Comrade Bob Mugabe and the Dictator Fun Club

♠ Posted by Emmanuel in ,, at 1/08/2012 03:03:00 AM
I'm a bit tardy here (apologies), but better late than never. Name the chicken restaurant chain and I've probably patronized it before: Kentucky Fried Chicken, Chick Fil A, Kenny Rogers Roasters, El Pollo Loco and so forth. Nando's is in a unique position of being a very international chain that isn't American. As we learn, however, its cosmopolitan nature isn't always an advantage. I was flipping through a recent issue of the Economist when the TV advertisement of the South African chicken restaurant chain entitled 'Last Dictator Standing' came to my attention (I too have consumed their poultry products since they have many branches in England):
Insulting dictators ought to be safe, so long as you do not operate in the same country. Nando’s, a South African restaurant chain, forgot that with an ad showing a Robert Mugabe lookalike glumly alone at dinner (after many of his fellow despots had been deposed [and perhaps more importantly, dead]). He reminisces about happy days shooting water pistols with Muammar Qaddafi, playing in the sand with Saddam Hussein and riding a tank, “Titanic”-style, with Idi Amin. The ad was broadcast in South Africa, where Nando’s middle-class target audience found it hilarious. But Nando’s also has restaurants in Zimbabwe. Threats ensued. Fearing violence against its staff there, the ad was pulled.
To be more exact, political youth groups linked to Mugabe threatened to harm Nando's employees in Zimbabwean outlets. The ad was also broadcast not only in South Africa but throughout the continent via satellite TV. (You also can't insult the head of state in Zimbabwean law.) Still, the corporate social responsibility angle is quite obtuse given that the aggrieved party is not exactly an exemplar of good governance. With his penchant for hyperinflation in the economic realm and even more unpleasant things in the security one, Mugabe is not a sympathetic figure to say the least. That said, he has gradually become worse in true Anakin Skywalker - Darth Vader fashion.

My, er...enjoyment of this Nando's commercial compared to the more straightforward if even more politically incorrect dumb blonde ad is curtailed though despite its IR angle. There is this thing called the willing suspension of disbelief that is said to enable enjoyment of fiction. However, when the events being depicted vary too far from established facts, the cognitive dissonance becomes too severe to overcome.

And so it is with this ad to an extent. While I appreciate that singing karaoke is an Asian stereotype, it is chronologically impossible for Mugabe to have joined Chairman Mao in this activity as a fellow dictator. For, Comrade Bob only assumed power in 1980 when Mao died in 1976. The same qualifier holds for Idi Amin who was ousted in 1979. Besides, isn't Mao responsible for the Cultural Revolution which aimed to expunge harmful foreign influences alike karaoke? Even more surreal is having Comrade Bob play on a swing set with South African apartheid-era Prime Minister P.W. Botha [?!] Why would an erstwhile leader of the pan-African independence movement away from white rule be frolicking with one of its most odious proponents? I suppose it's what got the Zimbabwean pro-Mugabe crowd most in a frenzy about the ad more than anything else.

It's too bad Nando's isn't going to include Kim Il-Jong in a follow-up advert with all the controversy. Now that's a real contemporary of Comrade Bob's who's gone on to...I don't quite know where atheists of his sort go. Besides, why feature Chairman Mao instead of true contemporaries alike Zaire's Mobutu Sese Seko, the Philippines' Ferdinand Marcos, Chile's Augusto Pinochet or Panama's General Manuel Noriega--certainly recognizable figures to any international audience?

I guess the song gets it right, though:

Oh my friend we're older but no wiser
For in our hearts the dreams are still the same

Counterpoint: Japan's Lost Decade is a Myth

♠ Posted by Emmanuel in at 1/08/2012 02:44:00 AM
The New York Times features an op-ed from Eamonn Fingleton arguing that Japan never suffered from a lost decade then and is doing perfectly well now. (He's been making this point for over a decade.) While I would probably agree that Japan's stagnation has been overstated by Western media, Fingleton fails to explain how China has overhauled Japan in a short span of time. He may also be misreading the consequences of such things as long lifespans and a strong currency for the nation's economic well-being. For one thing, continuing and sizeable current account surpluses he cites may be evidence of an inability to transition to a more domestically driven economy. Hence it is more vulnerable to economic downturns in export markets--even for capital goods--and the challenges posed by a strong currency.

