Archive for the ‘economic failures’ Category
With 2011, a wave of unrest descended upon the MENA. What became later known as “Arab Spring“ represented a ragged set of uprisings throughout MENA countries including Tunisia, Egypt, Libya, etc. The vision of those uprisings was but one, at least initially, as it could be heard on every street and square, shouted or screamed from mouths young and old. Freedom. Democracy.
Some of those uprisings turned ugly (civil war in Libya and Syria), others (Tunisia, Egypt) ushered in what many reformers/revolutionaries believed to be a new era.
Freedom, democracy. Of course, those high-pitched and loaded terms are as cliché by now, without much merit nor substance, rallying slogans for disillusioned and ignorant. What people really meant, or needed to mean, was “better life standards,“ “more and secure jobs“ (on social/personal level) and “economic growth“ (on national level).
Another cliché/stereotype associates democracy and economic growth. Many think that those two are interchangeable, i.e. occurrence of one will automatically imply or cause the other. Then there is “modernization theory,” predominant since the late 1950s onward, and which claimed that middle and other aspiring classes created by industrial capitalism would necessarily (and eventually) bring about accountable and democratic governments. Reality is less obvious that this foregone and simplistic conclusion.
Why so? There is an easily spotted pattern, in which democracies usually are among the economically developed countries. However, the paths to democracy are varied. One is tempted to think that lack of economic stability or growth, which implies increasing poverty levels, will trap societies in a vicious political circle of dictatorial reign and economic deterioration. While bonds of poverty cannot be dismissed, they are not inexorable. Countries such as Taiwan, South Korea, Japan, Singapore, Malta and Greece went from utter poverty into spectacular growth, some as much as quadrupling their per capita incomes. Dictatorships bloomed in Taiwan and Singapore during the entire and South Korea during most of this period of drastic economic transition and growth. Only Japan and Malta remained democratic throughout their respective periods of economic growth, and Portugal as well as Greece tattered between democracy and dictatorship, while growing economically.
There is no predictable pattern, but once a democracy is established, its survival depends on a few factors. Foremost among them is the level of economic development.
Let’s have a closer analysis of how a democracy caused an economic depression, with a study of Thailand’s recent history.
In the 1980s and early 1990s, nations from Indonesia to the Philippines embarked on their own democratic transitions, not unlike the 2011 Arab Spring. In Thailand, hundreds of thousands (middle class) came out into the streets of Bangkok in 1992 to bring down a military government. They wanted democracy and freedom. Thailand boasted a large, educated middle class, one of the best-performing economies in the world, and a relatively robust civil society. By the late 1990s, Thailand had held several free elections and passed a reformist constitution that enshrined greater protections for civil liberties and created a wealth of new institutions designed to ensure civil rights.
However, the “reformist“ frenzy started cooling off in the late 1990s, as many leading Thai reformers, who were behind the protests in 1992, backed off. They believed that Thailand had passed a threshold (of transition to democracy and economic growth), and as a result, many NGOs, media watchdogs, and organizations that were instrumental during and in the immediate aftermath of the 1992 uprising closed down. It only helped, with dawn of the Asian financial crisis in 1997, to put many of those idealistic-minded middle-class reformers into unemployment, making it even harder for them to spend time volunteering at organizations dedicated to reforms.
As Thai reformers slowly drifted off, a telecommunications tycoon Thaksin Shinawatra used his fortune to build a political party. He bought up politicians to join his party. To soften the blow and an at the same time trying to appeal to the larger part of the Thai society, the poor, Thaksin initiated a well-thought combination of entrepreneurial inducement and grassroots empowerment projects, including inexpensive health care schemes and loans to villages to start businesses.
In 2001, Thaksin became the elected PM, and showed little love for democracy. He used his power to threaten Thailand’s free media, eviscerate its independent civil service, and launch a campaign against insurgents in the Muslim south. He rewarded political allies and punished political enemies. In 2005, Thaksin was reelected, again with massive support from the poor, and largely thanks to the lackluster opposition of the Thai middle classes, which by then had grown disillusioned with democracy, believing it had delivered only elected autocracy. The reaction was prompt. Another row of street protests in 2006, whereby Thai middle class once again took to streets, hoping to topple the elected (autocratic) government. The result was a military coup of 2006. Thaksin fled into exile.
The military coup triggered an economic meltdown. Thaksin might have damaged the country’s weak democracy, but the military ruined it. It shredded the reformist constitution and set the stage for today’s Thai government, which unleashed massive force against demonstrators who gathered in the streets of Bangkok in spring 2010.
Thaksin is once more back to the country, in a proxy way, via the elections favoring his sister’s party and her as a PM.
How to avoid a similar democracy failure in MENA? It is essential to create and keep independent government watchdogs, new and independent press outlets. Introduction of government policies to reduce economic inequalities is also vital, allowing an increasing transition from low to middle class. Lastly, while a charismatic (or not so much) leader is a good focal point for rallying reformists, a more important and longer-term reform is to induce a knowledge economy and infrastructure facilitating foreign investment and (especially foreign-owed) property rights/protection.
We fail to advance towards future. We advance not to the 22nd century but more to the period corresponding to 8th-15th centuries AD. Below a reprint of an excellent article providing the necessary reasoning.
The middle of the 21st century will resemble nothing so much as the Middle Ages of the 8th to 15th centuries, from the sacking of Rome by the Visigoths, in 410, to the fall of Constantinople, in 1453. This was a long and uncertain period and thus an ideal metaphor to characterize our times. It was an age of plagues and progress, commercial revolutions, expanding empires, crusades, city-states, merchants, and universities. It was multipolar, with expanding empires on the Eurasian landmass, and apolar, with no one global leader. The new Middle Ages—synonymous with the age of globalization—have already begun.
First let us take the empires. Charlemagne’s efforts to resurrect the Roman Empire have been succeeded, over a millennium later, by the multipronged armadas of Brussels Eurocrats steadily colonizing Europe’s periphery, in the Baltics, the Balkans, and, eventually, Anatolia and the Caucasus. The Eurocrats’ book is not the Bible but rather the acquis communautaire: the 31 chapters of the Lex Europea, which is rebuilding EU member states from the inside out. By 2040, even depopulated Russia, with any luck, will be an EU member and the West’s front line against the far more populous East.
