It's just not a straight line world

POST: From Globalization to Localization, By Stephen S. Roach, December 14, 2006

Good piece by Roach. I do think we're in a generalized period of "caboose breaking" on globalization for a number of reasons:

1) We've just gone through a period of rapid expansion of the global economy and any expansion (esp. that big) begets some pullback and--here--political "profit-taking" of the Lou Dobbs sort.

2) the global economy is growing very nicely and very broadly, so many leaders will hold back on big global agreements, prefering localism and regionalism in the meantime (easier to achieve, and a collective form of caboose braking against the dangers of "them"--outsiders). We'll see this in Europe in spades. Typically, you get the big, risk-taking global deals when the economy is slow, and politicians are desperate to restart growth. But only the ignorant position regionalism as the binary alternative to global accords, when they're historically necessay stepping stones--as in, first you crawl and then...

3) Rural unrest in New Core pillars (where I first encountered the dynamics that led to my caboose braking notion) will add to some of this slow-down as well. That's both natural and good.

4) The mood in the world's largest economy is one of withdrawal from the world, due first and foremost to Iraq, so that encourages slowness on globalization too.

But it's wrong to read a slowdown and localization as the "demise" of globalization (or the much-feared ideology of "globalism"), because that's like saying a recession should push you to rejects markets and capitalism. Sure, some of the more frightened and politically-opportunistic will certainly go down that path. They always do, but market optimism always returns, as do competitive pressures.

What's different today about globalization (which, after all, is just a fancy name for global markets) is that companies within national economies all end up feeling like they have to scour the world to access cheap labor, raw materials, intellectual talent/property, production capacity and R&D.

And that won't change with a slowing of globalization sentiments in some markets. It'll just be delayed.

Beware of fantastic standards being imposed--as in, "globalization must sweep the planet in a few short years, binding all the world's peoples in everlasting peace, or it's doomed!"

That sort of bullshit got you socialism and fascism in the past and now the global jihadist movement, and it'll beget even dumber, more fantasically impatient ideologies in the future.

Meanwhile, global markets and the resulting integration will continue to win out over the long haul. But no, almost none of this stuff happens without some violence (that's why I called it the Pentagon's new map) and predictions based on, or their opposing straw-man arguments requiring, linear projections always prove false.

It's just not a straight line world.

Thanks to Hans Suter for sending this in.