Globalization Is Poverty: "The Endgame Is Painfully Obvious"

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Central bankers have never done more damage to the world economy than in the past 10 years. One may argue this is because they never had the power to do that. If their predecessors had had that power, who knows? Still, the global economy has never been more interconnected than it is today, due mostly to the advance of globalism, neoliberalism and perhaps even more, technology.

Ironically, all three of these factors are unremittingly praised as forces for good.

But living standards for many millions of people in the west have come down and/or are laden with uncertainty, while millions of Chinese now have higher living standards. People in the west have been told to see this as a positive development; after all, it allows them to buy products cheaper than if they had been made in domestic industries.

But along with their manufacturing jobs, their entire way of life has mostly disappeared as well. Or, rather, it is being hidden behind a veil of debt. Still, we can no longer credibly deny that some three-quarters of Americans have a hard time paying their bills, and that is very different from the 1950s and 60s. In western Europe, this is somewhat less pronounced, or perhaps it’s just lagging, but with globalism and neoliberalism still the ruling economic religions, there’s no going back.

What happened? Well, we don’t make stuff anymore. That’s what. We have to buy our stuff from others. Increasingly, we lack the skills to make stuff too. We have become dependent on nations half a planet away just to survive. Nations that are only interested in selling their stuff to us if we can pay for it. And who see their domestic wage demands go up, and will -have to- charge ever higher prices for their products.

And we have no choice but to pay. But we can only pay with what we can borrow. As nations, as companies, and as individuals. We need to borrow because as nations, as companies, and as individuals we don’t make stuff anymore. It’s a vicious circle that globalization has blessed us with. And from which, we are told, we can escape only if we achieve growth. Which we can’t, because we don’t make anything.

So we rely on central bankers to manage the crisis. Because we’re told they know how to manage it. They don’t. But they do pretend to know. Still, if you read between the lines, they do admit to their ignorance. Janet Yellen a few weeks ago fessed up to the fact that she has no idea why inflation is weak. Mario Draghi has said more or less the same. Why don’t they know? Because the models don’t fit. And the models are all they have.

Economic models are more important in central banking than common sense. The Fed has some 1000 PhDs under contract. But Yellen, their boss, still claims that ‘perhaps’ the models are wrong, with it comes to inflation, and to wage growth. They have no idea why wages don’t grow. Because the models say they should. Because everybody has a job. 1000 very well paid PhDs. And that’s all they have. They say the lack of wage growth is a mystery.

I say that those for whom this is a mystery are not fit for their jobs. If you export millions of jobs to Asia, take workers’ negotiating powers away and push them into crappy jobs with no benefits, only one outcome is possible. And that doesn’t include inflation or wage growth. Instead, the only possible outcome is continuing erosion of economies.

The globalist mantra says we will fill up the lost space in our economies with ‘better’ jobs, service sector, knowledge sector. But reality does not follow the mantra. Most new jobs are definitely not ‘better’. And as we wait tables or greet customers at Wal-Mart, we see robots take over what production capacity is left, and delivery services erase what’s left of our brick and mortar stores. Yes, that means even less ‘quality’ jobs.

Meanwhile, the Chinese who now have taken over our jobs, have only been able to do that amidst insane amounts of pollution. And as if that’s not bad enough, they have recently, just to keep their magical new production paradise running, been forced to borrow as much as we have been -and are-, at state level, at local government level, and now as individuals as well.

In China, credit functions like opioids do in America. Millions of people who had never been in touch with the stuff would have been fine if they never had, but now they are hooked. The local governments were already, which has created a shadow banking system that will threaten Beijing soon, but for the citizens it’s a relatively new phenomenon.

And if you see them saying things like: “if you don’t buy a flat today, you will never be able to afford it” and “..a person without a flat has no future in Shenzhen.”, you know they have it bad. These are people who’ve only ever seen property prices go up, and who’ve never thought of any place as a ghost city, and who have few other ways to park what money they make working the jobs imported from the US and Europe.

They undoubtedly think their wages will keep growing too, just like the ‘value’ of their flats. They’ve never seen either go down. But if we need to borrow in order to afford the products they make in order to pay off what they borrowed in order to buy their flats, everyone’s in trouble.

