The Inanity of “Globalization”

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Pundits from both right and left are inveighing against globalization. The right knows that it undermines national security by making supply lines depend on remote sources, including frenemies like China. An example is the furore over including high-tech products from China’s telecom giant Huawei in the backbones of global next-generation “5G” communication systems. More recently, globalization left our nation and many others without control over their responses to the Covid-19 pandemic, due to unreliable foreign supplies of masks, other PPE, tests, testing reagents, and ventilators.

The left had begun the push against globalization much earlier. It did so after China and other low-wage foreign nations had lifted nearly a billion people out of extreme poverty by giving them the jobs of Americans and Europeans, using borrowed or stolen Western technology. That immense foreign drain of jobs and technology, unprecedented in human history, also contributed to the election of Trump as president, to Brexit in England, and to a global rise of authoritarian leaders in erstwhile or would-be democracies.

The wonder is that it took everyone so long to see the light. We’ll get to why later. But for a moment, let’s just probe the inanities of globalization a little more.

New Zealand and Australia are island nations remote from the rest of the civilized world. Yet New Zealand sells lamb all the way to China, England and Northern Europe, although sheep once grazed on the “backs” of world-famous colleges in Cambridge. Australia exports coal, bauxite and iron ore to China and Japan, which make metal, cars, appliances and gadgets to export back to New Zealand, Australia and all around the world. Africa flies flowers daily to England and Northern Europe, where they could easily be grown in hothouses or in closer Southern Europe.

These are only selected examples of gross inefficiency and waste, of fuel, ships and aircraft. Parts made in the US and Europe also get flown or shipped halfway around the globe to China and Japan, where they’re assembled into much heavier equipment, including cars, railroad wagons and aircraft (or parts thereof), to be shipped back again, halfway around the globe, for sale and use, or sometimes for further manufacturing and global distribution (as in the case of wings for Boeing and Airbus aircraft).

This global distribution of manufacturing, and the global dispersion of its products, is powered partly by coal and partly by the most efficient and least polluting fossil fuels—oil and natural gas. Unfortunately, the latter two are rapidly running out, most likely during the lives of children living today (click here for oil and here for gas). This overuse of dwindling resources is happening in a world that, due to burning those selfsame fossil fuels, is heating up faster and faster, likely well beyond the temperature regime in which our species evolved.

And these are just the inefficiencies of economics and fuel. They pale beside the social and political “inefficiencies.” The maldistribution of manufacturing labor to low-wage countries like China has led to vast labor surpluses in the “developed” world. The result has been plummeting standards of living, social and political upheavals, and illiberal authoritarian governments everywhere from Italy, Poland and Hungary to the United States.

This is not to mention China itself, where the fear of losing middle-class prosperity, so recently and dearly won, has led its supreme leader to declare himself president for life, to intern a million Uighurs in concentration camps, and to exploit the recent pandemic to justify a level of high-tech surveillance, control and repression that not even Orwell could have conceived.

It gets worse. Under a global system of “just-in-time” supply, materials and parts for manufactured things are provided only as, when and if needed. In theory this system avoids waste and oversupply. But—especially when vital parts are distributed globally—this system also makes supply lines fragile and prone to disruption, by such things as natural disasters, man-made catastrophes like Fukushima, and pandemics like Covid-19. The world learned this system from Japan, which calls it “kan-ban.” But the world is infinitely larger and more fragile than Japan, a geographically compact, culturally homogeneous and socially stable island nation.

Wouldn’t it be far better to mine, farm, and make things closer to where they are consumed, and to do so with local workers? Then we could pay workers local wages. Then workers could receive local benefis; they could also influence how, when, where, how well and whether the work is done. And really vital things, like basic foodstuffs, energy, and critical supplies needed to survive pandemics would be made as needed, much closer to home.

