Chapter 1 ~ Summary of Accomplishments of Globalization During the Past Three Decades ~
Chapter 2 ~ Introduction ~
Chapter 3 ~ Problems with Globalization in Developing Nations ~
Section (3-A) ~ Currency Devaluations ~
Section (3-B) ~ Health Care in China ~
Section (3-C) ~ Consumption Patterns Throughout the Developing World ~
Section (3-D) ~ Effects of Globalization on the Poorest of Developing Nations ~
Section (3-E) ~ Power Politics in World Trade ~
Section (3-F) ~ Misconceptions about "Successfully" Globalized Nations ~
Section (3-G) ~ SAPs: Another Unnecessary Ideology-Based Disaster for Developing Nations ~
Chapter 4 ~ Problems with Globalization in Developed Nations ~
Section (4-A) ~ The Race to the Bottom in Developed World Agriculture ~
Section (4-B) ~ The Role of Globalization Ideology in Precipitating and Prolonging the Great Recession ~
Section (4-C) ~ The Risks Involved in US Long-Term Non-competitiveness in World Trade ~
Chapter 5 ~ Problems with Globalization worldwide ~
Appendix A ~ Facts and Figures supporting the Contention that the Point of Convergence Between the Developed and the Developing Worlds Cannot be Close to Conditions like those in the Developed World.
~ Reference List ~

The globalization process started to have a significant effect on national economies around 1980. It seems worthwhile, then, to look back at its effects on a global, national, and personal level over the past 30 years. A lot of data have been collected, and much of it can be found in the six globalization-related documents on this website. Here we condense these data in order to get a clearer picture of what has been happening, and where the world's economies are headed over the next few decades. In recent years, public opposition to trade agreements among large regions of the world has been increasing. The public in both the developed and developing worlds has become skeptical of the basic arguments for eliminating trade subsidies and import duties. This skepticism in both worlds has merits. The two most often-heard arguments in developed nations supporting globalization are easily shown to be false. (See Arguments 1: and 2: below.) Developing nations are feeling all manner of side effects that no one told them about when they were sold on globalization ideology, and on the idea of joining multi-lateral trade organizations. Many were coerced into signing on to various trade agreements (See Section [3-E].) Many now see these trade agreements as a return to colonialism. Being forced to submit to "Structural Adjustment Programs" has been found to be particularly, extremely, unnecessarily painful and to reflect erroneous ideologies of major advocates of globalization.

One should also note that nations have a wide variety of strategies for dealing with globalization that typically depend of the circumstances faced by each nation. Western Europe manages globalization-related policies to maintain modest trade surpluses (05G2). Germany and Japan both manage to keep their advanced manufacturing sectors anchored at home, and to defend domestic wage levels and social guarantees. When they do disperse production and jobs overseas, as they must, they do so strategically. Japan, in order to (1) survive in a globalizing world, (2) maintain positive trade balances, and (3) maintain the world's highest wages, has no other choice but to resort to a strategy of covert protectionism. The US has, for over three decades, run large, risky, non-sustainable trade deficits. It also makes no effort to protect US wages, and it defines "national interest" primarily in terms of advancing the global reach of the world's 60,000+ multi-national enterprises (05G2). Nations like Chile, China and Vietnam are inclined to ignore the rules of globalizations, and appear to have benefited significantly from such policies.

The false ideologies problem has probably caused more human misery and expense than any other globalization-related problem. It apparently originated in the early 1980s with a new US president (See Chapter 4 of Ref. (09S1) for a detailed analysis of this issue.)

Argument 2: It would be impossible to deny that exploding mobilities of virtually every element of economic activity in an extremely bi-polar global economy must produce ever-decreasing bi-polarity - eventually to the point of largely eliminating bi-polarity. Convergence of the economies of the developing- and the developed world economies is thus a certainty. The only question is: what would characterize the converged state? The commonly argued position is that the converged state will resemble the current developed world economy to a far greater degree than it will resemble the current developing world economy. "Footprint" analyses and "Net Primary Production" analyses (08S2) can easily show that this is a physical impossibility - even neglecting growing problems with fossil fuels supplies. (See Sections (6-A) and 6-B) in Reference (08S1).) Just the 20% of developing world labor that is currently producing for the global economy has caused significant increases in prices of virtually all the natural resources that are vital to economic activity. Also see Appendix A for data that shows the impossibility of developing world wages and benefits approaching anything close to the wages and benefits of the developed world.

Argument 3: We often hear that the US needs to adopt this or that policy in order to "remain competitive in world trade." The US has not been competitive in world trade since 1976 (the entire span of the current globalization era). Other developed world nations have been able to be competitive in world trade, albeit with considerable (and growing) difficulty in recent years by managing their globalization better than the US does. The annual US trade deficit has been increasing rapidly in recent decades. Prior to 1967, the US ran trade surpluses for 74 consecutive years (00B2).

