Those of us who grew up with Samuelson’s ubiquitous economics textbook “learned” that trade between two nations benefits both. Unfortunately, everyone took it for granted that the “benefit,” an increase in GDP, accrues to all. Even Samuelson rather recanted on this toward the end of his life, but many of those who never went beyond his book are believers. They are then easy marks for those with vested interests in promoting the globalist philosophy.
Hence the constant drumbeat in the mainstream media: Globalism is good for you, Trump missed a great opportunity by not participating in TPP, and so on.
I’m still in China as I write this. Recently on the train from Shanghai to Ningbo, I happened to be sitting next to a friendly, talkative man who is the general manager of a Chinese electronics company. Apparently the Trump administration had blocked his firm from doing business with the U.S., and the GM gave me the same line, that Trump is fighting against the natural world order in which everyone benefits from trade.
In light of all this, I was pleased to be tipped off by a reader concerning this article. This passage is refreshing, to say the least:
Take, for instance, Caterpillar. The United States’ 74th largest company has long been a symbol of domestic advanced manufacturing prowess, a firm that leverages American ingenuity to take capitalize on growth around the globe. Since announcing a big bet on the China market in 2010, Caterpillar’s stock has soared 178%. But that success hasn’t translated in to more American jobs, as the firm employs fewer Americans today than eight years ago, according to its latest annual report.
Interesting in that I read this the same day I went past a large Caterpillar building in Shanghai. But how can this seemingly contradictory situation arise? Over the years of writing on these topics, I’ve proposed some thought experiments that explain why.
This was during the time NYT journalist Tom Friedman was telling us that “the world is flat,” his symbol for the benefits of globalism. Yes, Friedman told us, some IT work is being shipped from the U.S. to India, but those Indian coding shops are cooled by Carrier air conditioners, thus creating jobs for American engineers. I countered that engineers are basically a fixed cost for Carrier; selling extra AC units in India is not likely to require the firm to hire many more engineers, if any. And as to U.S. factory workers, well, where is Carrier likely to manufacture those AC units to be sold in India? Roy Beck’s old quip about U.S. firms preferring to do their IT in India instead of Indiana probably applies here.
Ironically, years later Carrier was the first firm that Trump tried to strongarm/sweet talk into keeping jobs in the U.S. The results have been mixed so far, but thank you, Tom Friedman, for the suggestion. 🙂