The world is beginning to close its borders, and what follows will be seismic.
Are we seeing the return of protectionism, narrow gauge xenophobia and the end of the cosmopolitan force that was globalisation?
Are we seeing the first of many instances where the EU and the US are unable to force their will on the rest of the world because they are no longer powerful enough? If this is so, what will these trends mean for us?
Last weekend, China and India in particular decided to play hardball with the world, forcing the abandonment of the world trade talks. For India’s ruling party, this might have been an expedient political victory ahead of an election in which its farmers will have a pivotal say; but is it in the long-term interest of a country to get rich by playing ‘‘beggar my neighbour’’ with its friends?
For the first time in a generation, efforts to expand trade and increase the flow of information have been thwarted. While no one denies that China and India – ‘‘Chindia’’ – are big enough to be heard, there is something more than just trade talks going on.
It is possible that we are witnessing the beginning of a profound structural change in the way the world runs itself? Will we see globalism replaced by nationalism, and the financial good of the many being hijacked by the narrow interests of the few?
The collapse of the World Trade Organisation (WTO) talks is a serious blow to Ireland, particularly if it is followed to its ultimate conclusion. Irish farmers might be happy, but they have the most to gain from open trade in the long-run due to the simple fact that the price of food is likely to rise over the coming years.
The world needs more trade, not less. China and India, in particular, need trade if these pair of giants are to pull their billions of people out of poverty. It is a simple economic fact that no country ever got rich without trade. Trade is the cornerstone of modern economics and is based on the straightforward concept of comparative advantage.
According to this basic idea, it is smarter to concentrate on the things you are good at, become productive in producing this stuff and use the earnings you get from it to buy the stuff you can’t produce.
Furthermore, being open to trade exposes countries and companies to competition from abroad and new techniques, which must be copied and bettered at home if your goods are to sell. It is a discipline that tends to lead to best practice.
If you doubt this just examine the experiment that was East and West Germany. One people, one culture, two systems, one definitive result.
History is littered with examples of how countries thrived when trade was free – not just economically, but socially as well. Traditionally, when people can trade, they are free to mix, exchange ideas and technology. In the past, countries that embraced free trade also tended to be the most liberal, with the best social and human rights records.
However, history teaches us that there are moments of profound change where the people reject free trade and all that goes with it, usually for some utopian and undeliverable vision. This can lead to monumental social change. Could the world now be at such a tipping point?
One hundred years ago, a best-selling book in Europe was a tome called Degeneration, written by a Hungarian intellectual called Max Nordau. Nordau, who shot to fame as an author, went on to be a vociferous Zionist and one of the driving forces behind moves to create the state of Israel. Degeneration was translated into numerous languages, because the central idea in the book struck a chord all over Europe.
The thesis was simple: Nordau argued that open trade and the dominance of economics and finance in political discourse had led to a corruption of European nations. He contended that European elites were now degenerate.
They had become cosmopolitan and divorced from the people, from the soil and from everything that made European countries unique.
His central message was that these cosmopolitans had betrayed the ordinary people with their preening narcissism in art and literature, their internationalism in politics, their alliances and affectations and their willingness to exploit the people’s labour in order to create a deracinated elite.
Nordau’s solution was to call for a regeneration of the people from the bottom up. He suggested that patriotism could replace internationalism and that the people could be purified of this degeneration by going back to basics, moving away from free trade and the free movement of people, returning to the soil and self-sufficiency.
Nordau was the spiritual king of the many nationalist movements springing up in Europe at the time. His DNA can be seen in the politics of Eamon De Valera, Arthur Griffin and Michael Collins. Unfortunately – and ironically given his subsequent Zionism- his fingerprints are all over Nazism too.
What makes Nordau interesting in the context of the failed WTO talks, is that his message started with trade. Under the cloak of standing up for the little guy against some ephemeral elite, Nordau tapped into a discontent that was real.
The elite had become removed from the people, they seemed to swan around telling the masses what was good for them and their income had exploded to being multiples of the average worker.
These are many disturbing similarities between now and the turn of the 19th century. Many of the same arguments are resonant today, beginning with the argument here against Lisbon. It amounted to a coalition of rejectionism rather than a coherent political worldview.
Similarly, our farmers are driven by a narrow perspective on trade. They are possibly unaware that their stance on this crucial issue might put their best friends and neighbours out of work. It is easy to reject. It is much more difficult to construct.
The rejection of the WTO, although remote, is part of a rejectionist trend. Who knows, it might be positive. But a constructive alternative hasn’t yet been articulated. Like the vacuum Nordau left at the beginning of this century, God knows what might fill it.
