Globalization Made Economies of Scale - Corporate Profit - The Sole Priority
Globalization placed Economies of scale ahead of household income, distribution of wealth, quality of life, sustainability of the planet, long-term employment, and other qualitative factors. The global commodification of labour assured that the efficiency gains from the economies of scale accrued almost entirely to capital. Local companies across the entire planet could not compete with the established multinationals which had economies of scale, low cost of capital, and labour cost advantages no local company could match. Free Trade agreements assured that the largest global multinationals had unimpeded access to local markets worldwide. The result was the wholesale liquidation of local industries, with the attendant loss of diversified skills and incomes. For everyday workers, the benefit of “low prices” could not offset the loss of income from the global labour arbitrage conducted by companies placing supply in one locale and demand in another. Despite relentless growth, large companies on balance destroyed jobs in developed nations while creating new low paying jobs in the developing nations.
WSJ April 2011
“U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization's effect on the U.S. economy.”
“The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million”
“The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million”
The accumulation of debt resulting from the inevitable trade imbalance papered over the declining standard of living that was taking place in broad daylight. Debt was misconstrued as a form of wealth even as debt levels climbed to unsustainable levels. Rentier-owned politicians looked the other way to growing inequality and unsustainability and assured everyone that Globalization was the best path to increased wealth. And indeed wealth was increasing, but it accrued to an ever shrinking ultra-wealthy rentier class - those who take their income from capital instead of labour. By the end, only rampant monetary expansion to fund asset bubbles could pretend to offset the growing global poverty exported via the global trade imbalance. It was a first order delusion carried out on an epic scale, with the full imprimatur of the morally bankrupt economics profession.
The CIA is much more efficient at explaining what happened:
The CIA is much more efficient at explaining what happened:
“The onrush of technology has been a driving factor in the gradual development of a "two-tier" labor market in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. But the globalization of trade, and especially the rise of low-wage producers such as China, has put additional downward pressure on wages and upward pressure on the return to capital. Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income. “
S&P Earnings Yield:
With Global GDP
Doh!
