1912ers would find the world strangely familiar
By Martin Hutchinson and Edward Hadas
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
After a century-long nap, I awoke in 2012. The world is changed, but not utterly.
Much happened between 1912 and my new now. The fragile European peace I remembered was broken by huge wars and then restored, but the can-do spirit of my earlier era is hardly present in Europe and – this really surprised me – is in decline in the United States.
In some ways, though, the world feels familiar. Passports are not necessary for travel in much of Europe, and capital movements are almost entirely free. Foreign investment takes up a comparable share of GDP (a useful measure that we did not have in my old life). And while the great powers have changed, I find it easier to understand the multiple competing blocs than the nap-time arrangements of Cold War stasis and unipolar dominance.
I’m delighted with all the new technology, but not too surprised (I used to read what is now called science fiction). Modern pharmaceuticals, computers and the Internet all surpass my pre-sleep dreams. But I have to admit to some disappointments: planets are not colonized and people still rarely live past 100 years.
One thing really bothers me – the expansion of governments. This whole “welfare state” business may sound good, better welfare than warfare and all that, but states are expected to do much too much. I’m not surprised that governments don’t seem to manage very well, either their operations or their finances.
Maybe that judgment reflects my training as a banker; I love sound money and strong markets. And that’s another thing I don’t like about the new world order – the financial system. Why on earth did they abandon the Gold Standard? With governments in total control of the monetary system, inflation and financial crises are inevitable.
I must say, banks now are grossly over-leveraged and these persistent government budget deficits are pernicious. The whole monetary system is gimcrack. New experts tell me that fiat money and leverage are good for the economy and society, but I simply don’t see it. It’s time for a monetary and finance refresher course.
Predictions: Breakingviews is publishing a series of articles over the holiday that look ahead to 2012. The pieces will be collected together in the annual ’Predictions Book’, produced in print and electronic form early in the New Year.