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Deglobalization 1.0 - Part 1
Plethora of opportunities await US and Canada!
Welcome to Decade of 2020, a newsletter with a relentless focus on how the next 10 years will affect the middle class. Forewarned is forearmed, they say. If you’d like to sign up, you can do so here. Or just continue to read…
In a previous article, we discussed the four major forces that are at play affecting the lives of tens of millions and which will amplify in their magnitude as this decade progresses. One of them is the end of globalization. In this four part series, we will explore how and why globalization will unravel at an accelerating pace. As we go ahead, the push in this direction will become more incremental and the change, more violent.
Don’t get me wrong: it’s not happening overnight. The whole infrastructure, made up of many intricately woven pieces operating simultaneously like a luxury Swiss watch, has been painstakingly put in place over decades. It will take twenty or so years for this change to reverse the full effect of the past eighty - a process that the apparatus behind populist Trump kicked off with its full might in 2018.
The Fourth Turning
In their prophetic and timely masterpiece of the same name, authors Neil Howe and William Strauss wrote:
“Though we live in an era of relative peace and comfort, we have settled into a mood of pessimism about the long-term future, fearful that our superpower nation is somehow rotting from within”
“History's howling storms can bring out the worst and best in a society. The next Fourth Turning could literally destroy us as a nation and people, leaving us cursed in the histories of those who endure and remember. Alternatively, it could ennoble our lives, elevate us as a community, and inspire acts of consummate heroism—deeds that will grow into myth-like legends recited by our heirs far into the future.”
“In foreign affairs, America's initial Fourth Turning instinct will be to look away from other countries and focus total energy on the domestic birth of a new order.”
The efforts to pause the termite-like cronies who were long benefiting from such a globalized order and the moral choice of taking a sledgehammer to its very foundation is proactive behavior by the powers-that-be desperate to avoid social unrest. It is about paying somewhat heed to those cynical voices that were busy persuading the rapidly impoverishing population that civil conflict is an inevitability.
“Poverty is a noose that strangles humility and breeds disrespect for God and man.”
Ancient Navajo tribe saying
The ruling class is scared of the manifestation of such a disrespect into more turbulent forms, and it is likely to emerge from the newly poor than those who were already destitute. This is the core reason democracy still works, despite its many, many flaws. This is why out of 190 nation states on this lovely planet, only a handful have attained true democracy - a large base of essentials (**highly recommended**). And such a framework compels the rulers to take notice of those voices when they grow loud enough, and act, while fearing for the worst.
Every Nation for itself
Professor Stéphane J. G. Girod, who teaches International Business at IMD Business School, describes globalization as “an ongoing process in which the world appears to be converging economically due to the greater interdependence through the movements of capital, goods, services and people across borders”.
While these different “movements” have brought about a huge wealth transfer from the richer parts of the world to the poorer. I don’t wish to go into detail given thousands of articles have been written about globalization and its beauty, glory and stuff like that. However, I wish to point out there are significant downsides - many of them obvious…..
Sun Tzu advocates the exploitation of an enemy’s vulnerability, especially when the enemy believes that vulnerability is its strength. Applied to the international chess game being played out in 2017, consider how many American products are manufactured in Chinese factories by low-wage workers who undercut American labor. Now consider how many other countries, often under the protection of international trade agreements, are also undercutting American labor. While the American consumer might be thrilled at the low prices of goods coming into the United States, the American labor market suffers, thus causing dissatisfaction among a vital voting constituency.
Unrestricted Warfare: China’s master plan to destroy America by Colonel Qiao Liang (乔良) and Wang Xiangsu (王湘穗)
….., some not so obvious such that only a philosopher can see them.
“Globalization has created this interlocking fragility. At no time in the history of the universe has the cancellation of a Christmas order in New York meant layoffs in China.”
Nassim Nicholas Taleb, Author and Philosopher.
The continuing weakening of global institutions like the UN, WHO and NATO have played very well into this theme. The onslaught of the Covid-19 only exposed to the world the discomforting fact that these institutions have become monopolistic, incompetent and highly corrupt. And by virtue of the failure of these multi-lateral instituitions, all nation states find themselves increasingly isolated. Case in point, America forcing 3M to stop selling desperately needed masks to Canada, or once again the U.S. snatching masks meant for France straight from the tarmac of an international airport in SE Asia.
Some voices have been vocal in scare-mongering, especially those that have a deep vested interest in keeping the old game of globalization going i.e. China’s PR Department: Wall Street.
“We may be at a point where globalization is ending and where provincialism and nationalism are taking hold.”
“In the 1930s every government that existed practically was populist. So populism by definition is nationalist and protectionist. And it's also a matter of values. There is a sense of threat, my country is losing its values to internationalism.”
Ray Dalio, Founder of Hedge Fund Bridgewater Associates, speaking at the World Economic Forum in 2017.
“High End Manufacturing first!” - Hit where it hurts most
It all began with the US administration issuing an executive order declaring a national emergency over threats posed by Chinese hardware giants in May of 2019, after talking tough for months.
“Both (Huawei and ZTE) are doing practices that we think are potentially injurious to our national security.”
Wilbur Ross, US Commerce Secretary
The actions against Huawei have been systematic and have only continued to grow stronger given founder Ren Zhengfei’s (above) close ties to the Chinese Communist Party (CCP). It must also be noted that Huawei dared to challenge the technological hegemony of the US and European tech firms like Ericsson and Nokia in the 5G space by winning lucrative contracts for 5G implementation from Germany, Mexico and Britain.
Most recently, Taiwan Semiconductor Manufacturing Company announced plans to begin work on a US$ 12 Billion cutting-edge chip making plant in Arizona. On the same day, the U.S. Commerce Dept announced that all non-U.S. chip manufacturers using American chip-making equipment, intellectual property or design software will have to apply for a license before selling chips to Huawei.
Zhengfei’s daughter Meng Wanzhou is currently under house-arrest inside her opulent mansion in Vancouver, British Columbia while a battery of exorbitantly paid lawyers fight her extradition to the US. In a last ditch effort, Huawei dangled the carrot of shifting their entire 5G research to Canada in December of 2019 praying for a good old quid pro quo, but it seems that the reigning Trudeau Govt has decided not to bite.
On 27th of May this year, the Honorable Supreme Court of British Columbia ruled against Meng Wanzhou and allowed the extradition process to continue. This came a punch to the gut. Keep an eye out for retaliation from China - and note that it may be asymmetric given that is the way China likes to respond. This action may just be the first salvo.
It is just one of the many examples of how sovereigns like Canada and Australia find themselves trapped in the crossfire between a rising and a risen power. More on that in parts II and III.
A personal note…
Firstly, as the writer of this blog, I wish to underscore that I am a realist. I don’t have any grand notion of bringing a change in this world or trying to right everything that is wrong and unjust. Without sounding preachy, let’s keep in mind Karma has everyone’s address and does its job with sincerity, but it can take generations.
“We shall leave this world as cruel and as wicked as we’d found it on arrival.”
Secondly, it would be delusional to not admit that the top 10% will certainly be among the early benefactors of this last inning of the current world order. My writing is intended toward alerting my readers who are honest and hardworking folks of the working class. It is geared to help you connect dots backwards and forward to create a mental lattice of how you too can profit from the tectonic shift that is underway, right beneath your feet.
Don’t forget to smile and stay safe!