Has Globalization been Responsible for US Economic Woes?

That’s the popular accusation thrown by progressives.

One example is from Jeffrey Sachs (Financial Times),

Globalisation has raised very serious adjustment challenges for the high-income world, and most high-income countries, notably the US, have failed to meet those challenges. The challenges include the loss of jobs and incomes of lower-skilled workers, a shift of manufacturing sector investments away from the transatlantic towards the emerging economies, a rise in energy costs occasioned by rapidly growing energy use in Asia, and an explosion of income and political power at the top of the income distribution, stoked by international tax havens and tax competition between jurisdictions.

Mr. Sachs essentially believes that political control must prevail over voluntary exchanges.

Here is the World Economic Forum’s (WEF) take on US competitiveness. (bold emphasis mine)

The United States continues the decline that began three years ago, falling one more position to 5th place. While many structural features continue to make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive. On the other hand, there are some weaknesses in particular areas that have deepened since past assessments. The business community continues to be critical toward public and private institutions (39th).

In particular, its trust in politicians is not strong (50th), it remains concerned about the government’s ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th). In comparison with last year, policymaking is assessed as less transparent (50th) and regulation as more burdensome (58th).

A lack of macroeconomic stability continues to be the United States’ greatest area of weakness (90th). Over the past decade, the country has been running repeated fiscal deficits, leading to burgeoning levels of public indebtedness that are likely to weigh heavily on the country’s future growth. On a more positive note, after having declined for two years in a row, measures of financial market development are showing a hesitant recovery, improving from 31st last year to 22nd overall this year in that pillar.

In sharp contrast to Mr. Sachs, the WEF sees that expanding government interventions (arms length relationships, transparency issues, burdensome regulations, fiscal deficits...I would add to that list minimum wage, Obamacare, taxes, various job mandates, unemployment benefits and regime uncertainty) as major factors responsible for the declining competitiveness of the US economy.

I would also place policies that trigger boom bust cycles and the growing welfare state (example record food stamps) and warfare state as major contributors too.

In short, by ignoring the ramifications of domestic policies and political developments, Mr. Sachs seems as confusing effects as the cause.