With countries internal societies in potential long term crisis, what is the virus doing to the age of globalization in
general? Is it going to slow the flow of people, trade and capital or will it kill off this neo-liberal concept
altogether?
Given that globalization has already received some major setbacks resulting from the 2007/8 Stock Market crash, the
Brexit fall-out between the UK and European Union, failure of the Trans Pacific Trade Agreement and the ongoing
tit-for-tat in the US and Chinese trade wars, this domineering market system that had underlined human progress for
decades now is being delivered a devastating uppercut with the ongoing spread of the Coronavirus. The Economist states
that as lockdowns and border closures ensued as the first wave terrorized the planet from March 2020, "the number of
passengers at Heathrow dropped by 97% year-on-year; Mexican car exports fell by 90% in April; and 21% of transpacific
container-sailings in May had been cancelled."[1] In April, global flights dropped to levels unheard of since the 1970s as airline companies such as Virgin Australia,
Colombia's Avianca, Chile's LATAM and Britain's Flybe all declared bankruptcy. And it wasn't just flights that were
affected as land border crossings between the USA, Canada and Mexico dropped to their lowest numbers ever in April as
well as a 48% decrease in migration across 35 key transit points across West and Central Africa.[2] Analysts project a record drop of global tourism by 80% on last year, compared with only 4% during the Global Recession
of 2009 and .4% due to SARS in 2002.[3] By May, every country in the world had imposed some sort of entry restrictions, ushering in a novel age of global
distancing.[4] Even as nations embark on the slow and uncertain process of reopening their economies and potentially some borders, it
is idealistic to believe that countries will no longer look predominantly inward, thereby politicizing travel, upending
immigration and impeding the free and unfettered movement of trade. With countries protective approaches leaning towards
and entrenching a bias towards national self reliance, (where regionalization of trade deals such as North American Free
Trade Agreement [NAFTA] have helped to keep the transfer of goods closer to home in the case of the USA, Mexico and
Canada) - the overall impact of greater localization will most certainly delay economic recovery and potentially lead to
geopolitical vulnerability and volatility.
Looking back to the 1990s, this golden age of integration had drawn the world closer than ever before in a unified
geopolitical embrace. Upon China's entry into the World Trade Organization in 2001, the emerging juggernaut of
autocratic capitalism effectively became the world's factory as western companies in particular swarmed to her shores in
the hunt of lower production costs and a huge and emerging domestic market to tap into. China, which had been closed to
the world for so long was rapidly opening up to foreign tourism, the business exchange of imports and exports was
becoming infinitely more fluid, as well as the free flow of capital and to a certain extent the exchange of information.
However after the stock exchange went into turmoil in 2008, in particular the financially momentous Lehman Brothers
collapse, many banks and multi-national firms pulled back from their financial foray into the Middle Kingdom. As a
result, relative to GDP, trade and foreign investment stagnated, compounded since 2016 with President Trump's trade wars
against China for its severe infringements upon US intellectual property and a form of business chauvinism and contempt
for alliances that turned many international business people off. (Multi-nationals were already starting to earn 4 times
less in profits from 2015-2020 than in the early 2000s even prior to the pandemic, especially as Chinese companies
specifically modeled their ventures on the blue chip companies that had entered China and were able to charge out their
talent at significantly reduced rates.)[5] President Trump's domestic political agenda to look after his blue collar voting base by reopening closed factories in
the USA and raising tariffs for those that were competing against these interests far outweighed building closer ties to
the economic powerhouse of the East (and countries like Mexico which had many US car making factories situated within
their borders.) By the time the virus hit Wuhan in 2019, America's tariff rate on imports had surged to its highest
levels since 1993. Both had also begun to decouple their technological industries, a feature that was also occurring
with the increasingly fractious Chinese and Indian relationship on either side of the Himalayas.[6]
As the virus spread into the global turning point that is 2020 - terminating retail commerce and a whole myriad of other
services, not to mention closing down offices and factories, the planet's supply and demand ratio declined altogether as
suppliers were unable to adequately access their customer bases. Currently at a 5% loss in global GDP it is estimated
that the trade of world goods this year could shrink by between 10-30%.[7] The damage to trade, albeit decapitating, has not affected every industry as food supply lines have predominantly
managed to keep moving, as shown by the astronomical rise of kiwi fruit and honey sales from New Zealand (on top of
steady dairy trade) to the global market.[8] Although many factories have been hindered due to an inability to source key parts and accessories from their
independent makers all over the world, companies like Apple insist that they can still make their I-phones.[9] In fact, much of China's and Germany's economies have been buoyed by the enormous uptake in the sale of medical
equipment during the first wave of the virus as the world rapidly played catch up and sought to secure whatever
protective equipment it could get its hands on. (Some countries however held tightly onto their PPE medical supplies to
ensure a stronger public health response rather than exporting it overseas for enormous profits as countries looked
inwards to protect their own during the virus' brutal first wave.)
