Saturday, August 16, 2008

The World According To .. ME

Interesting times, these. Only a year back, the British Chancellor was talking about the 'longest uninterrupted period of prosperity' since the war. It was only twenty years when the Cold War was finally over, and the supremacy of United States was completely established. Only four years back, American public believed that George Bush can indeed make America a safer place and put him back in office. Francis Fukuyama announced the end of history - the human civilization reaching its highest form.

But, in 2008, we are staring at a different world altogether. Under George W Bush, America started believing that they have won the cold war and went out to shape the world in their own terms. And failed. Like all great empires before them, they overestimated their power and stretched themselves thin. They walked into a quagmire in Iraq and Afghanistan, and lost the moral superiority and the hallow of the winner, which they needed to sustain the global empire. They forgot, like other great powers before them, the superiority of arms often allow a power to degenerate morally, and that always bring about their downfall.

Also, Britain's stretch of economy prosperity is over. In fact, the Prime Minister can very well start talking about the worst economic downturn ever, when the pains from the recession will far exceed the pains of the great depression or of the winter of discontent in the 1970s. The house prices have turned irreversibly south, the banks have abdicated their role as the drivers of the economy and global prices have rendered monetary policy instruments useless. The government is clueless and frozen into inaction.

Consider this: In the middle of the housing market meltdown, a senior official in the treasury was heard talking about a 'stamp duty holiday' on a train, which started a huge rumor that the government will soon exempt house purchasers from stamp duty. When asked, the Chancellor, Alistair Darling, did not deny this and said the government is looking at a 'range of options'. That was two weeks back. The government is yet to come up with any policy so far. Needless to say, such rumours called any possible purchases that would have happened despite the downturn, making a bad market worse and forcing many estate agents to close shop.

Meanwhile, the business continues to consolidate, springing one deal after the other spelling out the end of independent organizations and creation of global empires. So, 95% of world's personal computers use the same software, about 10 information providers control 60% of world's information flow and despite the cacophony of television channels, the uniformity of news, opinions and views remain astonishing.

Soviet Union was sure bad, when the big brother watched all the time and one was forced to conform. However, we are entering a world where one is programmed to conform, and watched and listened to all the time [I know London's Piccadilly Circus has more than 300 cameras]. However, no one talks about the problem - we all know how evil socialism was and how its end spelt the start of the age of freedom. However, freedom is sure on the retreat and no explanation is available on the media, except that the public want safety first.

So, how did we come here? Why did history not end and the prosperity did not last? I shall pretend to give some simple answers:

1. The enemy of freedom is fear. But fear is good business. Fear is good propaganda in democracy. However, fear is unsustainable, because it stifles minds. Soviet Union was based on a system of fear, so it went down. We replaced it with our own elaborate system of fear. We should know where we are heading.

2. The only good thing about capitalism is competition. But no capitalist loves competition. That is the essential conflict at the core of the system. Despite all the regulatory attempts, competition is stifled in many industries, though new frontiers of entrepreneurialism has opened. But if the world is uniform, which it will be for lack of freedom and dissent, competition will die to. It needs to survive to keep our world going.

3. The world is governed by short term considerations. Financial markets are, because that's their nature. Professionally managed and publicly listed companies are similar. Democratic governments also are. No one seems to have any space left for thinking about tomorrow.

4. There are limits to prosperity. The big limit is Environment. It can only take so much. However, we have defined our world in terms of money. But, because of the short term nature of our financial markets, and the systemic blindness of our short-lived governments, money can not any longer represent the true value, or cost, of anything. Hence, what we think is increasingly at odds with what it actually is.

So, this hardly looks like the end of history. It actually seems like the beginning of another phase in human history. Do we need Noah's boat? May be, who knows how severe the revenge of history will be.

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