Tuesday, June 12, 2007

China's military spending touches new record

The Stockholm International Peace Research Institute (SIPRI) estimates, in its latest yearbook, that military spending in China climbed to an estimated $49.5 billion last year from $44.3 billion in 2005. For the first time in living memory, China's military expenditure surpassed that of Japan, "making China the biggest military spender in Asia and the fourth biggest in the world".

As far as is known, no one is planning to attack China. So is China is planning to attack? What? And when? Sphere: Related Content


I have just read this slight and over-assertive book (with one word IN CAPITALS in more or less every alternative sentence, at least in certain parts of the book).

Regretfully, the book is addressed primarily to an American audience.

What a pity that Iacocca who made so much of his money from companies playing on the global stage, should confine this otherwise thoughtful book only to American interests. Sphere: Related Content

"Rising government violence in Sri Lanka"

A friend in Colombo, who is NOT Tamil, tells me the following, and I quote more or less verbatim:

"Recent weeks have brought about noticeable changes in atmosphere in Colombo; there is a heaviness in the air. The spiraling conflict is finally having an effect on Colombo, which has otherwise remained removed from the horrors of war in other parts of the country. There are no signs that there will be any improvement in the near future as the government is bent on a military solution. They are borrowing monies to fight a war that they cannot win, leaving the future generation to pay. In the meantime the president's family is putting handsome sums into foreign accounts through arms-deals. In the end it is the poor who suffer in this conflict. They are the ones whose sons are sent to be killed. They are the ones who can't afford to leave the country to flee the shelling. They are the ones struggling as taxes are raised, government charges increase, unemployment rates soar…

"We are continually amazed to hear of the different schemes the Government thinks up in order to make money, the most recent being a tax they are now imposing on all NGO income from 2005.

"On a more positive note people are starting to challenge the government's course of action. Only last week hundreds of Tamils "without legitimate reason to be in Colombo" were taken away in the middle of the night by buses, in what could be described as ethnic cleansing. However, a public outcry has forced the government to issue apologies, with the Tamils allowed to return. There seems to be a new determination amongst the church leaders of Sri Lanka not to remain silent in the face of the injustices committed on both sides of the conflict. Please pray for the protection of those church leaders who are courageously taking public stands. "

That's what he says. Sphere: Related Content

Monday, June 11, 2007

Does the world need a new financial order, as Putin claims?

The Russian leader has, I read, called for a radical overhaul of the world’s financial and trade institutions. Apparently, he said that the world needed to create a new international financial architecture to replace the existing model that has become “archaic, undemocratic and unwieldy”.

I am not sure what Putin means by "democratic" and "undemocratic", but I am pretty sure that what he means by those words is not what most people around the world mean by them.

However, the institutions are indeed "archaic", "unwieldy" and in need of reform. The world does need a new financial order - one that is genuinely oriented to creating global justice, fair play, transparency, accountaibility, stability and environmental responsibility rather than the chimera of "growth".

If Putin's remarks encourage the reformation of the global financial institutions in a way that leads to their becoming at least efficient and effective, that would be wonderful.

However, his remarks were confined to the need for these institutions to "reflect the growing economic power of emerging market countries – including Russia", as FT put it today, quoting Putin as saying that these institutions "are a far cry from recognising the existing balance of power.”

That is more like sobbing at being not allowed into a club. Sphere: Related Content

British business leaders are now as spineless as American ones

In this morning's edition of Financial Times, I see that Prime Minister Blair is being criticised by British business leaders for voicing his fears over the direction that Russia is taking: Putin is consolidating his control over not only over politics (which is, if one is generous, a mixed blessing) but also over business (which will be an unmitigated disaster for business - and not only in Russia).

"There were few dissenting voices from the denizens of global business attending the forum over the weekend that included the heads of Deutsche Bank, Citigroup, Chevron Corp, Royal Dutch Shell and BP," claimed FT, naming specifically the Hans Jörg Rudloff, the chairman of Barclays Capital, and Peter Hambro, executive chairman of Peter Hambro Mining, as those who are publicly critical of their Prime Minister's comments.

The FT is now one of the few newspapers around the world that has so far maintained its neutrality and objectivity, so one can reasonably assume that the report is accurate. If that is so, then I cry, on Britain's business leaders, "Shame!".

