We had a great time at our meeting! However, we had only 3 attendees this time. In fact, as we have had fewer and fewer turnouts, I have been thinking twice about arranging these meetings at all. Perhaps it was the timing this time (being a few days after Thanksgiving), but I must admit I was very much embarrassed with the turnout this time. The following is certainly not directed to those who do and have attended regularly. In particular, I want to thank Jeff Harrington not only for his individual contribution to the discussions but also for his efforts to increase attendance at our meetings.
Let’s go into the reason why I decided to arrange these meetings in the first place. I have been speaking with people like Kevin Day and Tom Murphy along with a host of other VIPs of sorts (executives of major corporations, associates of billionaire families, venture capitalists, visionaries, university professors, etc.), and have gained tremendously by my conversations with them. I felt that if I could get these people in front of those who may not have access to them, then others could also gain as I have. Kevin, in his prime, was a vice-president of one of the largest conglomerates in US history and has taken probably more than a hundred trips around the world throughout the last four decades; and when he takes out his time and effort to share his knowledge and perspective at our meetings, and only one person after myself shows up, I feel it to be a disgrace on my part! After the dismal attendance at our meeting today, I don’t know whether I really want to invite Kevin Day, Tom Murphy, or Vance Hall or any other VIP, if only a couple of people show up to appreciate what they have to offer.
Another reason for these meetings is to become more aware and conscientious human beings. Historically, wars, acts of terrorism, social strife, etc. can only be perpetuated time and again as long as most people remain voluntarily ignorant to the facts and therefore fail to act upon the issues at hand. This is the very reason why we have a speculative bubble roughly every 10-20 years because people choose not to learn from the past. The biggest losers are, therefore, the average worker and his/her 401k, or the day-trader who quits his/her job overnight to pursue millionaire-dom. In my opinion, voluntary ignorance was also the reason for the September 11th attacks, as American citizens failed to be aware of how our government was affecting the rest of the world and how our actions abroad might inevitably affect us at home. As long as the current generation remains apathetic, like those preceding ours, there will be no end to our problems. Perhaps, I must be an alien inhabiting earth and maybe it is only me in this world that actually sees this and wants to do something about it, but my hope is that you all see this too and want to do something about it also.
I would like you all to think about and consider the bigger picture here. Politicians, historically, are not really there to solve our problems; the truth of the matter is that we put them there because we don’t want to make the important decisions. The choice is ours, obviously. We will all collectively decide what kind of world we want to live in and leave for our children. But the first step, in my opinion, is to become aware of the problems first. I don’t think we get together to truly devise solutions to worldwide issues, but to just become aware of them. This awareness will spread invariably to others around you and become a new consciousness in itself, over time. Even if we cannot do anything about it, we’d rather be aware than be willfully ignorant. However, if I have misjudged your characters and motivations, then I apologize, and maybe I am asking too much.
In any case, as a result of the declining attendance at our meetings, I have decided, after consulting Kevin and Tommy, that there will be no meetings during the month of December for the holidays, and we will have our next meeting on January 4th, 2009. If this meeting fails to draw a sizable attendance, then I don’t feel like my time and effort is being utilized and that will be the end of the meetings. Perhaps you could leave some comments/suggestions and let me know what I could/should do to increase attendance at our meetings.
Kevin’s Trip To Tunisia
Kevin recently returned from his trip to Tunisia and he narrated a most extraordinary incident that occurred to him. Once while their tour bus was driving, a barrage of baseball-size stones broke the windows and were aimed at the tourists inside, some of them incurring serious injuries. Kevin explained how this came from local dissenters of foreigners and how he felt that his life was in serious danger. He has been to Tunisia many times to study the archaeological ruins of old Roman cities that have been preserved there and has noticed a growing anti-foreign influence throughout the decades.