For another thing, is life expectancy now a measure of competitiveness? Or, aren't substantial and still-rising health care costs an additional burden on Japan's fiscal well-being given that its citizens live so long? Speaking of which, why does the author (conveniently) ignore that its public debt is over 200% of GDP and that 2012 will not be a year for fiscal consolidation? Given that he keeps harping on US decline, it is odd that he gives Japan a free pass on debt while arguing that the US should emulate Japan. There are many holes in Fingleton's reasoning, but here's some of his cited "evidence" as to why Japan has not had a lost decade...
  • Japan’s average life expectancy at birth grew by 4.2 years — to 83 years from 78.8 years — between 1989 and 2009. This means the Japanese now typically live 4.8 years longer than Americans. The progress, moreover, was achieved in spite of, rather than because of, diet. The Japanese people are eating more Western food than ever. The key driver has been better health care.
  • Japan has made remarkable strides in Internet infrastructure. Although as late as the mid-1990s it was ridiculed as lagging, it has now turned the tables. In a recent survey by Akamai Technologies, of the 50 cities in the world with the fastest Internet service, 38 were in Japan, compared to only 3 in the United States.
  • Measured from the end of 1989, the yen has risen 87 percent against the U.S. dollar and 94 percent against the British pound. It has even risen against that traditional icon of monetary rectitude, the Swiss franc.
  • The unemployment rate is 4.2 percent, about half of that in the United States.
  • According to skyscraperpage.com, a Web site that tracks major buildings around the world, 81 high-rise buildings taller than 500 feet have been constructed in Tokyo since the “lost decades” began. That compares with 64 in New York, 48 in Chicago, and 7 in Los Angeles.
  • Japan’s current account surplus — the widest measure of its trade — totaled $196 billion in 2010, up more than threefold since 1989. By comparison, America’s current account deficit ballooned to $471 billion from $99 billion in that time. Although in the 1990s the conventional wisdom was that as a result of China’s rise Japan would be a major loser and the United States a major winner, it has not turned out that way. Japan has increased its exports to China more than 14-fold since 1989 and Chinese-Japanese bilateral trade remains in broad balance.
Lastly, what does the number of tall skyscrapers built in Tokyo have to do with Japan's relative prosperity? Isn't it a function of land being scarcer in Tokyo than major American cities alike relatively roomy LA? As I said, there are many glaring questions here but read it and see what you make of it yourselves. Yes, America is not doing well but it can do far better than emulate Japan of all places.

Japan, Real Euro Saviour and Big EFSF Customer

♠ Posted by Emmanuel in ,, at 1/06/2012 09:23:00 AM
This is a short take on a news item I found interesting. With its massive $3 trillion and "change," China has often been touted as the saviour of various ailing peripheral EU economies [1, 2]. While European leaders--Nicolas Sarkozy in particular--have solicited China's help in these fundraising efforts, PRC help has not been forthcoming. China, for one, would like a lot of concessions granted first such as the EU lifting its designation of the PRC as a "non-market economy" before 2016 or the 15th anniversary of its WTO accession. (I explain why in a November 2011 post.)

So, it may surprise some of you that the big customer for European Financial Stability Facility (EFSF) bonds from the Asia-Pacific has been Japan, not China. In the auctions to date including the most recent, apparently oversubscribed one, it has been the Japanese who've upped their holdings of euro-denominated papers:
Japan has bought 300 million euros ($383 million) worth of bonds sold by the euro zone's rescue fund, the European Financial Stability Facility (EFSF), in an auction on Thursday, a finance ministry official told Reuters on Friday. The amount accounts for 10 percent of an oversubscribed 3 billion euros worth of bonds sold by EFSF on Thursday to raise funds for Ireland and Portugal. The bond was the first with a three-year maturity for the triple A-rated EFSF, which is seeking to offer a greater range of maturities. It attracted orders close to 4.5 billion euros [for a bid-to-cover ratio of around 1.5].

