Jeremi sits down with Abraham Newman and Henry Farrell to talk about the effects of COVID-19 on our global world and how it will potentially change our democracy.
Zachary sets the scene with his poem, “Linked”.
- Jeremi SuriProfessor of History at the University of Texas at Austin
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Dr. Jeremi Suri: Welcome to our new episode of This is Democracy. Today’s episode is going to focus on globalization, a word that’s ubiquitous in our political and newspaper culture today, but a word that’s rarely defined. We are fortunate to have with us two scholars who have done some of the most important work in understanding the nature of globalization in our current world, how it affects democracy, the main theme of our podcast, of course, and the challenges and transformations in globalization in our current world. They are also the authors of a very important recent piece published by Foreign Affairs called, “Will Coronavirus End Globalization as We Know It?” We will link that piece along with their bios to the podcast description. The first guest is Abraham Newman. He’s a Professor of Government in the Edmund A. Walsh School of Foreign Service at Georgetown University. He’s also director of the Mortara Center for International Studies, which I’ve had the pleasure of visiting and lecturing at a few times, it’s one of the most beautiful buildings in Washington DC, I think to actually give a lecture.
Abraham Newman: Thank you.
Dr. Jeremi Suri: Abe, as I’ve already said, his research interests focus on politics and globalization. He’s written a number of important books. Most recently, co-authored a book on “Privacy and Power: The Transatlantic Struggle Over Freedom and Security” and “Voluntary Disruptions: International Soft Law, Finance, and Power”. Welcome to the podcast, Abe.
Abraham Newman: Thanks. Thanks again for having me.
Dr. Jeremi Suri: Our pleasure. We will also be joined by Henry Farrell. He’s a professor of Political Science and International Affairs at George Washington University and Editor-In-Chief of the Monkey Cage Blog, which is one of my favorite blogs with Washington Post. Henry also works on a variety of topics related to democracy, globalization, political economy, and the internet. He’s actually written a number of books and articles on the topics, including a number with Abe Newman. So we have the dream team here with us. Before we turn to the LeBron James and Steph Curry of globalization, Zachary, you have your Michael Jordan poem, right?
Dr. Jeremi Suri: What is your poem titled today?
Dr. Jeremi Suri: Let’s hear it.
Zachary: Linked. When the wall fell and the whole world stared and the little concrete pieces found their way around the world, did anyone recognize what was sifting out of the rubble? I know the dust coalesced that new system, a net through which millions flowed with thousand different points on a map of every port, every city. Out of the dust came a new system, a net, not flat, stepped on in points of weakness by US sanctions, Chinese 5G, the silent wars on the internet, invisible above. Out of the dust, we were all linked. The Japanese car assembled in Ohio with parts from Germany and computers from South Korea. Out of the dust, linked. Inexorably linked. Out of the dust, we all needed something and were needed, no more the freestanding self-dependence, no more do the US need to make erasers, no more do China have to grow soybeans. The compromise seems too good to a suspicious world and we are busy hiring private detectives to stalk our global competitors while farmers’ crops mold in damped fields or technology companies send our data across the oceans in seconds. We are teetering on the edge of mutually assured destruction, fingers hovering, shaking, just above the economic triggers, and instead of nuclear codes, the president holds the US dollar in his hands.
Dr. Jeremi Suri: I love the imagery there, Zachary. What is your poem about?
Zachary: My poem is really about this new world order of globalization that arose after the Cold War. In the beginning, we thought it was going to be this very liberating system. But in many ways, we’ve found some of the same problems of the older system are lingering.
Dr. Jeremi Suri: Well, I think that’s a good insight and a perfect place to turn to Abe. How Abe do you describe globalization to those who use the word but haven’t thought as deeply about it as you have?
Abraham Newman: Well, first, I just want to say that that poem, it really captures many of the core arguments that Henry and I make in our work. The belief in business and efficiency and profit and how that would trump security interests and conflict and self-interest, but also this idea of the map. So maybe let me start there, when I think about globalization, which is to say that in our version, globalization is not a simple global market. I think that’s often what people think of, “Oh, there’s just one market.” But actually we know that there’s virtually no single market for anything in the world. But instead, we have these national markets that are linked through networks of exchange for goods, services, and information. That’s really what globalization is, is the movement away from depending solely on national products to the interconnectedness of countries through economic exchange of goods, services, and information, which then create globalization.
