What Works: Success in Stressful Times. Hamish McRae

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СКАЧАТЬ and North Americans this will be disturbing-far more disturbing than late twentieth-century concerns as to whether the ‘Anglo’ or the ‘continental’ or the Japanese versions of capitalism were the most effective. We are not used to a world where financial power is located in China and India rather than Europe and North America. Despite the size of the Japanese economy, its financial model has had little influence on the rest of the planet. And, for the moment, the financial services industry of China remains primitive by global standards. But it will become both larger and more influential as China moves closer to becoming the world’s largest economy. My own view is to welcome that, but, of course, this process will create strains.

      That leads to a wider concern-of something happening to the world economy that undermines the fundamental role of international trade and finance. The shift from an ever-more global economy to one where international trade and investment fall back a bit, for example, could easily trigger protectionism-restrictions on the movement of capital and maybe goods and services. That happened in the 1930s.¹⁷ Were it to happen again, London, as the most dependent city on international business, would suffer most. However, what happens to the City, or indeed to the UK economy, is less important than what happens to the world.

      Put bluntly, were anything to go wrong with globalization-and it has had a pretty severe blow-that would herald a most dangerous period not just for the world economy but for humankind. At some stage in the first half of the twenty-first century, the world will probably cease to become more global. International trade and investment will stop growing faster than world output. We may go back to protectionism and a collapse of world trade, as happened in the 1930s; though maybe we will move to more of a plateau rather than falling backwards. But it is not hard to hear the voices against globalization, calling for protection from cheap imports from China and India, or resenting the shift of power away from Europe and towards Asia. Were the general economic downturn also to be associated with widespread conflict, such as happened in 1914, that would be even worse.

      This hardly bears thinking about. My point is simply that no one should assume the present burst of global prosperity, which involves more of the world’s population than ever before, will continue for ever. It will not. With luck, thoughtful political leadership and a sensitive attitude within the financial services industry, the threats to world prosperity will be averted. But there will be nail-biting years ahead. This future will be shaped in part by a handful of politicians in the various world capitals, but also, maybe to a rather greater extent, by the myriad anonymous players in the world’s business and financial community.

      Arguably, at the beginning of the twenty-first century, the City of London has become the focal point for this community. It is a gigantic responsibility to carry. In the years running up to the First World War it was widely believed that war was impossible because the world economy was so interdependent. It was unthinkable that countries that depended on each other for their prosperity and had invested so substantially in each other could throw that progress away. Countries were by definition national but finance was international. Yet the financial markets failed to discipline the European politicians into cooperation. The world was allowed the slither into the First World War. The markets failed to educate the politicians on the economic disaster (let alone the human catastrophe) that nationalistic policies might provoke. Now we face similar dangers, at least potentially. Yet the markets have themselves misbehaved, or more specifically some of the protagonists in those markets, including some in London, have failed. Their moral authority is under challenge, and understandably so.

      Maybe it is too much to ask when the future is so uncertain, but I still think the question is worth putting: who on balance over the years are likely to be better custodians of global prosperity, politicians or financial markets? I think, comparing their records over the past couple of centuries and notwithstanding the disaster of 2008/9, it is no contest. That is why I respect the City. It is why I believe it has much to teach the world. It is why, too, I believe that global prosperity will be rekindled and why world financial markets have a crucial role in that process.

       CHAPTER THREE

      I. WHAT IS THE STORY?

      During the 1990s something amazing happened in Ireland. At the beginning of the decade it was about the poorest country in the European Union. By the Millennium it was among the richest. In between it had become by far the fastest growing economy not just in Europe but in the entire developed world.¹ The most obvious parallel was with the explosive growth of the Asian ‘tiger’ economies, such as Singapore and Hong Kong, and in 1994 a friend, David McWilliams, the Irish economist and TV show host, came up with the phrase that caught it all: the Celtic tiger.

      My own perspective on this is acutely personal. I grew up there.

      In the spring of 1951 my father was in Dublin for a business trip. He walked down Grafton Street and, on a whim, went into a phone box to call my mother. ‘I am looking at the happy, smiling faces here in Dublin,’ he said, ‘and I think we should come and live here.’

      We were living in the Isle of Man at the time. My mother was eager to live in a larger place and immediately agreed. We would, my father warned her, be very poor. She pointed out that we were very poor already. I was seven at the time-and so that was how I came to be brought up in County Wicklow just south of Dublin.

      But it was not just us who were poor. The whole country was poor and it continued to be right through to the 1990s. Of course, the poverty was relative: people were well fed, rather better fed than they were in Britain, which still had rationing at the beginning of the 1950s. The Dublin of the 1950s and 1960s had a cheerful if shabby charm: the place was indeed full of happy smiling faces. But while, of course, there were pockets of wealth-I remember the father of a school friend who had a huge American car with a wiper on the back window-for most people, including my parents, it was a struggle to get by. The life was pretty simple too. We eventually got a car but even well into the 1950s, the milk arrived in a horse-drawn cart with a huge churn on it and they measured the milk into your own jug. Right through the middle 1950s there was a recession.

      By the 1960s things were picking up a bit, but not by enough to employ the flood of young people coming onto the job market.² The young left for jobs in America or more often Britain; some three-quarters of my economics class at Trinity College Dublin³ left the country on graduation. We were the lucky ones for economists then were in short supply. For the mass of emigrants who did not have a university degree, the more likely occupation was on the building sites of Britain.

      Despite the highest birth rate in Europe,⁴ Ireland’s population slowly shrank. There were lots of children, lots of older people, but few young adults. The population of the twenty-six counties, the Republic of Ireland, was down to 2.8 million by the middle 1960s.⁵

      And now? Well, it is no secret that the Irish economy has been among the hardest hit by the global recession, of which more later. But despite its current difficulties the centre of Dublin has become a shining modern European city. Superficially it is just a smartened-up version of its old self: Grafton Street is still the main shopping area and you can still drink at Davy Byrnes, the ‘nice quiet bar’ in James Joyce’s Ulysses, round the corner in Duke Street.⁶ But now it is a seafood СКАЧАТЬ