May 22, 2012

My perspective is that of a beginning student of the vast subject of globalization. I am currently reading about 10 books on various aspects of this subject. I simply must stop and take the time to recommend this one to any of you who may want to better understand the condition of the world today.

The word "globalization" is not in the title, but globalization is about trade, about movement of people, and about every way in which we interact globally. What could be more relevant to globalization than an outlook on the key issue of world leadership in the next decade or two?

Ian Bremmer has written a captivating book on that subject. He argues clearly that we are likely to be leaderless for a time. The US is neither able nor willing to play the role it has played (not to say that that role was played well or poorly in the past few decades--it was some of both). There is no other country or group of countries or world organization which is properly designed, equipped, and prepared to take on that role.

Some might say that China is prepared to do so, but Bremmer clearly explains the issues that China, in the words of its own Prime Minister only 2 years ago, "still a developing country," must maintain as priority. China has major internal challenges which it is rightly dedicated to managing. We will all benefit greatly is Chinese leadership only does that well for another decade. Neither is Russia, India, or Brazil ready. Clearly the European Union has years of financial struggle ahead before it could consider spreading its wings.

The implications of a world which is spinning rapidly in terms of trade and migration toward more and more globalization, but yet has no leader and no vehicles for agreement on a wide array of critical issues, such as water, technology, the internet, trade, and on and on, are indeed vast.

The book does not seek to frighten us or to mollify us. I am usually distrustful of arguments which take to those extremes.

I highly recommend this book to those who want to understand the risks and opportunities that lie ahead of us in a world that is struggling to find the answers to cooperation in ways that will be of greatest benefit to all of us.

Personal Experience

August 19, 2012

Here's something about globalization--on the surface, pretty mundane, but can be interesting (especially if you're the one faced with it!):

We're newly arrived in London. Both of us have student visas for Masters programs beginning soon. We'll be here for 18-24 months, we expect, maybe longer. We have excellent credit in the US. All we need is a mobile phone and an apartment. A local bank account and a credit card/ATM card in local currency would be nice.

Here's the problem: You can't get a mobile phone without a local bank account. You can't get a local bank account until you have a lease. A hotel address will not do. You can't get a local lease based on any form of international documentation--eg., copies of US bank statements, letters of reference from friends, your bank, landlords, etc. If all of your experience is from outside the UK, it means nothing. If you can find a "UK guarantor" who is sufficiently creditworthy, you can start the process, but we dare say that few of us have such, nor would we wish to impose on such a UK friend for a guarantee if we did have one.

This is the case, apparently, for all who come without a UK employer waiting for them--all who want to rent and have a mobile phone, etc., for the duration of an allowed tourist visa, or as students, immigrants, etc. It seems likely this circumstance applies to thousands of visitors to the UK annually.

So, the only solution that is offered is that the tenant pays 6-12 months rent in advance. With that, the lease can be obtained. With the lease, the bank account can be opened, and with that, the mobile phone can be contracted, and you're in business.

Setting aside the few days or weeks in limbo until you find an acceptable flat, that's OK for those who have that much cash to provide in advance. However, even for those, it feels like an insult that all of one's years of conscientious determination to be creditworthy in an equally advanced country is considered of no value--zero. Also, paying so much in advance clearly reduces the tenant's leverage in event the flat develops problems which the landlord is not compelled to fix--what power does the tenant have if the landlord has been so fully paid in advance?

What's the globalization question here? This is it: Why does this system exist, when we are in the year 2012, and how much longer will it survive? Isn't this "difficulty" all about borders? Wouldn't it be a great opportunity, considering all the tools of the modern age and globalization, for some enterprising property owner or intermediary, to offer to accept (or guarantee in the case of the intermediary) qualified tenants without all this hassle? Or, to provide such guarantee to the mobile phone company? Or, for an enterprising banker to offer to provide accounts to those who can be qualified, even if perhaps with limited exposure arrangements?

How could this be done, if there was a mind to do so? Without question, there are a number of countries in which credit verification systems are equally advanced as those in the UK. We imagine those would include US, Canada, Australia, and a number of European countries. So, step one could be to verify against those systems in the traveler's home country. Without today's internet and fibre-optics lines, this step could take seconds to accomplish.

