Bankers blame Technology for Inequality and the coming Collapse
Central banks warn of risk of slowing globalisation and attack Nationalism and bilateral negotiations.
Populism questions the benefits of globalization. However, the coordinator of the central banks, the Bank of International Settlements (BIS), makes in its annual report a fiery defense of globalization:
“We run the risk of forgetting the lessons of the past, taking for granted the progress achieved during the last century in living standards,” says its president, Jaime Caruana.
Moreover, the document points to technology as the main responsible for the increase in inequality.
In its annual report, the BIS admits the problems of globalization: on the one hand, profits “have not been distributed equally”; it harms the unskilled in rich countries, especially in very specific regions and industries, and has stalled the growth of the upper middle class.
On the other hand, it benefits the most educated, the rich and the workers of the emerging countries.
Caruana once again forgets to point out the obvious: Globalization strengthens globalists organizations that are at the head of the movement defended by him and his technocratic pals.
In fact, globalisation favours capital gains over labor earnings; reduces the ability to negotiate higher wages and helps to minimize corporate taxes and large fortunes, which in turn diverts the tax burden to the poor, while the rich pay less and less.
In addition, these problems are exacerbated when robust institutions lack competition. The BIS is an example of it. Central banks are managed by interest groups that are able to capture the benefits of globalist policies.
As pointed out in the Basel Capital Accord, central banking exist to guarantee five outcomes:
Increase Power of International Creditors over Debtors
Increase Financial Consolidation
Increase Bank Supervision and Financial Convergence
Increasing Complexity of Financial Instruments
Enable Domestic Predatory Lending
To make matters worse, national policies, largely controlled by international banks, have always favoured the problems now being pointed out by bankers as they blame them on technology, nationalism or protectionism.
If there one truth that has come out of globalisation is that financial integration implied, a goal of globalization, amplifies and enhances financial crises. For example, according to the report put out by BIS, developed economies’ external debt has soared from 80 percent of GDP in 1995 to 290 percent in 2015.
That is to say, in the opinion of the BIS, the financial opening has grown much more than the real one, especially in the rich countries.
In fact, the report stresses how before the crisis the euro was a facilitator of financing that led to an increase in debt.
In line with a recent report from the European Commission, the BIS responds to these challenges with a profuse battery of arguments.
To begin with, it claims, the empirical evidence shows that countries very open to globalization such as France or the United Kingdom have not seen setbacks in the weight of employment.
The BIS says that many industries that are regulated and not exposed to global competition have lost even more work than other sectors that were exposed.
The ‘evils’ of technology
Despite all of the examples that prove how globalisation has destroyed financial and economic activity, the latest BIS report points to technology as the main driver of inequality, largely because, they say, the more educated workers take advantage of these innovations.
“Just as we do not suggest going back with technology, moving away from globalization would be very harmful to living standards,” Caruana said.
The document cites, among other factors that induce inequality, the cost of housing, either via ownership or rent.
The central bank argues that globalization lowers the type of products that low income people consume in greater proportion, which gives them a lot of purchasing power.
He says that open markets also facilitate access to financing, generally increasing the wealth of the less affluent and drives the transmission of knowledge and skills.
When investing, you can diversify risks and obtain greater benefits. Hence it concludes that globalization has no net negative effects.
Instead, Caruana, blames technology, although it is technology itself what allows the kinds of benefits he points out as a result of globalist policies.
According to the BIS, globalization has greatly improved well-being and it is essential to strengthen it in order to achieve sustained growth.
Caruana says that it is necessary to promote more “international financial supervision”, that is more central bank control over national governments through their local central banks. He says that such control would allow the implementation of more and better training to improve job availability and even specific employment plans in heavily disadvantaged regions and sectors. The bank also says that it is necessary to maintain sound financial accounts in the countries.
Financial openness hand in hand with global trade
Financial openness is usually cited as a necessary tool to improve wealth redistribution. However, such openness is nothing more than a power grab by institutions such as the BIS, that intend to centrally plan and direct national systems via globalist mechanisms that are established to enable further concentration of power and wealth.
In its latest report, the BIS recommends countries to have an accounting system that is free from financial imbalances. The report points out that, in fact, emerging nations learned from their crises to improve their situation.
Above all, it emphasizes the need for greater “international cooperation” to tackle sudden crises.
The hurdles of avoiding financial globalization are much greater, says Caruana. Without it you can neither finance nor make payments in international trade, he adds. “Neither is it possible to attract foreign investment or participate in global production chains by benefiting from the jobs they provide,” he insists.
Caruana paints a dire picture for anyone who refuses to deal in the heavily controlled international system that his bank is responsible for, but forgets that in the past things were different and they worked just fine.
He also ignores that international trade and sound economic and financial policies can be achieved while still maintaining national sovereignty. There is no need to surrender national interests to participate in global trade if a country so desires.