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The Bear’s Lair: Is the world global? This afternoon my OE Inbox mysteriously received Martin Hutchinson’s latest Bear’s Lair piece. This one considers the prospects for the globalising economy. I am very pleased to publish it here.
In some respects, the technological and ideological changes of the 1990s have already altered the world, and are not going away. The Internet has hugely increased the opportunities for sourcing both goods and services from the Third World, and it’s not going to be un-invented. Communism is dead, except in a few outposts like Cuba and North Korea. However determined Russian President Vladimir Putin may be to recreate the old Soviet Union, he has no particular wish to see it take on again the inefficiencies of communism. Both the intellectual debate and the technological debate are thus closed; globalization, in certain truly fundamental respects, is here to stay. That’s not to say that either the intellectual or the economic changes of the 1990s are an irresistible river, forcing us to our inevitable destination. They are more like a waterfall, that permanently altered our position, but after which we are in a large pool with complex and dangerous crosscurrents. Intellectually, Communism may be dead, but socialism certainly isn’t and nor is totalitarianism. There are various economic theories being bandied around currently, from extreme environmentalism, through health-conscious weight and tobacco extremism to globalized social democracy that can and do have the effect of increasing the state’s share in the economy and the power over us of distant and unaccountable bureaucracies. In particular international institutions such as the International Court of Justice, the European Union and the Intergovernmental Panel on Climate Change are all mechanisms whereby unelected and unaccountable international bureaucracies can regulate the lives of everybody and metastasize the public sector. The World Trade Organization is another such institution, although its power is so limited and the lobbies ranged against it so strong that it poses little danger. Economically, the Internet has made it easier to outsource, but it’s a one-off effect. We can now talk to China and India over the telephone almost for free, but it still takes almost 24 hours to fly to either of those countries, and several weeks to ship goods from them to Western markets. Only over a generation or two will the majority of Chinese or Indians learn to communicate with us in English (still less, of course, are we likely to learn Mandarin or Hindi!) Meanwhile, labor costs in China and India escalate steadily, as those societies join the affluent Westernized economy. Thus the cost benefits available to early adopters from outsourcing will gradually decline until eventually an equilibrium point is reached in which the remaining communications difficulties of outsourcing balance its cost advantages. The forces which since 1990 have pushed the world towards globalization are weakening, and other forces are appearing, like eddies at the bottom of a large waterfall, which push the world in very different directions. The first such force is terrorism and the rise of rogue states. Just as the Internet has made it easier for Western companies to source goods and services on a worldwide basis, so it has made it easier for terrorist organizations and rogue states to communicate, and organize acts of destruction in any Western location they choose. Like the Internet itself, this ability is not going to disappear. There will always be a minority of people who, for whatever reason, wish to damage the predominant global culture and their operations can now be conducted on a global basis, without the non-electronic, physical forces of the United States, NATO and the United Nations being able to prevent them. To some extent, we are just going to have to learn to live with acts of terrorism, just as we have always lived with crime. Terrorism clearly raises the level of suspicion and distrust between societies. Since the Iraq and Lebanon conflicts it has become clear that an aggressive response to terrorism does the same. Just as trade has always brought peoples together, even as it disrupts established patterns of manufacturing, so military activity pushes them apart, however well intentioned and careful the military force concerned. Thus a policy that maximizes trading opportunities, and minimizes military contact (while maintaining appropriate defensive measures against terrorism) is most likely to reduce support for terrorism and its ability to recruit new members. Just as the Internet enables terrorists, it brings cultures together, and in particular brings the powerful mass culture of the West into contact with societies that find it disruptive. Whereas normally conservative inhabitants of a non-Western culture may find Western consumer goods attractive, and Western computer and telecom capabilities useful, they are at best ambivalent about Western popular culture, which imposes values of materialism and hedonism on societies that are not rich enough to enjoy the materialism and find the hedonism highly repugnant. Western critics of such countries as Saudi Arabia and China, which censor the content reaching their people, forget that First Amendment rights historically never extended to foreigners, or to foreign propaganda that might be socially destructive. Even domestically in the West, content that offends prevailing social mores can be