Financial columnist Rana Foroohar's lessons for localizing a global economy in 'Homecoming'

Published October 18, 2022 at 10:00 AM EDT

Containers are transported at a port in Lianyungang, eastern China's Jiangsu province on January 19, 2016. China's GDP grew at its slowest in a quarter of a century last year, creating pressure for more stimulus policies to ensure a soft landing for the economy that is a crucial driver of global growth. (STR/AFP/Getty Images)

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The COVID pandemic isn’t the first disruption to U.S. supply chains, and it won’t be the last.

In a new book, “Homecoming: The Path to Prosperity in a Post-Global World,” financial journalist Rana Foroohar explores what it would really take to localize economies in this country.

“These globalized, very fragile, highly ‘efficient’ supply chains are enriching Wall Street but starving Main Street and driving small farmers out of business,” Foroohar says.

Rana talks to people like Joe Maxwell, an independent farmer in Missouri who says he’s seen, firsthand, how globalized, corporate ownership has changed food production.

“Their whole purpose in life is to make all they can for a shareholder, for the investor. That’s why we have to have government,” Maxwell says. “We need safeguards. We need safeguards in place that allow the market to work so that opportunity exists for people.”

Today, On Point: Creating stronger industries closer to home. Rana Foroohar on localizing our economy.

Guests

Rana Foroohar, CNN global analyst. Financial Times global business columnist and associate editor. Author of “Homecoming: The Path to Prosperity in a Post-Global World,” “Don’t Be Evil” and “Makers and Takers.” (@RanaForoohar)

Jack Beatty, On Point news analyst. Author of the Age of Betrayal: The Triumph of Money in America and editor of Colossus: How the Corporation Changed America. (@JackBeattyNPR)

Book Excerpt

Transcript

MEGHNA CHAKRABARTI: Today, Rana Foroohar joins us. She is a global business columnist and associate editor at the Financial Times. And you all probably know her best, I’d say, because we claim her as one half of the duo, along with Michelle Singletary, whom we lovingly call the On Point Money Ladies. Because Michelle and Rana come on fairly frequently to give us their macro and micro economic analysis of issues that are hitting close to home.

Now, on those shows, Rana has frequently talked a lot about building more resilient economies. In fact, just last week, we did a show inspired by something Rana had previously said about China’s dual circulation policy. So today, we’re going to look more deeply at what building more resilient local economies would look like here in the United States, because that is the focus of Rana’s newest book. It’s called Homecoming. Rana, great to have you back.

RANA FOROOHAR: So nice to be here. Thanks for having me.

CHAKRABARTI: And I really mean it. We did a dual circulation policy show last week and it was absolutely fascinating.

FOROOHAR: I love it when I can push out wonky words into the world. That’s, like, my favorite thing.

CHAKRABARTI: I’m going to ask you more about it in a bit, because I want to hear your comparison between of China’s policy in the United States, a little bit later. But I wanted to actually start with something that you write at the very, very beginning of your book. And it takes us back in time a little bit, because I think it’s important to set the stage in terms of how we got here. It’s a story I had never heard you tell before. And it involves a meeting that you had in the ’90s, with Richard Trumka, who was then head of the AFL.

And he had shared with you a conversation that he had with a Clinton administration economic policy adviser about what could happen if the United States agreed to NAFTA. And I’m just going to read a section from your book here. Richard Trumka told you that, quote, He was concerned about a sudden flood of cheap labor into the global marketplace and the effect this would have on American workers incomes and lives. And I told the official that the deals would kill us. And he agreed, Trumka said. But he said that after a while, wages would start to go up again and things would even out around the world.

And then Trumka tells you that he asked the official, the Clinton administration official, how long this process of leveling out might take. And the official answered about 3 to 5 generations. Why is that so important to understand now?

FOROOHAR: Well, it’s funny, whenever I tell that story, and as you’re telling it, it’s just like you take a deep breath and you hear it because you’re like, Wow, that’s 100 years in people’s lives. To clarify as well, you know, Trumka himself had that meeting in the ’90s. He actually told me about it around 2014 or so. But same point. This is important, because we made a bargain in this country over the last certainly 20 years.

