Global Culture

The recent shift in U.S. politics may have a lot of people assuming that policy changes will soon improve their situation, whether they hurt for the lack of jobs, stagnant wages, poor access to health care or education. The sad reality is that the government (any government) may not be able to affect the destiny of its people when global corporations have taken over the destiny of the world.

BusinessWeek’s cover story “Can anyone steer this economy” is a review of how classic economic principles are no longer effective to control global forces with far too much influence on the affairs of the world. The article by Michael Mandel is mostly focused on the U.S., but it is easily a reflection of what the entire world should expect.

Sometime next year [...] the U.S. will hit a milestone. For the first time in recent memory, the cost of imported goods and services will exceed federal revenues. In other words, Americans will soon pay more to foreigners than they do to their national government.

Through the many posts about Globalization, I’ve reiterated the basic premise that corporations are taking over our destiny in all possible ways, affecting even the most traditional aspects of our culture. However, a renewed sense of urgency to discuss this problem should be felt when realizing that even the most powerful economy in the world is falling to the mercy of these forces:

the U.S. is more open to the global economy than ever before, and the links run in both directions. Now many of the levers affecting the U.S. economy are located not in Washington but in Beijing, London, and even Mexico City.

The rules of the game have changed and it seems that governments are no longer sure how to play.

The traditional metrics for economic security and prosperity are capturing impressive signs of life. Unemployment, inflation, an interest rates are low by historical standards. The stock market is rising, and household wealth is higher than it was at the peak of the 1990s boom, even after adjusting for inflation.

But, despite all these theoretical abundance, the only winners are the global corporations, and the big loosers are those in the middle class. Hope is fading as we awaken to the realization that companies have no loyalty to a nation, moving entire production facilities to the cheapest possible places, taking advantage of whichever local incentives are available. In a desperate move to compete, governments are doing nothing else but fueling this strategy.

But governments are not the only ones to blame, the millions of middle class consumers have lost any sense of nationalism and will only consider the cheapest treat. When policy makers try to pump the economy by creating incentives, consumers will maximize their expenditures by hunting bargains from abroad.

Even traditional wisdom such as increasing education may not be as effective, when considering that even those capable of completing a bachelor’s degree won’t do as good as they used to. In addition,

education is closely tied, in tricky ways, to the hot-button issue ofo immigration. Despite post-September 11 restrictions, foreing students with temporary visas still account for almost 40% of new graduate students in science and engineering.

When no economic strategy will have the impact that is needed, it seems the only hope is to expect that people around the world will awaken to this new reality and react by prioritizing the health of their local cultures above the easy life-style preached by global corporations.