MegaThreats: Ten Dangerous Trends That Imperil Our Future, and How to Survive Them
by
Nouriel Roubini
Published 17 Oct 2022
Indeed, in April 2022 Janet Yellen, the US Secretary of Treasury, argued that traditional views about the benefits of free trade and global supply chains require updating. “Secure trade” and “friend-shoring” should replace unfettered offshoring in countries that are strategic rivals of the United States. “We cannot allow countries to use their market position in key raw materials, technologies, or products to have the power to disrupt our economy or exercise unwanted geopolitical leverage,” she said. “Let’s build on and deepen economic integration and the efficiencies it brings—on terms that work better for American workers. And let’s do it with the countries we know we can count on. Favoring the “friend-shoring” of supply chains to a large number of trusted countries, so we can continue to securely extend market access, will lower the risks to our economy, as well as to our trusted trade partners.”12 This is a new twist on globalization.
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By restricting global trade in goods, services, capital, technology, data, and investments, they will impose higher import prices, rising costs of production, and will sap growth. 4. Reshoring of manufacturing may improve supply chain security, but shifting production from low-cost emerging markets such as China to friendlier but higher-cost developed markets (“friend-shoring”) will spur cost and price increases. When security replaces efficiency in allocating capital, costs of productions will rise. Expect price increases, supply bottlenecks, and unintended consequences when narrow nationalistic politicians reverse globalization. 5. Fierce competition between the United States and China is already becoming a cold war.
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Economist Dani Rodrik and others argue that hyperglobalization, democracy, and national sovereignty create an “inconsistent trilemma.” To maintain democracy and sovereignty, hyperglobalization needs to be curtailed. More recently, as the consequence of the COVID-19 crisis and the ensuing disruptions to global supply chains, logistics, and transportation networks, calls for reshoring or friend-shoring of manufacturing and global supply chains have become louder and more popular. Indeed, global pandemics that spread faster because of globalization have first led to draconian restrictions of the movement of people—as during the peak of COVID-19—when foreign travel became nearly impossible and is still hampered.
The Capitalist Manifesto
by
Johan Norberg
Published 14 Jun 2023
What saved hospitals from even worse shortages of protective clothing was that imports from countries outside the EU increased by as much as 44 per cent in one month. During the same month, EU imports of hand sanitizer from the outside world increased by 278 per cent and of gas masks by 430 per cent.29 This exposes the danger of the popular idea of ‘friend-shoring’ – trading more with close geopolitical partners while avoiding rivals. In March 2020, France didn’t just impose an export ban on protective equipment, it even confiscated such goods sent through the country by third parties. While France was trying to stop vulnerable neighbours like Italy and Spain from getting hold of the equipment their healthcare systems needed, Italy and Spain could buy it from Asian exporters like China.
