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The Netherlands may be the first country to hit the limits of growth

The Netherlands may be the first country to hit the limits of growth

The country has 507 people per sq km, nearly five times the EU average, while liveable land is shrinking due to climate change
© Harry Haysom

The other morning I cycled around the Dutch town where I grew up. Behind our old house, the field where I spent half my childhood is now covered with homes. So is my old football club. My high school is now in a built-up area. At the local train station, the bike shed was full on a Saturday afternoon. When I got to Amsterdam, the business-traveller economy appeared to have broken down: endless waits for Ubers, nobody at hotel reception, restaurants closed at lunchtime for want of waiters.

I know over-construction and understaffing are now global problems, but they are particularly acute in the Netherlands. The country has run out of space and staff. Sure, a recession may temporarily loosen the jobs market, but the problem was acute pre-pandemic and will simply resurface whenever growth resumes. The Netherlands is probably the first country to hit the limits of economic growth.

Other overdeveloped places such as the Bay Area, New York and Singapore may follow, running out of room for new workers and businesses. This raises the question: can a rich place be happy if its economy stops growing?

With hindsight, the Netherlands was too well-suited to the era of globalisation. The trading nation with Europe’s biggest port experienced 26 years of unbroken economic growth until 2008, then a world record. Now it tops ETH Zurich’s KOF Globalisation Index as the world’s most globalised country.

And so its population mushroomed. When the counter hit 14 million in 1979, Queen Juliana said, “Our country is full.” In 2010, Statistics Netherlands said the population would probably never reach 18 million. Today it’s 17.7 million and rising…

The EU’s Crisis Is Global: Neocolonialism, Hyper-Financialization and Hyper-Globalization Come Home to Roost

The EU’s Crisis Is Global: Neocolonialism, Hyper-Financialization and Hyper-Globalization Come Home to Roost

The EU’s crisis isn’t limited to energy. It is a manifestation of the global breakdown of Neocolonialism, Financialization and Globalization.

The European Union (EU) was seen as the culmination of a centuries-long process of integration that would finally put an end to the ceaseless conflicts that had led to disastrous wars in the 20th century that had knocked Europe from global preeminence.

Wary of the predations of the U.S. and rising Asian powers, European nations sought the economic and diplomatic strength of a confederation that would be greater than the sum of its parts, a union that would restore Europe’s rightful place as a global power.

This worthy goal was undermined by the destructive dynamics of the past forty years: Neocolonialism, Financialization and Globalization.

These dynamics are unstable due to their internal contradictions. In classical colonialism, the Core dominates the Periphery with force, extracting economic value by exploiting the subject states’ commodities and forcing the colonies to buy the valued-added finished goods produced by the colonial power’s domestic economy.

This extractive model was at odds with the liberal worldview of the colonial powers which held self-rule and open markets as necessary to stable prosperity. The contradictions of classical colonialism led to its collapse as colonies broke free and the colonial powers were forced to navigate a more open global economy.

Beneath the glossy vibe of strength through unity, the EU institutionalized a Neocolonial Model in which some EU members are more equal than others, a divide that was starkly revealed in the debt crisis of 2011-2012.

I described the EU’s version of the Neocolonial Model in 2012: The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

…click on the above link to read the rest of the article…

This is how civilisations collapse

For neoliberal ideologues such as Milton Friedman, who used the pencil fable to argue for opaque world-spanning supply chains, the beauty of such complex systems is not only that the consumer obtains his product at the lowest price possible, and that the producer can maximise his profits, “but even more to foster harmony and peace among the peoples of the world”. As the historian Quinn Slobodian noted in Globalists, his recent study of the first neoliberal theorists, such idealistic motivations were evident from the very start. Ignoring the fact that the globalised world of the late 19th century failed to prevent World War One, they believed that creating a giant interconnected market would make a repeat of such a cataclysm impossible.

They were wrong. Instead, the restructuring of the global economy into a large web vastly increases the risk of a total system collapse. Instead of one economy failing, a shock in one corner of the world can place great and sudden stress on economic and political systems thousands of miles away. A war in distant Taiwan can mean you’re no longer able to buy a new car; a drought on the other end of the world means empty shelves at home.

…click on the above link to read the rest of the article…

Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense

Why Shortages Are Permanent: Global Supply Shortages Make Fantastic Financial Sense

The era of abundance was only a short-lived artifact of the initial boost phase of globalization and financialization.

