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Should we be reassessing the argument for globalization?

by jmh1 min read26th Apr 20208 comments


EconomicsWorld Optimization
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If so, what might the ramifications to that reassessment might be in terms of economic, social, cultural and political (including multilateral, global institutions) be?

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Smearing supply chains across the world and chasing them to the lowest labor costs and into very specialized locations produces a supply chain that while extremely efficient has zero surge capacity for unusual circumstances, is brittle and liable to lock up at a moment's notice, and requires far too many state actors to not be at cross purposes.

NOTHING in biology is optimized for efficiency. Everything is robust at the expense of efficiency. Everything too efficient yet brittle died off long ago. A potato manages 0.5% conversion of sunlight to starch, nowhere near the theoretical yield of its photochemistry. But if you move it from shade to sun, it doesn't burn up its electron transport chain (which is harder than you'd think for photochemistry!), and if you move it from sun to shade it gets by without starving. If a virus chews up your lungs, you have fat stores to draw on rather than only functional tissue and the capacity to get by on lower lung capacity until the crisis is dealt with and regeneration can happen.

Nothing that has stood the test of time is nearly so centralized and brittle and over optimized as the current global civilization. Regardless of the end effects, things that last will go away from that direction.

EDIT: This does not only apply to international supply chains. Over optimization and over centralization and giganticism of players of the food supply chain has resulted in a system within the US in which is untenable unless everything goes right. Closing restaurants has resulted in farms that only sell to specialized suppliers being unable to get their product into domestic supply lines leading to absurd waste and a few crowded nodes in the meatpacking industry represent both absurdly effective viral breeding grounds and critical points that are threatening to take down large fractions of the domestic meat supply. Other examples abound.

EDIT: One could make the counterargument about how everything on Earth functions as part of an ecology rather than being fully self-sufficient, but ecologies are systems with huge numbers of interacting parts that are interchangeable, not small numbers of super specialized but independent actors. Symbiosis exists but results in loss of individuation once it gets severe enough...

I think we should recognize that "globalization" is far too generic an idea to really assess in any way. We should be considering what services (including the services of creating and delivering products) we're willing to pay extra for (and/or get lower quality or variety) in order to maintain a more visible, local, source. Or more likely - still globalized, but with larger reserves and redundant supply chains.

For many things, you simply can't grow or mine the necessary stuff in your region, so full local supply is a non-starter. You do without or you import. For many others, there are economies of scale, and comparative advantage of labor and social structures that make it massively inefficient try to do it locally. For a lot of things, consumption patterns change quickly enough that it's simply impossible to have tens of millions of micro-factories exactly distributed to match the needs.

Fortunately or un-, there's no actual argument going on. This isn't a decision that's being made by a rational agent. It's a distributed decision made by non-agent optimizers (like evolution, markets don't act based on a model, they simply aggregate trillions of more trivial-seeming decisions). Globalization can be slowed by social and government barriers, but the overall optimization process is inevitable.

I disagree profoundly with the last sentence.

The process continues when everything is perfect, but shocks undo it. If super-efficiency and super-specialization were optimal, the biosphere would have reached that point long ago.

Instead, everything is robust at the expense of efficiency at multiple levels, from individual cells to networks of ecological interactions. Super-optimized things do evolve, and sometimes spread explosively, but they are almost always shortlived and die out.

2Dagon1yFair point - I misstated. The optimization process is inevitable, but no particular optimization level is. Every equilibrium is subject to changes in the forces that underlie it. The balance of efficiency and robustness changes, as well as finding new areas of solution-space that trade off (or don't!) different dimensions of these aggregates. I should acknowledge as well that there's enough path-dependence in the process that there's no guarantee after a shock that the new equilibrium will be better on any dimension, let alone overall.

I agree that "globalization" is a very broad term, hence my several aspects.

I believe you over state the case about markets and absence of planners/decision-making. Even historically trade with external entities generally included many prerequisites, some political in nature others more social and cultural. Yes, the underlying economic requirements were also generally present (relative scarcity, comparative advantage related aspect stuff).

The focus on the pure economic/trade/supply chain aspects I don't think stand in isolation. The connecti... (read more)

No. We should be re-assessing the idea of allowing the FDA to stop the Mayo Clinic, Co-Diagnostics, Roche, et al from producing PCR test kits during epidemics. Shutting down the Principle Of Comparative Advantage is not an option.

We should all personally re-assess our basement stockpiles, as well... going to the grocery to fight over toilet paper on the first day of the Zombie Apocalypse or some nuclear tiff, is not a reasonable plan. (My own stockpile had me on Planet Smug until I ran out of canned fruit... ;)

The opposite actually. I agree that things like strategic parts of the supply chain is something that should probably be re-evaluated, but ideally we should keep up global cooperation more than ever.

What we should change however is the expectence of following international rules. Everyone isolating wouldn't help either our economies or even help prevent the next outbreak. Strict demands on following human rights, press freedom and expectence of cooperation in cases of novel diseases. On top of all that you have the repeat history of disregarding laws of trade etc. (not that the US don't have some issues there historically either, but china's transgressions are more current).

My point is that this calls for international organizations that are competent and powerful enough to be able to prevent future disasters, as well as not fearing single countried.