Category Archives: economics

Orwell and Agee as Fieldworkers

David Denby’s review of the collected works of James Agee in the latest New Yorker contains an interesting comparison of Agee and Orwell as cross-cultural fieldworkers.

For Agee, … the point was not that these families suffered from atrocious social conditions. The point was that they existed. In an age concerned largely with the “masses,” Agee was impressed by the notion that other human beings idiosyncratically are what they are, in every ornery fibre. Flesh, bone, desire, consciousness–in almost every way, the farmers were different from him and therefore obdurate in their singleness and as capable of pleasure and misery as he. A young couple sitting on a porch and staring at Agee had in their eyes “so quiet and ultimate a quality of hatred, and contempt, and anger, toward every creature in existence beyond themselves, and toward the damages they sustained, as shone scarcely short of a state of beatitude.” [A little projection of self-hatred here, perhaps?–J.] Agee, born an Episcopalian, and deeply religious as a child, was no longer an orthodox believer. But he had a consciousness of the sacred in people and in ordinary objects that believers associate with God’s immanence. He loved, and took literally, Blake’s proclamation “Everything that lives is holy.”…

Agee’s lyrical gift set him off from other writers of liberal or radical conviction of the day. At almost exactly the same time that he and Walker Evans were in Alabama, George Orwell was exploring living conditions in coal-mining towns in the North of England, and it’s instructive to compare Orwell’s remarkable report, “The Road to Wigan Pier,” with “Let Us Now Praise Famous Men.” Orwell boarded for a while in a little house that took in miners:

The place was beginning to depress me. It was not only the dirt, the smells and the vile food, but the feeling of stagnant meaningless decay, of having got down into some subterranean place where people go creeping round and round, just like blackbeetles, in an endless muddle of slovened jobs and mean grievances.

So often in Orwell there is a strong sense of the sordid–­the scandal of meanness, decay, filth. And he was appalled by sloth and inanition. When, with much greater sympathy, he describes the miners and their wives in Wigan and other towns he typically catches them not “creeping” but moving vigorously–working, washing, cooking, or searching a slag heap for usable coal. Orwell is a chronicler of man as actor, and the second half of his book is a call for action in the form of socialist reform. But Agee chronicles being. He evokes the farmers and their families not just in sleep but at rest, sitting on a porch, or staring shyly and saying nothing. And he was incapable of physical disgust. For him, there is only an endless variety of shapes, textures, and dispositions, none of them beyond redemption in words.

In “Famous Men,” Agee is not a political writer but a poetic and metaphysical writer, who wanted to honor reality, and also to abolish it. There is a trap built into his kind of intense receptivity. That a person or a thing is itself and nothing else, and is therefore worthy of notice and celebration, may be the beginning of morality, but it’s also the beginning of tragedy. As Agee sits on the porch or alone in a room in one of the houses, he tries to take in, all at once, everything that the family is, everything that exists in the house–­for instance, Mrs. Ricketts’s dress, which is shaped “like a straight-sided bell, with a little hole at the top for the head to stick through, the cloth slit from the neck to below the breasts and held together if I remember rightly with a small snarl of shoelace.” He stares at a pair of coarsely sewn and nailed work boots, or at a tattered doll, or at the worn-through oil cloth on an old table, and is amazed at how much life went into the making and use of that table, amazed by how much life is going on in similar households, unnoticed, unrecorded. The mood is one of Wordsworthian awe and submission, though Agee extended his sympathies to objects–­even mass-produced, industrial products–­as well as to nature. At the same time, however, he is stunned by how limited the families are. Being so vividly and absolutely themselves, they are unable to be so many other things, and some of the angriest, most eloquent pages of the book are devoted to the deformations wrought on the children by early work and poor schooling. They have been cheated out of the most elementary ways of teaching themselves–­and therefore cheated out of pleasure. When they grow up, and become similar to that disdainful couple Agee encountered on a porch, the fierceness of their pride will be created as much by ignorance as by anger. The rhapsodist of things as they are is necessarily caught in a position of infinite regret. That is why the book, for all its celebratory tone, never falls into bathos. No one could confuse the tenant farmers’ days with a complete mastering of life.

via Arts & Letters Daily

UPDATE: As much as I admire Orwell, I’m beginning to develop an interest in Agee (born in Knoxville, TN), whose works I am far less familiar with. Part of it may be a vague admiration for the chutzpah of Southern writers who manage to invade and colonize New York City on their own terms. Among those I’m most familiar with are Harper Lee, William Styron, Mark Twain, Tom Wolfe, and Richard Wright. (I must confess that I don’t much admire such purveyors of bald stereotypes–northern and southern, respectively–as Erskine Caldwell and Margaret Mitchell.) The beginning of a 1964 William Styron review in the New York Review of Books explains what they were up against.

