There is no Global Economy

By C. Fernando Lumba


The leaders of business, of academia and of government are all telling us that we now have a global economy. Boy, are they all wrong.  If indeed there is such an animal as a global economy, these four pillars of an economy must be present:
1. Free movement of goods and services within the global economy.
2. Free movement of labor within the global economy.
3. Free movement of financial instruments.
4. Free movement of technology and raw materials.

I think you will agree with me that goods and services can now be produced all over the world and transferred almost anywhere without impediment. Score one for the “global economy.”

And I think you all know, as well as I do, that the financial instruments, such as stocks, bonds, mortgage notes, etc. can in fact move from one part of the world to other parts with ease. Score two.

In short, goods and services can and are being outsourced or offshored and therefore globalization applies in the case of manufactured products as well as services. Applies to financial instruments too. Investors in China can and do purchase U.S. government treasuries, U.S. bonds, stocks, etc.

Globalization exists for two of the pillars of the so-called global economy. But what about the other two pillars?

In an economy, labor can move from one place to another without impediment because labor tends to move where jobs are available. Does this condition exist in today’s so-called global economy? Not by a long shot. Americans, Europeans, Australians, etc., whose jobs have been shipped to China, cannot move to China to follow the jobs there.

And even if it were legal for them to move to China, would they do so? If you’re an American would you want to work in China for ten bucks a day? If you’re an Indonesian willing to work for ten bucks a day, would the Chinese allow you to move to their country? Of course not.

There is no economy, my friends, if there is no freedom of movement of labor. Movement of labor is co-equal to movement of goods and services in importance in any economy.

The fourth pillar, movement of raw materials and technology is not free within the so-called global economy. The Chinese have cornered rare earth metals and other important metals and are controlling their movement. The oil cartels can, on a whim, stop the flow of oil and gas.

Technology is closely guarded and is not normally shipped from country to country. A manufacturer in China, in other words, cannot just go up and buy technology from an American company and start manufacturing. Technology transfers occur only under strict licensing agreements.

In fact, technology transfers are frowned upon by governments.

So what is the bottom line? The bottom line is we are being deceived. The leaders of industry, government and academia are telling us that there is a global economy and we all have to live by the new rules when the reality is there is no such thing as a global economy.

What we have are national economies that must fend for themselves because two of the four pillars of their economies have been globalized: the sourcing of goods and services, and the sourcing of financial instruments.

Why have the leaders of U.S. industry, commerce and government sold us on the concept of the global economy? Because they want us to accept the new world order. They want us to accept the fact that they ship our jobs to China and elsewhere and there’s nothing we can do about it. They have, in a nice way, flipped a finger at us.

They want us to accept the fact that at age 50 we must go back to school and learn new trades so we can get jobs in industries that do not even exist in America. In other words, they want us to waste our time and money learning new technology and other academic courses in night school so that we can prepare for jobs that do not yet exist in America because such jobs are all in China, India, Mexico, South Korea, etc. and those countries are not about to ship them to America.

In the 1970’s, there were loud noises coming from the leaders of industry that heavily criticized the American labor movement for being an overpaid, underworked bunch.Some of that criticism was well deserved. American unionized labor was indeed pampered to the extent that they rendered U.S. manufactures uncompetitive.

But that was not entirely the fault of labor. The American experiment required the strengthening and bolstering of the American middle class. That was a part of the deal. And the middle class would not be attainable for most Americans if the unionized American labor were not allowed to thrive.

What American industry should have done was to accelerate the use of robotics in combination with unionized labor to make American-made products more price-competitive. Instead, American industry abandoned American labor and shipped everything they could possibly ship to other countries.

To hell with American workers, the CEOs of the large, medium-sized and small manufacturers seemed to have hollered in unison.

This, dear readers, is why our young people today can only get jobs at Walmart, Target and McDonalds. It is why people in mid-careers are selling real estate and insurance to each other part time. It is why multi-level marketing organizations are mushrooming all over this great land, with armies of underpaid and underappreciated workers hawking vitamins to each other and getting $4.37 checks from time to time.

The CEOs have abandoned American manufacturing workers. It is time we convince them that if they want to continue selling in the American market, by far the most important market in the universe, they have to play by our new rules.

And this is rule number 1: The CEOs must find a way to make things in America again, but this time cheaper with the use of robotics combined with human labor.

The CEOs must realize that there is a strong sentiment for what I call “The Proposed New American Doctrine.” This is the Doctrine that states: All major manufacturers that sell in the American market must make 51% of their products sold in the U.S. within the boundaries of the United States of America and its territories.

The manufacturers will be given five, seven or ten years – depending on the complexity of their manufacturing processes – to set up plants and operate those plants in the U.S. or face huge tariffs that will render their products uncompetitive.

The GE’s, Nikes, Apples, etc. of this world are now on notice that because their products are made in China and other countries, they are in reality foreign-made products and can be tariffed out of competitiveness in America.

We are Americans and we own the American market. We can set any rules at will when dealing with foreign-made products.

Rule No. 2: We will disabuse ourselves of the concept of a global economy.There is no such thing. Not yet. If there ever is, it will not be in this century.

When the rest of the world’s standard of living catches up with the U.S. and Europe’s, and national governments agree to being a part of a world government, a true global economy will be within reach.

Until then, for us Americans there is only one economy that matters: the American economy. The Europeans, Australians and Canadians must also think this way about their own economies.

If they don’t the future will be bleak for their young citizens and future generations of citizens.

The patience of today’s youth in the industrialized world that consists of the U.S., Europe, Australia and Canada, is being tried. It is being pushed to the limit.

That part of society that consists of young people can and will explode.  I can almost see a time when young people in the industrialized world are marching in the streets, Egyptian-style.

(If you wish to email the author, send it to lumbacesar@gmail.com.  He will be glad to have a conversation with you.)