Why do people oppose globalization?

Dani Rodrik writes:

So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on.

(There is much more at the link.)  I was surprised to read this.  In the 1980s people were very hostile to Japan and Japanese imports, even though Japan at the time was quite wealthy and had relatively high standards in these areas.  I also receive a fair number of emails — some of them of the hate variety — by people who are suspicious of the rise of China.  I believe it is Chinese success which bothers them even though they sometimes come up with ancillary stories about unfairnesss.  These people are not less upset when other countries use capital rather than labor or when foreign production does not create much pollution.

Most of all, many people in poorer countries object to having to compete with America, with McDonald’s, with Hollywood, and so on.  Those objections are usually more strenuous than the complaints of Americans about a poorer China and of course the poorer countries tend to be more protectionist, in part for this reason.  That’s where feelings of unfairness are truly strong.  There’s nothing special about the "regulatory arbitrage" unfairness story and in fact it is one of the weaker feelings of unfairness out there.  In reality the entire past of the world is unfair but cosmopolitanites can look past that to appreciate the gains from ongoing trade.

Rodrik himself seems to object to when Americans trade with countries in which first world labor standards are violated.  But doesn’t such trade raise wages in these countries and also give a long-run boost to labor standards?  And where does the net unfairness lie?  Haven’t the Western powers — if only through imperialism — usually treated these countries much worse than vice versa?  Didn’t we steal Panama from Colombia for instance and take away a huge chunk of Mexico?  (Were Europeans so nice to the Ottoman Empire?)  Maybe the American worker ought to feel those folks deserve a bit of regulatory arbitrage (and that’s not what most of the trade is based upon) in return.  But it is striking how infrequently such a fairness calculus — whether correct or not — is even considered.  That again is because most people engage in "in group, out group" thinking.

The bottom line is that most people support their countries to a highly irrational degree in most international questions or disputes.  That’s just obvious — watch the World Cup — and yes Jonathan Swift understood that too.   


I agree that the real reason for most people is xenophobia, and then they go looking for a more acceptable justification to give as their stated reason.

As hard as it is for cosmopolites like us to understand, deep down most people seem to believe that foreigners are less human than their countrymen. :(

Reading Zakaria's "Post-American World" has part of it - as a country we're so inwardly focused that when someone else rises to our attention, our first reaction is negative. The reason India and China suddenly are a problem is because we've basically ignored them for the last 15 years and don't have a realistic solution or strategy for dealing with their rise

Exhibit A: Holland's 3-0 defeat of Italy this week. Aside from a city swathed in orange and a persistent roar throughout the night, the match sparked a conflict between national pride and commerce: a local merchant offered €100 off a €400 flat-panel TV for every goal scored by the Dutch team. The unthinkable third goal induced a run on the sets, quickly depleting supplies and causing the merchant to withdraw the offer. I like to imagine him squirming in the last few minutes of the match.

I see this as further evidence of Hanson's point:

"To think more objectively, become less allied."

I would argue that becoming less allied to your national group virtually requires spending a significant chunk of time (at least a year) outside of your home country.

Why do people oppose globalization?

A lack of shared cultural values.

I don't understand the big surprise here. People have congregated in groups of varying sizes and employing strange criteria for 'membership' since time immemorial. Animals (and plants) do the same.

There will always, always be an 'us versus them' mentality at some level somewhere. To deny that is to deny reality.

I think what's more at play is that people are generally averse to change and prefer status quo whenever it provides a base level of comfort. Things that challenge the status quo - an influx of immigrants, upsetting of an industry by foreign competition, etc. generate an unfavorable reaction at first.

"So the "us" and "them" characterization that Tyler attributes to irrational nativism perhaps has more to do with the absence of a common set of international rules on labor standards, environment, consumer safety, and so on."

This leads me to ask a couple questions:

1. Does Rodrik seriously believe that the U.S. has higher standards in these areas than say.. the EU? Canada? South Korea? I'd like to see his evidence in that area.

Example: Asian countries, on average, are far, far ahead of the United States in adoption GHS (Globally Harmonized System of Classification and Labelling of Chemicals). So is Rodrik saying that the U.S. shouldn't have freer trade because the U.S. is slower in adopting international standards than, say, Taiwan?

