Can that continue forever?
I'm not sure that will come back in the same way because I think there will be a lot of pressure from both sides:
* the most advanced countries have seen how quickly that edge can be lost if you outsource to this extent, which could lead to more proprietariness and a desire to enlarge gaps in absolute lifestyle instead of short-term cost-minimization; especially if armed conflict stays hotter than it was in the 90s
* on the other hand, if closing labor cost and standard of living gaps continue in the future, globalization makes less sense because paying the logistics penalties and shipping costs in a world with more-or-less equivalent labor costs everywhere becomes stupid - sooner or later you run out of cheaper places to outsource too. Both knowledge work and "real-world" production benefit from short turnaround times and easy communication, so barriers based on specialization alone seem very hard to maintain in that world, especially across countries where IP restrictions often aren't enforced that strictly. Outside of raw materials, what do you need from halfway across the globe that none of the millions of people within a few hundred miles couldn't figure out how to do or copy?
What is the alternative? Richer countries voluntarily transferring wealth to poorer countries? Richer countries hoarding wealth because it is not politically popular to transfer wealth to poorer countries?
Can also replace countries with tribes of any size delineated by any given arbitrary characteristic(s).
But if it keeps getting transferred, how can that last forever? Over time, the gaps between countries shrink in that system. So "labor cost exploitation" puts itself out of a job.
[0] globalization is corporations more than "countries" voluntarily transferring wealth, sure, but... I don't think you can argue it hasn't increased wealth in those countries
I can't wait for that small and poor country to manufacture its own modern chips (perhaps in 100-200 years) so that it can enjoy the technology available today(i.e cheap smartphones, TVs etc). I thought HN is smarter than that. The future is multi planetary not self sufficiency.
Even if there were a network of planets. They'd need to be self sufficient in key areas (food, air, water, shelter) as the time and energy needed to trade is likely too much for robust exchanges.
If you have valuable goods/services you can offset the transport costs and exchange them for food or whatever you need.
The same rules apply at the individual level. How many engineers are self sufficient? How many cities are self sufficient? Is it really worth it to build all kind of redudant systems (i.e people building bunkers for their families and learning survival skills) ? I think we already know the answer.
On the other hand countries that must import food, suffer greatly when there’s any economic shock. Basic food stocks can double or tripe in price due to inflation affecting imports most strongly. And the country is trapped: it must export in order to get money to buy food, however demand is already down. Add to that that many counties run on credit, so failing an import/export balance leads to additional debt, increased inflation, and a vicious spiral to economic ruin.
Yes those are the only two options, totally unrestricted free trade*, or a total ban on trade. There's no middle ground, no spectrum.
*Except for what restrictions "free trade" agreements place on national legislation, of course. Can't have rogue countries reducing copyright length or the scope of patentable subject matter.
But you're conflating nationalism with imperialism, as is so common these days.
And somehow you think that in the current system where multinational corporations sneak anti-consumer legislation into trade deals, poor countries don't get the short stick. Why? Who do you think benefits when poor countries are made to agree to onerous patent and copyright protections, and forced open internal markets, that prevents them from growing or protecting local industries?
> So you think a less free trade will reduce copyright length?
Copyright length is literally written into trade agreements and other international treaties, yet you are incredulous?
Whoever abandons the globalisation will find itself poorer. That was my whole point. And yeah, TSMC is a global/foreign company so that praised investment is part of the globalisation. The moment U.S becomes protectionist against Taiwan you can say good bye to TSMC. TSMC in the U.S does not represent the death of globalisation. I would say on the contrary. U.S provided good incentives for TMSC and other GLOBAL players to manufacture in the U.S. When the incentives move somewhere else so the capital/factories(i.e see the exodus from China).
No matter how you spin it globalisation is here to stay regardless of what one big player does(i.e U.S or China).
Does not exactly sound like a desirable state
If cheap labour is no longer possible/desirable, then near fully autonomous factories driven by next-gen AI and robotics becomes significantly more viable.
Now globalization is unpopular in the west because the west realized neo-liberalism is bullshit, for lack of a better term.
? That is globalization. It's arbitrage through nations borders. Arbitrage is not limited to financial instruments but can be extended to Labor, Weather and Culture.
> * the most advanced countries have seen how quickly that edge can be lost if you outsource to this extent, which could lead to more proprietariness and a desire to enlarge gaps in absolute lifestyle instead of short-term cost-minimization; especially if armed conflict stays hotter than it was in the 90s
Sure, in a truly globalized world, every country will be arbitraged to equality. That's a feature not a bug.
