Globalization: The Tweetstorm

Byrne Hobart
14 min readJan 3, 2020

A few weeks ago, VGR put out a call for hundred-tweet threads on a single topic. I slightly misread this as hundred-tweet threads in a single sitting, but a couple hours later it was done.

  1. Let’s talk about globalization! It has “global” right there in the name, so it’s obviously about every country. But really, globalization is about just one country. Unfortunately, we don’t know which one. Either America or China, for very different reasons.
  2. Globalization is synonymous with America in the sense that it describes how the world changed from 1946 onward, i.e. after America conquered all of the world except a weird communist rump state, which inevitably collapsed.
  3. Not only did communism collapse due to internal contradictions, but it only survived due to *external* contradictions. The Soviets were sucking serious wind in the 70s, and managed to get back on their feet by selling oil. (Much more on oil and globalization to come…)
  4. So, one version of globalization is that it’s the system America imposed on the world, probably by accident. A bunch of smart Americans got together to decide how the postwar order should look. Everybody else counted up our aircraft carriers and warheads and said “Okay, sure.”
  5. But there’s another version. The China version. China is a more literal force for globalization in that it’s the axis on which “developing” countries rotate into being “developed” instead.
  6. China’s big competitive strength is in assembling: putting together a bunch of components, and shipping out a finished product.
  7. Think iPhones. You get designs emailed from Cupertino, chips designed in Santa Clara and built in Hsinchu, optical components from somewhere in Japan, displays from somewhere in Korea. They all get shipped to Shenzhen, and turned into iPhones and Galaxies.
  8. All this effort requires physical infrastructure, which means concrete, copper, iron; it also requires power, i.e. coal, oil, and natural gas. All that stuff flows into China, from the lowest bidder. And what comes out is consumer products, mostly for people in the rich world.
  9. In other words, China is a great big machine for turning aggregate demand in the rich world into demand for end products in whatever country is best at producing them. For high-tech products, it’s whoever planned ahead; for raw materials, it’s whoever got lucky.
  10. In other words, China…

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Byrne Hobart

I write about technology (more logos than techne) and economics. Newsletter: https://diff.substack.com/