BANKING IS NOT THE CREATOR OF PROSPERITY BUT THE CREATION OF IT
By Kevin A. Stoda, in Kuwait
In 1904, ten years before the era in which the British domination of the world’s financial sector began to end (i.e. in the wake of WWI and WWII), the former colonial secretary of Great Britain, Joseph Chamberlain spoke to British Bankers, "Granted that you are the clearing house of the world, ‘but’ are you entirely beyond anxiety as to the permanence of your great prosperity? . . . Banking is not the creator of our prosperity but the creation of wealth; and if the industrial energy and development which has been going on for so many years in this country were to be hindered or relaxed, then finance and all that finance means, will follow trade to the countries which are more successful than ourselves."
As both regionally, first Dubai and now Kuwait seek to become new financial capitals over the coming two decades, it is now time to reckon what it means to put one's future development primarily into the hands of the financial and debt sectors.
In his chapter on "Debt" in the non-fiction work AMERICAN THEOCRACY(2006), Kevin Phillips cited Joseph Chamberlain’s speech to bankers in Britain of 1904, i.e. in a land--similar to the U.S.A. in 2001--which had gernerally determined that investing in homeland productivity had less and less value. In short, over a hundred years ago this decade, British financiers, lenders, and bankers had determined that chasing global investment and investments in financial gimmicks were easier money than promoting productivity in the United Kingdom.
Phillips notes, "But while this [perspective of Joseph Chamberlain] was one of the most accurate predictions in British commercial history, it did not carry the day."
Such was the case over the past two decades as critiques from all over the political spectrum in the U.S.--from Kevin Phillips to Paul Krugman to Noam Chomsky--warned America about its decision to hollow out its commitments to the poorest echelons of the society while focusing on the financial post-industrial development of the USA. The United Kingdom, Iceland, Hong Kong and other countries have mimicked the USA model of the past decades.
Kevin Phillips, in AMERICAN THEOCRACY, gives the examples of more balanced economies (than Britain and the United States) to make clear how the myths concerning the positive facets of post-industrialism should have been called into question by both the USA and the UK leaders over the past two decades. The three countries that Phillips lifted up as alternative models to the under-exploited industrial and productive capacities of the USA and its Atlantic counter-part are: Japan, Switzerland and Germany.
JAPAN, SWITZERLAND, GERMANY
Phillips begins his attack on the U.S. model (mimicked from Spain in the 15th and 16th Century, Holland of the 17th and Britain of the 19th Century) by warning American readers, "Postindustrialism, then, may be more a quest for genteel retirement than a real economics-based future for a major power."
That is, if you want to retire as a superpower, you might try the financial emphasis.
Nontheless, the U.S. federal reserve has already given 850 billion dollars in "cash for trash" in 2008 without reducing poor people's debt and housing losses AT ALL.
Furthermore, Phillips argues, "All three nations have wages or overall production costs higher than those in the United States. All have reasonably successful financial sectors and postindustrial accomplishments (tourism, ecological awareness, and renewable-energy emphases—wind in Germany, solar power in Japan). However, they balance these with highly developed manufacturing industries. For Germany, machinery, vehicles, chemicals, and metal products are the great exports; for Switzerland, chemicals, metal products, machinery, and mechanical-engineering products (especially clocks and watches); and for Japan, vehicles, electronics, and computers. Each nation’s products command global respect for quality."
This, of course, does not mean that the U.S. doesn’t have quality production. It has wonderful production out of Silicon Valley and other IT firms—as well as high tech weaponry. It also has some medical technologies--which many poorer Americans can't afford--to export. It also currently has some nascent alternative energy research and techniqes to offer.