Homecoming

<b><b>A sweeping case that a new age of economic localization will reunite place and prosperity putting an end to the last half century of globalization—by one of the preeminent economic journalists writing today</b></b><br><br><b>“This invaluable book is as bold in its ambitions as it is readable.”—Ian Bremmer <i>New York Times </i>bestselling author of <i>The Power of Crisis</i></b><br><br><b>ONE OF THE BEST BOOKS OF THE YEAR: <i>Kirkus Reviews</i></b><br><br>At the dawn of the twenty-first century Thomas Friedman in <i>The World Is Flat</i> declared globalization the new economic order. But the reign of globalization as we’ve known it is over argues <i>Financial Times</i> columnist and CNN analyst Rana Foroohar and the rise of local regional and homegrown business is now at hand.<br> <br>With bare supermarket shelves and the shortage of PPE the pandemic brought the fragility of global trade and supply chains into stark relief. The tragic war in Ukraine and the political and economic chaos that followed have further underlined the vulnerabilities of globalization. The world it turns out isn’t flat—in fact it’s quite bumpy.<br> <br>This fragmentation has been coming for decades observes Foroohar. Our neoliberal economic philosophy of prioritizing efficiency over resilience and profits over local prosperity has produced massive inequality persistent economic insecurity and distrust in our institutions. This philosophy which underpinned the last half century of globalization has run its course. Place-based economics and a wave of technological innovations now make it possible to keep operations investment and wealth closer to home wherever that may be.<br> <br>With the pendulum of history swinging back <i>Homecoming</i> explores both the challenges and the possibilities of this new era and how it can usher in a more equitable and prosperous future. “Fascinating . . . Powerful . . . [A] valuable [contribution] to the understanding of the trends toward regionalization.”<b>—<i>Foreign Affairs</i></b><br><br>“Foroohar’s work here is equal parts journalism and visioning offering a host of case studies of how we might produce and consume differently while simultaneously painting a picture of a more resilient and rooted economy. . . . As [<i>Homecoming</i>] spells out in vivid detail we have our work cut out for us to bring the economy home.”<b>—<i>The American Prospect</i></b><br><br>“In this deeply reported book Foroohar offers a mix of lively on-the-ground tales and stimulating macroanalysis to explain how globalization and localization are changing business finance and our wider society. . . . A must-read.”<b>—Gillian Tett <i>New York Times </i>bestselling author of <i>Anthro-Vision</i></b><br><br>“Foroohar has consistently been right on globalization. <i>Homecoming</i> explains how local manufacturing is becoming a solution for many communities around the world. The detailed reporting and interviews make for eye-opening and gripping reading.”<b>—Joseph E. Stiglitz Nobel Prize laureate in economics</b><br><br>“The way we eat impacts everything in our world and <i>Homecoming </i>is a thorough examination of not just the dire consequences but also the many hopeful possibilities contained in that simple truth.”<b>—Alice Waters<i> New York Times</i> bestselling author of <i>Coming to My Senses</i></b><br><br>“By asking the fundamental questions of <i>what matters </i>and <i>who matters</i> this book comes with some conditioned optimism about the future: Global cooperation is possible (and needed) but can yield positive social outcomes only if built on sound economic thinking that values community sustainability and equity. The road to this new form of capitalism is paved with books like <i>Homecoming</i>.”<b>—Mariana Mazzucato author of <i>Mission Economy</i></b><br><br>“In this fascinating book Rana Foroohar argues that the retreat from hyperglobalization is a fact—and a welcome one at that. <i>Homecoming</i> will change how you think of the world to come.”<b>—Dani Rodrik author of The Globalization Paradox</b><br><br>“Foroohar walks us through the fiasco of four decades of devotion to neoliberal economic theory that emerged from the collapse of the Bretton Woods system leading to the inevitable global and internal imbalances we see today. <i>Homecoming </i>offers a truly comprehensive and vivid discussion of the aftermath and what we need to do to belatedly address these errors.”<b>—Daniel Alpert author of <i>The Age of Oversupply</i></b><br><br>“Rana Foroohar understands what went wrong with America and how to make it right. In <i>Homecoming</i> she weaves it all together to show how to build a safer cleaner and more peaceful world. A visionary blueprint for a future that works for all of us.”<b>—Barry C. Lynn author of <i>Liberty from All Masters</i></b> <b>Rana Foroohar </b>is the author of <i>Don’t Be Evil</i> which won a Porchlight Business Book Award and <i>Makers and Takers.