2. Does Rodrik think that California should have free trade with, say, Louisiana? Or does he think that the two states have even remotely equivalent standards in environmental law?

What I object to about "globalisation" as it implemented today is that all it really means is that global capital has complete freedom of movement whilst global labour is still tightly controlled and regulated. As if capital needed more advantages over labour.

Just look at American and EU subsidies on agriculture. The obvious reason people oppose certain globalization is because some policy would benefit people with "different colored skin" (Central Americans, South Amaericans, Africans) at the expense of the "white man". I point to the fact that the most socialized countries in the world are the most homogeneous societies. Most people don't mind trading with someone that looks like them, but once we start talking about trading with Asians, we need to set up huge barriers to trade. Labor standards are just a red herring.

Obama always qualifies his support for free trade with environmental qualifications. This will provide him with an out to appease the unions.

Hi, I'm a Marxist complaining about exploitation of poor immigrant workers or black market factory workers in 3rd world countries, who actually find their condition more favorable than living in and obeying the laws of a country implementing Marxist policies I like.

Let me see how non-obvious I can make that contradiction sound ... OH!!! I know! I'll use moral indignation! That's always a winner!

Globalization in itself is a good thing, what people oppose is the corporatocracy that comes with it. Trade agreements like NAFTA on the surface seem to improve the economy of all the participant countries, but in reality what happens is that only the rich people get benefits.

What benefit have the poor Mexican farmers for example? It's a large part of the population, and it can't compete with foreigner big corporations. Sure, you can say it's the natural way the economy works, the people that rule the world will make sure the macro-economy looks good even though poverty indexes increase.

The richer country always gets the upper-hand, of course, the poor countries also improve a bit, but only the rich people.

Only naive people think it's a win-win situation.

Globalization or so called "free trade" is not really free trade. It is government who picks and chooses the winners and losers in various industries. Besides, most, repeat, most other nations (namely Asian nations) highly regulate and protect their industries because they know that their own independence as nations is dependent on their engineering, manufacturing, agriculture industries. Only pie in the sky American liberals (of the left (Clintons, Osama/Obama) and of the right (Joreg Bush, Juan McAmnesty)), think "nationalism" is dead and time for "world citizenry" - a HORRIBLE mistake.

Nationalism is making a comeback (thankfully!). And for you young, leftists, I don't mean rabid Nazi-like nationalism, I mean common sensed nationalism.

That's why too much trade and immigration destroys a nation's culture, history, language, etc. People oppose globalization precisely because it destroys one's native culture and turns everyone into nothing but a cell phone toting, mind-numbed "citizen of the planet". How pathetic. These young Americans have been mis-educated. They don't know the true history of the USA and it's founding principles.

Aside from the much commented upon loyalty to group dynamics, there is a also a fundamental economic fallacy many people hold. It is that the size of the world economic pie is fixed. That is, any gains from other groups means less for me. I am amazed at how few people believe this.

I think the point is to demonstrate to everyone (including yourself) how patriotic you are.

That is why no one thinks clearly about whether the barriers actually benefit the country - if they concluded that the barriers were harmful they would lose the ability to cheaply and honestly signal their loyalty.

"I believe it is Chinese success which bothers them even though they sometimes come up with ancillary stories about unfairnesss."

Xenophobia and envy. Yup, that must be it, Prof. Cowen. The fact that wide swathes of U.S. manufacturing regions have been totally wiped-out -- and with them, millions of American jobs -- thanks to off-shoring of facilities couldn't possibly have anything to do with it. The problem, clearly, lies with ethnic resentment.

And why are the naysayers prattling on and complaining about "unfairness", anyway? Since when is it "unfair" one nation (the U.S.) is assessed tariffs on most of its goods, while the nation (China), which assessed those tariffs, dumps its products tons-at-a-time on both the other nation's shores?

And hasn't that lopsided commercial relationship between two parties [u]always[/u] been the classic definition of "trade"?

Only a xenophobic troglodyte would say otherwise.

ranger granger: "The fact that wide swathes of U.S. manufacturing regions have been totally wiped-out -- and with them, millions of American jobs -- thanks to off-shoring of facilities couldn't possibly have anything to do with it."

