I am on record as saying COVID-19 is bigger than 9/11 and the 2008 financial crisis put together. It is probably the biggest thing that’s happened since the end of the Cold War. In terms of intensity and impulse, I think COVID-19 is a bigger compressed shock, as the “end of the Cold War” really occurred over five years or so.
So if I think COVID-19 is such a big deal, what has it made me change my mind about? I do believe that the free-trade globalization of the late 20th-century went too far. I am aware of comparative advantage, and the reality that trade makes us all richer in myriad ways. It is quite persuasive. But I think richer isn’t always the best because the gains in efficiency come at the expense of robustness.
In The Human Web McNeill and McNeill argue that the multipolarity of civilization allowed for there to be redundancy over time. While the late Bronze Age collapse was extended, and to some extent resulted in total cultural erasure (the Classical Greeks were unclear that their own ancestors had created the great cyclopean citadels of the Bronze Age), later civilizational regressions were not as catastrophic because “not all the lights went out.”
The problem in the current globalized era is that specialization has gone so far as to remove redundancies in the supply chain in a “just-in-time” world. Specialization and economies of scale in China mean that our inputs and materials are extremely cheap, allowing us to purchase other things, but if China’s “lights go out” as they did in early 2020 it cascades through the system, we experience a major “supply shock.” In some cases, it is really hard to find alternatives to China, as they’ve cornered the market in all the requisite skills.
Also, to be entirely frank I think we need to revisit the neoliberal idea that trade and engagement allow for liberalization over time. I still support engagement in particular, because I dislike war a great deal, but it seems quite clear that free trade works best between regimes which are ideological in sync on the fundamentals.
For the United States, a move toward more autarky won’t be that difficult. Most of our economy is “internal” already. Unlike small nations like the Netherlands, or, export-driven economies such as China’s, trade is not necessary, it is a bonus. I don’t think it’s a bonus we can afford anymore. When exogenous shocks hit us, nations can only rely on themselves. Ask Italy.