Japan has so far bought 3.535 billion euros worth of EFSF bonds of a total 21 billion worth of such bonds sold by the Luxembourg-based fund, set up in 2010, in all the six auctions since last year. A senior Japanese government official said on Thursday that Japan will continue to buy bonds issued by the EFSF by making use of highly liquid euro assets in its foreign reserves in accordance with Europe's certain efforts to resolve the region's debt crisis.

The rescue fund is hoping that strong demand will quieten concerns that the EFSF could struggle to raise funds as the debt crisis threatens the credit ratings of its main guarantors, particularly France.
So there you go as far as Asian vote of confidence in the euro is concerned--albeit from a country you may not necessarily have suspected to be buying in large quantities. In a small way, it also buoys the EUR/JPY rate to Japan's benefit.

Today's Resource Curse on Aussie Surfboard Mfg

♠ Posted by Emmanuel in ,, at 1/05/2012 04:36:00 AM
Little surfer, little one, make my heart come all undone...with your"Made in China" surfboard?

Is there nothing sacred about beach culture that the Chinese won't infiltrate with their relentless manufacturing machine? First you had them testing the Brazilian bikini industry. Now you have them putting Australia's equally famed surfboard makers to the test with inexpensive boards.

It may be odd that the Bloomberg article I excerpt here was the main story on the site front page, but closer inspection reveals that it's quite a straightforward application of resource curse theory: Enduringly strong global and in particular Chinese demand for Aussie minerals and deposits has appreciated the Australian dollar (AUD) massively, promoting both a decline in domestic manufacturing and an influx of foreign goods (that are often substitutes as the article notes). Given how seriously Australians take their surfing, emotions are running high as PRC-made wares come ashore in larger quantities:
On Australia’s Gold Coast, a 22-mile- long (35-kilometer) stretch of beaches named Surfers Paradise and Rainbow Bay, Neil Rech opened a surf shop in December and unwittingly disturbed the peace. His store, Sedition Surfboards [an apt name IMHO], sells Chinese imports for A$250 ($259), one-third the cost of some Australian-made boards that competitors are offering. Rival retailers averse to discounts and upset about local job losses questioned his patriotism, and even threatened violence, he said.

“It’s quite heavy,” Rech, 34, said of the backlash. After teaching for two years in China before opening a store in Coolangatta, Queensland, “I realized how cheap you can actually get these boards so I thought it’d be a great opportunity to bring them here and sell them to the public cheaper.”
And then we have a backgrounder on the economics of it all that are definitely unfavourable to the domestic industry:
Inexpensive imports from Asia, coupled with a 54 percent jump in the local dollar since October 2008, are delivering a double dose of pain to one of Australia’s most iconic industries. The struggles at surfboard makers are playing out at manufacturers across a country where China’s demand for iron ore and fuel has spurred a mining boom while leaving non-resource businesses behind.

Manufacturers are on the wrong side of a divide in Australia’s economy, which has avoided a recession since 1991 and boasts an unemployment rate of 5.3 percent, about half the level in Europe. While the number of mining jobs (AULQMINN) soared 21 percent to 242,400 in the fourth quarter from a year earlier, manufacturing employment slumped 4.4 percent to 953,500 and retail positions sank 2.2 percent to 1.21 million.
Chalk another one up for China. Now, if they only had a Beach Boys-like ensemble singing in Mandarin it would be a total appropriation of beach culture. Heaven knows, they've already got the beachwear arena, er, covered.

PRC vs Cultural Imperialism: Mao 1, Disco Stick 0

♠ Posted by Emmanuel in ,, at 1/04/2012 08:03:00 AM
I've talked about how a left-leaning British professor of my acquaintance claims that he does a roaring trade in consulting with PRC doctrinaires on Marxist theory. Talk about the contradictions of market authoritarianism. It is befuddling to me how the Communist Party in particular pays lip service to fairly conventional Marxist theory when modern China is precisely the sort of bourgeois society Herr Marx would disapprove of with its often crass materialism and gross inequality. It outdoes any number of Western nations in both respects, while adding insult to injury by having perhaps the lowest labor share of income of any major country. Worker's paradise? I think not.

