Onshoring makes business work in global marketplace

When the Cold War ended in the early 90s, and “emerging markets” like Brazil, Russia, India and China (BRIC) began to devise and implement free market reforms, some American theorists and businesspeople expected the world to become increasingly integrated, like a big global village.

Why imagine that supply chains and/or markets could or should be compressed into the boundaries of a single nation state, or among America’s reliable allies? “Globalization” was the catch phrase of an era. The prize would go to those American (and Wisconsin) businesses that spread themselves across the planet the fastest, in a relentless drive to lower costs, exploit new markets and maximize profits.

What a difference 25 years makes! The capitalistic global utopia some anticipated has not materialized, and probably never will. Instead, instability and disorder within and among nation states, and a series of disruptive economic bubbles have roiled and continue to roil the global marketplace.

You don’t need a Ph.D. to see that some, and maybe all, of the BRICS represent geopolitical rivals as well as potential market partners. They have a natural desire to advance their own political, economic, and cultural interests (as they see them). They want their own companies to succeed and when push comes to shove they care little, or nothing, about the success or failure of Wisconsin businesses.

Efforts to talk to these rivals have and will continue to be made – but don’t bet the farm that the talk will add up to much. It makes sense that “onshoring,” not “globalization,” is our current buzzword. After all, those that spread themselves out the fastest in today’s dangerous environment will not necessarily win the prize. Maybe they will just get chopped up.

But just because some were a bit utopian in their prognostications 25 years ago doesn’t mean we should shrink from making a few predictions today. What should Wisconsin business people and policymakers expect the global marketplace to look like over the next few decades, and how should they prepare for it?

Well, to quote scripture, “Whatever is has already been, and what will be has been before.” Geopolitical rivalries remain, and over the next 25 years the economic, political and cultural boundary disputes that characterize them will fluctuate with varying degrees of intensity. Businesses will err if they extend themselves across these geopolitical lines without careful thought – and even if an extension is embarked upon it would be silly to bet the house on it – or neglect to keep up your home just because you acquire a cottage abroad.

Likewise, our state and federal governments should, while holding the playing field steady for all foreign and domestic companies, nonetheless remember that the republic has an interest in ensuring that we keep American companies expanding here at home, while at the same time providing an environment that encourages the growth of innovative new American enterprise.

It is foolish to run our affairs with an eye too narrowly focused upon maximizing profits or chasing evanescent opportunities abroad. We must always remember geopolitical risk and the long-term interests Americans share. As businesspeople and government officials relearn to do their calculations correctly we can be confident the risk/reward ratio will tilt in Wisconsin’s favor. Doing business in Wisconsin over the next 25 years, no matter the sector, is a wise bet.

At Concordia, we develop programs for professionals seeking their MBA with opportunities to focus on the evolution of global markets and international trade. At the same time, we help them recall that enterprise success occurs only if businesses have deep roots in their local community. As George Washington reminded us, there is nothing so sweet as cultivating, and sitting under, a local “vine and fig tree.” And you can’t have international reach without it.

Van Mobley is associate professor of history and economics at Concordia University Wisconsin and is the Thiensville village president.

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