The writer is an FT contributing editor and writes the Chartbook newsletter
It is a commonplace that in recent years the paradigm of globalisation has come apart. There is no longer a presumption of ever closer global integration. The politics of trade are superheated. National industrial policy is all the rage. But the evidence for major changes in the flow of trade is scant. What has replaced the old paradigm is less a coherent new agenda than pervasive cognitive dissonance.
As far as the macroeconomics are concerned, plus ça change. The US is running twin deficits — on government budget and trade account. Consumer demand is strong, financial markets buoyant. By contrast, the EU and China, with inadequate domestic demand, run large export surpluses. These imbalances have shaped the pattern of globalisation for decades. Experts have long urged rebalancing, only to be ignored. They are still ignored today, but now the familiar tensions within globalisation are reinterpreted through the dark lens of industrial rivalry and geopolitics.