In an open-border global economy nearly every car manufacturer, for example, is trying to have a presence in every market. But when all the factories crank out more cars than people can buy, down come car prices. Down go the profits of car companies. Out go the workers. And down go the number of people who can afford to buy cars.
Economies can spiral downward toward recession, or worse.
That is what is beginning to happen in Asia now. Since 1991, countries like Thailand, South Korea, Indonesia, Malaysia, and the Philippines have accounted for nearly half of the world's growth in output, primarily manufacturing. This overcapacity is financed in large measure by international investors. Chunks of this money inevitably went not into factories but into speculation. This kind of volatility is exacerbated by the short-term profit motive.