The Failed Age of Globalization and a New Era of Homecoming | Amanpour and Company

As the global economy faces increasing pressure, our next guest is making the case that the era of globalization is over. Rana Foroohar is a global economic analyst for CNN and columnist at the Financial Times. In her new book, “Homecoming,” Foroohar examines ways in which events like COVID-19, and Russia’s war on Ukraine, have disrupted fragile global supply chains. She tells Walter Isaacson that the future for the global economy may lie in local and regional business.

Now as the global economy faces increasing pressure our next guest is making the case that the reign of globalization is over rana furuhar is a global economic analyst for cnn and a columnist at the financial times and in her new book homecoming she examines how events like covid and russia’s war in ukraine have disrupted fragile global supply chains and she tells

Walter isaacson that the future for the global economy may lie in local and regional business thank you christian and rana farrar welcome to the show thanks for having me you know we always thought that globalization free trade was going to make everything wealthier nations wealthier and it has in some ways allowed workers to go to walmart on a sunday night get

A flat screen tv very cheaply but i think what we didn’t uh understand was it might also make it so they couldn’t get the early morning bus and have a decent life because of a decent job tell me about the failures failures of globalization you know it you’ve you’ve really hit the nail on the head um neoliberal globalization what we’ve known for the last 40 years

Was all about the idea that money goods and people could travel across borders wherever they wanted and that they were going to land up where it was best for everyone and so what we got was cheap capital coming from the u.s into asia the exchange was for cheap labor and we got a lot of cheap stuff as you say we got uh you know we got low low prices in walmart uh

And on amazon but it didn’t make up for the fact that even though there was all this wealth at a global level within countries within the u.s within many european countries great levels of inequality were growing and big parts of countries were being hollowed out in our own country in the u.s big chunks of the midwest where i’m from the south where you’re from these

Areas just did not see the kind of wealth that the coast did and we had this idea that we could become a country in which everyone was going to be a banker or software developer and that was going to be fine and we outsourced a lot of our industrial base and it just didn’t work well enough so you know all those cheap goods didn’t make up for the fact that the price

Of the things that make you middle class right housing education health care in america they were rising at multiple times core inflation even before we had this latest bout of inflation and i think that that sense that we now need to reconnect the global economy to national political concerns is really where the action is you call your book homecoming it’s not

Just about national concerns it’s local it’s like every community it’s a homecoming for that explain the concept of homecoming yeah absolutely so one of the trends of the last 40 years has been concentration concentration of power concentration of wealth in a handful of cities and in a handful of companies lots of statistics to show that my take is that basically

If you want to have a functioning liberal democracy you’ve really got to spread the wealth you know you’ve got to get a much broader range of communities feeling that prosperity and you know we can look back the last few elections in the u.s and see in places where there was a sense of wealth a sense of optimism a sense of you know the future might be better those

Areas tend to devote for joe biden the areas where where they did not have that they tended to vote for donald trump and you know we’ve seen populism not just on the right but on the left as well bernie sanders is sort of you know the other side of the coin in that sense so you’ve got to start building up local communities and one of the things that i’m actually

Very encouraged about is that aside from the political concerns which are um encouraging a new production in the u.s you’ve just seen for the first time in in half a century two big semiconductor factories being started in the u.s one in uh in ohio one in upstate new york this is great because it’s about building manufacturing it’s about building resiliency but

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There’s lots of new technologies that are in train that are allowing things to be done more locally and this is something i look at carefully in my book actually um uh i spoke to eric schmidt um former head of google and we talked a lot about something called additive manufacturing 3d printing this used to be something for hobbyists it is now something that every

Industry is looking at because it allows you to make parts right on location you can make a whole car this way now or even a whole house you know i went out into texas and saw houses being 3d printed in six days for 250 000 that cuts out seven different supply chains and all the energy and all the carbon costs to transport those things through far-flung areas and

To bring that economic growth and activity into local communities these are just a couple of examples but it’s happening in pockets everywhere we’ve been talking a lot about china and especially recently with supply chains disrupted and then the chips act saying okay we can’t be so reliant on chips from taiwan as well as from china do you think this whole trend

