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 - 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.
No comments:
Post a Comment