Globalization

Democracy today. Most governments today claim to be democratic, but many lack some essential freedoms usually associated with democracy. In some countries, for example, the people are not allowed basic freedom of speech and of the press, or competitive elections.

One of the most important influences on democracy since the 1970's has been the economic and social globalization of the world's nations. Globalization refers to the trend toward increased business, cultural, and government interaction across international borders. Globalization involves the loosening of trade restrictions and the movement of businesses, investments, and workers around the world. It also involves the rapid spread of information, ideas, and values, by means of the Internet and other technological advances in communications.

Some people believe that globalization can encourage the development and practice of democracy worldwide. Increased cultural interaction may help the spread of democratic principles and the reporting of human rights abuses. In addition, democratic countries may be able to use economic pressure to make dictators give up power and establish democracy. Some international economic organizations require nations to establish and maintain democracy before gaining membership.

On the other hand, some people believe that globalization may have negative consequences for democracy. In some cases, a nation's efforts to attract international business and investment may conflict with the needs of the nation's people. Countries may reduce social spending, cut taxes that fund public programs, or eliminate environmental regulations to decrease business costs. In addition, many people are concerned about the growing powers of certain international organizations that are not directly accountable to the people.

1. The Number of Jobs Grows With the Population

As Figure 1 shows vividly, the total number of jobs in the American economy is first and foremost a function of the size of the labor force. As the population grows, the number of people in the work force grows; then market forces absorb that supply and deploy labor to different sectors of the economy.

Consider all the major events that have increased the supply of labor during the last half-century: the baby boom, the surge in work force participation by women, and rising rates of immigration after decades of restrictionist policies. Consider as well the key developments that have slashed demand for certain kinds of labor: the growing competitiveness of foreign producers and falling U.S. barriers to imports; the shift by American companies toward globally integrated production and the consequent relocation of many operations overseas; the deregulation of the transportation, energy, and telecommunications industries and the wrenching restructuring that followed; and, most important, the many waves of labor-saving technological innovations, from the containerization that replaced longshoremen to the dial phones that replaced switchboard operators to the factory-floor robots that replaced assembly-line workers to the automatic teller machines that replaced bank tellers.

Yet in the face of all this flux, no chronic shortage of jobs has ever materialized. Over those tumultuous five decades, a growing economy and functioning labor markets were all that was needed to accommodate huge shifts in labor supply and demand. Now and in the future, sound macroeconomic policies and continued flexibility in labor markets will suffice to generate increasing employment, notwithstanding the rise of China and India and the march of digitization.

2. Jobs Churn Constantly

The steady increase in total employment masks the frenetic dynamism of the U.S. labor market. Gross changes -- total new positions added, total existing positions eliminated -- are much greater in magnitude. Large numbers of jobs are being shed constantly, even in good times. Total employment continues to increase only because even larger numbers of jobs are being created.

According to economist Brad DeLong, a weekly figure of 360,000 new unemployment insurance claims is actually consistent with a stable unemployment rate. In other words, when the unemployment rate holds steady -- that is, total employment grows fast enough to absorb the ongoing increase in the labor force -- some 18.7 million people will lose their jobs and file unemployment insurance claims during the course of a single year. Meanwhile, even more people will get new jobs.

More detailed and dramatic evidence of job turnover can be found in Table 1. According to data compiled by the Department of Labor’s Bureau of Labor Statistics, total private-sector employment rose by 17.8 million