Case study: Israel and Palestine, an Alternative Approach
Sixty years after the creation of Israel, the issue of Israel’s existence, the rights of the Palestinians, the issue of a western power on Arab land, and the issue of Arab and Jewish Diasporas financing their respective sides; continues to create a dangerous stalemate in the Middle East.
Every new American president seems to have to address the issue of resolving the dispute between Israel and the Palestinians and the Arab world on a broader scale.
The situation is getting worst rather than better with Israel being recognized as a Nuclear Power, Pakistan having nuclear capabilities, Iran attempting to develop same, and at some future date countries such as Egypt, Syria, Algeria, or Iraq having the wherewithal to develop their own weapons of mass destruction.
We have a situation where Israel is perfectly happy with the status quo, and its foreign policy is focused on destabilizing the Palestinians; maintaining its military supremacy over Egypt, Syria, and Jordan; and ensuring that regimes in other parts of the Arab World do not challenge its nuclear hegemony in the Middle East.
The Palestinians have split into two groups; a radical Islamic Fundamentalist wing (Hamas) with no intention to compromise, and a more docile group, the remnants of the PLO (Fatah) willing to look at a 2 state solution. Moreover, the rest of the Arab world may soon become more radicalised and split between Islamic Fundamentalists and pro Western regimes.
We have the makings of a powder keg with fires rising and falling all around it.
There appears to be no way out. The Israelis will not concede an inch as long as they have military superiority and the backing of the USA. The Palestinians and every other Arab state somehow would like to see Israel magically disappear from Arab lands, just as the Christians did after the Crusades.
This impasse is important for the world to resolve as it resembles somewhat the Balkans prior to the beginning of World War I. For the moment, at least, there is no one to challenge the Israeli/ USA axis. This will not remain this way for long, as world economic and military power shifts, and oil politics change alliances, countries such as China, and Russia may be back on the stage to challenge the Israelis and Americans.
So there is no time like the present to produce some form of lasting peace based on mutual respect and justice. The Israelis cannot be expected to be reabsorbed back into Europe, and the Palestinians will never give up their right to live in their ancestral lands, Palestine.
To solve this situation, radical solutions are required; International negotiations with give and take on both sides can go on forever, unless some basic principles are established as a starting point. These principles might look something like this:
1) There will be only one state and not two, and the state will be secular.
2) Each community will have the right to mange its own cultural and religious affairs.
3) There will be an international tribunal composed of 10 leading jurists agreed to by the International community, and not appointed by either Israel or the Palestinians.
4) Israelis will be able to maintain their current land holdings, but where there is a clear ownership title by Palestinians; they will receive an appropriate compensation from the Israelis or return the land to the rightful owners.
5) The country will have a single constitution focused on individual freedoms and a justice system that is secular.
6) There will be specific protection for minority rights in any constitution, to prevent one group from dominating the other.
7) Both sides will give up the right to bear arms.
8) For a time the defence of the new state will be through UN forces.
9) The new state will focus its internal defence forces in a similar manner as Switzerland or some other small European state, or it will join NATO.
10) All Jews and former Palestinians will have the right to immigrate to this new state if they so wish.
11) Private property will be the bases of land ownership; the state cannot own land unless it’s for infrastructure to facilitate commerce.
12) Religious sites will be apportioned to the appropriate cultural communities and trade and visiting rights negotiated.
Something like this could create a solution to the existing stalemate. How would one get both groups to accept it? One would have to return to pre World War I power politics where the major powers would essentially mandate it. That might get tremendous resentment on both sides.
The alternative is for the US to propose an impartial commission composed of various groups to come up with something based on these principles, and then try to sell it to both sides, by applying International pressure to get the 2 groups to commence to think of a different world, not based on ethnic and religious differences, but on human principles of democracy, justice, and individual freedoms.
A two state solution will never work because both sides will continue to demand access to each others lands. The state of Israel will continue with its destabilization policy; while the Palestinians will continue with their rallying cry of evicting the infidels from their ancestral homeland.
Monday, August 24, 2009
Monday, August 17, 2009
Minority Rights and The Nation State
Minority rights and The Nation State
We live in a world composed of Nation States with significant ethnic majorities, or at least cultural majorities. Russia is supposedly Russian, Germany is German, China is Chinese, Japan is Japanese and so forth. The stereotype is of a nation composed mainly of a cohesive and pure ethnic group with a common cultural affinity. When we look beneath the covers, so to speak, we find something quite different. There is a majority ethnic and or cultural group; however there are many ethnic minorities, culturally different groups, and certainly significant differences of opinion politically. With the concept of majority rule, and democratic institutions, we are all supposed to be part of one big happy family, represented by the State and the history of its people.
One would argue that the greater the ethnic and cultural concentration, the more efficient the state becomes. After all, a common history, culture and ethnic group, should help to align the aspirations of its citizens towards a common goal. In other words, it is assumed that greater alignment will lead to greater cooperation and a higher potential for achieving the common objective; a prosperous, economically and militarily competitive Nation State. After all, classical 19th century Nationalism maintained that an individual would best blossom within his ethnic and cultural group; Two world wars later, and we begin to have some doubts as to the merits of aiming towards a monolithic ethnic and cultural Nation State. Perhaps we would be better off accepting a more diverse ethnic and cultural mix, which might lead us into becoming a more tolerant and culturally aware society.
When we look at countries such as the United States, we can see that to call the US ethnically pure is not within the norms of possibilities. At one point, perhaps before the beginning of the 20th century we might have been able to call it a Nation composed of European descendants with a significant Black minority. Today, one hundred years later we would have to remove the European label, and say that the US is composed of a variety of people from all over the world, with a common American culture, and no particular ethnic purity. One hundred years into the future and we might begin to speak of an American ethnic group. The point being that the most successful nation of the last 100 years is anything but ethnically pure; there is an American culture, but it is composed of many sub cultures. We might say, there is a dominant culture, with lesser sub cultures. Even in this environment, there are significant issues around language, religion, race, regional differences, urban versus rural differences, and class differences. The United States is held together not by ethnicity or cultural affinity, but by common beliefs in individual freedoms, democracy, and the mistrust of government involvement in cultural or religious institutions. It is a country where Jews can be Jewish, Christians can be any number of different sub-faiths, Muslims can be Muslims, and if you believe in voodoo then so be it. Religious rights are protected in the US constitution. Culturally, the state does not attempt to promote one culture over another, and the media is typically viewed as an economic activity with no state interference. Americans are however becoming highly concerned about the rise of Spanish as a language of communication, and historically have shown a degree of racism to match that of any monolithic ethnic state. So, even in a multi ethnic, multi racial, multi cultural State as the United States, minorities have their work cut out if they wish to maintain a degree of independence and not be coerced into the common culture. However, when we compare the freedom that minorities possess in the United States with the lack of freedom of minorities in more monolithic cultures; we have to wonder, what is the rationale for the continued suppression and coercion of these minorities?
The unity of the state is sacrosanct, and this unity, with the exception of the United States, is premised not on common beliefs and individual freedoms, but more on historical land claims, ethnic purity, common language and culture, and the need to protect the mother or father land against old and new enemies. Invariably this includes protection from internal coercion by minorities and somewhat not quite ethnically pure individuals. We therefore have the history of the Jews in Europe, where they may not have been all that different from the common ethnic group they lived with, but were seen as outsiders, different, suspicious, and resented for their success, or lack of success in the case of the Roms or Gypsies. We have all the minority groups from neighbouring states that had to either suppress their Nationality or leave. We have had more recently a mass immigration into western European countries, and the difficulty of being accepted by the majority ethnic groups. In places such as China where the majority Han Chinese are so much the overwhelming majority group, that one would think they would not be worried about giving Tibetans and some other ethnic group some degree of autonomy and self rule; at least as concerns religion, culture, and language. Moreover, the Chinese continue to maintain that they are a monolithic culture, even though there are many regional differences, both culturally and ethnically. Russia, rather than adapting its constitution to the reality of the varied minority groups within its territory, insists on the indivisiveness of Russia and has basically devastated Chechnya and the Chechen people in order to make a point about its integrity as a state.
It seems that rationalizing why the state’s ethnic and cultural purity and its borders must be maintained, is an easy excuse to trample on minority rights. One would even say it is primal, its part of our need to belong, its part of maintaining our identity and the greater identity which the group bestows on us. The idea of a State with common values, but composed of various ethnic minorities, cultural groups, and even different language groups, is something which threatens the very core of who we are. We somehow seem unable to operate as a group unless we have cultural, religious, ethnic, and language similarities. Is it any wonder, that the ideal Nation State was to be culturally, ethnically, religiously and linguistically a monolith, within a prescribed national territory. Was this ideal, ever achieved? Probably not; never the less it is what continues to dictate our view of the world and the people within it. From ridiculous symbols such as National flags and the Olympic flag, with its supposed five races, to National histories emphasizing the maximum geographic range of its national ethnic group, to the achievements in battle, technology, science, culture, and civilization; the National ethnic group is pure, glorious, and not to be let down. We after all, pledge allegiance to the Nation State and its sacrosanct borders.
This would all be great, if it were thus; however, the reality is quite different. I know of no monolithic state, I know of no state with only one religious group in it, I know of no state without cultural or linguistic minorities, I know of no state where its cities are not populated by a variety of people from all over the world. Is it not time to see the state for what it is; a 19th century concept requiring significant revision? The major role of the State after all was to provide security to its citizens, this was achieved by being economically competitive, thus permitting the creation of a standing army to protect both your national and economic interests. In a world with a significant global trade, and a significant economic interdependency, what role is the state providing? It is true that as little as 60 years ago we were involved in a life and death struggle between the forces of evil and the forces of good, as some might argue; however, was this really a struggle between Nations, or was it a struggle for freedom and democratic principles against the proponents of might is right. Certainly both a Nationalistic interpretation and an ideological one could be argued. So it may be somewhat premature to abolish the Nation State and open ourselves to the acceptance of international standards of conduct, composed of common beliefs, values, and respect for human beings and human diversity.
Can we at least commence the process by which minorities are granted certain rights? Minorities should have the right to practice their culture, language and religion, without fear of coercion or persecution. Minorities should have the right to not pay taxes for items that are essentially meant to marginalize them or force their integration into the larger groups’ culture. In other words, states should refrain from pushing one culture over another, one religion over another, or one language over another. Minorities should be protected against economic discrimination. Minorities should have equal representation under the law. Minorities should have the right to associate and support each other as they see fit. In a larger sense, the people needing protection are the minorities, not the majority. The argument will be that this type of state will break apart, as the cohesiveness of the state will be undermined. This does not have to be so, if the state argues for a set of inclusive values, such as individual freedom, democracy, equal justice under the law, and protection for all under the constitution. After all this has worked in the United States of America. As a European from a supposed monolithic ethnic state, it had always amazed me how many blacks were prepared to fight for their country, even though to a large extent they were severely discriminated against both by fellow citizens and by the state. What I did not understand, at the time, was their belief in the American constitution and the civil rights movement in getting America to recognize that its black citizens had equal rights to their white brethren. By doing their part in defending the United States they would have a greater authority in demanding that those rights were recognized. Today we have a black US president.
The Nation State will have greater cohesive ability if it focuses on common values, then if it focuses on a non-existing monolithic ethnic group to justify its existence. As security needs diminish, as the state becomes less important in the economic success of its citizens, as international economic and cultural integration evolves, the state will fall apart; unless it has beliefs and values that transcend cultural and ethnic grounds.
If we are not careful, we will return to times where masses of people were forced to move and return to recreate the ethnic pure states from whence they came. This would set back human civilization, and contribute to greater conflicts and possible military interventions.
