From vacation that is. 5 days in Melbourne and 3 in Sydney. Glad to be back on the Gee. A couple more weeks and I'll be flying back home to Manila. Wahooooooo!!!!!!!!!
Will post some pictures soon. Tired. Bone tired.
Tuesday, April 29, 2008
Sunday, April 20, 2008
Serendipity of the Surreal
I know that we make conscious decisions, for life to be something we make and not the other way around. But sometimes random things, events and people converge in our lives in such a way that makes us wonder, how in the world could it not have been designed by fate?
It just so happens that I am in (still) Australia. And that I am in the Gold Coast. And that I randomly chatted up my friend H. at a bus stop last January. That she also happens to be a postgrad student in my uni. And that she's a practicing journalist. And that we became fast friends. And that she's specialising in media ethics. And that Brian Gorrell is living in a farm near Byron Bay. And that she wanted to do a couple of news articles on him. And that one day was free for us to go see him.
Random? I don't think so.
It felt so surreal, meeting the man behind the blog. Mediated spaces are different from real life. We tend to not realise that there is a real person behind the images and the text. They become caricatures - disembodied from reality. But Brian Gorrell is real.
He was kind enough to pick us up at the bus station at Byron Bay (an hour and a half away from the G.Coast). We drove for 40 minutes to his little hideaway up in the mountains. H asked me to hold the recorder for her, while she asked Brian questions. He spoke almost non-stop from the time we got into his car to his home. 4 hours. I don't know how he wasn't exhausted afterwards. So many emotions - he laughed, he cried, he cracked jokes.
I sat, stood up, nodded my head, asked a couple of questions, smoked a couple of ciggies. 4 hours. I was exhausted afterwards. I thought, this man is both fragile and incredibly strong at the same time. He didn't censor himself. He said what he thought. And quick. Witty. Incredibly articulate for someone who only finished 8th grade. He seemed sensitive and in touch with his emotions. Also very receptive of his audience (i.e. me and H). I thought, he sensed what he thought we wanted to hear.
Whatever he alleges on his blog, whether his ex did indeed steal that money from him, I cannot tell. What I can say is that this was a man so deeply hurt - he burned. Incendiary. And seemed genuinely, righteously angry.
I know people read Brian for various reasons. For those doing so merely to be entertained, I suggest you stop. Brian Gorrell is a real person. The people he talks about in his blog are real. Beyond your flickering computer screen are real lives enmeshed in one huge mess.
I felt incredibly sad when we left. Over sushi, I asked Brian if he feared for his life. He said no. Perhaps fearlessness comes from knowing you have nothing left to lose. I thought, this was a man who learned early on to embrace life with such gusto, prudence probably wasn't in his vocabulary. It showed in his driving. It showed in the range of emotions that marked his face.
Those who say Brian doesn't need the money because he can afford wine or champagne or what, have no clue that a bottle of wine in Australia is the same price as a KFC meal. Pricier wines might cost the same as a box of pizza and a bottle of softdrink. His monthly pension of $1,100 is not much. To give you an idea of living costs, my monthly rent is $580. A month's grocery costs about $300. Those who may have been given an impression that he lived an ostentatious life because of those short video clips (i.e. the one where he gets up from the pool), have no clue that a bus driver in Australia can afford a home with a pool. 'Luxuries' in the Philippines aren't so here.
To Brian, I wish you well. Even though you may have chosen to take on big names back home, I believe you to be a worthy adversary. You have cojones THIS BIG. I'll give you that.
Keep up the fight mate. :)
-------
ETA:
Omg. H's article has come out. Randy Dillera?!?!? Bwahahaha. What a name. Tongue in cheek na tongue in cheek.....
Monday, April 14, 2008
No Brains to Drain?
In response to the Nashman (currently a PhD student in the UK), who says he doesn't believe there is brain drain for a country of 90 million. He says "No sooner have we left and there is another one better and brighter..."
Pasensya na ha.
Just because there are 90 million bodies, probably over 100 million in two decades, does not necessarily increase the chances of there being better or brighter people. Babies need nourishment and education to stand a fighting chance. To get better and brighter people, you need to invest. Mahirap yatang maging matalino kung kang-kong lang ang kinakain mo araw-araw.
This study by PIDS shows the decrease in government spending on education. At the same time there are more and more kids moving from private schools to public schools because private education is getting more expensive. I should know. I have taught in public and private universities.
And according to former education Secretary Butch Abad:
Among 10-64 year old population, only 41% are HS grad or higher; 65% can read, write, compute and comprehend; 84% can read, write and compute but not comprehend, 89% can only read and write
9.16M (or 16% of population) are functionally illiterate: 98% of unschooled, 35% of elementary drop-outs, 29% of elementary graduates are illiterate youths and adults
1,000 children enter Grade 1: 312 drop-out before Grade 6 (2/5 between G1-3; 3/5 between G4-6)
Of 638 elementary graduates, 439 complete in 6 years; 249 complete in 9.6 years due to repetition
Of 638 elementary graduates, only 7 mastered all minimum competencies for elementary level
Only 23% of Grade 6 pupils are independent readers in English
High School diploma does not mean much: 44% not mastered English, 52% not mastered Math, 74% not mastered Sciences competencies
College diploma does not mean much: only 2-7% of college graduate applicants to ICT jobs are accepted
Even professional license does not mean much: 46% of practicing M.D.s in Visayas did not pass competency-based test - admitting patient, administering correct drugs or oxygen
So, tama ka. Wala nga'ng brain drain.
