(Roughly) Daily

Posts Tagged ‘global trade

“The function of small corner shops in maintaining cities as viable social institutions does not appear in the Washington consensus. The possibility that corner shops may do better at safeguarding social cohesion than mass imprisonment is considered outlandish – if it is considered at all.”*…

For decades, globalist neoliberalism (and here) has driven the policies and practices and political, commercial, and financial leaders and institutions across the developed– and given development policy, the developing– world. Rana Foroohar argues that its time may be up; geography is retaking the upper hand…

For most of the last 40 years, U.S. policymakers acted as if the world were flat. Steeped in the dominant strain of neoliberal economic thinking, they assumed that capital, goods, and people would go wherever they would be the most productive for everyone. If companies created jobs overseas, where it was cheapest to do so, domestic employment losses would be outweighed by consumer benefits. And if governments lowered trade barriers and deregulated capital markets, money would flow where it was needed most. Policymakers didn’t have to take geography into account, since the invisible hand was at work everywhere. Place, in other words, didn’t matter.

U.S. administrations from both parties have until quite recently pursued policies based on these broad assumptions—deregulating global finance, striking trade deals such as the North American Free Trade Agreement, welcoming China into the World Trade Organization (WTO), and not only allowing but encouraging American manufacturers to move much of their production overseas. Free-market globalism was of course pushed in large part by the powerful multinational companies best positioned to exploit it (companies that, of course, donated equally to politicians from both major U.S. parties to ensure that they would see the virtues of neoliberalism). It became a kind of crusade to spread this new American creed around the globe, delivering the thrill of fast fashion and ever-cheaper electronic gadgets to consumers everywhere. American goods, in effect, would represent American goodness. They would advertise American philosophical values, the liberalism tucked inside neoliberalism. The idea was that other countries, delighted by the fruits of American-style capitalism, would be moved to become “free” like the United States.

By some measures, the results of these policies were tremendously beneficial: American consumers in particular enjoyed the fruits of cheap foreign manufacturing while billions of people were lifted out of poverty, especially in developing countries. As emerging markets joined the free-market system, global inequality declined, and a new global middle class was born. How free it was politically, of course, depended on the country.

But neoliberal policies also created immense inequalities within countries and led to sometimes destabilizing capital flows between them. Money can move much faster than goods or people, which invites risky financial speculation. (The number of financial crises has grown substantially since the 1980s.) What is more, neoliberal policies caused the global economy to become dangerously untethered from national politics. Through much of the 1990s, these tectonic shifts were partly obscured in the United States by falling prices, increased consumer debt, and low interest rates. By the year 2000, however, the regional inequalities wrought by neoliberalism had become impossible to ignore. While coastal U.S. cities prospered, many parts of the Midwest, the Northeast, and the South were experiencing catastrophic job losses. Average incomes among U.S. states began to diverge, having converged throughout the 1990s…

Since the beginning of the neoliberal era, a handful of economists had pushed back against the received wisdom of the field. Karl Polanyi, an Austro-Hungarian economic historian, critiqued classical economic views as early as 1944, arguing that totally free markets were a utopian myth. Scholars of the postwar period, including Joseph Stiglitz, Dani Rodrik, Raghuram Rajan, Simon Johnson, and Daron Acemoglu, also understood that place mattered. As Stiglitz, who grew up in the Rust Belt, once told me, “It was obvious if you were raised in a place like Gary, Indiana, that markets aren’t always efficient.” 

This view, that location plays a role in determining economic outcomes, is only just beginning to land in policy circles, but a growing body of research supports it. From the work of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman to that of Raj Chetty and Thomas Philippon, there is now a consensus among scholars that geographically specific factors such as the quality of public health, education, and drinking water have important economic implications. That might seem intuitive or even obvious to most people, but it has only recently gained broad acceptance among mainstream economists. As Peter Orszag, who served as President Barack Obama’s budget director, told me, “If you ask a normal human being, ‘Does it matter where you are?’ they would start from the presumption that ‘Yes, where you live and where you work and who you’re surrounded by matters a ton.’ It’s like Econ 101 has just gone off the path for the last 40 to 50 years, and we’re all little islands atomized into perfectly rational calculating machines. And policy has just drifted along with this thinking.” He added, “The Economics 101 approach, which is place-agnostic, has clearly failed.”

