Belmont Club

The Global World Hits a Snag

Rats without borders

The impeachment of Brazilian president Dilmah Roussef is an example of what happens when a political ecosystem collapses.  Just a few years ago, Brazil was hailed as the wonder model of the developing world. “It was called the ‘Brazil model’, or simply ‘the Lula model’, back when this country’s economy was roaring and its president, Luiz Inácio Lula da Silva, was a superstar of the developing world. By balancing support for big business with big social-welfare programs, the union boss turned statesman presided over an era of growth that lifted tens of millions of Brazilians out of poverty. Lula’s presidency cut a new template for a Latin American left that had long insisted class struggle and revolution were the only road to fairness.”

Then the wonder model ran out of money for reasons that are easy in retrospect to understand.  Brazil’s boom years attracted corruption on a massive scale.  Soon the leeches were sucking more blood out of the host than its body could replace.  Once the economy collapsed and the middle class had been beggared an angry public went looking for a scapegoat and found one in current president Dilma Roussef.

The same catastrophe maybe happening on a global scale.  The music has stopped and the petrostates who have long bankrolled Western politicians have run out of money. “The petrostates assembling in Doha to discuss a potential output freeze two days from now aren’t coming together in a show of solidarity or out of some sense of duty towards one another, but rather as an act of desperation. Bloomberg ran the numbers, and found that the oil price collapse has collectively cost the 18 countries involved in this meeting nearly one third of a trillion dollars.”

The Washington Post says OPEC “has lost control of the oil market.” Caught between the desire to cut production to raise prices and pump to earn ready cash, the oil producers are unable to cut production for long term gain with some members, like socialist Venezuela, forced to keep pumping at all costs to barely keep afloat. What’s different about the present situation — and why it represents a political ecosystem collapse — is that Saudi Arabia and Russia are essentially in the same boat with Venezuela.

Saudi Arabia has reached out to Russia, primarily to discuss the war in Syria but also to discuss oil. Russia is also producing oil at near-record levels, but top officials said earlier this week that Moscow is not contemplating cuts.

“Clearly Saudi Arabia needs the money and so does Russia,” said Kenneth Rogoff, an economic professor at Harvard University. “Russia is really hurting. The standard of living has plummeted and if it lasts that will eventually undermine [Russian President Vladimir] Putin’s poplarity no matter how effective his propaganda.

“But Saudi Arabia has its failed war in Yemen, gigantic population growth and all kinds of internal political problems. So neither place is in a fantastic position to cut back.”

Long a byword in wealth, the Saudi credit rating has taken a nose dive, something as unthinkable as Brazil’s decline only a couple of years ago. Now according to Madeleine Albright, the Saudis have to keep pumping for all they are worth in order to maintain market share even at a loss, since once they lose their dominant position they would also forfeit their political influence, with fatal consequences.  Unlike Venezuela or Brazil who are only threatened by financial ruin the Saudis risk physical extinction if the neighboring swathes of terror and war, much of it their own making, are not held back by the United States.

Therein lies the rub.  They don’t have the money to buy protection anymore.  The decline in the Saudi bank balance has made them less influential in American political circles.  Faced with a bill that would allow victims to sue the KSA for 9/11 “Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars’ worth of American assets held by the kingdom if ” this were allowed.  A threat that once might have stopped Congress cold is as Tim Worstall at Forbes notes no longer important enough to be decisive.

But it’s not only the petrostates that are losing their former influence. China announced it will lay off 1.8 million “steel and coal workers” as it “aims to eliminate production capacity of as much as 500 million metric tons of coal and 150 million tons of steel by 2020.”  The Chinese are bust too.

Without that money the Globalization meme may also be in political collapse and in its decline liberals sense the possible resurgence of nationalism and other reactionary causes. EJ Dionne writes, “I locate the common roots of the rise of right-wing populism in globalization and technological change.” A Brookings forum following the same track noted “how economic grievances and political fragmentation are fueling the rise of right-wing political movements in the United States and Europe”.

Brookings would have done well to observe that grievances had been there for years and held only in check by a relentless repetition of a Narrative that endlessly described how wonderful the globalized world without passports would be.  The Manhattan Institute noted that Bernie Sanders “during a campaign event in New York … declared his intent to impose a nationwide ban on hydraulic fracturing,” like some witless zombie who “has made clear his intent to ruin the U.S. economy, put people out of work, and make Americans totally reliant on imported oil” while probably hoping to achieve the opposite result.

That’s how the Narrative works.  Sanders, like many a well-meaning liberal, may become so habituated to the mental Kool-Aid that he no longer detects the poison in it and like many other individuals is convinced he can fundamentally transform America by adopting policies which but for the artful camouflage of political consultants could easily be recognized as authored in Saudi Arabia or Beijing.

What Dionne called “the rise right-wing populism” may simply be the weeds of common sense suspicion springing up in the face of Narratve cutbacks.  Now that the Kool-Aid is in short supply even liberals are beginning to suspect that some Democratic candidates are being “bought and sold”. Renewed calls to examine the role of Saudi Arabia in the September 11 attacks and an increased skepticism in a world without nuclear weapons  may be among the first signs that the lower echelons of the food chain are starting to feel the pinch.

The Narrative may be breaking down.  That would come none too soon.  One of the unappreciated risks of globalization is it destroyed the barriers to corruption formerly imposed by limitations in institutions.  The marvels of the modern age have made possible not only to spread organizations like Medicins sans Frontieres but also to proliferate crooks without borders.

Today the world is one giant Easter Island as the Panama Papers show.  For years scientists and archaeologists were baffled by how “Easter Island, in the south Pacific, once lush with subtropical broadleaf forest, was left barren and vast seabird colonies were destroyed after the arrival of man.” The most common theory is that the island’s 15,000 Polynesian inhabitants simply cut the trees down recklessly and — like Detroit or Venezuela — ate up their seed corn. A newer, not so very different theory is that Easter Island was reduced to a wasteland by rats. The danger facing the global world was that unlike the Polynesians there would be no getting away from the global rat.

Almost all of the palm seed shells discovered on the island were found to have been gnawed by rats. Thousands of rat bones have been found, and crucially, much of the damage to forestry appears to have been done before evidence of fires on the island. Evidence from other Pacific islands also confirms how devastating rats can be.

Exactly how rats got on to the island is not known, although one theory is that they arrived as stowaways in the first canoes of Polynesian colonists. Once they arrived, the rats found palm nuts offered an almost unlimited high-quality food supply.

Under ideal conditions, rats reproduce so rapidly that their numbers double every 47 days; unchecked, a single mating pair can produce a population of nearly 17 million in just over three years. Research in the Northwest Hawaiian Islands shows that when available food is taken into account, populations can reach 75 to the acre.

“At 75 rats per acre, the rat population of Easter Island could have exceeded 3.1 million,” says the report. The Hawaiian research demonstrates that rats were capable, on their own, of deforesting large lowland coastal areas in about 200 years or less. “In the absence of effective predators, rats alone could eventually result in deforestation.”

But the rats are starting to lose.  Events in Brazil are very probably soon to be echoed in in the West.  The pendulum is swinging against them because, as Madison observed, rats are so voracious they often eat each other before civilization can be extinguished. “Ambition must be made to counteract ambition,” he wrote.  We are saved not by our better natures but by our worse.

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