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Trade Errors: Globalization Versus Internationalization

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Trade Errors: Globalization Versus Internationalization Trade errors: Globalization versus internationalization By Herman Daly Excerpt from “Trump’s Growthism: Its Roots in Neoclassical Economic Theory”, real-world economics review, issue no. 78, 22 March 2017, pp. 86-97, http://www.paecon.net/PAEReview/issue78/Daly78.pdf. Finally we come to a place where we must give reintegrate its pieces into the new global some credit to Trumponomics for having economy. opposed neoclassical economics rather than As the saying goes, “To make an omelette you blindly following it. Whether this was out of have to break some eggs”. Under globalization conviction, or devious political expediency, or the disintegration of a nation’s economic both, is a question I will leave to the reader. boundaries is achieved through globally Free trade, off-shoring, capital mobility, and integrated capital markets, labor pools and uncontrolled immigration added up to the trade agreements. neoclassical cheap labor policy, nominal opposition to which gave Trump his big issue Internationalism refers to international trade, and political victory. Of course it was sold as treaties, protocols, alliances and other “pro-growth” rather than “cheap labor”. The structures where nations rely on each other and Democrats, under the influence of neoclassical work together towards common goals. “Inter- free traders and global corporations, were blind national” means between or among nations, to the devastation and resentment their cheap and under internationalism the basic unit of labor policy had caused in working class and policy and decision-making remains the nation. rural America. Bernie Sanders understood, and Internationalism was the post-WWII goal of the almost got the nomination, but Hillary Clinton Bretton Woods institutions; globalism has and the Democratic establishment failed to become the goal with the WTO, TPP and learn the lesson. transnational corporations. As nations outgrow their domestic resource base they expand, via The presidential election revealed a deep- globalization, into the global commons, and seated discomfort with globalization and its into the ecological space of other nations. costs, and as Donald Trump sets the agenda for his new administration, some fear he will move In internationalization, trade is conducted the United States towards isolationism and between nations with their own self-interests in nationalism. There is another alternative open mind. Countries determine what they are best at to him that served the country well for over fifty doing, specialize in those goods or services, and years, neither globalization nor nationalism, trade with each other on that basis. In the but internationalism. classic example, England trades its wool and textiles for Portugal’s wine and vice versa. It Globalization is frequently conflated with would be unproductive for English investors or internationalism but is something quite workers to attempt large scale winemaking in different. Globalization refers to the global the English climate, and England’s resources integration of many formerly national are better put to use in sheep farming and wool- economies into one global economy. making. Through trade based on comparative “Integration” derives from “integer”, meaning advantage, both England and Portugal benefit. one or whole, and when we integrate, we combine into one the previous parts. Since In a globalized economy with free capital there can only be one whole, the disintegration mobility, nations no longer specialize in their of the national economy is necessary to own “comparative advantage”, but instead global capitalists and corporations follow “absolute advantage”–allocating their benefits, and then ships products back to sell to resources to maximize global productivity and U.S. consumers at a much higher profit, the global profit. They function as components of result is not what most Americans think of as an integrated global economy. U.S. “free trade”. It is instead freedom from corporations or investors shift capital to China regulation and responsibility done under the to produce goods with less expensive Chinese cover of globalization. labor for sale back into the U.S. By doing so, The restoration of internationalism re- the same investment generates more product at establishes the nation as the locus of policy and lower cost, thereby growing the global reasserts the principle of interdependence –not economy. However, these global gains can integration–as the basis for international inflict enormous cost at the national level. collaboration. Interdependence is to integration While the global economy may grow more with as friendship is to marriage. Strong real globalization, each nation no longer necessarily friendships lead to a long and happy life, but benefits. With globalization the nation loses its few people attempt or survive a multi-lateral ability to enforce its own laws and standards. marriage. The U.S. has national policies, for example, Trump has recognized the distributive flaws of governing workers’ rights and workplace globalization, but it remains to be seen if he will standards–minimum wages, non-discrimina- limit capital mobility in order to make the tion, fair pay, child labor laws, and world safe for trade based on comparative environmental and safety regulations. These advantage. Or will he opt to maintain capital agreements have been reached through mobility and accept the consequence of generations of national debate, elections, substituting absolute advantage for strikes, lockouts, court decisions, and, at times, comparative advantage in the quest for global violent conflict. They affirm national values growth? Probably, like neoclassical and strike a balance between how the economic economists, he is not aware that the logic of pie is split between “capital” and “labor”. comparative advantage is based on the These policies become meaningless in a assumption of internationally immobile capital, globally integrated economy. as explicitly stated by David Ricardo in his If a U.S. corporation run by U.S. executives famous comparative argument. Probably global closes a plant in Michigan, lays off its workers growthism will win out in the Trump regime, and opens a new one in Mexico facing since it is in the interests of the billionaire US muchless stringent compliance standards, staffs elite, from which he has entirely drawn his it with lower salaried Mexican workers who do cabinet of advisors. not require health insurance or unemployment .
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