Globalization: a Necessary Evil

Globalization has many positive aspects to it, not the least of which is the resulting economic boom that followed the advent of modern globalization. However, the world's hesitation to embrace the idea of globalization in its entirety is completely justified- there is no true guarantee that allowing a nation's economy to join the global one will bring success, and the link between a national economy and a global economy can be a negative one when an economic crisis arises.

Niall Ferguson's "Sinking Globalization" explores both the positives and negatives of a nation engaging in the global economy using the uncanny similarities between the globalization of the late 19th century to the beginning of the first world war. The global economy was then expanding in a similar way to today- "relatively free trade, limited restrictions on migration, and hardly any regulation of capital flows. Inflation was low. A wave of technological innovation...". All of these are conditions that were mirrored in the 80's, 90's, and even the early years of the aughts. However, Ferguson then uses this parallel set up to make the reader understand that, like the downfall of the first period of globalization through (put mildly) a series of unfortunate events (if World War I, the great depression, and World War II can be so classified), the global economy of today is far from infallible. In fact, his point is driven home by the recent recession and the move towards protectionist policies in order to bolster a stalling American economy.

The US of today also faces several challenges that it did not during the first period of globalization. The US is now a debtor nation, not a creditor one, we are indebted to countries with economies that are fragile (China), we are over-exerting our influence and are spread thin, the US is no longer the fastest growing economy on the planet, and terrorist regimes that are hostile to capitalism still exist. All of these factors make the current global situation one that SHOULD make the US stop before plunging headfirst into the global economy.

However much the US needs to think before acting, Thomas Friedman argues in "The Lexus and the Olive Tree" that for the US, or any nation for that matter, to progress economically, there is no choice but to embrace globalization. Friedman starts out by giving the very Fukuyama-esque comment that no other economic system "can generate income to distribute as efficiently as free-market capitalism", and that once this idea has been grasped, the only logical and profitable step is to engage in the global economy. This global economy required that governments place fewer restrictions in economic regulation. However, it is at this point that Friedman introduces the point that makes me the most hesitant about embracing globalization: today, economic success is not assured by entering the global market. The "electronic herd", as Friedman calls modern day investors who utilize technology to make rapid business decisions, have a strong impact on the economic success of a nation, and it is easy for the power wielded by this herd to change directions quite quickly.

As well, globalization truly leaves no one in charge. The safety nets that are in place in a national economy in case of a crisis are simply not present in the global economy. The complete lack of a fail-safe makes me nervous to embrace globalization, as the repercussions of a global economic melt-down could be catastrophic if we have no system in place to immediately recover.

Despite this risk, I feel that the US must move in the direction of further globalization for the reason that Friedman presents: for the growth of our economy, we have no choice but to engage ourselves in the global marketplace.