Globalization and the lowering of trade barriers has been a defining force for more than a generation. Freer trade has meant expanded business opportunities for large and small companies alike and an expansion of wealth that has reach from the richest to some of the poorest people on the planet. From centuries ago when Adam Smith originally explained why bilateral trade benefited both countries involved… to today where exports raise the standard of living for many… the overall effect of globalization is a net positive for human kind.
As a free trade advocate, I feel like I should have seen this latest populist anti-globalization movement coming. Last year when Congress cut funding to the U.S. Export-Import Bank, this was a proverbial “canary in the coalmine” – an omen of bad things to come . There was literally no legitimate policy reason to do this. The ExIm Bank provides services to American exporting companies both large and small. It guarantees some foreign transactions that benefit US business. And it provides loans to bridge the time between shipment and payment from foreign markets. It acts as oil to grease the wheels of trade.
And here we have it… in the U.S. both American major party candidates are vocally protectionist instead of actively looking for ways to expand markets for American products and services abroad. It’s a populist notion without a strong basis in the facts. It plays on people’s real pain of losing jobs and whole factories in parts of the country, then blaming China or Mexico instead of technology gains and shifts in global competition. Instead of looking forward into the future full of evolving technology and market needs, populists of all stripes look to the past for some nostalgic sunny version of a bygone era. They pine to bring back jobs that no longer make sense in today’s technology-filled world. There are no longer rooms in companies filled with secretaries typing letters. There are no longer factories teaming with workers performing repetitive functions. Many other countries are experiencing their own populist backlashes against globalization in favor of protectionism.
So how do we prepare ourselves for this future that by all accounts is already here?
- Education. Yes, that’s right. We need serious retraining for those most affected by the shifts of globalization. Smart governments provide these programs for free or nearly free. For those still in school: get a college degree of some type, do at least one study abroad program to better understand the world, learn technology, languages and critical thinking skills. We don’t know what jobs will be created tomorrow, but we do know that they all need these skills instead of the ability to manually tread a tire or transcribe dictated business memos.
- Look Outward, Not Inward. It’s easy to get focused on one little corner of the world. But globalization compels us to look to other markets for customers. That means understanding culture and languages. The American-only market limitation is passé.
- Learn about Big Trends and Keep Focused on the Future. When I meet with a new company, I can usually tell within minutes if they are more focused on their own past history or on the future. Those in the past tend to get stuck in the past. Those looking forward watch for industry and global trends to leverage their company’s strengths to take advantage of trends in their favor (ex. Exchange rate fluctuations or a fast-growing country’s economy) or prepare for a coming threat (ex. Presidential candidates espousing populist rhetoric to buy a few more votes from scared citizens).
Before anyone chooses to warm up their keyboard with an angry rebuttal about globalization’s impact on the environment, please let me confirm that globalization is far far from perfect. There are products created and shipping overseas that truly have no value to most people. As a human race, we need to make smarter decisions about what we choose to consume. We need to keep production in many cases closer to consumers to avoid unnecessary ocean and air shipping. No where is this truer than in our global food supply. Working within this imperfect system still allows us to balance politics, economics and the human condition around the world.
With free trade, we allow each country, each company to find their markets and create jobs to support their society. As a wise futurist recently shared with me, technology may eventually mean that there literally aren’t enough jobs to sustain our capitalist-based economic system. He suggests that we may as a world eventually move beyond the need for money, where people will have more leisure time to pursue other non-work interests and projects.
I don’t know if such a world will exist in our lifetime, but I do think that trade helps to improve the standard of living for many. Open trade encourages sustained peace over long periods of time. And it encourages innovation in the face of competition. Let’s be smart and globally move forward.