You could put the marker even earlier, and maybe we’ll get into that. But as we deregulated our financial economy and also moved into the global economy, with trade deals like NAFTA, and also allowing China into the WTO in 2001, we entered a new era of globalization. And part of the bargain of that era, this is what policymakers and politicians told us, was that we’re going to get a lot of cheap stuff.

Yes, we’re going to send jobs abroad. There’s going to be losses in some industries, but prices are going to go down. Because cheap labor from other countries are going to do these jobs now.

And don’t worry, everyone, it’s going to be better on balance, because, you know, you’re going to be able to buy so many low-cost things in Wal-Mart, and your TV costs are going to go down. Those iPhones are going to go down. And you know what? That did happen. But guess what? No surprise to anyone listening, I’m sure, that that did not make up over the last 20 years for stagnant wages, for the hollowing out of the industrial base, and for the fact that all the things that actually you need to be a middle-class person.

Housing, education, health care in this country have been rising at triple the core inflation rate, even before the latest bout of serious inflation over the last few years. So I tell this story because I want people to know that was the bargain, and it was the wrong bargain.

CHAKRABARTI: Yeah, well, they didn’t make the bargain, right?

FOROOHAR: That’s right. And I don’t think we ever really got a clear human telling of that bargain. And that’s what I’m trying to do in the lead.

CHAKRABARTI: It is just such a stunning story. … They knew, there was deep knowledge in policymaking circles that people would be experiencing a period, generational period, 3 to 5 generations of a period of pain, essentially. But I don’t see evidence of a thoughtfulness on what to do to help those people as that global transition took place.

But lo and behold, here we are now in 2022, and thanks to a lot of fragilities in different systems, I mean, financial market fragility, which obviously 2008, we got a big wakeup call on supply chain fragility. The COVID pandemic helped open our eyes to that political fragility as an outgrowth of that suffering over time. … Something has to change. And in fact, in many countries around the world, there are active efforts to change that. How would you describe what that desired change is?

FOROOHAR: Well, the way I describe it in my book, which is titled Homecoming, is really that it’s about finding a new balance between global and local. My basic take is that over these last many decades, the global economy has become a bit of an end all and be all. It has taken so much more precedent than domestic concerns in not just in the U.S., but in many countries. And so you’ve gotten a huge amount of wealth created because, you know, the last 50 years have done nothing except for in rich companies, in particular in the top 1% of the population.

But we haven’t gotten a kind of a rich mooring of that wealth, a sharing of that wealth in a way that we need to make people believe in the system. And this is my big thing that I keep pushing. I mean, there’s a lot of reasons why people don’t have trust right now in institutions, in politics. But I think one of them is that we have had the balance in our policymaking between global and local off. The global economy went way too far ahead of national political concerns. And we need to reconnect those two things if we want to help people to believe in our system again.

CHAKRABARTI: Well, obviously, the Biden administration is talking a lot about strengthening supply chains, bringing some fresh industries back to the United States. So let’s dive into one part of the economy that you focus on quite a bit in your book. And it surprises me, actually, Rana, because it’s not one I would have thought of. Food and farming. So I want to play a clip from a video that you also produced along with the new book Homecoming.

It’s where you speak with Joe Maxwell, an independent farmer in Missouri, and the president and co-founder of Farm Action, a group that advocates for change in agriculture policies. And he told you that big corporations dictate what most farms in the United States grow and what they dictate is food for cattle, not necessarily people.

JOE MAXWELL: And I’m not suggesting that we should quit raising corn and soybeans. I’m not saying that at all. But it shouldn’t be all we’re doing. And raising it for a price that’s below production cost and depending on taxpayers to hold us up while we see Brazil’s JBS, or China’s Smithfield or U.S. Cargill, it’s corporate power around the world, has a lock on it, and they push farmers to raise corn and soybeans. Corn and soybeans. Corn and soybeans.

CHAKRABARTI: Joe Maxwell in Missouri speaking to Rana Foroohar. So, Rana, what is it about food production that makes it such a good example for not only globalization, but then the homecoming that you write about?

