Archives for posts with tag: Free market

“the world is not a ‘global community’ but an arena where nations, non-governmental actors and businesses engage and compete for advantage…Rather than deny this elemental nature of international affairs, we embrace it.”

Rings a bell?

Sounds too neoliberal for you?

I’m afraid we are dealing with a huge communication problem here.

For some ‘competition’ has become a dirty word while some others interpret it according to their, narrow, ideology. To fit through their horse blinkers.

To make my point I’m going to use Valentine Wiggin’s Hierarchy of Foreignness. For those of you who are unfamiliar with Orson Scott Card’s work, Valentine is one of the main characters in Ender’s Game.

– An utlänning was defined as a stranger recognized as human from the same planet as a subject, but of a different nation or city. Utlänning means “foreigner” in Swedish.
– A främling was defined as a stranger recognized as human, but from a different planet than a subject. Främling means “stranger” in Swedish.
Raman were defined as strangers recognized as “human”, but of another sentient species entirely. The term was only ever used to refer to the entire species as a whole rather than an individual member. Although not a common word, it may be constructed in Swedish from rå + män, where rå indicates “coarse,” “raw” or “crude” (not refined), and män means “man” or “person.”

Varelse were defined as true aliens; they were sentient beings, but so foreign that no meaningful communication would be possible with the subject. Varelse means “creature” in Swedish.
Djur were non-sentient beings. They were capable of independent thought and action, but their mode of communication could not relay any meaningful information to the subject because the djur itself lacked the capacity for rational thought and self-awareness. Djur means “animal” in Swedish.

It’s simple to understand that this hierarchy is based on the ‘subject’s’ ability to communicate with the ‘foreigner’. But not exclusively! The whole thing also depends on both parties willing to accept the other as a ‘partner’.

In fact the entire Ender’s Game series is about Humankind wagging an all out war with an alien civilization, only to discover that the conflict was produced by a colossal misunderstanding.  Neither of the belligerents had recognized the other as ‘raman’ and, as a consequence, both had treated the other as ‘varelse’. And, eventually, the humans prevailed. The book was written by one of us…
Read the whole series, you’ll have a surprise at the end!

Coming back to ‘competition’, let me remind you that it is nothing else but the most comprehensive form of cooperation.

Not only that the participants do something in common – they all obey the same set of rules and cooperate in throwing out the cheaters – but they also help each-other to become better at whatever they are competing about.

Savvy?

What would any competition turn into if too many participants would no longer obey the rules?

Act as djurs? Obsessed by their own wishes and behaving disdainfully towards all others?

 

“If democracy and open societies depend on constantly providing their citizens with more wealth tomorrow than today, then the Western world — and soon enough the whole world — is in for tough times.” (Zachary Karabell, Forget Dow 20,000 — the Boom Times Are Over. Is Democracy Next?, Foreign Policy, 2017/01/26)

Shouldn’t we ‘back track’ and try to identify what and when, if any, we’ve done wrong before attempting to go any further?

The author identifies, with surgical precision, the stepping stones that have led us to where we are now.

We, in the West, have grown to associate material affluence with capitalism, democracy and liberalism.
In the process, we got “addicted” to a special kind of ‘economic growth’,  the one measured in monetary terms.Lately, after people no longer had as many children as they used to – which, supposedly, is going to hinder and eventually halt ‘economic’ growth, things are no longer seen in the same light.
The economic boom in China and recent developments in Philippines, Turkey and a few other places which “have seen a surge in nationalism of late, a questioning of democracy and skepticism about liberalism even as economic growth has been strong and deep”  are adding to the confusion.
Even “more surprising is the erosion of support for democracy and the norms of liberalism — even of capitalism — in the United States, France, Spain, Greece, and elsewhere”.

He also identifies, with equal precision, some of the barriers that prevent us from seeing the wider picture.

