Tag Archives: Business

China after November

By Basil A. Coronakis – The war between the US and China that started shortly after the election of Donald Trump in 2016 and has since continue at relatively low intensity w

There is no doubt, of course, that it will continue at even stronger pace after the election, regardless of who the winner is, whether it is the remains of the Democratic party or of the Republicans. Indeed, Trump has brought the US’ relations with China to a point of no return. And regardless whether he will or not win a second term, the Sino-American war will not stop.

American society has been intelligently brain-washed by the Trump Administration into holding China responsible for the Wuhan Virus pandemic, and the more lives it costs in the United States, the more Americans will hold China responsible. As this is, for ordinary Americans, a matter of life or death, their anger and hatred for China will continue to grow in parallel with the pandemic effects.

It would be far fetched to speculate that Trump has handled the pandemic in the way to have exactly this effect, but there is no doubt that he maximized it as an excellent detergent for brain-washing the people of Main Street.

Americans are convinced that China is responsible for the pandemic, which is true, but to communicate this sort of truth efficiently, and to engage the entire population of the United States, was a victorious tactical maneuver in the New Cold War against China.

Now all Americans are psychologically engaged against China and this is the bond that the next president will be forced to continue the war against China. If he does not, he will certainly be accused for high treason, an accusation which regardless of what the impact is on his presidency, will carry on in the historical record.

For China, this war is a win-win situation because if Beijing loses, it will be completely isolated from the rest of the world and will have no external influences, which means no dangers, thus leaving the Communist regime with eternal power. For China’s Communists, isolation is the best-case scenario as they will maintain power and extend their totalitarian rule to all aspects of life by eliminating any potential threat to their grip on power, all of which will be done pretty easily as the Chinese people have never sensed freedom or democracy, and they are trained to work for a handful of rice under the shadow of the Great Helmsman. more>

How to Disguise Racism and Oligarchy: Use Economics

By Lynn Parramore – James McGill Buchanan is a name you will rarely hear unless you’ve taken several classes in economics. And if the Tennessee-born Nobel laureate were alive today, it would suit him just fine that most well-informed journalists, liberal politicians, and even many economics students have little understanding of his work.

The reason? Duke historian Nancy MacLean contends that his philosophy is so stark that even young libertarian acolytes are only introduced to it after they have accepted the relatively sunny perspective of Ayn Rand. (Yes, you read that correctly). If Americans really knew what Buchanan thought and promoted, and how destructively his vision is manifesting under their noses, it would dawn on them how close the country is to a transformation most would not even want to imagine, much less accept.

That is a dangerous blind spot, MacLean argues in a meticulously researched book, Democracy in Chains, a finalist for the National Book Award in Nonfiction. While Americans grapple with Donald Trump’s chaotic presidency, we may be missing the key to changes that are taking place far beyond the level of mere politics. Once these changes are locked into place, there may be no going back.

MacLean’s book reads like an intellectual detective story. In 2010, she moved to North Carolina, where a Tea Party-dominated Republican Party got control of both houses of the state legislature and began pushing through a radical program to suppress voter rights, decimate public services, and slash taxes on the wealthy that shocked a state long a beacon of southern moderation. Up to this point, the figure of James Buchanan flickered in her peripheral vision, but as she began to study his work closely, the events in North Carolina and also Wisconsin, where Governor Scott Walker was leading assaults on collective bargaining rights, shifted her focus.

Could it be that this relatively obscure economist’s distinctive thought was being put forcefully into action in real time?

MacLean could not gain access to Buchanan’s papers to test her hypothesis until after his death in January 2013. That year, just as the government was being shut down by Ted Cruz & Co., she traveled to George Mason University in Virginia, where the economist’s papers lay willy-nilly across the offices of a building now abandoned by the Koch-funded faculty to a new, fancier center in Arlington.

MacLean was stunned. The archive of the man who had sought to stay under the radar had been left totally unsorted and unguarded. The historian plunged in, and she read through boxes and drawers full of papers that included personal correspondence between Buchanan and billionaire industrialist Charles Koch. That’s when she had an amazing realization: here was the intellectual linchpin of a stealth revolution currently in progress.

