Some people go to Thailand to frolic on island beaches in the Gulf of Siam, where the biggest worries are whether a coconut will fall on your head or where to find a sufficiently chilled bottle of Singha beer. Others, like author and playwright Barbara Garson, have a different idea of fun: She went to Southeast Asia and spent her time loitering around half-constructed oil refineries interviewing migrant workers -- while also learning the ins and outs of the shrimp farming business and jellyfish import/export.
Garson set out to write a book about the global economy, a daunting subject that instills equal amounts of terror and confusion in most ordinary souls. Interest rates and currency exchange speculation do not usually make for riveting, or comprehensible, reading. But the remarkable thing about "Money Makes the World Go Around" is that her investigation of the movement of capital around the world ends up as easy to swallow as that cool Singha beer on a hot day at the beach.
The result is subversive, a sugar-coated exposé of the way the world works that is halfway digested before you realize how radical it truly is. And by then it's too late. You're stuck: Now you know why peasants in Thailand pay the price for bad loans made by Citibank and Chase Manhattan, or why the unrestricted flow of billions of dollars around the globe in a ceaseless search for higher and higher rates of return ends up benefiting very few people.
Garson starts with a simple, disarming conceit. She's going to track "her" money around the world. She takes her book advance and divides it into two parts: One part gets deposited at a small, privately owned bank in upstate New York; the other goes into a big mutual fund. Then she trots about, checking in on the progress of those dollars.
Of course, there's no telling where "her money" actually goes, in any concrete, physical sense. As soon as she makes her deposit to the Bank of Milbrook, for example, it becomes part of a flow of electrons that zips hither and thither in merry chaos. She has to make some arbitrary decisions. The Bank of Milbrook has a relationship with Chase Manhattan, and Chase makes a loan to refinery builders in Thailand, as well as providing a letter of credit to a fish and shrimp importer in Brooklyn. So even if the mathematical abstraction that represents her book advance cannot be pinned down, she still follows the money.
Over the phone she calls herself a "little old Jewish lady," striking the same tone of unassuming self-deprecation that laces through her book. But she also happens to boast some very sly reporting chops. She manages to get all kinds of people -- from labor importers in Singapore to bank managers in New York to pipefitters from Burma -- to talk to her with surprising frankness.
Maybe if they knew upfront that she was a self-described socialist, with an agenda that includes highlighting the plight of the ordinary worker in the global economy, they would have been a little more discreet. Or maybe not. Garson doesn't try to convince readers that she has the answers to all the world's troubling economic questions. She doesn't evangelize Marxist ideology, or rail shrilly about exploitation and speculation.
She just shows us how it works. She shows us how International Monetary Fund bailouts to countries like Thailand end up leaving some people even poorer than they were before Western money started flowing in. In the second section of her book, which follows her mutual fund investment, she gives us a detailed case study of how "Chainsaw" Al Dunlap was brought in to restructure the Sunbeam appliance company. The "restructuring" -- which really meant little more than handing over cash directly to shareholders -- ended up crippling the company. An old story to those who followed the mergers-and-acquisitions mania of the 80s, but Garson tells it with fresh, crisp relevance.
If there's a moral to the story, it is that unrestricted capital flow across borders appears to encourage pure speculation on a grand scale far more than it does actual "productive" investment. And by "productive," Garson means the actual production of real things, goods and services, and not just the simple reselling of shares of stock back and forth between a few well-heeled investors. Garson isn't anti-growth, or anti-business.
She is, however, pro-worker -- which is not at all surprising given her previous efforts to delineate the nature of work in modern society, "All the Livelong Day" and "The Electronic Sweatshop." And workers around the world, as she compellingly demonstrates, are getting the shaft.
We hear the term "globalization" every day now. What does it mean to you?
From the point of view of finance, globalization means another place to put the money that was accumulating in fewer and fewer hands in the U.S. Starting in about the 1970s, we came to what would have been the every-50-year depression. Money had accumulated in fewer and fewer hands, workers weren't being paid enough to buy what was being produced, the post-war expansion had ended, and from the point of view of financiers, bankers, mutual fund people -- the people that held my money -- all kinds of places in the world had built-in protections against capital flows.
So for example, you might not be allowed to borrow in dollars or yen or marks in Thailand, beyond a certain range. Restrictions of this sort slowed money down ... Starting in the 70s, when the banks and insurance companies and the mutual funds began to have more money than they knew what to do with, they battered all those regulations down; they battered down all the doors that would keep their capital out or slow it down. That was globalization.
Is globalization the triumph of the free market?
If you went to the IMF, if you went to the college campuses, you heard people explain how globalization was going to raise all boats, but I never talked to a real banker who said that. It was only, let me in, and if you have rules against it, end them, and let me take my money out as fast as I want.
Early on in your journey, you experienced some difficulties actually finding real loans to track.
That's right. The book took five years to write, and during that five years I begin with Mexico, which was the emerging market. Oh boy, everybody in New York who was into Latin American loans was a real hot shot, but I couldn't find an actual Mexican businessman who had borrowed money to build something constructive -- or even something destructive, like a shrimp farm or a golf course. They complained to me that they couldn't get that money. When Mexico collapsed, it became apparent why. I had an old-fashioned idea: Loans had to be used to build something, or else how could you pay it back? But in Mexico, it was a collusion between my bank, Chase, and Mexican businessmen: The money would go straight there and then bounce straight back to Chase in the form of bank accounts.
