It is the season of lists: best movies, best books, and on and on. As I teach and write on globalization with all its various meanings, I thought it would be interesting to do something very different: a geo-political-economic list -- a list of the globalization top five from an American perspective.
Why only five? Because I am only giving an overview, a macro look at how globalization is now shaping or will shape America. More than five and the list would tend to become less of an overview and more of a detailed analysis.
1. America might still be a conservative to middle-of-the-road country politically, but it has become economically a globalized country. Europe and China bashing does not make sense when so many of America's jobs are dependent either on foreign direct investment or on international trade. Whether one is talking about this year's projected U.S. export of 12.30 million bales of cotton primarily from Texas, and going mainly to China, or the BMW factory in Spartanburg, S.C., with its investment of $750 million, which made it the largest car factory in the United States by number of employees, or Siemens, with its 60,000 employees in the United States, or Volkswagen which, after investing over $1 billion, is completing a plant in Tennessee that will produce 150,000 cars per year, America's economy is globalized.
2. Of course the corollary to this is that America is no longer a self-contained continental market, secure against world wide economic contagion. If Europe, our largest trading partner, has pneumonia, if China and the emerging market slow down partly because of Europe and partly because of how interconnected their economies are, the U.S. economy is affected. Just look at the IMF figures that show the euro crisis has reduced the projected United States per capita GDP by 2 percent over the last three years.
3. The American economy is in a uniquely positive position compared to the rest of the world. This is partly because of the stability of the American political system as just demonstrated again by our last election, and by continued international money flows into American treasury bills. It is also partly due to new technology that has unlocked huge quantities of natural gas, dramatically reducing the cost of large scale industrial manufacturing in the United States, while at the same time enabling America to approach energy self-sufficiency. And it is also partly due to the post-crash comparative strength of the American banks, which unlike the European banks, are regulated on a monetary-wide system. In addition, the American banks were forced to undergo a severe transparent stress test after the crash by the Treasury Department, administered by the Federal Reserve.
4. Globalization has now entered a new, more unwieldy, more competitive and much more fragile stage. It is forcing countries that appear to be rivals or potential rivals to act in specific areas as each other's joint venture partners. Unlike previous times in history, the world-wide capital flows of globalized world have forced nations that might be rivals to also be dependent on each other. During the cold war, the Soviet Union's internal machinations never affected the United States' continental-based economy. Now rumors come out of Beijing that China might consider stimulating its economy, and the New York stock exchange immediately bumps up, as if Ben Bernanke announced QE4. These nation-to-nation joint ventures take a cue from the business concept of Global Strategic Partnerships where corporations join together in one market while remaining rivals in another, much like airlines that agree to combine routes on one continent and compete on another.
5. The dominant issue of 2013 will be China. Can it redirect its economy and maintain its growth rate under its current governing system? Or has the low-hanging fruit (cheap labor for manufacturing) already been picked and it is now facing an insurmountable growth wall fortified by vested interests, which will inhibit any change?
What will be the consequences of a failure to change? Will the Chinese government need to become more nationalistic and increasingly more aggressive in order to maintain its "mandate from heaven"? And of course whether it changes or does not change, how does the need of China to protect its own global supply lines conflict with America's traditional post-World War II role of guarantor of the freedom of the seas?
Compounding this of course is how much of the world's economy has become dependent on China's economic growth, whether Brazil, Africa, Southeast Asia or Australia, and how will this slow down affect the economics and politics of those countries?