The Obama Administration
Obama is a smart and capable politician. However, his supporters may feel betrayed after they find that Obama is not going to be able to deliver on a majority of his promises. It was interesting to note that his presidential acceptance speech was the first time he mentioned that really long-term nature of the problems he is confronting, mentioning how it may take more than one term to implement his solutions. His assumed appointment of Hilary to Secretary of State will effectively kill her ambition for running against him for his second term. Kevin, however, although lauding Obama for his political acumen, questions whether Hilary is the right person for the job. She has the reputation for being vehemently anti- North Korea, Pakistan, and Palestine, and keeping her country’s well being first might not come easy to her nor will it be easy to convince these countries that the US has their best interest in mind. Obama will probably pass a bill to uphold the rights of unions to satisfy a large constituent that elected him. Kevin thinks that Geithner was a good choice for Secretary of Treasury. As Fed President for New York, he was also a key player in rescuing Bear Stearns; Wall Street right now is looking for an assurance of trust and confidence and Geithner may provide this role. There is a quick question that we have for you all as we did not know the answer: for any reason if Obama is killed before Inauguration Day, who would become President? As Biden has been elected Vice-President would he be eligible to become President? Or would there be some other course of action? It is clear that Biden would become President should something happen to Obama after he is inaugurated, but what about before his inauguration? If you know the answer, please post a comment and let us know as we are curious what the answer might be.
Goldbug Thesis
Kevin, who has been trading the market for over 40 years, made it very clear that the occurrences in the financial markets in the last three months have frightened him. He has described himself as the “last optimist on Wall Street”, but admits that for the first time in 40 years, his nerves have been shaken recently. He spoke to us about how banks have been unwilling to part with his deposits and have effectively frozen his assets in some cases as they are all straining for cash. With the FED pumping trillions of dollars into the system which further depreciates the currency, hard assets like precious metals may be a good investment to preserve value. He has suggested investing in a gold etf like GLD or SLV as these funds actually hold physical gold and silver deposits. He also thinks that the next asset class to decline is commercial real estate; his time horizon for this to start occurring is within the next 6 months.
Recent Intelligence Report
There was a recent intelligence report purporting a decline of American influence around the world and a massive transfer of wealth to China and India in the next 30 years. This, however, is an exaggeration. Both China and India have a long way to go and can hardly approach the industrial giant that America is today. The recent bombings in Mumbai are an indication of how much progress needs to be made. Sixty hours after the initial shootings, Mumbai police were still not able to kill off the terrorists. Kevin called it the “British officer” syndrome; the appearance of officials looking official, but are, in fact, very incapable when action is required. 45% of the Chinese labor force and 60% of the Indian labor force is engaged in agriculture today, while less than 4% of Americans are engaged in the same trade. If one has ever been to India or China, then one can readily see the stark day-and-night differences between urban city life and rural village life. Prosperity stays in the cities and has not trickled outside of them.
The Arbitrary in “Relationships”
After we ended our meeting, Tommy and I went to a Starbucks to discuss some very fundamental issues of the human condition. Our discussions revolved mostly around the inherent fallacy of “relationships” (between a man and woman, etc.), and how they inherently cannot be sustained. Most times it is not the person itself we are interested in, but the fulfillment of an idea or promise of what a person might be. For example, first dates are only an exchange of impressions, not of the actual person itself. For example, one might find a woman attractive in a black dress, etc., but that same woman does not assume the same attractiveness when she must perform the necessities on the toilet. In fact, what is considered “attractive” is completely arbitrary. The Chinese during the Han dynasty found women who bound their feet to be very attractive (foot-binding is a practice in which a girl literally binds up her feet so that the bone structure is smaller in adulthood). There is nothing inherently “sexy” about red lips on a woman or muscled chest on a man. The body and the ideas about it have nothing to do with the actual person itself. The actuality of the person itself is ignored altogether. After the “honeymoon” stage, people cannot keep up the act of impressions forever and are forced to deal with the person as he/she is, which may be very different from the expectation or initial impression of the person. This is not to be confused with a real relationship where the actual person is concerned and there is merely the joy of being with that person irrespective of external features (gender, attributes, etc). In such a case, people are upfront and honest about themselves and no value judgments are made about the person, but is merely accepted as he/she is.
In response to the question of what would happen if Obama is assassinated prior to his inauguration, nothing immediately. Upon inauguration, the Vice-President elect would become President. For more on presidential succession, visit http://www.infoplease.com/ipa/A0101032.html
ReplyDeleteCONNECTING THE DOTS
ReplyDeleteVJ wrote last month, "What is more interesting is that the hunger epidemic did not even exist before the 1950s" ("Conagra and World Hunger", November 17). Human hunger is indeed a problem. We should address this problem. And any person or non-profit organization or for-profit corporation that worsens this problem should be held accountable. However, the hunger epidemic has existed almost as long as humans have existed. So why does VJ's source date the beginning of the hunger epidemic to the 1950s rather than to the dawn of civilization?
