Image credit: DF / Public Seminar

For about the last half century, with few exceptions, the US has pursued an economic policy of financial and trade liberalization. Largely in response to government policy, US multinational corporations moved investment offshore, particularly to East Asia, where lower wages enabled manufactured goods like electronics and apparel to be produced cheaply and efficiently. Meanwhile, a revolution on Wall Street forced Main Street American businesses to become leaner and meaner, or else to die out, while many of those same Wall Street financial institutions underwrote multinationals’ reorientation abroad.

The consequences have been highly uneven. While globalization has led to large profits for Wall Street and US multinationals—as well as unparalleled rates of growth for some developing Asian nations and the rise of a global middle class—it has also resulted in the hollowing out of many small communities across the country for whom small and mid-sized manufacturing businesses were the main source of economic well-being, and prolonged a stagnation in wages for the average American worker.

Within the last decade, the consensus behind the economic philosophy guiding this transformation, colloquially known as neoliberalism, has begun to crack. Importantly, however, this consensus has always had its critics. Rana Foroohar, whose recently published book Homecoming not only aims squarely at this consensus and the version of globalization it has proffered, but also provides a path forward, is among the most formidable.

From her upbringing in the Midwest to her position at the Financial Times, where she writes a lucid column on money and US politics, “Swamp Notes,” Foroohar has formulated a comprehensive critique of neoliberal globalization that connects her experiences and on-the-ground investigations to the big and seemingly abstract transformations rocking economies around the world. If the US is to salvage its prosperity, she argues, it must abandon the pursuit of unfettered globalization, and focus on putting that prosperity back into the places hollowed out by decades of misguided policy.

In my interview with Rana, we discuss her childhood and professional trajectory, and discover how she came to formulate the ideas that comprise her economic vision.

Kodres-O’Brien: I want to begin with something you wrote in your Swamp Notes column a couple of months ago on industrial policy—“the policy that shall not be named,” as you put it. You quoted a Peterson Institute economist who said manufacturing was a “fetish for keeping white males with low education in the powerful positions they’re in.” Your retort was to turn it around: “the economics profession itself is a way to keep white males with high education in the powerful positions they are in.” This back-and-forth raises a set of interesting questions about US manufacturing, race and gender, education, and the contrast between mainstream academic economics and your own economic journalism. You grew up in a small Midwest town as the child of an engineer who had immigrated from Turkey. What was that like?

Foroohar: As you say, my father was an immigrant. He was educated in the US and then ran factories for a variety of big manufacturing companies like United Technologies, and there was a big Japanese firm at one point, KYB. He ran their US operations and then started his own small manufacturing business to do customized runs of things for large companies.

If you go back to the eighties and nineties, what I witnessed was what we all know about now: the “China shock” that David Dorn and David Autor identified. A lot of the more expensive jobs were outsourced to Asia, particularly mainland China. A lot of technology was brought in and there was a lot of worker-replacing technology.

And that was certainly the case with my father. At KYB, there was a lot of robotics technology installed. So, a lot of my experience was seeing my dad implementing these manufacturing strategies, dealing with workers, seeing what was happening on the front lines, and also seeing the hollowing out of the town I grew up in. In some ways, I had the lived experience that has now been quantified in books like Angus Deaton and Anne Case’s Deaths of Despair.  

We now know that there are areas in which there was a much harder shock from that efficiency model. And in fact, so much work went abroad that when I was in college at Barnard, my dad eventually lost his job working for the big Japanese firm.

It was also interesting in that the jobs left in part because American workers were not as well trained as the Japanese workers for the use of these particular technologies. I learned a lot from my dad, but I also learned a lot about the Japanese model, and it really struck me that we in the US don’t have a respect for labor. We are not treating labor as an asset. We have a contentious labor-capital relationship. It is totally dysfunctional relative to the Japanese model of incremental innovation where the worker is a crucial part of the innovation paradigm. The German model is similar, the “co-determination” model where labor is a crucial part of innovation.