And then globalization itself is in trouble. The very beneficiaries, the owners of globalization will be. Though not before they have taken away most of the fruits of our labor. What are you going to do with your billions when the societies you knew when you grew up are eradicated by the very process that allowed you to make those billions? It stops somewhere. If those 1000 PhDs want to study a model, they should try that one.

Globalization causes many problems. Jobs disappearing from societies just so their citizens can buy the same products a few pennies cheaper when they come from China is a big one. But the main problem with globalization is financial: money continually vanishes from societies, who have to get ever deeper in debt just to stand still. Globalization, like any type of centralization, does that: it takes money away from the ‘periphery’.

The Wal-Mart, McDonald’s, Starbucks model has already taken away untold jobs, stores and money from our societies, but we ain’t seen nothing yet. The advent of the internet will put that model on steroids. But why would you let a bunch of Silicon Valley venture capitalists run things like Uber or Airbnb in your location, when you can do it yourself just as well, and use the profits to enhance your community instead of letting them make you poorer?

I see UK’s Jeremy Corbyn had that same thought, and good on him. Britain may become the first major victim of the dark side of centralization, by leaving the organization that enables it -the EU-, and Corbyn’s idea of a local cooperative to replace Uber is the kind of thinking it will need. Because how can you make up for all that money, and all that production capacity, leaving where you live? You can’t run fast enough, and you don’t have to.

This is the Roman Empire’s centralization conundrum all over. Though the Romans never pushed their peripheries to stop producing essentials; they instead demanded a share of them. Their problem was, towards the end of the empire, the share they demanded -forcefully- became ever larger. Until the periphery turned on them -also forcefully-.

The world’s central bankers’ club is set to get new leadership soon. Yellen may well be gone, so will Japan’s Kuroda and China’s Zhou; the ECB’s -and Goldman’s- Mario Draghi will go a bit later. But there is no sign that the economic religions they adhere to will be replaced, it’ll be centralization all the way, and if that fails, more centralization.

The endgame of that process is painfully obvious way in advance. Centralization feeds central forces, be they governmental, military or commercial, with the fruits of labor of local populations. That is a process that will always, inevitably, run into a wall, because too much of those fruits are taken out. Too much of it will flow to the center, be it Silicon Valley or Wall Street or Rome. Same difference.

There are things that you can safely centralize (peace negotiations), but they don’t include essentials like food, housing, transport, water, clothing. They are too costly at the local level to allow them to be centralized. Or everybody everywhere will end up paying through the nose just to survive.

It’s very easy. Maybe that’s why nobody notices.


FreeShitter Tue, 10/17/2017 - 09:36 Permalink

Endgame is depopulation, they cant have a NWO w/o taking the guns, so they will work you to death, make your insurance cost an arm and a leg (no pun), and just make your life financially a living hell, driving you to psych meds and opiates. Its a slow death by a thousand cuts. If the sheep had one braincell left, they could see this, but alas..  Nope.

HenryHall Stuck on Zero Tue, 10/17/2017 - 11:55 Permalink

> Globalization causes many problems.The root problem is overpopulation. Which will destroy the earth unless solved. The earth has many problems that threaten its survival, but overpopulation dwarfs all the rest. And by a large margin. The earth needs to have a human population of about 1% of today's population.The primary cause of the root problem is religions, especially those which mostly stand opposed to birth control. 

In reply to by Stuck on Zero

Herd Redirecti… Rapunzal Tue, 10/17/2017 - 12:45 Permalink

We need to stop talking about economic and political policies as being 'good' or 'bad'.  What they are, rather, are policies that have benefits and costs.  And this is especially important to mention when the BENEFITS AND COSTS belong to different groups!  Then of course the groups that benefit will say the policy is 'good', like low interest rates, for example.  While those who are paying the cost think 'this policy is very bad'!Same thing with mass migration.  It is GOOD for people who own apartment buildings in urban centers, and make money from unskilled labor, but bad for those who WORK as unskilled labor, and RENT apartments.

