Angry Planet - Lost Episode: ‘Goodbye Globalization: The Return of a Divided World’

Episode Date: January 29, 2025

Listen to this episode commercial free at https://angryplanetpod.comThe pros and cons of globalizationThe end of trust in the global systemWhat was behind the WTO protests of the 1990sHow 1999's WTO Protests Influenced the Policing of Protests TodayChina, China, ChinaThe Covid shockWhite goods?And we have to talk about McDonald’sHow sanctions created the multipolar world“There’s no trust between the U.S., China, and Russia.”Autocrats or historical forces?Martyring Jack MaWhat will happen to pricesHow to make a T-shirtHow much would the iPhone cost if it were made in America?The Houthis attack on the global supply chain“I don’t know why you’re so sad about McDonald’s”Goodbye Globalization: The Return of a DividedSupport this show http://supporter.acast.com/warcollege. Hosted on Acast. See acast.com/privacy for more information.

Love this podcast. Support this show through the ACAST supporter feature. It's up to you how much you give and there's no regular commitment. Just click the link in the show description to support now. Glad to be able to actually put this together. I know. It took us a while but here we are. Thank you for your flexibility. Not at all. If there's any like dealing with weird time zones and it's, you know, and busy people. And busy people. We do it all the time. It sounds like you've got some fancy equipment there, Matthew. Is that?

Yeah, this is one of the nice mics. You're a very own radio studio. Yeah, basically. I mean, I live far away from all the centers of power, so I had to construct my own kind of studio here. I needed to do some, like, sound dampening stuff, but other than that, we're pretty good. It's pretty good here.

I've been to Matthew's house and there is not that much sound other than the cats. It is pretty far away from bed. That's true. I don't have like any city noise or anything to cover, right? Well, so thanks for, thanks for, you know, coming on. And I just, I mean, I, you know, I've been following on LinkedIn your career, which seems to be going in a good direction. Can't complain.

I'm glad. I'm really glad. And yeah, the last time we spoke, you may not even remember because I see you've done a fair number of interviews. But you've written something for foreign policy and we ended up talking about the Stasi for about 45 minutes, which was absolutely fascinating. I think we were supposed to talk about something else and then we got on like a long Stasi tangent, but it was good. Yes, I do remember it now. Yeah. So again, a while ago, but. Yeah, there's, there's, it's, it's always fascinating talking about this.

I would be happy to do it now too, but I know we're hoping to discuss globalization. Let me flip the, let me flip the switches here so we can get started. Get the redundancy on. Recording in progress. All right, Jason, I've got both of my things running. so whenever you're ready to start, sir. All right. Well, hello and welcome to another conversation on an angry planet.

If you're listening to this episode in sequence, you'll notice that my voice is slightly better. And I've been croaking for the last couple of episodes. But anyway, that aside, I wanted to welcome Elizabeth Bra to the show. She has actually been with us before a few years ago talking about this Stasi. or she says it, Reischdazi, right? Anyway, so, but today we're going to be talking about globalization and the end of it.

So, Elizabeth, would you mind giving a brief introduction of yourself and a bit about the book as well? Yes, so my name is Elizabeth Buras, you said, Jason, and I'm a senior fellow at the Atlantic Council, and I focus on new national security threats. And in the course of working on new national security threats over the years, I realized that the private sector of Western companies were incredibly exposed to geopolitics. And then I started noticing how concerned they were becoming about those very threats, how concerned companies, executives were becoming about these new threats. and I started essentially documenting how globalization was retreating. And I'll just say straight away, trade statistics are still good, but what matters is how companies, how executives feel about the state of globalization,

and indeed how policymakers feel about the state of globalization, and ordinary people voters, how they feel about the state of globalization, and how they feel is that it's not going well for globalization. because we don't have that that harmonious world in which companies can operate pretty free of threats anymore.

And so that's why I ended up writing this book, Goodbye Globalization. That doesn't mean globalization. It just means we are beginning to wave goodbye to it. Well, that sounds like a pretty good distinction. But globalization was sort of touted at when we had the end of history, now we're going to have globalization, right?

I mean, and please correct me if I get off on a wrong tangent. But I think there was a lot of optimism and then a lot of fear as well. I mean, we also had in the United States massive protests against globalization back in the late 90s, early 2000s. In Seattle, in particular, we had massive protests. What is it that's, is there, what do you think is good about globalization and why are people afraid of it in the first place? Simple questions, small questions. What's good about globalization is that it makes commercial activities incredibly efficient, which makes them cheap, which means that we all benefit. So, for example, the devices that you and I and Matthew are sitting in front of at the moment are all much cheaper.