If these global supply chains are not to be put into quarantine for good, and globalization is to survive and possibly
thrive into the future it will need to be changed dramatically to reflect a more fairer and balanced outlay of national
interests, rather than the domination of the most powerful countries which has contributed to so much inequality
globally. (For example the recent NZ - UK Free Trade Talks give a good deal for New Zealand being able to sell $100
million of its produce for significantly less in return, yet the UK values the longstanding relationship forged from the
earlier colonial days and New Zealand's ability to forge ahead with unique trade deals despite the challenges under the
Covidian era.)[10] There also has to be a strong move to prevent the expansion of this bipolar world where the competing interests of the
USA and China, in particular, make it impossible for smaller trading nations like New Zealand to choose sides and still
thrive or even survive economically. Even if Trump loses the next election it is unsure whether even a fully democratic
led government would be able to turn the tide on this growing animosity between the superpowers of the world.
Set amongst the very clear trade downsides sits the underlying anarchy of global governance institutions which are being
exposed not just through ongoing criticism of entities like the World Health Organization responses to the pandemic by
the United States, but the ineffectiveness of global entities like the United Nations altogether which has seen
significant corruption and squandering of resources provided by member countries that are beginning to question such
investments.[11] This has been seen by the ongoing hijacking of Security Council decision making due to the veto power of the permanent
members which prevents very little from happening due to the vested self-interests of countries like Russia, the USA and
China.[12] Furthermore the Eurocentric nature of these institutions in no way reflects the current geopolitical population and
power centres now dispersed throughout the planet, especially the involvement of rising economic juggernauts in Asia,
Africa, South America and the Pacific. It makes it much more difficult to secure buy-in for a rules based international
system if these 'left out nations' have little or no say at the decision making table.
China has clearly propped up the World Health Organization with the injection of $2 billion to keep forwarding its
efforts given the Trump Administration has declared it will cease funding altogether, but given that China has been
threatening Australia with punitive tariffs for requesting an investigation into the origins of the pandemic and its
fudging of fatality and case statistics, its overall secrecy and bullying don't amount it to taking up the global
leadership reigns left sagging by the United States whose seemingly insurmountable partisan divide and actions of its
current Administration have left its international reputation in tatters.
Furthermore with countries like France and the UK arguing over quarantine rules, a feature that will clearly become more
salient as countries start to open up their national bubbles to other 'select nations', (e.g. the New Zealand
trans-Tasman bubble with Australia or with the Covid-19 free Pacific Islands Nations and Hawaii), the underlying
politics of inclusion and rejection will seek to potentially erode international unity overall. For example, the
postponement and possible cancelling of the Olympics in Tokyo, (which is historically a globally unifying international
athletics meet), not to mention a whole reign of popular international sporting codes such as rugby, cricket, swimming,
basketball, hockey, netball and soccer that can no longer play international competitions so easily.[13] Add to this the undeniable added stress of taking on a foreign government's ever changing quarantining rules and
ultimately trying to stay safe throughout a potential resurgence of the pandemic which in many cases is totally changing
each event's or businesses' playing rules and the ways that the public can engage with the sport or specific industry at
large.[14] Therefore with events like the Super Rugby competition now no longer including Australia, Argentina, Japan and South
Africa and simply forced to remain domestically within New Zealand's borders - and international tests having to take on
a whole new element of financial uncertainty and physical health risk, one imagines that unless enormous money, sporting
prestige, and viewing popularity is at stake, many global events simply will not go ahead until there is a trustworthy
cure or vaccine.[15] Some sporting leagues however will find undreamed of boosts due to the pandemic, as is the case with New Zealand
Basketball that signed an unheard of lucrative TV deal with ESPN as it was the only place in the world to be playing
basketball with crowds and thus of interest to the American Network.