‘There is a saying among the Negroes in Harlem,’ James Baldwin said recently, ‘to the effect that if you have a white Southerner for a friend you’ve got a friend for life. But if you’ve got a white Northerner for a friend, watch out. Because he just might be the kind of friend who decides to move out when you move in.’ This is a sentiment which may be beguiling to a Southerner, yet the fact does remain that a Southern ‘liberal’ and his Northern counterpart are two distinct species of cat. Certainly the Southerner of good will who lives in the North, as I do, is often confronted with some taxing circumstances. There was the phone call a number of years ago in the distant epoch before the present ‘Negro revolt,’ and the cautious interrogation from my dinner hostess of the evening: a Negro was going to be present–as a Southerner, did I mind? If I wished to stay away she would surely understand. Or much later, when Prince Edward County in Virginia closed its schools, the deafening and indignant lady, a television luminary, who demanded that ‘we’ drop bombs on ‘those crackers down there.’ (She got the state wrong, Virginians may be snobs but they are not crackers [you’re wrong, Bill; we’ve got all kinds!–J.]; nonetheless, she was proposing that ‘we’ bomb my own kith and kin.) Or quite recently, a review in The New Yorker of Calder Willing-ham’s [sic] Eternal Fire, a remarkably fine novel about the South which the reviewer, Whitney Balliett, praised extravagantly without knowing exactly why he was doing so, charging that the book was the definitve [sic] satire on Southern writing (through the book is funny it is anything but satire, being too close to the bone of reality), and polishing off Faulkner, Welty, Warren, et al. with the assertion that Southern fiction in general, in which the Negroes had served so faithfully as ‘a resident Greek chorus,’ had now terminated its usefulness. It is of course not important what this particular reviewer thinks, but the buried animus is characteristic and thus worth spelling out: white Southern writers, because they are white and Southern, cannot be expected to write about Negroes without condescension, or with understanding or fidelity or love. Unfortunately, this is a point of view which, by an extension of logic, tends to regard all white Southerners as bigots, and it is an attitude which one might find even more ugly than it is were it prompted by malice rather than ignorant self-righteousness, or a suffocating and provincial innocence. Nor is its corollary any less tiresome: to show that you really love Negroes, smoke pot, and dig the right kind of jazz.

Yes. Familiar types, all.

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Immigration and Job Growth

A new study by the Harvard Business School suggests links between immigration and job growth, reports Daniel Weintraub of the Sacramento Bee in the San Diego Union-Tribune.

A major piece of conventional wisdom about immigrants – that newcomers take jobs away from native Americans – has been questioned in a new study of urban job growth by a Harvard Business School professor and expert on inner-city economics.

The study, in fact, seems to show just the opposite: Cities with higher concentrations of immigrants are the places where the number of jobs is growing the fastest.

The research by Michael E. Porter, founder of the Initiative for a Competitive Inner City, found that about half of the 80 largest inner cities in America had job growth between 1995 and 2003.

Inner cities that lost jobs and those that gained them tended to have similar percentages of minority residents, and their residents had about the same level of high school and college education.

But the two groups of cities differed sharply when it came to one demographic measure: immigration. Inner cities that gained jobs had populations that, on average, were 31 percent immigrant. Inner cities that lost jobs had populations that averaged just 12 percent immigrants.

“There is a direct correlation between immigrant populations and job growth in inner cities,” Porter writes. “Immigrants clearly and more readily identify the unique business conditions and opportunities that inner cities offer and are able to capitalize upon them. In addition, they are attractive to small and large businesses seeking willing and available labor.”

