Looked at in this light, one of the unintended consequences of tying the known universe together under the banner of globalization may be that we have synchronized the world economy not only in good times, but also in bad. A collapse of the US housing market can now bring down British and Dutch banks within weeks, as well as gutting US banks. At the same time that the West needs Chinese capital, the market for Chinese goods has collapsed. A single recession brings not only GM into monstrous losses, but also Toyota.
For whatever incremental increases in efficiency and productivity that globalization may have brought during times of growth (or was that just a spending spree?), it has also dropped every economy on Earth –which is to say only one economy, the integrated global economy—straight off a cliff.
Globalization may necessarily lead, eventually, to a well-coordinated failure: A Global Collapse.
Essentially, the world economies have all linked hands and spun around in a huge game of Ring around the Rosie. Now, after the dancing comes “ashes, ashes, we all fall down.” Getting back up with our hands still linked will be a bit of trick. Suddenly, the game is more like Twister.
The cheap goods and services of globalization don’t seem quite as cheap to me.
And how will we conquer this new phenomenon of coordinated collapse? Why, with a better coordinated stimulus! At least that’s what many international bureaucrats, investors and cheerleaders are suggesting. The solution to excess centralization is always more centralization, right?