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The Economist magazine, echoing a theme of mine that has permeated several posts (the evolutionary ecology of human social institutions and technologies ) discussed two unconventional examples of managerial efficiency: Somali pirates (http://www.economist.com/whichmba/somali-pirates) and the North Korean government (http://www.economist.com/blogs/schumpeter/2010/10/succession_planning). Somali pirates provide a purely predatory and parasitic example of how smaller start-ups can break into markets dominated by established behemoths, and North Korea provides an example of successful succession planning (as important in corporations as in governments). While the details of the comparisons are interesting (read the articles), what is most interesting to me is the issue of the balance between productivity and predation that these and other successful strategies are used in service to.
We tend to see the world in absolutes, dividing it into production and predation according to our location and ideological predisposition. Anti-corporatists (mostly on the left) view corporations, and anti-imperialists view powerful nations, as entirely predatory, while those who benefit either directly or indirectly from their activities, and are aware of it, see them as primarily productive. But there are objective measures by which we can untangle the two, such as contribution to global GDP, or to other forms of utility production, versus contributions to global utility reduction. Some enterprises are clearly purely redistributive (such as piracy), producing no new wealth at all, and in fact reducing its production by throwing gravel in the gears of the productive engines of the economy (i.e., increasing transaction costs). This is true even though they are siphoning some of that wealth produced elsewhere to grateful populations, complete with forward and backward linkages from which other enterprising souls might benefit (e.g., outfitting the pirates with equipment, benefiting from their increased spending of their loot, even generating business for security services to defend against them).
The strict Libertarian philosophy places minimal constraints on these processes, differentiating little between production and predation, as long as it occurs within a context of legally defined and protected private property rights. But even within that legal context, there are opportunities for predation constantly arising, such as those that led to the Enron-engineered California energy crisis of 2000-2001 or the 2008 financial sector meltdown. There are many more innocuous activities in the market economy which do not produce wealth, but rather only siphon it off, such as high-volume, high-velocity, extremely short-term stock trading using computer algorithms, or shady personal injury legal services (not to imply that all personal injury legal services are shady) that rely on massive advertising, high volume business with rapid turnover, and quick settlements that may not reflect the clients’ best interests or even outcomes superior than could have been achieved without the lawyers’ assistance. These are perfectly legal forms of what are largely predatory practices.
Economist Mancur Olsen wrote a book titled “The Rise and Decline of Nations” in the 1970’s or 80’s about how nations become wealthy by developing production-oriented economies, and then are weakened by an increasing over-emphasis on distributional struggles, which divert an increasing proportion of people’s time and effort from productive activities. Of course, a nation doesn’t have to be wealthy for too many people to be investing too much in distributional struggles (a common trap of many underdeveloped nations). The point is that what proportion of human effort-hours is invested in productive activity v. redistributive activity is relevant to how much wealth and utility is being produced.
There is nothing wrong with attention paid to distributive implications of policies, as long as that attention is paid in conjunction with attention paid to the balance of productive and redistributive efforts. Given a choice between two equally productive economic models, the one that produces greater distributional equity is preferable. Nor is it wrong for a large market economy to invest some of its resources in consideration of how to divert wealth in economically and socially productive ways. Distributional struggles exist with or without the intentional intervention of government, and government subsidies are often captured by those least in need of distributional assistance. Both government and the public which overseas it has an inescapable challenge in monitoring distributional choices to ensure that they are both efficient and fair.
Indeed, many public investments that are perceived to be primarily redistributive, or predatory against tax-payers on behalf of “special interests,” are in fact primarily productive, addressing social problems, infrastructural maintenance demands, and human capital development demands in ways which increase aggregate utility (both directly, and indirectly through decreased transaction costs) as well as lead to a more equitable distribution of it. But increasing diversion of resources to battles over how to divide the pie ends up shrinking the pie that is divided, and those enterprises (like Somali pirates) that not only divert resources to distributional struggles, but do so through violent predation, decrease the size of the pie even more.
