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Globalization or greed

James Surowiecki writes about sovereign wealth funds, which are pots of money used by governments to buy things. Qatar, for instance, thinking of buying the British supermarket chain, Sainsbury’s, and Dubai thinking of buying [1] P&O which is a contractor for security in some US harbors.

National security and dislike of foreigners aside, there’s another angle to all this that you won’t see discussed too often in the financial press. Surowiecki mentions:

“The prospect of American companies being sold to foreign states is, to be sure, disconcerting. But it’s a problem of our own making. The reason that sovereign wealth funds are so flush with cash is all the dollars we spend on oil and Asian consumer goods. If we want to consume far beyond our means, then, one way or another we’re going to end up selling off assets to pay for it.”

But what he doesn’t discuss is why those dollars are spent that way. It’s not consuming beyond our means that’s the real root problem — or at least it’s not only that. A big part of it is decades of kleptocratic government policy.

Oil? Well, our spending on that would have something to do with an energy policy whose main purpose is to make sure Big Oil and Big Car don’t lose any money. A clean, sustainable energy policy carried forward from Carter’s day would see us spending way less on the slimy stuff.

Asian toys? We buy them because they’re cheaper. They’re cheaper because the workers are paid pennies and the environmental regulations are, shall we say, different. Living wages and a clean environment should never have been abandoned in a race to the bottom. To the extent that somebody else can make goods that are truly cheaper, well, that’s fine. But if they’re cheaper through cheating, there’s nothing protectionist about slapping on a tariff that cancels out that part of the difference.

That sounds a lot like what the anti-globalization crowd has been saying since forever. Their only problem is that they misidentified the problem. Globalization is not the problem. Unfair globalization is.

What we’re really talking about isn’t globalization at all. The only thing that’s been globalized is corporate profit. When US consumers try to buy cheaper drugs from Canada, laws are passed right quick to stop that. And as for workers going to the market where they can get the best price for their labor, forget it!

What we’re really talking about is good old-fashioned greed. Corporations saw a way to avoid regulations and maximize profits, and took it. They called it globalization, and the rest of us didn’t look too close because we could buy cheap stuff. To go all biblical in honor of NBW [2], greed is one of the seven deadly sins, and we’ll be paying its wages for a long time to come. Calling it globalization doesn’t change that.

Crossposted to Shakesville [3]. Previous similar post: Globalization for me but not for thee [4]