England’s Last Trench Vet

Harry Patch, the United Kingdom’s last surviving infantryman from World War One, passed away at the age of 111. He was apparently something of a national icon – the UK Poet Laureate even wrote a poem about him. Today, the AP quoted the following statements of condolence from British dignitaries:

Prime Minister Gordon Brown said the whole country would mourn “the passing of a great man.”

“The noblest of all the generations has left us, but they will never be forgotten. We say today with still greater force, We Will Remember Them,” Brown said.

Queen Elizabeth II said “we will never forget the bravery and enormous sacrifice of his generation.” Prince Charles said “nothing could give me greater pride” than paying tribute to Patch.

“The Great War is a chapter in our history we must never forget, so many sacrifices were made, so many young lives lost,” the prince said.

There’s some irony at work in this. Mr. Patch, who didn’t start talking about his experiences until he was 100 years old, described himself as a reluctant and frightened combatant who saw the war as a tremendous waste.  Meanwhile, historians increasingly see the ineptitude of political institutions and leadership as the primary cause of the conflict. As Adam Gopnik wrote in the New Yorker in 2004:

You could not have chosen a worse bunch of guys [in 1914] to have the fate of Europe in their hands. There is Kaiser Wilhelm, the deformed lesser member of the dominant royal family of Europe, intensely jealous of his cousin Edward VII and his Francophile ways (although Edward had died by 1910, the icon still shone), and determined to act in a manly and warriorlike way, yet caught in a bizarre cycle of peevishness, belligerent insecurity, and a superstitious fatalism that he thought of as “religious.” There is Count Conrad, who genuinely seems to have acted in part because he was in love with a married woman and imagined that success in war would help his romance. Even Herbert Asquith, the British Prime Minister, who for some reason gets off very lightly in British histories, seems hopelessly inadequate to the occasion.

Gopnik allows for the fact that WWI would prove a novel and harsh learning experience for military and political leaders, who could not foresee all of the battle field consequences that industrial technology would bring about:

…the previous century had been filled with wars, and none of them left behind much more than a scar and a memory of honor. The worst recent war in Europe, the Franco-Prussian War of 1870-71, had made a deep imprint on the French psyche, but it was immediately followed by the decade that resides in our imagination—courtesy of the Impressionists, but courtesy of the facts, too—as idyllic. How bad could a war be? The Germans thought that, more or less, it would be like 1870; the French thought that, with the help of the English, it wouldn’t be like 1870; the English thought that it would be like a modernized 1814, a continental war with decisive interference by Britain’s professional military; and the Russians thought that it couldn’t be worse than just sitting there.

He also points out that some of the primary actors were driven by some primal human desires:

Above all, the tragedy was that their goal was not to look weak. Even in Strachan’s dry and unemotional narrative, one wet and emotive word rings out again and again, and that word is “humiliation.” The game was not to prevail—for all the players, save perhaps some of the Germans, knew that none of them could—but to avoid being seen as the loser. There are, in the recorded words, few references to rational war aims, even of the debased, acquisitive kind; instead, you find a relentless emphasis on shame and face, position and credibility, perception of weakness and fear of ridicule. “This time I shall not give in,” Kaiser Wilhelm repeated robotically (to the arms manufacturer Krupp) in July of 1914. Lloyd George, on the British side, a key actor in favor of war, called for the mobilization of a million men lest Britain not be “taken seriously” in the councils of Europe. It was not runaway trains but a fear of being humbled, “reduced to a second-rate power,” that drove the war forward. The keynote is insecurity, an insecurity that arose, above all, from the German paranoia about encirclement, matched by Britain’s insecurity about its naval power.

A few observations:

First, the desire for humiliation — and its opposite objective, saving face — may be what human individuals and/or societies had been selectively adapted to entering the 20th century. In fact, the Armistice at the end of the war fully embodied the desire to further hobble and humiliate the vanquished.  John Maynard Keynes presciently warned the world of its likely consequences, including a second great war. What’s interesting is that in the Second World War, military aims became more about strategic objectives, and Allied leadership did not try to impose quite the same measure of humiliation that their forbears in WWI had. Interestingly — and despite the cultural popularity of martial ideals and practices in business (e.g., The Art of War) — the major players in WWI and WWII seem to have moved a bit beyond the primal motivations of saving face and avoiding humiliation — whereas they continue to play a strong role in most parts of the world. Perhaps the First World War was a crucible for this? These cross currents are alive and well in international business, e.g., in individuals/institutions vs kin/clan traditions (of course, as interesting as these seeming contrasts are, human beings are alike in more respects than they are different, and we all move through backgrounds, however varied, in which individuality, institutions, family, and friends all play important roles).

