The hard-working staff here at Spoiler Alerts suggested Tuesday that the distribution of interests and power were not as favorable as they were in 2008 for the system to work in responding to crisis. Countries do not seem to be acting as though they would be better off from a coordinated response. The United States is not as powerful in the health domain in 2020 as it was in finance in 2008. The United States’ botched coronavirus response has, astonishingly, paved the way for China to burnish its credentials as the health provider of last resort even though the virus originated there.
The third part of “The System Worked” thesis was that the state of ideas also determined the caliber of a coordinated global response to a crisis. In 2008, the commitment to globalization was embraced by the three most important actors in the system: the United States, the European Union and China. In 2020, that commitment to a global response is very much under assault in all three countries.
China is engaged in a tit-for-tat with the United States over the ejection of reporters and is also erecting barriers for foreigners to enter the country. The European Union has abandoned in all but name the Schengen arrangement that permits borderless travel. And President Trump cannot stop bragging about what a great job he did banning foreign entry from China in late January and foreign entry from Europe over the past week.
Any close observer of the Trump administration knows that this assault against globalization began well before the coronavirus. Compared with 2008, populist nationalism is in far greater ascendance in the marketplace of ideas. Last week, Ross Douthat of the New York Times praised Trump’s decision to ban entry from China. “Trump made the right call, and in so doing he briefly vindicated a case that his supporters have always made for him: He acted like the guy who would make common-sensical choices in the national interest, even when they went against the nostrums of globalization and the supposed wisdom of the do-gooders.”
Indeed, conservative commentators have spent the past month urging Trump to fully embrace his nationalist impulses. Last month, Rich Lowry wrote in Politico: “The moment doesn’t call for market-reassuring Trump, but threats-aren’t-getting-past-our-borders Trump, not Dow 30,000 Trump, but drawbridge-and-moat Trump.” This month, Lowry added: “It is borders that are the first line of defense, both within countries and between them. Relatedly, it is globalization and increased interconnectedness that have been a key vector for the spread of the virus.”
But it’s not just conservatives. This week, Henry Farrell and Abraham Newman suggested in Foreign Affairs that the coronavirus was an “enormous stress test” for globalization:
As critical supply chains break down, and nations hoard medical supplies and rush to limit travel, the crisis is forcing a major reevaluation of the interconnected global economy. Not only has globalization allowed for the rapid spread of contagious disease but it has fostered deep interdependence between firms and nations that makes them more vulnerable to unexpected shocks. Now, firms and nations alike are discovering just how vulnerable they are.
It would seem that advocates for economic openness and global governance would be hard-pressed to respond. After all, this virus spreads because people cross borders. Even critics of travel bans acknowledge that “this kind of security theater can be dangerous — but the absence of security theater can be dangerous too. Apparent inaction (or insufficient action) erodes trust in public health authorities, which undermines response efforts.” If global supply chains are being disrupted, isn’t this even more evidence for the nationalist idea?
The idea of nationalism is far more potent in 2020 than in 2008, which is another body blow to a more coordinated response. But rather than just nodding along with the notion that the nationalists have a point, maybe it’s worth observing that even in this instance — an easy test for populist nationalism — their preferred solutions don’t work.
Consider the travel bans. One can make the case for them, but the Trump administration’s implementation of a travel ban on Europe has been disastrous. By enforcing the new procedures, the administration guaranteed long lines at 13 major airports, leading to stories of chaotic wait times in which people could not practice social distancing. As my Post colleagues noted, “the measures intended to prevent new infections in the United States caused conditions that facilitate the spread of the highly contagious virus, with throngs of people standing shoulder to shoulder — in some cases for several hours.” If the primary concern was to halt the spread of infection, simply letting all the Customs and Border Protection officers go home would have been the better move. Better coordination with European partners might have made implementation easier. Either option was preferable to a drawbridge-and-moat approach.
Similarly, on global supply chains, part of the reason the United States is hard up for some medical supplies is the ongoing trade war with China. Chad P. Bown of the Peterson Institute for International Economics notes, “In the last two years, Trump’s policy has forced China to divert the sales of [medical] products — including protective gear for doctors and nurses and high-tech equipment to monitor patients — from the United States to other markets, and now the U.S. medical establishment faces looming trouble importing these necessities from other countries, which may be hoarding them to meet their own health crises.” Little wonder the administration quietly reduced tariffs on these products over the past week. Protectionism has not made the United States more resilient, it has made the country more vulnerable.
The correct lesson to draw from the coronavirus is not that globalization is to blame — it’s not like the global economy was open in 1918 during the influenza pandemic. Rather, as Farrell and Newman note, what is needed is globalization, plus more slack in the system:
In normal times, firms often see slack as a measure of idle, or even squandered, productive capacity. But too little slack makes the broader system brittle in times of crisis, eliminating critical fail-safes …In an earlier age, manufacturers might have built up stockpiles of supplies to protect themselves in a moment like this. But in the age of globalization, many businesses subscribe to Apple CEO Tim Cook’s famous dictum that inventory is “fundamentally evil.” Instead of paying to warehouse the parts that they need to manufacture a given product, these companies rely on “just-in-time” supply chains that function as the name suggests. But in the midst of a global pandemic, just-in-time can easily become too late. Partly as a result of supply chain problems, global production of laptops fell by as much as 50 percent in February, and production of smartphones could fall by 12 percent this coming quarter. Both products are built with components produced by specialized Asian manufacturers.
The need for more strategic reserves and deeper inventories should be a policy response that should unite nationalists and cosmopolitans. But the idea that the coronavirus requires a doubling down on nationalism is the wrong lesson to take.