We're all much cheaper when we bought them to compare to what equivalent devices would have cost us 20 years ago or let alone 30 years ago. And so when you look at globalization from a purely economic business, but commercial perspective, there's no alternative to it. it just makes so much sense. But then there is that, that, a pesky little bit about how people feel about it and how countries behave. And that's when you start getting problems because it's not just about economics. It's about how countries behave and indeed how people feel about the whole set up. And the moment they start losing faith in this arrangement, that's when it starts getting into

trouble. And that's what we are seeing now. And I should say, since you mentioned Jason, the protests. in Seattle all those years ago. What's interesting is that those protests were Western activists saying we don't like these company bosses and financial bosses who meet and make decisions that have an effect on all of us and we don't get to have a say and we want to say. But what we are seeing now is it's not just activists, you know, the 99% vis-a-vis the 1%.

It's not just activists who have taken to disliking globalization. It's policymakers who are discovering that, oh, our countries, our Western countries are far too dependent on China, and that makes us extremely vulnerable, or that we are far too dependent of Russia, that makes us extremely vulnerable. And it's also business executives who are saying, ooh, this is not a good idea anymore. We are far too dependent on China. We have to think about reducing our exposure so that we can continue to manufacture and produce our products without having to worry about geopolitics.

And again, it's ordinary citizens who are saying we don't like this globalized economy. Many so-called ordinary citizens have been saying that all along. They've been saying we don't like the fact that companies moved our jobs away to foreign countries. We want our jobs. here are communities, but they were such ordinary, so-called ordinary citizens were dismissed us, being leftovers of some bygone era back when in the 90s, they voiced such opinions. And now, it turns out they were right. It is good to have some manufacturing and some key commercial activities in our own countries

lest we can become dangerous and dependent on other countries. And COVID was also a huge shock, right? I mean, you've got the geopolitical pressures, but a clear demonstration about how terrible this could be was COVID. Is that right? Oh, COVID was a massive fork in the road. So I think we all remember what happened in the early stages of COVID when countries ran out of various supplies, whether it be PPE, whether it be medications, whether it be various other supplies. And I think we all remember, depending on which countries we live in, we remember when people stockpied out of fear that their country would run out of their local supermarket would run out of various items. I remember in particular past that could not be had in the UK and toilet paper.

But what COVID really showed and showed to the whole world was two things. first of all, that we are extremely dependent on China selling various products to us. And during COVID, it was PPE in particular where we were so dependent on China. And China turned that into a sort of almost sadistic game where they exported PPE to the countries they liked. so Serbia, Spain, Italy, whereas a country like Sweden that had enraged China apparently got nothing. And this was not a matter of giving gifts. It was a matter of commercial contracts. But China used it to its advantage to say, you know, we'll export to such and such countries,

but not to other countries, which we don't like, countries that we don't like. The other thing was that regardless of how the virus originated, Chinese authorities obfuscated about its spread once it was spreading within China. And that's, of course, what then made it into a pandemic because people within China were getting the virus then because it's a globalized world. Many of them travel to other countries, including a large number of travel to Italy, because again, it's a globalized world. and that's how the virus spread.

And that's when people all over the west of the world and elsewhere started saying, well, hang on, what is this country whose government we can't trust to tell the truth about something as serious as a deadly virus? And they decided we saw it in opinion polls all over the West that people decided they could not trust China or they could not trust the Chinese government. And that was a really key moment because until then, most so-called ordinary citizens in the West

haven't really had a strong opinion about whether you could trust Xi Jinping. Why should they have an opinion? After that, after COVID, they did have an opinion. Yeah, I can see that that would happen. But the globalization, I guess I should ask, and I'm a little afraid, because I've seen some of your other interviews, and you've been asked this so many times,

that's why I'm afraid. But if we could go to when globalization started and how we ended up here and how we ended up with China, you know, we just spoke about why they've sort of become the official bad guy. But, I mean, how did we get here in the first place?

I mean, was it really the 1990s or was it before then? We got here because the end of of the 1980s and the beginning of the 90s were just such a fortuitous and unique moments in history.

It was, remember, it wasn't just the Berlin Wall falling and the countries in the Warsaw pact deciding they wanted market economies and most of them deciding they wanted liberal democracy.

It was lots of other countries that around the same time decided they wanted market economy too. and we should remember China had been experimenting with pockets of capitalism for a number of years and had been expanding those pockets. So all of a sudden it seemed like everybody who mattered, or at any rate, lots of countries at the same time wanted market economy. And what an incredible moment for Western business.