FOROOHAR: Food is, it’s something that touches us all, right? It just immediately connects to people. And the reason that I started thinking about this, particularly for this book, about localization and kind of, you know, balance in global, local was that when the pandemic hit, we had this real time experiment in fragile supply chains and also highly concentrated agriculture and what that means.

And so, if you remember, you go back and pandemic hits, restaurants are empty. Everybody’s at home, but you can’t find certain things in the grocery store. And so, I started thinking, well, wait a minute, you know, there should be a sort of a rebalancing there where the food supply that was going to restaurants could go to grocery stores. No. Why? Because there are two totally separate supply chains, both “hyper efficient.” And I put that in quotation marks. Owned by about, you know, two or three companies, maybe four tops in both sectors.

And they, you know, designed to be totally separate. So, they’re about just in time efficiency. But at a point of resiliency where you need flexibility, you need sharing, you need a diverse economic ecosystem, they start to break down. Then I started looking into what is it about our agricultural system that has made it this way? And I realized that all the policy tweaks of the last several decades have basically pushed us into cash crop farming.

So, you know, most of what we are growing, let’s say corn, for example. That’s a crop I know well because I grew up in Indiana. My first job was actually dazzling corn. Most of the corn in this country is grown not to feed people, but to feed cattle. That is about the heaviest emission-heavy sort of thing that you can do to heat up the planet.

I mean, that kind of agriculture is one of the number one reasons that we have massive climate change right now. So, we’ve got all these incentives pushing us in a certain direction. So, I go out to farm country, and I traveled from Madison, Wisconsin, actually down to Missouri, and through Iowa and down to Missouri to talk to Joe and his some of the small farmers there.

And they said to me, you know, the system is so concentrated and so globalized that we can’t even take our hogs and go six miles down the road to a school or a hospital and sell that meat. We have to go through three levels of middlemen, commodities, traders, financial houses in order to do that. That is a broken market.

CHAKRABARTI: I want to talk more about food because you said it was a broken market when a farmer can’t even just go down the street and sell the goods. This year he’s growing. But on the other hand, though, you also described a system that was built for maximum efficiency. Right. So can a system be both efficient and broken at the same time? Is that what we’re seeing in food?

FOROOHAR: I’m glad you sort of called me on the word. I mean, I use the word efficient. We talk about efficient systems. And in the corporate world, that means it’s meant to be fast. It’s meant to drive down prices and it’s meant to produce a lot of mass goods. And that, indeed, is what our agricultural system does. If you count mass goods as calories, I mean, we are producing way more calories than anybody in this country needs.

But we actually have a shortage of the things that we need more of, like healthy, fresh produce. You know, we have plenty of corn for cattle. We have plenty of corn to put in corn sirup for frozen foods. But we don’t have enough healthy food. And that’s because the system is incentivized to be, quote-unquote, efficient and big and concentrated. I was looking at the move, particularly during the pandemic, towards more local agricultural ecosystems.

One of the stories I came across, actually, I just touched briefly in the book, but I’ve since learned more. Alice Waters, you know, the famous chef at Chez Panisse and one of the wonderful proponents of slow food, of healthier food, of more localism, is working to basically get the big middleman food companies out of the school systems in California.

The kind of giant companies that come in and plop down the frozen lunches we all enjoyed as children, probably many of us. And to really make local predominant in the agricultural system. And it’s totally possible. But you’re fighting against corporate lobbies, you’re fighting against incentives. And so this is something that’s going to take time, but it is going to work out better. It’s going to raise incomes and it’s going to make us healthier when it happens.

CHAKRABARTI: So, regarding that efficiency question, I mean, you write in the book that agriculture has become incredibly efficient. U.S. farmers have tripled their production over the past 70 years, but it has come as at a cost to everything. As you say, our health, food security, working conditions for people, farmers, livelihood, etc.

But part of the reason for that efficiency, that now sort of the questionable efficiency comes with what Joe Maxwell told you, because he mentions some names that come up over and over again. We talk about food, JBS, Smithfield, Cargill, the global food giants that control 70%, 80% of various forms of the food market in the United States. How if we’re going to move towards a better system, a more local system, it comes against the edifice of these enormous global food corporations.

