Globalization's Unequal Discontents

The first of the larger perspectives on globalization is that open economies adjust faster to their real competitive advantages, allowing them to employ their own people. The most recent U.S. unemployment rate was 4.4 percent. France, along with other relatively protected economies, typically has twice as high a proportion of the population unemployed because their workers are stuck in inappropriate jobs.

Still more protected economies, like many in Latin America, often run much higher rates of unemployment -- up to 40%. Economies more open than the U.S. -- like Singapore and Hong Kong -- historically run lower rates of unemployment.

The worst inequality is between families whose breadwinners have jobs and those who don't. Globalization minimizes that problem.

Globalization has brought countries with about 3 billion people from subhuman conditions of life into modern standards of living with adequate food, basic shelter, modern clothing rather than rags, and life spans that are over 60 rather than under 45. (In the early 1950s China's life expectancy was 41 years, in 2005 it was 72.7 years. This is the greatest reduction of inequality that has happened in human history.

In East Asia, this reduction of inequality has resulted from a wave of economic growth that has swept through Japan, Taiwan, South Korea, Thailand, Malaysia, and much of Indonesia. It is rapidly spreading across China, is well on the way in India and Vietnam and is coming to other countries around the world.

The world's fastest growth is occurring in some of its poorest countries, notably India, China and Indonesia. The middle income countries are growing faster on average than the rich countries. In other words, global inequality is declining fast.

It is not surprising when workers in industries undergoing adjustment complain about the pain of change. For many families, prolonged unemployment can wipe out their savings, cost them their homes and turn their lives into a nightmare. The suffering of these families can't be ignored.

But sound economics is based on facts grounded in objective analysis, not on emotion. Sometimes, what seems like a "common sense" solution is not really very sensible at all, as is seen with the arguments of the protectionists. Even the best of intentions can, in the end, bring about the worst of outcomes. The protectionists' proposed policies would sharply increase the agony of unemployment.

America will not benefit if an increasing number of opinion leaders and elected officials use exaggerated, partial views of inequality to try to lead us into a future of slower growth, higher unemployment and greater world tensions.

Instead, America and its leaders should focus on how the nation can use the rapidly expanding economy to assist individuals who have suffered from globalization to get the education, training and opportunities in new industries they need to benefit rather than suffer from globalization.

William H. Overholt is Director of the Center for Asia Pacific Policy at the RAND Corporation, a nonprofit research organization.