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May 11, 2020

The Internet Turbocharged Globalization

Just in time, it is becoming local as well.

Back around the turn of the century, the Internet reduced international communication costs by 99% in just a couple of years. In 1998 phone calls to China and India from the US cost more than $1.00/minute and data communication costs were similarly high. International supply chains were very difficult to set up and costly to manage because of the cost of communication. Internet telephony brought call rates down to pennies per minute, partly through technology and partly by making an end-run around the international telephone cartel managed by the UN. A huge investment in undersea fiber and technical advances in fiber capacity as well as Internet pricing brought data rates down as well. The Internet model made these advances in communication accessible to almost anyone who could get access to the Internet, not just to large corporations.

A factory in China could then look at graphic specs from a US prospect as easily as a US-based competitor could. Discussing a bid across oceans was no more expensive than across town. The enormous amount of data exchange needed to manage an international supply chain was no longer significantly expensive. Collaboration was enhanced in ways that would have been unimaginable just a few years previously. Innovation flourished. Globalization was turbocharged.

Globalization accomplished many great things. Worldwide, there was an explosion out of poverty with a consequential increase in education and life expectancy. Child mortality plunged and birth rates went down in tandem. Consumers in the already-developed world had access to a plethora of incredibly cheap goods including generation after generation of more and more powerful electronics – almost all of which were built in the developing world.

We ignored the dangers of over-concentrated and complex supply chains. In a world where prices can be readily compared, the temptation to go for a momentary price advantage by concentrating supply overshadowed the fragility of single-sourcing and long supply chains.

Then the virus hit the fan.

We couldn’t even get enough masks to protect our hospital workers. They come from abroad and “abroad” needed its own production. Tried to make masks and found out we don’t make enough specialty paper or elastic domestically. Tried to make ventilators but all the parts come from somewhere else. South Korea went immediately to test and trace; we couldn’t because we didn’t have enough test kits or chemicals to use with them. South Korea is a lot closer to the beginnings of its supply chains than we are. Many of our supply chains run through South Korea.

The Internet made it too easy for us to outsource too much to too far away; short-term thinking made us ignore the risk of no plan B.

Better late than never, the Internet has also come to the rescue.

Work at home let many of us “non-essential” workers continue to work.

Americans all over the country began making masks. They used the Internet locally both to scratch up raw materials and to make their masks available to those in need. Local businesses and non-profits with 3d printers downloaded open source specs for face shields and other medical necessities and started printing. The Internet made it easy to find a local restaurant that can deliver and possible for the restaurant to stay at least partially open. Those who needed to stay tightly locked down were able to find local delivery services for groceries; those who couldn’t pay found local volunteer organizations, which had sprung up to meet their need. Certainly no nirvana but better than it would have been if the Internet weren’t there for us to collaborate on.

After years of talking about it and experimenting around the edges, both education and medicine went online because they had to. We learned how to Zoom.

Local has been everything in this crisis. One state is not like another; even regions of the same state are different. Local news and information are critically important. In Vermont and much of the rest of the country local daily newspapers have withered away and local tv and radio have cut their news staffs. VTDigger, Vermont’s online news source (on whose Board I am) has had a fourfold increase in traffic. Hyper-local Front Porch Forum is at the heart of self-help and help-your-neighbor efforts in almost every town in Vermont. Select Board meetings on Zoom are at least as accessible as they were in person.

Some of this has been so good that we won’t try to do it all in person even when the bug’s been banished back to the bat cave. Traffic may be reduced permanently by telecommuting. We can make room for social distancing in offices by having only a fraction of the workforce come in each day (if at all). Perhaps the same will be true for schools. Telemedicine can increase the availability of healthcare and reduce cost. Online college might actually be free. Just-in-time local 3d print-to order-shops will take some of the business from globalized supplied chains and add security.

But there is one enormous “but”: we must make sure everyone has access to highspeed broadband. The quality of all these online solutions is marred by the fact that a small minority does not have broadband access; we can’t switch service delivery online while even a small minority don’t have access.  It will be a crucial part of planning for not only the next emergency but also recovery from this one to achieve broadband for all. We can do that.

See also:

The Perfect is Not Only the Enemy of the Good

After the Pandemic: A Lot Less Commuting

Federalism Is the Key to End Lockdown

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