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--:-- Noel King: Today, Explained. I'm Noel King.
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--:-- Noel King: The 1990 opening of a McDonald's in Russia was a big deal. It was a symbol of a new era of globalization. But, as Patrick Foulis of The Economist explains, the promises of globalization never entirely materialized.
--:-- Patrick Foulis: If you go back a long time, there was a burst of globalization before the First World War, so in the late 19th century and early 20th century. And then the First World War and Second World War really exploded that world completely.
--:-- Noel King: [pauses] And then what happened?
--:-- Patrick Foulis: In the ruins of the world in 1945, there was an attempt to rebuild connections between countries. And most of that, to be honest, happened between rich Western countries.
--:-- Noel King: [pauses] And then what happened?
--:-- Patrick Foulis: The big event really happened after the fall of the Berlin Wall and the collapse of the Soviet Union. Mr. Gorbachev teared down this wall. And in the 1990s, you saw what some people call hyperglobalization begin.
--:-- Noel King: [pauses] And what's hyperglobalization?
--:-- Patrick Foulis: When countries all around the world begin to become more connected, when Russia, China, India open up their economies and try and connect more with the West.
--:-- Noel King: [pauses] And China's economy has grown faster than that of any other major country.
--:-- Patrick Foulis: A true heavyweight in international trade.
--:-- Noel King: [pauses] And for some time, really for the 1990s and much of the 2010s, that system was really very successful, integrating ever more closely and in effect being something of a global boom.
--:-- Patrick Foulis: There was a moment when all of a sudden I and millions of other people became aware that everything I bought had a Made in China sticker on it.
--:-- Noel King: [pauses] And which countries became most economically dependent or most integrated with each other?
--:-- Patrick Foulis: Typically, it's countries with their next-door neighbors. So America, you know, it's Canada, Mexico. If you're in Europe, it'll be with Germany, France, Italy, Britain, etc.
--:-- Noel King: [pauses] And what were the economic links between the United States and Russia at that point?
--:-- Patrick Foulis: There was some trade in energy, pretty limited, but you'd be staggered by how small the connections were.
--:-- Noel King: [pauses] And what did it mean for McDonald's to open up in Moscow in 1990?
--:-- Patrick Foulis: Well, I suppose McDonald's represents, in a way, everything the Russian communists hated, right? Muscovites are used to queuing up for something to eat.
--:-- Noel King: [pauses] And what's the significance of McDonald's opening in Moscow?
--:-- Patrick Foulis: It's a cultural milestone because we suspect the Soviets are about to learn what Westerners have known for years, that political systems come, political systems go. But junk food is forever.
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--:-- Noel King: [pauses] And then in February, with global supply chains already shattered by the pandemic, Russia invaded Ukraine, and McDonald's decided it had had enough.
--:-- Patrick Foulis: Coming up on Today Explained, what McDonald's Exit West tells us about the future of globalization.
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--:-- Announcer: Support for this show comes from Adio. Adio is an AI-native customer relationship management system built specifically for the next era of companies.
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--:-- Noel King: [pauses] So are we not doing globalization anymore?
--:-- Patrick Foulis: I think we're in a totally different phase where companies are actively seeking to redesign how their supply chains work.
--:-- Noel King: [pauses] And what's an example of that?
--:-- Patrick Foulis: Intel, for example. Intel is going to be investing billions of dollars in a pair of new plants for chips in Ohio.
--:-- Noel King: [pauses] And what's the significance of that?
--:-- Patrick Foulis: The whole idea is to reduce the reliance on Asia, China, Taiwan, where the geopolitical risks are high, and bring supply chains closer to home where they're more reliable and safe.
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--:-- Noel King: [pauses] So, Patrick, let's do a thought experiment. In 10 years, if the world continues with its skepticism of globalization and begins to pull back a little bit or a lot, what might my ordinary American life look like?
--:-- Patrick Foulis: I think there are kind of two different parts. One is there's a kind of rational adjustment to deal with some of the problems we've been talking about, which probably means that the pattern of globalization is more regional, that the links with really nasty regimes are smaller.
--:-- Noel King: [pauses] And what's the worst-case scenario?
--:-- Patrick Foulis: The worst-case scenario is obviously that the world begins to break those economic links. And as in the 1930s, that that intensifies political tensions around the world and actually leads to a war, particularly with the US and China.
--:-- Noel King: [pauses] And what would that mean for my ordinary American life?
--:-- Patrick Foulis: I think it would be less attractive and that's because there'd be less choice, it would be more expensive, I think it would be more boring.
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--:-- Noel King: [pauses] Today's show was produced by Avishai Artsy and edited by Matthew Collette.
--:-- Noel King: I'm Noel King. It's Today Explained.