The importance of place has become even more evident since the start of the COVID-19 pandemic, the economic decoupling of the United States and China, and Russia’s war in Ukraine. Globalization has crested and begun to recede. In its place, a more regionalized and even localized world is taking shape. Faced with rising political discontent at home and geopolitical tensions abroad, governments and businesses alike are increasingly focused on resilience in addition to efficiency. In the coming post-neoliberal world, production and consumption will be more closely connected within countries and regions, labor will gain power relative to capital, and politics will have a greater impact on economic outcomes than it has for half a century. If all politics is local, the same could soon be true for economics…

All economics is local: “After Neoliberalism,” from @RanaForoohar in @ForeignAffairs. Eminently worth reading in full (and contemplating the consequences of this all-too-plausible shift for addressing global issues like change change and the migration it is sure to drive).

John Gray

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As we re-scope, we might recall that it was on this date in 1975 that prescient objectors, the Sex Pistols, made their live debut at St Martin’s School Of Art in central London, supporting a band called Bazooka Joe, which included Stuart Goddard (the future Adam Ant).  The Pistols’ performance lasted 10 minutes.

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Written by (Roughly) Daily

November 6, 2022 at 1:00 am

“The international situation is desperate, as usual”*…

… so desperate, an increasing number of pundits argue, that globalization– the “flat world” proclaimed by Tom Friedman– that was to totem of the turn of the century, is no longer possible. But as the estimable Martin Wolf argues, we shouldn’t be too hasty– nor too sweeping and blunt– in our judgements. Trade in goods may be slowing, but the potential for technology-enabled trade in services remains huge…

What is the future of globalisation? This is among the biggest questions of our time. In June, I argued that, contrary to increasingly widespread opinion, “Globalisation is not dead. It may not even be dying. But it is changing.” Among the most important ways in which it is changing is via the growth of services provided at a distance.

A crucial point is that the expansion of trade in such services has depended little on trade agreements. The regulation of service activities focuses on final services, not intermediate ones. There exist, for example, strict rules on selling accounting services in the US. Yet there are few rules on the qualifications of the workers that do the paperwork behind the provision of such services.

Thus, a “US accountant can employ pretty much anybody to tally up a client’s travel expenses and collate them with expense receipts”. Examples of occupations that provide intermediate as opposed to final services include book-keepers, forensic accountants, screeners of CVs, administrative assistants, online help staff, graphic designers, copy-editors, personal assistants, X-ray readers, IT security consultants, IT help staff, software engineers, lawyers who check contracts, financial analysts who write reports. The list goes on. As Baldwin argues in The Globotics Upheaval, the potential for this sort of technology-enabled trade is huge. It will also be highly disruptive: the white-collar workers who provide these services in high-income countries are an important part of the middle class. But it will be hard to protect them.

In all, the evidence suggests that natural economic forces have largely been responsible for past changes in the pattern of world trade. Growing concern over the security of supply chains will no doubt add to these changes, though whether the result will be “reshoring” or “friendshoring” is doubtful. More likely is a complex pattern of diversification. Meanwhile, technology is opening up new areas of growth in services…

Globalisation is not dying, it’s changing,” from @martinwolf_ in @FT.

* Tom Robbins, Even Cowgirls Get The Blues

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As we contemplate commerce, we might send muckraking birthday greetings to Upton Sinclair; he was born on this date in 1878. A writer, activist, and politician, he is probably best remembered for his classic novel, The Jungle, which exposed labor and sanitary conditions in the U.S. meatpacking industry, causing a public uproar that contributed in part to the passage a few months later of the 1906 Pure Food and Drug Act and the Meat Inspection Act.

Many of his novels can be read as historical works. Writing during the Progressive Era, Sinclair describes the world of the industrialized United States from both the working man’s and the industrialist’s points of view. Novels such as King Coal (1917, covering John D. Rockefeller and the 1914 Ludlow Massacre in the coal fields of Colorado), Oil! (1927, the Teapot Dome Scandal), and The Flivver King (1937, Henry Ford– his “wage reform” and his company’s Sociological Department, to his decline into antisemitism) describe the working conditions of the coal, oil, and auto industries at the time.