By then, a rebranded, globalizing China will be just a decade shy of the centennial of its civil war’s end, in 1949; the Communist Party has long declared that 2050, not 2008 (the year of the Beijing Olympic Games), will mark the country’s real coming-out party as a superpower. A half century from now, China may still be the world’s most populous country, and if the exploits of its 15th-century explorer–statesman Zheng He are any guide, its demographic, commercial, and strategic presence from Africa to Latin America—to say nothing of its diplomatic and cultural dominance in East Asia—will have substantially increased.
The world’s third center of gravity will be the United States, demographically stable but also more thoroughly amalgamated with Latin America. Almost a century after John F. Kennedy’s Alliance for Progress, the country will have rediscovered its southern neighbors, especially Brazil, for an industrial partnership to boost the Western hemisphere’s competitiveness against Asia—and to achieve energy independence from the Middle East.
What then of the Middle East, the current center of geopolitical travails? Monarchies may still support dreams of a caliphate, but a unified Islamic ummah, such as the Abbasid empire attempted, is unlikely to emerge. Global energy resources will be more diversified than they are today, so oil and petrochemicals will sustain only a modest degree of Arabian cultural expansionism, even if they still support a few Islamic crusades. With something of a reformation under way in parts of the Muslim world, one of the most practiced religions on Earth will be ever more fractured and embedded in diverse geographies, much as Christianity is today.
Meanwhile, the resurrection of the city-state, the most prominent medieval political unit, will continue. To the current list of global cities—Dubai, Hong Kong, London, Los Angeles, Miami, New York, São Paulo, Shanghai, Singapore, and Tokyo—we may add additional globalized nodes, such as Alexandria, Istanbul, and Karachi along major trade routes. Now, as then, city-states are commercial hubs all but divorced from their national anchors, reminding us that corporate actors will be paramount well into the future. City-states will pay for protection as global security privatizes further into corporate hands—the 21st century’s knights, mercenaries, and condottieri. Today’s sovereign-wealth funds, fused with city-state savvy, will be tomorrow’s Hanseatic League, forming capital networks that disperse the newest technologies to nearby regions. Not Oxford and Bologna, but rather Silicon Valley, Singapore, Switzerland, and their like will be the standard-setting centers.
The Middle Ages witnessed a number of innovations—from the cannon to the compass—that were geared to intensified global exploration. In the 21st century, the speed of communication and transport will bring us ever closer to simultaneity. As the ranks of billionaires soar beyond Gates, Branson, and Ambani, mega-philanthropists will become the postmodern Medicis, financing explorations in outer space and the deep sea alike and governing territory and production in the manner of medieval princes.
And, as in the Middle Ages, humanity faces diseases and invasions in the decades ahead. AIDS, malaria, SARS, and other maladies could become plagues like the 14th-century Black Death. What will be the impact of the coming migratory hordes, potentially unsettled by wars and environmental disasters? Who will be the next Mongols—small, concentrated hordes who violently establish their own version of peace, law, and order? How will contemporary diasporas—the millions of Chinese, Indian, Turkish, and Arab peoples living outside their home countries—blend into European, African, and American societies?
Finally, the fundamental reality of the Middle Ages was feudal social stratification, whose return the global economy may be accelerating. In medieval times, diverse power structures—religious, political, military, and commercial—all vied for control in shifting alliances. All of this is true again today and will remain so until a dominant form, like the nation-state in the 16th century, finally emerges. For now, the state is still in flux: declining in the Near East, resurgent in Asia, and almost nonexistent in Africa. Establishing a new system of global governance will take centuries, hence the uncertain leadership and complex landscape of the mid-21st century. The next Renaissance is still a long way off.
All that is solid melts into air, all that is holy is profaned.
Occupy Wall Street is the visible symptom of societal sickness induced by “bad” capitalism. It highlights the fact that more and more people are starting to think Karl Marx was right about unregulated/loosely regulated markets. An image below does a pretty good notional mapping.
Marx welcomed capitalism’s self-destruction. He was confident that a popular revolution – a grassroots revolution of proletariat spreading from city to city – would occur and bring about a communist system, an egalitarian and fair system where everyone will have his/her chance to be heard, get an employment and lead a happy life.
He understood well how capitalism destroys its own social base, the middle-class. A self-sustaining middle-class is essential for any healthy and happy society. That was the greatest contribution of Henry Ford, who created the middle-class America. As economists realize, middle-classes are the ones being most affected by bad economic practices on corporate/institutional levels and it is their movements that are currently showing their lion’s head.
Marx considered capitalism as the most revolutionary economic system in history. Hunter-gatherers persisted in their way of life for thousands of years, while agricultural and feudal societies have been in existence many hundreds of years. In contrast, capitalism (with its early roots in 9th century Muslim world) is evolutionary. It transforms everything it touches, making and unmaking societies, industries, markets and companies.
Most importantly, capitalism also destroyed the very way of life which it preached and depended upon. In the UK, the US and other developed countries over the past 20-30 years, industries have stalled, markets stagnated, job security gone away and jobs outsourced or discontinued.
More and more people live from day to day, with little idea of what the future may bring. 18th-19th century middle-classes used to think their lives unfolded in an orderly progression. It seems no longer to be the case with middle classes of 21st century. There seems to be no upwards stairs. We’d be happy if we could stay on the same level.
While capitalism created and accelerated the industrial revolution, its detrimental effect, especially during last few decades, has given to most people unstable, precarious lives. Admittedly, middle-class incomes are higher then 100 years ago, but there is little effective control over the course of our lives/careers.
Unfortunately, Western governments are quite reactive. Their panacea to the crisis is austerity. Even rich from the West now ask for austerity. They don’t realize one important thing. In Victorian times, the rich could afford to relax provided they were conservative in how they invested their money. It is no longer possible in 21st century, where even the rich get bankrupt from one day to another even without any risky undertakings.
Austerity is a band-aid, a short-term relief against current economic and social sickness afflicting most of the developed world. In a time of zero-interest rates, spending/consuming cuts, melting savings, rising prices, and contracting industries, thriftiness and austerity will yield a negative return on money and over time erode the accumulated/preserved capital.
In a society that is being continuously transformed by market forces (capitalism), one cannot abide by or get used to traditional values (and life standards) for long time, risking to end up on the scrapheap. It’s a person who borrows heavily, who starts a business, who goes on creating jobs and initiatives that survives and prospers. That is the foundation of Schumpeter‘s ideology.
