Globalization

Thomas L. Friedman has a particularly good editorial in today’s New York Times. While the subprime mortgage mess involved a huge ethical breakdown on Wall Street, it coincided with an education breakdown on Main Street — precisely when technology and open borders were enabling so many more people to compete with Americans for middle-class jobs. He cites Harvard University labor expert Lawrence Katz who explains: If you think about the labor market today, the top half of the college market, those with the high-end analytical and problem-solving skills who can compete on the world market or game the financial system or deal with new government regulations, have done great. But the bottom half of the top, those engineers and programmers Read More ›

Maybe it’s a generational thing. But the U.S. is going to have to overcome some of its most deeply rooted Cold War notions if we are to develop effective new international strategies for the decades ahead. Robert Kagan’s continuing assertion that Russia and China are menacing “autocracies” is a case in point. As Ross Douthat, a conservative writer for The Atlantic, notes: I’ve griped about this before, but he keeps doing it, so once again – Robert Kagan’s column about “the surprising resilience of autocracy in China, Russia, Venezuela and elsewhere” is at least somewhat undercut by the fact that neither Venezuela nor Russia are really autocracies, as the word is actually defined, and China certainly isn’t one. Kagan’s criteria Read More ›

Matthew Slaughter of Dartmouth highlights two major positive — yes, positive — effects of globalization on the U.S. auto industry. First, competition: For decades the competitive pressures of international trade and investment have forced the Big Three to innovate and boost productivity, starting with gains in fuel efficiency after Japanese car imports surged with the oil-price shocks of the 1970s. In 1998 GM averaged about 46 hours to produce a vehicle in North America. By 2005 that was down to just 35 hours. And second, insourcing: In 2005, foreign-headquartered multinationals in motor vehicles and parts employed 334,900 Americans — at an average annual compensation of $68,125, fully 34% above the private-sector average. Over the decades that the Big Three have Read More ›

Unlike World War II, when Americans were asked to sacrifice a great deal in support of the war effort–think rationing, rubber and scrap metal drives and the iconic image of “Rosie the Riveter”–the War on Terror has demanded little in the way of citizen involvement. In fact, given the country’s cultural obsession with Anna Nicole Smith and American Idol, one would be hard-pressed to know we’re at war at all. As a result–and not surprisingly–few individuals or corporations have gone out of their way to directly contribute to American military success (or if they have, did not receive coverage in the media for doing so.) One notable and poignant example–highlighted in this Associated Press article–is the recent commitment by IBM Read More ›

Go read this, the best magazine column of the young year. Those of us who have long followed the economic analysis of David Malpass, chief economist at Bear Stearns, are thrilled he will now write a semi-regular column in Forbes magazine. His first installment takes on the “triple deficits” — budget, trade, and savings — and shows they are either innocuous or in fact virtuous. David writes The U.S. has a powerful, growing economy, yet we project the “wrong path” image of an aging society drowning in debt and burdening the world with risk. This gloomy fiction distorts our domestic and international economic policymaking. We should reject it and launch a more energetic vision of global prosperity built on economic Read More ›

Just as IBM massively increases its bet on China, the Middle Kingdom today signaled it might attempt to pacify unions and labor with severe new restrictions on employer flexibility. The giant employment and wealth boom of the last 28 years owes much to the flexible labor laws that were first instituted in the Free Zones and then spread across much of the nation. When employers know they can fire a worker, they are much more likely to hire him in the first place. Thus the largest mass migration in human history with some 250 million peasants leaving the countryside for new and better jobs — jobs, remember! — in the Free Zones along the Coast. But Beijing is worried about Read More ›

IBM announced today it has moved its procurement division, which spends $40 billion annually, to Shenzhen, China. -Bret Swanson

Last night the Discovery Channel (no relation to the Discovery Institute) premiered a wonderful new documentary, “China Revealed.” Part of Discovery’s “Atlas” series, this two-hour program accurately conveys the traditions, diversity, dynamism, high-energy, and challenges of the largest and fastest changing nation on earth. The cinematography is terrific, with sweeping landscapes and skylines, but equally as vivid are the personal stories: 12 year-old Jin Yang who hopes to compete for the Olympic gymnastics gold in 2008; Master Liu who presides over the famous Fa Wang martial arts monestary; Yang Fuxi, the last of 17 generations of Imperial bow (and arrow) makers; Song Feng, the migrant window washer of Shanghai skyscrapers; the rice farming Liao family; and Vincent Lo, the billionaire Read More ›

We’ve been critical of the Administration’s China policy over the past few years, so we’re happy to note Treasury Secretary Hank Paulson’s successful effort to avoid a trade catastrophe. Last week, on the heels of his highly successful China trip, Paulson persuaded Sens. Smoot Schumer and Hawley Graham — as Larry Kudlow calls them — to drop their 27.5% tariff bill. Paulson has not only averted a trade war with relatively little blowback so far from America’s anti-trade jingos, but he also appears to have set us on a new, strategic, “generational” course — as he calls it — vis-a-vis the Middle Kingdom. I don’t know that we’re totally out of the woods on the dollar-yuan currency front, but I’ll Read More ›

BEIJING John Rutledge showed you his “workstation” at the Starbucks just down the drive where we’ve been downing espresso and getting work done. Here’s my office: The famous Starbucks music mix is pleasant — the first few times around. Now it is burned on my brain, and everytime I hear those adult contemporary and light rock songs, I’m sure I will think of cosmopolitan Beijing. Here’s the view just outside our “office.” Not quite Chairman Mao’s Beijing, is it? -Bret Swanson