Globalization’s Broken Promises: How Controlled Open Markets Closed Doors for American and Canadian Workers

 

Introduction

Globalization promised a new era of prosperity: open markets, booming trade, and rising tides that would lift all boats. But for millions of American workers, those promises proved hollow. Factories shuttered, communities crumbled, and wages stagnated. The architects of globalization — multinational corporations, policymakers, and international institutions — reaped the rewards, while working people paid the price.

This article examines the economic and social toll of globalization in the United States, grounded in testimony, data, and scholarly research. It lays out the consequences for labor, the structural failures of trade policy, and most importantly, a roadmap for reform that puts people before profits.

Chapter 1: The Grand Bargain That Wasn’t

The global economic order that emerged after the Cold War was built on the idea that trade liberalization would create shared prosperity. The U.S. opened its markets, dismantled tariffs, and championed free trade agreements like NAFTA and China’s accession to the WTO.

But instead of mutual gain, the result was an asymmetric transfer of wealth and jobs. U.S. manufacturing employment fell by nearly 5 million between 2000 and 2010. Entire regions — from the Rust Belt to parts of the South — experienced deindustrialization. Promised retraining and reinvestment for workers never materialized at scale.

As economist Adam Posen testified in 2021, “The issue is not globalization per se, but our failure to mitigate its consequences domestically.” Yet the failure to mitigate became the defining feature.

Chapter 2: Labour Bears the Costs, Capital Gains the Rewards

Globalization wasn’t “bad” in theory, but it was implemented in a way that served capital over labour. Multinational corporations chased lower labour costs abroad. Supply chains spread across continents. Profits soared. However, the working class lost bargaining power.

From 1979 to 2020, productivity grew by 61.8%, while hourly compensation grew by just 17.5%. The divergence is stark evidence that workers were not reaping the gains of trade. Economist Dani Rodrik warned of this in the 1990s, arguing that globalization creates “winners and losers” — and that in the U.S., losers were rarely compensated.

OECD research confirms that globalization has led to growing inequality in advanced economies. Trade exposure correlates with job displacement, reduced wages, and community decline, especially in areas dependent on manufacturing.

Chapter 3: The China Shock and the Great Hollowing

No episode illustrates globalization’s asymmetric pain more vividly than the “China Shock.” Following China’s WTO accession in 2001, the U.S. experienced a flood of cheap imports and a rapid offshoring of jobs. Research by Autor, Dorn, and Hanson found that areas most exposed to Chinese imports experienced sharp employment losses, falling wages, and rising opioid deaths.

Between 1999 and 2011, nearly 2.4 million U.S. jobs were lost or displaced due to the China trade imbalance. Meanwhile, corporate profits surged, and stock markets celebrated — but hollowed-out towns were left behind.

The U.S. failed to adopt proactive policies like those used in Europe, which buffered regions and workers from trade shocks through active labour market policies, industrial policy, and wage protections.

Chapter 4: The False Promise of Retraining and Market Adjustment

The theory behind globalization’s “disruption” was that markets would adjust: workers would retrain, relocate, and find better jobs. But the adjustment mechanisms were grossly inadequate.

Trade Adjustment Assistance (TAA), the main U.S. program for displaced workers, reached only a fraction of those affected and often offered subpar support. Community colleges were underfunded. Relocation was expensive and socially costly. The result was widespread disillusionment and immobility.

As the Peterson Institute acknowledged, “Globalization’s benefits were oversold, and its costs were undersupported.” The American worker was told to compete globally with no safety net.

Chapter 5: Institutions Captured, Accountability Lost

The globalization regime was not neutral. It was shaped by lobbying, corporate influence, and investor-driven priorities. Trade agreements like NAFTA and the TPP included robust protections for intellectual property and investor rights but left labour and environmental protections weak and unenforceable.

Multinational corporations gained access to Investor-State Dispute Settlement (ISDS) mechanisms, allowing them to sue governments for regulations that might hurt profits. Meanwhile, workers had no such avenues for redress. Democratic oversight eroded as fast-track authority allowed presidents to negotiate trade deals with limited congressional input.

The global institutions — WTO, IMF, World Bank — encouraged deregulation and austerity over inclusive development. Developing countries were pressured to open markets prematurely, often exacerbating inequality.

