By Joseph Joyce. Originally published at Angry Bear
The wide-scale imposition of tariffs by the Trump administration is part of a larger effort to undo the expansion of markets around the globe and ensure that the goods consumed in the U.S. will be produced here. Will it be successful? And what would a world that represented a retreat from the globalization of the 1990s and early 2000s look like?
Martin Sandbu of the Financial Times believes that the open world economy “can withstand the assault.” He points out that the emerging market economies that have benefitted from the increase in international trade have an interest in maintaining the current regime. Moreover, it will be difficult to replace global supply chains with production facilities in each economy where a firm sells its products. Finally, limiting overseas expansion of markets will do nothing to address the problem it is supposed to correct: the stagnant wages of relatively low-skilled people. There are policies to help those whose jobs have been eliminated by technology, but these include better educational opportunities and health care, not limitations on trade.
While globalization will not be replaced by national autarchies, it is possible to imagine more narrow organizations of production and finance. The increase in the number of regional trade pacts will accelerate If the World Trade Organization is undermined by the Trump administration. Whether or not regional trade agreements are the source of trade creation or diversion is an empirical issue. Research by Caroline Freund of the Peterson Institute for International Economics and Emanuel Ornelas of Sao Paulo School of Economics-FGV indicates that such pacts in the past were beneficial for trade. But there is no guarantee that this outcome will continue in the future, particularly if the regional pacts replace wider agreements.
The world could divide into competing spheres of influence. China is taking advantage of the withdrawal of the U.S. from international pacts to advance its Belt and Road Initiative that will link it to resource-rich developing economies in Asia and Africa as well as markets in Europe. Advocates of British withdrawal from the European Union claim that there are better opportunities in the “Anglosphere” of English-speaking countries such as the U.S. and Australia.
But the Trump administration has exhibited animus to even regional pacts such as NAFTA, and seemingly favors bilateral pacts guided by mercantilist goals. Such an approach would be a serious problem for U.S. based multinationals that have integrated production lines across the borders with Mexico and Canada. Nor will the governments of those agree to mercantilist arrangements that are designed to ensure bilateral trade surpluses for the U.S.
A world of tariffs and quotas, moreover, would also be a step towards increased government controls on the private sector. Anne Krueger of Johns Hopkins points out that quotas, such as those on steel that South Korea has agreed to, must be administered by either the Korean or U.S. government. Similarly, exemptions from tariffs must be granted by a bureaucracy that reviews applications from private firms. These grants of authority open up opportunities for corruption. They also act as barriers to entry for new firms, and lessen incentives to innovate. All this adds to the higher costs that consumers and those who rely on imported intermediate goods will pay.
Perhaps the most self-defeating counter-globalization measure would be to lower immigration. While most of the benefits of immigration flow to the migrants themselves, there is also a “migration surplus” for the economy that hosts them. The tax payments of migrants can be used to pay rising Social Security payments at a time when the native U.S. population is aging. Moreover, immigrants have a strong record of establishing new businesses. The Center for American Entrepreneurship reports that 43% of firms listed in the 2017 Fortune 500 were founded or co-founded by first- or second-generation migrants.
Not all movements towards globalization were beneficial for those countries that opened up their borders. In the area of finance, financial flows led to the Asian crisis of 1997-98 and the global financial crisis of 2008-09, while their impact on growth is slim at best. The IMF has renounced its previous advocacy of capital account deregulation and now views capital controls as part of a government’s toolkit of macroprudential measures to stabilize the financial sector.
Moreover, Dani Rodrik of the Kennedy School has pointed out that the hyperglobalization drive of the 1980s and 1990s pushed trade agreements beyond their “traditional focus on import restrictions and impinged on domestic policies…” Rodrik argues that some of the recent trade pacts are designed to increase the revenues of multinational firms, and their redistributive effects will overwhelm any increases in efficiency.
But attempting to impose a system of nationalistic managed trade that limits the movements of people is inherently difficult, and will lead to widespread government intervention. Workers and firms who benefit from such measures will be outnumbered by those who lose export opportunities and those who must pay higher domestic prices. Over time, firms will cut back on investments if they feel the need to secure government approval. All this will lower productivity in economies where productivity growth is already depressed. There is a need for a better-designed globalization, but what we are seeing is a movement to a world of national barriers that will only fuel xenophobia and hamper long-term growth.
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I am afraid the opposite of antiglobalisation is war. This is because as nations look inwards, they become desensitised to new cultures and bombing a far off land and killing millions is written off as collateral damage.
Globalisation if managed properly can bridge these gaps.
Quite agree. Then war is the predictable byproduct of antiglobalization.
What was the ultimate extreme of localized production? Centuries of serfdom, in which most serfs never ventured more than a day’s journey from their place of birth.
There’s a reason we call that time the Dark Ages, as Trump’s neo-Dark Age rings down on us. If oil trading collapses, we’ll just have to burn books to stay warm. :-0
The Dark Ages were because of lack of mobility?
Anyways, I’m not a student on the fall of Rome, but I’m guessing there was a “balanced trade” dimension to the fall of Rome. That the imbalanced trade between the elites compared to the plebs became unsustainable: the elites were tilting the playing field too much to hoard the surplus.
The collapse of systems often includes and is associated with the collapse of trade. These have happened before the end of the Western Roman Empire is one example, the Bronze Age collapse is another, but historians dislike using the term dark ages to refer to such periods. Globalization is not inevitable or a straight path. But this era of globalization is different. In prior ages, trade appeared to be primarily about getting goods (often luxury) that could not be obtained locally. In the Bronze age, this included gold from Egypt, copper from Cyprus and purple dye from Crete. Later this involved shipping grain from Egypt and Africa to Rome or tea and spices from East Asia to Europe. These examples seem different from our current age because they were primarily about good which were not available, or available in sufficient quantities, while today’s is about labor arbitrage and where they can be made at the lowest cost.
Also, my understanding is that by the time of the empire, the Roman economy was very much based upon the use of slave labor in farms and mines. These slaves were acquired during wars with barbarians, which were a regular feature of Imperial Rome.
Slave labor in Roman times = labor arbitrage today??? If the mountain will not come to Mohammad then Mohammad must go to the mountain.
The majority of Roman slaves derived from non-payment of debt not conquest. Already our mass incarceration has resulted in slave labor. The ruling class salivates at the prospect of debtors prisons. Debt slavery though is superior to the real thing, as far as the masters go, in that you do not have to feed and clothe your slave.
The Roman Empire ran a perpetual current account deficit in silver with China.
Ahh, good point. I remember reading about this in Zarlenga’s Lost Science of Money. China and India had better terms (than the west did) for swapping gold in exchange for silver, so anybody who had their currency in silver was doomed to see their currency “flee” eastward. Follow the money indeed. And otherwise at the time the west didn’t seem to have anything else (besides silver) which was of interest to the east, while the reverse was not true: the west was a big fan of the spices and perfumes from the east.
Anyways, my comment was kind of ignoring this, just focusing on the “trade” if you will within Rome, between the elites and plebs: plebs exchanging their labor in exchange for payment from the elites. And how that went into imbalance.
But if memory serves, I think Zarlenga makes the argument that that imbalance within Rome was an outgrowth of its coinage fleeing eastward (the silver imbalance with the east that you’re bringing up). I’ll have to go back to reread. Here’s a snippet in the mean time.
It’s been awhile since I studied such things but serfdom was an economic method of manorialism which was fully formed as an economic model before the fall of the Roman Empire. It arose in the Late Roman Empire as a result of a number of things: intense concentration of wealth and land holding in the very upper classes, shifting of tax burdens from the large land owners onto what we would call the working and middle classes thereby impoverishing them, unpayable debts, resulting in: large numbers of whole families surrendering themselves to the land owners as “coloni” or serfs so they could eat, the consequent fall in taxes payed to the central government requiring the government to demand that mega land owners take over the functions of government like road maintenance, courts, local safety in exchange for tax reductions, ie privatization of public services and on and on. This system was in place before the fall of the empire to the barbarians who preserved it and added feudalism to it as a political system based on oath loyalties. Feudalism comes from an early Germanic word for oath. So I always have to laugh when people say that socialism is the road to feudalism. No, in a way, the road to feudalism was tax cuts for the rich, massive wealth inequality, “4th” world levels of poverty and the resulting necessity for the privatization of public services. Serfdom as as result of poverty. The word serf comes from the Latin word servus meaning slave.