We need to understand that the majority must consciously protect its minorities and ensure their equality in all areas, otherwise ethnic, cultural, religious and political strife will ensue. In a world where migration and economic integration continues at a relentless pace to the benefit of all humanity; we need to ensure that the Nation State concept of an ethnically and culturally pure citizenry is viewed as a phenomenon of our past. A progressive ethnically mixed, multicultural Nation State focused on individual freedoms and reflective of the dynamism and diversity of today’s major urban population needs to be championed and protected as a symbol of human cooperation and cohabitation, hopefully leading to less tension between Nation States and especially between the majority community and the growing list of minority groups.
We have come a long way from the cohesiveness and belonging to the tribe, and need to recognize that we have evolved beyond the ethno-centric Nation State. Our future lies not in protecting our turf or territory from all who would imperil it, but rather in the opening ourselves up to other cultures and ideas, within a framework of equality for all and respect for others different but never the less acceptable lifestyle.
Does this mean that competition between people will end? No it implies competition at both a cultural and ethnic level, but competition based on merit and ability to influence others; not competition based on threats, coercion, and the advantage that majority rule might temporarily bestow on us.
In the past we protected ourselves from the unknown by a close allegiance to our fellow ethnic or cultural group. Today we should protect ourselves by associating with others and making common cause against anyone that would endanger our individual freedoms and our right to associate with those with which we feel an affinity. As long as we do not infringe on anyone else’s rights and freedoms, then it is no one’s business as to how we choose to lead our life, regardless of which Nation State we are citizens of. Our protection against tyrants, and other would be domineering groups, lies in the power of our ideas and sharing those with other common minded individuals and coming to the aid of any part of the Global Village that might be under attack.
If Tibetans are persecuted and suppressed, it matters to us all. If Chechens are murdered for their desire to be free of Russian oppression and domination, it matters to us all. If Kurds are not allowed to have some minimum form of cultural self rule, it matters to us all. If the Basques, the Catalans, The Corsicans, the French Canadians, and any other cultural or ethnic minority want some form of local cultural independence then we should all support it. Where we should draw the line is where these same groups or others are interested in creating the equivalent of the oppressive state they are interested in separating from.
Just as we should be decentralizing cultural and ethnic power, we should be centralizing economic and legal statutes based on the concept of equality, individual freedoms, and respect for minority rights. Our future lies with the growth and enlightenment of all mankind, not in protecting and advancing the power and influence of our little part of the globe that our Nation State represents. After all, power no longer rests with the size and productivity of our agricultural fields, but with the ability to add value through wider economic cooperation and technological innovation. Moreover, our challenges do not lie in protecting and enhancing our little corner of the world, but with the management of our planet’s resources in an equitable manner ensuring the long term sustainability of our economy and our planet. The best way to achieve this is through some form of equitable distribution and inclusiveness in the management of the economy and the eco-system of all of the planet’s citizens. For the moment, as a first step, minorities must be made to feel full and equal partner in the decision making process. At some future point, the concept of the Nation State will fade away, to be replaced with some yet to be defined global distribution of power through international institutions.
We live in a world composed of Nation States with significant ethnic majorities, or at least cultural majorities. Russia is supposedly Russian, Germany is German, China is Chinese, Japan is Japanese and so forth. The stereotype is of a nation composed mainly of a cohesive and pure ethnic group with a common cultural affinity. When we look beneath the covers, so to speak, we find something quite different. There is a majority ethnic and or cultural group; however there are many ethnic minorities, culturally different groups, and certainly significant differences of opinion politically. With the concept of majority rule, and democratic institutions, we are all supposed to be part of one big happy family, represented by the State and the history of its people.
One would argue that the greater the ethnic and cultural concentration, the more efficient the state becomes. After all, a common history, culture and ethnic group, should help to align the aspirations of its citizens towards a common goal. In other words, it is assumed that greater alignment will lead to greater cooperation and a higher potential for achieving the common objective; a prosperous, economically and militarily competitive Nation State. After all, classical 19th century Nationalism maintained that an individual would best blossom within his ethnic and cultural group; Two world wars later, and we begin to have some doubts as to the merits of aiming towards a monolithic ethnic and cultural Nation State. Perhaps we would be better off accepting a more diverse ethnic and cultural mix, which might lead us into becoming a more tolerant and culturally aware society.
When we look at countries such as the United States, we can see that to call the US ethnically pure is not within the norms of possibilities. At one point, perhaps before the beginning of the 20th century we might have been able to call it a Nation composed of European descendants with a significant Black minority. Today, one hundred years later we would have to remove the European label, and say that the US is composed of a variety of people from all over the world, with a common American culture, and no particular ethnic purity. One hundred years into the future and we might begin to speak of an American ethnic group. The point being that the most successful nation of the last 100 years is anything but ethnically pure; there is an American culture, but it is composed of many sub cultures. We might say, there is a dominant culture, with lesser sub cultures. Even in this environment, there are significant issues around language, religion, race, regional differences, urban versus rural differences, and class differences. The United States is held together not by ethnicity or cultural affinity, but by common beliefs in individual freedoms, democracy, and the mistrust of government involvement in cultural or religious institutions. It is a country where Jews can be Jewish, Christians can be any number of different sub-faiths, Muslims can be Muslims, and if you believe in voodoo then so be it. Religious rights are protected in the US constitution. Culturally, the state does not attempt to promote one culture over another, and the media is typically viewed as an economic activity with no state interference. Americans are however becoming highly concerned about the rise of Spanish as a language of communication, and historically have shown a degree of racism to match that of any monolithic ethnic state. So, even in a multi ethnic, multi racial, multi cultural State as the United States, minorities have their work cut out if they wish to maintain a degree of independence and not be coerced into the common culture. However, when we compare the freedom that minorities possess in the United States with the lack of freedom of minorities in more monolithic cultures; we have to wonder, what is the rationale for the continued suppression and coercion of these minorities?
The unity of the state is sacrosanct, and this unity, with the exception of the United States, is premised not on common beliefs and individual freedoms, but more on historical land claims, ethnic purity, common language and culture, and the need to protect the mother or father land against old and new enemies. Invariably this includes protection from internal coercion by minorities and somewhat not quite ethnically pure individuals. We therefore have the history of the Jews in Europe, where they may not have been all that different from the common ethnic group they lived with, but were seen as outsiders, different, suspicious, and resented for their success, or lack of success in the case of the Roms or Gypsies. We have all the minority groups from neighbouring states that had to either suppress their Nationality or leave. We have had more recently a mass immigration into western European countries, and the difficulty of being accepted by the majority ethnic groups. In places such as China where the majority Han Chinese are so much the overwhelming majority group, that one would think they would not be worried about giving Tibetans and some other ethnic group some degree of autonomy and self rule; at least as concerns religion, culture, and language. Moreover, the Chinese continue to maintain that they are a monolithic culture, even though there are many regional differences, both culturally and ethnically. Russia, rather than adapting its constitution to the reality of the varied minority groups within its territory, insists on the indivisiveness of Russia and has basically devastated Chechnya and the Chechen people in order to make a point about its integrity as a state.
It seems that rationalizing why the state’s ethnic and cultural purity and its borders must be maintained, is an easy excuse to trample on minority rights. One would even say it is primal, its part of our need to belong, its part of maintaining our identity and the greater identity which the group bestows on us. The idea of a State with common values, but composed of various ethnic minorities, cultural groups, and even different language groups, is something which threatens the very core of who we are. We somehow seem unable to operate as a group unless we have cultural, religious, ethnic, and language similarities. Is it any wonder, that the ideal Nation State was to be culturally, ethnically, religiously and linguistically a monolith, within a prescribed national territory. Was this ideal, ever achieved? Probably not; never the less it is what continues to dictate our view of the world and the people within it. From ridiculous symbols such as National flags and the Olympic flag, with its supposed five races, to National histories emphasizing the maximum geographic range of its national ethnic group, to the achievements in battle, technology, science, culture, and civilization; the National ethnic group is pure, glorious, and not to be let down. We after all, pledge allegiance to the Nation State and its sacrosanct borders.
This would all be great, if it were thus; however, the reality is quite different. I know of no monolithic state, I know of no state with only one religious group in it, I know of no state without cultural or linguistic minorities, I know of no state where its cities are not populated by a variety of people from all over the world. Is it not time to see the state for what it is; a 19th century concept requiring significant revision? The major role of the State after all was to provide security to its citizens, this was achieved by being economically competitive, thus permitting the creation of a standing army to protect both your national and economic interests. In a world with a significant global trade, and a significant economic interdependency, what role is the state providing? It is true that as little as 60 years ago we were involved in a life and death struggle between the forces of evil and the forces of good, as some might argue; however, was this really a struggle between Nations, or was it a struggle for freedom and democratic principles against the proponents of might is right. Certainly both a Nationalistic interpretation and an ideological one could be argued. So it may be somewhat premature to abolish the Nation State and open ourselves to the acceptance of international standards of conduct, composed of common beliefs, values, and respect for human beings and human diversity.
Can we at least commence the process by which minorities are granted certain rights? Minorities should have the right to practice their culture, language and religion, without fear of coercion or persecution. Minorities should have the right to not pay taxes for items that are essentially meant to marginalize them or force their integration into the larger groups’ culture. In other words, states should refrain from pushing one culture over another, one religion over another, or one language over another. Minorities should be protected against economic discrimination. Minorities should have equal representation under the law. Minorities should have the right to associate and support each other as they see fit. In a larger sense, the people needing protection are the minorities, not the majority. The argument will be that this type of state will break apart, as the cohesiveness of the state will be undermined. This does not have to be so, if the state argues for a set of inclusive values, such as individual freedom, democracy, equal justice under the law, and protection for all under the constitution. After all this has worked in the United States of America. As a European from a supposed monolithic ethnic state, it had always amazed me how many blacks were prepared to fight for their country, even though to a large extent they were severely discriminated against both by fellow citizens and by the state. What I did not understand, at the time, was their belief in the American constitution and the civil rights movement in getting America to recognize that its black citizens had equal rights to their white brethren. By doing their part in defending the United States they would have a greater authority in demanding that those rights were recognized. Today we have a black US president.
The Nation State will have greater cohesive ability if it focuses on common values, then if it focuses on a non-existing monolithic ethnic group to justify its existence. As security needs diminish, as the state becomes less important in the economic success of its citizens, as international economic and cultural integration evolves, the state will fall apart; unless it has beliefs and values that transcend cultural and ethnic grounds.
If we are not careful, we will return to times where masses of people were forced to move and return to recreate the ethnic pure states from whence they came. This would set back human civilization, and contribute to greater conflicts and possible military interventions.
We need to understand that the majority must consciously protect its minorities and ensure their equality in all areas, otherwise ethnic, cultural, religious and political strife will ensue. In a world where migration and economic integration continues at a relentless pace to the benefit of all humanity; we need to ensure that the Nation State concept of an ethnically and culturally pure citizenry is viewed as a phenomenon of our past. A progressive ethnically mixed, multicultural Nation State focused on individual freedoms and reflective of the dynamism and diversity of today’s major urban population needs to be championed and protected as a symbol of human cooperation and cohabitation, hopefully leading to less tension between Nation States and especially between the majority community and the growing list of minority groups.
We have come a long way from the cohesiveness and belonging to the tribe, and need to recognize that we have evolved beyond the ethno-centric Nation State. Our future lies not in protecting our turf or territory from all who would imperil it, but rather in the opening ourselves up to other cultures and ideas, within a framework of equality for all and respect for others different but never the less acceptable lifestyle.
Does this mean that competition between people will end? No it implies competition at both a cultural and ethnic level, but competition based on merit and ability to influence others; not competition based on threats, coercion, and the advantage that majority rule might temporarily bestow on us.