VJ wrote more recently, "In my opinion, voluntary ignorance was also the reason for the September 11th attacks, as American citizens failed to be aware of how our government was affecting the rest of the world and how our actions abroad might inevitably affect us at home" ("Meeting Minutes", December 1). Many Americans are unaware of their government's impact on the rest of the world, and many Afghans are unaware of their government's impact on the rest of the world. Both the Americans' unawareness and the Afghans' unawareness were contributing factors to the September-11 attacks, but neither was the cause of the September-11 attacks. So why does the source of VJ's opinion identify "the reason" for the attacks as the victims' voluntary ignorance rather than the attackers' publicly stated motive?
The answer to these two questions may be related. To read more, see Lee Harris's article "The Intellectual Origins of America-Bashing":
http://www.hoover.org/publications/policyreview/3458371.html
You bring up some excellent points, Jason. The article was fascinating in perhaps bringing out a prejudiced angle I may have been taking, "America-bashing", per say. I do not at all mean to imply that America has done nothing good in my blogs, but to highlight some things that need our attention.
ReplyDeleteHowever, I believe that perhaps I have worded some of my arguments incompletely. Let me complete my first argument about world hunger. The dictionary definition of the word 'epidemic' is a disease or anything resembling a disease, attacking or affecting many individuals in a community. I meant that quite literally. I believe that the disease of world hunger is a targeted and disease-like phenomenon. This does not mean to say that people have not gone hungry since the dawn of civilization. Of course, this is true. The problem of world hunger has its roots principally in poverty. Poor families produce more children (more hands, etc.), and more children and less resources equals hunger. I would urge you to read the book 'World Hunger: 12 Myths' by Lappe and Collins to see why the hungry have decidedly increased since the 1950s with foodstuff corporations systematically taking over and hoarding resources in other countries to keep food commodity prices inflated. I found a brief summary online, but I'm not sure if this point was highlighted anywhere:
http://www.hartford-hwp.com/archives/28/079.html .
Secondly, it is true that the terrorists have publicly declared their motive to destroy America. However, much of this behavior may be traced to what the CIA would term 'blowback'. For my source, please read 'Blowback: The Costs and Consequences of American Empire' by Chalmers Johnson. These terrorists did not become anti-American "overnight", there was a gradual process involved. If American citizens knew and thoroughly understood our foreign policy and wanted to take accountability for it, I would say they would disapprove exceedingly of some of the things we have and are continuing to do. The US decided after the end of the Gulf War and Cold War to maintain itself, instead of dismantling itself. Troops were no longer needed in Japan, Korea, Saudi Arabia, Kuwait, Germany, etc., but they were kept there anyways. One must understand Islam to understand why there may be hostility coming from the Middle East. After the end of the Gulf War, the US should have withdrawn from its troops Saudi Arabia as Hussein had been put down, albeit temporarily, as a threat. This did not occur, however, and the result was 30,000 foreign, Christian troops were occupying Mecca and Medina, the holiest of holy cities for Muslims. This may be perhaps just one example of our actions being a source of their hostility. I also believe that the problem lies within Islam as well. When any person believes blindly in the complete destruction of the US, I believe that even if America did not incite it to violence, I would still seek to completely destroy the country. Therefore, I am not saying that 9/11 was completely the result of our actions, but that our voluntary ignorance of our foreign policy may have been a factor leading to it.
CONNECTING THE DOTS (Part 2)
ReplyDeleteTo support his claim that “the hunger epidemic did not even exist before the 1950s” (“Conagra and World Hunger”, November 17), VJ cited the book World Hunger: Twelve Myths by Frances Moore Lappe and Joseph Collins. I read the book. And it actually states: “In every region except Africa, gains in food production since 1950 have kept ahead of population growth” (p.9, World Hunger: Twelve Myths, 1986).
