How A Successful Tourism Industry Led to Globalization

Most of us have heard the word “globalization” widely used in a variety of contexts over the past few years. But what is the actual definition of this commonly used term? Merriam-Webster defines globalization as, “The act or process of globalizing: the state of being globalized; especially: the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets.” Now that we’ve established the true definition of globalization, it’s probably easy to see how it plays a vital role in the tourism industry. After all, people visiting other countries would naturally be engaging in globalization as they purchase products and services in their travels. But what may not be as obvious is how successful tourism led to globalization. That is the topic we’ll explore in this blog.

Although it’s hard to say exactly when the tourism industry began, many historians would agree that it probably started when well-to-do citizens of ancient Rome began spending their summers in other parts of the region to escape the hustle and bustle of what was then (and is, even now) the metropolis of Rome. That would mean that tourism is, at the very least, about 2,000 years old. But the end of the Roman Empire also meant the end of tourism, albeit only for a few hundred years, as unrest in that region made travel of any sort a risky proposition at best. A few hundred years later, during medieval times, the tourism industry experienced a rebirth when large groups of people began to make holy pilgrimages. That meant that those people needed places to eat and sleep along the way. Another few hundred years later, people began to travel for other reasons – such as to improve their health and to view art, architecture, and visit historic locations. It was at this time, during the Industrial Revolution, when the tourism industry began to take the familiar form that we know today. Methods of transportation were developed, as were hotels and restaurants, to cater to tourists. Finally, beginning in the 1960s, as aircraft and ocean liners became more commonplace and more affordable for the masses, tourism became a global industry. In our day and age, if you have the time and the money, you can arrange to travel, quite literally, anywhere on the planet.

And, as it turns out, many people DO have the time and the money. According to The Statistics Portal, between the years of 2006 and 2017, the travel and tourism industry contributed $8.27 trillion dollars to the global economy. The greatest contributors include North America, the European Union, and North East Asia. While these regions continue to lead the tourism charge, other less-likely countries are making their own mark in the industry, undoubtedly due to the lucrative possibilities that tourism brings with it. Some of the most notable are African countries, such as Namibia, Zambia and Angola, to name a few.

In the KOF Globalization Index of the 100 Most Globalized Countries in 2017, it should come as no surprise that leading the list are many EU countries, including Netherlands, Belgium, Austria, Switzerland, Denmark, Sweden, France, and others. Also on the list – although further down than the EU countries – are Canada and the U.S. The KOF Index of Globalization takes into account three key indicators: economic, social and political. They define globalization as, “… the process of creating networks of connections among actors at multi-continental distances, mediated through a variety of flows including people, information and ideas, capital and goods.” While there’s no doubt about the economic impact that tourism has on the global scale, the other indicators of globalization are harder to measure – namely the social and political influences that the tourism industry brings to the global stage. But if we measure the impact of tourism on globalization with regard to the flow of people, information and ideas, as well as capital and goods, we can say with a certain level of certainty that the success of the tourism industry has more than likely led the way – both directly and indirectly – to globalization.

Bernie’s Last Stand

With Trump in the White House it seems that our society has in so many respects succumbed to a much lower common denominator. The divisions that exist have only exasperated the growing divide that has turned humanity away from what is good and virtuous. It is quite evident when for the past 30 years the violent atrocities in our schools, entertainment venues, churches, and other places where the public gathers has steadily increased in severity and frequency. Yet, our leaders seem powerless to find solutions that would negate all the horrific violence that is like a plague on our society.

The truth of the matter is that no one seems to acknowledge that there has been a generational decline in morals, ethics, financial stability along with an increase of governmental laws, mandates and Supreme Court rulings that have only intensified the growing insensitivity of too many. With this recent assault on women’s rights the long arm of an obtrusive government has again striped away an inherit right. The government has no right to interfere with a women’s right to choose. That decision is between herself, her family and her God not the government. As a nation we have failed our society because we have either ignored, deemed not credible, or otherwise dismissed our own history. It is a very sad commentary for this nation that our elected officials continue to forsake the American public by all the contentious behavior displayed in every election cycle and legislation chambers in every state house all the wall to Washington.

The rise of violence not only in the United States but through-out the world continues and with it continues the demoralization of America. The Trump Administration has ushered in a host of contingencies that have exasperated the rise of instability and violence we see on an almost weekly basis. For the past two and a half years when we should have ushered in policies that would improve the standard of living for all Americans and decrease the violent atrocities our elected officials did nothing. Had we done what New Zealand did following their most recent act of terror just maybe some of the violence we see would have been avoided.

Today, the Trump White House has again created a tempest of financial chaos with his trade policies that have already caused the cost of living to skyrocket. This at the same time when the majority of Americans can least afford it. Now, to redirect America’s attention away from the adverse economic reality caused by the most costly imposed tariffs this Administration has set in motion yet another military fiasco in the Mid-East. This is just another example of an Administration who cares not for the American public. Not since the days of Andrew Johnson has the United States been subject to an incompetent and blundering President. A President who might just put American forces again in harms way and who already has caused one of the worst financial and economic calamities of our times.

With the primary season heating up along with the summers rising temperatures the tempers of a growing frustrated public many will undoubtedly erupt against the many reforms that are needed to stabilize the instability and insecurity created by the disingenuous policies of not only this Administration but of past Administrations. It is quite obvious that the fellowship of the American public has withered and died on that vine of so many lost opportunities. And, with the political discord that is displayed by so many has only underscored why the United States is so divided.