In the past we protected ourselves from the unknown by a close allegiance to our fellow ethnic or cultural group. Today we should protect ourselves by associating with others and making common cause against anyone that would endanger our individual freedoms and our right to associate with those with which we feel an affinity. As long as we do not infringe on anyone else’s rights and freedoms, then it is no one’s business as to how we choose to lead our life, regardless of which Nation State we are citizens of. Our protection against tyrants, and other would be domineering groups, lies in the power of our ideas and sharing those with other common minded individuals and coming to the aid of any part of the Global Village that might be under attack.
If Tibetans are persecuted and suppressed, it matters to us all. If Chechens are murdered for their desire to be free of Russian oppression and domination, it matters to us all. If Kurds are not allowed to have some minimum form of cultural self rule, it matters to us all. If the Basques, the Catalans, The Corsicans, the French Canadians, and any other cultural or ethnic minority want some form of local cultural independence then we should all support it. Where we should draw the line is where these same groups or others are interested in creating the equivalent of the oppressive state they are interested in separating from.
Just as we should be decentralizing cultural and ethnic power, we should be centralizing economic and legal statutes based on the concept of equality, individual freedoms, and respect for minority rights. Our future lies with the growth and enlightenment of all mankind, not in protecting and advancing the power and influence of our little part of the globe that our Nation State represents. After all, power no longer rests with the size and productivity of our agricultural fields, but with the ability to add value through wider economic cooperation and technological innovation. Moreover, our challenges do not lie in protecting and enhancing our little corner of the world, but with the management of our planet’s resources in an equitable manner ensuring the long term sustainability of our economy and our planet. The best way to achieve this is through some form of equitable distribution and inclusiveness in the management of the economy and the eco-system of all of the planet’s citizens. For the moment, as a first step, minorities must be made to feel full and equal partner in the decision making process. At some future point, the concept of the Nation State will fade away, to be replaced with some yet to be defined global distribution of power through international institutions.
Wednesday, August 5, 2009
The Current Financial Crisis and Global Capitalism
The Current Financial Crisis and Global Capitalism
Perhaps it is best to step back a little in time to understand what has been going on. Certainly there would not be many individuals who would argue that the epicentre of the current crisis is centered on Wall Street and the massive (fraud some might say) issuance of Mortgage Backed Securities on the World Financial markets. This has led us into a major recession, possibly depression, and the possibility of a major setback in global growth and possibly global trade. The mispricing of MBS bonds and the massive housing boom created in America, and some other countries, is viewed as a typical free market over reaction, leading to normal boom and bust; events fairly common in the economic cycle. However, this is turning out to be nothing resembling a common recession. We are at a major turning point in the evolution of the global economy. In the 1930’s Capitalism itself was on trial, and many expected that its end was near. By taming it somewhat, putting in shock absorbers, and guiding it along, eventually revived capitalism; while communism or socialism, its supposed successors, have lost their shine and appear to have receded as alternatives to our current capitalist system. Today the questioning is not around Capitalism, as we have no rivals to replace it with; what we are questioning is global trade. Global trade which has been so positive in bringing millions of people out of poverty is on trial, due to the impact of competition on developed economies’ consumers.
We are therefore at a crossroads, just as in The Great Depression, we are questioning whether to kill the goose that laid the golden egg. Why have we become so disenchanted with global trade, and more specifically global capitalism? In total, global capitalism has benefited the world economy. When we look for specific winners and losers, we get a somewhat different view, or perception. We would all agree that Global Capitalism has benefited, the most, developing economies such as China, Brazil, Mexico, and India. We would also agree that OPEC countries and Russia have benefited from the rise in demand for oil. Resource rich countries have benefited from the demand for iron ore, copper, nickel, agricultural products, and livestock. The developed world has benefited from increased competition through lower consumer prices for manufactured goods. All in all, not a bad report card; however we must now also look at the losing side of the ledger.
On the losing side, the biggest losers have been the developed worlds’ current and former manufacturing workers whose jobs have been transferred to places such as China and Mexico, or whose salaries have been kept down by the pressure to compete against workers who are prepared to accept a lower standard of living. To these individuals, Global Capitalism is not quite viewed as a positive force. There are of course other consequences, such as greater amounts of pollution being produced by countries whose environmental standards are not comparable to the developed worlds’. Although prices have been kept down overall, the rise in demand for oil from emerging economies has had an impact on the price of gasoline worldwide.
The real problem that we are facing is that the adaptation to Global Capitalism is not reaching its end, but is only at the beginning. The modern corporation has learned to segment its business in such a way, that it produces in the least costly geographic entity, sells its wares in the geographic entity where it can get the highest price, and reports its profits in the geographic entity where it can minimize its taxes. Moreover, the modern corporation will play one government against another to obtain financial concessions to build or not close a given plant or facility. As all politics is local, politicians have not looked at the greater picture, but have focused on getting as much as they could to ensure local growth, or support for the local economy. This type of competition for investment dollars, after all, is nothing new, and not only international, but national as well. What is different is that on a national level, there are some rules to play by. On an International level, rules are vaguer and can more easily be gotten around.
Governments have been dealing with Global Capitalism for over 30 years at least and the developed world’s economies had been adapting rather well it seemed. There were two problems; politicians generally have been focusing on short term remedies, and the globalisation has moved well beyond manufacturing. Let’s look at these two individually.
Politicians, in the developed world, have been telling their citizens that the way to be more productive is to move up the production economic ladder. The theory being to let the developing economies produce the simple widgets, and gadgets, while the developed economies workers could focus on the higher end products, such as aerospace, automotive, healthcare, information systems, R& D, etc. This is certainly a valid strategy; however, these areas do not produce many additional jobs. The surplus labour has tended to be absorbed into the service economy. This has worked relatively well, as the service economy has the advantage of requiring local labour, or at least that was the thinking. The problem with the service economy is that it tends to produce lower paying jobs. This has had the effect of moving the average family from a single bread winner, to two bread winners, and thus maintaining their standard of living. This was not a big sacrifice, as house work has become highly automated as well as farmed out to the service economy (restaurants, dry cleaning, etc). Additionally, women were more than happy to leave the drudgery of the home, thus the two income family was welcomed, and the single income family was viewed as a relic.
Looking at the second problem, that is, that globalisation had moved well beyond manufacturing, we see the beginning of the need to address longer term globalisation issues. Globalisation no longer focuses solely on transferring blue collar jobs to developing economies. With the advent of the internet and instant communication, jobs as diverse as engineering, accounting, call centers, information processing, Research and Development scientists, and why not, middle level managers; could now be transferred to the developing economies such as India and China; economies that produced more University graduates in one year then the developed economies produced in a decade. Moreover, an engineer in India could be had for $10,000, while a similarly qualified engineer in the developed world could be had for ten times that. Companies such as IBM have been increasing their developing world staff significantly, while cutting their developed world staff. For corporations this was a no brainer, if we wish to remain competitive we have to reduce our labour cost. The way to reduce our labour cost is to transfer knowledge jobs, as well as service jobs to the developing world. For example, the Cruise ship industry is nothing more than packaging a developed world vacation into a developing world cost structure. Management of the Cruise Ship Company is handled out of New York or London, while ship staff is from Indonesia, Philippines, or Columbia. The design of the ships is done in California, while the actual ship building is done in the European or Asian nation that provides the greatest subsidy to the dry docks facilities. Cruising has become so successful that now there are plans to have medical ships that would actually dock in a third world country, local doctors would perform operations, and the ship would act as a convalescent hospital while transporting patients back to their home country. Another initiative is to create some type of retirement home, or convalescent home for the elderly. Why pay developed world salaries, when developing world labour is so abundant and inexpensive. Other creative approaches include moving a company to a Caribbean island for tax purposes, outsourcing accounting, IT, engineering, to a place such as India, while focusing on design, sales and marketing in a developed economy country. The permutations and combinations are endless.
The results of these trends have been to create a growing boom in the developing world, and strange enough a growing boom in the developed world. How is this possible? As the developing world produced greater products and services, they were mostly to satisfy the demand of the developed economies, as the local workers were paid wages that were so low that they could not afford to buy the products they produced. This created a trade surplus for the developing world, and a trade deficit for the developed world. The developing world wishing to stay competitive, not only with the developed economies, but more so with competing developing economies; undertook policies to keep the value of their currencies low. They did this by recycling their foreign reserves into the developed world economies currencies, such as the US dollar, the yen and the Euro. This money eventually found its way into Wall Street hands, and the US and other housing booms were underway. As the money could not be invested in productive endeavours in the developed world, it went into unproductive endeavours such as US government bonds and Mortgage Backed bonds. As the US $ was the International Reserve currency, it had the effect of keeping interest rates down and this lead to massive lending to the housing market. The US consumer being squeezed financially by suppressed wages due to the Globalization effect borrowed heavily hoping to make enough money for his retirement through investment and housing profits, and not through savings.
One other significant impact of Global Capitalism has been to dramatically alter the income distribution curve. This happened as the value of head office personnel rose, while the value of the middle manager and the industrial worker stagnated or fell. The top 5% of the population began amassing larger and larger portions of the income generated by the economy. The effect of this was to ultimately increase production capacity while at the same time lowering consumer demand. As income became concentrated, it generally went into investments all over the world. The greater the concentration of wealth, the greater the risk the investor is willing to take. This stands to reason, as a billionaire will be much more capable of absorbing a $100 million loss, then a simple millionaire will be capable of absorbing a $100,000 loss. The billionaire has much more room to manoeuvre and will consequently take greater risk. On the consumption side, consumers wanting to spend more could only do so by borrowing, as their income either stagnated or fell. They borrowed from their banks by mortgaging their houses to the hilt, by obtaining multiple credit cards and making only the minimum payment, by leasing their cars rather than buying them. For a while it looked that all was well. The rise in asset values whether in the stock market, or real estate, created a false sense of prosperity.
The hope was that at some point there would be a significant rise in demand from developing economies’ consumers, to offset the eventual reduction in demand from the developed economies’ consumers. Of course, this was not going to happen given the intense competition for jobs in the developing world, and the consequent low wages paid to the labour force.
Like in the great depression of 1929 capitalism has once again tilted dangerously towards concentration of capital, and an out of balance bargaining position between capital and labour. This has happened because in a world where capital and goods can move to anywhere in the world they choose, labour has remained stuck in the old Nationalist Ideology of the monolithic Nation State. Corporations have played one Nation State against another while at the same time reducing the power of labour. It was a great run for 30 years. We now see its consequences and the need to again place some rules around capitalism to tame its tendency towards extremes. Unfortunately, we do not have the international institutions in place to define, implement and manage these required changes. As long as we think nationally and not internationally we will not be able to adjust the economic eco-system that has sprung up, that is Global Capitalism.
Perhaps it is best to step back a little in time to understand what has been going on. Certainly there would not be many individuals who would argue that the epicentre of the current crisis is centered on Wall Street and the massive (fraud some might say) issuance of Mortgage Backed Securities on the World Financial markets. This has led us into a major recession, possibly depression, and the possibility of a major setback in global growth and possibly global trade. The mispricing of MBS bonds and the massive housing boom created in America, and some other countries, is viewed as a typical free market over reaction, leading to normal boom and bust; events fairly common in the economic cycle. However, this is turning out to be nothing resembling a common recession. We are at a major turning point in the evolution of the global economy. In the 1930’s Capitalism itself was on trial, and many expected that its end was near. By taming it somewhat, putting in shock absorbers, and guiding it along, eventually revived capitalism; while communism or socialism, its supposed successors, have lost their shine and appear to have receded as alternatives to our current capitalist system. Today the questioning is not around Capitalism, as we have no rivals to replace it with; what we are questioning is global trade. Global trade which has been so positive in bringing millions of people out of poverty is on trial, due to the impact of competition on developed economies’ consumers.
