The World Isn’t Flat

The only sure way to make the world economically flat would be to have a global minimum wage – an idea worth considering.

Actually, the world isn’t flat either topographically or economically. The flat earth theory became popular among multinational business leaders and economists who wanted to eliminate trade barriers and depict the results as good for everyone: rich, poor and middle class.

Then Thomas Friedman, a respected journalist and world traveler, wrote a book called The World Is Flat, referring to the easy movement of jobs, money and companies from country to country, usually in pursuit of the lowest wages.

But the world isn’t flat. It is a place of deep valleys and shallow gulleys, of hills in the shadow of high mountains; and that’s also the way the economic world is. There are economic swamplands, and there are countries that are low-lying hills; there are a few mountains, and then there is one towering peak that is the United States.

The flat worlders aren’t deterred. In their hearts they know the truth: For their theory to proceed, the peak must be reduced, but they cannot say that publicly.

During the debate over passage of NAFTA (the North American Free Trade Agreement) there were so many wild conspiracy theories that it was difficult to argue the valid reasons for concern.

Republicans in Congress had been promoting free trade for years; but Democrats blocked NAFTA, which was the historic breakthrough. Then Democrat Bill Clinton was elected president in 1992, and through the influence of such advisors as Robert Rubin, Clinton came around to supporting NAFTA, making possible its congressional approval in 1993.

NAFTA and other trade initiatives are given credit by supporters for creating the economic boom of the Clinton years, but that conclusion is hard to justify.

Mexico’s economy actually collapsed and had to be bailed out with a huge loan from the United States in 1994. The number of U.S. manufacturing jobs continues to shrink. The quality of jobs is lower and the wages of most Americans have stagnated or fallen.

These are not pleasant facts to confront, and most flat worlders aren’t about to admit they might have been wrong, or that free trade will not eventually benefit everyone. But look at the results: More manufacturers have moved their plants out of the United States; Mexican agriculture, which was its largest employer, declined and many displaced workers immigrated to the United States.

Did you ever hear that illegal immigration was a serious problem until the last few years?

The one prominent voice warning against the results of free trade in the 1990s was Ross Perot, the independent presidential candidate, who got 20 percent of the popular vote in 1992. Perot’s showing was remarkable for a third party candidate, and his opposition to the free trade movement was a big reason.

Remember Perot’s warning that passage of NAFTA would create a huge “sucking sound” that would be jobs going from the United States to Mexico? He neglected to mention that there would be a similar “sucking sound” of Mexican immigrants coming to the United States, some legally, but most illegally or temporarily.

Of course, the players keep shifting in the world economy. Jennifer Tang, in a September column for The Atlanta Journal-Constitution, recalled that as a child she was fascinated by her Barbie doll’s round, perfect bottom. She was especially fascinated by the inscription, “Made in Hong Kong.” Her mother had lived in Hong Kong as a teenager and had been a $1 a day worker for Mattel, putting arms and legs on Barbie dolls.

But as Hong Kong grew and prospered and wages rose, Mattel moved its Barbie plants to the Philippines, then to Indonesia, then by 2007 to China.

There’s only one sure way to make the world economically flat. That would be to have a global minimum wage. Sounds impossible but it is an idea worth considering. Of course, a global minimum wage would mean higher costs all around. A Barbie doll actually made in the United States might cost $15 instead of $12. But would it be worth more? Would the United States have more and better paying jobs if Barbies were made by U.S. workers?

It seems to me that would be better than the race toward the economic valleys now occurring, which the United States cannot win because of its commitment to higher wages and employee benefits.

The world isn’t flat, but every nation should aspire to be a mountain instead of a swamp.

Categories: Guest Commentary