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Sunday 4 December 2016

It's too late for globalisation – Kakistocracy is in fashion

Bob Swarup in The Guardian

The world is getting smaller. That is the unbidden meme of our generation, thanks to the juggernaut of growth unleashed by an outpouring of global bodies, free trade agreements, technology and international capital. Every business and person now has a global reach and audience.

Today’s paradigm is globalisation and free trade is its evangelical mantra.

But this narrative has become worn and no longer fits the facts. In recent months, there has been a backlash, accompanied by emotive talk about the reversal of globalisation and the battle for society’s future. The Organisation for Economic Co-operation and Development used its latest health check on the global economy to warn of the costs of protectionism.

The hand-wringing is half a decade too late, because globalisation is already dead and we are already some miles into the journey back.

Donald Trump and Theresa May are not flagbearers in the distance, they are catapults battering at the walls. Trump’s stated intent to pull the US out of the TPP on his first day in office underlines the new reality we inhabit, as does the European Union’s recent troubles closing a trade agreement with Canada thanks to Wallonia’s obstinence.

Today, we have a new meme – deglobalisation – as people turn their backs on an interconnected world economy and societies turn iconoclastic.

It is not for the first time.

Globalisation may be defined as when trade across nations is growing faster than GDP. People interact more, transact more and create more wealth. Deglobalisation is the alternate state where trade grows less than GDP. Countries focus inwards, trade declines as a proportion of GDP and growth shrinks. A clear cycle of the two emerges over history.



 Phases of globalisation and deglobalisation over the last two centuries. Illustration: Maddison, World Bank, Max Roser, CPB Netherlands, Camdor Global



Proto-globalisation (1820-1870): Rapid global trade growth, thanks to the Industrial Revolution and the spread of European colonial rule


Globalisation 1.0 (1870-1913): Empire building became the norm. Rapid advancements in transport and communications grew trade. But rapid change also meant volatile bouts of economic obsolescence and crisis


Deglobalisation 1.0 (1913-1950): Limited growth, unequal outcomes and a huge debt overhang from previous decades stoked economic nationalism and protectionism. Trade fell and a collective failure to tackle deeper structural issues led to the 1930s
Globalisation 2.0 (1950-2010): Since then, we have been on a tearaway expansion with unparalleled growth of both global trade and GDP


Deglobalisation 2.0 (2010-?): The last financial crisis focused policymaker attention inwards and crystallised the growing sense of social disenfranchisement. A toxic mix of suppressed wages, rocketing debt and political myopia have largely destroyed the allure of globalisation.

This is more than a sense of ennui. Global trade today is not slowing down but has plateaued – hardly a barometer of rude global health. After their peak in January 2015, global exports fell -1.6% by the end of August 2016. The blame lies not with commodity price falls, but shifts in trade policy. Protectionism is en vogue. Restrictive trade measures have outstripped liberalising measures three to one this year and increased by almost five times since 2009, as policymakers try to circumvent the WTO. Meanwhile, the deleveraging of banking balance sheets over recent years has hit global lending, as banks retreat from peripheral to core domestic activities, cutting vital credit flows through key arteries.

All of this preceded the populist deluge of 2016 and, indeed, contributed as policymakers myopically prioritised stability over social cohesion, ignoring the lessons of the past.

But globally, politicians are now fast realigning to shifting public moods. A year ago, to imagine a world where the major western leaders included Trump, the Brexit brigade and Marine Le Pen was the province of satire. Today, we are two-thirds there. Their ascendancy has shifted the political debate towards nativism in a hauntingly familiar nationalist narrative, as others follow suit.

Our new politics are not leftwing or rightwing, merely whether you are in this world or out of it. Even defenders of globalisation are falling into the same trap. By demonising those that voted against and not providing alternative options, they cling tighter to those that confirm and affirm their beliefs. That is still nativism of a different sort and still the politics of division, not unity.

This is Deglobalisation 2.0.

Monetary policies such as quantitative easing and its newborn sibling, fiscal easing, cannot change this dynamic. Absent structural change, their cumulative corrosive impact on savings and fillip to global debt ensure a limited runway and only inflame the rhetoric of disenfranchisement. Meanwhile, divorces are turning ugly as emotions override reason, viz the talk of Brexit fees and anti-dumping levies, the metaphorical Kristallnacht of populist victors like May and Trump as they struggle for coherence, and emerging divisions between central banks and politicians, to name but a few.

