The signs are clear: the future is inequality

As markets become global and the traditional workplace gives way to cyberspace, only the elite will have anything to offer to the world's economies. Ian Angell predicts mass unemployment for the unskilled, and a slow death for the nation state
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The Independent Online
`Many too many are born. The state was devised for the superfluous ones." With these pitiless words from another century, Friedrich Nietzsche heralds the demise of the nation state as we enter the next. The Industrial Age and its need for an over-supply of humanity spawned the nation state. But what is to be done with the glut as we enter the Information Age?

There will be no nice, tidy transition, rather a severe and total dislocation with the past. One thing is certain: the masses will not win in the natural selection for dominance of an increasingly elitist and cosmopolitan world.

Because of new technology the costs of production have dropped to a point where a billion new workers have entered the job market. Companies are globalising and mobilising, chasing "spot markets" in cyberspace. The costs of overcoming time and space no longer buffer the impact of cheap labour. The state has to be part of the global economy, so it is incapable of fending off foreign incursions. Mass unemployment is a cancer infecting every nation state, sending shock waves through their workforces.

The electronic transfer of money offshore has made tax avoidance a bigger business than narcotics. The next stop is off-planet banking.

Unhindered by national barriers, corporations will be truly global. They can communicate globally, and their shareholders, executives and employees are spread out across the, globe. They will relocate, physically, fiscally or electronically, to where the profit is greatest and the regulation least. Their profits are declared in low-tax countries, while they continue to operate in high-tax ones. The global company no longer supports the aspirations of the country of its birth.

Companies large and small move. When a British plastics company switched its polythene bag factory from Telford to China, 150 British jobs were lost, but its payroll bill was cut by 90 per cent.

Despite all the patriotic bleating, companies know that to remain competitive they can no longer afford to carry a large and overpriced inventory of a national "people product" of varying value and quality. It is no accident that most companies are presently downsizing, delayering and outsourcing. Routine production jobs can be performed by robots or exported anywhere on the globe, so wages will converge worldwide to Third World levels. "Social dumping" is also dragging down wages for service work, a sector which is itself being increasingly automated. In 1994 the International Labour Organisation claimed that there were 800 million sub-employed people in the world; the West must now suffer its fair share.

Job losses are not the result of some temporary downturn in the economic cycle, but are the result of structural change. It is no good waiting for the upturn. Fundamental changes in the nature of work are taking place, changes as profound as when agricultural workers left the land for the cities and the whole fabric of society mutated. Now work is leaving the office and the factory for cyberspace.

The idea of a job, born with the Machine Age, is changing beyond all recognition. Work is becoming increasingly casual and part time among the mass of workers. No one will protect their interests. Released from a single location, companies are free to ring the death knell of dinosaur trades unions. Middle management, too, is under threat. Under the euphemistic banner of business process re-engineering, companies are firing a quarter of managers. The motto for everyone is "add value or perish".

Moralising politicians use the fact of "inhuman" working conditions in the Third World for their hypocritical justification of protectionist import controls in their pathetic attempts to stem the tide, but large corporations will ignore their pleas. Even President Clinton can't control corporate America in its feeding frenzy over the China market.

Politicians, both the knaves and the naive, incant the abracadabra words "training in new technology" and "jobs through growth" to conjure up new jobs for the huge number of soon-to-be-unemployed. They will never learn that technology is the problem, not the solution. Today, productivity is delivered by a technology needing only a few machine minders. National economies can no longer grow themselves out of unemployment. Growth has been uncoupled from employment. It is created by the unique skills of a few entrepreneurial knowledge workers, not the labour of low-grade service and production workers.

The continuous innovation of entrepreneurs is the real generator of wealth. Their income will increase substantially as countries compete in a global market for their wealth-generating services, without which states will drown in a whirlpool of poverty.

Innovation happens in self-generating hot spots with incentives that stimulate investment and profit. The very concentration of innovation acts as a magnet for established innovators and a spur for new enterprise. But knowledge workers refuse to be treated as part of a homogeneous labour force, as standardised units. Talent, entrepreneurship, innovation - the great dividers of humanity - are diviners of economic success. Egalitarianism goes out of the window in this dog-eat-dog world.

