As we drove out of Dulles airport one afternoon last week for Washington DC, I said to my colleague that arriving in the States no longer gave me any kind of buzz and that it must be my age. He agreed with the conclusion, but added that there were increasingly few stimuli from which to get a buzz everywhere looks much the same these days, so the sense of being “in America” has dissipated, even over the past decade.
There was the ubiquitous Marriott hotel and Route 66 across the Potomac was lined with the sort of mirrored, light-industrial developments that you would find outside any prosperous European new town. Even the cars look much the same these days.
The following day in Chicago, I was reminded of what he’d said. Apart from the taller buildings and a somewhat larger lake, Chicago could be a city in the Black Country or the Rhine Valley, with its derelict parking lots and its abandoned industrial hinterland, juxtaposed with a vibrant, new, service- industry heart.
And it isn’t that Europe is becoming increasingly Americanised. Rather refreshingly, I noted that some standards of American service, which for so long put Europe to shame, are adopting an Anglo-Saxon, or even Gallic, truculence. Unusually for a non-European operator, United Airlines has check-in staff that could provide an excellent training video for obstructive jobsworths.
I presume that there are cities in South-east Asia, Africa or South America that don’t have Marriotts and mirrored, light-industrial suburbs, but the First World is increasingly hard to differentiate in its constituent parts. Take a photograph that doesn’t include obvious tourist icons and I challenge anyone to identify which side of the Atlantic it is. This is the bottom line of globalisation a sort of millennial melange, created by Marriott, Microsoft and Mammon.
All these reflections came to mind as I touched down at Heathrow on Saturday and read in the Financial Times that Chancellor Gordon Brown has elected to sell more than half of Britain’s $6.5bn (3.9bn) worth of gold reserves (strange that our gold reserves are always valued in dollars, never sterling).
Now, there are any number of otherwise quite sensible people who will get as worked up about Britain’s gold reserves in the vaults of the Bank of England as there are those who worry about Rolls-Royce passing into German ownership. These are people who worry about the future of real ale.
I’m not concerned with the pros and cons of those arguments here. Rather, I’m interested in how Brown’s decision to cash in some of the Old Lady’s ingots is symptomatic of the plain-vanilla Western economies that have developed and the indistinguishable markets that support them.
Globalisation has been driven by exponential growth in information technology, so that markets don’t recognise national boundaries. The Internet has given us virtual markets, so to speak, outside national jurisdiction but operable from within national boundaries.
This not only means that national reserves, which underwrite local currencies, grow increasingly irrelevant, but that local economies and the relationships between them are increasingly problematic for measurement by traditional criteria. That is partly why economists are so puzzled as to why last year’s collapse of South-east Asian economies, the Russian rouble and Brazilian markets has not had a disastrous domino effect on the major developed economies.
Perversely, globalisation brings markets closer together, but makes the whole more resilient to fluctuations in its constituent parts. You only have to look at the scale of consolidation in the global telecoms market, which I wrote about a fortnight ago, to see that market prosperities (and commensurate poverties) are increasingly driven by global sectors rather than by geographical economies.
Which brings me to my next point, that the sheer scale of these developing super-sectors in industries such as telecoms and IT makes national reserves largely meaningless. When AT&T can bid some $58bn (35bn) for MediaOne and Microsoft’s Bill Gates’ personal wealth cruises past the $100bn (60.6bn) mark, $6.5bn worth of gold in an east London basement is hardly going to defend the national currency if markets based on that kind of investment go belly up.
Despite recent Europhobic lobbying, I remain convinced that most British businesses favour a single European currency. In any event, the cases for favouring it are stronger than those for resistance. It doesn’t take an irrational leap of the imagination to envisage a single global currency one day.
Gordon Brown may think the same way. At any rate, you don’t have to be a cynic to suspect that he may be selling gold and buying foreign currencies in order to deflate the value of the pound ahead of joining the euro in the next parliament. Much in the same way that he handed interest-rate control to the Bank of England at the start of this one, so that he could not be blamed for economic vicissitudes if we joined the euro suddenly.
But, whatever his motives, the implications for businesses in international trade are clear: abandon thoughts of overseas credit guarantees in favour of spread risk in virtual markets. Source products and services globally and outsource labour and staff functions to the most cost-effective locations. Finally, raise capital where it is cheapest and least regulated.
As to where to locate in the developed world, go where you like. As I say, it’s all the same to me.
George Pitcher is a partner of issue management consultancy Luther Pendragon