Chapter 6: Social Fracture and Political Backlash

The socioeconomic fallout of globalization contributed to a growing distrust in government, elites, and institutions. Communities suffering from job loss and wage stagnation felt abandoned. Political movements from both the left and right channeled this anger — often with radically different diagnoses and prescriptions.

Populism, protectionism, and nationalism rose across the U.S. and Europe. Brexit, Trump’s 2016 win, and rising skepticism of free trade agreements are all symptoms of a deeper discontent. Globalization was no longer seen as a rising tide but as a rip current pulling workers under.

What Needs to Change: Principles for a Fair Global Economy

To repair the damage inflicted by decades of unbalanced globalization, and to restore dignity and opportunity to American workers and communities, policymakers must chart a new course grounded in the following principles:

1. Rebalance Trade Policy Toward Labour, Not Just Capital

Trade agreements must be rewritten to prioritize labor standards, enforceable wage protections, and environmental sustainability. International economic engagement should no longer be dictated solely by investor protections and corporate profit margins. Instead, workers' rights must have equal legal standing.

2. Invest in Domestic Resilience, Not Just Efficiency

A global supply chain that prioritizes lowest-cost production abroad creates national vulnerabilities and hollows out local industries. Strategic sectors — including manufacturing, rare earth materials, and health equipment — must be reshored where feasible. National policy must support production capacity as a matter of security, not just economics.

3. Institute Tax and Industrial Policies That Reward Domestic Production

Tax codes must favour firms that invest in American workers and production over those that offshore jobs. Smart industrial policy — like that seen in South Korea or Germany — can support technology hubs, regional development, and critical industries with public-private partnerships focused on jobs and innovation.

4. Realign Global Institutions to Support Worker-Centered Growth

Institutions like the WTO and IMF must be reshaped to recognize national sovereignty in labour protections and public interest regulation. Instead of pushing deregulation, austerity, and financial liberalization, these bodies must promote inclusive, worker-first development across all nations.

5. Restore Democratic Control Over Economic Policy

The American people must regain authority over trade and economic policymaking. Fast-track approval processes must be replaced with deliberative, transparent mechanisms. Voters — not corporate lobbyists — must have the final say in shaping the global rules that impact their livelihoods.

6. Enforce Corporate Accountability and Long-Term Thinking

Short-termism in corporate governance has driven outsourcing and wage suppression. Reforms are needed to ensure companies invest in their workforce, maintain ethical supply chains, and internalize the social costs of globalization. Boardroom decisions must no longer be made in isolation from community well-being.

7. Guarantee Economic Security During Transitions

When change is necessary, it must be just. Workers displaced by trade must receive far more than token retraining. Wage insurance, full benefits, relocation support, and community reinvestment are essential. America must promise not only opportunity but also protection.

8. Measure Success Beyond GDP

A fairer economic vision requires new metrics. GDP growth is no longer a sufficient proxy for national well-being. We must prioritize wage growth, employment quality, wealth distribution, and community resilience. An economy is only strong when its people thrive.

Closing Statement

Globalization didn’t fail in theory — it failed in practice. The ideals of shared prosperity and international cooperation were hollowed out by greed, shortsightedness, and a blind faith in markets. But history is not destiny. America can forge a new path — one that empowers workers, revitalizes communities, and restores faith in a system that works for all.

That change begins with truth, accountability, and bold action.

Sources

1. Adam S. Posen, Testimony before the U.S. Senate Subcommittee on Fiscal Responsibility and Economic Growth, September 28, 2021.

2. “The Economic Consequences of Globalisation in the United States,” Organisation for Economic Co-operation and Development (OECD), 2020.

3. Dani Rodrik, “Globalization for Whom?” Harvard Kennedy School, 2020.

4. Ralph E. Gomory and William J. Baumol, Global Trade and Conflicting National Interests, MIT Press, 2001.

5. “Globalization and Its Discontents Revisited,” Joseph E. Stiglitz, W.W. Norton, 2017.

6. “Globalization and the American Worker,” Peterson Institute for International Economics, 2008.

7. The Economic Policy Institute, various reports on trade, wages, and labor market impact.

8. Congressional Research Service (CRS), Reports on U.S. manufacturing and job losses.