In reply to by Rapunzal

Cash2Riches FreeShitter Tue, 10/17/2017 - 10:20 Permalink

The Elites want to massively decrease the wealth of the rest of the world. They envision a time when everyone is poor and therefore cannot resist them, who will have all the wealth. They first need to destroy the cash based system to get us under their soft control. Their end game is power.…

In reply to by FreeShitter

NickyGall Tue, 10/17/2017 - 09:36 Permalink

 As shown in this article, the new global "economic reality" has left the world's central banks unable to battle the next recession:… 
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We are now discovering that there are unintended consequences to every action that central banks took to "rescue" the world from an economic collapse.

Iskiab BennyBoy Tue, 10/17/2017 - 10:35 Permalink

Here comes a rant...

Here are the problems:
1. Economics is general has become corrupted by governments and business. The best economics jobs entail having a specific outlook, and funding is tied to the political slant of the university. The result is economics has become nothing more than PR, they’ve become ammunition in debates. ‘If you do what’s bad for my company, here’s the negative economic side’. This is then packaged as jobs to get the uneducated to buy in.
2. The economists at the central banks know exactly why wages have dropped, but they keep up pretenses to keep their job. One of the oldest models for international trade and wages explain what’s going on very well. Y axis is capital, x axis is labour pool (and grows with more labour), z axis (to the right side of the x axis) is land. Draw a line from total capital to where y and z intersect, and another from total land to where x and y intersect. The intersection is wages.
3. Again, any economist, hell even someone who only took intro, can tell you wages drop with more labour. It’s just bad for your career to say so.
4. Until economics sorts itself out, any economic analysis should be ignored.

Now about the article:
1. China has some of the strictest environmental laws in the world. The weather patterns in the US allows the US to pollute and have it blow away at sea. China does not, in Shanghai you need to wear a mask to walk around in the city the pollution is so bad. While industrializing they polluted a lot but quickly had to enact environmental laws for health reasons.
2. A lot of industries are better off being outside the US, like textiles. They can make it cheaper and people in the US aren’t willing to do the work.
3. US citizens want their cake and to eat it too. They complain about illegal aliens and then exploit the shit out of them. An example to this day is the fruit picking industry in California. If there were no aliens, there’d be no fruit picked.
4. There are different theories as to why the Great Depression happened, but everyone agrees protectionism played a big part. With the way US policy is going, and the current state of the US economy, I can guarantee protectionism will lead to a depression
5. Globalization has helped third world countries. In the search for cheaper labour places like Vietnam has opened up. Companies are moving to cheaper countries and the pluralistic idea is somewhat working. Trade makes the world a safer place.

In reply to by BennyBoy

small axe Tue, 10/17/2017 - 09:42 Permalink

Central bankers like to tell us that they're increasing the size of the pie. Unfortunately, the CBs and their friends are gluttons. All we get are their dirty plates and maybe a crumb or two.Thieves, pure and simple

Bemused Observer small axe Tue, 10/17/2017 - 10:13 Permalink

Well, once the pie is baked, it can't be enlarged. What you CAN do is make more pie. Unfortunately that takes time, which means those who are hungry now will have to wait a while. It also takes resources, skill and energy, all of which have costs of their own, and might not be available in the amounts you need when you need it. Their argument reminds me of the glutton who takes ALL the crab legs at the buffet, and tells everyone else that it's ok because they'll bring out more. Yeah, maybe they will, but probably not before MY lunch break is over, so fuck YOU you greedy slob! Then worse, as you pass by him on the way out, you see he didn't even finish all the ones he took!

In reply to by small axe

Sonny Brakes Tue, 10/17/2017 - 09:42 Permalink

If you manage to live without incurring personal debt you are still ultimately held liable for the debts of others through taxation. QE is a tax. Higher prices are taxes. Taxes fall on those who least can afford it.

You Only Live Twice LeadPipeDreams Tue, 10/17/2017 - 11:06 Permalink

Yes, the bankers are doing things intentionally. The change of chair at the Fed does not mean a change in leadership. People seem to forget that those that are the private shareholders of the Fed (the long standing private banking families) always remain in control in the shadows. The chairs of the Central Banks are simply the public figure-heads.

