Even a stopped clock tells the right time twice a day – so I
won’t gloat too much about the fact that everything completely bat shit crazy I
have written over the past few years now appears to be accepted as fact by the
wider media, politicians and academics. Even Mark Carney, who built his career
at Goldman Sachs advising client firms on outsourcing jobs and financing the
process of globalisation, and thus hastening inequality, has now given a speech
saying that globalization and outsourcing jobs is bad, inequality makes our
economy unsustainable and leads to the rise of demagogues (and, incidentally,
also that none of this has anything to do with him). I note my last blog post,
written quite a few months ago, was entitled ‘the pitchforks are coming’ and it
even seemed a bit mad to me then, and I wrote it – except now they are now getting
pretty close…
But anyway, everyone now appears to share my diagnostic of
the world’s economic ills, and entirely the wrong consensus has been reached –
namely, that global trade is bad. This is, of course, nonsense.
I want to take you back in time, to a table in Athens in Ancient Greece, at which sat Euripides. He’s munching on a bit of bread, perhaps some crumbs get in his wise beard. He’s wearing a robe made with silk - he didn’t want to buy the robe, incidentally, but he accidentally tore it in the shop and –hey, Euripides, you buyya dese…
But I digress: what he knew, and what we know, is that the
bread he is eating is made from wheat grown in the Ukraine, a thousand miles
away. The silk is from China. The original farmer in Ukraine got richer, the
Chinese silk producer got richer, the merchants who shipped them to Greece got
richer, and Euripides got…better bread and a slightly ripped robe (and wise
crumbs in his wise beard. So wise).
Move forward a few hundred years – to, say, 600AD – to a Celtic
merchant sitting in his hovel in Sussex (we Celts hadn’t been thrown out yet
and pushed into soggy western bits) and eating his meal – off a plate made in
China, flavoured using spices grown in northern India, and washed down with
wine grown in southern Europe. All parties to this global trade benefitted.
My point is that trade has been global for centuries – the global
north traded with the global south, global south traded with global north, and
both north and south benefited.
There were a few hiccups – there was a global financial
crisis in the sixteenth century, as too many goods were flowing East from China
and were being consumed by Europeans, and too much gold from Europe flowed East
in return, which caused an imbalance and a global monetary crisis – surely something
that would NEVER happen these days. But then the Spanish found enough gold to
ruin the world forever in South America, and global economic balance was
restored – at the cost of millions of lives, of course, and set the pattern for
western exploitation for a few centuries, which hasn’t really stopped.
Then the world trundled on, man exploiting man, until after
the 1970s, with global trade ensuring, at least, general economic progress and
a sense of hope. The Soviet alternative meant at least western governments had
to pretend to offer a better world, otherwise we would join the Bear and spend
our time playing chess whilst drinking vodka. Nazdarovya!
Then, around the 1980s, accountants, after staring at their
balance sheets for some time, worked out something – and they took this to
their CEOs in the US, and together they and US executives worked out that they
could do something new – outsource actual labour. This made their shareholders
richer, and themselves richer, and their workers poorer, and started a process
of growing inequality which has accelerated ever since.
Now, this isn’t global trade – labour is a liability on a
balance sheet, not an asset – and outsourcing this cost is a zero sum game ultimately
benefiting no one, not the global south, not the global north – no one that is,
apart from the executives (and possibly the accountants). We Britaineers were a
bit late to the party, but after 1997 our executives worked out something
similar – we could outsource jobs, but without moving the jobs themselves – by
moving in cheap labour here from abroad. This would also destroy collective
bargaining, further making their lives easier, and also - WINNING! - lower
wages, which were a liability on their balance sheets. Hurrah!
Inequality mushroomed – but was covered up initially by an explosion
in credit, which masked this inequality as the slowly destroyed middle class
could pretend they were getting richer by borrowing more – from bankers such as
Mark Carney. Except for every pound they borrowed, because of our fractional
reserve banking system, everybody got fractionally poorer – except the bankers
(such as Mark Carney – sorry Mark, I’ll stop in a second) – and inequality continued
to increase. This inequality caused massive piles of cash to swash around financial
markets, which ultimately created instability in the global financial system
and the inefficient allocation of resources – and, eventually, the global
financial crisis. To which central bankers responded by lowering rates, printing
money (sort of) and exacerbated inequality even more, which is what caused the
problem in the first place.
And now, predictably, we have the rise of demagogues like
Trump – who want to stamp down on global trade, which is exactly the one thing
that isn’t causing the US problems. And he is, sadly, just the start.
Now this theme has been picked up by politicians, the media
and think tanks, what should be done about it?
Easy – strengthen labour laws and give workers better
rights, clamp down on executive pay and then with regards to housing – and this is the
easiest and most important bit – give people security of tenure so at least the
majority of the population have secure homes to come home to, think innovative
thoughts about how globalization benefits everyone and sit around eating artisan
bread from…Kent, and sparkling wine from…Sussex…okay, we’ve gone backwards on
that a bit. Silly hipsters.
And, what will in fact be done?
Well, nothing, obviously.
Those in charge think they don’t have to – there is nowhere else for us
to go, at least until the pitchforks come out in full. They think they can do what they like now, they have us trapped – the best thing we non-pitchfork types can do now is put on a Santa hat, down the third free glass of warm, cheap
white wine at the office Christmas party and try and seduce that chap or chapess from
accounts. At least then we can get hold of their balance sheet…
