TOPICS > Economy

Authors Debate Effects of Globalization on Society

September 28, 2006 at 6:40 PM EDT

JEFFREY BROWN: “Take This Job and Ship It,” that’s the name of a new book that looks critically at some of the forces shaping today’s global economy and its impact on American workers. One of its prime targets is another book, “The World is Flat,” a bestseller with its own view of the changes brought through globalization.

Side by side now, here are the authors: Byron Dorgan, Democratic senator from North Dakota; and Tom Friedman, columnist for the New York Times.

Welcome to both of you.

TOM FRIEDMAN, New York Times: Thank you.

SEN. BYRON DORGAN (D), North Dakota: Thank you.

JEFFREY BROWN: Senator Dorgan, you write, “The world is flat? That’s just flat wrong.” Now, what do you mean? What world do you see?

SEN. BYRON DORGAN: Well, I do. This is a new world, after a century of progress and lifting American standards, building a middle class, lifting wages, and all the things that we did to make this the country it is.

Now it’s a new day, they say. It’s a global economy, a flat world. Corporations should search for the lowest, cheapest labor, lowest cost labor, produce there, ship here, sell in America, run the income through the Cayman Islands.

We’re up to our neck in debt, $800 billion trade deficit this year, downward pressure on wages and benefits. I’m saying this doesn’t work. It’s going to shrink the middle-class. It leaves us choking on debt, and we need a fair trade strategy. This free trade nonsense in which we sell out and pull the rug out from under American workers and American interests just has to stop.

JEFFREY BROWN: What do you see, Tom Friedman?

TOM FRIEDMAN: Well, my book is really about the world as it is and the world that’s evolved in the last two decades. And it’s a world in which three things have really come together: the personal computer, which has allowed individuals to author their own content in digital form; the Internet, which has allowed them to send that content anywhere, words, photo, data, spreadsheet, video; and workflow software that’s made it possible to collaborate anywhere with anyone on anything.

That’s what’s really flattened the world, in my view, and made so many more people potential collaborators, connectors and competitors.

Now, there’s an iron rule, I would argue, Jeff, in this world, and it goes like this: Whatever can be done will be done. There’s only one question: Will it be done by you or to you?

And in that world, OK, I have no doubt that Americans can compete, thrive, and succeed, if we keep our economy open so more people can do more things, competitive so we get the first signals, OK, because we face competition, all right, and we empower, and enable our workers to do it before it’s done to them.

Harmful loss vs. inevitable change

Tom Friedman
We used to have a receptionist at the New York Times Washington bureau, OK? We don't have a receptionist anymore, but that phone isn't answered in India. It's answered by a microchip.

JEFFREY BROWN: Potential benefits for everyone, you see.

You see loss of jobs, lower wages?

SEN. BYRON DORGAN: There's no question about that. I mean, I don't disagree with the advent of the Internet. The world isn't flat; the world clearly is smaller because of the information technology revolution. I don't deny the benefits of all of that.

The question is: Who will receive those benefits? Will we in this country? The fact is, the world "as it is," as Tom says, it's about what kind of world we want to live in. What kind of trade agreements do we want to engage in with other countries?

Tom takes a look at Bangalore and says, "Isn't this wonderful?" Well, if American jobs are gone to Bangalore, no, it's not so wonderful.

I tell in the book a short story about Natasha Humphries. She did everything right. She went to Stanford, got a degree, an African-American young lady, went to work for Palm Pilot. By the way, her last job at Palm Pilot was to train her successor, an engineer from India who will work for one-fifth the cost. Is that good?

No, it's not good for this country. It wasn't good for Natasha, and it's going on around all this country. And some leading economists say there are 40 million to 50 million tradable jobs, and even those that aren't gone from this country will face downward pressure on wages. That's what most families are now facing in this country; that's what the facts are.

JEFFREY BROWN: What's the response to the story of that woman?

TOM FRIEDMAN: Well, I'd like to know what she's doing today, whether she's found a job, number one, because I bet dollars to doughnuts, if she has the skills that the senator suggests, that she has found a job.

Number two, I'd say this, Jeff. I happen to believe that capitalism is the most brutal, high-pressure, intense economic system in the world, except all the others. Capitalism makes people unequally rich. Socialism was a great system for making people equally poor. There was no other better system than that, and so this is the world we live in.

