However while I disagree with his argument, I find myself increasingly in agreement with his conclusion. Unlike Saul, I would attribute this possible end to rising energy costs - a function of political stability, increased demand, and looming peak oil - which must I think ultimately weigh against globalization.

That is an assumtion, based on my understanding that globalization requires cheap energy for the transportation of goods. Not only manufactured goods, but transport back and forth of components for manufacture - which would act as a cost multiplyer for cost of goods for domestic consumption.

I suspect that this may be the true Achilles heel of transnational manufacturing for domestic Western consumption.

But what are the energy costs of transporting goods and components around the globe? At what point do energy costs upset the system?

[ 28 September 2004: Message edited by: britchestoobig ]

But within the context of both the American economy and our own...how much of the GDP rests on manufacture of goods. I've been reading about the U.S. current account balance (errr...I think that's the name...balance of exports and imports), and that makes me think that the U.S. economy relies on import of actual goods...

Edited to add: About US trade. Their trade deficit is financed by foreigners accumulating US assets. Up until now, that's worked out fine, since foreigners got a pretty good return on their holdings. But once the returns start to fall, then foreigners will start dumping their US holdings, and the USD will tank. It's already gone down by quite a bit, but there's a long ways to go yet.

[ 28 September 2004: Message edited by: Oliver Cromwell ]

quote:

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Originally posted by Oliver Cromwell:
About 1/7 of Canadian GDP is produced by the manufacturing sector. I'm guessing that you'd find similar numbers in the US and in Europe.

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- Ok, back from lunch, gonna try to retool my argument.

Are there multipliers though...I may not be using the term in the same way as an economist so I'll clarify:

It would seem to me that there has been a symbiotic relationship between corporate consolidation and globalization as it has been undertaken. Such that a lot of manufacturing falls under the aegis of a few large corporations.

So an increase in manufacturing costs has effects wider than the manufacturing sector itself. Problems roll uphill to the parent corporations. I read yesterday that Merrill [Lynch] Sees 'Tsunami' of Earnings Warnings and had to think that rising costs in tangible goods reverberates throughout the economy.

Take that together with weak consumer demand, itself a vestige of outsourcing due to globalization as it has been undertaken. The loss of union jobs, together with the switch to a 'service' economy has greatly reduced the power of the working class and has contributed to the growing income inequality within the United States.

I read today an article by David Ignatius The Perils of an Empty Piggy Bank in which he discusses poor growth in average disposable income. Averages themselves become suspect when there is an income gap, yet even so it is clear that disposable incomes are barely growing in the United States. Tangible, manufactured goods, tend more to be necessities do they not? I'd suggest that increasing costs in manufactured goods could have a much wider effect here as well because it would mean that a larger amount of disposable income would have to be directed towards goods, and less then would be left towards services.

So between the effects on the consumer and those on the corporate head office, couldn't rising energy costs act as a tipping point to bring down our current economic model?

[ 28 September 2004: Message edited by: britchestoobig ]

quote:

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Originally posted by Oliver Cromwell:
About 1/7 of Canadian GDP is produced by the manufacturing sector. I'm guessing that you'd find similar numbers in the US and in Europe.

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Yeah, but let's not forget agriculture. I'm not sure of the numbers, but agricultural trade is one of the major distorting factors involved in globalization. And things like wheat etc. are high volume, low price--increases in transportation costs could make local production much more competitive, or at least force the major exporters to spend even more on their subsidies to keep export markets. At some point surely a political breaking point would be reached, where the public would no longer be willing to pay their tax dollars to support agribusiness profits.
Meanwhile, on the third-world export side, we could say goodbye to cheap coffee, bananas etc., not to mention (sob) CHOCOLATE! Local greenhouse production of many things might, again, become more competitive; take flowers, for example, which are being produced in huge low-wage plantations in South America these days and shipped up here so we can give 'em to our sweethearts. On one hand, we might find it cheaper to just grow our own flowers. On the other, they might find themselves better able to compete growing their own staple crops for domestic consumption.

And ultimately to my mind, trade in information is nice and all, and it might even become a high-value part of the economy, but it's still a frill. It's like self-actualization in the personal needs pyramid--people with all the other stuff may concentrate much of their effort on it, but take away their house and that will change.

[ 28 September 2004: Message edited by: Rufus Polson ]