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WaveHunter

COVID-19: A WAKE-UP CALL FOR THE DANGERS OF ECONOMIC GLOBALIZATION.

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The COVID-19 epidemic is really bringing to light the world's vulnerabilities that are resulting from economic globalization.  In an outstanding book written by Rosemary Gibson a few years ago called China Rx: Exposing the Risks of America's Dependence on China for Medicine, she said that 80% - 90% of the key ingredients of generic drugs are made by China.  

 

Up until the early 1990's, 90% of the key ingredients were made in the US, Japan, and Europe.  What happened to change this?  The answer is economic globalization.  

 

China emerged as the manufacturing leader in the world for one simple reason...cheap labor.  Workers in China are basically slave labor.  They work long hours for very little pay, they have no labor unions, and they are kept in place by a social credit system. The global community knows this is a serious violation of human rights, but the financial incentive of cheap production costs far outweigh this and so this is how it now is.

 

Even more concerning, China is so good at production efficiencies that most of the world has now come to rely on "Just In Time" (JIT) production, meaning that they only order raw supplies or sub-components needed for their short-term needs since it vastly reducing inventory costs, and they know that China can quickly replenish their inventories whenever necessary. 

 

It's actually an elegant financial model that has saved billions of dollars in industries such as automobile and aircraft production as well as pharmaceuticals, and it's worked reliably.

 

The US and Europe now have no capability for producing raw materials for pharmaceuticals and rely completely on China.  Even the second largest manufacturer of pharmaceuticals in the world, India, is wholly reliant on China for raw materials.

 

This all worked just fine...until now.  For the first time in history, China's ability to provide an efficient supply chain is in jeopardy.  Most countries outside of China have perhaps a 90 day inventory of essential pharmaceuticals on hand.  Once those are exhausted, there will likely be severe shortages should this outbreak not end very soon.

 

It's a real wake-up call about our reliance on economic globalization.

 

 

 

 

 

 

 

 

 

 

Edited by WaveHunter
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