2022-23_Textes 1_Assignments_Enjeux mondialisation EU

See “textes introduction”, the two previous mandatory texts were:

 “A World in Need of a New Order” THIERRY DE MONTBRIAL, New York Times, Apr 2, 2009
 https://www.washingtonpost.com/business/2022/05/26/davos-globalization-covid-war/

 ‘Davos elite reassess globalization amid turmoil of pandemic and war’, New York Times, 26 May, 2922
 https://www.washingtonpost.com/business/2022/05/26/davos-globalization-covid-war/

 Optional: for students who are interested in questions regarding work and labor:
“Le bilan de la présidence Trump en matière d’emploi : quels défis pour les organisations syndicales?’
Donna Kesselman, Chronique Internationale de l'IRES, 2021/1 (N° 173), pages 49 à 62
http://www.ires.fr/index.php/publications/chronique-internationale-de-l-ires/item/6331-etats-unis-le-bilan-
de-la-presidence-trump-en-matiere-d-emploi-quels-defis-pour-les-organisations-syndicales

« Open Future Globalisation is dead and we need to invent a new world order »

1. A book excerpt and interview with Michael O'Sullivan, author of “The Levelling”, Jun 28th 2019, The
Economist, BY K.N.C.
2. HAS THE world witnessed “peak democracy”? Is the future one in which open societies with free markets
vie for influence in global affairs with authoritarian countries under state capitalism? The very questions
evoke a nostalgia for a seemingly simpler past. For Michael O’Sullivan, formerly an investment banker and
economist at Princeton University, it is more useful to consider the future.
3. Mr O’Sullivan’s book, “The Levelling: What's Next After Globalisation” offers a roadmap. He sees a
multipolar world forming but international institutions unprepared for this. He voices worries about a
world of low growth and high debt—and calls for a “world treaty on risk” so central banks only resort to
measures like quantitative easing under agreed conditions.
4. But his most intriguing framing of the issues is his comparison of today’s world and 17th century
England’s Putney Debates, when the practicalities of a rights-based democracy were first enunciated by a
faction called “ The Levellers” (which inspired the book’s title). The world, he believes, will cleave into
“Leveller” countries that hew to rights and freedoms, and “Leviathan” ones that are content with state-
managed growth and fewer liberties.
5. As part of The Economist’s Open Future initiative, we probed Mr O’Sullivan ideas in a short interview.
Below that is an excerpt from his book, on the end of globalisation.
6. The Economist: Describe what comes after globalisation—what does the world you foresee look like?
7. Mr O'Sullivan: Globalisation is already behind us. We should say goodbye to it and set our minds on the
emerging multipolar world. This will be dominated by at least three large regions: America, the European
Union and a China-centric Asia. They will increasingly take very different approaches to economic policy,
liberty, warfare, technology and society. Mid-sized countries like Russia, Britain, Australia and Japan will
struggle to find their place in the world, while new coalitions will emerge, such as a “Hanseatic League
2.0” of small, advanced states like those of Scandinavia and the Baltics. Institutions of the 20th century—
the World Bank, the International Monetary Fund and the World Trade Organisation—will appear
increasingly defunct.
8. The Economist: What killed globalisation?
9. Michael O'Sullivan: At least two things have put paid to globalisation. First, global economic growth has
slowed, and as a result, the growth has become more “financialised”: debt has increased and there has
been more “monetary activism”—that is, central banks pumping money into the economy by buying
assets, such as bonds and in some cases even equities—to sustain the international expansion. Second,
the side effects, or rather the perceived side-effects, of globalisation are more apparent: wealth
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 inequality, the dominance of multinationals and the dispersion of global supply chains, which have all
become hot political issues.
10. The Economist: Was the death of globalisation inevitable or could (and should) it have been prevented?
11. Mr O'Sullivan: One problematic factor here is that there is no central body or authority to shape
globalisation, beyond perhaps the World Economic Forum or maybe the Organisation for Economic Co-
operation and Development. In many ways, the end of globalisation is marked by the poor and
inconclusive response to the global financial crisis. In general, the response has been to cut the cost of
capital and not to tackle the root causes of the crisis. As such, the world economy will limp on, burdened
by debt and in hock to easy money from central banks.

12. The Economist: The book's title comes from the "Levellers" during Britain's Putney Debates in the mid
1600s. Who were they and what can their story teach us today?
13. Mr O'Sullivan: The Levellers are a hidden gem from British history. They were a mid 17th century group in
England, who participated in debates about democracy that took place in a part of London called Putney.
Their achievement was crafting “An Agreement of the People,” which were a series of manifestos that
marked the first popular conceptions of what a constitutional democracy might look like.
14. The Levellers are interesting for two reasons. First, in the context of the time, their approach was
constructive and practical. The “Agreement” spells out what people want from those who govern them in
a clear and tangible way. For example, they proposed term limits on political office and that laws
regarding indebtedness are applied equally to the rich and poor.
15. Second, they are interesting for the way the movement was countermanded and then snuffed out by the
military leader Oliver Cromwell and the Grandees (the elites of their day). Like so many idealistic political
start-ups, the Levellers failed. This should encourage the growing number of new political parties, like
Change UK and new candidates to be worldy-wise in how they approach the process of political reform
and change.
16. The Economist: You foresee new international institutions to replace archaic 20th-century ones that are
suited for a different time. How would they work? And can countries with such different values (ie,
democratic, market-based "Levellers" and state-managed societies and economies, the "Leviathans")
really cooperate?
17. Mr O'Sullivan: A lot is made of the Cold War rivalry between communist Russia and America, and now
some want to see a clash of civilizations between America and China. The “Levelling” characterises a
future where there are at least two approaches to public life.
18. The most distinctive approach to nations doing things in their own way will be for what the Levellers
might call the “rights of freeborn men,” or the idea of the open society. The code of the Levellers presents
a very clear political formula that Europeans and Americans will recognise for its values, though
decreasingly in its practice.
19. The challenge to this code will come from the rising acceptance of less democratic ways of ordering
society, in both developed and developing countries. A related clash will be the desire of a growing
proportion of electorates to have a more open society as economies also open up.
20. As the world evolves along the lines of Leveller-type and Leviathan-type societies, it is possible that in
some countries, such as Russia, a Leviathan-like approach—that is, order in exchange for reduced
democracy and rights—will be the accepted way of life. In other countries, most interestingly China, as its
economy loses momentum and evolves, there may be a growing tension between groups holding the
Leviathan view (supported inevitably by Grandees) and opposing Leveller-like groups (who favor equality
of opportunity and a multiparty system). The role and views of women, especially in China, and of
minority groups like the gay community will be pivotal.
21. The emergence of a new world order, based on large regions and coloured by Leveller and Leviathan
modes of governance, echoes several periods in history. The challenge in the next few years will be for
Leviathan-oriented nations like China to maintain economic stability so that rising unemployment, for

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 instance, does not break the “Leviathan contract”. Equally, the challenge in Leveller countries will be to
maintain open, fraternal societies in the face of political and potentially economic volatility.

TRADE POLICY
Free Trade Agreements with Their Pros and Cons
Six Advantages and Seven Disadvantages and Their Possible Solutions
BY KIMBERLY AMADEO, November 02, 2018

Free trade agreements are treaties that regulate the tariffs, taxes, and duties that countries impose on
their imports and exports. The most well-known U.S. regional trade agreement is the North American Free
Trade Agreement/= U.S. Mexico-Canada Agreement. USMCA Agreement.

Six Advantages

Free trade agreements are designed to increase trade between two countries. Increased international
tradehas six main advantages:
1. Increased economic growth. The U.S. Trade Representative Office estimates that NAFTA increased U.S.
economic growth by 0.5 percent a year.
2. More dynamic business climate. Often, businesses were protected before the agreement. These local
industries risked becoming stagnant and non-competitive on the global market. With the protection removed,
they have the motivation to become true global competitors.
3. Lower government spending. Many governments subsidize local industry segments. After the trade
agreement removes subsidies, those funds can be put to better use.
4. Foreign direct investment. Investors will flock to the country. This adds capital to expand local industries
and boost domestic businesses. It also brings in U.S. dollars to many formerly isolated countries.
5. Expertise. Global companies have more expertise than domestic companies to develop local resources.
That's especially true in mining, oil drilling, and manufacturing. Free trade agreements allow the global firms
access to these business opportunities. When the multi-nationals partner with local firms to develop the
resources, they train them on the best practices. That gives local firms access to these new methods.
6. Technology transfer. Local companies also receive access to the latest technologies from their
multinational partners. As local economies grow, so do job opportunities. Multi-national companies provide
job training to local employees.

Seven Disadvantages
There are seven total disadvantages:
The biggest criticism of free trade agreements is that they are responsible for job outsourcing.
1. Increased job outsourcing/externalization/delocalize. Why does that happen? Reducing tariffs on imports
allows companies to expand to other countries. Without tariffs, imports from countries with a low cost of
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living cost less. It makes it difficult for U.S. companies in those same industries to compete, so they may
reduce their workforce. Many U.S. manufacturing industries did, in fact, lay off workers as a result of NAFTA. 
One of the biggest criticisms of NAFTA is that it sent jobs to Mexico. 
2. Theft of intellectual property. Many developing countries don't have laws to protect patents, inventions,
and new processes. The laws they do have aren't always strictly enforced. As a result, corporations often have
their ideas stolen. They must then compete with lower-priced domestic knock-offs.
3. Crowd out domestic industries. Many emerging markets are traditional economies that rely on farming for
most employment. These small family farms can't compete with subsidized agri-businesses in the developed
countries. As a result, they lose their farms and must look for work in the cities. This aggravates
unemployment, crime, and poverty.
4. Poor working conditions. Multi-national companies may outsource jobs to emerging market countries
without adequate labor protections. As a result, women and children are often subjected to grueling factory
jobs in sub-standard conditions.
5. Degradation of natural resources. Emerging market countries often don’t have many environmental
protections. Free trade leads to depletion of timber, minerals, and other natural resources. Deforestation and
strip-mining reduce their jungles and fields to wastelands.
6. Destruction of native cultures. As development moves into isolated areas, indigenous cultures can be
destroyed. Local peoples are uprooted. Many suffer disease and death when their resources are polluted. 
7. Reduced tax revenue. Many smaller countries struggle to replace revenue lost from import tariffs and fees.
Solutions
Trade protectionism is rarely the answer. High tariffs only protect domestic industries in the short term. But,
in the long term, global corporations will hire the cheapest workers wherever they are in the world to make
higher profits.
The best solutions are regulations within trade agreements that protect against the disadvantages.
Environmental safeguards can prevent destruction of natural resources and cultures. Labor laws prevent poor
working conditions. The World Trade Organization enforces free trade agreement regulations.
Developed economies and governments can reduce their agribusiness subsidies, keeping emerging
market farmers in business. They can help local farmers develop sustainable practices. They can then market
them as such to consumers who value that. 
Countries can insist that foreign companies build local factories as part of the agreement. They can require
these companies to share technology and train local workers. 

