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For climate, we already are seeing a glimpse of what is to come: drought, floods and far more extreme storms than in the recent past. We saw some of the implications over the past year, with supply chains broken because rivers were too dry for shipping and hydroelectric and nuclear power impaired.

As with climate change, demographic shifts determine societal ones, like straining the social contract between the working and the aged.

We are reversing the globalization of the past 40 years, with the links in our geopolitical and economic network fraying. “Friendshoring,” or moving production to friendly countries, is a new term. The geopolitical forces behind deglobalization will amplify the stresses from climate change and demographics to lead to a frenzied competition for resources and consumers.

The problem here, and a problem broadly with complex and dynamic systems, is that the whole doesn’t look like the sum of the parts. If you have a lot of people running around, the overall picture can look different than what any one of those people is doing. Maybe in aggregate their actions jam the doorway; maybe in aggregate they create a stampede

if we can’t get a firm hold on pedestrian economic issues like inflation and recession — the prospects are not bright for getting our forecasts right for these existential forces.

The problem is that the models don’t work when our economy is weird. And that’s precisely when we most need them to work.

The fourth, artificial intelligence, is a wild card. But we already are seeing risks for work and privacy, and for frightening advances in warfare.

A key reason these models fail in times of crisis is that they can’t deal with a world filled with complexity or with surprising twists and turns.

Economics failed with the 2008 crisis because economic theory has established that it cannot predict such crises.

we are not a mechanical system. We are humans who innovate, change with our experiences, and at times game the system

Reflecting on the 1987 market crash, the brilliant physicist Richard Feynman remarked on the difficulty facing economists by noting that subatomic particles don’t act based on what they think other subatomic particles are planning — but people do that.

What if economists can’t turn things around? This is a possibility because we are walking into a world unlike any we have seen. We can’t anticipate all the ways climate change might affect us or where our creativity will take us with A.I. Which brings us to what is called radical uncertainty, where we simply have no clue — where we are caught unaware by things we haven’t even thought of.

This possibility is not much on the minds of economists

How do we deal with risks we cannot even define? A good start is to move away from the economist’s palette of efficiency and rationality and instead look at examples of survival in worlds of radical uncertainty.

In our time savannas are turning to deserts. The alternative to the economist’s model is to take a coarse approach, to be more adaptable — leave some short-term fine tuning and optimization by the wayside

Our long term might look brighter if we act like cockroaches. An insect fine tuned for a jungle may dominate the cockroach in that environment. But once the world changes and the jungle disappears, it will as well.

the clash is nonetheless a giant step away from globalization — and, unlike World War I, it comes at a time when the world has already been moving away from economic integration: Trade’s share of global GDP peaked in 2008, and has been falling for the past decade.

the war in Ukraine doesn’t necessarily mark sharp a break in history. But it underlines and will perhaps cement the decline of globalization.

Similarly, the U.S. and Europe got vaccinated not only before low-income countries, but also before other rich countries — because they had the production capabilities.

Eventually, the logic of geopolitical conflict entered the equation. President Xi Jinping’s “Made in China 2025” initiative, for example, isn’t about creating jobs, it’s about securing economic space for China to operate with political autonomy.

even actors more benign than Putin can see the value of autonomy.

When the Covid-19 pandemic hit, national sovereignty took precedence over free trade almost everywhere.

That decline started with a populist backlash to the Great Recession and sluggish employment growth that made the politics of saving jobs more appealing than the politics of efficiency.

Meanwhile, in the U.S., one issue on which President Joe Biden hasn’t broken with his predecessor is trade with China.

Foreign nations see this, too. The sanctions regime against Russia is both extremely tough and surprisingly non-global.

There are good reasons for all this deglobalization. But it’s important to note that it will come at a cost.

Consumers around the world reaped large benefits from a world of specialization, comparative advantage, just-in-time shipping and elaborate supply chains.

But the populist economics that powered the current wave a decade ago are basically wrong. Mass unemployment after the financial crisis was a tragic mistake of demand-side policy, not a sin of globalization. America can absolutely drill more oil and gas, build more cars and microchips, and make more steel. But there is not a vast army of unemployed people to do that work.

If the U.S. reshores a large segment of tradeable goods, then it will have fewer people left to build houses, clean teeth, cut hair, cook food and care for children and the elderly.

To meet real security imperatives, these may be prices worth paying. Make no mistake, however: There is a price.

as more countries step away from globalization, the price will get steeper. A poorer world offers fewer customers for everyone’s exports, and a world less economically connected is one in which disruptions and conflict are more thinkable.

Are these costs unavoidable? Probably.

But they can be mitigated

One alternative to importing foreign-made goods, for example, is to import foreign-born workers. In an inflationary, supply-constrained, deglobalizing world, immigrants — including the so-called “unskilled” ones who clean houses, wash dishes and pick crops — are a valuable asset.

It’s also crucial to think pragmatically about what the actual issue any given policy is trying to address

there is a world of difference between a supply chain that depends on China and one that leads to Mexico, Central America or the Caribbean.