The global neighborhood

Automotive Design & Production, August, 2006

The so-called "global economy" is pretty much like the weather. Everyone talks about it. And there are some people who do something about it--we all know about the Fed making adjustments to the money supply and the G8 getting together to jaw bone and Bono getting on stage to call for debt relief and ... Similarly, there are people who shoot sodium iodide into clouds or do rain dances or ... Certainly, there are some who understand the global economy, just as there are those who understand metrology. But many people who hold forth on the former are about as well qualified as the weather bunnies who are on the 6 pm local news when it comes to the latter. If for no other reason than to get a different, informed view of the global economy, then Globalization and Its Enemies is worth your time and effort. While some people in the U.S. seem to think that we are being inundated with products from elsewhere, Daniel Cohen, who happens to teach economics in France, at the Ecole Normale Superieure and the Universite de Paris-I, points out that while the 15 leading European countries account for "nearly 40 percent of global commerce"--which is certainly a non-trivial amount--"two-thirds of its exports and imports are traded within Europe itself. France, Italy, the Netherlands, and England are the principal trade partners of Germany, the number one European exporter." That last sentence isn't quite as surprising as this one that follows: "Trade between Germany and the United States is less than Germany's trade with Belgium and Luxembourg." Moreover, Cohen points out, "the goods traded in the heart of Europe are practically identical. Renault automobiles are traded against Volkswagens, Yves Saint-Laurent clothes against those from Prada, and so on. The majority of world trade is very much like neighborhood commerce, as much for the products as for the trading partners." Who would have figured that? Sure, there are lots of BMWs and Mercedes and Audis on the streets of the U.S., but not quite as many as some might have been led to believe.

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Cohen makes an argument that needs to be taken into account by all countries, including the U.S. He says there are a series of levers that help maintain the wealth of a nation: educated human capital; access to machines and technology; the efficiency of technological progress and the efficiency of business. All of which is to say that education, capital equipment (from machine tools to supercomputers), investments in R&D, and the elimination of red tape are all key to continued and future success. But who hasn't figured that? Lots of people talk about it, but ...

--GSV

Globalization and Its Enemies

By Daniel Cohen

The MIT Press

$27.95