'Slowbalization': Is the Slowing Global Economy a Boon or Bane?

A group of Italians started the Slow Food movement back in the 1980s. Stay away from fast-food restaurants, they urged: eat local, focus on traditional recipes, relax, and enjoy your meal.

The Slow Food movement began as a protest against McDonald's, which opened a new franchise near the Spanish Steps in Rome. But it grew into much more than that. Slow Food was a finger in the eye of globalization and its relentless transformation of culture into uniform McNuggets of experience from New York and New South Wales to Dakar and Dhaka.

Since that call to culinary arms, the movement has spread to other branches of culture: slow cinema, slow education, slow medicine, slow design, even slow travel. To a world addicted to ever greater connection speeds, ever faster modes of transportation, and ever more caffeinated feats of multitasking, the go-slowers recommend a perverse resistance to the frenzied scherzo of modern life in favor of a more comfortable adagio.

Now it seems that the global economy is finally catching up to this fashion.

Earlier this year, The Economistidentified several key indicators of what it calls "slowbalization." The portion of trade as part of global GDP has fallen. Multinationals have seen a drop in their share of global profits. Foreign direct investment tumbled from 3.5 percent of global GDP in 2007 to 1.3 percent in 2018.

It's possible that the world has passed "peak globalization."

The U.S.-China trade war is only part of this story. Although escalating tariffs between the two countries could cost the world nearly half a trillion dollars in lost growth by 2020, a sudden about-turn by the two countries wouldn't necessarily reverse the current trajectory of the global economy.

The real reasons behind slowbalization are more structural in nature, The Economist reports:

The cost of moving goods has stopped falling. Multinational firms have found that global sprawl burns money and that local rivals often eat them alive. Activity is shifting towards services, which are harder to sell across borders: scissors can be exported in 20ft-containers, hair stylists cannot. And Chinese manufacturing has become more self-reliant, so needs to import fewer parts.

A tariff war is bad. So is a global recession. The apostles of economic globalization fear that growth will slow, poorer countries will be deprived of a chance to catch up to the rest, and interstate conflict will sharpen without the softening effects of trade.

But perhaps slowbalization is exactly what the planet needs right now. How else to reduce the global carbon footprint, shrink economic inequality, and reorient national economies toward local growth?

The world faces a number of urgent crises. Perhaps the ancients were right when they coined the phrasefestina lente: more haste, less speed.

The Old Economy

The Howard Street train tunnel in Baltimore, built in 1895 and running underneath the downtown, is a marvel of engineering. It has been a key link in the circulatory system of globalization for more than a century.

But it's 18 inches too short.

Baltimore is the fourteenth most important port in the United States. Ever since the Panama Canal was expanded in 2016, however, container traffic to the East Coast has increased dramatically.

That's great for Baltimore's port, which has been upgraded accordingly. But the main train tunnel at Howard Street is a major bottleneck. It's just a bit too short to handle a rail car with two stacked containers. So, a lot of the containers go out by truck instead. And some ships are heading to other ports that can handle the increased traffic.

The state of Maryland is therefore looking for money to remodel the tunnel, adding a notch to the arched ceiling and lowering the floor. Such are the local modifications necessary to sustain the greater commerce created by globalization.

Upgrading the Howard Street tunnel might sound like a modernization process. But, increasingly, the modern economy is going in a different direction.

Consider the greater automation of factories. In the age of globalization, multinational corporations have situated their manufacturing according to a number of variables, one of which has been the cost of labor. That's why so many American manufacturers relocated first to Mexico and then to China, where workers earn considerably less than their U.S. counterparts.

But if workers are replaced by robots, then the need to offshore manufacturing becomes less pressing. Indeed, the new state-of-the-art term is "reshoring," which brings manufacturing back home along with a shift toward more highly skilled labor and better pay. Reshoring has created over 16,000 jobs in the U.S. manufacturing sector, which has contributed, between 2008 and 2017, to a 20 percent increase in manufacturing output.

