Technology and trade
household purchasing power of $1500 from 2000 to 2007, 11 are disproportionately enjoyed by consumerist middle-class households, which can afford to buy the manufactured goods flowing from China, as compared with the lowest income quintile of renters in America that spend an average of 62% of their incomes on rent. 12 Aggravating social unrest and an aversion to free trade among low-income households, job losses and pay cuts are far more salient than the deflationary pressure on consumer goods, due to the loss-averse nature of people and the fact that to notice this deflationary pressure requires knowledge of what the goods would have cost without trade. As a result, globalization has become an increasingly politicized issue, manifest on occasions where ‘ institutional opportunity structures ’ 13 such as the Brexit referendum have facilitated ‘ unconstrained public backlash ’, and provided a platform for political parties to exploit discontent and drive change aligned with their political agendas. 14 Thus, mainstream politicians will have to listen to the most disadvantaged of their electorate or risk losing power to the rise of populism and more radical nationalist parties that promise western voters the collapse of the liberal international system in favour of a greater domestic focus. Further intensifying an anti-globalization disposition, the pandemic has fostered a belief that the w est’s reliance on global supply chains increases our vulnerability to economic shocks. The breaking of a chain connotes the way in which a bottleneck in one part of a free trade exchange will destroy the whole system. This was epitomized by the global microchip shortage in 2021, caused by a simultaneous surge in demand for consumer electronics and contraction of supply as Covid lockdowns hit factories, and intensified by the US Department of Commerce’s restriction on China's largest chip maker SMIC , 15 which hit carmakers with a 10% decrease in production, and 80% lower cashflow, 16 On the other hand, there is evidence that strong international trade made sustaining national lockdowns possible because the various nature of the pandemic’s effect on the world and th e diversity of import options meant trading partners could shift their suppliers to the countries least affected by the pandemic to ease domestic shortages. 17 However, the 11 LSE report, 10/4/23: https://blogs.lse.ac.uk/businessreview/2019/08/20/trade-with-china-benefited-us- consumers/. 12 In 2021. United States Census Bureau, 26/4/23: https://www.census.gov/library/stories/2023/03/low-income- renters-spent-larger-share-of-income-on-rent.html. 13 Professor Sarah Hobolt – LSE lecture 5/9/23: Anti-globalism and the Future of the Liberal World Order. Available at: Anti-globalism and the Future of the Liberal World Order - London School of Economics and Political Science (lse.ac.uk). 14 An LSE report demonstrated a strong positive correlation between the regional prevalence of vote leave and the extent of negative impacts from the ‘Chinese import shock.’ LSE report, 5/5/23: https://blogs.lse.ac.uk/brexit/2016/11/23/globalization-and-brexit-areas-that-voted-to-leave-were-most-affected-
by-the-chinese-import-shock/. 15 imposed in September 2020 16 Wikipedia, 15/5/23:
https://en.wikipedia.org/wiki/2020%E2%80%93present_global_chip_shortage#:~:text=COVID%2D19%20pandem ic,Main%20article%3A%20COVID&text=An%20increase%20in%20remote%20work,to%20the%20depletion%20o f%20inventories. 17 China, the country most deem to pose the weakest link in our global supply chains, helped to ease domestic shortages of PPE in the EU and USA by producing 116 million masks a day at the peak of the pandemic, 12 times its supply prior to the outbreak. Peterson Institute for International Economics, 8/5/23:
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