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.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
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.