LAURENCE BUTLER, a reader of this site, is the author of the following essay, which was written for an essay contest held by the Libertarian ISI group in Virginia. The topic of the contest was, “Can Character and Community Survive in an Age of Globalization?” Mr. Butler’s response was, in so many words, “No, they can’t.”  The essay is relevant to the recent discussions here on free trade and, though it is quite lengthy, I think readers will enjoy it and so I am posting it in its entirety.

 Can Character and Community Survive in An Age of Globalization?

       — Laurence Butler

To determine survival, one must first know what something was and what it is, so that a judgment can be made on what it becomes. Thus it is important to first identify community, character, their relationship, and how they are threatened, if at all, by globalization. A community can be regarded as a set of interactions or human behaviors—actions and understandings based on shared expectations, values, beliefs and meanings between individuals.[1] These values and beliefs are, in turn, products of traditional and experiential development. Communities are naturally exclusive. A community’s strength of character is its willingness to maintain its particular identity apart from globalized interests. Character is an investment by a community in itself. While character is essential for the preservation of a community, it abounds from whatever inherent strengths and virtues the community espouses. Character functions to uphold the community standards, maintain its healthy traditions, and incorporate modernity as needed. While strength of character is an unrelenting pursuit of community interest, it must be an interest healthy for the community’s entirety, not just economical. The survival of a community, and thus the survival of character, is dependent on a continually discerning approach.

Communities are continued by like-minded posterity, and as such exist as recognizable constructs far older than any of their living members, constructs that will likely continue through generations. Ultimately, a community is beyond its very components, members, or even a geographical location. It is self-sufficient, existing without external need or dependency. Though attributes such as race and religion often aid in identifying a community, it is reducible, as a concept, to individuals with a common interest. Character is the measurement of a community’s ideals embodied in an individual or the group as a whole. Strength of character is determined by the capacity to preserve the communal traditions, and its variances of conviction affect the motivations and inclinations of any individual when making judgment or decisions. Community interests are not always synonymous or harmonious with the same community’s traditions, and at times it is necessary for individuals to serve their interests, as well as those of their community, even if against tradition. Provided these individuals do so with strong character, and they act for the good of the community, the traditions deemed most essential will be preserved and the community will ultimately endure.

Within the context of global trade and interactions, communities are simplified and amalgamated into a nation. Common interests become national interests, though individual traditions and ideals may not be identical or complementary; some amount of unity is necessarily lost. While nations, as a whole, appear to readily benefit from the plentiful labor, cheap consumption, and massive spending that comes with increased globalization, individual communities often do not. In a globalized economy, national interests often conflict with those of their comprising communities. The practical difference with the modern concept of globalization is that nations are no longer limited to trading goods or raw materials. As the tendency towards outsourcing grows, the protective element of national borders, formerly in place to protect communities, is not a prerogative of economic nations inclined towards globalization. It was not until the 1970s that the percentage of world GDP in foreign assets recouped the integration seen in the early 1900s.[2] From 1870 until 1914, at the height of European imperialism and nationalist preoccupations, massive amounts of capital were sent from Europe and the Americas to areas of recent settlement with plentiful natural resources, but not cheap labor.[3] Unlike today, developed nations were paying for raw materials but reserving the manufacturing jobs for domestic workers. In these circumstances, communities were not sacrificing domestic labor for national interest in foreign development. Furthermore, the governing opinions on globalization and free trade were far from homogeneous. Developed European nations, as well as the United States, specified protective tariffs, particularly affecting domestic agriculture, and the policies often changed with every new political election.[4] Since the 1970s, the prevailing aspiration of many nations has been a modern, highly globalized economy that dissolves borders—a policy regarding globalization as an indisputable good. Robyn Meredith, Senior Editor at Forbes, offers a sufficient rendition of this trend:

Cut to 2007, and the numbers are in: The protesters and do-gooders are just plain wrong. It turns out globalization is good–and not just for the rich, but especially for the poor. The booming economies of India and China–the Elephant and the Dragon–have lifted 200 million people out of abject poverty in the 1990s as globalization took off, the International Monetary Fund says.[5]

For proponents of globalization, the free flow and exchange of goods and services has flooded world markets with cheap, plentiful goods and labor saving devices for the benefit of anyone with money to spend.

