🌐 Tariffs are the tremors, systemic change is the earthquake

Fixating on trade wars misses the point, a reshaping of the geopolitical & technological order is underway

Globalization has grown exponentially. Our linear institutions, norms, values and systems could not adequately keep up.

It is a case of what I call the “exponential gap”, the chasm that emerges between rapidly developing new technologies and the slower rate at which our existing corporations, institutions, employees, politics, and wider social norms adapt to these changes. In this case, the bundle of technologies, some digital, physical, social and legal technologies, is called “globalisation”.

This set of technologies refactors how the world operates faster than our existing institutions can adapt. At some point, something would have to give.

The last 30 years have since two parties spin the flywheel of globalisation faster. On the one, the US consumer, who has kept spending, is supported by common-sense decisions by businesses to reduce their costs. However, those short-term decisions have turned into long-term structural problems. Like plaque on teeth, they are layered and layered.

China is the best place to make an iPhone and forget the cost. The know-how, over 20 years, is there. The ecosystem, with its codes, cues and knowledge, is there. Hear Tim Cook on this. Mark Gurman goes into much more detail. Moving advanced manufacturing of scale takes time, longer than a Presidential term.¹

The other party, the Chinese, turned their economy into a supply-side juggernaut. It was fuelled not by domestic consumption, even though there was an enormous number of increasingly rich consumers, but through exporting to the rest of the world. The Chinese consumer doesn’t. And their relative unwillingness to spend has been recognised as a problem for a while.