Tinkering with Leviathan – Review of “The Fourth Revolution: The Global Race to Reinvent the State” by John Micklethwait and Adrian Wooldridge
 

“The ten most dangerous words in the English language are ‘Hi, I'm from the government, and I'm here to help’” – Ronald Reagan
 

Anyone following American politics will be familiar with quotes similar to the one from America’s 40th president. There is no shortage of people eager to echo sound bites like the above or the even simpler charge to “shrink government to a size that we can drown it in a bathtub”. While these statements make for effective campaign rhetoric, they do not make for elegant policy prescriptions and are also guaranteed to elicit reflexive opposition from their adversaries on the opposite political spectrum. A lot of air time is spent by the right in denouncing the “evils of big government” with their counterparts on the left responding in kind by describing any attempt to trim the government as an attempt to starve poor kids. What has been sorely lacking is a debate or examination of what the proper role of government should be in modern society, what the structural challenges are that prevent governments from being responsive to the needs of its citizens and, most importantly, what steps could be taken to right the ship. This excellent book by two journalists at The Economist goes beyond doing much needed justice to these essential topics, it also provides an intellectually coherent and beautifully written sweep of the evolution of what could be termed “western democracy”.

The authors’ essential point is that the values and governing structures of western democratic societies (broadly defined to include much of Europe and Anglophone North America) have undergone distinct dramatic changes or revolutions over the past half millennia. These changes have happened in response to the needs of society or to correct the excesses that result when successful revolutions are transformed into a staid status quo by the passage of time and the calcification of the governing elite.

The first revolution identified by the authors is the emergence of the modern European state in the 1600s. This is a revolution personified by its intellectual godfather, Thomas Hobbes who in his seminal work: Leviathan (or The Matter, Forme and Power of a Common Wealth Ecclesiasticall and Civil) advanced for the first time the concept of a social contract between the governed and their (absolute) sovereign. While modern readers may wince at the powers that Hobbes sought as ideal to bestow on the sovereign - essentially a call for dictatorship - it is important to put the work in its proper context. Europe in Hobbes’ day was a place where life was truly nasty, brutish and short. The entire continent was a relative backwater (compared to China) that was been torn apart by senseless wars started by every petty lord or minor aristocrat who could muster men under arms and proceed to find something to be offended about. The most important thing that 1600 Europeans needed was order and security, so the first revolution in government occurred to grant them the much needed order. In the 1600s and subsequent centuries, Europe’s monarchs grew much more powerful. Gaining greater control or successfully co-opting previously troublesome noblemen and establishing dominance over religious activities within their realms through the concept of cuius regio, eius religio (“whose realm, his religion”). They effectively succeeded, in many cases, in establishing a monopoly on the legitimate use of physical force within their kingdoms. France’s monarchs went to such great length to keep tabs on their country’s nobility that they come up with the concept of “The whole of France around the king”, keeping anywhere from 1,000 to 10,000 noblemen as hangers on at court and occupied with frivolities to keep them from dangerous thoughts of war. The net effect of these moves was the emergence of a stronger and more prosperous Europe that was able to shift its attention and resources away from the wasting competition of civil wars to the productive competition of commerce.

Like every innovation, the move to more powerful governments embodied by the sovereigns - while serving a real need at that time to tame the fractious tendencies of petty nobles - soon became long in the tooth and self-serving. Government, especially in the UK, became largely a vehicle through which elites extracted rents from the economy and society. This was the era of “rotten boroughs”: parliamentary constituencies so small (one had 3 houses and 7 votes) that wealthy landowners basically treated them as heirlooms that were passed from father to son and in that way secured an absurdly disproportionate influence on the legislative process. This concentration and abuse of privilege was not only restricted to the legislature. What counted as a civil service was little more than a system of sinecures, with stories of privileged appointees to government offices not showing up for a single day of work for decades. To correct this unfortunate turn of events, the 2^nd revolution identified by the writers was launched by thinkers such as John Stewart Mill and politicians like William Gladstone, a Liberal politician who served as Prime Minister and Chancellor of Exchequer on four separate occasions each. William Gladstone was a man so committed to reforming the corrupt and inefficient public service of his time that he earned the nickname “The People’s William” and had a most famous parsimonious quote: “No Chancellor of the Exchequer is worth his salt who is not ready to save what are meant by candle-ends and cheese-parings in the cause of his country”. If Gladstone is the political embodiment of this movement, its intellectual godfather will be John Stuart Mill: a thinker who championed the rights of the individual in opposition to unlimited state control. These liberal reformers made important tweaks to the apparatus of the state: instituting competitive exams for civil service roles; reforming the parliamentary process and laying the foundation for a laissez faire economic system.

This trend towards utilitarianism however met with its inevitable reversal as 19^th century England became an increasingly harsh place. This was the era of workhouses, debtors’ prisons and other cringe-worthy mainstays of life now immortalized in the great works of Charles Dickens. By the dawn of the 20^th century, many people had come to find the situation untenable and the authors did a masterful job of explaining how the yearnings of the citizenry for a more humane society led to some deemphasizing of utilitarianism as a governing philosophy and the advent of Fabianism (in the UK) and Social Democracy (in much of Scandinavia and Northern Europe). This movement, embodied by intellectual and organizer extraordinaire Beatrice Webb, had the establishment of a universal welfare state coupled with strong workers’ rights at the core of its governing structure and philosophy. Proponents of this philosophy often viewed government control of “the commanding heights of the economy” as a necessary condition for an ideal society. This thinking led to the establishment of social security in the US in 1935 and universal health care in the UK through the founding of the NHS in 1948. Governments all over the western world become more assertive in the economy and more willing to intervene in the markets when they felt the markets were not helping to achieve desired public policy. Franklin Roosevelt established the Tennessee Valley Authority (“TVA”) to electrify America’s deep south when it appeared profit-maximizing utilities were more than happy to ignore the, often poor inhabitants, of these sparsely populated farms in favor of the North’s more industrialized centers. In the UK, the post-World War II government of Clement Attlee proceeded to establish the foundations of the British welfare state and embarked on a vast nationalization agenda that covered coal mining, railways, telecoms, road haulage, electricity and the steel industry. The Swedes went much further in putting a safety net under their citizens and a paternalistic glow on their nation by coming up with the concept of Folkhemmet (“the people’s home”). A concept that says society should effectively function like a small family with everyone’s needs taken care of and the richer members subjected to the crushing taxes required to maintain such a generous “cradle to the grave” style welfare system. The social democrats’ long unbroken tenure running Sweden’s government (from 1932 to 1976) gave them enough time to put this concept into action that people started to refer to a Swedish “middle way” between socialism and capitalism.
 

Like everything conceived by man, the appeal of Social Democracy / Fabianism / The Welfare State - or whatever term can be used to describe the intellectual justification of the brand of activist government popular in much of the western world in the post-war years – soon began to fade and its warts became all too apparent in the 1970s. And if the backlash against the welfare or corporatist state has a guardian angel, it will be Margaret Thatcher, a grocer’s daughter made good, who decided she was going to force a sought of striver’s thriftiness on her countrymen. To put into perspective how much of a trailblazer she was, it is important to think about how involved the government was in the lives of ordinary Brits when she came on the scene. A Briton getting up to catch a flight to America in the late 1970s, would have put on his bed lamp with electricity from the state; left a message for his superiors on a phone line provided by the state; fixed himself breakfast on a stove using gas supplied by the state; rode to the airport on a train owned by the state; arrived at an airport owned by the state and travelled on a wide bodied aircraft owned by an airline controlled by the state. And this is all before 10am in the morning! Margaret Thatcher was not going to put up with this for much longer and proceeded to launch a major privatization program, which ensured that by the end of her tenure almost all of the services earlier referred to would have been provided by private firms. Her kindred spirit across the Atlantic, Ronald Reagan also embarked on a task to shrink the state. Although he had much less to cut because the state in  America was never as big (in relative terms) as it was in the UK. These reforms were not limited to the western world. India, a nation in love with Fabianism as any, also embarked on a series of lauded liberalization programs in the early 1990s that effectively put the “License Raj” to a well-deserved death. The Brazilians also launched a series of ambitious privatizations in the early 1990s and the Russian privatizations, though seriously flawed, achieved a real objective of shrinking the state.  