Dr. Jeremi Suri: So an example of that would be for instance, a vehicle or an iPhone, both of which would have parts made from multiple continents actually integrated together, correct?
Abraham Newman: That’s right. So you have these intricate supply chains which have components from multiple jurisdictions that are woven together.
Dr. Jeremi Suri: Right. I think Henry has joined us now. Henry, are you there? Well, welcome aboard. We’ve already introduced you at the top of the hour. You didn’t get to hear Zachary’s poem, but you’ll get to hear it in the playing of the recording. We were just talking about what globalization is, how we define it and Ab talked about the importance of networks. What would you add to that, Henry?
Henry Farrell: So that is I think the key thing, the key insight that I think we want to push home in our work is that when we think about globalization, there’s a lot of wofty rhetoric that people use about markets and awesomeness of consumers and businesses being able to connect together. But what is really important is the plumbing that allows all of this to happen, which involves networks, which involves supply chains evermore, as we see right at the moment there’s Coronavirus, and that these are now becoming politicized in ways that are bringing them to public attention and making us realize that these are very, very complex and they simply cannot be taken for granted in the ways that we have taken them for granted in the past.
Dr. Jeremi Suri: What was the evidence, Ab, for this before coronavirus, before we get to the present. What were you and Henry seeing that led you to be a little more cautious about the implications of globalization?
Henry Farrell: I think when we started, we were very focused on information networks. How data was being shared globally and was being used for new data services companies from Google to Facebook. I think that the clearer canary in the coal mine for us was the Snowden revelations. There had been this big talk of the Internet was going to be this transformative power for freedom and liberation. What you saw, I think very clearly in those revelations, was the ways in which powerful actors, particularly the NSA in the United States, was able to turn the network from a distributed architecture that everybody could evade each other and be free from government to one in which governments gained, particularly the US government, this panopticon, this ability to watch and monitor their adversaries and use distributed communication as a tool for surveillance.
Dr. Jeremi Suri: It’s extraordinary how long ago that seems. It was not that long ago, but the Snowden revelations with all the Sturm und Drang of the last few years, it seems so long ago, don’t they?
Abraham Newman: I know. There’s so many scandals happening, it’s hard to even remember back that far.
Henry Farrell: Five days ago seems a long, long time ago.
Dr. Jeremi Suri: That’s exactly right.
Zachary: What has really been the role of big superpowers in this new global order?
Henry Farrell: Well, what we see I think is that a lot depends on when they became superpower. If we look at the Snowden revelations which are all about surveillance, if we look at the other work that Abe and I have done which focuses on financial networks, which are also crucial and have allowed for various exercises of power. What we see is that the United States has been very privileged and very capable of turning these networks into tools of strategic dominance. The reason why it has been able to do that is because it was around and was dominant at the time that these networks were being formed. Whereas China, which was not around when these networks were being formed, has had to play a game of global catch-up. This helps explain, for example, a lot of the fighting over Huawei. Because if we look at Huawei, which of course this Chinese telecommunications company, which has become very controversial, it wants to build out the infrastructure for 5G, for the world.
The worry that the United States has is that this will then give a backdoor to the Chinese government, which it can then use perhaps not only to surveil conversations, but perhaps even to take over and make the communication structure break down in a situation of some kind of a standoff between China and other powers. The United States is pushing back with everything it can, including its own control of semiconductor markets in order to prevent this from happening. What you can see this as being is a situation in which the United States is still the dominant superpower, China is challenging it, but is disadvantaged in its access to and its control over these global networks, and is effectively trying perhaps through Huawei to gain some control that it has not had before.
Dr. Jeremi Suri: It sounds, Henry, a lot like a combination of the first mover advantage and maybe very traditional geopolitics in a different space.
