Ed, When the countries in Europe had their own currencies, those currencies in the international market would indicate that things are going well or ill. The single currency in a bunch of different countries - no matter how much they claim to be one - is a real problem. The different currencies provided information, the Euro doesn't, hence the Greek situation which was belatedly discovered. Harry ****************************** Henry George School of Los Angeles Box 655 Tujunga CA 91042 (818) 352-4141 ****************************** From: [email protected] [mailto:[email protected]] On Behalf Of Ed Weick Sent: Tuesday, January 04, 2011 4:00 AM To: Keith Hudson; RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION Subject: Re: [Futurework] The softening of the cocoons during 2011 Interesting, Keith. I doubt very much that trading countries will go very far in the direction of a single currency. As the EU is demonstrating, adherence to a single currency can impose an awful burden on the individual state. Control of currency represents considerable domestic and international power. You are right about individual economies having become multilayered, with the top layer, consisting of the largest firms, entwining the globe. However, there are many layers below that in which firms can only work nationally, regionally and locally. What I see is a bifurcation of economies, with the top layer and the layers below having increasingly different interests. Ed ----- Original Message ----- From: Keith Hudson <mailto:[email protected]> To: RE-DESIGNING WORK, INCOME DISTRIBUTION, ,EDUCATION <mailto:[email protected]> Sent: Tuesday, January 04, 2011 4:57 AM Subject: [Futurework] The softening of the cocoons during 2011 Politicians don't get it. Government bureaucrats don't get it. Central banks don't get it. Most economists don't get it either.
Nation-states are spinning. No, they're not spinning round like tops. They're spinning in the same way as silkworm cocoons are spun. As they are becoming boiled (governments now going irretrievably into debt) the political-credibility gum is melting in each cocoon and the shell is softening. Fine strands are breaking through, and are being drawn to intertwine with others from other cocoons to form threads around the world. Depending on how many cocoons are being boiled concurrently, so is the thickness of each thread. That's the Western world anyway. Previously (and this is where the metaphor breaks down!), the hard-shelled, territorially-defined nation-states either fought one another or, between times, allowed their businesses to trade with those from other countries. Previously (about a century ago), the goods transferred between nations were either raw materials or they were finished goods -- mostly consumer goods. Goods were traded by nation-bound, nationally-taxed, nationally-recruited businesses within each country using national currencies. Politicians, bureaucrats, central banks (and most economists) thought of economics as a summation, or a balancing-up, of these "national" economies with one another. That's how they thought. National economies and national currencies is what they thought they were controlling (in the case of politicians, bureaucrats and central banks), or talking about (in the case of most economists). It's different now. The businesses are no longer nation-bound but thread themselves around the world, increasingly having only nostalgic allegiance to their countries of origin. They will locate their operations wherever it suits them. Their production units will go to where labour is either the cheapest or the most educated in the skills they need. In the case of production units requiring high-skill, well-educated personnel, businesses will go to the sunniest and pleasantest places. In the case of the headquarters of these business, they will go to where corporate taxes are most benign and where there is plenty of access to banks, talented individuals for recruitment, restaurants and a wide band of sexual and cultural entertainment. Most of their trade is now raw materials and part-goods, the finished goods of yesteryear being only the last segments of the freight chains which now criss-cross one another. But the flexible, yet stronger-than steel, silky threads now encircling the earth are not just production businesses but also vast retailing businesses. Also, there are many other international threads -- investment banks, hedge funds, scientific networks within each discipline, habitations of the super-rich, urbanization, elite artists and entertainers (soccer almost deserving a thread of its own!), special interest groups, innovative ideas. There are even attempts by senior bureaucrats and overly-ambitious politicians to turn the clock back and form supra-national organizations such as the IMF, OECD, EU, EMU, NAFTA, G7. G8, G20, ASEAN, SCO, IPCC, etc (the UN being the most obvious so far to show the failure of such attempts). What is different about the threads, compared with nation-states? There are many differences -- including the lack of standing armies which are not necessary to back up the threadies' power -- but two stand out. The new threads are lateral and they are efficient. They accumulate wastage, of course. All organizations do. But unlike pyramidal, highly centralized multi-layered nation-states, they are self-culling or they don't last for long. Being lateral, they allow for younger, more innovative individuals to come to the fore and disturb their (much reduced) rank orders more frequently. The one universal feature that all the new threads need, but governments, so far, are denying them, is a rock-solid currency to which national currencies would have to anchor themselves instead of swishing about as they do now (this month Chile being the latest country to devalue in self-defence against the dollar). This is something -- it was rumoured -- that President Hu Jintao of China was going to discuss with President Barack Obama at a meeting last June. I had a lot of naive hope for that as I mentioned in a previous posting. But this fell through. They're meeting again now, one learns. They'll certainly be discussing currency. That's the tinder-box issue above everything else. But whether they'll make any serious attempt at agreeing on a universal trading currency is quite another. Perhaps they'll pay attention to the President of the World Bank, Robert Zoellick, in calling for a currency with gold-referencing. Perhaps they won't. Perhaps Obama and his coterie still want to saturate the world with even cheaper dollar bank-notes. If so, then America had better watch out. Many of the largest banks in the world are now pushing the Chinese renminbi as a prototype world trading currency. This could grow enormously during 2011. Be warned, Obama, Geithner and Bernanke. Keith Keith Hudson, Saltford, England http://allisstatus.wordpress.com/ <http://allisstatus.wordpress.com/2010/12/> 2011/01/ <http://allisstatus.wordpress.com/2010/12/> _____ _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
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