The Pandemic Has Accelerated the Global Economic “Slowbalization”

Part of the Series

Despair and Disparity: The Uneven Burdens of COVID-19

COVID-19 has now reached dozens of countries including in the Middle East and Africa, and over 1 million global citizens have been infected. The global pandemic continues to impact United States domestic and foreign policy at every level of government while creating new norms in both social and economic life, says John Feffer.

Feffer has written extensively on globalization, U.S. foreign policy and the geopolitics of North Korea, South Korea and China. Feffer is a writer and a member of the Democratic Socialists of America. He currently serves as the director of Foreign Policy in Focus in Washington, D.C., and is the author of Aftershock: A Journey Into Eastern Europe’s Broken Dreams and the novel Splinterlands.

In this interview, Feffer looks at what COVID-19 means for: the prospect of globalization, U.S. foreign policy, the media and climate discussions; what the crisis says about domestic and economic policy in the United States, and how the virus is shaping the discourse of electoral politics.

Daniel Falcone: You have written about how COVID-19 has impacted globalization. Can you tell us where we are now in terms of globalization, where we were just before the pandemic outbreak and the prospects for the future?

John Feffer: Just prior to the outbreak of COVID-19, there was a growing consensus that globalization was slowing down, the so-called “slowbalisation.” It was a feature of The Economist magazine in January 2019. And there are a couple of indicators that they point to, namely the percentage of trade in global gross domestic product (GDP), the percentage of foreign-directed investment and also the share of multinational corporations in global GDP — all of which had been declining for about a decade. In other words, since the financial crisis, there had been a kind of a retrenchment, if you will, in the global economy.

And it wasn’t just a response to the financial crisis. There are some longer-term trends that are at work here. For instance, The Economist pointed out the fact that there are no longer any additional savings from shipping things around the world. The cost of shipping things has not gone down.

Another was that multinational corporations were often losing out in competition against their local rivals.

Then perhaps the most significant would be technological shift. That would encompass, for instance, automation. For many years, corporations have outsourced their manufacturing in their search for cheaper labor. Labor is often the major cost of the final product.

So, manufacturers were looking for the cheapest possible inputs. But in substituting a worker with a machine, it doesn’t really matter where that machine is located. Obviously, the machine doesn’t have to be fed, it doesn’t need health care, and indeed the factory itself doesn’t even need to be lit or heated. So, that means considerable savings. And, of course, the automated factory can be located right near corporate headquarters. You don’t have to locate it somewhere else in the world. So, this process of “reshoring” — the opposite of offshoring — has been gathering steam. All of these factors have contributed to a kind of slowdown in globalization prior to the outbreak.

Now the outbreak comes, and, of course, it takes place in China, so you see immediately a breakdown in all of the global assembly lines that involve Chinese manufacturing and Chinese labor because China basically shuts everything down.

That means that suddenly component parts are missing. It means the costs go up as manufacturers scramble to find other sources. But this was considered, at least at the beginning, to be just a Chinese problem. In other words, we’d already (in the United States in particular, but in other countries as well) been shifting away from China as a result of tariffs and the overall trade war between the United States and China. So, in that first month or so this was seen as simply an accentuation of that particular trend.

As the virus spread, it became quite clear that the entire circulatory system of the global economy was going to be affected. That meant manufacturing, of course, as countries shut down nonessential factories, nonessential manufacturing. But it also meant the other networks of globalization, namely airline travel as well as the shipping of goods from port to port. So, the lifeblood of globalization has been considerably affected over the course of the outbreak.

Now looking at the future, I would say that a number of the trends that had already been in place that suggested a slowing down in globalization will get a boost from the coronavirus. So, the process of reshoring, the process of re-localizing, the diminishing share of multinationals in the global economy — all of that will be accentuated. And we’ll also see a shift away from the blue-collar aspects of the global economy and toward the white-collar aspects of the global economy. Anything that can be accomplished online, for instance, will have a priority as countries continue to be in lockdown.

The price will be enormous. This will have a tremendous effect especially on countries that are export oriented. But the pain will be shared globally.

On the bright side, prior to the outbreak of the virus there had been a substantial critique of globalization from the environmental point of view. Obviously, the global economy — global manufacturing and as well global logistics — has contributed a tremendous amount to the overall carbon footprint of the world. The shutdown in large part of the global economy over the last month or so has meant a substantial reduction in carbon emissions, as well as the air pollution and other associated environmental problems.

As soon as the virus fades, we’ll have a sudden resurgence of manufacturing, travel, et cetera, and a bump up in carbon emissions. This happened after the 2008/2009 financial crisis. It’s not clear whether that will necessarily happen this time, because of two things. One, for some governments, this will be an opportunity to implement more sustainable economic policies which would lock in place some of the reductions. And two, it’s not entirely clear when global manufacturing will start up again. In some places, like China, they’ve managed to put this virus under control for the time being. But epidemiologists are worried that this coronavirus will become a periodic virus, like the common cold and influenza, and enter our seasonal disease expectations.

So, the trend toward perhaps greater sustainability in government policy and then the incorporation of the coronavirus into periodic health problems may lead to a reduction in global manufacturing and potentially a reduction in global carbon emissions.

