Want to Retain American Jobs? Stop Blaming Globalization

Everything is cheap and nobody has jobs. Welcome to the future. President of the Federal Reserve Bank of Dallas fills us in on how we got here.

Robert S. Kaplan: So listen, during almost my entire lifetime globalization has been a key element of our economy. It started decades ago as many industries wound up—manufacturing in particular—off-shoring jobs to take advantage of lower labor rates in other countries. And so we lost manufacturing jobs in this country due to globalization. But the other part of globalization is increasingly the S&P 500, the 500 largest companies domiciled in the United States, are increasingly finding a larger share of their revenues and profits are coming from outside the United States.

And the other part is our trade relationships, the nature of them, are changing due to globalization. I’ll take Mexico as an example. Right now, of the imports to the U.S. from Mexico, 40 percent of those imports is U.S. content. So what is that about? It means these are not just trade relationships. These are integrated supply chains and logistics that, in our judgment at the Dallas Fed, are making the U.S. more competitive, likely actually adding jobs in the United States and keeping those jobs from going elsewhere, most likely to Asia.

The last part of globalization that we have to—a couple of more parts I’ll talk about is China is much bigger today than it was 10 years ago and 20 years ago, and I mean much bigger as a percentage of global GDP. China has been growing at much higher rates consistently than almost any other country in the world except for maybe India. It means they are a larger percentage of global GDP and they’re a much larger percentage of global GDP growth. Okay, what’s the impact of that?

They have been—in order to get that growth, and they’ve been growing recently, about 6.5 percent. Unfortunately in order to achieve that growth they’ve been growing debt to GDP. In other words they have been leveraging in various sectors to either build infrastructure or to build capacity in many state-owned enterprises. The impact of that is they’ve got dramatic overcapacity in a number of their industries which creates global overcapacity. And so China bears watching. The world is going to have to get accustomed to lower levels of growth from China and also because of currency outflows. That has the potential, because the world is much more financially integrated, currency outflows in China, which is what happened in the first quarter of 2016, have the potential to create ripple effects and spillovers throughout the world and this happened in the first quarter of 2016 where we saw financial turmoil in China translate into rapidly tightening financial conditions globally.

So those are a number of elements of globalization. What’s the point of it all? The point of it all is: you have to think about the economy in a much more global way. Globalization is likely putting downward pressure on prices because we have more overcapacity. And also our trading relationships have to be thought about differently because, particularly in this hemisphere, it’s actually helping U.S. companies become more globally competitive and therefore is likely growing jobs in the United States. So as a central banker, it’s no longer an option in thinking about U.S. monetary policy to think just about the United States. I have to understand economic conditions around the world and the inner relationships between economies and financial markets around the world because the ripple effects, the spillovers, are much more likely to happen.

And this is one reason why when we talk about the currencies, particularly the U.S. dollar, as a central banker I’m much more sensitive and aware of the impact on the dollar of central bank actions and also much more sensitive and aware of the potential ripple effects of either a strong or weak dollar not only on the United States but also on economies around the world. We’re just much more globally interconnected and so we have to think about the economy in a different way. It’s my view though, and I get to the third secular driver, the next one, which is technology-enabled disruption.

Increasingly I think globalization is sometimes now being confused with technology-enabled disruption. What do I mean by that? Twenty years ago, and in history, jobs were lost in a number of locations in the United States because they were lost overseas. And while there were a number of benefits of global trade and globalization in the United States, we did a poor job in this country helping local communities and workers adjust to the negative effects of globalization. And I’ll come back to that. Today, if you lose your job in a city in this country it’s probably as or more likely that the reason you’re losing your job is not globalization but it’s technology-enabled disruption. It’s changing. People are attributing it to globalization but it’s probably as or more likely to be due to the fact that businesses are increasingly replacing workers with technology. Whole industries are being disrupted out of existence. Think: the film industry, the camera industry. While it still exists it’s been dramatically disrupted by digital technology and by handheld phones. But this is going on in retail, even in higher education. It’s going on in every industry. And so what’s happening is, I think it’s accelerating. Workers are far more likely today to lose their jobs or have their functions changed because of technology-enabled disruption. Technology is replacing people.

And in addition, because of technology-enabled disruption, consumers have much more pricing power. They have the ability to shop with technology. That’s putting much more pressure on businesses in terms of pricing pressure. And businesses don’t have as much pricing power, and that probably is rippling back through impacts on workers and their wages, and it may even be encouraging businesses to increasingly replace workers with technology.

