Globalisation becomes too expensive

The New York Times has been talking about the impact rising oil prices are having on globalisation.  The key point is:

Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages. Rising concern about global warming, the reaction against lost jobs in rich countries, worries about food safety and security, and the collapse of world trade talks in Geneva last week also signal that political and environmental concerns may make the calculus of globalization far more complex.

The story is demonstrated by US electric car maker, Tesla, choosing to manufacture its batteries in California rather than importing them from Thailand via installation in Britain.

The cost of shipping a 40-foot, or 12-meter, container from Shanghai to the United States has risen to $8,000, compared with $3,000 early in the decade, according to a recent study of transportation costs. Big container ships, the pack mules of the 21st-century economy, have shaved their top speed by nearly 20 percent to save on fuel costs, substantially slowing shipping times.

The study, published in May by the Canadian investment bank CIBC World Markets, calculates that the recent increase in shipping costs is on average the equivalent of a 9 percent tariff on trade. “The cost of moving goods, not the cost of tariffs, is the largest barrier to global trade today,” the report concluded, and as a result “has effectively offset all the trade liberalization efforts of the last three decades.”

The Greens have been consistent and constant questioners of the current neo-liberal globalisation agenda because of the economic damage it has done to local communities and the environment.  But it’s not good enough for us to sit back and wait for globalisation to collapse under its own oily weight.  We need to act now to make sure we rebuild our local manufacturing, diverse farming, and public transport infrastructure so that we can manage a transition to a positive new economy where we can supply the goods and services we need in our own towns and cities and countryside, rather than importing everything on the credit card that is our billions of dollars large trading deficit.

Brian Gordon from Canada’s equivalent of gblog has more on the topic here.