David, you are spot on in this article. The Irish farmers have shown themselves to be utterly selfish in their outlook ; par for the course really. It puts into perspective our Taoiseach’s pathetic attempt to appease them in the recent Lisbon saga ; instead, he should have told them where to go, and that they were no more important than any other interest group. And as for the recent cozying up between the IFA and Mr Sarkozy ; all one can do is laugh. It really is a muppet show. Narrow-mindedness reigns regrettably!
“Will we see globalism replaced by nationalism, and the financial good of the many being hijacked by the narrow interests of the few?” Since when has this *not* been the case? Globalisation in theory is about actual free trade, but in practise is essentially re-colonisation under a different guise, with the same European colonial powers and the US taking the lead and reaping the benefits. A visit to Shanghai and a walk down the Bund will reveal to anyone the massive gaps between those who have benefitted for China’s prodigious grown and the peasents from the countryside who form an… Read more »
Free trade is only fair trade when all the participating nations are evenly matched in terms of competition. The German economist,Fredrich List, who had a profound influence on the development of the American System of Economy, promoted the concept that developing nations require protectionism in order to be allowed a buffer to develop their productive potential to a level of efficiency which was competive with respect to the already developed and established economies. Only then was it considered reasonable to expect the newly developed economy to relax their protectionism and engage in trade competively. List in fact defined the wealth… Read more »
If we take the case of Chinas’ protectionist model, we can see that there were beneficiaries here as well on the part of large European and US companies who merrily outsourced – hollowing out large areas of their own indigneous countries. We can see the evidence in Ireland – a mere pimple in this global exercise where manufacturing has all but dissappeared. I am not pretending to have any answers on this, but it strikes me that the rich make as much hay out of protectionist as open trade models. Had China let it’s currency rise sooner, I feel their… Read more »
As they say Resistance is futile in this case. Emerging economies will account for more than 50% of Worlds GDP and that changes everything , including the rules of Global trading. This debate is all about the change of the World order , trade is just one of the subjects . Prepare yourselves more of these kinds of squaring up to the old masters of the world. I would say next on the agenda is UN , and the reformation of United Nations Security council .These are not comfortable times as western powers concerned. All they can do is to… Read more »
It is funny that india and china caused the collapse of WTO yet they were the countries that beneffited most from it. This may well backfire on them. If protectionism returns they will be hit hard, china and india are still very dependant on western investment and technology, they are still at the stage of copying western technology but doing it more cheaply, they still havnt taken the reins themselves, free trade also requires a stable world order in that countries depend on other countries supplying them with goods they no longer produce at home. It is dangerous to become… Read more »
It is funny that india and china caused the collapse of WTO yet they were the countries that beneffited most from it. This may well backfire on them. If protectionism returns they will be hit hard, china and india are still very dependant on western investment and technology, they are still at the stage of copying western technology but doing it more cheaply, they still havnt taken the reins themselves, free trade also requires a stable world order in that countries depend on other countries supplying them with goods they no longer produce at home. It is dangerous to become… Read more »
Free trade is a bit of a hard concept to measure in exact terms. The Chinese devaluing setting an artificially low peg to the dollar is a prime example. Another example is the agricultural production of Brazil, where quality standards are often non-existent.
There will never be Free Trade, even when tariffs are removed, because the mercantilist mentality in political entities, will determine other barriers. Call a spade a spade here. The EU has been let down once again with an Anglo negotiator who seems driven to weaken continental European economies for ideological preponderance !!!
“A visit to Shanghai and a walk down the Bund will reveal to anyone the massive gaps between those who have benefitted for China’s prodigious grown and the peasents from the countryside who form an unending stream of beggars on that famous promenade. ” This is the nonsense of a mini-global elite entrenched in their no doubt over-protected jobs, or perennial tenured academic lifestyle, spouting perennial student nonsense. The per-capita GDP in China has increased by 10,000% since reforms, and wages are growing at more than 10% a year. Those beggars are probably much richer than 1978 and have not… Read more »
“with the same European colonial powers”
And give over the tired European colonial horsecrap. It doesn’t even work for corporations, my bank is Chinese for instance. The nineteenth century is over and it is time that the tired reciters of sanctimonious pseudo-socialist claptrap realized it. There is no European colonial power. If the EU ever got an army together it would lose a war with Liberia.
I hope you’re not suggesting in the final paragraph of your article that we’re about to repeat the 20th century?? Are conditions aligning to support a large fascist movement taking root?
