Jobs, Wealth and Values in a Globalized Economy Syllabus

Class Session Themes, Subject Areas, Highlights

Globalization is integration of trade and investment among countries, facilitated by free movement of capital with reliance on market forces to determine prices and costs as well as transport, telecommunication and other technologies.

I. Globalization development to 1945

Precursor to Phoenicia:

-17000 End of Last Major Glacial Age

-10000 Wild grain seeds of Anatolia after climates warm, planting seeds vs. hunter gather

-5000 Mesopotamia, Egypt – war and conquest, but not trade, economy, investment focus

-5000 Land tech: Irrigation, flood control, wheel, animal, construction, rural productivity, urban service, public works

-4000 economic culture – language, writing (cuneiform, wedge), accounting (grain storage, trade), laws (Hammurabi)

-1500 to 400 BC Phoenician city states of Eastern Mediterranean

Rise of sea technologies, Mediterranean application: lateen sail, rudder, keel, oars, star and sun navigation

Diversity of needed resources: Cyprus copper, Anatolia iron, Cornwall tin, resource source and market diversity

Similar advances in Indus, China Yellow, but in Mediterranean more continuity and familiarity

• Smaller, discrete political entities than Egypt or Fertile Crescent Mesopotamia civilizations
• Reliant on trade with other cities and states around Mediterranean and beyond
• -1500 Ugarit, -1300 Byblos, -1100 Sidon, -1000 Tyre, -400 Tripoli
• Irrigation and water flow control developed by Egypt, Mesopotamia
• Sea going navigation, discovery of North Star by Phoenicians
• Wheel and domestication of animals for ag production vs. oar and sail for trade

-400 to 1250 Greeks, Romans, Arab Empires contribute to advance to globalization

Greek arts, science, mathematics, philosophy, political systems

Rome added military power, empire, infrastructure

Arab religion based society and values formed bridge to east and stored values of west

• Greek science, philosophy, arts, learning, politics spread by Alexander like US pop music, movies, TV today
• Rome perfected span of control through legions, infrastructure, central rule, control
• Arab preservation of learning during medieval Europe and bridge to China and Indies

1250 to 1914 Rise and dominance of Europe: Renaissance, Discovery, Industrial Revolution

Consistency of China contrast to volatility of Europe Mideast and South Asia

Chinese technology, innovation, civil service facilitate political stability and economic progress

• 1267 Hanseatic League city states dominate Baltic and North Sea trade until 1600’s decline
• 1300-1600 England wool, Belgian cloth, Italian banks parallels artistic renaissance
• 1450-1550 Sea discoveries East to India, West to America and around the world
• Portugal , Spain, UK, France, Dutch colonial discovery and mercantilism
• Mineral wealth, societies in upheaval, parent and colonies, new goods traded, Constantinople falls
• 1750-1800 Industrial Revolution, Capitalism, social progress, Enlightenment, Liberty in US, French turmoil
• 1800-1914 Transport, communications, synthetics: telegraph, telephone, electricity, oil, chemistry, wireless
• 1850-1914 Empires of UK, France, industrial power of Germany, US

1845-1945 Europe Empires to World Wars, US Manifest Destiny, Asia Stirrings

Post Napoleon Metternich Europe, US moves west, Civil War, Perry in Tokyo, Pacific Latin America interests

Destructive European Civil War tests limits of monarchies after industrial revolution, capitalism, fascism, communism

Asia tests limits of Japan co prosperity, resists Western colonial control, China Civil War

• US 1845 Manifest Destiny, 1861-65 Civil War, 1853 Perry in Tokyo Bay, 1898 Cuba, Philippines, 1900+ Central Am
• 1905 Japan defeats Russia, 1914-45 World Wars, Depression, Communism, Fascism, Empires, Colonial end
• War Cost, Loss: 1914-18 $200B. 11M deaths, 1939-45 $2,000B, 60M dead, half civilian, 1945+ Millions of refugees

II. Explosive globalization growth from 1950-2010 and associated benefits and threats

1945-1970 US Golden Age economic dominance, Europe aid, Japan recovery, Cold War, US- USSR compete in 3 rd world

1947+ Colonial end, Superpower limits: 1927+ Communist China rise, 1947 India free, 1957 Ghana, 1954-75 Viet Nam

1970 Trade and manufacturing parity among developed world, resource emphasis, protectionism in 3 rd world

1970+ Increasing world trade and economic competition and integration, accelerated by 1989-91 Communism fall

 Rise of Globalization Enabling Technologies

• GI Bill avoids post war recession (½ 16MM ed, 2.5mm homes), unions decline (30-15%), coal, rail competitors

