Bright lights, world city - Stories told by dazzling London landmark

The Economist offers a short article citing the heart of London's West End as an apt symbol for globalisation now and throughout the years:

They are an instantly recognisable symbol of London, but, perhaps appropriately for such a global city, the advertising lights at Piccadilly Circus, first switched on in 1908, have mostly been a catwalk for foreign brands, rather than domestic ones. Now Sanyo, which has flashed its name at the site since 1978, is to make way for Hyundai, a South Korean carmaker, which will pay Land Securities, the firm that owns the electronic hoardings, around £2m ($3.3m) a year for a central spot.

For the past century, the glittery displays have reflected shifts in international influence in business and beyond. British and European brands predominated until after the second world war: Perrier, a French drinks firm, was the first to spell its name in lights; Guinness, Bovril and Schweppes, three other beverage-makers, were also early presences. Yet the London landmark has not hosted a British company for nearly 40 years.

By the 1960s Americans were well established: Coca-Cola has been adding life to the lights since 1955; other American torchbearers have included Budweiser and McDonald’s. As Asian companies began to conquer global markets in the 1970s, so Japanese businesses started to colonise the Piccadilly boards. Canon led, followed by Fuji and TDK. The South Koreans came next. The illuminations in New York’s Times Square, which feature multiple American brands and also advertise shows, are comparatively parochial.

As the geographical spread has tellingly shifted, so has the mix of products on display. Disposable incomes rose, consumers became more ambitious and the cheap and easy pleasures of Player’s cigarettes and Skol and Double Diamond beer gave way to the new opiates of the masses: Kodak cameras, Philips hi-fis and Panasonic colour televisions, as well as the aspirational pull of the Volkswagen Beetle and foreign air travel.

The lights have sometimes reflected momentous events, as well as commercial trends. Though overrun with American GIs, Piccadilly Circus was dark throughout the second world war, lighting up again only in 1949. The signs have since been dimmed for the funerals of Winston Churchill in 1965 and Princess Diana in 1997. With the rise of LED displays and decline of neon the lights are now brighter than ever. But they may yet need to find some greener hues in their multicoloured glory: they generate 1.9m kg of carbon dioxide a year, equivalent to the emissions of around 2,000 of Hyundai’s bestselling cars. That is a lot of gas for a set of streetlights.

Economist: The case against globaloney (globalisation)

Schumpeter in this week's The Economist has an interesting article pointing up—and reviewing positively—the imminent publication of an important new book on globalisation by one Pankaj Ghemawat. Entitled World 3.0, the newspaper characterises its thesis: "At last, some sense on globalisation":

Geoffrey Crowther, editor of The Economist from 1938 to 1956, used to advise young journalists to “simplify, then exaggerate”. He might have changed his advice if he had lived to witness the current debate on globalisation. There is a lively discussion about whether it is good or bad. But everybody seems to agree that globalisation is a fait accompli: that the world is flat, if you are a (Tom) Friedmanite, or that the world is run by a handful of global corporations, if you are a (Naomi) Kleinian.

Pankaj Ghemawat of IESE Business School in Spain is one of the few who has kept his head on the subject. For more than a decade he has subjected the simplifiers and exaggerators to a barrage of statistics. He has now set out his case—that we live in an era of semi-globalisation at most—in a single volume, “World 3.0”, that should be read by anyone who wants to understand the most important economic development of our time.

Mr Ghemawat points out that many indicators of global integration are surprisingly low. Only 2% of students are at universities outside their home countries; and only 3% of people live outside their country of birth. Only 7% of rice is traded across borders. Only 7% of directors of S&P 500 companies are foreigners—and, according to a study a few years ago, less than 1% of all American companies have any foreign operations. Exports are equivalent to only 20% of global GDP. Some of the most vital arteries of globalisation are badly clogged: air travel is restricted by bilateral treaties and ocean shipping is dominated by cartels.

Far from “ripping through people’s lives”, as Arundhati Roy, an Indian writer, claims, globalisation is shaped by familiar things, such as distance and cultural ties. Mr Ghemawat argues that two otherwise identical countries will engage in 42% more trade if they share a common language than if they do not, 47% more if both belong to a trading block, 114% more if they have a common currency and 188% more if they have a common colonial past.

