Learning the Wrong Lessons From Suez

www.realclearworld.com
4 min read
standard
In March, a ship got stuck in the Suez Canal. After six days, it was finally freed, thanks to the efforts of tugboat crews combined with shifting tides. Before the freeing of the ship, analysts...
In March, a ship got stuck in the Suez Canal. After six days, it was finally freed, thanks to the efforts of tugboat crews combined with shifting tides.

Before the freeing of the ship, analysts made dire warnings about how the crisis in the canal proved the inherent instability of the globalized economy. According to a headline in The Washington Post, "The Suez logjam shows how fragile our global trade system is." Bloomberg went even further, saying, "Suez Shows Civilization Is More Vulnerable Than We Think." One ship had shut down a route that accounted for more than 10% of international trade, and, the author argued, this showed how the existence of civilization itself is vulnerable to the closing of a few chokepoints.

The lesson of Suez is actually quite the opposite. Globalization does not increase fragility, but in fact makes supply chains robust against shocks. Once we understand this, we can see that many arguments for protectionism and investing heavily in American military primacy fall apart.

A recent White House document says it is the goal of American foreign policy to "defend access to the global commons, including freedom of navigation." The United States must remain in the Middle East lest Iran close the Strait of Hormuz, according to former Secretary of State Mike Pompeo. Likewise, the U.S. Navy conducts Freedom of Navigation Operations through waters claimed by Beijing in the South China Sea, risking war in order to make sure they remain open to international shipping.

The problem with such arguments is that they ignore redundancies in the system, and the ability of consumers and producers to adjust to novel circumstances when given an economic interest to do so. If a street in your town is shut…
Richard Hanania
Read full article