g m g D e s i g n . c o m

Dr. Thomas Barnett has a foreign policy wish list for 2008 (he also had a list for 2007). Bulleted summary (pasted) is here:

• Continued frustration for Hugo Chavez. 
• Less hyperbole on global warming. 
• More attention to rising global food prices. 
• Less demographic demagoguery from nativist know-nothings. 
• China’s JFK moment 
• Africa Command’s first splendid little peace. 
• Al Qaeda’s continued rollback. 
• Nixon goes to Tehran — sort of. 
• The dollar bottoms out before too much shakes out. 
• When the bubble eventually bursts in India and/or China.

Reason mag has a good article on how politicians are worsening the mortage crisis.

Opening para:

Nothing is more fun than doing noble deeds with someone else’s money, and right now, Democrats are getting ready for a rollicking good time. Contemplating the subprime mortgage problem, with numerous borrowers unable to pay their debts, the party’s presidential candidates and congressional leaders have a simple solution: Fleece the lenders.

And an interesting point:

But lenders who made bad decisions are already paying the price. Many mortgage companies have gone bankrupt. And if these loans are so unconscionable, the question is not why the foreclosure rate is so high but why it’s so low.

According to the Mortgage Bankers Association, less than 5 percent of subprime adjustable-rate mortgages are in the process of foreclosure. The vast majority of borrowers are making their payments, keeping their homes and asking no one for a bailout.

Concluding paras:

If the government imposes the punitive option, another problem will arise down the road: Lenders will be far less willing to offer credit to people with flawed credit records. Even the Bush administration’s plan for mortgage companies to freeze rates on a small number of loans effectively warns lenders to steer clear of all but the soundest borrowers. As Yogi Berra might put it, if mortgage companies don’t want to do business with certain customers, nobody is going to stop them.

The consequence of this approach is clear. We’d be robbing tomorrow’s subprime borrowers for the benefit of today’s. Of course, when it comes to proposed solutions, robbery seems to be the order of the day.

I was thinking the other day… many colleges/universities mandate certain courses to get a degree. The argument is often that such courses provide for a well-balanced education. They often include a couple/few semesters of English (writing & literature), history, art, theater, and so forth. Certainly, such courses are useful, and I’m not (necessarily) arguing against the mandatory nature of such courses. But what is curiously absent from that list is science & engineering. Why not mandate a course or two in computer science or computer engineering. I mean, wouldn’t that be consistent with the “well-balanced education” idea? And, conveniently, wouldn’t that lead to greater overall competitiveness after college of this country’s (or any country’s) students?

So why not? Colleges require liberal arts (“humanities”) courses that, for many people, are neither “enriching” nor are they economically useful (again, for most). Why not mandate courses that are (generally considered) economically beneficial and also mind-expanding?

Reason magazine has an interesting and pretty well-balanced article on Hoover, FDR, and the aftermath of the Great Depression (esp the New Deal).

One exchange:

reason: You write that an economist of the time lambasted the NRA as the National Retardation Affair. It was also often derided as Nuts Running America. Effectively, it was an attempt to oversee virtually all aspects of the economy. How did it play out?

Shlaes: With Roosevelt in the White House, America was supposed to be about the little man, the forgotten man. But this was a cartel arrangement, or close to it, where big companies wrote codes that made it hard for little companies to survive.

And toward the end, an important point:

The most important thing for our generation is that the New Deal will come back to bite our children when they pay yet higher payroll taxes because we did not dare to reform Social Security and other entitlements. There are not enough people to pay for Social Security, and Social Security is set up so that you can’t fix it just by growing the economy.

This is a moment of choice for us, our generation and the younger people. We have to look again at Roosevelt. Roosevelt was inspiring. He was right on World War II, but we do not have to have false nostalgia for his wrongheaded policies in the ’30s. We should warn our children and help to change Social Security, but you don’t see that in the presidential candidates. You don’t see daring on Social Security.

Anyone who reads this blog knows that I’m not a fan of economic micro-management, massive entitlements, stupid regulations (not saying all regs are bad, btw), and other quasi-socialist characteristics. Any sane person with access to a rudimentary economics primer can glean why I have that position.