Being sympathetic to Marx’s cause but going one step further, Schumpeter realized the inherent self-destructive nature of capitalism and preached entrepreneurship and disruptive innovation to counter this effect by creating and recreating new economic values, in turn resulting in societal values and traditions. Schumpeter, while thinking that capitalism will cause its own demise, didn’t think it would be by means of communism. His idea, “creative destruction,” explains well why grassroots instability takes place and what the potential cure might look like.
Our single-minded focus on the expectations market will continue driving us from crisis to crisis to ruin—unless we act now.
Says Roger Martin, author of Fixing the Game. Perhaps, he is right. Perhaps, we need to lower our expectations. Perhaps, we need to love what we already have rather than want what we don’t. That and “creating incentives for individuals to act in mutually beneficial and productive ways” (Schumpeter would agree) is what might save the Western world.
Perhaps, there is still hope.
How do UN affiliates fare? Let’s review World Food Program (WFP) and World Health Organization (WHO) who are in charge of health and food correspondingly in the UN world of affairs.
Few organizations that were created after WW2 – including the FAO, the World Bank and the World Food Program – tasked with weaving together a safety net for the world’s poorest. Some analysts claim that decades of neglect of agriculture by those agencies have left many countries with less food to feed their people.
The FAO has become the target of increasing criticism. In 2007, an independent review concluded that the agency had lost the confidence of donors, who have steadily reduced funding to the organization over the past decade. That same year, World Bank commissioned an internal review of its agricultural programs in Africa, concluding that “over time, the importance of agriculture in the Bank’s rural strategy has declined.” The bank’s Independent Evaluation Group noted that total international agricultural aid fell from $1.9 billion in 1981 to less than $1 billion by 2001, and that the bank cut its number of agricultural specialists for Africa from 40 to 17 over the past decade.
Over 80% of the world’s poor are in rural areas, but the World Bank seems to have decided, for past 30 years, that if market signals don’t support agriculture – they support low-end tech and junk finance mostly – so it won’t support it either.
Both the EU and the US Congress passed tweaked their legislations, writing off billions for farm subsidies, including for the production of ethanol. That last coupled with the fact that Western (European) governments have continued to stick to an import ban on high-yielding, genetically modified crops, thus dissuading African nations from using a technology that could increase production.
Nonetheless, WFP has been receiving and wielding billions of dollars on poor countries. Where does that money go and what purpose does it serve?
One investigative article sheds light on that question. According to it,
…tens of millions of dollars of aid to Ethiopia during the 1984–1985 famine were used for arms.
…an estimated 50 percent of food delivered by the U.N. agency is essentially being stolen—not only by the WFP’s own personnel and contractors, but also Somalia’s armed militias, some of whom are radical Islamists.
Three Somali businessmen won about 80 percent of the agency’s $200 million in transport contracts last year, in what is described as a 12-year-old “de facto cartel.” One of them, Abdulqadir Nur “Enow,” apparently staged a hijacking of his own trucks in order to sell the food. In another case, the report cites witnesses saying Enow’s company sold hundreds of thousands of dollars of food aid in local markets, an outcome made possible by the fact that WFP depended on a local agency run by Enow’s wife to verify his deliveries. Meanwhile, a second WFP trucking contractor, Abukar Omar Adaani, used his wealth to finance a rebel militia that launched an offensive in Mogadishu last year against Somalia’s U.N.-backed transitional government and African Union peacekeepers. Adaani also persuaded the WFP to fund a road officials said was designed to give Islamist insurgents access to an airstrip, according to the report.
…in Ethiopia (one of the largest recipients of food aid in the world), the WFP has spent millions on contracts with transport companies controlled by the country’s increasingly authoritarian ruling party… claimed the Ethiopian government uses food as a weapon, a mere 12 percent of food reached the people for which it was intended in 2008, according to figures from the U.S. State Department.
…for its $1.2 billion, three-year food-relief program in Afghanistan, the WFP’s trucking and shipping costs for food were two to three times above commercial rates… noted that less than 40 percent of the mission’s budget was actually for food.
WFP’s planned shipping costs to send more than a half billion dollars of food aid to North Korea were inflated — prompting the agency to admit that some of its shipping budget went to companies owned by dictator Kim Jong Il’s government.
All this looks like a morbid plot planned by evil malfaisants, whose sole objective is to waste huge amounts of money in their attempt to perpetuate the end of the (poor parts of the) world. But is it? How is it not then?
Has the demonic Common Agricultural Policy (CAP) been scrapped – it accounted for 48% of the EU’s budget in 2006, i.e. circa 50 billion Euros of keeping alive zombie farming businesses?
- Have the debts of the world’s poorest nations been cancelled?
- Is each country in the world paying its fair share into helping those most in need?
- What about China and Russia and Malaysia and other countries with oil interests in Sudan and other places where their corporate not only damage environments but also cause (indirectly and sometimes quite directly) civil unrest and political turmoil?
World Health Organization (WHO) is considered by many one of the most successful UN affiliates. While unquestionably impactful, it had its fair share of failures in the past. Starting on the positive note though, WHO’s greatest triumph was in 1977 when it announced that it had achieved its aim of eradicating smallpox from the globe. But some of its successes were marred and look bleak in the wake of facts such as that cholera, diarrhoea and tuberculosis still kill thousands of children and adults each year in the developing world despite cures being available. In the case of the latter, misuse of antibiotics has caused severe problems with the disease becoming resistant to the initial treatments.
But before we plunge into its past, let’s review one of its biggest to-date efforts on vaccination and immunization, Global Immunization Vision and Strategy (GIVS).
GIVS was launched in 2006 in cooperation with UNICEF being first of its kind first 10-year plan of tackling global vaccination and immunization matters for most endemic deceases. Its goals are noble and ambitious. But some of its strategies, at least seem to be, quote strange. For example, the “Strategic Area I: Protecting more people in a changing world” contains:
- Strategy 2: Increase community demand for immunization
- Strategy 3: Ensure that unreached people are reached in every district at least four times a year
- Strategy 4: Expand vaccination beyond the traditional target group
What does the Strategy 2 imply? Why would we want an increase in demand for immunization? There is a natural demand, driven by carriers of deceases and those potential at risk of contagion. It is this demand that has to be met, not less, not more. Unless we are talking business, revenue increase and improvement of margins for pharmas regardless of whether there is or not a need for more immunization medicine, something that has had its spotlight and caused much embarrassment for those high flying firms.