Argument 4: An often-repeated argument contends that the Smoot-Hawley tariffs, instituted 8 months after the stock-market crash of 1929, caused the Great Depression of the 1930s. Note however that imports in 1930 were 4% of GDP, and 2/3 of that came in tariff-free. Smoots-Hawley tariffs then represented a marginal tax hike of 1.3% of GDP - hardly a likely source of a 46% contraction of the US economy, 25% unemployment, and a wipeout of 85% of the value of the U.S. stock market (00B2).

Fundamental Differences: Exploding mobilities of essentially all components of economic activity imply that the fundamental differences between the developed- and developing worlds will diminish over time. We need to determine what these fundamental differences are. An analysis in Ref. (09S1) demonstrates that the main fundamental difference is the extreme scarcity of financial capital in the developing world. Financial capital in the developed world is a glut in comparative or absolute terms (judging from the low cost of renting capital, i.e. interest rates). Virtually all the other apparent differences are easily traced back to this fundamental difference (09S1). If the fundamental difference were to disappear, so also would virtually all the apparent differences. Ref. (09S1) shows that high population growth rates cause the extreme scarcity of financial capital in developing nations. The link between the two factors is infrastructure. High population growth rates require corresponding high growth rates in the infrastructure needed to accommodate growing numbers of people. The current cost of this added infrastructure is roughly $1.4 trillion per year for the developing world as a whole (09S1). People earning a median $2/ day / person (subsistence level) could not possibly come up with that kind of money. The extreme scarcity of financial capital characterizing the developing world, and the bulk of all the ills that result from that scarcity, stem from the drain on financial capital created by the need (mostly unmet) for more infrastructure.

The evidence for the above-mentioned link between population growth and financial capital scarcity is compelling. Over the past 100 years, only eight nations have progressed from developing-world status to, or close to, developed-world status. All eight of these nations made the conversion during periods of active family planning programs (09S1). Also, in recent decades, family planning programs have been active in three Latin American countries - Brazil, Chile and Mexico. All three nations now show the beginnings of a middle class - a rarity in Latin America.

It must be pointed out, however, that repeating the conversion from developing world status to developed world status becomes increasingly difficult as the remaining 150 or so developing nations attempt to make the conversion. Over time, natural resource constraints increasingly determine how far the conversions progress, and the global economy becomes increasingly natural resource constrained. (See Appendix A.) In a totally natural-resource-constrained global economy, developed world wages and benefits would decrease by about 70%, and developing world wages would roughly triple at the point of convergence. This assumes a starting point of developed world wages being ten times that of developing world wages. It is far from clear that the US, or any other developed nation, could survive a 70% reduction in wages and benefits. One effect would be defaulting of all bonds and other fixed investments and an extreme decline in common stock values reflecting extreme deflation. One solution to deflation: print money.

Effects of Fundamental Differences: Exploding mobilities of virtually all elements of economic activity cause, in essence, a mixing of the developed world economy with the developing world economy. As noted above, developing world economies suffer from (1) extreme scarcities of financial capital (the cause of virtually all of the other problems of the developing world (09S1)) and consequently (2) extreme gluts of labor. Such a mixing of economies must therefore provide huge benefits to developed world providers of capital. Increasing levels of buying goods produced by cheap developing world labor, and then selling those goods to developed world consumers who earn roughly 10 times more than the developing world labor that produced these goods cannot help but produce high profit margins. Such a mixing of economies can also hardly avoid imposing extreme duress on those who provide labor to the developed world's GDP (in essence, the consumer sector of that economy - roughly 2/3 of the US economy). Developed world wages and benefits must decline due to (1) competition from developing world labor and (2) weak developed-world labor markets due to the export of millions of developed world jobs overseas. (Economist Alan Blinder contends that, of about 140 million jobs that presently exist in the US, 42-56 million could be moved offshore during the next decade or two. His estimate includes all 14 million current US jobs in manufacturing and 28-42 million jobs in the services sector (07M1).) The economic changes observed in the US in recent decades agree with these expectations. Wages and benefits make up the lowest share of the US GDP since 1947 (when such data first started being tabulated). Corporate profits in the US, on the other hand, have climbed to their highest share of the GDP since the 1960s (06G1).

Section (3-B) ~ Health Care in China:
China, in seeking ways to become more competitive in the global marketplace, has decided to sacrifice the health of its citizens. In 1975, 85% of China's rural residents had government-financed health care. Today 10% do. In 1991, 39% of China's total health-care expenditures came directly out of pockets of individual citizens. By 2000, individuals paid directly for 60% of China's health-care costs. Through the 1990s, Chinese farmers' incomes roughly tripled, but medical costs increased more than 8-fold. Life expectancy in China increased from less than 40 years in 1950 to 69 years in 1982. But during the ensuing 20 years (the globalization period), life expectancies increased by only one year (03W1).

