Globalization is About to Collapse. Here's Why

The device you are using to view this video made more than a hundred border crossings before reaching your hands. Raw materials were mined in Central Asia so that individual components could be manufactured in Taiwan, which used machinery from Central Europe to meet design specifications that were drawn up in South Korea, China or the US to reach final assembly. in East Asia and will be made compatible to run operating systems designed in the U.S. The components used in a single iPhone rely on more than 200 individual suppliers to say that your device has had to cross more than 100 borders before. no box is probably an understatement, this complex network of trade is achieved through the process of

globalization

, secure sea routes and a global commitment to international trade make all this possible.

Globalization has increased the quality of life for more people than any other economic system in human history. Around the world they have access to more goods at lower prices than ever. Best of all,

globalization

lifted more than a billion people out of poverty. No other economic policy has done more for the extremely poor than foreign and globalization. Everything will soon come to an end This video comes largely from the book The End is just the Starting by Peter Zion It is linked in the description Global trade is nothing new, anyone who knows a little about history has heard of the Road of Silk or Triangular Trade, however, these early globalizations trade networks lacked safe passages piracy and kleptocracy made foreign trade incredibly expensive and risky global trade was isolated within specific European empires the English, French, Spaniards and others had their own trade networks and rarely traded with each other, of course they robbed each other. others during times of war, which happened often, the lack of cooperation between European powers made it easier for pirates to roam the Caribbean and Mediterranean seas if the ships could evade the pirates, their cargo could still be looted by nations rivals, it was quite common for rival European powers to steal each other's cargo, the English would steal from the French, the French would steal from the Spanish, and the pirates would steal from everyone.

Conflicting colonial powers would make foreign trade unreliable and, in turn, more expensive; This would be the norm of global trade until 1945. At the end of World War II t

here

would only be two global powers, each with its own sp

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of influence, but unlike the USSR, the United States would emerge as the world's only naval power, while the Soviets would control Eastern Europe and Central Asia. America would have the oceans. all of them when it was Western Europe's turn to control the global oceans that power was used exclusively to enrich the mother country a mix of colonization and state sponsored monopolies all were designed to generate wealth for the Homeland when the Americans took control of the seas that they had a different idea marked by the horrors of the world wars.

The United States decided to use its naval superiority to grant free trade to all nations, including its most recent enemies. Everyone could participate in this new global free trade network. The high cost of providing a global network. The navy to keep the sea lanes safe would be paid entirely by the Americans. There is only one problem to participate in this global free trade network. You would have to be staunchly anti-Soviet. Despite this geopolitical mandate, a new era of global trade was unleashed in the days of Cargo ships stolen by rival nations or pirates were over. If your country lacked natural resources or food, it could now be easily imported without needing to bow to a European colonial master and this was just the beginning.

The Free Trade Network would eventually open to the communists. China in 1979, the Golden Age of globalism had arrived in this new era. Brits could play Nintendo, Americans could drive Volkswagens, and Indians could drink Coca-Cola, but the Golden Age of economic growth wasn't just because the U.S. Navy provided safe passage around the world. In the world, the World Bank and the International Monetary Fund were established to provide loans to nations that failed to industrialize. Underdeveloped nations could obtain low-interest loans to industrialize quickly. Of course, these loans came with political conditions, in particular anti-corruption and anti-Soviet agreements.

Loans along with global free trade are guaranteed in an era of prosperity for both developed and underdeveloped countries. The world's rich countries could offshore manufacturing to nations with cheaper labor costs and fewer regulations. Underdeveloped nations would be inundated with new employment opportunities and rich countries would gain more. Goods at lower prices almost all people outside the Soviet sphere saw their quality of life improve. This era saw the fastest global economic growth in human history, at least until the next era of globalization. Mr. Gorbachev tore down this wall in the late 1980s, the Soviet Empire began to crumble.

Eastern Europe and Central Asia were now allowed to join the globalized economy, while the transition from a command economy to a free market economy lasted a difficult decade in the 90s, they would be long-term winners with a reunified Germany and strong conviction. that international trade results in international peace EU investments flowed east the former Warsaw Pact country experienced an explosion of growth and even had higher growth rates than the manufactured exports of its western neighbors was the name of the game for these countries and their wealth would increase, but The end of the Cold War was not the only thing that improved global trade.