labeled “hate speech” and censored as such. Countries such as Saudi Arabia find it very difficult, acting unilaterally, to prevent Western popular culture from damaging their social structure. They would find it much easier if they received cooperation from governments of the countries broadcasting the culture. Just as the United States feels free to ban Internet gambling, we may therefore in the future see treaties between the West and affected societies in the Middle East and elsewhere to restrict the access of the more extreme Western popular culture to local airwaves. By this means, the friction between societies caused by incompatible social and cultural values would be minimized, giving more traditional societies time to develop their own cultural adaptations of the new technology. Another disruptive effect of modern communications is mass migration. Whereas companies outsourcing jobs must still conquer a substantial barrier of communication and shipping costs to gain the difference between wage levels, companies employing mass immigrant labor suffer no significant cost disadvantage compared to domestic labor, and can thus employ immigrants at a discount, driving down domestic wage costs. Essentially, they have shifted the communications and logistics costs of outsourcing from their own income statement to that of the immigrant laborer, who must in return for a higher wage than at home bear the cost of relocating from his home country, and the uncertainties of setting up, possibly illegally, in a new home. For most manufacturing industries, it’s more efficient to move the jobs to the workforce than vice versa; hence the benefits to the employer are maximized by outsourcing. For service sector industries such as construction, retailing, personal services and hospitality it’s either more expensive or impossible to shift the jobs abroad; hence mass legal and illegal immigration is concentrated in those sectors. For domestic workers, mass immigration is worse than outsourcing, because it removes the entry barriers against cheaper labor competing for jobs, and drives domestic wage rates down to rock bottom levels. Needless to say, the effect on domestic unskilled labor of having its sources of employment removed is thoroughly demoralizing, producing an increase in crime and other pathologies. Thus in Western countries service sector employers favor mass immigration, while low skill domestic voters oppose it. So far the employers, being better organized and more economically sophisticated, have dominated the political argument; it’s likely that in the next recession this will change. We are just entering the era of the third major disruption caused by globalization, the advent of mass consumption in India and China. China’s automobile sales in 2006, for example, will total 7 million, up from 3.2 million in 2002 and a substantial fraction of the 16-17 million sold annually in the United States. In itself, this is not a problem; we may find that the 2010 automotive designs from the world’s major manufacturers have dragons on the radiator grille, to attract the Chinese market, but that’s capitalism – such minor adaptations are harmless, and to be expected. More serious is the effect of Indian and Chinese consumption on natural resources and the environment. Contrary to current popular belief, oil prices are likely to remain high as Chinese gasoline consumption soars, as are the prices of copper, zinc and other metals in relatively short supply and with substantial industrial uses. Whatever effect hydrocarbon consumption has on atmospheric pollution and global warming will also intensify. This, and the related relocation of production closer to new Chinese and Indian markets, is likely to cause economic pain in the West and consequent political pressure for protectionism. A moderate protectionism would not be a bad thing, for three reasons. First, governments have to fund themselves from somewhere; there is no reason to suppose that a moderate tariff is any more economically distorting than a moderate income tax. It is subsidies, whether to exports, to favored industry or to agriculture, that are truly economically damaging, being both distorting and revenue losing. Second, in a world of floating and therefore fluctuating exchange rates, there is a benefit to domestic producers not being wiped out by a relative price fluctuation that may prove to be temporary. Third, there is reason to believe that in a world of the Internet, Ricardo’s 1817 Doctrine of Comparative Advantage, in which outsourcing to cheaper wage countries is beneficial to both sides, may no longer be true if the outsourcee country can climb up the value chain and seize the outsourcer’s intellectual property or other comparative advantage. The collapse of the Doha round of trade talks has already increased pressures for protectionism. It is likely that these pressures will intensify further in a recession. The correct policy response will be to channel such pressures into moderate, revenue-raising tariffs. The world forces that produced globalization and the attempt to “democratize” the Middle East appear to have been temporary, and are being superseded by new pressures. If we are lucky, the new world will be one of moderate protectionism, tight immigration controls, careful security, isolationist foreign policy and restrictions on disseminating subversive pop culture to traditional societies. This will be less attractive to the theocrats of free trade, but probably more comfortable for everybody else.
