Is this the end or the beginning of the end?
The telegraph posted that “We’re All Socialists Now!” in response to the nationalization of Britain’s banks. In his blog, Jon Taplin has interesting thoughts on the matter.
Sparks! I see you snickering at the back!
What has this got to do with Better Political Parties, Not Impeachment? Is it time to throw in the towel and join the global band wagon? Perhaps, this is all part of the Great Transition? Whatever the future holds, I have faith that God does play dice. And no, God isn’t spelled, Marx.
Popularity: 1% [?]
It puzzles me that as a pro-gray kinda guy, you’re in and if and or sort of mode. FDR saved Capitalism. The European Welfare State stemmed the tide of Communism. There’s your answer not to Marx, but Lenin and Mao.
There is some truth to the characterization of a sudden socialism. But I think the analogy to a Banana Republic by Christopher Hitchens is worth looking at.
When the US media started bandying about the “s” word when it became apparent that the Bush administration was going to rescue American financial capital, I did snicker. The State rescuing lumpen capitalists is “socialism?” Are you kidding me?!?
In response to your post, I present alternative views of two of the greatest political economists of the 20th century, Karl Polanyi and Susan Strange.
Fred Halliday sums up their scholarly contributions. On Polanyi:
And Susan Strange:
djb, LOL.
mlq3: ah. i was thinking about Einstein. He said God doesn’t play dice. he was pro deterministic. but we got ourselves a complex system, and finance is probabilistic. and economic-wise, i think that that is based on solid science.
i thought about the great transition because they postulated that the world is in a planetary transition and that market forces though one probable tomorrow will fail. it is unsustainable, they said.
Mao’s China though is (so far) successful because they embraced capitalism. which i think does work and is essential. “equal opportunity in the market place”. i think why the chinese is succeeding and why for many years American style democracy has succeed is large part due to their governments being philosopher kings.
There must be equal opportunity in the market place. FDR was right. we have to have Four Freedoms.
Cocoy (at 9:01 pm), i think you’re missing the first part of China’s formula. Before Deng, there was Mao who got rid of the Oligarchs. This equality (especially the absence of big landlords save the government) paved the way for Deng’s market reforms. Same formula for Japan, Taiwan, South Korea, even Malaysia and Singapore. Equality first, then market reforms.
Sparks,
Here is a fact I did not know a few weeks ago: Between 2000 and 2008, the total amount of the world’s available investment funds suddenly doubled from about 36 to 70 trillion US dollars, because new wealth was accumulating in places like the Middle East, India, China and Southeast Asia. How this Giant Pool of Money created the so called Subprime Mortgage crisis and triggered the Financial Crash of 2008 are longish stories, but I offer them as charming supplements to Polanyi and Strange.
It is certainly ironic that the nationalization of the financial and banking sectors of the US economy is being accomplished not by the long haired sixties hippies like Bill Ayers, but by the bald-headed geniuses like Hank Paulson (formerly head of Goldman Sachs). It’s socialism for the Rich and free enterprise capitalism for the Poor! (That’s what we used to call “crony capitalism”).
Chuck,
As promised I read about the gini coefficient in your blog.
There is a a part where it says:
inequality in the ownership of land not only is more important for explaining growth than inequality in the distribution of income it also turns the distribution income into an inconsequential factor
But that was your reply when I asked for clarification on your definition of economic inequality.
You mentioned that gini coefficient,,where the UN Human development report still uses the income distribution metric as a basis for inequality.
But you presented literature with different basis for inequality which is the land ownership distribution.
land for everyone, sounds like homes for everyone.
homes for everyone, add that to more homes to those who already have homes,then add greed ;it all ends up to the subprime mortgage crisis.
Karl, i believe you are referring to this post where it says…
There is a Gini coefficient for income which measures inequality in land and there is a another Gini coefficient for income inequality. The two economists above found that land inequality is a bigger negative factor as far as economic growth is concerned. Our neighbors (whether capitalist like Japan, South Korea or Taiwan or communist like China or Vietnam) addressed land inequality first. The Philippines, on the other hand, has been slow to confront this issue so this land inequality continues to act as a drag to economic growth.