Sunday, April 13, 2008
Remit, Vomit
More comforting reads for the weekend.
"We find that the data confirms the countercyclical nature of remittances, which is consistent with the model's implication that remittances are compensatory transfers. In addition, we also find that remittances are negatively associated with economic growth. This result is also consistent with our model, in which remittances are subject to significant moral hazard problems that increase the likelihood of poor economic performance. Together, these results imply that remittances do not act like a source of capital for economic development, at least for now, and moreoever that there are significant obstacles to transforming them into a signifant source of capital (Chami, Fullencamp & Jahjah 2003: 5)
Edited to add:
"The prospect of converting remittances to development capital is even more daunting if we think of immigrant remittances as returns to flows of human capital across national boundaries. Immigrant remittances can be thought of as dividends from human capital assets invested by the family in economies where their return is relatively high. In other words, sending members abroad may already represent the family's main investment project, which has a much higher return than investment opportunities at home, including human capital investment. If this is the main motivation behind migration, then it implies that remittances are intended to be a main source of family income and will be devoted primarily to consumption...The dependency on these transfer induces recipients to use remittances as a substitute for labour income, and to lower their work effort. (22)."
"Governments, too, may succumb to a moral hazard problem created by the receipt of remittances...remittances provide a major source of foreign exchange for many countries. In the absence of remittances, it is likely that many countries' exchange rates, and in turn their domestic economic policies, would come under (greater) pressure. But the receipt of large remittance flows removes or mitigates this pressure. Therefore, the government may be able to ignore imbalances in the domestic economy and avoid taking politically costly steps to address them. At worst, governments could intentionally pursue politically beneficial but economically unwise policies, in the expectation that remittance flows will continue to insulate the domestic economy from any negative consequences. Such policies would likely exacerbate the conditions that led to large-scale migration and remittance transfer, leading to heavier dependence on immigrant remittances and decreased effort on the part of domestic workers, firms and entrepreneurs (23)."
Chami R., Fullencamp C. & Jahjah S. (2003). "Are Immigrant Remittance Flows a Source of Capital for Development?" IMF Working Paper WP/03/189.
"We find that the data confirms the countercyclical nature of remittances, which is consistent with the model's implication that remittances are compensatory transfers. In addition, we also find that remittances are negatively associated with economic growth. This result is also consistent with our model, in which remittances are subject to significant moral hazard problems that increase the likelihood of poor economic performance. Together, these results imply that remittances do not act like a source of capital for economic development, at least for now, and moreoever that there are significant obstacles to transforming them into a signifant source of capital (Chami, Fullencamp & Jahjah 2003: 5)
Edited to add:
"The prospect of converting remittances to development capital is even more daunting if we think of immigrant remittances as returns to flows of human capital across national boundaries. Immigrant remittances can be thought of as dividends from human capital assets invested by the family in economies where their return is relatively high. In other words, sending members abroad may already represent the family's main investment project, which has a much higher return than investment opportunities at home, including human capital investment. If this is the main motivation behind migration, then it implies that remittances are intended to be a main source of family income and will be devoted primarily to consumption...The dependency on these transfer induces recipients to use remittances as a substitute for labour income, and to lower their work effort. (22)."
"Governments, too, may succumb to a moral hazard problem created by the receipt of remittances...remittances provide a major source of foreign exchange for many countries. In the absence of remittances, it is likely that many countries' exchange rates, and in turn their domestic economic policies, would come under (greater) pressure. But the receipt of large remittance flows removes or mitigates this pressure. Therefore, the government may be able to ignore imbalances in the domestic economy and avoid taking politically costly steps to address them. At worst, governments could intentionally pursue politically beneficial but economically unwise policies, in the expectation that remittance flows will continue to insulate the domestic economy from any negative consequences. Such policies would likely exacerbate the conditions that led to large-scale migration and remittance transfer, leading to heavier dependence on immigrant remittances and decreased effort on the part of domestic workers, firms and entrepreneurs (23)."
Chami R., Fullencamp C. & Jahjah S. (2003). "Are Immigrant Remittance Flows a Source of Capital for Development?" IMF Working Paper WP/03/189.
Seduction
At the risk of sounding ingrata, I have always had the sneaking suspicion that the Australian government spending money on me is entirely for self-serving reasons. First, expenses incurred on moi counts as ODA, which relates to security concerns - i.e. you don't want basket cases for neighbours. Second, their investment on human capital undercuts handing ODA to corrupt governments. They put their money directly on me. Third, and this is the insidious part, their scholarship programs have 'harvested' the best and brightest the region has to offer. Some of the PhDs I know will be living here for three-four years. Those who will be staying for a long time have the option of bringing their families along with them. Although our contracts require us to return to our home countries, there is nothing stopping us from coming back here after two years.
Australia is one among six rich countries aggressively competing for highly skilled workers in global labour markets today. In my uni, they have seminars providing information on how graduates can stay as permanent residents. Labour shortages in OECD countries are foreseen to continue and they will be needing more and more workers to augment labour supply as their populations shrink and grow older.
Life is easier here. And although I love my country dearly, probably more than most, I am also a rational human being. I imagine the other scholars who already have their families here may find it difficult to go home in a couple of years. I think of V, who worked for the International Rice Research Institute in LB. I think of our rice shortage. I think of Australia's strong agricultural policies. Australia grows rice. I think of those educational fairs they hold every so often in Manila. You wonder why these countries are so aggressive in promoting higher education in their countries? Well because increasingly they see foreign students as 'test migrants.'