“Free Trade or Democracy, Can't Have Both”

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 Saturday, 03 March 2012 05:39By Dave Johnson, Campaign for America's Future | Op-Ed
1. Recent stories about the conditions of Apple's contractors in China have opened many people's eyes about
where our jobs, factories, industries and economy have been going, and why. The stories exposed that
workers live 6-to-12-to-a-room in dormitories, get rousted at midnight to work surprise 12-hour shifts, get
paid very little, use toxic chemicals, suffer extreme pollution of the environment, etc. Is this "trade?" Or is it
something else? (DK: Ouïghours :
2. Is This "Trade?"
3. "Trade" means to exchange, to buy and sell, you buy from me and I buy from you. I have something you
want and you have something I want, and we exchange. We both end up better off than where we started.
4. Is it "trade" to close a factory here and move it to a country where people don't have a say? It is "trade" to
just move all of the machines from a factory here to a factory there, send the same parts and raw materials
over there, and then bring bring back whatever it was the factory used to make and sell it in the same
places here? Is that really "trade?" Or would another word be more appropriate?
5. When People Have A Say
6. When people have a say we insist on good wages, benefits, safe working conditions, and a clean
environment. We even go so far as to say we want good public schools, parks and opportunities for our
smaller businesses. When We, the People have a say we get so uppity and ask for the most outrageous
things! (DK: but labor costs increase! So not “labor friendly”!)
7. Efficiency vs. Humanity
8. Yes, countries where people do not have a say are more "efficient" and "business friendly." Countries
where people do not have a say can make things at a much lower cost than workers where people have
rights. But when we let exploitation of human beings be a competitive advantage it undermines our own
democracy. It means that democracy is a competitive disadvantage in world markets.
9. We Can't "Compete" With This, We Have To Fight It
10. Let's get right to the core of this. Suppose the South actually did rise again, and they reimposed all-out
slavery. Would it be "trade" to close factories here and move them south, so the companies would have
lower costs?
11. When we allow companies to just import stuff that is made by exploited workers in countries where people
do not have a say, we are granting not-having-a-say an advantage over having a say. We make democracy
a competitive disadvantage.
12. This Is About Preserving Democracy, Not About "Trade"
13. How often do you come across arguments that "globalization" and "free trade" mean that America's
workers have to accept that the days of good-paying jobs and US-based manufacturing are over? We hear
that countries like China are more "competitive." We hear that "trade" means that because it's cheaper to
make things over there we all benefit from lower-cost goods that we import.
14. How often do you hear that we need to cut wages and benefits, work longer hours, get rid of overtime and
sick pay? They say we should shed unions, get rid of…
15. DAVE JOHNSON

“The World Trade Organization Is Dying. What Should Replace It?”

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Two decades after Seattle, it has failed to deliver on its promises.

By Lori Wallach, director of Public Citizen’s Global Trade Watch., Nov. 28, 2019, New York Times

Marching against the policies of the World Trade Organization in 1999 in Seattle. The protests drew
widespread attention.Credit...John G. Mabanglo/Agence France-Presse — Getty Images
16. Twenty years ago this weekend, 50,000 people converged on Seattle to protest the World Trade
Organization, which was holding a ministerial-level meeting in the city, and a plan championed by the
world’s largest corporations to increase the organization’s authority over even more facets of people’s
lives.
17. The epic protests, televised worldwide, revealed that Americans were united with millions of
people protesting the organization in other countries, who demanded new rules for the global economy to
make it benefit more people.
18. Those protests, and subsequent protests and activism around the world, bolstered developing-
country negotiators who derailed the W.T.O.’s plans for expansion. But the W.T.O.’s underlying principles
still shape the global economy. And the stubborn refusal to alter that model of globalization has fostered a
global backlash against “trade” and, in recent years, brought the organization to near collapse.
19. The dirty little secret is that the World Trade Organization is not mainly about trade. Rather the
organization has the primary task of carrying out what the Harvard economist Dani Rodrik calls
hyperglobalization — the worldwide imposition of one-size-fits-all rules, favored by global financial
markets, which constrain democratic governments’ ability to address their societies’ needs.
20. The W.T.O. asserts expansive power to set binding rules over a wide range of non-trade issues;
countries are required to “ensure the conformity of its laws, regulations and administrative procedures”
with W.T.O. rules — and, in turn, corporate financial interests. This includes limits on energy policy,
financial regulation and food and product safety, as well as new monopoly protections for pharmaceutical
firms to charge consumers more.
21. If countries do not comply, they are subject to millions of dollars in trade penalties. Of the 242
completed W.T.O. cases, in only 22 did the domestic policies, many unrelated to trade, survive challenged.
22. Thus, the country-of-origin labels on meat that we relied on in American grocery stores
were eliminated after the W.T.O. classified them as “illegal trade barriers” and authorized $1 billion in
sanctions. The United States was also forced to weaken regulations under the Clean Air Act, dolphin
protection laws and Endangered Species Act rules.
23. Given the role played by the United States in pushing the W.T.O., there is a certain irony that
more than a third of challenges decided by the organization have targeted American policies — which have
been found to violate W.T.O. rules 90 percent of the time. Developing countries have fared yet worse,
losing 95 percent of 87 challenges.

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 24. The United States has filed 49 challenges against other countries, with rulings against Indian
policies promoting access to seeds for poor farmers and European limits on genetically modified foods and
a ban on artificial growth hormones in meat. The United States has used threats to pressure Thailand,
Brazil and South Africa to reverse policies on access to AIDS medication and other lifesaving drugs.
25. Recently the W.T.O. has facilitated a circular firing squad over climate-change efforts. The
European Union and Japan challenged Canadian incentives on renewable energy. The United States won a
case against a solar-power program in India. Then India attacked renewable energy programs in several
American states. Then China filed a case in 2018 against additional American renewable energy measures.
26. But the W.T.O.’s overreach could prove to be its undoing. Its ability to decide such cases will
effectively end on Dec. 11, when its appellate review board will no longer have a quorum.
27. After a series of W.T.O. decisions in which tribunals cooked up new standards — never agreed
to by member nations — related to anti-dumping and subsidy issues, the Obama administration initiated a
protest. Last year, the Trump administration doubled down, blocking the appointment of new appellate
adjudicators.
28. The Seattle protesters who raised concerns about giving too much power to the W.T.O. were
dismissed as anti-trade. But it was W.T.O. proponents, those who branded the organization and similar
deals as “trade agreements,” who have given trade a bad name.
29. Since the W.T.O.’s formation in 1995, its proponents have oversold it with grandiose promises of
dazzling economic gains. President Bill Clinton said the organization would deliver the average American
family $1,700 a year of additional income. It would facilitate open market access that would, in turn,
reduce our trade deficit, create new high-paying jobs and bring new riches to farm country.
30. But the organization’s rules were not designed for those outcomes, which never materialized.
31. Instead, trade negotiations have been dominated by corporate interests, while labor, consumer,
and environmental groups are largely shut out. It’s no shock, then, that the W.T.O. has no labor or
environmental requirements to raise wages or limit pollution, or that it sets ceilings but no floors on
consumer safety standards. Nor are there rules disciplining monopolistic mega-corporations that now
distort global markets or combating currency manipulations that create unfair trade advantages.
32. No doubt some American workers are bitterly angry and moved by Donald Trump’s trade
rhetoric after having repeatedly been promised great gains from “trade” agreements. During the W.T.O.
era, developed countries have lost millions of high-paying manufacturing jobs, especially after China joined
in 2001. Income inequality between rich and poor countries, and within countries, has increased greatly.
33. Of course, the W.T.O. isn’t dead yet; the question is, will it see the looming crisis and undertake
the reforms necessary to save itself? Unlikely: Its current priority is to set new limits on regulations
regarding e-commerce and data privacy at a time when most people are clamoring for some check on the
industry.
34. This is especially perverse, given that the original global trade body, the 1948 International
Trade Organization, provides a ready foundation for creating better global trade rules. With a focus on full
employment and fair competition coming out of the horrors of World War II, the I.T.O. included labor
standards, anti-monopoly provisions and currency-cheating rules to ensure the benefits of trade accrued to
more people. But the Senate blocked American participation in the organization, effectively killing it.
35. That very different vision for a rules-based global trading system remains attainable, once we
agree that the system is supposed to work for people around the world, not the world’s largest
corporations. Twenty years after Seattle, we still have work to do.
36. Lori Wallach (@wallachlori) is the director of Public Citizen’s Global Trade Watch.

