Watching both Barack Obama and Mitt Romney characterize the phenomena of globalization and outsourcing as inherently bad for America, it’s easy to wonder if either candidate has at least a rudimentary understanding of economics.
Indeed, the issue of whether the United States should embrace globalization and the reshaping of the economic, political and cultural landscapes around the world has emerged as a major theme of the presidential race.
President Obama has made globalization one of the focal points of his campaign strategy by running ads that repeatedly accuse Romney of being a “corporate raider,” who “shipped jobs off to China and Mexico” during his tenure as CEO of Bain Capital.
Naturally, the Romney campaign has retaliated with some ammunition of its own, highlighting the fact that Obama’s stimulus package sent U.S. tax dollars overseas and outsourced thousands of U.S. jobs.
To many Americans, the words “globalization” and “outsourcing” evoke negative images of super-wealthy CEOs trying to further increase their fortune by moving factories and jobs from the United States to foreign countries.
In addition, our political leaders have claimed for years that global integration would further impoverish and oppress the poor and crush local economies.
However, the results have shown that Obama, Romney and anyone else who decries globalization as evil couldn’t be more wrong.
In fact, globalization benefits everyone, especially the poor.
From 1999 to 2007, the booming economies of India and China have lifted 200 million people out of abject poverty, according to the International Monetary Fund. Furthermore, tens of millions of people have been able to catapult themselves far ahead into the middle class.
The concept of globalization is simple, yet profound: It is the interweaving of countries’ markets, technologies, information systems and telecommunication networks.
But in order to truly comprehend globalization and what it entails, it is imperative to gather a basic understanding of how it came about.
Globalization is the culmination of several fundamental technological advances: First, a tremendous investment — especially during the dot-com bubble — in increasing broadband connectivity throughout the world, which allowed for the creation of the Internet and mobile phones.
While these advances were crucial to sowing the seeds of our hyper-connected world, the underlying driving force behind globalization is the newfound ability of individuals to compete and cooperate with anyone from anywhere in the world.
New York Times columnist and Pulitzer Prize winning author Thomas Friedman describes globalization as a dynamic force that has “flattened the world,” and as a phenomenon that allows individuals to innovate so easily from all over the planet.
Interestingly enough, globalization will ultimately be more beneficial to America than any other country. It frees up people and capital to do different, more sophisticated work, and it gives an opportunity to produce the end product more cheaply — benefitting customers as it helps the poor.
So, how will globalization affect the bottom line in concrete terms for university students once the inevitable job hunt begins after graduation?
For example, what type of additional skills will a university student, who wants to work as an accountant, have to acquire in order to stay in business in America?
First, let’s consider that there are about 70,000 accounting graduates in India each year, many of whom will accept $100 a month as their starting salary.
With strict training and standardized forms, these recently graduated Indians can be easily converted to basic Western accounting practices for pennies on the dollar relative to American accountants.
The accountant who wants to work in the United States will be the one who is talented at formulating creative, intricate strategies, such as tax avoidance or tax sheltering.
They must also be able to create value through impeccable customer relationships. If you are unable to do this, the tax returns will be outsourced to a firm that either does a better job than you or can do it more cheaply.
We are going through one of the most transformative changes in global culture. No matter what your profession, everyone must focus on exactly what value he or she adds to his or her firm.
If we do not embrace globalization, however, the United States will fall behind as a world power, because change is always hardest on those caught by surprise.
