Exile Economics: What Happens if Globalisation Fails

by Ben Chu

'A smart, vivid and humane account of the way the world really works' TIM HARFORD

'This is the book to read if you want to understand what might be about to hit the world economy' EVAN DAVIS

The dangerous race for self-sufficiency has begun. Be warned.

Nations are turning away from each other. Faith in globalisaton has been fatally undermined by the pandemic, the energy crisis, surging trade frictions and swelling great power rivalry. A new vision is vying to replace what we've known for many decades. This vision - Exile Economics - entails a rejection of interdependence, a downgrading of multilateral collaboration and a striving for greater national self-sufficiency. The supporters of this new order argue it will establish genuine security, prosperity and peace. But is this promise achievable? Or a seductive delusion?

Through the stories of globally traded commodities - from silicon to steel and from soybeans to solar panels - economics journalist Ben Chu illustrates the intricate web of interdependence that has come to bind nations together - and underlines the dangers of this new push to isolationism. Exile Economics is an essential guide to this new world in all its promise and peril.

Genres: Economics, Nonfiction, Politics

320 pages, Hardcover

First published November 1, 1997

Reviews

[Rob Sedgwick · Rating 5 out of 5]

Exile Economics is about the futility of countries deciding to "go it alone". It's a great follow-up to the brilliant Material World: The Six Raw Materials That Shape Modern Civilization, which it refers to several times. This book focuses more on the economics rather than the scarcity of resources, but in many ways, it boils down to the same thing.

David Ricardo's theory of Comparative Advantage proposed that it is more efficient for countries to specialise and benefit from trading with one another, and everyone will be better off. That's the way the world is largely set up, and it's partly down to where stuff is, whether material goods or people. The markets organise themselves in efficient ways, and have to work around political constraints. The recent protectionism, such as the policies of Trump and to a lesser extent Biden, as well as many other countries (on the left and on the right), is based on the simplistic notion that it's better to do more stuff yourself. In our case, that's very hard being a relatively small nation, but it's just as applicable to the larger countries in many areas.

Ben Chu takes us through several areas such as food independence, solar panels and electric cars, and rare earths. In every case, becoming more independent would result in a much worse outcome for a nation's citizens, whether through less choice, higher prices, lower wages or lack of resources. The Chinese have a huge head start in the new clean technologies, but rely on chips produced elsewhere. Everyone wants to make their own chips, but due to the scarcity of resources or expertise in subcomponents, multiple choke points are controlled by different blocs.

Steel is another topic; it's incredibly inefficient for each nation to produce its own steel. Keeping factories running leaves a huge amount of unused capacity, which has financial and environmental costs. Even China imports steel, as there are many different types of the metal made by specialist companies around the world.

As the author suggests, it's far more sensible for every nation to be able to source components from multiple locations. There are still a few things that have a single point of failure, which obviously need resolving, but you get the feeling that countries which just get on and concentrate on what they are good at will fare best, and avoiding relying on one nation for key components. Wasting time and resources trying to be the Jack of All Trades is the road to ruin!

[Saurabh Varanasi · Rating 5 out of 5]

For enthusiasts of geopolitics, drop whatever you’re reading and dive into Ben Chu’s Exile Economics without giving it a second thought. It’s topical, informative, crisp, entertaining and straightforward.

I was about to return empty handed after my quest for my next book at a store when this book caught my attention. One of the reviews on Goodreads said this book is a nice follow up to Material World (another fantastic book), and that was enough to make me want to give Exile Economics a chance. Two hundred and twenty seven pages later, I must say I’m an exceedingly satisfied reader.

Increasing number of countries around the world are starting to look within. Whether you call it economic nationalism, isolationism, protectionism or nativism, it all implies the same: the desire of a nation to cut off ties with other nations (be it trade or migration) and to start fulfilling their requirements all by themselves. Ben Chu warns that this race to become self-sufficient is myopic especially when viewed through the lens of the complexity of the mind boggling supply chains for a variety of components that form the building blocks of strategic commodities like food, energy, semiconductors (chips) and medicine. There’s also a nice chapter on how choking off immigration could be detrimental to innovation and the giant leaps of technological advancements that were made possible only by immigrants.

It’s only a matter of time before people start raving about this book.

[Wan Shoo · Rating 4 out of 5]

A timely and crucial read for our current geopolitical climate. This book powerfully argues that history should serve as a lesson for our leaders, a principle too often overshadowed by human greed. The author masterfully breaks down a vast topic into digestible chapters, making a solemn subject highly accessible. By grounding the discussion in data and its direct relevance to our lives, the arguments become undeniable. Ben avoids preaching, instead presenting historical records and posing pertinent questions that allow readers to draw their own conclusions. The central message is clear: a functioning economy is the bedrock of a nation, and blind nationalism without economic feasibility is a recipe for disaster. This is an essential book, and one can only hope policymakers will approach it with the humility to learn, as its lessons on economic policy will resonate for generations to come.

[Stuart Trow · Rating 5 out of 5]

A very worthwhile read, underling how our interests are so much more aligned than they are in conflict. It recognises that so much that is good about what we do arises from having a global perspective. More importantly there are data, reports and narrative to support what’s being asserted. The boring business of making this work by talking, negotiating and compensating the losers of globalisation are unlikely to set pulses racing, but they are absolutely essential to our peaceful co-existence and infinitely better than the alternative.

[Sean Canty · Rating 5 out of 5]

only a really good, passionately written book on economics would quote Aquinas