Until the beginning of the early 1980's, China's socialized medical system, with "barefoot doctors" at its core, worked public health wonders. Since then, China has privatized vast swaths of its economy and shifted public health resources toward the cities. The collapse of China's socialized medicine and cost increases has opened a gap between urban health care and rural health care. (About 80% of China's population is rural and not involved in exports.) In less than a generation, China's rural population has gone from 0% uninsured to 79% uninsured in terms of health care (06U1). More than 50% of urban residents enjoy coverage, supplied by their employers. Once a peasant's illness becomes debilitating, his/her relatives can face the decline of a breadwinner, and medical bills steep enough to bankrupt the family (06U1).

Section (3-C) ~ Consumption Patterns throughout the Developing World:
The negative effects of globalization on developing nations are well illustrated by a study by Weisbrot et al (01W1). Table (4D-1) in Reference (08S1) shows this. Ref. (01W1) examined all developing nation data for the period from 1960 through 2000 on the following issues: per-capita GDP, total life expectancy, infant mortality, child mortality, total public spending on education, literacy rates, total primary school enrollment, total secondary enrollment, and total tertiary school enrollment. Because the study covered two decades before globalization became a significant influence on the global economy, and two decades in which globalization was a significant influence on the global economy, the negative effects of globalization in all of these areas are clear.

Section (3-D)~ Effects of Globalization on the Poorest of Developing Nations:
Cambodia is typical of the poorer developing world countries that have joined the World Trade Organization (WTO). Population growth rates are typically high in the poorest nations of the developing world. As a result, insufficient financial capital is generated to create the human capital needed to provide anything other than unskilled labor to the global economy. For these people, wage scales are typically subsistence level, making the generation of financial or human capital virtually impossible. About 80% of Cambodians work in agriculture - typical of poorer developing world countries. Before it joined the WTO in 2004, impoverished Cambodia agreed to expose its farmers to more competition that the EU and the US were willing to accept for theirs (06W1). The result: huge trade deficits that poorer developing nations like Cambodia cannot afford. Cambodia also cannot afford to subsidize its agricultural exports to anywhere near the extent to which the US and the EU subsidize theirs. This is typical of the poorer developing nations. They lack both the negotiating skills and political clout to benefit from trade negotiations, and their staggering external debt gives them a weak hand to start with. The Internal Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO) have overwhelming influence over countries with large external debts, and these organizations take a dim view of tariffs, thus giving the US and EU the upper hand in any trade negotiations.

In 2006, the UN Development Program (UNDP) disputed the less-than-forthright WTO ideology-based argument that removing trade barriers is the surest way to reduce poverty. Instead the UNDP advises poor Asian countries like Cambodia to do what Japan and South Korea did successfully in the 1970s and 1980s: protect key industries (usually agriculture) temporarily with tariffs on agricultural imports before exposing them to foreign competition (06W1). The UNDP noted that expanding global trade creates jobs for skilled laborers (a rare commodity in nations with dire scarcities of financial capital and hence human capital). Huge surpluses of poorly educated rural folk are the overwhelming problem for developing nations. These people can no longer make a living in the 60-80% of the economy that is in agriculture because of heavily subsidized farm imports from the US and EU.

Section (3-E) ~ Power Politics in World Trade:
Increasingly heavy-handed behavior of developed nations, via the World Trade Organization (WTO) and others, in imposing their versions of the trade rules defining modern-day globalization on the developing world, has been documented in a book by Jawara and Kwa (03J1). These authors interviewed 33 WTO diplomats and 10 organization employees. They claim that industrialized nations (Canada, Japan, Australia, New Zealand, South Africa, and countries in Western Europe) used bribery and dissemination of fear to convince developing countries to sign agreements on international trade. Developing country ministers had been physically barred from participating in negotiations related to their countries. Also, developed countries had threatened to stop aid to those developing nations if they did not sign the agreements. Six WTO ambassadors from developing countries were removed from their posts in Geneva after disagreeing with diplomats from developed countries on the 2001 Doha Round of WTO talks. An official document written by US trade representative Robert Zoellick, demanded that developing countries change their positions regarding some trade negotiations or face inclusion on a US list of "enemy countries" (03J1).

A book by John Perkins (04P2) (who worked with US intelligence agencies) described similar US dealings with developing nations. Perkins, a former chief economist at Boston strategic-consulting firm Charles T. Main, worked for 10 years helping US intelligence agencies and multinational corporations cajole and blackmail foreign leaders into serving US foreign policy. His economic projections cooked the books to convince foreign governments to accept billions of dollars of loans from the World Bank and other institutions to build dams, airports, electric grids, and other infrastructure he knew they couldn't afford. The deals were smoothed over with bribes for developing world officials, but it was the taxpayers in these countries who had to repay the loans. When their governments couldn't do so (as was often the case) the World Bank or the International Monetary Fund (IMF) would essentially place the developing nation in trusteeship. They would then dictate everything from its budget to security agreements, and even to its UN votes (04P2).