So the reason this diagnosis is important, if you think that this is happening because of globalization you might take one set of actions. If it’s happening because of technology-enabled disruption you might take a different set of actions and, in particular, back to the trade relationship with Mexico: I’ve been arguing that our trading relationship, as I said earlier, with Mexico helps improve U.S. competitiveness and keep jobs here. And if instead we misdiagnose that relationship and think that it’s actually hurting U.S. workers we might actually take steps to dismantle part of those trading relationships. And I think unfortunately that may actually hurt U.S. GDP growth. I don’t think it’s going to help workers locally or it may not help workers locally because technology-enabled disruption is a bigger issue that’s affecting our workforce. 
On both those trends though, regarding both of them, it highlights the need for more workforce development. I think of the worker of today—if you’ve got a college education you have a better chance to manage this. If you have some college or your educational attainment is either high school or less than high school you are much more likely to be at the end of this impact and have much less ability to adapt to it. So much more likely in people’s careers—and when I was a professor at Harvard I used to tell my students: you are far more likely to get fired than I was. You will be. You’re far more likely to have to fire people than I was. And you’re far more likely to have the industry you start in not be the industry you end in, because the industry you start in may not exist or it’s going to be so different that you’re going to have to adjust.

So I think it’s critical, first because of globalization but now in particular because of technology-enabled disruption. We need to do much more to help workers adjust to these trends and help them improve their ability to adapt. And the more educational attainment, either college or some type of skills training, the more of that you have the much more likely you’re going to be able to adapt to these trends. So that’s the third trend, is technology enabled-disruption; but I think that and globalization are related, and today I think some of the effects of technology-enabled disruption are being attributed to globalization and I think in some cases inaccurately.

The US economy has spawned a vicious cycle that few people are talking about, but it's one that affects us all. You, right now, are likely caught in that ugly loop. In fact, it's what may one day send you packing from your job. It's called technology-enabled disruption. And the worst part? (There's a worse part!?) You contributed to it in a big way, explains Robert S. Kaplan. Advancements in retail technology gave consumers the power to shop smarter and put pricing pressure on manufacturers. That pressure is "rippling back, through impacts on workers and their wages, and maybe encouraging businesses to increasingly replace workers with technology," says Kaplan. In a nutshell: every time a consumer finds a bargain, a robot gets a job.


But tech-enabled disruption isn't prominently on the public agenda. Currently a multitude of loud voices are blaming globalization for America's waning job market but, as Kaplan explains, it seems to be a case of misdiagnosis. It is crucial to identify the correct cause of the coming job market crash because if the problem is globalization, policy makers will take one set of actions (like withdrawing from trade deals). However, if it's technology-enabled disruption, that calls for an entirely different set of actions. The danger of this is most easily understood through US-Mexico trade, which Kaplan argues does not milk jobs from the US, but rather creates jobs, keeps US businesses competitive, and actually grows US GDP. It's time to re-think America's plan of action, and hopefully get the solution right the first time around. You can read Robert S. Kaplan's latest essay at the Federal Reserve Bank of Dallas.

7 most notorious and excessive Roman Emperors

These Roman Emperors were infamous for their debauchery and cruelty.

1876. Painted by Henryk Siemiradzki.
Politics & Current Affairs
  • Roman Emperors were known for their excesses and violent behavior.
  • From Caligula to Elagabalus, the emperors exercised total power in the service of their often-strange desires.
  • Most of these emperors met violent ends themselves.

We rightfully complain about many of our politicians and leaders today, but historically speaking, humanity has seen much worse. Arguably no set of rulers has been as debauched, ingenious in their cruelty, and prone to excess as the Roman Emperors.

While this list is certainly not exhaustive, here are seven Roman rulers who were perhaps the worst of the worst in what was one of the largest empires that ever existed, lasting for over a thousand years.

1. Caligula

Officially known as Gaius (Gaius Caesar Augustus Germanicus), Caligula was the third Roman Emperor, ruling from 37 to 41 AD. He acquired the nickname "Caligula" (meaning "little [soldier's] boot") from his father's soldiers during a campaign.

While recognized for some positive measures in the early days of his rule, he became famous throughout the ages as an absolutely insane emperor, who killed anyone when it pleased him, spent exorbitantly, was obsessed with perverse sex, and proclaimed himself to be a living god.