What about the “new economy” of free-flowing capital and borderless information? Here Mr Ghemawat’s figures are even more striking. Foreign direct investment (FDI) accounts for only 9% of all fixed investment. Less than 20% of venture capital is deployed outside the fund’s home country. Only 20% of shares traded on stockmarkets are owned by foreign investors. Less than 20% of internet traffic crosses national borders.

And what about the direction rather than the extent of globalisation? Surely Mr Friedman (author of “The World is Flat”) and company are right about where we are headed even if they exaggerate how far we have got? In fact, today’s levels of emigration pale beside those of a century ago, when 14% of Irish-born people and 10% of native Norwegians had emigrated. Back then you did not need visas. Today the world spends $88 billion a year on processing travel documents and in a tenth of the world’s countries a passport costs more than a tenth of the average annual income.

That FDI fell from nearly $2 trillion in 2007 to $1 trillion in 2009 can be put down to the global financial crisis. But other trends suggest that globalisation is reversible. Nearly a quarter of North American and European companies shortened their supply chains in 2008 (the effect of Japan’s disaster on its partsmakers will surely prompt further shortening). It takes three times as long to process a lorry-load of goods crossing the Canadian-American border as it did before September 11th 2001. Even the internet is succumbing to this pattern of regionalisation, as governments impose a patchwork of local restrictions on content.

Mr Ghemawat also explodes the myth that the world is being taken over by a handful of giant companies. The level of concentration in many vital industries has fallen dramatically since 1950 and remained roughly constant since 1980: 60 years ago two car companies accounted for half of the world’s car production, compared with six companies today.

He also refutes the idea that globalisation means homogenisation. The increasing uniformity of cities’ skylines worldwide masks growing choice within them, to which even the most global of companies must adjust. McDonald’s serves vegetarian burgers in India and spicy ones in Mexico, where Coca-Cola uses cane sugar rather than the corn syrup it uses in America. MTV, which went global on the assumption that “A-lop-bop-a-doo-bop-a-lop-bam-boom” meant the same in every language, now includes five calls to prayer a day in its Indonesian schedules.

Mr Ghemawat notes that company bosses lead the pack when it comes to overestimating the extent of globalisation. Nokia, for example, spent years trying to break into Japan’s big but idiosyncratic mobile-handset market with its rest-of-the-world-beating products before finally conceding defeat. In general companies frequently have more to gain through exploiting national differences—perhaps through arbitrage—than by muscling them aside.

This sober view of globalisation deserves a wide audience. But whether it will get it is another matter. This is partly because “World 3.0” is a much less exciting title than “The World is Flat” or “Jihad vs. McWorld”. And it is partly because people seem to have a natural tendency to overestimate the distance-destroying quality of technology. Go back to the era of dictators and world wars and you can find exactly the same addiction to globaloney. Henry Ford said cars and planes were “binding the world together”. Martin Heidegger said that “everything is equally far and equally near”. George Orwell got so annoyed by all this that he wrote a blistering attack on all the fashionable talk about the abolition of distance and the disappearance of frontiers—and that was in 1944, when Adolf Hitler was advancing his own unique approach to the flattening of the world.

Clearly, a most interesting publication and one vital to our understanding of this phenomenon—an opportunity to gain some perspective on one of the most characteristic international phenomena of our age.

Oil prices: Steps needed to wean UK onto other energy sources

The Guardian has a story underlining the seemingly radical influence of recent events affecting the globally-interconnected oil economy on UK government policy (as an exemplar, no doubt, amongst many other developed economies' policies):

As Middle East conflicts cause oil prices to rise dramatically, government spells out plans for radical energy shift

Ministers will be ordered to adopt urgent measures to wean the country off oil, amid rising concern that the Libya crisis has left the economy exposed to a dramatic rise in fuel prices.

With fears growing that the cost of petrol could hit £2 a litre if instability in the Middle East persists and deepens, every government department will be told this week to comply with a new national "carbon plan" aimed specifically at "getting off the oil hook".