A similar analysis by George Monbiot (05M1) described disasters imposed on developing nations by the World Bank. He noted that a past president of the World Bank, Robert McNamara, concentrated almost all the World Bank's lending on vast prestige projects - dams, highways, ports - while freezing out less glamorous causes such as health, education and sanitation. Most of these major projects have, in economic- or social terms or both, failed catastrophically (96C1). He bankrolled Mobutu and Suharto (both corrupt, despotic rulers), deforested Nepal, trashed the Amazon, and promoted genocide in Indonesia (Recall Indonesia's "transmigration" program, first funded by the World Bank in 1976). The developing nations affected were left with unpayable debts, wrecked environments, grinding poverty, and unshakeable pro-US dictators (05M1).

What is so tragic about all of this is that the World Bank was once a leader in bringing family planning and contraception to the developing world. But, around 1980, major political changes occurred in Washington (09S1). (Note: The World Bank is controlled mainly by the US.) The new US leaders had a dim view of contraception and family planning, so the World Bank changed accordingly and adopted the new administration's "bad government" theory of the developing world's ills, plus the environmental policies, population policies and foreign policies that came with it, all of which turned out to be disasters (See Chapter 4 of Ref. (09S1)). Had McNamara and the US leadership realized that the ills of the developing world were caused by dire scarcities of financial capital caused, in turn, by demands for infrastructure growth required by population growth, the above-mentioned disasters precipitated by the World Bank would probably not have happened.

Section (3-F) ~ Misconceptions about "Successfully" Globalized Nations:
One often hears about nations like China, Viet Nam and Chile as being prime examples of the success of globalization ideology. However, closer examination of these "globalization success stories" shows the exact opposite. The economic growth of these nations can be shown to have resulted more from ignoring the advice of globalization's advocates and globalization's ideology than from heeding it. These nations' governments played an overwhelmingly dominant role in subsidizing, and controlling, the development of the industrial and agricultural segments of their respective economies (08S1) and (04J1). Japan could be added to this list. To survive in a globalizing world, and maintain positive trade balances, Japan, with the world's highest wages, had no other choice but to resort to a strategy of covert protectionism.

Section (3-G) ~ SAPs: Another Unnecessary Ideology-based Disaster for Developing Nations:
Perhaps no single example of globalization mismanagement has caused more duress to more developing world people than SAPs (Structural Adjustment Programs) (08S3). The International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) used the leverage they had via their loans to developing nations and via globalization trade agreements to impose SAPs. These imposed extreme hardships on deeply indebted developing nations. They forced these nations to devalue currencies, privatize state infrastructure and services, remove import controls and food subsidies, charge consumers the full cost of health- and education services, and generally downsize the public sector. The UN's major study of urbanization (03U2) concluded that the single main cause of increases in poverty and inequality in developing nations during the 1980s and 1990s was the "retreat" of the state (i.e. privatization imposed by SAPs). The middle class disappeared. The brain drain to oil-rich Arab countries, and to the West, increased dramatically (95B1). In Africa, SAPs resulted in capital flight, collapse of manufactures, marginal or negative increases in export income, drastic cutbacks in public services, soaring prices, and steep declines in real wages (97R1).

The apparent strategy of SAPs was to make developing nations more "efficient" by eliminating internal subsidies and eliminating subsidies for exports, a major intent of the WTO. One goal was apparently to increase the likelihood that these nations will become better able to repay their external debts, currently amounting to well over $3 trillion and growing (08S3). The results of SAPs were the exact opposite. They provided a significant portion of the cause of the development of a large, and rapidly growing, "informal" economy in which daily survival is often challenging. (The "informal economy" is projected to become about two thirds of the developing world economy during the next few decades (08S3).) They also greatly decreased likelihood that these developing nations will ever repay their $3 trillion+ external debts. A default on the order of $3 trillion in loans poses a potentially staggering blow to developed world financial institutions and taxpayers. It also imposes a potential staggering blow to developing world economies when they lose their access to future external loans.

Political ideologies are clearly at play here. The developing world's problems have little to do with "inefficiencies" (a.k.a. "bad government"). Instead they are due to the staggering burden (about $1.4 trillion/ year) of financing the expansion of infrastructure required to accommodate population growth. The result is a dire scarcity of financial capital that causes "bad government" and virtually all the other problems typical of developing nations. Active family-planning programs could eliminate these problems - and do so at low (and declining) cost (a small fraction of the developed world's development and humanitarian aid to the developing world) (09S1).