So “cui bono?” as the ancient Romans used to ask. “Who benefits?” Someone besides powerless Chinese peasants has to have gained for such an irrational system to have taken root worldwide and lasted until the present pandemic made its inanity self-evident. (Some might even add an “s” and say “insanity.”)

By now, the chief beneficiaries of modern globalization are now crystal clear. They are the Western oligarchs who sold their technology, factories and the jobs of tens of millions of their local workers to China and other low-wage countries in exchange for a share of profits. Stripped to its essence, what they did was profit obscenely by arbitraging the wage differentials between rich and poor countries. No one ever asked them whether their workers’ livelihoods were theirs to sell, or whether their doing so looked more like long-banished feudalism than modern “capitalism.”

The oligarchs are few and their workers were many. So the few needed help. They got it from whole classes of what Lenin—who established an entirely different but even more destructive system—called “useful idiots.” In the oligarchs’ case, the useful idiots included a class of free-market cheerleading economists, who got so distracted by shiny abstractions as to take leave of common sense, let alone any scientific proof of testable hypotheses by observation or experiment.

But as we all know from the history of global warming, theoreticians—even those who really are scientists—don’t control anything by themselves. To implement their plan of globalization, the oligarchs also needed a class of powerful co-conspirators.

Enter the bankers. To understand their role in all this, you need only peruse a recent op-ed by one Ruchir Sharma.

Although its title is misleading, it’s not a bad piece of economic reporting. It catalogues, at more length than I’ve done here, the many ways in which economic cause and effect had already started strangling globalization long before the pandemic provided the coup de grace. So the piece is worth a read for its factual reporting alone.

But it’s also worth a read for an entirely different reason. An aura of paradise lost underlies almost every sentence, especially this one: “Nations have been erecting barriers to the free flow of people, money and goods, even as the flow of internet data has continued to rise rapidly.”

As the byline reveals, the author Sharma “is the chief global strategist at Morgan Stanley Investment Management.” In other words, he works for one of the global banks that invented globalization. Morgan Stanley was one of the first big banks bailed out in the Crash of 2008, after Lehman Bros. had been allowed to fail.

Not only did men like Sharma (almost all his ilk were men) profit astronomically from globalization. They got to travel all over the world, living the high life while making deals and playing masters of the Universe. At they same time, they were selling out their countries, their neighborhoods and their nations’ workers. If you want to know the reason for the global rise of nationalism and “populism,” which was indeed well under way before the pandemic hit, you need look no further than that.

For those of us in the West who are neither bankers nor oligarchs, globalization has been an unmitigated disaster, especially in the United States. For the last century, we have been the most inventive and innovative nation on Earth. Yet globalization has taken our new technology and sold it abroad, depriving our own workers of a decent living. It also has deprived us of control over our own technology, its use and development, and of continuing management of our manufactures and commerce. It has put our patented chips on planes and ships and brought us back iPhones made abroad in a firm called Foxconn, by Chinese whose lives were so miserable that, for a while, they began jumping off the balconies of their high-rises.

Now globalization has left us Americans with an economy based 70% on “services.” What does that mean? It means that our future depends on us giving each other haircuts, correcting each other’s ill health, suing each other, accounting for and managing the wealth of the 1%, or becoming fiction writers or artists. (The oligarchs don’t much like news writers because they open ordinary people’s eyes. Hence Trump’s relentless insults.) Now we can’t even provide ourselves with enough masks to protect ourselves in a pandemic—dollar commodities that anyone can sew!

No, globalization is not the best of all possible worlds. We can be a lot happier and more prosperous, on the average, if we have things made, mined and farmed closer to home, by the people who use, smelt and eat them. Then—perhaps with a little help from rifle-shot tariffs targeted at international wage differentials—the workers can make living wages. They can work under conditions appropriate to home. They can have some influence over what is made, mined and farmed and how the pollution from doing so affects their local communities, let alone the globe and its climate. Then the gross waste of energy and time in transporting raw materials, parts and end products all over the world in the very process of their manufacture can be minimized.