Unlike the United States, the Singapore Government has been able to provide housing to its people without stumbling into a subprime crisis. The way the USA tried to provided housing i.e. giving housing loans, mostly via private lenders, without the necessary credit checks and repackaging these into ‘AAA’ investments to be resold to other financial institutions and building all sorts of toxic derivatives on top of it (especially Credit Default Swaps) is the reason for the ongoing US and World Financial System meltdown.
Other countries (including Singapore) were smarter in going about their public housing programs.
Sorry, the first sentence after the blockquote above should read..
‘There is a Gini coefficient for income which measures inequality in land and there is a another Gini coefficient for income inequality.’
Oops sorry again (strikethrough does not work, please disregard 8:53 am), to clarify the first sentence after the blockquote (at 8:52 am) should read…
‘There is a Gini coefficient which measures inequality in land and there is a another Gini coefficient for income inequality…’
Cvj, yup, that gini coefficient was adequately and properly applied by these neighbours of ours, in fact, by Singapore.
And yes, by addressing land inequality, you address the fundamental issue of income inequality. That’s why many analysts see a probable solution thru funds infusion for the CARP, which, many see as a shield against poverty.
The issue though boils down to this–yep, we have a good solution yet we have’nt rid ourselves of powerful cliques that would undermine the solution in the base. These caciques should have been eliminated first. However, they populate Congress. That’s why the solution never worked.
by the way, i don’t subscribe to the idea that by turning socialist we’ll all survive this global malady. Scrumpeter predicted this thing to happen fifty years ago. It’s just a correction, not really a continued downslide to a financial ice age. Or, even if it leads to an ice age, it will thaw later still and we’ll see growth happening. When? Probably in the second half of 2009.
Patricio, i agree with you on that. The reason why our economy never took off whether it be under a dictatorship (under Marcos) or in an elitist democracy (before and after Marcos) is that we’ve never adequately tackled the problem of the rent-seeking Oligarchs. The economic & historical data on the benefits of eliminating inequality is overwhelming from both the Capitalist and the Communist countries.
yup…we rid or exterminate these oligarchs and we are about sixty percent problem solved.
patricio, i’d rather turn them into industrialists just like their Zaibatsu or Chaebol counterparts in Japan and Korea so they can earn a decent living for a change.
hi cvj,
am in with you on that too.
yup, turn these bastards into sociable and decent people, hehehe.
Our oligarchs, like all oligarchs, would ask for guarantees from the State, if and when they decide to turn themselves into Zaibatsu.
Question: Would that be acceptable? That is, if they fail, are we — especially the Middle Class who would bear the brunt — willing to bail them out with our taxes if the fail?
Jeg, it’s just fair for would-be industrialists to ask for guarantees from the State provided such guarantees are based on performance. This is what Alice Amsden calls the Reciprocal Control Mechanism In fact, the social contract should go something like this:
Rich people – keep capital within the Philippines, do not salt dollars abroad.
Businessmen – invest capital in manufacturing, as much as possible employ locals
Labor – maintain labor peace and receive salary & wage according to productivity and global competitiveness
Consumers – patronize locally manufactured products
Government- protect local manufactures and establish trade missions to promote local products for export abroad.
Academe – provide training for expertise required by local industry, work with business & government to engage in Research and Development
The collaboration between government, private sector and the academe to identify industry areas and markets to develop is something that we need to do to catch up with our neighbors.
Everyone can & should do their part for Philippines Inc.
That indeed sounds good, cvj, but it will take a strong, almost dictatorial leadership to pull that off, because I dont think our free-wheeling electocracy will cut it. Youve expounded on this before as youve put up South Korea and Taiwan as examples. How does the scenario go? Dictatorship first, then we people power the dictator our if he or she becomes too comfortable (which he or she will — it’s almost guaranteed), and hope for the best? How do we get out of the vicious cycle?
