The cons to globalization

A question from Yahoo! Answers:

What are the cons to globalization?
Especially how globalization affects the average american.

Well, your question is ambiguous.  The average American actually benefits from globalization; the cons fall squarely on a small segment of American workforce.

The most important “con” of globalization is that wages in industries that produce labor-intensive (but not skill-intensive) internationally tradable goods and services tend to equate across nations.  In the extreme, wage disparities can be so large that the whole industry ends up being located in low-wage countries.

Now, while this is definitely bad news for Americans doing unskilled jobs in industries that produce tradables, such Americans are a distinct minority.  The average American is not an unskilled worker.  Moreover, the average American unskilled worker is not involved in producing tradables; he or she is way more likely to work in the service sector, where he or she mops floors, washes dishes, or flips hamburgers.

The average American actually benefits from globalization through lower prices.  Does it mean there is no problem?  Not really, because a small part of the U.S. workforce (some would say, 5%) faces the evaporation of their livelihood.

Now where things get complicated is in figuring out how much of this evaporation is due to globalization and how much of it is due to purely domestic things like industrial automation.  The research that has been done on it so far suggests that automation trumps globalization; disappearing jobs are much more likely to have been automated than gone to China.

Indeed, another poster in this thread mentioned call centers.  While it is true that many call centers have migrated to India, it is equally true that many call centers have downsized because of speech recognition technology.  Call 411, and your call will be answered by a computer; a human being would come online only if the computer gives up trying to understand you.  Call your bank’s 800 number, and you will realize that most (if not all) interaction you had during that call had been with a computer…

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