ESSAYS

ESSAY 3

Globalization Took Their Jobs

The blue-red political divide, between thriving cities and the rest of the country, has a cause. It’s called globalization. And it’s just getting warmed up.

 

When economies change, everything changes. How we earn our living determines who we are and how we live. This is true for people. And it’s true for cities and whole nations.

 

Historically speaking, the United States is a young country. Almost everything that has happened here has happened in the past 250 years – our founding as a nation, our exploration, the creation of our states, our civil war, and our growth as a global power.

 

The industrial age also began about 250 years ago. Those two great events – the birth of an economy and the birth of a nation – mightily influenced each other. That age shaped America’s economy and the way we live. It framed American democracy. And it created almost everything we know – our highways, our airports, our communications, our universities, our cities. Especially our cities. Nearly every American city was built to answer a need created by the industrial age.

 

And now that age is over. The global age has arrived. It is a massive economic transformation, as wrenching as the exodus from the agricultural age into the industrial age. The cities we know will survive and thrive to the degree that they meet the demands of this new global age. 

REUTERS/Aaron Josefczyk

"No wall or moat can stem this tide. Globalization can be shaped, but it can’t be denied. It’s folly to say it’s good or bad: that depends on who and where you are."

Globalization is new, maybe 30 or 40 years old. Already it is bestowing its rewards and punishments unevenly. Overwhelmingly, Blue-Dot America is coping; Red-Sea America is not.

 

This isn’t going to change. No wall or moat can stem this tide. Globalization can be shaped, but it can’t be denied. It’s folly to say it’s good or bad: that depends on who and where you are. It’s only realistic to recognize that it’s here and reinventing American cities as we watch.

 

Carl Sandburg, the poet laureate of the industrial age, understood this. He wrote: 

Put the city up; tear the city down;
Put it up again. Let us find a city. 

Right.

 

Cities are labor pools. They are civilizations, too, with houses and schools and theaters, with soaring buildings and broad streets. But first and always, they have been labor pools filled with people who wanted to do a day’s work, as factory hand or artist, and be paid for it. Men and women came from around the world to work and to build American cities. The work they did created the civilization.

 

Globalization has changed all this – the work to be done, who does it, who pays for it, who pays for the civilization.

 

Basically, globalization has changed national economies into a global economy. Technology has created a global market for money, goods, and services. Investors can put their money anywhere where it makes the most economic sense. In this new economy, national frontiers are becoming meaningless.

 

So is the concept of place. The industrial economy was based on place – a factory employing local workers, making goods from local raw materials to be sold locally, financed by local investors and run by local bosses. The global economy is based on flow of goods, money, jobs, and people, often around the world. A city thrives today less because of what it makes than where it stands on this global supply chain.

"Globalization, has taken away their jobs and their identity as Americans and their membership in a familiar society."

The residents of Red-Sea America see themselves as true patriots, devoted to place. For them, national frontiers are crucial. For them, immigrants symbolize an un-American loss of national identity. So, for that matter, does globalization itself. They are right to feel this way, because this is exactly what globalization does.

 

Globalization also took their jobs. These are the workers in formerly Democratic towns and cities who did the routine work, the mass manufacturing, that has gone abroad or replaced by automation. Lacking higher education or skills, they couldn’t compete in the new economy. Neither could their cities. These places, like their citizens, earned their livings from heavy industry. When that went, both cities and citizens were out of a job.

 

Globalization, in short, has taken away their jobs and their identity as Americans and their membership in a familiar society. No wonder they have rebelled. 

REUTERS/Rebecca Cook

The industrial age spread its benefits across most of the American economy. By contrast, the global economy funnels its well-being into a relative handful of cities – the global cities, regional capitals, and university  towns. This new economy values college degrees, technical smarts, commercial ambition, and entrepreneurial zeal. As we saw, people – especially young people – are grabbing their diplomas and heading for the cities where these skills will be rewarded.

 

The industrial economy demanded a lot of space, for all those factories and warehouses and railyards, and for its workers and their homes. The factories and warehouses are still there, but the work force of the global economy can fit nicely into areas no bigger than Chicago’s Loop or lower Manhattan. If the industrial economy commanded whole regions, the global economy zooms in on a few select places and the people who work there.

 

This, too, won’t change. Global cities have a bright future. The industries that can be scared away by high taxes or high rents have already left. The ones still here are here to stay. They’re willing to pay to be where they want to be, which is near people – creative globally minded people – like them.

"Giant corporations still drive the economy, but their products now are services, not goods. Their raw materials are ideas and expertise, not iron and coal, and their employees need to be high of forehead, not broad of back."

As Robert Lucas, the University of Chicago economist, said, “What can people be paying Manhattan or downtown Chicago rents for, if not for being near other people?”

 

Traditional urban thinkers often oppose higher taxes, the raising of minimum wages, or imposition of various user fees on the grounds that this will chase away business to lower-cost cities. As author Richard Schragger points out, this is obviously wrong. Costs, including taxes and labor costs, already are higher in the global cities and still businesses still keep flowing in.

 

If cost was the only criterion, businesses would be leaving Manhattan for Newark or Chicago for Gary. Costs in the great cities would be going down to meet competition from the low-cost cities. It’s not happening.

 

Instead, the blue-red urban-rural divide keeps getting wider and deeper. Giant corporations still drive the economy, as they did in the industrial age, but their products now are services, not goods. Their raw materials are ideas and expertise, not iron and coal, and their employees need to be high of forehead, not broad of back. These corporations and the businesses that serve them need a big labor pool of well-educated and worldly employees. They are willing to pay top dollar to get them and to pay what it costs to be in the cities where these global citizens gather. The global citizens, in turn, flock to the global cities for the same reason that their grandparents migrated to the old factory towns – because that’s where the jobs are.

 

This is good for the big cities, bad for every other place. But there are two looming problems.

 

First, those rising costs in global cities are easily paid by the global corporations and their employees, but they threaten to force out everyone else – the teachers, policemen, bus drivers, and other middle-income people on whom any city rests. This already is happening in San Francisco, London, Vancouver, and other cities where costs – especially rents – are making the city unaffordable for middle-class wage earners. Gated neighborhoods are giving way to gated cities.

 

Second, the global economy needs a lot of highly educated and highly skilled workers and is willing to pay for them. But it does not need the huge numbers of workers required by the industrial economy, even in the great cities themselves. Chicago may be one of the top ten global cities, but it provides hundreds of thousands fewer jobs than the old industrial Chicago supported. 

"The global economy is new and still evolving. No one knows if it will eventually create jobs for everyone who wants one."

The industrial age supported a nation. The giant factories and mills were locomotives that pulled the rest of the country behind them. The workers in the new economy, from Manhattan to Silicon Valley, are very good at what they do, but they are outposts, not locomotives, global powerhouses but decoupled from the country around them.

 

As we noted, the global economy is new and still evolving. No one knows if it will eventually create jobs for everyone who wants one. Already, economists and other thinkers are debating a possibility that would have been unthinkable until recently – a guaranteed annual income for everyone, to take the place of work.

 

Unemployment has always been with us. But not this mass unemployment, in which substantial shares of the population would go through lives without a decent job. This reality already exists in the hinterlands, beyond Blue-Dot America, and is driving the populist rebellion there.