Adapting to the Future of Law: Globalization
Globalization carries with it some challenges. Many Americans view it as a threat to their futures and try to ignore it or battle against it. Instead, consider viewing globalization as an opportunity for job and career enhancement.
Globalization is not new. Cyrus Field’s transatlantic cable (1866) was really the first globalization marker. The cable that connected the New World to the Old fostered close to real-time communication and boosted trade that benefited both continents. For the next century, globalization was very much a net positive for the United States.
Then, in the early 1980s, the U.S. found its economy became inextricably linked to external developments and pressures increasingly out of our control. It was no longer possible to strategize domestic economic policy in isolation from events abroad and the actions of foreign governments. Paying attention to Wall Street and Washington was no longer enough; now we also had to be concerned about Frankfurt, London, Tokyo, and Beijing.
Other countries moved quickly to temper the more negative effects of globalization on their national economies and labor forces. Much of the rest of the developed world, especially Northern Europe, more closely scrutinized corporate governance and paid more attention to nurturing labor-management relations and improving worker skills for the new, global technology-oriented economy. The U.S., by contrast, arguably did little, as intervention in the economy to offset the deleterious effects of globalization did not comport with the ideology of Reaganomics. Even during the 1990s, globalization was largely expected to be a boon to workers, as NAFTA and similar deals were embraced.
Impacts of Globalization
The world and its 200-plus independent nations are now inextricably interconnected. People and goods move around the world in a matter of days. Intangible assets such as money cross borders with a keystroke (best estimates are $35 trillion each day). Satellite technology and the Internet enable instant, real-time communications from virtually any point on the planet to any other. Financial blips anywhere in the world have cascading impacts in distant locations.
Consider the so-called “Cyprus Effect.” Despite its size, small population, and miniscule economy, Cyprus (a Eurozone member) had become an offshore banking haven, albeit a relatively small one. Its banks held almost €100 billion, half of which consisted of Russian assets, as well as €22 billion of Greek private-sector debt—large amounts for a nation with a GDP of only €19 billion. When bad-debt ratios rose, Cypriot banks came under severe financial pressure. The Greek debt crisis led to fears that these banks would collapse. When the major rating agencies sharply downgraded the country's rating, long-term bond yields rose above 12%, and financial shockwaves were sent through markets worldwide.
If that was not enough to make clear the implications of globalization, consider this: U.S. manufacturing, the linchpin of our economy for more than a century, lost 50% of its workforce in 25 years, largely due to offshoring to Asian countries with much lower labor costs. At the same time, manufacturing was transitioning from “brute force” assembly-line manufacturing reliant on unskilled and semi-skilled workers to advanced manufacturing marked by robotics and high-tech machinery that required a skilled workforce to run and maintain. Then add currency manipulation by China, which is intended to garner an export advantage while rendering U.S. and other countries’ exports more expensive and thus less competitive.
In recent years, the U.S. has increasingly recognized the potential risks of globalization, and has taken steps to counter those risks. The Obama administration, along with some states and localities, embarked on long-term programs to combat the negative effects of globalization while, at the same time, taking advantage of the opportunities it presents. Efforts include federal “manufacturing hub” initiatives, combined with aggressive state and local schemes that include business attraction efforts directed at European Union (EU) companies, local government broadband initiatives, state and local efforts at “reshoring” plants that left the U.S. 10 and 20 years ago, and global recruiting of STEM-educated professionals (foreign-born individuals now account for almost 25% of the 2.1 million workers employed in nonacademic U.S. science and engineering occupations).
This is good news for attorneys because it expands the potential employer and client pies.
A renewed focus of government policy on manufacturing, reshoring, “onshoring” from the EU, the transformation of corporations into multinationals, and the opportunities that innovation presents for selling more products abroad, are combining to generate more regulatory compliance mandates while simultaneously complicating the law surrounding the effects of globalization.
At the same time, export controls, cross-border mergers and acquisitions, “inversions” for tax purposes, vigorous enforcement of laws such as the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1, et seq., immigration constraints imposed on high-value employees, and EU and foreign country laws and regulations elevate corporate governance, risk management, and compliance to major corporate concerns. Globalization adds to the uncertainty that informs almost everything today, and uncertainty and complexity often mean the need for legal advice and counsel.
What is perhaps most striking from a legal opportunity perspective is that size matters less and less. Globalization is rapidly insinuating itself into small communities and small and medium-size enterprises (SMEs). SMEs have had to come up to speed in a hurry on the legal implications and obligations of participating in the world economy.
The “trickle-down” impact of globalization is both deep and broad. Community banks in small towns, small manufacturing and even retail operations that realize that their market is no longer delineated by a modest radius extending out from where they are physically located, and state and local governments aggressively seeking to attract foreign companies to their areas, are just a few examples of the impact of globalization on legal and law-related job opportunities.
If you are attuned to these changes and trends, and are diligent about the opportunities that they may create, you may find that globalization is a net positive for your career. Fortunately, as someone who is pursuing or has obtained your law degree online, you are in a prime position to recognize that geography matters much less than innovation and grit—precisely the traits that globalization tends to reward.