Henry Farrell: That’s right. If you look at the way that we think about global e-commerce, if you think about network effects and first-mover advantages, obviously crucially important there, you want to be not necessarily the first actor to bring an innovation to market, but you do want to be the first actor to bring an innovation to scale to get the network benefits and externalities. The United States has been able to do that. China is doing its best to catch up.
Abraham Newman: If I could just add, I think something that’s important to remember is many of these networks, these scale networks, they were created largely out of private actor interests. The banks, internet companies, they were creating these networks that had a particular map to them, a particular topography, which was that there were these central nodes in those networks. Then in the wake of 9-11, the US government woke up and said, “Hey, this structure of globalization, this particular map can be extraordinarily useful for us.” They started to exert that power, first against terrorist organizations, but now we see it increasingly against other great powers like China.
Dr. Jeremi Suri: Right, and of course, the treasury department became a central node for this activity.
Abraham Newman: Exactly.
Dr. Jeremi Suri: With these advantages that you have mapped out, Abe and Henry, you would think the United States would be well-positioned to use globalization to its advantage in the coronavirus crisis, but you have written both of you very eloquently about how we haven’t. Why is that?
Henry Farrell: Well, part of the story at least, involves state capacity. We argue that in order to be able to use these kinds of forms of network power, you need control over a central node in the network. You need the kinds of norms, also the kinds of state institutions as well that allow you to exercise that control effectively. So the Trump administration, obviously you can say many things about it, but administrative competence is not something that has been particularly notable in the Trump administration and capacity to understand the situation that it’s in, equally just the same. So we have seen I think that the United States could probably have done a lot more a lot earlier, in order to try and press for its advantage. Now it is belatedly trying to wake up to this.
So we see for example, the use of the Defense Production Act, which is not simply, or perhaps even not primarily being used to gash domestic producers to change what they are producing, but instead it’s being used against companies like 3M as best as we can tell from media reports, which are a little bit conflicting, but it appears that it is been used to get 3M to force its various foreign subsidiaries to stop supplying other foreign governments and to supply the United States instead with the masks and other medical equipment that the United States wants. So in effect, we can see this was another kind of virtual weaponized interdependence. That there are a lot of multinationals which still have their headquarters here in the United States. This means that they are heavily legally exposed to the US jurisdiction and the Trump administration is using every weapon it can to try and get them to devote their supply chains to the benefit of the US at the expense of other countries, including US allies.
Dr. Jeremi Suri: It sounds like another version of what the Trump administration has done with sanctions on Iran, using America’s banking power to force banks overseas to not loan money or engage in commerce with Iran.
Abraham Newman: Exactly. I think one of the key points of the arguments that Henry and I have made is that it’s not simply that they forced the US companies to change their activities, but it also, it’s forcing global networks to bend to US power. So when it comes to sanctions on Iran, it’s not just that US banks have to do things, but if you’re Deutsche Bank, and you want to clear through the US dollar clearing system, which you almost certainly have to do to be a global bank, then you have to comply with US sanctions.
Henry Farrell: If I could just add one thing that is interestingly different is that, you don’t have much choice if you’re a bank, than to use the US based banking system. If you are a government abroad and you’re thinking about US multinationals and relying upon US multinational supply chains, you probably have various other alternatives that you could possibly turn to. So this could have some pretty significant long-term costs for the ability of the United States to push forward this US-lead form of globalization, which has worked so well for it in the past.
Dr. Jeremi Suri: That’s one of the points that stood out to me in your piece in Foreign Affairs. Abe, it did seem that you and Henry were arguing that the supply chains the United States to rely on, especially for things like iPhones, but also for masks and things of that sort have left us vulnerable because we can’t produce these things ourselves. Is that accurate?
