Is globalization a good thing?
I was asked this question recently and I don't have an answer but I suspect I am not alone in that. No one - from economists to business leaders to politicians - is really sure because no one can truly predict the future.
What is apparent, though, is that globalization is certainly changing our economy - both the Canadian and the world economy. We do not live in the world of grandparents or great grandparents. Changes are happening faster than we can adapt.
To back up a long way, modern humans emerged after the last ice age and began to settle various regions of the planet in individualized groups. It is estimated the world's population at the time was between 1 and 10 million people - or about the equivalent of a moderately large international city, such as Toronto.
Our ancestors were fragmented into groups so diverse they did not communicate for thousands of years, giving rise to the notion of different racial characteristics but also socio-economic structures. Pre-historic Chinese had different ways of doing things from sub-Saharan Africans. And both cultures differed from proto-North Americans.
The world was vast and groups developed their resources, their land, their agriculture, and their society in a vacuum with little engagement with any other group. Indeed, contact with other groups usually came about only in the form of war or invasion.
But with the invention of sailing ships, the world got smaller. We could travel from China all over the Indian oceans and establish colonies in east Africa. We could travel from Europe to North and South America.
New lands became available. New products came to market. For example, prior to the adventures of Christopher Columbus, tobacco was not available in Europe. Silk road merchants introduced silk into Italian society. And Australia was a sparsely populated continent.
As our population increased, we spread out. We occupied more spaces. We gained new resources. We started on the long road to our modern globalized civilization.
By the beginning of the 20th century, the world's population had reached around 1.5 billion people. There were still unexplored landscapes and uncontacted tribes of humans but the development of air travel, the convenience of the automobile, and the tracks of railroads opened up vast areas of land. Ships still plied the seas moving goods from one continent to the next. The cost of transportation dropped dramatically.
By the end of the 20th century, the world's population had reached 6 billion. It is now around 7.4 billion and we can move goods around the world with such ease, we don't think of the distances involved.
Cherries from Chile in January, orchids from Thailand two days after they are harvested, shoes from Vietnam, cellphones from China - the world moves commodities with the click of a computer button.
The world's economy has become global. A thousand years ago, you would be lucky to meet someone who had traveled more than 20 miles from home. Now, you could not find someone who hasn't.
But economic rules haven't changed. We still want the best products at the cheapest price possible. We want t-shirts costing $7 instead of $20. We want bananas at $1.72 per kilo not $17.20. We want automobiles for $17,000 and not $170,000.
We need to find the cheapest supplier. With the world's transportation system, suppliers can be halfway around the world. They live in countries with very different internal markets. Their wage structures do not need to match ours.
We are now in a position where we can outsource so much of our manufacturing, our services, and our goods that we do not need to hire Canadians. We do not need to purchase from high wage countries.
And we are a high wage country.
The result is good for business. As the goals state for the Trans-Pacific Partnership, it will: "promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labor and environmental protections."
What isn't clear is whose economic growth?
Where will jobs be created?
How will innovation, productivity, and competiveness be advanced?
And whose standard of living will be raised?
Is globalization a good thing? I think the answer lies in who you ask. Most companies and corporations that can outsource labour and acquire foreign resources will be better off. In theory, their increased wealth might trickle down to everyone else.
But on the whole, what we have seen so far is a massive shift in manufacturing jobs off-shore and the gutting of the middle class. The gulf between the one per cent and the rest of us is growing, leading to economic strife and tension.
Whether or not globalization is a good thing, it is certainly changing the structure of the Canadian economy.
