History Future Now with Tristan Fischer

Christopher Marlowe’s play Doctor Faustus was written around 1592 and was based on an earlier German work about Dr Faustus, a talented German scholar at Wittenburg University who was frustrated by the limits of human knowledge. Feeling that he understood everything humanly possible, he made a bargain with Lu- cifer that for 24 years he would have access to knowledge that had hereto been hidden from humanity. In re- turn, he would give his soul to the devil. The devil lived up to his side of the bargain and, 24 years later, comes to claim Faustus’ soul. Faustus, realising his mistake, is horrified and begs for mercy from God and the devil. But it is too late and he is dragged off. His friends later find his body, torn to pieces. In 1992 the West signed its own Faustian bargain. Not exactly with the devil, but for a promise of unparal- leled wealth and a monopoly of power over the entire world. In return for this bargain we would leave our economies and societies in ruin and usher in the possible end of the West’s dominance over the world that it had enjoyed since the 1500s. History Future Now looks at what happened. This article covers a lot of ground – 500 years of history rang- ing from the Age of Discovery to the Opium Wars; a geographical reach over the entire globe, from Edo to Constantinople and Beijing to Washington; economic thought, from mercantilism to free trade; regulation and deregulation; and the impact of the financial services sector on jobs and our economies. It even includes an action list of what we need to do to escape from this Faustian bargain. While there is never a real beginning to a story in history – there is always a possible prequel – we first need to go back to the traumatic events of 1917 and then look forward all the way to 2013 and beyond.

Despite the fact that both John Maynard Keynes and Friedrich August Hayek are dead, their ideas are very much alive today and form the basis of whether governments chose austerity or stimulus as a way out of our current economic crisis. Both men were brilliant and arguably had people listened to their opinions before the Great Depression that started in 1929, the Depression and the Second World War would not have happened. Modern politicians are listening to their opinions now in the hope of preventing our Great Recession from turning into a second Great Depression. This is a mistake. Before History Future Now explains why it is a mistake, it would be useful to provide a very quick primer on who these men were and an elevator pitch on their policies.

History Future Now looks at our military expenditure and asks two basic questions: first, what is the purpose of the military and second, if we did things differently would we need to spend so much on the military? The results were surprising and the conclusion is clear: the military is no longer used to defend our borders and countries from attack, but to maintain secure energy supplies and trade routes. Both of which are not worth fighting for. Read on to discover the astounding statistics to show why.

The Great Recession has been going on for four years, with no end in sight. A great part of the problem is financial: we borrowed too much money for too long and now don’t have the ability to pay off our debts. That is the reason why governments across Europe have been calling for austerity measures. The argument for austerity is as follows: governments have spent too much money on social programmes. They have borrowed from the future to pay for expenditure for today. To get our fiscal houses in order, the argument goes, we need to cut government expenditure. This will reduce our borrowing requirements to pay for everyday items and will enable us to keep on paying the interest on our debts when they are due. Note that no government has a policy of paying down our debts: the best that they can hope for is to maintain debt levels and not default by failing to pay interest payments. As a goal, the ambition is rather modest, but the damage being caused to our societies is huge. Unfortunately, whilst important, this policy ignores the fundamental problem with our economies. While politicians may struggle with the issue of indebtedness and fret over which social or military programme to cut, they are ignoring the central social and economic threat to our countries: the loss of good jobs. If you have good jobs you can afford to pay lots of taxes, which allows the government to pay for the various programmes that it is used to spending money on. If you have no jobs, you have no taxes and you cant afford to do anything. This raises two questions. First, why are the good jobs leaving? And second, what can we do to bring them back?

The concept of a nuclear family is relatively recent – it is first mentioned in The Oxford English Dictionary in 1925 – and refers to a household that consists of a mother, father and their children. It is recent because the cost of establishing a household has been historically very high and young couples simply could not afford to do so. It was the economic ability to live separately that then enabled the significant social change of splitting up the extended family. Essentially big government has replaced the role of the extended family in many societies today. Since big government is no longer affordable, the nuclear family will no longer be affordable either. History Future Now believes that the nuclear family is a historical aberration and ultimately doomed to fail.

History Future Now has been tracking the expanding numbers of young people who are unemployed in the European Union with great concern. Both Greece and Spain have youth unemployment rates that are well over 50%. Most European Union youth unemployment levels are over 20% and 10 European countries have levels over 30%. But statistics are relatively cold and don’t give you a full impression of what life really is like at those levels of unemployment. Two quotes spring to mind, Harry Truman’s truism that “Its a recession when your neighbour loses his job; its a depression when you lose yours” and Stalin’s quip: “a single death is a tragedy; a million deaths is a statistic.” I have just spent a week in Spain and can report that the reality on the ground is far worse than you can imagine. And, that there is no light at the end of the tunnel.

