Rising tide does not lift all boats

The popular mantra for globalization is: “Rising tide lifts all boats”. The claim is that as the emerging economies grow, they also create enough economic activities worldwide that in turn can also lift the economy of the developed nations. The notion is that “everyone benefits” thanks to globalized economy.

This slogan assumes that boats are floating on the same body of water, which in turn maintains the same level of water for all boats floating in it. This is an overly simplistic slogan at best. Frankly it is a ridiculous and absurd simplification. What are these analogies – the boat, the body of water and the tide – supposed to represent? If the tide represents the economic benefits or standard of living, then they are not the same for everyone in the globe. If the body of water represents economic activity, then again it is not the same across the many nations of the world.  If the boats represent the individual workers or the companies they work in, again their needs or requirements are not the same across the globe as well. One dollar of rise in wage means a lot to a worker in India or China, but it means not a whole lot for workers in similar jobs in USA, W.Europe or Japan.

A better analogy will be that “Boats in a pond at the bottom of the hill may be lifted ever so slightly, while the boats in a lake on top of the hill may hit the rocks sooner, if the water is drained continuously to fill the pond at the bottom of the hill!” So, next times someone says, “Rising tide lifts all boats”, don’t simply believe what you hear! Ask the questions of “Why?” and “How?”