Global corporations didn’t go to all the effort to establish quasi-monopolies and cartels for our convenience–they did it to ensure reliably large profits from control and scarcity. Not all scarcities are artificial, i.e. the result of cartels limiting supply to keep prices high; many scarcities are real, and many of these scarcities can be traced back to the stripping out of redundancy / multiple suppliers of industrial essentials to streamline efficiency and eliminate competition.

Recall that competition and abundance are anathema to profits. Wide open competition and structural abundance are the least conducive setting for generating reliably ample profits, while quasi-monopolies and cartels that control scarce supplies are the ideal profit-generating machines.

The incentives to expand the number of suppliers, i.e. increase competition, are effectively zero. America’s corporations spent $11 trillion buying back their own stocks over the past decade; that’s equal to the combined GDP of Japan, Germany and Italy. If adding new suppliers to the global supply chain were profitable, some of that $11 trillion would have exploited those vast profits.

The financial reality is attempting to compete with an established cartel that has captured regulatory and political mechanisms is a foolhardy waste of capital. If firing up a new supplier of essential solvents, etc. was so captivatingly profitable, the why wouldn’t Google and Apple take a slice of their billions in cash and go make some easy money?

The barriers to entry are high and the markets are limited. A great many specialty lubricants, solvents, alloys, wires, etc. are essential to the manufacture of all the consumer and industrial products that are sourced globally, but the markets are narrow: manufacturers need X amount of a specialty solvent, not 10X.

…click on the above link to read the rest of the article…

The End of Western Globalia?

The End of Western Globalia?

Since the 1970’s, international trade has continuously been promoted by leaders of developed countries and economic agents.

Several theoretical frameworks have been put forward to explain the benefits of a free trade environment, from Adam Smith’s concept of absolute advantages to more recent firm-based theories. However, the reality is much more nuanced, especially after China’s entry into the WTO in 2001, and questions arise as to the sustainability of the current model.

While the development of free trade activity could be regarded as a sound intellectual victory for Western capitalism, such trend has paradoxically weakened several countries in Europe and America.

The first side effect of economic globalism in the West has been the retreat of manufacturing in several economies like the United States, with durable unemployment issues as a result. Beyond social impacts, Canadian author Vaclav Smil argued that a manufacturing decline is structurally problematic as it affects the ability of a country to innovate on the long run [1].

The second reason to be skeptical about international trade is the multiplication of structural imbalances in the global economy, with unstainable surpluses and deficits everywhere. An economy displaying a growing trade deficit is getting poorer with respect to foreign economies, leading to a financial and/or social crisis in the end. To understand that, it is necessary to imagine a country whose currency is backed by something tangible (e.g. gold). In that case, a deficit means that the country owes metals to the rest of the world. Of course, current account deficits can be offset by financial inflows, but as there’s no free lunch in economics, that should not be seen as a long-term solution.

…click on the above link to read the rest of the article…

Where’s Dirk Gently When You Need Him?

Where’s Dirk Gently When You Need Him?

Did you hear? A supersized cargo ship got wedged in the Suez Canal on March 23rd? If you didn’t, you must do pretty well at avoiding the news, social media, and late night TV. But the short of it is: the Ever Given somehow lost control (sandstorm strength winds have been blamed, as have human errors) and crashed into the bank of the canal and lodged itself in.

So what? Is this really news? Or just a sensational story to distract us from the pandemic, which, one might argue, is itself a distraction from the rapid unraveling of Earth’s systems and thus human civilization? Perhaps. But then again perhaps not.

Here’s why this incident is worth understanding:

First, a ship single-bowedly disrupted global trade for six days. It was finally freed on March 29th. However, there is now a backlog of over 300 ships while many ships rerouted around the Cape of Good Hope. The Suez Canal is part of a trade route that carries more than 10 percent of global trade, including 7 percent of the world’s oil. Each day 30 percent of the world’s shipping container freight moves through the canal. Thus it created backlogs in shipping (including some 200,000 live animals who could have overheated or run out of food). It raised the price of oil briefly. It created shortages in factories—not just of parts but of shipping containers. And of course, it felt like a freak occurrence. Last year, of the 18,840 ships that moved through the canal, there were no incidents.

But the main reason is because this is an excellent metaphor on how fragile our entire globalized system has become.