In the US companies were looking at labor as just a cost on the balance sheet. Cut the cost as fast as you can, replace labor with technology, and if American workers don’t know how to use the technology, go somewhere where the workers do know.

Kodres-O’Brien: You mentioned you went to Barnard. Were you interested in economics in college?  

Foroohar: Not at all. I was a failed pre-med student. My immigrant dad was like, ‘Oh my God, how are you gonna get a job? You’ve gotta be a doctor or an engineer.’ I’m like, okay, I’ll try to be a doctor. Didn’t work. Fortunately, as you know, at Columbia, you can’t major in pre-med, so you have to major in something else. So I got an English degree.

Kodres-O’Brien: So you knew how to write very well.

Foroohar: Yes. I grew up in a big household of readers.  

Anyhow, I graduated and got a job at Forbes, and, since then, I’ve become fascinated by covering business. To me, there’s such an interesting dichotomy between what economists are saying should happen, and what people that are actually doing the work on the ground are experiencing. I started to really focus on that gap. Then I worked as a foreign correspondent in Europe for many years, and I started to see that there are many different kinds of capitalism, and that the rules of capitalism are not handed down on stone tablets; they’re crafted and created by policy decisions.

I came back to the US in 2007, right in time for the financial crisis. My whole way of thinking, of looking at the gaps between the deductive and inductive, led me to write my first book, Makers and Takers, because I could see very clearly that the financial markets were no longer serving business.  

Kodres-O’Brien: I reread a number of the classic works in political economy in an economics course I TA’d for at Barnard this past fall. Adam Smith, who along with Ricardo gets held up to be a champion of free international trade—actually says in The Wealth of Nations that domestic trade is preferable to international trade, which is preferable to what he called “carrying trade.” You mentioned Ricardo would never have thought it would be possible to outsource an entire supply chain. Why might economists mischaracterize their own discipline’s history?

Foroohar: I love this. I would step back and say that not only does the political economy change, and thus the rules of how we think about economic theory and capitalism change, but they change based on the challenges of the moment. So, you have mercantilism in the 18th century, which moves to laissez-faire, then Keynesianism, and finally neoliberalism. When the paradigms change, the people who are shaping the new theory often pick selectively from old theories. If we look just at neoliberalism going back to the Mont Pelerin Society and even 1930s Europe: what was the challenge of the moment? The challenge of the moment was to figure out how to make sure that these European nations never went to war with each other again.

Now throw everybody into depression, and add fascism. These theorists were looking to people like Ricardo and saying, ‘Hey, if we just connect global business across borders—you make cloth, I’ll make wine—things are going to be great. They’re picking and choosing ideas from past works that fit the needs of the moment. And it’s true, connecting business across borders was what was needed at that time to lift the world into a different place. But then the economic pendulum always swings.

We live in a very messy human world, but at the end of the day, economics as an academic discipline has physics envy. Economists want to think that everything can be plugged into a formula and it’s all going to be fine. But in reality, that’s not the case.

Kodres-O’Brien: The follies of abstraction in economics, was it something that you were keen to write about when you were at Newsweek andTime? Did you go from Forbes to Newsweek to Time? What’s the trajectory there?

Foroohar: I went from Forbes to—actually, I had an opportunity to work at a women’s business magazine, called Working Woman. It’s defunct now, but it was trying to reinvent itself out of being a second-wave feminist publication. Women had progressed to enough positions of power in industry that they actually wanted higher quality business content as opposed to aspirational, ‘how to get up the ladder’ content. So I went in as the number two to the editor-in-chief to try to revamp that magazine. The job was more about magazine making as opposed to learning about economics. But then I decided I was more interested in the subject matter and less interested in the process of magazine making.

When I went to Newsweek, I worked on the foreign desk, mostly covering business.