Second, Gopnik’s and modern historians’ descriptions of WWI are excellent examples of a “complex foresight horizon“. World War One must indeed have been a “world of emergence, perpetual novelty, and ambiguity” for all involved, whether in palaces, parliaments,  trenches, or manning a hearth. Gopnik provides the figure that 260,000 French were killed in the first 26 days — that’s the mind boggling equivalent of more than three 9/11 attacks per day occurring for twenty six straight days! If political and military leaders — and populations at large, as Gopnik aptly points out — had known the calculus beforehand, perhaps they would have shown more modesty. Still, the failures of leadership from 1914 through 1918 (and in many other incidents of political economy in the 20th century) are striking, and not easy to forgive. Perhaps it’s inescapable that people in positions of power will always struggle with the choice between the primal motivation to save face versus the more courageous act of speaking candidly and openly with constituencies (their own and their opponents’), and with the many ethical dilemmas and challenges of wielding power. Hopefully, institutional learning will continue apace.

Meanwhile, strong leadership traits can be heard in the words of the gentleman in question:

At a remembrance ceremony in 2007, Patch said…”Today is not for me. It is for the countless millions who did not come home with their lives intact. They are the heroes,” he said. “It is also important we remember those who lost their lives on both sides.”

The AP article also pointed out that Patch outlived three wives and his two sons — a burden that we probably don’t think about when wishing to live to a ripe old age.

URLs:

http://news.yahoo.com/s/ap/20090725/ap_on_re_eu/eu_britain_obit_patch

http://www.newyorker.com/archive/2004/08/23/040823crat_atlarge?currentPage=all

http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=keynes+consequences+peace&x=0&y=0

http://www.telegraph.co.uk/culture/books/3671688/The-Five-Acts-of-Harry-Patch.html

http://www.santafe.edu/research/publications/workingpapers/95-12-106.pdf

DISCLOSURE: Symmetry Capital Management, LLC earns a 4% fee on sales for ‘click through’ purchases to Amazon.com’s website under the Amazon Associates program. Clients, principals, and the firm do not own any Amazon securities. The foregoing is for informational and/or educational purposes only, and is not an offer to buy or a recommendation to sell any security or to engage in any investment strategy.

Perseverance: Coach Don Meyer

Here’s a powerful and inspiring story from the recent ESPN Espy Awards — Northern State University (S.D.) men’s basketball coach Don Meyer was awarded the Jimmy Valvano Award for Peseverance, after surviving and eventually losing a leg to a horrific traffic accident, and undergoing treatment for liver and intestinal cancer that was discovered during the trauma surgery. Meyer coached last season primarily from a wheel chair, and broke the national record for most career wins in men’s college basketball — toughness and dedication.

In his acceptance speech, he said that the experience taught him that “peace is not the absence of trouble, trials, and torment, but calm in the midst of them.” Good stuff.

URLs:

http://nsuwolvesathletics.com/news/2009/7/21/MBB_0721090257.aspx?path=mbball

Convergence Divergence

We subscribe to the idea of long run convergence in the global political economy, but sometimes an incident reminds you of how far things still have to go. This one’s by way of India:

NEW DELHI (AP) — A police inquiry was launched Tuesday into employees from Continental Airlines after a former president of India was frisked before boarding a flight to the United States.

The airline’s staff violated a government order on protocol for dignitaries when former President A.P.J. Abdul Kalam was told to remove his shoes and scanned by a metal detector, Civil Aviation Minister Praful Patel told Parliament.

Patel said airlines are given a list of Indian VIPs who should be exempt from searches.

“This act of frisking the former president … is absolutely unpardonable and beyond the scope of the laws of our country,” Patel told Parliament.

Lawmakers condemned the search of the 77-year-old Kalam as “outrageous.”

OK, not totally outlandish. After all, the guy’s flying commercial, unlike some of our ex-dignitaries. But here comes the scary part:

In a police complaint, the aviation ministry accused Continental’s staff of violating government directions, an aviation ministry statement said.

“If convicted, the staff members can be jailed for two years or fined 1 million rupees (US$20,830), or both,” said Moushmi Chakravarty, the ministry spokeswoman.

Wow!!! Up to two years jail time for inconveniencing someone? Apparently there’s yet another class of “Untouchables” in India…

DISCLOSURES: The foregoing is for informational purposes and/or entertainment only. It is not an offer to buy or a recommendation to sell any security, or to engage in any investment strategy. Some clients of Symmetry Capital Management, LLC hold securities issued by Continental Airlines.

URLs:

http://finance.yahoo.com/news/US-airline-probed-after-apf-1181104551.html?x=0&.v=1

Ryan: What Does “It” Look Like in September?