That we haven’t yet developed a clearer understanding of what liberalism and democracy might be. In his own words they still are “adolescent concepts relative to the tenure of recorded history”.
Then there is the matter of how we understand ‘economic’ growth.
“Politicians and governments rise and fall based on how successfully they have been seen to address the problem of wealth and jobs — not the problem of food, shelter, health, and quality of life.”
“we know no other way to assess economic strength and societal success except by the metric of growth. Three hundred ago, the metric was armies and territory. Today, it is GDP, jobs, and wages. You could craft a lovely society with zero growth, but nobody would believe it if GDP, jobs, and wages were shrinking and the rewards remained unevenly dispersed.”
And it’s not only a matter of understanding but also one of perception. “How people react to inequality is hardly straightforward; the populist wave that elected Trump doesn’t yet mind a billionaire cabinet. But the perception that some are reaping rewards at the expense of the many is deep and strong; that, too, was a line almost verbatim in Trump’s inaugural address.”
Which perception leads to a certain way of seeing things. “We clearly are able to provide basic material needs to everyone. But in the developed world, we are failing to provide a sense of security even while most people’s lives are de facto more secure.
On top of this, there is “anger”. Produced by the “evidence that we have the ability to meet our collective needs and wants” corroborated with the “ample evidence that many countries lack the political will or social consensus to make that happen”.

So, what next?

In Mr. Karrabell’s terms, we need to brush off skepticism, fear and anger – since they “are not themselves barometers of the future” – and …

“The greatest questions for the coming years is whether material stability is enough to mitigate against political chaos and societal decay.”

I’m sorry but I really don’t like this kind of ‘wait and see’ attitude.
It doesn’t make much sense to bother about something that will happen outside your sphere of influence, does it?
Place a bet, if you are a betting guy, and go back to whatever you might be able to actually do!

How about rephrasing that question?

What is it that might bring about the “political chaos and societal decay” we are so afraid of?

Now is the moment for me to make a confession.
I’ve altered, just a little bit, the narrative.
While Mr. Karrabell did mention “anger”, he only said about it that it was “evident” – without providing any cause for it. It was I who associated that anger with the “ample evidence that many countries lack the political will or social consensus” to “meet our collective needs and wants”.
The way I see it there is no way that any country might ‘meet our collective needs and wants’, no matter what amount of ‘political will or social consensus’ might be involved in the process. Not in the longer run, anyway.
All communist regimes – which were, declaratively, trying to accomplish exactly that – have failed. Abysmally.  Not because, in reality, all of them did nothing but cater for their ruling elite but because all of them used to be run according to a ‘central plan’.

And stop calling China a ‘communist’ regime. Or Vietnam, for that manner. As long as the ‘means of production’ are more or less private, and their owners free(ish) to use them as they see fit, those countries are not ‘communist’. They might not be entirely free but they are not at all ‘communist’. Venezuela, for instance, is a lot more ‘communist’ than China.

But let’s return to the countries that might attempt to make it so that ‘our collective needs are met’.
How are they going to do that?
First of all, those in charge – the government, right? – would have to determine what those ‘needs and wants’ are and only then make the necessary arrangements for them to be met. But not more than that, because that would be wasteful.

Do I hear any chuckles? You figured out that those ‘willing’ countries would have to use the same ‘central planning’ system that has already led to the failure of the communist regimes?

How about re-framing the whole situation?
How about the “ample evidence” mentioned by Mr. Karrabell suggesting that too many countries – including the one that has recently inaugurated Mr. Trump as President – no longer have “the political will or social consensus” to allow their citizens enough real freedom and enough real opportunities to pursue their own “needs and wants”? As they see fit?

Then shouldn’t we next try to understand the process through which the erstwhile ample opportunities have been curtailed?

As I mentioned before, I’m going to use the ‘back-walking’ method.

First step, anger. We really need to loose that. Nothing good ever came out of it.

Specially when considering the next steps, perception and understanding. If we allow anger to cloud our thinking both perception and understanding will yield errors instead of knowledge.

