There has been, as Sean Speer noted recently in the National Post, a broad consensus in most countries on the benefits of globalization – the ability of goods, people, and capital to flow across borders – since the end of the Cold War. It is difficult to dispute the evidence: thanks largely to globalization, extreme poverty has fallen from 36 per cent of the world’s population in 1990 to only 10 per cent in 2015. Over the same time period, the child mortality rate fell from 9.3 per cent to 4.2 per cent, while life expectancy and incomes have risen.
The coronavirus pandemic, however, has caused, at least for now, some reversals in globalization. Borders have been locked down to control the spread of the contagion. Some imports from China of supplies of personal protective equipment (PPE), such as medical masks and gloves, have proven to be defective.
The result, as Speer wrote in a later National Post column, is that the pandemic “is causing us to rethink many of our economic assumptions,” most notably the “supposed benefits of globalized supply chains.” The column was part of a National Post series on “shockproofing” Canada, which declared that Canada is prosperous because of globalization and trade, but “needs to become more secure by becoming more self-sufficient” in a wide range of areas, including in the production of food, energy, PPE, and pharmaceuticals.
The trade-off, as Speer noted, is between supply chain security and economic efficiency. His “shockproofing” column, which made the case for onshoring the production of PPE to achieve greater security at the expense of efficiency, prescribed subsidies and ongoing government support, as well as “managed trade” (as opposed to free trade) with China to ensure that Canada would not need to rely on imports to be well supplied with PPE.
“Only the most dogmatic libertarians,” he contended, ”are ostensibly going to object to cultivating a PPE production capacity within our borders.”
The objections, however, to more government management of international trade in order to protect domestic manufacturing of PPE, are plentiful and not necessarily dogmatically libertarian.
The first and most obvious is that it would be much cheaper and easier to stockpile the supplies than to ensure domestic production capabilities. In fact, the Ontario government did attempt to stockpile medical masks and other supplies. A few years after SARS was over, the province purchased around 55 million N95 masks. The problem was that most of the masks have since expired as the government only budgeted to store, but not manage, the supplies.
At first blush, this government failure might seem like a bad reason to favour stockpiling. But if the government can’t even maintain a stockpile correctly, surely Canadians should have even less confidence in a much more complicated PPE strategy that hands government greater control over domestic industry and international trade by putting government at the helm of a subsidy and regulatory regime. Making sure the government turns its stockpile over often enough to keep the supplies from expiring is not only cheaper than a domestic production strategy, but it also has a much better chance at successful implementation.