Three ways to read the ‘deglobalization’ debate

The writer is a contributing editor to the Financial Times and writes the Chartbook newsletter

As 2023 approaches, the world of economic analysis and commentary is marked with an A The disconnect between discourse and data. On the one hand, you have frantic talk of deglobalization and decoupling. On the other hand, the statistics show a continuity of deficiencies in trade and investment patterns.

There are at least three ways to resolve this tension.

Option 1: You can stick to the old religion that economics always wins. In this case, she dismisses talk of deglobalization as journalistic hype. This outrageous position has an air of empiricism and common sense about it. But in order to hold on to this opinion, you must, in fact, believe many things, foremost of which is that the Biden administration does not mean what it says.

If you take Washington seriously, it is hard to avoid the conclusion that whatever the statistics tell us about the current situation, the United States is intent on revising the global economic system. It intends to rearrange domestic production priorities and meet the historic challenge posed by the rise of China. If there is one thing the divided US government can agree on, it is the need to confront China.

Taking this view leads to the second option: instead of business as usual, we are on the cusp of a new historical era, a new Cold War. This is not the Cold War in the era of détente. In Washington these days, even coexistence with China led by the CCP is up for discussion.

Considered on the surface, this is a high-stakes confrontation scenario that overshadows every other priority. In recent weeks, there have been de-escalation efforts — first the G-20 meeting between Xi and Biden, then China’s downbeat appearance at Davos. But these moves do not herald a return to business as usual.

Instead of reconciliation and rapprochement, the Biden team is offering something much stranger. They do not want to halt China’s economic development, they insist, only to put a cap on every area of ​​technology that might challenge American primacy.

How this is supposed to work is anyone’s guess. But in her pure metaphysics she points to explanatory option number three. We are not witnessing a reversal of globalization, or a large-scale decoupling, but a continuation of some aspects of a familiar pattern, just in very different places.

The future global economy may consist of a patchwork of hostile coalitions divided by curtains of more or less visible data. Countries with the resources will launch national policies such as the US Inflation Act, which blends green manufacturing and “buy American” with an anti-China stance and a push for friendly supply chains. That the IRA has provoked a quarrel with Europe and South Korea is not wrong. It’s an advantage.

Perhaps the harbinger of the future is the mad quilt of covid vaccines: the US-led Operation Warp Speed; The Europeans are trying to broker a complex deal involving exports to the rest of the world; India as a manufacturing center; China seeks an inadequate national solution; And a third of the world’s population is completely excluded.

You might shrug and wonder if this combination of geopolitics, economic nationalism, and the occasional pandemic is really new. Isn’t this just “History” as we’ve always known it – unpredictable, red in tooth and claw? But, by saying that you’re giving up on the game. The promise of globalization, as understood from the 1990s onwards, was precisely that it would usher in a new era. So, not only is acknowledging that a myriad of unexpected and diverse shocks are disrupting the global economy, but that they are multiplying and becoming more severe is, in fact, acknowledging a fundamental disappointment in expectations.

While business-as-usual advocates declare it still “economics, stupid” and the new cold warriors rally around the slogan “democracy vs. tyranny,” the third position faces the reality of confusion, the kind of confusion recorded by a term like “polycrisis.”

Polycrisis It has its detractors, and at Davos 2023 it risked becoming something of a cliché. But it serves three purposes as a motto. It records the extraordinary variety of shocks attacking what once seemed a steady course of global development. She insists that this coincidence of trauma is not accidental but cumulative and internal. With its coinage, it marks the moment when a rising self-confidence about our ability to decipher the future or recent history begins to seem at once superficial and outmoded.

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