Interesting comments on CNBC from Rep. Paul Ryan (R-WI) on the current versions of health care reform: http://www.cnbc.com/id/32008145

One of his more interesting arguments is from 3:00 to 3:50 of the clip, where he talks about the likely effects on the health insurance industry — he sees a handful of the largest health insurers becoming claims processors for the federal government. This is similar to a warning we offered in 2008 regarding corporate tax burdens:

[O]pponents [of lower corporate taxes] often overlook entirely the aggregate costs imposed by all business related taxes (e.g., payroll and a variety of state and local taxes) and regulations that dictate the allocation of a significant share of resources. Left leaning critics should be mindful of the risk that these kinds of barriers are more beneficial than harmful to ‘big business’, as they tend to limit competition.

Ryan’s comments were later followed by a panel including Howard Dean, who (almost) argues that the private health insurance industry isn’t really worth saving: http://www.cnbc.com/id/15840232?video=1188383109&play=1

Dean’s comments about health care costs leading to job losses due to lower costs abroad is interesting — but we continue to believe that this is more a function of the rising relative marginal corporate tax rate in the U.S. — which we could reasonably lump employer health care mandates into.

That Howard Dean and Rep. Coburn (R-OK), who helped pen a competing health care proposal with Rep. Ryan, have both been practicing physicians is interesting — and seems to support the idea that this is complicated stuff, both philosophically and operationally. In fact, at 7:30 of the second clip, Dean argues that health coverage shouldn’t be subject to the costs found in most competitive enterprises — executive salaries, sales and marketing, and returns to [creditors and] shareholders. Ryan countered that the plan won’t address health inflation, and that the CBO still sees health care costs rising well in excess of inflation. Dean deftly counters that health care costs have been rising at substantial rates under our private insurer system.

Once again, complicated stuff. If you’re waiting for an easy answer and a simple solution, don’t hold your breath (that includes you, Mr. President).

URLs:

http://654advisors.com/index.php/blog/2009/02/trade-insights-and-more-thoughts-on-corporate-taxes/

http://654advisors.com/index.php/blog/2009/07/should-health-care-be-a-right/

Productivity and Prenatal Health

AP carried an interesting story on a study that compared children’s IQ levels at age five with their level of prenatal pollution exposure, and found that children with higher exposures scored an average of four to five points lower than others in the study. The public health and other researchers quoted in the article viewed the findings as ground breaking — “there may be more dangers from typical urban air pollution than previously thought,” one remarked — but perhaps they shouldn’t be (though the researchers did come up with an ingenious method — the pollution detection device worn as a backpack — to gather their data on prenatal pollution exposure). A few maverick researchers (as well as many cranks and quacks, of course) have been sounding these kinds of warnings for decades. This particular study is longitudinal, meaning that they’ll continue to follow and compare the children’s academic performance and other behavioral and developmental measures, which could get really interesting.

What strikes us about the study’s findings is that it confirms one of the basic tenets of economics, that there ain’t no free lunch. Hydrocarbon emitting technologies have done wonders for the productivity, health, and leisure of modern societies — which means they almost certainly come with a cost. While people have known about the environmental and political impacts of fossil fuel consumption for decades, the biological impacts on human bodies are just now becoming more apparent, it seems, and they could go well beyond a decline in IQ. We’re not Luddites, in fact we’re very pro-technology, but we readily admit that all societies face the challenge of how to optimally share the gains and losses of new (and existing) technologies, and how to appropriately manage the externalities and asymmetries they create.

URLs:

http://news.yahoo.com/s/ap/20090720/ap_on_he_me/us_med_pollution_iq

http://www.amazon.com/gp/product/0879836385?ie=UTF8&tag=symmetrycapit-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0879836385

http://www.quackwatch.org/

An Obama Reset?

There’s a thoughtful op-ed in the WSJ today by Ted Van Dyk, a veteran Democrat and author who worked in the LBJ administration. In it, he argues that President Obama needs to “reset” his presidency by scaling back his policy ambitions and exerting more influence over the legislative process, arguing that by delegating control to Congressional leaders and committee chairs, he has come up short on his campaign promise to engage in genuine bipartisanship (we’ve emphasized our favorite passages in bold).

The first warning signals for me came with your acceptance speech at the Democratic National Convention. In it, you stressed domestic initiatives that clearly were nonstarters in the already shrinking economy.

Van Dyk takes a notable swipe at at least one senior Obama staffer’s cynical (or callously opportunistic) candor:

Many of the missteps that have followed flowed, in part, from your reliance on these Clinton holdovers. Your chief of staff, Rahm Emanuel, defined your early strategy by stating that the financial and economic crises presented an “opportunity” to jam through unrelated legislation. To many of us, the remark was cynical and wrong-headed.