</i> Currently the global business columnist and associate editor for the <i>Financial Times</i> and the global economic analyst for CNN she has served as the assistant managing editor and economic columnist at <i>Time</i> and an economic and foreign affairs editor and foreign correspondent at <i>Newsweek</i>. Rana Foroohar is a life member of the Council on Foreign Relations and sits on the board of the Open Markets Institute. <b>CHAPTER 1<br><br> One World Two Systems</b><br><br> <br> Years ago during a reporting trip to Beijing following the 2008 financial crisis I interviewed the CEO of a major European clean-energy company that was a market leader in China at the time. I asked the executive how he saw business going forward and he said he felt optimistic—the company would be in fourth place within the next five years. I was startled. Why was falling from pole position to fourth place good news? And how could he be so precise about the future? Because as the CEO told me this is what Communist Party leaders had told him would happen as local competitors moved into the market.<br><br> A few years later in 2013 I was in China again. I happened to be there right as the Edward Snowden story was breaking and as the world was digesting the whistleblower’s leaks of National Security Agency material that showed that the United States the United Kingdom and various other liberal democracies were regularly gathering surveillance data on citizens often with the help of private technology and telecom firms. The American public in particular had been shocked—or as Claude Rains’s character says in the movie Casablanca “shocked shocked”—to learn that the U.S. government and the private sector had shared such information.<br><br> During one of my interviews in Beijing I broached the topic with a People’s Liberation Army general with whom I was discussing the potential for conflict between the two countries. At the time the United States’ chief foreign policy problems were still in places like Pakistan Afghanistan and the Middle East. But I had been struck on another visit to the U.S. Navy’s Indo-Pacific Command headquarters in Honolulu by a heat map showing the locations of past present and possible future geopolitical conflicts. The red portions were moving inexorably from the Middle East to South Asia to the South China Sea which is where the problems of the future seemed to lie. This struck me as a big and very underexplored story given that most of what you could buy in Walmart had to make its way through the South China Sea to get to American consumers.<br><br> I asked the general (a woman interestingly) what she thought about the Snowden leaks and the role of both the state and the private sector in the global economy and geopolitics. She smiled and said that most Chinese found Americans’ naïveté around such things surprising. “In China there is no line between the country and the company.” The two were one and the same and the latter would always be in service to the former.<br><br> These were among the many reporting moments I’ve had in China over the last two decades that made me wonder why U.S. policy makers and corporate leaders ever thought that China would miraculously take its place in the existing world order and trade system. At the time that I was having these conversations much of the world—certainly China—was understandably questioning the wisdom of laissez-faire Anglo-American-style capitalism and unfettered free trade in the wake of the financial crisis. Yet policy makers in the West were still pretending that the world would reset to the mid-nineties. CEOs of large companies were willfully blind to the risks of supply chain problems and market access in China where a new Great Power conflict with the United States clearly loomed and where the rules of the market game could in its state-run system change at any time. There was also a general level of arrogance on the part of the West in relation to China that I found puzzling. Why would such a large nation with its own long history rich culture very different political system and enormous market not create its own rules as it retook its historic place on the world stage? Remember that for much of recorded history China and India not America vied for the top spot as the world’s largest and most powerful economy. That’s important to remember now because as they rise once again the decisions that these countries make will be just as influential as anything that might happen in the United States. China’s decision for example to decouple itself completely from U.S. and Western economic control over the next few years is a crucial part of the story of deglobalization.