What’s Behind Inflation?

Globalization was deflationary, Deglobalization is inflationary. The entire point of globalization is to 1) lower costs as a means of maximizing profits and 2) find markets for surplus domestic production. Both serve to export deflation as offshoring production keeps prices stable (and profits high) and dumping surplus production in high-cost developed-nations suppresses their domestic producers’ pricing power.
Deglobalization is inflationary because reshoring production increases costs. Securing production from the threats of geopolitical blackmail, civil/economic disorder in the producing nations or broken supply chains requires moving essential supply chains back to the security of the domestic economy.
This move costs money, and production costs are higher in developed economies for all the reasons that drove corporations to move production overseas: labor costs, healthcare, environmental compliance, social benefits and taxes are higher.
Now that resources have been depleted in many producer countries, the costs of producing essential materials is rising. China, a major exporter of rare earth minerals essential to the renewable energy sector, is now exploiting neighbor Myanmar’s resources: Myanmar’s poisoned mountains.
As developing-world nations prospered from manufacturing exports, their workforces have demanded higher pay and improved financial security. Poisoning the water, soil and air is highly profitable but the public pays the price, and eventually the public demands some environmental limits on the toxic dumping of globalization.
The warm and fuzzy narrative of how wonderful globalization was for everyone was always bogus. As I explained back in 2009, importing deflation to the developed world and maximizing profits by turning the developing world into a toxic waste dump was neoliberal capitalism’s “fix” for stagnation:https://oftwominds.cloudhostedresources.com/?task=get&ur…
More cynically, China offered a low-cost was to evade the West’s
stringent environmental regulations.
From this point of view, China is not the world-beating leader of the global economy:
it is the bag-holder: the last big market ruthlessly exploited and the one which
will now be left behind as global capital exists, leaving China to deal with the social
rubble and dire ecological consequences of rapid, unconstrained industrialization.


The warm and fuzzy narrative of how wonderful globalization was for everyone was always bogus.

Counter argument.

According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty; China’s poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015…

Report: India Lifted 271 Million People Out Of Poverty In A Decade

Root causes of violent conflict in developing countries
Poverty and political, social, and economic inequalities between groups predispose to conflict; policies to tackle them will reduce this risk

Globalization IS slightly deflationary for those that benefited the most from colonization - but we are a much more stable world when everyone has enough wealth that they feel like they have something to lose - that jihad is not worth giving up your Hongguan Mini or your Tata Nexon.


According to the World Bank, more than 850 million Chinese people have been lifted out of extreme poverty

Unfortunately for those Chinese folks they heavily invested in real estate which has gone into the dumper.

China was trying to pass us based on being so much bigger than us the RMB peg to the USD would de facto be reversed.

It was us or them all along.

I agree we are leaving them high and dry. Or as the communists have done to Hong Kong they will do to us.

I say push them overboard and brag about it.

Meanwhile companies that are not building factories here “quick enough” will see a possibly decline in revenues. China is running on idle.

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