CHAN AKYA The G-20 piles folly on folly
By Chan Akya
LONDON, April 1: I am feeling a bit like Syed Saleem Shahzad this
morning, with all due apologies to the intrepid Asia Times Online correspondent
who reports from the Taliban frontline. In my case, a combination of
anarchists, nutcases, attention-seekers, the grossly unemployed and assorted
victims of the credit crunch have descended on the Bank of England, gathering
up a tsunami of protests linked to the London summit of the Group of 20
countries [1] - a tidal wave of civil disagreement with authority that began
barely a moment after I had secured an elusive macchiato from the local
Starbucks.
The barista recommended that I stayed inside the shop when they boarded it up,
fearing that anti-globalization protests would be directed against all symbols
of America however far removed from
the world of finance. Instead, I took my coffee and walked out into the
beautiful London day, waiting to be asked a cogent question on the future of
capitalism. As luck would have it, most of the folks in the crowd merely wanted
to find out where to score drugs, while a few did enquire about where I had
managed to find the coffee.
After we were all "locked" up inside a strange pattern of streets next to the
headquarters of a large German bank that shall go unnamed, it soon became clear
that the kids who had asked about drugs earlier were on to something. There was
much trading in cannabis, right under the watchful eye of the London police,
who only cared if anyone wished to lob a stone at the nearest bank.
Before all that though, drifting along with a crowd into Threadneedle Street,
home to the Bank of England, was amusing. For one thing, the whole of the Bank
intersection had been taken over by protestors ranging from anti-capitalists to
environmentalists. Amongst the first acts of physical damage of the day was the
trampling of spring daffodils outside the Royal Exchange; I observed that those
doing the trampling were carrying the "End Carbon Emissions" placards. You
really couldn't make this stuff up.
It was when the force of the crowd turned me the wrong way around, towards Bank
Station that I found myself confronting a motley crew calling themselves the
"G20 Meltdown" and who had helpfully brought along one of the four horsemen of
the apocalypse. For a while, I thought the solitary horse was explained by
their inability to afford all four, being idiotic communists, but as it turned
out they had planned to get three other horses through other
underground-railway stations. I only managed to spot one other horse during the
day, and even that could well have been a mirage.
Anyway, this was a more charismatic group; which is to say that the ringleaders
all looked like they had never held down a day's job in their entire lives
except perhaps in one of Her Majesty's prisons. Alongside the horsemen, the
group included a coalition known as "Class War" - i targets landowners and
assorted capitalists.
This grouping was incredibly popular with the ranks of the unemployed: with
more than 2 million jobs already lost, the UK clearly had more than sufficient
supplies of people to join this group, never mind that they were protesting for
a return of the status quo ante rather than an overthrow of the establishment.
All along, the crowds had been increasing to the point where the London police
started applying mini-quarantine areas; the idea being to isolate any group
that looked like they may actually be troublesome into a small square and
disallow entry or exit. Things quickly turned nasty after that at a location
that wasn't previously closed off; a branch of RBS was vandalized by protestors
throwing computer screens at the glass window.
In effect that act brought up the old broken glass conundrum into sharp focus:
if someone throws a brick through a window, classical economists would consider
the event economically accretive: given that the homeowner would have to buy
glass, pay someone to fix it and so forth. In more rigorous schools of
economics (such as the Austrian) though, the act would be economically
destructive: while the act of replacing the glass would increase gross domestic
product, it would always substitute another act (such as the person paying for
curtains or buying himself a new toaster oven). More importantly, the act of
breaking the glass pane diminishes one's view of safety, thereby causing more
useless, defensive spending such as buying home insurance and the like.
The reason for that moral question was the events of the next day when world
leaders actually met.
April 2, 2009
Quite tired by the overnight ordeal of being trapped with a bunch of nubile
20-year olds (no, I am not making that up), I met the dawn of April 2 to the
cacophony of UK newspapers blaring about the failure of the summit before it
had even started. Despite having been in the main square of the protests, even
I couldn't recognize the vituperative commentary being spewed by news
columnists who with a single voice proclaimed a day of chaos, intrigue and
whatever else caught their fancy.
That it had simply been a rough day made worse by the actions of the London
police was of course beyond the grasp of the newspaper columnists. Those that
didn't report on the "riots" focused on the state dinner: right-wing newspapers
highlighted the supposed snub given by Queen Elizabeth's consort, Prince
Philip, to US President Barack Obama; while other newspapers pointed to the
sheer scandal of the First Lady placing her arms around the sainted monarch.
As it happened, audiovisual evidence indicated that the prince had misheard the
president's remarks and made one of his characteristic gaffes, while the queen
had actually initiated the extraordinary gesture by placing her arm behind the
First Lady's back. Given the facts, it was clear that the prejudice of the UK
media stood very much against Obama, something explained not so much by his
actions since becoming president but by the simple act of supposed solidarity
being shown with the extremely unpopular Prime Minister Gordon Brown in the UK.
