Our generation didn’t invent globalization, but we’ve certainly moved it to a new level.  Even here in the isolated Midwest, it’s hard to find a product, a job, or a community that hasn’t been impacted by the high degree of connectivity between customers, businesses, and buyers and sellers of all kinds around the globe.  We’ve enjoyed a cornucopia of incredible new products – from cell phones to flat screen televisions to microprocessor-laden automobiles – which have had many or all of their principal parts made abroad.  We send our mayors to Asia in search of jobs, and we welcome the investment of a foreign-owned consortium to operate our state’s toll road.

Well, some of us do, anyway.  Many of us don’t like it a bit, and I’m not just talking about the toll road lease.  Even many of those who are full time players in the global economic game, traveling abroad regularly to tend after business, will privately admit that they wish they didn’t have to do it.  A few even will say that it is a game that America is not playing by the same rules as other countries.

Certainly those inside players who are skeptics can find plenty of company on the outside.  There has always been something about contact with foreign cultures that gives rise to fierce passions, especially when they can be said to be responsible for some slight or offense.  But in the ramped up, high octane world of global commerce, where goods and services fly in all directions, it can be hard to find a single villain.  So some have made war with the concept itself.

There are some who can draw a connection between globalization and almost every perceived shortcoming of the American economy.  Declines in manufacturing employment?  Due to outsourcing production abroad.  Companies less likely to offer health insurance?  Occurs because their competitors offshore don’t pay this expense.  Decay in downtown retail districts?  Caused by big companies like WalMart moving in and selling foreign-made goods.

There is an element of truth to these assertions.  But it’s a partial truth.  There is in fact much, much more to the story.  For if we are to enumerate the supposed evils of a globalized economic environment, we should list the benefits as well.  And there are many.

In our role as consumers, it’s hard to argue that globalization has been anything but a bonanza.  Take the automobile market, for example.  Competition has brought more choice – there are now more than 12 companies in the U.S. that sell more than 30,000 vehicles a year.  It has also forced manufacturers to make better cars, incorporating the latest technology on even the lower priced models. 

And it has helped keep prices in check, to an astounding degree.  As recently as the early 1990’s, the price index for motor vehicles and parts showed a steady, upward tick, rising by about 3 percent a year.  But that has completely stopped.  Adjusted for vehicle content, prices have been steady and actually declined in the wake of the 2001 recession, standing today at levels roughly comparable to 1996.

It’s been that way though out much of the economy.  That not only has a direct benefit to everyone who buys anything, but yields an even greater benefit to the economy as a whole.  By interrupting the cycle where cost increases today show up in product prices tomorrow, global competition has helped keep overall price inflation in check, which has helped the economy grow faster overall. 

But the essence of globalization is competition.  We economists like to sing the praises of competition, but I doubt very much that we would like to feel its full force – say, in a daily battle with other economists just to keep our jobs – any more than the next person.  Yet that competition would make us better economists, just as it has helped the motor vehicle industry make a better car.