Tuesday, 16 December 2008

Global Economics and Local Cipollas

Even if nation states were on their way out, some governments seem to want to linger around. They are thrusting themselves onto the global arena with a whole new set of aspirations, quite detached from their original functions. And by doing so, they meet entirely new forms of appreciation by the World.

Some will be happy, it seems, to subject themselves to ridicule: the Polish government banning the ‘super-gay teletubbies’ was an instant classic. Or contempt: the US deluding itself into a ‘global policing’ function did not exactly meet widespread appreciation around the world. Or admiration: did you register what AUSAID, the Australian government’s aid agency, did in Indonesia after the tsunami? Or, sometimes, the combination of contempt, ridicule, and admiration: remember the French government’s attempt at the global Francophone television? (Or, in fact, remember the “French government’, as such?)

The interesting thing is that these New Government Actions are mostly independent of their respective societies. And as they are busy reinventing themselves, the national economies that they have been presiding over are gradually dissolving into the global economy.

It started so much grander… 

At the beginning there were the sovereigns. Those mighty times of rule-free orgies and joyous beheadings. The times when the sovereign was still truly sovereign on its own land. 

But then, a glitch emerged. Even if slowly. 

Land was less and less important, people mattered, their heads mattered (and, shocking, more at the end of their necks, rather than on the top of a spear). With all the new ways of moving around and difficulty in stopping them from doing so, the people turned out to be not-so-loyal subjects. Huh, hard times came for the sovereigns. They had to compete with each other! Efficiency mattered. And worst of all, I kid you not, it was not even clear any more who the sovereign was. Can you imagine that? Sick world!

And thus the ‘government service providing institutions’ were born in the place of the Mighty Sovereign. But it might still end on a sweet note. 

As the world economic crisis is taking its full shape, and the national government’s services are becoming less effective by the day, a new, global set of institutions will emerge. And thus, the newly underemployed national governments will face the choice of reducing their size or finding new roles. (This is not the first time in recent history. See the variation with which the newly formed Eurozone’s old, national central banks reacted to their sudden lack of tasks. Some downsized, some magnified past functions, some created whole new ones...) This will be the moment, for national governments to reassess the globally interesting positions they sit on. There are some things, thank heavens, that cannot emigrate. Mountains rich in ore, seas of oil reserves, or nice beaches, coral reefs and snowy slopes are difficult to drag away. (Although some do try: witness Dubai’s two-piste mini ski resort.)

It might be a long time before these are submitted to global level control (do you know who owns the larger Schlesswig-Holstein banks? That provincial government never really came to terms with German reunification, did it? And I am talking about the one by Bismarck and not by Kohl.) We already began to discuss the consequences of this coming phenomenon, when the increasing role of sovereign wealth funds came into our sights. But the real thing is yet to emerge.

It is not that bad, is it? It will, or at least should not be necessarily very different from city municipalities playing a role in a nation’s economy, providing say infrastructure services, and at the same time maybe being an important, but not dominant player on the local capital markets. 

But some of the global players of government origin might turn out to be Cipollas. Excessively large accumulated wealth (maybe in sovereign wealth funds, maybe somewhere else, such as in government controlled mining companies), combined with lack of transparency, lack of any form of external oversight, and power hungry power-hungries. 

The newly emerging global state functions (well, if they emerge at all) might just start off with an unexpected rouge opposition. 

Tuesday, 9 December 2008

Cornish Love - Off Global Economics...

(more from those equatorial forests of Cornwall)

We also collected some real gems:

One. In the village shop where we stayed, people were very friendly to me. Liz suggested that here it might be better to be a foreigner than a non-Cornish Brit… So there was this guy, the local baker, who wanted to show off his freshly baked bread to me, accompanied by the words: “I bet that they did not tell you at Immigration about how great the bread is going to be here”. Sure, they did!

Two. It was also in this village shop that I witnessed firsthand two 50+ men say in all seriousness to each other: “see you later alligator”, “in a while crocodile”. I kid you not: they were not joking. Even a bit grumpy. And thus was the true etymology of the term ‘corny' uncovered.

