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Bye-bye, Globalization

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Reposted from the blog of the United Steelworkers

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Bye-bye, Globalization

Hugh J. Campbell | October 24, 2012 | USW blog

The recent Washington op-ed, What will replace the globalization model?, predicts: the political party that controls the White House after January could, four years later, be out of power for a generation. Not because of the fiscal cliff, but because of more the fundamental “far from sustainable trade deficits” or as the author puts it: “The globalization model of the past 30 years is cracking up.”

This op-ed is the lasted validation of Warren Buffett’s January 2006 Forbes quote, which follows: “The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to ‘political turmoil.’”

Our candidates in the debates have offered glittering generalities of “tax reform” and “more government investment,” assuming that America’s economic downturn is cyclical and that counter-cyclical remedies are the solutions. If the globalization model is melting down, the shift in world economic affairs is structural, like a “leak-in-the-dike” and therefore a new model is needed.

In fact, just such a model was proposed by none other than Warren Buffett in his November 2003 Fortune article “America’s Growing Trade Deficit Is Selling the Nation Out From Under Us. Here’s a Way to Fix the Problem—And We Need to Do It now.” If historians don’t fail us, in all likelihood they will find it unfathomable that the United States’ demise was, in no small part, due to the inaction of America’s political elite to a suggestion by its second wealthiest citizen.

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