They are imitating the example of some spineless American business leaders who would rather collaborate with the dictatorship in China than encourage and cajole them to aspire to the global standards now expected in politics as well as in business.

Businesses have a moral responsibility to use the power of their investments not only to make money but also to improve matters globally. That is the whole point of their signing up to statements and organisations such as the UN's Global Compact or participating in exalted events such as the World Economic Forum.

If businessmen and businesswomen don't want to entirely discredit such organisations and institutions, the least they can do is to keep quiet rather than openly show that they are prepared to sacrifice liberty, law and principle for the sake of profit.

And if such organisations wish to have any chance of keeping their integrity and reputation, they must denounce such behaviour on the part of the leaders of their member organisations.

So-called leaders who support unfair and unjust regimes or actions will, sooner rather than later in today's world, be found out and fall from their eminent and lucrative positions. Not only that, the businesses they lead will themselves collapse suddenly. Sphere: Related Content

Professor Marglin on "Institutionalised Greed"

On last Friday, 8 June, I posted an entry titled, "sustainability versus institutionalised greed around the world".

Harvard Professor Stephen Marglin, responds as follows:

"I want to reinforce your excellent statement about the meaning of institutionalized greed, especially the paragraph:
Most important: the entire culture, worldwide, is now oriented to making a quick buck – that is why we have so few bright youngsters who think as their first priority of joining the government or multilateral agencies – everyone wants to go into consultancy or investment banking or the financial industry (and only those who "fail" at this go into other areas) – well, that is too broad a generalisation – but I think you see what I am aiming at
"Everyman for himself and devil take the hindmost" is inscribed on the doorposts of the church of economics, and economics is the dominant religion of our times. Attached is an anecdote from my forthcoming book (The Dismal Science: How Thinking Like an Economist Undermines Community) which makes your point."

The excerpt, that Professor Marglin attached from his forthcoming book, reads: "That the foundational assumptions of economics are cultural myths rather than universal truths was brought home to me forcefully some years ago in Moscow. Shortly after the fall of the Soviet Union, a Finnish colleague and I had gone there to recruit Russians for a collaborative intellectual enterprise on the scope and limits of economics in addressing ecological problems. One afternoon we had a particularly lively discussion, and there was a general interest in continuing into the evening. The Russians proposed supper at the apartment of Sergei and Lena. Sergei was associated with the School of Cultural Politics where the afternoon meeting had taken place, but in fact we knew Lena much better since she had been our interpreter since our arrival. Lena had already given us a warm welcome and excellent dinner the evening before, so it took considerable reassurance from her to convince us that six or eight people descending upon her would not be a major inconvenience. Her only concession was to allow us to purchase some food and drink for the occasion. We went to a gastronom, a delicatessen/grocery store, which despite being a state enterprise was reasonably well stocked. Both because of the long lines and the clumsy system (you got a ticket specifying your purchase, went to a cashier to pay, and then back to the sales person for the goods) the process took a while, but for me the chance to see what more or less ordinary Muscovites could purchase in early 1993 outweighed any inconvenience. At last we were done: a lot of smoked fish, some wine and vodka, and enough other things to make a reasonable supper.

As we emerged from the gastronom, Lena, quite out of the blue, said: "Terrible, terrible.” Earlier remarks had prepared me for some cryptic if not apocalyptic comment, but nothing seemed particularly terrible to my untrained eye. "What's terrible?" I asked.



"Yes, milk. It's terrible. Here they sell milk for 54 rubles per liter (approximately $0.09 at the then current rate of exchange) and at the kiosk in front of our apartment house it costs 92 rubles."

Jokingly, I responded: "That's not terrible; it's a great opportunity."

Now it was Lena's turn to be surprised: "Great opportunity? What do you mean?"

"Simple. You buy milk here for 54 rubles and sell it in front of your house for, say, 75. You make a lot of money and the folks in your apartment get their milk cheaper.” Once an economist, always an economist.

Lena thought about this for a moment, and then said "It won't work. You can't get the milk there. You can't buy gas.”

"Listen," I said. "If you can make money from buying milk cheap, you can find gas."