FOROOHAR: Yeah. And you could say that for almost every industry. And that’s one of the reasons why the Biden administration is going after big food. You know, there’s major antitrust action going on in Washington right now. That’s something we’ve talked about, I think, on this show before. But one of the biggest areas of focus, and this definitely took off post-pandemic, is agriculture. You know, you saw the big chicken companies, the big meat packaging companies, really come under fire for working conditions, for the kind of cornering of the market that they’ve done over the last few years.

That has been incentivized by our system, which is meant to make everything cheaper. But cheap isn’t cheap, when you think about the real cost of it. To the environment, to our health, to our jobs. I mean, remember those meatpacking workers and just the disastrous conditions that they worked in. And we learned about that during COVID.

It’s like going back to the Upton Sinclair days of The Jungle. It’s that kind of thing that’s happening in so many different industries. And it’s just something that we need to really pull back the lens and look on and say, Is this how we want our market system to work? Where does this end? Because it doesn’t end with the meatpackers. It does not end with the meatpackers. We’re all feeling the pinch.

CHAKRABARTI: And there seems to be some perverse incentives now built into the process of food production. Because you talk about the commodity treadmill in the book. Where there’s this cycle, where farmers, because they’re struggling with all these low prices, they produce more of those commodities, to try, according to the expert you talk to, to recoup their losses. But then it’s like a negative feedback loop.

FOROOHAR: You have to go way back actually to the 1930s to understand the whole system. And, you know, at that time and this is true in so many economic paradigms at that time, the system made sense. Great Depression hits. You have mass migration from rural areas into cities. The country as part of the sort of New Deal … program incentivized just a ton of industrial farming to create cheap calories to feed factory workers essentially and the poor people that were flooding into the cities.

That worked for a while. And then there was, of course, the exporting of a lot of those commodities overseas, many of them in sort of tit for tat trade deals that weren’t always good for U.S. workers. Big companies get bigger, food gets cheaper, but obesity rises, health care costs rise exponentially. The land degradation is stunning. And, you know, as I say, I grew up in farm country. The amount of chemicals that you need to coax growth out of the same soil, decade after decade when you farm in this way is really stunning. And I find it just such a metaphor for some of the cities of the highly globalized, highly financialized system that we live in.

You know, if we look around and think for a minute, we would say, This actually isn’t working all that well. It’s degrading the very land that I live in, the nutrition of the plants that are being grown. You know, the biggest cash produce item in this country. I don’t know if you can guess, it is iceberg lettuce. Why is that? Iceberg lettuce is to my mind, it’s a vehicle for blue cheese. But maybe that’s just me. But the reason that is the top cash crop in produce is that it can be transported for six months in a truck and still be edible.

Now, whether you want to eat it is another thing. It also loses, you know, about 60% of its weight, which is water weight during that time. So, think about that. Just like put on our logic caps and say, Hmm, what are the economics of taking this item that isn’t actually that nutritious that we’ve farmed? Just because it can stay in one place for six months and still be edible, it loses half of its weight.

So, we’re shipping something that’s actually shrinking in size. We’re spending the fuel, we’re spending the emissions to do that, instead of maybe just growing some more nutritious lettuce nearby. You know, it ain’t rocket science. But, you know, we’ve talked about economics and how divorced it is from reality sometimes.

CHAKRABARTI: The other day I was pawing through my freezer, and I pulled out a bag of Trader Joe’s frozen peas. And I looked on the back. … Where did these frozen peas come from? They came from China. It’s very fascinating how far food moves in order to get to our local grocery stores. Now, I want to first of all, acknowledge, though, that there are many places in the United States where people are living in food deserts.

FOROOHAR: … Oftentimes food deserts are very, very near to some of the biggest growing areas. So, it’s about that globalization of the market. If you made it more local, there would be fewer food deserts, I believe.

CHAKRABARTI: Well, I want to talk about the tradeoffs, though. If we were able to, you know, bring food production and food consumption, shrink the distance between the two, and we’ll discuss a little bit about how in a minute. But there are tradeoffs, because you started this conversation about food by saying, Yeah, well, we’ve become used to, even though food prices have been rising, especially over the past couple of years, generally, lower food prices, more affordable meat in particular.