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INDEX NB Page numbers in italics indicate illustrations Afghanistan, 160–61, 256 Africa, 30–35, 70, 267, 282 colonisation, 31 independence, 31–4 Sub-Saharan Africa, 30–31 AIM (AOL Instant Messenger), 170 Albania, 50 Algeria, 251 Alphabet, 179 AltaVista, 169, 174 Amazon, 169–72, 178–9 Amazon Prime, 179 Andersson, Magdalena, 8 Angola, 239 Annan, Kofi, 3 Ant Group, 227 AOL (America Online), 169–71, 174 Apple, 107–8, 159, 163, 169–73, 179 Apple TV, 179 Arab Spring, 215 Aristophanes, 73 Aristotle, 70 ARPA, 183–6 ARPANET, 184–5 Asia, 267, 282 Asp, Anette, 287 Attac, 2–3, 6 Australia, 11, 258, 267, 282, 285 Ayittey, George, 31 Bangladesh, 235 Bank for International Settlements (BIS), 144 Bankman-Fried, Sam, 153 Bao Tong, 212 Baran, Paul, 184, 186–7 Bastiat, Frédéric, 114 Beijing, China, 209 Belgium, 285 Berggren, Niclas, 62 Bergh, Andreas, 56, 103 Bezos, Jeff, 127 Biden, Joe, 76, 217 big companies, 141, 146–50, 176–7, 292 BioNTech, 177 biotechnology, 195 Björk, Nina, 263, 265, 272, 274–5, 278 BlackBerry, 174 Blair, Tony, 170 Blockbuster, 151 Blue Origin, 202 Bolivia, 47 Bolt, Beranek and Newman, 184 Bono, 4, 170 Botswana, 34–5 Boudreaux, Donald, 125 Boulevard of Broken Dreams (Lerner), 190 Brazil, 11, 29, 239, 258 Brexit, 116–18 Bullshit Jobs: A Theory (Graeber), 86, 98–9 business regulation, 139–41 Callaghan, James, 10 Canada, 102, 267, 283 Capital in the Twenty-First Century (Piketty), 128 capital income, 130–31 Carbon Engineering, 255 Cardoso, Fernando Henrique, 29 Carlson, Tucker, 146 cars, 158 Carter, Jimmy, 10 Case Deaton, Anne, 108–11, 136 Castillo, Pedro, 30 Chávez, Hugo, 43, 135 child labour, 20 child mortality, 19–20, 20 Chile, 11, 29–30 China, 5, 7, 11, 19, 24–5, 76, 78–80, 83–4, 104–7, 204–29, 239, 258 agricultural productivity, 206–7, 209 Communist Party, 182, 204–9, 211–12, 215–18, 221–3, 226–8 deindustrialization, 84 economic development, 205–29 environmental issues, 251–3, 257 exports, 209–10 industrial policy, 205, 212–13, 217, 223–4, 296 innovation strategy, 182, 192 innovation, 226–8 poverty, 213, 214 Reform and Opening Up programme, 212 state-owned companies, 208 WTO and, 205, 209, 211 China’s Leaders (Shambaugh), 215 Chirac, Jacques, 191 Chomsky, Noam, 49 Christianity, 264–5 Churchill, Winston, 135 Clark, Daniel, 87 climate change, 5–7, 230–60, 293 carbon border tariffs, 258 carbon tax, 256–7, 259 energy supplies, 233–5, 253–6, 259 greenhouse gas emissions, 231, 233–5, 238, 240–41, 244, 253–9 see also environmental issues Climeworks, 255 Clinton, Hillary, 140 Coase, Ronald, 206 Cohen, Linda, 189 communism, 2, 25–6, 241–3, 290–91 Communist Manifesto, The, 1848, 2 community, 267 Compaq, 174 Concorde, 191 Confucianism, 22, 25 Congo-Brazzaville, 30 Congo, 239 consumer culture, 160–62, 287–8 Cook, Tim, 173 cooperation, 278–9 Coopersmith, Jonathan, 188–9 Corbyn, Jeremy, 43 coronavirus see Covid-19 pandemic Council of Economic Advisers, 147, 152 Covid-19 pandemic, 8, 21, 76–81, 223, 232–3, 270 Cowen, Tyler, 154 Credit Suisse, 132–3 crony capitalism, 139–40, 291 culture wars, 12–13 Czechoslovakia, 26 Dalits, 63–4 dating profiles, 154 ‘deaths of despair’, 7, 108–10, 136, 271, 293 Deaths of Despair (Deaton and Case Deaton), 136 Deaton, Angus, 19, 108–119, 136 DeepMind, 177 degrowth, 232–5, 254–5 ‘deindustrialization’, 83–5 democracies, 26, 37, 46 Deneen, Patrick, 262–5 Deng Xiaoping, 24, 46, 205, 212–13 Denmark, 91, 285 ‘dependency theory’, 27–8 Detroit, Michigan, 87–8 dictatorships, 11, 24, 29, 32, 42–8 Digital Equipment Corporation, 174 disability-adjusted life years (DALY), 237 dishonesty, 153–6 Disney, 178 Dominican Republic, 225 Easterlin, Richard, 279 ‘Easterlin paradox’, 279–80 Easterly, William, 39 Ecclesiazusae (Aristophanes), 73 Economic Freedom of the World index, 35–7 economic freedom, 35–42, 36, 57, 58–62, 58, 77–8 Economist, The, 179, 192 education, 20, 94 Energiewende, 191, 192–3 Engels, Friedrich, 2, 277, 290–91 Enlightenment, 73 entrepreneurship, 123–4, 128–9, 152–4 ‘welfare entrepreneurs’, 197 environmental issues, 236–41, 245–52, 293 agriculture, 239–40 air pollution, 237–8 biodiversity, 238–9, 249–50 deforestation, 239 health and, 236–8, 237 plastics, 247–8 prosperity and, 245–52, 249 transportation, 250–51, 254–5 Environmental Performance Index (EPI), 248, 252 Estonia, 26 Ethiopia, 277 Europe, 22, 239, 267, 282 European Centre for International Political Economy, 79 European Union (EU), 4, 68, 79, 116, 164, 258–9 Everybody Lies (Stephens-Davidowitz), 155 Facebook, 163, 167–75, 179–80 Fallon, Brad, 192 famine, 29 Fanjul, Alfonso and José, 140 fascism, 75 Federal Communications Decency Act (USA), 174 Feldt, Kjell-Olof, 11 feudalism, 73, 75 Financial Fiasco (Norberg), 142 financial markets, 141–3 Financial Times, 8, 267 Finland, 76, 78, 268, 285 Foodora, 102 Forbes’ list, 129–30 forced technology transfers, 211 Foroohar, Rana, 8 Fortune 500 list, 151 Fortune magazine, 169 France, 79–80, 97, 159, 192, 281, 285 Fraser Institute, 35 free markets, 2–4, 6, 23, 58–62, 65–82, 83, 290–97 happiness and, 279–89, 282, 284, 286 human values and, 261–89 Friedman, Thomas, 204 ‘friendshoring’, 79 Friendster, 170 GAFAM (Google, Amazon, Facebook, Apple, Microsoft), 169–70 Gallup World Poll, 267 Gandhi, Indira, 245 Gapminder, 18 Gates, Bill, 124–7, 274 GDP (Gross Domestic Product), 5, 23, 26, 33, 35, 49–56 General Data Protection Regulation (EU GDPR), 164 generosity, 274–7 Georgia, 26, 215 Germany, 26, 84, 97, 101, 192–3, 196, 268 gig economy, 101–3 Gingrich, Newt, 191–2 Gini coefficient, 132 global financial crisis, 2008, 4–5, 142–3 global supply chains, 41–2, 58–61, 76, 81 Global Thermostat, 255 global warming see climate change globalization, 3–8, 17, 19, 80, 103–10, 117 Google, 163, 169–73, 179–80 Gorbachev, Mikhail, 215 Graeber, David, 86, 98–9 Grafström, Jonas, 240 Greece, 26, 254 Green Revolution, 239–40 green technology, 243, 251–5 Greider, Göran, 50, 241 growth, 49–57 degrowth, 232–5, 254–5 government and, 55–6 health and, 52–3 poverty and, 53–4 Guangdong, China, 207–8 Guardian, 3, 169 Halldorf, Joel, 262, 265 happiness, 279–89, 282, 284, 286 Hawkins Family Farm, 140 Hawkins, Zach, 140 Hayden, Brian, 161 Hayek, Friedrich, 66 Helm, Dieter, 193 Henrekson, Magnus, 56 Hertz, Noreena, 261, 262, 265, 268, 272, 274–5, 278 Hillbilly Elegy (Vance), 87 Hinduism, 22, 25 Hong Kong, 23, 205, 207 Horwitz, Steven, 294 housing market, 131, 142–3, 208–9 How China Became Capitalist (Wang and Coase), 206 How Innovation Works (Ridley), 188 Hsieh, Chang-Tai, 148–9 Hu Jintao, 215–16 Hugo, Victor, 25 Hume, David, 284 Hungary, 26, 283 IBM, 151 Iceland, 285 IKEA, 119, 141, 147 illiteracy, 20, 20 ‘import substitution’, 27–8 In Defence of Global Capitalism (Norberg), 3, 17, 33, 38, 42, 146, 151, 156, 169, 204, 214, 230–31 income, 22, 55, 88–96, 95, 134–5, 285, 291 low-income earners, 136–8 minimum wage, 90 wage stagnation, 89, 92–3 see also inequality India, 11, 24–5, 63–4, 70, 234, 239, 251, 258 caste system, 63–4 Indonesia, 239 industrial policy, 182, 188–203 Industrial Revolution, 22 inequality, 7, 27, 42, 54–5, 110, 131–8, 133, 285–7 happiness inequality, 131–2 income, 285–7 life expectancy and, 136–8 infant mortality, 19–20, 235, 291 Infineon, 196 inflation, 8, 10–11, 69 innovation, 65–6, 122–3, 125, 151, 181–203 government policy and, 181–203 innovation shadow, 169, 176 prizes and, 199 research, 199–200 subsidies and grants, 196–7 Instagram, 168, 177 integrity, 164 intellectual property, 41, 210–11 International Disaster Database, 235 International Union for the Conservation of Nature (IUCN), 238 internet, 162–8, 183–7 IPCC (Intergovernmental Panel on Climate Change), 231 iPhone, 107–8, 156, 159 Iran, 220 Iraq, 251 Ireland, 285 Italy, 97, 285 Jackson, Jesse, 43 Jacobs, A.