Reinventing the State Chapter 11: Globalisation and the Role of the British State

David Hall-Matthews revisits and refers approvingly to the topic of Chris Huhne's chapter of the Orange Book. He makes many very good points that globalisation's detractors ought to be aware of. For instance, globalisation is largely enabled by governments, not imposed upon them.

...anti globalisers' fears about the loss of state control are exaggerated, but have political significance. On the other hand, the far more serious threat of future global recession, as part of normal - if unpredictable - economic cycles is arguably not discussed enough in political treatises on globalisation.

This is an important point. We must not let fear of the political consequences blind us to the benefits of trade. Nonetheless Hall-Matthews has some suggestions for achieving a balance between the promotion of trade and protecting people and the environment. Largely, they are familiar Liberal Democrat ideas: democracy, transparency, localism, protection of the vulnerable and so forth.

Only occasionally is the neck stuck out...

As Nicholas Stern showed in his analysis of the impact of climate change, it is possible - and politically necessary - to estimate the economic costs of failing to spend now to prevent future calamity. Calculating what is needed to maintain a motivated and adaptable workforce should therefore take priority over the desire to cap public spending as proposed by Vince Cable.

A slightly odd example, perhaps, since the production and exchange of more expensive low-carbon energy might all happen in the private sector, and not impact the size of the public sector at all. Let's not slip into the lazy error that good can only be done by the state. In any case Hall-Matthews is not addressing Cable's argument. Of course there are a great many compelling demands on public money - if there weren't we could talk about reducing taxes. Listing them does not address the need for discipline, if not at 40% then at some (what?) higher figure.


I am a little unsure of the tone of this chapter, that maybe it talks up the power of governments a little too much in distinguishing globalisation from anarchy. Perhaps there are some good ways in which governments are less powerful too. Still, the thrust is correct, that we do not need to surrender the good things that governments do.

The Orange Booker Slur, part 3

This part coincides nicely with Chris Huhne entering the leadership race. Based on my current rate of progress, Susan Kramer should declare at the weekend.

Iain Sharpe points me to an earlier review of the Orange Book, making similar arguments perhaps. But the slur persists and so will I. And as the term is not Orange Book chapter fiver or sevener, I shall proceed through these unobjectionable chapters until my detractors are bored into submission. Within chapters I will cut to the chase.

Taking Global Governance, Legitimacy and Renewal I have trawled pages of cogent analysis for anything that might give away a hidden right-wing agenda, much as I did in part 2.

I find a balanced discussion of globalisation. A failure to condemn it as an unmitigated evil that will horrify Greens and Socialist Workers, but need not trouble us. The impacts of globalisation on inequality and the environment are recognised.

On Kyoto, Huhne comments that "... a greater effort will have to be made to persuade the USA that there are other ways of meeting Kyoto commitments than higher fuel taxes ...[such as] intensified research and development into non-emitting technologies." While such R&D is something the USA now talks about as an alternative to Kyoto, it is also a sound policy to follow while supporting Kyoto. American obstinacy is recognised but not justified.

On economic governance, Huhne decries the degree of austerity typically required by the IMF, and speaks approvingly of a Chilean system of capital control on short term money. The latter is preferred to the Tobin Tax, popular on the left. Whether the Tobin Tax should be popular with liberals would depend I hope on its practical consequences. As Huhne makes practical arguments against it beyond my competence to judge, I will defer to him.

Huhne is not alarmed by the threat of international competition leading to a "race to the bottom on environmental and labour standards, and on taxation" observing that corporate taxation and the tax burden as a whole is stable or rising in most developed countries. Also that in the USA there is not an observable race to the bottom between states. These are fears of the left, and now of Greens determined not to recognise any progress. While right wingers would relish a race to the bottom, social and economic liberals do not fear it because it isn't happening. The benefits of trade outweigh the costs.

Next up, chapter 5: Liberal Economics and Social Justice by Vince Cable.