Trump has stated that the U.S. should never have given control of the Panama Canal to Panama in 1999. The Panama Canal is now controlled by the Panama Canal Authority, but foreign investors, including Chinese companies, have acquired stakes in its port operations.
Trump has criticised transit fees and claims that China is now operating the canal.
President José Raúl Mulino has asserted that Panama’s sovereignty over the canal is non-negotiable, but acknowledges the U.S. strategic interest in the region.
The Nation-State is Still a Powerful Global Actor
Despite claims that globalisation has weakened the nation-state, the Panama Canal’s history and Trump’s comments show that powerful governments still play a decisive role in global affairs. The U.S. exerted its influence to construct and control the canal for much of the 20th century, demonstrating the strategic importance of military and economic power.
The fact that Chinese firms have acquired stakes in the Panama Canal’s operations exemplifies how economic power is shifting away from the U.S. Of course Chinese firms are closely allied with the Chinese State, so the Panama Canal is a case study in the shift of global power towards China.
As discussed in this analysis of globalisation and the nation-state, while globalisation has changed the way power operates, strong states like the U.S. continue to shape economic policies and geopolitical strategies. Trump’s suggestion that the U.S. could retake the canal by force reflects the enduring significance of national power in global politics.
Similarly, Panama’s firm stance on its sovereignty highlights how small nations can assert themselves in a globalised world. Despite its size, Panama has successfully resisted U.S. pressure and maintained control over its most valuable asset.
Applying the Optimist View of Globalisation…
Global optimists might argue that global trade trumps (no pun intended) all, and overt military conflict is unlikely….
Proponents of globalisation argue that it fosters economic growth, innovation, and international cooperation. The Panama Canal is a prime example of how global infrastructure projects can boost trade and development. Since taking full control in 1999, Panama has successfully managed the canal, increasing its economic benefits and strengthening its national identity.
As outlined in the optimist perspective on globalisation, global trade networks allow for economic interdependence, reducing the likelihood of conflict. While Trump’s rhetoric suggests a return to economic nationalism, the reality is that the U.S. and China are deeply interconnected through trade, making outright conflict over the canal unlikely.
Moreover, the expansion of the canal with new locks has facilitated larger trade volumes, benefiting multiple economies. This supports the idea that globalisation can be a win-win scenario where infrastructure investment and international commerce create prosperity rather than exploitation.
Relevance to Globalisation and Global Development
This discussion is relevant to the sociology of education because it demonstrates how globalisation shapes economic opportunities, social structures, and political power dynamics. As detailed in this resource on globalisation and global development, understanding global economic history is essential for students analysing contemporary issues in international relations, trade, and development.
The case of the Panama Canal offers a concrete example of how historical economic policies influence modern global politics, making it a valuable topic for sociological study.
In an era where extreme wealth allows for unparalleled experiences, the most exclusive adventure trips in the world reflect both human ambition and the stark inequalities of our globalized economy.
From space travel to deep-sea exploration, these luxury experiences push the limits of what money can buy. However, beyond their staggering costs, they also highlight global economic disparities, raising critical questions about who benefits from globalization and how resources are distributed.
This article will explore the most expensive adventure trips and provide an analysis using World-Systems Theory, trade as a strategy for development, and pessimist theories of globalization.
1. Orbital Spaceflight – $450,000+ (Virgin Galactic)
Space tourism is no longer a dream of the distant future. Companies like Virgin Galactic (source) are offering suborbital spaceflights for $450,000 per seat, allowing passengers to experience weightlessness and witness Earth from the edge of space. While much cheaper than past space missions, this remains one of the most exclusive travel experiences available. SpaceX also has plans for lunar missions with costs expected to run into the tens of millions.
2. Summiting Mount Everest – Up to $160,000
Climbing the world’s tallest mountain is a feat reserved for the most determined—and wealthiest—adventurers. According to National Geographic (source), a basic guided climb costs around $40,000, but those opting for premium packages, including private Sherpas, oxygen supplies, and luxury base camp accommodations, can spend as much as $160,000.
3. Private North Pole Expedition – $100,000
Reaching the North Pole is an extreme undertaking, and those wanting a private expedition must pay top dollar. Companies like Quark Expeditions (source) offer guided icebreaker cruises starting at $20,000, while private journeys involving helicopter transport and custom experiences can cost upwards of $100,000.
4. Antarctic Private Jet Tour – $80,000 – $150,000
For those who prefer their extreme cold with a side of luxury, Antarctic private jet tours are the pinnacle of exclusive travel. Operators like White Desert (source) offer luxury eco-camps where guests can visit penguin colonies, explore ice caves, and dine on gourmet meals—all for the hefty price of $80,000 – $150,000 per person.
