16 November 2010

The chickens of globalization come home to roost for the U.S.

The Americans are famously competitive. The free market is their economic god. So naturally they have been leaders in the push for economic globalization, turning the world into one big market. It appears, however, that global competition may be getting a bit too rich for their blood.

After years of buying a lot more from China than China buys from them, they want the Chinese to let their currency rise thus making their products more expensive. Accusing the Chinese of currency manipulation, they pushed hard for this at the recent G-20 summit, but their fellow nations refused to go along. The U.S. case was seriously weakened when it recently printed $600-billion to boost its economy, thereby engaging in a little currency manipulation of its own.

The G-20 did agree to attempt to reduce the gaps between nations running large trade surpluses and those running deficits, or at least they agreed to monitor them by guidelines yet to be determined. In other words, they agreed to measure the problem rather than do anything about it.

The underlying problem, of course, is that the Americans are living beyond their means. For years they have run huge trade deficits with exporters like China, Germany and Japan. These countries understandably lack sympathy for the U.S. Chinese commerce ministry spokesman Yu Jianhua wrist-slapped the Americans with the comment, "If you're sick yourself, don't ask others to take medicine." Germany, the world's second largest exporting nation, was outraged at U.S. plans to limit the current account surpluses of big exporters, pointing out that its trading prowess has nothing to do with currency mischief. "To set political limits on trade surpluses and deficits is neither economically justified nor politically appropriate," said German Prime Minister Andrea Merkel. 

The U.S. push for globalization was a success on its own terms. It is a corporate state and it pushed for a form of globalization that would above all afford its corporations cheap labour. This it has achieved, abroad and at home as well with the systematic undermining of organized labour. But it turns out that what is good for American corporations might not be so good for America.

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