Curious Capitalist

Foroohar: Is Globalization Over?

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A fascinating piece today in the FT’s comment and analysis section made the point that there’s a sea change happening in world trade. For 30 years, it’s been growing twice as fast as the global economy itself. Now, for the second year running, it looks like that won’t be the case. So, what’s up? Is globalization over?

What I’d say is that it’s changing, profoundly. As I wrote in a story called “Go Glocal,” back in August of 2012, the coming period of slower and more volatile growth in the global economy has led to a situation in which countries are circling the wagons. Trade complaints are up, and there’s a fear that protectionism may become more common (a fear that has been much discussed since the financial crisis, but hasn’t yet fully come to pass). Certainly, the government shutdown that derailed US participation in recent Asian trade talks didn’t help matters. While we were trying to get a debt dealing, the Chinese were busy pushing their own trade agenda in Asia.

But there’s also good news is this new trade trend. The recent renaissance in American manufacturing that my colleague Bill Saporito and I wrote about recently means that more of what we produce in this country is staying here at home. The same is true in places like China, which are developing more of their own consumer spending cultures. As I have been saying for some time, I think we’re entering a new era of “localnomics,” in which growth will be driving more by local ecosystems than by unfettered global trade. If that means more consumption and job creation here at home, then maybe the global trade slowdown isn’t a bad thing.

3 comments
Whatanotion
Whatanotion

What seems to be becoming "over" is wild west capitalism.  The "there ain't no free lunch" paradigm seems to fly in the face of over-production of food and goods over and above the capability of demand to consume that productivity.   "Over-Capacity" is heard more and more in economic discussions.  What does seem to be in the offing on the positive side is the possible recognition that the definition of productivity can "morf" to take on new definitions.  Just as a grub eventually becomes a butterfly so can an economic system mature into something far different than its beginning. 

Yoshi
Yoshi

Over? Doubtful. What of the semi-secret negotiations going on with the trans-Atlantic trade pact?

smjhunt
smjhunt

Globalism may be slowing down but the other job eliminator, technology, is still ramping up.  A lot of those localnomics cases got their business justification from advances in technology allowing them to hire much fewer workers than they did when the products were last produced locally  (look at the textile industry in the South as an example).