5. Diving to the Titanic Wreck – $250,000
Before its operations were suspended, OceanGate Expeditions (source) offered the chance to dive nearly 13,000 feet below the ocean’s surface to visit the wreck of the Titanic. The cost? A staggering $250,000 per person. Though currently unavailable, deep-sea exploration remains one of the most expensive and elite adventure experiences.
6. Round-the-World Private Jet Tour – $100,000 – $150,000
Luxury travel companies such as Four Seasons (source) offer extravagant private jet journeys that take travelers to multiple countries in first-class comfort. These curated experiences include stays at top-tier resorts, fine dining, and cultural excursions, with prices ranging from $100,000 to $150,000 per person.
Deep-sea tourism is an emerging industry, and companies like EYOS Expeditions (source) offer submarine journeys into the ocean’s most remote trenches. With a price tag ranging from $50,000 to $100,000, these trips allow travelers to explore the deep sea in a way previously reserved for scientists and researchers.
8. Luxury African Safari – $50,000 – $100,000+
Safari experiences range widely in cost, but for the ultra-rich, companies like Singita and &Beyond (source, source) offer private safaris with exclusive lodges, personal guides, and aerial wildlife tours. With add-ons like hot air balloon rides and custom wildlife photography workshops, these safaris can easily exceed $100,000 per person.
For those who want to explore one of the most biodiverse places on Earth in style, high-end tour operators provide Amazon expeditions featuring private riverboats, expert naturalist guides, and five-star jungle accommodations. With full customization and private charters, costs can range from $30,000 to $80,000 per person.
Global Inequality and Luxury Travel
These high-priced adventures highlight the stark inequalities present in our globalized world. The world’s wealthiest 1% control nearly half of global wealth, enabling them to indulge in extreme luxury experiences, while billions struggle to meet basic needs.
From a World-Systems Theoryperspective, this reflects the core-periphery divide, where wealthy nations (the core) dominate global economic structures while developing nations (the periphery) remain dependent on them for investment, tourism, and resource extraction. As sociologist Zygmunt Bauman states: “When the rich pursue their goals, the poor pay the price.”
Trade as a Strategy for Development
While some argue that tourism and global trade help developing economies, evidence suggests that much of the profit remains in the hands of Western corporations rather than local populations. The luxury tourism sector, particularly in Africa and South America, reinforces economic dependency rather than fostering sustainable development. It is difficult to see how these luxury trips help development in any meaningful sense.
Pessimist Theories of Globalization
Pessimists argue that globalization exacerbates economic inequality by allowing wealthier individuals and corporations to control resources while the working class remains excluded from its benefits (source). The luxury travel industry is a prime example, as it allows an elite minority to experience the wonders of the world while climate change, economic exploitation, and resource depletion disproportionately affect the Global South.
Conclusion
Luxury travel reflects the widening gap between the wealthy and the rest of society. While these elite experiences may offer excitement and prestige, they also underscore how globalization benefits the few at the expense of the many. As the world becomes more interconnected, the question remains: should such extreme wealth disparities continue unchecked, or should global economic systems be restructured to create more equitable opportunities for all?
Many migrant workers who do domestic work in the U.K. are exploited by their employers.
Approximately 80% of people engaged in employment in the domestic sphere are women. increasing numbers of workers in the home-care sector are also migrants.
Abuses against such workers include everything from not being paid to overt physical violence including rape.
This study draws on two research projects: one an ethnographic study carried out between 2009 and 2013 and another a participatory video-study carried out between 2018 and 2020.
The study takes an intersectional approach. It focuses on the intersection between these workers being both female and migrant workers.
This blog post is a summary of this research.
The global care chain
Domestic work in more wealthy households in rich countries is increasingly done by migrant workers from poorer, developing countries. We thus have a global care chain.
This is a result of the lack of state funding for domestic care in wealthier countries. It potentially creates a divide between elite women in rich countries and poor women from poor countries.
31% of domestic workers in the UK are migrants. They are mainly from Asia and Africa, from countries such as The Philippines, India, Bangladesh and Nigeria. Most migrant domestic workers in the UK are live-in workers.
They get into the UK with a domestic overseas work VISA which lasts for six months. They have to work for a particular employer in their country who will choose to bring them abroad.
The number of organisations recruiting domestic workers has grown rapidly over the last 20 years…
The exploitation of female migrant domestic workers
A survey of 500 workers found that 70% of them don’t have their own bedroom, in some cases they have to sleep in the corridor.
Paying below minimum wage and working long hours is the most common form of abuse. Some have reported having to work 90 hours a week and being required to be on-call 24 hours a day.
More extreme cases of abuse include:
not being paid.
being locked in the house during the day.
racial abuse.
Isolation, having passports locked away is common.
A wide range of physical, psychological and emotional violence, including rape by male employers.
Why migrant workers come to the UK
The main reasons why they come to the UK are financial.