As someone who studies and writes about U.S. foreign policy, what does COVID-19 mean for countries we tend to dispute militarily?

In the ideal case, of course, the United States would announce an immediate ceasefire with all of our adversaries. And indeed, the United Nations secretary general has pleaded with countries around the world to basically engage in a moratorium on all conflict. That’s the ideal world. And unfortunately, if we look at the past as an example, militaries often don’t take pauses during health crises or pandemics. They usually end up spreading the pandemic more widely.

But if we speak specifically about countries, let’s take North Korea. The United States, despite Donald Trump’s overtures to the leader, Kim Jong Un, has basically continued its stringent economic sanctions, its containment of the country. And the coronavirus has only added to that. In fact, the kind of lockdown that the United States wanted to impose on North Korea failed. North Korea was engaged in still a tremendous amount of trade with China, both official and unofficial. Well, coronavirus basically eliminated that as North Korea shut down its border with China and trade with the country dropped precipitously.

The same with Iran. The United States was eager to use sanctions to bring the country to its knees. And it looked as though, again, the coronavirus is going to aid the United States in that effort.

If we were dealing with a sensible government, this would be an opportunity for Washington and Tehran to bury the hatchet and ask: What can we do to help each other get over this crisis? But that, of course, is not the modus operandi of the Trump administration. There are a number of calls for the United States to at least reduce sanctions as they pertain to medical and health issues. But the Trump administration is more interested in launching rocket attacks inside Iraq against Iran-affiliated militias. It has drawn up a plan for more confrontation with Iran, not less.

We’re also seeing the U.S. continuing to ratchet up its policies of containment toward Cuba and Venezuela. And despite some kind words between Trump and Xi Jinping, we’ll see the continuation of at least trade conflict between the United States and China.

So, in other words, aside from some selective U.S. military operations, for the most part, the United States is attempting to use the coronavirus to augment already existing policies of containment against our adversaries.

You’ve written about what this health crisis says about the domestic political culture of the United States, but how do you foresee the pandemic playing into the remaining primaries and the forthcoming national election, especially in terms of the economics of the United States?

It’s possible that we’ll be in kind of a second wave of infection in November. If the election takes place physically, then a whole lot of people will stay away from the polls for fear of infection. There will also be great potential for misinformation to suppress the vote count, such as a false rumor of someone coughing near the polling place at such and such a location. It would take a lot of fortitude to then go and vote there when you’re not sure whether that was a true report or not.

If everything shifts to voting remotely, we might have a better chance of getting everybody or a better cross section of the population represented. Whether we’re able to do that is another question. There’s a certain amount of money that’s been allocated for that, but everyone says it’s insufficient. We didn’t do so well even with the Iowa Caucus, when they rolled out the new app. And here we’re talking about a national election.

Forecasting the results of the election, of course, is hard to say. Unbelievably, to my mind, President Trump has seen an increase in favorability, by a couple of points. Plus, a majority of Americans in several polls have said that he’s handled this crisis well, as opposed to a minority (a large minority, but nevertheless a minority) that says that he hasn’t handled it well. And I say it’s unbelievable because it seemed to me quite obvious how Trump screwed things up in any number of ways, which has been reported on pretty obsessively.

But unfortunately, it’s a tendency of Americans to trust in leadership at a time of crisis no matter how poor and ill-informed that leadership might be. Much depends on the development of this virus and its impact on the economy. If everybody is in fact back at work in the summer, then the president can claim a victory. There might be the usual amnesia about his initial responses or his responses throughout the crisis. And that will give him a lift in November.

But even if the virus spreads more resolutely around the country, there’s a likelihood it will affect urban areas more negatively than rural areas. Folks in the cities will be absolutely furious at Trump, but they’re already furious at Trump. And the folks in the rural areas will not be as inconvenienced by this and will stick to their support for the president.

I thought it could be used as an opportunity to reignite the rivalry within the wings of the Democratic Party and give Bernie Sanders and the underlying issues of his campaign more viability or exposure. I’m not sure that that’s happening in the face of the pandemic, which is concerning.

I would say first that Sanders and the progressive wing did have an impact on the party. I think the party as a whole has shifted. And that was a victory of Sanders from 2016. It was a victory of the organizing around the 2018 midterms. And it’s a victory of the progressive candidates for the 2018 primaries. All three of those contributed.

In terms of going forward, there will continue to be a battle within the Democratic Party about how best to stand up to Trump, how best to defeat him in November. And, you know, the usual Democratic Party strategy, going back decades, is to run in the middle and even center-right in many cases.

I’m not sure that that necessarily will hold true as a strategy come November, in part because Trump is an unpredictable candidate and he supports, at least rhetorically on the economy, some of the ideas that the left or the progressives have pushed in the past when we talk about improving infrastructure or helping the common worker. So, the Democratic Party might not actually find it strategically useful to run center-right and might find it much more effective to embrace more of Sanders’s rhetoric. I do think that Sanders and other progressives can play an important role in shaping the Democratic platform and furthering this incremental shift of the Democratic Party.