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The End of Globalization
SOCIETY AND POWER - 22/01/2023

The device you use to read this was sent over 100 borders before it reached your hands. Raw materials were extracted in central Asia so that individual components could be manufactured in Taiwan which used machinery from central Europe to meet design specifications that were drafted in South Korea, China, or the US to reach final assembly in east Asia and made compatible to run on operating systems designed in the US. Components used in a single iPhone rely on over 200 individual suppliers. To say that your device had to make over 100 border crossings before being unboxed is probably an understatement.


This complex web of commerce was achieved through the process of Globalization. Safe shipping lanes and a global commitment to international trade made this all possible.
Global trade is nothing new. However, these early globalization trade networks lacked safe and secure passages. Piracy and kleptocracy made foreign trade incredibly expensive and risky. Global trade was isolated within specific European empires. The English, French, Spanish, Dutch and Portuguese, all had their own trade networks and rarely traded with one another. They would steal from each other during times of war which happened often. The lack of cooperation between European powers made it easier for pirates to roam in the Caribbean and Mediterranean seas.


If ships could evade pirates, their cargo may still be plundered by rival nations. It was quite common for competing European powers to steal each other´s cargo. Clashing colonial powers would make foreign trade unreliable, and in turn more expensive. This would be the norm of global trade, until 1945.


By the end of the second world war, there would be only two global powers, each with their own sphere of influence. But unlike the USSR, the United States would emerge as the world’s sole naval power. While the Soviets would hold eastern Europe and central Asia, America would have the oceans. All of them.


When Western Europe had their turn with controlling the global oceans, that power was used to exclusively enrich the mother country. A mix of colonization and state sponsored monopolies were all designed to generate wealth for the homeland. When Americans took control of the seas, they had a different idea. With idea to substitute traditional colonialism with financial colonialism, the United States decided to use their naval superiority to grant free trade across all nations, including their very recent enemies.


Everyone – except communist nations - could participate in this new, free global trade network. The high cost of providing a global navy to keep shipping lanes safe would be an investment entirely by the Americans, as also the major profit also went to USA. There was only one catch to participate in this free global trade network: you would have to be firmly anti-Soviet. Despite this geopolitical mandate, a new era of global trade was unleashed. The days of cargo ships being stolen by rival nations or pirates was over. If your country lacked natural resources or food, it could now be easily imported without needing to bow to a European colonial master.


And this was just the beginning. The free trade network would eventually be opened up to China in 1979. The golden age of globalism flourished. It spread fast over the World and when it reached the peak in 2019, there were barely no more self-sustained, commercial independent country on the Globe. And then came COVID. And some apparently small occasions – with tremendous impact. Like Evergreen, a containership who got stuck in the Suez channel and blocked trading in weeks. Or a local war, Russia invaded Ukraine February 2022 and soon most of Europe were short of energy and facing high inflation. Or the misgovernment by leftist politicians in West energy and environmental politics which made the major impact of the problems Russia was blamed for. Finally the Globalism backlashed and paralyzed the World.


After 70 years with economic development and innovations, a rather abrupt slow down and deglobalization will lead to deindustrialization, deurbanization, and even depopulation. Europe will face several challenges like aging demographics, energy dependence vulnerability, and lack of access to industrial materials. Africa and India will have numerous problems, including the most existential one, the ability to feed its citizens.


Instead of cheap and better and faster, we're rapidly transitioning into a world that's pricier and worse and slower. Famines will return. Likely people will starve to death, and many will suffer chronic malnutrition.


Deindustrialization doesn't simply mean an end to industry; it means an end to large-scale food production and the return of large-scale famine. The days of long-haul transport are largely over. For any product that is chronical multinational dependent in terms of supply, expect market collapse as the entire export-driven industrial plant will be written off completely. Mass-production assembly lines are largely out. The pace of technological improvement in manufacturing will slow down because of the combination of demographic collapse (shortage of skilled workers) and much lessened ability to network among such skilled workers (deglobalization reduces networking of information exchange and related innovation).


A big part of the Earth, including major agricultural producing areas will be negatively affected by climate change, like Australia will be exposed to drought and the Netherlands to flooding. Probably, climatic challenges to the agricultural production zones will hazard the nutrition of some 4 billion people."


The world of the future will feature reduced trade opportunities, more difficult access to energy and more challenging security concerns. But in one corner of the world exists a series of relationships that will stand the test of time. Southeast Asia will emerge as an echo of the free trade of times past, making it one of the very few parts of the world to survive more or less, perhaps even with some surprises to the upside.


Join video: https://www.youtube.com/watch?v=n7irOJhbwUE

(Correction: China's zero-covid policy ended December 2022, not 2027 as expected in the video)
Read more: “The End of the World is Just the Beginning” by Peter Zeihan.
Copyright 2018 - Thomas Nilsson - All rights reserved - [email protected]
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