The crises did not represent an opportunity. They presented an obligation to do one thing: Return our financial system and our economy to good health.

He then contrasts the manner in which the Johnson and Obama administrations have pursued health care and energy initiatives:

[A]t every stage [in the Johnson administration], congressional leaders of both political parties and financial, business, labor and other private-sector leaders were consulted. Johnson wanted to assure that his legislation was substantively sound and could get consensus support in the Congress and the country.

Your strategy, by contrast, has been to advocate forcefully for health-care and energy reform but to leave the details to Democratic congressional committee chairs. You did the same thing with your initial $787 billion stimulus package. Now, you’re stuck with a plan that provides little stimulus until 2010. A president should never cede control of his main agenda to others.

This tactic has already had negative consequences. Frightened by the prospective costs of your health-care and energy plans — not to mention the bailouts of the financial and auto industries — independent voters who supported you in 2008 are falling away. FDR and LBJ, only two years after their 1932 and 1964 victories, saw their parties lose congressional seats even though their personal popularity remained stable. The party out of power traditionally gains seats in off-year elections, and 2010 is unlikely to be an exception.

This might indeed be a factor behind the decline in Obama’s ratings over the last few months. However, we think it’s unlikely that the GOP will gain seats in 2010, based on the last time we checked the data (when only Sen. Dodd’s seat appeared to be at risk), some recent high profile implosions in the GOP, and an expanding vacuum of formidable GOP candiates for 2010 and 2012.

You made promises about jobs that would be “created and saved” by the stimulus package. Those promises have not held up. You continue to engage in hyperbole by claiming that your health-care and energy plans will save tax dollars. Congressional Budget Office analysis indicates otherwise.

Amen. We’ve been complaining about the double and triple speak since the 2006 Congressional elections. The first time we hear a politician talk in NET terms about some program they advocate — whether jobs, revenues, or outlays — we’ll announce it, loudly.

It’s time to re-examine these initiatives. Could your health plan be scaled back to catastrophic coverage for all — badly needed by most families, but quite affordable if deductibles are set at the right levels? Should the Rube Goldbergian cap-and-trade proposals be replaced with a simple carbon tax, with proceeds to be allocated to alternative-fuels development?

No wonder we like Van Dyk’s op-ed. We’ve advocated for both of these more centrist alternatives over the ‘expensive messes’ he says are now in the works:

The evolving health and cap-and-trade bills are loaded with costly provisions designed to gain support from congressional leaders and special-interest constituencies. In short, they have become an expensive mess. This legislation will not clear Congress by the August recess, as you have requested, and could be stalled for the remainder of 2009. Settle for incremental change: Do not press Democratic legislators to vote for something they fear will destroy them in 2010.

Van Dyk’s warning below about enacting ‘high risk’ legislation is probably sound, and we certainly like the centrist tenor of his piece. But as noted above, we can’t ignore the state of utter disrepair that the GOP finds itself in — and as Rahm Emmanuel might counsel, why not take advantage of the opportunity?

This tension between short term opportunism (Emmanuel) and sound long term strategy (Van Dyk) has analogues in the investment world. Short term opportunism contributed to today’s woeful state of the GOP, and will probably have similar effects on the Democrats, eventually. But for the time being, there’s little standing in the way of the party’s agenda.

DISCLOSURES: The foregoing is for informational purposes and/or entertainment only. It is not an offer to buy or a recommendation to sell any security, or to engage in any investment strategy. Please note that Symmetry Capital Management, LLC earns a revenue sharing fee of 4% from Amazon.com for any ‘click-through’ transactions. The firm, its principals, and its clients do not own shares in Amazon.com.

URLs:

http://online.wsj.com/article/SB124779697143755743.html

http://www.citypages.com/2008-02-13/calendar/ted-van-dyk/

http://www.amazon.com/gp/product/0295987510?ie=UTF8&tag=symmetrycapit-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0295987510

http://news.yahoo.com/s/ap/20090717/ap_on_re_us/us_sc_governor_travel

Should Health Care be a Right?

There’s a deep philosophical debate underlying Congressional attempts to craft a health care reform bill, centered around whether access to health care is (or should be) a basic human right. Up front, we see compelling arguments on both sides, and the “Yes” camp might even have the weightier material arguments on its side.  But the philosophical ones should not be brushed aside – especially given that the philosophical underpinnings of classical liberalism have served the U.S. and other western democracies pretty well (to critics, yes, realities have been far removed from ideals at times, but overall, these systems have proven remarkably stable and reasonably progressive).

