The Real Globalization

As Baby Boomers enter their retirement years, North America's consumption economy will begin to slow down. What then?

Imported goods are nothing new to the hardlines industry. These days, the average Canadian retailer's SKUs probably come from any one of a number of different nations, with an increasing number coming from what we call the Third World. This month's viewpoint however, is about more than countries of origin.

Globalization has become so overused in daily newspapers and in the business press in this country that few of us really think about what true global markets mean. Or perhaps more accurately, what global markets could mean if we, in the wealthy West, create a truly equitable global trading environment.

Let's face it, the shift of our manufacturing base from North America to countries like China, India and the formerly Communist East European nations has not only kept retail consumer prices down in this country, but largely offset the decade long drop in Canadians' disposable income. That's good. What's not so good is what is going to happen when Baby Boomers such as myself move into the years when we simply don't have the inclination or the energy to do the things that fill my local home center each Saturday morning. Will the so-called Generation X fill the gap? According to demographers, the answer is no. Gen-Xers simply don't have the Boom generation's disposable income and apparently never will.

That leaves the Echo generation who are now in their early 20s. The trouble is, except in a few high tech industries, the real income erosion of the last decade, means that as long as their parents are still around, the Echo generation will also have limited choices. Granted, this is just one scenario but it's a hot one in the press and in the business community at large right now. It seems to me that for our industry, and many others, we will soon enter a period of perhaps five to ten years in which growth will decline unless we do something about it. One thing we could do is to think about the level of disposable income in those new manufacturing countries.

The current practice of making, say hammers, in India or China and paying production personnel $2.00 a day is not only unsustainable, it hurts the Canadian economy. Why? Because it prevents billions of potential consumers from attaining Western living standards by purchasing the goods and services that we produce in North America. There are over two billion potential shoppers in Asia alone who, given the resources and political stability to own their own homes, would create a bull market in hardlines which could last 50 years. Of course the China's and India's of the world are quite capable of manufacturing many of their own consumer goods, but Canada already exports large quantities of building materials and high tech products to those regions.

Let's face it, Canada has become a predominantly export economy as dealers in Canada's booming cities already know. Creating more wealth and disposable income for Canadians means more exports. But in a largely saturated Western world, creating new markets where none previously existed is the key to future growth. One Canadair jet makes up for a lot of $2 screwdrivers.

I am not talking about blowing down forests for endless mini-malls and parking lots; I am talking about billions of consumers actively buying, renovating and enjoying home ownership. Can Canadians sell into a relatively low wage economy? Yes, as long as low wages are accompanied by low productivity. If Canadians can become world leaders in worker productivity and education, replacing 20th century manufacturing industries with 21st century high-tech will make us all richer.

Let me make one thing clear. I am not advocating instant wage parity with Western industrial standards. Even if it were possible, the results would be economically destabilizing to say the least. I am merely suggesting that as domestic spending starts to slow, we need to put more money in enough consumers' pockets (outside this country), to keep the consumption economy rolling. And if globalization truly means something, it won't matter where on earth those consumers live. What do you think? Send me your comments at eopasini@southam.ca.

ELENA OPASINI, EDITOR