Is Globalisation at Risk?

One of our local 'dollar stores' sells some amazingly good pickled, roasted peppers from Turkey. Not only are they quite good, they are also quite inexpensive - costing far less than 'fresh' peppers at the grocery store (presumably grown somewhere on this continent). Although growing sweet peppers is possible in our Northerly latitude, it could hardly be construed as inexpensive when time and effort are taken into account.

Globalisation, has made its way to our heart via our stomach. Nothing in this world is ever unequivocally good, of course, but we think that having some access to the World's goods and culture generally enriches our lives and is a positive. We understand that this process has been everywhere disruptive, as well, but on balance it feels like progress.

Can globalisation fail? Is it an artifact of cheap energy? And if energy always gets more expensive from here on in, will globalisation decline? Our opinion is probably not. The advent of the Internet and peer-to-peer networks will provide opportunities for division of labour and broadening markets even as transportation costs become dearer. Some more localised production and distribution will gradually have a greater cost advantage if it is otherwise competitive, but as transportation is rarely a significant portion of costs, this is not likely to impede globalisation all that much.

Will the Depression kill globalisation? It certainly may set it back through trade financing problems, and through protectionist and autarkic public policies. However, as long as global exchange presents true efficiencies and opportunities for profit, those setbacks are likely to be temporary or geographically limited. If anything, the Depression will likely reinforce globalisation as marginal, less-efficient enterprises wind down.

There was an protest saw from a prior era: "Think globally, act locally." It is actually not bad advice under the current circumstances, though very far from the original intent. What are you doing to be globally competitive? What resources that you find in your immediate environment can you marshall to produce something for a globally-minded market? If you cannot come up with something, you may find the World passes you by.

Much of the Industrial era to date has consisted of efforts to make the Industrial way of life as much like the Agricultural as possible: the company or government as patronly employer for life; the financial investment dividend as reliable as land rent; and the bizarre experiment of Marxist Communism. These efforts have all failed, or are still in process of failing. What is emerging from the rubble is a much more dynamic and creative way of making one's way in the world.

Globalisation is really only at risk if humanity rises up to turn back the clock. Reactionary elements are now, as always, ever at work to stymie developments that threaten their turf. However it is certainly not in the best interest of the majority to embrace a reactionary world-view.

There are some ideas out there posing as progressive, voiced by intelligent people, which are actually reactionary: globalism is unequivocally bad; small towns are unequivocally good; all economy should be within mostly self-sufficient communities, etc. We know it often difficult to imagine a better and truly new tomorrow when trends in place have delivered so much disruption, but that imagining must be done if society is to avoid stagnation and decay.

The Myth of Progress

A notion bandied about, both in the media and in academics, is that of 'progress.' The idea, put simply, is that society will always improve itself. A problem immediately arises: one cannot define 'progress' any further than this. It is even more nebulous than 'globalisation' in meaning, and just as contentious a subject. In order to more clearly define progress, we will give our personal version thereof. Progress is:

An unending and inevitable process, moving the world towards a post-industrialised service economy. Society progresses towards an American-style middle-class lifestyle, and technology becomes both more efficient and less polluting. Progress is widely considered a 'good' thing, both a desirable and positive development.

Before we go further, let us say we consider 'progress' a load of bunk. For example, in the year 1800, the world population was around 1 billion. The vast majority of people then (i.e. 'the poor') were landless peasants. They had houses, they had food, they had beer or wine. The phrase 'poor but decent' comes to mind, in a general sense.

Fast forward to 2001, when 2.4 billion people lived on less than $2 per day. That's over twice as many people alive as in 1800... all completely or nearly destitute. Could you, Reader, live on about $730 per year, have only the clothes on your back (maybe a cinder block hut)? For the record, having less than $2 per day to live on is considered only 'moderate poverty' by the World Bank.

Another bit of 'progress' is the development of nuclear energy. It is argued that developing the power to split the atom was a 'good' thing - a 'good' thing which later acquainted itself with Hiroshima and Nagasaki. Is it a positive development that the planet could be rendered medically sterile several times over by fusion bombs? Even with 'peaceful' nuclear power generation, there is the deadly legacy of the radioactive waste; barrels of lethal crap which will exist for thousands of years to come. Progress?

Clinging to the idea that 'progress' is both a good and necessary thing is foolhardy. To believe that the old ways of doing things (a.k.a. business as usual) were the 'right' ways, is to be a casualty of the 2008 Depression. In the 2008 Depression, as with all past Depressions, one must adapt to the changes brought. For a closing metaphor, consider 'progress' the mirage of an oasis in the desert. One cannot afford to chase mirages; one must seek shelter.

A Case for Optimism

As you can surmise from our posts, we are not hopeful that the world can avoid hard times. However, a true optimist is someone who will make the best of any situation, good or bad.

A depression is not merely a destructive force, but a force for change. New businesses and institutions grow out of the wreckage of the old. Emerging industries meet new needs, and more efficient operations replace obsolete models. Whether what new forms replace the old are "better" or "worse" is a subject of debate that we won't get into.

In the USA during the depression of 1929-1939, many major, traditional sectors of economic activity more or less completely withdrew from the scene and were replaced. For example, the family subsistence farm was replaced with specialised, industrial farming. The mom-and-pop corner store was replaced with the supermarket. The workshop manufacturing system was replaced with mass production. Horse-driven transportation was replaced with cars and trucks.

What industries of today are heading for the chopping block, or at least facing prospects of diminished significance? US auto makers? The "FIRE" economy? Big government? Public education? It's a difficult thing to predict, but if these sectors do not deliver value in proportion to their cost, they will likely shrink until they do.

Also, how will the forms of economic life change? Will online shopping grow in significance as the mall-dependent retail stores fail? Will globalisation increase or decrease - that is, will goods and services from around the world be a larger portion of one's spending? - or will import substitution grow as entrepreneurs discover how to use small scale technologies and the internet to beat the advantages of the mass market and global trade?

What this has to do with optimism is this: if you lose your main source of income, what will you do? We hope you won't simply join the bail-out parade. We hope you will turn on your inner entrepreneur and recognise the many activities all around you right now that can be done for a profit. Join forces with others who are on the ball, or create something new on your own. The possibilities are endless. Even if others around you go mad with bailout-mania, resist the temptation to have someone "make work" for you, unless you are just going to use that as a "day job" while you build up your creative work. You are never too old to learn a new skill - in fact, learning new skills keeps both mind and body sharp.

We have been reading many sad stories of people who have lost their jobs or businesses, but kept spending their way right into bankruptcy and homelessness. Wishfully expecting your income to be restored is not optimism, it is reckless delusion! One must always live within one's means, no matter how meagre. If you loose 70% of your income, you must cut at least 70% of your spending. This can be a hard thing to do, and depressing psychologically. We know, we have been there.

There's a Depression on, folks. There's a good chance you, Reader, are looking at an imminent, massive, and persistent decline in your income. You must be able to respond to that appropriately if you want to have a hope of restoring your sense of accomplishment in life. Economic depressions break people psychologically. You must prepare yourself to avoid involuntary homelessness and starvation. Soberly assess how much you could rely on friends, family, your church, or "the government" to prevent that eventuation.

In conclusion, optimism is proactively managing a loss of income, and working towards its regrowth. We will further elaborate on both those tasks in future posts.