The End of Globalization?

Erik Loomis over at Alterdestiny raises some interesting questions about how the rising costs of transportation and raw materials will affect globalization, especially in physical terms.

Let's think about how expensive oil changes the globalization equation. First of all, it may mean that the trend of deindustrialization in the United States reverses itself. Perhaps this seems far-fetched in the face of GM's latest plant closings. But once it becomes economical again to manufacture items at home, we are likely to see factories again spring up. How does this then affect the developing world? Does it continue to develop? If manufacturing jobs aren't going to Cambodia or Honduras anymore, do those nations fall further into poverty? Or do they change their production for the local market, building localized economies that succeed because money was made through an earlier globalized economy? On the local front, do unions make a big comeback because both labor and capital will be less spatially flexible? Will US unions also be able to make big inroads in Mexico, since the border will be the one place where transnational manufacturing will still make sense?
Those are good questions, and ones I've asked myself over the last five to ten years and the US's manufacturing base has been shipped elsewhere. For me, the question is, what's the tipping point? How expensive does it have to become to transport goods for US manufacturers to build locally again? I'm not sure we're there yet.

I can't say I've studied the subject, certainly not to Erik's level, but the most affected part of the economy to me seems to be food distribution. Florida, especially south and central Florida, was once an agricultural powerhouse. That's disappeared, thanks to the real estate boom among other things, and there would be great resistance to returning it to its agricultural roots, mainly because the money in real estate, when it's there, is so much better. But if transportation costs become truly prohibitive, I think you'd see our sprawl become less of an issue, and many of those developments that border the Everglades be razed and turned from condos to crops.

But things would have to get really bad for that to happen, and it's hard to quantify just how bad that would have to be.

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