One of our collective challenges as we continue to refine our social institutional landscape is to create regulatory regimes that increase the amount of productive praxis, and decrease the amount of non-productive predation, in both our market and non-market activities. Just as ecosystems can be ravaged by locusts, or overly extractive human beings, so to human economic systems can be ravaged by those actors that swoop in and ravenously extract wealth without producing any. The fact that it can be accomplished in the context of well-defined and well-enforced private property rights is just one more argument why a regime of well-defined and well-enforced private property rights, and no more, is not the ultimate culmination of political economic development. Private property rights are just one thread in a more complex tapestry, a tapestry which we are continuing to learn to weave.
Libertarians rely on the assumption that government is predatory, and that private corporations aren’t, but, in reality, either or both can be, and our challenge is to prevent either and both from being so. Crippling the one that is organized to serve the public interest (and is designed, with limited success, to be answerable to the populace as a whole), in order to leave the field clear for the one that is organized to serve only private interests (and is organized comparatively efficiently to do so) is not a recipe for reducing predation. Rather, it is a recipe for increasing it, and reducing only our means for reining it in.
Vincent Carroll, one of several conservative Denver Post columnists that get paid not only to be profoundly clueless, but to help others to be so as well. In his latest display of having missed the boat to the 20th century (never mind the 21st), Carroll waxes indignant that members of the audience in a Bennet-Buck debate hissed when Buck referred to Afghans as “backward” (http://www.denverpost.com/carroll/ci_16350199). Yes, the hissing leaves something to be desired, but not only was Carroll’s civilized sensitivity offended by the hissing, but also by the notion that there is anything wrong with an American senatorial candidate referring to the citizens of a sovereign nation in an unstable and volatile region as “backward.” The irony, of course, is that Carroll is defending a far more expansive and dangerous form of “hissing” himself, a far more offensive and dangerous kind of elitism than that of the intelligentsia daring to recognize that the ethnocentric arrogance of the United States is neither helpful nor accurate.
It seems like just yesterday when we had finally, as a nation and a civilization, come to the realization that our dismissive disdain for cultures different, and, yes, less politically, economically, and technologically developed than our own was a shameful chapter of the past, one whose disdain had conveniently justified enslavement, slaughter, displacement, and, generally, an attitude of moral superiority while acting with distinct moral inferiority. But the Regressives have made headway in turning back the clock, making it okay again to speak with dismissive self-satisfaction that we, who recently condoned and used torture techniques on people kidnapped off foreign streets on mere wisps of evidence of association to terrorism, are superior to those violent heathens, some of whom commit pretty much the same crimes against humanity that we do, only less efficiently. (And let’s never forget the model of nationalistic chauvinism, fueled by a sense of racial superiority, achieving “laudable” heights of efficiency in the commission of their own crimes against humanity, and remember that it’s nothing to aspire toward).
It is precisely those like Carroll, beating their chests while claiming that others who dress differently while beating their own are inferior for doing so, who are proof of just how dramatically wrong they are. But they are not the only proof. History offers plenty of its own.
Trace backward from the present, and find an endless succession of conflicts that “couldn’t be resolved” because the factions involved had been “killing each other for centuries,” that were, alas, resolved after all. Note all of the cultures that were too backward to ever join the modern world, many of which have since joined the modern world. Carroll’s archaic belief in our own cultural superiority is not only the nearly universal folly of the past that is the true measure of “backwardness,” but is is also completely ahistorical.
Of course Afghanistan is a mess; no one’s denying that. Of course their political, economic, and technological level of development is not currently conducive to a sudden leap into a western-style political economy. No one’s debating that. But people less backward than Carroll understant that depicting the variable conditions under which people live, for complex world historical reasons, as proof of inferiority and superiority, is mere cultural narcicism, egomania on a societal scale, and one of the major causes of the wars that humanity continues to propagate on scales large and small.
Vince, go to the bank, withdraw all of your money, and go buy yourself a clue.