Which brings us to our obsession with (monetary measured) growth. Could this obsession be explained by the fact that money is the easiest thing to distribute but also the easiest thing to hoard? Panem and circenses eventually failed… Why do we still see hoarding money as a legitimate goal (after amassing more than one could ever spend, with the entire family, in a hundred years)… beats me.
But explains what’s going on.
As long as enough of us see hoarding money as a legitimate past-time, more and more people will engage in it. More exactly ‘try to engage’ in it. And this is the very behavior which produces ‘bubbles’. As in ‘market bubbles’. And, eventually, crashes.

But not only crashes. Misconceptions also.

“There is little evidence that democracy and liberalism (and capitalism) in their current form are the best or only conduit for providing for economic needs and wants for all. If they were, there would be less roiling discontent.”
My point being that none of those, in any form, are ‘conduits’ for anybody to provide, through them, anything for anybody else.
Democracy, liberalism and capitalism, together, determine the three dimensional ‘space of opportunity’ where we, human individuals, try to provide for our own needs. If allowed to, of course.
It fact it is not the “politicians and governments” mission to “address the problem of wealth and jobs”. In a full-fledged liberal democracy the government does nothing but guards the freedom of the economic market  and the safety of the citizens – including their ‘human’ rights and private property.

As for capitalism… it doesn’t provide anything. Lest of all “incentives”. People provide incentives. Capitalists provide their employees with incentives to work and politicians provide the capitalists with incentives to engage in such or such enterprises or to refrain form others. And while the first kind of incentives, those provided by the capitalists themselves, work as intended – increase productivity, that is, if employed wisely, the latter end up curtailing the freedom of the market. Which can no longer work smoothly enough. This being the moment when opportunities disappear for the ‘man in the street’ and when those ‘connected’ to the government start to ‘flourish’.

You see, real capitalism is not as much about money as it is about trust.
Trust that your business partner – well, most of them – is going to fulfill his end of the bargain, not try to rip you off. Trust that if things go wrong – in the rare event that he does try to rip you off – the government will move swiftly on your behalf.

That’s all.
That’s what Deng Xiaoping meant by ‘I don’t care about the color of the cat, all I care is for it to catch the mouse’. That’s why the Chinese imported capitalism works. Because the Chinese government has learned that the market cannot do its job, in the longer time frame, without a certain dose of ‘liberty’.
The problem being that China is but an exception. Along with a few other examples, mostly in South Asia, they are the very few countries whose authoritarian governments have learned to refrain from interfering too much in their economies.

Looking back in time, ‘back-tracking’ that is, we’ll notice that capitalism has emerged in places where the entrepreneurs had both considerable individual liberty and enough wisdom to refrain themselves from trying to con their business partners. Otherwise the whole (budding) economic effervescence of the time would have very quickly been smothered by greed.
Think of the Medieval Venetians trading with the Arab merchants of the time. This being the reason for why the oldest surviving bank in the world, Monte dei Paschi di Siena, is based in Italy – the least centralized country in the Medieval Europe.
Or think about how a hand shake used to be enough to seal a deal between two Americans. Some time ago… nowadays you need an army of lawyers to buy a car… not to mention the flurry of official permits needed in most cases…

So, what we need to do, if we want to continue to be a source of inspiration for the rest of the world, is to restore democracy, liberalism and capitalism to what they used to be. Dimensions which described the space of opportunity that used to be open for all of us.

OK, hindsight is always 20-20… or so they say…
I’m afraid that what I just described was an idealized mental construction but I’m sure that you got my drift.
After-all, if the Chinese were able to learn it from us … we’ll surely be able to restore it to its old glory.
Or else…

http://foreignpolicy.com/2017/01/26/forget-dow-20k-the-boom-times-are-over-is-democracy-next/

I recently shared this meme on my FB wall:

when_i_was_poor_and_i_complained_about_inequality_they_said_i_was_bitter_2014-07-23

This is what happened next:
No two people are the same.“”That’s why I prefer equal opportunities instead of equality.
No two opportunities are the same. What you might consider an opportunity I might pass up. It’s a very diverse world we live in, a wide one in which hopefully everyone can be accommodated.

