Chapter 11 People are more important than profits

The development of information technology indicates the emergence of new employment opportunities, and it is also one of the reasons why people's employment conditions have changed.The development of computers, software and networks means that the need for labor in traditional production processes has decreased. In the 1980s, Japan's economic rise raised concerns that the increasing mechanization of production lines would make many workers obsolete. This trend intensified further in the mid to late 1990s.It is not just the production workshop of the factory that is affected.For example, the financial services industry used to require millions of people to do various jobs. This is no longer the case.The application of automatic teller machines is the most obvious example.ATMs have popped up everywhere seemingly overnight, including in some of the most unlikely places.In addition to banks, we can also see ATMs in convenience stores, movie theaters, airports, and shopping malls.Many consumers are happy about this, but one of the consequences of the use of ATMs is the loss of employment opportunities, and many bank teller jobs have been replaced by ATMs.

So, when praising the virtuous cycle of market, Internet and technological prosperity, don't ignore that there is another layer of popular culture, a layer that is quietly surging.In the United States, high school students in some areas have organized their own investment clubs, while in other areas, many high school students whose parents have lost their jobs have not yet found new jobs with comparable income and security.Many people felt left out of the boom of the 1990s, but neither the US government nor the media recognized this.It is for this reason that in November 1999, when officials from all over the world gathered in Seattle for a new round of World Trade Organization negotiations, no one thought it was a particularly big deal.However, it is not.

Warning signs are not new. In 1997, the trade negotiations held in Melbourne, Australia, triggered large-scale protests and demonstrations. However, Americans felt that it was happening in a world far away from them and did not care. In the early 1990s, some people strongly opposed the signing of the North American Free Trade Agreement, and billionaire Ross Perot also participated in the 1992 presidential election under this banner.In his opposition to signing NAFTA, Perot famously made a prediction.He believes that with the signing of the agreement, many jobs will be transferred from the United States to Mexico, because jobs will always inevitably move from areas with high labor costs to areas with low labor costs.Perot's warnings that jobs would move south from the U.S. to Mexico fueled fears and the millions of dollars he poured into the campaign, which gave him a staggering 19 percent of the vote.

But when Perot ran for the second time in 1996, his share of the vote dropped to around 8%.It is widely believed that the economic prosperity of the United States under the Clinton administration dispelled previous concerns about trade liberalization and laissez-faire trade policies represented by the North American Free Trade Agreement and the World Trade Organization.The Clinton administration firmly believed that closer economic ties with the world and increased trade and economic activity were important components of a stable global system, and Clinton administration officials have been committed to creating this system.At the same time, they also realized that the public does not care about these issues. As the "Cold War" fades away, Americans are less and less concerned about the overall situation of the world, and they are less and less willing to invest time, energy or resources in this regard.

This has given the US government a sense of urgency.Given the lack of interest among Americans in international affairs during the 1996 election (including among some officials in the U.S. government), during President Clinton's re-election, the Clinton administration felt that Americans needed to be reminded that maintaining participation in the global economy was in line with U.S. of national interest."There are many in Congress who question the need for strong US leadership and global engagement in the 'post-Cold War era'," the administration said in a policy paper.This idea must be resisted. In December 1996, a memo to incoming Secretary of State Madeleine Albright stated: "Never since colonial days has American prosperity depended so heavily on effective Participation and leadership.” The memorandum also clearly stated that the necessity of integrating China into the world economic system is also one of the reasons why the United States should continue to pay attention to the shaping of the global economic system.

The Seattle talks were supposed to move that agenda forward.But plans were derailed by thousands of angry demonstrators blocking roads, setting fires and causing chaos.Some of them were anarchists whose main purpose was to disrupt the talks.But others have more explicit grievances—they oppose free trade, the "Washington Consensus" that sees increased global trade and economic activity as in the best interests of the future world, and the inequality, unfulfilled promises of the "new economy." Promises and unfulfilled dreams. "People are more important than profits!" was one of the slogans chanted by the men and women who flocked to the streets of Seattle.An important component of the Clinton administration's economic policy is the liberalization of global trade and the reduction of tariffs and trade barriers.This fundamental concept comes from a classic tenet of economics, namely the law of comparative advantage.Theoretically speaking, if there are no artificial cost constraints such as import and export restrictions, a certain product or service will come from those enterprises and countries that can provide the highest quality product or service at the lowest cost.Although in the short run breaking down trade barriers can be disruptive to the economy as some businesses fail to adapt to global competition, in the long run breaking down trade barriers is good for greater prosperity from which not only It is the owners of businesses and businesses, as well as consumers around the world.The most productive firms will dominate the market, and dominance of the market will allow these firms to reap greater profits, and as costs fall, these firms can also lower the prices of their goods.End consumers will benefit from lower prices for products and services.

