August 15, 2011

By michael payne

Globalism, which has enriched Corporate America, has been an absolute disaster for U.S. manufacturing and the American worker. But, as the saying goes, all good things must come to an end. So let's make an objective analysis and a prediction of how globalism, the darling of the free traders and transnational corporations, will cease to be the driving force of the world's commerce.

What exactly is globalism? Generally defined it is a "socio-economic system dedicated to free trade and free access to markets." It's an innovative form of international commerce whereby nations think of marketing with a world view rather than their own national view. Trade between nations has been going on for centuries but under globalism and the evolution of gigantic transnational corporations, it has become far more intensive and much more sophisticated.

Think of the monumental volume of products and raw materials that are exchanged day in and day out between nations via air transport and ocean shipping; the enormous trade that goes on between the U.S. and China and Japan, albeit most of the traffic is for exports to America rather than exports by America; the volume is staggering.

Yes globalism is doing quite well right now as multi-national corporations are raking in enormous profits. Corporate profits skyrocket while, at the same time, the lives of those who work for slave labor wages in China and other nations suffer greatly for their greedy masters, many headquartered in the U.S. In America, millions of workers who once earned decent wages in years past are collecting unemployment checks and searching for jobs that no longer exist.

So is globalism here to stay, will it continue to grow and bring great benefits to the nations of the world? I think not; in fact, I am quite certain that its days are numbered; that its demise is fast approaching. If that's so, what will be the primary causal factor? In one word it's -- OIL. Why oil? Because oil fuels the commerce of the entire world and the day is fast approaching when plentiful and relatively affordable oil will become a thing of the past.

What poses the greatest threat to the future of globalism is called Peak Oil, a term still not very familiar to most Americans. Peak Oil is a theory which is evolving right before our eyes. The demise of globalism will begin as the world enters the era of Peak Oil, that point in time when the world's demand for petroleum will overwhelm the production capabilities of the world's oil producing nations. While the world will not run out of oil for a long time, the dilemma is that oil is becoming much more difficult and expensive to extract from the deposits that are rapidly declining. Not only are there are no new large oil fields being discovered but the potential for new discoveries is very slight.

As a counter to this theory, there is a body of naysayers who are spending a lot of time and money trying to discredit this theory for their own personal gain. It's that part of Corporate America, primarily the oil industry and its congressional lackeys, whose intent is to keep the majority of Americans addicted to oil and prevent the development of new sources of energy. "Big Oil" wants no competition of any kind and it sends mega millions of dollars to Congress to keep it so. But no matter how hard the oil industry wants to dispute this eventuality, Peak Oil is coming and, when it does, it will have a massive, revolutionary effect on the way world commerce is conducted.

This article, "The Scourge of Peak Oil" by Dahr Jamail gives an excellent overview of what Peak Oil is and how it will affect our lives. The author believes that Peak Oil may already have arrived and I agree that it is in its beginning stages. This is evidenced by the fact that, even with much of the world still in recession, the cost of a barrel of oil and the cost per gallon of gas continue to remain high. For those who say that part of the high cost of gasoline is due to Wall Street speculators they are right; but why is speculation so high and continuing? It's because those speculators know that we are heading into a scenario in which world supply is becoming more and more problematic and they are protecting their interests.

As the article states, the International Energy Agency (IEA) is forecasting a global oil consumption rate of about 89.5 million barrels per day for 2011 and 91 million bpd in 2012. China and India, among other nations with rapidly growing economies, are using more and more oil. Considering the fact that world oil production is currently just keeping up with this growing demand, the specter of Peak Oil is looming ominously over this planet. It's not a case of if Peak Oil will happen; it's simply a question of when it will happen.

As supply problems dramatically escalate, the first thing that the oil producing nations will do is guarantee their own supply of oil by cutting back exports to other nations. That will magnify the problem and cause an immediate disruption in shipments of oil all over the world. Nations that formerly embraced the concept of globalism will, whether they like it or not, be unable to continue existing trade agreements with other nations when the combination of oil shortages and escalating costs make it prohibitive.

Now how is this going to affect America and its massive imports of products from China, Japan and other nations? How will it affect America's many transnational corporations whose entire agenda depends upon these imported products? The demise of globalism will be devastating to Corporate America, and massive retail chains such as Wal-Mart will see their pipeline of products from China begin to dry up; they will see sales plummet. America will, temporarily, be caught up in a very dire situation because, when imports are significantly disrupted, there will be a dearth of American manufacturing companies needed to pick up the slack.

And that will become a turning point that will pave the way for the restoration of this nation's manufacturing sector. Corporate America will have a clear choice; it can bail out on America and concentrate its operations overseas or it can, instead, recognize and accept the revolutionary changes taking place and aggressively rebuild the manufacturing sector, including the hiring of millions of American workers. Whether major corporations stay or go, you can bet that there will be plenty of U.S. entrepreneurs who will seize the opportunity to take advantage of producing products for a large domestic market with little to no competition from China, Japan and other foreign nations.

While there is no absolute guarantee that globalism will end as the era of Peak Oil begins the probability is very high. These developments could bring about the restoration of this nation's consumer-driven economy that is currently in its death throes. The rebirth of the manufacturing sector, together with taking millions of workers off the unemployment rolls and into productive jobs is exactly the shot in the arm that America needs.

So, I am confident that in the coming years we will witness the demise of globalism and, with it, a great opportunity to transform America from a nation in a steep downward spiral to one with a very promising future.