A crucial question left unanswered by Porter’s study is the extent to which immigrants cause job growth or are attracted by it. If the presence of immigrants in an economy leads to more business creation and job growth, then that is a very important finding. If immigrants are merely more likely to go to a place that already has a vibrant economy, then the connection between their presence and job growth is not as significant.

via RealClearPolitics

Well, let’s compare the records of Britain, Ireland, and Sweden with that of, say, France, as reported in the International Herald Tribune on 21 October 2005 (via the Dynamist).

It turns out the doomsayers were partly right: Nearly a year and a half after the expansion of the European Union, floods of East Europeans have washed into Britain.

Poles, Lithuanians, Latvians and other Easterners are arriving at an average rate of 16,000 a month, a result of Britain’s decision to allow unlimited access to the citizens of the eight East European countries that joined the EU last year.

They work as bus drivers, farmhands and dentists, as waitresses, builders, and saleswomen; they are transforming parts of London into Slavic and Baltic enclaves where pickles and Polish beer are stacked in delicatessens and Polish can be heard on the streets almost as often as English.

But the doomsayers were also wrong: Multicultural Britain has absorbed these workers like a sponge. Unemployment is still rock-bottom at 4.7 percent, and economic growth continues apace.

Since May 2004, more than 230,000 East Europeans have registered to work in Britain, many more than the government expected, in what is shaping up to be one of the great migrations of recent decades.

Yet the government says it still has shortages of 600,000 workers in fields like nursing and construction.

“They are coming in and making a very good reputation as highly skilled, highly motivated workers,” said Christopher Thompson, a diplomat at the British Embassy in Warsaw. “The U.K. is pleased with the way it’s progressed over the first 16 months, and we’re confident it will be a beneficial relationship for both sides in the future.”

Tens of thousands of East Europeans have also moved to Ireland and Sweden, the only other West European countries that opened their labor markets to the new EU members….

Fearing a massive influx of East Europeans after enlargement, other West European countries threw up barriers that will be lowered only gradually over the next decade. A Pole seeking to work in France, for example, still needs to apply for a work permit. France issued 737 such permits to Poles in the 10 months after enlargement; that is the number of Poles who arrive in Britain every two days.

Allowing immigrants access to jobs and business opportunities seems to be key.

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Impearls on Entrepreneurism and Its Enemies

Impearls is back to blogging more regularly in his trademark long and thoughtful essays with footnotes. His latest post bemoans the derision of all corporate entrepreneurism by too many on the political left.

It’s been obvious and has disturbed me for some time the way in which supposed “liberals” demonize private enterprise and those institutional vehicles which comprise it — companies and corporations — as the veritable Princes of Darkness.

The whole essay is worth reading, but I’ll cite just a couple of his supporting quotes.

Andrew Sullivan:

Thank God for the evil pharmaceutical companies. One day, when the history of this period is written, I have a feeling we will look back with astonishment as we recognize that advances in medical science, particularly pharmaceuticals, were arguably one of the most significant developments of this era. And yet the people who pioneered these breakthroughs were … demonized and attacked. Baffling and bizarre. I’m merely grateful the attacks haven’t stopped the research progress. They’ve merely slowed it.

Alexis de Tocqueville in Democracy in America:

On the left bank of the Ohio work is connected with the idea of slavery, but on the right with well-being and progress; on the one side it is degrading, but on the other honorable; on the left bank no white laborers are to be found, for they would be afraid of being like the slaves; for work people must rely on the Negroes; but one will never see a man of leisure on the right bank: the white man’s intelligent activity is used for work of every sort. […]

The white man on the right bank, forced to live by his own endeavors, has made material well-being the main object of his existence; as he lives in a country offering inexhaustible resources to his industry and continual inducements to activity, his eagerness to possess things goes beyond the ordinary limits of human cupidity; tormented by a longing for wealth, he boldly follows every path to fortune that is open to him; he is equally prepared to turn into a sailor, pioneer, artisan, or cultivator, facing the labors or dangers of these various ways of life with even constancy; there is something wonderful in his resourcefulness and a sort of heroism in his greed for gain. [emphasis added –Imp.]

Virginia Postrel notes related ironies in a recent article in Forbes on Criminalizing Science.

U.S. scientists and their supporters tend to assume biomedical research is threatened by know-nothings on religious crusades. But as the Canadian law illustrates, the long-term threat to genetic research comes less from the religious right than from the secular left. Canada’s law forbids all sorts of genetic manipulations, many of them currently theoretical. It’s a crime, for instance, to alter inheritable genes.