So why did some regions begin to experience gains in food production in the 1950s? Because it took some societies thousands of years to learn how to reduce poverty. Douglas C. North explains: “Throughout most of history and for most societies in the past and present, economic performance has been anything but satisfactory. Human beings have, by trial and error, learned how to make economies perform better; but not only has this learning taken ten millennia (since the first economic revolution)—-it has still escaped the grasp of almost half of the world's population. Moreover the radical improvement in economic performance, even when narrowly defined as material well-being, is a modern phenomenon of the last few centuries and confined until the last few decades to a small part of the world” (Part V, “Economic Performance through Time”, 1993: http://nobelprize.org/nobel_prizes/economics/laureates/1993/north-lecture.html).
And why has Africa not experienced gains in food production? Because in its struggle to learn how to reduce poverty, Africa has taken two steps forward and one step back. D. Eric Schansberg explains: “Africa’s record features abject poverty and famine despite abundant natural resources and tremendous agricultural and economic potential. The World Resources Institute says Africa has much more land that can be cultivated—-an area it estimates as more than three times the size of the United States; unfortunately, only one-fourth of Africa’s arable land is currently in use. Africa was actually food sufficient in the early 1950s. But between 1960 and 1985, per capita food production declined by 25% as governments inflicted poor policies on their people, especially farmers. [¶] With Africa’s low per capita incomes, starvation is not a ‘food problem’ per se but a productivity problem. The crucial issue is low income, not an absence of food. One reason is that people have few skills. But a larger problem is government policies that distort the economic incentives to work hard and be productive, to engage in trade and to make investments in capital and human capital. These combine to ensure that most people on the continent suffer through lives of unmitigated poverty” (pp. 197-198, Poor Policy: How Government Harms the Poor, 1996).
Institutional disorder, like Africa’s, is a common problem for societies throughout human history. Douglas C. North continues: “As tribes evolved in different physical environments they developed different languages and, with different experiences, different mental models to explain the world around them. The languages and mental models formed the informal constraints that defined the institutional framework of the tribe and were passed down intergenerationally as customs, taboos, and myths that provided cultural continuity. With growing specialization and division of labor the tribes evolved into polities and economies; the diversity of experience and learning produced increasingly different societies and civilizations with different degrees of success in solving the fundamental economic problem of scarcity. The reason is that as the complexity of the environment increased as human beings became increasingly interdependent, more complex institutional structures were necessary to capture the potential gains from trade. Such evolution requires that the society develop institutions that will permit anonymous, impersonal exchange across time and space. To the extent that the culture and local experiences had produced diverse institutions and belief systems with respect to the gains from such cooperation, the likelihood of creating the necessary institutions to capture the gains from trade of more complex contracting varied. In fact most societies throughout history got 'stuck' in an institutional matrix that did not evolve into the impersonal exchange essential to capturing the productivity gains that came from the specialization and division of labor that have produced the Wealth of Nations” (Part V, “Economic Performance through Time”, 1993: http://nobelprize.org/nobel_prizes/economics/laureates/1993/north-lecture.html).
Other societies that have failed to develop an institutional matrix that has produced the Wealth of Nations are the less-developed countries (the LDCs). D. Eric Schansberg continues: “The governments of LDCs are frequently anti-business and anti-farmer. They typically pursue some combination of the following: nationalization of land or restrictions concerning property rights; minimum wages and tariffs on imported inputs; high tax rates, price controls or monopolistic purchasing boards. These lower the rate of return for farming and make long-term investments in capital unwise. Further, one would expect to see large-scale foreign investments given the low cost of labor, and other inputs, but restrictions and the uncertainty inherent in dealing with such regimes make investment less attractive” (p. 197, Poor Policy: How Government Harms the Poor, 1996).
Despite the fact that many societies have evolved an institutional matrix that is self-destructive, an institutional matrix as the potential to be self-enriching. As David Beckmann and Arthur Simon explain, “[C]apitalism works best when people in business are honest and committed to being of real service to their customers. Capitalism is most attractive when it is balanced by democratic government and a strong sector of religious, humanitarian, and civic activity” (p.112, Grace at the Table: Ending Hunger in God’s World, 1999).
Scholars who have studied the wide variety of institutional matrixes that societies have evolved have made two significant observations concerning poverty:
* Evolving towards a productive institutional matrix is correlated with reducing poverty.
* And the more productive the institutional matrix, the greater the reduction of poverty.
