4 ms·

Peak Globalization

20 points by alanthonyc 16y ago

trevor99 16y ago
China is a scary place, we're screwed in the US.
mixmax 16y ago
An artist did a very interesting thing a few years ago: He made a pencil from scratch. He cut the wood, mined the graphite, melted the lead, and created the eraser from a rubbertree. His pencil ended up costing thousands and thousands of dollars. Yet you can go to the nearest office outlet and buy ten pencils for a dollar. This is because of globalisation. Someone somewhere has specialised in making pencils and churn out millions of them a year, driving the cost down to almost nothing. The same is true of almost all other products. This is the primary reason our standard of living increases, most economists agree on this. Protectionism usually comes around when times are bad and countries need a scapegoat and a bad guy whose fault it is. For the US it used to be Mexico, now it's China. But the fact is that open trade helps both them and us (they get to sell goods, we get cheaper pencils), besides it works both ways. Denmark, for instance, specialises in hearing aids and container shipping both of which we have a more than 50% global share of. The world gets cheap hearing aids because Denmark massproduces them, and in return Denmark gets cheap pencils and other stuff that someone else somewhere produces. Politicians. thoughtleaders and policy makers across the world are aware of this mechanic but often use protectionism as a political weapon, knowing that it's bad for their economy. Nations are more economically intertwined and trade more than ever before, and it's not going to stop anytime soon. There might be a bump in the road, as there often is when times are bad, but it's not going to stop. Globalisation is here to stay, and you should be happy for it. It means that you can get a Wii for the price of a digital watch ten years ago.
- Umalu 16y ago
  You can read Leonard Read's masterful 1958 essay on the miracle of something as humble as a pencil ("I, Pencil") here: http://www.econlib.org/library/Essays/rdPncl1.html http://www.econlib.org/library/Essays/rdPncl1.html
  - billswift 16y ago
    That is an excellent essay, probably why the "artist" used a pencil in the first place. And Henry Petroski did a whole book on the evolution of the design of the pencil in the early 1990s: http://www.amazon.com/Pencil-History-Design-Circumstance/dp/0679734155/ref=sr_1_1?ie=UTF8&s=books&qid=1292925202&sr=8-1 http://www.amazon.com/Pencil-History-Design-Circumstance/dp/...
- deleted 16y ago
  [deleted]
- chrismealy 16y ago
  Decentralized and self-organizing systems aren't always good things. For example: climate change, financial crises, fatal stampedes, etc.
- Create 16y ago
  This all makes sense. But. Given the high degree of specialization, livelihoods and economies get very exposed to change, which, according to the cliché is coming at an ever accelerated rate. Some people and economies get to choose how and when to switch, and according to the mantra, innovation plays a role* (some call it here wealth creation). Some don't, and this mostly applies to colonies (especially economic ones). So people loosing their living in places where they are coerced into submission become protectionist (in the form of nationalism -- one of the root causes of national socialism was, that Germany and Italy were left out of the colony pie, and didn't get what they thought they deserved to match their status). I think everybody would agree, that in a European country, being perfectly capable of producing pears (i.e. suitable climate), it is unsustainable to have over 20% jobless, more debt than a country could ever repay in a generation, and yet import pears from China. And pumpkin seeds. With the usual socks and cutlery and electronics. Worse, this is a real example I have given. Globalization, in this current form is not here to stay. You can only get your WII for the price of a digital watch ten years ago by externalizing more and more costs (like shipping in your example). Out if sight, out of mind. This is a very important pillar of globalization, which oddly enough is turning against itself (better communication, though less true of the active concern of people, which one might think as a consequence). * This reminds me of a Russian children story. Once upon a time there was a pencil factory. Somebody had the obvious innovation, that since _nobody_ uses the last inch of lead of a pencil, because it would be too small to hold and sharpen anyway, so it makes sense to make some profit by leaving it out. Great savings, management promotion. Soon after, seeing the success, comes a new innovation: everybody knows, that the essence of a pencil is writing, and if there is no graphite, there is no need for the wood either. Cutting the useless piece of wood from the pencil would save forests and make huge profits. This cycle of logical, rational and economically sound innovation continued and iterated, until the pencil was gone. Everybody got prizes and promotion everywhere. But then came along the new innovator, who thought about putting a piece of graphite embedded into a wooden straw. Brilliant invention, huge prizes, and the pencil was reborn. The article is saying, that it is becoming readily apparent, that the pencil is about to be gone.
  - thwarted 16y ago
    What are the chances that the 20% unemployed can produce pears that are price competitive with the ones shipped from China or with substitute products?
A1kmm 16y ago
The author seems to conflate all opposition to the current flavour of globalisation with nationalism. Nationalism in this context basically means thinking that your country and their people are best and so things made there are better - and if someone's only reason for believing that is that they were born there, or that they were brainwashed to believe it, that is irrational. There are examples of nationalism in the United States holding back some forms of globalisation. For example, in a truly global world every country would have open borders to anyone who wanted to immigrate there, and saying that someone can't come to your country because that would take jobs from 'more deserving' locals is a form of nationalism. However, "local food, DIY, sustainability" are not examples of nationalism. Instead, they are an expression of growing discontent about inadequate price signals for externalities like climate change and peak oil, and that much global trade is focused around avoiding environmental and labour protection laws, and exploiting third world countries, rather than genuine comparative advantages and economies of scale.
- fleitz 16y ago
  Local Food, DIY, and Sustainability are not about inadequate price signals for climate change and peak oil. They are about creating consumer surplus via PR, and nostalgia for early 20th century farming techniques. Admittedly, most people in the industry have no idea that this is what they are doing, but thats the beauty of good PR and healthy dose of nostalgia. That is to say the reason most people pay the price premium for organo-locavore food is that it makes them believe they are better people, not because they believe that futures contracts for degree days are mispriced. Walk into a Whole Foods and ask what the appropriate prices of a heating degree day is once climate change and peak oil are priced in and they will give you a blank look. http://en.wikipedia.org/wiki/Weather_derivatives http://en.wikipedia.org/wiki/Weather_derivatives Hell I bet you could phone up John Mackey himself and he wouldn't have the slightest idea. Believe me there are a lot of guys in hedge funds trying to price in peak oil through futures contracts and in the pricing the long term value of certain stocks, various forms of insurance, risk swaps. Both climate change and peak oil can easily be traded on the various global futures markets. People who believe that climate change and peak oil are mispriced in the market not opening organic rooftop urban gardens, they are opening trading accounts (and will make a killing if they are right)
Umalu 16y ago
I get suspicious when articles talk in terms of "the Chinese" and "the Americans" and "the Germans." That is painting with such a broad brush. You know you are not the same as everyone else in your country, but it is so easy to fall back on the assumption that people in other countries must all be the same. It is really hard to write insightfully about the variety and complexity of real life, so instead we get articles like this.