Where do these truly evangelical beliefs of the secular left come from? Medieval agrarian repulsion at urban corruption (like the Moravian Brethren)? High-born disdain for the commoners who produced the surplus wealth that funded noble endeavors? A combination of both?

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Dr. Paul Farmer’s Marxism

“For me to admire Cuban medicine is a given,” Farmer said. It was a poor country, and made that way at least in part by the United States’ long embargo, yet when the Soviet Union had dissolved and Cuba had lost both its patron and most of its foreign trade, the regime had listened to the warnings of its epidemiologists and had actually increased expenditures on public health….

One time he got in an argument about Cuba with some friends of his, fellow Harvard professors, who said that the Scandinavian countries offered the best examples of how to provide both excellent public health and political freedom. Farmer said they were talking about managing wealth. He was talking about managing poverty. Haiti was a bad example of how to do that. Cuba was a good one.

He had studied the world’s ideologies. The Marxist analysis, which liberation theology borrowed, seemed to him undeniably accurate. How could anyone say that no war among socioeconomic classes existed, or that suffering wasn’t a “social creation,” especially now, when humanity had developed a grand array of tools to alleviate suffering. And he was more interested in denouncing the faults of the capitalist world than in cataloging the failures of socialism. “We should all be criticizing the excesses of the powerful, if we can demonstrate so readily that these excesses hurt the poor and vulnerable.” But years ago he’d concluded that Marxism wouldn’t answer the questions posed by the suffering he encountered in Haiti. And he had quarrels with the Marxists he’d read: “What I don’t like about Marxist literature is what I don’t like about academic pursuits–and isn’t that what Marxism is, now? In general, the arrogance, the petty infighting, the dishonesty, the desire for self-promotion, the orthodoxy: I can’t stand the orthodoxy, and I’ll bet that’s one reason that science did not flourish in the former Soviet Union.”

SOURCE: Mountains Beyond Mountains: The Quest of Dr. Paul Farmer, a Man Who Would Cure the World, by Tracy Kidder (Random House, 2004), pp. 194-195

My biggest problem with Marxism–apart, of course, from “the arrogance, the petty infighting, the dishonesty, the desire for self-promotion, [and especially] the orthodoxy”–is that it takes wealth for granted (as Farmer does), and therefore assumes that poverty can only be eliminated by transferring existing wealth from rich people to poor people. The best way to destroy poverty is to enable poor people both to create new wealth and to accumulate it–and not just to rely on larger and larger transfers from those who have previously managed (legally) to create and accumulate it.

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Fiberoptics-dependent Economies

CRMBuyer [CRM = Customer Relationship Management] reported Wednesday on a major blow to offshore service centers in South Asia.

Damage to the undersea telecommunications cable SEA-ME-WE3 (SMW3) Monday initially disrupted most of Pakistan’s international telephone and Internet connections, but the outage spread to India, the United Arab Emirates, Oman and Djibouti as repairs were started yesterday.

Call centers in India using connections through the Reliance Group, India’s largest corporate conglomerate, to SMW3 to reach customers in the U.S. were experiencing service outages for the past day, they reported to InternationalStaff.net, a company that specializes in offshore process migration, call center program management, turnkey software development and help desk management….

SMW3 provides Pakistan with its sole high speed cable access. All call centers in Pakistan serving international customers have been without their usual level of telecommunications service since Monday.

The government of Pakistan has provided satellite backup systems to international call centers in that country at no charge to those centers, in order to make them more internationally competitive, and nine international call centers in Pakistan are reportedly operating on satellite backup connections now.

Oil-dependent economies need strategic reserves; connectivity-dependent economies need strategic backup networks.

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An Economist’s Take on Jared Diamond’s Collapse

Alaska-based econoblogger Ben Muse cites fellow economist Partha Dasgupta’s review of Jared Diamond’s Collapse in the London Review of Books. Seems Diamond fails to understand the relationship between pricing and scarcity in modern economies. Of course, if the government controls pricing, then it effectively slaughters that bellwether.