Abraham Newman: Definitely. I think the thing that we’re very concerned with in the Foreign Affairs piece is this notion, the way we call as reverse protectionism, that the idea that countries traditionally when they engaged in protectionism, they were minimizing imports and they were trying to maximize exports. But what we’re seeing right now in the corona crisis is countries are doing the opposite. They’re restricting exports of key equipment and goods. But the problem is, is that many of these supply chains, they do not own the complete supply chain. So if you’re looking at the vaccine markets, there’s only a few companies that can produce these vaccines, they’re not all distributed globally. So if we start to create limits on who can buy 3M masks, and then the Germans start to say, “Well, we’re going to limit who can buy potential vaccines,” you start to get what we call in the piece, sicken my neighbor, type of reverse protectionism, where everybody blocks part of the supply chain and nobody wins.
Zachary: How do we protect ourselves from the vulnerabilities of our supply chains while also avoiding completely blocking ourselves off from this new global trade networks that we’ve come to rely on?
Henry Farrell: It’s a really tough set of policy questions and the one which Abe and I have frankly not had nearly as much time to think about as we would like. In a certain sense, the last several weeks, we’ve been dealing with everything else. Everybody else has been dealing with coronavirus, at least those like us who are lucky enough to be able to hold up and do our work at home, while also trying to deal with this extraordinary, complex, ever ramifying set of events. What I think we would say is that a purely national solution is probably a bad idea. That is that the kinds of things that Peter Navarro, the Trade Advisor to the Trump administration, is talking about of bringing our supply chains home. That’s probably not going to work nearly as effectively as we might think that it would.
Henry Farrell: For example, there are various domestic problems in supply chains that we see as well. Geoffrey Gertz at Brookings just tweeted a couple of hours ago about how it is that the shutdown of the Smithfield meat processing complex, which is going to have huge consequences for our ability to buy meat in the United States. If you want pork sausages, go out and get them now. They may not be there a week or two from now. This suggests that there is a more general problem with redundancy in supply chains. Part of the problem is that the more that we have had pushes for increased efficiency in supply chains, the more that we have had pushes against inventory, against trying to have multiple different suppliers, the more that we find ourselves in this kind of situation where we are extremely vulnerable.
One possible way in which we might think about this going forward might be to think not only about international solutions, but also about domestic solutions, which might, for example, involve the use of anti-trust law. This is something that Barry Lin at the Open Markets Institute has been pushing, is the idea that concentration in markets is not only a problem in terms of consumer welfare from the standard perspective, but it also can create these kinds of bottlenecks and choke points, which suddenly can turn out to be devastating under unexpected situations. Maybe we need to push back against this tendency towards having major businesses choke points, and want you to think about using anti-trust, not simply as a means of making prices cheaper for consumers, but also ensuring that there’s some greater degree of redundancy in the system.
Dr. Jeremi Suri: That lends itself to the next question I was going to ask. Is there a tendency in globalization that you’ve seen toward monopoly, or at least oligopoly?
Abraham Newman: Well, I think from Henry and my- from our perspective, what we’re very concerned with is an over-emphasis on efficiency as opposed to vulnerability. We don’t want to be panicked and say, “Hey, throw globalization away and we need to just go back to national markets.” Clearly, there are a lot of benefits from having global markets and the welfare enhancing effects of trade. But there is a point where, let’s call it a neo-liberal delusion, has made people just discount the potential security and vulnerability consequences of market activity. That, I think- it’s unclear if globalization simply leads to monopoly effects, but it definitely has led to the tendency to emphasize efficiency concerns over security and vulnerability issues. So that’s where I think Henry’s point about anti-trust, it goes hand-in-hand with other initiatives that might see, for example, foreign direct investment through a lens of national security issues.
You had last week the DG Commissioner, Vestager, who’s in charge of anti-trust, say, “European countries need to think about state aid, when Chinese companies come to swoop in and buy companies that have been hit by the pandemic.” That’s something that you wouldn’t have heard even two or three years ago from the neo-liberal bastion of the European Commission. But I think we’re seeing a transformation in which security issues are really front-and-center in economic issues and globalization.
Dr. Jeremi Suri: I think that brings us to really what was the final question that we wanted to ask. We always like to close the podcast with looking forward. If, as you have both shown, and as many other scholars have shown too, globalization has had many salutary effects in increasing trade and wealth. But also at the same time, the historian would have to say it’s also contributed to concentrations and inequalities. What are the ways we can pursue a good globalization? What would that look like? How should citizens and scholars begin to think about that?