Buchanan, a 1940 graduate of Middle Tennessee State University who later attended the University of Chicago for graduate study, started out as a conventional public finance economist. But he grew frustrated by the way in which economic theorists ignored the political process.

Buchanan began working on a description of power that started out as a critique of how institutions functioned in the relatively liberal 1950s and ‘60s, a time when economist John Maynard Keynes’s ideas about the need for government intervention in markets to protect people from flaws so clearly demonstrated in the Great Depression held sway. Buchanan, MacLean notes, was incensed at what he saw as a move toward socialism and deeply suspicious of any form of state action that channels resources to the public. Why should the increasingly powerful federal government be able to force the wealthy to pay for goods and programs that served ordinary citizens and the poor?

In thinking about how people make political decisions and choices, Buchanan concluded that you could only understand them as individuals seeking personal advantage. In an interview cited by MacLean, the economist observed that in the 1950s Americans commonly assumed that elected officials wanted to act in the public interest. Buchanan vehemently disagreed — that was a belief he wanted, as he put it, to “tear down.” His ideas developed into a theory that came to be known as “public choice.”

Buchanan’s view of human nature was distinctly dismal. more>

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We are Hong Kong

By Chris Patten – In my final speech as Hong Kong’s governor on June 30, 1997, a few hours before I left the city on Britain’s royal yacht, I remarked that “Now, Hong Kong people are to run Hong Kong. That is the promise. And that is the unshakable destiny.”

That promise was contained in the 1984 Joint Declaration, a treaty signed by China and the United Kingdom and lodged at the United Nations. The deal was clear, and the guarantee to Hong Kong’s citizens was absolute: the return of the city from British to Chinese sovereignty would be governed by the principle of “one country, two systems.” Hong Kong would have a high degree of autonomy for 50 years, until 2047, and would continue to enjoy all the freedoms associated with an open society under the rule of law.

But with his recent decision to impose a draconian new security law on Hong Kong, Chinese President Xi Jinping has ridden roughshod over the Joint Declaration and directly threatened the city’s freedom. Defenders of liberal democracy must not stand idly by.

For over a decade after the 1997 handover, China largely kept its promise regarding “one country, two systems.” True, not everything was perfect. China retreated from its promise that Hong Kong could determine its own democratic government in the Legislative Council, and the Chinese government periodically interfered in the life of the city. In 2003, for example, it abandoned an attempt to introduce legislation on issues such as sedition – an odd priority in a peaceful and moderate community – in the face of mass public protests.

Overall, however, even skeptics conceded that things had gone pretty well. But China-Hong Kong relations started to deteriorate after Xi became president in 2013 and dusted off the playbook of aggressive and brutal Leninism. Xi reversed many of his immediate predecessors’ policy changes, and the Communist Party of China reasserted control over every aspect of Chinese society, including economic management.

Xi toughened the party’s grip on civil society and universities, and cracked down on any sign of dissident activity. He demonstrated that his regime’s word could not be trusted internationally, for example by reneging on promises he had made to US President Barack Obama that China would not militarize the atolls and islands it was seizing illegally in the South China Sea. more>

Updates from Chicago Booth

Think you’re not racist?
Research uncovers our secret prejudices, and ways to overcome them
By Alice G. Walton – It has been 50 years since the Civil Rights Act outlawed discrimination based on race, color, religion, sex, or national origin. The landmark legislation marked the end of the era of legalized racism. Now some affirmative action programs, created to encourage and promote diversity and the presence of underrepresented minorities, are being rolled back.

However, while overt racism may be on the wane in the US, research suggests it remains just below the surface. Very few people would admit to being biased, yet there’s strong evidence that biases continue, often under the level of our expression and of our awareness.

Ten years ago Marianne Betrand, Chris P. Dialynas Distinguished Service Professor of Economics at Chicago Booth, and Sendhil Mullainathan, then at MIT, published a famous study entitled, “Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination,” in which 5,000 fictitious resumes were sent in response to 1,300 job postings in Chicago and Boston. The resumes were either “high quality” or “low quality,” varying in the typical things that set resumes apart—job and internship experiences, academic institutions, and languages spoken. Then, the team randomly assigned either a “white-sounding” name, such as Emily Walsh, or an “African American–sounding” name, such as Lakisha Washington, to each resume.