Brown is considered in the UK press as a bit of a buffoon, variously derided
for being a bore and more recently for crash-burning the UK economy by his
extraordinary series of borrowings during the good years for the economy; money
that had been wastefully spent by the Labour government.
After the newspapers, the next chore was to actually get to the place where the
G-20 meeting [1] was being held: in something called the Excel Centre in the
eastern part of London. I had been warned to stick to public transport and duly
complied.
Here is a slight digression for Asian readers who are used to the comfort of
metropolitan train journeys within cities like Tokyo, Singapore and Hong Kong.
If you are one such person and are asked to travel on London's tube, or
underground rail, network, here is a simple one-word recommendation: Don't.
Unlike the train systems in Asian cities, allegedly built or bequeathed by the
British, the London tube system is a mess of delays and accidents. Inside the
carriages, conditions are virtually unbearable even on a beautiful spring day,
while outside in the train stations, expect to see failing escalators,
overcrowding and what have you.
Anyway, my journey was interrupted along the way, and I had to finally take a
cab. While expensive, the road journey did offer a stunning view of the
Millennium Dome, a vanity project of former UK prime minister Tony Blair that
offers a wonderful economic lesson all on its own. Initially conceived by its
design rather than its purpose, the Dome was meant to represent a new
generation of "cool" people that inhabited the British Isles.
It proved to be the proverbial albatross and was soon dumped by the government;
eventually picked up by the private sector at a fraction of the price, the Dome
was renamed the O2 (after a telecom company) and now houses the largest indoor
concerts in Europe, all at a profit derived from the sheer scale of events
relative to the cost of buying (not building) the place.
This object lesson in economics, along with the previous day's broken glass
paradox, was completely lost on the assembled leaders in the Excel Centre. By
the way, this center was another eyesore, apparently built by the British
government to encourage business tourism; that it hasn't failed in the same
proportion of the Millennium Dome is only because some businesses actually
ended up hosting large trade shows in the venue as they fled the crowded
confines of London.
The statement
As with the previous rounds of G-20 meetings, I actually did try to read the
final, official statement [2] from the gathering. Unfortunately the assembled
brainpower completely lost me on the fifth point:
The agreements we
have reached today, to treble resources available to the IMF to US$750 billion,
to support a new SDR [the special drawing rights, or currency, of the
International Monetary Fund] allocation of $250 billion, to support at least
$100 billion of additional lending by the MDBs [multilateral development
banks], to ensure $250 billion of support for trade finance, and to use the
additional resources from agreed IMF gold sales for concessional finance for
the poorest countries, constitute an additional $1.1 trillion programme of
support to restore credit, growth and jobs in the world economy. Together with
the measures we have each taken nationally, this constitutes a global plan for
recovery on an unprecedented scale.
(Japan, the European Union
and China will provide the first $250 billion of the increase in IMF rescue
funds to $750 billion, with the $250 billion balance to come from as yet
unidentified countries, Bloomberg reported. The G-20 said they would couple the
financing moves with steps to give emerging economic powerhouses such as China,
India and Brazil a greater say in how the IMF is run, the report said.)
In effect, the only tangible result of the G-20 meeting - the tripling of IMF
resources - is astounding. The same people who drove the Latin American economy
into dust and were responsible for widespread poverty in Asia in the aftermath
of the Asian crisis; the very people who encouraged the idiotic accumulation of
market-return independent foreign exchange reserves by Asian countries that
subsequently caused the asset bubbles of the US and Europe; the very people who
had no clue about the impending bubble burst up until the beginning of 2008,
are now supposed to gather up the foresight and skills required to end an
economic crisis whose only recent historic parallel was the 1929 depression in
the United States; an event that took place a good 16 years before the IMF was
itself created.
Reading that bit of the statement, I was reminded about a different bit of
history from the same Britain, and pretty much from the opposite end of London.
This event took place on September 30, 1938; the BBC reported then as follows:
The
British prime minister has been hailed as bringing "peace to Europe" after
signing a non-aggression pact with Germany. PM Neville Chamberlain arrived back
in the UK today, holding an agreement signed by Adolf Hitler which stated the
German leader's desire never to go to war with Britain again. The two men met
at the Munich conference between Britain, Germany, Italy and France yesterday,
convened to decide the future of Czechoslovakia's Sudetenland. Mr Chamberlain
declared the accord with the Germans signalled "peace for our time", after he
had read it to a jubilant crowd gathered at Heston airport in west London. The
German leader stated in the agreement: "We are determined to continue our
efforts to remove possible sources of difference and thus to contribute to
assure the peace of Europe."
I have the dread feeling that the
G-20 declaration from April 2, 2009, will achieve similar notoriety in years to
come.
Note 1. The G-20 members are Argentina, Australia, Brazil, Canada, China,
France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia,
Saudi Arabia, South Africa, Turkey, the US, the UK and the European Union.
Officials from Spain and the Netherlands were also present.
2. For the full text of the communique click
here.
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