The Bear’s Lair: Heaven preserve us from a flat world!

Thomas Friedman’s 2005 best-seller “The world is flat” asserted that we were moving inexorably towards globalization and that barriers to trade and people movement were disappearing, as would many aspects of sovereignty. It is now clear that this process produces a political reaction, in which ordinary people protest vehemently against the flattening of their planet. We should rejoice: a flat world would be a tyranny, and the bumps in our current planetary economic system are all that protects us from this nightmare.

Walter Russell Mead, in a year-end article, echoed this zeitgeist when he described the “liberal international order” as the biggest loser of 2018. This sounds alarming, until we realize that the “liberal international order” is not the classical sense liberal, nor fully international, nor even much of an order. It consists of a morass of international treaties and institutions, all of which are designed to replace the norms of the free market with the dictates of unelected bureaucrats. That is not “liberalism” in the classical sense, which allows free markets the maximum possible rein, with small governments confining themselves to setting up rules of trade and information provision. It is also anathema to individual freedom of all kinds.

Another symptom of the declining credibility of the “liberal international order” comes from Japan, where Vladimir Putin calendars, complete with bare-chested pictures, were the #1 best seller this year. This is not to claim that Japanese are dying to give Putin back the Kurile islands, far from it, nor are they keen to bring corruption and unexplained disappearances to Japan. However, Putin with his nationalism and contempt for international norms represents the best possible protest against the stultifying political correctness that the “liberal international order” represents.

At the state level also, the credibility of bossy international treaties and global organizations is declining rapidly. The U.S. withdrawal from the 2015 Paris Agreement on climate change has been put down to President Trump’s eccentricity and hatred of the global order. However, last week Japan, generally a dutiful upholder of international agreements, pulled out of the International Whaling Commission, saying it had utterly failed to maintain a balance between whale preservation and orderly development of the whaling industry.

Japan’s prime minister Shinzo Abe has been in office for years and is nobody’s idea of a screaming radical. Japan’s withdrawal from an agreement with which it had complied for over 30 years is thus deeply significant. It is also however entirely justified; the Commission had allowed no whaling since 1986, on the grounds of whale stocks’ depletion, but those stocks have now rebuilt. Japan’s cultural and economic wishes for an active whaling industry should take precedence, in any rationally ordered society – which the Commission, being an international body, isn’t.

The current passion for international governance, of one sort or another, grew out of World War I and was reinforced by World War II — it was felt that anything that could avoid such global catastrophes in future would be beneficial. However, the winners of World Wars I and II, the United States, Britain, France and the Soviet Union, were all run by big-government advocates.

In 1919, for example, Britain’s Lloyd George believed in the “war socialism” which had taken hold during his period of office in 1916-18, while Woodrow Wilson was an authoritarian would-be-despot whose Progressive ideology believed that all problems could be solved by sufficiently fanatical and determined intellectuals. As for France, Georges Clemenceau was a more practical statesmen than the other two, but he was still a French Socialist, with an instinctive belief in government control.

In 1944-45, similar forces were at work. The United States was run by second-generation Progressives, who wrongly believed their meddling had solved the Great Depression (and several of whom were in any case in the pay of Stalin) while British policy was set mostly by the benign but economically unsophisticated Socialists led by Clement Attlee and the thoroughly un-benign but even more dictatorial Maynard Keynes. The free-market types who had run both the United States and Britain in the 1920s and 1930s – one thinks of the very able Andrew Mellon and the thoroughly capable Neville Chamberlain – were not involved in the design of either set of globalist institutions.

As a result of their provenance, the global institutions that came into being were thoroughly statist and oriented towards rule by “experts.” The World Bank has an innate bias towards the public sector in its lending, and generally requires local governments to support the projects it finances. The IMF offers free advice to governments, but that advice is always tailored towards government control, and the IMF by its very existence put out of business the London merchant banks’ advisory business, which had supported emerging markets economic development so well in the 19th Century.

Likewise, the treaties that were generated by the new international bodies were all heavily oriented towards state control and away from the private sector. Agreements such as the Law of the Sea treaty and the various climate-change agreements allowed infinite influence for left-oriented lobbying groups, but little if any say for private business, which was deemed to be a “vested interest” not worthy of a place at the table. All of this was entirely in the tradition of Keynes himself, who appears to have talked to few private bankers and no businessmen at all in his investigations of how the economy worked, thereby deriving an entirely misguided picture of economic reality.

In recent years, an alternative to the international development institutions has grown up, in the Chinese “belt and road” initiatives to develop emerging market infrastructure. In Africa in particular, but also in countries such as Ecuador and Sri Lanka, these were greeted with joy, as mechanisms by which capital could be injected into the economic development of these countries, without the tiresome and misguided moral and economic lectures from the World Bank and its equivalents.

However, very recently it has become apparent that the Chinese initiatives are a “debt trap” by which Chinese influence can be extended permanently into the recipient countries. China foreclosed on Sri Lanka’s Hambantota port facilities, taking control of them. In South Africa, China is blamed for the massive corruption of the Jacob Zuma administration, through its relationships with the Gupta family. In Malaysia, Mahathir’s new government has torn up several Chinese development agreements, in a bid to preserve Malaysia’s independence. Thus, Chinese imperialism is now seen by emerging markets as only marginally better than the international institutions as a road to development.

There is a better alternative. The global institutions designed by Progressives and socialists after World Wars I and II were not the only way to avoid global conflict. A century earlier, the Holy Alliance between the major powers, assembled at the Congress of Vienna, had provided an ongoing forum to discuss the inevitable areas of friction between different countries’ interests, and arrange solutions for conflicts short of war. It imposed no new international institutions, but merely arranged for a Congress to be held whenever a problem needed to be discussed. By the subsequent Troppau Protocol, the powers agreed to intervention only to prop up an existing government if its potential overthrow might disturb the international peace.

Since it had the ability to overpower any potential malefactor, and its members were in general agreement about the type of world they wanted to preserve, the Holy Alliance was both a more effective and less coercive version of the League of Nations/United Nations structures developed after the World Wars. Regrettably a foolish British statesman, George Canning, decided Britain’s interests lay more with the middle-class urban “liberals” attempting to disrupt the international order than with the order itself, so the Holy Alliance lasted in effective form for less than a decade. By the time global tensions escalated in the run-up to World War I, there was no forum where the world’s statesmen met regularly, to know each other and sort out difficulties such as territorial disputes and Balkan assassinations.

The “liberal international order” is a statist socialist myth. Rather than the current plethora of international bodies and treaties, the G7 and G20 annual meetings between the world’s leaders are all we need to solve disputes and arrange for arbitration of any especially knotty issues. These should not have secretariats of their own, because such secretariats become devoted to their own preservation and aggrandizement, as well as falling prey to Marxist and Alinskyite charitable organizations. Simple meetings, reinforced by ongoing contacts between the various national bureaucracies, are all we need to solve disputes. Anything more diverts control from elected or otherwise legitimate national governments, where it belongs.

Go on, abolish the supra-national bureaucracies, including the EU Commission and its associated empire! You will find that the more extreme forms of populism die down, because people are once again in control of their own destinies.

(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)