I finally clicked on and opened this little treasure trove of wonders on The Economist website (http://www.economist.com/blogs/democracyinamerica/), and discovered (at the top of a string of interesting posts) a post which suggested, tongue-in-cheek, that foreign participation in American democracy (ala foreign money financing political speech) is only just and right, since American hegemony means that American decisions increasingly directly and indirectly affect the lives of foreign nationals.
As I’ve argued before (http://coloradoconfluence.com/?p=243&cpage=1#comment-12), there isn’t really such a vast difference between “empire” and “federalism” as we sometimes pretend. The Tea Partiers, as sometimes happens, are actually right to conflate the two, though wrong in the oversimplistic moral-political judgment they impose on that similarity: Such political consolidation generally yields both aggregate and broadly (if not equitably) distributed benefits that shouldn’t be disregarded. It also involves the institutionalization of uneven distributions of power and influence.
As many people around the world viscerally realize, American hegemony is not really that far removed from American empire, just as Roman hegemony during the late Republic was not all that different from the Roman Empire that followed. And the Southern states that rebelled in defense of slavery were far more accurate than the Northern zeitgeist acknowledges when they (the Confederates) claimed to be heirs to the revolutionaries, fighting against a centralized federal/imperial government telling them what to do.
Of course, the American Revolutionaries themselves weren’t all that anti-imperialistic a mere 13 years before the signing of the Declaration of Independence, when they were still proud and loyal British citizens. It was their disappointment in the wake of the French and Indian War over a set of British policies that was less favorable to them than they would have liked that quickly eroded their love of empire (the policies in question included the abandonment of the long-standing British policy of “salutary neglect,” sparing the colonies the taxes levied on everyone else in order to give them an opportunity to grow prosperous, which they did; the protection of the Indian tribes in the newly acquired Ohio Valley from colonial expansion; and tolerance of the French language and Catholic religion in the newly acquired Canadian territory).
Our attitudes (like those of our founding fathers) toward political consolidation and centralization are generally situational, less indignant when it is serving our interests, and more indignant when it isn’t. Two ideological cross-currents have entered that stream, one which views any exercise of power over those who are not constituents of that power (i.e., members of the electorate of those who exercise it) as unjust and unacceptable; and one which, bizarrely, sees any consolidation of democratic agency within the nation (over those who elect their representatives) as an affront to liberty, but at least a significant faction of which is not particularly concerned about exercises of power abroad (over those who have no democratic say in the matter), except to the extent that it inconveniences them. (To their credit, another faction of this latter group are true isolationists, but, as I hope I make clear below, though that may be more consistent, it isn’t at all functional).
Both of these ideological cross-currents to some extent confuse the issue, the first by positing that humanity is best served by the eradication of all injustice (something that, if successfully prosecuted, leads to universal destitution), and the second by thinking that humanity is best served by the eradication of all power (other than, for some, that which the nation projects abroad), something that, if successfully prosecuted, leads to social disintegration and a very dramatic contraction of wealth and well-being (whether at the national or global level).
While I am not unaware of the beneficial, if not necessary, role of hegemony in the world, simply because the preferable path of global confederation is too obstructed by a tangled and brutal mess of vested interests to keep pace with the overwhelming need for some degree of global governance, I certainly recognize the injustice of it, and even more so when hegemony is exercised particularly irresponsibly (as it was throughout the first eight years of the new millennium). I’ve written about that demand for global governance (Problems Without Borders ), and about the aristocratic arrogance with which that demand has been met, when it’s been met at all (Lords and Serfs on the Global Manor: Foreign Aid as Noblesse Oblige ). But social organization, perhaps in all forms, involves some distribution and exercise of power (even decentralized normative control does). That’s just a reality we have to deal with, and far preferable to the alternative (a Hobbesian “war of all against all”).
The issue isn’t that the power exists, but rather how it is distributed, how it’s checked and balanced, how it’s contextualized to best serve the interests of those under its umbrella and to protect the vulnerable from abuses. We should want to live in a world capable of organizing across national boundaries to face international challenges and take advantage of international opportunities. But we should also want it to be done, to whatever extent possible, in a way which does not, systemically and consistently, serve the interests of some at the expense of the interests of others. We should want it to be done democratically.