Unfortunately, the trial-and-error, evolutionary path towards a productive institutional matrix is a two-way street. As some societies evolve towards a productive institutional matrix, other societies evolve away from one, slowing down the reduction in world poverty. Ian Vasquez explains: “The most comprehensive empirical study of the relationship between economic policies and prosperity is the Fraser Institute’s annual report Economic Freedom of the World (Gwartney and Lawson 2001), copublished by the Cato Institute. It examines more than twenty components of economic freedom, ranging from size of government to monetary and trade policy, in 123 countries over a twenty-five-year period. The study finds a strong relationship between economic freedom and prosperity. With the countries divided by quintiles, the freest economies have an average income per capital of $19,800 compared with $2,210 in the least-free quintile. Freer economies also grow faster than less-free economies. Annual growth of output per capita in the 1990s was 2.27 percent in the freest quintile, but –1.45 percent in the least-free countries. The Fraser study also found that economic freedom is strongly related to poverty reduction. The United Nations Human Poverty Index, for example, is negatively correlated with the Fraser index of economic freedom. The recent acceleration of growth in many developing countries indeed has reduced poverty, measured as those living on less than one dollar a day. In the past ten years in the developing world, the percentage of people who are poor fell from 29 to 24 percent (World Bank 2001, 21). Despite that progress, however, the number of poor people has remained stubbornly high at approximately 1.2 billion, and reductions in poverty have been uneven geographically. [¶] This mixed performance has prompted many observers (for example, Wolfensohn and Stiglitz 1999) to ask what factors other than growth reduce poverty and whether growth is enough to accomplish that goal. Market reforms themselves have been questioned as a way of helping the poor. After all, many developing countries have liberalized their economies to varying degrees in the past decade. The pattern of poverty reduction we see around the world should not be surprising. It generally follows the relationship found by a recent World Bank study that considered growth in sixty-five developing countries during the 1980s and 1990s (Easterly 2001, 13). The share of people in poverty, defined as those living on less than one dollar per day, almost always declined in countries that experienced growth and increased in countries that experienced economic contractions. The faster the growth, the study found, the faster the poverty reduction and vice versa. For example, an increase in income per capita of 8.2 percent translated into a 6.1 reduction in the poverty rate. A contraction of 1.9 percent in output led to an increase of 1.5 percent in the poverty rate” (pp. 199-200, “Globalization and the Poor”, The Independent Review, Volume III, Number 2, Fall 2002: http://www.independent.org/pdf/tir/tir_07_2_vasquez.pdf).
The findings of these studies are good news for people seeking a way to reduce poverty, but they are overlooked by Chalmers Johnson in his book Blowback: The Costs and Consequences of American Empire. I read this book. And I agree with Philip Zelikow’s review: “In this book, [Johnson] charges America with running a global capitalist empire—-comparable to the Soviet Union in its foolish assumptions and overstretched reach and deserving a similar fate. Although he offers opinions about American policy everywhere, Johnson's particular focus is on Asia. He views allies like Japan as American stooges and equates Japanese prime ministers with the former leaders of East Germany. He finds American hubris responsible for practically everything he dislikes. For instance, Johnson asserts that the CIA installed former Indonesian leader Suharto in Indonesia in 1965-66 and that the U.S. Defense Intelligence Agency removed him in 1998. (Neither claim is true.) Nor does he give America credit for anything that has gone right, like progress toward democracy in states such as South Korea, Taiwan, or the Philippines. In contrast to a work like [William] Gleysteen's, Blowback reads like a comic book” (pp. 138-139, Foreign Affairs, 79.5, September-October 2000).
In addition, Johnson’s underlying assumption is also simplistic. Lee Harris explains: “The belief that mankind’s progress . . . could be achieved through the destruction or even decline of American power is a dangerous delusion. Respect for the deep structural laws that govern the historical process—-whatever these laws may be—-must dictate a proportionate respect for any social order that has achieved the degree of stability and prosperity the United States has achieved and has been signally decisive in permitting other nations around the world to achieve as well” (“The Intellectual Origins of America-Bashing”, Policy Review, December 2002 and January 2003). Indeed, the further reduction of world poverty may be dependent upon the further expansion of this Pax Americana.
Well said, sir. I want to commend you for your scholarship and level of sophistication in presenting your arguments. I must admit that you have displayed a more thorough understanding of the problems that I have and therefore, your arguments certainly deserve merit in my eyes. Thank you, Jason, and I hope you will keep responding/replying to these blogs...
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