EU government leaders have put no headline energy into trying to end the warfare torturing eastern Congo for the past month. And you can’t blame that on being distracted by Israel retaliating against random rocket attacks from Gaza with an 8-day bombardment until Egypt brokered the ceasefire on 21 November. Heads of EU governments weren’t headline visible on Gaza either. They’re distracted by other things.
EU leaders’ cans
In my last post (13 Nov), I commented on the unprecedented dimensions of global problems with which international institutions and world leaders have to grapple today. I suggested that it is the lack of precedent in this “age of more, most and never before” that explains the consternation and unease generated by today’s crisis.
Well, nobody looks more consternated that the EU’s leaders as they gather together and line up the cans labelled “Eurozone crisis” and “EU budget” so they can kick them down the road. Thirteen months ago they shafted George Papandreou, then Greek Prime Minister, for having the temerity to suggest that the Greek people could be consulted over what was about to happen to them. Since then, they have seemed frozen in shock. Less rabbits in headlights, more like villagers in the path of the volcano’s lava as they mutter an ancient prayer, fearful that it won’t work but unable to think of anything better.
True, the group has what in EU-speak is called variable geometry, because the Eurozone is less than the whole EU, so the group of leaders is different for different cans. And membership changes with political fortunes. But the mood and the tone haven’t.
That not so golden age
Oh how different it once was. Or seemed. After all, the two decades up to 2008 were hardly still waters in the global economy with crashes at the end of the 1980s and in Asia in the second half 1990s, Japan’s lost decade and the collapse of many a dot.com at the start of this century.
So the sense of safety and certainty about the economy that opinion-leaders and policy-makers in the rich countries often expressed was always shallow and misleading. Yet there was a real feeling of forward movement and confidence.
Today it feels so very different. Now we know that the world economy was horribly out of balance, that in the old capitalist countries of Europe and North America we were consuming far more than we were producing, and financing that consumption by borrowing from China (a global version of the system whereby the car manufacturer lends you the money to buy its new car, or the government lends another government money to buy its weapons). On a smaller scale, within Europe, Germany played a version of the Chinese role as maker and lender. We were happy to borrow and they to lend – win-win for the old firm of greed and greed.
Winners and losers
In the changes since 2008, as always, not everybody has gained and lost equally. Billionaires, to take a random example, suffered badly in the initial crash: in 2008 1,125 of them held assets of 4.4 trillion US dollars. Late in 2009, there were but 793 of them left, holding a mere 2.4 trillion dollars’ worth. But worry not: in 2011, the world total of billionaires stood at 1,210, holding assets of 4.5 trillion dollars. Phew.
The old idea of a sharp division in the world between rich countries and poor countries no longer holds in the same form. Some countries are richer than others – in the richest countries, GNI per head is about 200 times greater than it is in the poorest – but behind those extremes shelters a lot of nuance. India is no longer one of the poorest countries, not even when wealth is measured per head of the population. But there are more people living in poverty in India than any other country.
On the other side of the balance, consider life expectancy and social class. The lowest average life expectancy is found in a handful of African countries and in Afghanistan. But in England, where average life expectancy is 77 years, being homeless cuts that expectancy by 30 years, putting it one year less than in Afghanistan and the Central African Republic. And think also of hand-outs: bringing us back to the Eurozone crisis, in Athens 400,000 daily receive free food.
Stumbling or limping?
Out of the crash of 2008, while Europe has stumbled into one hole after another, the USA has limped. It was deeply in debt too but it had more collateral. It has several times seemed to pull itself clear of the wreckage – the last set of optimistic figures helped Obama’s re-election – only to fall back. Meanwhile China walked tall for the first couple of years and the Indian economy performed only a little less impressively. Yet, like the US, the rising economic powers are now being slowed and hindered by Eurozone stagnation. Globalization has harnessed everybody’s economic fates together.
An economic system that was previously marked by perpetual forward motion and astonishing resilience has taken a terrible buffeting. Each crisis summit offers at best a breathing space before the next crisis and the next summit.
We need something better – not just clearer and more effective leadership but more resilient institutions. The role of law-based institutions, especially in the economic sphere, can quite often be summarised as protecting ourselves from ourselves.
In all probability, the resilience of the economic system will reassert itself eventually and there will be something to call recovery – but most likely at high cost for many people in many countries. A less painful recovery and a more stable future seems to require at least some work on our institutions – especially those that govern how the economy runs – to protect us all from the malign influence of short-term greed and the tunnel vision it generates.