There’s nothing like a World Cup to trigger huge displays of patriotic fervour. Old ladies in Germany have been tearfully telling reporters that they feel proud to be German for the first time in 60 years. While in Britain, the vexed question of whether Scots should support the England team seems to have provoked a constitutional crisis. But patriotism is not nationalism – and no-one should allow the events of the last few weeks to obscure the fact that nation states increasingly don’t matter.
That will already be obvious to anyone who works in the City. At a dinner hosted by the top brass of one of the major London investment banks the other day, I found myself in the company of a couple of Americans, a couple of Italians, a Turk, an Indian and a Lebanese – oh, and two Brits. That’s an extraordinary turnaround in just ten years, when almost all of the senior jobs at any London bank were filled by Brits. The City is now a genuine global market for talent, where nationality is irrelevant.
That’s just the City, people say. It’s nothing like the rest of Britain. But it is. Sticking with football, look at the Premiership, which is awash with foreign players. Try and find an English plumber. Or an English waiter. The hospitality industry couldn’t operate without foreign workers; nor could our hospitals. Meanwhile, where are all the Brits? In swathes of southern France, Spain and Italy, the English now almost outnumber the natives. These are migrations unprecedented since Roman times.
The rise of the global free trade empire
The comparison with Rome is apt. We live increasingly in a global empire defined by the rules of free trade and the market. Within the borders of this empire, which embraces the entire Western world and much of Asia, goods, people and capital can move about with astonishing ease. As in Roman times, anyone born anywhere in the free world can rise to the top. Nations are becoming provinces, whose responsibility is to ensure the provision of infrastructure and sufficient skills to prevent the local economy collapsing.
Of course, politicians don’t yet see it this way. Or, if they do, their only response is to fight it. That’s one reason why, in the Western world, politicians are increasingly seen as irrelevant. But business understands very well. A study published this week shows that firms in Europe have abandoned their national identities in the most astonishing way. Most big businesses now operate as European companies, in terms of their operations, board composition and workforce. Increasingly, the majority are global. Unilever, for example, employs dozens of different nationalities among its top 120 employees – and it is far from unique.
Some people worry this new empire cannot last. Some look at how previous empires came to an end. Some were destroyed by barbarian invasions; some collapsed under the cost of keeping the barbarians out, others have been pulled apart by nationalism, protectionism or the loss of access to key markets and resources. It’s true that these problems exist today; the West grapples with imperial border wars in Iraq and Afghanistan, struggles with social dislocation and worries about future access to oil. But this empire boasts awesome military and economic power, making it hard to see it being toppled anytime soon.
Globalisation: good news for investors?
Instead, the pace of globalisation is likely to pick up. For investors, that means huge windfalls. As national distinctions break down, the scope for further integration and consolidation is immense, particularly in Europe, where whole chunks of the economy remain highly fragmented, such as banking, utilities, retail, property and infrastructure. Meanwhile, governments will have little choice but to continue to free up markets and cut taxes to attract investment. Around the world, corporate profits will continue to outstrip economic growth, creating huge opportunities to get rich.
Sure, there will be plenty of losers. Entire industries are being turned on their heads. Those without relevant skills – and those lacking the wherewithal to acquire them – will suffer most in the face of remorseless competition from migrants at home and cheap foreign labour abroad. So will anybody be foolish enough to put their faith – and fate – in the hands of a benevolent employer or state? Meanwhile, the social contract that underpins generous national welfare systems will continue to fragment as societies become less homogeneous. That points to further growing inequalities. The jackpot may be getting bigger, but the odds on winning it are getting longer.
But there is no point raging against globalisation or trying to turn back the clock. There is no future in autarky – ask the people of North Korea. There is little option but to embrace these changes and try to make the most of the opportunities they create. For governments, it means providing the infrastructure – social and physical – to encourage investment. For individuals, it means taking responsibility for one’s own life, in terms of training and self-reliance. And for investors, it means identifying those countries and firms that understand that, when all the World Cup flag-waving is over, this is the way it is.
Simon Nixon is the editor of Breakingviews.com