Ah, it is not looking good :(
For Filipinos At Home and Overseas
There is a dearth of scholarship about the Philippines in IR. But when it comes to the globalisation of labour movements, we are a star. Heaps upon heaps of free publications in the ILO website. Don't stick to that web page alone. Explore!
Here is an excerpt of the paper I'm working on at the moment. Enjoy.
This paper seeks to examine the dynamics of today’s human movements within the context of globalisation. Globalisation is here broadly defined as a set of processes which embodies a transformation in the spatial organisation of social relations and transactions - generating flows and networks of activity and modifying the exercise and loci of power. Its dimensions include a stretching of social, political and economic activities across frontiers, an intensification of interconnectedness, a speeding-up of global interactions and a magnified impact of distant events to local ones. These ‘flows’ include people, symbols and information across space and time. ‘Networks’ are the regularised or patterned interactions of agents.
The first part explores the theoretical frameworks within which migration today is studied and interpreted. Also, what are the various socio-economic determinants of human movements today? The second part frames migration within the context of the globalisation of production. As the more mobile factors of production, i.e. capital, globalised, was there a consequent pressure for labour to ‘go global’ as well?
Thirdly, what are the political implications of migration today? It will be shown that while the logic of contemporary capitalism generates pressures for people to migrate, it must necessarily engage the socio-cultural and political ‘discreteness’ of nation-states. The notions of ‘identity,’ ‘citizenship’ and ‘justice’ become increasingly problematic as the ‘national’ becomes more fluid. In contrast to the regulation of other kinds of flows – capital, ideas (intellectual property rights), commodities and certain forms of services, why has labour movement become difficult to include in the World Trade Organisation’s regime? Or indeed, in any other kind of multilateral agreement? At what cost do societies today forgo such regulation? And what has happened to the ‘boundaries’ of social justice?
Lastly, we examine the impact of labour movements on development. Remittances increasingly become important capital flows. According to World Bank estimates, migrants sent $150 billion in remittances to their country of origin in 2004, reflecting an increase of fifty percent in only five years. What are the developmental impacts of such external financial sources to local development? Are they a form of compensation for human capital losses of those emigrating? And what of the impact of ‘brain drain’, the transfer of skilled human capital from developing countries to industrialising ones?
Here is an excerpt of the paper I'm working on at the moment. Enjoy.
This paper seeks to examine the dynamics of today’s human movements within the context of globalisation. Globalisation is here broadly defined as a set of processes which embodies a transformation in the spatial organisation of social relations and transactions - generating flows and networks of activity and modifying the exercise and loci of power. Its dimensions include a stretching of social, political and economic activities across frontiers, an intensification of interconnectedness, a speeding-up of global interactions and a magnified impact of distant events to local ones. These ‘flows’ include people, symbols and information across space and time. ‘Networks’ are the regularised or patterned interactions of agents.
The first part explores the theoretical frameworks within which migration today is studied and interpreted. Also, what are the various socio-economic determinants of human movements today? The second part frames migration within the context of the globalisation of production. As the more mobile factors of production, i.e. capital, globalised, was there a consequent pressure for labour to ‘go global’ as well?
Thirdly, what are the political implications of migration today? It will be shown that while the logic of contemporary capitalism generates pressures for people to migrate, it must necessarily engage the socio-cultural and political ‘discreteness’ of nation-states. The notions of ‘identity,’ ‘citizenship’ and ‘justice’ become increasingly problematic as the ‘national’ becomes more fluid. In contrast to the regulation of other kinds of flows – capital, ideas (intellectual property rights), commodities and certain forms of services, why has labour movement become difficult to include in the World Trade Organisation’s regime? Or indeed, in any other kind of multilateral agreement? At what cost do societies today forgo such regulation? And what has happened to the ‘boundaries’ of social justice?
Lastly, we examine the impact of labour movements on development. Remittances increasingly become important capital flows. According to World Bank estimates, migrants sent $150 billion in remittances to their country of origin in 2004, reflecting an increase of fifty percent in only five years. What are the developmental impacts of such external financial sources to local development? Are they a form of compensation for human capital losses of those emigrating? And what of the impact of ‘brain drain’, the transfer of skilled human capital from developing countries to industrialising ones?
Sunday, April 06, 2008
Are You a Winner or a Loser?
More fun reads today!
Try "Winners and Losers over Two Centuries of Globalisation" by Jeffrey Williamson.
Abstract:
"The world has seen two globalization booms over the past two centuries, and one bust. The first global century ended with World War I and the second started at the end of World War II, while the years in between were ones of anti-global backlash. This lecture reports what we know about the winners and losers during the two global centuries, including aspects almost always ignored in modern debate how prices of consumption goods on the expenditure side are affected, and how the economic position of the poor is influenced. It also reports two responses of the winners to the losers' complaints. Some concessions to the losers took the form of anti-global policy manifested by immigration restriction in the high-wage countries and trade restriction pretty much everywhere. Some concessions to the losers were also manifested by a 'race towards the top' whereby legislation strengthened losers' safety nets and increased their sense of political participation. The lecture concludes with four lessons of history and an agenda for international economists, including more attention to the impact of globalization on commodity price structure, the causes of protection, role of political participation in the whole process."
Try "Winners and Losers over Two Centuries of Globalisation" by Jeffrey Williamson.