Kodres-O’Brien: A former Newsweek journalist, Jonathan Atler, once said Newsweek was the Avis to Time’s Hertz. What was that contrast like?

Foroohar: Newsweek was scrappier, it was smaller, it was almost like MSNBC compared to CNN—smaller staff, people are working much more nimbly across borders with each other. It was a more reporter-driven publication by a long shot. That was one of their things. Maynard Parker, the editor-in-chief when I came in, used to talk about scrambling the jets, putting people on planes, and sending them to report. Time by contrast—its international editions were actually separated regionally. So there was Time Europe with an editor-in-chief. There was Time Asia with an editor-in-chief. And then there was a global edition that had Latin America and North Africa and other regions.  It was much more top-down, while Newsweek was much more bottom-up.

Kodres-O’Brien: When you went to the Financial Times you had just finished Makers and Takers, which pretty strongly criticized the financial establishment. People often think the FT, along with The Economist, are patron saints of the British saving and investing class, and champions of neoliberal globalization. How did you fit in there?

Foroohar: I sometimes get pushback for the work that I do from our readers, although there are certain people inside and outside the FT that are also very, very supportive of the work that I do. I don’t think The Economist would’ve hired me—the FT and The Economist, it’s almost like Newsweek and Time: FT is much more decentralized. Once you’re hired as a columnist at the FT, nobody’s telling you what to write or what to do. Also, I think that there was an understanding way early on at the FT that something really is wrong with the financial markets. John Kay, for example, had been writing about financialization. Martin Wolf too. They had seen that this is a market trend that was going to be impactful to their readership, the global investing class.

I had thought that CEOs were going to be really thrilled about my book. ‘Hey, you’re standing up for us real businesses as opposed to financial markets.’ But they were actually very happy for the system to carry on the way it is because they’re getting 80% of their compensation in stock. Whereas the highest level financiers were the ones that were most interested in my thesis, because (a) they could see it happening themselves, (b) they knew it was eventually going to have an impact on the real economy, and so (c) it was going to impact their own investment portfolio and their own decisions. They were the great white sharks, and they were smelling the blood and wanting to investigate. So that’s why I’m at the FT. I think they realize that this is an important trend, it’s something that they need to be aware of. And so they let me cover it.

Kodres-O’Brien: Your newsletter, Swamp Notes, is co-written with Ed Luce. Quite often the two of you go back and forth on the problems with US economic policy. Do you find that to be a productive way to tease out your ideas, to have a counterpart with a slightly different perspective?  

Foroohar: I do. We are both democrats, but we definitely come at things from different perspectives. Both our journalism and personal backgrounds are quite different.

Kodres-O’Brien: Swamp Notes has spanned two presidential administrations now, and although they are obviously very different, both agreed that the globalization process—particularly regarding US-China trade—was due for a reset, which is the main topic of your latest book, Homecoming. When did you start to think about doing a book on globalization?

Foroohar: The idea of localization—or as I was thinking of it years ago, “Glocalization”—has been with me for decades. It comes out of that experience of growing up in the Midwest. I wrote a piece when I was at Time magazine called “Go Glocal,” about some of the new rules of globalization, and those ideas morphed into what became Homecoming.

This was pre-Trump. When Trump came in, frankly, like a lot of people that didn’t grow up on the coast, I was pretty sure he was going to win. And, indeed, my hometown county went 76 percent Trump.

I remember when he was in the primaries, I was at a dinner party where there were a lot of Republican donors. The Republican primaries were playing on a television in the background. Trump had not been declared the nominee yet, but everybody around me was talking about who the nominee was going to be. Nobody thought it would be Trump. And I said, what are these other candidates offering working people? What are they offering aside from trickle-down? Nobody really had an answer to that. And in fact, it was the Indiana primary that was on, and of course, Trump won.

