Many people who monitor the unfolding Peak Oil threat believe that it will eventually choke off globalism due to transportation costs rising to the point where it's no longer feasible to ship goods long distances. This will lead to substitution of imported good with locally made ones. Julian Darley of the PostCarbon Institute makes a convincing argument for the unfolding of this scenario and so do many others.
Then today an interesting discussion began over at The Oil Drum. One of the regulars pointed out that trade began long ago in the age of sail, thereby implying that Peak Oil will probably not impact too adversely on global trade as we will be able to revert back to ships powered primarily by sail.
Damn!, was my first reaction as I'm not a fan of globalism. After thinking about it for a few minutes, I countered with:
Aren't we missing something here by fixating on transport costs alone? Peak Oil won't just make it uneconomical to drive your SUV three blocks to the 7-11 and back for a bag of Hostess Twinkies. It will also raise the prices of all those Made in China "I Support Our Troops" stickers and plastic storage tubs. Most of the junk we import today from China is either 100% plastic or has a very high plastic component to it.
If plastic becomes prohibitively expensive due to rising oil & NG prices, won't that kill off the incentive for a substantial portion of global trade?
Think of it this way, if we revert back to making things out of wood and metal, why not do it locally or at least somewhere within our own borders? Products made the old way are probably too heavy to ship half way around the world.
Then I also remembered Jeff Vail's four arguments against globalization:
Anti-EconomiesIt's economics 101: Economy of Place and Economy of Scale are the driving forces behind our global economy. But are there opposing economies to each of these fundamental forces? Hey, anything's possible. Imagine a world far, far away, before people knew about positrons...
Economy of place is the concept that some things are more efficiently done in certain places--to use the classic example, it would be just plain silly for to try to grow grapes for Port in dreary England when they grow so nicely in Portugal. Lumber is more ripe for the logging in Oregon than it is in Kansas. So what's the "anti-economy of place?" Well, that would be the Economies of Independence and Diversity.
Economy of scale is the concept that it is more efficient to do lots of one thing rather than trying to do a little of everything. You can specialize and stratify and apply all kinds of fun economic terminology, but bottom line is, if all you do all day is draw out wire into push-pins, you're going to get pretty good at it. But if you only had to draw out wire into a push-pin when you need a push-pin (can't remember the last time that happened to me), you will probably be very slow and inefficient in their manufacture. This is economy of scale--and it applies even better to things like microprocessors and flu vaccines than push pins. So what's the "anti-economy of scale?" That would be the Economies of Simplicity and Ontogeny.
Economy of Independence: There is a certain, undeniable efficiency of not depending on things beyond your control. If Lampedusa's primary economic product is capers, and if they depend on a strong market for capers to be able to purchase other fundamentals like food, clothing, shelter, etc., then they may reap the advantage of economy of scale, but they certainly also incur the disadvantage of diseconomy of dependence. Their prosperity--that is, the value of their economy of scale production--is dependent on the fickle demand for their one product. In addition, the diseconomy of dependence also demands that they incur increasing transaction costs for all the products that they must import...
Economy of Diversity: There is also a certain, undeniable efficiency found in diversity. No two environments are the same, no two sets of initial conditions are the same, and therefore there is no single solution to these diverse problems. While paying an architect to produce just one home design and then duplicating that design across endless tracts of land is efficient due to economy of scale, it is also inefficient due to failure to exploit economy of diversity. Every home site is slightly different, with different sun exposure, microclime, prevailing winds, views, etc. Not to mention that every occupant has different needs. The efficiency of designing each home to meet the exact demands of its site and occupant is an example of economy of diversity.
Economy of Simplicity: Economy of place and scale create massive information processing burdens--that is, the burden to coordinate the production of specialized elements (economy of scale) and distant elements (economy of place). The larger the hierarchal organization, the greater the percentage of its effort that must be dedicated to internal information process, command and control, etc. While small localized production faces diseconomies of place and scale, it also reaps economy of simplicity: One guy going out to check his chickens doesn't have to allocate much of his time to HR concerns, vision statements, planning meetings, etc. He just goes out and checks his chickens. So while his time may be less efficiently spent, he spends nearly 100% of his time on that task. In a major corporation, let's say Tyson, a significant portion of their cumulative time is spent on tasks other than their direct production of chickens.
Economy of Ontogeny: Finally, while spending your entire life attaching button B to sleve hole A may be amazingly efficient from the perspective of economy of scale, it isn't exactly fulfilling. It might even make you go insane. This isn't just whining--our genetic ontogeny creates certain inflexible limits on the tolerances of human activity. These limits are murky and far-reaching, but one pretty clear example is that a person who gets to make an entire shirt will enjoy better mental health than someone who just attaches button B--and from a purely economic standpoint, that superior mental health makes them a more efficient, more reliable, longer lasting human asset. It may seem like an insensitive analysis, but the point is actually quite humane: keeping people happy will also make them more economically efficient. So even if it comes at the cost of economy of scale, economy of ontogeny may be worth the cost...
The bottom line here is that there are very real diseconomies intractible to the "standard" economies of scale and place. I certainly don't have hard numbers to prove that one outweighs the other, but it is at least a starting point to recognize that there is a coutner-weight--something that is normally ignored. It's great to buy organic produce and socially responsible mutual funds, but until "normal" economists are convinced that it actually makes more sense to be less hierarchal--with less narrowminded focus on economy of place and scale--it will be difficult to affect any real change in our economy of hierarchy...(Source)