So why, one may ask, was the Thatcherite / Reaganite only described as a “half revolution” by the authors? The answer lies in the lack of durability of their revolution. After a lull in the 1990s, the governments of the western world have continued to grow at a fast clip. Both conservatives and liberals continue to find things to spend money on (e.g., defense and homeland security for conservatives, education and other welfare spending for liberals). Essentially, the authors argue, in much of the western world there is no real party of small government. Each party is perfectly willing to be big spenders when it comes to favored constituencies or projects and often times unwilling to raise the tax revenue necessary to fund this expenditure, leading to deepening fiscal problems.  

If the authors of this book did an admirable job of explaining the evolution of government in western democracies, they did a much more outstanding job in examining and distilling the current ills that plague western democracies. Of the “Seven Deadly Sins” of modern government that the authors raised, using California as an example, the two that resonated the most with me are: Olson’s Law and the problem of the “Overactive State”. Olson’s law, first proposed by American economist Mancur Olson, essentially states that because lobbying and collective action in a democracy is inherently time-consuming and expensive only the people with the most interest in a topic or issue will be sufficiently motivated to organize to effect change on that issue. This “law” provides a good explanation for why so many issues that affect society at large are effectively controlled by a few people. Examples of this abound and they range from the influence the National Rifle Association (“NRA”) has on US gun policy; the impact of the teachers’ union on shaping public K-12 education and the very significant role that the prison guards’ unions have played (especially in California) in advocating harsh criminal law policies of questionable value such as the “three strikes” law. For these constituencies the issues they care about are “voting issues” and they can effectively dictate the agenda since most of citizens don’t pay enough attention.

One doesn’t have to be a “small government conservative” to be sufficiently miffed by the overactive state and the move to ever more licensing and regulation. When Hippocrates was hanging out in ancient Greece around 400 BC and codifying some of the early precepts of medicine or Benjamin Rush was helping to lay the foundation of modern American medicine in 18^th century Pennsylvania, they may have contemplated a situation where the practice of medicine will require a state license obtained after rigorous examinations and many years of postgraduate medical education. What both men will probably find deeply ridiculous is that it takes about 300 hours of coursework to work in the wig trade in Texas or that many American states require multiple hours of coursework, exams and licenses for people wishing to be barbers, florists and even fortune tellers. While it is important for government to protect the unsuspecting from an unqualified brain surgeon, I think it should not be a high priority for the state to protect citizens from receiving a terrible haircut, or from buying an incompetently arranged bouquet of flowers; or from wearing wigs that are just not cut exactly right or receiving an inaccurate forecast of their future. People are perfectly capable of dealing with these things. While consumer protection may be the headline reason for the proliferation of licenses, the net effect of this excessive licensing is increased costs to consumers as prices are kept artificially low due to the barriers to entry that licensing provides. You could wake up a medieval guildsman in the 21^st century and he will quickly recognize much of occupational licensing as basically the same stuff they did back in the day. Liberals, with an interest in protecting the poor and striving, should have an interest in taming the overactive state as it increases costs to the people least likely to afford the extra cost. This is one area of reform in which liberals and conservatives can make common cause.

In concluding the book, the authors laid out a series of common sense reforms that could go a long way in improving governance and providing an avenue for western democracies to regain the edge in the competition with alternative Eastern governance models (notably those of Singapore and China). The idea I find most appealing is setting a sunset clause for every new law that is passed. Every law that is passed should have an expiry date, at which time it would be reexamined for relevance and if there is sufficient public support it will be reaffirmed and if not, the law will be struck off. That seems like a good antidote for anachronistic laws.

Overall, I believe this is a great book that should be read by every politician or person interested in how people organize themselves for effective governance in a democracy. And if you are just a history buff, the sweeping history of western political philosophy and organization should tick some boxes as well!

From Sea to Shining Sea – A review of “The Men Who United the States: America's Explorers, Inventors, Eccentrics and Mavericks, and the Creation of One Nation, Indivisible” by Simon Winchester

Of the 193 sovereign nations that are member states of the United Nations (as good a definition of a “country” as any), only 21 border on two or more oceans. Of these 21 countries only a small group of 11 countries share the distinction of bordering on the earth’s two greatest bodies of water: the Pacific and Atlantic Oceans. The United States is not just one of these 11 countries; it manages to get on the list in grand style. The country has a massive land mass and long coast lines on both oceans unlike some other members of the “club of 11” such as Chile, which can be uncharitably described as being effectively a strip of land on the Pacific that just happens to touch the Atlantic.

Translating the phrase of “sea to shining sea” in the (unashamedly patriotic) song, “America the Beautiful” into a real physical and cultural reality took centuries of diligent and often mind-bending and back-breaking work by courageous pioneers and adventurers. These people decided they were going to bend untamed wilderness to their will and embark on engineering marvels that still manage to boggle the mind. In the process, these pioneers wove regions and lands as disparate as the cotton fields of Louisiana; the rugged hills of Appalachia and the windswept coastal fishing towns of New England into a multicolored, imperfect but ultimately enduring quilt that is the modern United States. These people had to put together rail networks; draw up cartographic and geological maps; build steamships and carve out broadcast networks and flight routes literally out of thin air to create the physical and cultural bonds that hold the country together. Some of these pioneers remain famous; some have seen their fame lapse with the passage of time while a great number never achieved any renown that could be subsequently lost. Simon Winchester’s new book (“The Men Who United the States”) provides a great service to all these people, the well-known and the barely-known, by telling their stories in as compelling and completes a manner that surely deserves an award by some august body that hands out such laurels.

I found the book to be an absolutely great read, with a lot of things to commend it to readers. Chief among the many commendable qualities of the book was the author’s decision to organize the book in a thematic fashion. Given the large cast of characters that were involved in “Uniting the States” and the considerable span of time this uniting took, there was a temptation that a less able writer could easily have fallen for to organize the book chronologically or, worse still, as a series of mini-biographies. That would have resulted in a book that reads more like an encyclopedia. Thankfully for readers everywhere the author avoided that trap. Instead Mr. Winchester, who lived many years in Asia, chose to organize the book using the five elements (or the Wu Xing) of Chinese philosophy: Wood, Earth, Water, Fire and Metal. The author was helped by the various elements aligning pretty reasonably with the broad chronology of American progress. The theme / element of wood corresponds closely to the early years of post-independence America when logging activity was a key driver of economic growth and the famed Lewis & Clark expedition took place to the period from 1835 to the current day which is dominated by metal (i.e., electricity grids, cable TV, radio transmission, telecoms / telegraph etc.).  

The cast of characters and events so richly described by Simon Winchester range from popular people and popular stories such as Samuel Morse and the invention / commercialization of the telegraph; to the Lewis & Clark expedition to cross the west after the Louisiana purchase to the construction of the transcontinental railroad. Lesser known people and stories also come alive in this book. My favorite story is that of John Wesley Powell, the one-armed soldier who climbed mountains, led expeditions and finally served as the 2^nd director of the US Geological Survey. For the stories most likely to be well known by his readers, the author sheds new light and provides a fresh perspective that makes reading a story you already know still pass for a very engaging read.