Many cannot cannot afford medical bills, or basic goods for the children. Or they are in debt.
Some return back to the UK over and over again knowing how bad their working conditions are going to be. This is because they cannot earn enough to meet their needs in their home countries.
Trades Unions are aware of the exploitation. However migrant workers are hard to reach because they are so isolated, and thus fragmented.
While this post focuses specifically on domestic workers, the issue is broader.
Recently the government added health and social care workers to the shortage list. Increasing numbers of migrants are now coming to the UK on these visas.
According to one recent International Labour Organisation estimate there are 75 million domestic workers in the world.
Global culture is where large numbers of people in different countries across the world share common norms, values and tastes, and is one aspect of globalisation. Those sociologists who believe that a global culture exists tend to see it as an ongoing process with more and more people around increasingly sharing similar world views and developing a global consciousness.
Global culture is a contested concept: there are several different perspectives on the nature and extent of global culture and disagreements over whether such a thing exists in any meaningful sense at all!
This post considers two theories of global culture:
Lechner and Boli (2005) who argue that global institutions are laying the foundations for what they call a ‘world culture’
John Storey (2003) who argues that Time-Space Compression (following David Harvey) has resulted in more cultural mixing and hybridity around the world, so we have a plurality of cultures rather than one global culture.
You might like to read this post in conjunction with my other related post on cultural globalisation which looks at aspects of cultural globalisation in more depth, looking at different aspects of cultural globalisastion one by one (such as consumption patterns, shared values etc.) as we as concepts such as detraditionalisation and the risk society.
That post is really the overview of the topic, this post offers a little more theoretical depth, focusing in on two actual theorists.
World Culture, institutions and organisations
Frank J. Lechner and John Boli (2005) use the term ‘world culture‘ rather than ‘global culture’ and argue that globalisation has resulted in a world culture that is here to stay, it cannot be undone though its content may change and it may increase or decrease in influence.
Lechner and Boli’s conception of culture is one of socially constructed and socially shared symbolism, so they see it as being about ideas and meanings rather than tangible material objects.
World culture develops through global values, becoming institutionalised through a process of structuration. Actors within global institutions establish typical patterns of behaviour and values and these eventually become institutionalised, and adopted by more and more people globally, who in turn ‘enact’ these behaviours thus further reinforcing them.
Examples of world culture
Two examples of world culture are education and chess.
Many education systems in different countries have similar institutional norms surrounding formal education such as having around 11-13 years of age-grouped teaching, curricula which clearly outline what is to be studied, well-structured examination systems leading to qualifications, and similar hierarchies of organisation within schools.
There are also and codes of conduct outlining expected patterns of behaviour and attendance from students, and a clear code of professional practice for teachers, which are very similar in many countries.
Throughout the world local chess clubs follow the rules of the World Chess Federation, and players look up to and seek to learn from international grand masters whose achievements are recognised all over the world.
There are also a set of norms about how to play chess, not just the rules, but norms to do with demeanour, how to communicate, and how to approach more senior players.
Lechner and Boli accept the fact that there isn’t total homogenisation of the way education and chess are enacted locally, there are local variations, but increasing similarities too.
There are also institutions whose purpose is to explicitly promote world culture such as:
The United Nations (UN) which overseas the Universal Declaration of Human Rights
The International Criminal Court (ICC) which is responsible for bringing to trial people who have committed crimes against humanity
The Olympic Movement which promotes fair play in several world sports.
Lechner and Boli accept the fact that there are examples of movements against global culture, such as the way Islam has manifested itself in Afghanistan or Iran, but at the same time there are people in both countries who argue for less extremist Islamic State policies and identify more with the global community.
Lechner and Boli argue that much of the apparent local diversity we see is just superficial, about clothing and food, rather than about deeper shared meanings and values where there is more global consensus.
Evaluations
While Lechner and Boli do identify some definite trends towards global culture they possibly overstate the extent to which we have an established global system of shared values and meaning.
The example of chess is especially weak as there simply aren’t that many chess players, and while education systems around the world have similarities the experience of education varies massively depending on whether you are a pupil in Britain or Somalia or Afghanistan, especially a girl in the later country.
There is a lot of difference and conflict and people just ignoring ‘universal global values’ that isn’t sufficiently taken into account.
John Storey: global culture
Storey (2003) argues that in the past, cultures around the world were generally separated from each other through space and time. In the 19th century, for example, it simply took too much time and money for people to travel across the globe and so there was relatively little intermixing of cultures.
Today however, the world is much smaller thanks to time-space compression. The main engine of this is the media which makes it possible for cultures in different parts of the world to influence each other instantaneously.
Global travel is also much faster which makes it possible for global cultures to develop. Global cultural events such as the World Cup and the Olympics can happen because it is relatively easy for teams and supporters to travel to one place , and the existence of these events create a global cultural legacy that endures.