Government debt levels in the United States, European Union and Japan are at all time historic highs, after decades of borrowing money to pay for regular annual expenditures, regular military interventions and multiple bailouts. Working out what will happen next is a matter of great speculation, but history can provide us with some pointers about what we should be looking out for, two of which are debt jubilees and hyper-inflation. Much of the government debt accumulated over time will never be repaid and will be rolled over indefinitely. However, interest on the debt does need to be repaid. As governments become increasingly indebted, interest payments as a percentage of government expenditure will increase rapidly. The US CBO expects that by 2025 US interest payments combined with Medicare, Medicaid and Social Security will be so large that they will theoretically consume 100% of all federal tax income receipts. Clearly, this situation would make no sense and you could expect a general tax payer revolt long before this happened. Citizens are highly unlikely to be willing to pay taxes if they got nothing in return: no schools, no roads, no hospitals, no defence, no jails and no legal system. Unfortunately, unlike other government expenditures, such as on defence, education and social security, interest payments need to be repaid. If they are not, the government will default on its debts, making it harder to borrow more money and to roll over the debt that it already has. So in a situation where it will be both impossible to pay the interest and impossible not to pay the interest, what will happen? One answer is to artificially get rid of the debt. Historically there have been two main ways of doing this: debt jubilees and hyper inflation.

I met with a partner of an accounting firm recently who said that his partners had concluded that most of the accounting work that is not face to face with their customers can be done anywhere in the world. With this realisation, his firm looked at a map of the world to find the cheapest place where all this non face to face work could be done, whilst maintaining the required levels of quality. They picked a city in India, which was miles from most of the normal Indian outsourcing destinations. Why? To help prevent his expensively trained accountants from leaving for other jobs with other western financial institutions that were doing the same thing. He now has PhDs doing accounting due diligence work which is both technically difficult and mind bogglingly boring. He is able to charge his European clients the Western rate for doing this, but able to pay his Indian PhDs a mere €8,000 per year. His is happy, as his profit margins are high and his Indian PhDs are happy, as the income is sufficient for them to afford a nice house, with a driver and a maid. Eventually, he agreed, this situation would have to end. This is the story why.

Niall Ferguson, the impossibly handsome economics history professor linked to Harvard and Oxford Universities and author of Empire, Colossus, Civilisation etc, is in the news at the moment for his 2012 Reith lectures on how the old are impoverishing the young. The main thrust of his argument is that those who are retired or are about to retire are imposing a huge financial burden on the younger working aged population in the form of medical, social security and pension benefits.

China has been accused of being a neocolonial power in Africa. The country, through semi-governmental organisations is buying up land in countries such as Sudan, Ethiopia, Mozambique, Tanzania, Madagascar and Zambia and investing heavily in resource extractive industries, whose products are then sent back to China for processing into value added goods. Much of this feels familiar to a historian. So is China really an up-and-coming colonial power, or is this something completely new?

In a world which is seeing a simultaneous increase in the capabilities of robots and artificial intelligence to do many factory and service sector jobs, and a significant increase in the world’s interconnected population, a natural question to ask is: “Are there enough good jobs to go around for everyone?” To many people, particularly those who hold positions of power in government and industry, the answer is simple: “Yes, so long as our population is sufficiently educated to take advantage of the jobs that will emerge in the future.” This podcast suggests that this view is too simplistic and wrong. Due to a collective amnesia and lack of historical awareness, this view forgets about the disastrous, multi-generational, consequences that rapid industrialisation had for the have nots, not just in societies that were experiencing industrialisation, but also for countries that did not industrialise at all.

Why does renewable energy get criticised for receiving subsidies that are far smaller than subsidies and expenditure on other sectors of the economy? History, Future. Now. examines why this bias exists from a historical perspective and concludes that there are six main reasons. First, we look at what other parts of the economy get subsidised.

Renewable energy frequently gets a bad press because it explicitly and publicly is the recipient of subsidies, whether in the form of feed in tariffs, as in the case of solar and wind energy, or capital grants, as in the case of newer technologies such as wave energy. In an era of austerity, where different parts of society are competing for a smaller amount of government support, all subsidies should be looked at with a critical eye. What is revealed is that government subsidies for the fossil fuel industry, whether in the form of oil, gas or coal, and the nuclear industry dwarfs that of the renewable energy sector.

The Roman Republic, and the Roman Empire which followed it, was one of the most successful multi ethnic, multi cultural, multi linguistic and multi theistic societies in history. This ability to absorb foreigners and to assimilate them into the Roman way of life was, as Amy Chua, a historian at Yale University, the reason why it was one of only five hyperpowers that have existed in history. What does this teach us about modern societies today and what will it teach us about our future?

Conservatives are rightly suspicious of environmentalists. By 1992, with Reagan, Thatcher and the end of the Cold War, socialism and left wing thinking appeared to be dead. Conservatism was triumphant and left of centre parties all around the world shifted heavily to the right to compensate, occupying positions that would have looked centrist or moderately right wing 10 years previously. This left true socialists and left wingers out in the cold, looking for a reason to exist. Conveniently, the emerging ozone hole crisis of the mid / late 1980s gave them an outlet for their energies: environmentalism.