Subba’s Serendipitous moments

May 10, 2007

Free trade and Globalization — A two way street!

Filed under: Business,Competition,Leadership — Subbaraman Iyer @ 4:58 pm

This Professor puts in a new spin on free trade. Writing a long piece about what free trade is, he quickly  changes track and then discusses why free trade is now bad for America.

Yes, there is a definite addition of 1.5 billion ambitious people from India, China, Russia eager to participate in the global economy and technological advances has only acted as the catalyst so that corporations can outsource their non core processes to cheaper countries. And wasn’t the concept of globalization a creation of the American mind, and make it an extension of free trade? It is another issue that  the people who thought about globalization and evangelized it  did not anticipate that third world countries like India and China would end up posing  threats.

Well, America wanted free trade when it was in a dominant position to supply to the rest of the world and wanted other countries to open up new markets for American goods and services. It also wanted cheaper raw materials for American factories.

Now that the world has caught up globalization and free trade, it is beginning to hurt America, It is enlightened companies which are moving their manufacturing operations to China and service operations to India so that the American consumer can buy goods cheaply.

Tthe respected Professor changes position; calls it apostasy and believes that services offshoring is going to hurt USA and hence this transition will be "large, lengthy and painful". True Professor, but how do you plan to put the genie inside the bottle and seal it?

He does offer some solutions like changing the education systems to suit the job demands of tomorrow, but his message that something more needs to be done is a veiled suggestion to bring protectionism back and protect American jobs.

Free trade unfortunately is a two street, Professor.

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