Other things equal, a world government ought to be a good thing. The deployment of resources, the creation of new resources, etc, could be planned so as to exploit (for everyone's benefit) the comparative advantages of different parts of the world.
Global companies already do this - albeit within the confines of their corporate footprint. They will seek to carry out labour intensive processes in low wage economies; component design may best be done where there is access to high tech knowledge and experience (preferably combined with low wages) such as India or China; assembly may need to be done where there is access to good infrastructure and communications; corporate strategy and direction will, of course, be carried out from the best locations in the world where there are access to good golf course, yacht moorings etc.
However, perhaps we already have one - a world government, that is! The people at the Davos meeting in Switzerland almost fit the bill. Even the FT almost agrees (here). There are nearly 1400 business executives at the meeting who, between them, control "22 per cent of the world’s market capitalisation, including the major banks behind the complex financial products that sparked the credit crunch". Why don't they, the FT suggests, sort out the crisis?
Getting things of me chest!
Wednesday, 23 January 2008
Tuesday, 22 January 2008
"Masters of the Universe"...?
Capitalism? Rugged individualism! Heroes - the businesspeople who "bet the farm" on a project and see it through! They take the risks and enjoy the returns! Not for these the welfare state. No way. You wouldn't catch them skulking to the state, cap in hand, hoping for a hand-out. God forbid!
Ironically, for small and medium businesses this picture is actually not far from the truth. Investors in businesses that, despite everyone's best efforts, go bust - lose their shirts.
The picture for big money is somewhat different. The present "credit crunch" and financial crisis is leading to a situation where international capital is being bailed out with buckets the size of aircraft carriers! Northern Rock, wrecked by its management, has enjoyed £30 Billion or thereabouts of taxpayers' hand-outs - a sum that is about the equivalent of the US trade deficit in goods and services!
The US Federal Reserve (ie, the state) has just reduced interest rates by an almost unprecedented 75 basis points (0.75% to you and me) - which provides a credit lifeline to the erstwhile "Masters of the Universe" and which led to a (no doubt temporary) "market resurgence" today. And "fiscal measures" are also in train (in the US at least) - multi-billion dollar tax cuts.
And, if all this wasn't sufficient, this week's edition of the Economist headlines on its front page (here) the way that so-called sovereign-wealth funds (ie the state) are "buying up Wall Street". And what's worse is that these are (I can barely bring myself to say it) foreign states! As the Economist says, "On January 15th the governments of Singapore, Kuwait and South Korea provided much of a $21 billion lifeline to Citigroup and Merrill Lynch, two banks that have lost fortunes in America's credit crisis... They have deftly played the role of saviour just when Western banks have been exposed as the Achilles heel of the Global financial system."
When you buy shares, doesn't it say on the packet that prices may go down, as well as up? This is as it should be, surely, in accordance with the rules of the "invisible hand" and all that. What big business appears to be saying, though, is that when it puts money on a horse, and the horse turns out to be a nag, it wants it's money back!
Remember this next time someone complains about welfare scroungers!
Ironically, for small and medium businesses this picture is actually not far from the truth. Investors in businesses that, despite everyone's best efforts, go bust - lose their shirts.
The picture for big money is somewhat different. The present "credit crunch" and financial crisis is leading to a situation where international capital is being bailed out with buckets the size of aircraft carriers! Northern Rock, wrecked by its management, has enjoyed £30 Billion or thereabouts of taxpayers' hand-outs - a sum that is about the equivalent of the US trade deficit in goods and services!
The US Federal Reserve (ie, the state) has just reduced interest rates by an almost unprecedented 75 basis points (0.75% to you and me) - which provides a credit lifeline to the erstwhile "Masters of the Universe" and which led to a (no doubt temporary) "market resurgence" today. And "fiscal measures" are also in train (in the US at least) - multi-billion dollar tax cuts.