And I would also add produce availability, regardless of what the season is. These are all things that we have become used to, and I would say a lot of people actually rely on. So what is the tradeoff for the end point consumer for the grocery store shopper? If we were to shrink the length of the food supply chain.

FOROOHAR: Well, we’d all be eating healthier for one thing. Because a lot of the products that are coming from very far away, and I was smiling as you were talking about the pees from China. Don’t even think about looking at the shrimp, the frozen shrimp in your IGA, because that’s coming often from Vietnam, South China Sea, Thailand in places where the regulatory systems are just there nonexistent. The level of chemicals, lead, all kinds of toxins. I mean, I don’t even actually allow myself or my children to eat them anymore after I’ve done some reading. But look, your point is an interesting one.

There is a tradeoff between resiliency and inflation, and we should get into that. There are also different ways of calculating what is cheap. You know, is it actually cheap to eat what we are being fed, and what we’re being incentivized to produce, be unhealthy and then have a medical system in which we’re spending literally double per capita the nearest nation, which is Switzerland? I don’t think that’s cheap. In terms of the people depending on food that’s grown out of season, it’s interesting.

Let’s take berries, for example. That’s a good one. And it’s something I actually cover in the book. Driscoll’s, which is the biggest berry company, when you buy the little berries in the store, they usually say Driscoll’s on them. They’re very worried about finding berries anywhere at any time anymore, because there’s only about three places in the world that you can grow them. And because of climate change, when there’s a small impact, it makes a huge difference.

I talked to the CEO of Driscoll’s. He’s like, if the climate moves a little bit, it changes the growing patterns, like 100 yards up a mountain. We can’t grow the berries there. It’s just not possible. So one thing that’s being done is decentralized technology is being used to find ways to actually bridge that gap between local and global, between efficiency and resiliency. And vertical farming is an interesting point in that category.

These are farms that grow on the sides of walls, on roofs. Google feeds most of its campus in California from vertical farms that are on site. You know, they’re not a silver bullet. There are certainly efficiency issues and energy usage issues there that need to be solved. But it’s one way in which people are problem solving around these tradeoffs that you talk about.

CHAKRABARTI: I guess what I’m wondering is, the tradeoffs to achieve a more resilient system. What I’m hearing, though, and it often comes down to this, is that we might have to pay more, right? Whether it’s for food or other consumer goods, things like that. But that’s a very hard sell, especially right now. People are struggling, living paycheck to paycheck.

The cost of food, you know, is going up. I’m just wondering, why should the average consumer be the one that bears the burden for the higher cost of a more resilient system? Is there anywhere else in that system, any other stakeholders or players who could or should absorb the higher cost to build a stronger, more resilient system, a.k.a the very corporations that are running the system itself?

FOROOHAR: Indeed. And, you know, I’m glad you’re using the word system, because really what I’m talking about in this book is systems change. You know, you talk about, yeah. Is it fair for the consumer to pay more? No, of course, nobody wants to pay more. I mean, I’m feeling the pinch of higher grocery prices. Many people are. But if you pull the lens back and you factor in the costs of cheap, cheap isn’t cheap. We’ve been paying for cheap all along.

We’ve all been paying for it in the fact that, let’s face it, a globalized workforce drives down price, it drives down incomes. It drives down incomes in countries like this one. Now, you know, if you’re a globalist, you could say, Well, you know, it’s okay, because people’s wages are rising in Asia. Well, to a certain extent, although they’re being often suppressed by the state, we can get into the politics of that. But the bottom line is we are paying for these things in some ways. So, pull the lens back.

Yeah, I think what we need is systems change where corporations are paying higher taxes in order to support a social safety net. And underpin things like, for example, a more universal health care system or higher wages, so that you could actually grow food in a different way. You know, I could go on and on, but that’s what this book is about. It’s essentially about a pendulum shift from neoliberal globalization. And I know that’s a mouthful, but hey, if you can handle dual circulation, you can handle this.