Then supply chains can become reliable again. If things go awry, help will be available from the next state or even the next county, not from another continent.

Will prices go up? Probably. But they won’t rise nearly as much as will our workers’ wages and satisfaction, or our collective, democratic control over our industry, its development, its pollution, its purposes and its use. And in hard times like the current pandemic—or in the throes of global food insecurity surely to follow—we will have control over our own supply chains. We won’t be last in line for test kits, test swabs, ventilators, masks, and other PPE. Our industry and commerce will be infinitely more agile, fairer, equitable and local.

How do we know this is possible? Because we are already doing it, at least where globalization has excited the right-wing’s fears. We Americans are in the process of excluding telecommunication giant Huawei from access to American high-tech components and markets, and we are pressuring our allies to do likewise. We are trying, belatedly, to bring some mask, ventilator, vaccine and test production back onshore so that our deadly and embarrassing response to Covid-19 doesn’t continue or get worse.

For a species that evolved in clans of around thirty or so individuals, all this return to localism will feel much more like the heart’s desire. And as our key institutions get more compact and more local, there will be far less pressure to tolerate, let alone re-elect, useless, incompetent blowhards like Donald Trump. Can you imagine any town or midsize city tolerating such a man as mayor for more than a year or two?

The final irony is centralism. During the last century, “capitalism” beat Communism hands down over the issue of central control. Communism’s final ignominy may have come when a pipe in the Soviet centralized heating system for the entire city of Leningrad broke in midwinter, causing several aging “Heroes of the Soviet Union” to freeze to death in their beds.

Now we have similarly constructed a centralized system of manufacturing for the entire globe. China makes one-fifth of what the whole world uses, mostly in crowded, polluted cities like Guangzhou. It makes 50% of the medical masks needed to fight Covid-19, while having only 18% of the world’s population.

So China has become like that centralized heating plant for the entire city of Leningrad, but for the whole world. When a pandemic hits the “world’s factory,” supply lines everywhere shut down. That is what Covid-19 has taught us and, to our chagrin, is still teaching.

To see how much our own “globalized” supply chains look like Leningrad’s centralized heating system, consider how meat moves into and within our own country. Under NAFTA (and now the USMCA) cattle from Mexico, Canada and all over the US come to our own huge feedlots to be fattened up and turned into beef. From there the meat goes all over the US and all over the world, including tongue to Japan.

Centralized facilities to fatten and slaughter cattle and cut them into meat create a lot of trade and profit for the corporations and oligarchs that own the feedlots. But they also create three big problems. First, their concentrated waste runoff pollutes land, waterways and aquifers. Second, their concentration of thousands or tens of thousands of animals increases the risk of disease and so the incentive to overuse antibiotics, thereby causing “superbugs” to evolve. Third, as we know from our own recent experience, the concentration of workers at close quarters in mammoth centralized slaughterhouses creates ideal conditions for the spread of a pandemic like Covid-19. When that happens, a large part of the nation’s meat supply may shut down. (At present, we elide the question whether our species should be eating so much meat, which is also a major cause of health problems in developed nations and a major factor in global warming.)

Who benefits? The big corporations that own the centralized feedlots and their shareholders. Who suffers when things go wrong? The farmers that sell them their cattle, the workers who lose their jobs (and get sick), the people who live around the feedlots and have their air, land and water polluted, and the people who depend on these analogues to Leningrad’s city-centralized heating system for food.

How far from common sense is all this? Remember the age-old advice “Don’t put all your eggs in one basket”?

The answer to the globe’s increasing population is not to rebuild the world’s economy on the model of Leningrad’s heating system. It’s not to make our global food chain even more complex, centralized and fragile than it already is, or even more dependent on industrial-scale agriculture, chemicals and antibiotics, with all their pollution and superbugs. It’s to spread things out.