…click on the above link to read the rest of the article…

Suez Highlights the Fragility of Globalization

Suez Highlights the Fragility of Globalization

Photo: Suez Canal Authority.

The global supply chain is an elaborately choreographed ballet, nowhere more than in the flow of containers through which 60% of the world’s seaborne trade travels. Calibrating a stream of over 800 million boxes each year entails sophisticated tracking that makes sure containers reach their destination. The system reaches down to the crane operator who stacks each box in a specified position on the ship, and ensures enough empty boxes are on site to load the next shipment.

Last week the ballet turned into a mosh pit, when a character named MV Ever Given stepped out of its choreographed role to disrupt the entire dance. It blocked the world’s most critical trade chokepoint, the Suez Canal, an artery carrying 30% of the world’s container traffic. Effects radiated across the planet. Oil prices ticked upwards. Ships were held up at major ports from Rotterdam to Newark. Store and e-commerce deliveries were delayed. Both Amazon and Ikea had shipments on the Ever Given itself.

In our just-in-time world, where ships act as precisely scheduled floating warehouses, a week’s interruption creates a backlog that lasts a lot longer. It may only take days to relieve the maritime traffic jam and restore normal canal operations. But leading container shippers predict it could take weeks or even months to sort it all out, as off-schedule ships pile into congested ports. The shipping industry was already struggling with impacts of the pandemic on operations and the way it has shifted consumer purchases from restaurants and entertainment to consumer goods. Containers were short in Asia where much shipping emerges, and costs were way up.  Then the canal blockage piled on. It is “going to result in one of the biggest disruptions to global trade in recent years,” reported MSC, the world’s second leading container shipper.

…click on the above link to read the rest of the article…

Toward an age of low tech for a more resilient and sustainable society

Globalization and Our Precarious Medical Supply Chains

Globalization and Our Precarious Medical Supply Chains

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The grave risks and dangers in the process of worldwide out-sourcing and so-called globalization of the past 30 years or so are becoming starkly clear as the ongoing health emergency across China threatens vital world supply chains from China to the rest of the world. While much attention is focused on the risks to smartphone components or auto manufacture via supplies of key parts from China or to the breakdown of oil deliveries in the last weeks, there is a danger that will soon become alarmingly clear in terms of global health care system.

If the forced shutdown of China manufacture continues for many weeks longer, the world, could begin to experience shortages or lack of vital medicines and medical supplies. The reason is that over the past two decades much of the production of medicines and medical supplies such as surgical masks have been outsourced to China or simply made in China by Chinese companies at far cheaper prices, forcing Western companies out of business. 

Sole source China

According to research and US Congressional hearings, something like 80% of present medicines consumed in the United States are produced in China. This includes Chinese companies and foreign drug companies that have outsourced their drug manufacture in joint ventures with Chinese partners. According to Rosemary Gibson of the Hastings Center bioethics research institute, who authored a book in 2018 on the theme, the dependency is more than alarming. 

Gibson cites medical newsletters giving the estimate that today some 80% of all pharmaceutical active ingredients in the USA are made in China. “It’s not just the ingredients. It’s also the chemical precursors, the chemical building blocks used to make the active ingredients. We are dependent on China for the chemical building blocks to make a whole category of antibiotics… known as cephalosporins. They are used in the United States thousands of times every day for people with very serious infections.”

…click on the above link to read the rest of the article…

Blain’s Morning Porridge – May 21st 2019

Blain’s Morning Porridge – May 21st 2019


“He knew everything about literature, except how to enjoy it…”

Waves of negative news headlines battering markets. Might have to wear a hat..

Huawei – Trade War Threat Level Rises

The Huawei embargo raises the trade war threat from undeclared to imminent shooting match. While it’s not quite “bullets fired at Archduke’s car”, it’s getting close. It feels like there is something of a tedious inevitability developing – a bellicose Trump realises his political future depends on winning, and the Chinese refuse to lose face. Is it already too late to rein back?  

Huawei being effectively barred from Occidental markets has triggered all kinds of market fears: a “digital iron-curtain”, the threat of an economic cold tech war, broken global supply chains, and knock-on effects we can only begin to imagine. It’s the End of Globalisation – scream the media. The Chinese hint at reprisals. The “temporary exemptions” granted last night by the US are just that – temporary: they won’t undo the sudden need of millennials to dump their Huawei phones. The damage has been done.  Who will the Chinese punish in return? 

