May 20, 2020

Axios Future

By Bryan Walsh
Bryan Walsh

Welcome to Axios Future, where we're taking steps to reinforce the supply chain of home office snacks.

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  • I'll be taking one of Axios' mental health days on Friday, so the next Future newsletter will be in a week.

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Today's issue is 1,602 words, a 6-minute read.

1 big thing: The coronavirus is a force for deglobalization

Illustration: Sarah Grillo/Axios

The COVID-19 pandemic is rolling back the tide of globalization, both economically and politically.

Why it matters: For all its flaws, increased global trade and international connections has on the whole been a force for prosperity and peace. COVID-19 is forcing a reshoring that, while necessary, could leave the world poorer and less able to counter global threats — including the pandemic itself.

What's happening: The World Health Organization held its 73rd annual assembly earlier this week — virtually — as it debated responses to a COVID-19 pandemic that has killed more than 300,000 people worldwide. But the meeting was overshadowed by growing animosity between the U.S. and China over the disease, leading to President Trump's threat to permanently cut off U.S. funding for the organization.

Driving the news: While international governance crumbles, the virus has been even more devastating to economic globalization.

  • The World Trade Organization believes COVID-19 could cause global trade to fall by as much as one-third, while the UN Conference on Trade and Development predicts the pandemic will reduce flows of foreign direct investment by as much as 40%.
  • The International Civil Aviation Organization projected last month that international air passenger traffic could drop by as much as two-thirds by September.
  • Exports of U.S. goods fell 6.7% in March, the biggest decline since the 2008 recession, and the drop will almost certainly steepen in April.

While the most extreme changes are likely a temporary effect of COVID-19 lockdown policies, globalization was already facing major political headwinds boosted by long-term technological shifts.

  • The U.S.- China trade war had significantly damaged the economic relationship between the world's two largest economies, and U.S. tariffs on imports were already at their highest rate since 1993 before the novel coronavirus.
  • The development of automation and robotics — another existing trend accelerated by the pandemic — will permit some companies to bring outsourced work home, or even replace workers altogether.
  • The advance of political populism in much of the West has sapped support for the institutions that undergird globalization.
"Globalization describes a world economy increasingly integrated under a common set of rules and principles. We’re now experiencing the beginnings of an unwind."
Ian Bremmer, president of the Eurasia Group

The catch: An infectious disease pandemic spreading around the world is a clear example of the dark side of global connection, and one that underscores the importance of considering resilience alongside efficiency when constructing supply chains. But true deglobalization would make the world poorer and less secure.

  • Increased global trade in recent decades coincided with an unprecedented reduction in global poverty. Throw that into reverse, and both workers in developing nations and consumers in rich ones will suffer.
  • As nations become economically more interdependent, they tend to be less likely to make war on each other — one reason why the post-World War II era has been a peaceful one, at least by the bloody standards of human history.
  • Large segments of the global population may want to turn their backs on each other, but nationalist impulses won't suddenly make international challenges disappear. Climate change, nuclear weapons and cyber crimes are "problems that can best, and maybe only, be solved via international cooperation," writes author Robert Wright.

The bottom line: Though globalization isn't dead, its trajectory will be altered by the pandemic. But we still need to figure out a way to share the same small globe.

2. Ranking countries by resiliency

Norwegians in what I imagine is their typical national attire. Photo: Valery Sharifulin\TASS via Getty Images

A new global index ranks the world's nations by resiliency.

The big picture: COVID-19 underscores the economic threat from disruptions of all kinds, from health to climate. The nations poised to thrive in the pandemic age are those that have built the most resilient systems.

How it works: The commercial property insurer FM Global just released the latest edition of its Global Resilience Index. 130 countries are ranked on economic factors, risk quality and supply chain.

  • The top performers aren't that surprising: Norway, followed by Switzerland, Denmark, Germany and Sweden. All are rich, with low levels of corruption and little exposure to natural disasters.
  • None of those conditions are enjoyed by the bottom of the table: Haiti, preceded by Venezuela, Ethiopia, Chad and Lebanon.

But, but, but: While some factors, like exposure to natural disasters, are beyond the ability of governments to control, every country can take steps to make themselves more resilient to shocks of all kinds.

  • Neither Armenia nor Macedonia would count as particularly rich, but they were two of the countries that moved up the most in FM Global's rankings this year, thanks to improvements in governance and urbanization.

Why it matters: As multinational countries look to make their supply chains more resilient post-COVID-19, well-governed countries that focus on managing risk will stand to benefit.

3. Baby bust

Photo: Salih Zeki Fazlioglu/Anadolu Agency via Getty Images

U.S. births hit a 35-year low in 2019.

