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History Table of Contents
1994 Summer Conference
Summer Conference 1994
Globalism and Tribalism: The New World Disorder?

Governanace: How Will Democracy Surivive the New Politics?

DAVID FRUM, Columnist,. Financial Post and Contributing Editor, Forbes Magazine

I am here to address three propositions.

The first proposition is that we are living in a world that has become and is continuing to become radically and rapidly more globally integrated.

The second proposition that it is this global integration that is spawning a greater sense of tribal identity.

And the third is that these two trends present problems of governance.

I don't believe any of them.

I don't believe we live in a rapidly globalizing world. While there are changes and they are important, by any definition the world today is much less international than the world of 1913.

Let's take a look at each of the components of this global phenomenon that we're supposed to believe exists.

The first is an internationalization of business activity.

The are more rapid international forms of communication.

And third, the rise of multinational institutions that govern this increasingly interdependent world.

Well, I think it's quite clear the world of business is less international than it used to be.

Milton Freedman has calculated – that as a share of global production – trade and investment across global borders today are a fraction of what they were in 1913.

In his Economic Consequences of the Peace, John Maynard Keynes give a description of the economic life of the ordinary middle-class resident of London in 1913. How this person could, with a phone call, obtain from his bank as much precious coinage and precious metals as he sought; could board a boat to anywhere in the world without any documentation and go there.

(He described how this person) could take this coin money – the main coin of Britain in those days was the sovereign, which was a gold coin that weighed about one-fifth of an ounce of gold – with him to any place in the world, and instantly, and without any bureaucracy, and without any fees, translate it into the local currency.

And, said Keynes, not only would he have been very shocked but he would have been very much surprised if anybody tried to get in his way.

Well, this conjures up a world we can only dream of.

Anyone who believes in the existence of a global financial economy ought to get his Aunt Mildred in Chicago to send his kids a personal cheque for a hundred U.S. dollars for Christmas and try depositing it in any Canadian bank.

This transaction would have been vastly simpler in 1894 than it is in 1994. It would have been cheaper and more convenient and it would not have taken the cheque six weeks to clear.

Nor, do I believe that what we are seeing with communications represents any dramatic shift.

Yes, it's true that phone rates are falling; we have the fax machine.

But, compare these to the laying of the first trans-Atlantic cable in 1866 and the fall in communications times between London and New York from two weeks to two seconds.

Or, compare anything we've seen to the moment to when the first dirigible airship landed in Bombay, I think in 1931, and cut the travel time from England to Bombay from six weeks to two days.

Nor, do I think it is true that we live in a world increasingly governed by multi-national institutions.

It is true there are enormous international bureaucracies. I think most of these creatures are quite pernicious, but they substitute in a very frail, incomplete way for the true international co-operation wrought a hundreds years ago by the combination of free trade and the gold standard.

A hundred years ago governments didn't consult about adjusting their economies to each other. Economies spontaneously and naturally adjusted to each other because of the flow of gold from one to another. A hundred years ago it would never have occurred to a government that it had the power to regulate it's own interest rates. It was understood that these were set by a global money market and no country in any way presumed to try to attempt to exert control over this thing.

I don't want to say there aren't real changes.

Obviously there's a big change from the days when it cost $75 to make a three-minute call from London to New York. But, the pace of change that we're living through today is far less than the pace of change of the 1860's and the 1870's. And the global economy we live in is far less integrated than that before World War I.

Next, I'd like to address the problems of governance.

In a international world where peoples and countries are very connected to each other, what problems does this raise for governments?

My reply to that would be, none.

All of the legitimate core functions of government, protecting people from criminals, protecting them from violent invasion, picking up the garbage – none of these are in any way affected by anything that happens outside a country's borders, except perhaps for the function of maintaining control of immigration. Cheaper airfares obviously make immigration more difficult to police and governments that choose to police it have some small problem here.

Otherwise there's very little.

It is not globalization that explains why attempts to do things like set interest rates below the prevailing world rate, or confiscate the assets of foreign oil companies – as Canada did in 1982 – that has made these a problem.

They never worked, ever.

The fact that it becomes obvious more quickly that they don't work today does not change the fact that the policies were always foolish and always reckless.

It was always true that Marketing Boards referred to impoverished people. People just didn't know it because, perhaps, they didn't see the television commercials from Buffalo telling them how much chicken could be bought for at the local Safeway.

But it was still true.

Maybe people didn't react as vehemently then as they do now, because they lacked that information. But, the leeching of wealth from people into unproductive activity was always there.

Most of what we in Canada describe as the political problems of globalization are really the political problems of indebtedness.

The reason we do not have control; the reason our governments find it very hard to make even those decisions they think they should, is not because there are international institutions stopping them and it's not because of the Bank of International Settlements.

To be a debtor is to be – and always has been – to be a slave.

We have voluntarily chosen to make ourselves debtors. In 1954, in 1924 and 1894 the country that took on as much debt, as quickly and as recklessly and for such bad purposes as we have done, would always be in the hands of its creditors.

That is not a function of the global economy.

That is a function of our own overspending, our own recklessness, our own inability to ask our people to do for themselves what they ought to do.

I would like to put this proposition before you.

It is true, I think, that we see around the world and, especially in Canada, a rise of tribal identities. I don't believe that this is a function of internationalization.

I think, especially what we have seen in Canada, is that these are changes we have invited, almost commanded, by changes in our own law and our own institutions.

When we see the rise of organized victim groups seeking to plunder the public fist, to make demands, demand preferences in hiring and so on, it is not a McLuhanesque phenomena. This is something we have invited.

Your political power is greatly enhanced if you find some group to belong to and you can cast your demands in the form of some organized group grievance.

We have seen the multiplication and the multiplicity of these things because we have rewarded it; because we have an increasingly ambitious states which is in a position to redistribute wealth.

Let me give one example that I written about and know well: Disability.

We, and the Americans too over the past 15

or so years, have transformed disability from a personal problem into a victim group – like descendants of slaves.

What we have done is we have made it possible for groups of disabled people to couch their problems – which are problems of disability – as problems of discrimination and lack of rights. And then what we have told them is: If you organize, and if you bring lawsuits and if you have demonstrations, you can get money.

Well, naturally people do that.

We've made the disabled almost a tribe. As we have made women a tribe. As we have made immigrants. As we have made gays a tribe. We have made them a tribe by offering them incentives for tribal action.

But, that is not in the stars; that is not a function of modern life – that is a function of our law.

If we are dismayed by the breakdown of common national identities, by the breakdown of public spirit and its replacement by selfish competing interest demanding redress from the public fist, let us not blame the international bond market.

Let's blame our own ideologies, let's blame our own laws.