Abstract:
"The world has seen two globalization booms over the past two centuries, and one bust. The first global century ended with World War I and the second started at the end of World War II, while the years in between were ones of anti-global backlash. This lecture reports what we know about the winners and losers during the two global centuries, including aspects almost always ignored in modern debate how prices of consumption goods on the expenditure side are affected, and how the economic position of the poor is influenced. It also reports two responses of the winners to the losers' complaints. Some concessions to the losers took the form of anti-global policy manifested by immigration restriction in the high-wage countries and trade restriction pretty much everywhere. Some concessions to the losers were also manifested by a 'race towards the top' whereby legislation strengthened losers' safety nets and increased their sense of political participation. The lecture concludes with four lessons of history and an agenda for international economists, including more attention to the impact of globalization on commodity price structure, the causes of protection, role of political participation in the whole process."
Philippine Wages
Wages in the Philippines have declined in the past decade according to the World Bank. Eh. Ano ba'ng bago?
Source: Global Economic Prospect 2007
Source: Global Economic Prospect 2007
Brian Gorrell...So Close You Are!!
The Aussie press finally caught wind of Brian's story. I cannot believe he's in Byron Bay....an hour away from me!!! Waaaaa!!!
Saturday, April 05, 2008
Focus
With a few twists the camera focuses its lens, and the image becomes crystal clear. How easy it is for this machine. How simple the dynamic. When it loses focus it is just as mechanical - an accidental movement in its case, no intention. When we lose focus it is never accidental. We choose to lose it for a reason. It is excruciatingly terrifying walking about when things are blurry - but there is also release in the unknown. It is exquisite when all there are are soft edges and swimming colours. It is art.
Week-end Reads
Dani Rodrik's take on World Bank President Robert Zoellick's speech about the world food crisis.
Rescue of investment bank Bear Sterns a 'socialist' agenda?!?
William Easterly on why Bill Gates hates his book The White Man's Burden:
Ok, I would link more articles, but I'm just too lazy. Start with these. See if you like 'em.
The truth, I fear, is that Zoellick's faith in trade agreements has little to do with the underlying economics and like many ideological free traders he is willing to latch on to the economic arguments only when they serve the cause (and to discard them just as easily when they no longer do).A new blog I came across, soc2econ - "a group of sociologists trying to save economics from itself."
Rescue of investment bank Bear Sterns a 'socialist' agenda?!?
William Easterly on why Bill Gates hates his book The White Man's Burden:
Mr. Gates seems to believe that the solution is to persuade for-profit companies to meet the poor's needs by boosting the "recognition" of corporate philanthropy. But the dossier of historical evidence to suggest this would work is as thin as Kate Moss on a diet. First of all, the recognition motive has proven to be awfully weak compared to the profit motive. Otherwise we would have had a lot more than the $5.1 billion of annual American corporate philanthropy to the Third World (as of 2005, which has the most recent reliable figures). That was four one-hundredths of 1% of the $12.4 trillion of U.S. production for the free market. Is it really the poor's only hope that the Gap will donate a few pennies per sexy T-shirt for AIDS treatment in Africa?
Ok, I would link more articles, but I'm just too lazy. Start with these. See if you like 'em.
Tuesday, April 01, 2008
Impunity
I was once in a car with a friend's cousin, K. We were on the way to her family's vacation house in Batangas. On the way to the toll gate, I was furiously counting my change to make sure I give the toll person the right amount. K unceremoniously told me to just lump them all together and give it to the toll person. Anyway, she wouldn't count - or if she did, we could just speed away. It never even occurred to me that I didn't have to give the exact amount of money. Anyway, unthinkingly I did as she suggested. She went to the fancy school in Ortigas, but later on went to take up law in UP. I hope her years in the state u have given her some perspective. She's a lawyer now. That said, congratulations to the newbies.
Monday, March 31, 2008
Taming Capitalism a.k.a There's no such thing as a 'free market'
Conservative newsmagazine the Economist released a report on the possible scenarios resulting to the subprime crisis. Months later a presidential candidate says the "r" word. It is pretty much a foregone conclusion that the US and the R.O.W. is headed for economic turmoil. Michael Lim of the Inquirer provides an excellent background to the origins of the crisis. Walden Bello characterises Capitalism's 'apocalyptic' mood.
------------
Capital today crosses sovereign boundaries with virtually no regulation from sovereign authorities. These transactions are largely closed to public scrutiny, as they occur within networks of financial institutions, protected by laws on banking secrecy. Unlike the actual exchange of commodities that are readily available for purchase in supermarkets or stores, the movement of capital today is removed from the consciousness of average citizens. Nonetheless, especially in recent years, the impacts of capital movements, whether they be in form of portfolio investments, foreign direct investments or debt service payments, have increasingly been ‘felt’ in ‘emerging market economies’ of the developing world due to perennial monetary catastrophes.
The ‘Debt Crisis’ of the 80s faded into memory as banks were assured by their governments and the IMF that their loans would get paid, rescheduled perhaps, but paid nonetheless. Capital shortage for the Third and Fourth Worlds, however, would not go away. The 90s presented a different kind of crises and indebtedness. If capital was owed to banks in the 80s, today they are owed to literally hundreds of thousands of private individuals investing in ‘emerging markets’ and all kinds of funds.
Governments ‘freed’ money capital by removing restrictions on international capital movements. The very first to do so were Canada, Swtizerland and Germany in 1973. In 1974 the US did the same, followed by the Britain in 1979, Japan in 1980, France and Italy in 1990 and Spain and Portugal in 1992.
In Economic orthodoxy, the freedom of financial markets were supposed to effect a redistribution of capital world-wide. Capital was supposed to “flow from capital-rich developed countries to opportunity-rich emerging countries (Eatwell 1997: 11).” Not only that, markets were also expected to discipline governments for greater ‘efficiency.’