Markets are now rife with speculation about “ripple” effects damaging tech dependent initiatives from autonomous cars, streaming, digitisation, and booking apps, triggering all kinds of real-world economic pain in sectors like tourism and luxury goods. While the market is fretting about how America will shod itself as tariffs are slammed on shoes made in China, it might be time to reassess market sectors where we expected long-term and ongoing China expansion, rising domestic consumption and demand to drive growth – I’m think areas from aviation, autos, machinery and plant, and energy. And, what are the implications for the UK – where the Chinese are building our nuclear power stations? 

This doesn’t end well…

 …click on the above link to read the rest of the article…

Localisation: A strategic solution to globalised authoritarianism

Ladakhi girls. Photo credit: Helena Norberg-Hodge

Localisation: A strategic solution to globalised authoritarianism

For those who care about peace, equality and the future of the planet, the global political swing to the right over the past few years is deeply worrying. It has us asking ourselves, how did this happen? How did populism turn into such a divisive and destructive force? How did authoritarianism take over the political scene once again?

From my 40 years of experience working in both industrialised and land-based cultures, I believe the primary reason is globalisation. When I say globalisation, I mean the global economic system in which most of us now live – a system driven by continual corporate deregulation and shaped by neoliberal, capitalist ideologies. But globalisation goes deeper than politics and the economy. It has profoundly personal impacts.

Under globalisation, competition has increased dramatically, job security has become a thing of the past, and most people find it increasingly difficult to earn a liveable wage. At the same time, identity is under threat as cultural diversity is replaced by a consumer monoculture worldwide. Under these conditions it’s not surprising that people become increasingly insecure.

As advertisers know from nearly a century of experience, insecurity leaves people easier to exploit. But people today are targeted by more than just marketing campaigns for deodorants and tooth polish: insecurity leaves them highly vulnerable to propaganda that encourages them to blame the cultural “other” for their plight.

Let me illustrate how this happened in Ladakh, or Little Tibet, where I first visited as a young woman and where I have worked for over four decades. Situated in the Indian Himalayas, Ladakh was relatively isolated—culturally and economically—until the late 1960s. When I arrived in the early 70s, a campaign of Western-style development had just been launched by the Indian government — giving me the opportunity to experience what still remained of the ancient culture, and to observe the changes that came with modernisation.

 …click on the above link to read the rest of the article…

“Globalization is the Demise of Humanity”: Towards an “Economy of Peace” with an Alternative Monetary System

“Globalization is the Demise of Humanity”: Towards an “Economy of Peace” with an Alternative Monetary System

Globalisation is the demise of humanity. That being said, if we want peace, solidarity, harmonious cohabitation, justice and equality – we have to defeat globalisation. And to be able to defeat it, countries which strive to take back autonomy and sovereignty may want to move away from the oppressive fist of the west.

BREXIT offers Europe and the world a formidable opportunity to break loose from the rigged, dollar-based fiat monetary system. BREXIT opens the door for other European Union (EU) nations to do likewise. Different polls indicate that between 60% and 80% of all EU citizens are fed up with the corrupt EU, wanting to leave. In France, whose Mr. Hollande has reached the attribute of least popular President of all times and who is openly called a traitor of the people, a recent survey says more than 85% of the French are against the EU.

Europeans are also worried about the gradual but steady integration of the EU with NATO. A militarisation of Europe with a US-led war machine moving ever closer towards Moscow is a strong and present danger for WWIII – meaning Europe may become again the theatre of war and destruction the third time in 100 years. Encircling China with two thirds of the US Navy fleet in the South China Sea, provoking territorial conflicts via the Philippines, a former colony and a US vassal; and presenting a constant menace with uncountable military bases in the area, all the way to Australia, are no signs of peaceful cooperation by Washington.

Bringing down the EU would break up the Euro and may also break up NATO. This, of course, is non-coherent with Washington’s hold on power over Europe and aggression against Russia.

 …click on the above link to read the rest of the article…

The Biggest Monetary Experiments In History: Part 2

The Biggest Monetary Experiments In History: Part 2

In part one we discussed the troubling issues in Europe (in case you missed it, you can read it here).

Today… Japan

The story of Japan is really a story that begins with globalisation.

According to the Oxford Dictionary, globalisation is described as:

“The process by which businesses or other organizations develop international influence or start operating on an international scale.”

It is, in a nutshell, international trade, and one of the things it’s done is add huge swathes of the global workforce to the world’s economy.

