Image via Flickr CC/batintherainAgainst all odds, we made it through 2016.
I think future historians will call last year the, “Year of Shattered Concepts.” Obvious truths proved false, and unstoppable trends stopped.
The idea that free trade and technology would merge the planet into one Giant Happy Global Economy is mortally wounded. The incoming Trump administration may well deliver the coup de grâce.
On that front, President-elect Trump said something profound last month.
Yes, I know, you rarely see “Trump” and “profound” in the same sentence, but this time it fits.
“Local, folks, local”
The above-mentioned profundity occurred at his December 15 appearance in Hershey, Pennsylvania.
From the Financial Times:
For years, the jobs and wealth have been ripped out of your state and ripped out of our country like we’re a bunch of babies,” Mr Trump told the crowd at a stadium where the Hershey Bears ice hockey team plays. “People talk about how we’re living in a globalized world, but the relationships people value most are local—family, city, state, and country. Local, folks, local.”
That one sentence I bolded deftly describes the fault line that is splitting entire nations and continents right now.
Globalization was supposed to make life better for everyone. It certainly helped some people, but many got nothing out of it, and quite a few went backwards.
This is now very obvious, thanks to Trump. Globalists are on the defense, hoping to put down the rebellion.
We’ll discuss that part another time. Today, let’s consider the second half of Trump’s sentence:
“The relationships people value most are local.”
That’s right—and it’s exactly what globalist elites don’t get. They come in different flavors, but none would accept what Trump said in Hershey.
Some are hyper-individualists who think “relationships” are pointless. Others have a kind of congenital wanderlust that keeps them always on the move.
Many see the whole world as “local” because hey, we’re all citizens of the world, right?
That’s a nice vision, but economically, it objectifies everyone. We are all cogs in a machine and must move in the way our superior cogs dictate.
If it means we have to move because our jobs went to China, then we just have to do it.
The globalists truly don’t get why this bothers us. Some even own residences in multiple countries, living in whichever one has the best weather and tax breaks at any given time. To them, the whole concept of “home” has little meaning.
Regular people aren’t like that.
What a De-Globalized World Will Look Like
This idea of staying rooted in your local community is gaining momentum. With globalization fading, what could take its place? What will a de-globalized economy look like?
Well, a thriving national economy is really just a collection of thriving local economies that have achieved some measure of self-reliance and identity.
Locally grown food is one sign a place is reaching that status. When you see farmers markets pop-up on weekends, it means two things:
- People in the area want to grow and sell food
- Other people in the area prefer local foods over imports
Technology is making the same possible with manufactured goods.
Instead of mass-producing stuff overseas and shipping it here, “additive manufacturing” (the industrial version of 3D printing) lets us make many things in smaller quantities closer to the customer. This technology is only going to improve.
Most of the manufacturing jobs that got shipped to other countries won’t come back, but the manufacturing itself will. The process will create new kinds of jobs that let us stay close to home and still have work opportunities.
Last week, the Wall Street Journal reported surprising growth in single-worker manufacturing businesses, and the numbers are rising.
As an example, the article profiles a man who makes leather products and sells them online for a nice income. He’s in Oregon, but he could be anywhere—a small local business with global reach. It’s possible.
“Local” doesn’t necessarily mean small towns, by the way. Even giant cities like New York have many distinct communities with their own economic identities.
The Trend Has Legs
We don’t know yet how the de-globalization trend will unfold, but I’m pretty sure it will continue.
The US economy is becoming less global and more local. If we’re lucky, it will evolve into a hybrid that retains the best features of both.
This megatrend should inform our investment strategies, too.
Legendary Fidelity fund manager Peter Lynch used to say people should invest in what they know. That’s good advice: Pay attention to what’s happening around you… shop at local businesses… notice what’s working and what isn’t.
You probably can’t buy shares in Bob’s Micro-Widget Factory like you can in, say, General Electric (GE). But if Bob wants to expand and you have capital to invest, maybe the two of you should talk.
Soon, Bob might have listed shares or bonds, too. New crowdfunding and peer-to-peer lending platforms let regular people invest in each other. The capital markets are localizing along with everything else.
That doesn’t mean everyone’s daily life will look like a Norman Rockwell painting. Life was never so spotlessly ideal. Even if it were, there’s no going back to it. But we will move forward, toward something unlike what we have now.
The year 2016 was a big, revealing step down that road. 2017 will be another one.
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