June 10, 2013
The most striking aspect of racing through the English countryside from London to Bristol is not the green and pleasant land of William Blake’s poetry, but the abundance of Tescos. After every 20 or so minutes of countryside, a massive out-of-town giant Tesco store announces each major train station. William Blake evoked the green pastoral land of rural England as an idyll – a place where the English could build their new Jerusalem in stark contrast to what he described as the “dark satanic mills” of the industrial revolution that he felt were destroying the English character with excessive commercialism.
The “green and pleasant land” written in the early 19th century was the artist’s lament against the wholescale industrialisation of England. If it were penned now, it would be straight out of the contemporary canon of the anti-globalisation movement, and today’s global companies like Tesco would represent the dark satanic mills of yesteryear.
The England Blake wrote about was the world’s major superpower, involved in an epic battle with France. Like so many colossii, it was broadly unaware of its own destructiveness, preferring to invent a romantic narrative about its own benign influence while depicting its competitors as delinquent.
This myopia was particularly evident on the superpower’s own doorstep.
As we sped past places with names like Didcot Parkway, Chippenham, Malmesbury, Pewsey and Upavon on the way to Weston-super-Mare, I am reminded of the scene in Brian Friel’s Translations, when the British soldier in Donegal pronounces the names of his home villages to the local girl, who has never heard of anything so ridiculous-sounding in her life.
But this is what happens when an economic superpower emerges: it exports its values, culture and mannerisms, as well as its merchandise, and the weaker countries have to accept it. These days, the superpowers are not in the business of actually setting up shop in weaker countries via colonies – as used to be the case – but their interest nonetheless dominates global concerns.
Nowhere is this obsession with the large countries and an unquestioning approach to globalisation more evident than at the G8 summit, which will be hosted in Enniskillen in ten days’ time.
The major difference between this summit and others is the fact that the major powers are at loggerheads in a way that they have not been for years.
In Blake’s time, big countries went to war. These days, they deploy different tactics to gain advantage. One of the main instruments whereby the large countries try to steal a march on each other is through cheapening their exchange rates.
Next week’s summit will be more like a peace conference than an economic love-in. Since they last met, the main G8 players have declared a currency war on each other.
The opening salvoes were sounded by Japan in March, when it explicitly stated that it would allow the Yen to fall as far as it took in order spur Japanese exports.
The world’s economic concerns have shifted from the perennial crisis in Europe, which morphs and changes each month but doesn’t go away, to Japan. The twin dilemmas of a rapidly ageing population and very high levels of public debt afflict Japan.
It is also experiencing deflation, and prices have been falling for some time now. In order to coax people back into the shops, the Japanese are trying to manufacture inflation by printing money. In addition, because the population is falling, Japan needs both to stimulate local demand and grab a bit of its neighbours’ markets too.
So Japan is letting the currency fall. This fall in the Yen is having a large negative impact on China because China and Japan are major trading partners and, as the Yen falls, the comparative advantage of China in the Pacific Rim is eroded.
As the Yen falls against the dollar and the euro, similar strains are also emerging between the world’s major trading partners.
As if this wasn’t enough, there are persistent problems in America’s recovery. The American economy is not creating enough jobs. Last Friday’s data reveals that, last month, the US economy created 175,000 jobs, which is still a sluggish pace of job creation. There are still far too many Americans out of work.
The Federal Reserve has said that it will not stop injecting dollars into the US banking system until unemployment falls properly towards 5 per cent. But the problem is the Fed’s money is driving up asset prices too quickly and not driving unemployment down quickly enough – leaving the central bank in a bind.
The policy has become a self-fulfilling prophesy. Investors see only two outcomes: either the Fed is successful in delivering higher growth, which would validate the move upwards in asset prices, or the Fed fails to stimulate the economy and this forces it to provide greater liquidity support for asset markets.
All this means assets prices are likely to keep going up for some time. There have been periodic sell-offs, but the basic conundrum remains for America and the world.
All the while, the European economy is slowing down progressively, with all indicators in the past few months pointing downwards. This is forcing the ECB to keep supporting the bond markets of bankrupt states so as to stop the euro from breaking apart. This, too, is driving up asset prices without affecting the real economy, where unemployment keeps rising and rising.
The G8 next week in Enniskillen has got to try to come up with a global roadmap that reconciles all these contrary interests. How can it persuade Japan to reverse its new policy when that policy has just been unveiled? How can the global powers ensure that the Fed can abandon its policy of money-printing without bringing the entire house of cards down via a massive asset price crash? And how can there be real growth – the only sustainable answer to the global dilemmas – when the underlying major economies are mired in debt?
As these problems mount, there are very few dividends trickling down to the average guy on the street, who sees rich guys getting richer, buoyed up by their rising share portfolios. Meanwhile, the ordinary guy is entitled to ask what the back-slapping event is all about. He is entitled to say: “This means nothing to me, my family or my situation.”
This is when the same urge that pushed William Blake to seek a new Jerusalem for the English in 1804 becomes widespread in the modern age. Blake saw grubby mercantilism destroying the ordinary English worker in the “dark satanic mills” and offering nothing for the ordinary Englishman. He yearned for a better system, a better future. When the G8 bosses come out with platitudes in Enniskillen, aren’t others entitled to ask where exactly is the New Jerusalem. Where, exactly, is the vision?
I’m chairing a debate – ‘What is the point of the Leaving Cert’ – on Saturday, June 15 at the Dalkey Book Festival. Tickets available here.