Welcome to the ‘Great Undoing’
Globalization has found its fortunes radically shifted thanks to President Trump.
For some 30-odd years, the world and the United States have experienced unprecedented globalization as we attempted to build what was often termed “an integrated global economy.”
I was at the very epicenter of it all, on Wall Street, in capital markets, then at the State Department, the United Nations, and in Davos.
I even contributed to a tome during the Clinton years, The Global Century, which argued for the benefits and inevitability of the processes of globalization.
But has it been an altogether positive thing? Did it work out well in all regards—and for everyone? For America and most Americans?
Or is there a counter-argument?
This may be the major inflection point in modern American history. Trump has taken on China and the globalists and is turning back the past 35 years.
Are the serious and considerable costs associated with such rapid and widespread globalization now outweighing the supposed benefits we were sold—or oversold?
What if it was all wrong? Misguided? And against our long-term national interests? What if it benefitted only a very few and large transnational corporations? What if it empowered a powerful elite that couldn’t care less about real people, in real places, making real things?
“Globalization,” of course, refers to the global economic integration of many formerly national economies into one global economy, mainly by trade and capital mobility, but also by uncontrolled migration.
Lying, Cheating, Stealing
Globalization, truly a borderless world, was driven primarily by four forces: trade, transportation, communication technology, and media.
These forces have combined to make the logic and scale of globalization very strongly felt, indeed unquestioned, until recently.
Globalization has now come under full attack—from the Right and the Left—and its defenders are admitting there were always downsides and risks, as well as winners and losers.
The globalist business model now has been thoroughly questioned and exposed for what it is.
Donald Trump disturbed it, just like he has disturbed about everything else that’s been too comfortable in our assumptions.
For him, the prime beneficiary of globalization—China—is an example of state capitalism, where a gangster, big government run by the dictatorial and corrupt communist party is totalitarian, mercantilist, and surveillance-prone. The Chinese steal intellectual property and force technology transfers, cheating their way to the place they have arrived as a result of globalization.
China most certainly is not a free trader. It games the system and it has played the rest of us, like a violin, for more than three decades.
No longer.
Breaking the Wave, Turning the Tide
This may be the major inflection point in modern American history. Trump has taken on China and the globalists and is turning back the past 35 years.
The deindustrialization of the American heartland, thanks to globalization and the outsourcing of many millions of American jobs is over.
The widely respected chief international economist of Morgan Stanley recently put forward a “tentative thesis” that 2013 might prove analogous in some respects to 1913 when the last wave of globalization ended.
He pointed to the rush of liquidity into emerging markets (fuelled by Western monetary policies after the 2008 financial crisis)—a trend that is now clearly reversing—and the recently growing evidence that many Western companies are repatriating parts of their production processes.
This is a big deal—a very big deal!
What we are witnessing with President Trump at the helm of an America First paradigm, is nothing short of the reversal of globalization.
The reversal of the situation in the plot of a tragedy is called the peripeteia.
According to Aristotle, the change of fortune for any hero should be an event that occurs contrary to the audience’s expectations and that is therefore surprising, but that nonetheless appears as a necessary outcome of the preceding actions.
Globalization has found its fortunes radically shifted thanks to President Trump.
Winning the Trade War with China
As a recent report from the audit firm Deloitte suggests, “In recent years, optimal supply chains were designed, in principle, for standardization and cost-efficiency. But as the next wave of globalization is characterized by change and uncertainty, many businesses are finding their supply chains to be less than fit for purpose.”
Look for “made at home” and “grown locally” labels and jobs moving back to the heartland.
Firms are leaving China in droves at this very moment.
The report goes on to say, “We know that successful global businesses now construct supply arrangements that encourage adaptability and flexibility; supply networks of the future will be designed to anticipate changes and respond to them accordingly.”
That is “management-speak” for repatriating the making of goods and services. It is underway—on a large scale, which will only grow in the months and years ahead.
A recent McKinsey Institute report actually found that the proportion of global economic output reliant on trade has been in sharp decline since 2007.
Now the trade war with China is shifting everything. Low-wage countries present no compelling argument in an age of automation and artificial intelligence.
The Revolt Against Homogenization
Trade growth has slowed markedly and international financial flows stutter. The old globalization game is over. The data show this in spades.
The negative impacts of globalization, rarely mentioned in the past, are now the focus of much attention—pollution, unfair competition, poverty in many countries and regions, and a system where working and middle classes have been screwed, with wages stagnant or in decline.
The unseen effect on the culture from globalization should not be discounted, either. The spread of global logos and brands has led to a homogenization and sameness that is unbearable. It has particularly hurt small businesses and local producers, in America, and elsewhere.
Big does not always mean beautiful.
The flow of the free movement of people is also ending. Learn from Brexit, Italy, Eastern Europe, and again, Trump.
Globalization has also enriched a tiny, fractional global elite at the cost of the general public, and especially the middle class, which has been decimated.
As the Gatsby Curve shows, America has become the most immobile society in the developed world. It is literally a Dickensian Tale of Two Cities—a kind of ZIP code capitalism, where 80 percent of our citizens struggle to put food on the table and haven’t saved even a mere $400, while the top bracket accumulates all the wealth.
Most dramatically, globalization has effectively eradicated the nation-state as a political unit. It has fostered the domination by faceless, unelected bureaucrats, the deep state, and international bodies such as the United Nations and the European Union.
Watch as the world now de-globalizes. The Great Undoing has commenced, and it will have many and profound consequences.
The editors of the Financial Times may be shedding tears, as is the Party of Davos, but the rest of the world and popular sovereigntists should be cheering loudly.
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