The intriguing point made here then is the idea that classical liberalism (i.e., liberalism before its socialist radicalization) came to its death following New Deal. I was thinking that occurred following the 60s and 70s anti-war movements and propagated by radicalized, tenured liberal arts professors. So, maybe the former was the catalyst and the latter was a major sustainer of the perversion of traditional liberalism. That, at least, is my conjecture at this point.

Interesting perspective here on the dichotomy in the “green” movement.

Just to be clear, the green movement has two wings: One is occupied by the no-growth “red” greens, who are itching to use global warming and other green issues to destroy capitalism and replace it with socialism. The other consists of pro-growth “green” greens, who see riches in solar energy and battery driven cars.

The commentary, entitled “The Dangers Of A Zero Sum World,” touches upon the zero-sumness of political thought in the red-green community. That concept can be expanded elsewhere, too. Generally, people are instinctively zero-sum in their thinking (i.e., if you’re winning, then I’m losing, and vice versa). However, capitalist economic models (except for deeply corrupted models ruled by oligarchs, of course) tend to be staunchly non-zero sum. I.e., Warren Buffet’s success is not to my detriment. In fact, economic growth on the whole works to my gain and to the aggregate gain of all.

How to tie in w/ environmentalism? If the efficiency associated with the creative-destructive forces of efficient free-market capitalism can give us ultra-fast computers, efficiently distributed food (making hunger in this country virtually obsolete) and other amenities, why discount the market when it comes to energy efficiency? Let the market do its thing to the greatest degree possible.

My view? We need to leverage market forces not to steer toward the politician’s-technology-of-choice, but away from carbon-based fuel sources. I.e., a carbon tax (I don’t propose a new tax lightly, mind you). Rather than politicians picking the winners (like corn-based ethanol, an inefficient and environmentally unfriendly fuel source), they should discourage the obvious long-term losers. Energy diversity and investment in energy efficiency has obvious payoffs to both environmentalism and national security.

Government can provide a “push” and let the markets do the rest.

Ignatius on Iraq and defining a process. Spoiler para:

Crocker and other U.S. officials don’t talk about reconciliation as an end state, but as a process. As security improves, they say, so do the local economy and the government’s ability to provide services. They hope to see an upward spiral, with increasing returns to stability and order. Just as no Iraqi wanted to be the last to abandon what appeared to be a sinking ship, neither will they want to be the last to clamber back aboard.

Progress in Iraq (or Afghanistan, or the “next Iraq”) is dictated by our process (and the quality of that process). Unfortunately, our process earlier in Iraq (after the highly successful overthrow) was not very good. I.e., our nation-overthrowing process is efficient, but our nation-rebuilding process has much to be desired. They’re totally different processes & mindsets. Getting out of Iraq sooner means we learn to up the quality of our nation-building process… fast.

Actually, recent events suggest those lessons have been learned (at least by the mil… not sure if our political leaders have this vision or not). But now we’re making up for lost time.

Good BBC article by the CEO of Lenovo on “worldsourcing.” The idea is that globally competitive brands will search the world for top talent for whatever task/project/thing they’re doing. I.e., it’s more than outsourcing, where some compartmentalized part is being shipped off somewhere. It takes globalized division of labor one big step further.

 Good for the economy? Yeah. What about national/international security? Yeah. It meshes nicely w/ a previous post I wrote on why, while politics is divisive and even jingoistic when times are tough, business/econ is inclusive when free trade is allowed to flourish.

Freedom in the marketplace = a good thing for a) prosperity and b) world peace (countries bound to each other via business don’t attack each other… that’s just bad for biz).

Worldsourcing… not sure if that catchy word will catch on, but there is (now) a Wikipedia entry for it (added by me).

From the BBC:

Three provinces in Bolivia have declared autonomy, protesting against constitutional reforms agreed by the government of President Evo Morales.

And from the NY Times:

Tens of thousands of antigovernment demonstrators flooded the streets of this city and three other provincial capitals on Saturday as four of Bolivia’s wealthiest provinces celebrated efforts to seek greater autonomy from the central government.

Frankly, I’m not an expert on Bolivia. In this volatile country, is this a public outcry against the sort of anti-freedom policies that have infected Venezuela? I suspect that sentiment does exist, but I’m not sure that that’s the full story (again, I haven’t been keeping up w/ Bolivian politics recently).