The American Declaration of Independence asserted that three rights had been granted by God to each individual – life, liberty, and the pursuit of happiness (or as Woody from Cheers memorably put it, “the purfuit of hapineff”). This was based on John Locke’s philosophical writings, and contextually, it was a declaration that no individual should be deprived of their life, property, or vocation involuntarily. In other words, the experience of human beings under governments should exclude unjustified limitations, expropriations, torture, and death. Thus the conservative nature of classical liberalism – there’s not a whole lot at work here, other than setting limits on what people can do to one another, including those in positions of political power. Within those boundaries, there’s a vast range of possibilities for human conduct.

In the modern secular world, rights are no longer granted to individuals by God, but are now social contracts – through democratic institutions, a society determines and declares what rights an individual is entitled to. For example, social welfare systems have evolved since the late 19th century as an embodiment of the idea that people should have a right (if they choose to exercise it) to a minimum standard of income (transfer payments), housing, and health care (e.g., Medicaid). Educational systems embody a similar principle. This modern version clearly has a more solid logical foundation, as deeming rights is clearly an endogenous human activity (presumably, if God cares and we get any of them wrong, he or she will let us know at some point). So that transition away from divinely granted rights seems OK to us. But like the opening of Pandora’s box, the transition carries risks — primarily that the list of rights grows substantially over time, with many unintended consequences.

[On a side note, this observation should illuminate the remarkable arc of governments since the time of Locke and later Jefferson. Back then, rights were necessary to protect individuals from the depradations of the powerful. Since then, governments have been increasingly designed to benefit the weak at the expense of the powerful (or perhaps more accurately, the poor at the expense of the wealthy). Of course, they don't always work that way. But clearly, the idea of 'tyranny from below' is more feasible in modern social democracies.]

So today, instead of determining that individuals have rights that limit a government’s power over them, we articulate rights to things which, in many cases, governments must provide or at least enforce the provision of. That’s the critical distinction between rights today and rights in earlier centuries. Those earlier rights were intended to level the playing field between, e.g., landed aristocracy and free individuals, by transferring a certain amount of political and social power from the former group to the latter. Today they are more often intended to extract resources from the haves for the benefit of the have nots – however defined for that particular right.* To the extent that that the public reallocation of private resources provides a greater level of security and productivity overall, it may be a desirable activity. But that doesn’t address whether those reallocations need to be, or should be, enshrined as ‘rights’.

This is tangential to the choice between a political system guided by principles versus one guided by mandates. A principles-driven system has a core of ideals that can be applied flexibly to a wide range of real world situations. It allows for the rational acceptance of human imperfections, and the development of institutions for dealing with them as they occur. A system based on mandates is inevitably more complex, with rigid and sometimes contradictory rules and regulations that often become more complicated over time, and utopian standards of outcomes and conduct that, carried to an extreme,  almost require that we legislate risk, bad outcomes, and human nature itself out of existence. An expanding list of human rights is almost certain to lead to the latter type of system. As just one example, consider ‘The Human Right to Health‘ declaration from The People’s Movement for Human Rights Education. It captures well the idea that we’ve gone beyond the right to not have government interfere with the voluntary conduct of individuals, to the right to have government provide (or ensure provision of) certain things for all individuals. These two kinds of ‘rights’ are conceptually so different that they probably ought to have different names.

If we’re going to take a rational approach to the question of whether access to health care is a right, we should look for a suitable existing analogue. To us, it looks like access is the key word, and that access to legal systems and political processes are close analogues. As law and political systems evolved, people have demanded (and received) greater access to them. More recently, as medical standards, technologies, and delivery have advanced, the demand for universal access to them has increased, and that’s not unreasonable. But whereas in Locke’s time, declarations of rights sought to reallocate power from ‘enemies’ of liberty who possessed too much of it (and too often wielded it unjustly), a declaration of a human right to health care requires a significant reallocation of resources from some of us to others of us. In other words, there is no ‘enemy’ in the situation at hand unless, to borrow from Pogo, one believes that enemy is us — that some have been depriving others of access to health care. And that presents a thorny set of issues for society to debate. Unfortunately, they’re not getting much attention.

As we noted at the outset, this is a deep philosophical question, and so this missive, like any colloquium in philosophy worthy of the name, utterly lacks a satisfying resolution. We would just ask people to be aware of the following: the distinct historical conceptions of rights; the unintended consequences that are bound to follow the adoption of any expanding compendium of human rights; and most importantly, in our view, the fact that past attempts at ensuring individuals’ access to health care have contributed directly to the large numbers of uninsured individuals and families and to the precipitous rise in medical expenditures. And we would point out that the current legislation only piles on to those previous errors.