SAPs devastated rural smallholders (farmers) by eliminating developing nation agriculture subsidies and pushing developing world farmers into global commodity markets dominated by developed world agri-businesses (heavily subsidized by developed-world governments) (00B1). For the typical developing nation with an economy that is 50-70% agriculture-based, this is no small matter. Adding to SAPs effects on developing world agriculture, three other processes are occurring at the same time: (1) the conversion of labor-intensive agriculture to capital-intensive agriculture in developing nations (causing huge reductions in farm labor per unit area of farm land), (2) population growth in developing nations requiring subdivision of farms among multiple heirs, and (3) little (if any) undeveloped arable land. The total effect of all four of these changes are producing one of the largest human migrations ever known - the rural-to-urban migration. Dispossessed farmers typically migrate to the vast slums that ring the bulk of the large urban areas of developing nations. There they typically become part of the "informal" economy where survival is often a daily challenge (08S3). The "informal" economy of the developing world is expected to become 2/3 of developing world's economy (08S3). This is likely to produce serious political repercussions because those in the "informal" economy are often abused and discriminated against by those in the formal economy.

Section (4-A) ~ The Race to the Bottom in Developed World Agriculture:
There are examples of "protectionism" that are undeniably beneficial, if not essential, for mankind's survival. This suggests that the fundamental ideology behind globalization is fundamentally flawed and must be examined on a case-by-case basis. A good example is found in developed world agriculture. The EU, Japan, Switzerland and Scandinavian nations must subsidize their farm sectors because these farms operate with far greater attention to output sustainability (03M1). Most of their developed and developing world agricultural competitors place far less emphasis on sustainability. Agricultural sustainability costs money (For details, see the analysis of the sustainability of the global outputs of food, wood and freshwater found on this website (08S4).) So forcing farmers in the EU, Japan, Switzerland and Scandinavia to compete directly with farms in North America, Australia, and most of the developing world, where sustainability considerations are largely ignored, would have serious global repercussions. This is one example of the often-heard charge that the rules of globalization are a "race to the bottom."

Section (4-B) ~ The Role of Globalization Ideology in Precipitating and Prolonging the Great Recession ~
Exploding mobilities cause, in essence, a mixing of the developed world economy with the developing world economy. As noted above, developing world economies suffer from (1) extreme scarcities of financial capital (the cause of virtually all of the other problems of the developing world (09S1)) and consequently (2) extreme gluts of labor. Such a mixing of economies must therefore provide huge benefits to developed world providers of capital. Increasing levels of buying goods produced by cheap developing world labor, and then selling those goods to developed world consumers who earn roughly ten times more than the developing world labor that produced these goods cannot help but produce high profit margins. Such a mixing of economies can also hardly avoid imposing extreme duress on those who provide labor to the developed world's GDP (in essence, the consumer sector of that economy - roughly 2/3 of the US economy). Developed world wages and benefits must decline due to (1) competition from developing world labor and (2) weak developed world labor markets due to the exporting of millions of developed world jobs overseas.

The economic changes observed in developed nations in recent decades agree well with the expectations noted above. Wages and salaries make up the lowest share of the US GDP since 1947 when such data first started being tabulated. Corporate profits in the US, on the other hand, have climbed to their highest share of the GDP since the 1960s (06G1). Ever since data were tabulated, US wage and salary trends tracked labor productivity trends well. Since around 1980, wage/salary growth has been lagging labor productivity growth. Today, wages and salaries are well over 20% below what labor productivities would suggest. Revision of US tax laws to tax the earnings of capital less than the earnings of labor are taxed could not possibly do anything but make matters even worse (10S1).

A sick consumer sector of any given economy means that the demand for capital to expand the facilities needed to provide goods and services to the consumer sector is reduced. The cost of renting capital (interest rates) drops as the demand for capital drops and as corporate profits create abundant financial capital. Federal monetary policy, in such situations, attempts to prop up the sick consumer sector - typically by lowering interest rates. These pressures on interest rates cause the returns on investment in retirement vehicles (e.g. IRAs, 401(k)s and annuities) to fall to barely more than the rate of inflation. This, in turn, causes investors to demand investments with high rates of return. Financial institutions accommodate these demands by creating all manner of high-risk investments, e.g. hedge funds and mortgages with ballooning repayment schedules sold to sub-prime borrowers. In fact, all the dozen or so major dysfunctionalities in the US financial system (See the list in Reference (10S1).) reflect attempts to satisfy demands for high rates of returns for investments by adding increasing elements of risk to investment opportunities sold to unsuspecting investors. (10S1).

