Liberalization, privatization, and bailouts. Déjà vu all over again

Today countries around the world view with cynicism the economic ideas we were trying to export. They came to believe that our push for liberalization and privatization was guided in no small measure by our own corporate and financial interests. Our bailout plans, which provided billions of dollars to help repay banks but denied millions of dollars in food and fuel subsidies for the very poor, only confirmed this impression.

You know what is really interesting about this excerpt? The "today" mentioned here is not in the context of the current economic crisis and the trillion-dollar bailout plans. No sir. This is from an essay that the Nobel-prize-winner Joesph Stiglitz wrote in the Atlantic in October 2002! In this essay, Stiglitz was reflecting on the "roaring nineties" during which he was at various times the chief economist for the World Bank, and chaired Bill Clinton's Council of Economic Advisers.

Well, here he is explaining the current global economic crisis:

The Market as God

All this constant chatter about the stock market reminded me about a wonderful article I had read a few years ago in the Atlantic. So, a quick search and it is amazing how fast we can now pull up something from the past.

In that 1999 article by Harvey Cox, who was (is?) a Professor of Divinity at Harvard, easily juggles with philosophical constructs, theological ideas, and compares them with how the Market has taken over as the new religion. I remembered feeling lost about some of the philosophical ideas he was talking about .... A neat piece that Cox concludes with:

No religion, new or old, is subject to empirical proof, so what we have is a contest between faiths. Much is at stake. The Market, for example, strongly prefers individualism and mobility. Since it needs to shift people to wherever production requires them, it becomes wrathful when people cling to local traditions. These belong to the older dispensations and -- like the high places of the Baalim -- should be plowed under. But maybe not. Like previous religions, the new one has ingenious ways of incorporating pre-existing ones. Hindu temples, Buddhist festivals, and Catholic saints' shrines can look forward to new incarnations. Along with native costumes and spicy food, they will be allowed to provide local color and authenticity in what could otherwise turn out to be an extremely bland Beulah Land.

There is, however, one contradiction between the religion of The Market and the traditional religions that seems to be insurmountable. All of the traditional religions teach that human beings are finite creatures and that there are limits to any earthly enterprise. A Japanese Zen master once said to his disciples as he was dying, "I have learned only one thing in life: how much is enough." He would find no niche in the chapel of The Market, for whom the First Commandment is "There is never enough." Like the proverbial shark that stops moving, The Market that stops expanding dies. That could happen. If it does, then Nietzsche will have been right after all. He will just have had the wrong God in mind.

Bonus if you read until here: it was in 1999 that the Atlantic also featured an article that argued that stocks were undervalued and that we would soon race towards a Dow Jones value of 36,000. Ha ha ha. I guess the Market God failed us, or got very very angry :-)
Their thesis was this:

Stocks are now, we believe, in the midst of a one-time-only rise to much higher ground -- to the neighborhood of 36,000 for the Dow Jones Industrial Average. After they complete this historic ascent, owning them will still be profitable but the returns will decline. You won't be able to make as much money from them each year. We believe that in the meantime, however, astounding profits will be made.

Homeland (In)Security at Airports

Jeffrey Goldberg has a fantastic piece in The Atlantic on the many, many, holes in airport security crap that we go through. What are the different things that he carried with him and was not stopped or pulled aside? Plenty that you think any fifth grader will know how to stop. And, of course, the fake boarding passes that pretty much the entire world knows about. It is all Bullshit as Professor Harry Frankfurt might say :-)

An excerpt:

And because I have a fair amount of experience reporting on terrorists, and because terrorist groups produce large quantities of branded knickknacks, I’ve amassed an inspiring collection of al-Qaeda T-shirts, Islamic Jihad flags, Hezbollah videotapes, and inflatable Yasir Arafat dolls (really). All these things I’ve carried with me through airports across the country. I’ve also carried, at various times: pocketknives, matches from hotels in Beirut and Peshawar, dust masks, lengths of rope, cigarette lighters, nail clippers, eight-ounce tubes of toothpaste (in my front pocket), bottles of Fiji Water (which is foreign), and, of course, box cutters. I was selected for secondary
screening four times—out of dozens of passages through security checkpoints—during this extended experiment. At one screening, I was relieved of a pair of nail clippers; during another, a can of shaving cream.
During one secondary inspection, at O’Hare International Airport in Chicago, I was wearing under my shirt a spectacular, only-in-America device called a “Beerbelly,” a
neoprene sling that holds a polyurethane bladder and drinking tube.

Las Vegas now #2 to Macau!

The Pearl River Delta and its neighborhood are THE happening places now. Hong Kong, Shenzen, and Macau. What an economic triangle! Macau has now officially displaced Vegas the gambling capital of the world.

Amazing.

Its location offers a distinct advantage over Vegas:

Macau airport is operating at nearly double its capacity, but with 2.2 billion
people living within five hours' flying time, it's a good bet that the number
will soon double again. Construction on a bridge linking Hong Kong, Macau and
Zhuhai in southern China is scheduled to begin soon. Work has begun to expand
Macau's northern border gate to accommodate 500,000 visitors a day.

