Karl Arnold Belser
9 August 2016

A significant problem in the world today is that of extreme globalization which has resulted in a Globalization Trilemma.  This Trilemma is that countries cannot have national sovereignty, hyper-globalization and democracy all at the same time. They must choose two out of the three.

The EU is suffering today because the nations states within the EU cannot locally adjust the value of money proportional to their local economy. The EU nations have essentially lost their national sovereignty. The EU is a localized globalization experiment that seems pretty likely to fail.

The US on the other hand has let it's exchange rate float, which has allowed it to manage the US economy by Federal Reserve policy. The US lets commerce move where goods can be made more cheaply and this action is hurting wages in the US by essentially wage arbitrage. Both presidential candidates are now opposing the Trans-Pacific Partnership (TPP). Will this move toward protectionism work?

Initially I thought that free trade was essential to world peace, and that the people in the US would just have to lower their standards of living.  I recently read the article from John Mauldin's blog called Globalization on It's Head that has caused me to reconsider the issue.

In short the observation is that technology is likely to allow a large part of economic activity to be done locally and that the days of wage arbitrage are over. The article points out some possibilities:

1. Renewable Energy

Solar and wind power along with improved batteries are probably going to make inexpensive local power generation possible. Both homes and cars might get their energy from electricity. This occurrence might significantly reduce the amount of oil that the US needs to import. See my post Renewable Energy and Survival.

2. 3D Printing (Additive Manufacturing), Artificial Intelligence and Robots

A manufacturing revolution is currently happening. Machines and computers will allow inexpensive manufacturing to be don locally. Raw materials will have to be mined or grown and imported if they are not available locally. International commerce may dramatically change as a result. The US will become more robust because a large portion of human needs can be made locally.

3. Locally grown food and locally purified water.

Abundant energy from renewable sources will allow the growing of plants and animals in climate controlled structures at a reasonable cost. There will be less need to import foods from diverse areas on the Earth.  Water desalination is already economically feasible, which will allow the US to have abundant water.

4.  Virtual reality

Virtual Reality (VR) systems are progressing rapidly. This will allow interaction among people of the world with a minim need to travel.


There are several collateral problems with these mega trends. One is that jobs are just going to disappear. This will probably cause the US to institute a minimum basic income and immigration and reproduction controls that it can only do if it remains a sovereign nation.
See my post Minimum Basic Income. Next there has to be significant infrastructure in communications, water generation and distribution, and waste disposal. There will also have to be military, police and judicial infrastructure. These latter are the "commons " that government will have to provide.

In summary I suspect that the solution to the Trilemma of Globalization will be to return to nationalism and put huge restrictions on global commerce.
Last updated August 19, 2016
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