So ordinarily the way it works is that if you, the way it worked until the night, late 80s was that if you were a Western company, and you could find every now and then a country that you could expand to, that weren't that many, and every now and then one would open because they had experimented where protectionism decided it didn't work. Then in the late 80s, early 90s, we got this avalanche of countries that decided they wanted market economy. And what a time to be alive as a business person. You could pick and choose the countries in which you wanted to do business. Whereas in the past, they've been excited if one country opened up.

And in the book, one of the protagonists is an executive for Michael Tresko, who subsequently became chairman of Unilever and also chairman of Erickson, and before that, CEO, Electrolux, one of the masters of globalization. And he says in this book that there were so many companies who could acquire among these newly opening, newly opening economists. At this point, it's impossible for him to remember the acquisition, every acquisition he made, but he did remember one acquisition in particular, which was Hungary's state-owned refrigerator maker. And he remembered that acquisition because if you bought Hungary's state-owned refrigerator maker,

you also got a zoo. So Electrolux ended up owning a zoo. That's how wild things were in those days, right? And by the way, he could also have bought hire, which was a H-A-I-E-R, which was a relatively small Chinese white goods company, but he decided the quality just wasn't such that he could defend acquiring it. And I'll just jump ahead to the year 2024. Well, today, Pire is the world's largest white goods company. It has acquired various Western white goods companies.

It has acquired intellectual property in various ways. Today, it's the world's largest white goods company, a company that back in the 80s and 90s was really too unpromising to even think about acquiring. So the story of globalization in one fridge, so to speak. That's interesting. And I think you have to explain to us because we know nothing, but what are white goods as compared to? I just hadn't heard the turn. Refrigerators, washing machines, like, manufactured large appliances that are typically white.

Really? Yeah. You call that because they're white? Yes. You New York City people. I had no idea. Well, everything that I've owned has been stainless. steel for the last little while.

Well, la-de-da. My choice is just what's available. The old fridge counts as white goods. So, yeah, it's not particularly sophisticated title, but that's where it is. Large household appliances. Thank you. Elizabeth, I want to ask the cliche question, just because it's something I've been tracking and I've been kind of endlessly fascinated the last year or two, I think a big

part of this story and the way people understand. it is how McDonald's is doing and how McDonald's is doing in various countries. Famously, Thomas Friedman said that, you know, there's never going to be a war in a place that's got a golden arches, almost immediately, you know, disproven. But it's gotten pretty complicated for McDonald's in countries like Russia and countries across the Middle East in the past few years. I'm just wondering what your thoughts are on that, and if you could talk about it. Yes, certainly. And then that too is the story of globalization. So it was clear that the West had won, the Western way of life had won when McDonald's was allowed to open a restaurant in central Moscow. Even while the Soviet Union was still alive, it was so weak that the government felt it had to allow McDonald's to open a restaurant, which it did. And there were endless cues of Moscovites lining up to buy hamburg at this McDonald's.

And McDonald's has done well or did well after that, and as it did in all the other markets it entered. But then the Ukraine war broke out, or rather Russia invaded Ukraine. I shouldn't put it in a passive voice. Russia invaded Ukraine. And McDonald's wisely decided that this was a crisis. Unlike previous crisis, it had weathered in Russia and elsewhere, and it decided it had to pull out. And that, I think, was a very, well, it was clearly an excellent decision by McDonald's leadership, but it wasn't totally obvious because in non-Western markets, you will have a lot of turbulence,

including in markets that are trying to become, countries that are trying to become more Western, you will have various conflicts, sometimes even armed conflicts. You will have coups. You will have scandals. You will have violence. And then as a Western company operating in these markets,

you have to decide, well, how serious is this? Should we pull out? And in most cases, you stay put because let's face it, the fewest countries are as safe as Western liberal democracy. You have to operate somewhere outside the West if you're going to continue to make money. So over the years, most Western companies operating in Russia have stayed put. They stayed put when Russia annexed Crimea. They stayed put when there were various almost civil wars within Russia.

They stayed put during the Chechen conflicts and so forth. But then when Russia invaded Ukraine in 2020, to a few of them, including McDonald's, decided that this was a completely different kind of crisis and they were going to leave. But many more decided that, oh, this is a conflict that we can, that we can weather and we'll stay because we are just, we're just a commercial undertaking, right? We are, we are not geopolitical, we don't take political positions. We just, we just sell coffee or whatever the case may be. And so many, we are just, we are just, we are just, we're just, of these companies decided to stay in Russia.

And that shows how little they understood, those companies understood, of how the world has changed. It was by staying in Russia, they made themselves extremely vulnerable to the Kremlin's retaliation against the West. And it was clear even in the weeks before Russia invaded Ukraine that the West, the West was going to impose massive economic sanctions. And it was clear at least to, I shouldn't say at least to me because it makes me sound like I think I'm some sort of a guru.

