Ambassador's Corner
WEEKLY MESSAGE FROM AMBASSADOR JOHN BRUTON
January 3, 2008
Christmas 2007 in Washington
Finola
and I spent our first ever Christmas as a family here in Washington. Previously
we had gone back to Dunboyne, but this time our adult children came over to us.
It was probably less hectic than Christmas is in Ireland, but we did get to a
few good parties, and we went to Blues Alley
– one of
Washington’s jazz venues –
to hear Ahmad Jamal and his band. He is a jazz pianist who recently received the
French Order of Arts and Letters. Although I am not a great blues fan (more of a
country boy), I found this performance was exceptional. The almost religious
fervor of the audience was testament to the power of Jamal’s music.
Christmas is a great opportunity to read – more time and fewer phone calls – and
I got through some really good books.
The War of the World by Niall Ferguson is an interpretation of the causes and
consequences of the World Wars of the twentieth century. He brings out how
racist were the assumptions people made about other nations and peoples a
hundred years ago. He also describes the often forgotten ethnic cleansing that
took place at the end of the Second World War, when 31 million people in Central
Europe were uprooted from their homes.
I read Liberty for Latin America by
Alvaro Vargas Llosa, a Peruvian, who
explores the historical, philosophical and organizational reasons Latin America
has not yet achieved its economic potential.
I also read a detective novel, The Voice of the Violin by
Andrea Camilleri. It
is set in Sicily and is both atmospheric and fast-moving.
Challenges for 2008
One has also to give some thought to more serious topics, and to the
challenges we face in the New Year that has just begun.
The world has been enjoying an almost unprecedented wave of prosperity in the
first years of the 21st century. Whereas previous waves of globalization
principally benefitted Europe and North America, this wave is spread much more
widely. Three billion people in
China and
India and other developing countries have
broken into the world market after centuries of isolation and have had dramatic
increases in spending power as a result. Of course some are still left out. Two
billion people in Africa and elsewhere are largely untouched by these changes.
There are risks to all this prosperity. I would select two big ones.
The biggest is of
nuclear weapons getting into the hands of regimes or
individuals, including
terrorists, who are so angry with the modern world that
they will not care about the consequences of using them.
That level of anger is found in some Muslim societies, but histories like the
one by Niall Ferguson I read over Christmas remind us that it also existed in
Western societies until quite recently. This anger comes from an (often
imaginary) feeling of being patronized or disrespected. Our response to nuclear
threats must therefore address the causes of this often misplaced anger with at
least as much of the imaginativeness we deploy to improve our security and to
repress the proliferation of nuclear technologies.
The other threat is one that we find closer to home. It is of an outbreak of
protectionism that would kill off the current wave of prosperity. This upsurge
in protectionism is partly caused by a sense that the benefits of
globalization
are not being evenly shared, even though the facts show that almost everybody is
objectively better off.
Protectionist sentiment has also been fuelled by a sense that modern
jobs are
less secure than jobs were in the past. Nobody really likes having to change,
and even if one can get a new job much more quickly than before, losing one’s
present job is not a pleasant experience. The loss is all the harder, if one
also loses health insurance cover or a pension entitlement.
It is true that chief executives and people with key skills have benefitted
disproportionately from recent economic changes. I would question whether the
high rewards some at the top are getting derive from the intrinsic value of
their services or from the fact that they have got a corner on a part of a
market. Underinvestment in public
education in the past may mean that too few
people have had a chance to get a level of education that would enable them to
compete for these high-skilled, high-paid jobs. Continuing underinvestment in
public education would perpetuate this.
The
recent big increase in the supply of unskilled labor in the world, as a result
of China's and India’s entry into the game, has also reduced the value of
unskilled labor as against the value of technology, capital and high-skilled
labor.
Ireland was briefly an exception to this, because increased access to
education reduced the supply of unskilled labor for a time.
These issues of income distribution and insecurity can be remedied by individual
countries adopting the right taxation, anti-trust (competition), educational and
social policies. Countries like
Denmark and
Sweden have shown that this is
possible. But it is far from easy. If the remedies adopted are too far-reaching,
high earners will escape paying their share of the costs by moving themselves or
their money to another country.
Stemming protectionist sentiment, and negotiating further trade liberalization,
will require political leadership and imagination of a high order. Just as we
need to deal with the causes of terrorism by helping people to change the way
they see themselves and see others, we need to show people that new prosperity
for others need not be a threat to their own prosperity.
We can point out that present trends are temporary anyway. Labor supply will
eventually ease off, as a result of falling birth-rates worldwide. Wage rates
are already rising fast in China and India, as are skill shortages. As our
societies age, there will be plenty of work for anyone who is willing to do it,
and the premium now
being earned by those with some scarce skills will diminish,
as education is improved and more people get those skills. Monopolies will
eventually be broken down by global competition.
And we should never forget two vitally important benefits of having a system
of free trade governed by global rules:
• It keeps our political systems honest. It removes the hiding places for
corruptible monopolies and for consumer ripoffs.
• It also removes the temptation to conquer other countries to gain access to
their markets, something that was very common a hundred years ago.
Congressman Rick Boucher
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I
recently met the Democrat Congressman representing the western corner of the
State of Virginia to discuss some of these issues. He was one of the legislative
pioneers of cable TV and is a co-founder of the Congressional Internet Caucus.
He is a strong advocate of better use of information technology in healthcare,
something I believe is easier to achieve when health provision is centrally
managed and where everyone is insured. Having everyone insured drives down costs
because the insured no longer have to cross-subsidize needlessly expensive
emergency room care for the uninsured.
We also discussed
climate change. Rick Boucher is preparing a major Bill on this
in the House of Representatives. He said that the United States is exceptionally
dependent on coal for its energy supply and that a viable method of safely
sequestering the carbon released when coal is burned was essential if the US was
to live within global limits on its CO2 emissions. I hope this technology is
found soon. The EU is spending money on R&D on carbon sequestration.
My worry is that we may not get our timing right, and that we may lose the
chance of a global agreement in climate change talks, while waiting for a
technological fix through sequestration that may never mature, and which, even
if it does, will only be a temporary solution.
But Rick Boucher’s opinion is worthy of respect. He is a very thoughtful man and
has devoted much of his legislative time to technology issues like this.
Please send me your
comments about this or any of my weekly messages or other EU matters. I
look forward to hearing from you!
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