‘Can be’ or ‘will be’?

And who is the real looser here?

Let’s see what the broad picture looks like:

The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy.”

Meanwhile

education debt

And what’s wrong with that?!?
Everyone has the right to do what ever he wants with his money and why should anyone expect to be educated for free?!?

OK, let me put it differently.

Every society is like a big community, even if its members do not share an intimate knowledge of each-other.
At least theoretically an overwhelming majority of any nation share the same set of values and the same goal – the long term survival of both the population and the afore mentioned set of values.

Now please consider which society would be better at the game of survival:

One which would make it easier for as many of its members to develop as much of their individual potential as possible or one that would make it easier for a small number of its members to spirit away so much wealth that the rest would remain crippled?

One which would use the very concept of a ‘free market’ as broadly as possible – make sure that as many as possible of its members enjoy the widest possible autonomy – or one that would allow the ‘never as free as advertised’ market to degenerate into the ‘winner takes it all‘ situation we are bound to reach if we continue on our present course?

How could enough people afford to ‘wander around’ for long enough to find the opportunities that would fit them if they are saddled at birth with a huge burden – the ever burgeoning national debt?
Would enough people risk to take on any additional debt (in order to prepare themselves to make better use of the opportunities they might find) if too many of those opportunities, even if met diligently, do not pay enough to ‘eat’ AND pay back the debt?

How is a society going to survive, let alone thrive, if a lot of ‘opportunities’ (social needs) end up being ‘plugged’ by unfitting/under-skilled/’less than enthusiastic’ individuals? Or not at all?

On the ‘supply side’, what do you think of those who choose to dodge paying taxes?
On the ‘demand side’, what do you think of those who squander public money as if there is no tomorrow?

So what should we be talking about? Equality or Equal Breadth of Opportunity?
About the Bed of Procrustes or about a ‘Free Market’ where all participants are simultaneously autonomous and fully aware of their responsibility for their children’s future?

Deflation ‘for dummies’.

And this is precisely what makes us human!

What? No mention about us being the only species that is able to make rational choices?

Nope.
First of all we are not the only ones, chimps and computers – among others – are also able to ‘reason’, in variable degrees.
Secondly, and way more important, reason is nothing but a tool. And tools are very, very important but not essential. Just as our hands and feet, they are extremely useful but being able to use them isn’t enough to make us human.

I was led to this understanding by the rapid succession of three events. The ALS Ice Bucket Challenge, the book lists mania that has currently engulfed FB and the eulogy read by Barak Barfi for his friend Steven Sotloff.

The Ice Bucket Challenge shows that we care, the fact that we post lists of books on FB so that complete strangers can gouge our personalities (real, pretended or a little bit of both) means that we are aware (of our public image) and Steven Sotloff loosing his life to a bunch of criminals while doing his best “to give a voice to people in war-torn lands” demonstrates that humans dare to do what they feel is right even when confronted with mortal dangers.

Still unconvinced?

Can you spell Stephen Hawking? And do you think that being able to spell proves you are human? Are you sure… chimps can do that too, you know? (Well, to a degree and using a computer, but still! http://researchnews.osu.edu/archive/chimps.htm)
Now, have you ever heard of the ‘obedience experiment’ carried out by Stanley Milgram? Although aware of the potentially dangerous  consequences of their actions only about 33% of the participants dared to contradict the ‘authoritative figure’ that was apparently in charge of the whole thing. And even more interesting is the fact that nowadays experiments like these would be considered illegal/unethical preciselly because of their effects on the participants. Check the first one.
Let’s go back to Stephen Hawking. He is the owner/operator of one of the finest minds ever endowed to a man. His reason is as precise as that of a computer while his imagination goes way beyond the limits of the Universe and way down into the realm of the invisible. And yet, what did he do when he found out he’ll soon loose the use of his limbs and will eventually need a machine to help him breathe? When he slowly became aware that those horrible things were actually happening to him?
Did he allow his beautiful mind to go berserk in self pity – the pinnacle of ‘caring for his own self’, the self preservation mania that is aggressively conquering more and more ground?

