Economic Globalization - A Basic Guide For Entrepreneurs

"New globalization" as we know it resulted from the Great Depression, which drew international attention to the dangers of an increasingly interdependent world. For the first time, people fully understood the dangers of having an economic system that relied so heavily on remote parts of the world and saw firsthand how instability in one region could spread, in a domino effect, to other regions. Also, capitalists began to suffer from the downturn of "supply and demand," as most consumers no longer had the means to demand, causing an oversupply and massive layoffs. They knew they had to expand to untouched regions to assert their influence, free up demand and save a few bucks on labor. Suddenly, more than ever, economic globalization meant stabilizing assets in other countries, spreading Democratic principles around the world and creating a sustainable environment of supply-and-demand, free trade and wide-scale participation.

"Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed against him must be battered down," ex-President Woodrow Wilson said in 1919. The world had changed irreversibly: economic globalization propelled Europeans, Americans, Asians and Indians full steam ahead.

Historically, from the Ottoman Empire to the Romans, trade strategy was always an important motivation for waging war and as a mode of acquiring wealth. Much of what propelled America forward during the Industrial Age was the manufacturing and exportation of automobiles, as well as the harnessing of raw materials and energy resources. Aggressive free market societies enjoy the largest benefits of economic globalization, which is why military might often follows business globalization like a bedraggled puppy dog. To have is not enough, when forces like Communism or international Terrorism are threatening one's trade strategy and assets, as we have seen in the Persian Gulf War and the War in Iraq.

In the 1980s, Reagan's domestic economic policies in many ways reflected the downfalls of economic globalization. For instance, he fired over 11,000 air traffic control workers who went on strike. Likewise, due to increased global competition, labor unions in the United States were severely weakened. A 1992 survey conducted by the Roper Organization found that nearly one-quarter of 500 employers said they had used or planned to use NAFTA as a bargaining chip if necessary, threatening to move the company overseas if their workers went on strike. Reagan gave tax-cuts to the wealthy, increasing the gap between the rich and poor in the United States by an alarming rate. Similarly, unrestrained world globalization creates a world dynamic of haves and have-nots, of capitalists and peons. While it greatly benefits the industrious, risk-taking entrepreneur, the small local farmers and mom-and-pop store owners fall between the cracks. Much of his deregulation allowed companies to snag tax breaks before going overseas, taking millions of high-paying manufacturing jobs with them, all in the name of "keeping prices low for consumers." US debt increased heavily during this time period too, which also reflects the growing nation-to-nation trade deficits that are rarely taken seriously, let alone collected.