Democracy is fast turning to kakistocracy – government by the least qualified leaders. Globalisation is transmuting to nationalism. The effects are well documented in history – autarky, economic naivety, protectionism and a rush to grab what remains of the pie, only to trample it underfoot.

Me first always ends in me last. The world is still getting smaller, but just
 in our minds and horizons now, and thoughtless we risk becoming all the poorer for it.

Thursday 1 December 2016

Hindu Nationalism versus Islamic Fundamentalism


There is a plan: Brexit means good riddance to austerity

John Redwood in The Guardian

As we leave the EU, the UK can turn its back on the austerity policies that have been the hallmark of the euro area. My main argument against staying in the EU has been the poor economic record of the EU as a whole, and the eurozone in particular. The performance has got worse the more the EU has developed joint policies and central controls.




Housing gets £4bn boost to increase number of new homes


The UK public warmed to the idea of spending our own money on our own priorities in the referendum campaign. The main issue between leave and remain was the money. Remain tried to dismiss its importance by claiming there was in practice little money at stake, and disagreed strongly with any reference to the gross figure for UK contributions.

The public did not take away one particular figure from the debate, but did believe that we contributed substantial money that it would be useful to spend at home. Cancelling the contributions would also make an important reduction in our large balance of payments deficit, as every penny we send and do not get back swells the deficit, just as surely as if we bought another import.

During the campaign I released a draft post-Brexit budget, showing how we could scrap VAT on domestic fuel, tampons and green products, and boost spending substantially on the NHS.

The government will be able to choose what to do once we have stopped the payments. The autumn statement showed a saving of a net contribution of £11.6bn in 2019-20 once we are out of the EU, as well as additional domestic spending in place of spending in the UK by the EU currently.

I am glad the chancellor has also adopted more flexible rules for the budget deficit. There is no need to genuflect to the Maastricht debt and deficit criteria once we leave, nor to pretend that we are about to get our overall debt down to 60% of GDP, as is required by those rules. The UK economy needs further stimulus, as the autumn statement acknowledged. There are roads and railway lines to be built, new power stations to be added, more water storage, schools and hospitals to cater for the rising population.

The government is right to say the UK needs to invest more. We need to make new provision for all the additional people who have joined the country in recent years, and to improve the efficiency of our infrastructure. The country is well behind in meeting demand for train and road capacity, and in energy provision.

The UK also needs to make, grow and provide more for its own needs. Leaving the EU will enable the UK to undertake a major campaign for import substitution. When we have our own fishing policy we could move back to being net exporters, instead of being importers. The common fisheries policy means too much of our fish is taken by other member states, leaving us short for our own needs. Designing our own agriculture policy will mean we can put behind us the quotas and regulations that have held back UK output during our years in the EU. We can change our procurement rules, so that the government when spending taxpayers’ money can ensure more is bought from home suppliers.


Why do we have a balance of payments surplus with the rest of the world but a deficit with our EU neighbours?


The UK is embarking on a substantial expansion of housebuilding. Too many materials and components for our new homes are imported. The lower level of sterling provides an opportunity for the UK to put in more brick, block and tile capacity, to prefabricate and manufacture more of the components and systems a new home needs. If more of the home is fabricated off-site – as happens in Germany and Scandinavia – we reduce the impact of bad weather, of labour shortages and other inefficiencies on the building site. Industry by industry there are opportunities for suitable investment and entrepreneurial activity, to meet more of the UK’s own demands. This will be good for jobs, and better for the environment, when more is produced close to the place of consumption.

One of the great unanswered questions of our time in the EU is: why do we run a balance of payments surplus with the rest of the world but a deficit with our EU neighbours? Why has it been so large and so persistent? Part of the reason rests in the way the EU rules were organised.

Early liberalisation was designed to help the sectors the continent was best at, rather than the sectors where the UK had a relative advantage. The continental competitors soon outpaced us in their better areas, leading to UK factory closures and job losses in areas like shipbuilding steel production and cars in the early years of membership. The special designs of the common agricultural and fishing policies also led to larger import bills for us.