I might add that a large reason for the inability of the Roman State to resist the “barbarian” invaders which were very small in number was the growth of this “economic” system and, I think very important here, the collapse of loyalty to the Roman State. When Hannibal invaded Italy Italian farm boys in the tens of thousands were recruited to fight and the Romans eventually won. But that was the era when the Roman Republic consisted of small farms in central Italy. Fast forward: the Sack of Rome in 410 by Alaric whose army was maybe 1/3 Goth, 1/3 Hun, 1/3 Italian, barbarian war lords were very well known for their inclusiveness in employment opportunities. The mythic noble Germanic “Volk” invasions of the Late Roman Empire was a result of 19th Century Romantic and nationalistic historiography. The “wanderings of the peoples” like the Germans say.
I know there is a lot of historical revisionism regarding usage of the term ‘Dark Age’ or not, but I still prefer the term ‘Migration Period’ for the reason that it illustrates well what happens when the big dog on the block goes into a fire sale and finally is kaput: Tribes, clans, peoples….arm up and start migrating, to find better places to plunder, occupy, tax, and ultimately settle as the new Ruling Class.
Buckle up and enjoy the ride! (If your local Duke or Lord has a good strong castle, and is willing to take on more serfs or warriors – you might just live to pass on some genes to the next generation of peasantry ekeing out a living in the rubble! :)
Oh really? Please post examples from before the 20th century.
I’d assert many historical civil wars were rebellions against absent overlords. The US dollar, as delivered by the IMF, has all the appearance of imperial might suppressing local peoples, that is a weapon of colonization.
Many wars were to assert the might of remote overloads over peoples — control the more land, collect more taxes applies, or just a straightforward desire to loot.
Low relocation is a feature of agrarian cultures. There is no incentive to move, other than the odd future wife in a local village.
After the collapse of the rural culture in England after the black death Churchill reports complaints from the “serfs” about the failure of “the King’s grace,” because of the economically forced relocation.
The enclosures acts in the UK, which were designed to force the English off the land, and into industrial cities.
What about all the wars (and more generally, violence) caused by the desire to expand trade, pry open markets, and control natural resources internationally? The Opium Wars, for example, were a consequence of a trade imbalance. Today, think of our expanded set of “national interests” related to globalization and the war machine required to protect it.
Greatest level of globalization before our era was reached in August, 1914
Well then, we don’t go to “every village sealed off in its own” extremes. We deglobalize to the state of nationally protectionized country-state political economies. And we permit regulated trade where necessary across economically-guarded country-state borders.
We restrict the concept of “comparative advantage” to its natural and proper place of actual different advantages in crop-growing potentials or rare and special mineral deposits and etc. I grow blueberries and you grow coconuts so we will trade my surplus blueberries for your surplus coconuts.
We will forbid the arbitrage of “comparative advantage” in union-busting slave labor regimes or differentially anti-social sub-standards or unemployment insurance “here” but not “there” or ” all pollution is totally legal” special-economic zones.
I disagree with both Joe and Jim. We are not speaking of being ‘desensitised to new culture’ but objecting to a trading partner with whom we are doubtless familiar.
Neither has the concept of “Dark Ages” withstood scrutiny. Art and literature flourished after the Western Roman Empire failed. It is just the Pope did not do very well for a few centuries until he placed the crown on Charlemagne. Those were dark times for him.
I haven’t noticed any drop off in war since globalization (or coup like in Honduras and Ukraine). War is a function of capitalist pursuit of profit and resources. Competition instead of cooperation. NAFTA should be attacked not defended.
Using the Financial Times, the Peterson Inst and Johns Hopkins as authorities calls the article into question.
Anne Krueger was World Bank Chief Economist. Dubious at best.
How about U.S. arms exports?
That’s globalization and certainly doesn’t lead to world peace.
“Oh, it’s for the workers in developing countries” is the usual risible whiff of hypocrisy in the pro globalization arguments, although it’s not stated in this piece.
The globalization of services now means that instead of having some underpaid American cold calling me to get crappy new vinyl windows, we have some guy sitting in an Indian call center doing it. 6 calls a day at least.
Got so fed up, made an appointment and tongue lashed the contractor that showed up, but got the information on how he gets the leads and will have fun with the higher ups after a little investigation.
“Oh, it’s for the workers in developing countries”
Yes, that’s true. Generally they, the workers, are the recipients of the results of arms exports. The benefits get delivered at high velocity.
Assuming that what you say is true (that globalization leads to less war, at least less world wars), is any burden from globalization on the prols too great, given that the alternative is world wars?
What about the elites? Have they similarly sacrificed? What if this was simply a way for them to tilt the playing field to their advantage, to hoard more of the surplus?
How do you get from “as nations look inwards, they become desensitised to new cultures” to “bombing a far off land and killing millions is written off as collateral damage”.
1) Why do you assume antiglobalization necessarily means insular jingoism and xenophobia?
2) Why would antiglobalizationists all of a sudden develop the craving to bomb people and kill millions, if not for cheap labor and resources?
3) Have you noticed that most politicians who support globalization also like war (not to mention showing belligerence towards Russia and most South American countries?
Does that explain why the US is presently bombing so many countries? At the height of globalization, our wars are now perpetual.
You’ve got a false alternative going on there, as does the article to a degree. Anti-globalization isn’t really about creating autarkies or cutting us off from other nations; it’s ultimately a matter of emphasis. For instance, low tariffs, which were the norm until recently, were imposed ONLY on goods that were produced here; that didn’t keep people from buying foreign cars, but it did help maintain a domestic industry. And the fact is, the US was much more prosperous then; corporate globalization has vastly magnified inequality of wealth, both within and between countries.
Something similar applies to mass immigration. I would argue that there are normal rates of immigration that aren’t a problem, because people are generally reluctant to leave their homes; it’s when their lives are disrupted, often by US policies, that they move en masse. For instance, the large movements from Mexico were triggered by NAFTA’s disruption of the Mexican agricultural economy; now the refugees are coming from Central America, disrupted by US foreign policy. And of course, the huge numbers of refugees from the Middle East are another example – though drought played a role there, as well.
Untrammeled globalization is always up against the “race to the bottom” logic, whether it’s capital or people moving. “Comparative advantage,” Ricardo’s argument for trade being always beneficial, simply doesn’t apply in the modern world; it may have been largely fictional in his. Only absolute advantage – trading apples for oranges – still applies. It’s mostly about geography and climate.
Globalization is no panacea for peace and harmony. There is already rising nationalism in Europe… China has been becoming more aggressive in its relation to local south asian neighbours, and its education system for the young is highly nationalistic and omits any embarrassing incidents such as Tianamen Square. There is already a rising angry discontent among the bottom 30 % of white americans (rising gun ownership, voting for Trump, high opoid addiction). A marginally successful Brexit vote. These are trends that have been gathering strength for quite a while, and are not flash-in-the-pan phenomena. All this despite ever increasing level of Gloablization and free flow of capital, goods and people.
I believe it is fair to conclude that globalization causes increasing stress and anger among local populations, if it causes declining income and worse living conditions, without a commensurate increase in a sense of dignity or hope for the future, then it is a recipe for rising resentment and violent nationalism, which will eventually result in war.
Although i cannot say with fact, i expect that the experience of 99% in countries that have been captured and colonized, mirror what i jave said.
A decent income, decent and stable living conditions, dignity and upholding truth and justice for others is the recipe for peace. If one feels comfortable in life and does not view others as threats to one’s lifestyle, most people would be inclined to support the status quo and be at peace.
Well the last time we had started down the path of what we call globalization today, was a little more than 100 Years ago, and back then we still had monarchs in europe, who were mostly all related, and that didnt turn out so well, with WW 1&2 being the end result
Pre-Chinese-conquest Tibet was non-globalized. How many wars did pre-China Tibet start in the several thousand years in which Tibet was non-globalized?
unless a replacement for fossil fuels is found (and can be quickly deployed) then there is simply no possibility of ‘long-term growth’.
ps: growth is enemy #1. cape town and saudi arabia are perfect examples of this. unless magic sources of water emerge AND population growth ceases millions of people will have to leave.