The IMF itself advocated deregulation of capital controls among members. Deputy Managing Director Stanley Fischer claimed capital account liberalisation would “outweigh the potential costs," hence the need to adapt “economic policies and institutions, particularly the financial system [to] operate in a world of liberalised capital markets (Singh 2003: 195).” Its sister institution, the World Bank also encouraged opening capital markets to foreign portfolio investment (Eatwell 1997: 7). Interestingly, China had not liberalised its capital account, but has maintained economic growth for the last two decades.
The result was the permutation of money into what Marx might recognise as ‘fictitious capital.’ The last thirty years has seen the creation of credit and wealth never before witnessed in Capitalism’s history. From 1975 to 1994, the stock of international bank lending from grew from $265 billion to $4200 billion despite crises. This is perhaps because of the nature of the debtors themselves. Unlike businesses or individuals that can declare bankruptcy, Sovereign states will always be able to pay as long as tax payers are born every day.
The Bank of International Settlements (BIS) estimated the value of exchange traded derivative products at $13.5 trillion in 1999. Over-the-counter (OTC) transactions, i.e. private transactions between institutions was estimated at $72.6 trillion.
Increasingly, investments have moved away from the “bricks and mortar” kind to short-term portfolio investments, the kind that can pull out quickly at the first sign (imagined or not) of trouble. The most obscure, highly ‘conceptualised’ capital circling the globe today such as swaps, options, derivatives and futures, are perhaps better explained by mathematicians than the space in this discussion allows. Indeed this ‘electronic herd’ of money managers, armed with computers, use algorithms and pure mathematical formulae to ‘read the mind’ of the market.
Nevertheless these innovations in finance have favoured big businesses instead of small businesses. Strange writes, “Unequal access to credit is certainly a feature of the international financial system…Big businesses is favoured by the innovations of finance…big businesses has an increasing influence on state policies and uses it to serve its own interests.
Increasingly, the way these highly liquid forms of capital move have little to do with the real economy. Investors wanting a quick return would prefer portfolio investments over FDI because they are easily recoupable with a few strokes on computer keyboard.
Surreptitiously, the phrases ‘economic fundamentals’ or ‘the real economy’ as distinct from the weird world of high finance…Indeed the financial sector is now often dismissed as a casino society where speculators play out their compulsive habits (Hoogvelt 1997: 81).
The past decade has seen one financial crisis after the next as rogue capital chase profit opportunities across the globe. Like the tide, money instruments ebb and flow in the developing world with the whims of the market. Their flow triggered imaginary ‘prosperity’ in the hands of local capital and there was some growth due to increased local consumption. Their ebb triggered crashes in Mexico in 1994, Asia in 1997, Brazil in 1998, Russia in 1999 and Argentina in 2001 (Held et al 1999, Kindleberger 2005).
--------
It would be interesting to see what the United States does in the coming months. So far it is the biggest victim of speculative capital. (See, Third World countries don't really matter). It also has the most power in taming the beast its foreign economic policies have unleashed since the 1990s. Obama likes the word 'regulation.' Finally.
The search for profitability is capitalism’s driving force, and increasingly, significant profits can only be obtained from financial speculation rather than investment in industry. This is, however, a volatile and unstable process since the divergence between momentary financial indicators like stock and real estate prices and real values can proceed only up to a point before reality bites back and enforces a “correction.”For a background on what is going on coming from the perspective of developing countries, here is an excerpt of a paper I wrote a couple of semesters ago. Enjoy.
------------
Capital today crosses sovereign boundaries with virtually no regulation from sovereign authorities. These transactions are largely closed to public scrutiny, as they occur within networks of financial institutions, protected by laws on banking secrecy. Unlike the actual exchange of commodities that are readily available for purchase in supermarkets or stores, the movement of capital today is removed from the consciousness of average citizens. Nonetheless, especially in recent years, the impacts of capital movements, whether they be in form of portfolio investments, foreign direct investments or debt service payments, have increasingly been ‘felt’ in ‘emerging market economies’ of the developing world due to perennial monetary catastrophes.
The ‘Debt Crisis’ of the 80s faded into memory as banks were assured by their governments and the IMF that their loans would get paid, rescheduled perhaps, but paid nonetheless. Capital shortage for the Third and Fourth Worlds, however, would not go away. The 90s presented a different kind of crises and indebtedness. If capital was owed to banks in the 80s, today they are owed to literally hundreds of thousands of private individuals investing in ‘emerging markets’ and all kinds of funds.
Governments ‘freed’ money capital by removing restrictions on international capital movements. The very first to do so were Canada, Swtizerland and Germany in 1973. In 1974 the US did the same, followed by the Britain in 1979, Japan in 1980, France and Italy in 1990 and Spain and Portugal in 1992.
In Economic orthodoxy, the freedom of financial markets were supposed to effect a redistribution of capital world-wide. Capital was supposed to “flow from capital-rich developed countries to opportunity-rich emerging countries (Eatwell 1997: 11).” Not only that, markets were also expected to discipline governments for greater ‘efficiency.’
The IMF itself advocated deregulation of capital controls among members. Deputy Managing Director Stanley Fischer claimed capital account liberalisation would “outweigh the potential costs," hence the need to adapt “economic policies and institutions, particularly the financial system [to] operate in a world of liberalised capital markets (Singh 2003: 195).” Its sister institution, the World Bank also encouraged opening capital markets to foreign portfolio investment (Eatwell 1997: 7). Interestingly, China had not liberalised its capital account, but has maintained economic growth for the last two decades.