We are therefore at a crossroads, just as in The Great Depression, we are questioning whether to kill the goose that laid the golden egg. Why have we become so disenchanted with global trade, and more specifically global capitalism? In total, global capitalism has benefited the world economy. When we look for specific winners and losers, we get a somewhat different view, or perception. We would all agree that Global Capitalism has benefited, the most, developing economies such as China, Brazil, Mexico, and India. We would also agree that OPEC countries and Russia have benefited from the rise in demand for oil. Resource rich countries have benefited from the demand for iron ore, copper, nickel, agricultural products, and livestock. The developed world has benefited from increased competition through lower consumer prices for manufactured goods. All in all, not a bad report card; however we must now also look at the losing side of the ledger.
On the losing side, the biggest losers have been the developed worlds’ current and former manufacturing workers whose jobs have been transferred to places such as China and Mexico, or whose salaries have been kept down by the pressure to compete against workers who are prepared to accept a lower standard of living. To these individuals, Global Capitalism is not quite viewed as a positive force. There are of course other consequences, such as greater amounts of pollution being produced by countries whose environmental standards are not comparable to the developed worlds’. Although prices have been kept down overall, the rise in demand for oil from emerging economies has had an impact on the price of gasoline worldwide.
The real problem that we are facing is that the adaptation to Global Capitalism is not reaching its end, but is only at the beginning. The modern corporation has learned to segment its business in such a way, that it produces in the least costly geographic entity, sells its wares in the geographic entity where it can get the highest price, and reports its profits in the geographic entity where it can minimize its taxes. Moreover, the modern corporation will play one government against another to obtain financial concessions to build or not close a given plant or facility. As all politics is local, politicians have not looked at the greater picture, but have focused on getting as much as they could to ensure local growth, or support for the local economy. This type of competition for investment dollars, after all, is nothing new, and not only international, but national as well. What is different is that on a national level, there are some rules to play by. On an International level, rules are vaguer and can more easily be gotten around.
Governments have been dealing with Global Capitalism for over 30 years at least and the developed world’s economies had been adapting rather well it seemed. There were two problems; politicians generally have been focusing on short term remedies, and the globalisation has moved well beyond manufacturing. Let’s look at these two individually.
Politicians, in the developed world, have been telling their citizens that the way to be more productive is to move up the production economic ladder. The theory being to let the developing economies produce the simple widgets, and gadgets, while the developed economies workers could focus on the higher end products, such as aerospace, automotive, healthcare, information systems, R& D, etc. This is certainly a valid strategy; however, these areas do not produce many additional jobs. The surplus labour has tended to be absorbed into the service economy. This has worked relatively well, as the service economy has the advantage of requiring local labour, or at least that was the thinking. The problem with the service economy is that it tends to produce lower paying jobs. This has had the effect of moving the average family from a single bread winner, to two bread winners, and thus maintaining their standard of living. This was not a big sacrifice, as house work has become highly automated as well as farmed out to the service economy (restaurants, dry cleaning, etc). Additionally, women were more than happy to leave the drudgery of the home, thus the two income family was welcomed, and the single income family was viewed as a relic.
Looking at the second problem, that is, that globalisation had moved well beyond manufacturing, we see the beginning of the need to address longer term globalisation issues. Globalisation no longer focuses solely on transferring blue collar jobs to developing economies. With the advent of the internet and instant communication, jobs as diverse as engineering, accounting, call centers, information processing, Research and Development scientists, and why not, middle level managers; could now be transferred to the developing economies such as India and China; economies that produced more University graduates in one year then the developed economies produced in a decade. Moreover, an engineer in India could be had for $10,000, while a similarly qualified engineer in the developed world could be had for ten times that. Companies such as IBM have been increasing their developing world staff significantly, while cutting their developed world staff. For corporations this was a no brainer, if we wish to remain competitive we have to reduce our labour cost. The way to reduce our labour cost is to transfer knowledge jobs, as well as service jobs to the developing world. For example, the Cruise ship industry is nothing more than packaging a developed world vacation into a developing world cost structure. Management of the Cruise Ship Company is handled out of New York or London, while ship staff is from Indonesia, Philippines, or Columbia. The design of the ships is done in California, while the actual ship building is done in the European or Asian nation that provides the greatest subsidy to the dry docks facilities. Cruising has become so successful that now there are plans to have medical ships that would actually dock in a third world country, local doctors would perform operations, and the ship would act as a convalescent hospital while transporting patients back to their home country. Another initiative is to create some type of retirement home, or convalescent home for the elderly. Why pay developed world salaries, when developing world labour is so abundant and inexpensive. Other creative approaches include moving a company to a Caribbean island for tax purposes, outsourcing accounting, IT, engineering, to a place such as India, while focusing on design, sales and marketing in a developed economy country. The permutations and combinations are endless.
The results of these trends have been to create a growing boom in the developing world, and strange enough a growing boom in the developed world. How is this possible? As the developing world produced greater products and services, they were mostly to satisfy the demand of the developed economies, as the local workers were paid wages that were so low that they could not afford to buy the products they produced. This created a trade surplus for the developing world, and a trade deficit for the developed world. The developing world wishing to stay competitive, not only with the developed economies, but more so with competing developing economies; undertook policies to keep the value of their currencies low. They did this by recycling their foreign reserves into the developed world economies currencies, such as the US dollar, the yen and the Euro. This money eventually found its way into Wall Street hands, and the US and other housing booms were underway. As the money could not be invested in productive endeavours in the developed world, it went into unproductive endeavours such as US government bonds and Mortgage Backed bonds. As the US $ was the International Reserve currency, it had the effect of keeping interest rates down and this lead to massive lending to the housing market. The US consumer being squeezed financially by suppressed wages due to the Globalization effect borrowed heavily hoping to make enough money for his retirement through investment and housing profits, and not through savings.
One other significant impact of Global Capitalism has been to dramatically alter the income distribution curve. This happened as the value of head office personnel rose, while the value of the middle manager and the industrial worker stagnated or fell. The top 5% of the population began amassing larger and larger portions of the income generated by the economy. The effect of this was to ultimately increase production capacity while at the same time lowering consumer demand. As income became concentrated, it generally went into investments all over the world. The greater the concentration of wealth, the greater the risk the investor is willing to take. This stands to reason, as a billionaire will be much more capable of absorbing a $100 million loss, then a simple millionaire will be capable of absorbing a $100,000 loss. The billionaire has much more room to manoeuvre and will consequently take greater risk. On the consumption side, consumers wanting to spend more could only do so by borrowing, as their income either stagnated or fell. They borrowed from their banks by mortgaging their houses to the hilt, by obtaining multiple credit cards and making only the minimum payment, by leasing their cars rather than buying them. For a while it looked that all was well. The rise in asset values whether in the stock market, or real estate, created a false sense of prosperity.
The hope was that at some point there would be a significant rise in demand from developing economies’ consumers, to offset the eventual reduction in demand from the developed economies’ consumers. Of course, this was not going to happen given the intense competition for jobs in the developing world, and the consequent low wages paid to the labour force.
Like in the great depression of 1929 capitalism has once again tilted dangerously towards concentration of capital, and an out of balance bargaining position between capital and labour. This has happened because in a world where capital and goods can move to anywhere in the world they choose, labour has remained stuck in the old Nationalist Ideology of the monolithic Nation State. Corporations have played one Nation State against another while at the same time reducing the power of labour. It was a great run for 30 years. We now see its consequences and the need to again place some rules around capitalism to tame its tendency towards extremes. Unfortunately, we do not have the international institutions in place to define, implement and manage these required changes. As long as we think nationally and not internationally we will not be able to adjust the economic eco-system that has sprung up, that is Global Capitalism.
Monday, August 3, 2009
The Problems with Globalization
The Problems with globalization
Global trade is a wonderful thing. We can get Chilean peaches and grape in the winter; we can get Argentinean wheat, Canadian beef, and Brazilian soybeans. If we happen to live in Northern Europe or even Japan this can certainly enhance the quality of life. Not only can we get summer crops all year round, we can actually support a larger population overall than we could without global trade. Of course trade is a two way street and Europeans and Japanese export wonderful manufactured goods, such as electronic devices (TV’s, Stereos, and computers), automobiles, and wonderful appliances. Even countries that at first glance look like they have nothing to trade suddenly become important in the overall economy. If Saudi Arabia had to provide for its own needs, its standard of living would be very poor indeed. It certainly could not support its current population. Saudi Arabia has massive quantities of petroleum, a major energy source, so the rest of the world is bending over backwards to trade food and appliances in exchange for petroleum. Surely nothing better has ever been invented than trade. After all, global trade is merely an extension of commerce. I work for an employer who pays me a certain salary for helping him produce a product or service. In turn I take my wages and buy whatever products or services I need. It’s called specialization of labour and it is miles ahead of our subsistence farming model, the previous method of organized life.
So what are the problems with global trade? Well, when we trade as in the examples above, generally speaking there is not a major problem. The problems arise when we look at states’ strategies for taking advantage of what globalization provides. The USA may be able to make a pretty good car, yet many of its citizens buy Japanese cars. Canadians, grow vast quantities of wheat, grow large herds of cattle, and produce significant amounts of lumber; yet they will buy Italian pasta, Italian leather sofas, and US or Indonesian flooring. China could be a self contained economy, and for many thousands of years has been. Now however, they have become an economic juggernaut. They can produce agricultural and industrial products at prices that no one else can compete with. This type of trade is more problematic. There may very well be a skill that Italians have in producing Pasta and Leather that Canadians do not. The US automotive capabilities are significant, yet Japanese quality and craftsmanship is superior, and people are willing to buy Japanese. As for the Chinese, they will produce anything and everything. People are willing to buy Chinese products because they are less expensive.
We now reach a point of discussion, which deals with relative value. How do we measure relative value, when there are different systems of organization, different currencies, and different government policies? One can argue the academic theory of supply and demand, and that if state A is prepared to subsidize the production of a given product, than fine, no problem; you are getting it at a bargain price. In the short term there is nothing wrong, in the long term it may remove a whole industry from one country and shift it to another, simply on the basis of pricing strategy. Once production has shifted, than a rise in the price can be obtained, and desired advantage achieved. We come to Mercantilist strategies. Mercantilism held that the more you were an exporter of goods, and the more gold you accumulated as a result of this trade, the greater advantage and power to your state. Mercantilist states therefore focused on increasing exports while minimizing imports. This is why the WTO (World trade Organization) was established to ensure that we have fair trade. The WTO can deal with subsidies, but it cannot deal with internal economic organization, nor can it deal with monetary exchange rate strategies. What is the comparative value of currency A over currency B? Well, whatever the market says it is. The market however, over and above comparative value analysis, looks at things such as monetary flows, but monetary flows can be manipulated by governments, who control such levers as the money supply and interest rates.
There are other problems; the value of labour is local, not global. That is a plumber in Beijing may be paid a lot less that a plumber in New York. Economic theory would dictate that this situation would not last for long as a number of plumbers from Beijing realizing that the rate of pay in New York is higher, would migrate to New York. This process would continue until the discrepancy between the two cities would be such that it would not be worth their while to move. This type of migration happens everyday, within the United States, and within China. However, to move form Beijing to New York is a different kettle of fish. There are significant restrictions to the migration of labour. Strange enough, there are practically no restrictions to the migration of capital and goods.
How can we move towards globalization when one of three principle components, into the capitalist production system, is not allowed to freely move about?