Long-term growth depends on the long term supplies of raw materials and energy to move and transform them. Globalization depends on the movement of raw materials and the distribution of products and this movement requires energy. Even software, designs, and other incorporeal intellectual properties require energy for their production and movement. The large scale transportation of corporeal goods is especially dependent on petroleum.
As you suggest, insufficient potable water — and I would add food — will provide some initial shocks to the temporary regime of ‘globalization’.
If indeed oil gets short and then gets shorter, and we don’t go back to running all the Free Trade Container Ships on coal ( which will be suggested I am sure), then less energy to push ships around will mean pushing less ships around. If shipping becomes so unaffordable that overseas-supply-chains become unaffordable, then energy-shrinkdowns will force deglobalization and re-countryfication and even some re-localization.
” Globalization is yesterday’s tomorrow.” We can only hope . . .
Why are media pundits dismayed that the market keeps rising despite the US global trade attack on all fronts? The strategic problem of too many fronts has undone most leaders bent on world domination. In Trump’s case, when he parries into a trade front, the market either absorbs the wound or takes evasive action. Trump’s corporate targets are mostly multinational. They owe him no special allegiance. He no longer can even tax them into submission. Funny that a Republican president does not understand that modern tariff wounds bleed slowly. You know, trickle-out economics.
The other day, while Washington and the media were going hysterical over the appearance of treason in Helsinki, Japan and the EU won the first major battle of the tariff war. Rather than interpret the deal as an economic Pearl Harbor, Wall Street closed higher! Doubtless other deals will soon be cut that will blunt more US tariff stabs.
Meanwhile, the Market seems to be demonstrating that Trump has already lost his ill-considered tariff war, and intends to wait out the next two years if need be – maybe sooner if Congress grows a pair.
>Japan and the EU won the first major battle of the tariff war
I still have to read some informed commentary, but my first impression is that this deal is little more than propaganda.
First, the amounts involved are not astronomical. Japan is the sixth EU trade partner, about as large as Turkey, with less than 4% imports/exports. The Dutch news reports a reduction in export tariffs of about 1 billion per year, Europe-wide. Given some 60 billion EUR exports per year, this is a “huge” reduction of 1,5-2%. Of less than 4% external trade.
Second, the cuts concern mostly agro-industrial products (to Japan) and cars (to the EU). The first is a relatively small, low-value-added sector. The rules for the second will be phased in slowly.
Third, the treaty will have to be approved by the member states. Those same member states who cannot find an agreement on immigration, who are deeply divided on what to do with NATO and the UK, are now supposed to sign on the dotted line. Refusing to sign will be an easy political win for a number of governments.
That is, admitting that there is still an EU after QE stops.
The EU has nothing to do with NATO.
I know. The fact that 22 EU countries out of 28 are NATO members is purely coincidental. It just so happened that NATO headquarters are in Brussels, just like the EU.
That all European NATO signatories eventually joined the EU or applied for membership, or are in EFTA, is a non-sequitur: it cannot be in any way construed to mean that there exists any relationship, however tenuous, between the EU and NATO.
And no one in Eastern Europe could have imagined that joining NATO would have meant automatically joining the EU in short time. It just so happened and took everyone completely by surprise.
The two organizations are totally unrelated and barely aware of each other’s existence :-p
Hah! Sort of like Christian evangelicals and the NRA are barely aware of the Republican Party.
Also seems the EU is creating its own military reaction force, why do that if its the same as NATO. course since both are based in Europe they would tend to have some the members its not like there are 1000s of countries in Europe, and you will likely only get the big ones any way
> Why are media pundits dismayed that the market keeps rising despite the US global trade attack on all fronts?
A non sequitur- ish question with regard to the post.
By market, I take it you are referring to the stawk and bond market, and why it’s rising in spite of supposed bad news?
The answer is, it’s rigged, and central banks are in the thick of it. From Wall Street on Parade, quoting Ed Yardini
http://wallstreetonparade.com/2018/07/norway-central-bank-goes-dark-on-its-276-billion-in-u-s-stocks/
“In the long run, it’s hard to imagine that having the central monetary planners buy corporate bonds and stocks with the money they print can end well. In effect, the central banks are turning into the world’s biggest hedge funds, financed by their own internal primary (money-printing) dealers and backstopped by the government — which can always borrow more from the central bank or force taxpayers to make good on this Ponzi scheme…”
There is not one iota of honesty left among the finance phuckers.
Bernie Sanders: The business of Wall Street is fraud and greed.
Well its likely cause the numbers that drive them havent caught up with the tariffs, tariffs started in june, or early july, non of those will show up till the earliest this month maybe, but might not show till the of 3rd quarter. we do seem to expect instant impacts from things that usually take time. now i have seen stories that say China has basically stopped buying some US products and those have had steep price drops. going forward
> Why are media pundits dismayed that the market keeps rising despite the US global trade attack on all fronts?
Because it doesn’t fit their narrative?
What if the narrative is simply: BTFD until the yield curve inverts? AKA “climb the wall of worry”.
Globalization is not a one-dimensional phenomenon, and some of its aspects are still intact. Hollywood dominance, Internet, English language dominance, West technological dominance, will not reverse any soon.
What is under attack by Trump, Brexit, etc. is neoliberal globalization, and, especially financial globalization, free movement of labor and outsourcing of manufacturing and services (offshoring).
Neoliberal globalization was also based on the dollar as world reserve currency (and oil trading in dollars exclusively). But this role of dollar recently is under attack due to the rise of China. Several “anti-dollar” blocks emerged.
Trump tariffs are also anathema for “classic neoliberalism” and essentially convert “classic neoliberalism” into “national neoliberalism” on the state level. BTW it looks like Russia switched to “national neoliberalism” earlier than the USA. No surprise that Trump feels some affinity to Putin ;-)
Attacks against free labor movement also on the rise and this is another nail in the coffin of classic neoliberalism. In several countries, including the USA the neoliberal elite (especially financial elite after 2008, despite that no banksters were killed by crowds) does not feel safe given animosity caused by the promotion of immigration and resorts of conversion of the state into national security state and neo-McCarthyism to suppress dissent.
I think those attacks will continue, immigration will be curtailed, and “classic neoliberalism” will be transformed into something different. Not necessarily better.
Several trends are also connected with the gradual slipping of the power of the USA as the chief enforcer of the neoliberal globalization. Which is partially happened due to the stupidity and arrogance of the USA neoliberal elite and neocons.
Another factor in play is the total, catastrophic loss of power of neoliberal propaganda — people started asking questions, and neoliberal myths no longer hold any spell on population (or at least much less spell). The success of Bernie Sanders during the last election (DNC was forced to resort to dirty tricks to derail him) is one indication of this trend. This “collapse of ideology” spells great troubles for the USA, as previously it spells great troubles for the USSR.
“Trumpism” as I understand it tried to patch the situation by two major strategies:
(1) splitting Russia from China
(2) Attempt to acquire dominant position in regions rick in hydrocarbons (Iraq, Iran, Libia, Venezuela, etc)
But so far the decline of neoliberalism like Irreversible. It never fully recovered from the deep crisis of 2008 and there is no light at the end of the tunnel.
Another powerful factor that works against neoliberal globalization is the end of cheap oil. How it will play out is unclear, Much depends whether we will have a Seneca cliff in oil production or not. And if yes, how soon.
This is the end of classic neoliberalism, no question about it, and the collapse of neoliberal globalization is just one aspect of it
>But so far the decline of neoliberalism like Irreversible. It never fully recovered from the deep crisis of 2008 and there is no light at the end of the tunnel.
Yes, in 2008 the mopes observed, that in a crisis, the neo-libs take care of each other and pitch “just get educated or die” to others not in their class.
The article also stated:
“Perhaps the most self-defeating counter-globalization measure would be to lower immigration. While most of the benefits of immigration flow to the migrants themselves, there is also a “migration surplus” for the economy that hosts them. The tax payments of migrants can be used to pay rising Social Security payments at a time when the native U.S. population is aging.”
Of course if these migrants are clustered in low-wage jobs, they won’t be paying much in SS payments anyway.