* There are current debates that relate primarily to founding principles and rights. For example, same sex marriage clearly relates to liberty and (according to 20th century SCOTUS interpretations) the pursuit of happiness, and on its surface it would not appear to involve the reallocation of private resources. But ironically, it’s due to the existence of laws governing the allocation of resources, such as probate and spousal benefits, that same sex marriage becomes a thornier political issue than it might otherwise be.

URLs:

http://news.yahoo.com/s/ap/20090715/ap_on_go_co/us_health_care_overhaul

http://graphics8.nytimes.com/images/2007/11/25/arts/25carr2190.jpg

http://www.igopogo.com/we_have_met.htm

http://www.pdhre.org/rights/health.html

Real Earnings

This is just a preliminary number, so no telling how accurate it will be once adjustments are made, but it’s not a pretty one – real average weekly earnings – that’s earnings after inflation is taken into account – were down 1.2% in June. Lower earnings accounted for .3% of that, while inflation ate up the other .9%, after three very tame months.

The trend matters more than a single data point, so we’ll have to see where the data goes from here, but if this marks a change in trend, then the stagflationary malaise we’ve feared could be well on its way.

URLs:

http://www.bls.gov/news.release/pdf/realer.pdf

UPDATE 8/28/09:

Real earnings data for July paints a more hopeful picture:

Real average weekly earnings rose by 0.4 percent from June to July after seasonal adjustment, according to preliminary data released today by the Bureau of Labor Statistics of the U.S. Department of Labor. This increase stemmed from a 0.3 percent increase in average weekly hours and a 0.2 percent increase in average hourly earnings. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was unchanged.

Southside Lefty

Hay is being made in some quarters about Obama’s poll numbers easing off in recent months, but this video of him throwing out the first pitch at the MLB All Star Game confirm that his rock star status is still intact. It also allows us to make a few observations:

First, there can no longer be any doubt that he’s a “lefty”.

Second, he’s clearly spent more time on his jump shot than his fastball (although he’s no Mayor Mallory, which has to be a relief to his Cabinet and the State Department). It’s reported in the video that he had practiced in the Rose Garden with an aide the night before. Imagine being able to tell that story to your kids and grandkids (unfortunately, in the age of the internet you can no longer claim to have lost the videotape showing how well your practice session prepared him!).

Third, he’s apparently a Southside booster, i.e., a fan of the Chicago White Sox, the perennial buck toothed step sibling to the Chicago Cubs (although, ahem, they won a World Series within the past few years, versus…well, let’s not rub it in, but it’s been awhile for the Cubbies).  The Sox jacket probably played in his favor (and come with hearty Secret Service approval) as the reaction in Busch Stadium, where the Saint Louis Cardinals play, could have been a bit uglier had we worn the jacket of their arch rival Cubbies.

Note to 2012 campaign opponents – if you don’t believe in baseball jinxes, consider putting Wrigley Field on your list of campaign stops!

URLs:

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=3906861&cl=14503618&ch=4226716&src=news

http://www.extremesportclips.com/video/2130/Mayor-Mallory-Can-t-Pitch.html

President Obama to the Motherland

President Obama made a powerful speech on governance in Ghana that he directed at all or most of Africa. While we would quibble with the idea that Africa and its people can be meaningfully addressed as a single pseudo nation-state, some of the observations he offered are applicable to all human societies. According to the Associated Press:

Speaking to the Ghanaian Parliament, he called upon African societies to seize opportunities for peace, democracy and prosperity.

“…Development depends upon good governance. That is the ingredient which has been missing in far too many places, for far too long.”

The son of a white woman from Kansas and a black goat herder-turned-academic from Kenya, Obama delivered an unsentimental account of squandered opportunities in postcolonial Africa…

In his speech to Parliament, America’s first black president spoke with a bluntness that perhaps could only come from a member of Africa’s extended family.

“No country is going to create wealth if its leaders exploit the economy to enrich themselves, or if police can be bought off by drug traffickers,” he said.

“No business wants to invest in a place where the government skims 20 percent off the top, or the head of the Port Authority is corrupt. No person wants to live in a society where the rule of law gives way to the rule of brutality and bribery.

“That is not democracy, that is tyranny, even if occasionally you sprinkle an election in there,” he said, “and now is the time for that style of governance to end.”

He added: “Africa doesn’t need strongmen, it needs strong institutions.”

Some reflections…

First, the President’s remarks are things that need to be said, and discussed more openly and frequently. Too often we subsume ethics and good governance to economic calculations, convenience, or fear. But the real costs of poor governance are staggering when you start trying to add them up.