There was a cool new technology called the Internet. Anyway, the Internet is this huge computer network that is getting really big. What do you mean by wait? I just want to know. What do you write to him as email? No, many people use it and communicate. I guess you can contact the writers and producers at NBC. Allison, can you explain what the Internet is? The Internet made transcontinental communications cheaper than ever. The cost of transforming a National Corporation. Going international was radically cheaper, but large corporations were not the only beneficiaries of the Internet. Now small artisans could access the global market to find new customers.

New suppliers and new investors. Turret guitarists could attract audiences in the Netherlands. Dominican painters could find clients in Australia. and Mexican artists could make custom pieces for clients in China the world was smaller faster cheaper and everyone was getting richer well almost everyone if the effects of globalization could be summarized on one page this is the graph to look at officially known as Lachner Millinavox chart It is better known as the elephant chart due to its unique shape. This graph shows the experience of international wealth growth between the fall of the Berlin Wall and the Great Recession.

The far left shows the poorest of the poor. On the far right, the richest of the rich. the far left represents people in countries that were unable to fully capitalize on globalization living in areas that are too remote or too unstable to have taken advantage of the wealth creation caused by globalization moving to the right we see tremendous growth these are the developing nations that became the real winners of globalization India China Mexico and Brazil are well known for their growth during this period, but this growth was not limited to large countries, smaller countries such as the Dominican Republic Lithuania Panama Angola and dozens more also experienced impressive GDP. per capita growth the generation of wealth from globalization was available to everyone, big and small, this exceptional growth rate lifted around 1.1 billion people out of extreme poverty due to globalization hunger and famine It has become exceptionally rare that people no longer have to depend on the local climate for good crops.

Fertilizers. High-tech agricultural equipment and the latest advances in irrigation technology can now be easily imported. The amount of yield in tonnage per acre skyrocketed for almost every crop on every continent. Does your country have soil for agricultural production? No problem. Imported foods are cheap and abundant. There is no need to work hard on poor land when your country could specialize in something else due to global agricultural trade. Every country in the world, with five tragic exceptions, saw a decline in deaths caused by malnutrition. This all sounds like a good deal until we get moving. Farthest to the right on the elephant graph, wealth growth plummets considerably, these are the low-skilled and semi-skilled workers in rich countries, the working class of the Anglosphere and Western Europe would not enjoy the same growth in wealth. wealth than the rest of the world and in some cases, quite the opposite, these people saw their careers sent abroad to people who would do the same job for a cheaper price.

Entire communities in the United States were devastated by the results of globalization, creating a huge region known as the Rust Belt, the factories that were once so crucial to winning World War II shook in favor of cheaper labor in faraway places once thriving middle-class communities became ghettos. This is not unique to the United States. Communities across the Anglosphere and Western Europe have their own version of places spelled by rust. Like Southern Ontario, Willagong, Wales, Flanders, Ruger beat Nordpal of Calais and the Basque Country have all felt economic hardship due to globalization. Economic insecurity made the working class of rich countries hostile to globalization.

Their animosity is further compounded as we continue to move along the elephant graph. On the far right we see the richest people in the richest countries getting richer. These are the kind of people who have really been able to take advantage of the wealth creation created by globalization. This part of the graph can be divided into two sections. Highly qualified workers. and the investor class the growth of globalization meant that brands now have to compete with companies on the other side of the planet to remain competitive in the global market they need highly skilled workers the demand for engineers, researchers, marketers, designers and others Highly skilled workers increased considerably as the demand for these highly skilled workers increased, their wages also increased.

On the far right of the graph is the investor class. When the world is experiencing unprecedented economic growth, it is quite easy to convert a large amount of money into an even larger amount of money. This generated resentment on the part of the working class in rich countries towards the people at the bottom of the elephant's trunk. It seems like everyone in the world is getting richer except themselves, while they lived in fear of unemployment, their countrymen enjoyed exceptional wealth. growth for most G7 nations a strong welfare system is in place even if someone loses their job due to globalization they can still plan to receive healthcare their children can still go to university at reasonable costs and they themselves can receive new training to pursue a better paying career, this is all paid for by taxing the profits of the winners of globalization to fund programs for the losers of globalization, all G7 countries do this to some extent except one which happens to be the one paying for the global navy that makes all this possible in the first place the majority of American citizens do not have a favorable opinion about globalization when asked if globalization is a good thing for their country only 42 percent of Americans responded affirmatively and That's not far off from the world average of countries, only 48 percent of respondents think globalization is good for their country, while it would be easy to say who cares what stupid Americans think.