In reply to by LeadPipeDreams

Dilluminati Tue, 10/17/2017 - 09:43 Permalink

The argument that globalism is failing will show itself in election after election until the system is no longer creating the global imbalances.  Planned command control economies fail, that is why decentralized free markets are the solution, but globalism isn't that.

Lordflin Tue, 10/17/2017 - 09:46 Permalink

Yellen doesn't understand the weak inflation.... give me a break. All the money printing goes to a handful of people who use it to manipulate the market, while inflation for the most part no longer counts basic living costs. Lack of a measured inflation is obvious as hell...

Ghordius Tue, 10/17/2017 - 09:48 Permalink

sorry, but my opinion on this author, Raul Ilargi Meier, is by now cast in stone: a shilla "preying on the ignorant" shill, to be more exacthe takes words, some which have a meaning, and some which are ill defined, slices them, puts them with other concepts, throws all in a blender and serves it cold and hotthe two centralization issues are "globalization", which is economic and that "globalism", which is politicalmeanwhile in the globalization issue he seems to favour protectionism over free tradeand in the globalism issue he seems to favour "arranging peace with institutions" (that would be the UN and/or international efforts) over the "sovereignty" "might makes right" argument(not going into the monetary part that he "throws in for good measure")he is educated enough, imo, to make those arguments way more clear. but... he doesn'tcompletely nonsensical: "I see UK’s Jeremy Corbyn had that same thought, and good on him. Britain may become the first major victim of the dark side of centralization, by leaving the organization that enables it -the EU-, and Corbyn’s idea of a local cooperative to replace Uber is the kind of thinking it will need "what? the EU the organization that enables... what? the UK?btw, Corbyn has repeatedly stated that the very first thing he wants to do when he becomes Prime Minister is to Nationalize (i.e. forcefully buy and make it state-owned) the British Railways. note, in this, that he can't do it as long as the UK is part of the EU, because this is against EU laws. hilarious, imho. this is the guy that was portrayed as the "chief Remainer" during the referendum. lol

HillaryOdor Ghordius Tue, 10/17/2017 - 10:26 Permalink

Yes and the problem is workers don't have bargaining power.  The solution is better jobs with more benefits.  Of course.  Typical Marxist speak.  The only reason these benefits ever existed is because of government, to help more money escape from the tax man.  Why would I want my employer to provide health insurance when I can buy it myself?  Just pay me the cash.  I'll buy it if I want it.  Oh that's right I have to have it, even though I never go to the doctor.  Then I have to also pay taxes on that extra money making the insurance more expensive in the first place.  Good thing I get so many benefits from my wonderful job.  People are so stuck in the status quo they can't even pretend like they want an alternative.  I'm sure this guy thinks we just need good government to fix the bad government.

In reply to by Ghordius

Nobodys Home HillaryOdor Tue, 10/17/2017 - 10:32 Permalink

I was unemployed 10 months last year by my own choice. I had no insurance and ended up paying $109 a month because of the mandate....that was sort of eliminated 2 months after I paid.

The insurance "benefit" in my new job is about $15 a month more than the fine (mandate) was last year. I don't go to the doctor either.
If the insurance "market" ever changes for the better I'll cancel and buy my own....or not.

In reply to by HillaryOdor

Pinot-Noir Ghordius Tue, 10/17/2017 - 12:12 Permalink

"meanwhile in the globalization issue he seems to favour protectionism over free trade" But it's not free trade though is it?? It's not free trade when you compete with a workforce that has no health and safety concerns, wages that are a fraction of the west's, a working week that may run into 60 or even 70 hours a week and virtually zero envoiramental concerns over pollution!! I understand what you mean by 'free trade', ...but the costs to our communities and society in general are collosal!! It is ultimatly very, very expensive.   

In reply to by Ghordius

Dilluminati Tue, 10/17/2017 - 09:49 Permalink

I'm all about voting for Bannon next election.  I'm done with the globalists, the economy is going in reverse, I have no fucking idea what McCain was babbling about how great the last 75 years have been, he's been awol for the last 15.