David: You certainly have a talent for generating nationalistic vituperation. Several of your respondents above don’t seem able to consider the benefits of free trade without beating the drums of anti-colonialism and anti-globalization. Put simply, the alternative to Free Trade is WAR. This is why central Europeans have persisted in the expansion of the EEC despite every attempt by ultra-nationalists to derail the process. Perhaps Ireland thinks that since it has espoused Neutral positions in previous conflicts, it can remain aloof from this choice between invidious alternatives. World war is not unthinkable, and if it were to happen, it would… Read more »
I think anyone who says free trade is coming to an end is looking very far into the future. Basically, trade is in hardware and software, stuff that must be physically shipped from one country or another (food, equipment, metals etc) or stuff that can be electronically transferred, (software, finance etc). Were quite different from 100 years ago, a lot of trade is now “software” and is much more difficult to stop even if the will is there to stop it. Maybe what were seeing is a decline of global institutions, WTO, UN, G8, World Bank etc. This could be… Read more »
To quote William Mckinly in regard to his opinion on free trade,
“free trade cheapens the product by cheapening the producer but protectionism cheapens the product by elevating the producer”
Brilliant!
If free trade ends we can develop Dublin port into a super mega city.
Those boats and containers were an eyesore anyway. Instead of operating from 9-5 the port can be a 24 hour credit fuelled apartment heaven.
Now all we have to do is to get rid of the multinationals and rely on the HSE and the State to employ us.
By 2020 we will have increased the number of quangos from 800 to 8000 so there will be jobs and sweets for everyone!!!!
The fact that Ireland rejected the Lisbon Treaty proves that now, Globalisation from what some have predicted for years is probably going to start Crashing and Burning.
Amy Chua is certainly a writer who is predicting an accurate picture for the future.
Thanks for showing us what is really Happening David, hopefully we can find a good substitute before things get nasty.
Bryan, economics is as far as i can tell at least 50% black magic and kung-fu, and the rest is opinion. And opinions are like arseholes: everybody’s got one. I’m only interested in the facts, I’d appreciate it if you could explain to me in more lucid tones why my opinions are a load of old donkey cock, which I’m happy to accept as I am here to learn. It doesn’t help to chastise anyone to questions Globalisation as a Trotskyite pinko academic. Globalisation is a crock and looks likely becoming a risk rather than an advantage to Ireland. Genuine… Read more »
Cheap credit made us rich. The multinationals were and excuse to lend to Paddy.
Hi David, You are correct in stating that trade is the key to economic enhancement and the usage of each area/region/city/country’s advantage where they sell what they are good at and buy what they need. However, when large regions are under control, it is possible for one to not require the trade of another. However, “No country is an island” applies in terms of trade, not even ours, as De Valera found out. In terms of the WTO, it was the extension of the types of goods and services that could be traded that was up for discussion. It is… Read more »
I’m not an economist but said ‘A visit to Shanghai and a walk down the Bund will reveal to anyone the massive gaps between those who have benefitted for China’s prodigious grown and the peasents from the countryside who form an unending stream of beggars on that famous promenade. 26% India’s population still lives in poverty, according to Indian Govt statistics and 40 percent of the population of Bombay, regarded as India’s most modern city, have no access to clean water, this in a booming economy’. Well isn’t this more to do with Chinese & Indian domestic policy than the… Read more »
Someone referred to Amy Chua and her thoughts on how elites form and how the western tendency to export of sense of openess and “free” trade to other countries can and has led to some of the worst atrocities and political/ economic imbalances in the last decade or so. Eliteism divides societies and failure to recognise it and stem it before it becomes transgenerational will lead to uprising or at best a general lack of cooperation. There is no real “FREE” trade for the reasons well articulated above – and attempts to enforce it (which actually makes the whole thing… Read more »
Sherman: “I think it is a bit disingenuous to pin rural Chinese poverty on globalisation.”
I agree, and I’m not saying that. Their poverty pre-existed globalisation. My point here is that while China and India can afford to operate like this, Ireland cannot.