Is going to mean we’re going to have to wean ourselves away from a strong economic relationship with china in a word yes i do i’ve i’ve thought for a long time that decoupling with china was was happening and it’s not just something that is about the us you know china is always very clear in its five-year plans about where it’s going and it made a statement many

Years ago that it wanted to be free of u.s technology of western technology that it wanted to have what it calls a dual circulation economy which is sort of what we’ve been talking about it’s it’s keeping production and consumption closer together um that makes sense to me china is a bit like the us and the world war ii period where it’s a big single language market

It still has room to run it makes sense for them to to keep more production domestic that’s all fine um the problem is that the u.s and china have been in sort of a dysfunctional economic relationship for for many decades now and it is going to take time and difficulty to untangle that here’s one problem though take lithium which is really important to the electric

Car batteries into the laptops right in front of us china doesn’t have that much lithium but a huge amount of the world supply of refined lithium comes from china same with most battery component if you try to start a lithium refining plant it’s going to take forever because we don’t permit because it’s not in my backyard because people are kind of afraid of the

Word lithium processing we just can’t manufacture in america not simply because of this globalization neoliberalism you talk about but because we’ve come so constricted how do we get over that uh these are fantastic points um all of it and it kind of plays to that whole notion of well cheap isn’t really cheap when you start looking at what are the environmental

Costs what are the labor costs you know we just kind of sent everything overseas and said let them deal with the pollution let them employ child labor if they want well now that we are bringing some of these jobs and industries back we have to make some hard choices there are indeed rare earth mineral uh companies being being launched out west uh there’s one that

Actually just reopened in canada recently so the the u.s and europe are looking for more redundancy in these supplies and i would say that that word redundancy resiliency and redundancy that’s where the action is going to be we’ve had efficient systems meaning you know they’re quick they’re concentrated they work as long as nothing else is going wrong in the world

But as the pandemic and the war in ukraine have shown us the minute something changes be it a geopolitical situation uh a tsunami you you know some kind of energy spike well these supply chains don’t work so well anymore so we are well advised to start um creating some more resiliency and redundancy in our own systems if we really want to be self-sufficient at home

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More so than we are now we probably need to be less reliant and europe needs to be less reliant on energy from russia from venezuela from saudi arabia other places but we also have problems in this country of saying yeah let’s have some more oil and natural gas leases be done let’s get some pipelines like joe manchin wants yes is it possible to do what you want

Without saying no we have to actually in this transition period uh wean ourselves from energy from places like russia and china um a great point um i would have liked to have seen more u.s shale production online of course energy markets are they’re very tricky they go up and down they’re highly cyclical when energy costs are low as they were until pretty recently

You get people saying well 70 shale just doesn’t make any sense anymore and so they cut off all production i have thought for a long time that we needed a what i would call an industrial policy you know when we start to have smart grids that can manage energy community by community sensors in everything that can really help us to to to to um just do things more

Efficiently more locally and move to those green technologies which can create more jobs you know imagine if you’ve got every coal miner retrained in clean energy platforms and guaranteed work and used federal budgets and purchasing power to do that that’s what the biden administration has been trying to do not easy though because you know we are going to have to

Work with partners this idea of friend shoring becomes much more important and you saw an interesting speech actually last and french touring means we rely on canada mexico places that are not as unfriendly as saudi arabia or russia could be at times a hundred percent yeah this idea and you know janet yellen actually um uh i had a conversation with her when she

First brought that term up it’s about thinking about values and not just prices when it comes to trade um christian freeland the deputy prep prime minister of canada actually gave a very interesting speech about this at the brookings institute last week and said look we are in a new world it matters that we get our energy from autocrats and we are going to need to

Work together work with the us and mexico to come up with clean energy platforms we need to get europe on board with that and this is something that’s going to be tricky as well it’s one thing for the u.s or north america and south america together which are you know we’re a big block we’ve got food fuel consumer demand we can kind of hunker down and do localism

