Reflection on Globalization: Yesterday and Today
Reflection on Globalization: Yesterday and Today was a talk delivered by known economist Paul Krugman at Princeton University. The talk focused on the phenomena of Globalization and what it did to the world and its role the ‘mess’ it caused. He gave a short history of globalization by saying that it is not new to the world because it was ongoing during the late 19th century. In his talk Reflection on Globalization: Yesterday and Today , Krugman addressed what were the changes, one of the changes he pointed out was technology. People were replaced by machines, he mentioned, because longshoremen were replaced with things similar to science fiction movies. The other trade Krugman was referring to was the policy. He said that countries like the United States moved towards the direction of free trade and that developing countries soon followed. He mentioned China as an example because the country was virtually closed but now became extremely open to the world. He also shared that today’s world is filled complexity, with enormous volumes of trade. Did globalization set the stage for the crisis experienced by the US today? Krugman mentioned that the question is not an easy inquiry to answer, but in his opinion globalization played a role in promulgating the crisis. Globalization opened up the world capital markets and the opening of the world capital that led to the synchronized crisis that countries around the world are currently experiencing. He ended his talk by saying that the world is already globalized whether people like it or not, and that the possible effects of globalization frightens him because history can repeat itself.
In his talk, he kept on mentioning the frightening effect of globalization and how it aided in the crisis experienced by many countries like the United States. In my opinion, I agree in his claim that globalization played a factor in the economic crisis. I think one of the reasons is that productivity became more competitive due to big countries such as China opening its door to the world. According to an article by BBC news, one of the negative impacts of Globalization is that it operates mostly for the benefit of the richer countries, countries that continue to dominate the trade world. Another frightening effect of globalization is that many people are replaced by machines. It is a prevailing trend in companies that mass produce products because machine operated systems allow them to produce their products faster. Although the maintenance of the machines are done by manual laborers, people are still losing their jobs because of the advancement of technology that results from the greater demands.
Tverberg (2013) mentioned that Globalization also uses up finite resource more quickly. For example, China joined the world trade organization in 2011, just a year after, its coal use rose rapidly. China is not the only country that rapidly increased its coal consumption, India for example, is also following the trend in the increase in consumption. Another reason why I agree to Krugman’s claim about the negative aspect of Globalization is that it is impossible for policy making bodies in one country to determine the worldwide implications of their policies. For instance, the issue of climate change is linked to globalization, due to the increase of carbon dioxide emission from burning coal. Globalization also increases the price of oil worldwide because of the basic principle of supply and demand. Ever since 2005, the prices of oil shoot up at a rapid motion, the oil supply is not increasing and ,therefore, can not suffice for the high demands of different countries. Globalization in general creates two spectra- one positive and one negative. It is difficult to assess its true impact because economies are affected differently.
Various Authors, Comparative Advantage, Economic Growth, The Gains from Trade and Globalization, and Computational Trade Modeling: Festschrift Papers in Honor of Alan V. Deardorff. International Policy Center Gerald R. Ford School of Public Policy University of Michiga, 5 Apr 2010
Caselli M, Some Reflection on Globalization and Development and Less Developed Countries, Oct 2004.
Tverberg, 12 Negative Effects of Globalization. http://oilprice.com/Finance/the-Economy/12-Negative-Aspects-of-Globalization.html 18 May 2014