Caligula gives his horse Incitatus a drink during a banquet. Credit: An engraving by Persichini from a drawing by Pinelli, from "The History of the Roman Emperors" from Augustus to Constantine, by Jean Baptiste Louis Crevier. 1836.

Among his litany of misdeeds, according to the accounts of Caligula's contemporaries Philo of Alexandria and Seneca the Younger, he slept with whomever he wanted, brazenly taking other men's wives (even on their wedding nights) and publicly talking about it.

He also had an insatiable blood thirst, killing for mere amusement. Once, as reports historian Suetonius, when the bridge across the sea at Puteoli was being blessed, he had a number of spectators who were there to inspect it thrown off into the water. When some tried to cling to the ships' rudders, Caligula had them dislodged with hooks and oars so they would drown. On another occasion, he got so bored that he had his guards throw a whole section of the audience into the arena during the intermission so they would be eaten by wild beasts. He also allegedly executed two consuls who forgot his birthday.

Suetonius relayed further atrocities of the mad emperor's character, writing that Caligula "frequently had trials by torture held in his presence while he was eating or otherwise enjoying himself; and kept an expert headsman in readiness to decapitate the prisoners brought in from gaol." One particular form of torture associated with Caligula involved having people sawed in half.

He caused mass starvation and purposefully wasted money and resources, like making his troops stage fake battles just for theater. If that wasn't enough, he turned his palace into a brothel and was accused of incest with his sisters, Agrippina the Younger, Drusilla, and Livilla, whom he also prostituted to other men. Perhaps most famously, he was planning to appoint his favorite horse Incitatus a consul and went as far as making the horse into a priest.

In early 41 AD, Caligula was assassinated by a conspiracy of Praetorian Guard officers, senators, and other members of the court.

2. Nero

Fully named Nero Claudius Caesar, Nero ruled from 54 to 68 AD and was arguably an even worse madman than his uncle Caligula. He had his step-brother Britannicus killed, his wife Octavia executed, and his mother Agrippina stabbed and murdered. He personally kicked to death his lover Poppeaea while she was pregnant with his child — a horrific action the Roman historian Tacitus depicted as "a casual outburst of rage."

He spent exorbitantly and built a 100-foot-tall bronze statue of himself called the Colossus Neronis.

He is also remembered for being strangely obsessed with music. He sang and played the lyre, although it's not likely he really fiddled as Rome burned in what is a popular myth about this crazed tyrant. As misplaced retribution for the fire which burned down a sizable portion of Rome in the year 64, he executed scores of early Christians, some of them outfitted in animal skins and brutalized by dogs, with others burned at the stake.

He died by suicide.

Roman Emperor Nero in the burning ruins of Rome. July 64 AD.Credit: From an original painting by S.J. Ferris. (Photo by Kean Collection / Getty Images)

3. Commodus

Like some of his counterparts, Commodus (a.k.a. Lucius Aelius Aurelius Commodus) thought he was a god — in his case, a reincarnation of the Greek demigod Hercules. Ruling from 176 to 192 AD, he was also known for his debauched ways and strange stunts that seemed designed to affirm his divine status. Numerous statues around the empire showed him as Hercules, a warrior who fought both men and beasts. He fought hundreds of exotic animals in an arena like a gladiator, confusing and terrifying his subjects. Once, he killed 100 lions in a single day.

Emperor Commodus (Joaquin Phoenix) questions the loyalty of his sister Lucilla (Connie Nielsen) In Dreamworks Pictures' and Universal Pictures' Oscar-winning drama "Gladiator," directed by Ridley Scott.Credit: Photo By Getty Images

The burning desire to kill living creatures as a gladiator for the New Year's Day celebrations in 193 AD brought about his demise. After Commodus shot hundreds of animals with arrows and javelins every morning as part of the Plebeian Games leading up to New Year's, his fitness coach (aptly named Narcissus), choked the emperor to death in his bath.

4. Elagabalus

Officially named Marcus Aurelius Antoninus II, Elagabalus's nickname comes from his priesthood in the cult of the Syrian god Elagabal. Ruling as emperor from 218 to 222 AD, he was so devoted to the cult, which he tried to spread in Rome, that he had himself circumcised to prove his dedication. He further offended the religious sensitivities of his compatriots by essentially replacing the main Roman god Jupiter with Elagabal as the chief deity. In another nod to his convictions, he installed on Palatine Hill a cone-like fetish made of black stone as a symbol of the Syrian sun god Sol Invictus Elagabalus.

