A Complete Economic History of the Entire World

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…

The Pitchforks Are Coming

I love being a Chartered Surveyor. It’s so enjoyable in fact, that it’s easy to forget that for many young chaps growing up on the Brighton and Hove border, it’s often the only route out of the ghetto.

But being a Chartered Surveyor, I think, sometimes gives you a perspective on society that other professions perhaps don’t always see. Obviously this is not exclusively true: but most people spend their time mixing with people of more or less their own socio-economic grouping, at home and work.

Lots of jobs come into contact with people across the spectrum, but within specific spheres, and within their own field, and perhaps only one or two groupings: lawyers might deal with criminals, police with drunken Chartered Surveyors etc, but what I mean is this: I see where everyone actually lives, from the poorest in our country, to the very richest. I sometimes survey a slum in London in the morning filled with a dozen migrant workers with no hot water, and in the afternoon survey a £10 million penthouse.

Anyway, what I’ve learnt so far is this: the pitchforks are coming.

From my daily meandering around London’s residential areas, it is clear that the city as a whole is transforming into roughly two parts: vast swathes of dormitory housing for migrant workers (which has replaced the former middle-class suburbs surrounding the core, pushing the former middle class inhabitants outside the M25) and these migrant workers daily service the second part: archipelagos of increasingly elite housing areas.

This process is not yet complete, but the transformation has been extraordinarily swift.

Our society is as unequal as it has been in modern history, and grows more so by the day. There are a higher proportion of people in London in servile jobs (domestic cooks, cleaning the houses of the rich etc) than there were 150 years ago, and the inequality I see every day is just…extraordinary.

Downtown Abbey portrays a socialist utopia that Londoners can now only dream of. An individual’s wealth – and whether or not they have a chance of buying a home – is now pretty much entirely down to their parent’s economic status, as it was a century ago. Some areas of housing in London now would not be unrecognisable to Dickens, and these areas are spreading rapidly. And in contrast, the wealth I see in some areas is mind boggling: pricing-Croesus-out-of-Mayfair type-wealth.

And, speaking as a former Archaeology undergraduate (I applied as it was near the front of the UCAS book) there has never been this level of regressive inequality in history before that hasn’t led to the masses taking up pitchforks, literal or metaphorical – the only alternative paths have been where authoritarian regimes have emerged, and managed to postpone the inevitable (by buying all the pitchforks first. Can you buy a metaphorical pitchfork? I think I’m getting lost in my metaphor’s metaphors).

Why else are the government proposing to collect all of our emails and internet browsing history, if not to pre-empt this dystopia?

At some point people will realise: our economy isn’t a game that is rigged, it isn’t even a game: it’s an activity, where wealth is transferred from the many to the few. And when they realise this, they’ll appreciate that the only option they have left is to go to the few that have the wealth, carrying pointy-objects, and…take all their stuff.

London now is a random group of people, who share nothing non-geographical in common and often don’t even speak the same language, and who live in a society with income and asset inequality not seen for over a century. The rest of the country will be the same soon.

How do you govern that?

As I Was Going To St Ives, I Met A Man With Seven Houses

St Ives have voted for…well, it was a while ago now, but something to do with banning new builds being sold to people not from St Ives. So no more new builds for St Ives, which will make their local housing crisis worse.

But this is about the least insane thing that has happened recently, in housing terms. I mean, really, where do you start now on deciding what to write about with regards to the housing market?

There’s nothing about it that isn’t completely f***ing batsh*t crazy.

Following the government’s proposal to build a million new houses, new house building has completely collapsed. Like, totally (dude).

Social housing is slowly being completely eliminated by the recent Housing Act and replaced with Starter Homes, which are themselves, as a policy, Alice in Wonderland-level insane.

Pick any bit of legislation regarding housing, at random, and it will be nuts: take, I dunno……..references to housing in the Immigration Act 2014 and the new Right to Rent madness.

Section 21(3) “P is to be treated as having a right to rent in relation to premises (in spite of subsection (2)) if the Secretary of State has granted P permission for the purposes of this Chapter to occupy premises under a residential tenancy agreement”

Now, there is no way in which someone can apply for permission to rent, but permission might be granted by the Secretary of State off their own bat, in certain enigmatic circumstances. So, some people who do not have the right to rent might be granted permission to rent. But they cannot apply for such permission.

Impressive.

Lucky everyone’s distracted by the EU referendum, hey?