Strategy 3 propounds and advocates a quarterly reach for everyone. Why is it 4 times?? Is it because there are four seasons in year? There seems to be no other logic as any infectious decease or epidemic has its own embryo-time, cycles and post-contagious period. Or it is a rule of thumb, a sort of a “just-in-case check-up/immunization”? That would be even dumber as we are dealing here with billions of taxpayer money, significant human and other resource commitments, economies of scale and whatnot. All this is easily convertible into monetary units.
And last but not even close to the least, Strategy 4 sounds like a new idea of a push-sales strategy of a firm that sees its sales stagnate. Traditional group – or so anyone would assume – is the target group which are those who need vaccination/immunization. To propose to enhance it beyond this group sounds little – well, not quite – silly, unless again commercial interests of pharmas are at stake.
Now that the bigger picture and mentality behind GIVS give us some notion about its inspiration – read between the lines – and goals, let’s have a look at numbers. 35% of estimated vaccine costs for 72 poorest countries (which host an estimated 733 million people) comprise 35% of total costs (an estimated $35 billion), the rest of expenditures (65%) spent on systems costs (maintenance of current system and scale up) and campaigns. GIVS assessed that US$ 11–15 billion of the overall resource needs are unmet in those 72 countries, if the GIVS goals are to be reached.
Applying an elementary algebra, we divide the total budget ($35 billion) by a total population (733 million) for those 72 countries. $47 – this is the average to be spent on each person for vaccination/immunization. Next step was to see whether this sum is big or small for stated goals? According to this abstract, the average cost per fully immunized – only against malaria – child (FIC) in Tanzania increases almost linearly from US 4.2 dollars per FIC at a vaccine price of US 1 dollar per dose to US 31.2 dollars at vaccine price of US 10 dollars per dose. What does this tell us? That even nominal costs to fully immunize against malaria are high, and not inclusive of marketing and other administrative expenses. Thoughts? There seems to be something wrong with numbers – or with my brains.
Let’s now focus on WHO’s treatment of swine flu and AIDS.
World Health Organization conceded serious shortcomings in the agencies handling of the H1N1 swine flu pandemic. The most worrying problem included a failure to communicate uncertainties about the new virus as it spread around the world. Keiji Fukuda, the WHO’s top influenza expert, said “The reality is there is a huge amount of uncertainty (in a pandemic). I think we did not convey the uncertainty. That was interpreted by many as a non-transparent process.” Fukuda targeted the U.N. agency’s six-phase system for declaring a pandemic had sown confusion about the flu bug which was ultimately not as deadly as the widely-feared avian influenza.
A vocal minority of scientists and government officials around the world have accused WHO of overplaying the danger of the virus, while others have claimed its decision to declare a pandemic was unduly influenced by commercial interests. Critics have said the WHO created panic about the swine flu virus, which turned out to be moderate in its effect, and caused governments to stockpile vaccines which went unused. Questions have been voiced regarding the WHO’s links to the pharmaceutical industry after companies like GlaxoSmithKline and Sanofi-Aventis made massive profits from producing H1N1 vaccine.
Falsely reassuring words of the officials regarding the “safety” of the swine flu vaccines, developed in haste, are now openly incriminated by the Finnish authorities for causing narcolepsy, a serious neurological disorder, which has been observed in several children and adolescents.
The WHO’s failure to hit its “3 by 5″ target – a plan to put 3 million AIDS sufferers on life-extending antiretroviral treatment by the end of 2005- is the result of it placing too much emphasis on treatment, and not enough on prevention. As a result of this misprioritisation, new cases of AIDS are piling up faster than they can be treated.
Philip Stevens, director of health projects at International Policy Network said: “Instead of learning from its mistakes and changing direction, the WHO is actually asking for more money so it can beef up a strategy that is clearly failing. This is entirely the wrong way to go about fighting AIDS in Africa.”
That was swine flue and AIDS. How is WHO fairing in on other infectious deceases and endemics? According to the Wikipedia entry of “eradication of infectious deceases,” resulting from the global health efforts, smallpox was successfully by WHO in 1977. Rinderpest, on the other hand was finally declared to be eradicated by FAO in 2010. Global eradication is underway for polio (led by WHO, UNICEF and Rotary Foundation) and dracunculiasis (led by Carter center, not WHO).
In regional efforts of elimination established or under way for malaria (initiated by Bill and Melinda Gates and creation/funding of Roll Back Malaria Partnership and their Global Malaria Action Plan), lymphatic filariasis (treatments donated by GlaxoSmithKline and Merck), measles, rubella (WHO missed its own set eradication target of 2010), onchocerciasis (Onchocerciasis Control Programme, a joint collaboration of WHO, World Bank, UNDP and FAO, eliminated onchocerciasis as a public health problem by 2002 but as of 2008, about 18 million people were still infected of which 300,000 permanently blinded, the decease still currently endemic in 30 African countries, with circa 120 million people being at risk for contracting the disease), yaws (WHO has moderate success tackling it), bovine spongiform encephalopathy and Creutzfeldt–Jakob disease.
The above illustrates that, with one important exception of smallpox, WHO has a sidekick’s role (polio, malaria, onchocerciasis), is a loser (tuberculosis, rubella) or almost entirely absent (dracunculiasis, lymphatic filariasis, measles, bovine spongiform encephalopathy, Creutzfeldt–Jakob disease) from the global health playground, shielding itself by (co-) commissioning studies and conducting surveys.
I leave it up to you to judge success rate and “RoI” of WFP and WHO.
Never in human history has so much knowledge been available and accessible, and yet so little curiosity or effort been expended to obtain it.
In 2010 Google estimated that there are about 130 million unique books in the world. Google Books launched in 2004 (by now 15 million books), GoodReads in 2007 (5 million members), Copia in 2009, New York Times e-book best-seller lists in 2011.
What are we doing with all this information and opportunity? What is the most accessed item on the internet? Sex.