This creates major problems; Shortages of labour in one area, overabundance in another. More so, a nation whose trade is in decline will suffer major economic adjustments. Even the Nation that is rising in trade will eventually have problems. The Capitalist class will play one group against another to obtain the lowest possible cost for producing their product. Moreover, there will be severe dislocations between where the product is produced and where the product is consumed. It will cause wage migrations towards the mean, but in a somewhat skewed fashion. It will lower the wages in the Nation which is in trade decline, but it will not necessarily raise the wages in the Nation that is experiencing growth. By playing one government against another, the capitalist obtains his objective of removing any bargaining capability on the part of the worker and the government; by threatening to move the plant to a more hospitable and lower cost country.
Other issues, safety, pollution, transfer of patrimony, inefficiencies of transportation, energy efficiency, etc. these are all issues to deal with. What we have is a free market system for capital and raw material; but a managed system for labour, working standards, educational and health support, and value for life, as portrayed by quality of life issues such as pollution, safety, labour laws, and minimum acceptable working conditions. If we now leave it to corporations to migrate to the least cost production environment, we will all eventually lower our standards to that level. This is neither good for labour, nor capital in the long run. In a global economy, we need global labour standards, and free movement of labour from one part of the globe to another. Only in this way will we have true free trade, and the application of comparative advantage, which should ensure a more productive and prosperous global economy. As things stand, the temptation on the part of governments and corporations to intervene in the free flow of capitalism will be too strong, and the rise of Mercantilism will be too strong a force to suppress. This will lead to a greater degree of protectionism as labour wakes up to what is happening, and ultimate disputes and wars between competing states.
Surely the day of the Nation State as a monolithic competing entity on the world stage has past, and should be buried.
Global trade is a wonderful thing. We can get Chilean peaches and grape in the winter; we can get Argentinean wheat, Canadian beef, and Brazilian soybeans. If we happen to live in Northern Europe or even Japan this can certainly enhance the quality of life. Not only can we get summer crops all year round, we can actually support a larger population overall than we could without global trade. Of course trade is a two way street and Europeans and Japanese export wonderful manufactured goods, such as electronic devices (TV’s, Stereos, and computers), automobiles, and wonderful appliances. Even countries that at first glance look like they have nothing to trade suddenly become important in the overall economy. If Saudi Arabia had to provide for its own needs, its standard of living would be very poor indeed. It certainly could not support its current population. Saudi Arabia has massive quantities of petroleum, a major energy source, so the rest of the world is bending over backwards to trade food and appliances in exchange for petroleum. Surely nothing better has ever been invented than trade. After all, global trade is merely an extension of commerce. I work for an employer who pays me a certain salary for helping him produce a product or service. In turn I take my wages and buy whatever products or services I need. It’s called specialization of labour and it is miles ahead of our subsistence farming model, the previous method of organized life.
So what are the problems with global trade? Well, when we trade as in the examples above, generally speaking there is not a major problem. The problems arise when we look at states’ strategies for taking advantage of what globalization provides. The USA may be able to make a pretty good car, yet many of its citizens buy Japanese cars. Canadians, grow vast quantities of wheat, grow large herds of cattle, and produce significant amounts of lumber; yet they will buy Italian pasta, Italian leather sofas, and US or Indonesian flooring. China could be a self contained economy, and for many thousands of years has been. Now however, they have become an economic juggernaut. They can produce agricultural and industrial products at prices that no one else can compete with. This type of trade is more problematic. There may very well be a skill that Italians have in producing Pasta and Leather that Canadians do not. The US automotive capabilities are significant, yet Japanese quality and craftsmanship is superior, and people are willing to buy Japanese. As for the Chinese, they will produce anything and everything. People are willing to buy Chinese products because they are less expensive.
We now reach a point of discussion, which deals with relative value. How do we measure relative value, when there are different systems of organization, different currencies, and different government policies? One can argue the academic theory of supply and demand, and that if state A is prepared to subsidize the production of a given product, than fine, no problem; you are getting it at a bargain price. In the short term there is nothing wrong, in the long term it may remove a whole industry from one country and shift it to another, simply on the basis of pricing strategy. Once production has shifted, than a rise in the price can be obtained, and desired advantage achieved. We come to Mercantilist strategies. Mercantilism held that the more you were an exporter of goods, and the more gold you accumulated as a result of this trade, the greater advantage and power to your state. Mercantilist states therefore focused on increasing exports while minimizing imports. This is why the WTO (World trade Organization) was established to ensure that we have fair trade. The WTO can deal with subsidies, but it cannot deal with internal economic organization, nor can it deal with monetary exchange rate strategies. What is the comparative value of currency A over currency B? Well, whatever the market says it is. The market however, over and above comparative value analysis, looks at things such as monetary flows, but monetary flows can be manipulated by governments, who control such levers as the money supply and interest rates.
There are other problems; the value of labour is local, not global. That is a plumber in Beijing may be paid a lot less that a plumber in New York. Economic theory would dictate that this situation would not last for long as a number of plumbers from Beijing realizing that the rate of pay in New York is higher, would migrate to New York. This process would continue until the discrepancy between the two cities would be such that it would not be worth their while to move. This type of migration happens everyday, within the United States, and within China. However, to move form Beijing to New York is a different kettle of fish. There are significant restrictions to the migration of labour. Strange enough, there are practically no restrictions to the migration of capital and goods.
How can we move towards globalization when one of three principle components, into the capitalist production system, is not allowed to freely move about?
This creates major problems; Shortages of labour in one area, overabundance in another. More so, a nation whose trade is in decline will suffer major economic adjustments. Even the Nation that is rising in trade will eventually have problems. The Capitalist class will play one group against another to obtain the lowest possible cost for producing their product. Moreover, there will be severe dislocations between where the product is produced and where the product is consumed. It will cause wage migrations towards the mean, but in a somewhat skewed fashion. It will lower the wages in the Nation which is in trade decline, but it will not necessarily raise the wages in the Nation that is experiencing growth. By playing one government against another, the capitalist obtains his objective of removing any bargaining capability on the part of the worker and the government; by threatening to move the plant to a more hospitable and lower cost country.
Other issues, safety, pollution, transfer of patrimony, inefficiencies of transportation, energy efficiency, etc. these are all issues to deal with. What we have is a free market system for capital and raw material; but a managed system for labour, working standards, educational and health support, and value for life, as portrayed by quality of life issues such as pollution, safety, labour laws, and minimum acceptable working conditions. If we now leave it to corporations to migrate to the least cost production environment, we will all eventually lower our standards to that level. This is neither good for labour, nor capital in the long run. In a global economy, we need global labour standards, and free movement of labour from one part of the globe to another. Only in this way will we have true free trade, and the application of comparative advantage, which should ensure a more productive and prosperous global economy. As things stand, the temptation on the part of governments and corporations to intervene in the free flow of capitalism will be too strong, and the rise of Mercantilism will be too strong a force to suppress. This will lead to a greater degree of protectionism as labour wakes up to what is happening, and ultimate disputes and wars between competing states.
Surely the day of the Nation State as a monolithic competing entity on the world stage has past, and should be buried.
Tuesday, July 28, 2009
The Undemocratic Nature of International Institutions
The Undemocratic Nature of International Institutions
The western democracies pride themselves as the model for modern government. They see themselves as the descendents of Ancient Greek and Rome. From the Greeks we have inherited the concept of Democracy and from the Romans the concept of Justice and equality before the law. The English trace their Democratic institutions from the Magna Carta of 1215 which imposed limits on the Monarch and guaranteed subjects of the crown with certain freedoms and rights under the law. The Americans pride themselves in their Constitution as the guarantor of the rights and freedoms of its citizens. The French remember the 1789 rebellion and the subsequent Revolution and the introduction of “Fraternite, egalite, and liberte”. All these countries and others recall the beginnings of equality under the law, and the right to a say in the running of the government; not necessarily through direct democracy, but through the right to vote, freedom of speech, the right to property, and the right to equal treatment under the law. In all cases the concept of equality and the right to vote based on simple citizenship and not title, land or capital holdings, have become ingrained in the culture and are guaranteed under the Constitution whether written or through common law.
The history of the 20th Century and the World Wars that have been fought have been characterized as wars to protect individual freedoms and the Democratic principles of government. Communism has rightly been depicted as limiting the rights of individual freedoms and the right to elect a government of their choosing. The Western Democracies have won the day and Totalitarian forms of government have, whether Communist or Fascist, been relegated to the dust bin of history. Western powers, especially the United States have been supportive of similar types of democratic governments and individual freedoms throughout the world. The United States has gone so far as to say that the latest Iraq war was an attempt to establish democracy and the rule of law in a section of the Middle East, with the hope that this would lead to the flourishing of democratic forms of government in other middle eastern countries. The British upon leaving their colonies after WW II, whether through colonial rebellions or financial necessity, had through the policies of its government attempted to foster democratic forms of government throughout its former colonies. The United States claims to have helped establish democracies in countries such as Japan, Germany and Italy. If we were to sum up the expectations of the Western Democracies it might be that progress and civilization will ultimately lead the rest of the world to a representative form of government based on individual freedoms and the election of a representative form of government. The thought being that these types of governments and individual freedoms will foster greater stability and peace throughout the world. The policies of any Democracy, it is believed, will tend to converge with every other democracy and lead to a more prosperous and peaceful world. This of course has not yet been proven, but there is merit to hope that such an outcome is probable. It has certainly worked on a National level, so why should it not work on an International level. The principle of individual freedom, equality under the law, and being governed by a freely elected government responsible to the people is conducive to civil living. After all, one of the greatest achievements of the Western Democracies is that if we have individual freedoms and a just and functioning legal system, combined with a representative government. In this environment disputes, misdeeds, and economic and regional rivalries, can be resolved in a peaceful non violent fashion, and adjustments made as circumstances warrant. There is little if any intrigue, no bottled up and stewing resentments, the competitive spirit is channelled towards economic or cultural competition, and the society evolves in a gradual continuous fashion, and not through stops and starts and violent outbursts and adjustments.
One would assume that what applies on a National level would also apply on an International level. The greatest threats to mankind today are self inflicted. We have evolved to a point, where barring a meteorite hit, we can adjust to anything nature can throw at us. Our greatest dangers are man made; whether these be technological, environmental, or over population, they require our attention and moreover cooperation amongst the bulk of humanity if we are not to turn such threats into military conflicts and possible human annihilation. With the experience of the first two world wars and the failure of the League of Nations, the United States and its WWII allies created the United Nations as an institution where human problems could be discussed and dealt with, without having to resort to the massive loss of manpower and human tragedy that these two wars represented. Unfortunately, as in all other human endeavour, self interest rears its ugly head, and if one can get away with it, one does. The United Nations which should have been a model for human dialogue, stewardship, and problem resolution, became an instrument for the WW II allies to project their future hegemony over world affairs.
It must be stated that at the time of the creation of the United Nations, we lived in a very different world. The concept of colonies still existed and was deemed to be normal by countries such as Britain and France. The Monroe doctrine providing US hegemony over the Western Hemisphere (North and South America), was viewed as perfectly natural. The Soviet Union’s sphere of influence over the Eastern Block (Eastern Europe) was viewed as a reality backed up by man and materiel on the ground. The AXIS powers defeat relegated them to secondary status. Countries such as India, Pakistan, Egypt, Nigeria, and most of South America were viewed as under the influence of some super power or other. The concept of equality amongst the various world governments was certainly not a concept whose time had come. Never the less it is very hard to give these excuses as to why the United Nations became structured in such an undemocratic fashion. This is an institution that got created by powers that believed, if not in Democracy, certainly in equality under the law. The Democratic countries (The United States, Britain, and France) could certainly have convinced The Soviet Union and Taiwan to go along with a more representative structure. After all, it would have been very difficult for the Soviet Union to argue against people’s equal representation in International institutions; and as for Taiwan, it would have gone along with whatever the United States would have proposed.
