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Intelligent Investing with Steve Forbes
Interview conducted by Alexandra ZendrianApril 15, 2010Forbes:
What do you think are some of the biggest lessons you learned while working onthe book
The first thing is that, and I think this is, in a way, the most important:whenever you think of one force dominating the world, it's never that simple. So whenpeople have talked about globalization, they've talked about it as if it's the only thing youhave to worry about. And there are many other forces out there that are going to mitigatethe effect of globalization.So the first is the shift in demand to services, which are locally consumed and provided.And that's been going on for a long time. So when you, for example, look at US typicalhousehold budgets, in 1970, people spent 6% of their income buying clothes, and I thinkabout 2% getting those clothes cleaned. And now, today, they spend 3% of their incomebuying clothes and about 2% getting them cleaned.So that shift to services is enormous. And it's most obvious in the importance of things likemedical care and education. And the services, you know, the rental services that peopleget from housing. But that's the first thing. And maybe in 50 years, they're going to getoffshore, but most of them are not going to get offshore.Another factor is that as manufacturing productivity grows, just like what happened whenagricultural productivity grew, the manufacturers, which are the heart of globalization. Itwas the agricultural products from the United States and Australia and Canada andArgentina, that as the prices of those products sell, they became much less important inworld trade.So the growth in productivity and manufacturing, coupled with the fairly limited demand formanufacturers, because you can't have that many flat-screen TVs is also a big factor that'sgoing to mitigate the effect of globalization.The second lesson that I think is maybe equally important is that local still matters muchmore than global. And it shows up actually in two ways. The first is that if you look at anycountry, it determines its own fate. So China, which has a very successful diasporapopulation, doesn't develop until the dead hand of the Chinese government gets off theback of the Chinese people. And then you see. And it's very rapid, from between 76 and80, they go from really faking 4% productivity growth and output growth to 10% a yearoutput growth without faking it.