The New York Times Runs a Bad Article on Globalization
It's really, really bad
The hard-working staff here at Drezner’s World has returned to the Eastern seaboard again after a whirlwind eight-day trip to a few capitals of Europe. As fun as the trip was, it is also good to be home. I find it is far more difficult to keep abreast of ongoing news stories while traveling. Even in a world in which one can access stories with one click on a smartphone, the rhythms of my average working day make it easier to peruse the news than while I am
consuming all the clotted cream I can find in London overseas.
I bring this up because while I was away this Sunday the New York Times chose to run a God-awful front-pager by Patricia Cohen about the 21st century perils of globalization. With a title like, “Why It Seems Everything We Knew About the Global Economy Is No Longer True,” one would expect the Cohen and Times to have painstakingly detailed the downsides of globalization.
That is not what this story does. Instead, it implies a lot without providing much in the way of evidence:
The economic conventions that policymakers had relied on since the Berlin Wall fell more than 30 years ago — the unfailing superiority of open markets, liberalized trade and maximum efficiency — look to be running off the rails.
During the Covid-19 pandemic, the ceaseless drive to integrate the global economy and reduce costs left health care workers without face masks and medical gloves, carmakers without semiconductors, sawmills without lumber and sneaker buyers without Nikes.
The idea that trade and shared economic interests would prevent military conflicts was trampled last year under the boots of Russian soldiers in Ukraine.
If Cohen and the Times had focused primarily on the climate change argument, I would not be writing this particular post. Free-market globalization does not address policy externalities well, and climate change is the biggest policy externality I have seen in my lifetime. That is a story worth writing.
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Of the story’s 65+ paragraphs, however, a grand total of two are devoted to that particular failing. The bulk of the article is devoted to the argument that other factors — rising inequality, the pandemic, weaponized interdependence, the war in Ukraine — have falsified the pro-globalization argument. As Cohen writes, “starting with Covid-19, the rat-a-tat series of crises exposed with startling clarity vulnerabilities that demanded attention.”
The thing is, most of these so-called vulnerabilities were exaggerated and/or misunderstood. Fears that the pandemic created vulnerabilities for economies dependent on global supply chains, for example, proved to be wildly misplaced. Ironically, most of the pandemic-induced stresses had to do with the private sector underestimating the robustness of government responses. As COVID-19 went global, firms responded by drastically scaling back production, anticipating a massive consumer slowdown. Instead, fiscal and monetary stimulus caused shifts in the composition of demand, mostly from services to manufactured goods. This caught many firms flatfooted, leaving them to scramble for newly scarce inputs.
Furthermore, there was zero evidence that goods with more complex global supply chains suffered more severe disruptions than good with regional supply chains. Indeed, if anything, the evidence suggests the opposite: precisely because supply chains were globalized, they were more resilient to regional shocks. This was because those firms who relied on global supply chains were more conscious about the possibility of disruption, thereby taking action to forestall it. By contrast, one of the most autarkic of U.S. products – baby formula – suffered one of the period’s deepest and longest shortages, which the federal government only alleviated by embracing imports.
Cohen also writes that globalization “deepened inequalities,” so it’s odd that her story comes out the same week that Branko Milanovic wrote in Foreign Affairs about the ways that globalization have reduced global inequality:
Zoom out beyond the level of the nation-state to the entire globe, and the picture looks different. At that scale, the story of inequality in the twenty-first century is the reverse: the world is growing more equal than it has been for over 100 years.
The term “global inequality” refers to the income disparity between all citizens of the world at a given time, adjusted for the differences in prices between countries. It is commonly measured by the Gini coefficient, which runs from zero, a hypothetical case of full equality in which every person earned the same amount, to 100, another hypothetical case in which a single individual made all the income. Thanks to the empirical work of many researchers, economists can draw the overall contours of the change in estimated global inequality over the past two centuries.
From the advent of the Industrial Revolution in the early nineteenth century to about the middle of the twentieth century, global inequality rose as wealth became concentrated in Western industrialized countries. It peaked during the Cold War, when the globe was commonly divided into the “First World,” the “Second World,” and the “Third World,” denoting three levels of economic development. But then, around 20 years ago, global inequality began to fall, largely thanks to the economic rise of China, which until recently was the world’s most populous country. Global inequality reached its height on the Gini index of 69.4 in 1988. It dropped to 60.1 in 2018, a level not seen since the end of the nineteenth century.
Characterizing Russia’s invasion of Ukraine as a failure of globalization is also confusing. One can argue that it demonstrates the limits of the commercial peace as a constraint on the use of force by a great power. But if anything, Russia’s failures in that war highlight the advantages that Ukraine has garnered from integrating itself into the West.
You know what would have been much more interesting story? The problem of self-fulfilling prophecies in narratives about globalization. While fears about excessive dependence have been exaggerated in the United States, a bipartisan elite consensus has calcified this fear into a stylized fact. That worries me more than anything else.