Homecoming
To paraphrase Eminem: localization is king, as we move toward a New World Order
Rana Foroohar’s new book Homecoming: The Path To Prosperity in a Post-Global World takes us from warehouses in South San Francisco, to textile factories in North Carolina and data entrepreneurs in Taiwan.
What connects the people we meet along the way?
They are all working to reconnect wealth with place. And this, according to Foroohar, is what we need to counter the power of both big government and big corporations.
As a business columnist for the Financial Times, Foroohar started sensing problems with globalization well before they burst forth these past few years. Her book explains why these problems emerged, but it’s not a Roubiniesque thundering of threats, it’s a story of how the economy can work better, told through people who see localization as increasing robustness, satisfaction and dispersion of power.
I started thinking of it as a kind of sequel to Chris Miller’s Chip War – which uses a similar style to explain how globalization created the current fragile world of semiconductors. Foroohar takes us from understanding globalization’s impact on the present to envisioning a different future.
Click here to listen to our conversation on Top Traders Unplugged and read on to get a taste of what we discussed.
Lots Of Calories…and Lots Of Strangeness
Food in the US is odd.
For example, I used to drive from St. Louis, Missouri to visit clients in Jefferson City. The two-hour ride is pleasant - the road rolls through the heart of farm country. But despite being surrounded by farms we always struggled to find fresh vegetables when we stopped for lunch. Another strange example: during the pandemic supermarkets across the US were short of food even while an entire industry that consumed food – restaurants – was shuttered.
Both examples are side effects of a system where farms must be large in scale and narrow in focus to be profitable. Most industrial farms only grow corn or soybeans. Food delivery is hyper-specialized to serve a particular end-user and thus fragile. Foroohar explains how this system evolved but what appeals is her profile of people working to change it.
There is Matt Barnard founder of vertical farm company Plenty who says “we make farms like Intel makes chips.” They grow food in a giant warehouse in Compton, Los Angeles which they claim produces 350x the yield per acre of a conventional farm. The food is grown near where it’s consumed, drastically reducing the cost and pollution of transport. Vertical farms can literally be anywhere, like L.A. or East London. The industry is just getting started and could be a huge win - creating a multitude of local sources for fresh, high-quality food.
The book also peers into the more distant future through the eyes of food scientist Molly Jahn. She is leading a program at DARPA with the modest goal of creating a new global food system.
Jahn asks “Could the relatively unexplored universe of microbes, bacteria and fungi produce nutrients in hours or days?” She thinks so. That doesn’t sound like an immediate threat to Shake Shack, but it’s easy to see applications for the military and national emergencies. Also, a world where countries feel secure in their sources of food is going to be a lot safer.
Build Back Better
Foroohar’s father owned a manufacturing business in Indiana and her belief in the power of making things locally is palpable. Her view doesn’t just rest on the benefit of creating jobs in places that need them, though this is a starting point. She also argues that successful manufacturing businesses create self-reinforcing ecosystems of suppliers, servicers and researchers. Together the ecosystem leads to innovation. When manufacturing is outsourced, the system withers and innovation declines.
The US lost millions of manufacturing jobs because labor costs are so much cheaper in China but additive manufacturing, also called 3D printing, is changing the calculus. It’s getting easier and cheaper to make almost anything locally. For example, check out how houses are already being “printed”. Long-term, it’s easy to imagine all kinds of businesses printing orders locally on the fly instead of shipping from another place. De-globalization has many inflationary aspects but additive manufacturing, with its elimination of time and transport costs, offers a potential offset.
Wealth Comes From Data. Why Give It Away For Free?
If our goal is to reconnect wealth to where its created, changing how data is paid for and distributed is critical. Why? Because nothing is more “local” than our personal data. And the collection and use of that data has been a foundational source of corporate wealth creation.
Our current situation is akin to the balance of power between workers and owners before unions. Unions allowed dispersed laborers to capture more of the value their work produced. Foroohar thinks “data unions” are a logical extension – groups of people joining together to set rules and prices for accessing their information.
Data and technology can also be used to make democracies more responsive and cohesive. She uses the example of Taiwan, which has grown less divided, despite being bombarded with disinformation campaigns. That achievement is partly due to innovations introduced by its Digital Minister Audrey Tang, a self-described “conservative anarchist”.
Tang has done some cool stuff. She established an online voting system used by half the country that allows people to weigh in on whether the government should pursue certain policies (like allowing Uber). They can also fact-check politicians in real-time. America’s vast array of local governments is an ideal setting to experiment in these ideas. Taiwan’s experience is that they bring out common ground and shared values. The US is a centrist country where noise from the flanks drowns out what most people want. The common ground is there, we just need new ways to cancel the noise.
Tang’s ideas – and the multitude of others catalogued in Foroohar’s book - offer an exciting way forward.
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