Beware the overly rosy view, however, since automation will lead to significant job loss overall. And not just in the manufacturing sector -- just think about all those annoying automated voice response systems that pick up when you call any large institution these days. But automation can also be nudged in more sustainable and less disruptive directions even as it eliminates 3D jobs -- dirty, dangerous, demeaning -- that no human should be doing.

Another longstanding economic development involves supply chains. To avoid natural disasters, wars, and other disruptions in the chain of production, manufacturers are increasingly moving their factories closer to their customers. Also, market preferences can change quite rapidly. According to one estimate, because it takes so long to ship a product by sea in those huge container ships, as much as half of what's produced goes unsold because customers don't want those particular products anymore.

Then there's the environmental impact of these global supply chains. Such logistics, according to the World Economic Forum, account for fully six percent of total human-generated carbon emissions.

Consumer preferences have also evolved, with "local" acquiring greater cache. The "buy local" movement has had perhaps the greatest influence in the agricultural sector. Direct-to-consumer sales of food increased more than threefold between 1992 and 2012. Buying locally produced food, manufactured items, and services employs more people, decreases economic inequality, increases local tax bases, and strengthens communities.

Port traffic is not going to decrease significantly in the near future. Because of the nature of the global economy, Maryland would be wise to fix that old train tunnel in Baltimore. But an entirely different economy that doesn't rely on huge container vessels of iPhones from China or soybeans from Brazil is emerging within the current system.

And this evolution, in turn, is changing the very definition of globalism.

What It Means to be Global

Economic globalization has been part of the world system since the Silk Road and even earlier. But the modern version dates to the late nineteenth and early twentieth centuries, when refrigeration, the railroad, the telegraph, modern factory production, and mass migration converged to create a new worldwide web of connections.

As a result of this global network, trade increased exponentially until 1914. The outbreak of World War I that year stopped globalization in its tracks. World trade wouldn't recover fully to those levels until the 1960s.

It's no accident that the birth of an international community coincided with the first wave of modern globalization. The League of Nations emerged after the end of World War I. International NGOs like Save the Children and the American Friends Service Committee began operations at this time. In the 1920s, a new sense of modern cosmopolitanism united American flappers, Japanese moga (modern girls), and Weimar hipsters.

It didn't last long. The nationalism, intolerance, and xenophobia of the 1930s -- typified by the rise of fascism in Europe, Stalin's anti-internationalist turn in the Soviet Union, and an ugly isolationist movement in the United States -- shut down this nascent globalism. Only after World War II did another attempt at rebuilding the international community begin with the creation of the United Nations and a set of international financial institutions.

It's common these days to invoke the 1930s when trying to understand the appeal of Donald Trump, the resurrection of tariff walls, and the widespread fear of refugees. Globalization and nationalism seem to be involved in a rough-and-tumble tango across history's dance floor, and it's now the reactionaries' turn to lead. That interpretation inspires sources like The Economist to wax pessimistic about slowbalization:

Globalisation made the world a better place for almost everyone. But too little was done to mitigate its costs. The integrated world's neglected problems have now grown in the eyes of the public to the point where the benefits of the global order are easily forgotten. Yet the solution on offer is not really a fix at all. Slowbalisation will be meaner and less stable than its predecessor. In the end it will only feed the discontent.

The first two sentences of this assessment don't sit well with each other. If globalization made the world a better place for almost everyone, who exactly shouldered all those costs that too little was done to mitigate? And what about climate change, which has accelerated as a result of all this economic growth and international trade?

Acknowledging the costs and benefits of globalization is not enough. The Economist should pay closer attention to the uneven distribution of those costs and benefits -- and how new economic trends can be shaped to help rectify these problems.

If it's true that the old system of mindless growth and unlimited trade is on its way out, then slowbalization is not a speed bump in the further integration of the global economy. It is an early sign, by markets and technology, that a global assembly line powered by immense cargo ships will soon be as much a part of the "old economy" as coal-fired power plants, typewriters, and cassette tapes.

The challenge now is to preserve the political internationalism necessary to address global problems like climate change and, at the same time, retrofit the global economy so that it meets the needs of people and the planet. This trick of separating the beneficial internationalism from the dregs of economic globalization must also be accomplished as quickly as possible.

Festina lente!