Globalization - the long term picture

Historically economy's have usually been local, and locals have fought to keep competition from outside the local area even as they sometimes are seeking to sell their goods and services to others outside their area.  Economists believe that knocking down all those local barriers will make everyone better off.

Globalization is the buzz word we use for the process of knocking down local barriers to commerce.  Globalization is one of those things that is great in economic theory but presents horrendously thorny problems when we try to find ways to get there.

The basic conundrum is as long as big parts of the worlds workers are climbing out of abject poverty, they are happy with a life style workers in developed economies find unacceptable.  But the process pursued in the last 150 years that has brought workers in less mature economies up out of poverty  has involved developed world companies moving jobs to less developed countries.  Sometimes this is driven only by the desire to make more profits, but often it is forced by realities of the market place.  If a company doesn't do it some one else will and the companies products will then be overpriced.

The result has been progress toward globalization has waxed and waned.   There is lots of enthusiasm for awhile, but eventually the process causes job losses and economic slowdowns which kill enthusiasm, particularly in democratic states, for globalization.

There is lots of irony involved in the Globalization process.   American consumers have made Wal-Mart one of the worlds most successful retailers because of its low prices, but Wal-Mart - and other similar companies - have dropped prices by producing their goods outside the United States and gradually undermined the economic viability of many of the industries that employed those same consumers.

So the fundamental problem can be posed - how can you deal with the job losses in developed countries that are inherent in the process without condeming the undeveloped world to decades of further poverty.   How do you replace the jobs in western countries that are migrating to less developed economy's?

Supporters of globalization (mainly either rich folks not threatened with job loss or idealistic economists) often argue that the free market can replace those lost jobs with the proper incentives.  I'm dubious - I think the free market can dream up some new products or services that can provide jobs for workers in developed countries, but I suspect that won't happen nearly as fast as job losses will occur.  Our world is already full of products and services many of us wouldn't buy, finding really new products that appeal to masses of people is really hard.

One possible way to alleviate the gap between job losses and creation of new private sector jobs is to use Government jobs.  Hire people, particularly young people and older folks, to do the things that contribute to a richer life but that the private sector can't do effectively (or profitably).  All my life I have marveled at the beautiful and functional infrastructure built by the WPA during the great depression.  It seems to me that offers a path to offset the negatives of globalization.

However the Civil Service laws that have built up over the last century create a problem with using Government.  If the primary purpose of the government program is to create jobs, direct government hiring is handicapped by the protections the law gives to Government workers.  Government jobs seeking to stimulate the economy should be focused on giving people a lifeline and experience.  They should pay less than the private sector, and provide fewer long term benefits, so people will be motivated to move out of the government job and into the private sector as soon as possible.