What History Tells Us About Deglobalization

In looking at a Post Pandemic Society, I took a Journey to the 1920s and 1930s to understand what history might tell us about our emerging future. I have been amazed at the eerie similarities between our present day and that period a century ago (see visual below). If anyone is interested in exploring the cycles of history, I highly recommend the book The Fourth Turning. In the meantime, this recent Article explores a similar comparison to that time in history with a focus on deglobalization. Per the article:

“The post-pandemic world economy seems likely to be a far less globalized economy, with political leaders and the public rejecting openness in a manner unlike anything seen since the tariff wars and competitive devaluations of the 1930s.”

Author Kenneth Rogoff references Princeton economic historian Harold James and his prescient 2001 book The End of Globalization. In it, Mr. James showed how an earlier era of global economic and financial integration collapsed under the pressures of unexpected events during the Great Depression of the 1930s, culminating in World War II. As we evaluate where COVID-19 serves as an accelerant or an obstacle, we can see the pandemic accelerating another withdrawal from globalization.



The pre-pandemic tariff wars started the process, mirroring the nationalistic mood of the early 1920s. The 1921 emergency tariff in the visual below is just one area of similarity between the periods. The author – a Professor of Economics at Harvard University – believes the pandemic will likely have an even larger negative long-term impact on trade; with the very real need to regard public-health capacity as a national-security imperative being one driver. This negative long-term impact is not confined to developing economies. Even the US stands to suffer a significant decline in real GDP because of deglobalization, according to Mr. Rogoff.

Events of the early 1900s

While globalization drove economic inequality in advanced economies, it lifted 86% of the world’s population out of desperate poverty, and deglobalization risks reversing those gains. Is the answer to the inequality challenge tearing down the entire system? Does building resilience mean starting over again? Our author acknowledges that the current model of globalization needs adjusting, but the path he envisions involves strengthening the social safety net in advanced economies. From an economic perspective, globalization has been a major driver of today’s low inflation and interest rates. As Mr. Rogoff points out, shifting the process into reverse could eventually push prices and rates in the other direction, especially given what appears to be a lasting adverse supply shock from COVID-19. He concludes his article with this final thought:

“Even if the US turns a blind eye to deglobalization’s effects on the rest of the world, it should remember that the current abundant demand for dollar assets depends heavily on the vast trade and financial system that some American politicians aim to shrink. If deglobalization goes too far, no country will be spared.”

I keep coming back to the visuals above. The similarities are eerie; what lessons have we learned from history? Explore more about COVID-19 via these earlier posts.

FEATUREDA Post Pandemic Society

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