20 points by alanthonyc 16y ago

China is a scary place, we're screwed in the US.

An artist did a very interesting thing a few years ago: He made a pencil from scratch. He cut the wood, mined the graphite, melted the lead, and created the eraser from a rubbertree. His pencil ended up costing thousands and thousands of dollars. Yet you can go to the nearest office outlet and buy ten pencils for a dollar. This is because of globalisation. Someone somewhere has specialised in making pencils and churn out millions of them a year, driving the cost down to almost nothing. The same is true of almost all other products. This is the primary reason our standard of living increases, most economists agree on this. Protectionism usually comes around when times are bad and countries need a scapegoat and a bad guy whose fault it is. For the US it used to be Mexico, now it's China. But the fact is that open trade helps both them and us (they get to sell goods, we get cheaper pencils), besides it works both ways. Denmark, for instance, specialises in hearing aids and container shipping both of which we have a more than 50% global share of. The world gets cheap hearing aids because Denmark massproduces them, and in return Denmark gets cheap pencils and other stuff that someone else somewhere produces. Politicians. thoughtleaders and policy makers across the world are aware of this mechanic but often use protectionism as a political weapon, knowing that it's bad for their economy. Nations are more economically intertwined and trade more than ever before, and it's not going to stop anytime soon. There might be a bump in the road, as there often is when times are bad, but it's not going to stop. Globalisation is here to stay, and you should be happy for it. It means that you can get a Wii for the price of a digital watch ten years ago.

