How Globalization Set the Stage for the 2008 Economic Collapse

[Leo 9]

Robert Creamer
Posted January 8, 2009 | 08:30 AM (EST)

How Globalization Set the Stage for the 2008 Economic Collapse

The extent of the 2008 economic collapse surprised and shocked the conventional wisdom in Washington and on Wall Street. But in hindsight, a good case can be made that the massive globalization of labor and financial markets, coupled with "free markets uber alles" policies, formed a toxic mixture that made the collapse inevitable. Here's why:

1). The globalization of labor markets -- and especially the outsourcing of once high paying jobs to low-wage economies - drove down incomes in the United States and western Europe. That effect might have been tempered by the growth of unions and by trade agreements that protected labor rights. But the right wing assault on unions in the United States--and the passage of trade deals that protected the rights of capital and did nothing to protect the incomes of average workers--allowed real incomes for most Americans to drop, especially in the last eight years. In fact, all of the economic growth of the last eight years went to the wealthiest 2% of the population.

Stagnating incomes led the Central Banks in Europe and the U.S. to encourage massive increases in consumer credit to fuel the economy. Without all that new consumer debt, the economy would have tanked years ago. Long-term economic growth requires that there are more and more people who have more and more money to buy products and services. Otherwise, businesses won't invest in new plants and equipment and hire new workers, since no one will have the money to buy their products.

The terrible consequences of shrinking incomes were also staved off by rising home prices. This allowed average people to borrow more and more against the rising equity of their homes.

But all of this new consumer and home equity debt created a giant "house of cards." It masked the underlying sickness of the economy for a while. As long as the economy continued to grow enough to create a net increase in jobs - and as long as housing prices rose - things were rickety but continued to hang together. But as soon as the economy began to contract, and housing prices fell, the whole construction came tumbling down in a heap

snip

http://www.huffingtonpost.com/robert-creamer/how-globalization-set-the_b_156172.html

[Hydra]

1. Yup

They keep wanting to steal from us, but they don't want to pay us, so they're surprised when we don't have anything more to take.

[Leo 9]

5. Wikipedia on Anti-Globalization

In either case, participants stand in opposition to the unregulated political power of large, multi-national corporations, as the corporations exercise power through leveraging trade agreements which in some instances damage the democratic rights of citizens, the environment particularly air quality index and rain forests, as well as national government's sovereignty to determine labor rights, including the right to form a union, and health and safety legislation, or laws as they may otherwise infringe on cultural practices and traditions of developing countries.

Some people who are labeled "anti-globalist" or "sceptics" (Hirst and Thompson)<36>consider the term to be too vague and inaccurate <37><38>. Podobnik states that "the vast majority of groups that participate in these protests draw on international networks of support, and they generally call for forms of globalization that enhance democratic representation, human rights, and egalitarianism."

snip

http://en.wikipedia.org/wiki/Globalization

[rhett o rick]

2. Globalization = leveling of the standard of living of the working classes of the world. nm

[Runcible Spoon]

7. yes, levelling them to abject poverty

and enriching the already superwealthy at ever-rapidly increasing rates.

[taught_me_patience]

3. Good article that cuts to the heart of the problem

Lack of wages. Obama's "simulus package" will do nothing to cure the heart of the problem, and is just another band aid. Also, globalization is one of many reasons why wages have been falling. There are many other reasons too.

[OHdem10]

4. How True! How True! How True!

Keep this front and center.

[Runcible Spoon]

6. excellent and important info.

KnR