During this new century, humanity must redistribute production, jobs, research, innovation, revenue and pollution equitably and thoughtfully worldwide, with each locality democratically fixing its own fate. We must make supply lines as local as possible, using our species’ seven billion and still-exploding population to avoid diseconomies of scale. That way, if supply lines or supplies fail, only a single city or region will suffer, not whole continents or most of the world.

We’ve also got to reconcile our complex economy with our biological and social evolution, which makes us most comfortable working and living in groups of thirty or so, with whom we can interact directly. We must exploit high technology and automation to rebuild farms, factories, supply lines, industries, towns and neighborhoods more to human scale.

The Internet can help make all this possible, if we just regulate it enough to drain its multiple cesspools of lies, including Facebook, which has reportedly refused to control lying in paid political ads. For the Internet can spread productive ideas and technology worldwide without forcing centralization of their use.

We can, for example, use the Internet to establish a global regime of intellectual property, enforced equally worldwide. Then inventors and innovators from anywhere can allow any locality, anywhere, to exploit and develop their technology, in return for agreed-on or socially determined remuneration. There need be no national hoarding of technology (apart from the sensitive fields of warfare and spycraft) as long as innovators get paid. Then manufacturing can proceed, or not, in each locality according to its local needs and wishes, just as solar arrays and windmills promise cheap, sustainable, and “distributed” production of power everywhere, at neighborhood scale.

Yes, the world is indeed changing, Mr. Sharma. But the change is something that no one should lament—even bankers. It will bring global and continental economies back under local control, at a neighborhood scale compatible with human evolution. There may be fewer masters of the Universe able to frolic globally, wasting jet fuel making deals while waxing obscenely rich. But hundreds of millions will lead far more prosperous and satisfying lives, working at their own paces under their own local conditions and local governance, with living wages at local scale, and in accordance with their local communities’ consent and needs.

Who knows? Distributed rather than globally centralized production might even foster more rational and predictable politics. As a leading American pol once said, “all politics is local.” Why not productive activity, too?

Scale: The South Korean Parable

As we distribute and localize production of electric power and tangible things, we have to manage scale. We can’t have every block in a neighborhood making its own cars and medicines, can we?

The answer depends, of course, on what’s being made and how complex it is. Cars are among the most expensive, complex and difficult consumer products to make. So assessing the right scale for their production will help put de-globalization in perspective.

By sheer coincidence, I got a good idea of that scale in 2005, when invited to an international conference in the Gangnam District southeast of Seoul, South Korea. (For a brief description of this sub-city, click here and search for “southeast”.) Suffice it to say that this sub-city was modern, gleaming and impressive. Its main street had five lanes on a side, surrounded by glass and steel skyscrapers emblazoned with the names of multinational corporations.

Modern, well-waxed cars, nearly all of Korean vintage, filled those ten lanes. Whether due to patriotism or price concessions, apparently South Koreans drove mostly cars of local vintage—one of the two brands Hyundai and Kia now familiar to most Americans.

South Korea’s population is 51.3 million today and was 48.7 in 2005. So let’s just say 50 million. That small population was able to support a high-quality, two-brand, multi-model auto industry powerful enough eventually to penetrate American and global markets.

If we take that number as an approximate scale for car production, we can estimate how distributed car production worldwide, instead of globally centralized production, might work out. The US might have thirteen car companies, with perhaps one just for California. Europe might have fourteen, Japan and Russia five each, and China 76.

But in a de-globalized world, each company would produce cars especially for its region. California’s cars might have surfboard racks convertible into ski racks for winter. New England’s cars might have snow plows, snow tires, and robust anti-skid traction control. Texas’ cars might have cattle guards, beefed-up air conditioning, and larger-scale speedometers.

The point here is that local production is not merely possible. It might produce vehicles closer to the heart’s desire everywhere, as well as better pay, more satisfied workers, and a more equitable and therefore stable distribution of industrial wealth.

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