And neoliberalism is essentially the political philosophy we’ve been living in. It underpins our economy, it underpins globalization. It’s the idea that capital goods people can go anywhere they want and they’re always going to go where it’s best and most productive. That’s the invisible hand, right? That’s the efficient market thesis. But the problem is money always travels a lot faster than goods or people.

And so who has benefited most from the last 40 years? Multinational corporations. They have seen the majority of the gains of wealth, and we have had incredible wealth gains. We’ve also had increasing inequality in almost every country, and that’s what I’m trying to get at. We need to change.

CHAKRABARTI: Well, I’d like you to actually put some shape around what an alternative food system might look like. I mean, you do write in the book that there’s no one silver bullet. But what would homecoming regarding food [look like]? Give us an example of what it could be.

FOROOHAR: So I mentioned Alice Waters’ activism earlier. I think it’s an interesting case study, because she’s blending a lot of different things. So, community supported agriculture, when it reaches scale, as it has in a place like California, prices do start to come down to a point where you’re not going to the farmer’s market and getting those boutique cheeses that cost $20. I mean, we can talk about artisanal farmers markets. That’s not a solution to national food systems change issue.

But when you start to get scale by creating enough space in the market, be it by antitrust policy, be it by having a critical mass of consumers in a high growing area like California, where you can start to do that, then you have the availability of a different market. Now, once you have some different market options, you can start to use the public sector, which is what she’s trying to do as a purchaser. By the way, that’s also what the Biden administration is trying to do. And in fact, that’s what they did do during COVID, just to make a little link.

But it’s important, I actually make this link in the book. Masks, COVID hits. We don’t have any masks. Why? Because we’ve been buying $0.03 masks from China. And the Chinese, understandably, in the middle of a pandemic, want their masks back. By the way, $0.03 is dumping anyway because the raw materials are like $0.05 or $0.06.

But the Biden administration came in and said, okay, you know what, we’re going to use the power of the federal government to purchase from a diverse range of suppliers these masks. That’s what she’s trying to do in California. She’s saying, we’re going to use the University of California system, ultimately the public school system as a purchaser, because there is now this diverse marketplace. That’s how you start to get to a different system. I could go on, but this is where the change happens.

***

CHAKRABARTI: I want to bring Jack Beatty into the conversation now. He’s On Point’s news analyst. He’s been listening patiently, thus far. Hello there, Jack.

JACK BEATTY: Hello, Meghna.

CHAKRABARTI: Jack, what Rana’s saying, what many others have been saying for a while, as well, makes a lot of intuitive sense. Hyper-efficient is also actually quite a delicate system. But do you see any potential drawbacks or downsides to the sort of pulling? Pulling in maybe isn’t the best word, but the more localizing of certain parts of our economy and supply chains?

BEATTY: As I was reading this brilliant, spirited book, I was listening to the reporting of President Xi’s address to his party conference over the weekend. And Rana, he seemed to be taking a page out of your book, by way of Chairman Mao’s Little Red Book. Xi using the phrase self-reliance in science and technology five times.

Meanwhile, I see a headline in The Wall Street Journal. The U.S. aims to, quote, Cripple China’s ability to make advanced chips. So here’s ‘localomics’ with a vengeance, in these two great powers. And I’m just wondering, is ‘localomics’ a kind of suburban, polite word … for protectionism, for a return to the … world of the 1930s, where nations, you know, I think Fortress China, Fortress America. What do you say to that?

FOROOHAR: It’s a great question. And it is something that I talk about in my book. I don’t think so. And here’s why. I don’t think so. Putting aside Xi and his political rhetoric, which frankly is a whole nother thing, because as you both probably know, in China, there’s what is said for the public and for posturing, you know, like as in politics here. And then there is the five-year plan, which is essentially the party puts out every five years what it is going to do. It never veers from that.

And the last five-year plan was basically putting forward this idea that Magna has explored about dual circulation. And what that means in the context of China is that China wants to, as the U.S. does, change some of the imbalances in the economy. Instead of just being the factory of the world, and exporting everything and taking in cheap capital and providing cheap labor. They want to move up the economic food chain, too. They want to both produce and consume. So they’re kind of, at this moment in their economy, they’re a bit like the U.S. in the post-World War II period where there’s a big single language market that has a lot of room to run.