We recently read news that China is once again entering one of its Western demonization phases. There are any number of reasons being cited for this turn of events: PRC officialdom wanting to deploy its culture as a "soft power" instrument; authorities fearing the erosion of morals via lowest-common denominator Westernized culture; and a tit-for-tat retaliation reflecting resentment at attempts to isolate it economically in its own region. Whatever the reason--I think it's a mixture of different concerns--the screws are being tightened:
President Hu Jintao has said China must strengthen its cultural production to defend against the West’s assault on the country’s culture and ideology, according to an essay in a Communist Party policy magazine published this week. The publication of Mr. Hu’s words signaled that a new major policy initiative announced in October would continue well into 2012.

The essay, which was signed by Mr. Hu and based on a speech he gave in October, drew a sharp line between the cultures of the West and China and effectively said the two sides were engaged in an escalating war. It was published in Seeking Truth, a magazine that evolved from a publication founded by Mao Zedong as a platform for establishing Communist Party principles.

“We must clearly see that international hostile forces are intensifying the strategic plot of westernizing and dividing China, and ideological and cultural fields are the focal areas of their long-term infiltration,” Mr. Hu said, according to a translation by Reuters. “We should deeply understand the seriousness and complexity of the ideological struggle, always sound the alarms and remain vigilant, and take forceful measures to be on guard and respond,” he added.
So far so propaganda-ish alike the 1954 poster above about how Chairman Mao Gives Us a Happy Life. The New York Times article linked to above goes into how making mainland media outlets more self-sustaining has resulted in progressively racier reality show-type fare (and worse). Mirroring the drug legalization argument, that the number of Western films that can be shown in a given year is limited may only create more demand for such "forbidden fruit":
Chinese leaders have long lamented the fact that Western expressions of popular culture and art seem to overshadow those from China. The top-grossing films in China have been “Avatar” and “Transformers 3,” and the music of Lady Gaga is as popular here as that of any Chinese pop singer. In October, at the sixth plenum of the party’s Central Committee, where Mr. Hu gave his speech, officials discussed the need for bolstering the “cultural security” of China...

Mr. Hu’s words suggested that China would not lift anytime soon strict limits that it sets on imports of some cultural products. Each year, the agency in charge of regulating film allows only 20 foreign movies to potentially make a profit off their box office take here. Hollywood studios have long criticized that system and lobbied the United States government and international organizations to pressure China into scrapping or loosening the quota.
Let the market decide? We're talking about "Communist" China here, classified by the US as a non-market economy after all. The BBC further notes that p-p-p-p-p-p-p-p-poker faced telecasters have begun removing Westernized vulgarities faster than you can say "Berlusconi variety show" in the wake of Chairman Hu's proclamations. It hastens matters that there were edicts requiring them to do so, too:
Satellite broadcasters in China have cut entertainment TV by two-thirds following a government campaign, state news agency Xinhua has reported. An order by the State Administration of Radio, Film and Television (SARFT) to curb ''excessive entertainment'' came into effect on 1 January. The number of entertainment shows aired during prime time each week has dropped to 38 from 126, said the watchdog. The news came as the president warned of the influence of Western culture...

The order, which was issued in October 2011, limits each of the country's 34 satellite channels to two entertainment programmes each week and a maximum of 90 minutes of entertainment content every day from 7:30 to 10 p.m. Broadcasters are also required to air at least two hours of news programming between 6 a.m. and midnight. They must each broadcast at least two 30-minute news programs between 6 and 11:30 p.m. The country has the largest number of television viewers in the world - an estimated 95% of its 1.3 billion people.
Is access to trash TV the right of every person? My intuition tells me that the killjoy Chinese authorities would not be so censorious if a Chinese Lady Gaga double entrende-spouting rival existed, but till then, mum's the word. As in the days of way back, lay back and think of...Chairman Mao.

Garrett: US 'All In' On Right Side of History vs China

♠ Posted by Emmanuel in ,, at 1/02/2012 08:41:00 AM
The framing is not one which I would use, but it's an increasingly familiar trope nonetheless: Is the United States' model of capitalist liberal democracy becoming obsolete vis-a-vis the "developmental authoritarianism" of China? The litmus test in Asia in this regard may be coming fast as the US appears to be nearing its neo-Bushian "you're either with us or against us" moment in the preferential trade agreement realm. Hillary Clinton recently suggested as much. However, I seem to have missed political economy stalwart Geoffrey Garrett's take on Obama going "all in" or betting everything regarding the Asia-Pacific via the much-ballyhooed Trans-Pacific Partnership (TPP) expansion bid. (When we last saw Garrett in these parts, he was talking about a G-2 US-China compact emerging in global governance.)