If they are eventually made eligible for SS, how will THEIR future SS payments be met?
If climate change is real, encouraging ever more migration to high CO2 producing economies appears to be a very bad idea.
And does that calculation on “migrant surplus” consider other costs associated with millions of mostly low-wage immigrants and their families (education, healthcare, etc)? Does it take into account the effect on wages generally? I tend to see this all as just more concentration of private benefits with distribution of public costs. In short, when I see the local chambers of commerce and big homebuilders being the loudest cheerleaders for “compassionate immigration reform” I’m skeptical. Cui Bono?
> But this role of dollar recently is under attack due to the rise of China. Several “anti-dollar” blocks emerged.
For that to work, once a block of countries is decided upon, the first order of business will be to decide which of them takes the hit on being the country with the trade deficit so that the rest of the countries in the block can have the trade surplus. Not all that different than the role that the US serves now in the world-wide trading block. Anyways, good luck maintaining political stability in the country that is willing to be the country with the perpetual trade deficit.
On that note, part of me wonders if we should just wall off wall street and silicon valley, so that the rest of us secede from them with our own country. Then they can support the trade deficit and we can have a trade surplus with them. We can even let them keep the US dollar.
It has occurred to me before that England could do the same for the City of London.
No need to wall of Wall Street or The City, simply switch to debt free government issued currency. Without the market in government debt there would be no Wall Street or The City.
A healthy organism, be it a single person (me) or “Gaia” (the totality of Life), have many similarities. Stability and lots and lots of redundancy (a plan B, C, D…).
We have two lungs, testes, ovaries, kidneys, eyes, ears, arms. We are at least two genders.
Gaia has a myriad of creatures, from extremophiles to Blue Whales. From T Rex to spirulina. 4 billion years of evolution, with multiple extinction events, has come to a completely different conclusion than the Doctors of Economics. Gaia Knows!
I am 68 yo and I, thankfully, stopped physically growing 50 years ago. IMO, almost every globalist “innovation” is, ultimately, another neo-thalidomide. For God’s sake, Globalists and know-it-alls, go home and tidy up your rooms. Take care of your kids. Work in your gardens, and then go for a long walk with your friends! Leave us alone with your big schemes.
Cancer is long term, uninterrupted growth of undifferentiated cells.
I guess this is one of those “published for information and reaction” articles, which contains this “keep marching toward the cliff” text:
Martin Sandbu of the Financial Times believes that the open world economy “can withstand the assault.” He points out that the emerging market economies that have benefitted from the increase in international trade have an interest in maintaining the current regime. Moreover, it will be difficult to replace global supply chains with production facilities in each economy where a firm sells its products. Finally, limiting overseas expansion of markets will do nothing to address the problem it is supposed to correct: the stagnant wages of relatively low-skilled people. There are policies to help those whose jobs have been eliminated by technology, but these include better educational opportunities and health care, not limitations on trade.
Nice concise statement of the corporatist-neoliberal positon. Oh well, it’s working, just needs tweaks off stage…
Let us tuck our heads under our wings as a species and “just wait out Trump’s puny efforts” to counter the storm surge of globalized corporatization, right? Because in our individual Homo economicus interests, at least the interests of those of us who have more wealth, more than even a “genteel sufficiency, “growth” via the externality-evading and -shedding model the larger political economy is working to, “I’m all right, Jack, so screw you, except that maybe there can be some ‘policies’ to alleviate your distresses, though contingent of course on money being found somewhere to pay for those ‘policies, but not out of my comfortable pile of it, which you will dip into only over my dead body.”
Yep, so irreversible processes are in motion, let’s ride them for all they are worth, believing, just knowing, that a comfortable death will overtake us before the deluge…
We say, we are loosing jobs due to this “expansion of markets”, and they reply, jobs lost due to technology can be mitigated. If one accepts their mis-definition of the problem the battle is already lost. I have no idea what Trump intends with his maneuvers, but in the broader context, no, tariffs are not meant to solve the problem of “stagnant wages of relatively low-skilled people”. Once that becomes the goal, again, the battle is already lost.
Quite. But there is no mitigation, because it would have to be paid for (taxes) which would reduce profits.
Globalization is pure and simple asset stripping. Trump would not be trumpeting and thumping around on the world if all the beneficiaries of the asset stripping were US based. What the US will not tolerate is China’s taking the profit from the asset stripping.
Parts of the US won’t take it any more, no. The Free Traderites actually supported it. The whole point of Free Trade was to asset-strip American wealth into Mexico and China and etc., where the Freely Tradering Corporations could then concentrate all the monetizable aspects of those stripped assets unto themselves.
The deplorables never did support the concept. And now, the deplorables have finally begun to rebel overtly against having their economic support-systems asset-stripped.
How about asset stripping the financial elites who through inflation and deflation loot the economy?
+1 Shorter Article: TINA
Actually casting the unrest of the masses as attacks on trade or globalization helps reframe the problem to make it obvious that There is No Alternative. The real problem is not trade, but regulatory arbitrage that lets global firms create/exploit weak environmental and worker protections in the colonies. If that were solved, I imagine resistance to ‘trade’ would evaporate.
>a movement to a world of national barriers that will only fuel xenophobia and hamper long-term growth.
One would think that it is just the *lack* of national barriers that fuelled xenophobia and hampered long-term growth?
growth (gwoath) n. : A term for a loaf of ever expanding economic gas-baggery.
“Can Globalization Be Reversed?”
Globalization is a bad idea. Complex, gigantic systems, in combination with limited diversity and limited redundancy, are unstable and doomed to fail. The only question is of timing.
Say there was an influenza pandemic (like 1918), and suddenly bulk chlorine, from China, for water treatment stations can not be exported or imported. Say, because of “just in time” efficiencies, there is only a two week supply of chlorine on hand? No potable water.
Say, not just chlorine, but every other little/big thing that we depend on. The necessities are gone!
Just the smallest nudge from Our Blessed Mother of Nature, and the entire Globalist pipe dream would collapse, like the World Trade Centers, before our eyes.
In 2008, wasn’t the entire world monetary system within hours of collapse?
Think small. Think simple. Think timeless
Globalization transforms the world economy into a wonderful “One Hoss Shay” — but sadly no hundred years wonder. How many things little and large do our economies require which come from abroad and no one here can or remembers how to make them? Through globalization we live most dangerously.
“There are policies to help those whose jobs have been eliminated by technology, but these include better educational opportunities and health care, not limitations on trade.”
The same old mantra: let them eat training.
Well I have some news, no matter how trained people are. If there are only so few decent jobs, only so few workers will be able to find a decent, well-paid position. The only thing that will change is that the overall level of over-qualification will be even higher, and that our clepto-elites you will keep hiding behind the “meritocracy narrative”.
exactly, “relatively low skilled people” indeed. money moves instantly, people can’t. that “free movement of labor” involves people, desperate to start with, on a perilous train journey north, robbed by bandits and police along the way, to hope to get across the us border somehow, and that’s the people moving to the u.s. where are the americans supposed to freely move to? bulgaria, where they use their newly acquired computer training to send phishing emails? a life of riches! the whole framework as far as i can see was set up by the us after ww2, or at the end of it; bretton woods had a goal of free movement of both capital and labor if i understand it, and as soon as you make these equally valued goals capital wins.
Seriously, come on economists! Say it with me, now, “supply (of education) does NOT create its own demand!!!” Say’s law has been proven false over and over. Stop sneaking it back into your ideas.
Dean Baker has pointed out that if there were actual skills shortages, instead of employers just moaning, then we’d be seeing narrow segments with rapidly rising wages. That’s not happening in any sector.
There’s simply NO empirical evidence of skills shortages in any sector of the economy. If employers are so intent on getting employees with better education/experience, then they should prove it by paying a premium to get those qualified professionals. But, since they aren’t willing to pay up, then the only conclusion left is that they are just whining.
Dean Baker has also pointed out that rates of productivity improvements (aka better use of technology) are lower over the past 20 years than they were in the 50s and 60s. There is very little hard evidence to support much of the arguments made in the mainstream media about these topics.
The Law of Diminishing Returns – in this case, enforced by hitting the resource wall.
I noticed that too. ” Unskilled” is dog-whistle code for ” low-class” and “uncredentialed” and ” definitely not our kind, dear”.