But I think it should have been clear to most people that Russia would then retaliate by targeting the Western companies that were still operating in Russia because they were such easy targets. And that's what happened. We have seen Russia expropriate a number of Western companies that are still. there and they, they are stuck. If you didn't leave in the weeks immediately after the invasion, you are stuck in Russia. And you, that makes you, you're essentially a hostage there.

Even if you're trying to leave, it's not within your power to decide when and how you can leave. And if you can leave. And so some of these companies, rather, got the, you know, Kremlin Okola treatment, basically, right? I mean, when you say expropriate, all of a sudden, There are these new beverages and burgers on the market in Russia. I believe McDonald's is now Uncle Vanya's.

You will be transformed. Yes, if you were clever, you left in the first weeks of war and sold your Russian operations for a pittance to local operator, but at least you were able to leave. If you were less clever, you stayed and you said, oh, we can stick this out. then you're stuck in Russia. Even if you're willing to sell your Russian operations to a local business person for pittance,

it's not within your power to decide whether that can happen. You have to humbly wait for the Kremlin's permission for that to happen, and the Kremlin may never permit, give that commercial or grant that permission. And indeed it may seize your occupation. operations altogether. So you may find, as has happened to Kansberg, as happened to Fortem, as has happened to Danone, that they just take your operations and that's it. And you didn't even get a few million dollars for what used to be quite substantial operations in Russia. it's interesting that because this goes against the fears that I think a lot of people had as we're talking about in the beginning about, you know, those protests, that corporations would be making all of the decisions and that everyone is at the mercy of multinationals. And as you said, they would have no say in what these companies do. And it's almost like, and tell me, you know, sort of what seems to be what you're saying to me is like, this is the revenge of

geopolitics. Right? It really is. I think the moment when the world was the most united was during the financial crisis

when we were all united against bankers, right? But now, now we, that unity is gone and geopolitics has returned.

And why has it returned? Well, I think it's like, you know, kids playing in a sandbox. It's fine for a while, but it always ends up with a fight because it's not in human nature to get along in perpetuity. That's why we have laws that govern our coexistence within countries, and that's why we have laws and treaties and conventions that govern the social existence

of countries around this can it. but this post-Cole War era was based on countries, not just following those rules to the letter, but also to the spirit and being willing to coexist and not just simply out of the goodness of the house, but everybody's interest to coexist because then commerce could thrive. Well, it's a little bit like, now I've talked about the sandbox now and sort of progress up in ages. So, you know, any romance starts well.

And then you notice your partner's annoying habits. And if it's a good relationship, you sort of, you make arrangements, you live with it because it's worth it. And you know you can trust the person. But if it's not a good relationship, then obviously the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the. side out balances, the benefits of the relationship. And if you feel you can't trust the other person, then it's over. And that's the point I think we have reached out now. There is no trust between the West and China, Russia in particular,

and countries that are like them. And if you don't have that trust, it will be very difficult to maintain the faith in the globalized economy, simply because there is no global police that can intervene if things don't go right and if one side misbehaves. And that's where we are today. In some places, the negative consequences of this stuff, the people that were better at geopolitics the whole time, or maybe we're thinking about geopolitics the whole time, have put the world in some pretty dangerous positions, right? cough cough Taiwan cough yes you know when people say oh

globalization was just wrong we should have realized Western government should have realized straight away that you know early in the 90s that Russia couldn't be trusted I don't think so one should always give people

on countries the benefit of the doubt and hope is not a bad thing we were hoping that Russia would become a country that would be able to coexist with other countries. We were also hoping that China would become a country that was able to coexist with other countries and indeed within itself. It doesn't mean that we should want China to become like a Western country and adopt all our values. That's for non-Western countries to decide.

But we were right to hope that Russia and China and similar countries would be able to co-examine. with other countries. And now it's clear that they, Russia in particular, but also China, that they are not able and willing to coexist with other countries. And so we have to then revise how we view them. But having given them the benefits of hope is not a bad thing. And imagine if we approached every other country on the basis of, you know, what's worse this country could do? Then actually it would be a very dystopian world to live in. How much of this is down to individuals? Because, you know, sometimes you talk about mass movements and the sway of history and all that kind of good stuff.

But we also have a few pretty distinct and from the American point of view, bad actors, you know, who seem to have pulled the globe apart. I mean, that's one view of it anyway. So you have Xi Jinping in one side and you have Vladimir Putin on the other. do you think that they would have, you know, that it took those particular people to end globalization or to push it towards an end or is it just was coming anyway? That is a really good question. I think an autocrat will always be on a journey towards becoming more autocratic simply because there is no off-ramp for an autocrat. there is no convenient or suitable moment for an autocrat to leave office and retire and be replaced by somebody else, which is why once you have a country that even has a slight autocratic tendencies, it would always develop towards more autocracy. And that's what we've seen with both Russia and China.

