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The end of the system of the world
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The end of the system of the world

A critical point has been reached; decoupling is for real this time.

Noah Smith
Noah Smith, 2022
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Globalization is breaking down and a new world order is forming, says economist Noah Smith in this thought-provoking essay. He posits that China and America once benefited from a mutually advantageous trade relationship: The former grew its economy while the latter profited from technology and expanded production. Yet China now recognizes that its openness to the West keeps it from economic self-sufficiency. Smith convincingly argues that a shift in great-power alliances centered on trade is ushering in a new configuration of geopolitical alliances.

Summary

After the Cold War, world leaders believed that political harmony would result from close commercial ties.

The United States shaped the new world order in the years following the Cold War, believing that globalization would mitigate conflicts and lead to greater geopolitical freedom. To this end, America and Europe supported China’s entry into the World Trade Organization, turning a blind eye to China’s currency manipulation and its shoddy labor and environmental policies. By 2017, China had become the dominant global manufacturer and supply chain hub.

The new state of affairs appeared to benefit almost everyone. American manufacturers increased their profitability by offshoring production to China, while US retailers and consumers took advantage of low-cost imports. US financial services...

About the Author

Noah Smith blogs at Noahpinion. He is a former assistant professor of finance at Stony Brook University and Bloomberg columnist.

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