This week, the global elite will convene once again in Davos, Switzerland, after a two-year pandemic break, for the World Economic Forum. The conversation will revolve around deglobalisation and its discontents. I expect the headlines will be that decoupling between China and the US is untenable, free trade always works just as David Ricardo thought it would, and unless we return to the mid-1990s status quo of neoliberalism, doom awaits.
Readers of this column will know I don’t agree. Yes, our most recent round of globalisation produced more wealth than the world has ever known. Unfortunately, as the economist Dani Rodrik has pointed out, for every $1 of efficiency gain from trade, there is typically $50 worth of redistribution towards the rich. The economic and political consequences of that are the key reason that we are now in a period of deglobalisation.
Even as supply chains are fast becoming more regional and local, academics and policymakers continue to debate whether decoupling is possible. They should get out of the ivory tower and speak to more executives and labour leaders. As economists debate the “possible”, business is simply getting on with the new reality of a post-neoliberal world and adapting in creative and, in some cases, even growth-enhancing ways.