Why it matters: Years of declines in the U.S. birth rate will shape the future of the country — especially if the economic and social stresses of the pandemic further discourage fertility. The number of children born today will help drive everything in the future from college enrollment numbers to the demographic makeup of the country.

By the numbers: The CDC found the number of births in the U.S. last year fell by about 1% from 2018, to 3.7 million.

  • 2019 wasn't a one-off — aside from a one-year uptick in 2014, U.S. births have fallen every year from 2007.
  • The drop is chiefly a result of the delay in the timing of motherhood. Birth rates for women in their teens and 20s have continued to fall. Rates rose for women in their early 40s, but the upshot is still fewer children overall and smaller families.

Between the lines: It isn't clear yet how the COVID-19 pandemic will affect births this year.

  • On one hand, less access to birth control and abortion during the lockdown could lead to a COVID baby boom in some areas.
  • On the other hand, putting existing parents in the sudden position of having to care for children at home while balancing remote jobs does not exactly appear to be the kind of situation likely to lead to new siblings.

Be smart: Bet on the latter — while it isn't yet clear how long lasting the economic downturn caused by the pandemic will be, recessions and high unemployment almost always drive fertility down.

4. Making sense of CO2 decline (and revival)
Adapted from Le Quéré et al. Nature Climate Change (2020); Global Carbon Project; Chart: Naema Ahmed/Axios

Pandemic-related lockdowns cut global CO2 emissions by 17% in early April compared to average 2019 levels as the crisis "drastically altered patterns of energy demand around the world," a new study concludes, writes Axios' Ben Geman.

Why it matters: The paper in Nature Climate Change provides a fine-grain look at the unprecedented drop-off, which saw average peak declines of 26% in individual countries, and a broad look at the immense difficulty of achieving sustained cuts.

  • It provides both a regional and sector-specific look at where the declines happened (check out the chart above).

What they found: The peer-reviewed study is roughly in line with prior estimates about the expected annual emissions decline, which the authors project will be in the 4.2%–7.5% range (although there's a much wider band of uncertainty).

  • Most changes are "likely to be temporary as they do not reflect structural changes in the economic, transport or energy systems," they said.

The big picture: The study underscores how the world is nowhere near on track to achieve the most ambitious goal of the Paris Climate Agreement.

5. Worthy of your time

Why do food delivery companies lose money? (Josh Barro — New York Magazine)

  • This excellent piece answers a question — inspired by a truly amazing pizza delivery arbitrage opportunity — that I've long wondered about. The short answer: because even with tech, there may not be money to make.

The rogue experimenters (Margaret Talbot — The New Yorker)

  • The movement of biological science out of the lab and into the community carries tremendous benefits — and plenty of risks.

Not even wrong: ways to predict tech (Benedict Evans)

  • Many of the most important advances in tech started out looking like useless toys. On the other hand, plenty of useless toys also started out looking like useless toys. The impossible trick is telling one from the other.

The farms growing beneath our cities (William Park — BBC Future)

  • As the world grapples with a suddenly disrupted food supply chain, it's time to turn attention to grow food in — and beneath — cities.
6. 1 quarantine thing: "Snowpiercer"

On the plus side, they finally have high-speed rail Photo: Justina Mintz/TNT

Even if you're no longer sheltering at home — welcome to the outside world, Connecticuters — I guarantee you're still watching tons of TV, so this newsletter is occasionally recommending pop culture that jells with the themes of Future.

  • This week's edition: The "I really didn't expect them to make a TV adaptation of this" sci-fi dystopia series "Snowpiercer."

Why you should watch it: You're a devotee of high-speed rail and elaborate climate change adaptation plans. Also, "The Last Dance" is over, and honestly, the streaming cupboard is getting a bit bare.

The original "Snowpiercer" was a 2013 film by the Korean auteur Bong Joon-ho, who won an Oscar this year for "Parasite." Like "Parasite," the cinematic "Snowpiercer" is a brilliant piece of social satire that exposes class divisions. Unlike "Parasite," "Snowpiercer" is set on a futuristic, fast-running train that is the only thing keeping survivors alive in a world frozen by a geoengineering scheme gone wrong.

  • Bong's film was too kinetic and comedic to give audiences time to worry about exactly how a train running a permanent circle around the world was supposed to shield passengers from a new ice age. But the TV series "Snowpiercer," which airs on TNT, has more hours to fill, which means more explanation.
  • More explanation is almost never a good thing in sci-fi. See: Star Wars prequels.

What they're saying: Matthew Dessem of Slate sums up the prevailing critical consensus: The show "doesn't even get out of the station before it goes off the rails."

The bottom line: All aboard for train puns!

Bryan Walsh