What we got was an institution composed of two chambers, The General Assembly and the Security Council. The General Assembly, an organization with no powers, except for the power of persuasion is at first glance viewed as being Democratic, that is each member has one vote, and decisions are based on majority rule. The problem is that each country has one vote. So India has one vote and the Bahamas, or Bermuda, or Singapore has one vote. The theory is each country represents a people, and each people have an equal vote, therefore democratic. One problem, India represents 1.2 billion people, the Bahamas represents less than 300, 000 people, they each have one vote. So on a ratio basis, each Bahamian individual has 4000 times the voting right of an individual Indian citizen. It is estimated that mathematically it is possible for 8% of the world’s population to pass a resolution in the UN General Assembly.
The Security Council, the only institution of the United Nations that has any power, is composed of 16 members, 5 permanent members with individual veto power, and 11 members that are elected in the General Assembly based on some very specific regional representation rules, who serve for a specific period of time and have no veto power. As most of us know the 5 permanent members are The United States, Russia, Britain, France and China. These states of course are the victors, or their descendents, of the Second World War.
Now that the world has evolved and we know better, there are movements afoot to alter The Charter of the United Nations so that it is more representative. In fact, if it is to survive and become a more useful institution, it has to change. Unfortunately to change the Charter a two thirds majority of its members is required along with the unanimity of the permanent members of the Untied Nations Security Council. The likelihood of this happening will be somewhat near to impossible, but not impossible. Interestingly, the changes proposed are not to do away with one country one vote in the General assembly and have something more representative based on population distribution, like all other Democracies; no, the focus is on which other countries merit security council permanent representation and should they have veto power or not. The issue of eliminating veto power is not even on the list of possibilities.
The inclusion of India as a permanent member of the Security Council is not very controversial, other countries such as Japan, Germany, Brazil, Nigeria, Italy, and possibly some Middle Eastern country are controversial. It seems no on has taken the time to address the issue of equal representation, justice, and feeling that as a citizen of whatever state I belong to, I can feel that I have equal representation in International institutions and can therefore accept and support whatever resolutions are democratically arrived at.
No, the jockeying for position is well under way, and campaigning to please the current permanent members is duly being strategized in the various world capitals whose government feels they have a chance at a permanent place within the Security Council, with or without a veto power.
Is there no government who believes in Democracy on an International level? It is not as if the United Nations is particularly intrusive in World affairs. Surely, the more states in the Security Council with veto power the less likelihood for that council to pass any resolution.
The old game of Power politics is alive and well, and no state has even contemplated not playing the game.
We will have to wait fro some other major world catastrophe before humanity will bury the United Nations and embark on some other form of World body, hopefully with a more representative form of governance.
We could have talked about the WTO (World trade Organization), the IMF (International Monetary Fund) or the World Bank. In all cases the concept of Democracy is not quite an accepted form of governance.
One needs to ask, why this is so?
There is certainly a great deal of mistrust in International relations, but one suspects that is not the main reason why these institutions are not democratic. The real reason has to do with protecting acquired rights. This in some sense is not that different from the struggle between the landed aristocracy (land owners) and the Merchant/Capitalist class during the Industrial Revolution. The new moneyed class certainly had gained in importance, but the landed aristocracy was not going to give up without a fight. We therefore had internal struggles nationally between the various power groups, ultimately leading to some form of Democratic government.
Who will fight for equal rights on an International level?
It will certainly not be the National governments; they will not give up any rights without a fight. The logical conclusion is that there will be struggles for power and eventually some form of international democracy will emerge.
Of course this presupposes that we will survive such struggles, not a particularly good bet I would hasten to add.
The World needs to return to the concept of International parties and proponents of greater International equality and human rights. Perhaps not the Communist International, but some form of belief in a common charter of rights and freedoms; not necessarily the United Nations charter of rights and freedoms, which is all encompassing and ultra generous because no state is required to apply it, and there are no penalties for infringing its rules.
Perhaps the United Nations will be reformed when, and only when, its members will be forced legally to abide by whatever resolution is passed in the United Nations. As we are a long way from that, the United Nations acts like a Royal Court, a place to see and be seen, to display your status, and to show your generosity to the lesser equals. Fortunately we know what has happened to Royal Courts. Perhaps the same will happen to the United Nations.
The western democracies pride themselves as the model for modern government. They see themselves as the descendents of Ancient Greek and Rome. From the Greeks we have inherited the concept of Democracy and from the Romans the concept of Justice and equality before the law. The English trace their Democratic institutions from the Magna Carta of 1215 which imposed limits on the Monarch and guaranteed subjects of the crown with certain freedoms and rights under the law. The Americans pride themselves in their Constitution as the guarantor of the rights and freedoms of its citizens. The French remember the 1789 rebellion and the subsequent Revolution and the introduction of “Fraternite, egalite, and liberte”. All these countries and others recall the beginnings of equality under the law, and the right to a say in the running of the government; not necessarily through direct democracy, but through the right to vote, freedom of speech, the right to property, and the right to equal treatment under the law. In all cases the concept of equality and the right to vote based on simple citizenship and not title, land or capital holdings, have become ingrained in the culture and are guaranteed under the Constitution whether written or through common law.
The history of the 20th Century and the World Wars that have been fought have been characterized as wars to protect individual freedoms and the Democratic principles of government. Communism has rightly been depicted as limiting the rights of individual freedoms and the right to elect a government of their choosing. The Western Democracies have won the day and Totalitarian forms of government have, whether Communist or Fascist, been relegated to the dust bin of history. Western powers, especially the United States have been supportive of similar types of democratic governments and individual freedoms throughout the world. The United States has gone so far as to say that the latest Iraq war was an attempt to establish democracy and the rule of law in a section of the Middle East, with the hope that this would lead to the flourishing of democratic forms of government in other middle eastern countries. The British upon leaving their colonies after WW II, whether through colonial rebellions or financial necessity, had through the policies of its government attempted to foster democratic forms of government throughout its former colonies. The United States claims to have helped establish democracies in countries such as Japan, Germany and Italy. If we were to sum up the expectations of the Western Democracies it might be that progress and civilization will ultimately lead the rest of the world to a representative form of government based on individual freedoms and the election of a representative form of government. The thought being that these types of governments and individual freedoms will foster greater stability and peace throughout the world. The policies of any Democracy, it is believed, will tend to converge with every other democracy and lead to a more prosperous and peaceful world. This of course has not yet been proven, but there is merit to hope that such an outcome is probable. It has certainly worked on a National level, so why should it not work on an International level. The principle of individual freedom, equality under the law, and being governed by a freely elected government responsible to the people is conducive to civil living. After all, one of the greatest achievements of the Western Democracies is that if we have individual freedoms and a just and functioning legal system, combined with a representative government. In this environment disputes, misdeeds, and economic and regional rivalries, can be resolved in a peaceful non violent fashion, and adjustments made as circumstances warrant. There is little if any intrigue, no bottled up and stewing resentments, the competitive spirit is channelled towards economic or cultural competition, and the society evolves in a gradual continuous fashion, and not through stops and starts and violent outbursts and adjustments.
One would assume that what applies on a National level would also apply on an International level. The greatest threats to mankind today are self inflicted. We have evolved to a point, where barring a meteorite hit, we can adjust to anything nature can throw at us. Our greatest dangers are man made; whether these be technological, environmental, or over population, they require our attention and moreover cooperation amongst the bulk of humanity if we are not to turn such threats into military conflicts and possible human annihilation. With the experience of the first two world wars and the failure of the League of Nations, the United States and its WWII allies created the United Nations as an institution where human problems could be discussed and dealt with, without having to resort to the massive loss of manpower and human tragedy that these two wars represented. Unfortunately, as in all other human endeavour, self interest rears its ugly head, and if one can get away with it, one does. The United Nations which should have been a model for human dialogue, stewardship, and problem resolution, became an instrument for the WW II allies to project their future hegemony over world affairs.
It must be stated that at the time of the creation of the United Nations, we lived in a very different world. The concept of colonies still existed and was deemed to be normal by countries such as Britain and France. The Monroe doctrine providing US hegemony over the Western Hemisphere (North and South America), was viewed as perfectly natural. The Soviet Union’s sphere of influence over the Eastern Block (Eastern Europe) was viewed as a reality backed up by man and materiel on the ground. The AXIS powers defeat relegated them to secondary status. Countries such as India, Pakistan, Egypt, Nigeria, and most of South America were viewed as under the influence of some super power or other. The concept of equality amongst the various world governments was certainly not a concept whose time had come. Never the less it is very hard to give these excuses as to why the United Nations became structured in such an undemocratic fashion. This is an institution that got created by powers that believed, if not in Democracy, certainly in equality under the law. The Democratic countries (The United States, Britain, and France) could certainly have convinced The Soviet Union and Taiwan to go along with a more representative structure. After all, it would have been very difficult for the Soviet Union to argue against people’s equal representation in International institutions; and as for Taiwan, it would have gone along with whatever the United States would have proposed.
What we got was an institution composed of two chambers, The General Assembly and the Security Council. The General Assembly, an organization with no powers, except for the power of persuasion is at first glance viewed as being Democratic, that is each member has one vote, and decisions are based on majority rule. The problem is that each country has one vote. So India has one vote and the Bahamas, or Bermuda, or Singapore has one vote. The theory is each country represents a people, and each people have an equal vote, therefore democratic. One problem, India represents 1.2 billion people, the Bahamas represents less than 300, 000 people, they each have one vote. So on a ratio basis, each Bahamian individual has 4000 times the voting right of an individual Indian citizen. It is estimated that mathematically it is possible for 8% of the world’s population to pass a resolution in the UN General Assembly.
The Security Council, the only institution of the United Nations that has any power, is composed of 16 members, 5 permanent members with individual veto power, and 11 members that are elected in the General Assembly based on some very specific regional representation rules, who serve for a specific period of time and have no veto power. As most of us know the 5 permanent members are The United States, Russia, Britain, France and China. These states of course are the victors, or their descendents, of the Second World War.
Now that the world has evolved and we know better, there are movements afoot to alter The Charter of the United Nations so that it is more representative. In fact, if it is to survive and become a more useful institution, it has to change. Unfortunately to change the Charter a two thirds majority of its members is required along with the unanimity of the permanent members of the Untied Nations Security Council. The likelihood of this happening will be somewhat near to impossible, but not impossible. Interestingly, the changes proposed are not to do away with one country one vote in the General assembly and have something more representative based on population distribution, like all other Democracies; no, the focus is on which other countries merit security council permanent representation and should they have veto power or not. The issue of eliminating veto power is not even on the list of possibilities.
The inclusion of India as a permanent member of the Security Council is not very controversial, other countries such as Japan, Germany, Brazil, Nigeria, Italy, and possibly some Middle Eastern country are controversial. It seems no on has taken the time to address the issue of equal representation, justice, and feeling that as a citizen of whatever state I belong to, I can feel that I have equal representation in International institutions and can therefore accept and support whatever resolutions are democratically arrived at.
No, the jockeying for position is well under way, and campaigning to please the current permanent members is duly being strategized in the various world capitals whose government feels they have a chance at a permanent place within the Security Council, with or without a veto power.
Is there no government who believes in Democracy on an International level? It is not as if the United Nations is particularly intrusive in World affairs. Surely, the more states in the Security Council with veto power the less likelihood for that council to pass any resolution.
The old game of Power politics is alive and well, and no state has even contemplated not playing the game.
We will have to wait fro some other major world catastrophe before humanity will bury the United Nations and embark on some other form of World body, hopefully with a more representative form of governance.
