Globalization

Ensuring demand for, and investment in, American workers

Skip to Articles

Overview

Globalization has produced a radically different result from the widely shared prosperity that its advocates promised. Instead, production shifted from some countries to others, taking labor demand with it and leaving behind a weakened industrial base, collapsed communities, and poor employment prospects. These shifts result not from genuine comparative advantage, but rather in response to aggressive government subsidies and the availability of exploitable labor in countries like China. Uncontrolled immigration and temporary work programs have a similar effect in reverse, flooding some countries with additional labor that releases the pressure on employers to pay good wages or invest in higher productivity.

This form of “free trade” is not the epitome of free-market capitalism; it is the antithesis. Economists and policymakers who believed that capitalism is “just another word for economic freedom” assumed that the free flow of goods, people, and capital across borders would automatically generate prosperity. But capitalism relies upon the mutual dependence of a nation’s capital and labor to produce good outcomes for both, and for consumers, too. Globalization has severed those bonds, urging the owners of mobile capital to forsake the interests of their fellow citizens and pursue higher profits through labor arbitrage abroad. American workers, their families, and their communities paid the price. The nation’s industrial strength, capacity for innovation, and economic resilience declined.

China poses a particular problem. Globalization’s rise coincided with the Cold War’s end, in part, because a global free trade system that incorporated the Soviet bloc was unthinkable. But the “holiday from history” of the 1990s created a presumption that liberal market democracy was on the march everywhere, and globalization’s proponents argued that incorporating China into a global marketplace would accelerate its own liberalization. They were wrong. Instead, China changed us—corrupting the free market, distorting investment flows, capturing valuable industries, and even exporting its authoritarian politics through campaigns of economic pressure.

At American Compass, we work to understand why globalization has failed and what alternatives exist. We develop approaches through which policymakers can rebalance America’s role in the global economy.

The Regaining Our Balance collection presents a comprehensive critique of how globalization has gone wrong, including Oren Cass’s seminal essay, Searching for Capitalism in the Wreckage of Globalization, and Senator Jeff Sessions’s reflection on how conservatives, himself included, were led astray. In Wrong All Along, page after page of quotations from an overconfident elite exposes the flawed ideology that has driven globalization; in Where’s the Growth, chart after chart depicts the negative economic results. Other essays dig deeper on particular facets of the failure, including Senator Marco Rubio’s assessment of China’s ascension to the WTO and Michael Pettis’s economic analysis of how free trade theory has broken down in practice. The Guide to the Semiconductor Industry provides a concrete example of these forces eroding American leadership and prosperity.

While evidence for globalization’s success is scarce, the market fundamentalism prevalent on the right-of-center has traditionally ignored this reality, instead pushing a narrative in which America has always embraced an open economy and any alternative would be worse. The Rebooting the American System collection confronts these myths. In fact, the American economic tradition historically resisted global entanglement and the economy developed into an industrial colossus with the help of aggressive public investment and high trade barriers. Oddly enough, as John Burtka observes in Don’t Trade on Me, free trade dogma was imported to America by the antebellum, secessionist South. The Reagan-era quota on Japanese vehicle imports, which strengthened domestic manufacturers and gave birth to a massive new industry in the American South, provides compelling proof that a different approach can work.

Examples like these point toward possible solutions today. The Balancing Act provides a comprehensive overview of interventions that could help bring American trade, immigration, and investment flows back into balance. The Moving the Chains collection details a range of strategies for reshoring American industry and innovation, including Willy Shih’s proposal for pre-competitive consortia and Michael Lind’s proposal for local content requirements. Fortunately, the unthinking consensus that encouraged mockery of anyone who questioned globalization’s wisdom has collapsed, and policymakers are beginning to act.

Start Here
3/9/2022
Searching for Capitalism in the Wreckage of Globalization

Mutual dependence between capital and labor, not mere “economic freedom,” is what Adam Smith so ably described. Globalization destroys it.

Compass Advisors
Robert Lighthizer

Former U.S. Trade Representative

Contact
Jeff Sessions

Former U.S. Attorney General

Contact
Michael Pettis

Carnegie Endowment

Contact

Featured Content

Browse all content in the Globalization library

Collections

Regaining Our Balance

3/9/2022

How to Right the Wrongs of Globalization

Moving the Chains

6/8/2020

9 Strategies for Retaking Global Leadership in Industry and Innovation

Rebooting the American System

5/4/2020

The comprehensive, conservative case for a return to robust national economic policy

Essays

All Who Squander Are Lost

10/2/2024 Oren Cass

How trade deficits, like budget deficits, mortgage our future for consumption today

Paying the Price for Investing in China

8/28/2024 Adam Chan

We should stop giving favorable tax treatment to capital gains earned boosting our adversaries

Free Trade’s Origin Myth

1/2/2024 Oren Cass

American elites accepted the economic theory of “comparative advantage” mainly because it justified their geopolitical agenda.

