"Globalization is reversible. Higher energy prices are impacting transport costs at an unprecedented rate. So much so, that the cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today."
View the entire CIBC World Markets Report here
In his book, Friedman identified 10 'flatteners', or trends that demolished the barriers to international trade and the movement of cash + services. Of course most of his 'flatteners' were either technological in nature, or involved the easy movement of goods and services. Friendman, in all of his infinite wisdom, did not realize that underpinning his entire theory of a new Globalized economy was an ocean of cheap, accessible oil.
See the wikipedia page about "The World is Flat"
I wonder what Mr. Friedman is thinking about his recent book now that oil is beginning its long, bumpy descent down the production curve? Or the nature of Globalization in general? What Friedman viewed as the inevitable path of history was of course only a temporary aberration riding the crest of a massive energy abundance.
The truth is that Globalization was a fantasy based on what I'm sure at the time seemed like an endless energy supply, so much so that Friedman didn't even feel like including it in his list of 10 'flatteners'. No amount of technology can compensate for the loss of oil. Globalization, to the extent that it exists today = a cheap, ever growing supply of oil. When this dries up, the world as we know it will be drastically altered.
1 comment:
I think you are dead on about transportation costs and how they will slow globalization and turn things back toward local. What blows my mind is that more of these educated researchers and opinion leaders like Friedman didn’t see this coming. Did they think cheap oil would last forever?
What I think we’ll end up with is some hybrid – things you can’t get anywhere else will still be shipped from around the globe, but will just be more expensive and thus available to fewer and thus decreasing volume. Things that can be done closer to home and are super heavy and bulky (thus costlier to transport) will shift when more expensive transport overrides cheaper labor. I really wonder about apparel, though, my area of focus. It’s pretty lightweight and even though shipping will increase costs, the labor costs overseas are so extremely cheaper than at home I think it will be awhile before we see significant shifts.
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