It's curious as to why Garrett penned write this article for probably the most bellicose of China's state-supported publications, the Global Times, when it suggests Chinese not American overreach. For what it's worth, though...
[T]he US is insisting that this will only be possible if China is willing to play by what Obama called "the rules" set by the US, which he claims are widely accepted in the region. As every poker player knows, going "all in" is the ultimate high risk and high reward gambit. You can win big, in this case having China accede to the US demands regarding opening its economy, giving larger political freedom to its people, and ending its territorial disputes in the region.

But you can also lose everything. Here Obama's gambit risks not only alienating China but also increasing the chances of conflict with China. Only the confident risk going all in. Obama's confidence stems from his belief that "history is on the side of the free - free societies, free governments, free economies, free people."
So far so grandiloquent. Which is par for the course for US officialdom almost by definition. But, the reasoning offered is that while China's trade ties with others in the region are growing and in many cases now outstripping their ties with the US, uncertainty about China's territorial designs gives the US a benefit of the doubt that it's using advantageously:
This statement is more than blind faith. Obama reasons that the trajectory of change is on the US side. While China has booming trade relationships with many countries in the Asia Pacific, including longstanding US allies led by Australia, Japan and Korea, there is still widespread unease in the region about China's ultimate intentions and ambitions.

In contrast, despite the big hits the US brand has taken, most Asian nations seem interested in even tighter ties with the US. This includes not only traditional allies but also new friends like India, Indonesia and Vietnam. The US calculation is that its coalition in the Asia Pacific is not only invulnerable to China's rise, but that it is so powerfully magnetic that bit by bit it will socialize China into joining, and changing itself in the process.
Add in the obligatory self-serving contrast between the US and China:
This socialization strategy is most obvious regarding economics and the TPP. Obama told his audience in Canberra "we need growth that is fair, where every nation plays by the rules; where workers rights are respected and our businesses can compete on a level playing field; where the intellectual property and new technologies that fuel innovation are protected; and where currencies are market-driven, so no nation has an unfair advantage." Although he didn't mention it by name, the specific issues Obama raised were no doubt directed at China.

Obama also went out of his way to talk up the importance of domestic political freedoms, claiming that "certain rights are universal, among them freedom of speech, freedom of the press, freedom of assembly, freedom of religion, and the freedom of citizens to choose their own leaders." And in an even more direct challenge to China, Obama asserted that "prosperity without freedom is just another form of poverty."
We then return to the commingling of security and economic concerns that I'm not so fond of...
Obama has laid down the gauntlet to China, saying that its booming trade ties must be underpinned by its acceptance of the values he believes the rest of the region holds dear. And he thinks, over time, China will agree.

Obama probably thinks this is a smart bet for three reasons. The US debt-induced military spending cuts won't curtail its capacity in Asia. China is unlikely to respond decisively until its new leadership team is firmly in place. And most importantly, it is in China's interests to move in the direction Obama wants. Time will tell if he is right.
For a different point of view, see Jagdish Bhagwati. To him, TPP is not a virtuous call for a level playing field but the ultimate trade diversion. Not only does it isolate China, but it also largely rules out the PRC ever joining according to the Columbia professor. While my thinking is more in line with that of Garrett--the US hopes to create sufficient bandwagon effects that China will want to come on board and play by the (American) rules--my belief is that Garrett far overestimates America's residual influence in the region. Witness, for instance, Japan signalling that it will join TPP negotiations--to appease the Americans--while knowing that little is likely to come out of them given the strength of its domestic agricultural lobby. That bit of Yank appeasing done, their leader then inks a deal to cement the use of RMB in regional transactions and for Japan to purchase RMB bonds to boot over Christmas. Note that these are not mere discussions alike TPP expansion but concluded agreements. Money talks.

Just as North Korea makes displays of bellicosity when in times of trouble to attract attention, American sound and fury is unarguably becoming a more common sight and sound these days. If that doesn't signal terminal decline, you tell me.

