Monthly Archive for July, 2011

If I Ruled The World: Mohamed ElBaradei

Published on July 30, 2011 in News. 0 Comments

By Mohamed ElBaradei, Prospect Magazine

Every person ought to spend an afternoon writing an essay with this title. It is stimulating to dream about how we could change our world.

Putting daydreams aside, a re-engineering of global governance is long overdue. Communicable diseases spread as rapidly as viral videos, multinational corporations are more powerful than many governments, and climate change does not respect borders. Arms sales, agricultural subsidies and energy strategies are agreed with little thought of the repercussions, which can include refugee migrations, famine, pandemics, environmental degradation and civil wars.

If I could, I would overhaul the United Nations system. In six-and-a-half decades, the UN has worked hard to bring about greater international co-operation in managing and overcoming common challenges. Its organisations have often been successful in redressing societal ills. But the system is in dire need of a serious rethink.

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The Busts Keep Getting Bigger: Why?

Published on July 27, 2011 in News. 0 Comments

Paul Krugman and Robin Wells, The New York Review of Books

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
by Jeff Madrick
Knopf, 464 pp., $30.00

Suppose we describe the following situation: major US financial institutions have badly overreached. They created and sold new financial instruments without understanding the risk. They poured money into dubious loans in pursuit of short-term profits, dismissing clear warnings that the borrowers might not be able to repay those loans. When things went bad, they turned to the government for help, relying on emergency aid and federal guarantees—thereby putting large amounts of taxpayer money at risk—in order to get by. And then, once the crisis was past, they went right back to denouncing big government, and resumed the very practices that created the crisis.

What year are we talking about?

We could, of course, be talking about 2008–2009, when Citigroup, Bank of America, and other institutions teetered on the brink of collapse, and were saved only by huge infusions of taxpayer cash. The bankers have repaid that support by declaring piously that it’s time to stop “banker-bashing,” and complaining that President Obama’s (very) occasional mentions of Wall Street’s role in the crisis are hurting their feelings.

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Hegemony with Chinese Characteristics

Published on July 23, 2011 in News and Newsletter. 0 Comments

By Aaron L. Friedberg, The National Interest

THE UNITED States and the People’s Republic of China are locked in a quiet but increasingly intense struggle for power and influence, not only in Asia, but around the world. And in spite of what many earnest and well-intentioned commentators seem to believe, the nascent Sino-American rivalry is not merely the result of misperceptions or mistaken policies; it is driven instead by forces that are deeply rooted in the shifting structure of the international system and in the very different domestic political regimes of the two Pacific powers.

Throughout history, relations between dominant and rising states have been uneasy—and often violent. Established powers tend to regard themselves as the defenders of an international order that they helped to create and from which they continue to benefit; rising powers feel constrained, even cheated, by the status quo and struggle against it to take what they think is rightfully theirs. Indeed, this story line, with its Shakespearean overtones of youth and age, vigor and decline, is among the oldest in recorded history. As far back as the fifth century BC the great Greek historian Thucydides began his study of the Peloponnesian War with the deceptively simple observation that the war’s deepest, truest cause was “the growth of Athenian power and the fear which this caused in Sparta.”

The fact that the U.S.-China relationship is competitive, then, is simply no surprise. But these countries are not just any two great powers: Since the end of the Cold War the United States has been the richest and most powerful nation in the world; China is, by contrast, the state whose capabilities have been growing most rapidly. America is still “number one,” but China is fast gaining ground. The stakes are about as high as they can get, and the potential for conflict particularly fraught.

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My Summer at an Indian Call Center

Published on July 20, 2011 in News and Newsletter. 0 Comments

By Andrew Marantz, Mother Jones

I stand flush against the window of a Toyota showroom, trying to stay in a shrinking sliver of shade. We’re on the cusp of midday, which, in Delhi in June, lasts most of the day and drives everyone into a languid torpor. I am waiting for a company cab, now an hour and a half late, to drive me across town to a call center, where an Indian “culture trainer” will teach me how to act Australian.

A uniformed guard next to me dozes on a stool, his rifle slumped in his lap. Behind the showroom window, which would be clear if two boys would stop rubbing it down with rags, a dozen red sedans glisten on a waxy white floor. On the dirt shoulder of the road, children hold hands as they walk to school.

Call centers don’t trust Indian infrastructure, as well they shouldn’t, so the company cab—typically a white Toyota Qualis—has become a standard industry perk. This morning a class of 24 new hires, myself included, will be ferried from all corners of the city to the offices of a small firm named Delhi Call Centre. For three weeks, a culture trainer will teach us conversational skills, Australian pop culture, and the terms of the mobile-phone contracts we’ll be peddling. Those of us who pass the training course will graduate to the calling floor. Our first job at DCC will be to interrupt Australians at dinner and ask them to switch phone providers. In the Delhi area alone, maybe 100,000 call-center agents make their living selling vitamins to Britons or helping Americans troubleshoot their printers. I am almost certainly the only one who acquired his conversational skills accidentally—by being born in the United States.

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Photo Courtesy of Sanjit Das/Panos

Economist Debates: Manufacturing

Published on July 9, 2011 in News. 0 Comments

Ha-Joon Chang, Jagdish Bhagwati, and Patrick Lane for The Economist

This house believes that an economy cannot succeed without a big manufacturing base.

Ha Joon Chang, Faculty of Economics, University of Cambridge says, “While a simplistic “manufacturing good, services bad” viewpoint is unwarranted, we undervalue the manufacturing sector at our peril.”

Jagdish Bhagwati, Professor of Economics and Law, Columbia University says, “Even if you wish to reduce the size of the financial sector, you would not have to go into manufacturing.”

Opening remarks by Patrick Lane:

Welcome to the latest of The Economist‘s online debates. Our topic for the next few days is one that has divided economic practitioners and commentators for as long as anyone can remember: how important is manufacturing? This old question has had a new lease of life since the financial crisis of 2007-08. To some, this is a cautionary tale of the celebration of finance and the neglect of manufacturing. Some economies that had seemingly come to rely on financial services, such as America’s and Britain’s, have struggled since. Meanwhile, Germany, a manufacturing power almost written off a few years ago, has performed strongly; and China, the world’s workshop, has continued to clock up giddying growth rates. There is more to services than finance, of course; but those who believe that making things is the basis of economic prosperity may see in all this a degree of vindication.

To Read the Debate…

Image: Paul

The Bottom of the Pyramid

Published on July 5, 2011 in News and Newsletter. 0 Comments

Staff, The Economist

MANAGEMENT gurus have rhapsodised about “the fortune at the bottom of the pyramid” in emerging markets ever since C.K. Prahalad popularised the idea in 2006. They have filled books with stories of cut-price Indian hospitals and Chinese firms that make $100 computers. But when it comes to the bottom of the pyramid in the rich world, the gurus lose interest.

This is understandable. McDonald’s and Walmart do not have the same exotic ring as Aravind Eye Care and Tata Motors. The West’s bottom-of-the-pyramid companies are an unglamorous bunch. Many rely on poorly educated shift workers. Some inhabit the nether world of loan sharks and bail bondsmen.

But even in one of the world’s richest countries the hard-up represent a huge and growing market. The average American household saw its real income decline between 2005 and 2009. Millions of middle-class Americans have been forced to “downshift”, as credit dries up and the costs of college and health care soar. Some 44m Americans live below the official poverty line ($21,954 a year for a family of four). Consumer spending per household fell by 2.8% in 2009, the first time it had fallen since the Bureau of Labour Statistics started gathering data in 1984.

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