The result was the permutation of money into what Marx might recognise as ‘fictitious capital.’ The last thirty years has seen the creation of credit and wealth never before witnessed in Capitalism’s history. From 1975 to 1994, the stock of international bank lending from grew from $265 billion to $4200 billion despite crises. This is perhaps because of the nature of the debtors themselves. Unlike businesses or individuals that can declare bankruptcy, Sovereign states will always be able to pay as long as tax payers are born every day.
The Bank of International Settlements (BIS) estimated the value of exchange traded derivative products at $13.5 trillion in 1999. Over-the-counter (OTC) transactions, i.e. private transactions between institutions was estimated at $72.6 trillion.
Increasingly, investments have moved away from the “bricks and mortar” kind to short-term portfolio investments, the kind that can pull out quickly at the first sign (imagined or not) of trouble. The most obscure, highly ‘conceptualised’ capital circling the globe today such as swaps, options, derivatives and futures, are perhaps better explained by mathematicians than the space in this discussion allows. Indeed this ‘electronic herd’ of money managers, armed with computers, use algorithms and pure mathematical formulae to ‘read the mind’ of the market.
Nevertheless these innovations in finance have favoured big businesses instead of small businesses. Strange writes, “Unequal access to credit is certainly a feature of the international financial system…Big businesses is favoured by the innovations of finance…big businesses has an increasing influence on state policies and uses it to serve its own interests.
Increasingly, the way these highly liquid forms of capital move have little to do with the real economy. Investors wanting a quick return would prefer portfolio investments over FDI because they are easily recoupable with a few strokes on computer keyboard.
Surreptitiously, the phrases ‘economic fundamentals’ or ‘the real economy’ as distinct from the weird world of high finance…Indeed the financial sector is now often dismissed as a casino society where speculators play out their compulsive habits (Hoogvelt 1997: 81).
The past decade has seen one financial crisis after the next as rogue capital chase profit opportunities across the globe. Like the tide, money instruments ebb and flow in the developing world with the whims of the market. Their flow triggered imaginary ‘prosperity’ in the hands of local capital and there was some growth due to increased local consumption. Their ebb triggered crashes in Mexico in 1994, Asia in 1997, Brazil in 1998, Russia in 1999 and Argentina in 2001 (Held et al 1999, Kindleberger 2005).
--------
It would be interesting to see what the United States does in the coming months. So far it is the biggest victim of speculative capital. (See, Third World countries don't really matter). It also has the most power in taming the beast its foreign economic policies have unleashed since the 1990s. Obama likes the word 'regulation.' Finally.
Sunday, March 30, 2008
China's "Charm Offensive" a.k.a Why we shouldn't expect an 'invasion' any time soon
This is an excerpt of a paper I wrote recently. I had to take a realist perspective on this one. Leaves a bad taste in the mouth. Oh well. Gotta play by teachers' rules.
The years following the triumph of the China’s Communist revolution, the state continued its political consolidation and strengthening. During this period China maintained the strategic position of an observer, holding its position as the world was divided in two ideological camps. As espoused by one of the nation’s great leaders, Deng Xiaoping, the PRC’s survival as an independent sovereign nation lent the country to “observe developments soberly, maintain our position, meet challenges calmly, hide our capacities and bide our time, remain free of ambition and never claim leadership (Foot 2006: 84).”
From a period of relative self-enclosure and self-sufficiency after the Maoist revolution of 1959 and during the Cold War era, the People’s Republic of China has since begun to embrace the world. It has been doing so since Deng Xiao Ping’s reforms of 1976. The four modernisations of industry, agriculture, national defence, science and technology could not be achieved without greater engagement with the international community. The focus on domestic economic restructuring necessitated greater external relations. It has thus been the PRC’s ‘grand strategy’ to establish various relationships with key actors and to make China a relevant partner in world affairs. The successive governments in the past years have worked hard to shed its ‘pariah state’ status and to gain a reputation as a responsible international actor. This is a status the PRC must work even harder to maintain and further cultivate as it continues its peaceful development.
Thus in 1979 the leadership worked to achieve détente between the PRC and the United States (Barnett 1977). The Open-Door policy allowed the entry of foreign investors to do business in select Special Economic Zones. In the height of the Asian financial crisis of 1997, the PRC showed solidarity with its regional partners, the ASEAN states and South Korea by choosing not to devalue the Renminbi even at a significant cost.
In the area of security China had signed 85-90% of arms control agreements by 1996, including the Treaty on Nuclear Non-Proliferation and the Comprehensive Test Ban Treaty. China’s Good Neighbour Policy has also engendered institutionalised security cooperation with its neighbours to the south, north and west. In August 2002 was China ready to be the 1st state to sign the protocol to the Treaty on the Southeast Asian Nuclear Weapon Free Zone. In November of the same year the PRC became a signatory of the Declaration on the Conduct of Parties in the South China Seas during 6th China-Asean Summit. China plays a pivotal role in the Shanghai Cooperation Organisation and has maintained a constructive partnership with the Russian Federation in tackling the threats posed by terrorism, separatism and extremism in the Central Asian region.
The PRC’s attitude towards one of the oldest multilateral institutions, the United Nations, has also changed significantly. It is, after all, legitimate and completely rational in the Marxist cannon for the ideological to follow the material. It has been in the PRC’s material interests – the pursuit of great wealth – to engage the international community. In 1965 China viewed the UN with more than mere suspicion, calling it “a dirty international political stock exchange in the grip of a few powers.” By 1995 it deemed the UN “the largest and most authoritative intergovernmental organisation in the world.” China’s membership in international organisations was a mere 2 in the 1960s. In a span of three decades this rose to 52 (Kim 2004: 42).