Lena was silent for another moment, and then shook her head, her exasperation with this uncomprehending foreigner showing through: "No, it still won't work. Even if you could find gas, there is no transport."

Now I began to feel a challenge. Here was first-year economics. Here was freedom for Lena's apartment house from the bondage of 92-ruble milk and a tidy profit in the bargain. "Look, if there is enough money in it, all these obstacles can be overcome.”

After some more back and forth, a light bulb went on just above my head: all this talk about "is" was really a cover for Lena's misgivings about "ought.” The difficulties were not logistical but moral. As a matter of right, milk ought to sell for the same price in front of her apartment house as at the central gastronom. And it was immoral to bring this about through the mechanism of the market and the incentive of profit.

I realized that what was second nature to me was totally alien to Lena. Doubtless the quickness and sureness of my responses owed something to my professional training, but my profession was only frosting on the cake of market culture. Most people reared in a market culture, economists or not, would have no trouble understanding rudimentary arbitrage, even if they could not define this term.

I realized two other things. First, while it was certain that 70+ years of communism were part of this story of cultural difference, Lena's resistance to the logic of the market ran much deeper, the product more likely of centuries of wariness than of decades of communist propaganda.
Second, however ingrained market logic might be for the present generation of Germans, Frenchmen, and Americans, hardly a century ago Lena's suspicions could have been found all over Western Europe and the United States. It oversimplifies to identify the populism that swept the American prairies in the 1890s with wholesale condemnation of the logic of the market, but I do believe that many populists would have taken Lena's side of our exchange rather than mine.

But we don't have to go to Russia or back to 19th century Kansas to see resistance and acclimatization to the logic of economics. Every year thousands of undergraduates all over the United States take courses in the principles of economics, partly, perhaps, because they are persuaded it is useful preparation for business or law school, but partly, I am sure, for enlightenment. Many ask (with Adam Smith) how morally to justify a world based on self-interest. Parents may have urged the importance of looking out for number one, but Smith’s idea of an invisible hand propelling self-interest to serve the general interest sounds too much like other forms of adult hypocrisy of which they become, as they grow up, increasingly aware. Imagine the relief, not to say exhilaration, to learn sophisticated arguments why looking out for number one is a social virtue. And if there remain any doubts, students can always draw sustenance from the source of the wisdom of Economics 101: the arguments come from professors of economic science—objective, unbiased professors who have no other ax to grind than that of Universal Truth itself. (There remains an unconvinced minority. No matter how hard they try, they just don't get it. Needless to say, these students tend to limit their further exposure to economics. Given this selection bias, it is no wonder that economics is not a hotbed of introspection about its premises.)".

That is pretty startling writing coming from a mainstream economist, but it shows that things may be beginning to change.

For those readers who are interested in getting hold of Professor Marglin's book, here are the details of the book: THE DISMAL SCIENCE: HOW THINKING LIKE AN ECONOMIST UNDERMINES COMMUNITY (to be published soon by Harvard University Press, USA).

The official description of the book reads: "Economists celebrate the market as a device for regulating human interaction without acknowledging that their enthusiasm depends on a set of half-truths: that individuals are autonomous, self-interested, and rational calculators with unlimited wants and that the only community that matters is the nation-state. However, as Stephen Marglin argues, market relationships erode community. In the past, for example, when a farm family experienced a setback--say the barn burned down--neighbors pitched in. Now a farmer whose barn burns down turns, not to his neighbors, but to his insurance company. Insurance may be a more efficient way to organize resources than a community barn raising, but the deep social and human ties that are constitutive of community are weakened by the shift from reciprocity to market relations.

"Marglin dissects the ways in which the foundational assumptions of economics justify a world
in which individuals are isolated from one another and social connections are impoverished as
people define themselves in terms of how much they can afford to consume. Over the last
four centuries, this economic ideology has become the dominant ideology in much of the
world. Marglin presents an account of how this happened and an argument for righting the
imbalance in our lives that this ideology has fostered."

