The Book Club

The Humbling Act of Spending Dollars Abroad

Hi Dan,

Perhaps the most amazing aspect of the Connected global economy—and one you repeatedly point out—is the way money washes around the world in unpredictable and unexpected ways. Did you see the piece in the New York Times last week about Irish investors buying Manhattan condos? Today, a Wharton-educated, corn-syrup-fed American yuppie can easily be outbid for a one-bedroom condominium in Hell’s Kitchen by a resident of what had been, until recently, one of the poorest countries in Europe, an object of charity and pity.

Of course, this has much to do with the relative weakness of the dollar, which is itself a partial byproduct of the imbalances that have arisen in this connected economy. For Americans who are invested in our nation being a hyperpower, there’s nothing more humbling than going to London and realizing just how little you can buy with the pathetic dollars in your pocket—and just how much all those resource-rich Russians and Middle Easterners can buy with their currencies.

These types of scenarios—and much of the rhetoric surrounding globalization—tend to paint the process as a zero-sum game, in which there is one loser for every winner. This frustrates a (somewhat) committed and enthusiastic globalist like me. And it must really annoy a much more committed and enthusiastic globalist like you. After all, the losses for Americans are so easy to tally—factories closed, jobs lost, pensions terminated. But the gains are more difficult to detect, in part because they’re embedded in our supply chains, our manufacturing processes, and our consumer culture. Every time one of my kids has a birthday party, the basement is stuffed with an embarrassment of toys, games, kits, instruments, doodads, and gadgets—or, as I like to refer to it, “plastic from China.” In America, we now regard cheap toys and clothes and electronics as something akin to a birthright. But we don’t—at least most of us don’t—wake up every morning and think of these things as gains from globalization.

In your post, you referred to the coexistence in China of state-of-the-art manufacturing plants and hundreds of millions of people subsisting in primitive conditions as one of the ironies of globalization. For the naive American who travels abroad, I think that combination—that coexistence of the relentlessly upscale and the thoroughly modern on the one hand, and the utterly destitute and seemingly premodern on the other—isn’t just ironic—it’s  jarring and distressing. When I traveled to South Africa last fall, I was shocked at the short geographical and massive social distance that separated the gleaming malls of Sandton from the shacks of Soweto (and at the even smaller geographic distance separating the gleaming malls of Soweto and the shacks of Soweto). Friends and colleagues who have traveled to India return with tales of fancy hotels filled with beggars. To me, the juxtaposition of the quite rich and exceedingly poor is less troubling than the equanimity with which so many of our counterparts—journalists , political officials, businesspeople—seem to accept this juxtaposition, the degree to which it does not seem to be a source of discomfort.

Here in the United States, we spend a lot of time—and justly so—talking about the growing inequalities in our economy. I notice plenty in my commute, which takes me through Greenwich, Conn., and the South Bronx. But really, it’s nothing compared with the global inequalities that exist. I think that as a result of the growing connectedness you describe, even those of us who don’t possess passports are increasingly aware of the coexistence of extreme wealth and extreme poverty, and feel implicated in it. Intuitively, I know that our engagement in trade is the key to the alleviation of the plight of the global poor. But as capital relentlessly continues to seek out cheap labor, there are times when it’s hard not to think that some measure of our wealth and comfort comes at the expense of China’s workers. Am I just a soft-hearted liberal with an insufficient appreciation for the wonderful workings of global capital?

I’ll leave you with a quibble. In talking about the reaction to globalization, you noted that one of your conclusions is that people have to take an active role in responding to the forces affecting them: “What I found again and again is that government, your boss, and your union won’t necessarily manage that transition for you.” As I read that, the New Deal and Great Society lobes of my brain flashed out a strong signal. Government may not be able to manage the wrenching move of America’s manufacturing capacity to China and elsewhere, but it can do plenty to ensure that the transition is less painful—and to ensure that Americans continue to embrace globalization. The way in which the forces of globalization are wreaking havoc on American-style welfare capitalism calls for more of a safety net, not less; more health insurance, not less; a stronger Social Security system, not a weaker one. Your last book, Neoconomy, described in fine detail the ways in which the current administration committed itself to policies that have weakened the safety net. Not coincidentally, those same policies, I believe, have had the effect of weakening political support for free trade and globalization. I think advocates of globalization do their cause a disservice by not speaking more forcefully about how we can better insulate ourselves from the shocks of globalization.