James Fallows had a similar narrative in The Atlantic a year ago. I use that multimedia piece in my classes. Of course, my students don't seem to be as impressed with the Macau story as I am :-)

The world is curved. No, it is flat. How about spiky?

Not too long ago, Thomas Friedman--the master manipulator of metaphors--asserted that the world is flat. The book earned him quite a few million dollars, I am sure, and then he went on to talk and write about a green revolution--about green energy--apparently oblivious that the green revolution is a phrase that is already under use. Now, thanks to Friedman the popularizer of metaphors, people are going to the forget the importance of improving agricultural productivity in poorer countries--the green revolution--which ought to be the #1 global priority.

One of the best critiques of Friedman's metaphor came from Edward Leamer, an economist at UCLA. He had a fantastic prologue to the book review:

When the Journal of Economic Literature asked me to write a review of The World
is Flat, by Thomas Friedman, I responded with enthusiasm, knowing it wouldn’t
take much effort on my part. As soon as I received a copy of the book, I shipped it overnight by UPS to India to have the work done. I was promised a one-day turn-around for a fee of $100. Here is what I received by e-mail the next day: “This book is truly marvelous. It will surely change the course of human history.” That struck me as possibly accurate but a bit too short and too generic to make the JEL happy, and I decided, with great disappointment, to do the work myself.

A few months after Friedman's book was published, in October 2005, Richard Florida wrote in the Atlantic that the world is spiky. In discussing that, Florida threw in more metaphors--valleys, hills, playing fields, ....

I suppose people decided that we have played around with metaphors enough. Enter David Smick and his book, The World is Curved. A Q/A with the author at that website has this:

The title The World Is Curved is sure to draw comparisons with Tom Friedman’s book The World Is Flat. Why did you select the title? Why is the world now curved? Was it ever flat?
Friedman brilliantly presents the first installment of the globalization story, concentrating on the revolutionizing (flattening) of the global supply chain. But there is a second installment—the financial side of the story where the world is not flat; the world is curved. You can’t see over the horizon. Sight lines are limited. As during the subprime mortgage crisis, we are forced to travel down an endless, dangerously twisting and turning road of volatility with steep valleys and risky mountainous climbs. We can’t see financial risk ahead. A small village in Arctic Norway can see its
entire financial future destroyed because its financial managers invested heavily in a Citigroup product called a collateralized debt obligation.

Can somebody please pass a law that playing with metaphors to explain global economic geography will result in a forced Peace Corps volunteer service in Moldova for two years?

As always, it is the first one who gains the attention and money--something that Friedman knows really well. Even if he is not always right in his analysis, he is definitely a trendsetter. I am pretty sure, and unfortunately for Florida and Smick, that people will not pick up the world is curved or spiked metaphors.

Bonus if you read until here. Matt Welch wrote a fine commentary on Friedman's punditry through metaphors and cliche.

Billionaires in Zimbabwe

Zimbabwe is to introduce a bank-note worth Z$100bn in response to rampant inflation - but the note will barely cover the cost of a loaf of bread reports the BBC.

Simply awful. It is horrible that the entire world is unable to put an end to this madness. I am not sure whether Samantha Power even remotely considered such a nightmarish scenario unfolding, the way Mugabe is creating this atrocious mess, when she wrote about the ten ways to kill a country.

GM's possible bankruptcy

Is Google Making Us Stupid?

In this thought-provoking piece in the Atlantic, Nicholas Carr wonders about our intelligence the more we rely on the Web and Google. Excerpt:
Sergey Brin and Larry Page, the gifted young men who founded Google while pursuing doctoral degrees in computer science at Stanford, speak frequently of their desire to turn their search engine into an artificial intelligence, a HAL-like machine that might be connected directly to our brains. “The ultimate search engine is something as smart as people—or smarter,” Page said in a speech a few years back. “For us, working on search is a way to work on artificial intelligence.” In a 2004 interview with Newsweek, Brin said, “Certainly if you had all the world’s information directly attached to your brain, or an artificial brain that was smarter than your brain, you’d be better off.” Last year, Page told a convention of scientists that Google is “really trying to build artificial intelligence and to do it on a large scale.”

Such an ambition is a natural one, even an admirable one, for a pair of math whizzes with vast quantities of cash at their disposal and a small army of computer scientists in their employ. A fundamentally scientific enterprise, Google is motivated by a desire to use technology, in Eric Schmidt’s words, “to solve problems that have never been solved before,” and artificial intelligence is the hardest problem out there. Why wouldn’t Brin and Page want to be the ones to crack it?

Still, their easy assumption that we’d all “be better off” if our brains were supplemented, or even replaced, by an artificial intelligence is unsettling.

My own take? No, Google is not making us stupid. And, yes, I can see it becoming a pathway to AI. But, that AI does not mean a flattening out of human intelligence.