Andalucia Steve

...living the dream

A few thoughts on where things are headed in coming decades.

 

I've been keeping this blog fairly free of politics but this weekend I seem unable to be thinking about anything other than Brexit. In a way, today is the most significant day since the referendum, if, as we are told, it is the last day by which a deal can be made. Though the last day of the withdrawal agreement is the 31st December, the thinking is there wouldn't be enough time to author and ratify an agreement beyond today.
 
So the question that is on my mind is what is next for Brexit. I'm not thinking short term here. Whichever way you slice it, 2021 will start out as a humiliating fiasco. Whether a deal is achieved or not there will still be months of disruption as new ways of doing things are explored and new, unintended consequences of Brexit arise to surprise us. The only question here is how long it will take things to settle down to some sort of normality.
 
No, I'm thinking more of what will happen to Britain in the decades ahead. Geopolitics is a little trickier than it used to be. Immediately following Bretton Woods, the end of WW2 and the exploding of two nuclear weapons in Japan, American might and money was the only game in town. The USSR grew and was, probably for the purposes of political expediency, demonised by America to be a greater threat to its dominance as a world power than it ever really was. Then the USSR fell and for a brief period of time it seemed the world was for the first time truly mono-polar.
 
More recently though the US has become increasingly indebted and less innovative and industrious. Meanwhile the EU has expanded, its currency becoming increasingly important on the world stage, and China has undergone massive economic growth. Despite Trump's efforts to stop China eating America's lunch, she remains a massive industrial power and the growth of her domestic market with a new and enriched middle class means China is here to stay, even with her exports reduced. It is now looking as though the future will consist of a tri-polar world in which the major players will be America, the EU and China, with other BRICS countries emerging and aligning themselves with one of these three main players. I see this as the new world stage into which Britain as an 'Independent Sovereign Nation' has to fit.
 
Old world, old money thinking sees Britain as a nation of traders who straddle the globe buying and selling stuff. We're the nation who started the East India Company after all. The trouble with this 'old skool' thinking is that the world is moving from physical to virtual. If I wanted to order a ton of spice in 1600 when the EIC company was formed, the only way to do it was to travel to India or wherever the spice was grown and to do a face-to-face deal. These days all you need to do is go to alibaba.com and you can find dozens of spice suppliers all competing with each other to deliver to you your ton of spice at the lowest price. By way of experiment I requested quotes for a particular chemical I was thinking of importing into Spain last year, and I was still receiving emails months afterwards from prospective suppliers. Global trade is so fluid these days, the only thing in the way of a deal is the lack of a free-trade agreement, which is why Brexit seems so absolutely nonsensical to me. I was looking into exporting olive oil a few years back and I was struck by how the trade agreements the EU already has with various third-party countries make the process to arrange an export to most parts of the world very simple. The idea that Britain is opting out of these in order to make its own bespoke arrangements seems to me to be a recipe for disaster. The EU has at its disposal an army of around 800 trained and very experienced trade-negotiators who are bashing out new global deals all the time. Britain has Liz Truss! As Britain does not manufacture anything of note, I just don't see a future for Britain as either an exporter or some kind of trading intermediary buying from one country and selling to another, as in an increasingly virtual world there doesn't seem a way to add value. We can add markup but in a world where sales are increasingly made directly, who wants intermediaries taking a slice?
 
Speaking of intermediaries, another area that is about to change dramatically on the world stage is money. China has for several years been developing and trialling the world's first Central Bank backed Digital Currency (CBDC). They are already leading the field and more recently America, Europe and other countries have started researching the idea and publishing policy papers and so forth, making noises that they are about to do the same. The lure of a cashless society is too good for the banking community to pass up and clearly there is a fear that if China's CBDC gets a head start, it could ask its trading partners to use it, suddenly threatening the place of the dollar as the world's leading currency. Obviously this is all very new and it is quite difficult to foresee how things will pan out, but again, the odds are that there will be three main CBDCs, the Digital Yuan, Dollar and Euro. As with crypto-currencies one of the main characteristics of CBDCs will be transparent accountability. It will become much more difficult to launder dirty money through currencies that have an online ledger. Given the chequered history of UK banking institutions and London's existing reputation among anyone from Mexican drug lords to Russian oligarchs as the go-to place to launder money already, my guess is Britain will resist the race towards introducing a CDBC for the Bank of England and instead, the fiat pound will become the central clearing house for the world's black money.
 
As I see it, that's a Britain Johnson & Co are quite happy about. It seems to me that this government is more mendacious than any other in British history. I sense they have no vision for the British people, nor do they care what happens to them, as long as they keep making money. It's clear they have a desire for small government and I fear without the stabilising hand of the EU, centuries of hard-won social and employment protections are about to be thrown out of the window. The welfare state and the NHS will be gone, quite soon I should imagine. Health & Safety and pesky employment regulations will be thrown on the bonfire. I should imagine Scotland will fight for and probably win independence. As the realisation of what is being done to Britain starts to sink in, the will in Scotland to escape the Tories and rejoin Europe will become compelling. The situation with Ireland may take longer to fester but the north of Ireland will become a gateway for smugglers to bring contraband into Europe and measures introduced to counter this will increase tensions and will bring pressure on Britain from the EU and America to reunite Ireland. Again, though publicly affronted, the Tories will be privately delighted to lose Scotland and Northern Ireland, as in their view there will be less money going out and more for them to secure fortress London, which will, as the decades roll by, start to resemble some 18th century Bahamian island beloved by buccaneers and cut-throats.
 
I don't think it is accidental that many of the current crop of Tory nationalists did their degrees in history or classics. It came as no surprise to me yesterday to see Johnson's government boasting it will have gunboats ready to defend British fish. Their thinking is aligned with the glory days of Agincourt and Waterloo. They think in terms of Empires and battles, a mindset that is out of step with the modern world. The days of the opium wars and gunboat diplomacy are long gone. France is a nuclear power (the only one in the EU post Brexit) and China, Russia and America dwarf Britain in military might. I can't help thinking that if the British government continues on it's current selfish, belligerent path, there will come a time, given the way the world is shaping up, that it will end up being put in its place by being on the receiving end of a bloody good kicking!
 
 

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