Pros and cons

In 2009, General Electric Co. plans to close a Bloomington refrigerator plant that employs approximately 900 people. Such news isn’t uncommon these days. While GE says the closing is partly because of the increasing popularity of other styles of refrigerators, it’s understood that the industry is in trouble. \nAmerican manufacturers are suffering. The customer service sector of our market is being outsourced almost wholesale to countries like India. On paper, these look like victories for the free market. And in the grand scheme of things, they are. But if you were to tell a worker at that GE plant that the relocation of his job will contribute to greater economies of scale and trade specialization more in line with comparative advantage, I don’t think he’d be much consoled. \nPut yourself in his shoes. You’re maybe two years away from getting a pension and retiring at a reasonable age; you’ve spent your life doing blue-collar work and you’ve been dedicated. It doesn’t matter if the reshuffling of jobs is more economical or results in lower prices across the board. Most people who know what globalization really is agree with it, until it threatens their jobs. Then they mutter darkly about Chinese currency manipulation and India’s child-labor force. And in a sense, they’re right to be upset. We theorize that, although unemployment from job exporting can be rough, other jobs will be created, and people can be retrained. But if you’re 48 years old and you’ve spent the bulk of your life as a welder, how much hope is there that you’ll go to Kelley, get your MBA and run off to be an investment banker?\nThe educational opportunities America offers also demand that you take advantage of them or risk being left behind. High-wage labor in a blue-collar trade isn’t America’s future; things like economic consulting and medical research are. That’s fine for us students. We can study whatever we want. But it doesn’t work for everyone.\nFor America as a whole, globalization helps. Wal-Mart might run some mom-and-pop stores out of business, but especially in an area with poverty like Bloomington’s, cheap access to daily essentials is a very good thing. Those mom-and-pop stores can’t operate without charging more, and a lot of people can’t afford to spend more than absolutely necessary on food. \nWhen more Indian refrigerator plants open up, they’re going to need more economic consultants, so more jobs in America will open up. Of course, this is a simplified model, but it’s essentially how things operate. The world keeps turning. \nAnd while people who lose their jobs tend to resist whatever caused the loss, the truth is that society will be better off. We have programs to assist these people, but it won’t be complete compensation. It’s just the reality of things, however, that isolationism hurts everyone, and to a greater degree than outsourcing. Job loss from globalization can be harsh, but the opposite, isolationism, can be even worse.