<br><br> China’s most recent five-year plan released by the state codified what was already common practice: via the One Belt One Road infrastructure and lending program the nation would become independent of Western technology and supply chains by 2025 and would build its own regional trade routes remaking and expanding the old Silk Road of Marco Polo’s time a pathway that stretched from China to Europe. China would lend to emerging markets cut its own trade deals in its own currency buy up farmland and ports and generally become more self-sufficient and independent of the United States. The Belt and Road Initiative combined with a host of new trade deals in Europe Africa South America Asia and the Middle East would make it easier for China to grow its exports to places other than the United States. Decoupling and regionalization not a reset of globalization was the new norm.<br><br> The economic decoupling of America and China and more particularly the trade war and new cold war between the two nations are sometimes thought of as a result of the misguided policies of the Trump administration. In fact the conflicts between the two countries and their systems were there long before hiding in plain sight. The idea that more trade would always be good for the United States has been dogma for the last half century under both Republican and Democratic administrations. Even if deals were cut with countries that had completely different national goals and political systems these agreements we were told by political leaders of all stripes would inevitably make us safer and richer. But the downsides to globalization—which range from the loss of important jobs and skill sets to the vulnerabilities of complex and far-flung supply chains and financial networks to the fact that China wasn’t in fact becoming freer as it got richer—were papered over for decades.<br><br> The only good thing that the Trump administration did economically was to stop pretending that the One World Two Systems problem as foreign policy wonks call it didn’t exist. While President Trump had no coherent strategy for countering the rise of China (and was actively supportive of Chinese allies like Russia) and while his vitriolic rhetoric didn’t help the United States the last four years did at least bring an end to the absurd Kabuki act on the part of U.S. policy makers and corporate executives regarding the reality and intractability of the China challenge. No matter how tempting that next quarter of growth in the Chinese market might be there are no guarantees that the playing field will be fair or that the rules won’t change at any time—particularly in the most strategic high-growth sectors.<br><br> It was a terrible irony that it took Donald Trump to lift the veil on the hypocrisies of the One World Two Systems problem even as his own policies contributed to the challenge. Like the protagonist in Herman Melville’s final novel The Confidence-Man Trump was able to embed a single visceral truth in a welter of falsehoods. So it was with the U.S. president’s anti-free-trade stance. He often couched it in terms that were xenophobic nationalistic or just factually wrong but the criticism that Trump (and later President Joe Biden who has continued much of the trade stance set by the former administration) leveled against China and to a lesser extent other nations engaging in unfair trade practices is getting at something profound. Many people simply do not believe that the current system of globalization is working in their favor. As the current U.S. trade representative under President Biden Katherine Tai put it in March 2022 at a presentation before the House Ways and Means Committee “The problem that we are confronted with today—after two years of the pandemic and also Russia’s invasion of Ukraine—is that this version of globalization that we are living in has not taken us to a place where we feel more secure. We are feeling increasing senses of insecurity in terms of our supply chains and our reliance on partners who we aren’t comfortable relying on.” In fact even before the events of the last few years only about one in three people in rich countries believed that trade increased wages. Meanwhile those in emerging markets are even more dubious about trade’s impact on prices; a median of 18 percent believes it lowers them according to a 2018 survey.<br><br> These feelings are what drives politics but there are facts to back them up. Pricing has been driven down by unfettered globalization but jobs in many places have been lost. This has led in turn to a highly bifurcated workforce and economy in hard-hit areas. Think of the wage pressure on labor in many rich countries or of the terrible working conditions for many of those in poor countries as companies use “free” trade to try to raise their own margins at the expense of all else.<br><br> Of course one can’t ignore the statistical links between freer trade and economic growth in the postwar period: the two have gone hand in hand at a global level as more countries have entered the capitalist trade system. But given this how does one account for these negative views of globalization?