The results were unambiguous. White-sounding applicants got 50% more callbacks than African American–sounding candidates. This didn’t seem to be a matter of how common the names were or the apparent social status of the applicant, but simply a function of what the names suggested about the race of the fictional applicants.

Even more disturbingly, white applicants with higher-quality resumes had a strong advantage over their African American peers. The authors suggest that this makes it less enticing for African Americans to develop high-quality resumes, which makes hiring discrimination part of a destructive cycle. more> [VIDEO]

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Do civilisations collapse?

By Guy D Middleton – We also need to think about what we apply the term ‘collapse’ to – what exactly was it that collapsed? Very often, it’s suggested that civilizations collapse, but this isn’t quite right. It is more accurate to say that states collapse. States are tangible, identifiable ‘units’ whereas civilization is a more slippery term referring broadly to sets of traditions. Many historians, including Arnold Toynbee, author of the 12-volume A Study of History (1934-61), have defined and tried to identify ‘civilizations’, but they often come up with different ideas and different numbers. But we have seen that while Mycenaean states collapsed, several strands of Mycenaean material and non-material culture survived – so it would seem wrong to say that their ‘civilization’ collapsed. Likewise, if we think of Egyptian or Greek or Roman ‘civilization’, none of these collapsed – they transformed as circumstances and values changed. We might think of each civilization in a particular way, defined by a particular type of architecture or art or literature – pyramids, temples, amphitheatres, for example – but this reflects our own values and interests.

It is the same with the Maya and with the Easter Islanders. In both cases, civilization and state have been confused and conflated. The Maya world was spread across a huge area with many different environments, from the dry northern Yucatán Peninsula to the river-fed lowlands in the south, and beyond into the mountains. It was an old and interconnected world of cities and kings, divided up among super-states of wide influence and more modest kingdoms that could fall under their spell. There were probably 60 to 70 ‘independent’ states; the fortunes of all waxed and waned. It was a bigger and more complex world than Late Bronze Age Greece.

he idea of a collapse of Maya civilization seems just wrong – and it carries with it the wrong kind of implications – that the Maya all disappeared or that their post-collapse culture is less important or less worthy of our attention. Via many individual collapses, Classic Maya society transformed through the Terminal Classic and into the Postclassic – a development that is hardly surprising when compared with the changing map of Europe across any five-century period. Maya society continued to change with the arrival of the Spanish, and through the colonial and modern eras. If we value the Maya’s so-called Classic period more than their culture at other times, this is our choice – but it is one that should be recognized and questioned. more>

It’s a virus, and this isn’t a war

The coronavirus crisis is a social challenge, Karin Pettersson writes, which the formerly secure are now being reminded is hitting the poor hardest.
By Karin Pettersson – In an essay in Wired magazine, the British author Laurie Penny describes how most of our disaster scenarios describe situations where those who survive are saved by raw strength and weapons. The hero is a man, alone against the danger: terrorists, zombies, aliens.

When the crisis came—our actual crisis—it turned out to look nothing like we had imagined. The hero who risks his life to save us is not a survivalist ‘prepper’ wrapped in a cartridge belt with a gun over his shoulder.

The heroine is an underpaid temp working in a home for the elderly, forced to expose herself to the virus without sanitizer or proper protection. The ‘frontline combatants’ in this apocalypse are not soldiers, but nurses and doctors, cleaners and cashiers. Surgical masks and ventilators, not weapons, are unloaded from Finnish emergency warehouses.

What stands between us and collapse is not raw strength but protective equipment, medication and hospital beds. It is the very welfare capacity which has been underfunded and even privatized in recent decades. It’s the prosaic infrastructure of civilization: eldercare, health care, social security.

This is also where our shortcomings become visible. The stories are by now commonplace—how people working in nursing homes kept on going to work when the virus exploded, even though they had a sore throat. They simply could not afford to stay at home. In the end they, and many others, lacked two layers of protection—against poverty as well as the virus.

Some politicians have called the challenge of dealing with the virus a ‘war’ nonetheless. But a real war, heaven forfend, calls for action. What is needed now, from most of us, is the opposite: patience, caring for others, quiet solidarity, small acts of kindness.