We could have talked about the WTO (World trade Organization), the IMF (International Monetary Fund) or the World Bank. In all cases the concept of Democracy is not quite an accepted form of governance.
One needs to ask, why this is so?
There is certainly a great deal of mistrust in International relations, but one suspects that is not the main reason why these institutions are not democratic. The real reason has to do with protecting acquired rights. This in some sense is not that different from the struggle between the landed aristocracy (land owners) and the Merchant/Capitalist class during the Industrial Revolution. The new moneyed class certainly had gained in importance, but the landed aristocracy was not going to give up without a fight. We therefore had internal struggles nationally between the various power groups, ultimately leading to some form of Democratic government.
Who will fight for equal rights on an International level?
It will certainly not be the National governments; they will not give up any rights without a fight. The logical conclusion is that there will be struggles for power and eventually some form of international democracy will emerge.
Of course this presupposes that we will survive such struggles, not a particularly good bet I would hasten to add.
The World needs to return to the concept of International parties and proponents of greater International equality and human rights. Perhaps not the Communist International, but some form of belief in a common charter of rights and freedoms; not necessarily the United Nations charter of rights and freedoms, which is all encompassing and ultra generous because no state is required to apply it, and there are no penalties for infringing its rules.
Perhaps the United Nations will be reformed when, and only when, its members will be forced legally to abide by whatever resolution is passed in the United Nations. As we are a long way from that, the United Nations acts like a Royal Court, a place to see and be seen, to display your status, and to show your generosity to the lesser equals. Fortunately we know what has happened to Royal Courts. Perhaps the same will happen to the United Nations.
Friday, July 24, 2009
The Malthusian Dilemma
The Malthusian Dilemma
Malthus was an economist in the 19th century that predicted that human population would outstrip food supply. Eventually famine would ensue, bringing food and population back into line. His premise was based on the theory that while populations grew exponentially, food growth was linear. What Malthus failed to factor in was the revolution in farming from feudal or subsistence agriculture, to single crop commodity production. The difference in methods would greatly increase the food supply, along with improved application of science with things such as chemical fertilizer and pesticides.
So while the population of the world had reached approximately 1 billion people, Malthus was preaching population control policies to avert a human famine catastrophe.
Two hundred years later, and the population has reached 6 billion and projected to grow to 9 billion. Obviously Malthus’ model was wrong.
If one wanted to be charitable, one could argue that at the current production methods of the time, if nothing changed, the population was hitting the limit of the system to support it.
That is precisely the reason why predicting future events is so fraught with danger. One cannot model all of the factors and their interactions. Moreover a new discovery, or unforeseen change, will lead to significantly different results.
Malthus was right directionally, he was spectacularly wrong in his timing. He failed to take into account the human ingenuity for innovation in addressing a problem.
What relevance does Malthus have for today? Today we still have the issue of population explosion, we have the issue of Global Warming, we have the issue of water shortage, we have the issue of ocean and air pollution, we have the issue of genetic engineering, we have the issue of biomass diversity and extinction, and we have the issue of mutual self destruction. We have a whole host of things where application of a Malthusian type theory can lead us to massive expenditures to correct for a problem in a manner that may or may not be appropriate or timely. We may have more science and information at our disposal; however we can never model the future. Not only is it too complex to do, but more so, we cannot know what we don’t know.
That was Malthus’s mistake; he assumed he had all the inputs. His theory was correct, but application of currently unknown techniques and science, would shift the problem into the future by hundreds of years.
So how do we deal with our major sustainability issues? We can take a Malthusian approach and say we may be wrong as to timing, but the issue is too important to wait for the time when it has become critical and immediate. It may work, and it may be timely; however in most cases it will be costly, controversial, and lead to significant problems in obtaining support for whatever policy is undertaken.
A more appropriate policy may be to allow the problem to develop, allow economics to deal with the issue of corrective measures. Such an approach would not be controversial, may address the problem at a stage when it is more costly to correct, but will help with the issue of obtaining support.
Unfortunately we are neither today, nor will we ever be in a position where wise men will be able to dictate policy. If we are to be truly democratic, we could allow the population to decide. This would be counterproductive as the fact that a majority feels that the answer is a or b, does not make them correct. Allowing the economic system through proper cost capturing and the dynamics of demand and supply would be an approach that in the long run would avoid controversy.
We need a feedback mechanism to correct for a given problem. Without an economic feedback mechanism we cannot steer the ship in a direction that is both appropriate and least controversial.
Some might argue that issues such as global warming need to be addressed prior to the event happening; otherwise it will be more difficult or impossible to correct. They may be right; however with proper monitoring and pricing of things such as CO2 production, we should be able to establish an appropriate mechanism for averting human calamities.
Unfortunately we can never know what we don’t know, and until unmistakeable symptoms appear, or the problem is glaringly evident to everyone, we cannot be expected to obtain support to correct a problem whose reality and timing is problematic.
Besides, we have bigger problems than that. Even if we could be certain that a catastrophe is imminent, given our current geopolitical structure, we would have political jockeying for obtaining advantage over other states, rather than focusing on the common problem.
Before we can solve any of these problems we need to assemble the appropriate project team. A project team with members who are not responsible for the problem, but are responsible to a power that has different political and economic priorities, will never be a united team. Obtaining alignment in such an environment is almost impossible. In this environment, there is no majority rule, and unanimity will be impossible to attain.
The first order of the day is to address the structure and rules of decision making by the project team. As we have one planet and one boat we need to have a common set of rules and methods for addressing future critical events.
The main function of such a team would be to set the rules for economic activity and the measuring and cost structure for guiding the eco-system forward.
Our problem is significant as we live on a single planet, but it is subdivided into geographically autonomous states, with different levels of cultural and technological evolution. We might even state that if everyone takes care of his own little corner, than the end result will be positive for all of us. There is certainly some merit for such an approach. In a world where we can affect climate change, ocean and air pollution, release of genetically modified bacteria, foods, chemical gases, and radioactive particles; it is somewhat naive to assume that our current Nation State approach to managing our planet will lead to positive results. Our current international Organizations report to National Governments and not to the population at large, moreover our international organizations are not democratic and we do not all have an equal say in their administration.
We can continue to muddle along, and wait for catastrophic events to unfold, either through wars, or environmental exhaustion or we can commence on a path to having a more appropriate and responsive management structure in place.
Malthus was lucky; the human ability at the time to devastate the planet was far from significant. Our current situation may be similar, however everything around us seems to be pointing to a more significant and immediate problem.
Malthus was an economist in the 19th century that predicted that human population would outstrip food supply. Eventually famine would ensue, bringing food and population back into line. His premise was based on the theory that while populations grew exponentially, food growth was linear. What Malthus failed to factor in was the revolution in farming from feudal or subsistence agriculture, to single crop commodity production. The difference in methods would greatly increase the food supply, along with improved application of science with things such as chemical fertilizer and pesticides.
So while the population of the world had reached approximately 1 billion people, Malthus was preaching population control policies to avert a human famine catastrophe.
Two hundred years later, and the population has reached 6 billion and projected to grow to 9 billion. Obviously Malthus’ model was wrong.
If one wanted to be charitable, one could argue that at the current production methods of the time, if nothing changed, the population was hitting the limit of the system to support it.
That is precisely the reason why predicting future events is so fraught with danger. One cannot model all of the factors and their interactions. Moreover a new discovery, or unforeseen change, will lead to significantly different results.
Malthus was right directionally, he was spectacularly wrong in his timing. He failed to take into account the human ingenuity for innovation in addressing a problem.
What relevance does Malthus have for today? Today we still have the issue of population explosion, we have the issue of Global Warming, we have the issue of water shortage, we have the issue of ocean and air pollution, we have the issue of genetic engineering, we have the issue of biomass diversity and extinction, and we have the issue of mutual self destruction. We have a whole host of things where application of a Malthusian type theory can lead us to massive expenditures to correct for a problem in a manner that may or may not be appropriate or timely. We may have more science and information at our disposal; however we can never model the future. Not only is it too complex to do, but more so, we cannot know what we don’t know.
That was Malthus’s mistake; he assumed he had all the inputs. His theory was correct, but application of currently unknown techniques and science, would shift the problem into the future by hundreds of years.
So how do we deal with our major sustainability issues? We can take a Malthusian approach and say we may be wrong as to timing, but the issue is too important to wait for the time when it has become critical and immediate. It may work, and it may be timely; however in most cases it will be costly, controversial, and lead to significant problems in obtaining support for whatever policy is undertaken.
A more appropriate policy may be to allow the problem to develop, allow economics to deal with the issue of corrective measures. Such an approach would not be controversial, may address the problem at a stage when it is more costly to correct, but will help with the issue of obtaining support.
Unfortunately we are neither today, nor will we ever be in a position where wise men will be able to dictate policy. If we are to be truly democratic, we could allow the population to decide. This would be counterproductive as the fact that a majority feels that the answer is a or b, does not make them correct. Allowing the economic system through proper cost capturing and the dynamics of demand and supply would be an approach that in the long run would avoid controversy.
We need a feedback mechanism to correct for a given problem. Without an economic feedback mechanism we cannot steer the ship in a direction that is both appropriate and least controversial.
Some might argue that issues such as global warming need to be addressed prior to the event happening; otherwise it will be more difficult or impossible to correct. They may be right; however with proper monitoring and pricing of things such as CO2 production, we should be able to establish an appropriate mechanism for averting human calamities.
Unfortunately we can never know what we don’t know, and until unmistakeable symptoms appear, or the problem is glaringly evident to everyone, we cannot be expected to obtain support to correct a problem whose reality and timing is problematic.
Besides, we have bigger problems than that. Even if we could be certain that a catastrophe is imminent, given our current geopolitical structure, we would have political jockeying for obtaining advantage over other states, rather than focusing on the common problem.
Before we can solve any of these problems we need to assemble the appropriate project team. A project team with members who are not responsible for the problem, but are responsible to a power that has different political and economic priorities, will never be a united team. Obtaining alignment in such an environment is almost impossible. In this environment, there is no majority rule, and unanimity will be impossible to attain.
The first order of the day is to address the structure and rules of decision making by the project team. As we have one planet and one boat we need to have a common set of rules and methods for addressing future critical events.
The main function of such a team would be to set the rules for economic activity and the measuring and cost structure for guiding the eco-system forward.
Our problem is significant as we live on a single planet, but it is subdivided into geographically autonomous states, with different levels of cultural and technological evolution. We might even state that if everyone takes care of his own little corner, than the end result will be positive for all of us. There is certainly some merit for such an approach. In a world where we can affect climate change, ocean and air pollution, release of genetically modified bacteria, foods, chemical gases, and radioactive particles; it is somewhat naive to assume that our current Nation State approach to managing our planet will lead to positive results. Our current international Organizations report to National Governments and not to the population at large, moreover our international organizations are not democratic and we do not all have an equal say in their administration.
We can continue to muddle along, and wait for catastrophic events to unfold, either through wars, or environmental exhaustion or we can commence on a path to having a more appropriate and responsive management structure in place.
Malthus was lucky; the human ability at the time to devastate the planet was far from significant. Our current situation may be similar, however everything around us seems to be pointing to a more significant and immediate problem.
Monday, July 20, 2009
Trapped in Our Own Past
Trapped in our own past
Millions of years of evolution have thought us the merits of belonging to a group. Group dynamics and solidarity have proved successful, and those of us who carry these types of genes have survived due to the benefits that such attributes have provided us.
In a hunter gatherer society, the simple fact of belonging to a group has made life less precarious, we have had a degree of protection from famine, attack, disease. The group was always there to provide for alternate source of food, protect us from external and possibly internal rivals, and if we got sick, we would be cared for long enough to be able to restart our regular activities once recovered from the disease.