The role of the state is to nurture, propagate and supply quality human raw material. Government is merely the supplier at the bottom end of the value chain that ultimately supplies wealth, which is the product not of labour, but of individual intellect and determination. If a state cannot produce a quality "people product" in sufficient quantities, then it must buy it in from abroad; it must scour the globe for elite knowledge workers, no matter what their age, sex, race or religion.

This elite of rootless economic mercenaries will expect to pay less tax, not more. Governments everywhere are being forced to lower top tax rates in line with declining global levels. They will have to acquiesce to the will of global enterprises and their key employees. Tax credits, tax holidays and "regulatory arbitrage" will be the name of the game everywhere.

Politicians must find ways of attracting global employers in order to employ the local masses. If, however, the state maintains a greedy collectivist and populist stance, under the defunct motto "power to the people", then the entrepreneurial and knowledge aristocracy will move on to more lucrative and agreeable climes, leaving that country economically unviable, composed solely of the unproductive masses, sliding inevitably into a vicious circle of decline.

The power in global economic forces means that the tax burden is irrevocably moving away from the elite on to the shoulders of the immobile. When Leona Helmsley said "only the little people pay taxes", she was unwittingly making a prediction. Very soon companies will be negotiating preferential tax deals, not only for themselves but also for chosen elite employees.

Politicians may promise, but markets decide. Governments are impotent as they face a triple whammy: substantially lower tax revenues, increased social security payouts, and the need to support "deprived areas". The books just do not balance.

The liability of a large, uneducated and ageing population is another major problem. The masses, with only a Saturday night lottery to soften the blow, will put economic well-being before the dubious privilege of electing powerless representatives.

The lights are going out for whole categories of employment. We are entering an age of hopelessness, an age of resentment, an age of rage. Whole sectors of society who previously felt their future secure can see it slipping away. Dissent is fermenting, and normally law-abiding citizens, who have nothing to lose, are being sucked into a culture of protest and crime. In the winter of 1995, French workers and students took to the streets against Alain Juppe's government in a futile defence of their cradle-to- grave health and welfare systems. But as the peasants were protesting in Paris, the "gnomes of London" were profiting from speculation.

The slow redistribution of wealth that has occurred over the last centuries is being rapidly reversed. The disposable income of the majority will be drastically reduced. The rich are getting richer, and the poor poorer: the future is inequality.

At the bottom of the heap we are witnessing an expanding underclass. The streets of London are again littered with beggars. The self-glamorising "New Age travellers" cannot disguise the fact that they are just a bunch of nomadic losers, whose survival depends on handouts from the tax-payer. Those tax-payers will demand restrictions on the mobility of travellers in return for their charity. The new Criminal Justice legislation is just the first step to the reinvention of the Poor Laws.

The state must behave as an economic institution, a national firm judged against the new economic circumstances. No state has an automatic right to exist. Government, like every other enterprise, will have to survive on the efforts of an elite few. It must represent success not failure; but in the Information Age, governments chosen by the majority are governments chosen by losers. The "will of the people" voting for full employment, a minimum wage and fair taxation is merely turkeys voting for Christmas. The politics of envy is suicide.

Democracy will degenerate to being the means of governing the immobile and dependent service workers. That citizens elect their slave masters makes their democracy slavery none the less. Democracy is an artefact from a time when the masses were needed. The big political question of the coming decades is how to find a socially acceptable means of dismantling democracy.

How can Middle England trust the present cast of parliamentary degenerates to lead us into this Brave New World? How can we expect leadership from those who get elected by kissing babies, and stay there by kissing backsides? The Tories, apologists for an aristocracy, have chosen the wrong aristocracy: yesterday's rather than tomorrow's. Despite all the spin-doctoring, Labour is still the party of the peasants; and the global power equation is unequivocal - "the sum of zeros is zero". As for the Liberal Democrats, Nietzsche says it all: "the honourable term for mediocre is, of course, the word `liberal'."

Who will defend us? Globalisation has shown the James Bond myth, where the state is good and global corporations (Spectre) bad, to be blatant state propaganda - a morality tale told by tax collectors. James Bond, the patron saint of civil servants, the thug of state, is now a geriatric. Goldfinger has won. The world belongs to the global corporation. The nation state is now desperately sick, and "a desperate disease requires a dangerous remedy" (Guy Fawkes).

Ian Angell, professor of information systems at the London School of Economics, appears in `The Hollow State', a two-part documentary on the end of the nation state, beginning this Saturday at 8.10pm on BBC2.

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