Globalization: The Economic Scourge That Quite Simply Isn't

It's popular among politicians, particularly in an election year, to bemoan the death of various aspects of American life-whether cultural, political or economic-because it allows incumbents and candidates alike to proclaim how they'll save the day. Like what they'll do to "save" manufacturing jobs or decrease student loan costs or stop outsourcing or "punish" cheap imports or or or. The possibilities are near-endless.

And a common scapegoat of America's woes (and the rest of the world's) is globalization-typically taken to mean the spread of only capitalism's dislocations without any of the net benefits to act as a scourge on the rest of the world.

But it seems to us globalization's bad rap doesn't much match its record-as illustrated by the rebirth of an Indiana steel mill, thanks primarily to ... drum roll ... globalization! As recently reported by The Wall Street Journal, it seems a 50-year old facility largely thought defunct is being revitalized by its owner, a Luxembourg-based steel company, on which the Indiana mill was told to model its operations.

The Indiana mill has been essentially in direct competition with a global partner-playing a friendly one-on-one scrimmage with a mill in Belgium, trying to match and eventually beat its production. Meanwhile, the Belgian mill is told not to let itself get caught.

Four years later, the US mill is experiencing record output. New technology is being implemented and productivity is rapidly increasing-to the point it's nearly caught its Belgian teammates. The beauty of the internal competition is it's a rising tide that can lift all boats.

But what about technology's impact? Isn't that decreasing the need for as many workers? Well, yes and no-on one hand, fewer overall workers are required to run the plant because of the advanced technology used. But on the other, because the mill operates more efficiently, it is once again globally competitive-something it hasn't much been since the 80s or so. Meaning it's gone from hiring zero employees just 10 years ago to now employing many-which sounds like an overall win for the US labor force to us.

Not only that, but consider all the ancillary business likely generated by mill's revival-locally as well as nationally. Locally, there are the myriad businesses that experience a boost from increased demand because of increased local employment. And more broadly, there's an increased demand for trucking and shipping services to transport finished goods to buyers. Increased demand that similarly trickles down to related businesses-yet another example of increased supply creating its own demand.

That's not to say there aren't short-term dislocations-there nearly always are given no system will ever be perfect-or that those dislocations won't cause some interim discomfort for individuals involved. But overall and on average, there's a preponderance of evidence globalization, like capitalism, is a force for societal good.

This article constitutes the views, opinions, analyses and commentary of Fisher Investments as of May 2012 and should not be regarded as personal investment advice. No assurances are made Fisher Investments will continue to hold these views, which may change at any time without notice. In addition, no assurances are made regarding the accuracy of any forecast made herein. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.