Maybe McWilliams is right about dropping the Euro in favor of a soverign currency so we could supply credit to what ever level was required to facilitate trade and commerce, since one of the problems hurting the Irish economy right now is a shortage of an exchange medium i.e credit, and not a shortage of goods and services. Without sufficient credit the latent potential of the economy can’t be realized. Secondly to fully exploit the potential which has been built up over the decade in the civil engineering and construction sectors and before this potential dissipates through unemployment and company… Read more »
To paraphrase longlivetherepublic’s devalerish argument:– “We return to a sovereign currency, leave the EC, erect high tariff barriers, abjure free trade, ring-fence the miniscule remaining fish resources, then go cap in hand to the IMF and meekly ask for loans of several trillion dollars to build four nuclear plants and high-speed rail links to every part of the country.” I have seldom heard of such a ludicrous economic NDP, except perhaps in Zimbabwe. If there is a severe recession, Ireland has two basic choices:– It can embrace Free Trade and model itself on Singapore, as an Entrepôt country, that acts… Read more »
I like the devalerish idea. Comely maidens at the crossroads etc. No exports or imports. Our own currency. No messing with Nukes or Wind or whatever. The Bogs will do. No more road development. Get back to a simple life and let’s have another Eucharistic congress as it was back in 1932. Let’s slow down and get real. It’s a mental asylum out there – all drugs, sex, foreigners, quare religions etc. And turn off RTE. Learn to look after your allotment and dig spuds and be healthy – have a few pigs and bring back the P7T and the… Read more »
The Bogs are finished. So much for this farcical notion that Dev had about a pure Ireland. We burnt it all. Short term thinking again. The farmers will sell the lot of us to keep 8% of their income. To join the EU in 1973 we got rid of our fishing rights for the fat greedy pigs that we call farmers. Yes. I agree ban everything again. Its far easier. Dev would have banned the air if he thought it was British or Protestant. From actually working in the container business I can say that the best thing to do… Read more »
“I’d agree with you if I as able but I’m still waiting for the crumbs from your table” O, O David, I used to be a melting pot fun loving hippy. I am a sad angry man now. I really hope we’re seeing the return of protectionism; xenophobia was always there and most of it stems from Joe-soap worrying from day to day, and never getting anywhere, while the middle to upper-middle class through the exploitation of Joe carve a future to pass on to theirs. He can’t see the grand big picture you seem to see, he only sees… Read more »
Interesting. ‘b’ might just have put his finger on a serious problem at the heart of the national malaise. The bloody minded docks and dockers. They had the same problem in London in the 1950s until they shifted all imports to the new container port down the Thames to Tilbury. And in Larne until Stena shifted terminals to Belfast. But Belfast Harbour Commissioners seem to have their act together to judge from the vast array of containers ranged about the place.
Tell us more ‘b’ about how you see the docks as a bottleneck and how you would fix it?
Its not the dockers. There are hardly any of them. The problem is higher up.
Was there some fracas a few years ago about using a deeper and bigger port north of Balbriggan. Made a lot of sense becasue Dublin port was reaching capacity due to its inability to handle large vessels. Also, the more northerly port would have been vastly more effectve for serving north and south of the Island with clean access to the rest of the country. If memory serves, vested interests in the North (the talks etc. were clouding issues), Property development, 10K people getting cheesed off versus the 50K that could have been continuously employed with the new port etc.… Read more »
Thats a red herring to build houses where the port is now. It has zero to do with NI it has everything to do with a land grab for prime city centre real estate. The northern port was floated by the PDs so Dublin port could become some sort of new town. Dublin Port is NOWHERE near “full capacity”. Half of it is empty and it runs only 9-5 like some glorified office. The port tunnel that I use every single day is no white elephant. In the morning about 20 minutes after the RO-RO ferries come in you can’t… Read more »
B said:— “I don’t see the bigger ships bothering their arses coming to Dublin with a few boxes. Dublin is out of the way. It takes a long time to come from the English Channel to Dublin when they could just skip it, dump the stuff in Waterford and continue to Rotterdam.” The key factor is that the bigger ships have a draft of 15 metres. Dublin Port has less than 8 metres of water, Waterford harbour only reaches 8 metres depth beyond Duncannon, and 15 metres off Hook Head; the approaches to Cobh and Kinsale are about 10 metres… Read more »
The return of protectionism, has it ever gone away…………… You can tell the arrogance and blatant disregard – for people who have to sell their labour in the market – in the pro globalization speak. ”narrow gauge xenophobia” ”Will we see global free trade replaced by nationalism, and the financial good of the many being hijacked by the narrow interests of the few?” ”The world needs more trade, not less. China and India, in particular, need trade.” (mounting food prices in 37 poorer countries) I suppose the suicidal Indian – and other – farmers are just a bunch of whiners… Read more »
@malcom,
Why? We neglected the ports during the boom and our manufacturing industry flatlined. We don’t have the infrastructure to handle large ships. Even if the dock were large and deep enough one Panamax ship discharging would bring Dublin to a total standstill.
