The boat was freed on Mar. 29, but what does it mean for the global economy? While the situation sounds ridiculous, Matt Stoller, author of “Goliath: The 100-Year War Between Monopoly Power and Democracy,” sees more than a big ship turned sideways. He sees problems with monopolization, big companies controlling trade and interdependence.
Stoller notes that before this big event, there were Thomas Friedman’s ideas on interdependence – notions he said were rare before the 90s. Because of these ideas, we consolidate production and send it offshore, creating higher output that comes back to bite us later. Therefore, an issue in one area affects everything else.
We’re gonna need a bigger boat.
The downside? We saw that on display last week. Stoller said the use of these mammoth ships reflects the consolidation in the shipping industry. “In 2000, the ten biggest shipping companies had a 12% market share; by 2019, that share had increased to 82,” he said.
Carrying 20,000 shipping containers of cargo, this ship’s delay cost world trade billions of dollars and was close to causing shortages in the global shipping industry, including oil, gas and consumer goods between Asia and Europe.
So we got bigger boats and made bigger alliances so we could produce more goods. What’s the big deal? “Making ships massive, and combining such massive ships into massive shipping monopolies, is a bad way to run global commerce,” Stoller wrote.
When you create monopolies, it creates more interdependence. And this reliance can be a side effect of free trade. How so?
You remember this from social studies: laissez-faire, which is trade liberalization, which is basically the government taking their hands off. They reduce or eliminate barriers to trade across international borders. (In the U.S. and EU, free trade agreements still come with some government regulations and oversight.) These trade agreements mean you can make deals with other nations and, say, send ships across the seas to trade goods.
Critics of the system
Critics say this system creates unfair competition from countries where lower labor costs allow price-cutting and create a loss of good-paying jobs to offshore manufacturers.
A real-world example of bucking this system is Brexit, when Britain broke out of the European Union. Advocates argued that the nation could better maintain immigration, be free from numerous regulations and grow. When one country in the EU crashes – or their giant boat gets stuck – Britain won’t be as invested. Critics warned Britain of higher prices because of tariffs and getting left out of preferential trade.
But Stoller says that interdependence on other countries “prioritizes efficiency over resiliency.”
“It shows our policymakers and corporate leaders couldn’t even think through what would happen if Really Big Thing Got Stuck In Important Canal,” Stoller said.
What do you think of our current shipping industry? Do you think the Ever Given’s respite in the Suez canal paints a bigger picture?