Are supply chain disruptions the beginning of the end of globalization?

At the end of last week there was 584 container ships idling in ports around the world, waiting to be loaded or unloaded. The disruptions in the bulk commodities sector appear to be even worse.

Experts suggest the problems are temporary. For example, Bloomberg columnist Brooke Sutherland maintains that three weeks of declining ocean freight rates tell us “Perhaps the worst is over with supply chain grunts that hampered shipments of everything from Coca-Cola Co. ingredients to paint,” toys and industrial attachments ”.

Optimism is premature, however. The growls could last for years. In addition, severe disruptions, however long they last, will help end the current period of globalization. Interconnection, it is now obvious, comes at a high price.

The backlog is serious. “Companies are waiting for the goods they ordered a year ago,” Jonathan Bass, CEO of WhomHome and relocation advocate, told me in a recent conversation. “The predictions that we will emerge from supply chain problems in the summer of 2022 are far from baseline. I think 2024 is more realistic.

In the meantime, expect empty shelves. Vice president Kamala harrisKamala HarrisEquilibrium / Sustainability – Presented by Southern Company – Climate Crisis Drives Child Marriage: Report Top House Democratic Group Launches Six-Figure Ad Campaign to Sell Defund Biden Infrastructure Package: The Only Way to Save America on a PLUS budget, while in Singapore in August, suggested Americans do their holiday shopping early. “If you want to have Christmas toys for your kids, maybe now is – maybe it’s time to start buying them because the delay can take many months,” she warned. American consumers, living in a land of plenty, will have to get used to scarcity.

These unprecedented problems are the result of a confluence of short-term factors, such as labor shortages, COVID-19 control measures and an array of misguided government policies on both sides of the Pacific. Bass also pointed out a factor almost never mentioned: “Older ships will soon be heading to the yards to be retrofitted with cleaner propulsion systems. ”

President Joe bidenJoe BidenRisch appalled by blockade by other GOP senators on Biden’s diplomatic choices Sunday shows preview: Boosters open to all American adults; House MPs push spending plan to Senate, White House calls for investigation into sexual assault allegations of missing Chinese tennis star MOREthe solution is to operate the ports 24/7. Still, keeping Long Beach open is only a stopgap because the breakdown in logistics also has a root cause: the existence of long supply chains stretching across the world, connecting factories and consumers. These chains are extremely efficient when in operation, but they are extremely fragile. It didn’t take a lot of pent-up post-epidemic demand to overwhelm them.

In addition, long supply chains are, due to growing friction with China, set to become even more fragile. The most recent cycle of globalization began when countries lowered political barriers to trade after the Cold War. In the euphoria of this period, American and Western analysts believed that the form of governance no longer mattered, so that democracies could, without repercussions on national security, trade with – and thus strengthen – states. authoritarian, dictatorial and otherwise diehard. Today, due to worrying developments in China, this view is largely discredited.

At present, global trade is around 5% higher than pre-COVID levels, but long-term trends will soon separate economies.

“The driving forces behind de-globalization are likely to dominate for the foreseeable future, and are hardly limited to the recently exposed national security dangers and political uncertainties arising from China’s role as ‘the world’s factory’,” Alan Tonelson, based in Washington, DC trade expert, told me.

Tonelson, who blogs at RealityChek, cites the inability of the World Trade Organization to operate efficiently, high and unstable energy prices resulting from the abandonment of fossil fuels and Europe’s desire for technological autonomy from – views from China and the United States. He also notes that the continued spread of automation in manufacturing drastically reduces the cost benefits of low-wage countries and encourages countries like America to manufacture products at home.

Despite the “decoupling”, there will still be a high volume of trade in the world. Many, therefore, say that economic and trade ties will continue to act as a “ballast” for stabilizing relations.

This opinion is questionable. “Does trade increase or decrease the likelihood of conflict? Samuel Huntington, the Harvard political scientist, asked in his seminal work, “The Clash of Civilizations and the Reshaping of the World Order.” “The hypothesis that this reduces the likelihood of war between nations is, at a minimum, unproven, and there is plenty of evidence to the contrary.”

As many have now pointed out, high levels of trade did not prevent World War I. Huntington, drawing on the work of others, argued that the wait is what matters. “Economic interdependence promotes peace,” he wrote, “only“ when states expect high levels of trade to continue for the foreseeable future ”. results.”

Of course, war does not inevitably occur when countries break up economies. However, the threshold for the use of force will inevitably drop under these circumstances.

De-globalization will occur primarily as a result of business and economic factors, but these factors will soon have geopolitical consequences. The world is already tense, and it is set to become even more so as societies seek economic self-sufficiency.

Gordon G. Chang is the author of “The Coming Collapse of China”. Follow him on twitter @GordonGChang.

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Estelle D. Eden