“Finally, limiting overseas expansion of markets will do nothing to address the problem it is supposed to correct: the stagnant wages of relatively low-skilled people.”
What about the stagnant wages of “high-skilled people”? Software engineers (for one example) often earn less now than 20 years ago. And I’m not talking about “with inflation” but in simple numeric terms. The lie that this isn’t a war on all workers everywhere is nice propaganda for the rich but just doesn’t hold up to scrutiny.
Agree one thousand percent. That describes me perfectly. I am in the insurance industry and IT has been wiped out in that sector.
90% of the people in emerging markets lived in poverty and 90% still do. What exactly is it about the status quo that they’re suppose to like? Global trade works for global elites and that’s it!
The problem is not stagnant wages. We’re heading for $15 per hour minimum wage in Ontario. Is that going to magically make things better? The problem is runaway inflation, caused by endless credit. We’re debt junkies. Let’s see how globalism holds up when we miss our first fix.
It will all crash and burn, forcing all westerners to do some soul searching – as opposed to this mindless materialism we’ve so happily embraced. Hopefully it ends with some sort of gold standard. Why? Because you must have some rules to restrain those who run our societies. Otherwise you have bankers and politicians doing whatever they want to enrich themselves and their friends.
And of course ZERO attention to the externalities of resource extraction and waste and destruction (water, topsoil, etc.) and greenhouse gas emissions (CO2 from ships carrying all those “profitable” bulk cargos and TEUs and petroleum) and so forth.
Let alone more and more “consumers,” every day, and of course the growth industry that tops them all, good old War and its many parts.
“ Carry on, my people,” until the species hits the wall…
It’s really a never-ending blind spot for economists.
All of their theories should seriously be revised to emphasize environmental sustainability. Otherwise you end up with lunacy like we see today with Fiji exporting water from underground aquifers thousands of miles to western consumers and Australia, the driest continent in the world, growing and exporting rice.
Or take the example of Egypt which was able to feed itself perfectly well for thousands of years with annual cereal crops because the annual floods brought in fresh nutrients. But then the brilliant idea of importing food instead, and growing cash crops, mostly cotton.
They built the Aswan Dam to generate electricity. The dam blocked the silt deposits and now Egypt needs to use the electricity to manufacture fertilizer to grow the cash crops to fund…..yes, those food imports.
But what do economists see? A bunch of people who were feeding themselves and not generating any GDP are now exporting cotton and importing food, generating economic activity that can now be measured and counted. But did it make most people better off? Highly questionable….
Clear winners: Oligarchs/multinationals that make money from cotton exports.
Clear losers: People who can’t eat when commodity prices spike (as they always do from time to time).
Well, it isn’t a blind spot for Herman Daly. And it wasn’t a blind spot for Charles Walters Jr. And it probably wasn’t a blind spot for Frederick Soddy. So we should remember that there are economists here and there with two seeing eyes in their faces.
Now . . . the Free Trade Economists? “Blind”? Or carefully “self-blinded”? Yes. I wonder how they would answer the following question: If I grow some tomatoes and eat them myself and no cash registers ring, did those tomatoes ever even exist?
That last paragraph goes a bit overboard and I question the premise that you can only have full-on globalization and not something in between such as trading blocks. It is all right for some to say ‘look at all the people that we have lifted out of poverty’ but at what cost to the planet? And in any case, globalization as far as I can see is really only a wealth pump on the planet for certain segments of the world’s population. Remind me again how much international corporations pay in taxes of what is due?
We have had some two centuries of constant growth and we assume that our financial trees will grow to the sky. As if. We are now in a period of transition and it is difficult to conceive of living in a civilization that is under gradual contraction as easy energy sources run down. The relevance here? You can only have globalization in a growing world economy and that may no longer the case.
My own thought is that whatever system that you have, it has to above all be sustainable. Call it a closed system but the way that globalization is organized at present is mostly open ended which has resulted in climate change, plastic-choked oceans and depleting critical resources such as farm-able soil. To tell you the truth, would it have been so bad and terrible if our present type of globalization had never come about?
The polecat closed system to ‘minimal’ sustainance : 1) house, feed, water chickens. 2) collect chicken poop (daily ! ..uhg !). Transfer to compost bin. 3) meanwhile, plant seeds, divisions, prune fruiting trees/vines/shrubberies (.. wow, my back’s killin me !!). 4) fertilize said crops with Last Year’s compost ..(Man, this stuff is nice !). 5) WATER … even if you’d rather do something else with your time .. (“god, this is boring !”). 6) harvest the fruits of your labors .. (“Oh My God, Look at all this FRUIT !!! Oh, these look nice ..Yummm !!!” better freeze/can/dry before the #@$!* neodynosaurs get em first .. (argh !!) 6) cleanup before Winter sets in (sigh!), and plant some carrots & garlic while your at it .. 7) waits in impatient anticipation for Spring to make it’s appearance/bites fingernails .. (Ouch !) 8) house, feed, water chickens …..
So industrial civilization fell out of a skyscraper one day and as it went by the 20th floor/century it was heard to mutter ‘So far, so good! So far, so good!’
“trickle-out economics.”
Best short description ever of neoliberalism.
+1
Any stick to beat a neoliberal!
Add in a few for neoconservatives, too.
It is important to remember that the term ‘nation’ covers entities of very different size. For the US to follow ‘nationalist’ policies is quite a different matter than if Luxembourg tries it. What is possible for large countries may be quite out of the question for smaller ones.
I’ve started reading Thomas Franks’s Listen Liberal and he points out how absurd this fetish with education is. If everybody is able to get a PhD, somebody still has to slop the hogs and dig the coal and clean the toilets. Those are the people whose wages are being withheld/stolen from them.
Progressives for Trump (PFT)
I consider myself a progressive. Supported Bernie. Economic issues to me are more important than social issues. Too many Americans have been left behind in economic opportunity, resulting in despair and declining life expectancy. Trumps economic plan will improve our lives. I support Trump.
Also, I do not support the US war machine. Russia and North Korea are not our enemies. On this I also support Trump.
Well said. I agree with you
I grew up in a United Mine Workers family, in small coal towns; first in Kentucky and then Southern Ohio. I tore up my draft card and sent it to Nixon, when my younger brother refused to register for the draft, during the War in Viet Nam.
I dream about World Peace! I have children and grandchildren…..
I support Trump as well. My “Progressive Credentials” are solid, consistent and go back to the 1930s. Both of my parents were committed, Labor-Union (worked for the UMW) progressives.
Well they are not our friends by any stretch of any one’s imagination.
This regurgitation of Sandbu by Joyce is basically a recitation of the policy bullet points — which are largely assumptions, assumptions which are increasingly disproven with each passing day — of presently reigning policy elites now being displaced by various forms of populist political revolt.
The key question for the immediate future is whether those populist revolts will tack left or tack right, and in which countries. The most important, of course, being USA. If USA tacks right, with appeals to jingoistic white identity nationalism as the primary motivation for sustaining political support, then the gloom and doom will come to pass.
If the populist revolts tack left, with appeals to the better angels of our nature coupled with appeals for a classical republican (not “R”epublican) mobilization of civic virtue for selfish interests to yield to the interest of the General Welfare in building a new world economy free of dependence on burning fossil fuels, the likely result will be a new “golden age of capitalism.” GAOC is based on the post-World War Two experience, when pent-up demand for consumer goods, and the need to rebuild Europe and Japan, were the physical basis for sustained multi-decade economic growth. Note that this physical basis was complemented by a policy basis of regulations tough enough, and enforced enough, to hold in check economic rent seeking and predatory finance. Today, there is pent-up demand for responding to climate change with a minimum program of $100 trillion to build 3.8 million 5-Mega-Watt wind turbines; 1.7 billion 3-kilo-Watt rooftop photvoltaic (PV) systems; 490,000 1-Mega-Watt tidal turbines, and much, much more. In addition, all major cities on the planet must be equipped with electrified mass transit rail systems with the service and route densities of cities like Tokyo and Moscow. That means massive underground construction in even London and New York City. Some of the world’s largest cities have minimal urban rail transit systems, such as Cairo, or Istanbul or Sao Paulo, or have none at all, such as Jakarta and Lagos.
