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To be more accurate, the pandemic showed that onshoring beats globalization... in a pandemic. The cost benefits were wildly outstripping the national security
by ketzo 5y ago
To be more accurate, the pandemic showed that onshoring beats globalization... in a pandemic.
The cost benefits were wildly outstripping the national security benefits before 2020! That's why globalization has thrived!
I know that's the point, and I'm sort of willfully misinterpreting what you're saying. But the cost benefits of globalization aren't going away, and people's fears of the pandemic and supply-chain disruption will fade with time.
Critical manufacturing simply will not be onshored by participants in capital markets if it costs more. It's the kind of thing that only a government can really make happen, and the U.S. government does not seem willing to impose massive costs on ~all of its largest industries.
Semiconductors -- maybe. There's a lot of focus on this particular industry right now, and Intel + the CHIPS Act might be able to make waves in the U.S.
But I think it's incredibly unrealistic to expect any significant share of global manufacturing to move back out of Shenzhen any time soon.
- svachalek 5y agoI don't think it's fair to say the national security benefits were tested before 2020. Risks are rarely considered until after they are exploited; everything that happens in an airport security line is based on something that actually happened before they added that requirement.
- ketzo 5y agoNo, I know -- that's my point. They hadn't reaaaally been tested before, and they probably won't be tested again for a long while. Regardless of whether it is correct to account for the risks of globalization, it's very unlikely that people will -- again, particularly when those people are participants in market economies -- because the risks are so infrequent, unpredictable, and catastrophic that people just don't like to think about them.
- UnpossibleJim 5y agoI think this type of thinking, while relevant, ignores other hidden costs associated with off-shoring the majority of our manufacturing. 1. The environmental costs are not insignificant with both the lack of environmental regulation and added ocean shipping (yes, I know people are tired of hearing about environmental impact) 2. The humanitarian cost of offshoring our manufacturing is not insignificant. We may not have the best humanitarian track record in the world, but we aren't setting up suicide netting or sending manufacturing to Uyghur prison camps. 3. NAFTA has increased income inequality https://www.epi.org/publication/briefingpapers_bp147/#:~:text=The%20loss%20of%20these%20jobs,unions%2C%20and%20reduced%20fringe%20benefits https://www.epi.org/publication/briefingpapers_bp147/#:~:tex.... 4. The Trans-Pacific Partnership weakened intellectual protections, food safety regulations and helped destabilize the U.S. economy - creating even more "bubble and bursts" https://inthesetimes.com/article/tpp-free-trade-globalization-obama https://inthesetimes.com/article/tpp-free-trade-globalizatio... Don't get me wrong, I think a certain amount of global trade is not only necessary but healthy. It strengthens treaties and national ties. This reduces war risk and national coalitions... all good things. But a certain amount of self interest and a healthy middle class bolster our own country. We have lost our ability to stand on our own two feet for any amount of time.
- ketzo 5y agoGood point, and I think assembling all these reasons alongside national security risks is our best shot at actually convincing our governments to enforce some amount of change.
- potta_coffee 5y agoEnvironmental impact is a really important concern. But aren't we just deciding _where_ that impact will occur? I don't think environmental damage in China is inherently superior to environmental damage in America; not for any reason other than, "I live in America, so of course I want America to be have a clean environment." I think the environmental impact of these industries could be reduced but profit overrules all other considerations.
- ketzo 5y agoWell, there’s environmental damage incurred by going back and forth between China and the U.S., which could be reduced/eliminated.