Everyone talks about the economic wall of worry, and the wall seems to be getting taller. Pandemic. Recession. Credit issues. Lockdowns. Nevertheless, these worries will pass. They are cycles, shocks, and bumps. They do not define our global system of trade and benefits. Policy-makers can see the immediate harm and are using their set of policy tools to dampen and reverse the negative effects.
Unfortunately, the longer-term worry that will stick with all economies is our trend to cut connectedness, globalization. This worry does not have a set of voices or policy prescriptions to offer as solutions. There are no current advocates against deglobalization, yet trade and the broader term of globalization has been the key generator for world economic growth.
The free movement of labor, capital, ideas, goods, and services across time and space has created enhanced economics opportunities for most and explosion of a middle class in emerging markets. These flows have driven global growth in spite of the financial excesses and shocks over the last few decades.
If the current globalization era ends, all economies will suffer, and no localized or national policy will solve the problem. There is a need for worry because globalization is not something that just happens. It is not inevitable. It takes work. Mercantilism is often viewed as a natural policy when countries think trade is a zero-sum game.
History has shown surges in world economic growth when there has been more freedom of global trade and financial flows. The great globalization surges include the pre-WWI period, the Bretton Woods period, and the China-WTO period. All were associated with national and global structures open to international flows, technology that allowed for low flow costs, and organizations that could coordinate economic activity.
Globalization has been under assault for some time. Some of the arguments against globalization are relevant, should be heard, and require adaptation, but the fundamental premise of globalization is being questioned. This generalized globalization assault is misplaced. Globalization is disruptive and will thus create both winners and losers. The wins will often be dispersed while loses will be focused. Hence, reaffirming the benefits of globalization requires constant reinforcement, yet also requires an appreciation that competitive trade may need localized support for those most disrupted
Barriers to trade are being erected with tariff growing as a normal tool. Pandemic has restricted travel and the flow of labor. Regulations impeded the flow of capital. The global institutions of cooperation have failed at their mission. New and longer-term geopolitical tensions further erode the desire for cooperation and increased national competition.
None of these trends toward deglobalization will be reversed without a conscience choice for global integration and cooperation. There needs to be champions for globalization that provide advocacy with candor; however, there first needs to be a recognition that deglobalization is a problem that needs to be solving.
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