Heterogenisation
Storey rejects the theory that cultural globalisation is simply a process of Americanisation. He argues that culture is much more than the products people buy, and that there are considerable variations around the global in how people use the same products and values they attach to them.
There are many examples of American products being adapted to fit into local cultural styles, such as with regional variations on McDonald’s food.
Hybridisation
Globalisation offers the possibility of cultural mixing on a scale never known before.
It has not undermine local culture nor does it lead to a single global culture. An ever greater plurality of hybrid-cultures: where global influences mix with local cultures and produce something new: a mixture (hybrid) between the global and the local, as with the example of Chicken Tika Masala.
One consequence of this is that folk culture is undermined, because even the oldest and most isolated traditions are changed by global influences.
Evaluations
Storey seems to paint a more accurate picture of the hybrid and complex nature of ‘global culture’ than Lechner and Boli, it seems accurate to accept the fact that there is no meaningful overarching global culture, rather pluralities and hybrids.
However Leslie Sklaire argues that he fails to recognize that not all cultures in the world are valued equally. There are maybe more powerful and dominant cultures which can disrupt local cultures against people’s will, such as consumer culture linked to brands pushed by Transnational Corporations.
A number of recent events in the 2020s suggest that globalisation is in reverse.
In America Jo Biden has made several speeches stating that more manufacturing will take place in America, rather than China, and his presidential predecessor, Donald Trump was vocally anti-globalist, while in Britain the recent immigration Bill suggests a breakdown of commitment to international human rights conventions.
Russia’s war on Ukraine and the hardening of divisions between Russia, its allies and China which is taking a neutral stance, and the U.S. and European nations supporting Ukraine with military aid suggest that the world is fracturing politically and economically, and at the same time global supply chains are still under strain from the aftermath of the Coronavirus Pandemic.
Individual countries are increasingly putting in place policies which protect their borders and economies and it seems are less inclined to support policies which promote globalisation.
The benefits of globalisation
Globalisation is about flows of things, people, finance and ideas across national borders: the more flows there are, the more the world can be said to be globalising.
Globalisation became a tidal wave in the 1990s with several events:
The collapse of the UUSR and the end of the cold war
The integration of Europe
The opening of of China
The birth of the World Wide Web
Globalisation made goods cheaper through economies of scale and lifted a billion people out of poverty. When you fragment trade
Globalisation also increases jobs in poor countries through export markets, and when China, the world’s largest exporter, shut off its trade in a chosen response to the Covid-19 pandemic its economy shrank.
Countries are increasingly putting themselves first and focusing on national gain rather than mutual benefit through gradually increasing trade barriers.
The World Trade Organization has assessed the consequences of what might happen if the world splits into separate trading blocks: it would cost the world a 5% loss in GDP in the long term, more than the costs of the entire British economy.
Global trade is essential to maintaining the quality of life we’ve come to expect because no country can produce everything itself: without global trade we have no rice or bananas in the U.K.
If Britain makes it more difficult for other countries to trade with it, other countries will do the same, meaning goods will be more expensive and probable knock on effects such as less tourism, and it be less likely that we’d work together to solve global problems.
National security concerns have affected trade in certain goods, obviously military goods but also microchips and batteries more generally, but there are increasingly trade barriers in other economic sectors too.
One form of anti-global policies is subsidies in which government money is used to make manufacturing at home cheaper than imports.
The problem with this is that it is only the richest countries that have deep enough pockets to do this, and it hurts poorer countries, and in some cases even relatively rich countries cannot compete with economic behemoths such as the United States.
British car manufacturing is at its lowest level since the 1950s because it cannot compete with subsidies in the U.S. The United States is offering billions of dollars in subsidies to companies there who produce electrical vehicle supply chains.
The European Union is thinking of retaliating against the U.S. by introducing its own subsidies for electrical vehicle manufacturers, which would actually make things WORSE for U.K. car manufacturers.
Countries are also increasingly using export controls to protect their economies.
The U.S. has put a lot of export controls on various goods that can’t be exported to China and limits on international investment to protect foreign take overs of American companies. The United States has put these measures in place mainly because it claims China has embarked on unfair competition.
President Biden’s Inflation reduction Act which focuses heavily on green tech only gives out subsidies to companies which are based in America.
One argument for subsidies is to protect strategic industries, because relying on one country alone for any one product makes you vulnerable to supply chain shocks
For example 92% of all global semi-conducted chips are made in Taiwan, which is not really an acceptable risk for other countries because these chips are essential to communications technologies.
Similarly, Africa imports 99% of its vaccines, and it would also probably be better off producing at least some of those vaccines within Africa.
National subsidies can help broaden supply chains and make countries more resilient.
The problem is if subsidies are applied to everything it destroys the free market and is very inefficient, so countries need to be very selective about how they apply them.