Sinclair ran unsuccessfully for Congress as a nominee from the Socialist Party. Then he ran, as a Democrat, for Governor of California during the Great Depression, under the banner of the End Poverty in California campaign, but was defeated in the 1934 election.

He was awarded he Pulitzer Prize for Fiction in 1943 for Dragon’s Teeth, which portrayed the Nazi takeover of Germany during the 1930s.

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

Upton Sinclair, ruminating on his gubernatorial loss

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Written by (Roughly) Daily

September 20, 2022 at 1:00 am

“Resistance to the organized mass can be effected only by the man who is as well organized in his individuality as the mass itself”*…

Thomas R. Wells on something to remember in these times of international conflict…

As any map will show you, the world is divided by political borders into spaces called countries. People and things can live in, come from, or go to these places.

But countries are not any more than that.

Firstly and most obviously, countries are merely a social construction. They are collectively produced fictions (like money, or religions) rather than mind-independent objects (like stones). Being fictional does not mean that countries do not matter, but it does mean that they only exist so long as enough people agree to act as if they do.

Secondly and more significantly, countries are places not agents. Places on a map cannot have interests or goals or take actions to achieve them. To think otherwise is to confuse the properties of one kind of thing with another. This category error infects not only general talk, but also much otherwise careful journalism and even academic analysis. For example, the influential Realistschool of international relations is founded on the axiom that countries do (or ought to) act only in their national interest. This trades on two category errors: that countries (rather than governments) can act and that they have interests. The result is confusing and unfalsifiable nonsense about buffer zones, access to resources and so forth that is about as helpful for understanding, predicting, and managing conflicts as an astrological map.

What lies behind this error is the eliding of spaces on a map with the organisations that rule them. Organisations are collective agents like armies or corporations in which groups of human individuals are converted into a hierarchically coordinated and powerful actor in their own right. Unlike countries, organisations are a kind of collectively produced fiction about which it does make sense to attribute interests and which can actually do things, often very significant things. What we call governments are a particular kind of organisation, one that has achieved the power to make and enforce rules over the inhabitants of a country, for example by hurting those who dare to disagree with it and by preventing outsiders from entering. In Max Weber’s famous definition, it “successfully claims a monopoly of the legitimate use of violence”. This power is called sovereignty and it is an attribute of governments, not countries.

People live in countries and are ruled over by governments. It is important to keep each of these three elements distinct and clear so that we can prevent the relentless category errors that confuse public discussion of international affairs. In particular, we should pay more credence to actual people and less to the organisations who claim to be their legitimate representatives merely because they have the power to hurt them. There are many tyrannical governments in this world. Their leaders may declare that they act in the name of the populations and territories they rule but they remain the ones responsible, the ones who should be held to account…

Being careful in how how we apportion blame in these fraught geopolitical times: “There Is No Such Thing As Countries,” from @Philos_Beard in @3QD. Eminently worth reading in full.

* Carl Jung

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As we steer clear of stereotypes, we recall that it was on this date in 1602 that Vereenigde Oost-Indische Compagnie (VOC, or The Dutch East India Company, as it’s known in the Anglophone world) was born.  Generally considered the world’s first trans-national corporation and the first publicly to issue stocks and bonds (and the first company to be ever actually listed on an official stock exchange), it began with a 21-year monopoly on the Dutch spice trade.  The VOC also prefigured the mega-corporation of today in that it had quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, strike its own coins, and establish colonies.  Considered by many to be the greatest corporation in history, the VOC eclipsed all of its rivals in international trade (and many nations in power) for almost 200 years.

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“Pam, this is from corporate. How many times have I told you that there is a special filing cabinet for things from corporate? Called the waste paper basket!”*…

The subject of this essay emerged by chance. I was researching the history of the U.S. passport, and had spent weeks at the National Archives, struggling through thousands of reels of unindexed microfilm records of 19th-century diplomatic correspondence; then I arrived at the records for 1906. That year, the State Department adopted a numerical filing system. Suddenly, every American diplomatic office began using the same number for passport correspondence, with decimal numbers subdividing issues and cases. Rather than scrolling through microfilm images of bound pages organized chronologically, I could go straight to passport-relevant information that had been gathered in one place.

