It has been the great global economic crisis farewell tour; 30 cities, 10 countries and more than 50 interviews with pointy heads and punters — from a newly unemployed Chinese day labourer to the New York day trader who managed to lose a billion dollars of his client’s easily won money — in a singe day. Though separated by continents and cultures, both had the same look of shock in their eyes, as if to say, “this can’t really be happening”. But it was.
Our tour through the economic carnage began with an eerily empty Qantas flight to LAX in February and ended with a mad scramble to get the last seat aboard a flight out of Port Hedland in September. In California, a tent city for the new poor had mushroomed within shouting distance of the State Capitol building in Sacramento. The seventh biggest economy in the world was officially broke. But in the mining boom-towns, where the crisis came and went in the blink of an eye, it cost $200 a night for a room in crummy motel. We’d paid less in New York and London. The global economy of 2009 is full of Alice in Wonderland weirdness.
Without doubt the scariest moment was to witness the teetering mountains of containers stacking up beside Chinese ports, literal evidence of the absolute collapse of world trade in February. Chinese factories kept delivering, but no one was buying. Likewise, America’s largest seaport at Long Beach has become the world’s biggest parking lot as unsold imported cars stretched to the horizon. This was the reality behind Steve Keen’s elaborate deflationary graphs, and David McWilliams and I stared at such scenes with a mixture horror and disbelief. It was if the world had opened up and swallowed the global economy
McWilliams is a “recovering” investment banker and made a name for himself in Ireland by being one of the few economists willing to call the bluff on Ireland’s Celtic Tiger economy. Sadly, he was only too right, and Ireland is currently living through the greatest contraction of any advanced economy since World War Two. In Iceland, we encountered an entirely bankrupt nation, in China’s Pearl River Delta we drove past one abandoned factory after another. Thousands had simply shut down from one day to the next. Neither of us could comprehend the damage done by the collapse in global finance until we saw it with our own eyes. It was if the economy had stared into Medusa’s eyes and turned to stone.
We’re kidding ourselves if we believe that somehow the scars of this collapse won’t be with us for decades. For now the panicked response has been to buy our way out of trouble, dealing with a debt crisis by piling on more debt. There has been precious little done to address the systemic problems revealed by the crisis, and as Professor Elizabeth Warren, chair of the oversight committee investigating what happened to America’s bail-out money, told us, “we’re now in a permanent hostage situation”. The surviving global financial institutions are in control and out of control at the same time, too big to fail and too powerful to be restrained.
And there, just over the horizon, is an ugly array of challenges that will make the financial crisis seem insignificant: climate change; over-population; the end of cheap energy; food water and air. Population warrior Professor Paul Ehrlich told me that as a species, humans are not evolved to deal with long-term thinking. For 95% of our time on earth we’ve concentrated on avoiding becoming some sabre-toothed tiger’s breakfast, adept at getting out of the way of an immediate problem, but useless for thinking about anything beyond tomorrow. Our response to the current crisis seems to support his case — dump the cost on the next generation and go back to business as usual. It’s hard to be sanguine then about our prospects given the scale and complexity of what’s coming.
The much-underrated Australian ecologist Paul Gilding calls this the moment of the Great Disruption, a threshold that heralds a period of great economic and social transformation. We’ve hit our ecological limits and the old growth-economy mantra will no longer work. Yet I think we are also missing another, even more important message from the GFC — it reveals a shortage of ideas. Governments around the world spend a tiny proportion of their time or money planning, yet this is where the majority of us will be living most of our lives.
When Alan Greenspan admitted he was shocked by the collapse of Wall Street and admitted it undermined his ideological world view, it was also an admission that we had entered an intellectual black hole. The old left/right arguments simply seem irrelevant in this new age and their old disputes have nothing to offer. And if this seems unlikely or difficult to accept, I urge you to take a good look around as we did. Or at least watch the series and begin arguing with what is, admittedly not your grand-mother’s ABC documentary series. It’s polemical, argumentative, and hopefully entertaining. And designed to get you thinking.
Simon Nasht is writer/director of the new TV series Addicted to Money. Irish economist David McWilliams is his co presenter.
Addicted To Money is on ABC 8.35pm Thursdays from tonight.
This is all very interesting (I really mean that) but I’m curious: Did the ABC or anyone else (e.g. the producers) pay Crikey to run this piece? Or did it run despite rather than because of it being an overt promotion for one of their programs?
The planet today is in the situation that Britain faced in 1940, a state of siege. The island nation was surrounded by hostile naval and air forces, and just over the Channel, an aggressive and successful land force had captured most of Europe. The War Cabinet included Churchill as the Conservative Prime Minister, and Attlee the Labour leader. The former dealt with prosecuting the war and the latter with domestic issues. Appalled by the record of profiteering industrialists in the First World War, Atlee was to ensure that this was not to be repeated in the Second. War time regulations were imposed to maximise the production of war materials and the wherewithal necessary to sustain the population, was rationed. Income was taxed at the rate of nineteen shillings and sixpence in the pound, that is, the taxpayer retained one pound in every forty earned. The sacrifice was shared in treasure and blood.
Planet Earth is in no less danger today than Britain was in 1940.
Every nation on Earth need its leaders to take note of the urgency of countering the anthropomorphic sources of global warming, and to emulate the boldness of those in Britain in 1940. With no one seemingly prepared to sacrifice anything, I fear that greed will succeed.
Enjoyed the show, but the drug metaphor got really old.
My sympathies lie with the rest of the animal kingdom before you humans (I’m a squid). I’d like to see the cashmonies of the top bankers appropriated and directed towards conservation of endangered species and reclamation of natural areas.
Glad I stumbled on the show first 5 minutes last night. If this has run earlier episodes I will have to seek it out. Youtube? (where by the by I watched a clunky version of Bourne Identity made 1988).
I thought the drug addiction metaphor was a stretch to begin with, but then I found it compelling.
Also being an Irish-Italian-Australian anglo I loved the continental jumps putting us humans generally in the frame.
We ecologists in Sydney have howled about the dredging/expansion of Port Botany all for gigantism (talk about literal not metaphor) of container ships from China or say Korea. This monster expansion was to disrupt by one calculation 50 suburbs of Sydney with tunnel/smog stack truckways in an already congested fug.
Growth, growth. It’s mindless. Ross Gittins, economics editor of the Sydney Morning Herald gets it and doesn’t buy this mindless spin. About 15 years ago I wrote to him very annoyed and said he knew the price of everything and the value of nothing. If it was harsh then he is a real moral leader these days from deep within his discipline.
The take out line about predatory overlord masters of the universe Investment Banks buying themselves out with our money. Just wonderful. You deserve a medal for that one line. Made of coca cola bottle caps perhaps.
As for the concern about running ‘a promo’ for the ABC I don’t buy that. It’s good news value here.
But there is a media meta analyis worth making. The ABC are reaching out into otherwise commercial online media big and small and that’s a hot topic as per Marg Simons piece same day on crikey blogs.
Where it ends, or is defined, regulated re public v private one can only imagine or guess but it’s happening and some of it will be good, some probably bad. Like p*rn I guess I will know when I see it.
(Speaking of “lifestyle porn” which was another great term from the show last night.)