The current rules on subsidies were established through the World Trade Organisation in 1994 and some current agreements on trade were entered into before China became a global player. Now the world is a very different place and trade rules may need to be changed to ensure a level playing field
Why the shift to deglobalisation?
In Reagan and Clinton’s era, American was very pro global free trade, which was the mood up until the 2008 financial crisis.
Globalisation created huge wealth on a global scale but it also created enormous inequalities within countries, which are largest in the Anglo-American world, and rising inequalities withing countries may have created the politics of nationalism that we saw with Donald Trump and Brexit.
By 2008 it had become clear that the global market system was working very well for a very small global elite, but not so well for ordinary working people who made up the democratic majority, and the failure to redistribute global wealth fairly led to a backlash and the rise of nationalist politics.
The average income of the bottom 50% hasn’t gone up for 30 years.
The problem with deglobalisation
The problem with this trend towards ‘deglobalisation’ is that it increases tensions between countries making it more difficult to slow climate change and stop the next pandemic. It would also slow growth and increase poverty.
We in the West cannot afford to be cut off from Asian markets with a combined population of 3.6 billion and a growing middle class, projected to be at over 3 billion people by 2030, which will make it the world’s largest market.
If the U.S. and E.U. start to put up trade barriers with China, China might just put up barriers to trade with the U.S. and E.U., and China can probably find sufficient trading partners within Asia, Russia and South America.
Increasing trade barriers reduces international co-operation which is required to tackle pandemics, climate change and conflict.
deglobalisation isn’t the answer
Globalisation since the 1990s has increase wealth but this wealth hasn’t been distributed equally which is a problem.
Rather than pursuing anti-globalist policies such as introducing subsidies which put up barriers to trade governments would be better off focusing on fairer taxation and redistribution policies to ensure that everyone can benefit from the increased wealth that increased global trade has generated.
The last 40 years have witnessed a form of neoliberal globalisation in which national governments have entered into a race to the bottom with corporate taxes: offering lower and lower taxes to attract investment.
This has lead to massive technology shifts around the world and mass deskilling of populations as more and more jobs have become automated, which has contributed to increasing inequalities withing countries, and low taxes have meant governments haven’t been able to reinvest sufficiently to make up for the disruption caused by these changes.
At the same time failure to tackle tax havens has allowed huge amounts of international capital to flow freely out of nation states.
Reglobalisation
The World Trade Organisation is now talking about reglobalisation: globalisation with a human face so that it’s more inclusive.
This might involve the following:
A global agreement on a minimum global corporate tax and getting rid of tax havens. This should work as companies are more interested in stability, infrastructure and a skilled workforce.
Governments need increased tax revenue so they can invest in infrastructure and education so as to pass on the benefits of global trade to more people.
Diversifying supply chains may still help with poorer countries, and reskilling poor people in rich countries.
We need to strengthen co-operation in some aspects to tackle three large global problems: climate change, pandemics and conflicts.
Turning our backs on globalisation won’t bring jobs or improve security or solve climate change, and it also threatens global peace!
The 2022 football world cup in Qatar has caused controversy because Qatar does not recognise same sex marriage or civil partnerships whereas European nation states tend to do so.
To my mind this year’s world cup has been overshadowed by politics and it’s shone a light on how little global consensus there is over the issue of LGBTQ rights.
Sexual acts between men can be punished with prison sentences of between one and three years, and flogging.
Muslims can be sentenced to death for having sex with another man, but this is because extra-marital sex is sanctionable by death and the state doesn’t recognise same sex marriage.
Trans women can be imprisoned for ‘impersonating a woman’ and forcibly de-transitioned while in jail.
Campaigning for LGBTQ rights is also legal in Qatar
The 2022 World Cup and the LGBTQ debate
Initially the Qatari authorities said they would allow the display of LGBTQ imagery at world cup games, but just before the tournament began they said they would be forcibly removing any spectators displaying such symbols, such as the Rainbow Flat.
This is line with announcements from the authorities that gay and trans football fans should respect the norms of Qatari culture while in public, and should hide their sexuality when in public by showing no signs of public affection.
FIFA also announced that any players displaying support for LGBTQ rights, such as by wearing rainbow armbands, would be fined.
There have been reports of some hotels refusing to allow same sex couples to stay as well as eye witness accounts of police brutality against gay people.
No global consensus on LGBTQ rights
Qatar’s failure to recognise the basic human rights of LGBT people to freedom of expression is clearly against the The United Nations Position on Human Rights, in violation of International Human Rights Law.
However, there is NOT universal agreement at the level of nation states on LGBTQ rights. In fact we are nowhere near achieving a global consensus around this issue.