And so in an ideal world, I think China would hub more production and consumption at home and within the regions so that they would be producing and consuming as part of a sort of an Asian regional bloc. I can see a European bloc. I can see an American bloc, actually it was very interesting. Chrystia Freeland, who was the deputy prime minister of Canada, gave a fascinating speech at the Brookings Institution last week, basically saying, yeah, you know, we need almost like a new kind of NAFTA, more inclusive, where we’re all participating in regional innovation that kind of lifts labor and wages rather than just outsources things.

Now, that’s the ideal world. However, you are right that there is a risk in tit for tat trade wars. But I would step back and say, you know, I don’t think the WTO has been working for a long time. And I think that part of that is down to a willful blindness about the fact that we do have different political systems out there in different political economies. Values matter. I remember going to China once, about 15 years ago and having a conversation with the head of a Danish wind company there. And they were in the number one spot in China at the time. And I said, how are things going? What’s the future going to be like?

And this guy said, the CEO, he said, Well, it’s pretty good. I think we’re going to be in fourth position in the next five years. And I said, why is that good? You know, and also how do you know so precisely? And he said, well, that’s what Beijing has told us. So, you know, the rules were always different. The Chinese economy is different. I think more regionalism, and more hubbing of production and consumption locally. Putting manufacturing and consumers, you know, together is where the future’s headed. It’s where technology is headed to. And we can get into that.

CHAKRABARTI: Jack, do you want to respond to that?

BEATTY: Is it sustainable, though? Is it durable? You know, we’ve heard from foreign policy experts saying one election can change America’s whole approach to the world. As the 2016 election did in terms of foreign policy and security policy. Is this change toward localomics proof against the next election, or is this just something that can be policy toward NATO, policy toward South Korea? Is it something that can just stop because the Republicans come back and they want to go back to Paul Ryan economics.

FOROOHAR: I’m glad you said Paul Ryan economics. Because, as you know, ironically, there’s not that much air, I don’t want to say between Trump economics, but more between Bob Lighthizer, who was the former USTR under Trump, who I think of as a thoughtful person and really not part of what I think of as the Trump universe. There’s not too much air between his trade policy and those of Katherine Tai’s, who’s the Biden USTR.

And they’re part of, I think, a very much bipartisan shift towards. Look, the economic pendulum swing. For 70 years, the pendulum has been swinging towards neoliberal, hyper globalized, hyper financialized, you know, make things as cheap as possible. And who cares if wages go down or, you know, jobs in every sphere are destroyed? That policy is now tapped out.

So, the pendulum is shifting back now. Republicans and Democrats will tweak this in different ways. The Trump administration came in with the blunt force tariffs. I think the Biden administration is being much more thoughtful about saying, let’s think about an industrial policy and how should we connect the dots between educators, job creators, you know, how should we use federal purchasing power to underwrite markets?

Much more thoughtful. I think there are some thoughtful Republicans, too, on this. Marco Rubio is actually, you know, pretty thoughtful on industrial policy. But you’re right, it remains to be seen and things can change in this country quickly. You’re right.

CHAKRABARTI: Well, I mean, on the other hand, the Biden administration hasn’t been fearful of making decisions that rile extremely rile up China. The recent ruling on banning sales of chips made with any kind of U.S. equipment anywhere in the world. I mean, an almost Trump [like] in its boldness in terms of going toe to toe with China. And that the reason why I point that out, is Jack has mentioned this in our editorial meetings before. And I wanted to ask you what you think about it, because part of the gauzy dream of hyper globalization was also that interdependence would yield an era of peace, essentially, because we simply relied on each other too much to go to war with each other. Is there any remaining merit to that at all?

FOROOHAR: Well, you’re talking about, you know, the Golden Arches theories. The world is flat. Two countries are the McDonald’s, never go to war with another. And, you know, not naming any names here, but that stopped working about the time that Yugoslavia fell apart. So, no, I don’t think that free trade has made us freer. And, you know, I frankly always thought it was sort of Western hubris in some ways that made us think that that would be the case.