The group moreover was a source of knowledge, we could learn from our elders, our peers, even our rivals. If an individual found a new source of fruit, game, or shelter, we could all benefit from it. If someone’s way of doing things was inefficient, the group would ignore his/her approach and thus vote to not change from their tried and true methods.
As humans having children required a great deal of time and effort to raise to maturity, the group provided not only a sheltered environment in which to raise the children, but a very efficient one as well. Not all women or elder children were required to take care of children. This provided a major advantage over the lone wolf type of living.
One other significant aspect of group dynamics was the ability to specialize. A good hunter would lead the hunt; a good strategist might be placed in charge of defending the territory. Someone with good observation skills and memory might be in charge of when to move the group from one hunting ground to another depending on the seasons. Someone with a good knowledge of plants might become the village shaman. Someone who knew where to dig for certain types of roots might become the group gatherer of edible plants. Someone with skills in the making of spears, clubs, and making of archery, might become the local arms maker. Someone with good ability to communicate visually might become the local trader with other groups. This in the end is the beginning of civilization. Without division of labour there would be very little need for civilization.
The individual in us was and is always looking for a group to belong to. It is part and parcel of who we are. It is the keystone of our success. It is so part of us, that we fail to realize the dynamics of the process.
Groups initially were very small. Related family groups were the initial groupings. As our ability to develop methods and technology to control large territories evolved, we grew into villages, somewhat mobile, but nonetheless villages.
With the arrival of domesticated animals and agriculture, the group gained a greater degree of stability and size, and we move from a village to something resembling a city.
Here things change, with the growth of the city, the familial lineage is broken; the tribal or ethnic lineage continues, but things get more impersonal. You may be from the same tribe, but if you are a farmer, you are much inferior to the soldiers. If you are the leader of the group, you may actually see yourself as being a member of a deity and not a member of the local tribe. You may be a member of a City, a Nation or an Empire; however you will have a highly defined role and a commensurate status within that entity. You are no longer seen as belonging to the same group and being one equal to all others, you are now viewed as a possession of the crown, ruler, or emperor. You are expected to make your contribution to the sovereign in some form of good or monetary fashion, and are expected to do as you are told, especially in times of external threats.
Over time, some type of justice system which has evolved from historical practices is codified and you have some recourse for injustices done you, especially by your peers. Injustices done to you by your superiors of course are a different matter. Nevertheless some type of justice system evolves, which over time becomes an expected minimum right. Empires come and go, but traditions remain, evolve, and become better defined.
With the arrival of large Empires, such as the Roman Empire, a codified law emerges. You have duties to the sovereign, but you also have rights. Again within your peer group there is a better chance of obtaining justice, across classes, the situation is more precarious.
We accept this evolution of justice as even in its incomplete, and discriminating form, it is superior to what might be attainable through means such as individual or tribal vengeance, not that these methods are fully given up. Over time as the justice system and the power of the state to dispense justice increases, the individual vendettas, one on one violence, or tribal skirmishes diminish. Even today in large parts of the world family reprisals for damage done to its members is still a common form of justice. In developed countries this type of justice is totally frowned upon, except during periods of civil unrest, riots, or civil wars; when this type of justice again surges to the fore and old grudges and settling of scores takes place. Of course the closer to a true and well functioning justice system the state approaches, the less the likelihood of this type of return to the “law of the Jungle”
With the expansion of commerce, the development of large urban areas and industrialization, the need for skilled traders and labourers increases; as the complexity of the society demands greater distribution of responsibility and authority, so the political leadership becomes more dispersed and the crown is forced to share power with the landed gentry and the capitalist class. We begin to see the development of limited monarchies, and outright democracies. Of course these types of political structures existed in the past in small numbers and in relatively small city states, or national groups. Now, large states have developed into functioning democracies. Within these democracies we get highly developed justice systems, where the state cannot intervene without cause with the protected freedom and individual rights of its members.
We now have a functioning state, that derives its power from the people, and whose purpose, nominally at least, is to serve the people and implement their wishes. Within the state, we could always get uprisings, civil wars, attempted coups, military revolts, as well as external invasions; however it is assumed that a functioning state with a functioning justice system, and an appropriate army to defend it against external threat, will survive and prosper. Segregation of duties, constitutional limitations to political office, and individual civilian vigilance is expected to keep the state functioning and evolving over time.
The model of the state, in theory at least, could be applied to the citizens of the planet. We have a functioning global economy with a transportation and communication system that rivals any fully integrated National State from the past. We have a literate and knowledgeable electorate that rivals any from the past. We have a desire for freedom, democracy, and constitutional limitation to rival any past republic. Yet, we maintain that eliminating National borders and creating some form of Global government apparatus would be akin to sleeping with the Devil himself.
We are told that we cannot trust other ethnic groups; yet the United States is a model of the ability of many groups to live together and prosper. We are told that we are different, superior, to other Nations; yet we now accept Chinese, Japanese, and Indians (from India) as our equals. We are told that our cultural and religious beliefs are not compatible with others; yet we claim to live in secular, multi ethnic, multi religious, multi lingual states, for example Canada, or even India.
There are economic advantages that we currently enjoy that we would have to give up or share more evenly with others. These and the historical misconceptions that have been fed us over the ages have created mistrust, and reticence to proceed to wider unions.
We may have advantages in being isolated, but we also have significant disadvantages. We have to keep standing armies, we may face nuclear annihilation, we are unable to resolve serious global economic, environmental, and sustainability issues.
We still believe in power politics. We have given them up for a more just society within the state, but are unwilling or unable to do so, on a broader basis.
This is the crux of this blog. What are our options, and why are we so reluctant to change
To be continued.
Millions of years of evolution have thought us the merits of belonging to a group. Group dynamics and solidarity have proved successful, and those of us who carry these types of genes have survived due to the benefits that such attributes have provided us.
In a hunter gatherer society, the simple fact of belonging to a group has made life less precarious, we have had a degree of protection from famine, attack, disease. The group was always there to provide for alternate source of food, protect us from external and possibly internal rivals, and if we got sick, we would be cared for long enough to be able to restart our regular activities once recovered from the disease.
The group moreover was a source of knowledge, we could learn from our elders, our peers, even our rivals. If an individual found a new source of fruit, game, or shelter, we could all benefit from it. If someone’s way of doing things was inefficient, the group would ignore his/her approach and thus vote to not change from their tried and true methods.
As humans having children required a great deal of time and effort to raise to maturity, the group provided not only a sheltered environment in which to raise the children, but a very efficient one as well. Not all women or elder children were required to take care of children. This provided a major advantage over the lone wolf type of living.
One other significant aspect of group dynamics was the ability to specialize. A good hunter would lead the hunt; a good strategist might be placed in charge of defending the territory. Someone with good observation skills and memory might be in charge of when to move the group from one hunting ground to another depending on the seasons. Someone with a good knowledge of plants might become the village shaman. Someone who knew where to dig for certain types of roots might become the group gatherer of edible plants. Someone with skills in the making of spears, clubs, and making of archery, might become the local arms maker. Someone with good ability to communicate visually might become the local trader with other groups. This in the end is the beginning of civilization. Without division of labour there would be very little need for civilization.
The individual in us was and is always looking for a group to belong to. It is part and parcel of who we are. It is the keystone of our success. It is so part of us, that we fail to realize the dynamics of the process.
Groups initially were very small. Related family groups were the initial groupings. As our ability to develop methods and technology to control large territories evolved, we grew into villages, somewhat mobile, but nonetheless villages.
With the arrival of domesticated animals and agriculture, the group gained a greater degree of stability and size, and we move from a village to something resembling a city.
Here things change, with the growth of the city, the familial lineage is broken; the tribal or ethnic lineage continues, but things get more impersonal. You may be from the same tribe, but if you are a farmer, you are much inferior to the soldiers. If you are the leader of the group, you may actually see yourself as being a member of a deity and not a member of the local tribe. You may be a member of a City, a Nation or an Empire; however you will have a highly defined role and a commensurate status within that entity. You are no longer seen as belonging to the same group and being one equal to all others, you are now viewed as a possession of the crown, ruler, or emperor. You are expected to make your contribution to the sovereign in some form of good or monetary fashion, and are expected to do as you are told, especially in times of external threats.
Over time, some type of justice system which has evolved from historical practices is codified and you have some recourse for injustices done you, especially by your peers. Injustices done to you by your superiors of course are a different matter. Nevertheless some type of justice system evolves, which over time becomes an expected minimum right. Empires come and go, but traditions remain, evolve, and become better defined.
With the arrival of large Empires, such as the Roman Empire, a codified law emerges. You have duties to the sovereign, but you also have rights. Again within your peer group there is a better chance of obtaining justice, across classes, the situation is more precarious.
We accept this evolution of justice as even in its incomplete, and discriminating form, it is superior to what might be attainable through means such as individual or tribal vengeance, not that these methods are fully given up. Over time as the justice system and the power of the state to dispense justice increases, the individual vendettas, one on one violence, or tribal skirmishes diminish. Even today in large parts of the world family reprisals for damage done to its members is still a common form of justice. In developed countries this type of justice is totally frowned upon, except during periods of civil unrest, riots, or civil wars; when this type of justice again surges to the fore and old grudges and settling of scores takes place. Of course the closer to a true and well functioning justice system the state approaches, the less the likelihood of this type of return to the “law of the Jungle”
With the expansion of commerce, the development of large urban areas and industrialization, the need for skilled traders and labourers increases; as the complexity of the society demands greater distribution of responsibility and authority, so the political leadership becomes more dispersed and the crown is forced to share power with the landed gentry and the capitalist class. We begin to see the development of limited monarchies, and outright democracies. Of course these types of political structures existed in the past in small numbers and in relatively small city states, or national groups. Now, large states have developed into functioning democracies. Within these democracies we get highly developed justice systems, where the state cannot intervene without cause with the protected freedom and individual rights of its members.
We now have a functioning state, that derives its power from the people, and whose purpose, nominally at least, is to serve the people and implement their wishes. Within the state, we could always get uprisings, civil wars, attempted coups, military revolts, as well as external invasions; however it is assumed that a functioning state with a functioning justice system, and an appropriate army to defend it against external threat, will survive and prosper. Segregation of duties, constitutional limitations to political office, and individual civilian vigilance is expected to keep the state functioning and evolving over time.
The model of the state, in theory at least, could be applied to the citizens of the planet. We have a functioning global economy with a transportation and communication system that rivals any fully integrated National State from the past. We have a literate and knowledgeable electorate that rivals any from the past. We have a desire for freedom, democracy, and constitutional limitation to rival any past republic. Yet, we maintain that eliminating National borders and creating some form of Global government apparatus would be akin to sleeping with the Devil himself.
We are told that we cannot trust other ethnic groups; yet the United States is a model of the ability of many groups to live together and prosper. We are told that we are different, superior, to other Nations; yet we now accept Chinese, Japanese, and Indians (from India) as our equals. We are told that our cultural and religious beliefs are not compatible with others; yet we claim to live in secular, multi ethnic, multi religious, multi lingual states, for example Canada, or even India.
There are economic advantages that we currently enjoy that we would have to give up or share more evenly with others. These and the historical misconceptions that have been fed us over the ages have created mistrust, and reticence to proceed to wider unions.
We may have advantages in being isolated, but we also have significant disadvantages. We have to keep standing armies, we may face nuclear annihilation, we are unable to resolve serious global economic, environmental, and sustainability issues.
We still believe in power politics. We have given them up for a more just society within the state, but are unwilling or unable to do so, on a broader basis.
This is the crux of this blog. What are our options, and why are we so reluctant to change
To be continued.
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