I also remember how he was campaigning, and, to me, it seemed like it was an open-and-shut case that he was going to beat Hillary after the first debate. That was not the experience that you were reading about in the New York Times or in many other publications, but I remember in that first debate when NAFTA came up, he just shut her down. And I thought, oh God, this is it. This is the Democratic weakness: they have nothing—particularly Clintonian neoliberal Democrats—nothing to say about this stuff. That got me thinking about the whole selling out of middle America by the Democrats from a trade perspective. That became the political heart of the third book.

Kodres-O’Brien: The neoliberal version of globalization that you’re concerned with in the latest book—is it the neoliberal part that’s more problematic? Or is it the whole thing? Why, in other words, talk about “de-globalization” and not just “decoupling,” which was your FT word of the year?

Foroohar: There are a few different things happening. Let’s talk about decoupling for a minute first. Decoupling is to me the One World, Two Systems problem. I’ve been going to China on various trips for 25 years, and it was just evident to me right away that China was never going to just simply wholesale adopt our system. They have their own rich, diverse, incredibly resilient, and interesting economy and population. They’re going to make their own rules. They’re bigger, they’re eventually going to be richer—why would they not have their own ecosystem?  

Yet, policy-wise, and in terms of decisions being made in the C-suite, we were still pretending as though China was going to come seamlessly into the Washington Consensus. To me, it’s not as if you want to decouple—and I think this is actually a crucial point. Decoupling is often spoken of as though the people who say some decoupling is natural or normal, or perhaps even desired, are somehow xenophobic or anti-China, or that they want to keep China down. No. First of all, nobody could keep China down. But my feeling is I simply want everyone on various sides of the transactions of the global economy to understand that these are two fundamentally different political systems and that the existing global institutions are not going to solve the differences between these two economies. You are not going to be able to square that circle over at the WTO, even if it were functioning well, which it is not. I think that that’s a better starting point for a debate about how engagement will happen. That’s how I see decoupling.

And then in terms of globalization vs. deglobalization, if you look at neoliberal globalization as being the assumption that capital goods and people will be able to travel freely and equally across borders, I think that that’s never really been true. Capital always traveled faster than goods. People much less so. I would very much like the US to work on adopting policies that allow people to flow across borders more easily and to think more carefully about how capital flows because a total laissez-faire approach to capital flows can create a lot of financial instability.

This is something that’s actually a very live topic right now in the Biden administration. We’re starting to see the de-globalization of certain supply chains become the de-globalization of capital flows. I’ve been looking back at the work of David Barboza, the former New York Times reporter, who’s done fabulous work mapping the supply chains of 10 million companies doing business in China. What he found is just phenomenal. Not only are the connections deeper and broader than we think, but they’re in potential violation of all kinds of international laws and sanctions.

And essentially what this close look at globalization and some of this de-globalization are doing, is raising the scrim on corporate opacity. And I think that that is a great thing because companies have basically been doing whatever the hell they’ve wanted for the last 40 years. And it’s been very, very difficult, as we see in things like the Panama Papers, to tease out what is going on.

I mean, are the world’s richest entities and people even abiding by any country’s laws, or are they existing in their own ecosystem? I think what we’re discovering is that the latter is true, and that becomes a question of political economy. What do we want to do about it?

Zooming back out to the larger issue, you can look at the geopolitical implications of trade wars between the US and China, or a hot war between Russia and Ukraine, and say: de-globalization is problematic. It’s bad. It’s happening for these contentious reasons. You can also look at the rise in wages in Asia, more attention being given to labor standards and environmental standards, higher energy prices that make it prohibitive to have long, complex supply chains. You can look at those reasons and say, you know, those are good reasons for us to think seriously about localization and regionalization.

Rana Foroohar is the global business columnist and associate editor for the Financial Times, the global economic analyst for CNN, and the author of Homecoming (Crown Publishing Group, 2022), Don’t Be Evil (Currency, 2021) and Makers and Takers (Currency, 2017).

Ben Kodres-O’Brien is a communications PhD student at the Columbia University Graduate School of Journalism.