> * on the other hand, if closing labor cost and standard of living gaps continue in the future, globalization makes less sense because paying the logistics penalties and shipping costs in a world with more-or-less equivalent labor costs everywhere becomes stupid - sooner or later you run out of cheaper places to outsource too.
This assumes all geographies have the same advantages. I'm pretty sure it's more profitable to produce bananas in African jungle; and also impossible to pump oil out of Japan. Globalization re-enforces local advantage. On equilibrium, only your local advantage will prevail as everything else will get arbed to death.
> Outside of raw materials, what do you need from halfway across the globe that none of the millions of people within a few hundred miles couldn't figure out how to do or copy?
Tropical fruits, Highly advanced computer chips, iPhone made by factories all around the world and assembled nearby, Internet services, Medical equipment, the list will goes on. Now if you are saying who will roast your coffee, cut your hair and wash your car; yeah it'll be a few miles around.
Also: Shipping material halfway through the world is stupidly cheap.
I disagree. The U.S. which has relatively high labor costs, has nevertheless been a leading recipient of foreign direct investment.
Specialization is a far stronger driver. Labor cost differentials narrow over time but specialization can be compounding.
Globalization is a choice.
Globalization - the contemporary concept as we understand it in this thread[1] - didn't exist before technology that enabled modern transportation and information networks. Like any sort of geopolitical arrangement there are tradeoffs, and one of which with globalization is of course labor cost arbitrage (that other people have mentioned in the thread). A lot of ink can and has been spilled on what these tradeoffs are, and whether cheaper toothpaste or plastic disposable goods all made in China actually do make things better off long term - for the Chinese or for everyone else. The "resistance is futile" crowd seem to always index on the economic calculation (not saying you are doing this), and seem to always ignore that there are intangible, qualitative aspects to this political arrangement that not everyone - even or perhaps especially in the United States - is happy with.
[1] There's a pedantic argument about older "global" empire, religious or otherwise, but let's all sidestep that, shall we? It's not the same thing and I think we all know it.
Many of the biggest nations today are bigger than the entire known world in the past.
It is thus possible to "stop" and put a boundary over the world and yet achieve almost all the benefits of "globalization" if your country has 300M people and spans the width of a continent.
But, most countries did not have vast trade --economies were local and regional. So, yes, humanity can survive and even prosper without "globalization" but progress may be slowed and progress may be less uniform, among other things.
So excluding China from the ISS ultimately worked to expand the overall reach of humanity into space. I would predict the exact same will happen in various other venues, from semiconductors to movies. Necessity is the mother of invention, and globalism minimizes necessity. Minimizing necessity is good from a comfort/stability point of view, but not necessarily good from a progress point of view.
Another great example would be the space race. If the US and USSR had been on friendly and positive terms, it's extremely likely that the space race (which was not only a cultural battle, but a weaponization proxy) would not have happened. In other words if we'd been a more global society in the past, it's very possible man would yet to walk on the moon.
Globalization doesn't necessarily make people lazy, but it does reduce some competitive technology pressures that get concerning after a while. Ironically, now that there's a pseudo cold war with China and a war in Ukraine there's lots of tech news about new defense tech. Given the Chinese space station (which I applaud them for, seriously space is hard and what they did is genuinely cool and innovative), hopefully we get another space race.
Very interesting comment. Could you point to me some article that supported this?
Evolution will favor those who trade over those who don't since the ones trading will be more efficient. There will blips along the way but unless you can convince me otherwise how a closed system will be more efficient, in the very long time, globalization is our fate.
You're looking at this wrong. The dichotomy isn't Globalization vs No Trade. It's more of Globalization & Free Trade vs Limited Conditional Trade. Throughout all of written human history there was trade. But there wasn't free trade like today where everyone is able to trade with one another so freely with little cost. Historically, only big powers who had massive navies to protect their own ships were able to trade in meaningful quantities. Today the USN guarantees all global shipping.
Morris Chang has long opposed moving Fabs to the US where most of his customers were because so long as the cost of moving stuff was negligible it made little sense. But Taiwan's trade is not guaranteed by the Republic of China Navy. And it's customers are overwhelming American.
