Slowbalization

Two years ago

Last year

America turn into protectionist was thought as dark warnings

Now

Misplaced ominous predictions

Global growth was decent; unemployment fell and profits rose

China is slowing ; Western firms exposed to China have been clobbered

Stagnating economy - slowbalization

Complacent

Globalization (1990-2010)

Trade war is designed to squeeze concessions from China, not blow up the commerce

commerce soared, firms set up around the world, investors roamed and consumers shopped with enough choices

costs of shipping fell, phone calls cheaper, tariffs cut and finance liberalized

Less glaring than but as pernicious as rise in costs of imports, rules of commerce are being rewritten

WHY

multinational firms burns money in global sprawl while local rivals eat them alive

Services are hard to sell across borders

Costs of shipping stop falling

Chinese manufacturing has become more self-reliant - less import

Regimes for vetting foreign firms (America, EU and China)

America weaponized power gained from dollar-payment system to punish foreighers

Grip on tech industries

Rules on privacy, data, espionage are splintering

Tech systems bent to patriotic ends - repatriate capitals to silicon valley

Cross-border investment fell / value of cross-border firms fell

Impact

Not a disaster for living standards, continental-sized markets are large enough to prosper

Deeper links within regional blocs / a fluid patchwork of regional deals

Evaluation - meaner and less stable, only feed the discontent

Disadvantages

Create new difficulties

Not a real fix for problems created by globalization

More countries struggle to trade their way to riches

Interest rates still influenced by the Fed, leading to financial turbulence, but Fed is less likely to rescue foreigners

Slowbalization will not moderate or contain China, but help it win regional hegemony faster

Climate change, migration and tax-dodging harder to solve without global co-operation

Automation means fewer blue-collar jobs

Slowbalization

Background

Slowbalization

Globalization benefits

Commerce soar, firms set up around the world, investors roamed and consumers shopped with abundant choices

This is caused by reduction in shipping costs and phone call price, tariff cut, finance liberalized

costs stop falling, global sprawl burns money, competitive local rivals, services hard to sell across border, more self-reliant manufacturing in China

Sluggish economy - Slowbalization

protectionist turn in America since 2 years ago

Provoked misplaced ominous predictions 2 years ago

Now, seems to work-China is slowing / global growth was decent, unemployment fell and profits rose

America sign a deal pact with Canada

Trade war

Tax rise on imports - cost passed to consumers

Complacency - Treat trade war as to squeeze concessions from China not blow up commerce

Imply rules of commerce is changed

Impact

WHAT - stagnating economy, shrinking cross-border investment leading to fragmented rules, regional protectionist

WHY - Neglected problems from globalization now accumulate to a point to which they cannot be ignored

Neutral

Disadvantages - rule of commerce is being rewritten

Not a disaster for living standards - continental markets prosper

New difficulties

Not a real fix

Countries influenced by interest rate planned by the Fed are more vulnerable to financial turbulence without rescue from the Fed

More countries will struggle to ratchet up riches

Helps China win regional hegemony faster

Climate change, migration, tax-dodge harder to solve without global cooperation

Fewer blue-collar jobs because of automation

Deeper links within regional blocs

Slowbalization

Globalization

WHAT - Commerce soar, firms set up around the world, investors roamed and consumers shopped with abundant choices

WHY - This is caused by reduction in shipping costs and phone call price, tariff cut, finance liberalized

Stagnating economy

Protectionist turn / Trade War

Rule of commerce is being rewritten

Impact

Neutral

Disadvantages - rule of commerce is being rewritten

New difficulties

Countries influenced by interest rate planned by the Fed are more vulnerable to financial turbulence without rescue from the Fed

More countries will struggle to ratchet up riches

Not a real fix

Helps China win regional hegemony faster

Climate change, migration, tax-dodge harder to solve without global cooperation

Fewer blue-collar jobs because of automation

WHY - costs stop falling, global sprawl burns money, competitive local rivals, services hard to sell across border, more self-reliant manufacturing in China

Deeper links within regional blocs

Not a disaster for living standards - continental markets prosper

Evidence

Fragmenting areas - Grip on tech, vet foreign countries, etc

Slower global investment