The energy secretary, Chris Huhne, told the Observer that the UK had no option but to speed up efforts to move away from oil. "Getting off the oil hook is made all the more urgent by the crisis in the Middle East. We cannot afford to go on relying on such a volatile source of energy when we can have clean, green and secure energy from low-carbon sources," he said. "The carbon plan is about ensuring that the whole of government is engaged in a joined-up effort to lead us into a low-carbon world."

The transport secretary, Philip Hammond, who has infuriated green groups by floating the idea of raising the motorway speed limit from 70mph to 80mph, will be told he must produce a nationwide strategy to promote installation of infrastructure for electric cars by June.

It is also expected that new deadlines will be set for building low-carbon homes, and that a firm starting date of September 2012 will be established for a new "green investment bank" to become fully operational.

The Carbon Plan will be launched this week by David Cameron, his deputy Nick Clegg and Huhne. In a tacit admission that ministers have failed so far to live up to their claim to be part of the "greenest government ever", the prime minister will, in effect, make their job security dependent on "green achievement" by demanding that those whose departments fall short of environmental targets write to him with a full explanation of what went wrong.

And in another extraordinary move, non-governmental organisations, including Greenpeace, will be asked to play a monitoring role to ensure progress across each department is maintained.

Do read the rest!

Guardian: Inequality, the new dynamic of history

Two days ago an interesting opinion piece by the economist Kenneth Rogoff appeared in The Guardian's Comment is Free section. Rogoff's assertion?—that global economic forces are creating ever-greater disparities of wealth within societies, amounting to the great policy challenge of our time...

Food shortage rioters and police in Belcour, Algeria.

As the dramatic events in North Africa continue to unfold, many observers outside the Arab world smugly tell themselves that it is all about corruption and political repression. But high unemployment, glaring inequality and soaring prices for basic commodities are also a huge factor. So observers should not just be asking how far similar events will spread across the region; they should be asking themselves what kind of changes might be coming at home in the face of similar, if not quite so extreme, economic pressures.

Within countries, inequality of income, wealth and opportunity is arguably greater than at any time in the last century. Across Europe, Asia and the Americas, corporations are bulging with cash as their relentless drive for efficiency continues to yield huge profits. Yet workers' share of the pie is falling, thanks to high unemployment, shortened working hours and stagnant wages.

Paradoxically, cross-country measures of income and wealth inequality are actually falling, thanks to continuing robust growth in emerging markets. But most people care far more about how well they are doing relative to their neighbours, than to citizens of distant lands.

The rich are mostly doing well. Global stock markets are back. Many countries are seeing vigorous growth in prices for housing, commercial real estate, or both. Resurgent prices for commodities are creating huge revenues for owners of mines and oil fields, even as price spikes for basic staples are sparking food riots, if not wholesale revolutions, in the developing world. The internet and the financial sector continue to spawn new multimillionaires, and even billionaires, at a staggering pace.

Yet, high and protracted unemployment plagues many less-skilled workers. For example, in financially-distressed Spain, unemployment now exceeds 20%. It cannot help that the government is simultaneously being forced to absorb new austerity measures to deal with the country's precarious debt burden. Indeed, given record-high public-debt levels in many countries, few governments have substantial scope to address inequality through further income redistribution. Countries such as Brazil already have such high levels of transfer payments from rich to poor that further moves would undermine fiscal stability and anti-inflation credibility.

Countries such as China and Russia, with similarly high inequality, have more scope for increasing redistribution. But leaders in both countries have been reluctant to move boldly for fear of destabilising growth. Germany must worry not only about its own vulnerable citizens, but also about how to find the resources to bail out its southern neighbours in Europe.

The causes of growing inequality within countries are well understood, and it is not necessary to belabour them here. We live in an era in which globalisation expands the market for ultra-talented individuals but competes away the income of ordinary employees .Competition among countries for skilled individuals and profitable industries, in turn, constrains governments' abilities to maintain high tax rates on the wealthy. Social mobility is further impeded as the rich shower their children with private education and after-school help, while the poorest in many countries cannot afford even to let their children stay in school.

