THE Covid-19 pandemic is making economics read like politics. At the height of the pandemic in late March, the global economy hung a "Closed for business" sign.
Below the sign was a fine print that many missed: "Every nation for itself". Economic nationalism, or the art of keeping labour and capital at home, was being given a boost by the pandemic.
But one nation — the United States under President Donald Trump — put up the "America First" sign long before the pandemic.
Decreasing reliance on global supply chains is fast becoming a fashion for countries around the world, say Marshall Auerback, a market analyst, and Jan Ritch-Frel, an executive director with the Independent Media Institute (NST, July 10, "Shattering the global trade system").
There are at least three reasons why countries are rushing to decouple from the world.
One, it makes economic sense, at least during the pandemic when people and nations are falling sick.
Take the case of surgical face masks and Personal Protective Equipment (PPE). These essential items were in short supply as one manufacturing country after another went into lockdown.
Also, those who made the products wanted them for themselves. Others, like Taiwan, had to find ways to make them at home. Thus was born a mask-manufacturing industry there. Necessity, as they say, is the mother of invention.
Two, economic nationalism makes great political sense. With businesses hit hard by the pandemic, unemployment queues are growing longer everywhere.
No nation can afford to keep its jobless on dole for long. Little wonder, "Jobs for everyone" makes a good political slogan.
Governments have been made and unmade on slogans such as this. There isn't a politician around who hasn't tried to get labour to work.
Three, new technology is making it easier to produce, almost anything, without leaving home.
But will this economic nationalism be a complete break from the global trade system as we know it?
Economists agree that it may be just a phase as nations grope to find new alliances and supply chains that don't bring the world economy to an abrupt halt as it did when Covid-19 dealt the late March blow.
At the most, it may just be a reduced reliance on the global supply chains as opposed to a total non-reliance. Expect countries to settle somewhere in between.
There are two reasons for arriving at this conclusion. First, not all the 193 countries in the world are as populous as China or India to keep them buying what they produce.
National markets are as small as Vatican City's 1,000 people and as big as China's 1.3 billion people. The nearer they are to the Vatican City, the more dependent they will be on global trade.
Second, not all countries are resource-rich enough to be self-sufficient, though the countries so blessed do trade with the rest of the world.
The oil-rich nations of the Middle East are illustrations enough. They neither produce nor grow all they require. This notwithstanding, the pandemic has put the trade ties that bind the global economy under terrible strain.
It was the English political economist, David Ricardo, who in 1817 introduced the economic concept of comparative advantage between countries in his book, On the Principles of Political Economy and Taxation, a treatise that was all for international trade. Covid-19 appears to be seeking some edits to the copy.