Jeg, i agree it would take strong leadership with a clear sense direction, but strong leadership is different from a dictatorship. (I always wonder why people confuse the two.) A leader has to lead via the power of ideas, which involves negotiating with competing interests and convincing people to follow him or her. It also involves listening because no matter how brilliant, he or she will not have all the answers.
Besides, a dictatorship is dangerous in the Philippine setting because we have so many elitists running around who possess a Messianic Complex, thinking that they have the answer and believing that it is just right for them to impose their answers via Executive fiat.
Jeg, i agree it would take strong leadership with a clear sense direction, but strong leadership is different from a dictatorship. (I always wonder why people confuse the two.)
Because only the flimsiest of membranes separates the two. Strong republic, remember? Was Lee Kwan Yew a dictator or a strong leader? What about Chiang Kai Shek? But be that as it may, I dont see the electocracy improving soon. Because “a leader has to lead via the power of ideas, which involves negotiating with competing interests and convincing people to follow him or her.” This needs an electorate who appreciates the power of ideas, and we are dangerously close to benign0 territory. The elitists with the messianic complex are strangely attractive to the electorate. Because like it or not, that’s what I think the people are looking for: a messiah.
Doesn’t ‘strong republic’ refer to the strength of institutions which is the opposite of leadership via strong men (or women)?
While they are often mistaken for each other, there is a distinction between the coercive and the authoritative styles of leadership. The latter is what we need and can be present even in a democratic setup. In fact, resorting to force (or deception) to get your way is a sign of weakness, not strength as a leader.
I think the Filipino people appreciate the power of ideas. I know you do, and i know i do, so what reason is there to think that the rest doesn’t?
As far as learning curves go, at least the Filipino people are learning. Our would-be political leaders haven’t really progressed. So it makes more sense to allocate power to the many who are learning rather than to the few who think they know it all.
Yes, that’s what strong republic is supposed to mean. As you are aware, that’s not how the present administration uses it. Our institutions are being systematically weakened.
I think the Filipino people appreciate the power of ideas. I know you do, and i know i do, so what reason is there to think that the rest doesn’t?
The quality of our political leaders.
There’s hope of course. Or else we won’t be ranting.
The quality of our political leaders is more a function of the political system which churns out lackluster candidates rather than the decision-making skills of the people. Besides, the 2004 Presidential elections doesn’t count. She cheated, remember?
Sometimes I wonder: could the taipans be considered as our own versions of the Zaibatsu? They didn’t inherit vast tracts of land in the first place — many of them started from scratch.
Our taipans are mostly in trade and services which is a far cry from their counterparts in Japan, Korea, Taiwan and China who are in manufacturing for export which is the key to industrialization. They could do better by moving up the value chain.
Precisely my point. They are not zaibatsu *yet* until they move up that chain. They do have the structures (holding companies and banks) but the “industries” they cling to are real estate, retail and food, unfortunately.
Jon (at 3:30 am) i think we share the same observation.
The question is, why are the Tsinoys stuck in these sectors? Far from being paragons of success that Benign0 is promoting (for example, see his comment this morning in own thread), the Tsinoy Taipans are actually underachievers when benchmarked against their Japanese, Korean and fellow Chinese counterparts abroad. Over at over at Manolo’s, when i asked this question (last March):
…A Tsinoy responded…
Unlike their counterparts in our neighbors, the local Chinese businessmen did not have the right incentives (and disincentives) to move into manufacturing. Hence my mix of recommendations above (at 5:09 pm).
The quality of our political leaders is more a function of the political system which churns out lackluster candidates rather than the decision-making skills of the people.
So they vote the least evil (or the most lustrous of the lackluster at least.)? I would think that faced with lackluster candidates, the right decision would be not to vote for anybody. And yet people still vote. I must admit Im baffled by this. What is this magical hold that elections have on us?
Besides, the 2004 Presidential elections doesn’t count. She cheated, remember?
She did, but did all of them? Have you seen the Congress? :-D
The problem of lackluster choices has to do with path dependence. The current electoral system for local posts (for Congressmen, governors & mayors) favors the incumbents who come from the rich families in their respective provinces. Notwithstanding Panlilio, Padaca and Robredo, we are so far unable to break from their domination. One promising area is with the party list system of proportional representation which gets around the problem of locally dominant politicos and warlords (as mentioned by Sparks).