• Synthetics:1907 Bakelite, DuPont 1931 neoprene, 1935, nylon, 1960+ plastics, petrochemicals

• 1947 Bell labs transistor, ENIAC at Univ PA, signal shift to services and knowledge, underlie logistics
• 1956 Containers introduced on ships by McLean-Sealand, Ike signs Interstate bill
• 1960’s Integration of transistors and computers in IBM 360 series for commercial dominance
• 1970’s mini computers to bring price down, expand market, capacity, 1980’s PC’s, 1990’s networks, 1968+ Internet
• 1978 US airline deregulation, 1984 IBM antitrust dropped, AT&T split, 1999 Glass Steagal repeal, 2008 meltdown

Emergence of Asia into Developed World: Japan – Rim Tigers – China – Soviet Collapse

• 1945-49 Japan MacArthur, Zaibutsu, 1947 India free, 1949 China Communist
• 1950-80 Cold War Confrontation: Taiwan, Korea, Viet Nam, 1960 Sino Soviet split
• 1949+ Chinese on Rim, 1956 Great Leap to 1966-76 Cultural Revolution in China, 1960’s+ Japan toys to auto exports
• 1972 Nixon to China, 1976 Mao dies, 1979 Deng economic opening, 1980+ Overseas Chinese ties revived
• 1970’s Japan auto exports, Rim of Asia consumer electronics dominance
• 1980’s Japan heavy mfg dominance, attempt to transfer to high tech but long term approach fails
• 1980’s Rim of Asia proves speed of tech transfer, lack of protection, like US PC’s, Japan 1991 crash and malaise
• 1980’s China and Soviet changes: 1985 Gorbachev perestroika, glasnost; China coast factories to 1989 Tiananmen Square
• 1989 East Europe Communists fall, 1991 USSR coup and yr end collapse, floodgates open to Yeltsin democracy, chaos
• 1991 India financial crisis, Singh end of license Raj, India opens to world

1992-2010 Technology and construction bubbles to mask manufacturing decline in US, IT productivity

• 1992 NAFTA and giant job sucking sound south, erroneous as China becomes lowest cost producer
• 1992- Japan stagnates while China rises, advances 50 mi inland/yr.
• 1995-2000 Dotcom, telecom, biotech hype, Wal-Mart supply chains, e-commerce emerges with Amazon, eBay
• 2000-1 Dotcom, telecom crash, 9/11 shift to fear, govt dependence, revenge, war in Afghanistan, Iraq
• 2000+ Importance of BRIC’s – Russia and Brazil resource based, India & China people based.
• 2002-2010 US budget surplus to $200+B deficits, energy-food-water-climate crises, 2008 financial meltdown

III. US Wealth, Jobs, Productivity Gains and Values, Social and Economic System Changes

Progression from basic resources to inventions to big business: organization, processes, automation

Automation: competitive advantage for big business or catalyst of creative destruction helping entrepreneurial and new

Troubling legacy of financial service contributions and rewards, capital investment and tax based wealth distribution

US Economy - From raw material cash crops to agriculture to manufacturing to service, finance, knowledge

• 1600’s+ From land in US with hard labor, some investment: Food, minerals, factories, homes
• 1793+ Inventions and innovation added for wealth creation – Whitney, Morse, Howe, Bell, Edison, Shoales
• 1865+ Business titans: McCormick, Singer, Rockefeller, Carnegie, Vanderbilt, Harriman, Vail, Young
• 1890+ JP Morgan and Mellon financial dominance, anti-trust, FDA, Federal Reserve, New Deal
• 1947+ Computers, telecommunications, deregulation, Internet, financial dominance, crises

US Jobs – Challenges from vast job creation and changes dating to Industrial Revolution

• 1700-1865 Home, village, farm societies start of factories, cities, railroads, industrial textiles, metals
• 1865-1900 Gains from productivity, efficiency, big business, loss of craftsmanship, job independence
• 1900-1945 Trust busting, union power, depression, New Deal, Arsenal of democracy, women at work
• 1945-1970 corporate benefits, one wage families, high growth, full employment
• 1970+ Imports, safety nets, employment cycles, OSHA, environment, non discrimination, skills

• 2010+ Job shifts from productivity, competition, education, work force size, income gaps

US Jobs – Challenges from Global Economy

• 1790-1865 Internal expansion west, limited international trade
• 1865-1900 Transportation and technology advances to make US competitive in world markets, farm to factory jobs
• 1900-1945 European and World Wars disrupt competition, business cycles income gaps effect jobs, help union rise
• 1945-1970 Golden age for US jobs as rest of world recovers
• 1970-1990 Dominance of Western economies, competition in US from imports, job threats, rise of tech, information
• 1990-2010 Market economy expansion, rise of BRIC, education gaps threaten US jobs

