Welcome to the home of Noah Brier. I'm the co-founder of Variance and general internet tinkerer. Most of my writing these days is happening over at Why is this interesting?, a daily email full of interesting stuff. This site has been around since 2004. Feel free to get in touch. Good places to get started are my Framework of the Day posts or my favorite books and podcasts. Get in touch.

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The Other Globalization

I’ve been doing a lot of thinking about the economy and American job market lately. Part of it is the natural byproduct of being a news consumer and the other is a result of starting a company during a recession. Anyway, I agree with the Economist on how we got here:

But today’s jobs pain is about more than the aftermath of the financial crisis. Globalisation and technological innovation are bringing about long-term changes in the world economy that are altering the structure of the labour market. As a result, unemployment is likely to remain high in the rich economies even as it falls in the poorer ones. Edmund Phelps, a Nobel prize-winning economist, thinks that in America the “natural rate” of unemployment (below which higher demand would push up inflation) in the medium term is now around 7.5%, significantly higher than only a few years ago.

But I’ve been thinking about a bit of a different angle on globalization. Sure part of it is about outsourcing (the article discusses oDesk, which is task-based outsourcing instead of job-based). I think that’s certainly part of the picture, but the more interesting globalization story to me is about the increasing ability of American companies to be successful without a strong American economy.

Again, my regular caveat is that I’m not an economist and my knowledge of how it all works comes from reading a bunch of articles on the internet. With that said, I’ve gotten to spend some time around some very large multinational corporations over the years and it’s impossible to miss the opportunity they see in developing markets. In the past I assume companies were more successful selling goods to consumers when the American economy was strong. Now that they’re selling worldwide, they can afford a weaker American market with global consumers picking up the slack.

For the first time, it seems to me, the American economy isn’t completely aligned with the needs of America’s companies. When a big company creates global jobs they are also creating consumers for the own goods, something that wasn’t true on the same scale 50 years ago. If you’re an American corporation with a global workforce who are you responsible to: The country you reside or the people you employ?

Again, not sure what this means, or if it’s even a valid economic argument, but it strikes me as a change that isn’t really being discussed.


November 28, 2011 // This post is about: ,