JEFFREY BROWN: You're saying dislocation is inevitable?

TOM FRIEDMAN: Not just dislocation. First of all, most jobs are not outsourced to Bangalore, and they aren't outsourced to Mexico. They're outsourced to the past. We used to have a receptionist at the New York Times Washington bureau, OK? We don't have a receptionist anymore, but that phone isn't answered in India. It's answered by a microchip.

So let's start with the fact that most of the job churn happens because of technological change. They aren't shipped abroad.

Secondly, OK, you've got -- if you look at companies that outsource today -- and I'm sure there's exceptions either way -- companies that outsource, outsource to win. They outsource to beat their competition so they can grow and actually offer more better jobs here.

If the world were as ugly and as bad, I think as the senator suggests, for us as Americans, how could our unemployment rate be only 5 percent, OK? So something is going on here.

Using exploitative capitalism?

Sen. Byron Dorgan
It is not capitalism when we decide that we're going to have a product produced in China, with people living 100 to a room, in big, cinder brick rooms, and then working for $50 a month.

JEFFREY BROWN: Well, what's the answer?

SEN. BYRON DORGAN: Well, let me tell you what's going on. Let me tell you what's going on. Wages and salaries, as a percent of our GDP, is at its lowest level since they started measuring in 1947. That's probably not true for journalists or politicians; it's true for American families.

And this notion all these statistics people use -- I know the story about the nine guys sitting on a barstool, and Bill Gates walks in. On average, they're all now wealthy.

The fact is: There's a lot of trouble in this economy. You can't escape the fact that $2 billion a day in trade deficit we're ringing up every single day, the highest in history. It is not capitalism when we decide that we're going to have a product produced in China, with people living 100 to a room, in big, cinder brick rooms, and then working for $50 a month.

And, by the way, that's what's happening for the production of the iPod. We engineered iPod in this country; now, it's being produced for $50-a-month labor in rooms that house 100 people to sleep at night.

That's not capitalism; that's labor exploitation. And it's going on, not just with respect to textiles, not just manufacturing, it's going on in high tech. And that is not, in my judgment, what we fought for a century in this country to create.

JEFFREY BROWN: Tom Friedman says it's brutal, capitalism is brutal, except for everything else. OK, but what are you suggesting?

TOM FRIEDMAN: What's the alternative?

SEN. BYRON DORGAN: But exploiting foreign labor is not capitalism. That's about fattening the treasury of a corporation at the expense of workers.

And so let me -- in my book, aside from this exploitation, fattening the treasury is also about running the income through the Cayman Islands. There's one little piece in my book about a five-story white building on Church Street in the Cayman Islands that is home to 12,748 corporations. They're not there, of course. It's illegal fiction so they can avoid paying taxes.

Aside from that, what we need to do is to say free trade agreements don't mean anything. I know Tom has said he's written in support of free trade agreements just because it said "free" without knowing what the agreement meant. I could talk for hours about how unfair those free trade agreements are to our country and to our workers. And we have to stand up for the interests of this country. We just have to stand up for its interests.

Stories of job loss and gain

Tom Friedman
The best jobs are here, OK, not the jobs over there. The best jobs are here, all the senior executive jobs.

JEFFREY BROWN: Tom Friedman?

TOM FRIEDMAN: You know, what the senator talks about, there's a lot you see you. You see people getting laid off, OK? And when the unemployment rate -- when you're unemployed, the unemployment rate isn't 5 percent. It's 100 percent. And we hear from those people.

But what we don't see is the 10 people being hired here, the 30 people hired there. I just spoke at New Jersey a few months ago at a development board meeting. I met a New Jersey entrepreneur. I said, "What do you do?" He said, "Well, I have an open-source database company. Our headquarters here is in Iceland, New Jersey. It's based on open source database. We use 50 programmers in Islamabad, and we communicate by Skype Internet teleconferencing."

Now, you think about that guy's business. That guy's business -- there isn't an element of that guy's business that existed, OK, 10 years ago. But what did he do? He was smart. He was on top of it. He put together a company because we have a free, open, and competitive society. He used people in Pakistan. He used people here.

