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Globalization is a Sham

April 5, 2022

I’m using the USA as an example because it was a leader in globalization. The term itself is quite easy to state and to understand. It simply means production and consumption in separate locations. It’s a low cost solution, one that requires low cost transportation. This is often provided by bulk carriers or large container ships. The low cost also requires low or absent tariffs.

The real motive for globalization is export without import. In fact, that’s what every country wants. It also provides for convenient disposal of surplus production. Unfortunately, export without import is impossible; You would have all sellers with no buyers. The next thing is import of raw materials, with export of finished products. That’s exactly what the colonizers did. That didn’t work either.

The result was that finished products were manufactured in other countries. Did you notice that all toasters and microwave ovens came from China? That situation was detrimental to the US. Next came supply chain disruptions. Something had to change.

We just saw some of the constraints on international trade. To engage in it safely, countries have to balance costs and risks. Some solutions may increase costs. Some tariffs may need to increase to protect local production. Competition is a critical ingredient because it provides multiple sources of supply, and because it may reduce costs. National security may require local production, but too much local production may bring isolation from the rest of the world. That’s why a compromise and a balance is required.

Now we have a new strategy, with a new name for globalization and with new policies. Will they give us what we really want?

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