The Commonwealth: Use Your Imagination

Deep in the afterglow of an incredible Olympic Games and a rekindled British spirit, there’s talk around the campfire that maybe the Commonwealth isn’t just a quaint affectation of a used-up Super Power.  In fact, no less an illustrian than ex-Canadian and convicted felon Conrad Black has run the idea of a resurrected Commonwealth up the international flagpole to see if anybody bothers to salute.  It’s a curious notion that isn’t going to get a lot of attention, but maybe it should.

In theory, The Commonwealth is the natural devolution of the British Empire – a collection of states bound together by (if nothing else) a common colonial experience.  These states share a tradition of British law, parliamentary democracy, education and language.  They are, in reality, and according to Commonwealth doctrine “not [entirely] foreign to each other.”  So much for theories.  In truth, the Commonwealth is an organization (and I know I’m going to get some emails about this) badly in need of a purpose.  What good it does do around the world goes largely unnoticed, and most people assume it’s just a holding tank for stodgy old colonials, with a few dusty monarchists congealing on the side.  Realistically, the Commonwealth simply does not swim where the big boys feed.  It has neither the infrastructure, the management nor the common direction to heft any weight internationally.  It’s only raison d’etre seems to be to voice a few high-minded principles and host the Commonwealth Games.

The weird thing is, however, an invigorated Commonwealth actually makes a lot of sense.  Look around.  Who takes the United Nations seriously anymore – aside from guys like Chavez and Mugabe?  Even Obama works around them when he feels the need.  OPEC is permanently attached to their petro-dollars, and the Arab League isn’t interested in anything beyond the Middle East and whatever anti-Israeli rhetoric is flavour-of-the-week.  Meanwhile, the European experiment is rapidly turning brown, and the Euro itself is on the verge of folding up like a cheap lawn chair.  If Merkel and Hollande can’t find some common ground soon, this time next year, this planet’s largest economic unit might be slowly sliding into the Mediterranean.

On the other economic hand, four of the sixteen largest GDPs in the world belong to Commonwealth nations.  In total, the Commonwealth has a combined Gross Domestic Product of over ten trillion dollars.  That’s second only to the EU and the USA.  It has a population of 2.1 billion — which makes it the largest single organization in history.  Folks, that’s enough purchasing power to get a discount outta WalMart!  Merely turning the Commonwealth into a Free Trade Zone without any other added economic attractions — would be like hitting the world economy with a double dose of adrenalin and a Red Bull™ chaser.  Whatever recession the IMF had in mind – forget about it.  It would be over instantaneously.  Individually, the Commonwealth states have enough natural and human resources to feed, clothe and power the world.  As a single economic unit with proper development and a little imagination, there is simply no limit to what it can accomplish.

Actually, the idea of a super-economy, built out of the British Empire, is an old one.  It’s a 19th century philosophy that found its voice in Joseph Chamberlain, a Victorian Era politician.  His idea was to form the Empire into a closed shop, eliminating trade barriers within the British Empire but erecting tariff walls around it.  Forged as a single economic unit, the Empire would generate immense internal wealth and secure Britain’s position as the world’s only superpower for another century.

Unfortunately, Chamberlain never convinced the British government to step away from its policy of free trade.  As early as 1910, the balance of British trade was beginning to tilt away from the Empire in favour of America (with a corresponding outflow of cash.)  Four decades of that — and a couple of expensive world wars — and Britain simply couldn’t afford its empire anymore.  A simplistic view I’ll grant you, but true all the same.

Very soon, empires will no longer be political; they’ll be economic.  The Commonwealth has the potential to be history’s greatest superpower, but don’t hold your breath.  There are too many national egos involved.  But mostly economists don’t make policy; politicians do.  Unfortunately, they have neither the imagination nor the political will to make something as radical as a non territorial political entity work.

The Sky is Falling: Let’s Eat the Rich!

According to NASA and the Federal Reserve, the sky actually is falling.  Apparently, UARS, a weather satellite that ran of gas in 2005, has slipped its leash and is about to come home — at about a million miles an hour.   NASA is pulling a Napolitano, though.  (“We don’t know where.  We don’t know when.  But something terrible is going to happen.”) They haven’t told anybody when this five tonne ET is going to come sailing in – or more importantly, where.  Actually, they don’t know.  It is kind of important, though; especially since NASA says around 500 kilos of it is going to make it to the crash site.  I, for one, would kinda like to know when to duck.  The betting boys in Vegas aren’t talking, but according to NASA itself, there’s only a 1 in 3,200 chance of me getting brained by extraterrestrial debris, so that’s somewhat reassuring.