Writing in the 19th century, Karl Marx famously observed inequality trends in his day and concluded that capitalism could not indefinitely sustain itself politically: eventually, workers would rise up and overthrow the system. Outside Cuba, North Korea and a few leftwing universities around the world, no one takes Marx seriously anymore. Contrary to his predictions, capitalism spawned ever-higher standards of living for more than a century, while attempts to implement radically different systems have fallen spectacularly short.

Yet, with inequality reaching levels similar to 100 years ago, the status quo has to be vulnerable. Instability can express itself anywhere. It was just over four decades ago that urban riots and mass demonstrations rocked the developed world, ultimately catalysing far-reaching social and political reforms.

Yes, the problems facing Egypt and Tunisia today are far more profound than in many other countries. Corruption and failure to embrace meaningful political reform have become acute shortcomings. But it would be very wrong to suppose that gaping inequality is stable as long as it arises through innovation and growth.

How, exactly, will change unfold, and what form will a new social compact ultimately assume? It is difficult to speculate, though in most countries, the process will be peaceful and democratic. What is clear is that inequality is not just a long-term issue. Concerns about the impact of income inequality are already constraining fiscal and monetary policy in developed and developing countries alike, as they attempt to extricate themselves from the hyper-stimulative policies adopted during the financial crisis. More importantly, it is very likely that countries' abilities to navigate the rising social tensions generated by gaping inequality could separate the winners and losers in the next round of globalisation.

Inequality is the big wildcard in the next decade of global growth – and not just in North Africa.

Clearly, as students of Conflict, War and Terrorism, this article should be at the top of our reading list—it contains important insights and current examples as to the source of contemporary conflict worldwide. Interesting, too, that Karl Marx makes a prominent return within analysis of the global scene.

Seed Magazine: On Systemic Risk

In Seed magazine today, Ian Goldin, Director of the James Martin 21st Century School at Oxford University, summarises an article he recently co-authored in the academic journal Foreign Policy:

Many of the greatest challenges of the 21st century are not new. These include the elimination of poverty and disease, the avoidance of conflict and nuclear proliferation, and the loss of biodiversity and natural resources. What is new is the nature of interdependence and complexity, as more integration among an increased number of people, combined with new technology, has led to greater fragility and the creation of a global risk society. The financial crisis is only the first part of the 21st century systemic crisis to manifest. It is vital that we learn from it in order to manage deeper and more damaging global challenges, such as climate change and global pandemics, and to avoid a destabilizing cycle of more acute financial crises.

Read the whole thing: http://seedmagazine.com/content/article/on_systemic_risk/

Goldin presents a balanced assessment and a timely warning of the dangers (as well as the benefits!) of globalisation and interdependence.

Guardian: WikiLeaks: Shell's grip on Nigerian state revealed

The Guardian outlines the latest scoop from the Wikileaks cables exposé: From the oil-rich nation of Nigeria, US embassy cables reveal a top Shell executive's claims that company 'knows everything' about key decisions in Nigerian government ministries.

Full article: http://www.guardian.co.uk/business/2010/dec/08/wikileaks-cables-shell-nigeria-spying

Clearly, these revelations have considerable significance for the apparent capacity of multinational companies to compromise the sovereignty of states in the developing world (the article notes that 70% of Nigerians live below the poverty line, despite the oil).

A brilliant example of recent globalisation or something that has already gone on for centuries?

Guardian: Globalisation at the crossroads

Economist Kenneth Rogoff argues in The Guardian's Comment is Free section that the US has championed free trade – at grave cost to itself. Rogoff asserts that in order too avoid a trade war, other countries must now share the burden...

American hegemony over the global economy is perhaps in its final decades. China, India, Brazil and other emerging markets are in ascendancy. Will the transition will go smoothly and lead to a global economy that is both fairer and more prosperous?

However much we may hope for this, the current rut in which the US finds itself could prove to be a problem for the rest of the world. Unemployment in the US is high, while fiscal and monetary policies have been stretched to their limits. Exports are the best way out, but the US needs help. Otherwise, simmering trade frictions could suddenly throw globalisation sharply into reverse. It wouldn't be the first time.

