3/3 GLOBALISATION AND RICARDIAN ECONOMICS : THE NEO LIBERAL TRAP

26 September 2025

Trilogy:

1. The Collapse of the American Empire (1/3).
2. Singapore: How to Avoid the Same Fate (2/3).
3. Globalisation and Neoliberalism: The Ricardian Trap (here and now 3/3).

Globalisation and Neoliberalism: The Ricardian Trap

1. The Promise of Ricardo
The theory of comparative advantage says each country should specialise in what it does best (this is not dissimilar to OTOP : one tambon one product) then trade freely across borders. Everyone doing what their best at was supposed to make everyone richer, creating efficiency, innovation, and cheaper goods for all of us.

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2. From Promise to Practice
However, in practice, globalisation and neoliberalism took Ricardo’s idea and ran with them just a bit too far.

• Capital, goods, and people flowed without restraint. Take people. Immigration is a great answer to shortages of labour. Labour shortest years might arrives for demographic reasons or simply because there is a growing demand that the producer can no longer meet. But hey wait a moment, what do the native peoples, the Host population, think of this? What do they think of piling up foreign cultures religions languages ... different cultures ... all into their living space?
• What happens if manufacturing jobs are shut down in a rich country because it's cheaper to ship the work abroad to low cost labor countries what happens to the work traditionally done by local people?
• And what happens to the wages of local people if they're now in competition with migrants? Wages stagnate
• Look at capital flows the work has gone abroad and with it the prophets but the reserve currency is a reserve currency used for international trade where will a foreign company or government store it's wealth maybe not in its local currency which is depreciating against the dollar they will want to store it in us treasuries that added demand is going to raise the price on us treasuries and asset values generally. So foreign demand for treasuries, corporate bonds, equities, real estate... raises asset prices eg the cost of a home goes up beyond a a price local people can afford. Those lucky enough to already own assets see those values go up while those without have only debt increasing debt.
• Deficits widen, debt balloons, and societies became more unequal - it was so easy to borrow or print so much easier than raising taxes.

The winners were global corporations, financiers, and the very small proportion of the population who seriously owned assets. The losers were the workers in industrial economies who saw their purchasing power drop decade after decade.

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3. The American Collapse
The US embraced this model most fully. You can see how it shifted from production to consumption, and from industry to finance - I would call this papering over the debts Twin deficits (trade and budget) became structural, debt piled up, and the reserve currency status only encouraged fiscal and monitoring irresponsibility. What began as Ricardo’s elegant logic ended in de-industrialisation and imperial overreach.

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4. Singapore’s Escape Route
Singapore is at an early stage of the debt cycle. It could follow the US path — financialisation, overvaluation, complacency, hubris — or it could chart a smarter course.

• Protect industrial capacity.
• Invest in productivity and innovation.
• Resist easy debt and speculative bubbles.
• Stay neutral in geopolitics.

This means basically pursuing cooperation in a spirit of respect with your neighbours and certainly don't get involved in any military adventurism - that would be a route that leads to debt, death and immiseration even if it might plump up the assets of the elite before the finish.

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Conclusion
Globalisation promised prosperity through Ricardo’s "comparative advantage". Neoliberalism turned that promise into a trap. America fell into it. Britain before it too. Singapore now faces the same choice: repeat the cycle, or stay small, stay smart, stay productive.

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