The Great & The Small

Following on from last night's exasperated economic sigh, I was reading - again in last week's New Statesman - an interview with author Dan Wang's take on America's changing role in world politics under Trump: the courting of Russia and China and the focus on AI as the future of the American economy. The interview was long and detailed and his conclusions too wide-ranging to summarise in the few words of tonight's post, but some key points are worth picking out of it.

The underlying faith in AI as the next US gold rush is largely based on the performance of Silicon Valley over the past several decades: a tech bubble on the west coast that functions almost as a separate national entity, unlikely to continue indefinitely as the physical and economic constraints of the semiconductor industry, software bloat and the voracious hardware demands of AI really start to bite. The truth is that the industry will hit a physical capability and manufacturing capacity brick wall, sooner rather than later; at which point investors will start to shrink back from this latest and sweetest of honeypots, precipitating at best a plateauing of the industry, and at worst a cliff-edge dot-com style crash.

The biggest problem we face - and this is not a problem unique to the US - is big-gesture politics and economics tied to a supposedly ineluctably untouchable free-market system. Of course the latter, as I've mentioned before, is an outright fiction which has been demonstrated time and again over the centuries, with central banks having to step into every market-led disaster area to sort out the financial mess left behind by the pirates of the 'free' markets: there always comes a point in any crash where governments have to start 'inventing' money and new 'fiscal mechanisms' to bale out the wider economy in countries' larger interests, usually with few penalties to the miscreants who created the problems in the first place. This, though, is the control we can exert as humans. The markets are not 'in charge': they are most definitely not ineluctable, and they can be held accountable and trammelled by the rule of law should we choose so to do.

As the US continues to disrupt world politics in Europe and the Middle East, so the markets will 'dictate' that inflation will continue to rise, fuel prices will continue to skyrocket, and supply chains will continue to falter. Trump coined the phrase that became MAGA on a promise to re-industrialise America, to reduce its reliance on long, Chinese supply chains and to promote American-made goods over imported stuff. He forgot - or deliberately ignored [the most likely scenario] - the fact that the US manufacturing industry, like Britain's and most of Europe's, had been completely hollowed out in the last forty years of big-gesture macroeconomics. We no longer make much stuff; particularly the smaller things that were traditionally the heart of most home-grown industry. The City of my birth, Birmingham, England, is colloquially still known as the City of a Thousand Trades. Oh, that that were still true today. The City centre is admittedly very pretty compared to my youth, but the place has been bankrupted by big gestures at the expense of the nuts and bolts [metaphor very deliberately chosen] of running a local economy properly.

Everything of value in the West generally, and particularly here in the UK, was sold off in the 1980s in the shadow of the so-called 'service sector', a euphemism for Greed Central Station here: the Square Mile of London. The Western Alliance sold its soul to the devil long ago, and many like Trump believe that getting into bed with the only remaining major suppliers of engineering skills left - the Chinese - and the biggest supplier of fossil fuels with few scruples either as to its use or in its choice of customers - Russia - is the only way forward. On the one hand, the Chinese have a system which relies on zero private ownership of land [which as anyone who reads this blog knows I totally agree with in principle], strict state control of its population through various means of coercion [which I don't agree with], and vast geopolitical and mineral resources from which to draw. On the other is Russia, whose vast supplies of fossil fuel resources are under the control of a bunch of ex-Soviet oligarchs, little distinguishable from the Mafia. The issue with the self-interested idiots at the centre of all of this; Trump, Putin, Xi, Netanyahu &etc. &etc., is that they are simply thus: self-interested, both in the pecuniary sense, and probably more importantly, from the standpoint of their own inflated egos.

What is missing from Western economies, as Wang points out in his interview, is dealing with detailed stuff, the small stuff: as he terms it 'the simple shit': citing that during Covid, the US developed mRNA vaccines [the headline stuff] then completely - as here in the UK - flunked out on the 'simple shit' like cotton swabs and face masks. Oftentimes the things that really matter are the simplest of things. Bazalgette may well have sorted out London's sewerage issues on the grand scale, but it was John Snow who connected a communal water pump to the 1854 cholera outbreak in Soho. Small things matter. We need to learn to sweat them too...