Right. We need to yank all those automobile jobs back from Mississippi and Tennessee and South Carolina and Texas - and put 'em back in Michigan and Ohio where they belong.

What do we really know about the state of U.S. manufacturing?

1. U.S. manufacturing output was at an all time high in 2006, and probably in 2007 as well.

2. U.S. exports of goods and services are currently at all time highs.

3. The U.S. leads the world in GDP.

4. U.S. leads, or is very close to the lead, in production of aircraft, motor vehicles, medical equipment, pharmaceuticals, chemicals, gasoline, processed food, industrial machinery, and much more.

But, of course, we don't make many sneakers and toasters and televisions in the U.S., so we must be facing an economic crisis.

John Dewey: "The U.S. leads the world in GDP"

And that (and the other things you mentioned) measures the standard of living...how?

People oppose globalization because they believe that it puts domestic jobs at risk. That scares them because someday it could be their job. Funny how that doesn't bother them as much when they are shopping at Wal-Mart.

Rodrik picked an unfortunate time to make this claim. Just a few days ago the cabinet members of South Korea's government offered to resign due to protests against the government in Seoul. The ostensible reason for the protests? South Korea just agreed to lift a ban on imports of beef from the U.S. that was originally imposed due to cases of mad cow disease -- something that has since not reappeared in the U.S. beef supply.

Now, I am not Korean but something strikes me as very odd about tens of thousands of protesters pouring onto the streets of Seoul, many singing old nationalist songs, due to the removal of a ban on imports that was rightly removed. I haven't seen any suggestion that South Korean food safety laws are any more rigorous or more stringent than those followed in the U.S.

Rapier says "One man, supposedly, controlling the markets and free traders worshiped him. You can't make this stuff up." I don't know, you just did a pretty good job of it. *Financiers* worshipped him. Free traders see through the Fed, every time.

First off, free markets optimise something-or-other but it's hard to say exactly what it is that they optimise. If we define "efficiency" as "what free markets optimise" then we can safely say that they are efficient.

Government action -- any government action -- distorts the results that a totally free market would create. There's no particular reason to think that a government would be efficient at distorting them in a good way. Or a bad way. It's real hard to be clear about what's going on here.

If you want free trade between two nations, you need both governments to avoid interfering. If either government interferes then you don't have free trade. When both governments interfere and disagree about the result then there's a chance to do arbitrage until the weaker government gives up. This can be pleasant -- but a vengeful government might put you in prison when they catch you.

Sure, there's a tradeoff between what's good for a nation's labor force and what's good for its consumers. To the extent that the labor force is the consumers, that tradeoff has to balance out.

Governments can (and do) do things that are not in their short-term or long-term best interest. There is nothing you can do about that short of persuading those governments to do otherwise.

If we were infinitely flexible, we could take advantage of governments that make bad choices and then immediately switch our strategy when those governments wise up. But we are not infinitely flexible. So a foreign government's mistake can cost us.

Governments have goals beyond maximising the total economic wealth of their citizens. Sometimes they care far more about their other goals.

Comparative advantage has an existence proof, not a universal proof. There is no guarantee that an entity will find its comparative advantage. If it fails to, it will become less able to buy. Entities can be forced into autarky when they have no comparative advantage. They are not very well off then, but they would probably be no better off with a government that tried to distort that.

So -- to the extent that the US government ran a free-trade policy wrt china, the chinese government has had a free hand. They distorted that trade to suit themselves.

When they manipulated currencies so that their businesses got less for their exports than they otherwise could have, when they basicly subsidised their exports to us, gave us a fraction of stuff for free, that was good for our consumers and bad for our businesses and labor. To the extent that it was our businesses and labor doing the consumption, it had to even out. To the extent that we succeeded in using our comparative advantage to produce more of what we're good at and sold it to china at free-trade prices and got wealthier, we benefitted from china's mistake.

By manipulating currencies and holding dollars, china has given away a lot of wealth to the USA. Also they have seriously damaged our economy. We used to be the world's only superpower. Now we do not have an economy worthy of a superpower. If china had tried to do that economic damage to us by military action, how much would it have cost them? They managed it with only hard work and low pay.

Was it rational of china's government to have goals beyond economic goals? Does it matter how rational they are? They'll do whatever they choose to do, unless we can persuade them otherwise.