Martin Hutchinson is the author of “Great Conservatives” (Academica Press, 2005)—details can be found here Comments:2
Posted by Furius on Mon, 16 Oct 2006 20:58 | # In a world of 10 billion people yes, resources are finite and not everybody can have a western standard of living without running out of stuff or heating up the planet like a meatball in a wok. In a world of 1 billion, there’s room for all, and struggle is fairly unlikely. I’d therefore be in favour of fairly draconian low-poulation incentives, particularly for the Third World (where growth is most excessive), so that contrary to Australian practice we paid those without kids a decent old age pension, for example. True. Wars over oil could become more common once Chinese consumption exceeds a certain threshold. However, wars and conflicts do not occur over resources alone. In the ancient world when the Earth’s population was a fiftieth of what it is today, wars were almost incessant. Western weakness and self-destructiveness will give an incentive to China to exploit that weakness. Power abhors a vaccuum. A United Sates tangled up in its own internal squabbles between blacks, whites and Mexicans (and God knows who else) will leave the field open to other powers (mainly Russia, China and India) to exploit that vaccuum in a way which suits them. 3
Posted by Fred Scrooby on Mon, 16 Oct 2006 22:24 | # From the log entry (with editorial additions in blue):
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Posted by Al Ross on Tue, 17 Oct 2006 02:37 | # As the US becomes less White its power and prestige will continue to decline. The non-White inheritors of the US will carry on attempting simulation of the alien political and economic culture of the race who built the US but will ultimately fail in this regard because of innate racial differences. Just as international competition intensifies, the US alters the complexion of its population by importing low IQ Third Worlders, thus severely curtailing the future growth of that sine qua non of the successful nation, the middle class. 5
Posted by Desmond Jones on Tue, 17 Oct 2006 07:22 | # It will be interesting to see how nanotechnolgy changes the demography of the industrialised West, if and when it revolutionises manufacturing. J. Bradford DeLong writes:
DeLong is an advocate of smart immigration. He foresees that knowledge workers, as in Britain’s weaving revolution, will be the most advantaged in a nano economy. Relatively, unskilled workers will apparently be a dime a dozen. Which begets the question, how large a population is really required, with the exponential growth in productivity, to support a nano economy.
Mr. Igorevich’s dream world, perhaps? 6
Posted by Rnl on Tue, 17 Oct 2006 23:24 | # There will always be a minority of people who, for whatever reason, wish to damage the predominant global culture That suggests that terrorists are motivated only by a vague “wish to damage the predominant global culture.” I doubt that’s true. Tamil terrorists will stop being terrorists if they get what they want. Whether they should get what they want is another matter, but they do have comprehensible motives for their terrorism. It is at least arguable that the terrorism we’re all thinking about—Muslim terrorism—is in essence no different. and their operations can now be conducted on a global basis, without the non-electronic, physical forces of the United States, NATO and the United Nations being able to prevent them. To some extent, we are just going to have to learn to live with acts of terrorism, just as we have always lived with crime ... the Internet enables terrorists ... When you see Saad al-Fagih in London chatting away on his computer to other bearded Saudi fanatics in Riyadh, you get the impression that the Internet, by enabling the formation of virtual communities across the globe, facilitates Muslim terrorism. That impression can be misleading. Muslim terrorists are often surprisingly low-tech. They rarely, it seems, even encrypt incriminating data on their computers. When the FBI and CIA investigated Wadih El Hage in Nairobi, they found his notebooks and papers strewn about on his desk, and they found unencrypted e-mail from fellow terrorists in East Africa on his computer. El Hage, a Lebanese-born American citizen, was bin Laden’s secretary in the Sudan, so he wasn’t an untutored underling. Yet he wrote down terror-related information with pen and paper, just as a terrorist in 1890 would, and he communicated to other al-Qaeda members in unencrypted