Or did he dare to continue with what he thought it was right for him to do?

You’ll rightly tell me that he couldn’t have survived if he wasn’t immensely lucky. That he was born in an era when technology was advanced enough, that he had already proven himself so material resources needed for his survival weren’t a problem, and that he had met the right people. True. But he did more than merely survive. He continued to create. To bring new ideas and understanding into the world.

– ‘OK’, jumps another one of you, ‘but what’s the difference between him an Hitler, lets say, or any other dictatorial sociopath that uses immense resources and top technologies to impose his understanding of the world on the rest of the people’?

Well, another excellent question!
A long time ago I had read something to the tune of: ‘Had Hitler been born in Britain he would have ended up in a loony bin, not running the show into the ground’. (I’m awfully ashamed for not being able to remember who said/wrote this nor internet savvy enough to identify the author.) The idea is that for a dictatorship to take hold you need way more than a guy, no matter how intelligent, powerful and devious. You also need a considerable number of people who dare not express dissent whenever they dislike/disagree with anything.

The point is that all three members of the triad that makes my title are equally important.
Being aware of the needs and caring for those around makes for a very good and obedient slave in the absence of daring while being a self conscious and uncaring dare-devil is meeting the first two requirements for becoming a dictator.
What happens with someone who dares and cares (mainly about himself, but not exclusively) while he is only marginally aware of the wider repercussions of his actions? Does the notion of ‘mad scientist’ ring any bells? Or ‘executioner’?

In fact if all three legs of the triad were equal the individual described by that triad would behave in a considerate and respectful manner towards all people, irrespective of social status, wealth or even age. In political terms that person would actively, persistently and politely reject any form of authoritarianism while in economic terms it would be a staunch defender of the free market. 

Image

“God cleans up your past, fixes your present and makes sure your future will be bright.”

I’d rather put it a little differently.
God offers you indeed all these generous opportunities but doesn’t do your part too.
It’s you that has to perform the hard work needed to put them in practice.

So stop ‘liking’ or whatever you were doing and start building your future.

What might have Spain in common with Syria except for the first and last letters of their names?

Quite a lot and there are many more countries that belong to the same group: Portugal, Turkey, Ukraine, Thailand, South Korea, almost the entire Latin America and the list is far from being complete.

They all traversed a period of dictatorship during which a sizable portion of the population had left the poverty zone, entered the middle class and started to demand ‘political rights’. In some of those countries the political establishment of that day understood that it was in their own (personal) best interest to give up some of their political power and personal clout – and by doing so vastly increased the chances of long term stability in their respective countries – while in other instances the rulers clung jealously to power unwilling to cede even an iota of it.

And this is exactly why Chile, Portugal, Spain and South Korea are in a completely different situation than Syria while in Thailand, Turkey and Ukraine things are in full process of being sorted out, one way or another.

Scriind comentariul precedent despre evolutia de la stadiul de tara ‘bananiera’, care se bazeaza in principal pe exploatarea resurselor naturale,  la cel de economie industrializata care isi valorifica cat mai bine potentialul uman, mi-am adus aminte de ‘nu ne vindem tara’.

Lasa ca in loc sa o vindem am lasat sa fie pradata…din pacate semnificatia ‘strigaturii’ e chiar mai adanca!
Poate ca initiatorii ei, ‘raspandaci’ care aveau ca misiune crearea unui etos care sa permita ramanerea la putere a ‘esalonului 2’, erau ‘sinceri’ in sensul ca le era intr-adevar frica ca daca ar fi venit niste investitori seriosi ar fi cerut instaurarea unei ordini firesti…cam asa cum cere acum Dacia sa fie construita autostrada Pitesti-Sibiu…

Problema este insa ca zicala a prins la public ori asta inseamna ca publicul respectiv nu trecuse inca de etapa de dezvoltare a organismului social in care identitatea proprietarului este mai importanta decat efectul folosirii proprietatii. Bineinteles ca acestea doua sunt strans legate numai ca orice exagerare, in oricare dintre directii, duce la izbirea oistei de gard sau chiar mai rau.

