Globalization | American Compass (original) (raw)

Ensuring demand for, and investment in, American workers

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.

Essays

A Grand Strategy of Reciprocity

10/17/2025 • Oren Cass

How to Build an Economic and Security Order That Works for America

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.

Research

Americans Reject Chip Exports to China

5/12/2026

On most other questions, significant partisan and generational divides

The Tariff Tally

3/29/2026

What the Numbers Say, One Year After Liberation Day

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.

Policy Proposals

Stop Selling the Rope

10/27/2025

Protecting American AI Dominance from China’s Globalization Playbook

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

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