This book is one of the best I have read in a long time but it is not without its flaws. One is that it adopts a sometimes overly adulatory tone towards these men and the America they created, a minor flaw that is probably linked to the enthusiastic patriotism often exhibited by naturalized citizens (“Americans by choice”) such as the author. The second and slightly irritating flaw was the author’s constant reference to Native Americans as “Indians”, a deliberately non-political correct term that most of the literati in America has jettisoned by now. I found the constant use of the term to be particularly silly, especially since “Indian” is a term that Christopher Columbus applied to Native Americans when he got lost, landed on American shores and thought he had arrived in India!

All told, this is a truly good book that deserves to be highly placed on best seller lists.  

A Land Facing Both Ways – Review of Ari Shavit’s My Promised Land: The Triumph and Tragedy of Israel

For a geopolitical junkie, no region holds more fascination than the Middle East: with its alluring mix of rich cultural heritage, strategic importance and a particularly combustible style of politics. Of the nations that occupy this subcontinent that that the French and British carved out of a vanquished Ottoman empire in the wake of the 1^st world war, the State of Israel stands out in a very unique way. Like most of its neighbors (Jordan, Saudi Arabia, Syria etc.), it is a young country that did not exist a century ago. However, the differences far outweigh the similarities: in a region populated largely by ethnic Arabs, Israel has a Jewish majority. While most of its neighbors are monarchies, theocracies or secular Baathist dictatorships, Israel has been a parliamentary democracy since its founding in 1948.

I have read a fair amount of essays and books on this important nation and they, for the most part, tend to be well-researched and fun to read. However, these books tend to be hampered either by: i) being written by insiders with an agenda to push or an ax to grind – the worst of the lot tend to be little more than partisan screeds; or ii) an objective and dispassionate observation penned by an outsider who struggles to muster the same level of passion or intimacy that insiders can. This new book by Ari Shavit (a celebrated writer at the Israeli left-of-center paper: Haaretz) seems to be the Holy Grail: a book by an insider that manages to be both passionate and objective and which examines the country in a deeply personal way: warts and all.

This book has many virtues to commend it. Mr. Shavit displays a deep love for his country, a love so deep that while he celebrates its triumphs and strengths he is also willing to explore his country’s shortcomings. Mr. Shavit narrates in very honest terms the expulsion of over 50,000 Palestinian Arabs from Lydda and Ramle in 1948, after both towns fell to the army of the new State of Israel. These towns were resettled by the victors, the empty houses of the vanquished occupied by new immigrants and the towns given new names of Lod and Ramla respectively. This was an event so indelibly etched in Arab minds that they refer to it as al-Nakba (“the catastrophe”). While not papering over this tragic event, it is important to put the event in historical context. Earlier in that decade, paragons of human rights such as the United States and the United Kingdom committed acts that top the incident at Lydda. While the nuclear bombing of Hiroshima & Nagasaki is well known, the arguably needless joint British and American aerial bombing of Dresden in the waning months of the 2^nd world war left over 25,000 people dead (most of them civilians).  

Mr. Shavit also charts (in a deeply personal way using his family’s history) the story and evolution of the state of Israel. We are swept from the days of Theodore Herzl’s publication in 1895 of Der Judenstaat (“the Jewish State”), a pamphlet arguing for the creation of the Jewish State, then to the early days of the immigrant farmers in the Kibbutzim, and their famed Jaffa Oranges. He lays out the evolution of the country from a few immigrants toiling in the Kibbutzim of the early 20^th century to the wave of immigration from the survivors of the holocaust in Europe and the pogroms of the Middle East in the 1940s and 1950s , to the emergence of the settlements movement in the 1970s and finally to the sophistication of the modern day.

A particularly touching part of the book which I believe has universal appeal is the description of Bizaron, a classic housing estate similar to many built in the 1950s to accommodate the thousands of immigrants streaming into the young country. These immigrants from Europe and the Middle East all had a few things in common: they had all suffered traumatic or near-death experiences, lost a great deal of their material possessions on their flight to Israel and, almost to a man, had to settle into jobs beneath their status in their prior lives. Recognizing that they would probably not reach their full potential, these people turned their efforts to educating their children to attain their fullest potential. These children of “down-on-their luck” immigrants achieved great strides: president of the Supreme Court of Israel, millionaire and billionaire entrepreneurs and many distinguished academics at various leading universities globally. This is a universal and classic immigrant story. Immigrant lore is replete with tales of the Nigerian doctor working as a healthcare assistant in Baltimore, the lawyer from Nepal driving a cab in Manhattan or the Ukrainian nuclear physicist working as a bookkeeper for a small firm in Queens. The high-energy and zealously-educated children of these people end up being disproportionately represented in high-powered positions in Corporate America.

Some of Mr. Shavit’s more potentially controversial statements revolve around the issue of Israeli settlement building, an enterprise which he vigorously opposes. The writer describes these settlements as “pregnancies outside the womb” and predicts that runaway settlement activity and ultra-nationalism exemplified by zealots such as Yehuda Etzion, a right wing activist previously imprisoned for a foiled plan to blow up the Dome of the Rock, will present challenges for the continued success of the country. Finally, summing up the essence of the Israeli-Palestinian conflict he talks about a continued conflict that leaves both sides worse off and unleashes a wave of everyday evildoing by non-evil people (in his own words “evil can take place without a need for evil people”). This section of the book is reminiscent of Hannah Arendt’s theory of the banality of evil.

All said, a great read and highly informative book that makes a gallant effort of being even-handed and balanced. Reading Mr. Shavit’s book I am reminded of the phrase: “militant centrist”, which I think is an apt description of the man. 

Finding significance in the mundane – Review of A History of the World in 100 Objects

It wasn’t very long ago (1963 to be exact) that the widely overrated historian: High Trevor-Roper, then a professor of history at Oxford University said “Perhaps in the future there will be some African history to teach. But at present there is none, or very little: there is only the history of Europe in Africa. The rest is largely darkness”. While many mainstream historians now correctly view this statement as being particularly narrow-minded, the key approach to historical analysis that informed the worldview of this condescending man has proven particularly hard to shake. Many people have a reflexive instinct to largely view history as written history, with most of history scholarship and teaching still being focused on the evaluation of written texts handed down by ancient societies and contemporary observers or visitors to such societies.

This emphasis is a really unfortunate one, not only because it largely confines the history of societies without a tradition of writing to the dustbins of history and leaves their achievements unsung. Further complicating this already sad picture is that what little information we have of these societies tend to come from the writings of other people they came in contact with. These interactions were often in circumstances that were less than amiable (i.e., enemies, competitors etc.) and the guys who did the writing often made sure to leave behind descriptions that were decidedly designed not to flatter their subjects. For example, much of the world’s knowledge of the Aztec civilization came from the writings of the Conquistadors that ended their subject’s civilization by - shall we say - taking a few items they were not entitled to while dispensing with the lives of those who posed any obstacle to their theft. Similarly, our knowledge of the life and activities of the Germanic tribes (out of present day Scandinavia) come largely from the writings of the Romans which they ended up defeating, a rare case of the vanquished getting to write the story. The list of biased reporting goes on: European settlers wrote about Native Americans, English visitors wrote fantastical tales about indigenous communities in West Africa etc.

This is why I really liked the approach of Neil MacGregor (Director of the British Museum) in writing this really great book. His great idea was to select 100 objects from all across the world through which he charts the progress of mankind from the Stone Age to the current day. He examines each object and explains the significance it held in the societies (and ages) in which it was created and used. These objects range from the two million year old Olduvai stone chopping tool to the modern-day credit card. The origins of these objects range from the Ife Bronze Heads (created in the 17^th century in what is now Nigeria) to an Egyptian sandal label from 4000 BC to the Seated Buddha of Gandhara (created in the 2^nd century AD in modern-day Pakistan) as well as a chronometer from the HMS Beagle (an early Victorian-Era naval vessel).

