The fact that their views should be front-page news is testimony to a remarkable shift in power in the world economy. To be successful in economic terms, countries have to make themselves attractive to these two immensely powerful global baronies: international financial capital, and international human capital. Politicians, accustomed to fabricating their policies to be attractive to domestic voters, suddenly find two new constituencies to which they have to appeal.
The constituency of the international company may seem a familiar one. After all, we have had Ford and General Motors operating here for three- quarters of a century. But in the last 10 years the power balance has changed both in perception and in reality.
We perceive that inward investment is much more important, because we are aware of the extent to which we relied on it throughout the Eighties to revitalise the economy. In addition, it is more important because multinationals are much more mobile.
Of course, you cannot lift a car factory and plant it in another country, but whereas opening a foreign plant used to be a rare event, now it is completely normal. A car firm manages a string of factories around the world like a portfolio, shutting one in one country, opening another in another. If this is true for cars, the largest consumer item to be mass-manufactured, it is much more true for newer products, things such as PCs or chips, where the efficient unit size for a factory is smaller. And the more mobile investment capital becomes, the harder countries have to work to attract it.
Similar changes have taken place in human capital. Skilled people, particularly Britons who could move easily to Canada, Australia and the States, have long been quite mobile. The "brain drain" was a familiar lament during the Sixties and Seventies. But there have been two new trends here as well.
One is that the UK has become a much more significant importer of clever people - or, at least, people valued highly in the marketplace, which is not quite the same thing. There has been a flood of foreign talent attracted into financial services, for example, and the growth of London as a media and communications centre has created a string of media-related international jobs. The pool of foreign professionals in the UK is enormous. When the European Bank opened in the City, it had to fill several hundred professional jobs with non-Britons, divided into various national quotas. It found it could fill 70 per cent of those jobs with people already based in London.
The other trend is the growth of a new breed of global citizens, people for whom choice of residence is little more than a convenience. Some are celebrities: open the pages of Hello! and you catch a glimpse of that end of the market: Americans sharing with readers their country house in Gloucestershire, Britons with one in Malibu, French living in Geneva, and so on. Others are international business people, the sort who read the International Herald Tribune. I realised that IHT readers were a breed apart when filling out a subscriber questionnaire on Monday. One of the boxes you had to tick was whether you had a private jet and, if so, was it owed personally, or through the company?
This phenomenon of the growth of a new elite, independent of the rest of the country, was noted by Robert Reich, the university professor and friend of President Clinton who became labour secretary in Clinton's first administration. In his book The Work of Nations, Reich argued that this new elite was cutting itself off from the rest of the country. These people would intermarry, send their children to the best schools, pass on their wealth, and thereby entrench their position even more securely.
Reich saw this principally in US terms, but it is more interesting as an international issue. At least while these people had to stay in one country, governments could extract more taxes from them and redistribute some of the money, as Reich argued they should. But if the people just move, then it becomes harder to call for large-scale redistribution. Besides, countries need not just this new elite's money; perhaps even more, they need its skills.
To acknowledge this is uncomfortable. It is much easier to say that we should not be relying so much on foreign inward investment, or, more snobbishly, that if Lord Lloyd-Webber wants to go (and it is not clear that he does) his departure would be to the cultural benefit of the country. It is tough to have to acknowledge that politicians, trained to construct policies that will appeal to voters, have also to construct policies which appeal to non-voters.
But, from the tone of the political debate, you can see that politicians are aware of the need to broaden their appeal. Labour has sought not just to reassure British taxpayers, not just to reassure foreign investors, but also to reassure foreign nationals who have come to work or live in the UK. For though the new mobility of financial and human capital in one sense diminishes a national politician's power, it also creates an opportunity. Create a climate attractive to both forms of capital, and the world will beat a path to your door.Reuse content