Globalization in general is good....but many are questioning whether it is good for ordinary wage-earning people.
Globalization is not working for everyone. Stagnating wages and rising job insecurity in developed countries are creating popular disenchantment with the free movement of goods, capital and people across borders. If unchecked, popular fears could turn into a political backlash that could lead to protectionism.
In theory, less-developed countries win from globalization because they get jobs making low-cost products for rich countries. Rich countries win because, in addition to being able to buy inexpensive imports, they also can sell more sophisticated products like machine tools or financial services to emerging economies.
Many companies in the U.S. and Europe have been able to squeeze workers' pay increases by threatening to move production abroad. In the past decade, real labor incomes in the U.S. have grown at roughly half the rate of labor productivity. The reason is simple: With the emergence of China, India and countries from the former Soviet bloc, companies from the established economies of North America, Europe and Japan have more choices on where to invest. That puts them in a stronger bargaining position with workers in their home countries.
The problem is that workers in the West aren't equipped for today's pace of change, in which jobs come and go and skills can quickly become redundant. Here in Southeastern Michigan the structural changes happening within the automotive industry make unemployed workers think of themselves as the canary in the U.S. mineshaft. Governmental support programs, like retraining workers who lose their jobs, can help people who are suffering from globalization.
Source: The Wall Street Journal, January 25, 2007