Despite the great diversity in the geographic origins and purposes of these various objects, they largely have one thing in common: they are largely mundane and pretty unremarkable in nature. There are very few grand and popular objects on the list: the Mona Lisa and other great works commissioned by the Medici are not held up to represent the renaissance era, rather we have mundane everyday items such as a note written in calligraphy and a miniature mechanical galleon that demonstrates the technical skill of 16^th century Germany and their seafaring ways. Representing the 2^nd part of the 20^th century is not a grand or sophisticated item like the Space Shuttle or the Mars Rover. Rather Mr. MacGregor’s choice is the humble credit card, a distinctly unremarkable rectangular piece of plastic lodged in billions of wallets the world over. The choice struck me as odd, but on further reflection I realized that a thousand years from now when our current civilization has been confined to the footnotes of history and an enterprising academic decides to write a thesis on how humans lived in the second half of the 20^th century, the credit card will be as good a window into understanding our lives as any other item I can think of. Encapsulated in that small, flat piece of plastic are themes such as: the emergence of the credit society and the attendant effects that personal debt brings; the rise of the “consumer society” that has led to there being 46 square feet of retail space per person in the US as well as the ubiquitous electronic networks that make all these incessant “swipings” workable.

I’ve always regarded Archaeology as a really cool discipline (hey, what other grown up occupation allows one to go around playing scavenger hunt games!). However, the end results of archaeology have too often been regarded as novelties that end up being gawked at in Museums and rich collectors’ living rooms. The close connection between history and archaeology is often not as closely linked as it should be, with very few books explicitly attempting to tell the history of everyday people in past eras through the simple objects they created and used in the normal course of their lives. This book did a great job giving voice to the voiceless as well as ink and parchment to the lives of often forgotten people who left little or no written text for succeeding generations to follow. 

Founding Pragmatist – A review of “Thomas Jefferson- The Art of Power” by Jon Meacham

I just finished reading the latest book by Pulitzer prize winning journalist and historian: Jon Meacham, the author of highly acclaimed historical works such as “American Lion: Andrew Jackson in the White House” (for which he won the Pulitzer in 2009). A former editor of Newsweek, he seems to have finally succumbed to the itch that plagues every American historian, which is a restless feeling that can only be sated by writing yet another book on Thomas Jefferson. While the 3^rd president of the United States can be said to have been studied to death, Jon Meacham manages to write a book that holds its own among the great works on this over studied great man. My sense of the author’s intent in writing this book is to paint a picture of Thomas Jefferson as a practicing politician and statesman of his time. A man skilled in the exercise of power and not simply the high minded philosopher and ideas man behind the lofty words of the American declaration of independence. I found this book to be refreshing and illuminating and I took away a couple of lessons that are often lost due to the all too human tendency to inflate the currency of the past

Revolutions – at least the successful ones – are typically run or enabled by the rich and/or the established. As Meacham wrote about the march to the American Revolution, “for the elite, revolution was the shrewdest economic choice”. While the history books are replete with stories of yeoman American farmers and striving craftsmen picking up arms in ragtag armies to secure their freedoms by defeating the “Redcoats” (as the British Army was not so affectionately called in those days). The truth is a little more encompassing than this, as the revolution was championed by the gentry, ruling classes and business elite of the colonies who had come to realize that continued rule from London was, well, not great for business and for their continued prosperity. One of the initial skirmishes on the road to the revolutionary war was the “Pine Tree Riot” in New Hampshire, during which royal officials were flogged and marched out of town. The leader of this revolt was Ebenezer Mudgett, a rich lumber mill owner who basically did not like the effect the royal ordnance to save the best trees for his majesty’s use was having on his profits. Counted among the signers of the declaration of independence were some of the richest men in the 13 colonies, they saw that throwing off the colonial overlords was not only good for the liberty of man, it was also good for business. This was probably not lost on Thomas Jefferson himself as Jon Meacham noted, “it was a rich man’s revolution and Thomas Jefferson was a rich man”. This is not just a relic of historical revolutions, the protesters at Tahrir Square started the revolution to overthrow Hosni Mubarak but the decision of the Egyptian Army generals to not attack the protesters but to abandon Mubarak basically sealed his fate.

The second important lesson is that partisanship and partisan bickering, like the poor, have always been with us. Listening to American media, one hears “talking heads” and politicians bemoan the partisan rancor in the country. They collectively long for the more amiable atmosphere of the past while not forgetting to add something along the lines of the “founding fathers rolling in their graves” at the sight of the bickering politicians. I am not so sure that these fathers will be as taken aback as pundits (who pine for a bygone era when political sages strode across the nation and engaged in calm, high-minded discussions) will like us to believe. Former US President Harry Truman was said to have remarked that “the only thing new in the world is the history you do not know” and that statement was quite borne out by this book. The election of George Washington was in many ways the last non-partisan election of a US president as Thomas Jefferson and John Adams were locked in highly partisan contests in 1796 and 1800. And each man was at the head of a political movement, Adams led the Federalists and Jefferson the Democratic-Republicans. Vicious publications in broadsides and pamphlets were the attack ads of the day and men such as James Callendar, a noted pamphleteer of his age, may even have one or two things to teach modern campaign hands like Karl Rove and David Axelrod about “defining the opponent”. Jon Meacham notes that the election between Adams and Jefferson was so hard fought that it drove a wedge between two men that had hitherto been very close (although they did make amends in their old age). Much has been made of the Jeffersonian practice of opening the White House for dinners with legislators every night, as it was a good faith effort to build bipartisanship. However, it must have been a sign of the times that the President avoided having congressmen of both parties together on the same day out of concern that such dinners may end in fist fights.

Also shining brightly throughout the book is the vivid image of Thomas Jefferson, the pragmatist. The portrait of Jefferson as philosopher king, devoted to such idealistic pursuits as crafting the declaration of independence and the statutes of religious freedom, has become quite ingrained in the popular imagination. In this book we see a new side to the man, we see Thomas Jefferson the politician skilled in realpolitik. The man who had a deep belief in a participatory democracy anchored on an active citizenry of his much beloved “yeoman farmers” also did as much as any president to expand executive power. He negotiated the purchase of the Louisiana Territory, which currently encompasses all or part of 15 American states and at 3 cents per acre it is considered by many to be the greatest real estate deal in history. The judicial “strict constructionists” of his time viewed this move as unconstitutional as the constitution did not explicitly make provisions for acquiring territory. However, he viewed it as imperative that the French influence in North America be curtailed and that the opportunity for the young country’s westward opportunity needed to be ensured. In foreign affairs, the man who had expressed reservations about standing armies (considering them a marginally less bad idea than banks) expanded the navy and launched the United States’ first foreign war. He sent ships to defend American ships that were being harassed by the Barbary states, getting the sanction from congress after the ships were on their way and establishing a precedent of vesting the power to conduct war and defend the country in the president even though the formal declaration of war was controlled by congress.

Overall, I found the book to be very densely researched but beautifully written in an engaging way that kept me going through the approximately 800 pages of this great book. It contained enough “red meat” for history and political nerds like me, while also having enough interesting anecdotes and engaging human interest content to engage the general reader. 

Melting Pot & Cauldron of Fire – A review of Levant by Philip Mansel

I thoroughly enjoyed reading Levant: Splendor and Catastrophe on the Mediterranean: a book describing the enigmatic history of the Levant by chronicling the vicissitudes of life over four centuries in Beirut, Alexandria and Smyrna (now the Turkish city of Izmir). The Wikipedia entry on the Levant region describes it as including “most of modern Lebanon, Syria, Jordan, Israel, the Palestinian territories, and sometimes parts of Cyprus, Turkey and Iraq”. This region of the world has quite distinct characteristics from the Middle East’s Gulf regions and the Maghreb region of West Africa. This unique identity however tends to get obscured in the statements and actions of those who prefer simplistic - and probably ignorant –terms such as “Arab world” or the much more annoying phrase: “Muslim world”. It is quite absurd to compare the multicultural, long established and often secular Levantine cities such as Beirut, Damascus, Alexandria and Istanbul with the more homogenous, conservative and recently founded cities of the Gulf Kingdoms.