“To Read, or Not to Read,” a report based on research conducted in 2007 by the National Endowment for the Arts found that while young Americans spend almost two hours a day watching television, only seven minutes of their daily leisure time is spent reading. Almost half of 18-24-years-old Americans read no books for pleasure.
Societies have always institutionalized inequalities of one sort or another. In the past, the pursuit of knowledge and culture was very much an elite preoccupation. In the Renaissance, for example, whether it was Leonardo da Vinci (scholar/scientist in pursuit of art/knowledge/etc) or the MEdici (commissioning creation of art/knowledge/etc), the engine of culture that produced advances in science/technology/art/philosophy was driven by a minority. It is thus not counter-intuitive that despite the overall increase in educational attainment, a large segment of society reflects “non-elite” interests. In this view, “high” (i.e. educated/intelligent) culture has always been the prerogative of the few/elites. Modern political/economic/social democratization/development has therefore merely placed majority culture (which was always there but not exposed as much) in full view.
The transmission of knowledge/tradition is one of the most important functions of any society. Usually, this function is fulfilled by the intelligentsia/elite/minority of the society. The problem is not that the elite failed to “bring culture to the masses,” but that the usual mode of cultural transmission has been inverted—the supposed culture of the masses has become the currency of the intellectual elite. As the decline in literary reading amongst the most educated indicates, the pursuit of ignorance has become a cultural imperative.
Paris Hilton’s latest leather bag, Brad Pitt’s latest sunglasses and alike are the buzzword and bread of masses who do not and want not to know anything say for example about global economic crises under way, or climate changes that already affect us.
Firstly, modern intelligentsia is no longer a transmitter and beacon of high culture but more a great zombie that spearheads trashy, hippy and vulgar (from Greek term meaning “popular”). In the past, this transfer was impeded by a myriad of factors including, lack of access to information, unavailability of information, transportation/transfer difficulties, information/knowledge reproduction costs, etc.
Youth who has university degrees – if I were to generalize somewhat – is the staple good of the (“intellectual”) society and which represents a large proportion of its future leaders.
Yet, according to professor Bauerlein’s book (2008) “The Dumbest Generation,” more than half of American school leavers score below basic achievement levels even in American history; 52% think that Germany, Italy and Japan were US allies in the WW2. It is the Digital Age which has, he postulates, stunted and diminished not only the knowledge young people attain, but the very tools they require to attain it. Calculator – adding numbers. Google Translate – translate entire text without review/analysis and thought. Baroness Susan Greenfield uses the term “mind change” to highlight the potential danger to human cognitive development in the unmonitored and unregulated exposure of young minds to digital technology/media.
Second reason, apart from reversal of knowledge transfer from the elite to masses, is the manner in which education is “packaged” and delivered at schools/universities. History books, for example, are narrow in their scope and tend to have biases (for example, history Easter Europe usually doesn’t get much adequate exposure in most modern European historic treatises – a notable exception is Fischer’s history of Europe). Thus, packaging is wanty. Delivery as well became less comprehensive as teachers are less and less educated/prepared for their jobs.
A third important aspect is that history has become more idealized/romanticized. In the pursuit of “real history,” history courses depict an ideological construct that they fabricate largely in the absence of evidence or filling in the “desired” course of actions (depending on history and politics of a country). Many contemporary history courses are actually a-historical, in which the social experience and context of the past float in a timeless and eventless “now” and where all regional/temporal differences are ignored.
Socrates realized that to “know thyself” one has to go through interaction with others. We are social animals, and understanding the “other” is essential to how we live and learn. The process of gaining this knowledge to inner worlds of others is called theory of mind. It’s a developmental process whereby children gradually achieve understanding that their mental view and perception of the world is different from that of others. Older children begin to be able to place themselves in someone else’s position, to understand something from someone else’s point of view.
Reading – check the fabulous introduction to Left Hand of Darkness by Ursula LeGuin why we need to read – is the ultimate form of exercise of theory of mind. It places us within the consciousness of both the writer and the characters of the book, while also giving us access to the writer’s world/experiences/imagination.
Current trend is that people want to be read, they don’t want to read. They don’t have time, nor feel there is much knowledge (beyond what they already know) that can enrich them – there is always some excuse.
The failure of our social/cultural institutions to counterbalance unwanted consequences of modern socio-technological pressures is what might bring to the point of make-or-break our modern society and its intellectual and economic achievements.
There are specks of hope though. In the spring of 1971, a librarian Marguerite Hart set out to inspire the Troy (America) youngsters to read and love the library. Her letter-writing campaign invited writers, actors, musicians, politicians to share what made reading special for them. She got 97 letters, including notes from Neil Armstrong and Isaac Asimov. The collection became known as Letters to the Children of Troy.
A famous story from IBM told of a man who made a $10M error. He was hauled up before the big boss where he expected to be sacked. Pre-empting this, he apologized and offered his resignation. Refusing the resignation, the boss said ‘Goodness, man, we can’t lose you now! We’ve just spent $10M on your education!’
Let’s focus on America and its incumbent leader, the 1st ever African-American to become a president of the US. Do you remember his promise and inspiration he induced in the entire world? Internet was abuzz with positivity, hope and visions of a truly positive America. That was back in 2008.
We are in the 3rd quarter of 2011. A quick search of term “Obama failures” brings in an excess of 12 million search results on Google. Isn’t this something?
There is “Obama fail blog” which aims to document all Obama blunders and eventually publish a book with all stories.
There is also “Obama lies” which features an impressive list of lies and failures – videos and articles from WSJ, Huffington Post, CNN, and other non-scam or radical/extremist-type media – in addition to a “Submit Editorial” section, which starts off by saying that the online visitor is likely to be on that page “by searching for ‘Obama Lies’. ObamaLies.net is a stage for people upset with the unkept promises of this administration to share their frustrations.” Its “Obama lies directory” section contains a big number of resources, including blogs, video links, and articles. Not forgetting about its own “commercial” side, the site sells branded t-shirts with “Obama Sucks” and alike for $20-30 apiece. This site has been up – if blog archive is any indicator – since March 2008 but contains entries starting June 2008, in itself a telling sign.
Curious about this “blog,” I had a quick look at Alexa.com, the web ranking engine of the Internet. According to Alexa.com, the audience (with an estimated 86% being in America) of this website comprises mostly of 35-64, predominantly male visitors with some college education who have no children. Doesn’t this sound like a middle class, average-educated, unemployed/freelance divorced/single American?