Such approaches attempt to simplify what is, by virtue of its being a global issue, a very complicated situation. They do so by equivocating national interests and national measures of wealth with the well-being of individual communities—those on both sides of the global trade paradigm. Dr. Paul Roberts, former Assistant Secretary of the Treasury, notes with distaste:

Desirous of demonstrating that globalization is creating more U.S. jobs than it is destroying; normally sound economists are making fundamental analytical and empirical errors… As long as most economists and elected officials remain in total denial, we are unlikely to do anything about it.[6]

The 1970s saw new highs in foreign asset investment, and even against the oil and debt crisis of the latter 1970s and early 1980s, promised increased consumption through global labor arbitrage. This mantra, as Dr. Roberts points out, is still repeated today. Even in the midst of the worst unemployment rates since the Great Depression, U.S. corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas.[7] According to the U.S. Census Bureau, poverty rates that were declining in the 1950s and 1960s spiked and stayed relatively static since the later 1970s.[8] While outsourcing was helpful for China and India in way of employment, it has not been correspondingly helpful to the U.S. The G.I. Bill, war development loans, private saving, and rationing of World War II left post-war Americans benefitting from high levels of education, technology, and capital. The American workforce was highly productive and had little to fear from cheaper, foreign labor working with less capital and technology. However, the increased privatization in Europe, China, and Mexico in the 1980s, along with the collapse of the Soviet Empire, created investment opportunities abroad where skilled but unemployed labor was available.[9] This explains the shift from colonial globalization to modern, with its new investment priorities. In this modern period, capital and technology are easily transferrable, and all other factors being relatively equal, are appropriated towards the cheapest labor supplies. Technology and capital were not so easily transferred in the early 1900s with cost-efficient results. Instead, the preoccupation was with the importation of raw materials to industrial complexes with better skilled and better paid workers. According to Roberts, globalism is a direct threat to U.S. living standards:

A number of economic factors, such as existing contracts and mortgage debt, make it impossible for U.S. wages and salaries to quickly adjust downward to Chinese and Indian levels. Therefore, Americans will continue to lose ground in the global labor market.[10]

For communities in the United States, the cost of globalization is a loss in employment.

Roberts and Meredith encapsulate the difficulty in gauging the value of globalization. They both come from the same nation, but as seen by their conflicting opinions, come from different academic communities. Meredith values the economic benefit that globalization brings in the form of foreign job creation and cheap consumption. Roberts values domestic jobs, if at a higher cost of consumption, and bemoans the loss of domestic employment—in essence emphasizing the economic costs of globalization. Meredith continues, “As the Chindia (Chinese-Indian) revolution spreads, the ranks of the poor get smaller, not larger. In the 1990s, as Vietnam’s economy grew 6% a year, the number of people living in poverty fell 7% annually; in Uganda, when GDP growth passed 3%, the number fell 6% per year”.[11] She refers to the same privatization as Roberts, but excludes the negative effects he emphasizes so heavily: “China unleashed its economy in 1978, seeding capitalism first among farmers newly freed to sell the fruits of their fields instead of handing the produce over to Communist Party collectives”.[12] Meredith is concerned with financial improvement regardless of community or nationality, citing with pride how Starbucks now serves coffee within the Forbidden City—a particularly contentious issue with the Public Citizen Group against whom she is arguing.[13] The Chinese and Indian economies are growing, as are the standards of living almost everywhere foreign capital goes. Considered in isolation, this prosperity is a good, but it does seem that certain elements of tradition, in this case oriental, have been compromised. It is ultimately up to those Chinese and Indians with strong character to decide what is most valuable, and up to them to create a balance between economic progress and cultural preservation. If the communities comprising the growing economy have re-orchestrated their ideals and values solely towards economic prosperity, then contemporary character and community would survive. The traditional aspects of their communities, however, will likely be forfeit, especially on a national level, where they cannot be represented as ubiquitous national traditions. The Chinese, as a nation, don’t necessarily value the Forbidden City as an austere and untouchable icon, though some Chinese communities do.