His sexual proclivities were also not well received at the time. He was likely transgender (wearing makeup and wigs), had five marriages, and was quite open about his male lovers. According to the Roman historian (and the emperor's contemporary) Cassius Dio, Elagabalus prostituted himself in brothels and taverns and was one of the first historical figures on record to be looking for sex reassignment surgery.

He was eventually murdered in 222 in an assassination plot engineered by his own grandmother Julia Maesa.

5. Vitellius

Emperor for just eight months, from April 19th to December 20th of the year 69 AD, Vitellius made some key administrative contributions to the empire but is ultimately remembered as a cruel glutton. He was described by Suetonius as overly fond of eating and drinking, to the point where he would eat at banquets four times a day while sending out the Roman navy to get him rare foods. He also had little social grace, inviting himself over to the houses of different noblemen to eat at their banquets, too.

Vitellius dragged through the streets of Rome.Credit: Georges Rochegrosse. 1883.

He was also quite vicious and reportedly either had his own mother starved to death or approved a poison with which she committed suicide.

Vitellius was ultimately murdered in brutal fashion by supporters of the rival emperor Vespasian, who dragged him through Rome's streets, then likely beheaded him and threw his body into the Tiber river. "Yet I was once your emperor," were supposedly his last words, wrote historian Cassius Dio.

6. Caracalla

Marcus Aurelius Antoninus I ruled Rome from 211 to 217 AD on his own (while previously co-ruling with his father Septimius Severus from 198). "Caracalla"' was his nickname, referencing a hooded coat from Gaul that he brought into Roman fashion.

He started off his rise to individual power by murdering his younger brother Geta, who was named co-heir by their father. Caracalla's bloodthirsty tyranny didn't stop there. He wiped out Geta's supporters and was known to execute any opponents to his or Roman rule. For instance, he slaughtered up to 20,000 citizens of Alexandria after a local theatrical satire dared to mock him.

Geta Dying in His Mother's Arms.Credit: Jacques Pajou (1766-1828)

One of the positive outcomes of his rule was the Edict of Caracalla, which gave Roman citizenship to all free men in the empire. He was also known for building gigantic baths.

Like others on this list, Caracalla met a brutal end, being assassinated by army officers, including the Praetorian prefect Opellius Macrinus, who installed himself as the next emperor.

7. Tiberius

As the second emperor, Tiberius (ruling from 42 BC to 16 AD) is known for a number of accomplishments, especially his military exploits. He was one of the Roman Empire's most successful generals, conquering Pannonia, Dalmatia, Raetia, and parts of Germania.

He was also remembered by his contemporaries as a rather sullen, perverse, and angry man. In the chapter on his life from The Lives of the Twelve Caesars by the historian Suetonius, Tiberius is said to have been disliked from an early age for his personality by even his family. Suetonius wrote that his mother Antonia often called him "an abortion of a man, that had been only begun, but never finished, by nature."

"Orgy of the Times of Tiberius on Capri".Painting by Henryk Siemiradzki. 1881.

Suetonius also paints a damning picture of Tiberius after he retreated from public life to the island of Capri. His years on the island would put Jeffrey Epstein to shame. A horrendous pedophile, Tiberius had a reputation for "depravities that one can hardly bear to tell or be told, let alone believe," Suetonius wrote, describing how "in Capri's woods and groves he arranged a number of nooks of venery where boys and girls got up as Pans and nymphs solicited outside bowers and grottoes: people openly called this 'the old goat's garden,' punning on the island's name."

There's much, much more — far too salacious and, frankly, disgusting to repeat here. For the intrepid or morbidly curious reader, here's a link for more information.

After he died, Tiberius was fittingly succeeded in emperorship by his grandnephew and adopted grandson Caligula.

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The ‘Lost Forty’: how a mapping error preserved an old-growth forest

A 19th-century surveying mistake kept lumberjacks away from what is now Minnesota's largest patch of old-growth trees.

Credit: U.S. Forest Service via Dan Alosso on Substack and licensed under CC-BY-SA
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Physicists push limits of Heisenberg Uncertainty Principle

New studies stretch the boundaries of physics, achieving quantum entanglement in larger systems.

Credit: Aalto University.
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