You know, as I say, when I’m in Asia or Turkey or any number of other countries, I’m not saying that their systems are perfect or desirable, but they’re different. And they’ve got their strengths, you know, and the idea that we all thought that everybody was going to miraculously just march along to the Washington consensus was really kind of arrogant. And, you know, I keep thinking back to that Bill Clinton speech, you know, globalization is just inevitable. It’s proceeding. There’s nothing we can do.

Well, actually, there’s been many different kinds of globalization, regionalization and localization throughout history. They’re different each time, we actually can craft policies and make decisions as a society about how they look, and how they work. And I think that’s what’s happening now with this understanding that … if I’m sitting in Germany, do I want to get my energy from an autocrat that may become a nuclear war at some point? No. Do I want to get a really cheap cotton T-shirt that’s made by tiny hands in a forced labor camp in Xinjiang? Maybe not. You know, there are value tradeoffs here, and we do need to think about them.

CHAKRABARTI: Jack, back to you. I’m wondering your response to what Rana is saying or any other aspect of this. Again, like completely understandable notion that our current fragile systems need a reset. And part of that reset is to bring things home, whether it’s all reshoring here in the United States.

BEATTY: Well, you know, I think you bring out very well, Rana, the political cost, the cost and resentment … of free trade, globalization, the left behinds. And you quote Hannah Arendt, connecting totalitarianism with loneliness, with isolation, with people feeling unconnected to the pulse of their countries. And, of course, that’s essentially the red map of the United States. That’s all those counties that voted against the Bill Clinton picture of, globalization is inevitable. But they are fighting back and they’re fighting back all over the world. Can local comics subdue the rancor? Can it take some of the poison out of populism?

FOROOHAR: Oh, boy. I love the way you phrased that, it is so powerful. Yes, I believe it can. And that’s why I’m so focused on work, work and income and jobs. I’m so uninterested in cheap. I’m so interested in raising wages. Because basically cheap. … The discount in a tomato is not making up for the fact that year on year, between the housing bubble that we’re in, and the rate hikes that we’ve seen, the mortgage carry on an average home has gone up by 52% year on year.

Cheap is not helping us. What we need is an economy that’s based not on asset bubbles, not on giant corporations outsourcing everything and creating a race to the bottom that will hit all of our jobs at some point. All of our jobs, which, by the way, one of the things that the pandemic showed us is … if you can do jobs anywhere, as one CEO said, if you can do it in Tahoe, you can do it in Bangalore. So get ready for the next wave of attempted white-collar outsourcing of everything. That is a recipe for a revolution, I think. And so, we have to start thinking about enriching local ecosystems.

CHAKRABARTI: I can imagine some listeners right now are like, these guys are just blowing smoke. Because the world is not flat. Everyone is not equal. Certain nations have certain competitive advantages. And that is simply how it is. And, you know, for the past 50 years, the role of government has been to reduce the barriers. So those competitive advantages could essentially work in harmony with each other. We’re not going to change that reality. So, are you asking for a change in the role of government here?

FOROOHAR: Well, for sure. I mean, I think that part of the neoliberal pendulum having swung too far is too much private, not enough public. I mean, you know, I think many of us would agree with that. But let me also say, I’m not arguing for going from hyper-global to totally local. I mean, we’re not going to all live on subsistence farms. It’s about a balance between regional, between labor and capital, you know, finding that middle ground, it’s just our system is way too far out of whack. And so that’s really what I’m trying to get at.

CHAKRABARTI: This brings me back to where we started, with that stunning story that Richard Trumka told you about a Clinton administration economic policy official, knowing that a vast swath of America would feel pain for generations. What can we do? What needs to be done to be sure that essentially, you know, decision makers from that same elite set of America, you know, aren’t crafting a new system with the presumption that other Americans will just have to bear some different kind of pain?

FOROOHAR: I actually feel kind of optimistic about that. And I’ll tell you why. In this administration in particular, a lot of the decision makers in power and I look at some of them in the book, people like Heather Boushey, Brian Deese. They’re not coming from those circles. They’re coming from a new generation of people that have lived some of that … pain, and they have different ideas.

Financial columnist Rana Foroohar's lessons for localizing a global economy in 'Homecoming'

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