‘Biden must learn the right lesson from globalization’

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By the Editorial Board, The Washington Post,March 6, 2021 at 9:00 a.m. EST

1. BETWEEN THE fall of the Berlin Wall in 1989 and the global pandemic of 2020, the global population
grew from 5.2 billion to 7.7 billion. Yet the share living in extreme poverty fell from more than a third
to less than 10 percent, according to the World Bank. In other words, hundreds of millions of
premature deaths were avoided and a similar number of opportunities for human flourishing were
created. While China accounted for much of the progress, World Bank data show that poverty fell at
similar rates elsewhere. Not coincidentally, this colossal achievement occurred during three decades of
U.S.-endorsed trade liberalization, which brought investment, jobs and income to previously destitute
corners of the world.
2. We reiterate these facts to rebalance the debate over globalization, which is at risk of being won by
those who view free trade one-sidedly as a job-destroying disaster for American workers. Alas, Biden
administration foreign policy pronouncements this week show how much influence this critique has
gained over both political parties.
3. In his first major speech, Secretary of State Antony Blinken all but apologized for past Democratic
support of trade agreements, promising that “lessons learned” from those deals will henceforth guide
policy. “We will make sure that the rules of the international economy are not tilted against the United
States,” declared a White House “Interim National Security Strategic Guidance” document released
simultaneously with Mr. Blinken’s speech. “We will only pursue new trade deals after we have made
investments in American workers and communities.”
4. There was a good sign in Friday’s mutual decision by the United States and European Union to
negotiate an end to their dispute over aircraft protectionism, and the tariffs it had triggered on both
sides. Yet in renouncing new agreements pending unspecified “investments,” or promising to put labor
and environmental groups (selected how?) “at the table” in negotiating them, the administration’s
statement all but eliminates hope that the United States would join broader tariff-reduction deals even
involving advanced industrial democracies, such as the Trans-Pacific Partnership, which the Obama
administration backed as a strategic counter to China.
5. Obviously, the failure of trade to induce political liberalization in China, as advocates promised and
expected, is a reason to get tougher toward the People’s Republic on technology transfer, intellectual
property and investment. This should be done in concert with allies, as President Biden has proposed.
If the administration’s call for “reform” of global institutions means it intends to fix the World Trade
Organization’s often biased forum for appealing trade rulings — without trashing or withdrawing from
the WTO, as former president Donald Trump would have — well and good. The United States must
counter predatory Chinese tactics and repair damage to manufacturing from unfair Chinese
competition.
6. Yet Chinese behavior is not typical of all trading partners. With Australia and South America, the
United States has both free trade deals and trade surpluses. Only certain U.S. workers and industries
benefited from Trump-era tariffs on China (which Mr. Biden is keeping, for the time being). Nor is it
true that all or even most Americans lose out from globalization, which has on the whole boosted
many exporters and helped consumers access a broader array of high-quality goods, both U.S.- and
foreign-made.
7. Globalization greatly reduced inequality between rich and poor nations. Any policy that undervalues
that side of the ledger enhances neither the United States’ moral standing nor, in the long run, its
security.

‘Trade fairness and economic recovery on Biden’s national security agenda’

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By Anne Gearan and John Hudson, The Washington Post March 3, 2021 at 6:19 p.m. EST

1. The Biden administration pledged Wednesday to place American economic security at the center of its
decisions about international engagement, trade and the U.S. response to an increasingly assertive
China.
2. That gentler version of President Donald Trump’s “America First” protectionism is part of a strategy to
marry U.S. foreign policy with domestic imperatives, starting with the coronavirus pandemic and the
economic downturn it caused. The new administration summarized its national security priorities in a
new White House report and a speech delivered by Secretary of State Antony Blinken, which
acknowledged that free-trade policies of the past had harmed some American workers.
3. “Our policies must reflect a basic truth: in today’s world, economic security is national security,” the
White House document said. “Our trade and international economic policies must serve all Americans,
not just the privileged few,” the report said, using language familiar to both the Trump administration
and liberals such as Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.) “We will make
sure that the rules of the international economy are not tilted against the United States,” the report
said. “We will enforce existing trade rules and create new ones that promote fairness.” The “Interim
Strategic Guidance” document is a placeholder for the Biden administration until a larger
congressionally mandated framework report on U.S. security objectives is released this year. The last
formal National Security Strategy report was released in 2017, under Trump.
4. Biden’s priorities share similarities with Trump’s, including identifying China as a strategic competitor
in most realms. “The most effective way for America to out-compete a more assertive and
authoritarian China over the long-term is to invest in our people, our economy, and our democracy,”
the report said. “By restoring U.S. credibility and reasserting forward-looking global leadership, we will
ensure that America, not China, sets the international agenda, working alongside others to shape new
global norms and agreements that advance our interests and reflect our values.”

5. Biden tells the world ‘America is Back’; the world isn’t so sure

6. The report does not mention Trump by name, though his rejection of traditional alliances and claims
that the United States was being robbed by competitors is the backdrop for some of its conclusions. In
his speech, Blinken outlined where U.S. foreign policy has succeeded and failed in recent years,
including a self-critical examination of his own actions. “Those of us who conduct foreign policy
haven’t always done a good job connecting it to the needs and aspirations of the American people,”
Blinken said. “Americans have been asking tough but fair questions about what we’re doing, how
we’re leading — indeed, whether we should be leading at all.”
7. Blinken’s speech, which went further than the report on the trade front, suggested that the new
administration will do away with Trump’s aggressive style but keep some of his protectionist
substance. The Biden administration has made several quick pivots, including rejoining the Paris
climate agreement, opening the door to renewed nuclear talks with Iran and ending the “Muslim ban.”
But the administration has also kept Trump’s high tariffs on China, maintained U.S. sanctions on Iran
and added its own buy-American rules that disappointed ally Canada.

8. Blinken says diplomacy will look and sound different under Biden

9. Blinken conceded that trade policies promoted by Democrats and Republicans have sometimes hurt
American workers, and said that the Biden administration would seek to make labor protections and
job security a priority. “Some of us previously argued for free-trade agreements because we believed
that Americans would broadly share in the economic gains and that those deals would shape the
global economy in ways that we wanted,” he said. “But we didn’t do enough to enforce agreements

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 that were already on the books or help more workers and small businesses fully benefit from them.”
Blinken, who previously served as deputy secretary of state, promoted the Obama administration’s
Trans-Pacific Partnership, a massive trade pact that the United States negotiated but never joined
amid bipartisan opposition in Congress. Without mentioning specifics, Blinken promised that Biden
would chart a separate path from President Barack Obama. “Our approach now will be different,”
Blinken said. “We will fight for every American job and for the rights, protections and interests of all
American workers.”
10. The Biden administration is aware of American war weariness in the Middle East and Afghanistan,
Blinken said, and is mindful of how that has reduced trust in U.S. foreign policy leadership. Blinken,
who supported U.S. military intervention in Libya and Iraq, said the Biden administration would not
engage in democracy promotion through military adventurism and had learned from past mistakes.
“We will not promote democracy through costly military interventions or by attempting to overthrow
authoritarian regimes by force,” he said. “We have tried these tactics in the past. . . . They haven’t
worked.”
11. Still, the Biden administration has not been shy about using military force. Last week, the president
authorized an airstrike on Iranian-backed military groups in Syria in response to rocket attacks on U.S.
personnel in Iraq. Blinken defended the move, saying the administration “will never hesitate to use
force when American lives and vital interests are stake” and will do so with the “informed consent of
the American people.” However, the airstrikes irritated members of Congress who were not told in
advance of the strike. The administration still hasn’t briefed senators on the operation, which has
drawn criticism from allies, including Sen. Chris Murphy (D-Conn.), who has questioned whether the
strikes were legal.
12. “I still need to be convinced that any president has the authorization required to take a retaliatory
strike, especially outside of Iraq,” Murphy said Tuesday.

‘Globalization Isn’t Over. It’s Changing.’

By Peter Coy, April 11, 2022, New York Times

1. “Deglobalization” is a word on many people’s lips these days — and understandably so. Russia has
been largely cut off from the West for its appalling invasion of Ukraine. The economic marriage of
convenience between China and the United States (“Chimerica”) is unraveling. And there’s more and
more talk about reshoring — producing more stuff at home — either for national security reasons or to
avoid future supply-chain disruptions such as those caused by the Covid-19 pandemic. “Rather than
the cheapest, easiest and greenest sources, there’ll probably be more of a premium put on the safest
and surest,” Howard Marks, a co-founder of the investment firm Oaktree Capital Management, wrote
to shareholders recently.
2. Wait, though. Maybe globalization isn’t dead after all. I talked to experts on both sides of the debate
over “globalization: dead or alive?” and came away with the impression that globalization is changing
shape but not going away. For example, the bottlenecks at the ports of Los Angeles and Long Beach,
Calif., have been caused largely by enormous demand for imports — a conspicuous sign that
globalization is very much still at work. Jeffrey Kleintop, the chief global investment strategist at
Charles Schwab, is among those who argue that globalization remains by and large healthy. I
interviewed him last week after seeing a provocative Twitter post of his: “The ‘End of Globalization.’
Where have I heard that before?” His post featured various books and magazine covers going back to
2016 that warned of deglobalization — displayed against a backdrop of a chart showing generally
rising volumes of world trade.

10
 3. I reproduced Kleintop’s chart below, but starting in 2000 rather than 2015 and extending the vertical
axis down to zero. The figures come from the Central Planning Bureau of the Netherlands, a respected
authority on global trade.

