Practice English Speaking&Listening with: Is Globalization Over? | What's Next For The U.S. Economy

There will be less globalization.

In fact, I think we have entered an era of deglobalization.

Productivity will be less dynamic as companies rewire supply

chains. There's going to be some hit to productivity.

There'll be high industrial concentration that tends also to be

bad for productivity. Then on the demand side, there's a

question mark as to how risk averse will people be coming out of

this. I hope that the coronavirus is not the end of

globalization. As some people are saying, the global economy is

not a zero sum game in which one side gains only to the extent

that the other side loses. It is and should be a positive sum

game. There are all sorts of advantages that we get and other

countries get out of globalization.

The United States cannot afford to do everything inside our

borders. That kind of an economy would cripple us, would make

us much, much poorer than we are right now.

Developing nations, if they can't export to the United States

and to other developed nations, they are going to stay poor.

This is crazy and crazy talk to think that we can go back to the

1930s, the kind of isolationism we saw then and remember what

happened then, that kind of isolationism made the Great

Depression even worse.

After this crisis, I think it's going to be very difficult for

policymakers to reengage with the rest of the world.

And by the way, the rest of the world's got a hard time

reengaging with us. So our economy will be less globalized to

all our detriment.

Our economy will be diminished by that.

And to step further away from that would be a significant error.

We we need to embrace the world.

The process of globalization was a slam dunk success for

Americans in the entire global economy and stepping away from it

is a serious area. But unfortunately, I think that's the

direction we're headed in the wake of this crisis.

It's a shame if we if we really abandon the global ecosystem we

created because it is actually created jobs all over the world.

It's lifted a lot of economies around the world.

It's made us more global citizens.

And in many respects, up until recently, I would say that it's

it's really allowed the world to operate in a more unified way.

But obviously currently there are a lot of other strains and

pulls on that on that whole ecosystem in addition to the virus

that I think are driving people to start to think about how do

we make things in a more domestic -- make decisions in a more

domestic way? Stuff moves in container ships around the world

incredibly cheaply and container ships are not vectors for the

virus. So that's not a problem.

But how much of the organization of that supply system depends

upon personal contact?

How much depends upon your your factory manager being able to fly

out to China and talk with the suppliers there?

And the answer is probably some of it.

And we're going to clearly have a lot less even even after the

pandemic. I think people are going to be less willing to do all

of that. So this probably is a setback for globalization.

The only question is the magnitude.

We're talking five percent, we're talking 50 percent and nobody

really knows. The impetus, original impetus for us when

corporations in general for getting into a globalized supply

chain was really around cost and efficiency.

It was cheaper and it was efficient through Just-In-Time

mechanisms and other systems to to get products delivered from

wherever it was in the world to the United States and elsewhere

or other places around the world.

We now obviously I've seen some of the aspects of

vulnerability's resilience in the Covid-19 era, which are

absolutely throwing these questions back onto the table

regarding what's the ideal type of supply chain.

You know, obviously, I think is still a lot of questions to be

answered before I can tell you whether it's going to land.

But I will say that there are considerations around inflation

and cost increases if we were to actually move the production

lines back into, let's say, the United States.

So to have more resilient supply chain, you would need to have a

more spread out production.

So not so much globalized, but globalized in a more even way.

And that, I think, is potentially an opening for other countries

that we are in some sense before completely shut down from

international trade by the complete dominance of China.

And now it's like there is a reason actually to take a risk on a

new country, which is that, well, what if something else happens

in China? Is it pandemic or politics, which could, you know, is

very much in the cards.

And so long as individuals want to consume and find the best

things that they want at the most affordable prices,

essentially, that's what drives globalization.

If China does manage to recover itself and its own consumer

starts to pick up more.

The Chinese consumer is the single biggest global game in town

and it certainly has been for the past five years.

And I can't imagine whatever politicians say that the world's

greatest consumer companies are going to want to miss out on

that. So, yes, it's very fashionable for politicians in the West

to blame China for everything that has happened with this

horrible pandemic.

I'm going to follow it up by saying, you know, there's going to

be a resetting of the agenda.

But I can't imagine Apple, for example, to say such a pioneering

US consumer brand to suddenly decide it doesn't want to sell any

iPhones to Chinese consumers.

Well, I do think it is very likely that there will be change.

Is a lot of companies that use supply chains around the world to

feed back into their own consumers will be very wary of having

too much of it in China in the future.

But I think, to be honest, that trend was underway already

because China would become a lot more expensive the past few

years as wages rose.

Workplaces will be online and will be global because the best

talent can be found anywhere that won't go away, but what is

happening in part is that, as we understand the structural

changes that are needed in the future, not only because of

covid, but also because of climate, the fact that we'll be

moving to electric vehicles, the fact that we'll be moving to

5G, the fact that will be moving to renewable energy there,

what's happening is not exactly the globalization, but

industrial policy in the U.S., in Europe and in Asia, saying we

want a piece of that future.

So we're going to protect our electric vehicle sector.

We're going to produce the wind turbines or the photovoltaics.

We want a battery supply chain.

So part of what is happening is a kind of manufacturing

nationalism, which, if it doesn't get out of control, is not so

bad because it basically is a race to competitiveness in the new

sectors of the economy.

What I do worry about is something else, which is a geopolitical

cold war, which a lot of hotheads in the United States want

these to be China.

This is a dreadful mistake.

God help us if we go that way.

The idea that isolationism, protectionism makes absolutely no

sense. We actually have to have more cooperation.

Now, There will be some insourcing back to the United States.

We have gone through what I sometimes call it, hyper

globalization. We didn't focus on the importance of resilience

in our supply chain.

And we this is not only true in global supply chains, but every

aspect of our economy.

We make cars without spare tires as we bring jobs back.

I'm not - It's probably not going to be when I say we're going

to be supply chain back, but it won't be jobs, much of that work

will be done by robots.

And so we shouldn't think of this as a job program.

It's a resilience program.

And in fact, in many aspects of this kind of protectionism are

going to backfire.

If others reciprocate, our exports will go down.

So the U.S. is better off then than most other countries because

we're big, we're relatively closed already.

We have lots of resources.

We have lots of people. We have lots of room to do it.

If you're a small, open economy, which, you know, people used to

think, oh, if I want to be anything in this global economy, I

want to be a small, open economy because I can turbocharge my

growth for the rest of the world.

Well, this is no longer the environment.

When we deglobalize, You want to have the characteristics of the

US. So we are in relative terms, we are better off.

In absolute terms, We would be better off if we collaborated but

collaborated according to rules.

So you took the example of China.

This is not just a U.S.

issue. Other countries have the same grievances as the US has

with China in terms of intellectual property theft, in terms of

joint venture requirements, in terms of unequal access.

So it's also important that other people in this globalization

construct abide by the rules of globalization.

You can't have a one way option where you get to benefit, but

you don't live up to your global responsibilities.