Roberts addresses the spending side of globalization, and observes a country of communities once known for economic thrift and prudence failing to preserve their traditions or even serve the immediate interests of economic well being. He asks, “Will the U.S. still be a superpower when it can no longer make anything and is dependent on foreigners for manufactured goods?”[14] The United States, an alliance of fifty greater communities, is running a massive trade deficit and losing income as more and more U.S. assets are forfeited overseas. The argument for globalization, that this loss is being more than made up for in cheaper goods, will soon be without merit, according to Roberts, as the U.S. dollar depreciates in value. While living standards increase elsewhere, they decrease in America, and the new sector of the American economy supposed to fill the manufacturing void, information technology, is also being outsourced at what is, for Roberts, an alarming rate.[15] For the United States, globalization seems to bring less economic well-being and has developed a destructive attitude among U.S. consumers. Modern outsourcing has caused America’s domestic demand for labor to decrease dramatically. Between January 2001 and May 2003, U.S. manufacturing jobs declined by 13.3 percent, and the jobs continue to decrease. Every state and the District of Columbia have lost manufacturing employment in the range of 15-21 percent over the last ten years.[16]

Nations can borrow on debt, as the United States continues to do, but individual communities cannot. When nations enter into trade, they utilize their productive resources.[17] In the United States-China relationship, the U.S. has borrowing power while China has labor to its advantage. When a nation absorbs more than it produces, it must necessarily borrow from abroad. While Congress expands the federal debt limit, manufacturing-centered communities like those in Detroit or Lexington North Carolina wither away.[18] A greater concern is the lessened emphasis on actual ownership and the moral hazard this brings. Part of the recent U.S. recession had to do with default mortgages and defunct credit. Americans seem to place less and less value on hard work, patience, and consolidated ownership. Wassily Leontief observed that the U.S. exported labor intensive commodities in the 1950s and 1960s—contrary to then-contemporary economic theory and quite contrary to today.[19] Any association of communities which once lent money to the world, as the exceedingly industrial United States did during and after World War II, cannot be in sequence with tradition or its values if it now perpetuates its own debt—an act showing a substantial lack of character for those community leaders who do so.

Because of the trade deficit, American communities must borrow to support higher living standards than they can produce, while many Chinese communities are producing better than they can afford. All of the communities involved have become dependent, though Robert’s fears of a devalued dollar have been abated so far by the Chinese Government pegging the yen. Foreign investors, like the U.S., have become dependent on cheap imports to make their joblessness acceptable. None of these parties sound like strong nations comprised of strong communities—communities that can reconcile current interests with a preservation of their traditional ideals. Global trade is no longer just an advantage or particular and small aspect of a protective community. It has been lumped into the greater goal of globalization, now held to be a necessary constant. A community that depends on foreign involvement is a community that will eventually buy into a new culture as well—in this case a culture of rapid consumption. While this may satisfy immediate community needs, the new culture will be incompatible with the community’s traditions and inherited ideals. Economic well being is distinct from cultural well being, and of course is of varying importance to any given culture. The economic interests of a community can be served in keeping with all of the community’s traditions, but often are not. Modern globalization, defined by its differences from globalism in the early 1900s, is setting a new trend of its own, and by nature of its reliance on progressive technologies, is very rarely in keeping with community heritage.

Many of the pro-globalism economists argue that globalization with tampered exchange rates isn’t ideal, and that any negative effects in the global exchange can be explained by monetary control. This is another example of varying communal priorities. The Chinese orchestrators of globalism, for example, value being exporters, and thus peg their currency. Many American communities, who are used to significant buying power, value international trade when complemented by domestic employment. While American buying power remains strong due to China’s policy, the nation at large will be unwilling to sacrifice cheap goods for higher levels of employment. However unemployment within American communities is likely to conflict with their traditions and put a strain on their cultural wellbeing. As the problem with unemployment grows, communities will begin to politically mechanize controls to the same effect of the Chinese—unregulated globalism is not really possible.

