Eleven Themes for the New Global Economy, Part 1
An unprecedented moment in history is upending significant parts of the world order, perhaps permanently.
The economic deck is being shuffled.
Photographer: Christopher Furlong/Getty Images
Covid-19, global supply-chain disruptions, frictions in reopening economies worldwide and now Russia’s invasion of Ukraine are spawning many winners and losers in economies, financial markets and political structures. Six of them are driven by transfers of incomes and assets. Five more are fundamentally the result of repricing goods and assets that I’ll cover in a separate column. Changes sired by either of these forces have further significant consequences.
I define globalization as the use of Western technology to produce goods in cheaper production sites that are then exported to rich countries in North America and Europe. In modern times, production using low-cost but disciplined labor started in China in the late 1970s and then spread to other Asian lands such as Vietnam. Globalization decimated high-paying manufacturing jobs, which plunged from 19.6 million in the U.S. in 1979 to 12.6 million last month. That spawned political movements on the far right and extreme left with significant results, including Donald Trump’s election victory in 2016. With the exodus of manufacturing jobs went private sector unionization, which collapsed from 24% of payrolls in 1973 to 6.1% more recently.