Three. Although the Enlargement of Europe is recent, Central Europeans are already making a mark on the local culture. I overheard the conversation of two eight-year-olds at a kids’ slide place: “I bet you are a Romanian!” It was not discovered whether the term was used in a positive or a negative context.

Four. But the best of all was the large poster hung on a house at the end of one of the small towns: “Love Sale Festival” (heart, heart, heart). I guess the recession has now officially spilled into all the sectors of the economy.


(notes from one other remote, exotic place, with strange people and customs: Cornwall)
In a Papuan rainforest location I recently witnessed a PR person bragging about how her company had really not done that much damage to the environment at all. In a field which had previously been a complex forest ecosystem on the equatorial, there now lies a grass meadow with grazing cows, right out of a Constable painting. And we thought that clichés were only harmful to the soul...
Now, in Cornwall, I am struck by how desolate the land is in the ‘mature economies’. The beautiful meadows, with the gorgeous rolling hedges (the latter - to be precise - can contain a surprising complexity of life in them), the cows and horses… It all seems so empty and destroyed compared to the real thing. Desolate, really, is the word. 
Csaba Aradi, the former director of the Hortobagy National Park in Hungary once played a little game with me. I - in my usual polite manner - asked him, why on Earth people are so interested in the flat barren land over which he resided. Hortobagy is a great plain. It was, I suggested, just grass and nothing. His response? He made me walk in a random direction, of my choice, for a random distance, also my choice, on this ‘empty field’. Then we kneeled down, and he made me count the species I could see within a circle of one-metre diameter. It took a while: there were a lot of species. Then we stood up, he made me choose another direction, and we walked just two metres. Kneeled down again, many distinct species again, almost none of them the same. The species diversity in this ‘flat, barren field’ was very high indeed. 
Now take Papua, the extreme version of ecological variation. You cannot say this slowly enough, for my mind to take it in. There are more than 2000 different orchids on Papua. Two thousand. More than 600 birds. Incredible. 61 different species of snakes. Some 2400 different fish. How many birds, or fish can I name? Or remember ever having seen? Including the zoo, the nature books, the Attenborough movies, and all my hikes altogether. I guess - I have seen quite a few – but it is maybe 300 max. Now Papua has double all the birds I think I have ever glanced at in life, on the screen or in books. Or fish: if I spent only a minute looking at each species, I would need almost two days of constant looking to get through them. (This is why people come up with silly comparisons -- the magnitude just cannot be felt through a number on the screen, albeit a four-digit one. The next thing I will do is calculate whether all the fish species lined up one after the other would actually reach the moon...)
And to top it all, you have more than 100 thousand insect species alone. Now, that is a lot of bugs.
Then look at the English landscape. Grass and grazing cows. That is two species. Well, grass is a little more complicated, so maybe a few more. And the weeds. And the crows. And… Er… There is also the fly, yeah? It is a desert.

This Guy Is Boring!

The emerging economic policy of the Obama administration can - at best - be described as  enlightened left wing policies, the kind that has been practised by the better of the European social democrats. The usefulness of these might be a revelation for the government-fearing US conservative elite, but economic policy innovation it is not.

There goes our hope for global leadership.

A vision about creating global policy institutions? Global regulatory framework? Global fiscal and monetary policy harmonisation? Leading the world to find a globally legitimate set of institutions, and thus transforming his enormous political capital into finding a global political channel to achieve all of these?


It would have taken a ‘world leader’ to create a new, global institutional framework with foresight, in preparation of what is coming, rather than always moving as the reaction to the latest immediate pressure. At this time, Obama is the only person who has the global clout to do that. All others who could have done it have either already burned their capital in futile actions, or are yet to emerge, but are still not on the horizon. And Obama is not doing it.

Now, we will have to wait for the global economy to slide deeper into recession, and then see how global governance innovation inevitably emerges as a response.  Expensive entertainment.