It should not be forgotten that the US Navy makes globalization possible in the first place. Without it, the bad old days of piracy and theft by rival governments will return. The increased risk of stolen cargo translates into higher costs for consumers,While international trade can certainly exist on land within connected regions, shipping by sea costs about 1/12 of the cost. Compared to land transportation assuming its safe passage on the seas when the Soviet empire fell, the purpose of the global American Navy fell with it. America's global naval presence had one primary goal, to keep the Soviets contained, the security of global trade was only a secondary benefit with the Soviets gone. the global US navy lost its purpose the American public's frustration with globalization would become evident during the 2016 presidential election, near the end of his presidency George W.

Bush began linking negotiations for the trans-pacific partnership agreement, these negotiations would be continued by Barack Obama. and for his entire presidency, this would have been a massive trade deal involving 12 Pacific countries combined; These 12 countries represent about 40 percent of the world's GDP; However, the deal would face major opposition from two prominent presidential candidates. No one doubts that corporations have closed in the United States. and they've gone to low wage countries that make sense to them, why do they want to pay an American worker $15 or $20 an hour when you go to Vietnam? You already know what the minimum wage is in Vietnam: 56 cents an hour, as Bernie Sanders says.

He said Hillary Clinton voted for virtually every trade deal that has cost workers in this country millions of jobs. The trans-Pacific partnership is the biggest danger, but the TPP, as it is known, would be the death blow to American manufacturing, while Bernie would not achieve it. to the White House Trump had the United States formally withdraw from the TPP on the first day of his term, but sinking the TPP was not Trump's only anti-globalization initiative; He would make good on his campaign promise to reduce trade with China by introducing new tariffs in 2018. Even with Trump out of the White House, his tariffs remain in place.

President Biden has stated that he is open to reconfiguring these tariffs, but no action has been taken. As of the time of this video, the American public has growing skepticism about globalization and it is starting to affect the election. American taxpayers pay more than $150 billion each year to keep the ocean safer. free trade and voters are wondering if it's worth it. Globalization has been the best thing that has happened to high-skilled workers in poor countries, but the worst thing that can happen to low-skilled workers in rich countries: frustration has led to a greater sense of nationalism and isolationism not only in the United States but in many parts of the highly developed world and now it is before the 2020s scientists in China. are trying to determine if a new strain of virus is responsible for the pneumonia outbreak in the city of Wuhan.

Globalization may have been able to survive populism, but it probably won't be able to survive the 2020s. Kovit taught the world many lessons, including what happens when global supply chains weaken the world experiences shortages of almost everything, toilet paper, lumber, new cars, any device with a microchip, all had their turn to suffer from shortages, some of which have yet to fully recover to see how fragile the global economy really is. es, let's look at America's greatest gift to the world: blue jeans, blue jeans are obviously a low-tech product and one would assume they have a simple supply chain.

This would be an incorrect assumption, the cotton produced to make the blue jeans would probably have been grown in China, Uzbekistan, Azerbaijan or Benin, the raw cotton would have to be processed into yarn, probably in India, China, the United States, Uzbekistan or Brazil, the yarn would probably have to be dyed in Spain, Turkey or Tunisia, of course, this dyeing process would rely on chemicals manufactured in Germany, the finished denim would then be transported to China, Mexico or Bangladesh to make its final ascent to jeans blues. Do you like your blue jeans with rivets? Then we will need even more steps in the supply chain or to make those rivets.

It will be extracted in Brazil, Peru, Namiba, Australia or Chile. The ore must be sent to rivet factories in Germany, Türkiye or Mexico. Do you like your jeans with zippers? That's another supply chain that we'll skip for now on the average pair of jeans. It made 10 border crossings before reaching the hands of the final consumer and that does not include rivets, zippers, buttons or other accessories and all this just for one stinky pair of pants. Electronics become much more complicated, but you get the idea despite globalization. complexity everything worked until it stopped being that way in January 2022 almost every country decided that we would have to live with greed, there were reliable vaccines available for everyone and we decided to start returning to normal, as the German Health Minister Yen said Spahn, almost all of them. in Germany they will be vaccinated recovered or dead despite the macabre declaration this sentiment was widely accepted around the world after two years of quarantines the world was ready to return to normal regardless of vaccination rates there is an exception to this sentiment and Simply put, China is the second largest player in globalization at the time of this video, Beijing's official stance is that they will maintain a zero greed policy until at least 2027.

