Globalization and its Discounts

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Globalization and Its Discontents
by Bill Bonner


It is widely believed that the Chinese are eating our lunch. Their factories hum and belch smoke, while ours go silent and send up weeds in the parking lot. This phenomenon is commonly called "globalization." But it is also commonly misunderstood.

In the reverie of modern Americans, globalization means the rest of the world sends you things you don’t have to pay for. The burden of today’s little essay is two-fold. The first part is easy; we point out that anyone who thinks such a thing is a fool. The second point is harder – and more important.

The world has been globalized for a long time. An Englishman in 1910 could sit in his parlor off St. James Park and drink tea that came all the way from Ceylon in cups that came all the way from China. Then, putting down his drink, he could pick up a Cuban cigar, put it to his lips...and perhaps sprinkle a few ashes on the carpet that he had bought in Egypt...or the leather boots he had ordered from a shop down the street that sold Italian goods. He could buy stocks in New York as easily as he could pick up oranges from Spain or the latest French novels to make their way across the channel.

But as Niall Ferguson points out in the current issue of Foreign Affairs magazine, globalization is not without its disappointments. In 1910, England had been a great world power...and one of the world’s greatest economies...for two centuries. But global competition had recently edged the British out of the top spot. American GDP surpassed it at the turn of the century. Germany marched by a few years later. Relatively, England, that "weary Titan," was in decline.

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