When Globalization Strikes Home
STEVE ROGEL, CHAIRMAN, PRESIDENT AND CEO, AT THE AMERICAN INSTITUTE OF CHEMICAL ENGINEERS, PUGET SOUND SECTION, FEDERAL WAY, WASHINGTON - 2/11/2003
Tonight, I plan to talk to you about globalization and what it means to Washington state, Weyerhaeuser Company, and to those of us in the field of chemical engineering in the Pacific Northwest.
Why should you care? Because globalization just might be the number one determinant in all of our fates. Now, more than ever before, what happens elsewhere in the world affects you and me. Some have suggested that this current period in world history can rightfully be called the era of globalization.
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This idea was first surfaced as far back as 1776 when Adam Smith published The Wealth of Nations. In this book, Smith argued that prosperity could be increased for all nations if each nation focused on producing those goods and services where it had the greatest advantage … natural resources, skills, experience, etc.
Then, through free international trade, all consumers would enjoy a wide range of products at their lowest prices, raising the overall standard of living for everyone.
Some economists believe this is exactly what has happened over the past century. Here’s what one has to say: “This has been the best century ever, never mind the great depression, a momentary setback from communism and socialism, and two great wars. Mankind today is further ahead of where it has ever been and there are the seeds of innovation from biology to the Internet for better and richer lives even beyond our wildest dreams.”
And indeed, income statistics show a dramatic decrease since 1950 in the global poverty rate, which the World Bank defines as living on a real income of less than a dollar a day. Admittedly, this is hardly a high standard, but it does enable us to measure progress. According to this standard, global poverty declined impressively from about 55 percent of the world’s population in 1950 to 23.7 percent in 1992. And, according to another study, this decline has continued.
On the other hand, globalization has definitely penalized some individuals, companies and nations to the benefit of others, while failing to eliminate the large gap between rich and poor nations.
As we witnessed in Seattle at a 1999 meeting of the World Trade Organization, there are definitely those who are suspicious of globalization and its accompanying theory of free trade, if not outright opposed.
In explaining opposition to these concepts, one expert has theorized that globalization and free trade create “invisible beneficiaries,” but very “visible losers.”
So is globalization a good thing or a bad thing? My own belief is that since we must all learn to live together on this small planet—and since I believe Adam Smith’s theories are essentially correct—it’s a good thing. And regardless of how anyone feels about it, globalization is here to stay.
To make it work well, however, we truly do need free trade.
While free trade poses potential penalties as well as potential benefits, if the game is played fairly, Adam Smith’s vision can be attained. Besides, as you’ll hear later, without free trade, business is prey to the unpredictable distortions of politics.
At this time, I’d like to bring into greater focus some of the specific benefits of globalization to you and me as residents of Washington state.
Washington is the most trade-oriented state in the union, with a legacy of foreign trade in agriculture, forestry and aerospace … and newer industries of telecommunications, and information- and bio-technology.
Washington generates more than...