Results have been tragic for most investors. Prolonged periods of low interest-rate environments have also been tragic for millions of would-be homeowners. Low interest rates made the cost of borrowing for a home abnormally low, enticing many would-be homeowners to enter a real estate market without fully understanding the risks posed by interest-rate fluctuations. The situation is made more precarious in an environment in which mortgage sellers are devising all sorts of ways to add risk to mortgages (e.g. ballooning repayment schedules) in order to increase rates of return for investors in mortgage-backed investments (10S1).

The tragedy of all this has not yet become fully apparent to most Americans. All the US recessions since the start of globalization (around 1980) have had jobless recoveries (09G1). The current "Great Recession" in the US shows every sign of continuing this trend. This suggests a sick consumer sector of the US economy for the indefinite future. This creates a poor environment for people trying to create IRAs, 401(k)s and annuities for retiring on for the indefinite future. This also suggests a dysfunctional financial system for the indefinite future. For the unemployed, this is an especially sad prognosis.

Europe is now showing the same problems as the US has been experiencing. The pressures on EU wages and benefits resulting from globalization-related pressures have forces EU governments to borrow heavily to fund the health care systems, public education systems, labor laws, and other amenities that Europeans have long grown accustomed to. As the consumer sectors of poorer EU nations grow weaker, the ability to repay the loans they took out become increasingly open to doubts. The result: high interest rates that make the ability to repay loans even more doubtful. A tragic spiral and global repercussions seem inevitable. Japan and the EU managed globalization far better than the US (10S1). This is why the Great Recession hit the US the hardest. Yet, the ever-increasing pressures of globalization are now affecting all three developed regions in similar ways. All three regions (and even Argentina (08S3)) now show strong evidence of caste systems developing (08S3). These make it increasingly difficult, if not impossible, for newer entrants into the labor force to advance in the ways their parents did before globalization became significant.

1. Increasing the percentage of housewives in the labor force,
2. Working longer hours,
3. Increasing "Togetherness." Since 1980 (about the time globalization became a significant economic issue) there has been an upward trend in the number of multi-generational family households, defined as households with three or more generations, with a grown child (over age 25) and parents. After WWII, the portion of Americans living in multi-generational family households fell by more than half until 1980 when the trend reversed itself. From 1980 to 2008, this portion rose by a third to 16% of the total U.S. population, or around 49 million Americans (10B1).
4. Submitting to ever-increasing levels of stress in the workplace environment, driven by growing pressures to become more "productive." These workplace stresses have been spilling over into the remainder of the US economy. Air rage, road rage, desk rage, pedestrian rage etc. appear to be growing in the US (00J1). Air rage incidents, globally, increased from 1132 in 1994 to 5416 in 1997. Road rage killed 218 people during 1992-1997 and left 12,610 people injured. Workplace violence - virtually unheard of until the 1970s - now costs businesses more that $36 billion/ year according to a 1995 report by the Workplace Violence Research Institute. About 14% of Americans are on the verge of exploding into acts of violence, according to the Anger Institute of Chicago (Pittsburgh Post Gazette (9/5/00)). Growing stressfulness is also reflected in the increasing nastiness and viciousness heard from televangelists, talk-radio, and all those mindless attack ads during election campaigns. The situation is reaching a dangerous level. People and political parties are discovering that rage-filled, irrational analyses can influence public policy. This produces policies having little or no logical support. This results in federal policies with a significant element of randomness.
5. Drawing down savings to the point where the average savings rate of American families has become slightly above, or below, zero. In the 1950s through the 1970s (pre-globalization) US personal savings rates as a percentage of disposable income increased from 7% to 10%. In the 1980s through 2007 (during the globalization period) personal savings rates as a percentage of disposable income decreased from 10% to 1.5% (09B5) (Commerce Department data).
6. "Maxing-out" credit card debts, and increasing the number of credit cards held. (New, tougher, bankruptcy laws now discouraged these practices.)
7. A seventh (and most tragic) strategy came in the form of an advertising blitz by banks and other mortgage holders that urged homeowners to take out some, or all, of the equity they had in their homes (08S7). Citicorp ran a $1 billion advertising campaign from 2001-2006 urging homeowners to take out "home equity loans." These loans were formerly known as "second mortgages," - high-risk (high interest-rate) loans to people usually in dire financial straits. Home equity loans were touted as means of making life more luxurious - never mind the additional risk involved. Since the early 1980s, the value of home-equity loans outstanding increased by a factor of 1000, from $1 billion to more than $1 trillion. Nearly 25% of Americans with first mortgages now have them. Banks' returns on fixed-rate home-equity loans and lines of credit are 25-50% higher than returns on consumer loans overall. The downside of this bonanza is now becoming apparent. The portion of people who have home-equity lines of credit more than 30 days past due stands 55% above its average since the American Bankers Association began tracking it around 1990. Delinquent loans now total over $10 billion. (This is probably an obsolete figure.) For the first time since WWII, the portion of total US home value that Americans own has fallen to less than 50%. In the 1980s, that figure was 70% (08S7). (Banks, etc. own the remainder of these homes.) This decrease in homeowners' equity in their homes, during a period of declining home prices, makes foreclosure problems far worse. This compounds and prolongs the misery that the Great Recession is causing.

