The Destabilizing Consequences of Globalization

Of Two Minds ^ | 12 May 2016

[Lorianne]

Gordon T. Long and I discuss the failure of the status quo's "New Normal" in a new 34-minute YouTube program.

It is not possible to coherently discuss the "New Normal" economy without discussing financialization--the substitution of credit expansion and speculation for productive investments in the real economy--and its sibling: globalization.

Globalization is the result of the neoliberal push to lower regulatory barriers to trade and credit in overseas markets. The basic idea is that global trade lowers costs and offers more opportunities for capital to earn profits. This expansion of credit in developing markets creates more employment opportunities for people previously bypassed by the global economy.

Though free trade is often touted as intrinsically positive for both buyers and sellers,in reality trade is rarely free, in the sense of equally powerful participants choosing to trade for mutual benefit. Rather, “free trade” is the public relations banner for the globalization of credit and markets that benefit the powerful and wealthy, not the impoverished.

Financialization and mobile capital exacerbate global imbalances of power and wealth.

Trade is generally thought of as goods being shipped from one nation to another to take advantage of what 18th century economist David Ricardo termed comparative advantage: nations would benefit by exporting whatever they produced efficiently and importing what they did not produce efficiently.

While Ricardo’s concept of free trade is intuitively appealing because it is win-win for importer and exporter, it doesn’t describe the consequences of financialization and the mobility of capital. In a world dominated by mobile capital, mobile capital is the comparative advantage.

[WKTimpco]

I think the article misses the point a bit.

I’m all for Trump, and especially for negotiating trade bills, but true free trade has Ricardian benefits, and has disadvantages, that do not stem from “financialization” effects.

The biggest disadvantage is the erasing of borders in the name of free trade. We can’t even trust the Uniparty to do free trade right.

[Mollypitcher1]

The biggest disadvantage is the erasing of borders in the name of free trade.
......................................................
And by so doing, erasing a nation-state’s sovereignty in favor of a group-think socialism administered by a governing body too distant from the governed to ever be controlled..

[central_va]

Free Traitors™, like Steve Hayes of Fox news, thinks the USA has been a free trading no tariff nation from the beginning. Well he is either a liar or very ignorant. The very first bill EVER passed was the Tariff Act of 1789. The free trading policy fiasco that we will have to endure a little longer, is relatively new and went on steroids with the Bush I administration and his NWO crapolla. The fact is up until 1913 the USA had no income taxes and the Feds were completely funded with tariffs and other user taxes.

[stephenjohnbanker]

The Uniparty are bought and paid for WHORES who pass laws that benefit only a handful of global corporations at the expense of the rest of us. A recipe for disaster over the long haul.