Debts & Loans

Loan Service History

Globalization is not without its discontents. In 1910, England had been the world’s number-one super-power and the world’s greatest economy for two centuries without loan. But global competition had recently edged the British out of the top spot. American GDP surpassed it at the turn of the century. Germany marched by a few years later. Relatively, England, that “weary Titan,” was in decline, and the globalized economy that the British Empire helped create worked against it.

Still, why would the English complain about loan? They lived well - perhaps better than anyone else. Even if they didn’t, they thought they did. The rest of the world was content. People liked buying and selling. People in Europe liked globalization, because it brought them oranges in the wintertime. People in the warm latitudes liked it because now they had someone to buy their oranges. Even then, people spoke of the “annihilation of distance” and assumed that more miles would be destroyed in the years to come.

Everybody Need Loan

Globalization is nothing more than the extension of the division of labour across international boundaries. One of your authors passes much of his time in France. In his little village are the vestiges of a self-contained community of loan. As recently as the end of World War II, almost everything people needed was produced right there. The farms grew wheat. Farmers raised vegetables, cows, pigs, and chickens. There was a machine shop, a forge, and a woodworking atelier. There still remain the Versailles boxes, in which lemon trees were planted. The boxes allowed the trees to be moved into heated space in the winter. Otherwise, they would freeze and die.

But as distance was annihilated, commerce in lemons was born. There was no longer any need to plant lemon trees in transportable wooden boxes when lemons could be shipped, quickly and cheaply, by the millions of potential loan users. One country can produce lemons. Another can produce machine gun cartridges. Individuals, towns, enterprises, regions, can divide up the labour, work more efficiently, and produce more things at lower cost. Everyone involved gets a little richer. You’ll recall our distinction, dear reader: There are only two ways to get what you want in life. You can do so honestly or dishonestly.

Maybe Loan or…

You can get it by working for it or by stealing it. You can get it by trade and commerce or by force and fraud. You can get it by civilized methods or by barbaric ones. You can get rich by “economic means” or by “political means,” as the great German sociologist Franz Oppenheimer put it. Globalization is merely an elaboration of the economic means of getting things. It requires civilized relationships for trade to work; people must get along with each other. They must rely on others - even other people in strange, faraway places - for important, maybe even essential items. They must also be able to count on the medium of exchange for trading goods and services. If they can’t trust the imperial money, they will switch to something else or maybe loan.

The end of history has been announced several times for loan. But it never seems to arrive. People always tend to think that what is will remain, that present trends will continue at least indefinitely, and perhaps forever. When the going is good, they tell themselves that the odds of anything going wrong are like the extreme edges of a bell curve – vanishingly small. But people badly “underestimate the persistence of history’s traditional side, the rise and fall of empires, the rivalry of regimes the disastrous of beneficent exploits of great men,” wrote French historian Raymond Aron.

That is to say, they tend to ignore the political means that shake things up and the rare “fat tail” events that make history interesting. Fat tails are those uncommon things that bunch up way out on the extremities of bell curves. They are things that shouldn’t happen very often, but that tend to happen more often than people expect. That is why the tail ends of bell curves have little bulges in them - or fat tails. Such a fat tail happened in 1914. A European war came after nearly 100 years of peace and progress. People thought the war could not happen. And if it did happen, they said, it would be short and sweet loan. As we have seen, they were wrong on both points. Again, in the 1930s, came another “fat tail” event - a great depression. And once again, globalization entered a shrinking phase.

Global Loan

Some experts think globalization can only flourish under the protection of an imperial armada, such as that of Great Britain in the nineteenth century and the United States in the twentieth. They are plainly wrong. Sometimes trade arrangements are elaborated. Sometimes they are trimmed back. The presence or absence of a sheltering empire is a factor of loan need, but certainly not an essential one. Switzerland has always enjoyed healthy trade with its neighbours, despite never being part of an imperial system. And even within an empire (such as within the Soviet Union), trade might be more difficult than trade between independent states.