Review of Goodman’s How the World Ran Out of Everything | M.R. Narayan Swamy

BOOK REVIEW

Review by M.R. Narayan Swamy

How the World Ran Out of Everything: Inside the Global Supply Chain
by Peter S Goodman

Mariner Books New York/Boston
Pages: viii + 406; Price: Rs 599

It is now politically fashionable in the US to blame China for all the economic ills the world’s richest country is facing. Yet it was the White House and the American monopoly capital that made Beijing what it is now – a global economic behemoth. When America let China get on to the track of capitalism and rapid economic development decades ago, the ostensible excuse was that the lure of free market and profits would eventually force Communism to fade away.

The real reason was more calculated – indeed cruel. The numerous factories that exploded all across China since the 1980s were frequently financed by investments delivered by multinational brands. Their executives used Chinese factories to avoid paying middle-class wages to workers in their country while hoarding their own savings. As global economics correspondent Peter S Goodman of the New York Times unveils in this meticulously researched book, the shareholders of the multinational brands were the greatest beneficiaries of China’s entry into the international trading system; they would exploit China as a source of cheap workers.

It helped that the mass shifting of the manufacturing industry to China was based on the latest capitalist philosophy – Just in Time. This meant that American and Western manufacturing giants could stop stocking in excess for uninterrupted production (and thus drastically cut expenditure on massive warehouses and the extra staff); they could keep shipping whatever the production lines needed from the other side of the world.

China slowly became the manufacturing source for the Western world. The major brands made a killing, the shareholders were happy, and the consumers got products cheap at Walmart superstores. Despite occasional warnings, the capitalist czars in the US did not realize the pitfalls ahead.
It needed a completely unknown Covid-19 pandemic to shake up humanity like never before, turning the richest countries virtually upside down. By then China had embraced capitalism (but not Western-type democracy) so well that it had become the dominant player in any number of fields. Chinese rulers had also helped dramatically reduce poverty at home, thanks to a globalization that had come to center around China. The country had become the heart of global manufacturing and critical global supply chain without which capitalism would only limp.

Shenzen’s factories made three of every four artificial Christmas trees sold in the US. A single complex in Guangdong produced 15 million microwave ovens a year or about 40 percent globally. Chinese companies made roughly 80 percent of the world’s air-conditioners, 70 percent of all mobile phones, and more than half of all shoes. China also made 80 percent of the world’s solar panels.

The Chinese also dominated the supply of important ingredients used by pharma companies in India, itself a major producer. In just a decade after China joining the WTO, nearly one million American jobs in the manufacturing sector had been eliminated directly by Chinese imports. The list was endless.

This is when the pandemic struck China – and rapidly enveloped the world. Suddenly, the world absorbed the dangers of having entrusted so much of its production to a single country. From India to Japan, manufacturers depended on China for nearly two-thirds of their important electronics components. No wonder, the halting of factories in China due to Covid-19 quickly triggered shortages of almost everything everywhere else.

The corporate quest for lower costs of production had combined to make the global economy dependent on Chinese factories for practically everything. This is why the world’s wealthiest country was reduced to begging for computer chips while scrambling to make medical devices in the midst of a pandemic. The shortages that gripped the rest of the world – populous countries like India included — was a scandal. The book’s otherwise sweeping canvass, however, doesn’t cover this.

The pandemic exposed the risks of depending on a single country separated by an ocean from the most important market, the US. It was left to Jake Sullivan, President Joe Biden’s national security advisor, to effectively declare the last rites on the philosophy that had propelled globalization for decades. “In the name of oversimplified market efficiency, entire supply chains of strategic goods – along with the industries and jobs that made them – moved overseas.â€

Thanks in part to the pandemic, cracks appeared in the world of globalization. There was simply no other choice. Manufacturing companies began to locate new hubs in Asia. Vietnam was the initial primary beneficiary. But there were problems. Asian countries gaining orders to produce products previously made in China were themselves heavily reliant on Chinese factories for critical parts and materials.

These included India, Indonesia, Japan, South Korea, Thailand and Vietnam. Naturally, some manufacturing jobs clawed back to China. But with Americans disgusted over the Chinese monopoly and a trade war escalating between Washington and Beijing, many multinationals shifted focus closer home – to Mexico. No, Mexico did not replace China; but an incremental yet meaningful shift had begun.

Goodman, whose books is an indictment of greedy and heartless capitalism, notes that while the great supply chain disruption had produced huge changes, the interests of shareholders (read Wall Street) remained paramount. Multinational executives were now majorly promoting automation and robots. Robots, as we all know, doesn’t demand salaries and wage hikes and will never fall sick. The excuse was that people did not want to do many jobs; the reality was that the working wages in many sectors had dropped so low, thanks to the greed of the shareholders, that working people were not interested in allowing themselves to be squeezed any further. The US faced a situation whereby numerous families became dependent on food stamps despite having one earning member.

Goodman hates the idea that corporate executives must gain the largess to amass private island or the whole system breaks down. He feels that the world can operate the supply chain, producing and delivering the wares of the modern world, and still protect and just compensate ordinary workers – as did Henry Ford, the icon of capitalism in an earlier era.

Unfortunately, deep damage has been done to the working class in the US. Today, tens of millions of American workers earn so little that they cannot afford childcare or medical expenses, to say nothing of a new car. Ordinary workers, the author underlines, must regain a critical element that has long been in chronically shortly supply: the means of earning a decent living.
Will the capitalist greed for more and more profits at the cost of even basic decency allow that to happen?