And, if all this wasn't sufficient, this week's edition of the Economist headlines on its front page (here) the way that so-called sovereign-wealth funds (ie the state) are "buying up Wall Street". And what's worse is that these are (I can barely bring myself to say it) foreign states! As the Economist says, "On January 15th the governments of Singapore, Kuwait and South Korea provided much of a $21 billion lifeline to Citigroup and Merrill Lynch, two banks that have lost fortunes in America's credit crisis... They have deftly played the role of saviour just when Western banks have been exposed as the Achilles heel of the Global financial system."
When you buy shares, doesn't it say on the packet that prices may go down, as well as up? This is as it should be, surely, in accordance with the rules of the "invisible hand" and all that. What big business appears to be saying, though, is that when it puts money on a horse, and the horse turns out to be a nag, it wants it's money back!
Remember this next time someone complains about welfare scroungers!
Wednesday, 16 January 2008
Jerusalem ?
Here's a marvelous article by FT columnist, Luke Johnson. It's about about what a great nation Britain was/is. It should be read whilst listening to Eddie Elgar in the background, slowly rising to a suitable crescendo as you reach the final paragraphs.
His basic premise seems to be that Britain has been great and can be great again. We discovered capitalism, after all, he says. Right up until 1950 Britain accounted for almost 25% of world manufactured output. Military force was a factor, "The British Empire was largely an undertaking to boost trade", he says.
The core reason "we" became great was because of people like him. If it hadn't been for Britain's "pioneering" capitalists (for he is one) "we" wouldn't have got to where we were in 1914 when, "Britain owned 45 per cent of the world’s foreign investments".
And, "Britain even inspired a second revolution with the privatisation of state assets under Margaret Thatcher. It revived our economy in the 1980s and has been copied everywhere from eastern Europe to South America".
It is true that from the 1970s onward, and especially following the collapse of the Stalinist states, there has been a global wave of privatisation and related polies - otherwise known as "globalisation". We would therefore expect to see that there has been a real boost to economic growth and wellbeing since that time - a "revival" in fact.
The chart below, from the IMF, shows something quite different. World economic growth during what the IMF calls the "Golden Age", from the 50s until the 70s was around 3% a year. This was the period of all the "old fashioned" policies subsequently rejected by Thatcher, Blair and the Globalisers.
During their period, that of "Globalisation", economic growth has been halved! Some "revival". At this rate, we will be "revived" back to the stone age before too long!
Undaunted, or unaware, he goes on to say that the secret of "our success" has been that "we" somehow created a society in which "we" allowed people to get rich. Because if "we" reward initiative, "the whole community gains through the “invisible hand” ".
But just a minute, somethings wrong (in the words of Jimi Hendrix). "We" have slipped behind! "We must do better if we are to prosper in the global economy of the 21st century".
What should we do? What? What?
We should reduce our tax rates, reduce government spending and, "engender a stronger sense of self-reliance and responsibility. We need to regain our sense of confidence and adventure...".
You see, this is what a good education does for you.
His basic premise seems to be that Britain has been great and can be great again. We discovered capitalism, after all, he says. Right up until 1950 Britain accounted for almost 25% of world manufactured output. Military force was a factor, "The British Empire was largely an undertaking to boost trade", he says.
The core reason "we" became great was because of people like him. If it hadn't been for Britain's "pioneering" capitalists (for he is one) "we" wouldn't have got to where we were in 1914 when, "Britain owned 45 per cent of the world’s foreign investments".
And, "Britain even inspired a second revolution with the privatisation of state assets under Margaret Thatcher. It revived our economy in the 1980s and has been copied everywhere from eastern Europe to South America".
It is true that from the 1970s onward, and especially following the collapse of the Stalinist states, there has been a global wave of privatisation and related polies - otherwise known as "globalisation". We would therefore expect to see that there has been a real boost to economic growth and wellbeing since that time - a "revival" in fact.
The chart below, from the IMF, shows something quite different. World economic growth during what the IMF calls the "Golden Age", from the 50s until the 70s was around 3% a year. This was the period of all the "old fashioned" policies subsequently rejected by Thatcher, Blair and the Globalisers.