The seventh strategy for protecting US living standards ended tragically in late 2007 and 2008 in the long-anticipated (and inevitable) bursting of the housing bubble, declining home values, and a blizzard of mortgage foreclosures. That blizzard was significantly enhanced by the far smaller equity that the homeowner had left in their homes after having sold so much of it off at the urging of the banks. The weakened consumer economy has also created a huge supply of empty commercial real estate, and this has created serious problems for banks that hold the titles to this real estate (10H1).

At this point (mid-2010) early in the Great Recession, US consumers have little or nothing left to sell off: All their options have been "maxed-out," or nearly so. This puts the consumer sector of the US economy, and hence the US economy as a whole, in a precarious position. No "eighth strategy" exists that could halt, or slow, the descent of US wages and benefits down to developing world levels. As noted above, this involves something on the order of a 70% decline (08S1). This virtually insures an ever-worsening consumer sector of the US economy, major declines in the prices of stocks, bonds and other investment options, and even the inability to maintain basic infrastructure.

In the EU, the above-mentioned seven strategies took the form of massive under-the-table borrowing. This was aimed at maintaining the living standards of Europeans who have long been accustomed to employment benefits that even Americans lack. The possibility of a collapse of Western Civilization seems within the realm of the possible. The vast infrastructure of the developed world could not possibly be maintained when wages and benefits of the consumer sector decline by on the order of 70%. In fact, numerous analyses have shown that US transportation infrastructure, its power grids and dams, and its water/sewer-related infrastructure are already in deplorable conditions (07H1).

Also the US Congress has started to give up on the financing of various economic stimuli. They have realized, correctly, that permanently fixing the consumer sector of the US economy requires a perpetual series of economic stimuli. This is physically impossible without bankrupting the federal government. This puts the consumer sector of the US economy (and hence the US economy as a whole) in a position even more precarious than before. No options remain (at least at the state- or lower levels) for halting, or slowing, the descent of US wages and benefits down to developing world levels (involving something on the order of a 70% decline (08S1)). This makes it probable that we will now see an ever-worsening consumer sector of the US-, EU-, and Japanese economies, continuing low interest rates, increasing levels of unemployment, major declines in the prices of stocks, bonds and other investment options, more bankruptcies, more foreclosures, shrinking "safety nets" (e.g. social security and Medicare) at the national, state, and local levels, and a reduced inability to maintain basic US infrastructure that is already in bad shape. In terms of societal options, it is far from clear that any options exist for reducing the pains of globalization sufficiently to avoid a societal collapse.

In 1980 the rest of the world was indebted to the US by about $0.3 trillion. At the end of 2005, total US foreign debt was $13.6 trillion (about $119,000/ household). Net foreign debt (which excludes the $11.1 trillion in US-owed foreign assets) was therefore $2.5 trillion (20% of the US GDP) (06W3). The 3+ decades of continuous US trade deficits (currently about $400 billion/ year) has resulted in an added $2.5 trillion in cumulative debt. These debts, plus the rapid pace of US accumulation of new debt, plus rising interest rates, could lead to a vicious cycle of increasing borrowing causing (and being caused by) increasing interest rates.

The situation could get out of hand quickly (06W3). The US has been absorbing roughly 70% of the world's available external savings (06R3). This fact alone tells us that the US current account deficit (the broadest measure of the trade deficit) cannot continue doubling without encountering serious problems. For the first time in at least 90 years, the US is paying noticeably more to its foreign creditors than it receives from its investments abroad (06W3). Deutsche Bank Research (and former Federal Reserve Chairman Alan Greenspan) warned that capital flows into the US could dry up, causing the US dollar to drop, interest rates to increase, and stock markets to dive. A sustained drop in US stock markets could precipitate a downward spiral of these events. Americans would have to pay higher interest rates (and higher oil prices) at the worst possible time, and the US economy could lurch to a halt (Wall Street Journal (4/22/02)).

Expert Opinions: A 1/7/04 report (04B1) by the International Monetary Fund (IMF), when viewed in conjunction with the rapidly growing federal budget deficit, warned of "significant risks" not just for the US but for the rest of the world as well. It warned that US' net indebtedness to the rest of the world could equal 40% of its total economy within a few years - an unprecedented level of external debt for a large industrial country, and one that could play havoc with the value of the dollar and international exchange rates, push up global interest rates, and slow global investment and economic growth. (The US dollar has been declining since February 2002. A falling dollar promotes inflation, hence rising interest rates, rising natural resource prices, and trouble in US stock markets.) The Institute for International Economics supports the IMF outlook, as does Robert E. Rubin (former secretary of the Treasury) who warned that the federal budget was "on an unsustainable path." Warren Buffet, the legendary investor, said that the US is destined to become, not an "ownership society" but a "sharecropper society" (05G2).

