Globalization

I was lucky enough to attend the Monetary Committee breakfast in Singapore. The topic: globalization.The participants: Finannce ministers and Central bankers from all over the world.Bob Bernanke, Hank Paulson, the CEOs of HSBC, RBS, and a few other heavy weights with Bob Zoellick, and the heads of all IFIs (International Financial Institutions) such as UN, UNDP, OECD, EU, AU, WTO etc..
People who not only know about the Financial world, but who are in the driver's seat.

Conclusion: The World has changed. Europe and to a lesser extent the US are dragging. Asia is booming, even Africa and latin America are doing great. After 40 years of aid, the former Third World is catching up. Problem: Our jobs are up for grabs by all of them. CEOs, who owe their loyalty to consumers and shareholders go where costs are lowest. Our consumers go for the lowest price. Today, anybody in Gabon, Morrocco or Iran can do what was done in Detroit, Birmingham or Dusseldorf.....and much cheaper.

Most of these countries have stopped borrowing from the IMF or the WorldBank . These institutions are victims of their success. The US is the largest borrower in the World. Instead of the split between rich and poor being between the First and the third world, it now is within each of our countries, between the skilled and the unskilled.
Problem:
Voters in the US and in Europe are not aware of the change. They view the disappearance of manufacturing jobs as a temporary outrage that can be stopped by "courageous" politicians with protectionist measures. You put a high tariff on imports. You close the border, and start a buy American campaign. politicians are always ready to offer simple remedies to be re-elected.
In Europe, EU citizens do not realize that the world can make the same Renault or VWs but without the extra cost entailed by social benefits and entitlements. Worse, because of protection against Asian brands, European cars have not innovated and are less attractive to the outside world , except for the luxury niche.
What politicians do not say, is that it is too late! Not only protectionism would kill competition, but it would allow a price hike. Higher prices = less purchases = less factories = less jobs = less money = less purchasing power = bankrupcies etc.
That happened in 1929 after the Smoot-Harley act....
When president Bush protected US steel manufacturers from foreign imports, Europe retaliated with a ban on US products. Worse, Detroit had no choice but to buy american steel and add to the costs of its cars!

As I write this, the WTO negociations are suspended and might die. If they are killed because of protectionist policies in the US and in Europe, the consumer can get ready to see its purchasing power take a tremendous hit. And if you remember what followed 1929, it won't be the biggest problem.

Why is it that consumers do not organize to save globalization from a handful of backward populists?

I was actually paid to attend this select breakfast. I would have paid to be there.