Definitely something to keep an eye on.

Fascinating article by Malcolm Gladwell on IQ. Getting to the gist:

* IQ is not a measure of intelligence, per se. I.e., it is an imperfect test if the intent is to measure raw intelligence.

* Race does not determine IQ or seem to have a bearing on it at all. (Not just being politically correct here. Read the article for the evidence.)

Excerpt that I found interesting:

There should be no great mystery about Asian achievement. It has to do with hard work and dedication to higher education, and belonging to a culture that stresses professional success. But Flynn makes one more observation. The children of that first successful wave of Asian-Americans really did have I.Q.s that were higher than everyone else’s—coming in somewhere around 103. Having worked their way into the upper reaches of the occupational scale, and taken note of how much the professions value abstract thinking, Asian-American parents have evidently made sure that their own children wore scientific spectacles. “Chinese Americans are an ethnic group for whom high achievement preceded high I.Q. rather than the reverse,” Flynn concludes, reminding us that in our discussions of the relationship between I.Q. and success we often confuse causes and effects. “It is not easy to view the history of their achievements without emotion,” he writes. That is exactly right. To ascribe Asian success to some abstract number is to trivialize it.

Gladwell points to “IQ fundamentalists” who believe that IQ is almost purely genetic (and also presume that IQ tests are accurate measures of intelligence to people unaccustomed to our means of testing). They’re wrong, and Gladwell explains why.

… per this NY Times article on the subject.

Check this out:

“Even though they’re based in the United States, companies are less and less thinking of themselves as American companies,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania.

Does this mesh nicely with my observation that while politics divides the familiar and the unfamiliar, free-market capitalism unites us with “those people” over there? Yeah, I’d say it does. And while freedom in the marketplace leads to greater prosperity (compared with protectionism or socialism), it also leads to the kind of deep relationships with the unfamiliar that breaks down walls and leads to idea-sharing.

Capitalism doesn’t just spawn innovation, it spawns peace among the involved nation-states. You can bet the bank on that.

Could N Korea (DPRK) become an emerging economic power-house? Probably not soon. But Foreign Policy’s blog site has an interesting (and encouraging) post on N Korea’s interest in attracting foreign investment. The gist:

According to the Official Business Webpage of the DPRK, North Korea “will become in the next years the most important hub for trading in North-East Asia.” Forget China. North Korea not only provides the lowest labor costs in Asia (which is quite simple when your economy is impoverished and that pesky business of human rights protection is completely out of the picture), the government also ensures that foreigners will not have to deal with middlemen: “All business made directly with the government, state-owned companies.” Moreover, North Korea offers tax incentives, particularly for high-tech operations, and a “stable” political environment (one of the benefits of a strong-fisted dictatorship) that claims to be corruption-free.

Well, I doubt the DPRK could be called “corruption-free” by any sane individual. But here’s why this is encouraging. Far short of “prolonging the Communist regime” (the junta doesn’t need prosperity for its survival), the transition from hardline socialist-totalitarian regime to “freer” regime will take time. We should not expect–and should not foment–democracy overnight. That would be chaos. Instead, we should encourage foreign investment and economic connectivity. In time, if that economic connectivity actually occurs, the political system will eventually follow suit.

China is following this path as we speak. Our wise leaders in Congress (not to mention Lou Dobbs) can talk about “Communist” China, but that’s such a vapid misnomer. In a generation, I suspect China will be a democracy, though not necessarily by name. This increase in overall freedom was spawned by an incrase in economic freedom. Can N Korea follow a similar path?

Overnight democracy in N Korea would be a disaster. But economic growth, over time, is good almost immediately (to put food on the table, quite literally), and invariably results in democracy, in practice if not in name.

This is encouraging and I hope it will last.

Who do we have to thank for this positive development? The CIA? The State Department? I doubt it. I suspect China’s influence is the catalyst, and if I’m right, a good influence it is.

Interesting analysis here on the rising tide of Christianity in China. Those “Commies” are really confused, eh? Fervent capitalists and, increasingly, devout Christians (despite blowback from Chinese authority, esp at the local level).

Not too long ago, the (now a misnomer) “Communist” Party gave Chinese citizens property rights. What’s next, a Bill of Rights?

Give it time.