IV. Burden of Values in Current US Work Force

Milestones of equal opportunity:

1863 Emancipation, 1918 Women suffrage

1945 GI Bill, 1948 Military desegregation, 1954 School desegregation

1963 Equal Pay Act, 1964 Civil Rights Act, 1965 EEOC,

1967 Age Discrimination 40-65, 1986 Eliminate Age Cap

1986 Immigration reform, control, 1990 American Disabilities Act

Non Wage Benefits and Standards of Employment

Company benefits after WWII: Solution to labor shortage, wage inflation, economic growth

Regulations on job working conditions, discrimination, security

• Health care supplied by employer, copayments by worker, complexity in controlling costs
• Pension care legacy of early contracts to provider retiree benefits as offset to higher inflationary wage increases
• OSHA, disability, non-discrimination, harassment regulations may raise costs, lower productivity

Wages, worker incentives, environment, other regulations

Complexity of comparability of tax rates and government costs for country competitiveness

Varying costs and standards of quality of life from pollution, standard of living, worker protection

Benefits to US consumers from low priced, high quality, wide selection of imports

• Environment quality: Air; water, toxic, solid disposal, emission levels
• Wage and benefit levels based on skills, supply, minimum pay
• Payroll taxes, permits, local and state taxes, corporate income tax rates
• Documentation fines and penalties, migrant worker living conditions
• Foreign visa limits for skilled and technology workers

V. US Globalization Facilitators, Government Policies, Values

Can US maintain tech leadership in energy, climate, life science opportunities?

Tradeoffs between importance of environment, cleanup, warming, worker rights, economic growth, job creation

Question of relation between capitalism, rapid economic growth, productivity, democracy, political control

 Technologies facilitating and promoting globalization

• Container shipping – reduce overseas delivery over 90-95%, can move manufacturing jobs worldwide
• 2001 telecom decline – near free data transfer, can move many service jobs abroad
• Computer tracking systems to support on line logistics supply lines
• Contracts to reduce foreign investment risk and exposure

Values and economic policies affecting globalization

• Open and relatively free markets to determine prices domestically and across borders
• Individual freedoms related to information flow, human rights, transaction and cost transparency
• Costs and benefits as well as effectiveness and commitment to representative political systems
• Government and other regulations related to production, work, trade, taxation, quality, patents, copyrights, immigration

Government policies determining rate of growth of globalization

• Import and export restrictions on capital, labor, equipment, inputs to production
• Floating, pegged, or other currency and foreign exchange limits and restrictions
• Compliance and enforcement of regulations and laws
• Objectives for economic and job growth, savings and consumer spending, infrastructure permits and costs

VI. US Consumer, Investor, Worker, Finance, Money Issues Determine Globalization Pace

 Economic decisions of largest unified US consumer block demand benefits of globalization and imports

Globalization requires free flows to create most value and benefits for all, but threatened by nationalism, vested interests

Manipulation and trading by countries and financial services add little compared to new products, services, business processes

Money and finance: catalyst or culprit of capitalism, global economy, productive investment, job equity?

Consumer demand for widest selection and range of prices, qualities, features, styles

• Question of willingness to pay premium price for US production, quality, comparability
• Cost effectiveness of Wal Mart and other globalized merchandisers and effect on local merchants
• Translation of buying patterns to reflect domestic production, worker benefit, local community, fairness beliefs
• Difference in buying decisions based on price range (disposables to autos), type (consumer goods to health care)

Worker decisions related to income distribution, disposable income, debt levels, future expectations

• Rich-poor gap increasing in US since 1968 after decades of narrowing
• Reagan Bush tax cuts and income distribution, worker-manager-CEO gap, limits of trickle down economics
• Practicality and acceptance of work sharing to reduce unemployment, telecommuting to reduce costs
• Correlation of debt levels and wage increase expectations in expenditure control
• Burden on younger workers to support parent entitlements, real estate values, expected life styles

Investor view of returns related to globalization, taxation, restrictions, risk

• Enhancing returns through low cost overseas production and sale in enormous US market
• Capitalizing on US distribution efficiency and globalization technologies for high investment returns
• Desire for unrestricted investment flows and returns as well as tax havens and repatriation
• Sanctity of production contracts to reduce investment capital and other foreign funds flow risks
• Importance of efficient and free capital flows and conversions to support globalized trade flows

