01.12.2012 0

The end of globalization?

By Bill Wilson — Over the past century, economies have become more integrated — trading more goods and services around the world, moving capital globally, labor being shifted overseas, and just recently in history, the worldwide dissemination of information has become instantaneous with the power of the Internet.

It’s often called globalization, and it’s certainly nothing new.

Ironically, there is a growing movement in the U.S. and other countries towards localism and community-based solutions. On the right, it is seen in proposals to shift entitlement spending to the states to be managed.  On the left, it is seen in the preference to purchase fresh produce locally as a means to reducing one’s “carbon footprint”.

This paradox — the individual’s desire to be left alone in their local community while governments and economies move towards monolithic, less personal global systems — stands at the heart of the conflict that will define this century.

That is because globalization is not just an economic process, it is also seen in the expansion of government.  It is a utopian impulse.

For example, as Europe and the rest of the developed world continues to struggle to find a way out from under its unsustainable debt, governments and international financial institutions are moving towards ever-larger global superstructures, such as the International Monetary Fund (IMF), to manage the increasingly shaky house of cards.

Nationally, it is also seen in politicians like Barack Obama who have made moves for government-run health care and vast expansions of unemployment benefits, food stamps, and fiscal and monetary “stimulus”, breeding ever-increasing dependency in the federal government’s ability to borrow and print money — despite the fact that the $15.2 trillion national debt will very soon be larger than the entire economy.

Wherever one looks, the message is always the same from the powers that be, who suggest we cannot take care of ourselves — not without them.  And not without ceding liberty and sovereignty to faceless entities.

There is a silver lining: It won’t last.

Specifically, one area that may be a pressure point in this conflict between the forces of globalization and individuals is energy.

As the cost of energy and specifically distributing goods worldwide grows over this century due to inflation and increased demand — Light Sweet Crude is above $100 a barrel, and Brent Crude above $110 — globalization will likely eventually become cost-prohibitive.  Is it $150 a barrel? $200? $500?

It’s hard to say where the tipping point is, but the market pendulum will one day swing back towards localism when consumers decide that goods and services spread across great distances are too expensive.  Most likely, that will be determined by where energy markets move in the next few decades.

But the nation need not wait for a global energy crisis for example to dictate the terms of a shift towards domestic production.  In fact, there is already great need to produce things here in America.

With a real unemployment rate close to 11 percent and underemployment really over 17 percent — 27 million working-age adults unable to find full-time work — a nation cannot sustain itself if individuals cannot even sustain their families.  We need to be creating jobs here domestically — now.

No amount of welfare will be able to replace the need — and the dignity — of individuals taking care of themselves.  The government cannot do so efficiently, and it cannot attempt to do so without severe consequences.

Besides eliminating incentives to acquire marketable skills, eventually, continued use of the printing press for welfare, national health care, education, housing, and retirement programs will make the programs themselves unaffordable.  It was unlimited financing for housing that generated the housing bubble that sent prices soaring, which, when they deflated, brought the economy to its knees.

All of which makes the push to move the financing for these unsustainable big government policies from the national scale to a global one all the more inexplicable.  What interest do foreign creditors have in bankrolling Americans through 99 weeks of unemployment benefits? Is that really a sound investment?

Europe no longer can sustain its socialism via private funding markets.  That is why it is turning to the European Central Bank and the IMF for salvation.  The U.S. need only look across the pond to see what’s coming.  Eventually, the national debt will become so large that it cannot be refinanced privately, let alone repaid.  In many ways, we’re already there, where the Federal Reserve owns over 10 percent of the debt, some $1.6 trillion of U.S. treasuries.

To avoid Europe’s fate, and a disorderly collapse of the global economy for that matter, the nation needs to look locally for answers.  But jobs will only be created stateside if the costs of doing business here are reduced.

Onerous federal regulations and laws in the areas of labor, the environment, health care, and capital formation are a tremendous part of the problem.  So are monetary inflation and the highest corporate tax rates in the developed world.

It’s already in the tea leaves: Globalization is a failure.  It will collapse, eventually, because it must.  What remains to be done is preparing to shift to a model where individuals take care of themselves — through local communities and decision-making.

We can wait for the collapse, or we can prepare for it.  If we act now, the shift towards sustaining ourselves can be on our own terms.  In practice, localism will mean less government.  The path to it is reducing the debt, eliminating costly regulations, restoring sound money, and lowering the tax burden on all Americans.

The alternative is to sit by silently while the powers that be continue their push for credit-driven globalism that is destroying our once-great nation, only to watch their utopian plans — and likely our liberty and sovereignty — go down in flames when the house of cards collapses.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

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