Boycott is an option but then it becomes a problem of coordination. This means, it can only be wielded selectively in a targeted manner, otherwise, we lose by default.
I think the 2004 elections still count, if only for a show of lackluster candidates. FPJ and GMA are both lackluster. I wonder what would’ve happened with an FPJ presidency :P
I do not intend to paint a rosy picture of what-might-have-been but FPJ’s platform did prioritize Food Security (something which GMA ignored) and he was well-regarded by the Filipino Muslims (the same cannot be said of GMA’s government) so he would have had the credibility to resolve the problem in the south. Also, since he would have been the genuine choice, there would have been less apathy and cynicism so people would, at least at the outset, have more buy-in to support the government. In collective efforts, buy-in is important you know.
I wonder what would’ve happened with an FPJ presidency
Noli wouldve been president by now. :-D
Boycott is an option but then it becomes a problem of coordination. This means, it can only be wielded selectively in a targeted manner, otherwise, we lose by default.
Yes we lose by default. Which brings us back to the first problem of the lack of appreciation for ideas. It is a fact that in our criteria for who to vote for, their stand on issues is not top priority. Maybe SWS or Pulse Asia or any of the universities could do a study. Im betting ‘madaling lapitan’ would rank pretty high up there.
You know, cvj is correct. I was seriously thinking of volunteering for FPJ in whataver capacity in case he won, because I thought he needed all the help he can get. (Didnt vote for him, no.)
cvj, jeg
please see previous post re: “Better Political Parties, Not More Impeachment”. Particularly MLQ3′s comments and Karl’s as well. They have strong and good points, re broken politics and how to fix it.
Jeg (at 10:02 am), i don’t think you can conclude that just because people vote from the current lackluster crop, that we lack appreciation for ideas. For example, Manolo Quezon is a bona-fide ‘ideas’ person as they come (‘Mr. Explainer’ himself) and yet during the last Presidential elections, he voted for GMA.
Elections, by its nature, always have ‘people’ attached to them. And the current mechanics of winner-take-all tends to amplify the personal aspect. Perhaps if more weight were given to Party-List system of proportional representation, then the ‘ideas’ side would have correspondingly more priority.
Ah, but crowds are a different thing all together, cvj. And MLQ3 voting for GMA doesnt mean he isnt an ideas person. It just means he got it wrong. Youre an ideas person too and you also got it wrong. There are no guarantees that the right attitude will get you the right result, but it’s the proper way to go. Anyway, you could be correct that the electorate is really ideas conscious during elections, but we’ll have to wait for the results of a study investigating that.
Dont think Im letting myself off the hook here. When it comes to elections, especially national ones, we’re all irrational to some degree. Hope and faith after all are non-rational, and most of us vote for those very reasons: faith and hope. I voted in the mid-term elections for senator.
Jeg (at 10:42 am), which is why i don’t think your response “The quality of our political leaders” (at 6:30pm) is evidence that the Filipino people do not appreciate the power of ideas.
I mean, with you, me, and Manolo, that makes at least three Filipinos who appreciate the power of ideas. Going by the rule of thumb that we are more likely to encounter the ordinary (representative sample of the population), rather than the extraordinary (non-representative member of the population), then it is reasonable to make the inductive leap that Filipinos in general appreciate the power of ideas.
LOL. I guess I should be proud that I voted for Bro. Eddie last 2004.
Jeg,
My fear with FPJ is that it would’ve been a replay of Erap: his advisers run the country, not him.
Jon: My fear with FPJ is that it would’ve been a replay of Erap: his advisers run the country, not him.
Like G.W. Bush? Haha. Seriously, that was my fear as well and is the reason I thought volunteering wouldve been a good idea for all people who thought they could help: ideas from outsiders. I also think FPJ wouldve learned from the experience of his pal. But alas, he was Garci-ed and he croaked. RIP.