Tom Friedman correctly points out that national boundaries are becoming irrelevant in the global economy. At the same time he argues that there is an important competition underway in which, to borrow a phrase from classical economics, the US has a comparative advantage. He claims that America has a comparative advantage in imagination. We simply need to unleash that advantage and we can win the competition. We will have 300,000,000 designers, inventors, marketers, scientists, engineers etc. etc. In other words, there really are national boundaries after all, and America can win the battle between other irrelevant nation states for the premier position in a world with no boundaries. American corporations will provide the brainpower.
Apple is a good example of the world without national boundaries that Friedman has been promoting. Around 10% of its workforce in engaged in the kind of work in which the US has a comparative advantage (according to Friedman). The remainder of Apples workforce is doing the work that we are happy to export to countries with less imagination and brainpower. This is a totally absurd idea. What jobs will be available for the great majority of the US workforce? Moreover, there is no reason to believe that the nations which perform the labor intensive manufacturing for US multinationals will not gain an advantage from doing that work. The expertise that they gain from building products and developing supply chains will help them to create their own products in the near future. No nation has a comparative advantage in imagination and brainpower.
Tom Friedman is actually a spokesperson for US multinational corporations. He claims that it is a win-win situation. Our multinational corporations should do whatever they can to gain market share and profit share in the global economy. The US workforce will provide the imagination and the brainpower that is less available in the rest of the world. If anyone believes that, I have a bridge that I would like to sell you.
What Friedman actually describes is a world in a state of transition. Multinational corporations are determining the distribution of employment and income by the decisions that they make which are in their best interest. The economy has indeed become a global economy. The nation states, however, have political systems that are intended to serve the needs of their citizens. Do they decide that what is good for General Electric is good for the country, and that their role is to assist their domestically based corporations in the global marketplace? On the other hand, what recourse is available to the nation states when corporations take actions that affect economic and social stability in the nation state? We live in a world in which globalization is proceeding at a faster pace than our current forms of political and social organizations that are bounded by geography. We have an international banking system but we struggle to provide rules and regulations that are needed to make it work in the public interest. Our problems in the eurozone are classic example of the difficulties that we have in dealing with economic integration across national boundaries as well.
Furthermore, we do share a single planet and we are all involved in mankind. We share the problem of providing a livable planet for future generations. We also have a world in which billions of our fellow human beings face a daily battle with starvation, and lives are needlessly lost because of poor sanitation and medical care. We easily speak about a global economy today. Does the concept of globalization only apply to the process by which markets are opened up for labor and capital? Are we capable of managing a world without national boundaries that serves humanity today and in the future?
Tom Friedman does not have the answers to the real questions that we must answer.
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