Globalisation in trouble?

How to unbreak global supply chains

WHAT do Covid-19, Suez Canal and rare earth minerals have in common? All three tell us bottlenecks can disrupt global supply chains. Some, like the Suez Canal blockage caused by the MV Ever Given container vessel, happen. Others, like vaccine hoarding, are caused. Is this the beginning of the end of globalisation? Yes and no. Yes, if supply supremacy rules. No, if the shortcomings of the global supply chains, are attended to speedily. Take “yes” first. Globalisation has two enemies: supply supremacy pure and simple, and supply supremacy tainted with geopolitics. Both keep the goods home. Call it pandemic politics or vaccine nationalism, supply supremacy in either form during Covid-19 is silly. Covid-19 may have begun as a relatively slow spreader. Today, SARS-CoV2, the virus that causes Covid-19, has grown into multiple variants. Some of them, if not more deadly, are superspreaders. Public health experts in every country have issued a consistent message: no one is safe until everyone is. Take that to mean 7.8 billion people. Yet some countries are going against the grain of this simple truth. The culprits are either Type 1 or Type 2. Type 1 are producers who want to keep the needle national, at least until all are jabbed. Type 2 are countries that don’t produce vaccines but hoard them for their citizens. Either is suicidal. Covid-19 isn’t Las Vegas. What happens elsewhere doesn’t always stay there. Having gathered vengeance in jabdenied countries, SARS-CoV-2, will return as deadlier variants. It is not unknown for some variants to be vaccine-beaters. Some countries may think they can get others to be infected on their behalf by denying them vaccines. They are mistaken. Disease, like death, is never vicarious. There is yet another supply supremacist worry that upsets the global apple cart. Having kept the vaccine for themselves, some, if not all, are declaring themselves “no fly zones” to the jabless. Being denied access to vaccines, now they are not allowed to fly because they do not have vaccine passports. This is unfair denial to the power of two. Next, sanitisation certificates for goods? David Ricardo’s comparative advantage aka globalisation has never been tested this badly.

Now for the “no”. Globalisation is here to stay, though there is much to set right, as no nation can produce all they need. Because none have all the resources, natural or human, to produce them. Even if they do have some, they still need capital and technology to work them. Borderless the world will still be, though it will be monitored more closely. Take rare-earth minerals. They go to make anything from flying machines to electric cars and some things military in between. According to the April 3 issue of The Economist, Europe, the United States, China and Japan are rushing where the rare-earth is. China is ahead in the rush run. With 95 per cent control of rare-earth mining, it is sure to keep much of it, if not all, for itself. So will the rest. Geopolitics is again turning globalisation-beater. But not for long. Japan, the newspaper says, is playing the loan and equity game to keep globalisation going. For a loan of US$250 million to and some equity in Australian outfit Lynas, two Japanese firms will keep the country supplied with 30 per cent of the rare-earths it needs. Geopolitics, can and does, shut globalisation down. But only for a while. Reengineered, globalisation can turn geopolitics-beater.

Covid-19 isn’t Las Vegas. What happens elsewhere doesn’t always stay there.