As I’ve pointed out before, free trade (globalization) has become so toxic political topic that it is the one issue that both presidential candidates agree on. Several world renown economist and learning institutions have agreed that advancements in technology and manufacturing efficiency alone cannot explain the manufacturing job losses in the U.S. over the last 25 years. But it seems that the majority of opinions side with the argument that globalization is the cause of job losses in manufacturing. There are a few that make the case that the job losses were inevitable. That these manufacturing job losses would have happened regardless of free trade. However, a significant number of the prominent economist in the U.S and beyond disagree with this assessment. So if it’s not technology and it’s not entirely globalization in itself, then what is it?
There are some in academia that blame the shortsightedness of Wall Street and corporate boardrooms for their pursuit short-term stock price gains in exchange for long-term damage to the American workforce. They argue that it was the pursuit of share price gains that drove many to move manufacturing and some operations offshore. That in order to produce quick short-term improvements to their bottom line, they ignored or failed to asses the true cost of pursuing such goals.
“ ‘Many companies that off-shored manufacturing didn’t really do the math,’ says Harry Moser, an MIT-trained engineer and founder of the Reshoring Initiative. ‘A study the consulting company, Archstone, showed that 60% of offshoring decisions used only rudimentary cost calculations, maybe just price or labor costs rather than something holistic like total cost. Most of the true risks and cost of offshoring were hidden’.”
No one considered the destabilizing social consequences that such shortsighted decisions would have. That as a result of these moves, the American worker would eventually lose long and sustainable employment. Also, that many would be unable to provide for their families and build up pensions working in newly created low paying employment. They failed to predict that the new economic instability would end up evolving into nationalist movements that are both anti-business and anti-trade.