On March 30 Wall Street was shaken by the news that the Bush administration
was raising countervailing duties against China. The news initially knocked the
stock market 1 percent lower.
But the market calmed down as it became apparent that this was a false alarm,
a ploy to get fast-track trade authority through Congress, which empowers the
Bush administration to negotiate credibly on complex non-tariff trade measures that require congressional action to
The action was later seen as an attempt to forge a consensus
between the White House and Congress to keep US trade policy from turning toward
protectionism. Nonetheless the action was a break from the Department of
Commerce policy dating back almost 25 years that shields non-market economies
from countervailing duties.
Surveys taken last summer by the Chicago Council on Global Affairs found that
58 percent of Americans continue to be in favor of globalization, at least in theory. But fully 43 percent of
those surveyed support it only if the government will step in to help out the
losers. And there is a growing question as to who those losers will be.
The shift to globalization is becoming ever more disruptive than anticipated.
In large part that is due to both the increasing speed of the transition and its
changing nature. Globalization has moved from tangible tradable goods to
intangible functions in the knowledge based economy.
As a result, the threat of off-shoring and outsourcing has rapidly moved up
the value added chain. US white collar workers used to be considered untouchable
by global competition. Nowadays once non-tradable services are being offered
from points all over the world.
Twenty-five years ago I bought my first Japanese car. Eight years ago I was
encouraged to move my call center to India. Six years ago my nephew went from
being an IT consultant to being an IT interface with an Indian consultant whose
clients are in Boston.
Today, my son, a newly minted computer scientist, competes with other newly
minted computer scientists from Yunnan Province in Southwest China. My partner's software
development operations, which used to be in Lexington, Massachusetts, are in
Gdansk, Poland. And my daughter's boyfriend, an MD radiologist in Boston,
competes with doctors all over the world.
Medicine, accounting, analytic services, software design, programming,
engineering, economics, architecture all have become fair game. Thomas
Friedman's economic paradigm of a "flat world" has indeed taken over. In
Friedman's words, the global "web-enabled platform for multiple forms of sharing
knowledge and work, irrespective of time, distance, geography and increasingly
language" has reached into almost every area of our lives.
This flattening coincides with a massive increase in the global labor force
of more than 1.5 billion new participants from China, the former Soviet Union
Over the last dozen years, this influx literally doubled the world's existing
workforce. The workers also joined the world's market economy with very little capital in hand. The result is
a glut of labor and a rising demand for capital. Thus, the rewards of capital
went up as the economic bargaining power of labor began to disappear.
(For more biz stories, please visit Industry Updates)