There are high flyers. Last year, Arianna Huffington, founder of Huffington Post who ranks 28th on “The world’s 100 most powerful women“, gave an interview to the Time magazine about her book “Third World America,” in which, the first 165 pages look like a catalog of horrors describing the decline of America and an undeniable and obvious role of Obama 2008 campaign and its subsequent “execution.”
There are the Republicans. Mitt Romney, the former governor of Massachusetts who currently leads in early polls for the Republican nomination, issued a video of a shuttered steel plant (that closed down in January 2011 after struggling for years) Allentown Metal Works, which Obama visited in 2009, to attack the president.
There are heavyweights. Nouriel Roubini aka Dr. Doom, the influential Italian economist who predicted the current economic recession, was forthcoming when he said, among others, that Obama’s presidency was heading for “fiscal trainwreck,” that his economic proposals “won’t make a difference” and that Obama’s spending freeze is just a “spare change.”
There are creative Wall-Street types too who churn out both wheat and chaff. A recent WSJ article, features “Snapshots from President Obama’s efforts to improve America’s standing in the world, 923 days into his administration” and an alphabetic list – all English letters are present – of info snippets offering statistical details, historic comparisons (not in Obama’s favor), and broken promises. Conspicuous are some comparisons such as the fiscal deficit of 3% in 2008 as opposed to an estimated 11% of GDP in 2011 and the then (November 2008) president-elect Obama’s promised creation of 2.5 million new jobs by 2011, whereas having shed 3.3 million jobs by October 2010.
Let’s be frank. We all commit mistakes, some big, some small; our employers, families and spouses, being considerate, shoulder those mistakes and think of them – best case scenario – as “investments” in our education like in the opening story about IBM or sunk costs/wasted resources – worst case scenario – which entail lay-off/other forms of downgrading.
Obama is no exception. Admittedly, he made and still makes errors, but with the particularly burdensome fiscal debt, the reeling economy, the ever-increasing unemployment and the real scope of the 2008 economic crisis finally unraveling itself, his (under) reactions might eventually have an even more grave consequences for America and the world. As it succinctly points out here, it is not clear
which tragedy is the more troubling: the failure to see the true scope of the disaster when accurate numbers weren’t available, or the failure to see it now that they are.
If Obama only did?
Curiously though, does Obama Google his name from time to time? What would he think/do if he saw what there is to see?
“One man with courage is a majority.” Thomas Jefferson
My last post was about the disarray in Europe. What about America?
Let’s start with some interesting statistics. The famous American “fruit” company, Apple, according to the latest financial report, now has more cash to spend than the American government. While in itself not a critical factor, this still poses a sort of dilemma – is business so much ahead of the government in America?
In the backdrop of the on-going debt debate, Barack Obama looks like a man who picked a fight he is unable to finish. But wait. Obama just announced that Republican and Democratic leaders reached an agreement on raising the US debt limit and avoiding default. The deficit reduction is meant to happen over the period of 10 years. And both sides went to a seemingly lose-lose compromise just to get the deal. Will it hold or even pay off?
The debt-related stand-off in Washington is political in nature, having been initially thrust upon incredulous investors. Increasing America’s overdraft (which, according to Government Accountability Office, GAO, has been increased 74 times over the past 50 years) beyond $14.3 trillion (or facing the very 1st default in its history) should have been relatively simple. But Republican congressmen, furious about big government, have recklessly used it as a political tool to embarrass Obama.
America’s fiscal problem is not now — it should be spending to boost recovery — but in the medium term. Its absurdly convoluted tax system (allegedly changed 579 times only during last year) is very inefficient, and there is speculation that ageing of its baby-boomers will push its big number of entitlement programmes into bankruptcy. Obama set up a commission to examine this issue and until recently completely ignored its sensible conclusions. For long time, Obama also held the illusion that the panacea to the deficit is to tax the rich (top 5% who already pay 60% of taxes).
The problem, in America like in Europe, lies not just in the weak/inconsistent leadership and inability to commit to radical economic measures necessary to cure the ailing economy, but also in the political structures. Just like in Japan, its dysfunctional politics were stemming from its one-party system, in American Congress, the (moderate) centre — conservative Democrats and liberal Republicans — has collapsed, in part because partisan redistricting has handed over power to the extremes, ushering it into a radical quasi-one-sided system, not unlike the Japanese.
But American politics is less broken than many think or allege. Since 2009, Congress has passed a huge stimulus bill, ARRA (although there are 1.3 million fewer private-sector workers today than when the ARRA was passed), aimed at economic recovery, evidence that the legislature is still able to get things done.
American economy is becoming increasingly vulnerable. New data continue to reveal just how weak growth was in the 2nd quarter of 2011. The economy has expanded at a 1.3% annual pace. Markets are declining, and businesses are building up cash reserves as insurance against the worst. After two years of pitifully slow recovery, while tens of millions of workers are unemployed (currently at about 14 million) and wages are flat, the government is doing little to get back to economic growth.
Some possible solutions to the ailing American economy include:
- Government size to be reduced (public sector, expenditures) in order to put a dent in this debt.
- Congress to accept cuts on entitlements.
- Government to create a favorable environment for job creation; the private sector does the rest (recently, McKinsey conducted a research asking, “What is the single most important step the U.S. should take to create more jobs” and published the responses here).
- Continue pursuing/following-up with taxes for the top 5% (to be invested, for example, in increasing financial aid for college students).
- Move some (according to certain criteria) of 46% of American population, who pay no Federal income tax, into the ranks of the remaining 54%.
- Impose a national sales/VAT tax. Tax consumption (not investment) and reward savings.
- Let the capitalism (supply and demand) solve the housing problem instead of introducing artificial measures.
- Let the zombie (aka bailed out) banks/firms go, which might result (for some of them at least) in chapter 11/bankruptcy and making them (in majority of cases) downsize and restructure rather than liquidate.
- Wind down American military engagements abroad (two wars, Iraq and Afghanistan, would save up to $150 billion/year in addition to withdrawing, at least partially, 53,000 military personnel from Germany, 36,000 from Japan and thousands more in another 133 countries).
I started by quoting Jefferson and so I shall finish, hoping that Obama and Congress will act before it is too late.
