In a world of increasing inequality – not only within countries but also between countries – the age-old question remains to be solved: why are some countries poor and others rich?
This is particularly relevant for poor countries in 2014. A huge amount of foreign capital has flooded out of the world’s poorer countries because rich people have become worried about risk in these countries.
When international money leaves a poor country, at the push of a button in a trading floor in New York or London, all sorts of dilemmas are thrown up for the poor locals.
This is one of the massive drawbacks of globalisation. Capital flows are amplified and they are driven by greed and fear.
Sipping a coffee in the medina of Marrakesh, the local effect of international outflows of capital is being felt.
Everyone is stocking up. Today, there is a general strike here because the government proposes raising taxes on almost everything to reduce the national debt. It is worried that it won’t be able to finance itself next year.
Moroccan GDP per head is 10pc of ours and its debt is minuscule by our standards, yet traders in New York and London want to be on the safe side before Christmas and this is having a huge impact here.
Welcome to globalisation 2014!
When you find yourself somewhere like this, the economic inequality conundrum appears ever more baffling. Many ideologues argue that the key to wealth is trade, hard work and entrepreneurial spirit. This is the accepted narrative. If only poorer people could be more entrepreneurial, they argue, all would be fine.
But would it?
There are fewer more entrepreneurial places in the world then Marrakesh. Everything is for sale, everything has its price; trade and commerce are ubiquitous in the souk. In fact, so synonymous with trade is this place, that an early Irish internet trading platform was called Marrakesh. Remember that?
The souk draws you in. It seduces you with the sensuality of the strange. It is confusing, disorienting, exotic, enticing and deeply attractive. It is a trading hub for everything.
Straight away your senses are assaulted.
What’s that smell? Is it mint, liquorice, aniseed, cardamom? What’s down this alley – the dark one – past the beautiful girl in the turquoise headscarf with henna tattoos?
No, sir, I don’t want a carpet. Tea would be nice, thanks.
On you go, deeper into the labyrinth. Watch out – mind the undernourished donkey with cart pulling a mountain of brightly coloured scarves – 20 dirhams my friend?
Tinny Arab pop music vies with the call to prayer from the myriad minarets which fortify the ancient medina.
Mind your step there. It’s a bit slippery. The marble has been brushed smooth by centuries of walking, shopping, bargaining, mooching, hiding and slouching. Today, water from the melting ice of the fresh orange juice is making the path treacherous.
The locals are extraordinarily welcoming and, as you negotiate your way around, they are constantly looking out for you in a mixture of French, English and the international language of the face, the hand and the gesture. This is the historic medium of commerce.
It’s a bargain hunter’s paradise.
Even the most frugal are battered down. Maybe it’s the aroma of freshly baked bread and grilled lamb, but curiosity and the sense of a deal will get the better of you. Try some falafel or some hummus, maybe?
Marrakesh spans the ancient with the modern and is like stepping back 500 years while still remaining part of the i-generation. Just across from me a young observant Muslim woman with dark eyes under thick black mascara, scrolled down to show me verses of the Koran on her iPhone 6 while a raunchy Nicki Minaj video played on the blaring TV behind her.
Marrakesh is where the Middle Ages meets the internet, where Africa meets Europe and where Berber, Arab, European, African, Jew and Bedouin live cheek by jowl. These people came here to trade. It was the traditional trading hub where the caravan routes of north and south intersected.
Fruit and salt from the Mediterranean were exchanged for gold and slaves from the Kingdom of Timbuktu.
The place buzzes with the humming indignation of the haggle. Crestfallen sellers gesticulate wildly at playful buyers as both grope their way to a deal.
Yet despite all this activity, despite all the commerce, the place, although rich by African standards, is years behind Europe economically. Given the trade going on, there is a much greater mercantile instinct here than in Western Europe, where so many people work in large bureaucracies and won’t know a deal from a kick in the head.
But there is something flimsy about the commerce here, something fragile. It is buying and selling but it’s not the solid process of making and building. Trading is very different to processing. There’s a significant difference between pocketing margin and truly adding value.
This fragility is something that many emerging countries share and it makes them susceptible to the mood swings of traders. It’s not that they are any worse governed than us. Obviously some are, some aren’t. Some are bureaucratic but then so too is Belgium.
However, fragility, mainly institutional fragility, might be at the root of the inability to translate trading nous into globally competitive companies.
The global free trading system is also designed in a way that helps companies that are already dominant. This doesn’t make it easy for poorer countries.
However, one thing is certain when you look around Marrakesh: there’s no lack of entrepreneurial spirit. They have it in spades.
I’m off now. There’s the imam calling the faithful to prayer. Noisy chap, so he is. Could that have something to do with it? Maybe, but that’s for another day!
Inshallah.
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Still on the ball Adam. First up is best dressed.
Only the Donkey was mentioned and he is a beast of burden .The beast of Trade where it really matters is the Camel .
Camel Traders are mainly in commodities and some with value added products such as handcrafts .
Velocity of a Camel is a bet depending if you are racing it or going a long journey in a desert .In the first instance you might win and in the second you might die but the camel will arrive anyway at the destination with or without you and your goods .
“It’s not that they are any worse governed than us. ”
Irelands public debt for 2014 is estimated at 110% of GDP, Morocco’s public for 2013 was 62.5% ! Morroco is ranked 5th largest African economy by GDP and apparently the World Economic Forum placed Morocco as the first msot competitive economy in Africa. Not bad for a semi arid country with just 8.8% unemployment !
