Grappling with Globalization

In a world in which corporations can move operations wherever they wish, there are no easy answers to stop the sting of globalization. Some Americans have called for crude measures such as import quotas or tariffs to protect workers in particular industries.

Such measures are hard to administer, could spark a trade war, and could undermine economic efficiency by enabling domestic industries to keep prices artificially high.

In The World Is Flat, Tom Friedman wrote, “The Indians and Chinese are not racing us to the bottom. They are racing us to the top — and that is a good thing.” To be sure, many Chinese workers are producing toys, shirts and furniture (often in deplorable sweatshops) that American workers once made.

Americans have to accept that such labor-intensive, low-value-added jobs will inevitably be lost to low-paid workers in China and other countries. But the loss of high-tech, high-value-added jobs to China, India and elsewhere is not something Americans should readily accept.

Not only are hundreds of thousands of high-paying high-tech jobs in play, but so is the future of many high-tech industries and perhaps our global economic leadership as well.

While the Bush Administration has focused on fighting terrorism, it seems to have engaged in unilateral disarmament in the struggle for global competitiveness. The administration has repeatedly cut the federal budget for science research, after factoring in inflation, when such research is pivotal to staying ahead of the pack.

President Bush has largely taken a “What, me worry?” attitude about the nation’s colossal trade deficit, which is undermining our manufacturing base and, as Warren Buffett warned, our long-term living standards as well.

Americans can boast of world-leading universities such as MIT and Cal-tech, but we allow far too many of our schools and children to wallow in mediocrity — and worse. Not only that, we seem to be surrendering our lead in science and engineering.

Eighth-graders in the United States rank fifteenth out of forty-five countries in international math rankings — behind Singapore, South Korea and Russia. Three decades ago, the United States ranked third in awarding science degrees — it has sunk to seventeenth.

Each year in the United States, 60,000 students receive bachelor’s degrees in engineering. In China, 700,000 do. In 2010, the American share of the science and engineering PhDs awarded worldwide is expected to be 15%, down from 50% in 1975.

The United States needs a scientific and economic call to arms, like the one that President Kennedy made after the Soviet Union launched the first human into space.

It needs to boost basic R&D spending and to steer more students into science and engineering. We as a nation need to give some of the same acclaim to academic and scientific achievement that we give to athletic achievement.

Although this might be wishful thinking, corporate attitudes do need to change. Far too many business executives seem predisposed to laying off workers at home and moving operations abroad. The corporate mentality should instead be “How can we make it work in the USA?”

Political leaders rarely criticize companies that move operations overseas, in effect, giving them a green light. Just as President Kennedy intervened with U.S. Steel to help hold down steel prices, some high-level jawboning might persuade some companies to keep jobs in the United States. This is not a call for protection — just a call for a change in attitudes.

The U.S. Congress should require companies that plan to lay off five hundred or more employees because they are moving production overseas or offshoring white-collar jobs to issue a report 60 days before they take such a move.

The report should explain the reasons for such a move and analyze the costs that such a move would have on the affected workers and community. Those companies should also be required to hold a meeting with their employees and the local community to discuss the layoffs.

With most Americans gaining from globalization, the nation should take some steps to help those who lose out. Retraining needs to be expanded and upgraded to make sure it produces results.

Moreover, federal retraining funds should go not just to factory workers who lose jobs to foreign competition — but also service-sector workers and white-collar workers, such as software developers and customer service representatives.

Just as important, the nation — if it hasn’t already enacted universal health insurance — should provide at least two years of health insurance to workers (and their families) who lose jobs to globalization.

And to pay for such measures, the government might look to increase taxes on those who Lawrence Summers said were the biggest winners from globalization, those at the top of the income pyramid.

With the country losing hundreds of thousands of good-paying jobs to globalization, government should use its economic might and foresight to plant the seeds for the industries of the future.

The Apollo Alliance, a coalition of environmentalists, unions and political leaders, has proposed making the United States a leader, rather than a laggard, in energy efficiency — all while creating at least one million good-paying jobs.

That alliance has called on the federal government to use billions in subsidies, grants and tax credits to spur companies to build hybrid cars as well as energy-efficient appliances, factories and office towers. The idea is simple — a good environment and good jobs.

As the world’s richest nation, the United States should use its consumer buying power to improve the lot of factory workers in developing countries such as China and Bangladesh — just as the National Consumers League used consumer power in the early 1900s to fight sweatshop wages and conditions in U.S. factories.

A first step would be to boycott products made in overseas sweatshops.

Second, the United States should make sure that in all its trade agreements, signatory countries pledge to enforce their own workplace laws (such as their minimum wage laws) and the international labor conventions they’ve already pledged to follow, like barring child labor and guaranteeing workers the right to form unions.

This is a modest step that even free traders should not balk at — asking other countries to do what they’re already supposed to be doing.

Editor’s Note: This feature is adapted from “The Big Squeeze: Tough Times for the American Worker” by Steven Greenhouse. Copyright 2008. Published by Alfred A. Knopf. Reprinted with the permission of the author.