“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” Thomas Jefferson
Europe is in disarray.
Appearance-wise and disregarding petty differences, the EU-27 are marching on the spot on foreign policy, defence, Schengen and the single market with the exception, notable but again not yet really convincing, of progress on financial regulation and supervision.
A layer deeper though, one encounters seemingly impassable hurdles of sovereign debt, vulnerable and domino-like arrangement of banks, and a poorly-designed Eurozone, the combined effect of which risk to disintegrate the Euro (for which the crisis was originally brought on by investors with genuine worries about the solvency of several euro-zone countries), on whose foundations the united European economic system was built. It is clear that economic integration has exhausted its potential, which is more limited than anyone had imagined at the beginning, for ensuring structural convergence of industry between Member States and ameliorating weak growth performances.
Presently, Europe appears to be heading towards a decade of stagnation with the triple threat of nationalism, populism and protectionism which is being dragged behind unemployment (9.9% and among young workers, more than twice that much). Industrial activity is already shrinking in Greece, Ireland, Italy, Portugal, and Spain. The time is coming when a new path towards integration, political this time, will reveal itself as indispensable. But no consensus exists for a new treaty. Ad-hoc formulas will therefore have to emerge as short term Band-Aids, exploiting the existing potentialities of the Lisbon treaty to be followed by long-term formulas, based on a complete revisit and revamp of European economic, social and political values and vision driven by a need for sustainability and prosperity.
Europe also finds itself faced with the colossal challenge of having to mobilize public opinion. But because of the lack of a real consciousness of European citizenship, public opinion is at best passive and at worst euro-sceptic. To mobilize it will demand the unveiling of a “European plan” and the rallying of a majority buoyed by the perception of a commonality of destiny on the economy and defence, two inseparable pillars.
European politicians, led by Angela Merkel, have gone to absurd lengths to avoid admitting two truths: that Greece is bust; and that north Europeans (Germans in particular) will end up footing a good part of the bill. The current rescue package reduces Greece’s debt, but not by enough to give it a genuine chance of recovery. As a result, Greece, and maybe other European countries, will need another bail-out rather sooner than later. To face this (upcoming) problem in a united manner, Europe might get “tighter together” by spawning a fiscal union, hitherto unprecedented, while trying to run away/re-distribute immediate problems.
There is also a part of blame to be laid on dysfunctional politics. In Europe national politicians, answerable to their own electorates are struggling to confront continent-wide problems – thus a crucial misalignment between expectations (by national electorates) and commitments (towards European policies) yielding, on average, ”value-less” results.
European leaders do however know what they need to do. They have been slow in doing for two reasons:
- magnitude of the commitment necessary to save the union is uncertain, and they don’t want to pay a penny more than is necessary, and;
- distribution of commitment costs is uncertain and not guaranteed, and no individual entity wants to pay a penny more than is necessary.
So what are those possible solutions to the ailing EU economy that EU leaders so far fail to carry out? Some might be:
- Peripheral debts to be addressed through austerity.
- Like in case of Ireland, to drop all unsustainable debts, not to continuously slowly the economic recovery.
- The Euro to compete with the national currencies, putting pressure on the ECB, which will ensure that the Euro is a low-inflation currency.
- A form of Eurozone bond, which would largely replace the national eurobonds issued by the individual countries.
- To bolster European emergency funding, which fight failing European banking contagion.
- Financial/fiscal integration to take place, including fiscal transfers to support peripheral economies while they get their budgets in order.
- European Central Bank to stop raising interest rates and being illusioned about inflation.
Just as in Japan two decades ago, politicians have failed to make the structural labor- and product-market reforms essential to spurring growth. Lack of strong leaders was the underlying problem of Japanese economy, which has not recovered yet. The turn has now come for European leadership to show what it is capable of, but there seems to be no leadership.
How do societies fail? Not just average, but also successful ones?
Historically, there are a number of complex, developed and highly-civilized societies that rose, became very successful and the, just as magnificently/incredibly fell, leaving behind testimonies of their greatness.
Jared Diamond outlines few glaring examples in his excellent book “Collapse.” Let’s take Easter Island. Its society built and dragged 80-ton 33-feet-high statues for 10-15 miles, in addition to navigating the Pacific Ocean to and from the most remote islands in the world, also managed to cut down its rich rain-forest and doom itself. With no trees left for making canoes, the Easter Islanders turned to devouring each other. The typical insult to a member of a rival clan was, “The flesh of your mother sticks between my teeth.” The population fell by 90% in a few years, and neither the society nor the island ecology have recovered ever since.
Or take other examples. Failures/collapses of once-powerful societies — the Mayans with the most advanced culture in the Americas, the Anasazi who built six-story skyscrapers at Chaco, the Norse who occupied Greenland for 500 years — or successes of, for example, Tokugawa Japan, which reversed its lethal deforestation, and Iceland, which learned to master a highly fragile environment. Modern times have their parallels to those of history. Rwanda, which lost millions in warfare caused by ecological pressure, and Australia, with its ambitions to overcome a rough environmental history, which still struggles to find a comprehensive solution.
Diamond contends that it’s a society’s failure to think long-term, which has many causes. One common reason is that elites become insulated from the consequences of their actions. Mayan kings could ignore the soil erosion that was destroying their crops just like modern wealthy Americans enjoy sufficient security, education, and retirement benefits, ignoring national as well as global issues that are already affecting their lives, indirectly, and will continue to do so increasingly for future generations.
But is it the only or even the most important problem that causes a society to fail?
Societies are complex entities, and as such failure/success factors, let alone underlying reasons, would hardly be simple to pinpoint – nor would they most probably be simple in their nature, embedding a combinations of smaller factors. There are concurrent conjectures/theories that attempt to explain away one or another aspect of functioning of societies and their subsequent lows/ups. They all, one way or another, base their claims on what is called theory of emergence.
In briefly, “emergence” – popularised in Steven Johnson’s book “Emergence” – is about how complex systems organise themselves, without any apparent direction/plan. Individual units of systems “do their own thing” without knowledge of any overarching aim/scheme, but out of this “chaos” order, pattern and system emerge. In Johnson’s book, classic emergent systems are ant colonies, cities and self-learning software, which, he claims, will bring self-organised order to the chaotic Internet in the not too distant future.