Of course, if it really were a war, as the author Arundhati Roy rhetorically asks, who would be better prepared than the United States? ‘If it were not masks and gloves that its frontline soldiers needed, but guns, smart bombs, bunker busters, submarines, fighter jets and nuclear bombs, would there be a shortage?’ Certainly not. more>

The scholar’s vocation

A century ago, Weber both diagnosed the ills of the corporatized, modern university, and pointed out the path beyond it.
By Chad Wellmon – The university was a modern-day patronage system. Intellectuals had long relied on the powerful and wealthy to provide for their material needs. In return, intellectuals advised princes and kept bureaucracies running efficiently. With the rise of the modern research university in 19th-century Germany, they assumed an even greater social role as members of a community that created knowledge for society at large.

Leipzig University, where Eulenburg taught, was founded in 1409. It began with a few hundred students, and remained roughly that size for centuries. In the 1830s, enrollments began to increase dramatically. As the state started to invest significant financial resources, a modern scholarly infrastructure and a division of intellectual labor emerged. In 1909, Eulenburg noted that although Leipzig University was 500 years old, it had become an ‘industrial operation’ in just the past 50.

The university’s evolution, he added, was a ‘microcosm’ of how life had changed in just a few decades. Modernity showed itself not just in urbanization, industrialization and steam-engine train travel, but also in the remaking of intellectual life. The transformation of the German university had far-reaching effects on the production of trustworthy knowledge. The conditions of intellectual life matter, and at the beginning of the 20th century many of the German cultural elite, especially younger people, felt like they were breaking down.

Weber began with a blunt account of the material conditions of the university. He enumerated the structural problems: terrible teaching, workplace discrimination, the exploitation of the labor force, an arbitrary hiring process, and a businesslike and, thus, uninspired understanding of the scholar’s vocation. The universitas litterarum (the ideal of the university as a corporation of scholars devoted to learning), he concluded, had become a ‘fiction’.

The transformation of the university into a capital-intensive, bureaucratically organised enterprise was not simply an effect of academic specialization. More than a century earlier, Adam Smith and Immanuel Kant had observed how some universities had begun to function as factories and organize themselves around the division of intellectual labor. Weber considered what he called the ‘Americanization’ of German universities – their saturation by the ‘spirit’ of American capitalism – more consequential than specialization. They now required largescale funding. They separated the academic ‘worker from the means of [scholarly] production’ – libraries accumulated unprecedented numbers of books, research institutes stockpiled instruments, and state-appointed bureaucrats controlled access to both. Universities had become ‘state capitalist enterprises’. more>

Updates from McKinsey

How payments can adjust to the coronavirus pandemic—and help the world adapt
The challenges are immediate, with long-term implications for global, regional, and local economies—and for the payments industry itself. Here’s what to expect.
By Philip Bruno, Reet Chaudhuri, Olivier Denecker, Tobias Lundberg, and Marc Niederkorn – As the catastrophic human costs of the coronavirus come into clearer focus, so too do the consequences for people’s well-being beyond the immediate imperative to safeguard lives. Taking care of our families and friends, our neighbors and communities, our employees and coworkers comes first. For that reason, companies across industries and geographies have scrambled to establish remote-working conditions—and continue to improve them as the health crisis continues. Those that can, including most banks and financial-services companies, have taken swift action to protect both their customers and their employees.

The next focus of all the professionals involved with the transactions infrastructure must be the stability of systems, for both payments and securities. At this writing, despite the scale of the emergency measures underway, no major outages of core infrastructure have been reported. Payments systems have proved resilient and reliable, as they have in earlier crises. Payments systems and providers, which enable companies and their customers to transfer funds in return for goods and services, continue to enjoy a high level of trust from the general public.

At the same time, we all realize that the economic disruption will be profound and the short-term drop in activity for economies under lockdown will be severe. Quarterly GDP in the second quarter of 2020 could decline by as much as 35 to 40 percent—and the payments industry’s financial outlook reflects that uncertainty in the short term. But the industry’s stability will play an invaluable role in rebooting the global economy, and the potential for innovation can support functioning economies as a “new normal” emerges. Below, we observe how the payments industry can adapt now—and suggest ten fundamental changes to the payments ecosystem that will help all of us find a new normal.

