I like the concept of globalization, it allows us to take part of other countries technologies and to export our technologies to other countries. It allows our money flow to go worldwide, but who pays for it all?
Let’s take my home country, Sweden, as an example here and dive into the good and bad points of globalization from an uneducated mans perspective!
In 1910 we had a very high percentage of each companies average winnings (the amount of money that goes to the owners), no rights to vote and we were in the middle of a world war, the only world war that Sweden have ever participated in. The “high percentile”, that is the 1% that holds most of the country’s money, held around 25% of all the capital in Sweden.
What happened shortly after the common man was allowed to vote (and shortly thereafter, the common woman) was a revolution economically. All of the sudden, the money scale shifted. The workers got paid more of what the company earned and the owners got a lower percentage of winnings, but they still made more money than before because at the same time, the production rate got higher and higher.
Production rates increased so much that during the years 1930 to 2010 the production has doubled every 10 years on average. From 2011 and onwards, the expected production rate doubling is at FIVE years. Yet the salaries doesn’t double in that rate. How come?
Up until the late 1970’s, the salaries did follow the production rate, but then globalization hit Sweden. Suddenly we had investors from other countries that brought their rules into the game. Before the globalization, the money couldn’t travel over the borders in the same way, so there was little to spend the money on, but now the owners can spend the money on international projects. More and more company owners (in most cases nowadays we are talking stock holders, not the CEO of the company) reach the point where they are financially liberated, they earn more than they could spend if they tried. All this extra money needs to be spent on something.
Before the globalization of Sweden, the money went back into the same company in the form of higher salaries, but now there is so many options. So many new companies popping up everywhere, that the investors gets sort of blindsided and see that they can do good by investing in these new machines, technologies and products worldwide, that they forget to look into the companies they are already investing in. It has come to a point where it is never even considered to give money back to the company you’re investing in and in the few cases the investor do that, it’s usually the administration of the company that gets to share this extra money.
A standard template for cooperations today is that the investors own half the company, therefore the investors gets 50% of all winnings, the rest is meant to cover both the salaries of everyone working for the company (the workers and the administration) and the company’s growth. Keep in mind that production is doubling every 5th year, so that means the growth fund must do the same.
We are today back at the same percentage of winnings that we had in 1910, that is the owners gets to share a third of all the income from the company and the workers gets to share a third, from the point in the mid-60’s where the owners only got around a fifth of the income (note that income is not the same as winnings, winnings are income minus costs, such as the salaries for the workers).
At this point in time, the “high percentile” holds around a THIRD of all the capital in Sweden. That is 1% holding 33.33% of all the money in Sweden!
At the same time, globalization has allowed international investors to invest in Swedish companies, allowing companies that would otherwise be dead by now to stay alive. Without the company, there is no jobs, without jobs there is no salary and we would’ve eventually devolve into where we were in the 18th century, where roughly 20% of the citizens migrated to America to seek their fortune there and find a way to survive (thou personally, I think China is where people would go today, they are the “new America”.
Whether it is good or bad, we have globalization today and that has the side effect that companies are expected to double their production rate every 5th year, but only increase the salaries with 2-5% during the same time, without adding to the workforce, or increase the workforce by the same amount without increasing the salaries. It has lead to Sweden becoming one of the highest grossing countries when it comes to exports, if you don’t count the oil countries, but still being one of the lowest paid countries in the world, not counting third world countries.
It has it’s ups and downs, as everything else, and I’ll leave it up to you to decide whether you thing globalization is worth the cost or if it’s better to localize a country. In my case, I don’t like where Sweden is at right now, but that matters little to me, since I can always use a bit of this globalization positively and move to another country, or even stay here and work over the net in another country. Many others don’t have this option thou, so I’ll leave it up to you as the reader to decide for yourself what you think, I’m just giving you my point of view!