e-mail, which is about as secure as a post card. A carrier pigeon would have been safer. Could 9/11 have been perpetrated in, say, 1950? In 1950 you could move money around the globe; in fact, in 1550 you could move money around much of the globe. Transferring money was slower and less routine in 1950, but you could still do it and with less fear of detection. The conventional wisdom that high-tech globalization enables global terrorism may be false. Perhaps the phenomenon of globalization encourages the idea that a terrorist in Egypt or Saudi Arabia can now hurt his perceived enemies in the United States, and that idea provides an incentive for Muslim terrorists. Nevertheless, Osama’s grandfather could have orchestrated something like 9/11, had he felt the inclination. It would have been easier in some ways and harder in others. Sayyid Qutb was able to wander about the US unattended and unobserved in the 1940s. If he had wanted to plant low-tech bombs or crash a plane into the Pentagon, he could have. Television, which after much debate and some violence came to Saudi Arabia in the 1960s, may be a greater factor in global terrorism than the Internet. It makes the world seem smaller, and it allows Middle Eastern Muslims to look at Western infidels. They’ve been looking at us for forty years now, and they don’t like what they see. And since so many Muslims now live among us, their opportunities for violence are much greater. There’s nothing high-tech about that. The most important recent innovation in terrorism is suicide-bombing, mastered by the Tamil Tigers and Hezbollah in the 1980s. There’s nothing high-tech about that either. 7
Posted by Desmond Jones on Wed, 18 Oct 2006 18:21 | # It might have happened once, in 1950, Rnl, however, they would not have had a second chance. 9/11 was not a one of event. The first attempt was in ‘93, and a precursor, eight years earlier, in 1942, would have ensured every Muslim in the USA would have been hanging from a tree or interned for their own safety. However, Enoch’s thoughts still stand, IMO. It really is in the size of the community. If incarceration, profiling, re-emigration had begun after the initial attempt, then the Twin towers would still be standing. The internet means little. Islam is a threat to the West because it’s in the West in ever increasing numbers. 8
Posted by Fred Scrooby on Wed, 18 Oct 2006 23:25 | # There is no threat coming from Islam which is of a level of gravity comparable to race-replacement. The worst imaginable damage Islam can threaten us with is as nothing compared to race-replacement, nothing. If the Moslems conquered us tonight and we all awoke bright and early tomorrow morning to take part in prayers facing Mecca, we’d need only to find a way to convert back to what we were in order to restore everything we’d lost. Restoration and continuity would be theoretically possible, at least: we’d still be us. If race-replacement triumphs, however, we’ll no longer be us but another race (for a portion of us, another species). Who’s pushing that on us and refusing to stop? Not the Moslems, the Iraqis, bin Laden, al Zarqawi, Saddam Hussein, Kim Jong Il, or the government of Iran. It’s George Bush — he and the whole degenerate WASP establishment with their defect-tainted DNA, their moth-eaten genetic capital which, like that of Prince Charles and the British Royals, was played out generations ago, who can’t boast synapses enough to see what’s in front of their noses, moral fiber adequate to the most elementary analysis of right and wrong, or testosterone sufficient to tell the Jews, the Catholics, the Negroes, the clueless women voters, or the homos to take it and they know where they can shove it (the Jews being the worst of the lot, as I think Amalek or someone else said here once). Compared to all that is at stake in the race-wars being waged against us on every hand right here at home, these Middle-Eastern wars against Islam mean nothing to us, have no significance for us, and we have no business being involved in them. Nothing threatens us from that quarter which can’t be mended even assuming a worst case while from this other quarter everything threatens and everything is a worst case: irremediable annihilation and extinction of Euro societies, nations, and fully-constituted, functioning, organic, living/breathing national racial groupings thousands of years nay tens of thousands in the making, all gone, gone with the wind in a hundred, eighty, sixty, forty years more if this isn’t stopped. Their forced race-replacement