The chart shows that the volume of world trade is higher than ever. To be sure, the global economy is also
bigger than ever. To account for that, the following chart measures world exports as a share of output. It
11
shows that globalization has been flat in recent years and dipped sharply in the pandemic year of 2020 but is
still well above its level of a few decades ago.
Image

Another aspect of globalization is foreign direct investment, which is cross-border purchases of factories, real
estate, companies and so on and excludes portfolio investment such as purchases of stocks and bonds. The
chart below shows that it rebounded in the first half of last year, after a soft period.
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1. I exchanged emails about the degree of financial globalization with Geert Bekaert of Columbia Business
School. He wrote that “firms are still financing themselves in international capital markets, there are
still massive capital flows across countries and financial market returns still seem highly
interconnected.”
2. China, in particular, is more embedded in the global economy than ever, despite efforts by the U.S.
government to decouple the American economy from China’s. According to the Organization for
13
 Economic Cooperation and Development, China was the No. 1 recipient of foreign direct investment in
the first half of 2021, with the United States second and Britain third. The O.E.C.D.’s information is
consistent with what Bekaert argues. If there is any slackening of financial globalization, he wrote to
me, it’s in the financial flows among the developed economies. Assaf Razin, an economist at Tel Aviv
University in Israel, told me, “Globalization is always getting reorganized, and it had to go through
disruptions, but the disruptions didn’t really move it away from the trends.” Like Bekaert, Razin said
that the rise of China has been and remains a driving force in the globalization of trade and
investment.
3. Alicia García Herrero, a senior fellow at Bruegel, a think tank based in Brussels, was the most skeptical
person I interviewed about globalization. For one thing, she said, China is reducing its reliance on
foreign parts for the products it makes. It’s still dependent on trade, but more of the value of what it
sells is being generated at home, she said. China has faced criticism from other countries, including the
United States, for its “Made in China” 2025 self-sufficiency initiative and has played down use of the
phrase in recent years. But García Herrero said the effort continues. She added that in financial
statements and calls with analysts, more company executives are saying they want to emphasize
safety and reliability in their sourcing, switching from “just in time” to “just in case. That’s true, but it
doesn’t mean globalization is passé. International migration and travel, which are another form of
globalization, are still on the rise. And if countries reshore production, they may need more immigrants
to do the additional work, especially if they have low population growth, García Herrero said. While
companies and countries are trying to wean themselves off overdependence on distant suppliers,
especially ones in possibly unfriendly countries, “it doesn’t mean it’s all coming home,” Kleintop said.
What was once made in China might be supplied instead by Mexico, for example, he said.
4. A year ago, when I was writing for Bloomberg Businessweek, I cited a similar argument by Peter
Williamson, an honorary professor of international management at Cambridge Judge Business School.
Our headline then: “Talk of Deglobalization Is Fashionable but Wrong.” There will always be forces
pushing countries apart. But there are equally strong forces pulling them together: Companies and
countries have a strong motivation to trade because they can make more money by focusing on doing
what they’re best at and buying the things they’re not so good at from others. (Globalization can also
be harmful at times: It hurts workers and the planet when companies ship jobs to countries that pay
lower wages or have poorer environmental protections.)
5. Even though globalization has its problems, the current fad for reshoring production is likely to run
into some limits. As someone pointed out soon after the imposition of sanctions on Russia: If cutting
the Russian economy off from the rest of the world and forcing it to produce everything it needs at
home is a punishment for Russia, why would it be a good thing for the United States to try to become
self-sufficient? Answer: It wouldn’t.

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 ‘The World Has a Choice: Work Together or Fall Apart’

June 18, 2022, New York Times, By The Editorial Board

1. It is a natural human impulse, and a political one, to turn inward when threatened by a crisis that
appears beyond our control. The world is facing several such forces at once: food shortages, inflation,
the persistence of Covid-19 and the effects of global warming. Taken together, they threaten the
stability and prosperity of nations around the world. That threat could hasten the retreat that many
countries are already making away from globalization and international cooperation.
2. This is the wrong lesson to draw. Covid, climate change and now the specter of a global food crisis
show clearly that the world’s problems are intimately linked, as are solutions. The power of
cooperation has been on display in the coordinated response to Russia’s aggression. More
cooperation, not less, is required to navigate a path forward through other crises. That’s true even
for inflation, an acute problem that Americans, like people in so many other countries, look to their
national governments to solve. Inflation is higher than at any other time since the early 1980s,
meaning that many people can’t afford to keep buying the same goods and services. Republicans have
sought to put the blame for rising prices on the federal government, for overstimulating the domestic
economy with relief funds in response to the pandemic, and economic analysts generally agree this
has played a role.
3. The U.S. central bank, the Federal Reserve, which is charged with keeping inflation under control, was
initially slow to respond. But it is now moving urgently to cool demand for goods and services by
raising borrowing costs. On Wednesday, the Fed raised its benchmark interest rate by 0.75 percentage
point, an unusually large jump. High inflation in other developed economies underscores that the rise
in prices is a global phenomenon, one that is caused in large part by global disruptions in the flow of
oil, food and other goods. As the Fed squeezes demand, the Biden administration can ease the
economic pain by working to expand the availability of goods and services. Some of the obstacles are
domestic: America needs to get serious about building more housing, for example, the single largest
expense for most American families.

4. A changing climate, a changing world

5. Climate change around the world: In “Postcards From a World on Fire,” 193 stories from individual
countries show how climate change is reshaping reality everywhere, from dying coral reefs in Fiji to
disappearing oases in Morocco and far, far beyond.
6. The role of our leaders: Writing at the end of 2020, Al Gore, the 45th vice president of the United
States, found reasons for optimism in the Biden presidency, a feeling perhaps borne out by the passing
of major climate legislation. That doesn’t mean there haven’t been criticisms. For example, Charles
Harvey and Kurt House argue that subsidies for climate capture technology will ultimately be a waste.
7. The worst climate risks, mapped: In this feature, select a country, and we'll break down the climate
hazards it faces. In the case of America, our maps, developed with experts, show where extreme heat
is causing the most deaths.
8. What people can do: Justin Gillis and Hal Harvey describe the types of local activism that might be
needed, while Saul Griffith points to how Australia shows the way on rooftop solar. Meanwhile,
small changes at the office might be one good way to cut significant emissions, writes Carlos Gamarra.
9. Others are global: The White House needs to put its shoulder to the work of expanding the global
production of energy, both through encouraging the near-term extraction of fossil fuels and by
investing in the development of sustainable sources of energy. We also have called for President Biden
to end his blanket tariffs on imports from China, a move the administration is reportedly considering.
10. The United States can help itself and the rest of the world by working with other nations — especially
the countries in Africa, the Middle East and South Asia that are most at risk — to address a major
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 impending food crisis. Shortages are already acute in parts of Africa, and some of the reasons are well
known: the extreme weather of climate change, the economic ravages of Covid-19, the inequality of
resources. But a new and devastating problem has been created by Russia’s cruel war on Ukraine.
11. Ukraine is the fourth-largest exporter of grain and seeds in the world, mostly corn and wheat, but with
its ports either occupied or blockaded by Russia, its ability to ship its grain has been sharply reduced. It
is essential to get the Ukrainian grain moving. Much of it normally goes to developing countries facing
the worst food shortages, and Ukrainian silos have to be emptied to make room for grain about to be
harvested.
12. Add a host of other war-related factors — sanctions on Belarus and Russia that have curbed the
world’s supply of a key fertilizer, potash; granaries destroyed by Russian shelling; countries like
India cutting off most wheat exports to make sure, understandably, that their own needs are met —
and it becomes evident that Vladimir Putin’s war is having devastating repercussions on food supplies
and prices far beyond Ukraine’s borders. As is so often the case, it is the poorest countries that suffer
the sharpest blow, and history shows that hunger can quickly turn lethal. Nigeria, Somalia, Ethiopia,
Egypt and Yemen are already feeling the pain of food shortages, The Washington Post notes; rising
prices have set off protests in Argentina, Indonesia, Tunisia and Sri Lanka, among other countries.
13. The largest constraint to the export of Ukrainian grain is the country’s inability to use its primary Black
Sea port, Odesa. Ukraine has instead tried to ship its grain by road, rail and river, but these methods
fall far short of what would be exported through Ukrainian ports. Before the Russian invasion, Ukraine
was exporting an average of 3.5 million tons of grain per month. That fell to 300,000 tons in March and
went up to a little over one million tons in April. Odesa could handle the volume, and it is still under
Ukrainian control. The problem is the warships and mines blocking shipping. Russia has indicated that
it is prepared to open a secure channel out of Odesa, but it would expect the lifting of some
sanctions in exchange. The United States and its allies have resisted lifting any sanctions; Ukrainians
say Russia cannot be trusted.
14. Time is fast running out. The winter wheat is ripe, and about 25 million tons of grain, according to
United Nations estimates, in Ukraine could rot if it isn’t exported soon. Even an immediate agreement
to clear the way to Odesa would require weeks to arrange a large flotilla willing to take the risk of
entering a war zone and pay for the necessary insurance and escort. Using NATO ships could create the
danger of a direct confrontation with Russian warships, which the Western allies have been intent on
avoiding.
15. The U.N. secretary general, António Guterres, has said that “there is no effective solution to the food
crisis without reintegrating Ukraine’s food production, as well as the food and fertilizer produced by
Russia and Belarus, into world markets, despite the war.” He suggested, in effect, that the United
States and Europe relax the existing sanctions on Russian and Belarusian agriculture exports in
exchange for letting Ukrainian grain flow unimpeded to the world. There is merit in trying to put world
food supplies above the exigencies of conflict, but easing the sanctions that Russia is demanding —
those imposed on Russian exports and financial transactions, as a Russian deputy foreign minister,
Andrei Rudenko, said on state media — would mean giving in to Russia’s aggression and attempt at
humanitarian blackmail.
16. What might yet work is a joint appeal to Mr. Putin by the countries that stand to be most affected by
the food crisis. Mr. Putin has met separately with the leaders of Turkey, Israel and the African Union,
among others, and has insisted publicly that responsibility for the emerging global food and energy
crises falls entirely on Western greed and Western sanctions. He repeated that message forcefully in a
speech on Friday at the St. Petersburg International Economic Forum, blaming the United States for
the world’s instability. But he may find it harder to brush off an appeal from nations that are
threatened by hunger, especially those that have so far resisted Western pressures to join in the
ostracism of Russia. The United States should encourage and support such an appeal, which would get

16
 these countries involved in a way that serves their critical interests. And if an appeal includes a
proposal to provide an escort of ships flying Ukrainian flags, Ukraine might feel less distrustful.
17. International trust and cooperation are in desperately short supply, but it’s the only way out of any of
these intertwined crises. The Biden administration should see this moment as a critical one for
America’s leadership in the world, and step up to meet it.