Post Covid & Ukraine Invasion it is clear that neither the US government, nor US corporations believe that there is no cost to crucial supply chains being located abroad. Nor is the transport of those vital supplies considered to be effectively negligible. TSMC leadership likely had some difficult conversations behind closed doors which to effect amounted that with the current status quo they are too expensive, and if they do not relocate some of their fabs to the US, their customers will look to alternative partners.
Calling "evolution" as an argument is always extremely weird. Efficiency is also a single part of the equation. Slave labor was very efficient, burning fossil fuel is very efficient, there are dozens of other variables
The United States. The conventional wisdom is that what the US gets in return is outsized influence in the internal politics of basically every country within that protection sphere, plus the petro-dollar. I don't totally agree with the second part, but that's what you'd find in an "explainer" from Vox or the pages of The Economist.
The United States, despite inventing the thing and using it first, has done more to get rid of nukes than anyone.
It’s essentially a prisoner’s dilemma where individual countries are better off defecting.
The thing is people and countries don’t all benefit equally from buying into the existing system. It’s the same basic reason people continue to run scams and steal stuff on land etc.
The US has not been the majority player in policing pirates in a long time and piracy is at an all time low - China and Europe handle the majority of the piracy actions around Africa today, the largest source of modern piracy. Even if the US were to withdraw, and it's just Europe and Asia trading with each other, what navy is going to magic into existence to threaten those trade routes? The 5th fleet is in theory always around to back things up, but even if you look at CTF-151 the USA hasn't had the comm since 2009, and basically all of the anti-piracy actions today are small potatoes and easily handled by coalition members.
Yes, the US navy is the best in the world. Yes, without it, there is less ability to protect these trade routes. But if the people that are doing the remaining trade are the people with the next 20 biggest navies, where in the world is the threat going to come from?
If globalization ends it's not going to be because the US navy took their ball and went home, because you have to go really far down the list of naval might to find people who wouldn't want to still be trading with each other.
Container ships produce a lot of emissions, but they also move a lot of cargo. On a CO2 per kilogram per mile basis, containers ships vastly beat out automobiles.
Automobiles are the worst and least efficient mode of transportation, and should be severely curtailed.
But yes, on the whole it's correct that common assumption that the distance freight travels equates to the overall carbon intensity of transit is incorrect.
A more effective change would be to make transportation emit less greenhouse gases. Get hydrogen powered container ships and electric vehicles. This would reduce greenhouse gases significantly more, and wouldn't involve destroying the global economy.
Do you think ammonia or hydrogen is more likely to be used for ships? At this time, I am leaning towards ammonia because storage and infrastructure is simpler.
Funny side note: While writing this post, I was doing a bunch of Google searches about ammonia, hydrogen, and blue vs green. Every single search returned a single ad from Saudi Aramco touting their blue ammonia and hydrogen capabilities. Incredibly depressing. The non-petro states need to hurry up and cover the center 80% of Australia with solar panels (Chilean Andes and North Africa too) to produce whatever green industrial inputs we need from "thin air". Maybe we can run a bunch of carbon sequestration machines too. In parallel, we can drive up carbon taxes.
Per the source above, rail is most efficient at 128k, then ships at 97.3k, then road at 10.8k, where units are in tonne-kilometers shipped per tonne of CO2 emitted.
If Country A can produce 100Mt of raw material by digging up 10000ha of already-destroyed farmland, and Country B would need to clear 100000ha of pristine untouched forest for the same amount of raw material extraction, wouldn't it be better to source from Country A? At least up to some point where the environmental impact of oil used to ship 100Mt of material from Country A is worse than clearing 100000ha of pristine untouched forest.
Surely it’s “until” not “unless”. We’re going extinct at some point, even if we make it all the way to the heat death of the universe.
it absolutely has. as you indicated in your follow up question.
for their time periods, many times throughout history we’ve had their version of globalization.
globalization is the natural state of society. obstacles are put in the way for various reasons; power, fear, etc… but it’s artificial roadblocks that temporarily stop it.
we trade with other humans. it’s pretty normal. it’s far more abnormal for someone to say, “you’re not allowed to trade stuff with Jim because he lives on the wrong side of that tree over there.”
Globalisation as we know it requires massive amount of military effort, diplomacy, and international law to be kept alive. In the past trade was taxed to death and was limited to luxury goods only. You could only trade in small volumes to limit the risk of theft. So all essential goods had to be made in your own territory.
I also think that this is the big difference between (classical) trade and (modern) globalisation. Trade has existed since ancient times, but globalisation, where a large fraction of a nation’s essential goods are from foreign countries, is very recent and artificial.