The potential demand for real, productive economic activity is simply staggering, and the poverty of present policy elites must be measured by their utter failure to recognize this.
Historically, protectionism as been a central policy for nations that achieved industrialization and the creation of a large middle class. These nations rejected laissez faire and free trade and used direct and indirect government intervention in the economy to direct market forces toward national goals.
In fact, it is usually direct and indirect government intervention that creates entire industries and markets, such as USA land grants to build railroads; development of metal working machine tools — the basic building blocks of modern industrial mass production — in federal armories; direct funding of the telegraph and early radio; government research and support for aviation (most planes today would not fly without the discovery of Whitcomb’s area rule and supercritical wings, which were developed entirely on the USA government’s dime); and a national program to pave roads, without which we’d be driving crawler tractors instead of automobiles.
Finally, it must be noted that in addition to protectionism, regulation of finance, and active government promotion of manufacturing and infrastructure, there was one other crucial policy, which has curiously been left out of most historical account: a Doctrine of High Wages. The key reason to impose protectionism is not to restrict imports, as is thought today; but to protect the earning power and livelihoods of a nation’s citizens. It is by refusing to engage in free trade’s “race to the bottom” that a nation protects the earning power of its citizens, thereby ensuring a strong domestic market for not just domestic products, but foreign products as well. In the 19th century USA, periods of relative “free trade” tariffs were quickly followed by a collapse in demand for imported goods. In the post-war 20th century, this collapse in demand was averted by a massive increase in private debt. A little known fact is that this situation of rapidly increasing indebtedness was foreseen by the 19th century advocates of protectionism.
The present system of global trade, based on exploiting the cheapest labor and arbitraging the least regulatory regimes, and trade pacts which are negotiated for all extents and purposes by and for multi-national corporations, must be replaced by a global trade system of expanding international cooperation of stifling predatory finance and rapacious corporations while redirecting the world’s resources toward building a new golden age of capitalism based on solving the problem of climate change.
Small cavil: not “multi-national corporations,” but “post-and-supranational corporations.”
It would be better to build electrified mass transit systems on the second story like the El in Chicago or Brooklyn. They could be built more quickly, cheaply and less disruptively, constructed in modules rather than digging in one direction underground. And the remaining street level traffic for local mass transit, deliveries, emergency vehicles, pedestrians and bicycles would flow much more smoothly without the waste of traffic jams and their extra wasted emissions.
Globalization is shorthand for changes much more ominous than the simple expansion of trade. It is composed of policies for the deliberate de-industrialization of the United States coupled with consequent intended unemployment and the financialization and leveraging of American Corporations. Other globalization policies create controls over national governments compelling their thrall to the will of Corporate power. Global trade is arranged to assure the flow of raw materials out of non-industrialized nations into the maw of the industrialized nations. A mad logic of optimization and efficiency constructed an economic system reliant on long slender threads of supply and distribution with minimized inventories, an economic system more frangible than salt gossamer, more fragile than a crystal unicorn in the angry hands of the hairy ape. The nuptial of Neoliberalism with Globalization stands solid against divorce as the that of doves.
As you detail — reversing Globalization is no less than the task of re-building our industrial base and re-structuring how it is dispersed. These were tasks begun in the United States in the days of Alexander Hamilton and immeasurably helped through our fortunes in two world wars. After closing our factories, our design centers, and our research centers — shipping them overseas — casting our machinists, designers, programmers, and researchers into the streets — and treating our factory and white collar workers like serfs and chaff … rebuilding our industrial base will be no easy task. I doubt China is anxiously waiting for the moment when it can dismantle portions of its industrial base and send it back to us with an influx of monetary capital.
Lefto-populists will have to start their own movement without seeking approval or recruits from the Righto-populist movement. Because there is already a Righto-populist movement and it will continue in existence regardless. So a Lefto-populist movement can either emerge and take some power in some places and make the case for itself and its ideas and goals, or it can fail to do so.
Energy spent fighting Righto-populism is energy diverted from building up a Lefto-populist movement worthy of the name “movement”.
“Reclaiming the State” by Mitchell and Fazi is a key book if we are to fully understand Brexit, Trump, and other resurgences of nationalism. Mitchell and Fazi describe a strategy–no, actually a philosophy–by which progressives can offer an inclusive, nurturing form of nationalism (with social programs funded via MMT) to counter the various xenophobic versions proposed by the right. It’s become clear that globalism has failed and is beginning to break down. The looming political battle is whether the nation state will reassert itself on behalf of the 99%, as Mitchell and Fazi advocate, or will merely continue globalism’s elite neoliberal priorities in a more localized manner.
+1 for Reclaiming the State. Great book for a dedicated NC post or reading list.
Here’s a video in which Dr. Mitchell hits the high points of this vitally important book.
https://www.youtube.com/watch?v=IynNfA1Ohao
This whole paragraph is another howler….
“A world of tariffs and quotas, moreover, would also be a step towards increased government controls on the private sector. Anne Krueger of Johns Hopkins points out that quotas, such as those on steel that South Korea has agreed to, must be administered by either the Korean or U.S. government. Similarly, exemptions from tariffs must be granted by a bureaucracy that reviews applications from private firms. These grants of authority open up opportunities for corruption. They also act as barriers to entry for new firms, and lessen incentives to innovate. All this adds to the higher costs that consumers and those who rely on imported intermediate goods will pay.”
There has been absolutely NO indication that I’ve seen that countries see reduced corruption after opening up to trade or Foreign Direct Investment (FDI). In fact, in developing countries often see huge waves of corruption once they open to multinational capital. We’ve seen over and over multinationals engage in land grabbing and resource grabbing and privatization rip off schemes. They demand that local governments rip up labor and environmental regulations. Those multinationals are happy to grease whatever palms they need to grease in order to get deals done.
Also, keep in mind, capital flows usually open in BOTH directions, more or less simultaneously. So, those bribes that got paid to local partners are often immediately stashed abroad in the usual tax havens that provide plenty of secrecy for their customers.
There’s a kind of disclaimer paragraphs which says, “we learned from Asian Crisis that portfolio capital flows are bad”, but that doesn’t go nearly far enough. Economists often treat FDI as some kind of holy grail to prosperity for developing countries when it’s mostly just a cover for mass looting. We saw repeated examples of this in Argentina, Chile, Russia, Mexico, most countries in Africa. The list goes on and on.
There’s really ZERO excuse for the economics profession’s refusal to acknowledge these disastrous episodes and revise their ideas and recommendations accordingly to stop the rampant criminality that occurs.
And yes, the pernicious effects of massive episodes of looting FAR outweigh any upside to dropping a few trade barriers (assuming that dropping them is even a good idea, per se, which is debatable).
The nation state was developed by and for monarchs, aristocrats, colonialists, etc. I’m skeptical that a system whose raison d’être is to consolidate wealth from a populace for the benefit of a few can ever be made to serve any other interests. Imho, we’d be better off scrapping the whole project and going back to the drawing board entirely, but the odds of that seem rather slim…
Supposed to be a response to Newton Finn. Oops.
Ok .. co-operative tribes then ?? .. that might work.
If one goes down to a microscopic view, that’s exactly what is more and more apparent. Workers coops, farmers coops, things that are going on in Detroit, stuff like that.
And of course the Skull and Bones tribe cooperates really well with the Wharton and Chicago School tribes. Here’s a link from a past NC kind of lining it out: https://whorulesamerica.ucsc.edu/power_elite/interlocks_and_interactions.html
“Finally, limiting overseas expansion of markets will do nothing to address the problem it is supposed to correct: the stagnant wages of relatively low-skilled people. There are policies to help those whose jobs have been eliminated by technology, but these include better educational opportunities and health care, not limitations on trade.”
Education as a solution to slack labor demand in the rich world, take a shot.
As someone who has worked before in a plant that has seen job loss to the developing world, I am skeptical about the sentiments expressed in the Angry Bear article and agree with many of the comments here.
The current situation is dependent on cheap oil, which has a questionable future at best.
The other big issue is that there have been very real declines in living standards for the working and middle classes. The so called neoliberal elite has tried to portray the manufacturing industries as only hiring people who have limited post-secondary education. Not true. At work, there are many engineers, accountants, and other professions. Yes, for many, it beats working in a minimum wage job, but manufacturing has an ecosystem of its own, something that is not often discussed.