One the other hand, the Federal Reserve isn’t even giving odds on my financial well being anymore.  Their boldest reassurance so far amounts to “significant downside risks.”  Let me translate: we’re screwed.

In the next few years, the odds of any of us not being touched by this world-wide economic debacle are zero.  Our best plan of action is to get our personal financial house in order and hope the stupid wears off our political leaders before it’s too late.  While I’ll grant you the enormity of our collective debt didn’t just show up last Wednesday, it’s the responsibility of those who govern us now to start killing alligators – we can drain the swamp another time.  The problem is the leaders of our time remain blind to the economic realities that face us.  Not only that, but their Win-Win-Everybody-Gets-A-Rainbow political philosophy is seriously getting in the road.   I’m not sure what Fantasy Island Merkel, Papandreou, Obama and the others have checked into, but they better start thinking about coming back to the real world while the planes are still flying.  Sunshine and lollipops aren’t going to do us much good when all the airlines are bankrupt.  I hate to keep harping on it, but the delusionary air circulating in the halls of power has convinced most of the politicos that this economic crisis is the same in kind as every other one we’ve faced since the Arabs turned off the gas in 1973.  Guess again!  It’s not!

To be perfectly blunt; this time we’re broke.  The United States, the UK and Europe haven’t got the price of a Big Mac among them; forget fries and a beverage.  We are so far in debt even the guy at Sham Wow wants cash.  Here are the numbers: the United States, 13.9 trillion dollars; the EU, 13.7 trillion; Britain, 8.9 trillion.  That’s how much we owe!  And everybody knows it.  There isn’t a money person on this planet right now — from Madame Lagarde at the IMF all the way down to Ron the teller at Rubberboot Savings and Loan — who doesn’t understand we are facing a financial Armageddon.  They’ve been yapping about it for a couple of years now.  Yet — and here’s the sharp stick to the eyeball — not one world leader is willing to publically admit it or, more importantly, do something about it.  The best we get out of our fearful leaders is some old same old, borrow, tax and spend stimulus package.  The latest incarnation is “Let’s eat the rich!”

Here’s some arithmetic (It’s not even math.)  According to Forbes, there are 10.5 million millionaires in America.  If Obama taxed (took) each one of them an extra one million dollars (which, by the way, would wipe a lot of them out) he’d get only 10.5 billion dollars.  Likewise, there are 412 billionaires kicking around.  If Obama extra-taxed them a billion dollars each and added that to the original scam, he’d still only have 422.5 billion dollars.  Everything being equal (and if the accumulating compound interest stopped this very second) it would still take America well over 30 years to pay off their current IOUs.   Meanwhile, over in the European forest, Merkel, Sarkozy and Cameron don’t have near as many millionaires to sic their tax men on.  So, it would take them even longer to get out of the poorhouse.  Plus, there’s no guarantee what these financial Einsteins are going to do with the money after they collect it.   It might never see the debt.  It might end up buying muffins at a Justice Department Conference – perhaps with coffee and a nice piece of fruit.  Quite frankly, the track record so far isn’t all that good.

There’s only one way to get out of this money pit we’ve dug for ourselves.  Quit spending so damn much!  We need to stop the dollar haemorrhage immediately.   It’s no secret that government – any government – wastes enough money to keep a small planet going.  It has to stop.  This means deep and drastic cuts to the vast majority of government programs.  There will be weeping and wailing and threats for the next election.  After all, it’s very difficult to convince people they can no longer have the things they think they’re entitled to.  But we have to do it.

Unfortunately, our leaders have been taking the easy way out on this for years, that’s how we got in this mess.  Now, instead of judicious trimming, we’re going to have to cut to the bone just to come out about even, and nobody’s going to like it.  However, for every day we delay, the cuts are just going to get deeper.  There’s no quick fix, folks; I don’t care what the politicos think they can get away with.

Like it or not, the financial sky is falling, and the chances of you getting hit are 100%.  Believe me: it’s better to go outside and get it over with than spend the next ten years being pelted to death by little pieces.