The Harvard edition in hardcover is due to be published in January 2008, ISBN 0-674-02654-3 $35.00 £22.95 E32.30

The other HUP book by Stephen A. Marglin is: GROWTH, DISTRIBUTION AND PRICES

Stephen A. Marglin is Walter Barker Professor of Economics at Harvard University. Sphere: Related Content

A quick recollection of the history of privatisation

In relation to a recent post, a friend asks if I'd include the privatization of basic public services (water, energy, public transport etc), in fact the privatization of the public realm in the Habermasian sense, into "the institutionalization of greed"?
She adds: "If I'm correct, the mainstreaming of this privatization started with Maggie Thatcher and the liberalization of money markets".

My response:

The fashion for privatisation started with a New Zealand Prime Minister in the 1970s (sorry, I can't recollect his name at present).

The "success" of that measure inspired Reagan's Proposition 13 in California (if I recollect the name aright) which was the precursor to privatisation taking hold as a philosophy in the USA

Mrs Thatcher overlapped/ followed Reagan - and the dovetailing of their policies was not limited to privatisation, which is why there were cartoons in which the famous Gone With The Wind film poster had Reagan carrying Thatcher, in a romantic pose similar to that of Clark Gable and Betty Davis, but with a mushroom cloud in the background...

Anyway, the impact of these 3 privatisation sweeps in the Western world was "only" the reduction of the middle class by some of them elevating themselves into the ranks of the rich (good for them, say I) and the decline of others to the lower classes

However, this set in train the fashion for privatisation around the world, in which publicly-owned assets were sold for a song to members of the dictatorial elite in countries such as Russia and China, so that the dictatorial elite became even richer at the expense of the public, to whom the elite threw the sop of surviving a bit better than they had done earlier if they were ready to join the new working class - though a few among the masses who were more intelligent, better organised and more agile, were able to benefit from the relatively free market economy and so could become, compared to the new working class, relatively rich.

Even a cursory analysis of purchases of real estate in the West by the Chinese and Russians between say 1990 and 2000 (or later) will indicate clearly that the primary beneficiaries of privatisation was the dictatorial elite which was in existence in such countries immediately prior to the collapse of the Berlin Wall

This should not be a surprise. Elites always look after themselves. What is a surprise is the ease with which they were able to dupe their masses (and the West) into believing that their version of the market economy was introduced for the sake of the masses and was good for the masses. When and if we understand this, we understand also the continuing appeal of Communist (or "nearly-Communist") parties in all the ex-communist parts of the world where the masses are permitted to have political preferences

In brief, my answer to your question is: Yes.
And the practical consequences of privatisation will be enormous but will be seen clearly, I suspect, only in about 10 years


-----Original Message-----From: kaarin [mailto:kaarin@kaarintaipale.net] Sent: Montag, 11. Juni 2007 10:19To: Marie-Claire Cordonier SeggerCc: 'Stephen Marglin'; Guptara, Prabhu; dan@worldfuturecouncil.org; councillors@worldfuturecouncil.orgSubject: Re: request for feedback/input

Dear Councillors,

thank you Marie-Claire for reminding us of the cornerstone of unilateralism:
"The American Way of Life is not up for negotiation..." - it would be
interesting to learn, by the way, what is the correct definition for "the
American way of life" - how many cars, or how much of what?

My main reason for wanting to join the discussion was to ask you economists, Sphere: Related Content

Saturday, June 09, 2007

"Give me money or give me death"

In the bad old days, before the wonders of modern technology and politicised morality, old-fashioned people followed the immature philosophy "give me liberty or give me death".

In our enlightened, modern, scientific and progressive times, we know that slogan should mature into: "Give me money, good health and happiness, or give me death".

Standards rise, we have greater expectations, so life should get better amd better - right?

Well, unfortunmately, life is not like fiction.

Human beings remain human beings, relationships (for all their frustrations) are still the only basis for happiness, and - yes - all human hearts still yearn for as much freedom as they can glimpse, even in their imaginations. Sphere: Related Content

Friday, June 08, 2007

Why the Middle East does not matter

I am just catching up with some of my reading from last month, so I have only just read Edward Luttwak's highly interesting article, "Why the Middle East does not matter" in the British monthly, Prospect.

