False Economy - Alan Beattie [2]
Second, economic history is vulnerable to fatalism. Any study that takes as its endpoint the present day is always vulnerable to arguing backward from the conclusion. History is so rich in scope and detail that it is always possible to pick a particular constellation out of the galaxy of facts to explain clearly and precisely why things are as they are. Yet such reasoning is frequently proven wrong by subsequent history. Or it completely fails to explain why other, similar, countries and economies came to a different end.
If we are going to learn from history rather than just record it, we need to stop explanations from becoming excuses. Drill too far down into explanations of how things turned out the way they did and you risk hitting a bedrock of determinism. There are plenty of reasons why countries have made mistakes. Often their decisions are driven by a particular interest group, or a coalition of them, whose short-term gains stand at odds with the nation's long-term interests. But such interests can be overcome. Similar countries facing similar pressures can take meaningfully different decisions. Most nations that discover oil and diamonds in their ground suffer as a consequence, but not all do. Some interest groups have captured countries and dragged them down; some have been resisted. Islamic beliefs have proved a drag on certain economies at certain times, but they do not have to. Some economies have managed to capture great benefits from the globalization of markets in goods and services; some have missed out.
History is not determined by fate, or by religion, or geology, or hydrology, or national culture. It is determined by people. This book is not a whimsical set of disconnected stories. It is an explanation of how human beings have shaped their own destiny. It also shows how decisions being taken now are determining our future.
Nothing can call back the finger of history to cancel even half a line of what has been written. But still we can compose the script for the remainder of our lives, and beyond.
Chapter 1. Making Choices: Why Did Argentina Succeed and the United States Stall?
Everyone remembers the horrendous, world-changing events of the morning of September 11, 2001. Everyone remembers the planes commandeered by terrorists slamming into the twin towers of the Centro Mundial de Comercio in Buenos Aires. As the richest country on earth and the modern world's first global hyperpower, Argentina was a prime target for malcontents revolting against the might of the Western capitalist order.
Fewer recall the disaster that befell the United States of America three months later. Fewer recalls the wrenching moment when the U.S. government, crushed by the huge debts it had run up borrowing abroad in pesos, announced it was bankrupt. The economic implosion that followed, in which thousands of jobless, homeless Americans slept rough and picked through trash bins at night in New York's Central Park, shocked only those still used to thinking of the United States as a First World country.
Well, no. It happened the other way around. But that was not inevitable. And the crisis that has hit the United States—and then the entire global financial system, threatening to plunge the world into another Great Depression—should be a dark warning. The United States could have gone the way of Argentina. It could still go that way, if the painfully learned lessons of the past are forgotten.
The strong likelihood is that in the long sweep of history, the turmoil that began with the credit crunch in 2007 and escalated to a full-blown global financial emergency in 2008 will be seen as a crisis of capitalism, but not its