https://www.washingtonpost.com/world/2020/12/23/coronavirus-trade-self-reliance-ghana/

‘The pandemic dealth a blow to global trade and revived an old dream:
Self-reliance’
The pandemic dealt a blow tived an old dream: Self-reliance
1. By Danielle Paquette , Washington Post, DECEMBER 23, 2020
2. ACCRA, Ghana — When the pandemic hit, Ghana called on companies to change gears. Shirtmakers
switched to cotton masks. A cosmetics lab churned out hand sanitizer. Dress sewers crafted face shields.
3. Those goods normally came from Chinese factories, but China had largely closed for business. Beijing’s
shipments to Ghana plunged by nearly 50 percent in March, sending the West African nation of 31 million
scrambling for backups. The pivot to medical supplies pumped new energy into a goal that has eluded
Ghana since its independence: self-reliance. A more prosperous and less vulnerable future hinges on
shaping a nation that “stands on its own feet,” the president said in November — “a Ghana that is beyond
dependence on others.”
4. Global trade fell by nearly a fifth from April to June as assembly lines shuttered and transportation halted.
The jolt touched off a succession of harried responses from leaders tempted by dreams of greater
autonomy as an alternative to today’s tightly interconnected world. Relying on overseas factories for
survival is “unsustainable,” the French president said. The coronavirus has presented “an opportunity” to
shrink the need for outsiders, the Jordanian prime minister said. Boosting domestic production in wake of
the crisis is “bad things” evolving to “good ones,” China’s top economic official said.
5. For Ghana, pandemic-proofing the way forward means building a new manufacturing hub. Core to the
mission is shrinking the flow of West African commodities to richer nations that end up reaping the bulk of
the profit. About 90 percent of the region’s cotton is shipped to China and its neighbors, which spin and
weave it into finished goods.

6. Most West African cotton is exported to South and Southeast Asia

7. Percentage of raw cotton exported from five West African countries, measured in USD

8. Mali, Ivory Coast, Benin, Togo, Ghana

9. 2.1% to Switzerland ; 11.8 to China ; 4.7 to Turkey ; 6.6 to Egypt ; 34.1 to Bangladesh ; 2.5 to India
10. 17.2 to Vietnam ; 2.7 to Thailand ; 2.3 to Singapore ; 7.4 to Indonesia

11. Source: The Atlas of Economic Complexity, U.N. Comtrade

12. Officials want to end that exodus and turn it into a revival. “We are going to use our resources more
effectively, and efficiently, to rapidly transform the economy,” said Yaw Ansu, chief economist emeritus
at the African Center for Economic Transformation in Accra, Ghana’s capital, who helped shape the
country’s coronavirus recovery plan. West Africa is the world’s sixth-largest grower of cotton. Chest-high
shrubs emerge every dry season in rural swaths of Ghana, Burkina Faso, Mali and Ivory Coast. But the
17
 region is equipped to process less than 2 percent of that cotton at home. Creating a clothing supply
chain here could boost the industry’s value by 600 percent, according to the West Africa
Competitiveness Program in Accra.

13. Ivorian farmers carry bags full of cotton after a day of picking in early December. West Africa is the
world’s sixth-largest grower of cotton, but it is equipped to process less than 2 percent of it. (Issouf
Sanogo/AFP/Getty Images)

14. Ghana hopes to achieve its upgrades with investors from the private sector — local and international.
The recovery plan’s projected cost is 100 billion Ghanaian cedis, or roughly $17 billion, over the next 3½
years. Mass commercial disruptions this year forced many countries to reckon with supply-chain
weaknesses. Beijing’s lockdown cut off the production of chemicals that India uses to make generic
drugs, prompting Indian suppliers to freeze exports of antibiotics and acetaminophen. That sparked drug
shortages throughout Europe, compelling the European Commission to launch a probe into its “direct
dependence” on pharmaceuticals outside the bloc.
15. Even China — which has the highest manufacturing output on Earth — bemoaned ruptures. The country
is expanding the assembly of semiconductors for phones, televisions and other electronics so it doesn’t
have to buy as many from the United States. Virtually no country can make everything it needs, but the
pandemic dealt a blow to decades of confidence about the benefits of international commerce. Back in
vogue are quests to thrive without it.

Seizing an opportunity

16. The path ahead is rooted in an old dream. Ghana’s first president, Kwame Nkrumah, inherited an
economy in 1957 that ran on British imports. He vowed to replace them with homemade wares. The
former colonial power had padded its wallet for years with Ghana’s natural riches. It was time to wrestle
that profit back, Nkrumah said. Up rose the industrial city of Tema, where the State Textiles
Manufacturing Company and other government-backed firms employed thousands of workers. Those
early factories crumbled, however, after a 1966 coup ousted Nkrumah, and the nation’s protectionist
policies spurred costly, inefficient output. Then came cheap alternatives from Asia. China’s economic
reforms, which began in 1978, triggered its industrial rise. Garment production in the country saw
double-digit growth each year for the next two decades. The laser focus on exports — with low taxes
and shaky regulatory compliance — led to the capture of huge shares of global business: China now
accounts for 40 percent of the world’s textile and apparel exports.

17. A ship unloads containers as a worker checks his cargo list in Tema, an industrial city where the State
Textiles Manufacturing Company and other government-backed firms used to employ thousands of
workers. These days, Ghana imports most of what it consumes, but leaders hope to reverse that.

18. Ghana’s cotton mills, meanwhile, rusted away. The country’s 16 large and medium-size textile firms of
the mid-1970s dwindled to four, according to the Brookings Institution. These days, the nation imports
most of what it consumes. Some 70 percent of medicines come from abroad. Frozen chicken arrives
from Brazil and rice from Thailand.
19. Leaders have long pushed to reverse this trend. In a recent presentation for companies around the
globe, they touted Ghana’s geographic assets: Packages leaving the Tema port reach American and
European buyers weeks faster than those departing hubs like Shanghai. Ghana is a trade-war shelter,

18
 they said — commercial pacts with the United States and Europe shield manufacturers from steep
tariffs. The minimum wage is also lower than in China, Vietnam and Bangladesh. Millions are ready to
work, officials said, especially after the economy contracted for the first time in nearly four decades.
20. Plus, the timing is right. Western companies have signaled a desire to shift supply chains away from
China and closer to home, according to a September report from the World Manufacturing Foundation,
a research group in Italy. Though that movement took off during the U.S.-China trade war, analysts say
the pandemic has encouraged a wider reassessment of global supply-chain risks. Corporate decisions to
spread production out around the world — rather than rely on plants in one place — are expected to
create new opportunities for some economies, said Daria Taglioni, a trade economist at the World Bank.
There aren’t only ruptures,” she said, but “creations of new links.” Ghana intends to seize on the
reshuffling, said Ansu, the economist in Accra. “We are going to develop areas where we have a
competitive advantage,” he said.
21. That’s where cotton comes in. The crop contributes to a $786 billion global-manufacturing apparel
market and supports hundreds of thousands of small growers across West Africa, who mostly harvest by
hand. The low-tech approach gives the crop an advantage: Eighty percent is classified as superior grade,
according to an analysis of international quality standards by the Tony Blair Institute for Global Change,
a British nonprofit. Absent a rough automated touch, the fiber is more likely to stay intact, shiny and
free of chemical grime. Global history shows that the textile industry is a gateway to wealth for budding
economies, said Alan Kyerematen, the country’s trade minister. “We believe it will also work for Ghana,”
he said.

Luring investors

22. To spin the white fluff into yarn and weave it into cloth, Ghana needs cotton mills, and few exist here.
Those that do exist operate at partial capacity. New operations cost up to $200 million, according to the
Tony Blair Institute. But Ghana’s push to lure investors is working, Kyerematen said: Investors with the
cash for the latest machines are circling. Seven firms have approached the government in recent
months.

23. After the pandemic struck, the nearly 200 workers at Sixteen47 learned to make cloth masks and face
shields. The firm also took orders that used to go abroad — labels, bank uniforms, political T-shirts —
from new clients fed up with shipping delays. “Now I’m realizing we could make literally anything,” said
owner Nura Salifu.

24. Some are from Turkey and the United States, including the American retail giant PVH — home of Calvin
Klein and Tommy Hilfiger. (The company declined to comment on the specifics.) Most interest, though,
is coming from the global textile champion itself: China. China’s textile market is saturated, and
investors there are looking to get in early elsewhere, said Willy Shih, a professor of technology and
operations management at Harvard Business School. The Chinese government encourages investors to
explore new markets like Ghana and even pays for trips abroad. “A lot of Chinese entrepreneurs are
going for: What is the next China?” Shih said. “They want to ride that wave because they have seen
friends and relatives get rich.”
25. Some of Ghana’s efforts to draw private money have already brought in more business. Akosombo
Industrial Company Limited — one of the only textile factories that survived the nation’s manufacturing
downturn — plans to upgrade its fabric mill and expand by as much as 30 percent, thanks to technical

19
 and machinery deals with Chinese and German partners. Most of its starter cloth today comes from
Asia, but the upgrade, executives say, is expected to change that. The company, which occupies 70
verdant acres to the north of Accra, pumps out bolts of colorful vibrant prints for shirts, dresses and
special-occasion looks.
26. The ambition is contagious. Nura Salifu, a 34-year-old garment factory owner in Accra, sources fabric
from Akosombo for women’s clothing. Her business, Sixteen47, heeded the government’s call and
transformed when the pandemic struck. Salifu’s team of nearly 200 learned to make cloth masks and
face shields from YouTube videos. Then they soaked up all kinds of orders that used to go abroad —
labels, bank uniforms, political T-shirts — from new clients fed up with shipping delays. “Covid gave us
confidence,” Salifu said on a recent afternoon, as her staff stitched military fatigues. “Now I’m realizing
we could make literally anything.”
27. Orders are up 200 percent, she said, and she plans to move Sixteen47 into a bigger space. She’s courting
potential investors who she hopes will be persuaded by Ghana’s tax breaks. “I don’t want to go back to
the way it was before,” Salifu said. Fabric should be made in Ghana, she said — perhaps right under her
roof. The next goal: her own cotton mill.