Arguments for free trade are just exactly like arguments for pacifism. Each individual economy and the economy of the world as a whole would be richer if we did not have to spend money on armies and navies. But it isn't enough to persuade one government to disarm. We must persuade all its plausible enemies to disarm too. In the same way, it isn't enough for one government to practice free trade. All its trading partners must practice free trade too, or you don't get free trade.

Toxic: "What globalization is killing isn't industry or culture. It's destroying unionized jobs that pay $70/hour for $30/hour work because the union monopolized labor. "

I agree that auto assembly workers are paid outrageous wages for the work they do. But wages are not really what is being destroyed by foreign automakers.

Workers at Japanese-owned auto plants in the U.S. earn wages that are comparable to those paid by GM and Ford. But those Nissan, Honda, and Toyota workers are much more productive. From what I've read, it is union work rules that cause the most profitable cars made in the USA to be Japanese.

A second reason GM and Ford cannot compete is the legacy retiree health care and pension costs which are factored into the price of each vehicle. Ridiculous promises made by GM and Ford management 20 and 30 years ago continue to haunt those companies.

"40 years ago we didn't even realize American cars sucked because we didn't know any better."

It was the culture. Drop forges wore out after 3 years or so, so they introduced a new model every 3 years. So they aimed for people to buy new cars every 3 years or 6 years.

They competed in advertising, in telling comsumers which style would best display the consumers' personality. They didn't have to compete hard on other dimensions.

It was a good life for the auto executives and the advertising managers etc. And the consumers could afford it.

A different world now. What other industries are still like that? Health care to some extent. If you need heart surgery you don't comparison-shop for the cheapest place. You tend to go where your MD sends you, and you pay whatever it costs you beyond your insurance.

Computing is a little like that. Each new advance that parallels similar advances a long time ago in mainframes. People gladly throw away the hardware from 2 or 3 years ago and get the new stuff that can run the new software that is improved in specific ways -- better graphics, better internet capability....

Cell phones? PDAs until the cell phones engulfed them.

What else?

Americans [union hating remark deleted] now have access to cheap high quality cars.

You cannot hide the lack of quality and performance by stuffing in Chinese junk all over it(Toyota/Honda). Doubly so if you forcibly limit(Japanese "gentleman's agreement") the performance in the vehicle. Even Germany had the sense not to do that stunt.

40 years ago we didn't even realize American cars sucked because we didn't know any better.

That's far from the truth and more of the tired 1980's era line that it was.
We knew all along what could be made, just that we were better on a consistent basis. The UAW manufacturers still are, even with different metrics.
They make the vehicles that Japan will never make - affordable, reliable, high-performance cars. The only way they deviate is when environmentalists attack.


If you really want trade, why not consider this suggestion:
In exchange for uncontestable agreements that only specify international trade, unions get every single obstacle removed from their path:
* "Right to Work" is declared unenforceable by any means.
* Taft-Hartley is repealed.
* Unionbusting/Labor Consulting practices of all kinds are prosecutable. This includes(but is not limited to) attempts to agitate unions to the "battles of attrition" to outlast strikers.
* Any attempt to circumvent this agreement by any means places penalties on those making the decision.

Faustian, yes. But it's probably your best shot. The US has the infrastructure and the people. The only way you're going to get people to accept trade is to give them a meaningful victory. Otherwise you're going to see more Ebens and Nitz.

Should you label me as xenophobic, fine. That just your opinion. I believe in protecting the nation from foreign influence- by all means necessary.

I oppose globalization because, contrary to the impression you'd get from the neoliberal commentariat, globalization and trade do not equate to "free markets." Most actual globalization amounts to corporate mercantilism. It relies on heavy state subsidies to long-distance transport, state subsidies to the export of capital (e.g. the road and utility infrastructure built with foreign aid and World Bank loans, without which overseas capital investment wouldn't be profitable), and on "intellectual property" [sic] which plays exactly the same protectionist role for TNCs in the global economy that tariffs did for the old national industrial corporations.

In short, I'm opposed to a bunch of turtles sitting on fenceposts gushing about the glories of the "free market."