The interests of communities that coincide with the exigencies of globalization will survive, but the traditions and interests that conflict with it will not. William Baldwin, a self-proclaimed critic of Meredith says, “We are unmistakably enriched when China dumps products on our markets too cheaply”.[20] This would only be true if consumerism were the be all and end all of America’s existence. But the cheap consumption and instant gratification of globalization are hardly in keeping with the characteristic traditions of many American communities. Consider the traditional, American Dream maxim: hard work, patience, and perseverance will yield anyone of any community their desires for liberty and happiness. It was this ideal that brought so many otherwise different communities together. But the reckless, materialistic pursuit Baldwin advances so fervently necessitates no hard work or patience. As long as China keeps offloading cheap goods, one doesn’t have to work hard or aspire to anything more. The older American community is dead and buried with its virtues. It has become an anachronism that will serve as little more than a dull heading towards the back of a textbook. Likewise, in an era of aggressive globalization, exporting communities cannot afford to prioritize based on inward needs, as they will be focusing on foreign demand. The unmarketable aspects of the old will fade as communities strive to interest foreign buyers.

New communities can form or develop as long as they maintain common interests and individuals with the strength of character to pursue them. Globalization, though it may contain economic incentive, is a pursuit pragmatically opposed to the independent community. The polis, the local community, exists to protect the interests of its citizens from external pressures. In the 21^st century, the conflict of globalism is between private communities and global forces. When communities attempt to globalize, they abandon their foundations. While these traditional communities seem doomed as the world becomes more and more economically integrated, this isn’t to say that new pseudo-communities won’t form or possess some small piece of their original virtue. However, these new commonwealths are products of globalization. They can be sustained only by globalization, and are wholly subject to its every ebb and flow. If there is a recession, they will also diminish; such is the risk of abandoning all self-sufficiency. Sufficiency can be, and was, complemented by international trade. Trade proved inadequate for the nations involved with the apparent benefits of rampant outsourcing. While nations may benefit from globalization, communities do not. Communities can trade, but they cannot globalize and remain a distinct community; it is an existential paradox. Individuals with strong character can accommodate inevitable change and reconcile the community’s traditional ideals with modern interests. However, globalization, the external search for economic security, has become incompatible with necessary self-reliance for community survival. The new global groups are centered on economic considerations that will take little account of traditional mores. The economist studies individuals living in a world of scarcity. Societies produced by globalization, whose character will be defined by economic interest, will be driven by individual inclinations toward personal gain rather than communal integrity.

                                                          — Comments —

Greg Jinkerson writes:

Thank you for providing Laurence Butler’s wonderful essay. He says so many things so well, addressing the complexity of globalization with the attention and evidence that it deserves. His emphasis on the durability and historical nature of communities is refreshing. Seeing communities as historically rooted entities is essential to a true understanding of how those communities interact with the forces of globalization. It’s gratifying to see how Butler so ably connects the remote operations of global trade to the fundamental questions of small communities and the character which all communities that wish to survive must cultivate in their members. Such questions seem rarely to cross the minds of certain economists. Murray Rothbard was an incredibly gifted writer and a deft communicator, but he was often heard to remark how he had no interest in learning anything about history prior to the 19th century. Not coincidentally, that is the period when the free-market libertarian approach to historical understanding first gained wide acceptance among some Western intellectuals. Going back further might have thrown a few wrinkles into Rothbard’s world view that would have been irreconcilable.

Mr. Butler writes:

Thank you Greg. I appreciate your warm words. I also appreciate your analysis of Rothbard, which is I think a very apt and underrepresented point against the modern perspective on preserving comfort and well-being by importing things produced in a non-American fashion, at the expense of our cultural integrity. We are importing the products of a foreign culture when we do this, and to do this with such profligacy is a great mistake, because I do not believe there are many leaders right now with the right character to resist the pressures and temptations . We import foreign culture and influence with our lust for trinkets and stocking stuffers, but this displaces the hearth and home we should be striving to protect in America.

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