And for me, a pivotal moment was when China, the Chinese government decided to go after Jack Mar. It seemed so counterintuitive. He is China's poster boy, the poster boy of Chinese capitalism, somebody so many people looked up to within China and outside China. Why would you go after the most successful entrepreneur you have, who is, by the way, even more successful than Western tech entrepreneurs who are phenomenally successful in their own right? And that's when I realized that for the Chinese government, it's not about increased prosperity at all costs. It's not about increased trade at all costs. It's about that top priority is remaining in power. And if anybody or anything threatens their hold on power, they will crack down on that person.

And that is, I think, something worth bearing in mind for not just for Western businesses operating in China, but for Western countries trading with China, because we have always said, well, China will never do anything that will harm trade because it's in their interest that trade continue. Yes, it's in their interest that trade continue. But most of all, they want to remain in power and anything that would threaten their hold on power,

they are willing to crack down on or eliminate so that they can remain in power. So basically what we've said so far is that the downturns that we're talking about now are the results of human nature, which stinks, and we've talked about that on the show before, and bad actors who are just following their human nature. So I'm just curious, I mean, could this ever have worked long term? Do you think globalization was ever something that could have been built on and we could have ended up with a one world guy? I mean, I don't know where we could have gone, but I mean, was this a project that should be filled with hope that just sort of went off its rails? It should be filled with hope. And for a while it went really well.

essentially, for a while it went really well, essentially all the way to the Beijing Olympics. Remember one world, one dream, and it was all very harmonious. But after that, it started going south. And it was a phenomenal run, and it made life very convenient for us here in the West, but also for people in other countries,

in newly capitalist countries, It also created lots of jobs in countries like India, like Vietnam, like Bangladesh and so forth, the Philippines. So it has been incredibly beneficial. So it was worth a try. But human nature is just human nature and the nature of countries is that we can't get along forever. So globalization was going to end within. a certain period of time anyway, and now that time has come. And actually, since I hope I'm an optimistic person, I think actually it's not bad that it's taking this downturn, because now we can

step back and think about what worked well, what didn't works well. And from my perspective, one thing that didn't work well is that, first of all, it was too much based on emotions and hoping other countries would become like the West, that it was too optimistic, let's be more problematic next time. And most of all, next time let's include climate change in the environment because that's something that clearly was not on the agenda at all in the late 80s and it needs to be addressed if this planet is going to survive. So it's not actually really that bad that we have to step back and look at, see the ruins of globalization, the growing ruins of globalization and think about what worked

well, what didn't work so well, and then have a go at making it better next time. And there could be benefits, if I understand this right, to onshoreing, as we like to call it, right? Anyway, that maybe some jobs that were better paying might come back to places like the United States or Western Europe, more developed countries, if they are no longer willing to take the risks of being tied completely to China. and actually I guess Matthew's totally right. I mean, Taiwan, you know, whether they seem awfully nice or not, they may not survive long term. But yeah, I mean, do you think that there could be added prosperity, at least in the short term, in some of the countries that experienced the strongest diaspora of their, you know, workers and all that, you know, that kind of stuff? Yes, and it is an artificial world where most of our things are made elsewhere.

I think it is not just in the interest of the country for national security reasons to make a certain range of goods within its borders, but it's also beneficial for the self-esteem of the nation as such to know that we know how to make things. we are not dependent on other countries. And actually, when you think about the lessons of COVID, what we realized then was that we needed to make things within the country and we realized, oh, we don't have enough factory workers

and we don't have enough people with the skills to become factory workers. And so what we are seeing now is countries trying to reduce their exposure to China, reduce our operations in China, bring some of their operations and some of their supply chain. closer to home. And the challenge there is how to be ready for that. So we have seen, for example, Arizona has made spectacularly, has been done spectacularly well, preparing itself for ensuring. Arizona State University, the Chambers of Commerce, the state, what a fantastic partnership that has been and they managed to attract all this chip manufacture into Arizona.

There's just one catch, which is there aren't enough skilled for. factory workers, you can actually work in these chip fabs that are being set up in Arizona. So you need, you need not just the state and businesses, you need ordinary people as well to be part of this. And I think they are willing to be part of it because it is exciting to be making things at home again. And by the way, the jobs that are coming back, will be coming back and not the jobs are left. They are very skilled factory jobs. And these are not jobs. that anybody should look down on. They require enormous skill.