Europe feels anxious about this at the moment and that’s because europe is pulled in many different directions um britain in particular post-brexit feels very alone um you know germany and france maybe are together still the center of europe but will the center hold um you know southern countries like greece and italy are actually being pulled in some ways into

The chinese orbit through the one belt one road strategy and so the world is bumpy the world is multi-polar and um diplomacy and friendship is still going to be very important even in a more local age here’s one problem i felt when i read your book which i love by the way oh i think but it was but it was that okay if we are going to be less dependent on cheap

Goods globalization free movement of capital and trade stuff like that it means a whole lot of things are going to cost a little bit more the flat screen tv is going to cost more but so is the oil and gas so is uh solar panels that you’ve talked about so will every component that we buy we’ve got a really bad inflation problem the trend you’re advocating wouldn’t

That add to inflation it would in the short term and there’s no getting around that um cheap isn’t really cheap when you count in the true cost of labor the true cost of energy the true price on carbon all the emissions that companies are are admitting to to create the things in walmart that we get so cheaply so yes there is going to be some short to medium term

Inflationary pressure but i would say that if you asked people working people making twenty five thousand dollars a year would you rather have more cheap stuff in walmart and amazon or would you rather have a job a middle-class job that is secure that would allow you to provide housing education health care for you and your family i think that they would pick the

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Latter and that’s what this regionalization and localization is about it’s about using transformative new technologies all the things we’ve talked about the transition to clean energy to start to build productivity and to build a new economy that can bring everyone along and if you look historically the periods where we’ve had a lot of shared sustained growth have

Been when there’s been a transformative new technology like the railroads let’s say or the internet the government puts the floor under it supports it and then the private sector commercializes it in each country and if we can harness that opportunity and stop thinking so short term i think we can be in a good place and what about though a consumer who can get their

Goods cheaper at walmart or through amazon they can’t get them cheap enough or sent year on year it just but doesn’t that hurt these little companies that you write about that are trying to do things in a local good way don’t they get crushed by those who know how to play the global supply chain well well they have although it’s interesting i think that you’re

Starting to see a real shift in washington around antitrust for example um one of the big initiatives that the bite administration has been to look at these concentrations of power in agriculture for example you know you remember when the pandemic hit um nobody’s going to restaurants everybody’s lining up at the grocery store you know you can’t find things well

Why why is that because about four companies are controlling our entire ag supply chain there’s two separate supplies one for restaurants one for grocery stores it’s a very concentrated very fragile system and so lena khan at the ftc jonathan cantor at the doj tim wu in the white house all these folks are starting to think about how can we make sure that there is

Opportunity for all small mid-sized businesses and big businesses but also community and workers how do you see the prospects of a recession i know you’re talking about longer term things but in order to get there how do you do that balance that might prevent a bad recession one of the reasons that we have got an economy that is so financialized and and by that i

Mean that the financial economy wall street you know all the things that are bought and sold on wall street that is now four times the size of the actual economy that we live in how did we get there well over the last half century um we have politicians of both stripes saying we don’t want to take those hard guns and butter decisions we don’t want to choose between

Interest groups so let’s just toss the ball of the market the market knows best and what that means in practice is that they toss the ball to the central bankers to the federal reserve and the federal reserve kept interest rates low really for a period of about 40 years um and then of course you get the financial crisis you get a lot of money being pumped into

The economy economy pandemic happens you get even more money being pumped in and so then you get a situation where the economy is so highly financialized and leveraged um and it’s we we’ve enjoyed this kind of saccharine growth and i say that because it’s not really the real thing you know central bankers can pump up stock prices and house prices they can’t build

A new factory they can’t invent the iphone they can’t really do the new new thing that you need to to create growth in an economy but now they have to try and bring down the inflation the asset inflation in particular that’s happened from all this sort of you know artificial pumping up of things and they have to do it fast because the inflation is really hitting

Real folks and i have argued as have many that they should have started doing some of that right after the financial crisis to give themselves more room to breathe rhonda ferrar thank you so much for joining us thanks walter

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The Failed Age of Globalization and a New Era of "Homecoming" | Amanpour and Company By Amanpour and Company