He says, among other things, that "Western analysts are forever bleating about the strategic importance of the Middle East. But despite its oil, this backward region is less relevant than ever, and it would be better for everyone if the rest of the world learned to ignore it....the dead from Jewish-Palestinian fighting amount to fewer than 100,000 - about as many as are killed in (a single season during the ongoing genocidal massacres in Darfur). Strategically, the Arab-Israeli conflict has been almost irrelevant since the end of the cold war...the relationship between turmoil in the middle east and oil prices is far from straightforward....And global dependence on middle eastern oil is declining: today the region produces under 30 per cent of the world's crude oil, compared to almost 40 per cent in 1974-75....Yes, it would be nice if Israelis and Palestinians could settle their differences, but it would do little or nothing to calm the other conflicts in the middle east from Algeria to Iraq...or to stop Muslim-Hindu violence in Kashmir, Muslim-Christian violence in Indonesia and the Philippines, Muslim-Buddhist violence in Thailand, Muslim-animist violence in Sudan, Muslim-Igbo violence in Nigeria, Muslim-Muscovite violence in Chechnya, or the different varieties of inter-Muslim violence between traditionalists and Islamists, and between Sunnis and Shias, nor would it assuage the perfectly understandble hostility of convinced Islamists towards the transgressive west that relentlessly invades their minds and sometimes their countries".

I should check his statistics when I have a moment: I suspect that the decline of the middle east's share of global oil production from 40% to 30% has been primarily because of the situation in Iraq.....

However, in other ways, the article is thought-provoking. Sphere: Related Content

sustainability versus institutionalised greed around the world

I am part of several efforts to introduce or enhance sustainability-related thinking and actions in the global economy.

In one such effort, I introduced the expression "institutionalised greed" into the discussion, and this has raised some puzzlement. I have been asked what I mean by that particular expression.

As this might be of wider interest, I excerpt my response:

"What I meant by 'institutionalised greed' is, for example, that the world's largest collections of money (pension funds) are, in theory, interested in stable long-term earnings, because their commitments are to fund pensions for their "members" for the rest of their lives – and there are statistical models that predict fairly accurately what those commitments will mean over the decades ahead (barring major disasters, in which case on average their commitments REDUCE)

In theory, therefore, all pension funds should be invested long term. In fact, however, most pension funds have a horizon of three years in their investment strategy.....

Or take the stock exchange system – as we have it at present, this enables "day traders" to buy/sell from moment to moment simply on the basis of whether they can make any money from the buy/ sell RIGHT NOW and without regard to fundamentals – nothing immoral about this in itself, only it nurtures a "short term greed" mentality – and the simple way to counter that would be to have two classes of shares for all companies – "short-term shares" and "long-term shares" – the proportion of these to be varied from time to time depending on whether we wanted to slow down or speed up the rate of economic activity. For example, a government could introduce 50% of each for all public companies, and reduce the proportion of short-term shares steadily over time, or increase them steadily over time. Of course, companies themselves could introduce such shares without waiting for government action. Worldwide we have a system of 100% long-term shares (in, e.g., family-owned companies) and 100% short-term shares (in all public companies). I am simply arguing for a better balance in the publicly-traded companies which actually drive the national and global economies, so that we have less short-termism in the global economy.

Another example of institutionalised greed: most companies that I know put the hourly movements (or less) of their share price on the computer screens of all workers, as if the workers should be focused not on their jobs but on pushing up the share price! In fact, NO worker (not even the CEO) can do very much to influence share price movements since those are mostly determined by flows of international capital to different regions and industries depending on their relative attractiveness at any moment. What any CEO does is to influence (to a certain extent) the price of her/his company relative to others within the "same industry" – but this is a very slight influence compared to the influence of the massive flows of capital across regions/ industries...However, the CEO's incentives are tied not to increases in profits on a long-term and sustainable basis but to increases in share price....

Workers too are monetarily incentivised to focus on their narrow jobs rather than to think of the long-term good of their company as a whole or of society...

Most important: the entire culture, worldwide, is now oriented to making a quick buck – that is why we have so few bright youngsters who think as their first priority of joining the government or multilateral agencies – everyone wants to go into consultancy or investment banking or the financial industry (and only those who "fail" at this go into other areas) – well, that is too broad a generalisation – but I think you see what I am aiming at

Even medicine and law (which were originally "public service" professions where one earned a reasonable amount but the main "payment" was public recognition and respect) are increasingly seen only as means of earning lots of money....