The world we live in is not one that celebrates dual or split identities. It is considered an insult to be described as “two-faced”: a phrase we associate with traits such as insincerity and hypocrisy. We regard people or societies with “two faces” to be making an unwholesome attempt at “having it both ways”. There is even a biblical injunction assuring the “spitting out” of people who are “neither hot nor cold”. I have always found the scorn heaped on people trying to “have it both ways” to be quite silly: why should I or anyone else have it one way if we can have it two, three or even four ways! The ancient Greeks had the good sense to recognize the virtue of split personalities. Classical mythology is replete with figures such Janus: the two-faced god of beginnings and ends who looks both into the future and the past. Most of the heroes of Greek mythology have split human/god personalities and are therefore prone to perform god-like acts like slaying thousands of men but also capable of very human traits such as throwing fits over being jilted by lovers.

 I find the Levant region fascinating because it is a region that has throughout its history tried to have things both ways and to keep multiple identities. It is a region that looks both to the West and to the East; it is both ancient and modern; both Christian and Muslim; Arab and European. The author describes a region that was equal part melting pot of cultures, nationalities and religions and also equal part frighteningly combustible cauldron of fire. The Smyrna, Beirut and Alexandria of the17th, 18^th and early 19^th centuries described by the author were cities in which Turks, Greeks, Arabs and Europeans freely coexisted and were able to practice their Muslim, Jewish or Christian faiths as they wished. To understand how unique this was we should note that it was taking place at a time when Jews and Synagogues in Europe were largely still restricted to Ghettos and the Muslim population in Spain had been either forcibly converted or banished. These were multilingual commercial centers where thousands of European traders and their families lived with Turks and Arabs. Philip Mansel describes a Janus-faced region with men trotting about in European dresses adorned with Arab headgear; a society of debutant balls and Islamic marriages (Nikah) and a place with assimilated Europeans who had converted to Islam and taken on Arab names. I will not be stretching credulity by saying that 19^th century Levant gave the world a foretaste of globalization and multiculturalism. A poster child of this period was Mohammed Ali Pasha, founder of modern Egypt and patriarch of a dynasty that ruled the country 1805 to 1952. Ali Pasha was an Albanian born in Macedonia who first came to Egypt as an officer in the Ottoman Army. This is a more notable rise to the top than many ascents in our modern age that are often prefaced with the words “only in America will –“.

All these good things notwithstanding, it’s important to realize that the Levant region of yore was not some multicultural nirvana where nice people gathered to hold hands and sing Kumbaya. This rich tapestry of nations, faiths and cultures was always on the edge of being ripped apart by partisanship, latent religious prejudice and the pursuit of narrow sectarian interests. Resentment of the special privileges or capitulations granted to Europeans and of the perceived impiety of the elite by the often more pious masses has always been a sticking point. This resentment often boils over and has been the cause of significant conflicts and bloodlettings from Smyra in the early 19^th century to the long drawn out civil war in Lebanon which lasted from 1975 to 1990. These tensions were considered sufficiently serious by many western powers that they took to stationing warships off major Mediterranean ports both as a deterrent and also as a means of quickly evacuating their citizens in the event of a conflict. Intermittent social conflict was not also the only challenge faced by the Levantines; also bubbling under the surface was a somewhat rigid social hierarchy. 19^th century and early 20^th century Lebanon has been described by some as a strict hierarchy with Catholics at the top and Shia Muslims at the bottom. In Mohammad Ali’s Egypt, European and Turkish officers were significantly better paid and more highly placed than their native Egyptian counterparts. These inconveniences and prejudices could be viewed as the worrisome Mr. Jekyll side to the more alluring Dr. Hyde side of the Levant where various nationalities and faiths coexisted.

However one constant theme, especially in Egypt, is the tension between the largely secular and pro-Western elite and the poor and pious masses over which they preside. This tension has become more important in the wake of the Arab spring: which saw the ouster of secular, pro-western strongmen such as Hosni Mubarak of Egypt. The hope of many western observers was that these strongmen would be replaced by secular democratic parties, alas the results of elections has given these people great pause. Islamist parties have won popular, free and fair elections in Egypt (Muslim Brotherhood) and Tunisia (Ennahda) while secular parties championed by the liberal educated elites have received sound drubbings. Turkey is also another country going through a similar transition as democratically elected parties with Islamic links have been rolling back much of the heavily pro-western regulations instituted by Kemal Ataturk. Described as the father of modern Turkey, Ataturk changed the Turkish alphabet to a Latin script; proclaimed Turkey to be a secular western country and banned the wearing of the Hijab (headscarf) by women in public. Parties campaigning on pledges to champion a bigger role for Islam have been winning elections with the wife of the current president also being known to wear the Hijab despite its official ban. While there are many challenges in the current-day Levant region, I regard the managing of the dual personalities of the region to be among the most important to get right.

In conclusion, this book validates the aphorism (attributed to US President Harry Truman) that “the only new thing in the world is the history you do not know”. Reading about the vicissitudes of life many centuries ago in these great cities, I am struck by how much of the lessons and challenges described by the author remain relevant today.

The European Cental Bank’s LTOR Initiative – furthering a deadly embrace?

To say the entire world has been fixated on the twin woes of a weak European banking sector and faltering sovereign fiscal situations will be stating the obvious. However, there is great justification for this fixation because of the extraordinarily tight connection between the economic fortunes of most European countries and their banks. Much has being made of the “too big to fail” issue as it concerns large American universal banks such as Bank of America, Citigroup, JP Morgan etc. While these institutions are large and have gotten larger in the recent past, their impact on the US economy seems really benign when compared to the impact their European counterparts have on their host countries.

Throwing out some numbers, the weakened Dexia Bank’s assets account for ~150% of host country Belgium’s GDP, RBS’ assets exceed 100% of UK’s GDP, BNP Paribas’ asset base is up to 100% of France’s GDP and so on. While a big driver of these numbers come from the far more international activities of European banks, it does not detract from the fact that in the vast majority of European countries we have less than 5 banks controlling substantially all of the banking system’s deposits and assets. French banking is basically controlled by BNP Paribas, Credit Agricole & Societe Generale, Unicredit & Intesa Sanpaolo have that distinction in Italy while Deutsche Bank has a kind of overwhelming influence on German finance that no American bank even comes close to having. If you couple this dominance with the fact that Europe has a more bank-centric financing system than the US, then the power of these banks become more glaring. Over the past couple of decades a shadow banking system, fuelled by securitization, has emerged in the United States to challenge the dominance of banks in extending credit to the economy. This has been far less developed in Europe with banks on the continent been more likely to hold assets on their books.

This has become apparent in the past couple of years with European nations basically turning a banking crisis into a fiscal one. Some of the fiscal problems currently ripping through Europe can be traced to the massive costs incurred by these nations as they tried to bail out their banks and ended up breaking their fiscal purses. One can easily link, to a non-trivial extent, the Irish fiscal crisis to the cost faced in bailing out such large lenders such as the Allied Irish Bank and the Bank of Ireland. As these banks have stabilized, the true costs of the (admittedly necessary) bailouts have become apparent as they are reflected in the higher borrowing costs of marginal European nation.