According to the Human Rights Campaign same sex marriage is only legal in 32 countries, meaning that Qatar is actually in the global majority, while the various activists from the various European Nations who have been championing LGBTQ rights during the World Cup are from countries in the global minority over this issue.
Most European countries have full equal recognition of same-sex marriage but the majority of countries do not recognise this and many, like Qatar, enforce harsh punishments for adults who same-sex consensual sex.
‘Enlightened’ European states have long ignored human rights abuses abroad
The difficult question is how should European nations deal with the majority of countries who don’t respect the sexual preferences of LGBTQ people?
At the moment the policy is to basically ignore what we would define as human rights abuses and carry on trading with countries such as Qatar. To be blunt, economic relations trump universal human rights around sexuality and sexual identity.
To my mind FIFA giving the 2022 World Cup to Qatar isn’t particularly unusual, it’s merely a more overt recognition of the way most Nation States (who are represented by FIFA) deal with countries who abuse human rights – we welcome them as part of the international community and ignore their abuses.
I mean the World Cup was in Russia in 2018 after all, and Russia doesn’t recognise equal rights for LGBTQ people either and most European countries actively trade with China and other well known human rights abusers.
Relevance to A-level Sociology
Personally I do think Western European nations are more enlightened than countries who are intolerant of LGBTQ rights, primarily because I believe in freedom of expression and don’t recognise religious authority of any kind.
But is this just me being a modernist dinosaur and out of sync with our relativistic postmodern times?
And so for me the global situation on LGBTQ rights which the World Cup has shone a light on is throughly depressing as it shows we are nowhere near progressing towards a global consensus on this issue – there is no global culture in this regard, in fact the issue is very divisive.
It’s also a reminder of the extent to which nation states put economic relations above individual human rights, and reminds us of the immense power of nation states in this regard, they seem to be at total liberty to ignore UN conventions on human rights with absolutely no consequence!
Liz Truss and then then chancellor Kwasi Kwarteng announced a mini-budget on September 23rd 2022 which outlined tens of billions of pounds of tax cuts:
corporation tax was to be cut from 25% to 19%
the basic rate of income tax from 20% to 19%,
while the top 45% rate of income tax was also to be slashed for the extreme minority of higher income earners.
At the same time the budget also committed the government to an increasing in spending to fund the energy-price cap which also ran into several billions of pounds annually for two years.
This package of tax cuts amounted to a planned reduction in government income of £45 billion, and the budget included no mention of how this shortfall was to be funded.
The extreme negative market reaction to Truss’ Mini-budget
For example, the 30 year bond rate increased from 4% to 5% – this is the amount of interest the UK government pays on its debt, meaning the UK government would have to pay a lot more going forwards.
The value of the pound also fell relative to the dollar and other currencies meaning it would be more expensive for businesses and individuals to buy imports.
What are government bonds?
Bonds are government backed loans – the government issues bonds when it wants to raise money to pay for various investments – and they promise to pay interest to whoever buys these bonds.
inflation – higher inflation is correlated with higher interest rates so the same pattern as above
a country’s credit rating – if a country is deemed to be at a higher risk of defaulting on its bonds, its credit rating drops and the interest payments go up.
The total value of UK government bonds, (in other words UK government debt) is at time of writing in October 2022 $2.6 trillion. (Also see source 1 below, for the latest UK Government data)
And huge debt also means huge annual interest payments, and so when bond rates increased by even just 1% as a result of the tragic Tory mini-budget, this means the UK government has to find tens of billions more every year just to service the interest on that debt, and this means less of our tax money going on public services.
The extent of government debt and why the Tory mini budget was so harmful
Even before the tragic mini-budget announcement Britain’s annual deficit stood at 2.3% of Britain’s GDP (according to latest government figures that’s £2.3 trillion) and so Britain was already spending approximately £50 more EVERY YEAR than it was bringing in in tax receipts.
The Tory mini-budget increase that deficit by around another £50 billion, meaning the total annual deficit would have been £100 billion, EVERY YEAR and the budget laid out no specific information about where that extra £100 billion was going to come from.
These policies would have had the further effect of feeding inflation, which had already been creeping up, and increasing interest rates which would have increased the cost of government borrowing while at the same time undermining the capacity of the government to pay the yield (interest rate) on its bonds.
Essentially the markets (i.e. the pension funds, countries and other companies who held UK Bonds (or debt)) looked at the Tory’s economic plan and said ‘there’s no way this is sustainable – you’re committing to running a national deficit of £100 billion a year with no indication of how you’re going to pay for it, which means you’re going to be less likely to pay back our debt, or the interest on our bonds’.
These policies which have since been reversed in a U-turn only two weeks after they were first announced (which completely undermines Liz Truss’ credibility as a leader and neoliberal economics more generally)
The Tory U-Turn
Shortly after the original mini-budget Liz Truss sacked her chancellor and appointed Jeremy Hunt in his place.