Freetraders are like donkeys eating a few oats from their globalist masters hands and are brainwashed into not seeing the long green grass.
b, that’s my point. Right now Dublin is under capacity and bottlenecked (contradictory but truely Irish I am sorry to say) – for reasons of underinvestment etc. I think the tunnel was too small (being chokkers at peaks just goes to show another underdimensioned mess) and anyway, most of the roads are still substandard to this day. Making sensitive equipment and shipping by road (as we have no trains) would add to unreliability with all the potholes and nuff said about our rickitty rail network. The country is very far from being “tuned” to run a 21st century economy (no… Read more »
We have the trains but the drivers won’t do containers. Point blank refusal.
We have the hot air allright but they would sink the airships because they are also full of shit!
Roads are a drain and rail is a gain. No matter how good the road network is it will always represent an over all waste as the cost of building and maintaining it will always exceed the benifit in terms of moving freight. The absolute most inefficient way in terms of energy and throughput of transporting goods is to use trucks. Trucks grind the roads back to gravel, use a lot of fuel to move a relatively small amount of freight and are slow, leading to bottlenecks and congestion. On the other hand electric based, high speed rail is currently… Read more »
Yes but we pulled the rails out and we won’t use the ones that are already there.
The bottleneck is human.
I heard it said
Performance = Attitude x Ability
Probably pinched from one of those management GURU books. I think it’s very accurate and can be applied here. We have no real problems here with ability. It’s the attitude is the snag and it matters not about the rest of the world or its machinations.
I hate to argue with someone who’s well meaning but its a lot more complicated than what Paddy is saying. Food shortages have many causes * EU/US subsidies to farmers result in their produce being sold below cost in other countries thus undercutting local producers and damaging local production. Dumping like this is not restricted to the EU/US though they have the biggest subsidies. * Crisis aid has the same result and some people who know far more than me argue that its wrong to send food. I cant agree with that but I wonder why its very easy for… Read more »
David, You said: ” It is a simple economic fact that no country ever got rich without trade” Wrong. I’m beginning to worry about you since the downturn took hold – you’re not quite as spot on as you used to be, and you seem to be ‘toeing the line’ a bit more. You discuss China quite a bit in your article, and miss the glaringly obvious. The most cursory glance at history will tell you China was a fantastically rich country while all trade was banned to and from it. The western powers were drawn to ‘the riches of… Read more »
“But a constructive alternative hasn’t yet been articulated.” For this to happen there should an open and honest debate on the ‘fundamentals’ of our ‘trade’. A lot of confusion over the value of ‘internationaly traded servcies’ and the agri / food sector since the WTO… Those in the know should call it as it is – Dublin and the other Irish ‘cargo’ ports are used for ‘imports’. Ask any haulier what’s the ratio of empty containers going out across the Sea to full ones in – 4 to 1! The cost of shipping a full container of ‘product’ inside the… Read more »
b said:– “We neglected the ports during the boom and our manufacturing industry flatlined. We don’t have the infrastructure to handle large ships. Even if the dock were large and deep enough one Panamax ship discharging would bring Dublin to a total standstill.” Taking a Suezmax or Panamax ship through the English Channel to Rotterdam is a nightmare. Thus a transshipment port in the Irish Sea shifting containers from the biggies to smaller vessels for redistribution throughout Europe makes sense. If it can cut the cost of importing goods to this country as well, then it will reduce the cost… Read more »
Degeneration by Max Nordau, now there’s a book to read , he didn’t have much time for our own Oscar Wilde either , but he had some valid points about urbanization. !. We are entering a state of recession now due to many factors, external and internal the external factors such as the speculators pushing oil above the $150 mark ( though slightly lower now ) , traders gambling on the future price of cereals and the Muppet’s who we have listened to on Global warming!. We cannot blame the farmers for our current situation or their narrow minded approach… Read more »
globalisation has brought to the socail table nothing but the worst elements of the human condition, get rich on someone elses back, ive done it myself!
and to it i bid goodbye ..
David … you are in danger of making cases for the indefensible and boring cases at that , cmon .. degenerate…. 100 years ago,
read GLOBAL WARMING..FOOD..OIL…INTERNET SEX
The powers that be wouldn’t put in a fiver for broadband into the ports.
Nobody will stump up the cash for a shallow wannabe Rotterdam. We have no industrial hinterland to justify it and the South coast of the UK has bigger ports than we do.
We are a bit player. Sorry, niche player.
sub
Ref Mr B….. For the size of this island our ports are big enough , it’s as you said earlier it’s the management where the problem is. Regarding Broadband , south Korea has a better net work than we have .
With the current down turn I can see Biffo taxing those of us who do have broad band ,..we’re doomed
South Korea has a better network than everyone.