Umalu 16y ago
You can read Leonard Read's masterful 1958 essay on the miracle of something as humble as a pencil ("I, Pencil") here: http://www.econlib.org/library/Essays/rdPncl1.html http://www.econlib.org/library/Essays/rdPncl1.html
- billswift 16y ago
  That is an excellent essay, probably why the "artist" used a pencil in the first place. And Henry Petroski did a whole book on the evolution of the design of the pencil in the early 1990s: http://www.amazon.com/Pencil-History-Design-Circumstance/dp/0679734155/ref=sr_1_1?ie=UTF8&s=books&qid=1292925202&sr=8-1 http://www.amazon.com/Pencil-History-Design-Circumstance/dp/...
deleted 16y ago
[deleted]
chrismealy 16y ago
Decentralized and self-organizing systems aren't always good things. For example: climate change, financial crises, fatal stampedes, etc.
Create 16y ago
This all makes sense. But. Given the high degree of specialization, livelihoods and economies get very exposed to change, which, according to the cliché is coming at an ever accelerated rate. Some people and economies get to choose how and when to switch, and according to the mantra, innovation plays a role* (some call it here wealth creation). Some don't, and this mostly applies to colonies (especially economic ones). So people loosing their living in places where they are coerced into submission become protectionist (in the form of nationalism -- one of the root causes of national socialism was, that Germany and Italy were left out of the colony pie, and didn't get what they thought they deserved to match their status). I think everybody would agree, that in a European country, being perfectly capable of producing pears (i.e. suitable climate), it is unsustainable to have over 20% jobless, more debt than a country could ever repay in a generation, and yet import pears from China. And pumpkin seeds. With the usual socks and cutlery and electronics. Worse, this is a real example I have given. Globalization, in this current form is not here to stay. You can only get your WII for the price of a digital watch ten years ago by externalizing more and more costs (like shipping in your example). Out if sight, out of mind. This is a very important pillar of globalization, which oddly enough is turning against itself (better communication, though less true of the active concern of people, which one might think as a consequence). * This reminds me of a Russian children story. Once upon a time there was a pencil factory. Somebody had the obvious innovation, that since _nobody_ uses the last inch of lead of a pencil, because it would be too small to hold and sharpen anyway, so it makes sense to make some profit by leaving it out. Great savings, management promotion. Soon after, seeing the success, comes a new innovation: everybody knows, that the essence of a pencil is writing, and if there is no graphite, there is no need for the wood either. Cutting the useless piece of wood from the pencil would save forests and make huge profits. This cycle of logical, rational and economically sound innovation continued and iterated, until the pencil was gone. Everybody got prizes and promotion everywhere. But then came along the new innovator, who thought about putting a piece of graphite embedded into a wooden straw. Brilliant invention, huge prizes, and the pencil was reborn. The article is saying, that it is becoming readily apparent, that the pencil is about to be gone.
- thwarted 16y ago
  What are the chances that the 20% unemployed can produce pears that are price competitive with the ones shipped from China or with substitute products?

A1kmm 16y ago

The author seems to conflate all opposition to the current flavour of globalisation with nationalism. Nationalism in this context basically means thinking that your country and their people are best and so things made there are better - and if someone's only reason for believing that is that they were born there, or that they were brainwashed to believe it, that is irrational. There are examples of nationalism in the United States holding back some forms of globalisation. For example, in a truly global world every country would have open borders to anyone who wanted to immigrate there, and saying that someone can't come to your country because that would take jobs from 'more deserving' locals is a form of nationalism. However, "local food, DIY, sustainability" are not examples of nationalism. Instead, they are an expression of growing discontent about inadequate price signals for externalities like climate change and peak oil, and that much global trade is focused around avoiding environmental and labour protection laws, and exploiting third world countries, rather than genuine comparative advantages and economies of scale.

fleitz 16y ago
Local Food, DIY, and Sustainability are not about inadequate price signals for climate change and peak oil. They are about creating consumer surplus via PR, and nostalgia for early 20th century farming techniques. Admittedly, most people in the industry have no idea that this is what they are doing, but thats the beauty of good PR and healthy dose of nostalgia. That is to say the reason most people pay the price premium for organo-locavore food is that it makes them believe they are better people, not because they believe that futures contracts for degree days are mispriced. Walk into a Whole Foods and ask what the appropriate prices of a heating degree day is once climate change and peak oil are priced in and they will give you a blank look. http://en.wikipedia.org/wiki/Weather_derivatives http://en.wikipedia.org/wiki/Weather_derivatives Hell I bet you could phone up John Mackey himself and he wouldn't have the slightest idea. Believe me there are a lot of guys in hedge funds trying to price in peak oil through futures contracts and in the pricing the long term value of certain stocks, various forms of insurance, risk swaps. Both climate change and peak oil can easily be traded on the various global futures markets. People who believe that climate change and peak oil are mispriced in the market not opening organic rooftop urban gardens, they are opening trading accounts (and will make a killing if they are right)

Umalu 16y ago

I get suspicious when articles talk in terms of "the Chinese" and "the Americans" and "the Germans." That is painting with such a broad brush. You know you are not the same as everyone else in your country, but it is so easy to fall back on the assumption that people in other countries must all be the same. It is really hard to write insightfully about the variety and complexity of real life, so instead we get articles like this.