Financial sector benefits and limits in globalization and wealth creation

• Role of risk from debt leverage, securitization, exotic instruments in 2008 financial crisis
• Barriers that lead to investment bank margins and returns and ways to increase competition and lower margins
• Tax policies to discourage oversized compensation
• Results of trickle down economics, consumption, savings rates, federal deficits threats, progressive tax rates
• Understanding of finance value added , complexity, shuffling related to technology, process, production improvements

Money as Enabler, Measure, Potential Solution, Deterrent in Globalized Economy Issues

• US income distribution and gap, changes over time, effect on economic growth, trade, investment, jobs
• Progress outside US in shift to market economies and trends in income growth and distribution
• Share of US financial sector in US economy, contribution to cost effective production of products and services
• Role and importance of financial incentives, tax credits, shelters, preferences, cost and value of complexity
• Role in ongoing problems like resource rich countries, terror, wars, economic and job growth
• Effect on multilateral policies such as exchange rates and protectionism, as well as trade, labor, environment standards
• Diversion of attention and financial resources to fear rather the economic understanding and intelligence
  

VII. Country Abilities, Goals, Policies Determine Globalization Participation Level

Europe

1700’s Industrial Revolution in UK, overtaken in 20 th by US due to resources, system, empire end, wars

Effect of EU: new, old members; Germany, UK; economic, life, value variations

South and North differ on social safety nets, initiative, innovation, comfort with change

• East and South focused on EU and Euro market and developing competitiveness and stability
• Germany and few others in North are global competitive manufacturers, mainly high value added products
• Uniqueness of UK and Swiss in world financial markets, solar/wind of Spain, Germany. Denmark, Nokia wireless
• Social safety nets and worker benefits limit innovation, initiative, global cost competitiveness, job flexibility

Russia-MidEast-Africa

Dominance of resources in USSR to build economy, Cold War competition and Central Planning in LDC’s

Complexity of converting resource wealth to productive economy, social benefits, wealth creation

Chasm between resource rich and poor countries with little other economic progress or integration

Imperative of education, tech skills, ingenuity, time, infrastructure to build cohesive growth and progress

• Energy and mineral export reliance, skills to support exports bought, not indigenous, oil nationalizations
• Inability to create new wealth or education with resource payment inflows lead to financial instability, terror funding
• Challenge of providing education and job opportunities to cope in modern world
• Export threat to oil of renewables, conservation, energy policies and evolution from factory to technology in OECD
• Africa as last efficient agriculture frontier hurt by infrastructure, institution lack

Latin America

Preoccupation with Cuba, revolution in Cold War impedes progress, solutions

Power and differences of Brazil, Argentina, Chile, Mexico, limits of others

Narcotics cancer of Andes, Caribbean, Mexico fueled by US demand

• Growing dominance of Brazil, success of economic focus in Chile, waste in Argentina
• Challenges in Mexico of income fairness, drugs, violence, oil efficiency
• Maquiadora and low wages of Mexico and textile Caribbean surpassed by Asia and China
• Import substitution jettisoned along with central planning, but limited skills and resources hurt in global economy

Asia

Remarkable stability and continuity of enormous China and India, despite 1947 India partition, 1949-76 Mao China

Japanese 1854 opening to West, 1904 Russia defeat, WWII co prosperity, recovery, 1970’s exports, 1989 collapse

Chinese of Rim of Asia check Japanese, inspire mainland China imperatives of growth to spread money economy

• Overseas Chinese in Rim of Asia curtail Japan economic rise in 1980’s
• China globalization success challenges necessity of democracy as integral open markets
• Other low cost Asian countries attempt to replace China current advantage
• Value of family, community, education in China economic success, despite Cultural Revolution
• India rise after deregulation of license Raj in 1991 and large tech educated English speaking middle class
• Potential of science and tech education to lead world in innovation, improved systems, business efficiency

VIII. Globalization Conclusions on Future Progress, Limits, Threats, Benefits

Enormous economic progress amid serious social dislocations

• Vast productivity, wealth generation, innovation since Industrial Revolution
• Loss of traditional ways, slow adoption of social safety nets and worker protection
• Importance of individual initiative and community trust as flux for strength in adversity
• Balance between embracing change, progress, new ways focus or seeking protection from past wrongs
• Relative importance of market based economies, human rights, freedom, democracy in globalized economies

Public policies to maintain values and standards of people and planet

• Varying values of worker condition, income distribution, environment, education, family by country and culture
• Extent US government policy influence over other countries and US economy may decline with globalization
• Cost and effect of costly government regulations and restrictions that divert attention, lack broad popular support
• Threat of US and international regulators like WTO moving slower than business due to need for consensus
• Do others need to follow past US economic approaches to gain benefits and avoid abuses of global economy?