Economist Videographic: Smart Systems

The Economist today published an interesting videographic feature on "smart systems"—yet another example of how technology and globalisation are making the world a smaller, more interconnected place:

Guardian: What is Globalisation?

Eight years ago today (2002!), The Guardian newspaper published a succinct article by Simon Jeffery explaining the origins and meaning of (what was by then) a ubiquitous term, viz. "globalisation":

It was the anti-globalisation movement that really put globalisation on the map. As a word it has existed since the 1960s, but the protests against this allegedly new process, which its opponents condemn as a way of ordering people's lives, brought globalisation out of the financial and academic worlds and into everyday current affairs jargon. But that scarcely brings us nearer to what globalisation means. The phenomenon could be a great deal of different things, or perhaps multiple manifestations of one prevailing trend. It has become a buzzword that some will use to describe everything that is happening in the world today.

The dictionary definition is a great deal drier. Globalisation (n) is the "process enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communications" (Collins) or - from the US - to "make worldwide in scope or application" (Webster). The financial markets, however, are where the story begins.

In the late 1980s and early 1990s, the business model termed the "globalised" financial market came to be seen as an entity that could have more than just an economic impact on the parts of the world it touched.

Globalisation came to be seen as more than simply a way of doing business, or running financial markets - it became a process. From then on the word took on a life of its own. Centuries earlier, in a similar manner, the techniques of industrial manufacturing led to the changes associated with the process of industrialisation, as former country dwellers migrated to the cramped but booming industrial cities to tend the new machines.

So how does the globalised market work? It is modern communications that make it possible; for the British service sector to deal with its customers through a call centre in India, or for a sportswear manufacturer to design its products in Europe, make them in south-east Asia and sell them in north America.

But this is where the anti-globalisation side gets stuck in. If these practices replace domestic economic life with an economy that is heavily influenced or controlled from overseas, then the creation of a globalised economic model and the process of globalisation can also be seen as a surrender of power to the corporations, or a means of keeping poorer nations in their place.

Low-paid sweatshop workers, GM seed pressed on developing world farmers, selling off state-owned industry to qualify for IMF and World Bank loans and the increasing dominance of US and European corporate culture across the globe have come to symbolise globalisation for some of its critics.

The anti-globalisation movement is famously broad, encompassing environmentalists, anarchists, unionists, the hard left, some of the soft left, those campaigning for fair development in poorer countries and others who want to tear the whole thing down, in the same way that the original Luddites attacked mechanised spinning machines.

Not everyone agrees that globalisation is necessarily evil, or that globalised corporations are running the lives of individuals or are more powerful than nations. Some say that the spread of globalisation, free markets and free trade into the developing world is the best way to beat poverty - the only problem is that free markets and free trade do not yet truly exist.

Globalisation can be seen as a positive, negative or even marginal process. And regardless of whether it works for good or ill, globalisation's exact meaning will continue to be the subject of debate among those who oppose, support or simply observe it.

A recent report in the Press Gazette, the trade magazine for journalists, dealt with attempts by a BBC focus group to throw some light on how far television audiences understand news reports.

In one clip, economics editor Evan Davies referred to "globalisation - whatever that means". A panellist replied: "Well if he doesn't what it means, how the hell are we supposed to?"

BBC BiteSize Revision (Video): Globalisation

The BBC's BiteSize Revision service has a convenient, nicely retro-looking video on the topic of globalisation, summarising the main points found in their online materials elsewhere (intended for GCSE Geography syllabi, but actually quite useful for our purposes in Global Politics!):

Globalisation: Small is Beautiful

Three years ago today, The Economist published an interesting infographic regarding an important recent trend in globalisation:

Small, rich and stable countries tend to be the most globalised, at least according to an index of 72 countries by A.T. Kearney, a consultancy, and Foreign Policy magazine. The index uses 12 measures which cover economic integration, personal contact, political engagement and technological connectivity. Singapore and Hong Kong make the top spots, boosted by the larger weighting given to the economic variables of trade and foreign-direct investment as a percentage of GDP. America, not entirely convincingly, scores poorly on the economic measures. Jordan comes in ninth, helped by its top ranking for political engagement as a result of its involvement in UN peacekeeping missions. The index may be most useful for starting debates.