I bring up globalisation because of what it’s done to the global labour supply.

Realise this labour supply wasn’t Joe-middle-class-Sixpack with a Beemer, a two story house in the suburbs, and a white picket fence.

When most people think of  this workforce, they picture small brown people in shabby clothes toiling in sweatshops in China, India, Bangladesh, Vietnam, Cambodia, etc.

And by and large that’s it.

We’re not talking about Joe Sixpack. No, this was Amit in Bangladesh with 45 kids, working 29 hours a day, and paid the equivalent of a Happy Meal at Mackers.

And when we got such a massive disparity in costs, market forces went to work and did what market forces do.

The supply of goods produced exploded, and the cost of labour on a relative global basis fell.

I guess we could call this a labour supply shock, and what this did was it helped keep wages suppressed in developed markets while those in developing markets rose. This is how Amit raised his living standard so he can afford his 5th wife.

Now, the flip side of suppressed wages in the developed world was, of course, ever cheaper imported goods as the cost of those has plummeted. Declining real wages in the developed world have been cushioned by deflation in consumer goods.

…click on the above link to read the rest of the article…

What’s Wrong with the Economy: 9 Toxic Dynamics

What’s Wrong with the Economy: 9 Toxic Dynamics

These nine dynamics are mutually reinforcing.

Beneath the surface signals of an eternally rising stock market and expanding GDP, we all sense something is deeply, systemically wrong with the U.S. economy. These nine structural dynamics generate secondary dynamics, all of which are toxic to social mobility, sustainable prosperity, accountability and democracy:

1. The financialization of the economy, which transformed services, credit, risk and labor into commodities that could be traded globally. Financialization generates enormously asymmetric returns: those with access to low-cost credit, global markets and expertise in finance collect the lion’s share of gains in income and wealth.

2. The technological transformation of the economy, which has placed a substantial scarcity premium on specific tech/managerial/communication skills and devalued ordinary labor and capital. As a result, the majority of gains in wealth and income flow to those with the scarce skills and forms of capital, leaving little for ordinary labor and capital.

3. The end of cheap fossil fuels. The fracking boom/bubble has obscured the long-term secular trend: the depletion of cheap-to-access and process oil. As many analysts have observed (Nate Hagens, Gail Tverberg, Richard Heinberg, Chris Martenson et al.), the global economy only grows if energy and credit are both cheap.

4. Globalization, which transformed the developing world into the environmental dumping ground of the wealthy nations and enabled the owners of capital to offshore waste and labor.

5. The destructive consequences of “growth at any cost” are piling up. “Growth” is the one constant of all existing political-economic systems, and none of the current Modes of Production (i.e. the structures that organize production, consumption, the economy and society) recognize that “growth” is not sustainable.

The first two dynamics drive three other dynamics that have hollowed out the productive economy:

…click on the above link to read the rest of the article…

The massive hidden costs of the fossil fuel system

The massive hidden costs of the fossil fuel system

Two stumbling blocks on the road to regeneration: externalities and subsidies

The prevailing opinion among today’s political and economic elites is that economic globalisation is in some sense inevitable, perhaps even the summit of human achievement. The oft-repeated mantra is that ‘there is no alternative’ and we should adapt to it as best we can.

Rather than being inevitable, economic globalisation is, in fact, the result of a number of carefully chosen policies. Paradoxically, as we shall see, many of these directly contradict the basic tenets of classical free market economic theory, from which the proponents of economic globalisation draw much of their inspiration and authority.

By understanding the key reasons why the global economy behaves as it does today, we will be in a better position to discern the core patterns underlying economic behaviour and, if we choose, to change them. Two key drivers of today’s global economy are externalities and subsidies.

These two factors heavily skew market prices in favour of large-scale industrial goods and services and against small-scale and locally-based economies. These two drivers are further reinforced by the type of money systems that are dominant in today’s global economy that create a structurally dysfunctional growth imperative and wealth disparities with devastating impacts on health, social cohesion, as well as, national and international security. Kenny Ausubel, co-founder of Bioneers, has put it succinctly:

“The world is suffering from the perverse incentives of ‘unnatural capitalism’. When people say ‘free market’, I ask if free is a verb. We don’t have a free market, but a highly managed and often monopolized market. …we have banks and companies that are ‘too big to fail,’ but in truth are too big not to fail.

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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