One might say, however, that there is still a risk--the risk that even with a good US credit history, someone might leave the UK with some remaining obligation unresolved, but all of his/her assets are in the US, making it difficult for the mobile phone company, the bank, or the landlord to collect. Couldn't that be resolved by an arrangement where a certain amount of the traveler's cash in a US bank is put into an escrow and held until some of this is resolved? According to the above set of rules, the mobile company and the bank would release their need for protection when the lease is obtained, and perhaps some aggressive landlords would agree that if they could be guaranteed at least 60 days of rent if the tenant leaves without paying, they would be comfortable to be paid on a monthly basis. So, maybe all the tenant with good credit from certain developed countries would need to do would be to put two months of rent in escrow--very doable for most people who are making such pilgrimages. Such a deposit could even be kept in the UK at an established bank or escrow company, even better for the local landlord.

All of this could be made public. People like us could make the necessary arrangements in advance, and when we arrive our hotel in London, we'd already have access to full mobile services, bank accounts, credit cards, ATM cards, and be ready to negotiate a lease. We'd be happy to pay a fee for that!

Is there any doubt such a system could work? It would be to the benefit of thousands of travelers to the UK, and this set of arrangements would also work as it relates to similar rules/circumstances in other countries. Clearly, we have all the technology to make it happen easily and fast, and if we don't yet have the legal structures to make it foolproof, those could be easily arranged between countries, if there is a will.

And, it seems there is likely sufficient profit for the parties to justify working this out--for the banks, for the mobile companies, and for the landlords.

What are the reasons it hasn't been done?

1. Perhaps the analysis of the opportunity has not been done, although in this world, it seems unlikely anything with profit potential, especially something that causes such inconvenience, has just been overlooked.

2. Perhaps the analysis of the volume of profits to be obtained reveals that the opportunity is not large enough to motivate the parties to try to address the opportunity. Usually it takes only one competitor to decide that a segment of underserved can be served and a significant volume drawn away from competitors. E.g., if a collective of landlords offered a better solution to prospective tenants, they would get a lion's share of the traveler business.

3. Perhaps the legal agreements between countries do not yet make it easy to draw on that escrow abroad. That could be resolved between countries, if there was a mind to do so. And, the escrow could be here, as well, in the UK.

4. And, could it be that the banks, mobile companies, and landlords are all too lazy to address it--yet? Or, simply enjoying the low risk present alternative. After all, it's unlikely this pesky inconvenience is actually deterring anyone from coming to the UK. If we (the landlords, banks, and mobile companies) all just sit quietly, no one rocks the boat, we collectively do not have to take more risk. After all, as landlords, it's awfully nice to get paid 6 months in advance, isn't it? This is true until one party starts to offer an easier solution!

I predicted to our Estate Agent here that this system will fall within 10 years. Globalization will tear it down--just my opinion!

What do you think?

North Korea--Jan 1, 2012

January 1, 2012

It should be apparent that I am supportive of China in a broad way, feeling that many of the areas of widely agreed need for improvement (such as intellectual property, human rights, and others) are best understood in the context of what has been accomplished for the greater good of not only the huge Chinese population, but also the world which benefits from the production of the Chinese machine.

But then, there is the matter of North Korea, and the opportunity that arises for change, which none other than China is positioned to better enable. It is largely now the responsibility of China and Russia to influence the change which might result in the elimination of poverty, political imprisonment, and the lack of opportunity that is so prevalent in North Korea at this time. The Kim Il Eun regime is protecting the elite at the expense of the vast population. Millions have been tortured, been imprisoned, or have died as a result of the political and economic policies of this regime, which will certainly fight to protect the privileges of the same elite and its progeny, if no one does anything. There need not be a war, there need not be further economic sanctions, if only China (in particular) would step forward at this time with appropriate pressure on the regime, supported by Russia, the US and others.

This should be an easy choice, with little to be lost (except for the regime) and so much to be gained, for so many.

Trump Again--Dec 7, 2011

December 7, 2011

Dec 7, 2011, Donald Trump goes public with his view that Barack Obama is arrogant! From the most arrogant guy I know in the whole media scene--how ridiculous! Does it not occur to him that he is widely regarded as the kind of arrogance?

And, his recent "disclosure" of his wealth at $7B, regrettably one indicator to many of his wisdom and acumen, is very likely to be wildly distorted to the upside. Forgetting all the banks and others who have lost fortunes in association with him in his past failures, we can only say: "Donald, produce all the details to support these claims--property addresses, descriptions, valuation calculations, etc." It's highly doubtful that he can legitimately claim a fraction of this if subjected to proper scrutiny.

It's just too much to really believe, isn't it?