As it stands there will be no tax cuts after all and the energy price cap guarantee will only hold until April 2023, rather than a year after that as had been the case in the original disaster budget.
Relevance to A-level sociology
In my experience most A-level sociology students have very little understanding of economics, but personally I think every student needs at least a basic level of understanding of national economics, taxation, public spending, the sheer scale of national debt, interest rates and inflation.
Without an understanding of these basic economic concepts students are missing out on a deeper understanding of how economic structures and the ‘macro’ picture affect social life at a more personal level.
This material is most relevant to the Global Development module to illustrate how important economic globalisation is!
What this case study demonstrates is just how far the power of the British Government (and ANY government for that matter) has declined in relation to international bond markets and ratings agencies, because they are so massively in debt.
Britain owes so much money that it can now no longer do anything which undermines its capacity to repay that debt which is largely held by international financial corporations.
In this case the markets forced the UK to abandon its plans to cut taxes, and one might reasonably expect this means that the government would not be able to increase public spending either – because that would put a similar level of strain on the government’s capacity to pay back its enormous amount debt.
Interestingly one of the things Jeremy Hunt said in his ‘biggest U turn in political history’ speech was that….
“Governments can’t prevent market stability but they can manage the situation so that people don’t suffer – in terms of rising prices, mortgages and pensions”.
As a final word I also think maybe it illustrates the looming division between the old and the young… pension funds hold huge amounts of UK bonds and so these moves have been another strategy to protect the old while the young will pick up the costs again, as there are public spending cuts coming.
The Russian State’s barbaric invasion of Ukraine is both a grim reminder of the power of nation states and local/ ethnic politics, but also an illustration of how even Russia isn’t immune from increasing globalisation. Maybe the later point offers us some hope of an early end to this war?
The very fact that Putin can amass an army of hundreds of thousands to invade a country the size of Ukraine reminds us that he military industrial basis of society has remained an important aspect of global power relations even in an age of increasing globalisation.
Russia has used its military force in Syria, Georgia, Crimea so far this century, all of which most of us in the West have managed to ignore because they are far enough away from Europe for us to not worry about, but Ukraine borders with Poland and Romania, and that makes it feel a lot closer to home.
We might like to think we’ve been progressing towards a more cosmopolitan society with more democracies opening up, and the European Union expanding, but Russia’s invasion of Ukrain maybe reminds us that there are limits to globalisation – Russia’s governance relies on a very different, autocratic model.
Something else to ask yourselves is how important the media and social media especially are in this conflict – Russians are hearing a very different story about the invasion of Ukrain – the state media there is spinning it as ‘liberation from a Nazi regime’ (despite the fact that the Ukrainian president is Jewish?) and censorship of free-media has increased in Russia since the invasion.
I’ve no idea what the average Russian individual thinks of this invasion BTW, but it seems that those who protest it are being arrested.
It is interesting to contrast Russia’s approach to increasing censorship to the way that the Ukrainian president and other celebrities are masterfully using the media (including social media) to gain support for the defence of their country, although as the Russian forces penetrate further into Ukraine it’s difficult to know how far these messages are being heard by the Ukrainian people.
A test of the type of Globalism we’re living in?
First off, the fact that Russia is still a member of the United Nations and that it has invaded Ukraine demonstrates that any notion of us living in age of what we might call ‘political gloabliastion’ is a joke – clearly we live in a segregated world. It also reminds of us how powerless the UN is!
NB the existence of NATO also shows us this – Putin is responding to what he says is a perceived threat of NATO expansion and NB given that American has invaded Afghanistan and Iraq this century, there is EVIDENCE that the West can be the aggressors too.
Russia is still as dependent on global trade and financial flows and the main thrust of Europe and America’s response to this unproved war has been to impose economic sanctions on Russia – preventing ordinary Russians access to financial services (Russians abroad have been unable to access some of their banking services), and cutting of trade in Russian oil.
Some Wester companies, such as Mcdonalds have also stopped operating in Russia.
However, will restricting economic globalisation be enough to bring an early end to this war?
The answer is probably not – there are plenty of other trading partners – Africa and China and India for example, and possibly in the short term all these sanctions are doing is hurting ordinary Russians rather than the Russian State, and whether that puts pressure on Putin is difficult to say when Putin has control of the Russian media.
At the end of the day I think out hopes rest on a combination of the power of decentralised forms of global social media to get the non-Russian version of the invasion of Ukraine out to ordinary Russians, to the mothers of the Russian solders dying in a war neither they nor the Ukrainians want, for example, and then we might start to see some sustainable grass-roots movements for change in Russia, I think that’s what it’s going to take.
This all just seems so pointless, dying over territory in the 21st century?
Along with the withdrawal of U.S. Troops from Afghanistan last week, President Biden also announced an end to ‘Nation Building’ as part of its foreign policy.