Forests loom large in Diamond’s case studies. As deforestation was the proximate cause of the Easter Islanders’ demise, he offers an extended, contrasting account of the way a deforested Japan succeeded, in the early 18th century, in averting total disaster by regenerating its forests. Now consider another island: England. Deforestation here began under the Romans, and by Elizabethan times the price of timber had begun to rise ominously. In the mid-18th century what people saw across the landscape in England wasn’t trees, but stone rows separating agricultural fields. The noted economic historian Brinley Thomas argued that it was because timber had become so scarce that a lengthy search began among inventors and tinkerers for an effective coal-based energy source. By Thomas’s reckoning, the defining moment of the Industrial Revolution should be located in 1784, when Henry Cort’s process for manufacturing iron was first successfully deployed. His analysis would suggest that England became the centre of the Industrial Revolution not because it had abundant energy but because it was running out of energy. France, in contrast, didn’t need to find a substitute energy source: it was covered in forests and therefore lost out. I’m not able to judge the plausibility of Thomas’s thesis – there would appear to be almost as many views about the origins, timing and location of the Industrial Revolution (granting there was one) as there are economic historians – but the point remains that scarcities lead individuals and societies to search for ways out, which often means discovering alternatives. Diamond is dismissive of the possibility of our finding such alternatives in the future because, as he would have it, we are about to come up against natural bottlenecks…

via Regions of Mind

Here’s a link to an interview with Diamond about that same book.

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Millionaires Against the Billionaires in Russia?

On 27 January, Washington Post columnist Jim Hoagland shared an interesting take on Ukraine and its possible lessons for Russia.

A revolt of “the millionaires against the billionaires” helped fracture Ukraine’s corrupt power structure and lift Viktor Yushchenko to the presidency there. A similar upheaval may be bubbling next door against Russian President Vladimir Putin.

That is the well-buttressed argument put forth by Anders Aslund, a Swedish economist and former diplomat whose past readings of failure in the Kremlin and its political consequences have earned my attention and respect.

I first ran across Aslund in Moscow in the 1980s at the height of Gorbymania, as the West cheered Mikhail Gorbachev for pushing perestroika as a means of reforming and saving the Soviet Union. Aslund’s predictions that Gorbachev would be unable to manage the forces he unleashed and would be destroyed by them were seen at first as provocative, then profound — and ultimately prophetic.

Being right once is no sign of being right always, or even often. There is a human tendency to analogize from the past and to miss what has changed. The rough-and-tumble years of Russia’s robber-baron politics and capitalism under Boris Yeltsin’s government, which Aslund initially advised, must have changed something.

But in conversation the other day and in several recent articles he has written, Aslund persuasively illuminated domestic conflicts that he sees leading toward “an unraveling of the Putin regime.” Parallels exist both with Gorbachev’s failure and with the political success of the reformer Yushchenko, with whom Aslund worked at Ukraine’s Central Bank.

Corruption and mismanagement have begun to sap the strong public support that Putin commanded in his first term, Aslund reports. And the campaign to line the pockets of Putin’s former KGB associates by jailing, intimidating and/or dispossessing the “oligarchs” who assembled fortunes under Yeltsin has turned much of the business community against the Russian president — as corruption did for Ukraine’s former rulers.

Ukraine’s “millionaires” — the big, but not the biggest, businesspeople — helped create and finance a political opposition that they hope will implement the rule of law and let them keep most of what they have already made, suggests Aslund, who directs the Carnegie Endowment’s Russian and Central Asian projects from Washington.

Siberian Light also notes an article in Mosnews about the importance of big-city mayors during revolutions.

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Some Backgrounders on Ukraine

Ukraine-based Le Sabot Post-Moderne explains how the system works there:

You have to understand the situation in Ukraine. The country is run by a series of oligarchic clans that actually found their beginnings in the Soviet Union, and then grew fabulously rich during the early days of “privatization”.

Compare the situation to Russia, where an authoritarian Putin faced off against corrupt oligarchs. In Ukraine, authoritarianism and oligarchy are fused. Yanukovych isn’t just another unscrupulous candidate, he’s the main man of Akhmetov — the duke of Donetsk and the richest man in Ukraine. The current president, Kuchma, is the head of a different clan, Dnepropetrovsk. The presidential administrator is Medvedchuk, who happens to run the Kiev-based Medvedchuk-Surkis clan. He also owns the two biggest Ukrainian TV stations, which is awfully convenient.