So we have an institutionalisation of greed worldwide (actually, primiarly since the end of the Second World War and the rise of Darwinistic thinking) – and, if we do not focus on understanding, analysing and countering this worldwide culture of institutionalised greed, we have no chance of winning the struggle for a sustainable future. Sphere: Related Content

Sunday, June 03, 2007

National People's Tribunal holds Indian national and state governments guilty of gross neglect of duty

All branches of the Indian government have studiously avoided the Hearings of the National People's Tribunal set up to investigate the recent incidents at Nandigram.

While the final report of the Tribunal is not yet ready, the following preliminary findings have been released:
- There is no doubt at all that grave violations of human rights have been committed against the villagers of Nandigram;
- There seems to be a disturbingly large number of reports of sexual violence against women;
- There is an urgent need for a thorough, independent investigation of the events of 14 March 2007, especially with a view to ensuring justice for all those whose rights have been violated;
- There are still a significant number of people in the area who need immediate medical attention for various problems related to the violence;
- From all accounts no steps have been taken by the state machinery to provide compensation for the dead and injured so far;
- The education and normal activities of school going children in both Nandigram and adjoining areas such as Khejuri have been seriously affected due to both past and ongoing disturbances.

For the actual Preliminary Report of the Nandigram National People's Tribunal hearings, please go to: http://groups.google.com/group/JohnDayal/browse_thread/thread/bbdfbf68d1ab7a44 Sphere: Related Content

Saturday, June 02, 2007

Russell Mokhiber and Robert Weissman

These two people do a wonderful job of keeping the corporate world on its toes. They have published for many years (somewhat over-rhetorical) accounts of corporate frauds, sicknesses and systematic failures.

The individuals are now going their separate ways to set up their own vehicles, focusing on slightly different things: Russell Mokhiberto continue editing "Corporate Crime Reporter" (www.corporatecrimereporter.com) and Robert Weissman to re-start his column titled "Focus on the Corporation" (www.multinationalmonitor.org).

In the recent swan-song of the joint-effort they have undertaken up to now, they say "Digitalization, corporate consolidation...and the expanding demans of the national security state are combining to enable the creation of a Big Brother corporate-state nexus".

There is a germ of truth in this. For something like a historical account of why we are going in this direction, however, one needs to read Jeff Faux's THE GLOBAL CLASS WAR (which I have reviewed elsewhere).

But all such authors (Faux, Mokhiber, Weissman and others) seem to be unaware that, historically, there has always developed, in every part of the world a "corporate-state nexus" or its equivalent. So, possibly after an initial period of tension, kings always became involved in an alliance with trade, and traders always ended up allying with the political elite.

The only exceptions were post-Reformation Europe - and the USA, which inherited the fruits of the Reformation. These parts of the wrold strove to separate, and to a large extent succeeded in separating, trade from rule - and in exporting this "best practice" (in however diluted a form) to other countries.

One could argue that liberating people to be themselves, rather than mere pawns in the game, consists in getting the political elite to set the right rules (which they can never do as long as they are in the pockets of commercial interests - or are themselves commercial interests with another face) and then in setting up systems by which the rules are applied equally to everyone regardless of their position, wealth, influence and so on.

One could argue that this is essential of the "rule of law" - there is no point in the law "ruling" if (a) the law is itself unfair, and (b) if the rich, powerful or influential can systematically and usually escape its requirements.

Most modern critics of the state-commerce nexus appear to be unaware that their own sense of what is right comes, originally, *exclusively* from the Bible - no other philosophy or ideology has any basis for indignation at a corporate-state nexus. And, equally important, that other than the times and parts of the world influenced by the Bible, the "state-commerce nexus" has in fact been the universal norm.

In order to recover the cultural strength for reversing the renewal of this old nexus, it is necessary to not merely rail against it, but to rediscover the "self-interest sacrificing" spirituality of the Biblical tradition which cleaned up (substantially) Europe and the USA - though that "clean up" is now losing strength due to the waning of Biblical influence in Europe and the USA.

Meanwhile, do keep up with Mokhiber and Weissman. They may not understand the roots of their own indignation, but they are doing good work - and, even when they get it slightly wrong, that is not out of malice or self-interest. Anyone can get it wrong sometimes.

They very often get it right. More power to them. And every success with their now-separate ventures. Sphere: Related Content