Why our supply chains will shorten and we might keep baking our own bread after COVID-19.
If you’re reading this right now, you’re likely trapped inside because the Chinese Communist Party failed to adequately regulate a wet market. The absurdity isn’t lost on anyone.
Pandemics are inevitable and can start anywhere. Spanish Flu was the first modern pandemic, but its effects were overshadowed and obscured by the first World War. COVID-19, in its broad effects on production and critical supply chains, reveals for the second time in the 21st century the sheer fragility of the global economic system.
If you remember anything from introductory economics in high school or college, it’s that wealth is created through exchange. Globalization is good because different countries have different comparative advantages in making different things. That’s why global GDP in 2018 was 28 times higher than in 1970. It’s why you can buy groceries for well under 15 percent of your income where it cost Americans close to a third of their income in 1950.
This development has arisen from an enormous decentralization and reallocation of production across the globe. The parts in your sneaker or your desk were likely harvested and assembled in dozens of different locations thousands of miles away from each other, and involved hundreds of different skillsets. This the beauty of the global marketplace, this is the decentralization that makes us rich. It’s also what makes us so incredibly vulnerable.
What we’ve always known but somehow are just beginning to understand is that the prosperity we’ve created is painfully and incontrovertibly linked to real precarity.
More than ever your life is determined by people you will never meet, whose incentives you don’t know, and whose values you may not share. A critical portion of our food supply is harvested by undocumented migrant farmworkers, remittances from the United States and other nations comprise over 10 percent of the Philippines GDP and stimulates consumption among their middle class, circuit boards for ventilators are manufactured in Malaysia and China, vital pharmaceuticals are manufactured in China. All these relationships are strained by this pandemic. What we’ve always known but somehow are just beginning to understand is that the prosperity we’ve created is painfully and incontrovertibly linked to real precarity. We’ve built glittering skyscrapers on beds of quicksand.
You can’t protect your child from pornography if you live in a neighborhood where all the parents aren’t doing the same. You can’t protect your country from pandemics if you are in an international community where all governments aren’t following the same standards of health and transparency. If you find out that your neighbor’s kid showed your son and his friends a dirty magazine, you can talk to all the parents at a PTA meeting and come to some collective parenting agreement, and if that fails you can decide that the people in this town just don’t share your values and that it’s time to move. In a global economic system, we face similar choices. Are we going to find a way to ensure shared cultural norms and rules with our partners? Or are we going to be pickier about who we enter into critical trade relationships with?
Many leaders will see this as evidence that we need to continue the project of creating a rules-based international order, that without shared liberal norms of transparency and accountability, we can’t work together. Former Bush administration official Bradley Blakeman is calling for an “international coalition to investigate China’s food safety and health protocols.” The neocons and the foreign policy establishment will likely echo such calls, arguing that global threats can only be serviced by our global institutions. They think the international order can work like a PTA meeting.
But after a decade where human rights abuses in Syria and China were met unaddressed, where our democratization projects failed, where international climate agreements failed to adequately curb our emissions, where nuclear deals have faltered to the whims of an administration, where an attack on the sovereignty of Ukraine’s border went unchecked, where China’s cheating and currency manipulations were unchallenged, where Israel’s illegal settlements went unsanctioned, it has been reaffirmed that the international community is not like a real political body with shared and internalized legal norms. It’s a jungle dominated by realpolitik and power games, and we have spent the soft power we do have on a brief unhappy stint with international military hegemony, which is rapidly coming to a close.
When we cannot coerce those whose actions affect us or otherwise come into meaningful agreements with them, our other options are to redefine, narrow, or exit the relationship. As global trade continues its slowdown for the second year in a row, as calls for “fair trade” are heard on the left, and as political pressure mounts to take punitive measures against China, this is the path we’re on.
After a financial crisis where an American housing bubble tanked the world economy and a pandemic where the Chinese government’s irresponsibility and lack of transparency will cost lives and grinded the world to a halt, it appears we have reached a peak precarity. We have encountered the exposure, the material insecurity that integration into such a large economic community brings us. We’re going to start leaving what the economists call “dollar bills on the sidewalk” on the sidewalk and opt for some security. Even where there are gains to be made from trade, we may not exploit them as readily as we did in the last wave of Globalization; our risk calculation has changed.
There’s going to be enormous political pressure to repatriate critical industries, to continue our independence from foreign energy, to strengthen our borders and travel regulations, and to disentangle our monetary value from the hands of a strategic competitor. Private firms will seek to shorten their supply chains. The promise that trade deals are going to help consumers are going to continue to ring hollow as our identities as “consumers” become less and less salient.
Perhaps the pandemic is accelerating a shift to more intimate and less regulated forms of economic life.
I predict that as our systems becomes slightly less global, our politics will become slightly less national and our tastes more parochial. You might see these trends already. We see the explosion of DIY on Youtube, banks are doing campaigns to buy small, farmer’s markets and main streets are making a comeback, the small craftsperson and the amateur artist are empowered by Etsy, Instagram and Patreon. Trapped at home, people are trying to start vegetable gardens and baking their own bread. Some fortunate people are finding that their work was possible from their home in the suburbs, without the long miserable commute. People are scheduling appointments at their barber’s house — and barbers are finding out that they can pocket all the cash. Some habits will stick. Perhaps the pandemic is accelerating a shift to more intimate and less regulated forms of economic life.
Globalization isn’t going away; but where the Globalization of the 20th century was built around trade liberalization through the coordination of states, the globalism that will likely persist or grow in the 21st is the coordination of peoples, localities, businesses and even the personalist relationships between elites and world leaders. Non-state actors, some transnational movements along un-activated lines of class and common interest will be engines of political and cultural change. The exchange of culture and ideas will continue to accelerate through the internet. At the same time, leadership from western states will fade as our appetite for foreign engagement drops and as the fiscal realities of successive rounds of debt, stimulus and loose monetary policy come to roost. Meaningful opportunities for the United States and western nations to protect human rights and create a rules-based order will be squandered because the will and the means do not exist.
Whether the Globalism of the 21st century is able to address the climate crisis, to protect refugees, and to service emerging youth bulges in parts of the world with little economic or political capacity remains to be seen.
Like the last wave of Globalization, this shift is going to have both pretty and devastating effects. Unlike the last Globalization, these changes are likely to be steady as to be immediately imperceptible; only down the line will we realize what has happened. Where the last hundred years have been dominated by the pursuit of wealth and prosperity, the hundred we’re in is being decided by the politics of precarity.