Republican Primaries--Dec 6, 2011

December 6, 2011

The latest blip in the Republican Presidential polls favors Newt Gingrich over Mitt Romney (and all the others). This is a disappointing reflection of our political process, because Newt is not the kind of leader we need for the critical next four years. His personal life is a concern, his positions have been A-Z on some key issues, he shoots from the hip, and he's arrogant to the extreme--seemingly believing he is the smartest and wisest person on earth, a rather disgusting trait. In this regard, Romney is much more the man we'd like to have dinner with, the man we'd trust to carefully consider decisions before advancing. Even better would be Huntsman, but that choice is regrettably academic at this point.

To emphasize our point, Gingrich's recent decision to seek the advice of Donald Trump pretty much wrapped up our willingness to respect his judgment. Trump has already revealed his lack of knowledge and wisdom on most key issues. Is Donald Trump the kind of adviser President Gingrich would turn to for advice in making decisions, such as those on China, where Trump clearly doesn't even understand the country, the issues, or how to negotiate with them?

So, the Obama presidency has been less than what we'd like to see, and perhaps many of us are vulnerable to voting for a new regime, especially one with a more fiscally conservative bent. Seems a perfect opportunity for the Republicans to take full advantage. However, they've done the opposite so far. The only good we can see is that, at least we are not forced to consider Sarah Palin, and we are finally rid of Herman Cain.

A word on Cain--we don't know whether the multiple allegations are true, but it seems highly likely that some are. He may well have been able to salvage his campaign if he had come clean, admitted his mistakes, and apologized. But, this way, we'll never know and we have to assume he had something to hide--the potential of dishonesty weighs heavier than this possible mistakes. However, if all of it were true, admitting and apologizing would have been woefully inadequate. Is that why he dropped out?

We are not the only ones who would seriously consider voting Republican in 2012--but--the only really credible candidates stand no chance of being nominated. The developing primary race so far has been a 3 ring circus.

A perfect opportunity for Republican conservatism to capture the country may be lost due to the lacklustre array of candidates to lead the Party and due to the intransigence of the Republican Congress to do something to address debt and stimulus through compromise. They seem to be betting everything on keeping us suffering until 2013. But, beware! We may turn to the Democrats again, considering this woeful lack of conservative leadership.

Gridlock--Citizens Responsible? Dec 3, 2011

We've been disappointed with the disappearance of Center in American politics. It seems that the "wingnuts" on both sides predominate at this time. While we keep thinking there will be some compromise on major issues, such as debt reduction/stimulus, the report of the special congressional committee ("we cannot reach agreement") is a ringing clarion of the trouble abroad in the land.

December 3, 2011

Here is one perspective on the issue: Maybe the problem is that we are a democracy. Political representatives certainly must listen to the people. Their failure to try to do that can't be the problem. The problem must be that the voice of the people is not clear--the people simply voice frustration with the inability of Congress to agree. We don't tell them what they should agree on. The voice of the people does not speak out a recommended solution. If we had one, they would have to listen. It isn't helping that we complain, protest, occupy, because we are not clear in what we want. This leaves Congress an enormous amount of freedom to do as they individually believe--and the political lines are drawn on this one.

Maybe the problem is that this one is a complex issue and many of us do not want to take the time to develop an opinion as to the right solution--will tax reductions significantly stimulate growth and employment? This is a question on which highly educated economist do not agree. If we were to agree that they would, then wouldn't we have to demand reduction in our entitlements? That's not happening!

The answer certainly depends on the nature of the particular tax deduction. Given our highly complex tax code, most Americans don't really know how any change would affect them individually. If we wanted their opinions, we'd have to provide everyone with an estimate of the impact of the tax reduction on them.

And, is debt reduction for the US more important than my entitlements in medicare and social security, to mention two of the at-risk budget items...? Maybe, but you'd better be clear as to the benefits to employment and growth to justify sacrificing your own wealth to make this happen. Most Americans are simply not sure those benefits would accrue to tax reductions and entitlement reductions. It's as if Americans are pounding the table demanding a magic solution. We are enabling Congress to behave this way, because we have no intelligible voice!

So, is there any solution? Well, it's not likely that the American people are going to take a good course in economics suddenly and make informed decisions about all these actions and effects. So, in the absence of that, why don't we all simply demand a clear "no smoke and mirrors" 50/50. 50% of the $1.3 trillion comes in tax increases, and 50% comes from budget reductions, including medicare, social security, and defense. 50/50 always had a good ring to it. Let's do it and get on with it.

The details follow--e.g., what tax reductions and for whom, what entitlement reductions affecting whom? Let's Congress work out this detail--they can do that if we tell them we want 50/50.

