As the World Trade Organization approaches its 30th birthday on New Year’s Day, 2025, the international trading system is in crisis.
The world’s largest economic blocs — the US, the EU, and China — are locked in an escalating tripartite tariff war. The UK has left the EU’s single market. The Covid pandemic saw unprecedented disruption to the flows of goods around the world. National security and decarbonisation have emerged as priorities in stark competition with free trade.
What these winds of change blowing through the global trading system mean is nicely summed up by Dmitry Grozoubinski early on in his new book Why Politicians Lie About Trade: “While you may have chosen to take little interest in trade policy, trade policy is increasingly taking an interest in you.”
Grozoubinski’s book is billed as a layperson’s guidebook to international trade policy, and to navigating politicians’ prevarications about it. Grozoubinski is well qualified on both counts. As a former government trade official, he is an experienced guide to how trade policy is actually made. As a current trainer of trade negotiators, he is a skilful communicator of a complex subject. As an Australian, he writes refreshingly bluntly about a notoriously turgid field: he states his aim, for example, as furnishing his readers with “a functioning bullshit detector”.
Despite being an entertaining read, however, his book is no joke. Structured in two parts, it succeeds both in explaining how global trade works and in illustrating how the rather rarefied topic of international trade policy affects things many voters actually care about: jobs, national security, climate change, and so on. Given how protectionism is increasingly touted as a simple solution to complex social and economic strains, it is also excellently timed.
Moreover, its admittedly flippant title belies a useful and often sympathetic unpicking of why trade policy so often becomes a political football. Grozoubinski emphasises two related challenges. One is that while economists reasonably see the goal of trade policy as achieving the “maximally efficient global factor of production resource allocation” — that’s allowing stuff to be made where it’s cheapest to you and me — no politician can talk in such abstract terms on the stump. That leads to a disconnect between expert advice and political reality.
The other is that trade “is notorious for having narrow, acute pain points and diffuse, disaggregated, and difficult to perceive benefits”. That means losers from trade liberalisation — such as the industries and communities that cannot compete with cheaper foreign producers — tend to exert more political influence than winners — such as the consumers who benefit from lower prices.
It is perennial dilemmas such as these, Grozoubinski suggests, rather than the intrinsic deceitfulness of politicians, which typically leads trade policy astray. The best antidote, he argues, is that non-specialists equip themselves to scrutinise the arguments that both lobbyists and rulemakers make more rigorously. In this respect, his book is a welcome shot in the arm.
One immediate opportunity to apply the Grozoubinski prescription can be found in Peter S Goodman’s new book, How the World Ran Out of Everything. Goodman’s compelling theme is the epic disruption of global supply chains wrought by the pandemic in 2020 and 2021. His argument is that this catastrophe served up an unsparing X-ray of the 21st century world economy, revealing with merciless clarity its underlying injustices, false promises, and inherent dangers.
The two defining characteristics of that economy, Goodman explains, are its dependence on an unimaginably intricate web of long and complex global supply chains, and the concentration of a large share of global manufacturing in China. The pandemic exposed its fragility. “For decades, the world has seemed compressed and tamed, the continents bridged by container ships, internet links, and exuberant faith in globalization”, writes Goodman, economics correspondent for the New York Times. “Now, the earth again felt vast and full of mystery.”
Goodman’s method is very different from Grozoubinski’s. A veteran reporter, he sets out the details of the modern international trading system by following a single product — a light-up Sesame Street figurine — from its design by a pair of entrepreneurs in Mississippi, through its manufacture in China, to its long — and in the event hideously disrupted — journey to the US by sea and land.
The resulting vignettes of life on board container ships plying the sea lanes between China and California, in the control rooms of automated unloading docks in Rotterdam, and on the road with hauliers in the American Midwest, evoke the remarkable richness, diversity, and sheer unexpectedness of the modern, globalised economy. At one point, Goodman embeds with a middle-aged, BBC World Service-addicted, long-distance truck driver en route to Ohio. “’I love Brahms,’ he told me as we wound through Kansas” is Goodman’s deadpan commentary.
Where How the World Ran Out of Everything is less convincing is in its analysis of what this system represents and why it came unstuck during the pandemic.
International trade as it exists today, Goodman argues, is intrinsically exploitative, in the grip of monopolists, and “efficient only on Wall Street”. Its collapse in 2020 was not ultimately the result of the pandemic or governments’ responses, but of a “fundamental alteration of American capitalism over the last half century, the elevation of shareholder interests to primacy, the triumph of financial considerations over all others.”
Goodman’s first-hand accounts reveal many iniquities and inefficiencies in the US economic system, and the pandemic certainly exposed a lack of resilience in global trade. Yet the identification of class struggle as the cause of these ills leads to some tendentious conclusions.
“[W]ho has actually benefited from the interface of Western business and Chinese labor[?]” he asks. “The consistent answer: the international investor class.”
Really? Given that China’s export-driven growth miracle has lifted hundreds of millions of people out of poverty, that the EU built whole industries on the back of the resulting demand for high-value goods and services, and that the US has become the richest and most technologically innovative nation on Earth as a result, that is a truly extraordinary claim.
Grozoubinski is right. It is very easy for arguments about trade to slip their moorings from reality. It isn’t only politicians that need to guard against it happening.
Why Politicians Lie About Trade . . . and What You Need to Know About It by Dmitry Grozoubinski Canbury £22, 320 pages
How The World Ran Out of Everything: Inside the Global Supply Chain by Peter S Goodman Mariner £25/$30, 416 pages
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