Globalization and its Effects

Home » Is Globalization Good for Americans and the U.S.?

Is Globalization Good for Americans and the U.S.?


There have been many arguments whether globalization is good for Americans and the United States ranging on both aisles of the issues. Arguments for or against globalization include topics such as economic, cultural, or moral. We mainly investigated the economic impacts of globalization including jobs, thinning of the middle class, tax havens, and backlash of globalization, specifically terrorism.

Many arguments in the media, and in this year’s past presidential election, focus on jobs, and outsourcing them over seas. Based on other classes I have had at Transylvania, what used to be seen as expansion of sending some work out of the U.S. to specialized firms, is now looked at a transition that could permanently increase the structural unemployment of the United States up from 3%. 3% of the workforce translates to about 4,650,000 (based on numbers from Department of Labor), however this number could increase due to the shifting of manufacturing jobs . If this increase is indeed correct, the United States economy could potentially see hundreds of thousands more out of work.


During an interview on CNN, Fareed Zakaria, a CNN foreign affairs analyst, claimed “Technology and globalization are putting the jobs of millions in America’s middle class at risk”. While he had no specific numbers, he uses the the idea about pay discrepancy in other nations, ease to move factories to other countries, and both these factors move middle class jobs such as factory work (Zakaria). Michael Casey, the author of Unfair Trade: How Our Broken Global Financial System Destroys the Middle Class, says the largest problem facing the middle class is a banking system in which the rich gets richer, and the poor get poorer. He contributes the public not fully understanding globalization and the true problems that face our country; politicians continue to not address the most critical issues of our country including the banking system (Curtin).

An example of our banking system is home mortgages. Banks typically offer loans to those with significant capital to ensure their investment, this means it’s very difficult for the poor to receive loans, and when they do they tend to come with higher interest rates. An example of this is Freddie Mac home mortgages. Customers that have a good credit history and other criteria get a lower interest loan through a federal agency as opposed to a regular bank loan through the bank. While this system can be seen as rewarding those who tend to be safe investments, and this is a very sound argument, it is more difficult for the less wealthy to receive loans, which therefore contributes to the flaws of the banking system which Casey discuses.
Globalization has also caused the wealthy to benefit from offshore tax evasion. A recent study by James Henry, former chief economist at McKinsey and Co, which is a consulting firm, found that the U.S. loses $280 billion dollars a year in tax revenue due to offshore banking. The article can be found here.

“Over the past 30 years most people have seen only modest salary increases: the average annual salary in America, expressed in 1998 dollars (that is, adjusted for inflation), rose from $32,522 in 1970 to $35,864 in 1999. That’s about a 10 percent increase over 29 years — progress, but not much. Over the same period, however, according to Fortune magazine, the average real annual compensation of the top 100 C.E.O.’s went from $1.3 million — 39 times the pay of an average worker — to $37.5 million, more than 1,000 times the pay of ordinary workers” (Krugman). So again, we see a system in which the wealthy benefit from globalization by escaping taxes and receiving lower interest rates, to the lower classes which have seen lower income increases relative to the very wealthy.

Some forms of terrorism, particularly what we seen in the Middle East, can be seen as a response to globalization effects. Italian Prime Minister Silvio Berlusconi said, “The terrorists were trying to stop the corrupting effect of Western civilization on the Islamic world,” when discussing the violent activities in the Middle East (Porter). Peter Bergen, a CNN correspondent, spoke at the University of Rhode Island for an Honors Colloquium on globalization. He believes; “The globalized world enables terrorist groups. The kinds of people who are in these jihadist groups tend to be quite sophisticated. In the globalized world, terrorist groups kind of take advantage of globalized tech.” He specifically mentioned the Internet, 24-hour news networks and terrorist groups all help aid these organizations (Hanson).These two quotes provide a possibility of why these terrorist organizations exist, to stop western influence, and how they benefit from globalization. These groups use effects such as globalization to move money and communicate to maintain a more organized body.

The bibliography can be found here.


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