A real problem for countries like this is the loss of assets that the immigration of their well educated young represents.
Hi David, I want to respond respectfully to the article because it shows a fundamental misunderstanding of why trade originated aeons ago. But first of all; “Yet despite all this activity, despite all the commerce, the place, although rich by African standards, is years behind Europe economically” Really? I think you should be smelling the coffee instead of drinking it. It should read “Morocco is years AHEAD of Europe economically if not infrastructurally”. From the article “Moroccan GDP per head is 10pc of ours and its debt is minuscule by our standard”. Rich defined is “abounding in wealth or natural… Read more »
The Devil is in the detail, they say and I just spotted one important detail on a reread !
” There’s the imam calling the faithful to prayer. Noisy chap, so he is. Could that have something to do with it? Maybe, but that’s for another day!”
Do you agree with UK historian Niall Ferguson in his book ‘ Civilization’ as regards Christianity’s important contribution to the economic and social development of Europe and US vis a vis the rest of the world ?
I don’t doubt for a minute the trading skills of the Arab world. What they appear to lack is trust in their Civic and Financial Institutions (much like this part of our little Island). If you lodge money in a bank in Geneva, Frankfurt, Vancouver, Sydney or the Bahamas an Institutional trust has been built up over generations that your money is safe. That trust is instinctive and has been hard won. I don’t think people would have that trust in Financial Institutions in Morocco whatever other positive attributes the Country has. I think International finance operates in Irish Financial… Read more »
Halloween
I really enjoyed this article . I am surprised that more readers have not contributed .
The prose used to demonstrate ‘institutional fragility to translate into global competitiveness’ is the key to the message written.
The insight shown into ‘ pocketing margins and added value ‘ is a revelation .
Earlier in the article expressions used variate the fun reading this serious economic message ‘ accepted narrative – a place of seduction – ( crossroad)of ancient culture – commodity exchange ‘ .
Imagination does sell .
Blaming the victim (lazy, stupid, ignorant, wrong culture, religion, sex, age) is a handy gambit. Rich idealogues, following a long line of empire builders and colonists, do it to avoid any residual guilt feelings, and for PR/propaganda. The rich feel that they themselves deserve every penny of their riches, and that the poor deserve their poverty. It is a psychological mechanism that has the benefit of simplicity, and enables the hypocrisy and obscenity of grabbing large bonuses (take a bow, Irish Water) to help the rich work harder, while implementing cuts to encourage the poor to work harder. I actually… Read more »
“We and David are very lucky he lives in the west.” should read “We and David are very lucky we live in the west.”
Here is Putin’s call to prayer.
All the world needs to listen to this message.
http://cluborlov.blogspot.ca/2014/10/putin-to-western-elites-play-time-is.html
‘However, one thing is certain when you look around Marrakesh: there’s no lack of entrepreneurial spirit. They have it in spades.’
hmmmmmm…..
Can I just add that you also find wonderful entrepreneurial spirit in the mafia, traveller gangs, paedophile gangs, the gambling industry (who now prefer to be called ‘the gaming industry’), the escort agency industry, the human trafficking industry…..just to name a few.
Use your entrepreneurial spirit to give yourself the self governance you need to have the freedom to be successful, before it is too late!!
http://directdemocracyireland.ie/today-oireachtas-plan-cede-sovereignty-comes-effect/
Ron Paul 10 years ago predicted the current chaos. Without expressly saying so he outlines one of the reasons poor nations remain poor. We destroy them and their infrastructure.
http://www.youtube.com/watch?v=zGDisyWkIBM
Worth a read:
“David Cameron’s tax credo is incoherent, immoral and economically illiterate”
http://www.theguardian.com/commentisfree/2014/nov/02/david-cameron-is-immoral-not-our-tax-system
Alistair Darling to stand down as MP http://www.bbc.co.uk/news/uk-scotland-29873595 So much for Alistair becoming a benevolent dictator for the next 20 years – Mr. Andrew G. Mooney?! Jesus, lads, you are way off with the predictions these days, I’d better off consulting Mystic Meg. As for the fantasies of gold, Tony I hope you live till you are 150 but if you do you’ll still be waiting for your gold dream to come through. You are pining for a historical time that is never coming back. Still if it’s your hobby then fair enough, that’s your business – just don’t ‘bank’… Read more »
Tell that to the Chinese or Indians and see them laugh!! But you are correct, it is irrelevant to you. In case you become interested in having an example of a barbarous relic other foolish people distracted themselves with, here is an add that may avail you an opportunity. I do not endorse the company. Do your own due diligence. ADVERTISEMENT Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world’s… Read more »
entrepreneurial spirit is alive in Germany as political party goes into business to raise funds.
http://www.telegraph.co.uk/news/worldnews/europe/germany/11205562/Germanys-eurosceptic-party-begin-selling-gold.html
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/30_Powers_That_Be_Have_Frozen_Money_For_Swiss_Gold_Initiative.html
‘The public has generously donated because of KWN and other sites. But that came to a stop two days ago when Paypal closed the account for donations and they froze the funds that were in that account without any warning.’
The dirty tricks to hinder the yes vote in the Swiss referendum have started!!