How will the coronavirus crisis affect payments economics?
There is no definitive answer. Much depends on the complex interplay between economic activity, the interest-rate landscape and associated liquidity patterns, and the evolution of individual and collective behavior. Taking these factors into account, we expect revenue growth in global payments to turn negative.

Instead of growing by 6 percent, as projected by our 2019 global payments report, activity could drop by as much as 8 to 10 percent of total revenues, or a reduction of $165 billion to $210 billion—comparable to the 10 to 11 percent revenue reduction in the wake of the global financial crisis in 2008–09. more>

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The rule of law is under duress everywhere

By Ted Piccone – Anyone paying attention to major events of the day in the United States and around the world would know that the basic social fabric is fraying from a toxic mix of ills — inequality, dislocation, polarization, environmental distress, scarce resources, and more. Signs abound that after decades of uneven but steady human progress, we are digging a deeper and muddier hole for ourselves. The principal reason for this pessimism is not the material facts of decline — we have lived through worse times before — but the crumbling consensus around how to overcome such crises. The outbreak of the COVID-19 pandemic is fast becoming the latest stress test for whether the social contract can hold.

The roadmap for climbing out of the trough should begin with the understanding that the rule of law is the sine qua non of more successful societies. Societies with strong rule of law have built-in mechanisms for mediating conflicts through open and inclusive debate, in which all voices are treated equally, and outcomes are perceived as fair and reasonable.

Unfortunately, as documented by the latest findings of the World Justice Project’s Rule of Law Index, the rule of law is declining around the world for the third year in a row. The trends are widespread and persistent: The majority of countries that declined in the 2020 rule of law scores also deteriorated in the previous year, and weaker or stagnating performance occurred in the majority of countries in every region and across every income group.

Of particular concern is that countries experienced the biggest declines over the past year in the areas of fundamental rights (54 countries declined, 29 improved), constraints on government powers (52 declined, 28 improved), and absence of corruption (51 declined, 26 improved). These three factors of the World Justice Project (WJP) Index saw the worst performance globally over a five-year time period as well.

In short, the key rule of law elements that undergird accountable governance, and relatedly, citizens’ trust in their leaders, are in retreat, in both established democracies like the United States, and in entrenched autocracies, from Russia to China to Venezuela. In this context, the rise of populist anger and social protests should come as little surprise. more>

Project and system

There are two ways of seeing order in the world: as a spontaneous system or as an intentional project. Which way lies freedom?
By Paul Kahn – Once we are alert to the distinction of ‘project’ and ‘system’, we see that it is by no means unique to law. These two pictures dominate our accounts of order. Traditionally, those accounts extended into the natural order: is nature God’s project or a spontaneous system? Today, the duck/rabbit problem of ‘project’ and ‘system’ presents itself whenever we give an account of the human world, from the individual to the society. Do we make ourselves according to an idea or do we realize an inner truth of ourselves?

The social sciences approach society as system; the regulatory state imagines it as project.

The picture of a project offers the simplest explanation of the origin of order. Projects can extend from an individual artisan to a creator god; they can involve objects in the world (eg, a house) or social structures (eg, a corporation).

A legislature has law-creation as its project; a people can take up the project of creating a constitution. A project has a beginning in the action of a free subject. That subject explains his project by referring to his intentions. Those intentions can reflect a well-thought-out theory or simply the agent’s interests.

Projects are the way in which a free agent occupies the world. An animal will look for food, but it will not plan its dinner. A bird might build a nest, but that is not a project because the bird could not have decided to experiment with a new design. It could not have been other than it is. That ‘might have been’ is critical to projects and thus to freedom.

In a world of projects, we are always thinking of what we might do, what we might have done, and what we might do better. Projects are successful when they meet their goals; they are redesigned when they fail. Projects then, whether of law or anything else, put at stake not just an idea of order, but also an idea of freedom. Freedom ends where projects end.

Systems have the capacity for maintenance and some ability of repair. An injured organism can heal itself; a market in disequilibrium can return to equilibrium. Of course, some systemic disturbances are beyond these capacities: systems do die.

Projects, though, ordinarily have no such capacities of repair. When a watch breaks, we take it to the watchmaker for repair. When legislation fails, we go back to the legislature for a new plan. Today, artificial intelligence is challenging that distinction precisely to the degree that we can teach machines to learn and to respond. more>