I soon discovered that I had Elihu Root to thank for making my research easier. A lawyer whose clients included Andrew Carnegie, Root became secretary of state in 1905. But not long after he arrived, the prominent corporate lawyer described himself as “a man trying to conduct the business of a large metropolitan law-firm in the office of a village squire.” The department’s record-keeping practices contributed to his frustration. As was then common in American offices, clerks used press books or copybooks to store incoming and outgoing correspondence in chronologically ordered bound volumes with limited indexing. For Root, the breaking point came when a request for a handful of letters resulted in several bulky volumes appearing on his desk. His response was swift: he demanded that a vertical filing system be adopted; soon the department was using a numerical subject-based filing system housed in filing cabinets.

The shift from bound volumes to filing systems is a milestone in the history of classification; the contemporaneous shift to vertical filing cabinets is a milestone in the history of storage…

It is easy to dismiss the object: a rectilinear stack of four drawers, usually made of metal. With suitable understatement, one design historian has noted that “manufacturers did not address the subject of style with regard to filing units.” The lack of style figures into the filing cabinet’s seeming banality. It is not considered inventive or original; it is simply there, especially in 20th-century office spaces; and this ubiquity, along with the absence of style, perhaps paradoxically contributes to the easy acceptance of its presence, which rarely causes comment…

But if it appears to be banal and pervasive, it cannot be so easily ignored. The filing cabinet does not just store paper; it stores information; and because the modern world depends upon and is indeed defined by information, the filing cabinet must be recognized as critical to the expansion of modernity. In recent years scholars and critics have paid increasing attention to the filing systems used to store and retrieve information critical to government and capitalism, particularly information about people — case dossiers, identification photographs, credit reports, et al. But the focus on filing systems ignores the places where files are stored. Could capitalism, surveillance, and governance have developed in the 20th century without filing cabinets? Of course, but only if there had been another way to store and circulate paper efficiently. The filing cabinet was critical to the infrastructure of 20th-century nation states and financial systems; and, like most infrastructure, it is often overlooked or forgotten, and the labor associated with it minimized or ignored.

The vertical filing cabinet was invented in the United States in the 1890s, and quickly became a fixture throughout North America and around the world. It spread globally because it provided a way to store large amounts of paper so that individual sheets could be retrieved easily. The technique of using drawers for storing a sheet of paper on its long edge was significant because loose papers cannot stand upright on their own. Put another way, the filing cabinet technology enabled loose paper to stand on edge so that more sheets could be stored in less space but still be accessed with minimal difficulty. It allowed loose papers to do the work of paperwork…

The filing cabinet had at least two inventors — and likely several others who remain lost to the historical record. The current accepted version attributes the invention to the Library Bureau, the Boston-based company founded in 1876 by Melvil Dewey, inventor of the eponymous decimal system of library classification. Although the Library Bureau would proudly claim the invention, critical developments happened elsewhere. It was the secretary of a charity organization based in Buffalo, New York, a man identified as Dr. Nathaniel Rosenau, who provided the initial impetus for construction of a vertical filing cabinet. Inspired by the use of cabinets to store index cards on their edges, Rosenau sought a bigger container for papers.

In 1892, he took his idea to the Library Bureau’s Chicago office, which built a prototype. But no matter the inventor, the turn of the 20th century saw the filing cabinet develop as a part of the rapid growth of an office equipment industry in which dozens of companies manufactured practically identical products with little respect for the hundreds of patents issued for products and parts. To underscore their uniqueness and modernity, this industry explicitly labeled its products “equipment,” “appliances,” and “machines” — not furniture. And it made these products indispensable to offices, and thus helped to constitute the office as a “modern” workspace. The office with a vertical filing cabinet was decidedly not a 19th-century office…

The filing cabinet was critical to the information infrastructure of the 20th-century; like most infrastructure, it was usually overlooked– an oversight that Craig Robertson (@craig2robertson) rectifies: “The Filing Cabinet.”

* “Michael Scott,” The Office (Pilot episode)

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As we savor storage, we might spare a thought for Malcolm Purcell McLean; he died on this date in 2001. A transportation entrepreneur, he parlayed his experience as a trucker into the development of the modern shipping container— which revolutionized transport and international trade in the second half of the twentieth century. Containerization led to a significant reduction in the cost of freight transportation by eliminating the need for repeated handling of individual pieces of cargo, and also improved reliability, reduced cargo theft, and cut inventory costs (thus, working capital needs) by shortening transit time.