While there is jockeying for control among these clans, the overall effect is for them to sustain one another in power. They all depend on the same system for survival, and actively collaborate to keep it in place.

A good example of the clan system in action was the recent privatization of the Kryvorizhstal factory. Western firms offered 2.1 billion dollars. It was sold to the presidents son-in-law for 800 million. His son-in-law is Pinchuk, the head of the Pinchuk-Derkach clan.

Do you start to see how life works here? This isn’t about a few stolen votes. It’s about an entire system of fine control over the political, social and economic life of the people. Economics and politics are incestuously fused here in a way that is difficult to imagine for those in the West.

Ukraine-based TulipGirl quotes an essay by Ukrainian novelist Oksana Zabuzhko in Monday’s print edition of the Wall Street Journal.

Never before — even 13 years ago, on the eve of the collapse of the Soviet Union — has Ukraine witnessed such a massive upsurge of national solidarity. People who’ve always remained politically indifferent and had missed voting in all previous elections, were disseminating self-printed leaflets from the Internet (samizdat is back — any piece of information was voraciously devoured on the spot!) in public places, and volunteering to monitor the elections on behalf of opposition candidate Viktor Yushchenko. At a peasant food market a merchant first asked who you’re voting for — the right answer (with which you could count on a generous discount) was “Yushchenko,” while incumbent Prime Minister’s Viktor Yanukovych’s supporters were more than likely simply refused service. In the playgrounds children were playing a game called “Yushchenko beats Yanukovych.” To quote my seven-year-old neighbor, “in our class Irka alone stands for Yanukovych, and no one wants to play with her.” The slogan chanted by protesting students at demonstrations reads in English as “We’re together! We’re many! We won’t fall!” And just how may of “us” there are, one can easily see in the streets. These days Kiev, as well as other major Ukrainian cities, is defiantly demonstrating its political sympathies by wearing orange, the campaign color of opposition candidate Yushchenko.

A special term has come into use — “The Orange Revolution.” It looks like people have dragged all shades of orange, from yellow to vermilion, out of their wardrobes and adorned themselves with them simultaneously — vests and sweaters, scarves and purses, coats and umbrellas. Orange ribbons flutter everywhere — on trees, fences, lanterns, and cabs. Drivers joyfully beep to each other, and pedestrians (traffic police included!) salute them with smiles and raised fists. It feels like the capital of three million has been transformed into a sea of brotherly love! The windows of shops are lavishly decorated with things orange. Among my favorites is the stunt of my neighborhood coffee shop — its windows glow with pyramids of oranges! …

Here I have to clarify one important point. A widespread cliche used by many Western journalists to describe the major collision of our dramatic elections is that the establishment candidate, Viktor Yanukovych, is “pro-Russian,” and that opposition candidate, Viktor Yushchenko, is “pro-Western.” This version has as little to do with the feelings of an average Ukrainian voter as with those of the belligerents of the Trojan war. Mr. Yanukovych is perceived not so much as being “pro-Russian,” but as, first and foremost, being “pro-criminal” — a Ukrainian Al Capone, who has under his belt two prison sentences for robbery and assault, and publicly uses criminal argot compared to which even the boorish tongue of retiring President Leonid Kuchma sounds as innocuous as a school textbook. A former governor of Donetsk, Mr. Yanukovych in power represents the so-called “Donetsk fellas” — a business clan with a notorious criminal background. That the latter have close ties with similar mafia clans in Russia seems to be the most immediate explanation for the pre-election outburst of a passionate love between Russian and Ukrainian leaders, an affair of which Yanukovych-as-president had been designed as a mutually satisfying offspring.

Chicago-based international relations professor Dan Drezner is more pessimistic:

A few years ago there were sizeable protests in Kiev because of “Kuchmagate,” in which tapes came to light suggesting that President Leonid Kuchma played a role in the disappearance of Ukrainian journalist Georgy Gongadze in September 2000. There was tangible evidence that Kuchma personally ordered Gongadze — who was investigating corruption in Kuchma’s administration — to disappear. Despite months of protests, however, Kuchma stayed in office (click here for an exhaustive World Bank study [PDF] on this case).