Leaving the EU has coincided, so far, with a fall in the value of the pound. The UK should now be very competitive. It is time for business to respond to the favourable levels of domestic demand, and to work with government to put in the extra capacity we need to meet more of our own requirements. Prosperity, not austerity, should be the watchword.

Cricket: Why you need to master defence to score runs

Jon Hotten in Cricinfo


Technique is a servant, not a master. Take the example of Jonny Bairstow, and his successful comeback to the England Test side


Dropped from the Test side after a run of low scores, Jonny Bairstow worked out his technical flaws and became a prolific run scorer © Getty Images



Graham Gooch once said, "I don't coach batting, I coach run-scoring." In a sentence he defined the requirements of the game's highest levels: those who arrived there already knew how to bat; what they needed to know was how to prosper on the mean streets, where the pressure was greatest and where any and every weakness would be found and exploited.

It suggested, too, that technique is a servant rather than a master, a means to an end rather than the end itself. Ugly runs count the same as pretty ones; David Gower's and Shivnarine Chanderpaul's look just the same in the scorebook, if not the history book. And as Alastair Cook, Gooch's most famous pupil, has moved inexorably onto the list of the all-time top ten Test match run scorers, and Goochie himself got more than anyone else across all forms of cricket, he's probably on to something.

Like all good buzzwords, technique has been thrumming through Test series between England and India, and Australia and South Africa. There's nothing like a batting collapse to begin the self-evisceration. Speaking to the Guardian for a thoughtful examination of Australian concepts of batting written by Sam Perry, Ed Cowan said: "One of [our] biggest issues is the attitude of 'attack at all costs', which I think is defunct in Test cricket. The message feeds through that we've got to pick attacking cricketers and that you need to be an attacking cricketer to be picked."

In India, Haseeb Hameed is the new poster boy for doing it right, the "baby Boycott", a kid with arms like sticks who hits through the covers with all of the easy power of a natural ball-player. Ben Duckett and Gary Ballance, having got it wrong, well, how must it feel to be them, to keep touring knowing that your tour is over and that stretching ahead is exile, and in that exile there are hard truths to be faced, hard labour to be undertaken.

They will join a list of recent discards, from Alex Hales to Sam Robson, Nick Compton to Adam Lyth, James Vince to Ian Bell, who have various hopes of a recall somehow, someday.

In that, they can look to Jonny Bairstow, who knows the feeling. When he was dropped from the side he averaged 27. He was out for 18 months and went through what he called some "dark spots". In the summer of 2014 he missed six weeks of domestic cricket with a broken finger and afterwards his renaissance began.

Bairstow addressed a point of technique. He felt that he was crouching too low in his stance, which led to a rigid right elbow and back and made him lunge at the ball, a fault compounded by a low backlift that often had him playing shots well in front of his body. He began standing up straighter and holding his hands higher, the bat hovering almost baseball-style as he waited. He still waggled the bat, but it came at the ball from a steeper angle and because of that it arrived later, which meant the interception point was under his eyes, where he was perfectly balanced. He laid waste to county attacks and was recalled for the 2015 Ashes. In 2016 he has made 1355 runs, more than any wicketkeeper in a calendar year, at an average of 64.52.

"You got two options," he says of being dropped. "You either run and hide or you front up."

It wouldn't have happened without a technical change, but then the technical change would not have happened without the desire to improve, to escape that darkness. He had what seems like the right attitude to technique, that it existed to serve him, to help him score runs. If he wasn't scoring runs, then he needed to find out why.

Dean Jones, the former Australia batsman, has published a book called Dean Jones' Cricket Tips (The Things They Don't Teach You At The Academy), about the kind of small improvements players need to make to evolve from being good professional sportsmen to international stars. He analysed a typical Sachin Tendulkar century, which took 180 deliveries, and found that Tendulkar left or defended around 70% of them - about 126 deliveries.

It suggested that the ability to stay in remains a great batsman's primary quality. His array of of scoring strokes, however wide and thrilling, are restricted to one ball in three. What all players looking to score runs must be able to do is defend forward and back and leave the ball well. To score runs, you begin by knowing how to not score them too.

It's interesting that the most discussed technical flaws always apply to defensive technique. England's most improved players, Bairstow and Ben Stokes, have improved most in that area. The problems of Duckett and Ballance lie there. For all of modern batting's pyrotechnics, finding a way to stay in remains the key to it all, as Cook and Gooch continue to show.