When McLean died in 1987, then Secretary of Transportation Norm Minetta said:

Malcom revolutionized the maritime industry in the 20th century. His idea for modernizing the loading and unloading of ships, which was previously conducted in much the same way the ancient Phoenicians did 3,000 years ago, has resulted in much safer and less-expensive transport of goods, faster delivery, and better service. We owe so much to a man of vision, “the father of containerization,” Malcolm P. McLean.

In an editorial shortly after his death, the Baltimore Sun wrote that “he ranks next to Robert Fulton as the greatest revolutionary in the history of maritime trade,” and Forbes Magazine called McLean “one of the few men who changed the world.” On the morning of McLean’s funeral, container ships around the world blew their whistles in his honor.

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“Exorbitant privilege”*…

Economic history books will commemorate the era we currently live in as the second wave of financial globalization, following the first wave during the Classical Gold Standard period. Our era is characterized by an unprecedented expansion of global financial flows. Partly, these flows form the counterpart to global value chains and the globalization of trade in goods and services. In the last few decades, however, they have been increasingly decoupled from the real sector. The financial infrastructure that enables this expansion is the international monetary system…

In its current shape, [the international monetary system] has a hierarchical structure with the US-Dollar (USD) at the top and various other monetary areas forming a multilayered periphery to it. A key feature of the system is the creation of USD offshore – a feature that in the 1950s and 60s developed in co-evolution with the Bretton Woods System and in the 1970s replaced it. Since the 2007–9 Financial Crisis, this ‘Offshore US-Dollar System’ has been backstopped by the Federal Reserve’s network of swap lines which are extended to other key central banks. This systemic evolution may continue in the decades to come, but other systemic arrangements are possible as well and have historical precedents. This article discusses four trajectories that would lead to different setups of the international monetary system by 2040, taking into account how its hierarchical structure and the role of offshore credit money creation may evolve. In addition to a continuation of USD hegemony, we present the emergence of competing monetary blocs, the formation of an international monetary federation and the disintegration into an international monetary anarchy…

Americans tend to take the global primacy of the U.S. Dollar for granted (indeed, often complaining about the current account imbalances to which huge quantities of off-shore dollars lead). But there’s no mistaking that this system has been been hugely advantageous to the U.S. Yet, as Steffen Murau (@steffenmurau) explains, it may not last: “The evolution of the Offshore US-Dollar System: past, present and four possible futures.”

See also Mernau’s “International Monetary System” (from whence, the image above), and Ben Bernanke’s “The dollar’s international role: An ‘exorbitant privilege’?

* Valéry Giscard d’Estaing (then the French Minister of Finance; later French President), referring to the benefit that accrues to the U.S. as a result of the U.S. Dollar being the world’s reserve currency

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As we count our blessings, we might recall that it was on this date in 1890 that journalist Nellie Bly completed her 72-day trip around the world.

In 1888, Bly suggested to her editor at the New York World that she take a trip around the world, attempting to turn the fictional Around the World in Eighty Days into fact for the first time.  A year later, at 9:40 a.m. on November 14, 1889, with two days’ notice, she boarded the steamer Augusta Victoria, and began her 24,899-mile journey.

She brought with her the dress she was wearing, a sturdy overcoat, several changes of underwear, and a small travel bag carrying her toiletry essentials. She carried most of her money (£200 in English bank notes and gold in total as well as some American currency) in a bag tied around her neck.

Bly traveled through England, France (where she met Jules Verne in Amiens), Brindisi, the Suez Canal, Colombo (Ceylon), the Straits Settlements of Penang and Singapore, Hong Kong, and Japan.  Just over seventy-two days after her departure from Hoboken, having used steamships and existing railway lines, Bly was back in New York; she beat Phileas Fogg’s time by almost 8 days.

Nellie Bly, in a publicity photo for her around-the-world voyage. Caption on the original photo reads: “Nellie Bly, The New York World‘s correspondent who placed a girdle round the earth in 72 days, 6 hours, and 11 minutes.”

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