Henry Farrell: It’s really hard. There are a lot of people who are thinking about this. I think about historians such as Quinn Slobodian, also Abe’s history colleague in Georgetown Jamie Martin has a very, very interesting new piece which just came out in The New York Times this afternoon. I think that’s what we need to think about, we need to think about a globalization that is not centered upon the neo-liberal attitudes that markets can solve everything, is not simply focused on flows of trade and pure market exchange, but thinks about the sets of problems that are thrown up by interdependence between different countries. You can think about pandemics as being a very obvious example of this. We would not see the same kinds of problems with pandemics if there was not the deep interconnections between countries, people traveling back into forth, which allowed these to travel along airlines, along land routes, infecting the world.
This goes together with wonderful things, obviously. But we don’t have even the beginnings of the institutional infrastructure which could deal with that. I think if we’re to look forward, we want to think about what are the major problems that emerge in a interdependent world? This is an old set of ideas which go back, for example, to John Dewey. He writes about this in his book, “The Public and its Problems” back in the 1920s. What are the problems, and what are the best and most appropriate ways of solving them? Not just thinking about pandemics, thinking about things like food security, thinking about things like, of course, climate change, and also perhaps finally, thinking about systematic action to eliminate some of the deliberately created loopholes in the global system, which allow, for example, rich individuals and corporations to stash their money away, making it more difficult for governments to raise revenues that they need to do things for their citizens, and also perhaps providing opportunities for those individuals and those corporations to exercise influence over politics in ways that don’t necessarily accord with the common good.
Abraham Newman: To give a darker note, which I hope we can avert. I’m very concerned right now that we’re leading to a US policy that runs a nationalist political agenda over global economic networks. I think that that is really, we stand on the precipice of a set of decisions that could drive globalization into the ground. You had a few weeks ago, there was a story in the German newspaper, Die Welt, where the German government was worried that the United States was going to buy a German vaccine producer and claim exclusive rights over that vaccine. Now it’s disputed about, did it happen or not, but the German foreign minister very much believed that this was happening. The 3M case is just another example of this, where the US is using these global economic networks that it has power over to not deliver for common goods and collective problem-solving as it did, let’s say, in the post 9/11 era, but instead, for very self-interested and narrow gains. I think the more that that happens, you could really see both for businesses but also for governments, the win-win mind frame, the mindset that really underpins globalization could unravel, and that’s my biggest concern right now is, how do we save it from collapse?
Dr. Jeremi Suri: Save the system from being undermined by its strongest actor in many ways.
Henry Farrell: Yes.
Dr. Jeremi Suri: As we close, Zachary, does this sophisticated but deeply compelling account of the importance of globalization, but also the importance of managing globalization and of cooperative measures to serve common interest, is that something that resonates with you and other young people as you think about the future of policy making in these issues?
Zachary: I think that what Abe and Henry said really does resonate with young people, and I think it’s primarily because our experience teaches us the power of globalization, the power of the iPhone in our hand that comes from so many different countries. But at the same time, we also see in front of us the many dangerous effects that globalization can have when used in the wrong way. I think that young people are far more aware of these issues than many other generations.
Dr. Jeremi Suri: Well, I hope you’re right, and I think you are. I hope so. But Abe has given us a strong warning and Henry has given us a very clear picture of what the negative alternatives are, so we certainly have a lot to learn. Abe and Henry, thank you for joining us. I hope our listeners will read more of your work and engage in what will be a more rigorous dialogue about globalization. If that comes out of the coronavirus crisis, that will be a silver lining in many respects. Thank you for joining us.
Abraham Newman: Thanks again for having us.
Henry Farrell: Thank you so much.
Dr. Jeremi Suri: Our pleasure, and Zachary, thank you for your poem as always, and thank you to our listeners for joining us for this episode of This is Democracy.
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MALE 3: The music in this episode was written and recorded by Harrison Lemke and you can find his music at harrisonlemke.com.
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