An end to globalization?

I’ve thought for some time that an increase in the price of energy was going to ultimately doom the big box store business model. Walmart, a distribution business, works by moving goods manufactured in places where labor costs are cheap or non-existant to places where prices for said good are high. The model depends on transportation costs being minimal or at least very small. Change the cost of transport and the profit margin is erased.

An article in the Times talks about the same basic implications as they’re playing out in the larger theater of globalization:

“With brutal efficiency, the oil price is beginning to duff up a monster of the 20th century: globalisation. Those great tentacles that gripped our world in a hideous embrace are suddenly weakening and the multinational octopus is looking a bit pale and sickly. The extraordinary rise in the price of crude oil is wrecking outsourced business models everywhere and distance from your customer is no longer merely a matter of dull logistics. Whether you are selling coiled steel or cut flowers, the cost of transport is a problem.

America’s steel industry is enjoying an unexpected revival, its competitive edge sharpened by the tariff wall erected by the cost of shipping heavy, low added-value products across the Pacific. We hear fewer complaints from Americans about Asian steel-dumping; instead, it is Asian exporters who are feeling the pinch and the pressure is from inputs as well as shipping to customers.

China needs to import iron ore and coking coal, but the cost of shipping a tonne of ore from Brazil to China now exceeds $100, a cost that is equal to the value of the mineral itself. The oil overhead for passage from the Atlantic to the Pacific is proving to be a powerful bargaining chip in negotiations between some Australian iron ore mining companies and their Chinese steel mill customers. Antipodean miners are holding out for a higher price, arguing that some of the benefit of lower carriage costs belongs to producers. Proximity is suddenly more profitable and local solutions begin to look less like the expensive option. It would be rash to predict a revival of the Yorkshire textile mill and the demise of the Guangdong sweatshop, but you have to ask whether it makes sense to ship stuff from China when the price of a sea voyage from Shanghai represents half of the value of the product.

The economics of long-distance supply chains are being rewritten; if it is small and expensive – drugs and sophisticated electronics, for example – fuel costs have little impact, but bulky goods are under the cosh. Furniture, footwear, basic machinery, building materials – this is the stuff that China exports in vast quantities to America and it was very cheap, until now.”

Read the full article here.

So, lets assume globalization disappears. Communications tech makes it unlikely that we’ll stop interacting with each other in real time, though the effect of that communication may be minimized. (Remember that the modern corporation depended on the telegraph for its birth.)

So what’s going to be the effect on the Church? Less face to face visits by the body of the faithful and more dependence on the connectional ministry of the bishop?

Author: Nicholas Knisely

Episcopal bishop, dad, astronomer, erstwhile dancer...

4 thoughts on “An end to globalization?”

  1. Less convenience? More local businesses? More local crops? Some drawbacks, for sure – but overall a great thing!

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