DAVOS – I’ve been attending the World Economic Forum’s annual conference in Davos, Switzerland – where the so-called global elite convenes to discuss the world’s problems – since 1995. Never have I come away more dispirited than I have this year.
Category Archives: Economy
The first pathetic pieces of wreckage from North Korean fishing boats known as “ghost ships” to be found this year are washing up on the coast of northern Japan. These are the storm-battered remains of fragile wooden boats with unreliable engines in which North Korean fishermen go far out to sea in the middle of winter in a desperate search for fish.
Often all that survives is the shattered wooden hull of the boat cast up on the shore, but in some cases the Japanese find the bodies of fishermen who died of hunger and thirst as they drifted across the Sea of Japan. Occasionally, a few famished survivors are alive and explain that their engine failed or they ran out of fuel or they were victims of some other fatal mishap.
Inequality is on the rise across the world, but it’s not increasing everywhere at the same pace. In many ways Europe stands out as a positive exception. Despite all the criticism thrown at the EU, it is a global leader in preserving a degree of fairness in the social fabric. This may seem unlikely – Europe is hardly devoid of problems and tensions. Parts of the left depict it as a vehicle for neoliberal economic policies, and parts of the right deride it as an inefficient administrative monster. So how is Europe really doing?
It’s hard to exaggerate the difference between western Europe and the USA when it comes to inequality. In 1980, these blocs of similar population and average income were also similar in income inequality: the top 1% captured around 10% of national income, while the poorest 50% took around 20%.
Things have changed dramatically since then. Today, the top 1% in Europe take 12% of income (in the US, 20%) while the bottom 50% have 22% (in the US, 10%).
Not so long ago, the argument over globalisation was seen as done and dusted—by parties of the left as much as of the right.
Tony Blair’s 2005 Labour conference speech gives a flavour of the time. “I hear people say we have to stop and debate globalisation,” Blair told his party. “You might as well debate whether autumn should follow summer.” There would be disruptions and some might be left behind, but no matter: people needed to get on with it. Our “changing world” was, Blair continued, “replete with opportunities, but they only go to those swift to adapt” and “slow to complain.”
No competent politician today would be likely to urge their voters not to grumble in this way. The Davos set, the Blairs and the Clintons are all scratching their heads, asking themselves how on Earth a process they insisted was inexorable has spun into reverse. Trade has stopped growing in relation to output, cross-border financial flows have still not bounced back from the global crisis of a decade ago, and after long years of stasis in world trade talks, an American nationalist has ridden a populist wave to the White House, where he disavows all efforts at multilateralism. Those that were cheerleaders of hyper-globalisation at the turn of the century stand no chance of understanding where it has gone wrong without realising how little they understood the process they were championing.
Back in 2005, in that same Blair conference speech, there was scope for doubt, and “no mystery about what works: an open, liberal economy, prepared constantly to change to remain competitive.” What of social solidarity? Would globalisation sweep it away? Blair insisted it could survive, but only if it were repurposed. Communities could not be allowed to “resist the force of globalisation”; the role of progressive politics was merely to enable them “to prepare for it.” Globalisation was the foregone conclusion; the only question was whether society could adjust to the global competition.
It is customary to contrast Trump and Macron: on one hand the vulgar American businessman with his xenophobic tweets and global warming scepticism; and on the other, the well-educated, enlightened European with his concern for dialogue between different cultures and sustainable development. All this is not entirely false and rather pleasing to French ears. But if we take a closer look at the policies being implemented, one is struck by the similarities.
In particular, Trump, like Macron, has just had very similar tax reforms adopted. In both cases, these constitute an incredible flight in the direction of fiscal dumping in favour of the richest and most mobile.
ATHENS – By 2016, almost all Europeans had realized that radical policy and institutional reforms were essential to revive the European project. Yet serious reform was impeded by the usual disagreement about what should be done – a dispute that Emmanuel Macron, France’s new president, once described as a “holy war” between German and French elites.
To call Bitcoin the biggest and most obvious bubble in modern history may be a disservice to its surreality.
The price of bitcoin has doubled four times this year. In early January, one bitcoin was worth about $1,000. By May, it hit $2,000. In June, it breached $4,000. By Thanksgiving, it was $8,000. Two weeks later, it was $16,000.
This astronomical trajectory might make sense for a new public company with accelerating profits. Bitcoin, however, has no profits. It’s not even a company. It is a digital encrypted currency running on a decentralized network of computers around the world. Ordinary currencies, like the U.S. dollar, don’t double in value by the month, unless there’s a historic deflationary crisis, like the Panic of 1837. Instead, bitcoin’s behavior more resembles that of a collectible frenzy, like Beanie Babies in the late 1990s.
The new 55-page “America First” National Security Strategy
(NSS), drafted over the course of 2017, defines Russia and China as “revisionist” powers, “rivals”, and for all practical purposes strategic competitors of the United States.
The NSS stops short of defining Russia and China as enemies, allowing for an “attempt to build a great partnership with those and other countries”. Still, Beijing qualified it as “reckless” and “irrational.” The Kremlin noted its “imperialist character” and “disregard for a multipolar world”. Iran, predictably, is described by the NSS as “the world’s most significant state sponsor of terrorism.”
Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geoeconomic process of Eurasia integration.
The rise of populism on both sides of the Atlantic is being investigated psychoanalytically, culturally, anthropologically, aesthetically, and of course in terms of identity politics. The only angle left unexplored is the one that holds the key to understanding what is going on: the unceasing class war waged against the poor since the late 1970s.
ATHENS – The Anglosphere’s political atmosphere is thick with bourgeois outrage. In the United States, the so-called liberal establishment is convinced it was robbed by an insurgency of “deplorables” weaponized by Vladimir Putin’s hackers and Facebook’s sinister inner workings. In Britain, too, an incensed bourgeoisie are pinching themselves that support for leaving the European Union in favor of an inglorious isolation remains undented, despite a process that can only be described as a dog’s Brexit.
NEW YORK – Fifteen years ago, I published Globalization and Its Discontents, a book that sought to explain why there was so much dissatisfaction with globalization within the developing countries. Quite simply, many believed that the system was “rigged” against them, and global trade agreements were singled out for being particularly unfair.