Dan Altman and Dan Gross, two of the wisest economics commentators writing today, had an interesting back-and-forth email exchange about globalization posted on Slate more than two years ago. I just read it the other day and it's still relevant and they do a great job at distilling some of the core issues. It's not too long and worth reading the whole thing.
Globalization is inevitably a political issue, although it no longer breaks down so neatly along the lines of right and left. (The recent Republican presidential debate featured plenty of tough talk on trade.) There are, however, two poles: On the right, there are the unabashedly happy globalists, who see only benefits to all involved from globalization (rising standards of living in the developing world, cheap goods in the developed world) and are indifferent to the plight of those harmed. On the left, there are those who see only gloom, would like to halt the globalization process, and are not all that concerned about the impact doing so would have on those who have yet to benefit.
On the sometimes invisible benefits of trade and interconnectedness:
…Much of the rhetoric surrounding globalization—tend to paint the process as a zero-sum game, in which there is one loser for every winner. This frustrates a (somewhat) committed and enthusiastic globalist like me. And it must really annoy a much more committed and enthusiastic globalist like you. After all, the losses for Americans are so easy to tally—factories closed, jobs lost, pensions terminated. But the gains are more difficult to detect, in part because they're embedded in our supply chains, our manufacturing processes, and our consumer culture. Every time one of my kids has a birthday party, the basement is stuffed with an embarrassment of toys, games, kits, instruments, doodads, and gadgets—or, as I like to refer to it, "plastic from China." In America, we now regard cheap toys and clothes and electronics as something akin to a birthright. But we don't—at least most of us don't—wake up every morning and think of these things as gains from globalization.
People might not tell the truth about how much they enjoy their cheap Chinese goods. I know many Americans who publicly bemoan a dying manufacturing sector in the U.S., but continue to buy the cheapest products they can find:
How could I prove exactly how much those cheap Chinese toys are worth to you, i.e., how much your well-being is enhanced by having access to those cheap products? It wouldn't necessarily be the same boost that I get from the same opportunity. Also, if anyone did ask, you'd have every incentive to lie and say that you weren't better off at all. For these reasons, I think we're going to find ourselves in a second-best world; hence my observation that people need to look out for themselves.
And how does globalization affect income equality?
I'm starting to form the view that globalization is a driver of income inequality within countries, but a driver of income equality between countries. Within countries, globalization tends to result in big income gains for the people who can take advantage of its opportunities—the ones with money and ideas—while depressing incomes for people who face more international competition. At the very least, the income distribution stretches at the top.