Hungary the EuroPakistan & CB Disindependence

♠ Posted by Emmanuel in ,, at 1/01/2012 08:51:00 AM
It's time to get the IPE Zone show on the road for 2012! Honestly, though, I wish I could say the same for the Hungarian economy. For a bit of a background, do you remember the time prior to the outset of the 2008/09 global financial crisis when the Hungarian forint hit all-time highs against the euro? Those were heady days for speculation on emerging Eastern European economies during a period when due diligence was an iffier, more relaxed concept. Borrow a lot in euros--what's the problem there? Unable to sustain its gaping current account deficit in the wake of the crisis, it soon took out a €20B bailout from the EU together with the IMF.

With the replacement of the party that negotiated the EU/IMF deal, the centre-right party of Viktor Orban decided to go down the populist route by chastising the IMF for Hungary's woes. This politicization included telling these lenders to effectively beat it by turning down another tranche disbursal in 2010. Now, I would have been more impressed by this "sticking it to the man" display if, a few more months down the road, we find that Hungary could not do without and is again at the IMF's door asking for help. The scoreline? IMF 1, Orban the insubstantial faux-populist 0.

In the meantime, Hungary under Orban has been busy testing the EU and IMF's patience by attempting to consolidate Fidesz's political grip. In recent days, the Hungarians have dished out a tripartite whack job of what not to do in currying the lenders' favour.

First, in an era which champions central bank independence, how about Hungary pushing for central bank disindependence by making politicians choose key CB figures? The EU among others warned of this coming to pass, but it now has despite being in clear violation of the Lisbon Treaty:
Barroso was referring to the Hungarian government's plans to reshape the structure of the central bank by designating a third deputy governor and also raising the number of members in the Monetary Policy Council. The newspaper quoted National Bank of Hungary Governor AndrĂ¡s Simor as saying that these elements of the legislation could serve no other purpose than to increase government influence on monetary policy...

The Commission has serious doubts about the compatibility of the Magyar Nemzety Bank (Hungarian National Bank) bills with Article 130 of the Lisbon Treaty...[a]rticle 130 says that neither the ECB nor a national central bank, nor any member of their decision-making bodies, shall seek or take instructions from Union institutions, bodies, offices or agencies, from any government of a member state or from any other body.
Second, there is concern about enshrining a flat tax into law depriving the country of flexibility for revenue raising measures which the EU and IMF will almost certainly seek if asked for help. Third, the Fidesz party is in the process of gerrymandering districts the old-fashioned way to ensure a firmer grip on electoral results.

Add all three in and it's quite a power grab by Fidesz. With formal negotiations for another loan disbursement due to start at the beginning of 2012, you have to wonder if Hungary can be forced to recant already-passed legislation. As the post title intones, today's Hungary is alike Pakistan: an economically misfiring entity that lurches from crisis to crisis. At the same time it is resentful of outside help yet insufficiently capable of resolving woes that drive it to external lenders time and again. While it may be fun to bite the hand that feeds, such gestures are empty if you eventually have to make nice with the folks you vilify since the essential problems remain unresolved.

Add in bonds downgraded to junk status, soaring bold yields and an abortive bond auction. Colour me unimpressed, Orban. Who do you think you are, the Eastern European Bolivarian?

3 January UPDATE: Confidence in Hungary's government is getting rather worse.

IMF's Blanchard on Consolidation vs Stimulus

♠ Posted by Emmanuel in at 1/01/2012 08:05:00 AM
IMF Chief Economist Olivier Blanchard writes about the "four hard truths" from 2011 that should interest most readers. Alike other economists, Blanchard is ambiguous on fiscal consolidation--its magnitude and the timing of when it's implemented. I have previously commented on the unreality of the widely-held idea that the US for instance should splurge now and retrench later based on the observation that America's national government has not managed to decrease its expenditures since 1965. Expanding government generates its own momentum into the future. There's also more than a smidgen of hypocrisy involved now that industrialized countries (from which many of these economist types comes from, you will observe) instead of developing ones are enduring hard times. Go easy on the richer ones, yeah?

That said, here is another Blanchard-ism for you concerning how markets seem to welcome announcements of fiscal consolidation but do not welcome the resulting slowdown in growth...
Financial investors are schizophrenic about fiscal consolidation and growth.