Second, what a great moment for the people of Africa (our quibble above duly noted) to host (briefly) the most powerful leader in the world, who happens to be the son of an African man, and whose identity was forged in part by time spent as a young man in Kenya. The AP reporter is almost certainly right in saying that only a member of “Africa’s extended family” could speak so openly about Africa’s historic travails and paths forward. That he didn’t focus his implications on northern hemisphere powers for their historic contributions to poor governance in parts of the continent will surely disappoint some – but perhaps his relative silence on that aspect is intended to point out that, for the first time in centuries, the way forward may have more to do with African countries’ internal resources and governance than with external powers. Still, we suspect that Yao Opare-Asamoa, the skeptical Ghanaian editorialist whom we cite below, will not be alone in taking a more cynical view of the President’s visit and speech.

Third, we’d point out to the President that, although probably far less damaging, tyranny is still quite possible even under the strongest of political institutions. And though not as bad as some right wing pundits are likely to declare in the coming days, there are shades of irony in his comments, given his incredibly ambitious agenda and the costs that it will (or would) eventually force onto some within the American electorate. While the President decries tyranny of the individual and their clan – the rule of strongmen – he leaves out the concept of tyranny of the majority, a problem and concern that has been around as long as democracies themselves. We don’t disagree that there are some pressing issues that the Obama agenda is designed to address (or that ‘tyranny of the majority’ is sometimes invoked as convenient cover for private sector tyrants). But strongman rule is also designed to address pressing issues – most often experiences and/or expectations of a fixed or falling level of resources relative to population – and so its practitioners probably believe that they too are fighting the good fight, however it might look to those on the outside. But if any leader, whether strongman or duly elected, goes too far in exploiting a country’s resources in order to enact an agenda – be it clan centered or focused far more broadly on social well-being – then those resources are likely to come up short in the long run. In the case of the U.S., if the party now in power goes too far in exacting tribute from the financially successful – and/or the broad economy – then the level of success, and the number of successful people, are likely to decline, leaving society worse off overall. It’s never clear exactly where that line lies, and surely the President understands that it exists – but some in his party demonstrate a clear willingness to trample it, either blissfully unaware of the unintended consequences, or willing to accept them as trade offs against other consequences that are presumed to be more dire (e.g., climate change). Thus, while we no longer face endemic “wars over land” in the U.S., we can’t deny that our political system has been girding for a “[war] over resources” for some time. However, that observation does support the thrust of President Obama’s speech – that with well developed political institutions, those inevitable “wars” inflict far less damage on people than they otherwise would.

Fourth, the myth of ‘one Africa’ really is a curious one. While it can be a balm or a rallying cry when thinking about the damaging legacies of slavery and other forms of exploitation, it’s not very practical for addressing the diverse realities on the ground that are faced by people living there. And it seems to betray a simpler level of understanding of Africa in the northern and western hemispheres than of, say, Asia, where few would ever consider addressing, for example, China, Korea, Japan, Hong Kong, India, Indonesia, Pakistan, Singapore, Taiwan, Thailand, and Vietnam as a single entity (though if there’s a parallel in that list to Africa, it might be our tendency to look at China as a homogenous population and country). For those who are interested in learning more about the diversity, nuances, traditions, and futures of Africa and its people, the internet is a great place to begin. For starters, we happened across this wide ranging essay from Koranteng Ofosu-Amaah, whose diverse cultural and business experience – and apparently deep intellectual curiosity – allow him to spin some fascinating anthropology-in-reverse riffs, and develop a ‘Low End Theory of Technology’ that, while aimed at technology investments in poorer countries, seems to have broader applications to investment and development. Businesses that want to invest wisely in frontier markets should probably pay close attention to voices like his.

Fifth, governance and prosperity are very much a chicken and egg riddle. It’s not entirely clear whether one precedes the other (and which one, if so) or if they progress haltingly, roughly in tandem, or whether other key ingredients are necessary, be they aspects of political economy or happenstance factors and endowments. For example, one skeptical editorialist in Ghana offered an anecdote about a lost foreign direct investment (FDI) opportunity that revealed the critical role of business education and practices, infrastructure, and security:

Now that everybody is singing our praises, let’s take advantage of the situation and push for Foreign Direct Investments (FDIs). Let’s seek technical assistance to build up our Polytechnics and other vocational institutions. It is often said that ‘investments’ desire peace and stability; we do have a case good to present on this front. This is where we come in. We need to adequately prepare and provide the atmosphere for the FDIs. A few years ago, it was reported that Korle-Bu Teaching Hospital lost a big opportunity for major technical and financial assistance because the management was just not ready and couldn’t draw up a simple proposal to show how the Hospital would utilize the funds. The government should have a clear-cut vision of what it wants to do. It should have plans and proposals at the ready. We should be able to guarantee year-round uninterrupted power and water supply. Safety and security of peoples and goods should be ensured. Only after these and more should we present our case and pursue it with all the ‘clout’ that we seem to have gained.