once achieved there’ll be no going back to the way things were — we’ll not get them back again, let no one have illusions. During the crisis of autumn, 1914, a European statesman said, “The lamps are going out all over Europe. We will not see them lit again in our lifetime.” Of this other crisis that is now upon us we may say, if it continues undealt with much longer, “The lamps of the European nations are going out. We will not see them lit again. Ever.” We now know in retrospect that Lincoln’s War of Northern Aggression and World War II, both of them horrific almost without compare, were in the last analysis wars of racial survival. Let their unprecedented ferocity, their unparalleled savagery, be a sign to those leading today’s attack on European peoples. 9
Posted by VanSpeyk on Wed, 18 Oct 2006 23:34 | # Thank you very much for this stark reminder, Mr. Srooby. It is something with which I find myself in total agreement. However, although those examples you gave are not the _real_ challenge we must still overlook the possibility that they may be of use for us. The presense of a large body of Muslims has certainly had the result of making people in Western-Europe dead set against further immigration from non-Western sources. Granted, arguments are still too much couched in cultural terms rather than on ethnicity. (Case in point being Stoiber’s recent comments that he did not want cities in the future whose look is graced by Mosques. Apparantly he cares more about buildings than the distinctivness of his people.) But the signs are there; things are changing. PS The prophetic words you quoted are attributed to Sir Edward Grey, foreign minister at the eve of that great terrible tragedy now known as ‘World War I’. 10
Posted by Rnl on Sat, 21 Oct 2006 17:31 | # Desmond Jones wrote: If incarceration, profiling, re-emigration had begun after the initial attempt, then the Twin towers would still be standing. The internet means little. Islam is a threat to the West because it’s in the West in ever increasing numbers. I agree, of course. Muslim terrorists can hurt us more easily if they live in our countries than if they live somewhere else. That’s not a brilliant insight or an inspired guess, but an undeniable fact that anyone can see clearly, yet it borders on the criminal in the UK and France and it’s still non-PC in the US. Sean Hannity, while talking tough about Muslim terror, does his best to keep his callers away from this obvious truth. *** Muslim Debunks Gibbon 11
Posted by Al Ross on Sat, 21 Oct 2006 23:20 | # Prof Kahn should take a walk from Magdalene to Brasenose and he will see, in the outer quadrangle of that college, a sundial bearing the admonitory inscription, “It is later than you think”. Islam is already the most despised belief-system in the West and the immigration gates of Europe are rapidly closing, even in social-Marxist France, to its troublesome and mainly illiterate adherents. Post a comment:
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Posted by Guessedworker on Mon, 16 Oct 2006 18:03 | #
To my mind, the shape of the long-term economic future will be influenced less by free markets and Western cultural imperialism than by the relative talents of the peoples of China, Japan and Korea, on the one hand, and an increasingly non-European West on the other. The Far East holds two, possibly three aces. East Asians work like stink and are intelligent. They may possess an inadequate smart fraction but there is also the argument that, creatively-speaking, the low hanging fruit has been picked. In the sort of team-work that characterises modern technological advances, Chinese cooperativeness - a sociobiological trait - might be an asset we cannot replicate.
The West, meanwhile, is burdening itself with a low-IQ population in the pursuit of economic competitiveness and political equality. Patent applications have been falling for years in Europe. The only question is how long will the US carry on defying gravity. It cannot be indefinite, though your article rests on the assumption that it will be. In truth, the linkage of mean population IQ to GPD will out in the end.
As for the great neocon task of saving humanity for Western values, how empty and foolish such sentiments seem now, with sixty or seventy mutilated bodies turning up each morning in Baghdad, and the British Army of Chief of Staff shaming the Prime Minister in public. For all our wealth, technology and firepower yet we are weak, and we will eventually exit Iraq and Afghanistan weaker still.