This now brings me to the potential danger in the ECB’s latest plan to shore up the European banking system through the recently introduced Longer Term Refinancing Operation (LTRO). Theoretically, the aim is to provide a liquidity backstop to European banks as they seek to jumpstart lending to the economy. I am however somewhat skeptical of LTRO’s benefits due to the potential for the carry trade. The December round of approximately EUR 500 Billion 3-year LTRO funds disbursed have an interest rate of 1%, while Italian, Irish and Portuguese government 3-year notes yield 3.9%, 4.5% and 1.91% respectively. From these numbers one can easily see a situation where the banks take money from ECB and just plough them into purchases of European sovereign bonds. For example, Intesa Sanpaolo (the big Italian bank) participated in the LTRO funding window up to the tune of EUR 24 Billion. Since the bank has an average Net Interest Margin (NIM) of ~1.6%, borrowing from the ECB and buying Italian bonds will yield a spread of 2.9% (almost double its NIM on loans). And to crown the good deal, due to banking regulations its purchase of these bonds will be deemed riskless and it will not need to set aside any capital for potential losses.

If this happens across the banking sector, we will end up in a scenario where bank holdings of sovereign debt increases in an era of increasing fiscal instability. If there are defaults on these debt holdings, the banks will suffer large losses and will have to be bailed out by the governments whose fiscal situations will then worsen as a result. In essence, this move may be locking European banks and sovereigns in a tighter deadly embrace.

I hope that the doomsday scenario does not happen, but I see a reason to be skeptical

Life post-PMS subsidy – Ensuring we do not let a “crisis” go to waste

I woke up on the morning of January 1^st to Facebook updates from friends denouncing and disparaging the Nigerian government’s “heartless” decision to remove subsidies on PMS (Gasoline) effective immediately. I completely relate to the sentiments expressed by many Nigerians as the pump price of Gasoline is expected to increase by at least 200-250% and this is money from the pockets of ordinary people. The government has advanced a fiscal argument for the removal of subsidies: since Nigeria lacks any meaningful refining capacity, the rise in crude oil and freight prices have made these subsidies increasingly expensive for the government. The finance minister and central bank governor have both stated that sustaining the subsidies will place the government on the path of higher deficit spending financed by unprecedented domestic borrowing. The major buyers of these bonds are Nigerian pension funds and banks, so a worsening fiscal condition can (in an extreme scenario) can potentially weaken our banks and threaten pensions. A clear result of this borrowing, which is probably beyond contestation, is that it has led to the crowding out of private borrowing as rising yields have made government bonds a lucrative risk-free and high-yielding investment that has increased the cost of private borrowing. However, whether you buy this argument or not, there is an opportunity for the country to use the removal of this subsidy to effect some structural changes in the economy

A key reason the removal of the subsidy is generating so much uproar is due to the Gasoline-intensive nature of the Nigerian economy. A possible unintended consequence of decades of government subsidy is that we have effectively subsidized and encouraged inefficiencies because of the artificially low cost of PMS. Nowhere are these inefficiencies as prevalent and absurd as those of the transportation and logistics sectors: two sectors that affect everyday things as the cost of getting to work and the cost of food. Anyone who has visited Lagos will witness the huge number of cars on the road as almost the entire middle class (or anyone who can afford a car) drives to work, with carpooling being taken up by only a minute percentage of the population. That’s why the recent moves being made to introduce commuter rail to Lagos is a big, cost-effective step in the right direction. We need every metropolitan center in the country working on similar schemes.

These inefficiencies are not limited to intra-city transportation; they also extend to inter-city travels. It is beyond absurd that the vehicle of choice for inter-state transportation in Nigeria is the 18-seater bus. This is an inefficient vehicle for providing mass transit services over long distances. Other countries have the good sense to consign these buses for shuttle services between airports, tour sites etc. Spreading fuel costs over only 18 people gives us more expensive transit than we would have if we used 42 or 50-seater buses for inter-city transportation. Hopefully, higher fuel costs we force us to make this switch into large-scale, efficient transportation choices.

Obviously, I have saved the most egregious for last. And that is the logistics and haulage system in the country, which is the primary reason food costs can be expected to skyrocket following the removal of subsidies. Nigeria must be one of a few countries in the world where bulky, non-perishable goods are shipped almost exclusively over long distances (i.e. over 1,000 Kilometres) by trucks. Name the bulky stuff (cement, grains, steel rods etc), we transport it by road! We even transport petroleum products (including Gasoline) using trucks, no wonder everything costs more than it should. As a country, we need to revamp our railway network to transport bulky products in a much more cost-effective manner and also better monitor our pipeline systems so we can stop the lunacy of transporting Gasoline over 1,000 Kilometres by road.

I know adjusting to a life without PMS subsidies will be difficult for most Nigerians but we should not let this opportunity go to waste, we need to use this opportunity to correct the structural deficiencies in our economy.

Mitigating the “Mancession” in the United States – the need for great endeavors

"the historian has difficulty in suggesting the degree to which the canal obsessed and enchanted Americans in the fall of 1825. It was taken to be a symbol of the boundless potentialities of the country, its resilience and its hopes” – contemporary newspaper article following the opening of the Erie Canal in October 1825.

Much has been said of the effects that the Great Recession and its aftermath have had on the employment picture in the United States as the unemployment rate has stubbornly refused to go below 9%. A level hitherto thought to be highly unlikely by some really smart and powerful people (including the White House’s economic team which predicted a maximum level of 8% in Q1, 2009 as they tried to sell the stimulus package). While a 9.1% unemployment rate is bad enough, it is important to realize that this is an average number. And like all averages it masks some really telling differences in the characteristics of the various sub-populations in the country. Through the recession, men lost jobs at a faster clip than women did. College educated men have a lower unemployment rate than men with high school diplomas, a group whose prospects are in turn better than those who never finished high school. All this information can by no stretch of the imagination be deemed to be new or insightful as everyone agrees that the recession and its aftermath have been particularly harsh on blue-collar men who tend to work in construction and other cyclical industries.

However, what is particularly scary about the situation is that this is not your typical cyclical unemployment driven by the boom & bust of economic cycles. The sustained household construction boom of the 2000s is gone and is likely not coming back; the Obama administration may have saved Detroit but these jobs don’t pay nearly as much as they used to and many of the manufacturing jobs that have flowed to low-cost countries are unlikely to flow back. This trend of burly men used to working with their hands being out of jobs has profound socio-economic consequences ranging from declining consumer demand to failed marriages and even heightened racial tension and xenophobia. It’s not unreasonable to expect social tension, domestic abuse and other ills to result from men being out of work and having to depend on their spouses or partners for sustenance.

A lot has been said about the need for innovation, reinvention and retraining for the new skills in demand in the new knowledge economy. I am in full support of these moves as it is clear that a lot of the well-paying blue-collar manufacturing jobs are not coming back to the US, neither should we expect nor even hope for the building boom of the 2000s to resurface. However, I think retraining is just one part of the answer as the more we look at what it entails, the less certain a solution this option appears to be. Firstly, the unemployment rate for college graduates is considerably less than that of high school graduates. So an obvious solution will be for unemployed folks to head back to college, right? Not so fast actually. Imagine telling a 50 year old guy who’s been either working in factories or construction sites to head back to college for 2 or 4-years and have to study calculus, macroeconomics or whatever it is college students learn these days. And while he is at it he will have little or no income to support his family. So while it is a sound and noble idea, many working people will balk at getting on the college track due to the difficulties involved in executing such a move.

It’s however not all gloomy as not every job that is projected to boom in numbers over the coming years requires a college education. However, only 8 out of the 30 fastest growing jobs being forecast by the US government requires nothing more than a high school diploma. These are: Personal and Home Care Aides; Home Health Aides; Medical Assistants; Social & Human Services Assistants; Gaming Surveillance Officers/Gaming Investigators ; Pharmacy Technicians; Dental Assistants and Gaming & Sports Book writers/runners. Looking through these eight job categories very few jump at me as being particularly well suited for a middle-aged man who has been pouring cement or hammering steel for decades. I am not sure it is very reasonable to expect a 50-year old worker laid-off from a closed refrigerator factory in rural Pennsylvania or Illinois to be particularly excited to work as a home health aide or as a dental assistant. Also not sure many people will also be rushing to hire a guy who has been shaping steel (and who looks the part) for a job tending to Grandma and Grandpa!