If we're not able to speak with a strong voice as to what we believe will be best in one extreme or the other, why can't we just demand a compromise and get on with it?

Citizen Responsibility in a Democracy--April 29, 2011

April 29, 2011

It's so dismaying to see who the "Average American" seems to be these days. I say "seems to be," because it's important to acknowledge that those who make noise are not necessarily the true average Americans--representing the vast majority of us. Nevertheless, even if the outspoken are not truly representative, they are numerous and their voice is very troublesome. As an American, I am frequently embarrassed by what those elements say publicly.

There are those of us who give Donald Trump a standing ovation in Las Vegas. There are those who watched the recent BBC presentation "The Chinese are Coming," and filled the comments section on You Tube with vitriolic criticism laced with vulgarity of stunning proportions--criticism of the Chinese, the "whites" and the BBC. There are those who apparently actually think Sarah Palin would be a good candidate for US President! There are those who want to continue to debate whether our President was indeed born in Hawaii, as his birth certificate clearly states. There are those who want to associate Planned Parenthood with something subversive to our government and/or racist. There are those who would argue that foreign countries are responsible for our employment problems. And, sadly, those who would like foreigners to return to their countries of origin, especially those of Islamic faith. And on and on. What about our TV? The Kardashians? Charlie Sheen? The Apprentice? Reality shows?

Sometimes I wonder, "...what have we come to?" Is this the changing face of America? If it is, it's embarrassing and shameful. And, it's certainly no wonder that "The Chinese are Coming," and no wonder that their country is forecast to eclipse the US in wealth and power in the 21st Century. If this is us, then we have done it to ourselves, and we certainly can't blame anyone else! Just based on the vocal elements in part identified above, one might think that all Americans are red-necks, that we are too lazy to study the issues and come to reasoned opinions, that we can't stand to hear others opinions (witness the behavior in recent town meetings when citizens disagree), that we only see the easiest answer--someone handy to blame, that we don't take responsibility for our own actions and outcomes, and that we can't even bear to tolerate, much less respect and accept, those who have different religious beliefs than ours.

I haven't lost faith in the US. There are still many who, even today, on national TV make it clear that they feel (as I do) that Donald Trump is a travesty in terms of Presidential candidacy, and who agree with me that we can hardly imagine a greater fool in economics and in international relations.

And, thanks be, there are many leaders who understand that the benefits of foreign trade far outweigh the loss of jobs in industries or companies which cannot compete. In the BBC series, some workers from Youngstown feel the Chinese stole their steel industry and their jobs. Indeed, we lost lots of jobs, but we still build buildings and bridges with steel (some from China) and as a result of our ability to get it much cheaper, we build more and make more progress--and there is more employment in other places in the US on the other end of this process. Here in San Francisco, we are building a new bridge with cost well over $10 billion, and most of the materials are manufactured and shipped from China. Does one imagine that local authorities did not even try to find US manufacturers who could compete with the Chinese bid? The differential was just too great to pass up the massive savings--and those savings go to benefit other programs in our state and city. In the case of cheaper foreign products, who should we be thinking to benefit--the US company making the more expensive products (and their employees) or those who are buying the competing product from abroad? That's a decision, I suppose.

I will in most cases argue to let the (international) market play out. Of course, if there is foreign government interference in the free market, we should take steps, but many of our protectionist proposals and regulations and taxes are at the behest of a company or an industry, and our protecting through such actions might also be examined as US government interference in the free market. As individuals, if we want to express our choices more clearly, we can avoid Walmart, where much of the merchandise comes form outside the US, and we can patronize local merchants--and pay the higher price that comes with that. That's a good way to express individual patriotism--and let others decide which they prefer to do! There is a good reason Walmart's parking lots are full! Don't we understand you can't have both--no foreign competition and lowest possible prices?

And, the fear and hatred of those of Islamic faith--again, just a way to blame someone for our failure to stop and listen and understand that these people (most of them) agree with all the key principles we hold so dear, and do not intend any harm to others. We forget that we have our own Christian extremists here in the US, and we have our own bombers and terrorists--born of several generations of US parents. And, we don't assume that all Americans are dangerous as a result of this reality. Why should we make the opposite assumption regarding Muslims?

We are a nation founded on principles of justice, fairness, openness, equality. Let's try to remember that and behave accordingly. And, let's try to remember to value in our officials those of good judgment. Let's listen to others and make our own decisions of who and what to support, but give space and respect to those who come to other conclusions.

And, I will try to remember that we also value freedom of speech. I just dearly hope some of the "speech" of recent times does not represent our true values.