Furthermore, nations like Germany and Japan are able to maintain large export surpluses. While not everyone is going to run a surplus, it suggests that having a large number of manufacturers is by no means incompatible with a developed world and the high wages it sustains.
Ultimately though, the issue is neoliberalism. The current form of globalization was made for the rich to crush the middle class. There are other provisions in many of these free trade agreements like the proposed TPP have nothing to do with trade and everything to do with corporate rent seeking. An example is the excessive intellectual property laws these provisions have.
As another commentator above me, likbez observed, neoliberalism has started to face its own legitimacy crisis. It was exposed in 2008 as a fraud for the rich to loot society.
What is usually called “globalization” is just a set of rules made to govern the world economy. There is nothing new about world trade, foreign investment, labor mobility and the development of new technologies that make global commerce easier. If anything we are in an era of slow growth as productivity growth has stagnated. Most of the New Economy tech is overrated compared to the tech advances of the period from 1870-1970 and a lot of it is actually rather pernicious like the impact of social media on mental health and the development of an enhanced form of Taylorism to monitor, track and discipline workers. Modern warehouses for example look more like something out a cyberpunk dystopia than something out of the utopia of Star Trek .
Many of the negative aspects of globalization can be reversed because globalization is not a force of nature but a political movement. Political movements can be reversed or cancelled by politics. Most people think of globalization as an unstoppable force of nature because that is what our media and schools teach. It is part of the TINA philosophy. But there is nothing “natural” about the WTO, IMF, the World Bank, NAFTA, CAFTA, the TPP and all of the other alphabet soup institutions and treaties. Moses did not come down from Mt. Sinai with NAFTA in his hands. Globalization is mostly about politics and it can be reversed or changed by politics.
Also, there is always the chance that war or catastrophic climate change or a major economic depression can reverse recent economic and political trends. Before World War I the Europeans thought that their empires would last forever and that technical progress would soon usher in a utopia. Few expected the Soviet Union to collapse when it did. Most famously the Roman Empire lasted for centuries before collapsing and even then the eastern portion of the empire continued to exist in a rump form for another thousand years. What seems like the inevitable course of history can always be reversed or changed.
Pax Americana is just too costly to keep up for the Americans (the people, not the One Percent).
Much of globalization was built on the back of the US Miltary guaranteeing safety for countries from each other. All of this began at the end of WWII. This age is now ending.
The US is spending more on the miltary than the rest of the world together. I used to think this was madness. It is madness but… realized that cost was to foster global trade. Perhaps it was worth it but at this point, we cannot keep on spending like that – just look at the health of Americans and the condition of the country itself! So other countries have to step up and pay up for the miltary costs. They won’t. So the American Hegemony will eventually die. Thus globalization will be reversed because the US is no longer guaranteeing safety of global trade flows or from countries who may have impure thoughts.
The end of American Hegemony may means the US Dollar may decline in value. The US does have control of SWIFT which means countries get punished if does not comply with US demands. This will drive countries away from the US Dollar because of the sanctions or… sudden USD spikes either direction (hard to deal with, hedging is costly).
Nobody wants to be the next reserve currency because of Triffin’s Dilemma. So the next currency will be neutral, one that doesn’t care about what country or poltics or the color of your skin… a currency that merely validates transactions in a way that is unbreakable. That is why I think Bitcoin et al will be the next world currency. When Bitcoin or its like becomes the leading currency, we will have globalization again but one that is more reasonable. It is silly having just in time chlorine from China… delivered on ships traveling thousands of miles.
With respect, there is no “migration surplus” for the average citizen. In EVERY case that the rich have used mass immigration to flood the market for labor, the result is the same: lower wages for the many, higher rents for the few. All else is double-talk and logic-chopping.
The issue is not whether ‘globalization’ (i.e., third-world-ization) can be reversed. It will. The issue is whether we will do it the easy way, or the hard way.
The overpopulated third world can consume all resources, and stay as miserably poor as the 9th century. A ‘globalized’ world will not equilibrate to the mean of current per-capita GDP: it will keep falling until it hits subsistence. Just one nation like Pakistan or Bangladesh, if given access to the resources of the rest of the world, could soon have a population that explodes to billions and then tens of billions, and sucks the world dry. But while dirt-poor wages are a short-term boost for the profits of the rich, they destroy long-term stability. A truly ‘globalized’ system must eventually collapse. This is not an economic prediction. This is a prediction based on physics.
Better, I should think, to let countries that have controlled their population growth rates, and developed some measure of prosperity, keep what they have worked for, and instead encourage the third world to change its course and take the path to prosperity themselves. But a world that is broadly prosperous would have high labor costs – because that’s what prosperity is – and make it hard for the rich to make large automatic profits, which is why any talk of moving in that direction is a priori racist.
Keynes in 1914 wrote:
“He could “order by telephone, sipping his morning tea in bed, the various products of the whole earth ….. he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises in any quarter of the world”
One minute to midnight before the end of the last globalisation phase.
Exactly. This “Globalization prevents war” is total BS. There was a unmatched % of global trade just before WWI
Been reading RK Massie’s “Dreadnought”, a history of the buildup to WWI. Kaiser Wilhem makes an impressive Trump, speaking out of turn, neglecting his advisors, insulting allies. Much of the wildly histrionic media headlines looks like a lot of today’s media.
Unfortunately, the informed and very rational debate in the House of Commons looks nothing like what passes for debate in our useless congress. And dedicated and skilled figures like Haldane and Grey, also have no parallel today, to our loss.
Great read BTW. Very engaging.
Good book.
Ive laways wondered if the dreadnought led to the development of the income tax.
Several comments predicted war without neoliberal globalization. We had corporate globalization when we subsidized the Marshal Plan, but neoliberalism is devoted to parasitical financial extraction of existing wealth as opposed to industrial production of new wealth.
We are waging elective wars everywhere pursuant to achieving imperial aspirations via world government. The sleepwalkers fear nationalism fomenting war while being unconcerned about the Yemeni genocide. Does this reactionary ilk actually believe that the mainstream workforce is going to accept neoliberal globalization coercing them to be globally competitive in a low-wage colony via TPP, the IMF structural reforms, the WTO, and World Bank loan sharks?
Wake up! America is being victimized by treasonous class warfare pulverizing the populations of a nation-state world. The anywheres against the somewheres. Sadly, nothing short of the imminent market collapse will engender political awareness.
.
Globalization looks to me like the Asian beetles laying waste to my grapevines and raspberries, or eurasian milfoil choking up the lakes, or ash borer killing 100% of ash trees, and so on down the line of apocalyptic denigration of the local biome, which idiot globalists never discuss. Which is a lot like global corporations destroying local economies and ecosystems, which most globalists act like there is no alternative.
Trump might be a pig man but I hope he buries globalization as we know it.
I do not think Trump is interested in Asian beetles eating grapevines, or eurasian milfoil choking lakes, or ash borers killing ash trees, or any apocalyptic denigration of the local biome so what makes you think he will deal with these aspects of globalization? I am just wondering how Trump articulates these concerns that you think he will take care of.
He does not care about any of that, surely. Nor do globalists. I would simply be quite happy to not have to deal with another wave of apocalyptic species laying waste to the North American biome, nor corporations with their extortionist investor state dispute clauses. Trump doesn’t have to care about such things to stick a fork in globalism.
Not really sure that he isnt just a globalist in disguise pretending to not be. after all who is economic team? Ross , Mnuchin, that tv guy? none of them have any back grounds that would say they understand the workers now do they? no they dont. and one has even admitted they have no idea what they are doing
Tarrifs arent a policy used by globalist.
But youll drive yourself crazy trying to figure him out
D, Trump is likely a part globalist, as I have never heard him say anything about foreign global corporate activity in America, treating America like we have treated 3rd world nations. The people you mentioned are all globalists, as are most others in his government. But the more he stands his ground on tariffs, the more his base loves him, and the more people like me smile, hoping he forces a conversation about Americans taking care of America – which the idiot imperial globalists running both parties and the media know nothing about.
