Global trade averts nuclear war

The unraveling of the consensus behind globalization is hard to date, but “China shock” became a significant force during President Barack Obama’s second term. Olson described the growing skepticism on Main Street that globalization and the rising of Chinese manufacturing were benefitting multinational corporations, Wall Street, and large financial institutions while hollowing out U.S. manufacturing and not boosting the average worker. Moreover, the realization of the weakness of the system of global trade governance – the World Trade Organization – also played a role. Despite calls for action against predatory Chinese trade practices, “There’s an increased recognition that the WTO isn’t going to ride in on a white horse here and save the day,” Olson said. (Donald Trump called the Trans-Pacific Partnership among 12 nations “a rape of our country” and withdrew the U.S. on the third day of his presidency.) The pandemic and the Ukraine war were the final systemic shocks, while the view that global trade is a tool in the struggle between authoritarianism and democracy has also played a role, Olson said.

The end of the notion that global interdependence is a driver of peace is a huge historical shift. The people who built the institutions of the post-World War II era were white men in their 50s whose lives had been defined by catastrophes – World War I, the Great Depression, World War II and the fear of nuclear war, Olson said. It was understood that the Smoot Hawley tariffs were a major contributor to the Great Depression and the war. “And so the pillars of this new system would be global cooperation, try to get global rules in place and establish multilateral organizations that were going to help keep us in line and help facilitate the ability of countries to work out their problems without dropping nuclear bombs on each other’s heads. So these were the Bretton Woods…. the United Nations, World Bank, the IMF… And free trade was an absolute centerpiece of this new world order that you were trying to construct in the aftermath of the Second World War.”