When we look at the political landscape for 2020 it is quite obvious what the DNC is trying to do. In their haste to thwart a Sanders nomination they have underwritten practically every other Presidential candidate especially Joe Biden. In this way the necessary reforms that Senator Sanders hopes to implement will never materialize. A repeat of 2016 is an almost certainty. That is when the DNC went out of their way to sabotage Bernie Sanders bid of the Democratic nomination. It is high time that the public starts to realize that the status-quo hasn’t worked for decades for the majority of Americans and that radical change is necessary to restore the American Dream for all Americans. It won’t happen under Trump and it most certainly won’t work under Joe Biden or any other candidate. Change is necessary for growth and rebirth. That is part of the message that Senator Sanders brings to the American public.

The Business Model and Today’s Economy – A Warning to Universities and Investors

As spring is upon us, this is the time deans and higher education vice presidents across the land embark on their yearly budget exercise. Given the rosy economic scenario painted by improving wages, job reports and corporate profits, it would not be out-of-place to start dreaming of expanding their own little circles and propose larger budgets and increased hiring for their respective units – what Warren Buffett has dubbed the institutional imperative. My warning: beware!

As an academician, I have often heard high-ranking officials espouse how public universities should be run using a business model. My own university president is a strong proponent of the idea. The problem is that universities are saddled with challenges most companies don’t have to deal with. For example, let us suppose that demand for your company’s product goes down. To keep your company viable and responsible to stockholders you will cut down on production. Fewer sales means less personnel will be needed leading to workforce reductions. Despite lower revenue, the bottom line is kept steady by lowering expenses for materials and personnel.

Let’s look at what happens at a university. Let’s suppose demand for your product, classes, goes down – i.e., fewer students are enrolled. The cost of materials to run a class is minimal as compared to personnel and physical plant costs. You can’t shut down buildings so your only recourse is personnel reductions. Here is a problem corporations don’t have. They never have a case where the few remaining clients demand that the company put out as much product as before the reduction in demand. But if you have a class of 40 reduced to 30 or even 20 students the university cannot cancel it. These students registered for the class well in advance, before the semester even began. Their schedules and even graduation are predicated on it. If the class does not make, students will be in an uproar and in this day and age they have no trouble letting the world know – online. As the news become viral, the university will gain a bad reputation. It will affect future enrollment. Any whisper of lower enrollment sends chills down high administrator’s backs.

Here is another difference between corporations and higher education providers. Corporation hires are more fungible. If you let go someone all you need is several weeks’ notice. Not so for academia. You may let go of staff personnel that way but instructors are on an academic year contract. University administrators may decide not to renew a contract for a non-tenured instructor after the academic year but they cannot terminate during. That means hiring and budget decisions have to be made well in advance.

Back in 2007 I was in the middle of this dilemma. I was the founder and Chair of the Idaho State University Budget Committee. Our mandate, as I saw it, was to keep abreast of economic developments so we could best advise administrators of “hiccups” leading to reductions in state allocations to higher education. Once those came about, we would provide advice on budget allocations to programs and hiring. Academic hires have to be done months ahead of time so timely input meant looking ahead at least six months. It was within that time frame I warned our higher administration of the coming economic slowdown and real estate problems at the epicenter of the Financial Crisis. That message went unheeded at the time so, for the next couple of years, our committee was saddled with helping the administration muddle through ever diminishing budgets.

The unemployment rate at the time of my warning in 2007 was 4.4%, wages increased by 0.3% for the month and 4.4% for the year, and S&P 500 profits were up 16% for the year. GDP growth was pegged at 3%. Sound familiar? There was plenty of reason to be optimistic and yet, the future did not play out that way. The same will happen this year, although the main factors behind the economic stall will be different.

There is a financial storm developing. This time around, the low-pressure front will be due to demographic forces resulting in a decrease in spending from the 46-50 age group, a group dubbed the peak spenders. There will be a prolonged and marked decrease in consumer spending that will lead to a protracted economic downturn starting this year and lasting as long as 2023.

State general accounts will dwindle as sales tax revenues drop and a rise in unemployment leads to lower personal tax revenues. These are the two main pillars filling state coffers. The two others are real estate and corporate taxes. While real estate tax revenue will remain steady, corporate tax revenue will mirror plummeting corporate profits. The bottom line is that state support for public universities will take a cut and once again these institutions will have the difficult task of managing their budgets by reducing personnel. This is, therefore, no time to be dreaming about expanding departments, but instead, a time of planning for retrenchment.

Administrators should shun the temptation to pass down the buck and use university reserves to meet the immediate challenge. Next year will be no better. In fact, this downhill process will continue to get worse, and as I mentioned above, will last until 2023. University officials will be forced to face the music at some point in time so they might as well brainstorm and come up with a 5- or 6-year plan to deal with the malaise.

The warning goes double for those invested in the stock market. The same forces at work within state finances will also hobble our economy and wreak havoc on corporate profits and prices. Stock portfolios will take a substantial hit. My advice is to heed the current stock market warning. We just went through a correction, but these are only birth pangs of the financial storm ahead. The wise will use any uptick as an opportunity to whittle down stock holdings. There will be many who will mock me now, but when the brunt of the tempest comes you will want to be totally out of the stock market.