If you have less material trade goods being shipped between continents, you have less opportunity for hitchiking invasive organisms to come in with the material trade goods, whether hiding in-among the packing and the pallets and the crates, or swimming in the ballast water, or whatever else.
Here is an interesting example I saw on TV about 10 or more years ago. Potted plants were imported from one continent to others ( I forget which in detail). In the soil of those potted plants was a certain kind of predatory flatworm which specialized in killing-eating earthworms. In certain areas, having these flatworms kill all the earthworms in low-lying areas led to erasure of all the earthworm burrows and water-logging of all the henceforth unburrowed and therefor undrainaged land.
Drumlin, about the only thing we need from other continents is coffee beans (which we might grow here in a few decades.) Otherwise, I say shut down most global trade, cancel all debt globally, and let all nations work it out whithin, and with near neighbors.
Can globalization be reversed? No. But it can be screwed with. Who knows what side roads it will take to avoid the age old nemesis of free trade capitalists. That being labor. Globalization would work, if it were managed correctly. I can’t believe anybody from the Peterson Inst. has the nerve, after 30 years of trashing this counry, to say globalization needs to be better managed. The first thing we must do to clear the way for better management of globalization is put the Peterson Inst. in chains, along with Robert Rubin and the Clintons – to name just a tiny fraction of the nitwits that brought us this totally one-sided capitalist version of “globalization.” The way to make globalization “work” is to start at the bottom, start with labor and let the benefits of this clever idea trickle up. It will never work any other way.
“Can globalization be reversed? No.”
Please explain further. With or without the good offices of the Peterson Institute [are you sure it is the only such institute to concern yourself with?] — what kind of non-one-sided capitalist version of “globalization” do you envision? You suggest ” start with labor and let the benefits of this clever idea trickle up”. I’m not clear what you mean. Please elaborate your vision. I start from the standpoint that labor, skilled or “unskilled”, educated or “needing education”, has very little to gain from Globalization in any form which I can imagine for it. Do you mean some kind of global cooperation? [I feel better with a term that carries less baggage with it than “Globalization”.] With respect to your vision of a future for a new “globalization” — How would you address the decline of world petroleum
reserves and their impacts on global trade?
Something like this. Trading for what? In my mind the world does not need much international trade at all. Nations must import the resources they don’t have or create an economy that doesn’t use them. Trade is theoretically a reciprocal thing – but there is nothing reciprocal about labor arbitrage. I believe that international trade is 90% unnecessary and the cause of much of our industrial pollution. But globalization is mostly a communication phenomenon – which is necessary and is a very good thing. Communication results in cooperation. So less trade in superfluous goods but more communication for starters. This eliminates the multinational labor arbitrage overreach that middlemen play so expertly. And it would clear the way for good, coordinated labor laws in an international balance. As far as the decline of petroleum goes, it is also a question of communication and cooperation and will require a global effort to both ration and replace. All hands on deck.
Globalization was politically and legally engineered into existence. Globalization can be politically and legally de-engineered back out of existence. It is like finding and dismantling millions of mines and IEDs and booby traps carefully hidden over millions of square miles. It would have to be done methodically and carefully.
The “localist” classes would have to conquer Domination Power over some countries FIRST and begin the deglobalization project within those countries FIRST. That is my feeling, at least.
Perhaps Trump is the wildly swung tire iron which can disorient the globalists enough withIN the United States to where better smarter re-countrificationists can take power and begin methodically unplugging America from the Corporate Globalonial Plantation and begin restoring economic self-production for self-consumption and self-supply from within this country for within this country.
Suppose that wages were to actually converge – no wage-arbitrage by off-shoring. What would that do to global trade (globalisation)?
What’s the old “economist” joke? “Assume a can opener”?
“In the area of finance, financial flows led to the Asian crisis of 1997-98 and the global financial crisis of 2008-09, while their impact on growth is slim at best.”
This is why I love economists. They’re such comedians!
Sorry — I can’t laugh at such jokes — they hurt much.
Know any better jokes? I need a good laugh.
Not sure about any real policies to deal with displacement from globalization ever being funded, or being more talked about. while education can help. but not every one can get PHD every few years (or can afford it, and since states stop funding of colleges now days replacing that with loans). but there is also the question of education in what? since it does take time and money and effort to get it, its not like a lot of those get education only to find those jobs are gone too. now what? and while every one might be able to enroll, not every is going to be able to get a PHD. no matter what some think
Really could pick the eyes out of this one, but a couple of notable comments should suffice
Migrants pay taxes which fund stuff? Claptrap! Federal taxes within a currency issuing sovereign country pay for nothing – how many times does this need to be explained? Unless populating previously unpopulated lands, migration simply allows an exchange of ideas to the host which will enrich economies over time at the expense of other economies. The GDP impact (if you want to use that measure) is null over time. Read Keynes on this point.
Trade of materials and services is not globalised. World trade has been and is broken up into trading blocs since time immemorial aided by a myriad of so called free trade agreements between these blocs and various countries. Tariffs and quotas are just another wrinkle to the imposition of manipulated global trade (think World Bank and IMF). Free trade? Meh! What the author seems to conflate as free trade is the unrestricted movement of capital (part of which facilitates trade) but most of which is just flipping currencies around the globe earning clip for Wall Street type parasites. The financialised World economy if you will.
What will be the result of the Trump tariffs, hangers on economies and the China/EU blow back? Not much, it’s business as usual.
Our leaders take advantage us because we are backward and gullible compared to other developed nations. For example, America is the only nation without a VAT to mitigate the wrath of transnational dumping. Under the guise of lifting tariffs, transnational predators inverted them to recycle finish goods from slave-wage sites, including the prison slavocracy. Whether via offshoring or domestic exportation of work from the formal economy into the corporate gulag, taxpayers are subsidizing an illegal dumping practice against themselves via slave-production arbitrage.
This must accompany basic income, which is merely QE for the people. Even many oligarchs know there will be a civil war if automation continues to be applied for capital dispossession. Once again, this income is monetized via conjured money.
Third, is reimplementing antitrust laws before monopoly absolutism destroys every vestige of entrepreneurial liberty.
I believe these parasites wish to strip every tangible asset via vapor liquidity and feudalize the planet by having the IMF pretend to rescue the economy from the ensuing disaster. The IMF gangsters operate out of the Treasury Department and betoken the problem, not the solution. This would foreground austerity to trigger the LBO strategy for hostile takeovers that corporate raiders popularized in the Eighties.
This is all emblematic of neoliberal globalization. There was no disaster capitalists or structural adjustments or reliance on offshoring before corporate globalization began playing on the other side of the ledger via debt-leveraged extraction.
Actually, the purpose of the trade war is to further impoverish those of us who can’t afford to consume overseas and further enrich those who can.
What was the biggest problem for globalisation?
The economics, neoclassical economics.
It was corrupted at birth and has never worked well in the past. Its last use in the 1920s led to the Great Depression.
The 1920s roared with debt based consumption and speculation until it all tipped over into the debt deflation of the Great Depression. No one realised the problems that were building up in the economy as they used an economics that doesn’t look at private debt, neoclassical economics.
The two elements of neoclassical economics that come together to cause financial crises.
1) It doesn’t consider debt
2) It holds a set of beliefs about markets where they represent the rational decisions of market participants; they reach stable equilibriums and the valuations represent real wealth.
Everyone marvels at the wealth creation of rising asset prices, no one looks at the debt that is driving it.
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png
The “black swan” was obvious all along and it was pretty much the same as 1929.
1929 – Inflating US stock prices with debt (margin lending)
2008 – Inflating US real estate prices with debt (mortgage lending)
The old political economy of the classical economists considered national interests and would have ensured the West didn’t create a new multi polar world, whilst undermining itself.
The broad political economy of the classical economists was replaced by a new, narrow economics, neoclassical economics. Western investors and companies found they could make more profit with China’s low wage workers and this is what they did until they had created a new multi polar world.
That’s not the only thing that went missing.
The early neoclassical economists hid the problems of rentier activity in the economy by removing the difference between “earned” and “unearned” income and they conflated “land” with “capital”. They took the focus off the cost of living that had been so important to the Classical Economists to hide the effects of rentier activity in the economy.
It looks like rentier capitalism because that’s what it is due to the economics.
If globalisation had succeeded it would have been a miracle.