And that could actually, I think, upgrade the so-called working class and not just provide very highly skilled jobs in our communities, but also hopefully change our views on people who do manual work. If you work in a modern factory, your skills are as sophisticated as those of somebody who sits in an office, if not even more sophisticated. Well, considering what I do when I sit in an office, I believe that. Is it possible that this will drive prices up to? Wasn't that one of the big benefits of globalization much touted that this drove prices down

and made it easier for everyone to buy a pair of blue jeans? It will drive prices up. And Matthew, I don't know when the last time was like when the last time, you bought socks. But I, you know, I constantly buy new socks because if there's a hole in a sock these days, you throw it away. And if you, those of us are more than 30 years old, we'll remember that that was not always the case because socks cost, it, a cost, socks cost a bit more than they cost today.

And so you made sure to keep them as long as possible. And by the way, now that I think about it, I don't think, I have seen many people with holes in their socks recently either, simply because if you haven't sold in your sock, you buy a new pair. But that is based on somebody in another country, obviously, making your socks very cheaply, your socks, your jeans, all the way out to your iPhone. And that's why it was so attractive to think about the world as being all about economics, and it makes complete sense for countries to specialize

and because the global shipping industry is able to ship our goods very cheaply across the oceans, it still makes sense to have our goods made elsewhere. And even though they have to travel far to get to us, and by the way, travel several times between their various stations on the supply chain route. But it won't get along forever. And now the companies are deciding that it's too risky to, to have, to exclusively manufacture in a country like China that may turn, but turn hostile or turn adversarial against them,

we will see French law, and that means we will see higher prices. But I think, actually, that if we have a session among policymakers, among business leaders, among the public, where policymakers and business leaders articulate and explain that what we are seeing now, we'll bring more jobs home, we'll have more products made close to us and even in our own countries, and it will mean higher prices. I think we can get the public to buy into that because having more manufacturing at home is a good thing and then obviously people like getting more jobs in their communities.

But it has to be, that conversation has to be honest. has to be transparent. And if it were to happen that people were just hit with higher consumer prices, then clearly they would rebel. It's funny. You're making me think of two separate projects to try to explain this that have been done over recent years. One was by National Public Radio in this country,

where they tried to explain how to make a T-shirt from buying cotton in Texas, and having it spun, you know, in I think it was Malaysia or Ecuador. Anyway, they finally brought home a T-shirt, and the T-shirt cost like less than a cent to transport on a big ship. I mean, all for all, the price was really not much, and it just explained it every step just how integrated the world was and how you end up with a reasonably priced T-shirt. The other experiment, thought experiment that I really enjoyed is what it would take to make an iPhone in California.

And all of a sudden, you're talking about an iPhone that costs several thousand dollars as opposed to what we're experiencing now. Do you think people would ever put up with that? They might treat their belongings with a bit more care, which would not be a bad thing. for the planet. Yeah, and it's an interesting thought experiment. What if Apple said we're going to manufacture in California and our phones will say, not just designed in California, but made in California too, would people then say, oh, I love this concept.

And oh, if Apple will then have to explain, it's going to cost you quite a bit more, would then people then say, yeah, I like this idea. we shouldn't implicitly support the Chinese government by manufacturing them, and by the way, it's risky, or would they say, no, what a silly idea, you know, workers make less money elsewhere, find a cheap country? It's a sociological study waiting to happen. Well, I also think part of this is kind of what you've already touched on with the SOX example. And I think iPhones are another really good example. If this stuff did cost more and was manufactured in the United States,

and my iPhone wasn't designed to fall apart in a couple years, if I could more easily, say, pay like a hundred bucks and replace the battery in it, and then it works the same as it did the day I bought it. And it lasts, you know, five, even ten years instead of, you know, kind of winding down after a few years and then you turn it in and you get the new one and you're on that treadmill and you always owe Apple like 50 bucks a month or whatever it is you're paying if you haven't bought it outright. I think if in the socks, another great example, if they're manufactured at home and I'm not buying a new pair all the time because there's not

a hole in them constantly, then I think that may change attitudes. Yes, yes. And frankly, we have to change attitudes because we are ruining this planet. We have to be more careful about the burden we place on the planet. And that involves both the way we live our lives, but also what we consume. And we should remember that Gen Z views commerce a bit differently from people of, let's say, who are over the age of 30, which I think is all three of us, they want companies to behave more ethically.