28. Sixteen47 owner Nura Salifu walks between workers. She plans to move the company into a bigger
space and is courting potential investors whom she hopes will be persuaded by Ghana’s tax breaks.

Read also: “Why the US Dollar Is the Global Currency”

Table of Contents
 Strongest World Currency
 Why the Dollar Is the Global Currency
 Calls for a One World Currency
 The Bottom Line
KIMBERLY AMADEO : Updated July 23, 2020)
https://www.thebalance.com/world-currency-3305931

“Which Nation Does the World Trust Most? (Hint: Follow the Dollar)”

(Ruchir Sharma  DEC. 25, 2017 NYT CreditPetar Kujundzic/Reuters

1. There is a popular narrative these days that President Trump is undermining America’s standing in the
world and ceding the mantle of global leadership to China. By insisting that America should act like any
other country and put its own interests first, these declinists say, Mr. Trump is demoting America to the
status of any other country and straining its postwar alliances to the breaking point. Global polls show that
20
 Mr. Trump is far less trusted than President Barack Obama was and Mr. Trump’s America is viewed far less
favorably than Mr. Obama’s was.
2. A provocateur like Mr. Trump will trigger strong opinions, but opinions are flighty. A president’s character
is indeed likely to affect America’s soft power — its cultural and diplomatic influence — while he is in office.
It is less clear, however, that any erosion of soft power under Mr. Trump represents a permanent threat to
America’s hard power, including its measurable economic and financial strength.
3. Even before Mr. Trump, the declinists cited data showing China gaining a greater share of the global
economy at America’s expense, a trend that is easy to exaggerate. America’s current 24 percent share
looks much diminished compared with 30 percent in 2000 but about the same as the 26 percent share in
1980. It’s simple to cherry-pick a start date that makes American decline look bad, but the reality is that
China is gaining global economic share at the expense mainly of Europe and Japan.
4. America is a tested economic superpower, having survived 21 recessions and a Great Depression since
1900. China remains untested, having suffered not one outright recession since its modern renaissance
began around 1980. It has yet to be seen just how well China will weather such a test, which is inevitable
for any large economy.
5. China’s rise has already slowed sharply. When the Chinese economy grew at a double-digit pace last
decade and its currency appreciated strongly, many forecasters thought it would match the size of the
American economy by now. Instead, following a significant slowdown, China is on pace to catch up to the
United States by 2030 — and then only if it experiences no major disruptions or further slowdown. Both
things are highly possible.
6. At a time when finance increasingly dominates the global economy, America’s influence as a financial
superpower is as great as ever. Central banks around the world are always looking for a safe place to park
their money, and they usually buy United States assets, typically Treasury bills, which show up as dollars in
their foreign exchange reserves. Since 1980, the dollar’s share of foreign exchange reserves has held
roughly steady at around 66 percent. This is in part the world’s way of saying it not only trusts the United
States to pay its debts but also trusts it more than Europe, Japan and especially China.
7. Serious money does not equate America with Mr. Trump, and those obsessed with American decline ignore
the state of its rivals. The euro was introduced 19 years ago, ambitious to become a reserve currency, but
its youth and the recurring fears of a eurozone breakup have limited the world’s willingness to trust it.
Aging Japan’s long stagnation acts as a permanent cap on the yen’s popularity. And outsiders remain even
more wary of the renminbi, owing both to China’s debt troubles and the standing threat that Communist
rulers pose to free flows of capital.
8. On the other hand, confidence in the dollar reflects longstanding faith in American financial and political
institutions and effectively ignores both the recent advent of Mr. Trump, who as a candidate threatened to
reduceUnited States debt payments, and the dysfunction in his White House.
9. When businesses in two countries — say, India and Argentina — want to conduct a deal, they almost
always arrange payment not in rupees or pesos but in dollars. Everyone wants to hold the world’s most
trusted and liquid currency. Nearly 90 percent of bank-financed international transactions are conducted in
dollars, a share that is close to all-time highs.
10. The world is on a dollar standard, and in some ways the reach of the dollar is expanding. When
individuals and companies borrow from lenders in another country, they increasingly borrow in dollars,
which now account for 75 percent of these global flows, up from 60 percent just before the global financial
crisis in 2008. Even though the crisis began that year in the United States, American banks dominate global
finance more now than they did before the crisis — in part because debt troubles have dogged banks in
Europe, Japan and China even more persistently.
11. The share of countries that use the dollar as their main “anchor” — the currency against which they
measure and stabilize the value of their own currency — has risen to 60 percent today from about 30
percent in 1950 and 50 percent in 1980. And those countries collectively account for some 70 percent of
the global gross domestic product. In other words, most of the world chooses to live in a dollar bloc.

21
12. Critically, there is no sign that the dollar’s status on any of these measures — as a reserve, an
anchor or the favored currency for cross-border transactions and loans — has declined since Mr. Trump
took office.
13. In a dollar world, most countries are happiest when the dominant currency is cheap and plentiful. A
strong dollar raises the cost of borrowing, which slows global economic growth and has often triggered
debt crises in the emerging world. A weak dollar has the opposite effect, which is why the weakening of the
dollar this year offers more evidence of its dominance: Partly as a result, the world is enjoying an unusually
broad recovery encompassing every major economy.
14. The global embrace of the dollar matters not only as a sign of trust. Having the world’s favorite
reserve currency is a practical advantage, lowering borrowing costs and boosting G.D.P. growth in America,
while symbolizing great power status. Not surprisingly, then, China in particular has been eager to
challenge the dollar’s supremacy.
15. Instead, the renminbi has gained no ground as a reserve currency and probably won’t as long as
China’s financial markets remain largely closed, underdeveloped and subject to government meddling. One
reason foreigners like to hold the dollar is that they know they will never get stuck with it, thanks to the
vast, open and highly liquid American stock and bond markets.
16. Many observers nonetheless assume that with China rising as an economic power, financial clout
will follow. Perhaps, but the United States surpassed Britain as the world’s largest economy in the late 19th
century, and the dollar did not fully displace British sterling as the leading reserve currency until after the
world wars, which left British finances shattered. That doesn’t mean it will take World War III to end the
dollar’s reign, but it will take time and a shock bigger than one unpredictable president.
17. History also suggests that economic size alone will not be enough to propel China to financial
superpower status. From 1450 through the late 1700s, the leading reserve currency was held by smaller
countries — first Portugal, followed by Spain, the Netherlands and France. These nations were all major
trading and military powers with credible financial systems, but not one was the world’s largest economy.
Throughout those centuries, the leading economy was primarily China. It never gained the advantages of
having the leading reserve currency because, then as now, its financial system lacked credibility.
18. No one doubts that China poses a growing military and economic challenge to the United States.
But Mr. Trump’s critics may be overstating both the scope and inevitability of American decline and the
role one president can play in advancing it.
19. To identify which nation the world really trusts in the long term, follow the money. And money still
flows downhill to the dollar — arguably the vote of confidence in America that matters most.

‘For Wall Street, a Strong Dollar Is Front and Center’

Investors are increasingly concerned that the rising U.S. currency will strain other economies
The dollar’s strength could pressure emerging markets, central banks and U.S. companies with large amounts
of foreign revenue.
Julia-Ambra Verlaine Sept. 11, 2022 8:00 am ET , The Wall Street Journal

The strong dollar is now one of Wall Street’s main concerns. On Main Street, a rising dollar boosts Americans’
relative purchasing power by making imports cheaper. But the dollar is also at the center of world financial
markets, and a stronger U.S. currency can have unforeseen consequences.

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Investors and policy makers are being forced to consider history’s unkind lessons. Currency shifts were behind
the 1997 Asian financial crisis and played a role in the Russian financial crisis of 1998, which took down giant
U.S. hedge fund Long-Term Capital Management.

This year has been quite a year for the dollar. With stocks and bonds both falling, investors looking for havens
have scooped up the U.S. currency. The dollar has gained 17% against the pound so far this year, and it
climbed past parity with the euro for the first time in two decades. The WSJ Dollar Index, which measures the
dollar against a basket of other currencies, is up 13% year to date.

Here are five main places where the dollar’s strength could become a problem.

Emerging Markets

As the world’s reserve currency, the dollar is used to trade commodities across country lines. Emerging-
markets economies are vulnerable to the dollar’s strength in part because they attract money from
international investors and often price their debt in dollars.

Why a Strong Dollar Is Rattling Wall Street

A stronger dollar often makes emerging-markets currencies less valuable. That in turn exacerbates inflation in
those countries, by making it more expensive to import goods and services. Earlier this year, emerging
markets remained resilient even as the dollar rallied. But that was largely because commodities prices were
rising, boosting countries that export copper, soybeans and coffee. Now commodities prices are falling, and
global economists say trouble could lie ahead for emerging markets.

Corporate Earnings

U.S. corporations involved in international business have cut earnings guidance since June, citing the dollar’s
gains. Microsoft Corp. was one of the first to raise red flags. Deere & Co., the farm-machinery supplier, also
warned that a stronger dollar would strain future profits.

That has translated into stocks, where companies with large sources of foreign revenue took a hit earlier this
year—including Apple Inc., Google parent Alphabet Inc., and chip maker Nvidia Corp. While the market has
rebounded since then, more companies are sounding the alarm, which could mean extra pain ahead for stock
investors.

The Global Economy

Global central banks are in a race to tighten monetary policy to try to curb inflation—but the rising dollar is
complicating their job. “A stronger dollar makes tackling inflation in Europe very hard for a number of
reasons,” said Keith DeCarlucci, chief investment officer at London-based hedge fund Melqart KEAL Capital.
“The most important goods they trade, including energy, are priced in dollars.”