However, it will only be gloom and pestilence for the blue collar man if the country chooses to have it that way. I believe there is a way out and this lies in something counterintuitive: launching a massive and sustained construction boom. Not the housing construction boom that created a mess big enough to sink the global economy. I speak of a nationwide infrastructure boom that will fix the country’s crumbling infrastructure and equally as important: put millions of blue collar men back to work using the skills they have gained over a lifetime. The American Society of Civil Engineers estimates that the US will require about $2.2 Trillion over the next 5 years to fix its crumbling infrastructure. People could be put to work fixing these infrastructure gaps that are an impediment to economic growth and a threat to human lives. Beyond fixing problems, there is a place for “great endeavors”: the building of the Erie Canals and Transcontinental Railroads of the modern era. This is the century of renewable energy so people can be put to work building the platforms of a green economy: building windmills and solar panels; revamping transmission lines and retrofitting homes and public buildings to make them more energy efficient. These things can be done and people could be gainfully employed doing thereby enabling the nation to buy time to retrain the workforce for higher knowledge while insuring itself against infrastructural decay and obsolescence.

This need not be entirely financed by the government. If there has ever been a time for public private partnership in infrastructure, it is now! The transcontinental railroad, the Suez Canal, Eurotunnel and many other landmark projects were not wholly financed by governments. There is no reason why the United States cannot enact legislation to build a National Infrastructure Bank that will be mainly privately funded. The money is there, the projects are there and the ingenuity and skills are abundant. If the rest of the world keeps piling money into Treasuries after a downgrade and were willing to finance NINJA mortgages for overextended people then they surely will invest in the debt and equity of an infrastructure bank investing in the future of the United States. It is a win-win for everyone and the millions of unemployed men will thank policymakers and financiers for it.

The “People’s Princess” as gold digger – lessons in the humanity of our hero(ine)s

Diana Spencer: Princess of Wales would have clocked 50 this year if her life had not been so ultimately cut short in Paris on an August night in 1997. So I found myself reflecting on the near apotheosis that was going on in the media about what a Princess Diana at 50 would have meant. So I asked myself: who was Princess Diana & what is the appropriate narrative for her life? Is it that of an intellectual lightweight, a lady who took her husband “to the cleaners” in a divorce receiving $28 million upfront & $600,000 annually and who seemed to have a less than ideal taste in men (some of whom were married). A possible “home wrecker” and a member – after her divorce – of the jet setting, hard partying crowd with the likes of Dodi Al Fayed (playboy extraordinaire still on an allowance from “daddy” at 42). Or is the proper narrative that of the “people’s princess”: who publicly hugged an AIDS sufferer, highlighted the horrors wrought by landmines and showed genuine interest in poor & oppressed people all over the world. A princess who brought people closer to royalty and demonstrated warmth often lacking in that institution. In reality, my question is sort of a “trick question” as she fit both of the above narratives. She was a good person but also an acknowledged adulteress (with James Hewitt) and I think this does not in any way remove or distract from all the great things she did for so many people.

This trend of us deifying our heroes: expecting them to be something other than human and subjecting them to unrealistic standards is disingenuous, naïve and unrealistic. George Washington was the father of his country, refusing to rule for life as a quasi-monarch when he could have done so. But he was also a man of limited military abilities & success and who was frankly not a very bright fellow. Martin Luther King was alleged to be an adulterer but he inspired a whole nation to seek change and justice in a non-violent way. These people – and many more of their stature – were giants among men and they all lifted the generations in which they lived. Their indiscretions or moral failings did not make them any less great but it demonstrated that even the noblest of humans is after all still human and that perfection is neither necessary nor sufficient for greatness.

I believe setting the records straight about great historical figures is not about “speaking ill of the dead” or even about striving for historical accuracy, it is rather to help us as citizens to have a more balanced and nuanced view of our leaders. Recognizing and discussing the flaws of people referred to as “founding fathers”, “queen of hearts” etc will enable us cut our less illustrious political leaders the required slack they deserve and need! Time after time, political candidates – especially in the United States – must continually bow at the altar of the false gods of piety and unrealistic expectations. Is it really important for us to know whether Bill Clinton smoked marijuana as a college student barely out of his teenage years? Did that have any bearing on his qualifications to lead wisely and make good decisions 30 years after? Adultery should not be condoned but isn’t there something weird in ascribing a consensual affair as “high crime & misdemeanor” (the criteria for impeachment)? Must everyone striving for political office have a wife, kids and dogs that look like images out of Christmas cards?

I think these are questions citizens and electorates need to ask themselves as they elect their leaders. The world is becoming increasingly complex with near intractable problems, so we need leaders willing to plunge headlong into discussing these problems and finding workable solutions. We don’t need them distracted by fears that someone will publish pictures of them at a fraternity party 30 years ago or unearth sordid details of amorous liaisons now confined to the dung heaps of history. We need to stop the deification of our leaders, accept their minor failings and concentrate on their abilities & passion for solving the great problems facing humanity. As the “great” political comedian: Bill Maher once said when comparing Presidents Bill Clinton & George Bush: “there is more to the presidency than not getting blown”.

The false security of state-sponsored “land grabs”

While the jury is still out regarding whether the recent IPO of the Swiss commodity trading giant: Glencore represents the end of the recent bull run in both soft and hard commodities, some trends are fairly settled. First, is that long-run demand for agricultural commodities outstrips current capacity with major capex investments needed in the coming decades to fix this imbalance. Secondly, food prices over the next half century will be broadly higher than they have been in the last half-century. Lastly, there will be increasing imbalance between where food can be effectively grown and where it is most needed. China, South Korea, the Gulf Cooperation Council (GCC) amongst other places are examples of places that will definitely experience increasing food import bills. This trend has started with the Saudis: as they have decided to phase out the growing of wheat and revert their policy of wheat self-sufficiency as a response to declining water tables in the country. While it may seem transparently absurd in the 1st instance to attempt to turn desert land into a wheat growing region. A better understanding of food and its role in politics will make the initial decision to grow wheat more understandable.

Over the years, governments have tended to fall when their citizens are unable to feed themselves. You can often get away with toying with people’s freedoms but you are best advised to make sure their bellies are filled! Moses in the biblical era faced a rebellion and may have been toppled in a “coup” if it were not for the miracle of manna (“heavenly food”) falling from the sky! The French revolution was as much a reaction to the rising cost of bread as it was a desire for greater political self determination. Given this history of food driven revolts it is therefore understandable that many governments with high food import dependence are fretting over their security and are seeking to acquire vast tracts of land across the world, especially in Africa.

There has been increasing reports of massive “land grabs” in various African countries (Ethiopia, Sudan etc) by various state-sponsored entities with a main aim of exporting the products of such farms to the countries sponsoring these land purchases. While a lot of people have written about the human and property rights issues involved with such purchases, my view on the topic has more to do with how secure this strategy will be for these food dependent countries.

While I completely respect the drive of these food import dependent countries to act to protect their interests, I think they may be falling into the fallacy of mistaking ownership with control. Import dependent countries can own millions of hectares of land in agricultural producing countries and it is unclear at best whether these assets will prove useful in a crisis. This is because while foreign governments or foreign entities may own farms overseas, it is the governments of host countries that determine if exports will be allowed or not. And history has shown over and over again (from the Biblical story of Pharaoh’s wheat storage during the “years of plenty” to the Russian wheat export ban of 2010) that governments will act primarily to first secure food for their own citizens. For example, ownership and export plans meant next to nothing in 2010 when the Russian government imposed an export ban on wheat following after droughts and fires. That means a government of X foreign country could have invested billions of dollars in farmland and export infrastructure and they would be of no value just at the time that they needed it the most. Generally, I struggle to see how continuous exports of food will be sustainable without domestic demand being fully met regardless of what ownership documents and supply contracts say.

