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INTRODUCTION:
Reflections from 2020

The following is an excerpt from an essay of historical analysis published in 2020. Warning: What you will read below will frighten you.

On September 1, 2020, newyorktimes.com re-published a famous essay that first appeared in 2018, when the old Times ran its final paper edition. Penned by an eminent French surgeon, the essay tells of the time his five-year-old granddaughter asked what it was like to fly in an airplane. It had been ten years since the surgeon had last flown, so he at first couldn’t remember all that much. When images of flying on a commercial carrier finally did come back, they were accompanied by other memories of the era of relative economic openness and prosperity that had existed before the Real Depression. "I wiped a tear from my eye as I thought about what I’d once taken for granted—flat screen TVs, feather light smart-phones, wines from around the world, foreign vacations, wifi cafés, ultra-small laptop computers. Now, all that is gone from my life. Even if I could find the nifty gizmos or a seat on the rare international flight, my income is inadequate.” Eager to spare his granddaughter any pain, the surgeon averred that flying wasn’t such a big deal—definitely not as much fun as, say, playing with her old PlayStation2 from 2005. "Yet she didn’t seem convinced,” the surgeon notes sadly.
Almost everyone is suffering in today’s economy, yet few in the general public understand just how bad things really are, nor how the ground fell out from under us, nor what we might do to avert future catastrophes. This essay seeks to remedy the situation by making more accessible the latest analyses offered by business historians. As is well known, the Real Depression originated in 2008, with the near implosion of the U.S. financial system. By summer 2009, more than a few observers were murmuring that the financial crisis was over and growth was ready to get back on track. No less a figure than U.S. economic official Lawrence Summers was remarking that he knew the worst was past when he no longer found himself getting up at 4AM to check the Asian market. More than ten years later, we know that his perceptions were wrong. So what happened? Business historians are quite united in their assessment: While the financial markets initially began to recover to something approximating normalcy, the financial crisis had begun to trigger an entirely preventable, insidious, and profoundly destructive phenomenon: Protectionism.
Unlike our parents’ semi-globalized world, ours has become brutally fragmented into national territories, each largely cut off from the others by tariffs, regulations, and other protectionist policies. The economic impact has been profound. Looking at aggregate measures like the global goods trade, services trade, capital flows, labor flows, and knowledge sharing, we find that the decline in cross-border activity has amounted to between 25% and 75% over the last decade. Before 2008, the world had been only partially globalized; now it seems barely so. The circulation of goods, capital, ideas, skills, people, even art and culture stands far below the levels of the late 20th Century—in fact, we’d have to go back to the mid 18th century to see the nations of the world as cut off from one another as they now are. Such tightened borders have proven immensely destructive economically, not least because many of the advantages derived from both specialization and economies of scale have dried up. In the end, our low-flow world is a markedly poor world.