Fareed Zakaria believes that opposition to globalization is an error. From his most recent Washington Post column:
The global economy is still dominated by large American firms; 134 of Fortune’s Global 500 are American. And if you look at those in cutting-edge industries, the vast majority are American. These companies have benefited enormously by having global supply chains that can source goods and services around the world, either to lower labor costs or to be close to the markets in which they sell. Since 95 percent of the world’s potential consumers live outside the United States, finding ways to sell to them will have to be a core strategy for growth, even for a country with a large domestic economy such as the United States.
Mr. Zakaria has made a basic error there, presumably because he doesn’t understand the nature of markets.
Not all individuals are prospective customers. You can’t just count heads and say “that’s our market”. At its most basic to be a prospective customer an individual must have what’s called the “willingness to pay”. Willingness to pay is a term of art and does not mean desire. It means you have the money to pay for something and the freedom to make a purchase decision as well as the desire to do it. The reality is that most of the people in the world are not prospective customers for American-made goods either because they’re too poor or because tariffs, quotas, and outright bans prevented American-made goods from reaching them at all.
The U. S., China, Germany, Japan, South Korea, and Brazil, just to name a few, are competing for the same pool of customers. China is competing for those customers on the basis of price; Germany on the basis of quality. Much of what the U. S. is selling is abroad is either arms or financial services. Subsistence farmers in China, India, and Nigeria are not good prospects for either of those.