America no longer trusts the world enough to be in the vanguard of its democratization as a world. We have, for some time, exercised our hegemony with disdain for the voice and will of those over whom we are exercising it. This is neither just, nor, in the long run, functional. Maybe it’s time we returned to the dream of Wilson and FDR that we usher in a new age of international organization, and sought ways to give those over whom we reign some small voice in how they are ruled.
I am not, of course, suggesting that we extend rights of direct or equitable participation in American democracy to the world’s population, but rather that we continue what had been evolving for two centuries or more; the gradual forging of a weak but functioning overlay of global governance. From the Concert of Europe in the wake of the Napoleonic Wars, through the League of Nations, to the United Nations, the modern developed world (repeatedly abandoned by the United States in the effort) has haltingly and imperfectly tried to forge workable institutions comprising a weak overlay of participatory global governance, each incarnation a little stronger and more functional than the last.
The United Nations is hopelessly flawed, it is true, but so was The United States under the Articles of Confederation. Hopeless flaws invite hopeful reforms, not an abandonment of the challenge the flawed institutions arose to meet. We probably need a new incarnation of this necessary part of the global institutional landscape, one which has more direct subnational representation and less deference to often parasitic national governments that don’t necessarily represent their people’s interests, and more participation of transnational, extranational, and supranational organizations that are key players on the world stage. But America has to continue to aspire to be more than a mere hegemon pursuing its own interests in the global arena; we must aspire to be the “leaders of the free world” we have so long claimed to be, and, as leaders committed to democratic ideals, continue to seek and find ways to include those who are led in the decision-making processes which affect them.
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President Obama addressed The United Nations earlier today (Wednesday) to announce a continued, if more vigilant, U.S. commitment to provide foreign aid to developing countries ( http://www.denverpost.com/ci_16141218). Way back in the last millennium, I was a student of Development (political, economic, cultural), and the various competing theories (Modernization, Dependency, World Systems). Modernization theorists tended to see nations as autonomous units, undergoing their own history, developing or not developing according to their own endogenous variables. Dependency and World Systems theories saw the world as more tightly intertwined, the relations among them affecting the fate of each.
The descriptive value of Dependency and World Systems theories is hard to deny: Due to client state and economic dependency relations to powerful nations, the small ruling classes in less developed nations are, more often than not, in either explicit or implicit league with the larger wealthy classes in some more developed nations, benefiting together as islands of wealth and comfort in a sea of suffering. To be sure, that’s not the whole story: Nationalism and other allegiances exist as well, with the ruling classes in those less developed nations generally identifying more with their own people of their own class at home than with those of their own class abroad, and sometimes even with the poor of their own country more than the rich of others. There are cross-cutting solidarities involved.
And it is overly simplistic to argue that the poverty of much of the world is a direct artifact of the wealth of some enclaves. Much of that poverty is, in reality, due to a lack of indigenous development, and would have existed with or without the rise of other wealthy and powerful nations. It’s also important to recognize that, in some ways, “a rising tide” really does “raise all ships”, and the wealth and institutional and technological innovations of the developed world have contributed positively as well as negatively to the development of less developed countries.
It’s hard to measure exactly to what extent that’s the case, and to what extent the rise of the European world empire did indeed suppress development elsewhere. Certainly, the history of colonization, of imposing inequitable trade relations, of dismantling sometimes diverse and vibrant indigenous economies in order to turn whole countries into plantations growing low value-added tropical crops and primary natural resources for the benefit of the lords across the seas or to the north, has to at least some extent exerted a suppressive developmental force on the late-comers. There is some mixture of both truths in play.