Zero Covet is isolating entire buildings, neighborhoods, districts or even cities to keep covid contained. Reliable figures on how many people are enduring lockdowns are hard to come by, but their economic impact has been felt strongly through inflation, while the rest of the world is ready to get back to work and consuming. China is not and everything is more expensive because Remember the jeans example above, China appeared more times than any other nation in the supply chain and China is involved in much more than just jeans, they are involved in everything, the more added value a good has, the more dependence it has on China.

With China's zero greed policy, inventories low and prices high, companies that rely heavily on Chinese manufacturing are scrambling to find alternatives. China and the United States have drifted apart over the past six years or so, but that is accelerating due to zero politics. covet a policy If your largest trading partner doesn't produce anything to trade, there aren't many options to consider other than trying to find a new manufacturing partner. This dilemma is not unique to the United States, almost all the European and Latin publications I know of. What we have found in researching this is also expressing frustration with China's zero greed stance, this is forcing multinational companies to find new manufacturing partners outside of China.

Rebuilding factories in new locations will be costly and timely, but not as difficult as finding a way to replace China's giant plants. workforce, but the good news for China is that they will not be remembered as the biggest villains of the decade in which dishonor belongs to Russia. It now seems in bad taste to talk about how the war in Ukraine will impact the global market. A lot of bad things happen to innocent people and it feels horrible to discuss how this will affect the price of jeans, but this is a video about the global economy and The Show Must Go On.

The Russian invasion of Ukraine will have a devastating impact on globalization. While China makes consumer goods that the world can survive without, Russia and Ukraine export something much more vital: food. Combined, the two countries export about 36 percent of the world's wheat supply and more than half of vegetable oils. in the world, with all food exports from Ukraine and Russia combined. produces almost 12 percent of the world's total calories, to make matters worse, Russia is the world's largest fertilizer exporter, accounting for about 15 percent of the global fertilizer market at the time of this video. Ukraine has still been able to export its grain largely due to negotiated mediation. by Turkey, but most of today's grain exports come from a crop that was planted before the invasion.

Unsurprisingly, Ukrainian farmers are having difficulty planting next season's crop with an invasion underway, even in parts of Ukraine that are far from the front line. The laborers have left their jobs to support the defense effort in one way or another. The longer this war goes on, the more expensive food will become, but food prices aren't the only thing we have to worry about because of this invasion. Do you live in Europe and do you like it? cheap utilities I'm afraid I have bad news: chances are that if you're watching this video you're already aware of the current energy crisis in Europe, although Europe isn't really involved in real combat with Russia, it certainly is involved in an economic fight. as such, they cut off all gas flow to the west and pipelines have been mysteriously sabotaged depending on the specific nation.

Europe has just lost between 10 and 30 percent of its total energy supply. This will cause more problems than just the need to wear extra clothing to stay worn. In the example of jeans, Germany plays a very important role. The production of complex machinery and chemical products. The machines needed to transform cotton into yarn, yarn into denim, and denim into pants probably date back to Germany in one form or another. Germany's involvement in globalization extends far beyond. jeans Germany has positioned itself as the third largest exporter in the world only behind the United States and China, while the United States provides services and China provides labor.

Germany provides something else that is just as crucial to making globalization work: sophisticated machinery and chemicals. Germany has positioned itself to be the leading supplier of complex machinery without German machinery modern manufacturing simply wanted to exist Germany's integration into globalization allowed it to emerge as Europe's largest economy, but there is a problem with the German economy: it needs energy affordable to operate energy that is increasingly expensive which will make machines more expensive which will make the manufacturing of goods more expensive which will make goods more expensive for everyone the interconnectivity of globalization means that when a great power faces an economic crisis the whole world faces a crisis The recent economic strains on global supply lines may be enough to lead to the end of globalization, but I have good news, despite the gloomy headlines and advocacy this decade, globalization was destined to fail on its own.