They want them to take positions on geopolitics and politics. And that is a really tricky reality for companies, you know, if they have to consider how Gen Z will react to the fact that they manufacture in Jingjiang, the fact that they may still be operating in Russia, it is really tricky because as a company, you do have to have operations in some unsavory countries because so few countries are as, as let's say, well-behaved as Western countries when it comes to human rights. But so the point is, though, Matthew, that I think even though Gen Z, the pressure from Gen Zad can be

a bit of a nightmare for companies, it's also good for. for them to feel that pressure because it will make them think about the reaction if they put out a new line of socks that you discard after just a couple of times of using them. That is just not in the zeitgeist anymore. You have to be more sustainable than that. More sustainable and more geopolitically and politically aware. And otherwise, you'll get angry consumers who will not, just boycott your products, but articulate very strongly on social media and elsewhere that

they're going to articulate your product. And that's even worse than a consumer boycott. Do you have another question? Justin, sorry, I was about to go. No, I was just going to say just one thing. Because I've got a 24-year-old. And I always wonder how committed he really is to all this stuff. you know, I've fed him many a hamburger, despite whatever ethical objections there may be to hamburgers. He has a car, a new car. Okay, it's a hybrid, but it's a brand new car.

And, you know, lots of stuff goes into manufacturing a car. I just, yeah, I guess I've just not convinced that when we were talking about human nature earlier, I think these Gen C people are still greedy little, you know, monsters, just like the rest of us. Yes, yes, but they will still wage a campaign against you if your company does something. So they're hypocritical. So they may still buy your product,

but they will wage that campaign against you. And that's that reputational damage is even worse than any sort of damage caused by a boycott. I kind of love that. Well, we've seen it cut other ways too, thinking about a couple years ago Target taking an enormous hit because it made

conservative activists mad you know this is not consumer campaigns are not just about globalization they're also about culture war issues which is completely wild to me

another point of weakness I guess one could say of globalization is supply lines just in general right thinking about what's happening off the coast of Yemen. Can you talk about that a little bit?

The Houthis are executing a brilliant campaign, so they know that the world depends on the Red Sea, and by the way, the connected Suez Canal for its supplies. And they just decided to launch a campaign against global shipping, and they put it under the guise of supporting the people of Gaza, Frankly, that is just pure cynicism. What they're doing is doing nothing for the people of Gaza, but doing a lot for the Houthis themselves,

who are obviously enjoying the global limelight every single day because every single day they attack some sort of vessel. As we speak, they have just attacked with three different projectiles, a Greek flagged vessel, that was so badly hit that the crew, 23 Filipinos, two Russians had to be evacuated by the European Union. The EU has a protection force in the Red Sea. Those, the crew members had to be rescued by the European Union. That vessel is now floating, is adrift in the Red Sea with lots of oil on it.

The environmental disaster waiting to happen, but the Houthis don't care because their mission. is to get attention, and they are getting attention. And that is, this is a new chapter in global commerce, and it's so dangerous. And I'm sure that Huth is 20 years ago may have had the same desire. Now they have the weapons to make it happen. And we can discuss maybe on another episode of this podcast, how they got the weapons. But the point is they have them, and their targeting is not always accurate. But that doesn't matter because what matters is that this puts,

The fear got into global shipping, some shipping companies still send their ships through the Red Sea. Many send out theirs around the Cape of Good Hope. Either way, it causes disruption, price increases. And by the way, Russian and Chinese flagged vessels and owned vessels are not targeted by the Houthis. And what the Houthis are doing is such a blatant violation of global marriage. time rules, but because they are not a government, they can't behave accountable. They are a militia. And you could say, well, Russia and China should have a serious conversation with them because

this is not the way to do things. But Russia and China, frankly, are benefiting from this campaign, so they won't do anything. It's interesting, though, I mean, because the Houthis are today's problem. We also had Somali pirates. That was fun for a while. and that disrupted shipping and was pretty scary. Well, I think the difference is that the Somali pirates weren't backed in funded by Iran. They weren't getting weapon shipments on the regular.

That's right. And also, so their mission was to take vessels and hold hostages and get money out of it. Whereas the Houthis, they can just fire off their missiles and rockets at any given vessel. and if one is said great and if none is said no no no harm done because they haven't managed

to instill fear among global shipping companies and when it came to the Somalis every government was united against them because everybody was affected now it's just the West because Russia and China are not affected

it is so infuriating and yet we don't have a global police. The world still needs a global police. It still doesn't have one. And that's why problems like these campuses, because not even the US is strong enough to impose

order on countries and their proxies that misbehave. I think we must be hitting our limit at the point. Globalization. Not even the US Navy is strong enough to provide consubiliary services

across the world's oceans. And it's also not the US Navy's responsibility. It has been doing it. It did a lot when it came to Somali pirates, has been doing a lot, obviously, in the Red Sea now where the Houth is. But the US Navy's role is to fight naval battles against other countries. It's not to escort shipping. and it's also not to keep global shipping lanes safe,

and it's doing it, but at some point it will reach the limit of how much constabulary work it can provide. I like the phrase constabulary work, by the way. It's very evocative. So it sounds like that for globalization to continue, it would need some sort of globalization. police force that would not necessarily be constituted entirely of the United States military.

