Guest Post by Paul Craig Roberts
If the coronavirus proves to be serious, as it does not appear to be at the present time, many economies could be adversely affected. China is the source of many parts supplied to producers in other countries, and China is the source of the finished products of many US firms such as Apple. If shipments cannot be made, sales and production outside of China are affected. Without revenues, employees cannot be paid. Unlike the financial crisis of 2008, this would be an unemployment crisis and bankruptcy of large manufacturing and marketing corporations.
This is the danger to which globalism makes us vulnerable. If US corporations produced in the US the products that they market in the US and the world, an epidemic in China would affect only their Chinese sales, not threaten the companies’ revenues.
The thoughtless people who constructed “globalism” overlooked that interdependence is dangerous and can have massive unintended consequences. With or without an epidemic, supplies can be cut off for a number of reasons. For example, strikes, political instability, natural catastrophes, sanctions and other hostilities such as wars, and so forth. Clearly, these dangers to the system are not justified by the lower labor cost and consequent capital gains to shareholders and bonuses to corporate executives. Only the one percent benefits from globalism.
Globalism was constructed by people motivated by short-term greed. None of the promises of globalism have been delivered. Globalism is a massive mistake. Yet, almost everywhere political leaders and economists are protective of globalism. So much for human intelligence.
At this point of time, it is difficult to understand the hysteria over coronavirus and predictions of global pandemic. In China there are about 24,000 infections and 500 deaths in a population of 1.3 billion people. This is an inconsequential illness. Compared to the ordinary seasonal flu that infects millions of people worldwide and kills 600,000, the coronavirus so far amounts to nothing. Infections outside of China are miniscule and appear to be limited to Chinese people. It is difficult to know for certain, because of the reluctance to identify people by race.
Yet China has huge areas in quarantine, and travel to and from the country is restricted. Nothing like these precautions are taken against seasonal flu. So far this flu season in the US alone 19 million people have been sickened, 180,000 hospitalized, and 10,000 have died. The latest report is that 16 people in the US (possibly all Chinese) have come down with coronavirus, and none have died. https://www.cnbc.com/2020/02/03/the-flu-has-already-killed-10000-across-us-as-world-frets-over-coronavirus.html
Perhaps the coronavirus is just warming up and much worse is to come. If so, world Gross Domestic Product (GDP) will take a hit. Quarantines prevent work. Finished products and parts cannot be made and shipped. Sales cannot take place without products to sell. Without revenues companies cannot pay employees and other expenses. Incomes decline across the world. Companies go bankrupt. You can take it from here.
If a deadly coronavirus pandemic or some other one does erupt and there is a world depression, we should be very clear in our mind that globalism was the cause. Countries whose governments are so thoughtless or corrupt as to make their populations vulnerable to disruptive events abroad are medically, economically, socially, and politically unstable.
The consequence of globalism is world instability.
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Do not know why this article makes me think how great it is that the US is 50 states and not one big country…..So many ways to say proof positive smaller, local, decentralized is great….3 d manufacturing, internet based schools, hydroponics…all local self sufficiency…..saves transport costs some too, saves Energy, Green! hahah……..
Total interdependence = Zero resilience
This is what happens when you put all of your apples in one basket, Apple.
Preach it brother.
Take the official Chinese numbers and add one or two zeros. At least 300,000 infected, probably 24,000 dead.
Whether it takes one month or six months for that 72″ tv to arrive from China means nothing to those like me who haven’t watched mindless media for the mindless masses for decades. So, whatever happens to the supply chains of useless goods will not affect our lives.
John, it could be much worse than that. I’m a Manuf. Rep for Engineered equipment in the US. Most if not all major equipment needed in the US has some of it’s components made in China. We are already are getting notices from our vendors that delays are inevitable. Delays of this equipment could easily disrupt big things. And the word delay could easily change to ‘not avail.’.
Many years ago, I stood on my soapbox to all my vendors that if they plan on getting even some components made in China that they could get in big trouble without a plan B, which to me means being able to make these same parts in another continent. The local brass agreed with me, but all the big brass just fell in line with all other Manuf. and went for lowering costs by getting stuff from China.
IF this becomes bigger, it could easily affect local utilities, etc…..
I dunno. Why not develop sources for components here in these 48 contiguous states? Novel idea, I know, but maybe we should start giving due consideration to new ideas. Sometimes an idea that at first glance seems crazy is later deemed to be a sound plan after proper analysis and evaluation.
OOOOh, sorree! After I read down to the other comments, saw that others had already made the same suggestion. Guess great minds really do run in parallel.
One big problem that should be realized soon is how china has taken over much of the antibiotics manufacture. They do not make the final drugs but many of the key ingredients.
I buy my vitamins and other supplements from an outfit in Florida that sources their supplies from Japan or Europe. More expensive, but their supplements actually contain the ingredients that the label guarantees. The cheap stuff from China often does not contain what it should, and is not properly filtered to remove dangerous impurities.
Yah, sure, a Yugo is cheaper that a Bimmer, but is it really less expensive.
Maybe there is a positive here. Might just have to bring our manufacturing back to the good ol’ usa usa usa.
exactly what I am pushing the Manufacturers I represent to do, and have been for 5+ years. Even with higher costs to Manuf.
The sad part is all Manuf. always look to lower costs which isn’t a bad thing, but when they put all eggs in one basket, that is a risk by itself. They all have been doing it for a long time.
I hope this is the wake up call to change things and start making more and more stuff in North America. Even South America would be smarter play than Asia. Unfortunately, the bean counters usually win in big Corps, but this is the first time in a long time that they are wrong, big time.
When electrical utilities cannot immediately obtain a new transformer from China, must wait a year for that transformer, and consequently must curtail the amount of electrical power that the utility can sell to their customers, the price of a transformer from China becomes very high.