Pai daca societatea romaneasca, populatie + guvernanti, ar fi reusit sa gaseasca o cale de a conduce eficient economia pe vremea cand toate erau ‘proprietatea intregului popor’ s-ar mai fi prabusit vreodata comunismul? Si atunci de ce am insistat sa lasam friele in mana acelorasi oameni care le tinusera si pana atunci? De ce ne-a fost frica de venirea unora care sa ne invete un nou model?

Bine, asta nu inseamna adoptarea necritica de comportamente doar pentru ca acestea provin ‘din afara’, acest lucru ar fi cel putin la fel de daunator ca refuzul aprioric de a intra macar in contact cu ele, din simpla frica de contaminare. Intotdeauna oamenii sunt cei chemati sa fie masura tuturor lucrurilor precum si motorul evolutiilor sociale.

Atunci nu ne-am ridicat la inaltimea provocarilor. Acum insa se pare ca avem parte de un nou start.

Dacia a depasit SNP Petrom si are acum cea mai mare cifra de afaceri dintre companiile din Romania.

In ciuda scrasnelilor din dinti ale unora dintre jucatorii de pe bursa de la Bucuresti – SNP se tranzactioneaza, evident, in usoara scadere, in timp ce Dacia a fost retrasa de mult de pe piata – cat si a unei ‘parti a presei’ – de multe ori se subliniaza mai ales scaderea Petrom si nu atat cresterea remarcabila a Dacia – repozitionarea semnaleaza o transformare calitativa a statutului economic al Romaniei.

Aceasta da semne ca vrea sa depaseasca stadiul de ‘granar al Europei’ si de tara care isi exploateaza la sange resursele naturale – gaze, petrol, paduri, pamant arabil, mine de aur – si incepe sa isi puna in valoare imensul potential uman.

Acest potential este arhicunoscut, romana fiind cea de a doua limba din campusul Microsoft iar medicii romani extrem de apreciati in vestul Europei. Iata ca acum acest potential incepe sa fie dezvoltat si aici, la el acasa. Pentru inceput de o firma straina.

Daca ne dadeam seama mai devreme ca ‘Nu ne vindem tara’ a fost o prostie imensa poate nu treceam prin acesti 20 de ani in care cuvantul de ordine a fost: ‘Romania, o tara deosebita, pacat ca este locuita’.

Felicitari inca o data tuturor celor care au facut ca acest lucru sa fie posibil. Atat celor care au avut incredere in Romania, de ambele parti ale granitei, cat si celor a caror munca a stat la baza acestor realizari.

I have great respect for Fareed Zakaria, I’ve been following him for at least twenty years.
That doesn’t mean that we always see things the same way…
He recently published “America’s educational failings” in the Washington Post. To me at least it represents a very balanced analysis of what ‘s currently going on. And yet!

“…if we really want to reduce inequality, we need to reform the system,….
And here is where we start to disagree!
Trying to ‘reduce inequality’ implies a lot of arrogance: it means we know where the inequality level should be and that we are confident enough that our actions would beneficial. (To whom?)
How about setting a more modest goal, long term survival?
In fact some inequality is good, it motivates people. Too much inequality, on the other hand, induces social fragility – the country actually falls apart.
The symptom that things have started to go south is ‘mass dependency’ – too many individuals cannot fend for themselves and depend on others, government or private charity, for daily survival. The tax payers, those who have to foot the bill, start to rebel while the recipients grow despondent. This has happened time and time again, from Ancient Rome to modern days communist states.
So yes, education is the only way out but we have to be very careful what we teach to the young generations.
Telling them to hunt for equality is one thing, encouraging them to better themselves by offering them a level playing field with low (or even 0) entrance fee and a lot of opportunities is quite another.

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