The Bear’s Lair: How Far Will De-Globalization Go?

The last couple of weeks have been full of events justifying predictions made in this column over the years, which is very gratifying. A 2010 prediction in this column and in a presentation to the American College of Cardiology talked about the possibility of de-globalization. Remarkably, that prediction appears to be coming to pass. I thus thought it worthwhile to look at how far the de-globalization trend might go, and whether it, unlike globalization, will be permanent.

Some of this column’s predictions were fairly obvious and so old, from 2002 or 2004, that their fulfillment is largely a matter of stopped clocks being right twice a day. Still the de-globalization prediction in 2010 was fairly counter-intuitive at the time, met with considerable skepticism, and thanks partly to President Donald Trump, appears to be coming true less than a decade after it was made. It thus counts as a win on my Nostradamus Indicator.

In 2010, I outlined several factors which I thought made it likely that de-globalization would occur. Some of them, for example possible resources shortages, derived from the high oil and mineral prices of 2010 and appear unlikely to happen. One can’t win them all. Some of them, like the forces pushing for higher tariffs, currency manipulations and other trade barriers, including those derived from conflicting regulations, were fairly obvious. Still others, like the possibility of a further financial crisis impacting trade credit and credit problems resulting from the growth in global indebtedness, have not happened yet but still look fairly likely. So too does the possibility of governments panicking in a further recession – with no more “funny money” to print and budget deficits already excessive.

Some of the factors I identified as leading to de-globalization appear prescient. Green protectionism, blocking economic activity for spurious environmental reasons, has proliferated. The Internet has been further Balkanized, with several countries setting up “Great Firewalls.” The barriers to trade created by excessive intellectual property legislation have proliferated, though the egregious Trans Pacific Partnership treaty has been defeated (that treaty was very far from a true free trade agreement, partly because it incorporated excessive U.S. patent and copyright protections.) Opposition to immigration has grown exponentially, largely because of the elites’ total and disgraceful failure to control it. Finally, I pointed out that de-globalization would benefit blue-collar workers in Western countries, who might therefore be expected to vote for it – this, above all, is a prediction I can be proud of, since there was no sign of it in 2010.

Enough with the self-congratulation – where do we go from here? Is de-globalization a temporary blip, a short-term pause in the inexorable trend towards a truly globalized world? Alternatively, is it a reaction so strong that we will spend the rest of the 21st Century in tiny atomized states, with Japanese-style immigration policies and autarkic attempts to develop domestic capabilities in everything? Or something in between?