Azekeil (azekeil) wrote,

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A half-formed thought on Globalism

So the news over the past few months has been about (and really these should all be in quotes) austerity, tax avoidance by big corporations, UK taxes that unfairly target the poorest or least able to defend themselves and now the 'middle class squeeze' on children - that those middle class children of relatively affluent parents growing up can expect to have less than their parents: more precisely, £50k debt on leaving uni and huge difficulty buying a property.

It occurred to me that with the rise of globalism, i.e. the ability to ship goods made in one country to another very cheaply, countries and their economies seem to have two choices: tax imports heavily to subsidise their standards of living or face standards of living being equalised throughout the nations you trade with. Clearly we can see that has already been happening as India, China rapidly transform themselves into visions of western commerce.

Of course, this leaves some services and most construction labour needing to be done locally, but as intangible goods increasingly make up more of an economy this makes taxation and the concept of borders tricker.

I begin to wonder how long economies like Denmark can continue to differentiate themselves in the face of globalisation. I think corporations and intangible goods have risen quicker than taxation laws are able to keep up.

As may be obvious to anyone who has actually studied any of this stuff, I am very much a lay person who has not. Any pointers around any of the theories I'm wildly throwing around would be most appreciated :)
Tags: money, sociology
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There's a third option - comparative (not just competitive) advantage. Singapore pursued this par excellence on the advice of a Dutch (I think - might have been Dane) businessman when it transformed itself from a post-colonial entity with no natural resources to an economic powerhouse. It's harder for a country with an existing economy to do that, but I wouldn't go so far as to say it's impossible. It might well be impossible outside of an autocratic regime, however! Saudia is trying something similar with its city and industrial park building programme (and is rich enough that it doesn't materially damage the country's economy if it's all a giant white elephant. Whether that money would be better spent on the populace is a political one, not an economic one ;) )

There's also the liberal economic theory that "a rising tide lifts all ships" - economics is a positive sum gain (everyone can win) not a zero-sum game (your win is my loss).

I have a bookshelf full of economics and globalisation textbooks which you are welcome to peruse and raid if you wish.