1828 DEBATE: Does the Suez blockage show the dangers of ‘excessive globalisation’?

William Clouston and Matt Kilcoyne

March 29, 2021

William Clouston, leader of the Social Democratic Party argues YES

A gust of wind and a possible power failure on a container ship blocked the Suez Canal – a commercial artery through which an estimated 12 per cent of global trade passes. This is just the latest example of the increasing fragility globalisation has caused.

From the start, the Coronavirus pandemic has exposed industrial vulnerability throughout the West, as governments scrambled for the supplies their gutted, de-industrialised economies were no longer able to produce. The seeds of this situation are to be found in a generation of liberal economic thinking, which has encouraged indifference to what is made where and by whom – in other words, excessive globalisation.

In fact, global free trade was always a rather utopian idea. The trend towards fewer but larger suppliers in most sectors has resulted in a strategic over-reliance on dominant corporations, many of which are effective monopolies. Whether it’s in the supply of semi-conductors or ships, genuine market competition has been undermined, and this has political implications in a world in which rival ideological blocks are re-emerging.

Globalisation has had winners and losers. It has not been in the interests of the West’s industrial workers to go ‘toe to toe’ in competition with corporations in poorer countries, many of which have significantly lower labour costs and poorer safety and environmental standards. Nor is such ‘globalism’ desirable from a macroeconomic standpoint. The consequences of the West’s de-industralisation have been profound. Strategically weakened economies such as the UK now suffer from stubborn trade deficits and the undermining of the industrial wage which formerly supported the family.

One lesson the West is learning the hard way is that large corporations have an obligation to the states from which they come. It is inconceivable that South Korean or Japanese companies would shed their national obligations in the way in which many of the West’s ‘global’ players have.

Thankfully, the tide is turning. Going forward, I expect Western governments to move towards securing greater economic resilience via re-industrialisation, re-shoring, import substitution and some trade friction.

Globalisation is past its high water mark – and not before time.

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