The Global Wealth Explosion

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The Global Wealth Explosion

Throughout the world, the number of people who can “create wealth” and afford to “spend big” is growing rapidly. At the same time, the number of people globally who can afford to spend at the middle-class level is growing even faster.

More producers and more consumers add up to a self-reinforcing cycle of prosperity. The result is a growing global pie that benefits nearly everyone. Since the collapse of communism, the world is no longer compartmentalized; what happens in one place affects life everywhere else.

For tangible evidence of the benefits of globalization, consider the produce section of an American supermarket. Only a decade ago, the apples were likely grown in Washington State, and the oranges were picked in groves in either Florida or California. Today, the tiny stickers on apples, oranges, and hundreds of other fruits and vegetables bear the names of countries from every corner of the globe.

As the U.S. economy continues its shift to knowledge work and services, agriculture is becoming a smaller part of world trade. In the late 1980s, the U.S. was the world’s leading exporter of farm products. Today, it has fallen behind the European Union, while Brazil, Canada, Australia, and Argentina are gaining larger shares. According to the Agricultural Outlook 2007-20161 from theOrganization for Economic Co-operation and Development and the Food and Agriculture Organization of the United Nations, many other developing countries are emerging as key agricultural exporters, including India, Malaysia, Russia, Thailand, Ukraine, and Vietnam.

What does this mean? For consumers, it means that they can buy a wider variety of produce, all year round, at lower prices. In a truly global market, a flood, frost, or drought in one part of the world may destroy a harvest, but when this happens, the weather is always better in some other part of the world. This means that even in the middle of winter, people who live in northern climates can get the nutrition they need from fruits and vegetables grown on the other side of the planet.

It also stabilizes the market by keeping the supply steady, which prevents spikes in prices. Produce, of course, is just one small part of world trade. By keeping prices low — for everything from coconuts to computers to televisions to toys — globalization increases the wealth of consumers because their spending power increases. Every dollar they save on a piece of fruit grown in Guatemala, or every $100 they save on a laptop assembled in China, gives consumers more money to spend, save, or invest...

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