Not to put a damper on what’s going on right now in Ukraine, but that example should be kept in mind when speculating whether the protests at the rigged election results in Ukraine will actually cause a change in government a la the Rose Revolution in Georgia [Quickly: opposition leader/reformer/nationalist Viktor Yushchenko led by double digits in Western-run exit polls over Kuchma stalwart/Russophile Viktor Yanukovich. However, the preliminary election results had Yanukovich winning by three percentage points. Outside observers are pretty much unanimous in their belief that there was massive vote fraud].

The two most salient facts in assessing what will happen are that:

a) Leonid Kuchma wants Yanukovich to win;

b) Vladimir Putin really wants Yanukovich to win.

I would love to be wrong about this, but it doesn’t look good for Yushchenko.

Canada-based Randy McDonald weighs in on Ukraine’s Underestimated Strength.

I’m skeptical, in short, that Ukraine is at real risk of splitting apart along ethnolinguistic-cum-political lines. And yet, I can’t help but remember Andrew Wilson’s The Ukrainians: Unexpected Nation, which suggested that the most likely and the most stable course for Ukraine would be a broadly centrist position, relying on slow Ukrainianization and a Ukrainian balancing act between the European Union and Russia. Going to one extreme (a strongly Ukrainianizing regime intent on immediate European integration) or another (a strongly Russophile regime intent on Eurasian integration) could, Wilson suggested, disturb the equilibrium. Mass secessions wouldn’t be the result so much as growing alienation, the formation of more coherent ethnic groups with stricter frontiers. This would be a problem for Ukraine, needless to say.

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New Zealand’s Market Reforms

Tyler Cowen of Marginal Revolution asks Have New Zealand’s Market Reforms Failed?

New Zealand moved from being perhaps the most socialized OECD economy to the freest. The country now has free trade, 0-2 percent inflation, no agricultural subsidies, free labor markets, free capital markets, low marginal tax rates, a reasonable fiscal position, and it conducted substantial privatizations, mostly with success. The reforms started about twenty years ago, but the country is not sweeping the world …

What gives?

First, New Zealand without the reforms would have fallen apart and become insolvent; that is the relevant counterfactual. Second, the country is small. The population is just a bit over 4 million; for purposes of comparison the Philadelphia metropolitan area is over six million.

Michael Porter nailed it over ten years ago. New Zealanders have few if any industries [one being electric fencing] where they control market conditions or lead with innovations. For the most part they are at the mercy of world prices and broader conditions. The country’s earlier crisis was precipitated in the early 1970s, when the UK ended “imperial preference” for New Zealand agricultural exports. Another shock will come if Australia passes its free trade agreement with the U.S.; New Zealand exports will face a new and tough competitor.

Finally, the brain drain has not gone away …

UPDATE: Tyler Cowen posts a response from a Kiwi who maintains that NZ’s domestic economy is laden with a regulatory environment that heavily discourages private capital accumulation and investment, including foreign investment.

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The Third Reason for Surprise on September 11th

The Hart-Rudman report [commissioned by U.S. President Clinton in 1997 and completed in March 2001] established the nation’s vulnerability, but even it could not say when, how, or from where that vulnerability might be tested. Its conclusions, however striking, therefore fell within the realm of the hypothetical. Press coverage was minimal, and the response of the newly installed Bush administration–like that of the outgoing Clinton administration–to the commission’s preliminary findings was little more than polite thanks. That the foundations of national security were about to suffer a seismic jolt was still by no means clear.

There was yet a third reason for the surprise, though, which went beyond the concerns of Hart-Rudman: it had to do with a widespread sense in the academic and policy communities during the 1990s that the international system had become so benign that the United States no longer faced serious security threats of any kind. Paradoxically, the success of American grand strategy during the Cold War encouraged this view.

The record was indeed impressive. The United States had used military occupations to transform Germany and Japan into thriving capitalist democracies, and the Marshall Plan had secured similar results elsewhere in Europe. Over the next four decades democracy and capitalism spread much more widely, even tentatively into the Soviet Union itself. Meanwhile the world’s other great communist state, China, was pulling off a dialectical transformation that neither Marx nor Mao could ever have imagined, becoming a hotbed of capitalism, if not yet of democracy. By the time the Cold War ended, no other models for organizing human society seemed viable: Americans were remaking the world, or so it appeared, to resemble themselves. And the world, it also seemed, was not resisting.