Thus it can be said, by looking at the above sporting examples, that around the world there is a lot more hassle to make
globalization work due to the travel and health risk stresses involved so it will only go ahead if deemed exceptionally
worthwhile.[16] These challenges have clearly expanded into deeper issues with people movement, especially with the Trump
Administration curtailing immigration by putting the Green card and work visa process on hold altogether despite many of
these essential workers having propped up the food supply with their harvesting skills, not to mention key roles in rest
homes, and other low paid, high risk work that permanent residents and citizens are not often willing to do.[17] This is also the case in New Zealand with only 5% of stranded immigrants likely to get back into New Zealand according
to Labour Quarantine Minister Megan Woods, even though many of these workers have homes, valid work visas and very
settled lives in New Zealand. There is also no welfare payments available for those immigrant workers stranded in New
Zealand, and with an inability to find work, especially if their working visas allowed them to work only at a specific
company that has now gone under, it makes their livelihood untenable and thus reliant on food packages.
These sorts of issues are simply the icing on the cake, as the movement of goods, capital and people continue to be way
more restricted than that of the internet information highways, although even journalism has growing challenges getting
access to viral hotspots around the world to cover stories. This has particularly been apparent with the inabilities of
journalists to access correct mortality statistics due to Covid-19 as discussed in an earlier chapter despite there
being greater readership and online engagement than ever before.[18] As some governments take a similar approach to China, closing shop to the outside world so journalists can't get access
to the truth of the actual situation going on in their countries, this will make wanting to travel or do business even
less enticing due to the uncertainty and overall unpredictability of their domestic situations.
Travel itself will likely be severely restricted further into the future with powerhouse airlines such as Emirates
stating that it is unlikely to recover till 2022 given 90% of the world has their borders closed to flights as of June
2020.[19] Cheap flights are also becoming a thing of the past with the need for strict social-distancing on flights significantly
raising overall ticket prices. The impact of this new travel reality may lead to the end of mass cheap air-transit
airlines like Easy Jet, Air Asia, Virgin Atlantic, Jetstar and Ryanair meaning that only the affluent can afford to
travel internationally which further limits cultural interactions of all classes around the world. As these global
movement restrictions compound further into the trade sectors it seems clear that countries will look even further
inwards to ensure their long-lasting resilience during these uncertain times. For example, India's Prime Minister
Narendra Modi stated on May 12th, 2020 that the country would enter a new era of self reliance, whilst Japan's Covid-19
stimulus package provided subsidies for firms to repatriate factories.[20] Parts of the UK have long been separating itself from the European Union, and the viral crisis has led the EU itself to
officially recommend 'strategic autonomy' where necessary - especially in the creation of a specific fund to buy stakes
in firms.[21] Such approaches are much like the USA which is encouraging the building of factories and plants back home to bring the
supply chains back within their borders and ensure long term sustainability and resilience for its domestic economy.
However repatriating globalized jobs can often be a lot harder than politician's portray as Carlton Solle found out the
hard way. G95, his company that runs out of Atlanta and makes scarfs fitted with a special filtration technology ideal
for pandemics should have been making a financial killing. However when his Chinese suppliers were locked down, he
attempted to move production to Michigan but the effort led to soaring costs, poor quality and further production
delays.[22]
This potential reversal of trade also mirrors the movements towards the flow of capital. The Economist states that
Chinese venture-capital investment has already dropped to $400 million in the first quarter of 2020, 60% below its level
2 years prior, and multinational firms are likely to cut cross-border investment by a third throughout the year.[23] The US has also just instructed its main federal pension fund to stop buying Chinese shares and according to the
Economist countries representing 59% of world GDP have tightened their rules of foreign investment.[24]
The growing instability of trading systems and border and national controls are likely to negatively impact poorer
countries most severely who are projected to expect an almost 20% drop in remittances according to the World Bank - the
largest decline on record. As a share of GDP the lack of remittances in these impoverished nations are set to fall to
their lowest levels since 1999, and they will also have less access to aid as the richer economies focus inwards to prop
themselves up financially and socially. On top of this it will also be much harder for them to catch up technologically.
With economies of scale lessened and the concentration of risk heightened due to the domestication of commodities and
trade it is likely that for wealthy countries life will ultimately become more expensive and less socially (and
geographically) mobile. Furthermore, with the massive loss of jobs and enormous number of people overleveraged
financially under the neoliberal system they have inherited there is likely to be significant negative social
mobilization with millions of the middle class likely to plunge towards poverty. This can already be seen by the lines
of Mercedes Benz's and other luxury cars lining up for hours to wait for food relief packages in America.
The erasure of globalization is also likely to have profound effects on the development of new technologies, in
particular the creation and dispersal of a much needed vaccine or cures for the virus. However, the UK is working with
EU on vaccine diplomacy which has already raised 7 billion pounds, and has suspended debt repayments for poor nations
who cannot afford them at this time which provides some positive signs of cooperative connectivity resulting from the
enormous impacts of the Coronavirus pandemic.
