About ten years ago I published an article in Foreign Policy that I just recently re-read. In the article I extended one of the arguments I made in my book, The Volatility Machine,
that the globalization process is driven primarily by monetary
expansion and the consequent increase in risk appetite. What was new in
this piece, because I hadn’t realized it when I wrote my book, is that
every period of globalization coincided with a stage of the industrial
revolution in which accompanying the expansion in international trade
and capital flows is a major technological boom, driven also by monetary
expansion.
After re-reading the article I thought it might be useful to republish it on my blog with a couple of comments while waiting for the next entry (which should come out this week). I think the point it makes about the process in which globalization is reversed is still worth considering.
Will Globalization Go Bankrupt?
“Only the young generation which has had a college education is capable of comprehending the exigencies of the times,” wrote Alphonse, a third-generation Rothschild, in a letter to a family member in 1865. At the time the world was in the midst of a technological boom that seemed to be changing the globe beyond recognition, and certainly beyond the ability of his elders to understand. As part of that boom, capital flowed into remote corners of the earth, dragging isolated societies into modernity. Progress seemed unstoppable.
Eight years later, however, markets around the world collapsed. Suddenly, investors turned away from foreign adventures and new technologies. In the depression that ensued, many of the changes eagerly embraced by the educated young — free markets, deregulated banks, immigration — seemed too painful to continue. The process of globalization, it seems, was neither inevitable nor irreversible.
Read more: http://www.creditwritedowns.com/2012/06/will-globalization-go-bankrupt.html
After re-reading the article I thought it might be useful to republish it on my blog with a couple of comments while waiting for the next entry (which should come out this week). I think the point it makes about the process in which globalization is reversed is still worth considering.
Will Globalization Go Bankrupt?
“Only the young generation which has had a college education is capable of comprehending the exigencies of the times,” wrote Alphonse, a third-generation Rothschild, in a letter to a family member in 1865. At the time the world was in the midst of a technological boom that seemed to be changing the globe beyond recognition, and certainly beyond the ability of his elders to understand. As part of that boom, capital flowed into remote corners of the earth, dragging isolated societies into modernity. Progress seemed unstoppable.
Eight years later, however, markets around the world collapsed. Suddenly, investors turned away from foreign adventures and new technologies. In the depression that ensued, many of the changes eagerly embraced by the educated young — free markets, deregulated banks, immigration — seemed too painful to continue. The process of globalization, it seems, was neither inevitable nor irreversible.
Read more: http://www.creditwritedowns.com/2012/06/will-globalization-go-bankrupt.html
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