I’m actually undecided as to whether we should leave: no one has convinced me that the democratic deficit in the EU can be overcome - or is even planned to be overcome. This trumps most things for me, but I like the idea of peace and love that the EU promises, and I have always wanted to one day claim benefits on the French taxpayer in Gaudeloupe in the Lesser Antillles, and leaving the EU would jeopardise this plan (it’s in the Caribbean, but technically part of the EU you know. I know! Right? Who’s with me on this one…).

Both sides are bananas: some of the people in favour of Leave are starting to become a teensy weensy bit massively racist, but someone from Remain told me recently that parliament is sovereign because even though it’s not, it could be if it wanted to be as we could vote to leave the EU. Presumably, we’re also a republic because, even though we have a Queen, we could vote to get rid of her, ergo we are a Republic. And also, I’m thin! Even though I’m overweight, I could be thin if I lost weight. So I must be thin! Hurrah!

But then, I doubt we’ll leave the EU even if we vote to. I reckon Cameron won’t push the legislation through parliament immediately, he’ll wait two years – by which time he will have negotiated such a disastrous deal, the economy will collapse (it will anyway, it’s just a matter of timing – best to let it happen when you have an excuse) and the original referendum result will be declared null and void, and the EU super state will role on.

Still, Guadeloupe looks great.

The Death of Social Housing Is Not Greatly Exaggerated

Increasingly unlike his descendants, my Great Grandfather was a wealthy chap. Major Albert Owen was what you might call a classic, old-school patrician Tory: he bought a new Rolls Royce every year, spend much of his life executing wildlife and thought French people should be flogged on sight. But ask him whether he thought his valet should be housed in a proper, three bed semi with a garden and that the state should pay for it if necessary – and if the state didn’t pay, then he would: he would have thundered “GOOD GOD MAN OF COURSE, HE DESERVES A DECENT HOUSE… QUICK! THERE GOES A FRENCHIE”.

And in fact he built a row of houses in Hackney for just that purpose: social housing (although they weren’t all for his valets), whilst maintaining what would politely be called “massively right wing views”. And he was symptomatic of his time. After the Second World War there was a sense that everyone in this country deserved a home, and this view was held by – as far as we can tell – pretty much everyone in the land. This social environment led to the Beveridge Report in the 1940s – which essentially said just that: everyone in the country deserves a home, and this formed the basis of government policies for generations. Furthermore, if necessary the government would provide those houses, as otherwise it was agreed that we won’t get rid of the five great evils: squalor, ignorance, want, idleness, and the damned Frenchies (I think those were the five anyway, my great-grandfather first explained it to me).

If you are going to use government money to provide houses to people – whole, actual houses, with windows and everything – then that is what you need: complete, social solidarity. You need the whole country agreeing, or mostly, anyway. It’s no good me or your saying, correctly: “…but it’s a great idea! It’ll be so much better, and even cheaper, in the long run if we provide decent housing all round etc etc” if even a sizable minority are against it, it just doesn’t work, as it’s such a big thing for the state to do.

And flip to today: if you asked the question, “should a Romanian who has just arrived in Dover be provided with a decent, comfortable, free house when they set foot in this country?” After all, they are now as full a member of our country as anyone else. But how many people do you think would agree with that? I agree they should – if people are living in this country legally and want to be British, they should be housed properly as everyone in the country should be, otherwise we will end up with slums everywhere (we are there already, basically). But lots of people will say NO. And as a result Social Housing is dead, or at least the flights to Dignitas are booked – you can’t just house some Brits and deny any migrants the same rights, as otherwise….I mean the whole thing becomes nuts. You have some people with the right to live and work here and claim benefits (Brits), and some people with the right to live and work here and not even vote (damned Fren…sorry, I mean other EU citizens). How is that sustainable?

Quick non sequitur: as a side question, have we ever before had millions of people living in this country, contributing, working and not able to vote in a general election, the position EU citizens are in currently? Oh - YES CHR**T WOMEN UNTIL 1928 YOU IDIOT I hear you scream…anyway.

That’s partly why I’m thinking of voting to leave the EU, even if it does cause short term economic chaos: it has destroyed our sense of social solidarity, and killed social housing, by giving a lot of frankly nasty interests a convenient scapegoat, and allowing rich people to get poor Brits to blame poor foreigners for their problems, rather than the rich Brits that caused them. 

But I’m not decided – although, just wondering: but should we have anything to do with the way, say, Italy or Portugal govern themselves? I have lived in Italy, and Portugal, and I don’t think my Latin friends would mind me saying that it’s absolute f****ng chaos.

Anyway, if we are going to actually leave, we should do it properly: sever the landmass from the underlying continental shelf, muster a few thousand tug boats, attach the outlying islands using bungees and tow ourselves somewhere sunny. And away from those damned Fre…oh, nothing.