But you did find some loans in Asia.
In Asia things were being built and I was able to find the shrimp farms that my Brooklyn shrimp importer was getting shrimp from, and the refinery that was going up, but there was just no limit to what was being built at all. [After the Asian crash] and Chase had $50 billion in risk, the IMF came in and the Thai government assumed the entire loan. The bank didn't lose one single penny. So why shouldn't they do it again? They got the money.
So what happens next?
The money is still piling up in fewer and fewer hands. We have to slow them down; we have to get stoplights and traffic signs [to slow down capital flows]. They can't stop themselves. In a sense they are crying out, "Stop me before I kill again."
They can't stop themselves. [In Malaysia] I spoke to some fishermen who couldn't fish the way they used to because my shrimp farms were polluting the coastlines ... It was impossible for fish to live closer than, like, maybe 15 or 16 miles off the coast. So these fisherman that I talked to now had to get motors for their boats to go 15, 16 miles out. They had to borrow the money to do that, so that brought them into the global economy.
They used to say, they fished until they had enough -- that's what they liked about it. Now they had to fish to pay back the loan on the boat. When I first heard that phrase "stop when you have enough," I knew it was a lovely phrase, but only afterward did I underline it and realize it was the most radical thing I've heard in my whole odyssey. Because my money can't stop when I have enough. There is no "enough"; the money cannot stop.
You wrote most of your book during a huge economic boom in the United States. What impact has the current downturn had on your own thinking?
I think it makes the book more comprehensible to people. My notion was that each new emerging market was a stopgap before we faced the real problem.
So we're facing the real problem now.
Yes. Now mind you, I'm not one of those people who think capitalism has to have its crises. I've always thought, sadly I might say, if they used all the Keynesian measures at their disposal they could keep an economy steady, not maybe nice, not maybe kind, but steady, from the point of view of not having financial crises. But I realize now, that that's only if people aren't too short-range greedy -- and it seems like my saying capitalism could be stable if the [money men] are not greedy is like saying socialism could be democratic if [socialist leaders] are not corrupt. [Laughs] If. If. If.
How did your own thinking change during the course of reporting your book?
I knew people were out for profit and out for money, but I thought it was all subtle. I thought it worked by the invisible hand. I didn't know it worked like a fist in the face. I expected my mutual fund manager, when he gets together with the head of a company, they talk about sports, they talk about mutual friends and then they say at the end, you know, by the way I'd like the stock to be doing a little better. I didn't know he walked in and said I own 5 percent of your shares and you are making 9 percent profit and I expect 17 percent profit and you will be out tomorrow if you don't get it to me by selling off these companies. I didn't know that "unlocking the value" -- which is what they keep saying; they buy the shares and then they "unlock the value" -- I didn't know that unlocking the value just really meant going up to the CEO and saying unlock the safe, and give me the money that's been saved for investment in the company. Just give me the money for my shareholders, or else you are out of a job tomorrow. I didn't know that that's what unlocking the value meant.
Does solving that problem mean people should accept that they don't have to have 20 percent returns on their investment. That they could be satisfied with 10 percent?
That could be part of it -- if you really want to put a limit on growth. The other way is to just recycle the money like Swedish socialism. Swedish socialism is capitalism. All the companies are private -- it's just that the profits are transferred in the way of many, many, many benefits -- they are transferred so the buying cycle can keep on going.
When you are tracking Chase loans or the investments that your mutual fund makes, you use the terms "we" and "my money" as if you are part of Chase or a major investment banker yourself. It comes off as a little jokey -- your small investment means that you are now underwriting the construction of an oil refinery in Thailand or about to restructure the Swedish economy. But it also seemed to have a deeper meaning, to suggest that we, the average American who has money in a 401K or IRA or college fund, are complicit in the global flows of money that suddenly put millions out of work in Thailand or Indonesia. Are "we" responsible?
I don't know about that. If everybody in the country had $29,500 in the bank and another $5,000 invested in a mutual fund like I did and they were all equal amounts of money like that, there would not be the same drive and dynamism to make 20 percent returns instead of 10 percent. It is because of the larger accumulations that the pressure is there.
Did the process of reporting this book make you any angrier?
I never really understood before why people could actually be poorer than before -- how it could be that the money swept in, the money swept out, and people in a country like Thailand that grew a lot of rice could suddenly have less rice to eat -- that was something I couldn't understand ... It took me a long time to get that.
Before I started, I thought these places are poor, these people are starving, and then these new opportunites came along with globalism, and there were some winners and some losers. Some people went to the city and other people had their land gobbled up by shrimp farms. But what I didn't realize is that after something like the Asian crash, when you have to pay back the money with baht that is worth half as much as it was before ... I didn't realize that the IMF comes in, and says to your government, "Yes, these are private loans to private companies from our private banks to your private banks, but the Thai government is going to have to assume the responsibility of having them paid back in dollars. And in order to get those dollars these are the things that you are going to do. There will be no more food subsidies. There will be taxes that double the price of food and that's the means by which you are going to sell less food inside the country and more is going to go out for export and by that means you are going to get good foreign currencies to pay us back with."
I thought that we were just knee-jerk; if "they're" doing it they must be bad. But I suddenly realized that without any kind of limitations or restrictions [on global capital flows] it really will be the ordinary people that pay the price every time.