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How to Cure the Globalization Backlash

Posted by hkarner - 26. Dezember 2016

Date: 23-12-2016
Source: Forbes

Those who fear globalization are often dismissed as bigots, but anxiety over security and jobs is another factor, explains author and professor Harold Sirkin for Forbes. Many in the developed world have lost confidence. “Unfortunately, too many people in the industrialized West have too much idle time on their hands – and not by choice,” he explains and that compounds the anger and fear. “People who feel secure in their jobs are more likely to spend their spare time (and spare change) on activities such as fishing and shopping, ballgames and beach outings, nights at the movies and dining out at restaurants, than thinking about globalization and immigration.” Education, training, jobs and productivity contribute to individual confidence and industry competitiveness. – YaleGlobal

Anxiety about jobs, underemployment combined with some people with too much free time may have fueled the anti-globalization movement and populism

Harold Sirkin

Many thought leaders in the United States and Europe are trying to come to grips with the globalization backlash taking place on both sides of the Atlantic.

While I don’t share the views of the de-globalization crowd, I think it’s important to understand their thinking—and not dismiss them out of hand as racists, religious bigots, and xenophobes, as some have done.

While xenophobia and other fears may be factors—speaking in the present tense, because the backlash has hardly ebbed—concerns over family safety and job security appear to be a much higher priority.

Unfortunately, too many people in the industrialized West have too much idle time on their hands—and not by choice.

European factories aren’t operating at or near capacity, hundreds of thousands of IT jobs have been lost in recent years and the European Union’s average unemployment rate is nearing 10% (and trending much higher than that in countries like Greece and Spain).

The situation in the United States isn’t much better. Though the U.S. unemployment rate declined to 4.6% in November, a nine-year low, some 7.4 million Americans were unemployed, nearly 5.7 million were working part time instead of full time and a record 95 million working-age Americans were “sitting on the sidelines,” as one news report put it.

People who feel secure in their jobs are more likely to spend their spare time (and spare change) on activities such as fishing and shopping, ballgames and beach outings, nights at the movies and dining out at restaurants, than thinking about globalization and immigration.

The big question is: What can be done to restore their confidence? The answer, of course, is bring back the jobs.

The situation here in the States is instructive. With labor costs rising overseas and energy costs falling at home, many companies are realizing they can manufacture in the U.S. at a competitive cost, without any of the headaches that go along with managing and financing long-distance supply chains.

Two issues threaten the return of manufacturing jobs, however.

The first issue is that U.S. manufacturing productivity has been on the skids for the past decade.

As two of my colleagues recently explained: Among all U.S. manufacturers, productivity increased at an average annual rate of less than one-half of 1% (0.4%) from 2007 through 2011. Since then, the record has been worse, with productivity declining by an average of 0.4% per year from 2011 through 2015.

“This is happening in nearly every manufacturing sector,” they wrote. “Only the automotive sector saw positive growth: a mere 1% per year. If this downward trend persists, U.S. companies won’t be able to compete globally and manufacturing jobs will start disappearing in large numbers again.”

The second issue is that the changing requirements of an increasingly high-tech workplace, especially the greater use of digital industrial technologies, are reducing the number of traditional assembly and production jobs. These jobs are being replaced by other jobs, but there is a growing mismatch between the skills needed for modern manufacturing and the skills of those in the job market.

This mismatch is so acute that manufacturing job openings have averaged 353,000 a month during 2016, according to U.S. Department of Labor data.

So how do we bring back the swagger of American factory workers and restore their confidence in America’s future, so they’re too busy making things (including a good wage) to get swept up by the de-globalization movement?

First, we need to boost manufacturing productivity significantly, so it makes good economic sense to keep production in the United States. Second, we need to reinvent the way we train and educate our children and employees so they have the skills they need to succeed in today’s rapidly changing workplace. And third, we need to convince American parents that manufacturing is a worthwhile and rewarding career choice for their children, with or without a college degree.

The best antidote to the anti-globalization fever infecting much of the industrialized world is work. When people have quality jobs, they generally don’t spend time stressing that people in other countries, or from other countries, are threatening their jobs.

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