Hanjin and the interconnected world

One of the drivers of the current trend towards nativism and xenophobia in the Western world is the Golden Age Fallacy. People imagine the world as they think it once was. Usually that feels like nirvana, at least compared to today. The fact that the world 100 years ago was a much more dangerous place on many levels, and they might not even have made it past early adulthood, much less lived to old age, is never considered.
One of the myths that nativists cling to is what I term the “pull up the drawbridge” myth. This myth is based on the idea that because a country was self-sufficient in the past, it should be easy to return to those Good Old Days. We see it in the grand pronouncements of Donald Trump, who has promised to cancel just about every trading agreement that the USA has with the rest of the world. He seems to think that the USA can go back to being some sort of trading island, the original shining beacon of freedom, just without the pesky problems of interacting with those inferior nations. Well, the USA would still interact with them. What I believe that Donald Trump hopes will happen is that the USA will simply send out a carrier group or two to “persuade” other countries to do our bidding or give us Stuff (like oil). In other words, a return to exploitative militaristic colonialism.
This story unfolding in South Korea offers a stark reminder that the “country as island” worldview is beyond obsolete. Hanjin, one of the world’s largest container shipping companies, has formally lurched into bankruptcy.The company had been in financial trouble for some time, but the creditor banks have now triggered the bankruptcy by refusing to extend any more credit.
The result is likely to be massive disruption to other businesses, the entire container shipping industry sector, and possibly impacts to countries. You could not get a better illustration of the realities of modern international trade. The mess is going to take years to sort out. Right now, dozens of Hanjin ships are impounded in ports or aimlessly sailing in international waters to avoid legal actions.
There is a bigger underlying story also, namely that, like the airline industry, the container shipping industry sector has been largely unprofitable for years, due mainly to chronic over-capacity. The recent downturn in Chinese exports exposed the underlying lack of viability of many container shipping companies and the network of suppliers (mainly shipyards) that fuelled the industry’s growth. Many of the non-viable businesses will probably be bailed out by governments, because businesses like shipyards are labour-intensive and therefore politically “too big to fail”.
Now, on one level, I could see fans of “pull up the drawbridge” arguing that this is precisely the reason why the USA needs to back out of those pesky bilateral trading agreements and Go It Alone. That is superficially attractive, but then the practical question emerges of how to do this. We can see a real-world example unfolding right now in the UK, where the government is now trying to work out how the hell it is going to negotiate the UK out of the EU, in accordance with the Leave vote in the recent referendum. It is going to be a train-wreck that may cause the break-up of the UK.
Leaving the interconnected world is not an option. Well, it is an option, if you want to push your country into a recession that might make the Great Depression seem like a minor economic blip.


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