The best jobs are here, OK, not the jobs over there. The best jobs are here, all the senior executive jobs. But he did that because we have a free, open and competitive society.

SEN. BYRON DORGAN: Well, let me describe with a story this kind of progress. I have it in the book, Huffy Bicycles. It's a manufacturing company. They manufactured Huffy bicycles in Ohio. All those workers got fired. They made $11 an hour plus benefits. They all got fired.

Huffy Bicycles moved to China. They're now in China, 33 cents an hour, 12 to 14 hours a day, seven days a week. And, by the way, the last job they took, they took the decal of the American flag off the bicycle, replaced it with a globe.

And a worker told me, when they left the parking lot, the last time when they got fired, they left a pair of empty shoes in their parking space to say to that company, "You can ship our jobs to China, but you're never going to fill our shoes."

Now, incidentally, replacing Huffy on that very spot is now a brand new Wal-Mart. It's almost a perfect metaphor for what I think is wrong. After lifting this country's standards up for a century, to suggest we should compete even with exploited labor around the world at 20 and 30 cents an hour is to inevitably push down standards in this country. Inevitably, it will diminish wages, diminish opportunities in this country.

America's path for the future

Sen. Byron Dorgan
Next year... [China is] going to ship cars here... When their cars come to this country, they'll find a 2.5 percent tariff attached to their cars. By agreement, we've said any cars we sell in China, you can impose a 25 percent tariff.

JEFFREY BROWN: Having laid out the problems, are you hopeful for the future about the American economy, and the American jobs, and the American worker?

SEN. BYRON DORGAN: I am. I couldn't go to work in the morning if I didn't have a lot of hope, but we need to fix this. You can't choke on $800 billion a year.

I read something yesterday, somebody said, "Well, that's a sign of economic health." A sign of economic health for us to be in the red $800 billion a year? We're selling part of our country everyday. Plus, we're diminishing standards in this country.

I want to lift America up. I want to raise America's hopes. And I hope with this kind of discussion that perhaps we can find the best of what everyone has to offer, and bring this country back to where it can be, and describe the kind of global economy we want to participate in.

JEFFREY BROWN: And, Tom Friedman, you've laid out the churning of the economy. Are you hopeful as you look forward?

TOM FRIEDMAN: I'm very hopeful. Look, if horses could vote, we never would have had cars, all right? I'm sure that there are bicycle jobs and furniture jobs that are lost everyday. That's in the nature of the churn of capitalism. It's called creative destruction.

It's government's job to cushion those workers and enable those workers to have a progressive tax system, OK, that allows us to take care of those people. I'm a big believer in that. I'm not for, you know, some wild market economy where government has no place. I believe that government has a huge role, even more in this economy.

I've heard the diagnosis from the senator, but I haven't heard the prescription, OK, because I'm telling you, you put up walls -- we tried that before. It's called Smoot-Hawley, OK? That led to World War I.

We tried that prescription. In a flat world, OK, you try to put up walls, you will impoverish this country. Yes, capitalism is tough. We're all going to have to run faster and get smarter. The job of the American government is to enable and empower our workers to do that. If we do that, we are going to do fine.

SEN. BYRON DORGAN: And let me just...

JEFFREY BROWN: Senator, I'm going to give you the last word.

SEN. BYRON DORGAN: One more point.


SEN. BYRON DORGAN: One more point. Next year, Americans will be driving some Chinese cars, because China's doing an automobile export industry. They're going to ship cars here. You know what? When their cars come to this country, they'll find a 2.5 percent tariff attached to their cars. By agreement, we've said any cars we sell in China, you can impose a 25 percent tariff.

A country with whom we have $200 billion trade deficit, we said, "You can apply a tariff that is 10 times that which we will apply." That is ignorant; it's destructive of our interest; it has nothing to do with protecting our country. And it seems to me denying those things is ignoring the obvious.

Let's decide how we raise America up. I'm not interested in building someone else's house with bricks from our foundation. Let's defend this country's interests and be a part of the global economy, yes, but defending our interests first.

JEFFREY BROWN: OK. The argument continues in the books. Senator Byron Dorgan's book is "Take This Job and Ship It." Tom Friedman's, "The World is Flat." Thank you both very much.

TOM FRIEDMAN: Thank you.