In conclusion, while I do not have an answer for what the best strategies for food import dependent nations are. I am quite convinced that buying up huge swaths of land overseas will be of little value in ensuring their food security in times of crisis. Their energy, time and money are better spent in ensuring more efficient global agricultural markets

Feeding the world – The Next Big Thing?

Every now and then it seems the world develops some level of collective hysteria around an emerging or ever-present scare topic with these “scary issues” running the gamut. During the cold war, we had the threat of a nuclear Armageddon, the world fretted about fuel supplies during the Arab oil embargo of the 70s, the 90s brought with it the threat of a world where nothing works because of a nice little bug called “Y2K”. The 2000s was not about to be outdone as that decade brought a litany of worries including: escalated global terrorism, potential global financial ruin due to some folks deciding to buy houses they could not afford and a worry about “peak oil” that led to crude oil reaching highs of $140+ per barrel. It seems this decade may be one of genuine worry regarding the world’s ability to feed itself in the long run.

When a magazine with the gravitas of Foreign Policy decides to wade in the issue with no less than an entire edition tagged “the Food Issue”, I guess we all have to sit up and listen. The articles in the edition (click here) were particularly insightful as they brought to light – in a cohesive and succinct way – the myriad of interlocking factors that are contributing to make this a real threat and why the threat of a hungry world is not one to be ignored or sniffed at. The article illustrated various tell-tale signs of the world’s worsening food situation: ranging from land grabs in Sub-Saharan Africa to grain riots in Asia to export bans placed on food in producing countries (e.g. the wheat export ban initiated by the Russian government last year)

What I find most intriguing about the world’s food situation is the multi-faceted nature of the factors acting simultaneously on both the demand and supply sides of the “food equation”. The demand side for food is driven by many things among which include the steady growth in human population: the world is projected to be home to 9 Billion people by 2050. Accompanying this headline population growth is income growth. And there are few relationships that are more certain than that between calorie intakes and income as people transit from starvation to maintenance rations, to comfortable diets and almost surely to indulgent consumption (seriously, no one needs a McDonalds Triple-Decker Burger or fine cuts of prime steak to survive or maintain healthy growth). As China, India and other lower-income countries become middle and/or high income economies, their protein intakes are expected to rise and demand for livestock will spike. And due to the weird construct of the Agriculture-Industrial complex, it seems cows and poultry can’t seem to get enough corn in their bellies. So greater absolute and relative quantities of the world’s grain output will be diverted to feed animals.

If diverting vital grain to feed animals rankles you, then it may be interesting to know that cars have started and are likely to continue “eating” corn in increasingly greater volumes. Renewable energy standards will see more ethanol use in cars as countries across the world enact clean-fuel standards that mandate minimum ethanol levels. What this means is that: 1) there will be increased competition for the world’s grain by the world’s cars (which we will continue to buy more of!) and 2.) the price of crude oil – which is getting scarcer as well – will set some sort of floor for the price of corn. As at higher oil prices, farmers will be incentivized to divert more of their output to ethanol production until equilibrium is reached that takes this incentive away. So consumers, brace up for a period during which the price of what goes into your car’s tank may very well determine the cost of what goes into your belly!

If the demand picture seems somewhat dire, the supply picture does not seem to be cutting the world any slack. Probably the biggest challenge to the supply picture is the rearing ugly head of climate change: droughts are getting longer and more frequent while floods are becoming more commonplace and severe. Both of these scenarios do not bode well for the planting process. Drought in Russia in 2010 delayed the planting season, which led to sharply reduced output and disruptions across the world. An equivalent drought in the United States would have had the same impact. Worsening climate conditions are also happening at a time when the world may be hitting the ceiling on farm productivity that is the result of a natural drop-off after years of gains and possible “over farming” of land and nutrient loss in major planting regions of the world.

Although I am no expert in this area (or anything for that matter), I’d wager that given the expected tightness in supply and boost in demand it may be prudent to be long food and the infrastructure and support systems required to deliver it to our bellies!.

“You just got Taylorized” – Why the urge for efficiency may be ruining society

I was sitting in an Operations Management class last week and my really young and energetic professor kept on going on about ”Taylorism” and how complex processes in various sectors can be broken into smaller, repetitive steps and how this makes for more efficient processes. (for the “uninitiated”, “Taylorism” refers to the concept of scientific management of processes and is named in honor of Frederick Winslow Taylor: the father of the industrial engineering). He then proceeded to show a video documenting the implementation of this concept in fields ranging from automobile manufacturing to the preparation of hamburger. Frankly, I thought that breaking the manufacturing of a car into discrete, easily-repeatable processes was cool but I became slightly disturbed with its application in producing hamburgers (with the exact number of ketchup and mustard squeezes on each bun pre-programmed, you can’t make this stuff up!!). That was the highlight of the class as I soon “zoned out” afterwards and started to think about the broader societal impacts of Taylorism and this near-maniacal drive for standardization. While I agree that Taylorism and standardization has enabled mankind make remarkable progress, ensured greater consistency across units of the same product and made every product more affordable. I think the drive for standardized processes - with its chief attendant consequence of “de-skilling” the labor force - has a perverse effect on society, hence it should be viewed with the seriousness that it deserves by policy-makers and businessmen alike.

A key result of increased standardization is the “de-skilling” of the labor force. Starting with Henry Ford’s brilliant move to an assembly line system which ended the era of skilled craftsmen building cars piece by piece and made it affordable. The blue collar labor force has been on a steady march to “de-skilling” as each person on the line needs to only know a particular, simple repetitive process and stick with it. At some point the cook at the local deli needed to know how to make a hamburger and determine –often through trial and error – the exact mix of ingredients that made a good hamburger. Now the dude at McDonalds only needs to follow a detailed guideline that allows for little discretion, in fact he may be only responsible for adding a few squirts of ketchup to the bun as someone else adds the meat!! Its difficult to argue that someone who spends all his day only squeezing ketchup on a succession of buns has any tangible skill, even if he does it for ten years straight. He is probably as good as he was squeezing ketchup as he was on his first day at work, ten years back! This makes labor very replaceable and hence cheap, which works well for companies as they can continuously capture more of the surplus and hand same to shareholders and other providers of capital.

While this seems great at face value: increased standardization leads to greater efficiency and the economy benefits, right? It is however not that simple because the “de-skilling” of increasingly greater array of jobs will lead to stagnation in wages as workers will not be able to demand higher wages because they can easily be replaced with young, novice workers who can also read manuals and operating procedures. The effect is the stagnation in blue-collar wages that is evident in the United States in the last two decades, which has in turn placed pressure on the middle class and widened the inequality gap. While I am by no stretch of imagination a socialist, it is a little bit disturbing to see stagnation in real wages for the lowest income section of society in an era of rising food and energy costs. There is a risk of a “permanent underclass” being created from people whose jobs have been “de-skilled” and this may breed resentment, envy and a general disenchantment with the economic system. The last thing business people and policy makers need on their hands is some sort of class warfare, no one wants that and we all have to work to ensure that this does not happen.

While I have no concrete suggestions of ways of reversing or reducing this trend,, I still believe it is a threat that needs to be taken seriously by society. Efficiency and standardization are great but are we pushing it too far to an extent that it becomes too costly for society as a whole. At the very least, I am frankly disturbed to see that my food has become a sheet in the book of standard operating procedures issued by Hamburger University!!.