Since the reforms of the late 1970s, China has succeeded in the modernisation of its economy by becoming integrated into the global economy.
China’s trade with Asia exceeds that outside the region. Although the United States remains its major export market and the European Union the third. Almost one-third of China’s exports are destined for the US, while 50 percent of total exports are manufactured on behalf of American firms.
The People’s Republic of China has relied on the ‘unipolar stability’ guaranteed by the United States and the institutions it has initiated to regulate world affairs in order to pursue its immediate goals of prosperity. Its gross per capita product has enjoyed an average growth rate of 10.3 percent from 1980 to 1990 and 9.7 percent from 1990 to 2002 (excluding Hong Kong S.A.R.).
Foreign direct investments (FDI) are a crucial component to China’s modernisation efforts. FDI also highlights the enmeshment of Asian economies with that of China. As of 2003 for example, 70 percent of total FDI were from investors in Japan, Taiwan, Hong Kong, Singapore and South Korea. 30 percent are from the US and EU.
The SEZs set up across Taiwan have proven irresistible to Taiwanese entrepreneurs. So much so that Taiwan’s National Security Report declared a threat the ‘over-concentration’ of Taiwanese trade in the mainland. As of 2005, 71 percent of approved overseas investment was in China which has resulted to three-fourths of Taiwanese manufacturing is made in the mainland.
China is not yet a major engine of global growth, but in 2002 it generated 15 percent of world economic growth and 60 percent of global export growth (Harris 2004: 62). In choosing to become the ‘factory of the world’ in the international division of labour, China has achieved its goals of becoming a relevant actor and has earned the status of an important ‘stakeholder’ in the current global order.
It is China's strategic choice to maintain the status quo. The modernisation of its economy is indeed reliant on the current system. It remains on the path of what it has called a ‘socialist market economy.’ The leadership recognises that a peaceful international environment is crucial in achieving this goal.
Economic security and globalisation have entered the Chinese academia’s lexicon in the mid-1990s (Zhu 2001). These are crucial inputs in China’s new security concept and new security diplomacy.
China’s new security diplomacy is a response to the new threats and opportunities caused by the re-structuring of the global environment after September 11, 2001. Elements of this new diplomacy include a maintaining a stable international environment to focus on internal development, wealth creation that is perceived by neighbours as mutually beneficial, and lastly to ‘counter, co-opt, or circumvent’ those countries in its periphery which may still hold allegiance with the United States but not in a way that will provoke aggressive (military) reaction.
This has been called a strategy of ‘Cooperative Hegemony,’ accommodating US foreign policy preferences and US presence in China’s perceived regional ambit as it continues to pursue internal development and building regional alliances (De Castro 2006).
A ‘cooperative hegemon’ will not directly confront a superior military power, as is the United States. Nor will it set up a counter-hegemonic coalition, rather it will create a “formalised cooperative substructure with the regional system to neutralise the more powerful traditional hegemon (De Castro 2006: 94).”
The years following the triumph of the China’s Communist revolution, the state continued its political consolidation and strengthening. During this period China maintained the strategic position of an observer, holding its position as the world was divided in two ideological camps. As espoused by one of the nation’s great leaders, Deng Xiaoping, the PRC’s survival as an independent sovereign nation lent the country to “observe developments soberly, maintain our position, meet challenges calmly, hide our capacities and bide our time, remain free of ambition and never claim leadership (Foot 2006: 84).”From a period of relative self-enclosure and self-sufficiency after the Maoist revolution of 1959 and during the Cold War era, the People’s Republic of China has since begun to embrace the world. It has been doing so since Deng Xiao Ping’s reforms of 1976. The four modernisations of industry, agriculture, national defence, science and technology could not be achieved without greater engagement with the international community. The focus on domestic economic restructuring necessitated greater external relations. It has thus been the PRC’s ‘grand strategy’ to establish various relationships with key actors and to make China a relevant partner in world affairs. The successive governments in the past years have worked hard to shed its ‘pariah state’ status and to gain a reputation as a responsible international actor. This is a status the PRC must work even harder to maintain and further cultivate as it continues its peaceful development.
Thus in 1979 the leadership worked to achieve détente between the PRC and the United States (Barnett 1977). The Open-Door policy allowed the entry of foreign investors to do business in select Special Economic Zones. In the height of the Asian financial crisis of 1997, the PRC showed solidarity with its regional partners, the ASEAN states and South Korea by choosing not to devalue the Renminbi even at a significant cost.
In the area of security China had signed 85-90% of arms control agreements by 1996, including the Treaty on Nuclear Non-Proliferation and the Comprehensive Test Ban Treaty. China’s Good Neighbour Policy has also engendered institutionalised security cooperation with its neighbours to the south, north and west. In August 2002 was China ready to be the 1st state to sign the protocol to the Treaty on the Southeast Asian Nuclear Weapon Free Zone. In November of the same year the PRC became a signatory of the Declaration on the Conduct of Parties in the South China Seas during 6th China-Asean Summit. China plays a pivotal role in the Shanghai Cooperation Organisation and has maintained a constructive partnership with the Russian Federation in tackling the threats posed by terrorism, separatism and extremism in the Central Asian region.
