At a time when Ford is withdrawing from Japan and Indonesia, when Tyco and Johnson Controls are merging, when large corporates and multinational banks are buying back their stock and laying off thousands in order to buoy up their balance sheets and P&Ls, corporate strategy rises to the fore. Surpassing corporate strategy in a future replete with self-driving cars, AI, Fintech, genetic modification, the slowdown in China’s growth, the fall in commodity prices and robots, is the concern about jobs. Where will the jobs come from in the future?
How will the millions of unemployed and underemployed youth in the world be turned from violence, terrorism and cybercrime?
Hamilton, the orphan from Nevis, who is presently starring on Broadway, tried to get Americans to think beyond states, beyond national borders. He created one U.S. currency, one central bank, one customers bureau. He tried to breach the endemic myopia and isolationism of the U.S. states. He failed.
A pundit described the World Economic Forum at Davos as a contest among alpha males for relevance.
During Davos, SIBOS and many recent global meetings, the financial industry has made a concerted effort to be relevant by presenting on such issues as Fintech and blockchains. In so doing, the financial industry violated the Jobs Rule. Steve Jobs famously said that “you must start with the customer experience and work your way back to the technology, not the other way around.” In Fintech and blockchains, I find a lot of role/goal confusion.
Only global trade deals effectively with the great issue of the future which is youth unemployment.
Most of what is described as ‘Fintech’ relates to payments, not to solving the complex issues of global trade. Furthermore, a lot of the issues proffered by the alpha males and females at Davos have nothing to do with the predominant issue of the future which is how do we create jobs and improve the quality of life everywhere despite all of the increasingly rapid technological progress we are witnessing. I keep thinking about Einstein’s warning about unguided technological progress as being “like putting an axe in the hands of a pathological criminal.”
Trade beyond mental borders
The answer comes in thinking of trade beyond national mental borders. Whereas Europe has been able to reach a degree of regional economic integration in terms of imports, relatively little economic integration has been achieved with regard to exports. This assertion is verified by the national scramble to trade with Iran. The exception is Airbus. The ability of Europe to be cooperative and integral is tested by the export of Airbus SE.
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A similar export-related regional economic cooperation and integration as has been achieved by Europe, is not achieved by NAFTA countries; by the U.S., Canada and Mexico. As a result, NAFTA is considered a dirty acronym in the U.S. and so is ‘globalization’. U.S. political candidates do not refer to NAFTA and globalization except with derision and ignorance.
NAFTA is primarily import-driven. It eliminates or reduces tariffs, taxes, duties among thousands of categories of imports, of the harmonized tariff system, the HTS. Anyone who has actually worked with this system knows what a nightmare the practical workings of NAFTA are, how dysfunctional it is. In any case, there is no practical application of NAFTA with regard to exports. Canadian EDC, Mexican Bancomext and US Ex-Im Bank function separately with regard to exports and there is no practical financial integration of these export credit agencies, ECAs in producing an integral export finance capability for North America. Boeing’s aircraft are not financed by the multilateral financial institutions of North America. There are none. As a result, jobs have been created in Mexico and Canada and NAFTA is considered to be job-creation negative or neutral at best in and for the U.S.
As far as exports and job creation are concerned, NAFTA is couched in ignorance and political myopia.
NAFTA is closely associated with the politically-charged issues of immigration and terrorism. The fact is that Mexican immigration is no longer an issue based in fact. Mexicans are immigrating back to Mexico from the U.S. because of the economic growth in Mexico which has resulted from the thousands of industrial companies from all over the world which have located there in order to access the US and Canadian markets, as a result of NAFTA. The immigration, illegal or otherwise to the US, is coming from Central America and Asia. The economic and political turmoil in the Middle East, Afghanistan and the rest of Asia has been what has propelled immigration to the U.S. One has only to ride around the borough of Queens, NY, to verify the cultural change that has taken place in the U.S. and where immigrants are coming from. Queens is little Kabul, little New Delhi, little Karachi. Importantly, the cybercrime which FBI Director Comey has identified as surpassing terrorism in its destructive effect, is not coming from Mexico.
The solution to the US immigration problem and to the economic and political turmoil in the world is trade for a clear and simple reason. Only global trade deals effectively with the great issue of the future which is youth unemployment.
Davos was about technological progress and Fintech and blockchains. Davos is about political and economic power wielded largely by alpha males.
William Faulkner was right: “The past is never over. It’s not even past.” Davos however, is over. It was about role/goal confusion. Davos is past; it is irrelevant.