Comparison with other developed nations: All this is in sharp contrast to the performance of other developed nations. Western Europe, whatever its problems, manages economic policy to maintain modest trade surpluses (05G2). Germany and Japan both manage to keep advanced manufacturing sectors anchored at home, and to defend domestic wage levels and social guarantees. When they do disperse production and jobs overseas, as they must, they do so strategically. By contrast, Washington defines "national interest" primarily in terms of advancing the global reach of the world's 60,000+ multi-national enterprises (05G2).

Infrastructure Crisis: A report "Infrastructure 2007: A Global Perspective," released on 5/9/07 by the Urban Land Institute and Ernst & Young LLP concluded that US airports, roads, rail lines, bridges and other transit infrastructure are deteriorating across the US because of insufficient investment. The report says that the failure to address this "emerging crisis in mobility" will undermine the ability of the US to compete internationally. In 2005 the American Society of Civil Engineers graded as "poor" the condition on the US transit infrastructure as well as US power grids, dams and systems for drinking water and waste water (water lines and sewer lines). The US faces a $1.6 trillion deficit in needed infrastructure spending though 2010 for repairs and maintenance according to the ULI/ Ernst & Young report. China spends 9% of its GDP on infrastructure; India spends 3.5%. The US spends 0.93% of its GDP ($112.9 billion/ year) on infrastructure according to the ULI/ Ernst & Young study (07H1).

Today's globalization's rules are once again being stacked heavily, and needlessly, in favor of multinational corporate interests with each new trade agreement - just like they were in previous globalizations. (See Chapter 1, Part [1B2] of Reference (08S1).) Many of these rules are contrary to fundamental globalization ideology, leading one to suspect that the ideology is based on an agenda other than what the public has been led to believe. These rules tends to enhance corporate profits even more than what is provided by the intrinsic advantage of combining the developed world economy with the capital-starved developing world economy. Some examples follow.

• Subsidies for research and development are exempted from counter-actions, while subsidies used by developing countries for industrial upgrading are not.
• In trade liberalization in Africa during the 1990s, trade was opened for services exported by developed nations - such as financial services -but remained protected in areas where developing nations could compete, such as agricultural goods, textiles or construction (02H1).
• High costs of raising and pursuing trade disputes give overwhelming advantages to large multi-national corporations.
• Environmental degradation associated with globalization is seen as a legitimate subsidy of international trade, despite the distortion of decision-making in a free market that such subsidies cause.
• Taxing multi-national corporations to pay for infrastructure necessitated by new manufacturing facilities is often illegal.
• Rights to choose what kinds of foods people eat, or what kinds of toxic pollutants they choose to outlaw, are restricted when these rights inconvenience multi-national corporations.
• If a nation finds a trade agreement to be disastrous, it must wait 20 years after it announces its intentions to get out before it can get out.

Chapter 9 of Reference (08S1) examines these issues and numerous similar issues in detail.

Around 80% of fish for human consumption ends up in three main markets (Japan, the US and the EU) (03W2). Since the population of the developing world is about five times that of the developed world, per-capita fish consumption in the developed world is about 20 times that of the developing world. So multiplying the population of the developed world by a factor of five would wipe out the world's marine and freshwater fisheries many times over. (The World's marine and freshwater fisheries are extremely, and non-sustainably, over-fished. This makes increases in global fish harvests highly unlikely.)

05G2 William Greider, "America's Truth Deficit", New York Times (7/18/05).
05M1 George Monbiot "I'm With Wolfowitz: Have we forgotten what the World Bank is for?" The Guardian, (4/5/05) www.monbiot.com.
05M2 Branko Milanovic, "Why did the Poorest Countries Fail To Catch Up?" Carnegie Papers of the Carnegie Endowment for International Peace, Number 62 (November 2005) 31 pages. http://www.carnegieendowment.org/files/CP62.Milanovic.FINAL.pdf.

10B1 Moriah Balingit, "Boomerang effect is a trend for U.S. Families," Pittsburgh Post Gazette (3/19/10). (Based on a Pew Research Center Study titled "The Return of the Multi-Generational Household.")
10H1 Christine Haughney, "Further Slide Seen in Commercial Real Estate," The New York Times (1/8/10).
10S1 Bruce Sundquist, "The Link Between Globalization and the Great Recession - Implications for the Future," Edition 4 (May 2010) http://home.windstream.net/bsundquist1/link.html