If central bankers raise interest rates too quickly, they risk recession. But investors tend to reward the
countries whose central banks act most aggressively to curb inflation. The Federal Reserve’s swift tightening is
one reason that the dollar has soared this year. Policy makers in Australia and Canada increased interest rates
in recent weeks. The European Central Bank raised rates on Thursday by the largest amount since the early
days of Europe’s currency union.
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Currency Intervention

Some are worried that continued dollar strength might push governments to intervene even more directly to
shore up their currencies, perhaps by selling dollars to buy their own currencies or abandoning pegs to the
dollar. That can work, though it is more likely to do so if the U.S. joins in. In 1985 the U.K., France, West
Germany and Japan joined the U.S. in the Plaza Accord, which aimed to bring down a dollar whose gains were
perceived as unhealthy. While most Wall Street analysts say such an intervention is unlikely in the current
political landscape, some say the option isn’t off the table.

Treasury Secretary Janet Yellen has pushed back against this idea, though. “In general our view is that
countries like Japan, the United States, the G-7 should have market-determined exchange rates and only in
rare and exceptional circumstances is intervention warranted,” Ms. Yellen said in July at a meeting in Tokyo
with Japanese officials.

U.S. Dollar Funding

Money managers are closely tracking whether dollars are growing scarce in an arcane funding market known
as cross-currency basis swaps. When volatility rises, investors sometimes hoard dollars. In March 2020, for
example, dollar-funding markets seized up, prompting the Fed to launch a lending facility that allows foreign
central banks to convert their holdings of Treasury securities into dollars. The so-called swap lines are meant
to ensure that dollars are available to other central banks during periods of market stress.

While a global tightening cycle could reduce inflation in the U.S. by strengthening the exchange rate, Fed
officials are always “carefully looking to see if there are some financial-stability risks out there,” Fed Vice
Chairwoman Lael Brainard said at a recent banking conference in New York.

—Nick Timiraos contributed to this article.

“Global trade’s dependence on dollars lessens its benefits: Policymakers around the
world yearn to be free of the greenback’s grip”

1. The Econonomist, 27 August 2020

2. Crashing currencies hurt. They make imports more expensive, cutting into household budgets and
raising businesses’ costs. But economics has long held that this pain brings with it its own salve. More
expensive imports should drive new demand for home-made replacements and thus for the workers
who make them, geeing up the economy. What is more, a devalued currency means exports are
suddenly cheaper to buyers abroad. That, too, should boost demand. When the value of the Colombian
peso collapsed in the summer of 2014, it was on the basis of these assumptions that the country’s
finance minister greeted the fall as “a blessing in disguise”.
3. It wasn’t. There were, the imf opined in a subsequent report, a number of reasons for this, many specific
to Colombia. But one problem was a factor which is embedded in the machinery of today’s international
commerce. Colombia does not trade in pesos. It trades almost exclusively in dollars; 98% of its exports
are invoiced in them. This is an extreme example of a general point. The amount of trade carried out in

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 American dollars vastly exceeds the amount that America imports and exports. Although that may seem
like a detail of book-keeping, it matters a lot. A growing body of evidence suggests that the dollar’s
prominence in trade undermines the advantages which flexible exchange rates are meant to offer. And
when the dollar strengthens, global trade tends to contract.
4. For decades, economists’ thinking about trade and currencies was summarised in a model created in the
1960s by two researchers at the imf, Robert Mundell and J. Marcus Fleming. They assumed no special
role for any dominant currency, but rather that traders would agree on prices in the exporter’s currency.
A Colombian devaluation, say, would immediately turn peso-priced batteries into bargains abroad,
encouraging foreign buyers to scoop up more of them. Meanwhile shoppers in Bogotá wanting to buy
Brazilian t-shirts would resent being made to fork out more pesos to cover the price fixed in real.
5. This simplifying assumption was potentially consequential. As early as 1947, Joan Robinson of the
University of Cambridge noted that the currency companies used for invoicing could mute the
expenditure-switching effect. If the prices of Colombian exports were in dollars, not pesos, a devaluation
would leave prices faced by American importers—and their demand—unaffected. But though that might
matter in principle, did it matter much in practice?
6. In 1973 Sven Grassman of the Institute for International Economic Studies used Swedish data to answer
in the negative. He found that in 1968 around two-thirds of Swedish trade had been indeed invoiced in
the currency of the exporter. This “fundamental symmetry in international payment patterns” became
known as “Grassman’s Law”. Swedish exports to America, which were mostly invoiced in dollars not
kronor, were written off as the exception. That suggested that Mundell and Fleming were right.
7. Over the next decades more data further supported Grassman’s Law—always with the same American
exception. But by the 1990s some researchers were beginning to doubt its validity. Their main argument
was that the actual prices of goods did not vary as much or as quickly as would be expected if payments
were in fact symmetrical. Grassman’s Law said that the price of Brazilian t-shirts in Colombian markets
should vary with the peso-real exchange rate, for example. But such prices were in fact much stickier.
8. In the mid-2000s Linda Goldberg and Cedric Tille of the Federal Reserve Bank of New York compiled data
describing 24 countries in the late 1990s and early 2000s. This confirmed that Grassman’s Law was
wrong: exports were not generally priced in the currency of the country they came from. In 2001, for
example, they found that South Korea invoiced 82% of its imports in dollars, despite only 16% of its
imports coming from America.
9. Other work confirmed and updated their findings: the dollar has a huge role as a “vehicle currency” in
which to invoice transactions to which no Americans are party, particularly in developing countries (see
chart). Gita Gopinath of the imf has compiled data covering just over half of world trade to show that
the dollar’s share of invoicing was 4.7 times larger than America’s share of the value of imports, and
triple its share of world exports. Another imf study showed that the dollar’s share has not decreased in
step with America’s declining share of overall trade.
10.

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11. The euro’s creators had hoped that it might supplant the dollar’s status. But even t

hou
gh almost half of trade is invoiced in euros, that is mostly because of how much trade involves countries
that use the currency. Between 1999 and 2014 euro-denominated trade was only around 1.2 times the
euro zone’s share of global imports.
12. Other would-be challengers appear to have failed even more miserably. Scant Chinese data suggest that
in 2013 only 17% of Chinese trade was settled in renminbi, and in 2012 only around half of such
settlements were invoiced in renminbi. In order to avoid financial sanctions, Russia has recently shifted
away from the dollar when paying for imports from China. But the euro, not the renminbi, benefited
most.
13. A lack of historical data makes it impossible to say whether Grassman’s Law held in the 1970s and has
since weakened or whether it was the always an artefact of insufficient data. Whichever is true,
economists busied themselves trying to work out why exporters used dominant currencies.
14. One suggestion is that using the same vehicle currency when setting prices for a certain market lets
companies avoid erratic price movements relative to their competitors. Ms Goldberg and Mr Tille
offered some support for this when they showed that dollar invoicing was more common in markets,
such as precious metals, where competition is cut-throat. Another suggestion is that the rise of global
supply chains saw more exporters importing some inputs. Invoicing imports and exports in the same
currency would preserve their profit margins in the event of a devaluation.
15. The arguments for a vehicle currency do not necessarily mean that that currency has to be the dollar.
But why would it not be? The dollar already dominates the financial world. Central banks stash 58% of
their official foreign-exchange reserves in it. It is the global currency of choice when issuing securities.
Banks use it for around half of their cross-border claims. According to swift, a payments system, it is
used in two-fifths of international payments.
16. Indeed the worlds of finance and trade are intertwined. Exporters borrowing in dollars will want to price
their foreign sales in the same currency, to protect against a sudden devaluation which would increase
the value of their debt. Assets denominated in dollars offer their owners more security, because they
will hold their value relative to imports priced in dollars.
17. Having established the importance of dollar dominance for global trade, economists updated their
understanding of exchange-rate gyrations. In America sticky prices set in dollars mean the demand for

26
 imports is impervious to exchange-rate shocks. A Colombian light aircraft priced at $50,000 will cost the
same when the dollar is worth 3,000 pesos as when it is worth 4,000. The change will eventually have an
effect—but it will be partial, and slow. One study has found that two years after an exchange-rate shift
only 44% of its effect would be seen in prices in America. Another found that just as prices did not
change much, neither did the volumes importers chose to buy. After a 1% dollar depreciation, they
found that the volume of imports into America fell by a measly 0.003%.
18. Money, money, money
19. All this allows America to enjoy what Ms Gopinath describes as a “privileged insularity”. Its adjustment
to a dollar depreciation happens almost entirely through exports, which immediately become cheaper in
foreign markets. Devaluations against the dollar in other countries, by contrast, see them suffer. It
becomes harder to afford imports while they don’t get the added export oomph the old models
suggested. Exporters’ dollar earnings will be worth more in local currency, which might tempt some of
them to expand. But that takes time. And the benefits are often offset by the higher cost of imported
inputs.
20. Around the world invoicing imports in dollars means that it is devaluations against the greenback, rather
than against the currency of the country you are trading with, that count. Emine Boz of the imf, Ms
Gopinath and Mikkel Plagborg-Muller of Princeton University found that prices of imported goods were
relatively unresponsive to bilateral exchange-rate movements. Over short-term horizons they were six
times more sensitive to the dollar exchange rate. The price of Brazilian-made football shirts in Mexico
will stay the same if the peso depreciates relative to the real, but not relative to the dollar. If the peso
drops with respect to the dollar, though, those shirts will become less affordable and may no longer be
sold.
21. During the East Asian crisis of 1997-99 South Korea, Malaysia and Thailand all experienced currency
depreciations of at least 60% relative to the dollar—and saw their export volumes stagnate or fall. With
prices set in dollars devaluations did nothing for their export competitiveness within the region. And
demand for imports from elsewhere in the region—also priced in dollars—plunged. Ms Boz and her co-
authors have found that, after accounting for the business cycle, a 1% appreciation in the value of the
dollar translates into a 0.6% decrease in the volume of trade between countries in the rest of the world.
22. Dollar dominance means trade is vulnerable to the global financial cycle, too. A study by Valentina Bruno
and Hyun Song Shin of the Bank for International Settlements found that a dollar appreciation leads
banks reliant on dollar funding to shrink their credit supply. Companies reliant on those banks—and
their dollar-denominated financing of trade—then slow their exports, an effect particularly marked in
companies with longer supply chains. Trade is a finance-hungry business.
23. Policymakers around the world yearn to be free of the dollar’s grip. That seems unlikely. The dollar’s
dominance is the product of millions of individual decisions, each seemingly optimal, which in concert
lead to collective problems. Each dip in the dollar’s value leads to a rush of wishful chatter about the
dollar’s demise, but for long as these optimisations continue to make sense it is hard to see how that
wish can come true. At least, though, for a while, the chatter-inducing weakness will provide a fillip to
trade. ■

