Cucumber Globalization

People may not take a cucumber crisis very seriously, but they should. It is representative of a wider problem that exists within our globalized economy.

If a cucumber is contaminated in Spain, it has grave consequences for multiple countries. One result is that the lever of the export machine becomes momentarily jammed. Cucumbers from Spain are rejected by other countries. The farmer, the packer, the shift supervisor and the company overseeing the distribution of cucumbers lose out. The free flow of perishable goods is interrupted. Shoppers from Berlin to Brno may become anxious and avoid buying Spanish cucumbers. They might even steer clear of them altogether for a period of time.

OK, not a travesty. But cucumbers are only, if you’ll excuse the salad based pun, the tip of the iceberg.

As we have seen over the past twelve months, nature has the potential to disrupt what many of us take for granted – the ability to travel by air, unimpeded. The consequences of the recent Japanese tsunami were felt all over the world. Car assembly lines were closed in the UK owing to the delay in the delivery of components. Toyota suffered a significant slump in productivity and sales. Similarly, the Icelandic volcano saga of 2010, and to a lesser extent last week, highlighted our sensitivity to air travel disruption.

The grounding or disruption to freight flights also reveals just how reliant some countries are on exporting single commodities. This is a ludicrous situation. Countries that possess the natural conditions or resources to grow a range of crops or produce materials domestically have been restricted in doing so. Instead, they channel most of their resources, time, labour and expertise into exporting a single commodity. The words eggs and basket spring to mind. When things go wrong, as they frequently do, the pain is intensified by the fact that there is nothing to fall back on. No plan B, let alone a Plan C.

The global economy can be dynamic when it works but it is also susceptible to disruption when a small cog in the machine temporarily jams. We cannot predict when such jams will occur or how consequential they will be. It is important, however, that we are aware of their potential and do not think – as many so-called experts did in the pre-recession boom years – that the status quo is infallible. In fact, the one thing we can be sure of is the uncertainty of the future.

With this in mind, I reach for my well-thumbed copy of Keynes’ General Theory.

Update: Spanish farmers have accused Germany of making unfounded allegations about the origin of the E.coli outbreak. The Spanish government is now considering whether to take legal action.

 

Policy, Policy, Policy

New Labour’s former Director of Policy, Matthew Taylor, has been considering the impact of economic growth on the environment. For the first time, so it would seem. This reveals a great deal about the early New Labour project. One of its leading intellectual voices and Tony Blair’s closest political ally was so fixated on achieving positive GDP figures for the U.K., he was not even aware of other perspectives that were challenging the orthodox growth model. Indeed, it is only now that Taylor is considering what many environmentalists have been arguing for years – that unchecked economic growth might be unsustainable and cause longterm, irrevocable damage to our climate. No doubt, the growth versus sustainability debate is a complex one. Precisely the reason there should be more open debate on this issue.

Unfortunately, this is not happening. There is, however, a great deal of coverage in the FT of the faltering eurozone economy and speculation of a double-dip in Germany from various progressive bloggers. In other words, both ends of the political spectrum generally still view economic growth as paramount for achieving a ‘good’ society.

Paradoxically, this is at a time when the idea of a so-called Robin Hood tax is mustering favour amongst political commentators and journalists. Even actor Bill Nighy is in on the act. In essence, the idea is to tax all bank transactions a modest sum and divert these funds to help protect public services through the post-recession recovery. It has been strongly suggested that the tax might also help to promote green industry and climate change initiatives in the world’s poorest countries.

Whatever one thinks of the Robin Hood tax, it poses fundamental questions to our politicians, bankers and economists. If we insist with the old orthodoxy that growth is good we should surely know why it is good. What purpose does growth serve? In the past, individuals such as Matthew Taylor would surely have said that the success of our financial institutions was good for society as a whole as the wealth created helped to pay for the services we all use. But this trickle-down theory has come under heavy fire in recent years. The wealth creation of the financial sector was not harnessed as many would have liked and deregulation and the resulting credit crunch has had dire consequences for millions of people the world over.

If policy decisions continue to be made with the narrow ambition of economic growth then the implications for our climate could be catastrophic. Let’s hope, with campaigns such as the Robin Hood tax putting pressure on elected and un-elected politicians, that a more rounded approach to policy takes form.