Saturday, March 24, 2007

As good as it gets...

Indur Goklany has written an excellent essay about the state of the world, which can be found here. No surprise really - we are healthier, wealthier and dare I say it, happier. Of course too much of a good thing can be a bad thing witness all those angst ridden teenagers at anti-globalization marches.
On the topic of globalization, few years ago, an excellent book by Martin Wolf called Why Globalization Works, looked at trade as the panacea for the world's poor. Indeed the percentage of people living on less than $1/day has more than halved in the last 20 years, global literacy levels have increased from 52% to 82%, and infant mortality rates have decreased almost everywhere. All this at a time of unprecedented increases in trade and freer movements of people and goods. It's almost painfully obvious that increasing trade is better for everyone. We wouldn't give the time of day to someone who would suggest increasing tariff barriers between the State of New York and the Commonwealth of Pennsylvania to protect jobs in New York and yet these are exactly the same sorts of arguments we are making on an international level.
Of course some people argue that a wealthy country trading with a poor country is not the same thing as two wealthy countries trading. Complete tosh. We haven't seen a drop in living standards in the US as a result of increased globalization. True average family incomes have not really increased but on the other hand, people's net wealth has, which is more important. More importantly, globalization has led to a stabilization in prices. Never have Americans looked so good dressed in low cost clothing from China.
The other thing that people forget is that the US economy has transformed itself in the last 40 years from manufacturing to services. Services now make up nearly 80% of the US economy. The US is the recognized leader in the services industry.
Indeed that "Great sucking noise" failed to materialize. Instead the US has gained massive benefits from free trade with Mexico. That Mexico hasn't benefited to the same degree is largely due to the inherent inefficiencies in the Mexican Economy.
The developing world has also benefited from globalization - witness India and China. Two economic basket cases 40 years ago are now poised to become the biggest economies this century.
Things are getting better with time. Increased globalization has led to greater innovation, more productivity, and increased trade. Increased competition keeps prices down while at the same time encouraging increased diversity of products and services. Consumers benefit from this and we are all, at the end, consumers.

1 comment:

Rajeev said...

You can buy Indur Goklany's book