There is a need to differentiate, marked by Mark Bedau and others, between two categories of emergence:
- Weak emergence. Systemic phenomena that are theoretically but not practically reducible to characteristics/functioning of its composite parts. Most complexity theories (for example, modeling, simulation, system laws, etc.) study this form of emergence. Calculations required to predict the resulting phenomena are so complex as to be effectively impossible but instead, these calculations are carried out by means of simulation.
- Strong emergence. Systemic phenomena that are fundamentally not reducible, but are distinct and can exert downward causation on the system from which they emerge. It is mostly a subject of philosophical discourse or considered in competing conjectures/theories of human consciousness, which didn’t evolve much since Nobel laureate Roger Sperry‘s research in 1969. No simulation is possible for this type of emergence.
Why is this relevant to the question of complexity in societies and the question of collapse? There seems to be an important interface between emergence and failure/collapse of complex societies as noted by Joseph Tainter in his book “The Collapse of Complex Societies.”
Tainter looked at several societies that gradually arrived at a level of remarkable sophistication then suddenly collapsed. Everyone of those groups had rich traditions, complex social structures, advanced technology, but despite their sophistication, they collapsed. He looked for some explanation common to these sudden collapses. The answer he arrived at was that they hadn’t collapsed despite their cultural sophistication, but because of it.
According to Tainter, a group of people, through a combination of social organization and environmental luck, found itself with a surplus of resources – management of this surplus made societies more complex, eventually resulting (at least for some of them) in the shift from rural- to urban-centric societies. Early on, the marginal value of this complexity is positive — each additional bit of complexity more than pays for itself in improved output — but over time, the law of diminishing returns reduces the marginal value, until it disappears completely. At this point, any additional complexity becomes a cost. Tainter’s thesis is that when a society’s elite members add a layer of bureaucracy or demand one tribute too many, they end-up extracting all the value from their environment possible to extract and then some more. This overstretching is what ushers complex societies into systemic collapse because, when a stress comes, those societies have become too inflexible to respond. In retrospect, it seems mystifying. Why didn’t these societies just refashion themselves into simpler ones? The answer Tainter gives is that when societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, but because they can’t.
In such systems, there is no way to make things a little bit simpler – the whole edifice is by then a huge, interlocking system not readily adjustable to change/simplification. Tainter doesn’t regard the sudden incoherence of such societies as a conincidence, mistake or failure to think long-term: “Under a situation of declining marginal returns collapse may be the most appropriate response.” Furthermore, even when moderate adjustments could be made, they tend to be resisted, because no simplification fits or is satisfactory to elites.
Let’s now shift gears and look at how emergence theory is (bluntly) being applied to describing modern social frameworks. If we can think of “democracy” as meaning a system through which members of communities organize themselves, rather than a system for controlling them, our democratic systems would be getting closer to being complex, adaptive and self-organizing. But what is wrong in the transference of the insights of “emergence” to political democracy and economic systems is its false analogy between physical systems (for example, ant colonies) on the one hand, and political/social organisation on the other.
Nobody knows exactly how ants organize themselves, but it is obvious each individual ant can’t possibly have any knowledge of the overall system. In fact, ants pick up signals from chemicals called “pheromones,” which they secrete. Scientists showed that if two ants go foraging for food, the ant, which finds food closer, will return quicker, and thus deposit more pheromones than the other ant. This trail will then be followed by others, and an efficient pattern of food foraging is thus established.
Another author, Steve Marcus, in his book “Engels, Manchester and the Working Class” argues that the clear-cut separation of upper and middle classes from workers which “emerged” around the working class areas of Manchester in 19th century was too complex a system to have been planned and thought up in advance. It was perhaps not planned in advance but certainly the outcome of conscious decisions, i.e. decisions of middle and upper class people to live as far away from the workers as possible. This may not have been a planned decision, but it was conscious.
Johnson thus considers cities as classic examples of “organised complexity” or more a “self-organised complexity”. Cities are in fact – like any human society – a dynamic interaction of planning and spontaneity. No one plans in advance the complex system whereby thousands of people get off a train. But that it takes place at all is a function of the underfunding of public transport, and (not least) the decision to build the train station in the first place. Decisions of this kind may not have been simultaneous and may have aggregated over time, but they did not just “emerge” out of thousands of random local/individual decisions. Self-organised complexity interacts with a rather well-organised complexity. Johnson proceeds showing that through the generations cities replicate their basic structure, even if all the individuals and businesses change; they are “patterns in time.”
A recent example of initiating a complex social system, without a recourse to traditional, hierarchic governance system is the Zapatista movement. On August 9 2003, the Zapatistas in the state of Chiapas (Mexico) presented their newly created Zapatista municipal authorities. This was an archetypal example of self-organisation from the bottom up and (not with reference to but) against state authority. This formidable achievement has taken ten years of work in difficult circumstances. In 2000, when 500 Zapatista activists from the communities arrived in Mexico City as part of their national consulta campaign, at least half of them were ill, suffering from different infections and other illnesses. What made them ill? Poverty and a lack of basic medicines like antibiotics, which would have immediately cured most of them. They were lacking basic social, economic and health factors that are usually institutionalized and supprted by a typical centralized government.
Zapatista example proves exactly the point Johnson is trying to make, namely that when delving deeper into the theory of emergence, one discovers that emergent systems are rule-governed. In natural systems the rules are established independently of the units whereas in human society rules and norms of behaviour have to be established consciously.
Stephen Wolfram writing in his book “A New kind of Science” confirms the same idea of complexity being based on a set of simple entities. “Whenever a phenomenon is encountered that seems complex it is taken almost for granted that the phenomenon must be the result of some underlying mechanism that is itself complex. But my discovery that simple programs can produce great complexity makes it clear that this is not in fact correct.” He has devised rules of interaction for those simple entities, known as “cellular automata” which as Ray Kurzweil writes can result in “patterns that are neither regular nor completely random. It appears to have some order, but is never predictable.”
It seems therefore that there is some sort of agreement that many systems (societies, economies, etc.), themselves based on or representing simple entities, are complex in their nature and not necessarily reducible to characteristics of their parts. We do however need to differentiate complex human systems, a mixture of conscious schemes and random choices, and other complex systems (such as ant colonies) where the emerging properties of a complex system are defined by individual random choices only.