Globalization has lowered prices

The argument

The camera industry illuminates the impact of globalization on consumer prices, because the shift in where cameras were made happened quickly enough to be read against the price record. In 2000, Japan exported the highest volume of cameras to international markets. By 2005, many Japanese camera companies had outsourced their manufacturing processes to Chinese plants, and China had overtaken Japan as the world's biggest camera exporter. The change in leading exporter did not reflect new Chinese firms displacing Japanese ones so much as Japanese firms relocating the making of their own products. The same period saw camera prices fall by between 2% and 5% annually. The argument reads the two together, since a sustained annual decline coinciding with a relocation of production is what the underlying mechanism predicts, and that mechanism is not mysterious. By changing the source country and reducing labour costs, businesses can sell their product to consumers more cheaply. In a market with several competing manufacturers they must do so, because a rival who relocates first can undercut anyone who does not, and the saving is passed on rather than pocketed. The final step concerns who gains from that. A price falling a few per cent every year compounds, so a product that was once a considerable purchase becomes an ordinary one within a decade. This allows more people to enjoy a standard of living previously reserved for the wealthy, and the gain is largest for those with least to spend, since it is at the bottom of the income range that a price change decides whether something is bought at all rather than merely when. On this account the cheapening of manufactured goods is not an incidental side effect of globalization but its principal contribution to ordinary life.

Context

Economic globalization allows companies to reduce their overheads by shifting their production operations from high cost to low cost countries. In a free market, without financial barriers to international trade, these cost savings can be passed onto the consumer, driving prices down for many consumer goods.

Premises

Counter-arguments

Lower prices for consumer goods may look like an advantage of globalization on the surface. But it is an environmental death sentence. Globalization creates new desires and consumption patterns that are unsustainable. The world cannot sustain a level of consumption enabled by globalization. If all 7 billion of the global population consumed goods at the same scale as the inhabitants of the West, we would need 10 planet earths to support our lifestyle.

Rejecting the premises

[Rejecting P3] This is not an advantage. It is an environmental death sentence.