The PRC’s attitude towards one of the oldest multilateral institutions, the United Nations, has also changed significantly. It is, after all, legitimate and completely rational in the Marxist cannon for the ideological to follow the material. It has been in the PRC’s material interests – the pursuit of great wealth – to engage the international community. In 1965 China viewed the UN with more than mere suspicion, calling it “a dirty international political stock exchange in the grip of a few powers.” By 1995 it deemed the UN “the largest and most authoritative intergovernmental organisation in the world.” China’s membership in international organisations was a mere 2 in the 1960s. In a span of three decades this rose to 52 (Kim 2004: 42).
Since the reforms of the late 1970s, China has succeeded in the modernisation of its economy by becoming integrated into the global economy.
China’s trade with Asia exceeds that outside the region. Although the United States remains its major export market and the European Union the third. Almost one-third of China’s exports are destined for the US, while 50 percent of total exports are manufactured on behalf of American firms.
The People’s Republic of China has relied on the ‘unipolar stability’ guaranteed by the United States and the institutions it has initiated to regulate world affairs in order to pursue its immediate goals of prosperity. Its gross per capita product has enjoyed an average growth rate of 10.3 percent from 1980 to 1990 and 9.7 percent from 1990 to 2002 (excluding Hong Kong S.A.R.).
Foreign direct investments (FDI) are a crucial component to China’s modernisation efforts. FDI also highlights the enmeshment of Asian economies with that of China. As of 2003 for example, 70 percent of total FDI were from investors in Japan, Taiwan, Hong Kong, Singapore and South Korea. 30 percent are from the US and EU.
The SEZs set up across Taiwan have proven irresistible to Taiwanese entrepreneurs. So much so that Taiwan’s National Security Report declared a threat the ‘over-concentration’ of Taiwanese trade in the mainland. As of 2005, 71 percent of approved overseas investment was in China which has resulted to three-fourths of Taiwanese manufacturing is made in the mainland.
China is not yet a major engine of global growth, but in 2002 it generated 15 percent of world economic growth and 60 percent of global export growth (Harris 2004: 62). In choosing to become the ‘factory of the world’ in the international division of labour, China has achieved its goals of becoming a relevant actor and has earned the status of an important ‘stakeholder’ in the current global order.
It is China's strategic choice to maintain the status quo. The modernisation of its economy is indeed reliant on the current system. It remains on the path of what it has called a ‘socialist market economy.’ The leadership recognises that a peaceful international environment is crucial in achieving this goal.
Peace and development remain the principal themes in today's world, and the overall international security environment remains stable...To address development and security issues through coordination, cooperation and multilateral mechanism is the preferred approach of the international community. The United Nations' status and role in world affairs are being upheld and strengthened. World wars or all-out confrontation between major countries are avoidable for the foreseeable future...Hegemonism and power politics remain key factors undermining international security (Chinese Defence White Paper 2006).
Economic security and globalisation have entered the Chinese academia’s lexicon in the mid-1990s (Zhu 2001). These are crucial inputs in China’s new security concept and new security diplomacy.
…China's security still faces challenges that must not be neglected. The growing interconnections between domestic and international factors and interconnected traditional and non-traditional factors have made maintaining national security a more challenging task (Chinese Defence White Paper 2006).The new security concept privileges cooperative or collective security over the Maoist conception of targeting enemies. Threat is best addressed through multilateralism…As a result of China’s growing integration with the global economy, economic and social security have come to enjoy a preferred position in Chinese security thinking.
China’s new security diplomacy is a response to the new threats and opportunities caused by the re-structuring of the global environment after September 11, 2001. Elements of this new diplomacy include a maintaining a stable international environment to focus on internal development, wealth creation that is perceived by neighbours as mutually beneficial, and lastly to ‘counter, co-opt, or circumvent’ those countries in its periphery which may still hold allegiance with the United States but not in a way that will provoke aggressive (military) reaction.
This has been called a strategy of ‘Cooperative Hegemony,’ accommodating US foreign policy preferences and US presence in China’s perceived regional ambit as it continues to pursue internal development and building regional alliances (De Castro 2006).
A ‘cooperative hegemon’ will not directly confront a superior military power, as is the United States. Nor will it set up a counter-hegemonic coalition, rather it will create a “formalised cooperative substructure with the regional system to neutralise the more powerful traditional hegemon (De Castro 2006: 94).”
Thursday, March 27, 2008
Manong Manolo, Subtlety Is Thy Name
I'm such a blathering groupie. In a tribute to a 'matriarch' who has passed away recently, he finally speaks, and does it with subtlety. Quelle classe. :)
No stranger to the joys of the rewards of effort herself, Madrigal offered up a blunt observation: a reward is best savored as a private pleasure, not a communal trophy, and not as an advertisement.
"One good thing about martial law was the abolition of society pages.... Call me old-fashioned, but I continue to be shocked by people who aggressively seek the limelight and even corrupt media to achieve their self-aggrandizement. In my time good form demanded that we avoid too much exposure," she wrote.
Perhaps the only person who cheered the publication of this passage was Carmen Guerrero Nakpil for whom the idea of being passé is just another vulgarity at par with newfangled terms like "eventologist."
Indeed, it was in the closing pages of her book, in her valedictory, so to speak, to younger generations, that Madrigal imparted a clear-headed advice: "Especially in the context of prevalent conditions, widespread poverty, crime and social injustice, it behooves us all not to give scandal by conspicuous consumption. I am upset by the contemporary lack of restraint, the excessive display in clothes, entertainment .... And then they complain about being burglarized, mugged and kidnapped!"
Perhaps she would have said, what is truly passé is to refuse to recognize that things become passé for good reason.
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