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Rather than bemoaning globalization, we should be celebrating it

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Senator Marco Rubio makes an interesting point when he writes in The Atlantic: “For too long, government and business leaders alike have stood back and endorsed supposedly unstoppable global forces that have made life harder for working Americans.” The two “global forces” that pop into mind are technology and globalization. Now since much of the current debate about working-class woes has centered around globalization — both trade and immigration — let’s focus on that.

Globalization is certainly stoppable. The first “global century” of growing connectedness among the world’s economies was stopped by World War I. “What an extraordinary episode in the economic progress of man that age was which came to an end in August 1914!” John Maynard Keynes wrote in 1920. The Great War was followed by higher tariffs and more non-tariff barriers — most famously America’s Hawley-Smoot tariff of 1930 — and unprecedented collapse of global trade during the Great Depression. (There were also new restrictions the movement of people, as well as goods, with the foreign-born share of the US population falling by more than half.) And while the end of World War II marked the resumption of globalization — tariffs among rich nations fell to 3 percent in 2000 from 22 percent in 1947 — the value of merchandise trade as a share of global economic output didn’t recover to pre-WWI levels until the late 1970s.

So we have ample proof of concept. Globalization can be stopped or at least thoroughly stymied by global war and global depression. But save those two things, globalization has proven pretty durable — strong testament to its contribution toward peace and prosperity. And even if there were some other way short of conflagration and collapse to stop or even meaningfully reverse globalization — and the rise of populism has yet to prove otherwise — we would be right in eschewing it.

Consider: America’s postwar “golden age” economy — still pretty closed to trade and immigration — was built on prewar innovations and ephemeral, one-off dominance over war-ravaged industrial competitors. Of course those competitors were going to eventually recover. And that drawbridge-up economy meant complacent American industry then “collapsed at the first sniff of competition,” note Alan Greenspan and Adrian Wooldridge in their new book, “Capitalism in America.” So not a great model.  

Was the rise of China an unstoppable global force? While its 2001 entry into the World Trade Organization may have boosted its ascent, it’s hard to imagine a nation of more than a billion people, opening up to global trade and investment, not becoming an incredibly important economic player. Most people certainly see the folly in trying to stop automation and technological progress. It makes as little sense to pine for a world where China never rises from deep poverty and industrial backwardness.

And not just because of the impossibility of forever suppressing China or other rising Asian economies. My AEI colleague Michael Strain has written that “the problem with the US labor market isn’t trade — trade does not have a significant impact on the level of employment or on churn in the labor market. And trade delivers a host of benefits to the US economy, including a greater variety of and lower prices for consumer goods, along with productivity and efficiency gains.” Stop globalization? Reverse it? Bemoan it? Focus only the disruption? Hmm. Instead let’s celebrate it and try to make it work even better for everybody.

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