Thursday, July 27, 2006

Globalization gobbles old jobs; CMHS helps you dream & create the new ones

Originally uploaded by joshbzin.

How to Embrace Change
The new world economy is disorienting, but full of opportunities for us to seize.
By Gordon Brown
June 12, 2006 issue - In the last year 1 million jobs have been lost from America, Europe and Japan—and one quarter of a million service jobs gone offshore. For the first time Asia is out producing Europe. And driven not just by political uncertainty but by the rising needs of Asia, oil and commodity prices have been rising fast.

Unsurprisingly, we are seeing not just the ever-faster advance of globalization but of globalization's discontents too. Protectionist forces are on the rise again: "economic patriotism" in Europe, populism in Latin America, anti-immigrant feeling and sullen resistance to change on just about every continent. Take one example. The European single market aspires to be what it says it is—an open market with the free movement of goods, people and capital. But in the last few months, Europe has seen France seek to block Italian utility takeovers, Italy threaten Dutch banking acquisitions, Spain stall German energy bids and Poland resist Italian financial-service mergers. Today an ambitious world-trade deal seems more elusive than ever, with rich-country protectionism criticized for standing in the way of poor countries' development.

The paradox of today's globalization is that even its winners feel themselves to be losers. Globalization is cutting the price of consumer goods, from clothes to electronics—putting what were once luxury goods into the hands of millions of ordinary households. Sadly, however, the citizens of the richest countries are more likely to think of globalization as the loss of jobs offshore.

This ignores the fact that cheaper products and sometimes services from newly emerging countries create the competition that spurs us on to greater productivity and innovation. And emerging markets are, in fact, expanding markets for us just as we are for them: U.S. and European company brands are emblems all over the world, and their global penetration, as much as homegrown entrepreneurship, is the key to our future success.

Isolationism, partial retreat and protectionism—attempts to stop the clock, freeze-frame and postpone the inevitable—are self-defeating options. By attempting to shelter ourselves we will only fall behind, risk competitiveness and pay a higher price for long-run adjustment. Indeed, the success of the American economic experience teaches us that the lifeblood of a market economy is the continuous injection of new competition.

It has been the hard work and enterprise of the American people, responding to the new opportunities brought by each successive wave of global economic change, that have been the foundation of American economic progress. And it is when America has shown that same commitment to leading the opening of markets in the rest of the world, such as the dismantling of trade barriers following the second world war, that the conditions are put in place for rising growth and prosperity in the global economy to the benefit of all.

It is clear that we need a global conversation about both the risks of protectionism and the benefits of globalization. The starting point—the most powerful anti-protectionist signal we can send—is breaking the world-trade deadlock. The prize is a 50 percent increase in world trade. And the key that will unlock that door is Europe and America offering progress by reducing protectionism in agriculture, and India and Brazil being willing to respond with liberalization of services and greater market access.

A globalization that works will mean not only open markets, free trade and flexible labor conditions but higher investment in innovation and education. For Europe this also means escalating the pace of economic reform. For Britain in particular, it means an emphasis on productivity—convincing people that while we may not be able to stop them from losing the last job, we can do a great deal to help them be equipped for the next jobs. And it also means looking at new sources of jobs at home—not least from the environment. In Britain alone we believe we can create more than 100,000 jobs from energy conservation to micro generation.

If nations leave dislocated workers to feel hopeless and forgotten with only the offer of dead-end jobs, they will be increasing the chances that their citizens will fuel the fires of backlash and protectionism. But if we expand the opportunities for new skills and then new jobs, make that work pay and invest in strengthening communities, then citizens will be far more likely to see the larger benefits of globalization. Throughout industrialization, we have been right to say that if people work hard, play by the rules and acquire skills, they will do well and the next generation can aspire to do even better than the last. It is now our task to demonstrate to those who lose jobs to the global economy not only that we are on their side, but that new and good opportunities will be available.

The Rt. Hon. Gordon Brown is the United Kingdom's chancellor of the Exchequer.


© 2006


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