Exactly. But that global government is just never going to happen because that would mean abdicating power and decision-making to a body that you're not in charge of. and the powerful countries of this world could never do that. So even the UN, as weak as it is, struggles to assert itself or as limited as it is in power,

struggles to assert itself. So we'll never get to global government, which is why we are stuck with, you know, needing to hope for countries to get along. And I think we'll see another round of globalisation where countries try to get along, albeit with fewer illusions about one another. And frankly, in the West,

we may have to live with a second round of globalization where other countries don't even pretend to want to become liberal democracies. And we shouldn't even expect them to want to become liberal democracies. We should just expect them to trade on fair terms and not gain the system. Do you think, though, that it may take some kind of war to do a reset like that? I mean, I'm just trying to think how you get to that reset. I think the way we get to that reset is that we have this retreats of globalization, more manufacturing and more French-soring, people realizing or deciding in 30 years' time that actually this is quite an inefficient way of doing things.

And let's try something new. Let's allow countries to specialize. That will make things much more efficient. Let's trade more. and then they'll have another go at globalization. Hopefully without the war. Oh, I don't know. We tend to be pretty good at getting ourselves into wars.

Humans, I mean, in general. Yeah. Yes. Especially I'm not intended wars. Yeah. I'm totally going to challenge you, Elizabeth, on being an optimist, but that's fine. You can plan to be one, if you like. I thought that was a pretty optimistic answer.

honestly. Yeah. All together. So, all right. Any steps that the U.S. or other countries should be taking now, any advice that you have to give for countries or companies even going forward? Yeah, I think for countries, the Western countries should try to win as many non-Western partners as possible.

The collective West should try to win. try to court and win as partners as many countries as possible. And that means that countries ranging from India and Vietnam to the UAE. And they don't need to be our closest friends. They just need to want to trade with us and not harm us. And so it would be a pretty low bar. But the way to win them is to accept them the way they are, just like you would accept a friend.

potential friend the way they are. You wouldn't tell them how they need to behave in order to be your friend. And I think that there is a difficult reality for Western countries because we are so used to telling the UAE that they really need to respect minorities more and they need to take human rights more seriously. And by the way, you, Rindra Modi, you shouldn't be visiting Putin. That time is over where we can tell other countries how to conduct. their domestic politics and indeed their foreign policy. And we should just try to win them over so that they can become reliable trading partners or that we can expand our commercial relationship with them.

And not on the basis of sharing lots of values, just on the basis of sharing commercial activities. Because if we were to just trade among ourselves in the West, our economists would plummet. It doesn't take an economist to figure that out. Then when it comes to companies, I think what I'm seeing and what is definitely the right approach for companies is to try to reduce their exposure to China,

not slash it. That would be illusory and it also wouldn't be possible because it's such a massive logistical undertaking, even reducing slightly the only, operations you've built up that over decades, over the three and a half decades, almost four, well, four decades now. So, and what's already happening is that companies are trying to see, you know, where can we build up operations elsewhere?

In India's got to be several countries, it can't just be one country replacing China. So maybe India a little bit, but it would have to be countries forming a hub within where which countries would those be? and how would the transportation and logistics work? What about the legal setup? Can those countries harmonize that? So that's what I think we'll see more companies doing. That's definitely the right approach.

What they shouldn't do and what they are not doing either is to cable out to the whole world that they are leaving China because then they can be sure that there will be retaliations against them because that would be human. for China to hear Western companies say, well, it's just not feasible for us anymore to be operating in China. We are leaving. You can, and so they, from a practical point of view, they have to stay in China anyway, but reduce their operations set themselves up, not just in one alternative country, but several, several countries in various hubs. And I think we'll see new hubs forming, for example, Mexico may form a hub with

southern U.S. and maybe one or two regional neighbors. What are those regional neighbors? These are exciting developments that we'll be watching over the next few years. Elizabeth, I want to say thank you very, very much for coming on. And I won't say that you've cheered us up, but I haven't I've been more depressed after other episodes. I'm fine. I don't know why. Well, you're often fine.

I don't know why you're so sad about McDonald's. Well, I'm not going to say it's a great burger. But anyway, the book was and is goodbye globalization, the return of a divided world. And that fits very nicely with an angry planet. So we'll take it. Thank you so much. Thank you.