During their period, that of "Globalisation", economic growth has been halved! Some "revival". At this rate, we will be "revived" back to the stone age before too long!
Undaunted, or unaware, he goes on to say that the secret of "our success" has been that "we" somehow created a society in which "we" allowed people to get rich. Because if "we" reward initiative, "the whole community gains through the “invisible hand” ".
But just a minute, somethings wrong (in the words of Jimi Hendrix). "We" have slipped behind! "We must do better if we are to prosper in the global economy of the 21st century".
What should we do? What? What?
We should reduce our tax rates, reduce government spending and, "engender a stronger sense of self-reliance and responsibility. We need to regain our sense of confidence and adventure...".
You see, this is what a good education does for you.
Friday, 11 January 2008
Virgin and Tonic
The Ft reports (here) that Branson is now going to launch "a groundbreaking foray into the NHS primary healthcare market on Thursday with a call to family doctors to join them in establishing a network of branded clinics." The government's noddy Ministers of course welcomed the idea.
If there is money to be made doing this, by providing an improved service, - why aren't NHS managers proposing it? The surplus from the enterprise could then support the wider NHS effort.
If there is money to be made doing this, by providing an improved service, - why aren't NHS managers proposing it? The surplus from the enterprise could then support the wider NHS effort.
Monday, 7 January 2008
2007
Here is an excellent summary from a Socialist perspective of the significance of 2007 - written by the general secretary of the UK Socialist Party. I've been following the Socialist Party since my early 20's, but I still get a buzz from reading such clear expositions of political, economic and social developments. Not only do you get an explanation of how they affect the majority of people in the world, but you also get a clear direction for the way forward.
I was very sorry to read about the death of Andrew Glyn in December. He was a socialist economist at Oxford - not many of those around! His last book was (I think) "Capitalism Unleashed".
This is what the Financial Times had to say about him. The article is relatively friendly and fulsome, but it says that Glyn took an alternative, radical perspective on the "free market capitalism" even though he had a perfectly happy background! The implication seeming to be that only if you are in some way psychologically damaged could you possibly have anything other than a thoroughly orthodox view!
I was very sorry to read about the death of Andrew Glyn in December. He was a socialist economist at Oxford - not many of those around! His last book was (I think) "Capitalism Unleashed".
This is what the Financial Times had to say about him. The article is relatively friendly and fulsome, but it says that Glyn took an alternative, radical perspective on the "free market capitalism" even though he had a perfectly happy background! The implication seeming to be that only if you are in some way psychologically damaged could you possibly have anything other than a thoroughly orthodox view!
Tuesday, 1 January 2008
"Smash Capitalism Now!"
Serious discussion about capitalism, as a system, is quite rare. With the fall of the Berlin wall at the outset of the 1990s, the overall view of the mainstream media was - "We Won!" For millions of people this seemed to indicate a very decisive end for socialism. Whilst very few people thought that the Soviet Union was a genuine, democratic socialist society, it did nonetheless seem to indicate that there was an alternative way of doing things, and with its demise the field seemed clear for big money. The "market economy" had been truly vindicated!
Since then, big business has had a marvelous time, celebrating the "new era". The frontiers of state have been further rolled back around the world. Complex "financial instruments" have been developed by financial and mathematical "geniuses" to make money seemingly out of thin air. Inequalities of wealth have reached unheard of proportions. According to the Economist of 9th December 2006, 2% of the world's population now own more than half of its wealth. This is the same as saying (again according to the Economist) that in a world of 10 people, 1 person would have £1,000, whilst the other 9 would have £1 each.
Nowadays, however, there is something new in the air. The international debt and housing market crisis - now beginning to affect ordinary people (as per, for example, the ironically named "Northern Rock") - is also beginning to affect the crowing confidence of businessmen and financiers etc.