But let’s look at the world through the Dependency lens for a moment. We can as easily see the world as one divided by separate international classes as one divided by national boundaries. And a comparison of modern history to Medieval and ancient history bears out such a view. Ruling classes within nations or continental cultures developed historically from the descendants of warriors becoming landed nobility on the estates that their ancestors stole in conquest, with the former inhabitants reduced to serfdom. And global ruling classes began developing in the early modern era when European conquistadors found new lands to conquer, new native inhabitants to reduce to serfdom or other forms of marginalization, and new expropriated wealth to enjoy as a result. Our smug (and historically conveniently amnesiatic) belief that our relative wealth has no connection to the relative poverty of others in our own and other lands is simply not borne out by an honest survey of world history.
And that’s why foreign aid, and much else about the modern world, reminds me a bit of a scene from Charles Dickens’ A Tale of Two Cities. Madame Defarge, eager to spill the blood of any members of the hated aristocracy, was testifying at the trial of innocent aristocrat Charles Darnay during The French Revolution, recounting how Charles’ father had once carelessly run over and killed a peasant child with his carriage, and stopped to toss the distraught parent a coin. Needless to say, Charles was sentenced to be guillotined, a fate only averted by his look-alike barrister, the down-and-out Sydney Carton, who redeemed his own squandered life by taking Charles’ place, and thus doing “a far, far better thing than (he) had ever done before.”
As Charles Dickens said of that era in his opening lines of the novel:
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
Some things never change.
The only thing uglier than tossing the peasant parent a coin after running over her child is having your hand held back by a member of your household in the moment of doing so, admonished not to waste “our” hard earned cash on such lazy riff-raff.
I don’t know the answers to the vexing problems of our age. Development happens when and where it happens for reasons other than foreign aid, and independently of most of our theories. Some have successfully instituted export-driven growth, finding niche markets, and developing on the capital thus generated. Others have successfully leveraged the wealth derived from natural resource endowments. Occasionally, targeted protectionism for nascent industries has helped those industries acquire the breathing room necessary to become competitive in the long run. Infusions of capital from the developed world can certainly help (as it did in The Marshall Plan), and can also hurt (as it did in the Latin American debt crises of the 198o’s). But one thing’s for sure: In the long run, there is no “Us” v. “Them”; there is only an “Us”.
We may find the Madame Defarges both past and present to be hateful individuals. But those who are their enemy have always helped to create them. You run over enough peasant children in your carriage, and people start to want to send your adult children to the guillotine, or fly airplanes into your skyscrapers. You draw enough lines in the sand with opportunistic military conquests, lines above which to prosper and below which to languish, and the desperate mass of humanity you locked out will eventually come flooding through.
We live in a world increasingly acutely locked into an anachronistic global political landscape. Sovereign nations, which were on the slow path to gradually compromising their sovereignty to some form of weak global federalism throughout much of the twentieth century (during the breaks from their extraordinarily destructive demonstrations of why it was absolutely imperative that they do so), have now, under the decreasingly enlightened leadership of The United States, begun backpedaling once again into global balkanization and mutual antagonism (except in the cradle of modern civilization, Europe, which has coalesced into the most vibrant of all supranational entities, and has tried to march proactively into the future despite, once again, the absence of an American willingness to see past its own nose and do the same).
But as the United States discovered early in its history, a degree of shared fate, of shared challenges, of shared opportunities, requires a commensurate degree of effective shared governance. And as I’ve said elsewhere, it is inevitable, and pragmatically necessary, that whatever form that takes, it does not simply wish away or disregard the real distribution of political and material power in the moment preceding its creation. That distribution of power has to be leveraged, to create something better from the soil of what preceded it. America has to be a major player in the creation of a functioning world order, whether Americans or non-Americans find that an attractive prospect or not.
As President Obama rightly noted in his speech, foreign aid is an act of self-interest. But that interest is best served when those aided are perceived to be less foreign, and instead are recognized as fellow human beings in a world too small for some to hide from others behind walls and across oceans. We can’t close our eyes and plug our ears and expect to live unmolested in our enclave of relative wealth and comfort, while horrors are the norm in so much of the world. That won’t protect us from the tsunamis that will continue to hit, with increasing force, all of our shores and borders. We are a part of this world, whether we like it or not. And it’s time to take our noblesse oblige seriously.
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