Russia war ends era of globalization that kept inflation low

For decades, the free flow of trade across much of the world allowed the richest nations to enjoy easy access to low-priced goods and supplies. It meant solid economies and stable markets.

And for households and businesses, especially in the United States and Europe, it meant an entire generation of ultra-low inflation.

Now, Russia’s invasion of Ukraine has delivered a devastating blow to that system. Prices, which had already been rising, have shot up further. Supply chains, already disrupted by the swift recovery from the pandemic recession, face renewed pressure.

The widening rupture between the world’s democracies and its autocracies has further darkened the global picture.

The new New World Order leaves multinational corporations in a tricky spot: They're straining to keep costs low and profits high while halting ties with Russia and facing pressure from consumers troubled by Russian aggression and Chinese human rights abuses.

Larry Fink, CEO of the investment management giant BlackRock, wrote last week in an annual letter to shareholders that Russia's invasion “upended the world order that had been in place since the end of the Cold War’’ and “put an end to the globalization we have experienced over the last three decades.’’

“A large-scale reorientation of supply chains,” Fink warned, “will inherently be inflationary.”

Adam Posen, president of the Peterson Institute for International Economics, wrote in Foreign Affairs that “it now seems likely that the world economy really will split into blocs — one oriented around China and one around the United States.’’

Though the rift has been years in the making, Russia's war against Ukraine may have completed it. It likely concludes an era in which countries with clashing political systems — democracies and...