Blog Post: November 9, 2020

      International Trade and the Growing Threat of Nationalism by Joseph Rollins

      Way back in 2008, as a fourth-year econ major at CSUF, I wrote several papers that turned faculty heads in the department. One disposing my own theories on international trade and finance earned a formal invitation to apply for the school’s grad program.

      The conclusion of the paper was that the majority of benefit for free trade would be reaped by those with the working capital to invest in what were essentially an arbitrage situations in terms of buying power, where the same currency goes farther in one part of the world than in another. You can download and read the paper here, but I have to warn you that it is very dry.

      Anyways, these are the facts as I saw them in 2007 that were generally ignored by the economic and political communities:

  • The convergence of incomes promised under globalization will not happen in a positive way for uneducated, working-class peoples in first-world countries. For the record, I still believe in utilizing globalization to raise the standard of living for billions of third-world workers.
  • In the age of globalization, those in the first-world with rising incomes are those with working capital, as explained in my CSUF paper. These tend to be educated, skilled workers, but that is not necessarily true. Educated and/or skilled workers with disproportionate debt to savings will not benefit, unless they are wealthy with access to the highest tiers of financial resources.
  • Rather than benefiting en masse from income gains through globalization, first-world workers benefit through drastic lowering in cost of living by importing lower cost goods. This has tamped down inflation in the first-world to unnaturally low levels for 40 years.
  • Lost industries are not coming back to the first-world on a large scale without the adoption of strict isolationist policies. Examples of these lost industries include textiles and steel production in the United States.

      Some relevant and sometimes extrapolated facts:

  • The stratified income gains in the first-world caused by globalization has exasperated a class war in the United States between the haves and the have-nots.
  • Lowered costs of living for first-world workers are mitigated by ever-rising housing and energy costs.
  • Lost industries due to globalization are compounded by severely limited industries regulated more and more heavily due to mounting environmental concerns. Examples of these include house and auto painting.
  • Large influxes of low-skilled immigrant workers benefit future generations of a nation, but have at best moderate benefits for the current indigenous population. By competing with other low-skilled workers, they tend to drive down wages, which benefiting business owners and those who control capital, but hurting working-class people.

      As of the year 2020, American politicians of both parties spent 40 giving lip service to white, uneducated and low-skilled workers, promising that they would bring back manufacturing jobs to the United States while espousing globalization. The advent of Facebook and social media in general, plus other forms of mass communication, coupled with leaders willing to lay blame for these grievances at the feet of immigrants and foreign workers, has produced millions of radicalized white Americans, flocking to the tenets of nationalism.

      Millions believe in a vast array conspiracy theories that are available on a large scale with a click or a tap and often involving politicians whom are no longer trusted. These Americans have lost their grip on reality and espouse hate-speech and belief systems long dormant on the fringes of American society like white supremacy.

      I wrote this article just to put thoughts to paper, but as I connected one dot to another, I started asking myself what can be done. How does a nation de-radicalize millions of its own people?

      As of now I see a handful of outcomes in the United States:

  • Government re-inventing an industry in a way that employs all the radicalized white workers for the foreseeable future. This is the most desirable outcome, as well as the most difficult to achieve.
  • The U.S. and other first-world governments adopting policies of increasing economic isolation, exasperating poverty in developing nations and eliminating a natural deterrent to global conflict.
  • The U.S. and other first-world governments adopting policies of increasing limitations on free speech and other personal freedoms, similar to those seen in the aftermath of 9/11. The attempt is to squash the Nationalist threat growing on social media and internet venues, but which will inevitably lead to the suppression of civil rights.
  • A rise of a sustained Nationalist movement in the U.S. and other developed countries, leading to a suppression of civil rights and blood shed both domestically and internationally.

      If we chose to pursue the first option above, then an idea like the Green New Deal recently touted by Congressional Democrats might be the answer. After the fallout of the Affordable Care Act I am hesitant to endorse a plan of this size and scale. The bill must be bought into by those on both sides of the aisle, and it must jump start a new sector of the energy industry and provide long-term growth employment for the disaffected workers in this country. It is this last line that has me concerned - will it actually provide long-term employment for our nation’s production workers, or will it just be another expensive band-aid? Perhaps further investment by the economists of the world is needed to redefine the role of free trade and advise in the necessary restructuring global trade.

More blog entriesBack to Top