NYT - "The End of the World Economy As We Know It"

According to the Grey Lady, we're in for "a rethink of of how much any country wants to be reliant on any other country."

For years I thought it was obvious that the global economy could not possibly survive climate breakdown. The global chain with its vast supply lines depended on a high degree of stability in its participating nations. Droughts here, famine there, critical water and resource shortages along the chain would leave the nation links exposed to destabilizing forces that, as history shows, lead to chaos or worse.  Now, it seems, a viral pandemic may have accentuated the vulnerabilities of globalism.

The world economy is an infinitely complicated web of interconnections. We each have a series of direct economic relationships we can see: the stores we buy from, the employer that pays our salary, the bank that makes us a home loan. But once you get two or three levels out, it’s really impossible to know with any confidence how those connections work. 

And that, in turn, shows what is unnerving about the economic calamity accompanying the spread of the novel coronavirus.

In the years ahead, we will learn what happens when that web is torn apart, when millions of those links are destroyed all at once. And it opens the possibility of a global economy completely different from the one that has prevailed in recent decades. 

“As much as I hope we are able to get ordinary economic activity back up, that’s just the beginning of our problem,” said Adam Tooze, a historian at Columbia University and author of “Crashed,” a study of the extensive global ripple effects of the 2008 financial crisis. “This is a period of radical uncertainty, an order of magnitude greater than anything we’re used to.”

Crises have a way of bringing to the fore issues that are easy to ignore in good times.
One obvious candidate is globalization, in which companies can move production wherever it’s most efficient, people can hop on a plane and go nearly anywhere, and money can flow to wherever it will be put to its highest use. The idea of a world economy with the United States at its center was already falling apart, between the rise of China and America’s own turn toward nationalism.

There are signs that the Covid-19 crisis is exaggerating, and possibly cementing, those changes. 

“There will be a rethink of how much any country wants to be reliant on any other country,” said Elizabeth Economy, a senior fellow at the Council on Foreign Relations. “I don’t think fundamentally this is the end of globalization. But this does accelerate the type of thinking that has been going on in the Trump administration, that there are critical technologies, critical resources, reserve manufacturing capacity that we want here in the U.S. in case of crisis.”