A good historical overview of the retreat in globalization now sweeping the world can be found in Whatever Happened to Free Trade?
Globalization is a secular cycle, now in its third mean reversion since the late 1800’s as charted below.
The first expansion cycle lasted 43 years and then spent 37 years in the retracement phase (1913-1950). The second expansion lasted 23 years, followed by 15 years (1973 to 1988) of retracement. The third lasted 20 years from 1988-2008 , before beginning the give back period now in process. Now just 9 years in, we should expect this downcycle in global trade, capital flows and growth to continue for several more years, perhaps a decade or more. This is all par for the historical course.
Trees can’t grow to the sky, hence we need the downturns to reboot and refresh: to burst asset bubbles, consolidate debt and reallocate capital from speculation to productive investment and policies.
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