Broadly speaking and end to nation building means the U.S. will no longer be invading foreign countries and keeping troops and advisers stationed in those countries for the long term with the intention of establishing ‘liberal democratic’ (sceptics might say pro-American )governments.
This is what the U.S. tried to do with Iraq and Afghanistan following the September 11th 2021 bombings, but now it seems that the case of Afghanistan has firmly put paid to the idea that America can successfully intervene and help to engineer ‘regime change’. If can’t do so after 20 years, it seems unlikely staying around any longer would have made any difference, especially when the Taliban took power so swiftly following news of the U.S. withdrawal.
So what does this mean in terms of globalisation?
This is certainly evidence against so called ‘optimist’ views of globalisation – America’s withdrawal from Afghanistan suggests its power globally is in decline, and it has less capacity now than ever to ‘export Western models of democracy abroad’.
However global pessimists might remind us that this won’t necessarily mean an end to U.S. military involvement in the region, or elsewhere in the world – it could just mean a shift to more covert forms of drone strikes on militants, and more chaos abroad, meted out from a distance by the United States.
Just about the only thing that is certain is this makes the world an even more uncertain an unpredictable place than ever!
AQA A level sociology revision resources | Revisesociology.com
What will be Britain’s post-Brexit role in the world?
Does leaving the EU mean we are now free to forge more truly ‘global relationship’ with other countries and regions in other parts of the world?
This is an important question for students studying the A-level option in Global Development and should be of general interest to any student studying globalisation.
The Integrated Review
In March 2021 the UK Government published what has become known as the ‘Integrated Review‘ which considered what Britains’ post-Brexit role in the world might be in the future.
The full title was the natty: ‘Global Britain in a Competitive Age: the Integrated Review of Security, Defence, Development and Foreign Policy’.
Boris Johnson and other pro-Brexit politicians are necessarily optimistic about the capacity of the Britain to still be influential in global politics, and take a leading role in the areas of climate change, science and technology and diplomacy, but how realistic are these goals?
World leaders in Science and Technology
The development of Covid-Vaccines has demonstrated that Britain is the world leader in genetic sequencing and the development of new vaccines, and we are world leaders in the life-sciences more generally.
However, ironically, a lot of our funding for scientific research has been cut now we have left the EU and the British government isn’t going to make up the short fall.
And besides life-sciences there is serious competition from other countries in most other fields of science and technology.
So while we have our ‘niche’ at the moment, this future role is far from guaranteed.
Climate Change
Britain is hosting COP26 in Glasgow in November, and the integrated review puts tackling climate change at the top of its priorities list.
Britain has a reasonably good track record on reducing emissions and could be well placed to bring other countries on board in more global efforts to deal with climate change.
International Aid
We are still one of the largest aid donors in the world, but the government recently announced it was cutting the aid budget from 0.7% of GPD to 0.5% of GPD, and this will have immediate consequences in the countries whose aid budgets are reduced.
It seems like a terrible time to have cut the aid budget if we wish to have a credible claim to this being one of our main roles in the world.
We have also recently forged a partnership with Indian companies who manufacture our vaccines in India
A world leader in diplomacy
The report points out that Britain is one of the best connected nations on earth – it has a seat in every global institution and strong diplomatic ties with many other countries.
There is scope for the UK to become a world leader in settling conflict and solving global problems.
Although this is maybe a bit vague?
Human Rights
Britain has long been a haven for those seeking refuge from oppressive regimes (at least ever since after colonialism when Britain was the oppressive regime) and IF we were to shun China and Russia we could take on a role as a defender of civil liberties, although the government’s draconian response to Covid-19 suggests we are a long way off being a model in this regard.
Foreign Policy as a response to China
Analysis has suggested that the whole of the Integrated Review is a response to China’s increasing power.
It seems that the general gist is to forge better relations with China and acknowledge they exist – hence the current 20 000 mile round trip being made by
HOWEVER, foreign policy in the future seems to be more about fostering relations with other powerful countries and leaving China (and Russia) on the other side of the equation.
We are actively pursing more commercial ties with India for example, and huge numbers of Indian students are increasingly coming to study in UK Universities, while decreasingly so from China.
We also invited India, South Korea and Australia to the G7 meeting we hosted in June 2021 and there is talk of expanding this to the G10.
Too little focus on Europe?
it’s worth noting that the report only has 10 lines devoted to Europe, and we’re probably going to have to spend a lot more effort than this dealing with our neighbours in the future!
Sign Posting
While this isn’t the most obvious topic for students of A-level sociology it’s worth considering as part of studying globalisation – probably most relevant to ‘political globalisation‘, and hopefully this post gives you few ideas of how Britain’s role is changing globally.
Sources
This post is mainly a summary of this analysis Podcast from BBC radio 4.