Only Trump Could Confront China

6/30/2023 Robert Lighthizer

The inside story of the trade negotiation that changed the world

Bad Trade

10/7/2022 Michael Pettis

“Bad competitiveness” results in weakening demand, which either reduces global production or requires surging debt to maintain demand and production at its existing level. Perhaps that rings a bell, because it is the world we live in.

Don’t Trade on Me

9/16/2022 John A. Burtka IV

America grew wealthy not from free trade, but behind some of the world’s most imposing protectionist barriers. In fact, the principal tradition of free trade one finds in American history was born in the Confederate South.

Research

Disfavored Nation

10/1/2024 Mark A. DiPlacido, Chris Griswold, Trevor Jones

A new report makes the case for revoking China’s “Permanent Normal Trade Relations” status and implementing a new set of tariff rates

The American Rejection of Globalization

1/11/2024

While many economists continue to insist that globalization has benefited the United States, the American people do not agree.

The Import Quota that Remade the Auto Industry

9/29/2022 Wells King, Dan Vaughn, Jr.

President Reagan negotiated a quota on Japanese imports that bought Detroit time to retool and spurred massive foreign investment in a new manufacturing base in the South.

Where’s the Growth?

3/15/2022

The era of globalization has coincided closely with the onset of precisely those problems that a clear-eyed analyst might have predicted and delivered outcomes contrary to the ones its ideologues envisioned.

A Guide to the Semiconductor Industry

4/22/2021

A guide to what is happening in the semiconductor industry and how the U.S. fell behind its competitors in the global race for leadership.

Policy Proposals

A New Trade Paradigm

3/14/2025 Mark A. DiPlacido

The case for eliminating the U.S. trade deficit, supporting high-quality jobs, and expanding domestic manufacturing through fair and reciprocal trade policies

Issues 2024: Globalization

1/11/2024

Revitalizing the national economy must begin with restoring the incentive to invest and build in America.

Coalition Letter: Outbound Investment Restrictions

11/16/2023

As the FY2024 National Defense Authorization Act (NDAA) moves through conference committee, we write to urge Congress’s support for security-related restrictions on outbound investment of American capital to the People’s Republic of China (PRC).

A Hard Break from China

6/8/2023

Protecting the American Market from Subversion by the CCP

Policy Brief: End “Permanent Normal Trade Relations” with China

5/17/2023

Reclaiming control of U.S. trade policy

Policy Brief: The Global Tariff

10/19/2022

Levy a tariff on all imports that rises until trade is balanced

Conversations

Talkin’ (Policy) Shop: Balancing U.S. Trade

10/19/2022

On this episode of Policy in Brief, Oren Cass is joined by American Compass policy director Chris Griswold to discuss how U.S. trade fell so far out of balance—and some ideas for how to rebalance it.

Capital Markets R’Us

6/16/2022

Oren Cass joins David Bahnsen to discuss the state of American financial markets, private equity and venture capital, what is going wrong, and potential solutions.

Has the Right Gotten It All Wrong?

3/3/2022

Oren Cass joins David Bahnsen to discuss globalization, market orthodoxy, and much more.

Commentary

The Need for Tariffs

10/5/2021 Robert Lighthizer

The country’s deficits with China are so immense that new thinking—and hefty tariffs—are required, says the first US trade representative under Donald Trump.

Tariffs are a bet on the free market rather than free trade

5/12/2025 Oren Cass

Innovation has stalled in a globalised era dominated by state-sponsored national champions.

Trade Deals in the Time of Tariffs

4/10/2025 Oren Cass

The reciprocal levies aimed at allies have been paused for 90 days, now what?

Trump’s tariffs aim to reset global trade — and boost America’s workers

4/3/2025 Mark A. DiPlacido

President Trump ushered in a new era of US trade policy Tuesday — a national course correction after decades of unfair trade practices

Stop Freaking Out. Trump’s Tariffs Can Still Work.

4/8/2025 Oren Cass

Last week’s “Liberation Day” marked a kind of D-Day in the effort to reorder the international economic system.

Europe Must Choose Between America and China

4/12/2025 Oren Cass

In a multi-polar world, old certainties about the US security guarantee and access to markets no longer hold.

applearrow-cardsarrow-sharearrowcaret-downcloseemailfacebook-squarefacebookfooter-imggoogle-podcasts-clearhamburgerinstagram-squarelinkedin-squarelinkedinpauseplayprintspotifystitchertriangletwitter-squaretwitter