The era of hyper-globalisation appears to be at a breaking point. Despite repeated warnings, including those in Backlash: Saving Globalisation from Itself by David Boyle and his co-author in 2018, little has changed. The book called out the political unsustainability of a global system that allowed China to bypass agreed trade rules and ignored persistent trade imbalances. Lord Andrew Lansley backed the book’s urgent message: politicians must stop taking globalisation and free trade for granted and rethink trade as a force for democracy—not dominance.
Yet, nothing shifted.
Even after COVID-19 disrupted global trade and sparked debates around resilience over cost-cutting, nations raced back to the old model. The system—inefficient and outdated—remained intact.
Now, former U.S. President Donald Trump’s aggressive approach has reignited the debate. While his tactics divide opinion, they may be the jolt needed to confront a trade structure that many agree is damaging and unmanageable.
The global trade discourse continues to polarize. One camp idolizes free trade, while the other vilifies it. But trade, like any policy, involves trade-offs. A singular focus on net gains, often derived from economic models divorced from real-world consequences, oversimplifies a deeply complex issue.
Take NAFTA. Though the agreement boosted U.S. welfare by just 0.08%, half of that came not from efficiency but from leveraging U.S. power against Mexico. Meanwhile, workers—especially high school dropouts in protected sectors—faced wage growth declines of up to 17 percentage points. The core question remains: are such trade-offs acceptable, and are they politically sustainable?
Moreover, separating goods from services in global trade is misleading. High-value services often depend on manufacturing. Whether it’s financial services backing factories or long-term support for aircraft engines and fighter jets, the two are closely linked.
Another myth—the idea that trade prevents war—also lacks historical backing. Before World War I, trade volumes were at an all-time high. Yet that didn’t prevent global conflict.
Today’s world has evolved far beyond the contexts of Ricardo and classical economists. Rapid tech transfer, brand building in weeks, regulatory arbitrage, and instant capital flows have transformed trade dynamics. Ricardo never foresaw a world where cost-cutting dominates global exchange.
As the Governor of the Bank of England noted, modern trade imbalances are no longer sustainable. This isn’t a world of empires anymore. And yet, global institutions still operate on outdated assumptions.
China, despite its massive trade surplus and long history of gaming the system, now claims to defend the rules-based order. The irony is striking. Globalisation has become an unsustainable game of cost-cutting with geopolitical risks growing.
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Source: Ceoworld.Biz
