♠ Posted by Emmanuel in Bretton Woods Twins,Credit Crisis,Europe,Southeast Asia at 5/07/2010 12:01:00 AMIt is a sad fact of life that we are often disconnected to those suffering calamities by increasing removes based on distance and dissimilarity from ourselves. Adam Smith profoundly stated this case in the Theory of Moral Sentiments given the hypothetical situation of China in its entirety being consumed by an earthquake (and a European caring little):
Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connection with that part of the world, would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all the labours of man, which could thus be annihilated in a moment. He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general. And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure, take his repose or his diversion, with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befall himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own.In this manner we can begin to understand some of the mass hysteria now ongoing with Greece. It seems every news article believes it necessary to begin with a reference to three fatalities that have occurred there caused by rioters. Being someone with a much longer memory, I simply wonder why the whitebread commentariat finds it so exceptional that something of this sort could happen in a tense environment.
Moreover, it pales in comparison to events that struck Indonesia back in May of 1998 when it too had financial troubles that required calling in the IMF. A few days ago, I made a somewhat lengthy post on how Malaysia has gone to great lengths to forestall a rehash of the race riots of 1971 via the implementation of its bumiputra or affirmative action policies. Whereas the global business class simply thinks of these policies as a form of backdoor protectionism, let us recall the outbreak of race riots in neighbouring Indonesia circa May 1998. Fuelled by massive discontent against strict IMF strictures, many rioters turned violent against the economically dominant ethnic Chinese, resulting in an estimated 1,500 deaths. Although bumiputra isn't something the neoliberal crowd would welcome, think of what could have likewise occurred had such policies not been in place as Malaysia combated financial crisis. An even stronger viewpoint would suggest that the Indonesian leadership of the time could have used ethnic hatreds to blunt anti-government sentiment.
Surprisingly, there is only limited research work into the May 1998 race riots in Indonesia. Still, some Indonesian researchers have used geographic information software (GIS) to study these incidents and come up with the following:
-> The highest concentration of damaged buildings overlaps with villages that have a dominant Buddhist (i.e., ethnic Chinese) population.While the events in Greece are indeed tragic, they measurably pale in comparison to those which occurred in Indonesia. The reasons which can be identified for comparable skittishness this time around is not really due to the magnitude of the violence. Rather, it's the prospect of further tumult in the world's foremost economic bloc and spillover effects into other economies given trends of global economic integration.
-> The damage to buildings was also concentrated in villages with dominant commercial activity [read: looting of shops owned by ethnic Chinese].
-> From the spatiotemporal aspect of the riots, a certain pattern emerges that shows the initial points of violence distributed in a wide area (average interpoint distances of 6.5 km). The start times of the riots at those initial points are relatively similar. Therefore, it can be concluded that the riots began in distributed points around Jakarta simultaneously.
From these results, it is suggested that there is a connection between the riot and ethnicity, especially toward ethnic Chinese and economic issues. There appeared to be a greater degree of destruction in those commercial areas with Businesses operated by ethnic Chinese residents. The implication of this is that the riot was ethnically motivated due to negative sentiment of the indigenous people to the relatively more prosperous ethnic Chinese.
In addition, the spatially dispersed distribution but spontaneous initial occurrences of the riot indicates an unnatural event. This implies that the riot might have been caused and designed intentionally. Typically, the spread of a spontaneous riot is like the ripples in a pond spreading out from the point of disturbance. In the May 1998 riot, however, there were several disturbances at the same time in several areas, from which a degree of intention is extrapolated.
And then, of course, we have the Adam Smith-style arguments which are certainly worthy of a comment. These riots are occurring in Greece--a wellspring of European civilization that is not so far away as to be interesting enough. That many commentators are Westerners besides whose governments are incurring masses of debt also adds to the feeling of "gee, that could be us" as a British tabloid not so indiscreetly put it. In other words, it's not just a Malay-versus-Chinese melee in a faraway land but white-on-white violence inside the European Union.
Make no mistake: Greece is the "little finger" that keeps Westerners awake at night. OK, maybe Europeans in particular as Americans are, on the balance, famously incurious about the rest of the world and geographically illiterate besides. Hopefully, however, we are seeing the last few veneers of respectability of American-style debt accumulation being peeled away. In the meantime, it's better to keep matters in perspective.
UPDATE: Still we await the iconic IMF-related image in Greece alike the Camdessus-Suharto picture that preceded Indonesia's race riots and Suharto's eventual ouster.