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Covid Economy: The Global Market with the Mask Off

By: Connor Reardon

For several months now, Connecticut, as well as many other states have been in a state of quarantine. Stocks have plummeted, 30 million Americans have filed for unemployment, and the world market has come to a near standstill. All because of an illness that sprung up in a manufacturing hub in Central China. While our own government’s response on a national level has been somewhat of a disappointment and overall a divisive issue, there is no doubt that the events in Wuhan were well beyond our control. As a result of events in a foreign country on whose exports the US economy is highly dependent, our own economy has ground to a halt, and continues to degrade despite trillions of dollars being injected by the government. This pandemic and its dramatic impact on our nation and its economy make one thing incredibly clear: our dependence on foreign economies is detrimental.


Capitalism is the economic philosophy of our time, and as a result it appears we live in an age of plenty. Vital, consumer, and luxury goods flow quite freely through most national markets, and a world without international trade seems unimaginable, and there can be no doubt about the benefits of international trade. However, it is quite well known that there is much competition in the global market, and although the United States maintains the highest annual income by a hefty margin, across the Pacific a rival state creeps ever closer towards encroaching upon our position of economic hegemony. Nonetheless, we have been, for some time, in a state of macroeconomic symbiosis with that rival state. Of course, it is China I speak of. American companies are reliant on cheap, sweated, foreign labor from China to produce the products they then sell to American consumers. As a result of the massive scale on which this occurs, and the amount of American conglomerates that are reliant on the Chinese manufacturing industry, this has also seen China become reliant on importing these cheap goods to America. Were China to cease its exports of manufactured goods, or America to find new manufacturing economies to produce them, the results would be disastrous for the country that did not initiate the termination of trade.


 As was stated earlier, due to events beyond our control in this foreign country upon whose manufacturing we have made ourselves so reliant, the American economy has been dragged into the catacombs along with that of China. Shipments of cheap, sweated goods from China have decreased immensely in the wake of this pandemic. As a result, American corporations that threw themselves in with the lot that are dependent on foreign labor and manufacturing are now suffering greatly, and it has led to unparalleled amounts of layoffs here, in America. Once again, the structural flaws in dependence on an unstable, fickle, and absolutely uncontrollable global market make themselves apparent for all to see.


This is, of course, not the first time the cracks inherent in international finance and unrestricted dependence on the global market have made themselves plain for all to see. We need not look back a full hundred years to see additional examples of the immense instability of an intertwined, global economy, and the disastrous effects on nations around the world due to events beyond their control in another. Let us examine what has been historically dubbed Black Tuesday, the stock market crash on Wall Street that obliterated the American economy for roughly a decade, and dragged many world powers down with us into the Great Depression. First, let it be known that economic experts as well as statesmen in America and the world foresaw a crash of the stock market if action was not taken to limit speculation. Due to inaction on the part of American individuals and the government, our economy was shattered in a matter of two days, and we were followed by Germany, the British Empire and its dominions including Canada and especially Australia (one of the hardest hit nations), as well as France and her colonies, Greece, Italy, Japan and Korea with it, not to mention the majority of the rest of the nations of the Americas. Our mistakes led the world into a crisis that was far more disastrous than what it currently faces, and that lasted far longer than this likely will. However, there were many more major economic crashes here and abroad that impacted the world throughout the 20th century, and this was as the ideas of unrestricted trade were only beginning to manifest in the world through national economic policies.


The economic impacts of this pandemic on the world and especially ourselves in the US should serve as a wake up call. For the last hundred years and then some, international trade has been increasing, and our reliance on foreign goods, foreign industry, and foreign workers has only risen. But we have become uncomfortably dependent on factors over which our direct control is nil. Our economy stands as a titanic monument, but it rests on a foundation so flimsy that even the slightest agitation may severely damage the supports, and without those already weak foundational supports, everything above will come crashing down. What is worse is that nearly everything that has damaged those weak supports in recent history have been elements outside of our control. 


In closing, the point illustrated here should be obvious. Our reliance on the global market and the manner in which we tie ourselves to foreign economies, both in constant flux, both with constant upsets, both at the mercy not of our will, but of circumstances we will have little to no control over, is an unstable force to rely on. This is not to say it is necessary or even desirable to isolate ourselves entirely from international trade, but it should now be apparent, and should have been in 1929, that we should become more reliant on ourselves and our own economic assets, which we can control, than foreign economies and forces, which we cannot.

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