If corporations engaged in global trade had to fully internalize all their own risks and operating costs, there'd be one HELL of a lot less trade, and we'd be buying a lot more stuff made in small factories close to home (and so would most people in the Third World).

Invoking the spectres of Ricardo and Cobden, in support of the present system of corporate global mercantilism, is about as honest as calling Stalin an anarcho-syndicalist.

John Dewey, since you have the Bureau of Economic Analysis info handy, what form did that "investment" take?

Was it perhaps US private investors and funds etc buying stock in foreign companies?

To my way of thinking that has only a very indirect effect on infrastructure etc.

If citizens of luxembourg sell their stock to americans and then perhaps immigrate to the USA, or if americans buy stock and then immigrate to luxembourg and renounce their US citizenship, what does it say about production and markets and investment in capital equipment and such? Not much.

I'd disagree with some of Kevin Carson's details, but who can disagree with his main point? Look at china, where nobody but the chinese government has put much money into infrastructure, where the government manipulates currencies to distort their economy, and where the government is not doing much that could be called free trade.

Obviously global markets are only occasionally free markets.

J. Thomas: "Was it perhaps US private investors and funds etc buying stock in foreign companies?"

I guess I could have provided the link to the BEA's U.S. Direct Investment Abroad

Direct investment of the U.S. abroad does not include small investments in foreign securities. The BEA definition is:

"Ownership or control, directly or indirectly, by one U.S. person, or entity, of 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise."

Such direct investment would include, of course, Hewlett-Packard's recent plant expansion in Dublin, Ireland. It would also include the expansion of Stryker Medical's prosthetic plant in that same country. The expansion of ExxonMobil's Australia refinery was also included in U.S. Direct Investment Abroad.

In the case of Luxembourg, the exception I fully expected someone to cite, the investment is mostly in holding companies. But in the case of Canada, almost all the investment is in manufacturing businesses.

Mr. Carson's claim - the claim I disagree with - was that overseas investment is dependent on World Bank loans and U.S.
foreign aid. The BEA data shows very clearly that U.S. capital is being invested in manufacturing businesses in other wealthy nations, such as Canada, UK, Germany, Japan, and Switzerland.

J. Thomas: "but who can disagree with his main point? Look at china"

No question that China is different from other growing nations, as it struggles to find a balance between its historical Communism and its modern capitalism. But that one nation does not make Mr. Carson's main point. It is the relatively free and undirected private sector in Ireland, New Zealand, Singapore, Australia, and other growing nations that continues to drive living standards higher.

J. Thomas: "Obviously global markets are only occasionally free markets."

That is not obvious to me at all. Please explain what you mean.

J. Thomas,

First, who cares about what all those tiny nations do? Really. Your claim was that "obviously global markets are only occasionally free markets". Each country pair is not a single market, and in the sum total of global exchanges, these tiny nations make up almost nothing.

Second, citing a single instance or even a hundred instances where one government has in some way "distorted" an absolute free trade definition does not invalidate the hundreds of thousands of instances of free trade between individuals of two nations. In other words, the U.S. steel tariff of a few years ago is not evidence that all economic exchanges involving the U.S. are thus not free trade.

Third, trying to find some minor point that would invalidate free trade by some strict definition seems a waste of time to me. We could claim that the inspections of imported food products is a restraint of free trade, but what does that really prove? We could claim that requiring passports of vacationing Canadians is a restraint of free trade, but so what?

If you want to claim that free trade with very minor restraints is not technically free trade, go ahead. The truth, though, is that global trade is more free today than it has been in decades if not centuries, and standards of living around the globe are better for that increased freedom.

"The truth, though, is that global trade is more free today than it has been in decades if not centuries, and standards of living around the globe are better for that increased freedom."

Good luck proving that one, chief.

There's no question that international trade has increased.

What might be harder to show is that it's freer, and that this freedom is responsible for worldwide increased standard of living.

The first claim is easy to measure, the other two are harder.

Since the mid-1960's, imports as a share of gross domestic product have jumped from 6 percent to 22 percent, while exports have grow from 6 percent to 16 percent.

I would be more impressed with this statistic if imports had increased to 16%, or exports had increased to 22%. When we continue to run a trade dificit and market mechanisms fail to adjust it, that might be a sign that we do not have truly free trade.

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