‘A Normal Supply Chain ? It’s ‘Unlikely » in 2022’

The chaos at ports, wharehouses and retailers will probably persist through this year, and perhaps even
longer.
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By Peter S. Goodman,  Feb. 1, 2022Updated Feb. 6, 2022, New York Times
1. With the havoc at ports showing no signs of abating and prices for a vast array of goods still rising, the
world is absorbing a troubling realization: Time alone will not solve the Great Supply Chain Disruption. It
will require investment, technology and a refashioning of the incentives at play across global business. It
will take more ships, additional warehouses and an influx of truck drivers, none of which can be
conjured quickly or cheaply. Many months, and perhaps years, are likely to transpire before the chaos
subsides. “It’s unlikely to happen in 2022,” said Phil Levy, chief economist at Flexport, a freight
forwarding company based in San Francisco. “My crystal ball gets murky further out.”
2. For those who keep tabs on the global supply chain, the very concept of a return to normalcy has given
way to a begrudging acceptance that a new normal may be unfolding. Cheap and reliable shipping may
no longer be taken as a given, forcing manufacturers to move production closer to customers. After
decades of reliance on lean warehouses and online systems that monitor inventory and summon goods
as needed — a boon to shareholders — manufacturers may revert to a more prudent focus on extra
capacity.
3. The deepening understanding that the supply chain crisis has staying power poses a daunting challenge
to policymakers.
4. Mayhem at factories, ports and shipping yards, combined with the market dominance of major
companies, is a key driver for rising prices. Spooked by the highest rates of inflation in decades, the
Federal Reserve has resolved to tighten credit, while the Bank of England and other central banks have
already lifted interest rates, sowing alarm in stock markets from New York to Tokyo.
5. Public anger over rising consumer prices — especially for food and fuel — helps explain why Democrats
may be in danger of losing control of Congress. Record beef prices, along with rising costs for pork and
poultry, have prompted the Biden administration to pursue the prospect of antitrust
enforcement against the four companies that dominate the American meat supply.

6. Inflation F.A.Q.
7. What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as
far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods
and services such as food, furniture, apparel, transportation and toys.
8. What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall
based on developments that have little to do with economic conditions, such as limited oil
production and supply chain problems.
9. Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price
gains can lead to higher wages and job growth.
10. How does inflation affect the poor? Inflation can be especially hard to shoulder for poor households
because they spend a bigger chunk of their budgets on necessities like food, housing and gas.
11. Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets
in general have historically fared badly during inflation booms, while tangible assets like houses have
held their value better.

12. But whatever the politicians and central bankers unleash in the name of taming inflation, businesses
continue to struggle to manufacture and distribute their products. Whirlpool recently warned that
customers who purchased its washing machines, refrigerators and other household appliances would
continue to experience delays as the company contended with supply chain problems. Even as Tesla last
week announced record profits amid overwhelming demand for its electric cars, the company said sales
would be hurt by difficulties in the supply chain — not least due to continued shortages of computer
chips. The chip shortage has limited the production of cars worldwide, while stymying makers of medical
devices and a vast range of electronic gadgets. The U.S. commerce secretary, Gina M. Raimondo,
recently described persistent chip shortages as an “alarming” threat to American industry.
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13. The International Monetary Fund last week cited supply chain woes among other factors as
it downgraded its forecast for global economic growth for 2022 to 4.4 percent from 4.9 percent.

14. The breadth and persistence of supply chain troubles in part result from how the coronavirus pandemic
has accelerated trends that have been unfolding for decades, especially the growth of e-commerce.
Whereas major brands traditionally ship goods from factories around the world to central warehouses
that supply retail outlets, e-commerce demands a far more complicated endeavor: Retailers must
deliver individual orders to homes and businesses. As warehouses have been swamped by goods, major
retailers have added capacity at a breakneck pace. Amazon spent more than $164 million to construct
new warehouse space last year, while Lowe’s, the home improvement retailer, spent more than $17
million, according to Reonomy, a commercial real estate data provider. Warehouses are stuffed to the
rafters in the places with the most demand — those near the largest metropolitan areas.
15. As of late last year, warehouses in the Inland Empire region of Southern California had vacancy rates of
less than 1 percent, according to CBRE Group, a commercial real estate services and investment
company. Those in northern New Jersey had vacancy rates of only 2.4 percent. “The basic physics of
land scarcity matters quite a bit,” said Chris Caton, managing director of global strategy and analytics at
Prologis, a real estate investment trust focused on warehouses. “If you look at Southern California, you
look at the greater New York-New Jersey area, there’s just no more land in the most sought-after
locations.” The tightness in warehouses helps explain why American ports remain seized by dysfunction,
especially the busiest one, the complex of terminals at Los Angeles and Long Beach. With limited room
to stash goods offloaded from inbound vessels, containers have piled up on docks uncollected. That has
prompted port overseers to force ships to float offshore for days and even weeks before they can
unload.
16. Over the last three months, container ships unloading goods have remained at American ports for seven
days on average, an increase of 4 percent compared with all of 2021 and 21 percent higher than at the
start of the pandemic, according to FourKites, a supply chain consultancy based in Chicago. As ports
work through the backlog, they are contending with structural problems — aging and overtaxed
infrastructure, a shortage of chassis used to haul containers with trucks, and not enough drivers, even as
trucking companies increase pay. Shipping companies are hobbled by outmoded technology that has
limited their ability to anticipate and plan around problems. “Those systemic problems in the supply
chains, this has been building for years,” said Steve Dowse, senior vice president and general manager
for international solutions at FourKites. “The pandemic has really just highlighted the fragility of our
supply chains.”
17. Even as companies confront the supply chain upheaval, the costs and complexity of solving their
troubles may dissuade executives from taking effective action. In a recent survey of over 3,000 chief
executives conducted by the consulting firm Alix Partners, fewer than half said they were taking longer-
term action to alleviate supply chain challenges, while a majority said they were relying on short-term
measures. Regardless of their approach, more than three-fourths of chief executives were skeptical that
their plans would prove effective.
18. The supply chain problems have endured despite much talk that they would prove a largely momentary
phenomenon resulting from the pandemic. In the initial months of the spread of Covid-19 — as markets
plunged and American businesses laid off workers — manufacturers slashed orders for a vast array of
goods on the assumption that health fears, lockdowns and diminished paychecks would limit demand
for their wares. Using the same logic, computer chip manufacturers cut production. Global shipping
companies reduced service.
19. Understand Inflation and How It Affects You
20. Inflation Calculator: How you experience inflation can vary greatly depending on your spending
habits. Answer these seven questions to estimate your personal inflation rate.

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21. Managing Your Finances: With interest rates rising, now is a good time to pay down credit card balances
and bolster emergency savings.
22. Cost of Living: As food prices rise, eating is becoming increasingly expensive. We took a close look at five
New Yorkers’ food and drink habits to see where the effects are most felt.
23. A New Playbook: As brands grapple with inflation, they are taking a new approach: being upfront about
price increases, hoping that transparency will keep customers loyal.

24. That calculus proved disastrously wrong. The pandemic did not eliminate spending so much as shift it
around. People stopped going to restaurants, sporting events and amusement parks, while directing
their dollars to outfitting their homes for life under lockdown. They added treadmills to their basements,
desk chairs to their bedroom offices and video game consoles to their living rooms. Many of these goods
were made in China. And the surge of demand swamped the availability of shipping containers at ports
in Asia, delaying transport.
25. As ships arrived at ports from Los Angeles to Savannah, Ga., they carried more cargo than dockworkers
and truck drivers could handle. Stacks of uncollected containers towered like monuments to
globalization gone awry. Shipping companies have expanded their fleets, but the impact has been
canceled out by the number of vessels marooned off ports. “A ship that’s queued up is not a ship that’s
moving stuff back and forth across the ocean,” Mr. Levy, the Flexport chief economist, said. “It’s a
floating warehouse.” Many economists assumed that after a few months, Americans would exhaust
their demand for products, allowing the supply chain to catch up. As vaccines reached the bloodstream
and the pandemic loosened its grip on many parts of the world, it was thought that consumers would
stop buying stand mixers and return to restaurants.
26. This shift has yet to happen meaningfully — a seeming testament to the economic impact of Covid-19
variants like Delta and Omicron, which have led many to return to social isolation.
27. The biggest uncertainty centers on what happens next. Once a household spends several thousand
dollars to outfit an exercise room in the basement, its occupants may not return to their old gym after
the pandemic ends. Rather than shell out for a gym membership, they may opt to invest in additional
gear at home, adding more weights or an elliptical. As white-collar professionals begin a third year in
their home offices, attending video conferences in sweatpants, how many will jump at the chance to
again don business attire? And what does that mean for retailers that sell such clothing?
28. These are merely some of the variables at play as businesses try to divine the future. The dearth of solid
information may dissuade investments — in trucking, in shipping, in warehouses, in technology — that
might ease the supply chain upheaval. “All of these head-scratching puzzles, these are really difficult,”
Mr. Levy said. “Everybody is wary of getting caught out.”

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