But the demonstrators in Seattle saw not the benefits they could reap as consumers from trade liberalization, but the profits businesses could reap as producers.At that time, the term "globalization" was widely used, but as now, the concept of "globalization" was still vague and confusing.For those who support the "Washington Consensus," globalization is a self-reinforcing system capable of bringing well-being to more and more people.And for those who look at globalization with despair, as Perot warns, with the signing of NAFTA and the birth of venture capitalists and computer industry billionaires in the boom of the "new economy", Everything that goes wrong is caused by globalization.Joseph Stighitz, once the chief economist of the World Bank and a sharp critic of globalization, pointed out that the perspective of the protesters in Seattle is diametrically opposed to that of the US government. Wondering if they're talking about the same thing.On the one hand they see rising wealth for all, while on the other they see falling living standards and increased insecurity; while one hails a more connected world, the other sees domestic culture Threats and breaches of social bonds.

For millions of Americans, the "new economy" is like a candy store, they can only stand outside, put their faces to the glass windows, they can see and long to taste the delicious taste of the store, but But nothing can be done.The "middle class" life on the TV screen is actually only enjoyed by the rich; magazines advertise that a new era is coming, but the objects and toys that appear in the reports can only be bought by a few people; The end of the cycle and rising stock indexes to new highs are empty prospects that only a few see.Everything that happened in Seattle ruthlessly reminded the reality of American society in the 1990s: this is an era of "new economy", but it is not an era of "new economy".This era has winners, who dominate the conversation; it also has losers, who are forgotten and ignored.Both winners and losers are right and wrong at the same time.

Enthusiastic supporters of the "new economy" have a "utopian" fantasy about the world, believing that technology, networks and markets will create a whole new world. They always talk about it, but they do very little.No one saw the nature of capitalism more acutely than the Austrian economist and Harvard professor Joseph Schumpeter in the 1930s and 1940s.Referring to the capitalist system as an endless process of "creative destruction," he saw the destructive reality beneath the surface of capitalism.However, proponents of the "new economy" seem to win the debate in the end, as they emphasize its "creative" side rather than admit the harm its "destructive" side has caused to the real world.The chaos in Seattle did not hurt the World Trade Organization itself, which has continued to expand since then, adding new members.Economic figures show that the economy is developing and productivity is increasing.The voices that challenged the "new economy" seemed weak.

In 2000, stock prices began to fall sharply, and the "new economy" began to shrink.In a year's time, the "new economic era" came to an end and quickly turned into a bubble, a deception and a mirage.From late 2000 to 2001, toward the end of the Clinton administration, the U.S. economy slowed down considerably.Soon, the "new economy" was shattered. The above storyline, which took place in the 1990s, may sound familiar, but just because it's familiar doesn't mean it's completely true.At a time when proponents are still preaching about a "new economy" and opponents of globalization are asking questions, the story also glosses over other plot points.Although many people believe that enterprises and wealth elites have gained disproportionate benefits in the "new economy", these enterprises hold different views on this.In fact, in the 1990s, unless your business was a new technology business, you felt lost and overwhelmed.If you are the CEO of a traditional retail or industrial company, the thoughts and words of Silicon Valley entrepreneurs will make you feel at a loss, and you will probably have doubts about the "new economy". It's hard to ask yourself a question when prices are skyrocketing and your business's stock is flat.

Companies such as AOL, Amazon, and Yahoo, which were born in the 1990s, suddenly have a market capitalization that surpasses traditional giants such as Caterpillar.For many leaders of traditional businesses, the world has turned upside down.They're doing business the way business should be done, but it's like driving a super-powered car in the slow lane. The rise of "new economy enterprises" has shocked traditional enterprises.These traditional businesses are always described as "dinosaurs", described as "lumbering idiots trapped in fixed factories", will die slowly and without dignity.Many predict that these traditional businesses will be replaced by nimble online upstarts that are creating a virtual world of industry and commerce.Unwilling to wait for this day to come, traditional economic experts sat down and did some soul-searching as they wondered how to reverse what seemed inevitable. The result of the thinking is a new strategy to look for possible economic growth points instead of clinging to existing growth points.This means not only focusing on new technologies, but also finding new markets.They are searching around the world, constantly asking themselves which markets have not yet integrated into the world economic system, where consumers still have consumption needs... There are many answers, and China is one of them. Few companies have a coherent and clear strategy.A hodgepodge is more representative than a well-thought-out strategic blueprint.Before the 1990s, business managers were not complacent.Businesses have been actively seeking new markets long before the technological revolution began. In the 19th and 20th centuries, American and European companies followed in the footsteps of Western powers and established branches in Latin America and India. In the 20th century, Americans were particularly active in doing business with countries and regions south of their borders, including Mexico, the Caribbean, Chile, Peru, and Argentina.European businesses found success in the United States, and transatlantic business links were established before the arrival of the technology boom of the 1990s.Early technological booms, from the invention of the telegraph and the airplane, to innovations in shipping technology, also reinforced this connection.