The Fading Glories of Globalization

Published on Tuesday, March 7, 2006 by the Palm Beach Post (Florida)'Everyone profits' doesn't work in port controversy.by Tom BlackburnThe first defense tried by President Bush in the great port terminal management flap was that, hey, it's only globalization. A British company that runs some terminals here sold its contracts to a government-run United Arab Emirates company. So? That's business.The word globalization ought to freeze high-minded members of the chattering class because they are supposed to favor an economic system in which everybody does what he can do most efficiently regardless of national borders, and everybody wins. The word didn't work, and the rhetoric shifted to accusing critics of bigotry against our friends in the UAE.By then, it was too late. Even landlocked constituents of House Speaker Dennis Hastert, R-Ill., who didn't know a buoy from a gull a week earlier, suddenly knew all about seaports.Everyone has his own take on the issue. Mine is that we screen 100 percent of airline passengers but only 6 percent of shipped containers. Something is wrong. But here I want to think about the failure of the globalization defense.On the Diane Rehm Show on Washington Public Radio, Justin Webb, BBC's Washington correspondent, said hostility toward globalization may be expected in poor countries — he mentioned Chad and Bolivia — that have gotten nothing from it, but he is surprised by Americans who "feel frightened and want to put the shutters up." Mr. Webb is hardly alone. He just happened to say it while I had a pen in my hand.In Washington circles, globalization is current wisdom. Protesters from developed countries turn up when the World Trade Organization meets, but the people who run things ignored them until about two weeks ago when everyone, including Rep. Hastert, started to sound like them. Much of the change of tone in Congress — it won't shock you to read — can be attributed to elections this year.The latest three-year incomes survey from the Federal Reserve Board showed that Americans' median income — half are above and half below — rose by only 1.6 percent between 2001 and 2004 while the average income fell by 2.3 percent. Between 2001 and 2004, the average income of people in the top 10 percent actually fell, from $322,400 to $302,100 (in 2004 dollars). That pulled down the average.In other income categories, incomes barely budged in three years. That held back the median. The net worth of families showed similar patterns, with the bottom 40 percent actually losing ground.You can do a lot with the Federal Reserve's figures. If the Democrats had any sense, they would. But all I want to do here is point out that such numbers are not supposed to happen to us in this gloriously globalizing world. And for this you can't blame the Clinton-stock bubble-9/11 recession, as the administration used to do. The recession happens to be the base year from which things got worse.If globalization really works better for us than for poor Bolivians, why, on average, are we doing so poorly? And we are doing worse, for the first time in this country's history, without a recession.There is a standard reply. It should be delivered in the smug tone of someone who never has missed a meal. (Otherwise it sounds fatuous.) It is that greedy unions left American companies in a position where they couldn't compete — by, say, cutting wages — in the global economy. But now comes the port flap, and it is not about wage jobs moving overseas.Longshoreman jobs stay here. The profits move overseas. That's one reason why, amid all the other signs of globalization, the port business became the proverbial last straw on, if Arabs will excuse the cliché, the camel's back. If we can't find U.S. managers for U.S. port terminals, what won't move overseas?I read recently of an entrepreneur who closed his plant, at his main retailer's behest, and sent his production to China. That left him more time to pursue his hobby, which he is said to be enjoying. How long, do you think, will it take the producers see they can get along without him?When someone from China starts dealing directly with the retail outlets, it will be a Chinese product and Chinese profit along with Chinese labor. Instead of a millennial win-win-win, globalization is starting to look a whole lot like old dog-eat-dog capitalism with losers as well as winners.When management gets bitten like labor, politicians have to notice.© 2006 The Palm Beach Post