It is widely believed that the Chinese are eating our lunch. Their factories hum and belch smoke, while ours go silent and send up weeds in the parking lot. This phenomenon is commonly called “globalization.†But it is also commonly misunderstood.
In the reverie of modern Americans, globalization means the rest of the world sends you things you don’t have to pay for. The burden of today’s little essay is two-fold. The first part is easy; we point out that anyone who thinks such a thing is a fool. The second point is harder – and more important.
The world has been globalized for a long time. An Englishman in 1910 could sit in his parlor off St. James Park and drink tea that came all the way from Ceylon in cups that came all the way from China. Then, putting down his drink, he could pick up a Cuban cigar, put it to his lips…and perhaps sprinkle a few ashes on the carpet that he had bought in Egypt…or the leather boots he had ordered from a shop down the street that sold Italian goods. He could buy stocks in New York as easily as he could pick up oranges from Spain or the latest French novels to make their way across the channel.
But as Niall Ferguson points out in the current issue of Foreign Affairs magazine, globalization is not without its disappointments. In 1910, England had been a great world power…and one of the world’s greatest economies…for two centuries. But global competition had recently edged the British out of the top spot. American GDP surpassed it at the turn of the century. Germany marched by a few years later. Relatively, England, that “weary Titan,†was in decline.
Still, why would the English complain? They lived well – perhaps better than anyone else. Even if they didn’t, they thought they did. The rest of the world was content too. People liked buying and selling. People in Europe liked globalization, because it brought them oranges in the wintertime. People in the warm latitudes liked it – now they had someone to sell their oranges to. Even then, people spoke of the “annihilation of distance,†and assumed that more miles would be destroyed in the years to come.
Globalization is nothing more than the extension of the division of labor across international boundaries. Our little village in France has the vestiges of a self-contained community. As recently as the end of WWII, almost everything people needed was produced right there. The farms grew wheat. Farmers raised vegetables…and cows…pigs…chickens. There was a machine shop…a forge…a woodworking atelier. There still remain the ‘Versailles’ boxes, in which lemon trees were planted. The boxes allowed the trees to be moved into heated space in the winter. Otherwise, they would freeze and die.
But as distance was annihilated, commerce in lemons was born. There was no longer any need to plant lemon trees in transportable wooden boxes when the lemons themselves could be shipped, quickly and cheaply, by the millions. One country can produce lemons. Another can produce machine gun cartridges.
Individuals…towns…enterprises…regions…can divide up the labor, work more efficiently, and produce more things at lower cost. Everyone involved gets a little richer.