Globalization has done many surprising things and reduced them considerably. Extreme poverty provided more high-tech goods at cheap prices and created the period of fastest economic growth in human history, but one of the byproducts of globalization is urbanization. Farmers could now use high-tech equipment to sew, harvest and process the need for agricultural laborers to a large extent. decreased in almost every part of the Earth people left rural communities and moved to cities in search of better job prospects the dream of having their own farm was replaced by the dream of becoming a yuppie although this seems inconsequential, it had a Profound effect on birth rates Farm children are assets that provide free labor in the city Children are very expensive pets, as a result birth rates plummeted throughout the industrialized world.

We've talked about how globalization depends on access to energy raw materials, technology, and Safe Seas food, but I've saved most of it. important ingredient for globalization for the last people for globalization to work you need a reliable supply of workers, consumers and investors and due to declining birth rates we are running out of all of them when people are between 18 and 65 years old They tend to be workers, consumers, taxpayers and investors all at the same time, but that changes when they retire. Obviously, retirees do not work, but they also tend to reduce their consumption and stop investing.

Much of their retirement funds are withdrawn from the stock market and converted into bonds or cash most countries also receive some form of government pension after decades of low fertility rates there will be a smaller tax population to support these pensions assuming no changes are made to benefits taxes should increase , which will reduce the cash available for consumption and investment. Fundscommon means less technological innovation and less consumption make the investment less profitable. Demographics and population pyramids will vary widely from country to country, but most nations that are fully industrialized are destined to reach a point where there will be more retirees than workers.

Most pensions are private. or the public will struggle to achieve promised payments, but that's not the only concern with demographic

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. The Dutch government has put together a useful list of what your country will look like when population decline really takes off. Are you planning a career in education or residential development that is probably a bad idea to plan a career in retail that will be harder to achieve with fewer customers who will pay higher taxes to accommodate retirees. Theaters. Movie theaters and concert halls will have a hard time selling tickets when there are fewer people with smaller incomes.

Disposable Income I love the design of the Dutch city as much as the next person, but it will be harder to maintain with the smaller tax fund and a general decline in population. Quality of living standards may have already peaked in 2019. Along with inflation, we can expect a future with higher taxes or reduced public benefits, possibly both, that's not all we can expect to lose with the decline of the population. Stanford economist Charles Jones recently wrote an article titled The End of Economic Growth, Unintended Consequences of a Falling Population, in which Jones proposed what new economic models will look like.

As with population decline, greatly simplify Jones predicts that with fewer people there will be fewer technological advances, to the point that quality of life will stabilize as most people look for hope as they contemplate economic decline due to depopulation, look at Japan has been dealing with the challenges of population decline for about five decades and its GDP per capita peaked in 2012. All in all, that's not so bad, but their methodology won't be replicable in others countries, an economically viable terrain during their demographic crisis. Japan was based on a new economic strategy called D sorcine instead of manufacturing in Japan, multinational companies would depend on the local workforce where their products are sold if a Toyota was sold in the United States it would probably be built in the United States if a Toshiba was sold in Brazil probably built in Brazil this works well and Well, until customer countries start experiencing their own recession induced by population decline as workforce and customer groups start to shrink around the world , desourcing will become a less viable solution, if possible.

Furthermore, Japan was already wealthy when it began to experience population decline. It needed capital to pay for all new manufacturing centers as part of its offshoring strategy. Other countries that grew old before getting rich will not be able to do the same if you are lucky enough to live in a rich country and your quality of life. life has probably already peaked and will stagnate in the coming decades if you live in a poor country there is a big chance that your quality of life will decrease but rich forward thinking countries will beg you to immigrate there.

Humanity's next chapter probably looks pretty bleak. It's not the

collapse

of the Bronze Age. It's grim; the Golden Age of globalization is coming to an end. Maybe at the end of Jones' article he concluded that the economy has a way of ordering itself during major stresses, who knows, maybe declining housing costs can free up money to invest. In automation that will save us from the worker shortage, perhaps healthier lifestyles will allow people to work beyond the age of 65. But what do you think our quality of life has achieved? Can we expect continued growth in wealth and technological advancement in the coming decades?

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