ON THE MORNING after the election, with the sense of political turmoil growing by the hour, Marion Ellman was pulled out of her regular staff meeting for a conference call with Bob Livingstone, who was on a visit to the Philippines. Doug Havering, the deputy secretary of state, was on the phone from Washington, together with Steve Haskell in Beijing. A National Security Council meeting had been scheduled for Friday to discuss the events leading up to the Fidelian bankruptcy and Bob Livingstone wanted to put a State Department paper to the president ahead of the meeting.
Marion didn’t know why a matter like that would be an issue for the National Security Council or why State should be called on to give a view. Within the State Department, only Livingstone and the deputy secretary knew what had taken place between Tom Knowles and the Chinese president in the hours before Fidelian failed. Five minutes after the call started, when Livingstone had given his summary of events, Marion knew as well.
By the time she got home that night, having been waylaid by the British and Dutch ambassadors in a corridor of the UN building for an impromptu meeting on the South Africa resolution, Daniel was asleep and Ella was just about ready for bed. Marion read to her a little before she went to sleep. Then she checked her email and found a draft paper for the president in her inbox. She wouldn’t get any other time to look at it so she sat down to work on it right away with a warmed-up dinner at her desk. By the time she was done another couple of hours had gone by.
Dave was in bed, reading a book.
He looked up as she came in. ‘You done?’
She nodded and sat down on the bed. ‘I’m beat.’
‘You know our net worth fell another ten per cent today.’
‘Really?’
‘Yeah. That makes us around twenty-five per cent down on the week. Not bad. I thought your boss might want to know. What’s his name again?’ Dave clicked his fingers. ‘Knowles? Somebody Knowles.’
‘I’ll be sure to tell him,’ said Marion.
‘You know, you should read this.’ Dave closed the book and tossed it across to her.
It was Joel Ehrenreich’s book, which had arrived a couple of days earlier. Marion had left it on her desk, fully intending to look at it, but hadn’t had a moment.
‘It’s good,’ said Dave.
‘Have you read it?’
‘Parts. You should read chapter 5.’
‘Is that one of the ones Joel mentioned?’
Dave shook his head. ‘Trust me, you should read it.’
She got ready and came back to bed. Dave had turned on the TV and was watching it with the volume low. Joel’s book was still on the bed. She was tired but picked it up anyway. She’d at least glance at it, she thought, before she went to sleep.
The next time she looked up, Dave was lying asleep, mouth open, and the TV was showing the closing credits of the Late Show.
Chapter 5 was one of a number in which Joel dissected the strands of global enmeshment, as he called them. It dealt with what he called the corporate strand. It was customary, Joel argued, to think that the sphere of corporate transnational companies was the one most free of national influence. It was efficiency-maximizing and nation-neutral, stretching across political boundaries in search of the lowest costs and highest profits. Yet in reality, on one critical criterion, this wasn’t the case. An analysis of a hundred publicly owned US-originated transnational corporations across all economic sectors, none of which had any US government ownership, showed that fewer than twenty were entirely free of known ownership by foreign national investment funds, and over thirty had ownership exceeding twenty per cent – enough, in most instances, for those owners to exert a prime if not controlling interest over the company. The chapter went on to outline the evolution of this situation: the avid acquisition of basement-priced stock by sovereign investment funds in the aftermath of the financial crisis; the provision of capital to enterprises hungry for funding as the upturn started; the continuing incremental accumulation of stakes in key corporations as the recovery gathered pace and surpluses built in oil-producing countries like the Gulf states and manufacturer-exporters such as China; and the tacit acquiescence by western governments in this program of acquisition in exchange for sales of the huge volumes of government bonds that were issued in the years during and after the recession.
In effect, Ehrenreich argued, the last decade had seen a massive recycling of the profits from western consumption obtained by the world’s oil producers and manufacturer-exporters into ownership of the west’s major businesses by state-owned funds, creating a situation in which the main economic engines and wealth creators of the free markets of the developed world were, to an unprecedented degree, government-owned. What the US government had never wanted to have – state ownership of private enterprise within the United States – had been achieved by the governments of Saudi Arabia, Abu Dhabi, China, Russia, Singapore and Kuwait. In benign conditions, this was unlikely to be an issue. But who could tell how these governments might use these holdings in conditions of stress? The world had sleepwalked into a situation in which the politics of global enmeshment, with all its tensions and potential flashpoints, was embedded deep inside the world’s major transnational corporations.
Ehrenreich’s point wasn’t that this shouldn’t have happened, or that it should be reversed. The reality of free markets was that in order to function as markets they had to be free. His point was that this situation would create an inevitable series of tensions so long as the world’s global governance was unaligned with this and other thickening strands of global enmeshment. Every one of these strands was like a fault line. Sooner or later, if governance didn’t come into line with them, the tension in one of these faults would cause a quake.
Dave looked around sleepily. ‘You still reading?’
‘I’m done,’ said Marion. She closed the book and put it on her bedside table.
Dave turned off the TV. ‘What do you think? I’m not sure if he’s made a point of incredible insight or if he’s talking out of his ass.’
‘I think if I hadn’t seen what I’ve seen over the last few days, I’d say it’s … interesting.’
‘Interesting?’
‘Joel-interesting. Thought-provoking. Paradigm-challenging. Rich in historical context.’
‘But about as likely to happen as me becoming a supreme court justice?’
Marion smiled.
‘And now?’
‘It gives me goose bumps.’
Dave looked at her in surprise.
‘There’s a little more to what’s been happening than most people know.’
Dave waited.
‘TS.’ That was their code. TS, Top Secret, for anything she knew she shouldn’t be telling him. ‘I only found out today. Before Fidelian crashed, apparently we tried to get the Chinese to stop it.’
‘We …?’
‘Tom Knowles spoke to Zhang.’
Dave took a deep breath.
‘Yeah,’ said Marion. ‘I know.’