Business

Bruce Greenwald “Warns”: Globalization Is On The Retreat

The global economy is undergoing a massive structural transformation. Bruce Greenwald explains the coming death of manufacturing and the return of the local.

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Bruce Greenwald: Globalization In Retreat

Transcript

From Roman times when we have the first good global data on standards of living until really 18 hundred 1820 there is no net increase in humans. Throughout that whole period the vast majority of the human race is essentially expensive livestock only Staples live with their animals have one suit of clothes comes off and on in layers over the seasons biological entertainment no real medical care no travel no nothing and there's a small elite that lives what we would think of as a normally human life. They aristocrats the well-off merchants and so on. From 1820 on what happens first in Northern Europe then obviously in Europe as a whole than in the British dominions in the United States. Is that the world changes and everybody by saying 1950 lives better than the aristocrats did an eighteen hundred and that is an extraordinary achievement. And it's not a scientific it is a managerial chief. The real shock is going to be that globalization is going to be in retreat for a number of reasons. If you look at the world before nineteen nineteen fourteen it is a world of commodity production. It's food in historically unprecedented quantities. It's natural resources it's well it's things like that. What happens is that we get so efficient that trade and that just disappears because everybody can grow enough food. And so you see globalization in retreat as you move out of those simple commodities that can be traded into local manufacturers with locally customized features. Same thing is going to happen again because what's happening is manufacturing is not in the same way that agriculture did.

You've got very high rates of productivity growth and relatively low rates of demand growth which means labor which is the fundamental cost of almost everything is going to come out of it. But it's actually worse than that because as the robots make everything the advantage of cheap labor which is what you're seeing now in Asia goes away. So when General Motors got in trouble in 1980 they had 360000 workers in North America. This time when they got in trouble they have 30000 workers in North America and they produce half as many cars. Once that happens. Exactly what's happening in the auto industry occurs which is nobody needs to import cars because transportation costs aren't going down that much that it is all about making cars locally and you're seeing that now in the United States and in the border areas of Mexico. We used to spend 9 percent of our income on clothing. 6 percent was making clothing and 3 percent was drycleaning and montri. Today we spend 6 percent of our income on 3 percent is drycleaning and laundry. Only 3 percent is making the clothing. So manufacturing becomes less and less important. It's all about services and you don't send your dry cleaning out to China. It's all about locally produced and consumer services. So for all those reasons globalization is actually a an early 21st century phenomenon. And by the middle of the century it's going to be in great retreat. It's really going to be all about tourism and where you want to retire.

I think 50 years from now if we continue to do what we've done over the last several centuries and in the last 20 years of course what's happened is that 800 million to a billion people in Asia have attained that standard of living. But if we continue to do it it will be a standard of living not based on a five day workweek but based on a three day workweek. And if we go on and on it will not be demanding physical jobs it will be increasingly set of jobs of human interaction and supervision in education in health care and housing that people really like. So I think that that engine which has over the last 150 years worked this extraordinary transition in society should continue to do so.