So I would join my brothers and sisters to wish President Obama and his family well. I pray that his would be ‘change we can believe in’ even in Ghana and the rest of Africa.

The writer’s emphasis on FDI also exposes (implicitly) the need for continued development of a financial system capable of matching domestic income and savings – rather than just export dollars and repatriated earnings from abroad – with increasingly diverse domestic investment opportunities (the Ghanaian economy is still heavily dependent upon agriculture and mineral extraction). I’ve had the pleasure of meeting financial professionals from Ghana, and have little doubt that the country will continue to make progress on those counts. But it has some catching up to do in those areas with, for example, Botswana, which has a per capita GDP ten times higher, pristine public finances, and a relatively well developed commercial finance sector. On the other hand, Ghana compares favorably on things like recent domestic investment as a % of GDP and income distribution. And both countries, like much of the developing world, have relatively young populations compared to industrialized countries – while HIV/AIDS might be a contributing factor, this is still a promising endowment for future progress – as long as institutional settings permit the productive use of their time, energy, and talents, as the President pointed out.

Sixth, the Obamas also visited the powerfully symbolic Cape Coast Castle off the coast of Senegal, which was a major jumping off point for the transAtlantic slave trade. Known for its ‘Door of No Return’, an inscription there reads:

IN EVERLASTING MEMORY

OF THE ANGUISH OF OUR ANCESTORS.

MAY THOSE WHO DIED REST IN PEACE.

MAY THOSE WHO RETURN FIND THEIR ROOTS.

MAY HUMANITY NEVER AGAIN PERPETRATE

SUCH INJUSTICE AGAINST HUMANITY

WE, THE LIVING, VOW TO UPHOLD THIS.

Though he follows two immediate predecessors there, Obama’s presidential visit is made all the more poignant by the fact that First Lady Michelle had ancestors who travelled through similar ‘points of no return’, if not the Castle itself. Symbolic acts matter, and presidential visits to sites memorializing the transAtlantic slave trade and other human holocausts seem like a good idea to us.

Finally, we have to ask, does this guy – our President – plug himself into a wall outlet at night?! Travel, diplomacy, political strategy, executive leadership, negotiation, etc, are all demanding on one’s energy and resources. And a marathon presidential campaign has to be one of the most exhausting experiences there is. But Obama is like the Energizer Bunny…he keeps working…and working…and working…however, studies of health, stress, even anthropology teach us that bodies are not immune to the laws of biology (the analogue in economics is that there’s no free lunch), and even small but chronic deficits will take a toll, much as small but chronic caloric surpluses will allow us to pack on many pounds in adulthood. The U.S. Presidency seems to impose more than a small deficit on its successors, and Obama continues to go after the job with gusto. Apparently his accelerated physical aging was noted as early as last summer and again this spring (with a tip of the hat for that last link to the Village Voice, which apparently — and perhaps justifiably — feels there are better topics for seasoned reporters to cover). Still, he continues to burn brightly, and we sincerely hope there’s enough fuel there to feed the flames, as a presidential burn out wouldn’t be much fun for anybody. If nothing else, it’s a good reminder that, despite what most of us like to think and say, public service does, at least in some important ways (and for some people, some of the time…qualifications galore…) entail sacrifice. Of course one juicy book advance or a few hitches on the lecture circuit can produce an extremely positive ROI on said sacrifice – but there’s some sacrifice involved nonetheless.

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URLs:

http://www.ghana.gov.gh/

http://news.yahoo.com/s/ap/20090711/ap_on_go_pr_wh/obama

http://en.wikipedia.org/wiki/Tyranny_of_the_majority

http://654advisors.com/index.php/blog/2009/07/tr2-why-well-leave/

http://koranteng.blogspot.com/2007/05/on-ibm-and-africa.html

https://www.cia.gov/library/publications/the-world-factbook/geos/GH.html

https://www.cia.gov/library/publications/the-world-factbook/geos/BC.html

http://www.modernghana.com/news/226743/1/obama-and-ghana-vis-vis-us-foreign-policy.html

http://www.politico.com/news/stories/0708/11520.html

http://www.nytimes.com/2009/03/05/us/politics/05gray.html?_r=2&hp

http://blogs.villagevoice.com/runninscared/archives/2009/03/breaking_obama.php