[1] Economist, May 14, 2020. "Has the virus killed globalization?"
[2] Washington Post, June 9, 2020, Anthony Faiola. 'The virus that shut down the world.' The annual pilgrimage to Mecca in Saudi Arabia was also limited to 10,000 people after attracting over 2.5 million in
2019.
[3] Washington Post, June 9, 2020, Anthony Faiola. 'The virus that shut down the world.' Changi Airport in Singapore, one of the world's great travel hubs saw traffic plunge in January 2020 from 5.9 million
passengers to a miniscule 25,200 in April - a 99.5% drop. The number of airlines utilizing the airport also dropped from
91 to 35.
[4] Washington Post, June 9, 2020, Anthony Faiola. 'The virus that shut down the world.'
[5] This was particularly the case for Chinese law and accountancy firms.
[6] Economist, May 14, 2020. "Has the virus killed globalization?"
[7] According to the Economist in the first ten days of May, 2020 exports from South Korea, normally renowned as a trade
powerhouse, fell by 46% year-on-year, potentially the worst decline since records began in 1967.
[8] New Zealand's exports have actually grown 1% since the beginning of the Covidian era.
[9] Economist, May 14, 2020. "Has the virus killed globalization?"
[10] e.g. New Zealand Trade Minister Parkers ability to lock in planes to bring in produce even though there were no people
able to enter the country.
[11] Take for example the enormous corruption underpinning green projects funding awarded by the UNDP in Eastern Europe and
Russia yet not completed and the money simply going missing according to whistle blower John O'Brien who has been
working for the UNDP for over 20 years.
[12] The veto power enabling Russia to stop the UN from intervening militarily in the Syrian crisis which has led to the
mass slaughter of its residents, Russia siding with the oppressive Assad regime.
[13] Even the America's Cup sailing regatta which requires participants to enter closed borders weeks or even months in
advance of the actual competitions to prepare for the event, (despite the ongoing uncertainty whether the event will
actually takes place due to a possible resurgence of the pathogen).
[14] This has been most recently shown by the Auckland Warriors rugby league team having to enter Australia for a month
prior to the restarting of the trans-Tasman competition, (and remaining in their own training camp bubble during the 2
week mandatory quarantine period), but unable to return to New Zealand to see their families throughout the course of
the competition (who are restricted from visiting due to quarantines on both sides of the Tasman.) Several players left
the team because of the inability to have family members come over to Australia.
[15] The America's Cup sailing teams are potentially contributing $200 million to the New Zealand economy while having to
house significantly sized teams for months in Auckland prior to the event, and were thus allowed to enter so long as
they were willing to pay for their quarantine process.
[16] For example, the Avatar Film Production team was allowed to re-enter New Zealand to finish shooting their sequels as it
had already involved significant numbers of the New Zealand film-making work force.
[17] International students in the USA are also being potentially deported from the country if their host university only
offers online courses due to a xenophobic Trump Administration education / immigration policy.
[18] Most smaller and local media outlets such as Bauer's magazines which saw the demise of iconic identity forging
magazines such as the Listener have floundered altogether due to the global domination over advertising revenue by the
bigger media and tech outfits such as Rupert Murdoch's Newscorp (which covers up to 75% of the globe), and other
multinational entities such as AP, Bloomberg, Guardian, Disney, Warner Bros, BBC, Google and Facebook to name but a few.
New Zealand's 'Stuff' media outlet has become more localized severing ties from Fairfax in Australia altogether for $1
rather than be closed down at the loss of 900 staff including 400 journalists. This tactic localizes the profits and
work opportunities as well as enabling the company to build greater overall journalism trust by covering local stories
from their own perspective, not that of the parent company from another country whose editorial ideology might be in
conflict.
[19] Economist, May 14, 2020. "Has the virus killed globalization?" Airbus has also cut production by a third as the majority of planes remain grounded.
[20] Economist, May 14, 2020. "Has the virus killed globalization?"
[21] Economist, May 14, 2020. "Has the virus killed globalization?"
[22] Washington Post, June 9, 2020, Anthony Faiola. 'The virus that shut down the world.' The cost of producing the company logo shot up from 20 cents in China to $3.40 in the United States and with his profit
margins taking a substantial hit, he returned to sourcing his product from China once its production facilities reopened
in May.
[23] Economist, May 14, 2020. "Has the virus killed globalization?"
[24] Economist, May 14, 2020. "Has the virus killed globalization?" As governments attempt to pay off enormous stimulus debts via taxing firms and investors, this may even lead to further
restrictions on international investment to keep the flow of capital in-house.