Certain theorists concluded from this that the movement toward democracy and capitalism was irreversible, and that “history” therefore was coming to an end. It might have been an innocuous enough argument, given the care social scientists had taken in recent years to ensure that their theories bore little connection to reality; but this particular theory–associated most closely with the political scientist Francis Fukuyama–did wind up shaping the course of events. The Clinton administration drew from it the idea that if progress toward political self-determination and economic integration was assured, then the United States need only, as national security adviser Anthony Lake put it, “engage” with the rest of the world in order to “enlarge” those processes. The hegemony by consent the United States had won during the Cold War would simply become the post-Cold War international system. President Clinton himself saw little need for a grand strategy under these circumstances. Neither Roosevelt nor Truman had had one, he told a top adviser early in 1994: “they just made it up as they went along.”

There were several problems with this position, quite apart from the chief executive’s shaky knowledge of World War II and early Cold War strategy. It encouraged a tendency to view history in linear terms, and to ignore the feedback effects that can cause successes to breed failures by inducing complacency–just as failures can breed successes by shattering complacency. It sought coherence through alignment with vague processes rather than through the specification of clear objectives. It brought the Clinton team closer to the examples of Harding and Coolidge than to those of Roosevelt and Truman, for those presidents of the 1920s had also allowed an illusion of safety to produce a laissez-faire foreign and national security policy. Finally, Clinton and his advisers assumed the continued primacy of states within the international system. If you could make most of them democratic, if you could bind them together by removing restrictions on trade and investment as well as on the movement of people and ideas, then the causes of violence and the insecurity it breeds would drop away. The argument was well intentioned but shallow.

For what if the power of states themselves was diminishing? What if the very remedies the Clinton model prescribed–political self-determination and economic integration–were slowly undermining the authority of those for whom the prescription had been intended? What if the hidden history of the Cold War was one in which the great powers, under American tutelage, ultimately resolved most of their differences, only to find that their own power was no longer as great as it had once been? It doesn’t take a rocket scientist to see how this might have happened.

Self-determination certainly enhances legitimacy: that’s why democracies during the Cold War proved more durable than autocracies. But it can also expose an absence of legitimacy, which is what led to the breakup of the Soviet Union, Yugoslavia, and Czechoslovakia after the Cold War. There are now more independent states than ever before–almost 200, as compared to about 50 at the end of World War II–but that doesn’t mean that the international state system is stronger. It means just the opposite: that there are more “failed” or “derelict” states than ever before.

Integration certainly enhances prosperity: that’s why so many people benefited from the liberalization of trade and investment that took place during and after the Cold War. But the resulting global market has also constrained the ability of states to determine the conditions under which their citizens live. Marx was right in pointing out that although capitalism generates great wealth, it distributes that wealth unevenly. States used to have the capacity to cushion that process, thereby minimizing the resentment it generated: progressivism and the New Deal in the United States, social democracy in Europe, and their equivalents elsewhere provided the social safety nets that saved capitalism from the self-destruction Marx had forecast for it. Now though, in an unregulated global economy, those nets are sagging and becoming frayed.

It’s also the case that states–even democracies–used to have some control over movements of people and exchanges of ideas. We tend to celebrate the fact that it’s more difficult to impose such restrictions in a world of cheap air travel, liberal immigration policies, fax machines, satellite television transmitters, cell phones, and the internet. But there’s also a price, which is that it’s harder than it used to be for states to monitor the activities of those individuals, gangs, and networks who are their enemies.

The bottom line, then, is that states are more peaceful these days–that’s a major accomplishment of the Cold War–but they’re also weaker than they used to be. That situation too contributed to the events of September 11th, and it’s certainly shaping the era that has followed. The most important failure of strategic vision in Washington, therefore, lay in the inability of American leaders to look beyond their Cold War victory to the circumstances that might undermine its benefits. As after World War I, they allowed the absence of visible danger to convince them that nothing invisible could pose a threat. They assumed that it was enough simply to have won the game. It did not occur to them that the arena within which the game was being played–together with the rules by which the United States, its allies, and its defeated adversaries had played it–might now be at risk.

It was not just the Twin Towers that collapsed on the morning of September 11, 2001: So too did some of our most fundamental assumptions about international, national, and personal security.

SOURCE: Surprise, Security, and the American Experience, by John Lewis Gaddis (Harvard U. Press, 2004), pp. 74-80

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