People are beginning to question some of the major fundamentals - such as, "if the government can find £20 or £30 billion at the drop of a hat to support a failing "building society", how come there is no money for hospitals and schools?" And, "if nationalisation is such an awful concept, as should not be mentioned in polite society, how come it seems the only way out for Northern Crock?". And, "why is the government choosing to rescue Northern Crock, when it didn't bother rescuing, say, the Farepak savings scheme, in which thousands of families lost their Christmas savings? - or Equitable Life etc"
The good old Economist (bless), always the staunchest defender of capitalism, in its editorial of 22nd December 2006, says that if you actually want to, "imperil the world economy", what you need is, "the baroque superstructure of mortgage-backed derivatives that enabled investors to bet on the housing market" - which, of course, is what we've got. The rot, it says, "can spread from housing to other areas, such as commercial property and credit card debt."
It is deeply embarrassed (as it should be) that nationalisation - recourse to the State for gawds sakes - should be seen to be unavoidably necessary.
All I'm saying is that I reckon people will, under the impact of events like the ones I've mentioned here, increasingly start questioning underlying assumptions. And if capitalism really wants to enjoy a "thousand year Reich", it's going to have to do a lot better than this!
The Economist concludes in the editorial above that, "The hope is that the credit markets unblock themselves and that buoyant emerging markets buy rich-world exports and recapitalise rich-world banks." In other words, they hope they "sort themselves out" and that poor countries rescue the rich! Some hope. In any event, as any business consultant will tell you, hope is not a strategy!
(By the way, so far as "Smash Capitalism Now!" is concerned, I used the heading for affect only - this was the heading of a hackneyed old poster of pesky lefty students when I was in my 20s. Never a very good slogan in my view.)
Since then, big business has had a marvelous time, celebrating the "new era". The frontiers of state have been further rolled back around the world. Complex "financial instruments" have been developed by financial and mathematical "geniuses" to make money seemingly out of thin air. Inequalities of wealth have reached unheard of proportions. According to the Economist of 9th December 2006, 2% of the world's population now own more than half of its wealth. This is the same as saying (again according to the Economist) that in a world of 10 people, 1 person would have £1,000, whilst the other 9 would have £1 each.
Nowadays, however, there is something new in the air. The international debt and housing market crisis - now beginning to affect ordinary people (as per, for example, the ironically named "Northern Rock") - is also beginning to affect the crowing confidence of businessmen and financiers etc.
People are beginning to question some of the major fundamentals - such as, "if the government can find £20 or £30 billion at the drop of a hat to support a failing "building society", how come there is no money for hospitals and schools?" And, "if nationalisation is such an awful concept, as should not be mentioned in polite society, how come it seems the only way out for Northern Crock?". And, "why is the government choosing to rescue Northern Crock, when it didn't bother rescuing, say, the Farepak savings scheme, in which thousands of families lost their Christmas savings? - or Equitable Life etc"
The good old Economist (bless), always the staunchest defender of capitalism, in its editorial of 22nd December 2006, says that if you actually want to, "imperil the world economy", what you need is, "the baroque superstructure of mortgage-backed derivatives that enabled investors to bet on the housing market" - which, of course, is what we've got. The rot, it says, "can spread from housing to other areas, such as commercial property and credit card debt."
It is deeply embarrassed (as it should be) that nationalisation - recourse to the State for gawds sakes - should be seen to be unavoidably necessary.
All I'm saying is that I reckon people will, under the impact of events like the ones I've mentioned here, increasingly start questioning underlying assumptions. And if capitalism really wants to enjoy a "thousand year Reich", it's going to have to do a lot better than this!
The Economist concludes in the editorial above that, "The hope is that the credit markets unblock themselves and that buoyant emerging markets buy rich-world exports and recapitalise rich-world banks." In other words, they hope they "sort themselves out" and that poor countries rescue the rich! Some hope. In any event, as any business consultant will tell you, hope is not a strategy!
(By the way, so far as "Smash Capitalism Now!" is concerned, I used the heading for affect only - this was the heading of a hackneyed old poster of pesky lefty students when I was in my 20s. Never a very good slogan in my view.)
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