They react positively to news of fiscal consolidation, but then react negatively later, when consolidation leads to lower growth—which it often does. Some preliminary estimates that the IMF is working on suggest that it does not take large multipliers for the joint effects of fiscal consolidation and the implied lower growth to lead in the end to an increase, not a decrease, in risk spreads on government bonds. To the extent that governments feel they have to respond to markets, they may be induced to consolidate too fast, even from the narrow point of view of debt sustainability.

I should be clear here. Substantial fiscal consolidation is needed, and debt levels must decrease. But it should be, in the words of Angela Merkel, a marathon rather than a sprint. It will take more than two decades to return to prudent levels of debt. There is a proverb that actually applies here too: “slow and steady wins the race.”
Is it a "deficits don't matter since the markets will punish slower resulting economic growth from austerity" argument? I submit that Dick Cheney's durable and adaptable economic belief system remains worthy of a Nobel Prize given its modern ubiquity.

BlackBerry's Latest Banishment Threat - Indonesia

♠ Posted by Emmanuel in ,, at 12/30/2011 06:03:00 AM
The sheer difficulty of cracking BlackBerry encryption has made several states wary of the Research In Motion service operating in their countries. As a compromise on national security-esque grounds, the Canadian firm RIM has located its servers within the countries that raise such concerns instead of at home--most famously the UAE:
Last year, the UAE threatened to suspend BlackBerry Messenger, email and web browser services unless RIM worked out a way to locate its encrypted computer servers in the country so the state could get access to email and other data -- the same access it says the United States, Russia and other states have.
That concession granted to some, it appears Indonesia is now complaining about how Singapore was made the location of RIM's Southeast Asia servers instead of the region's largest nation and largest user of the popular BlackBerry service. The mooted penalty for this betrayal of sorts is (once again) banning BlackBerry from operating in Indonesia. Via the Jakarta Post:
The Indonesian Telecommunication Regulation Body (BRTI) says that it may have to end the BlackBerry Messenger (BBM) service on all BlackBerry after the smartphone’s manufacturer, Research In Motion (RIM), opted to build a server in Singapore rather than in Indonesia.

“Because RIM has not been cooperative, it is possible that we will soon end BIS (BlackBerry Internet Service) and BBM service. BlackBerry therefore, would just be like other cellular phones,” BRTI member Heru Sutadi told The Jakarta Post on Friday.
The Indonesian government claims that, aside from the usual national security request, RIM indicated that it would build the server in Indonesia before its act of info-treachery:
In September, RIM made a commitment with the government to carry out four agreements by Dec. 31. One of the agreements called for the establishment of a server or a data center. Although the agreement did not specify where the server would be built, the government felt that RIM should make Indonesia a priority as it was home to the most BlackBerry users in Southeast Asia, far exceeding the number of users in Singapore.

The government’s insistence on having a server built in the country was mainly due to security reasons, Heru said. Currently, all data exchanged through the BIS and BBM is processed in Canada, the home of RIM, which makes it impossible for the government to monitor and protect data sent by its millions of Indonesian users.

“With the condition as it is now, we warn that the country’s users to be cautious about using BlackBerry because the data exchanged is not safe or cannot be guaranteed of its safety,” he said.
While the idea that Indonesian users are more at risk now that RIM servers are in Singapore than they were before when the servers were in Canada is risible, I remain a believer that information flows within a nation remain a state's prerogative despite insipid notions to the contrary. Insofar as we haven't moved past notions of state sovereignty to something akin to world government, firms must play by national rules for better or worse.

To be sure, the longstanding presence of active separatist movements and terrorist groups may make Indonesia more legitimately entitled in raising information security concerns. It's too bad that Indonesia appears to want punishing RIM for commercial reasons as well. But, it's a price you have to pay in a world where extraterritoriality does not apply.

Singapore's Fat-Fighting Tool: Military Conscription

♠ Posted by Emmanuel in ,,, at 12/29/2011 08:10:00 AM
Given its sheer girth, the globalization of American-style obesity is not a problem you can sit on and forget about. Industrialized countries already burdened with sizeable health and pensions obligations may, in all likelihood, be underestimating this weighty problem as their citizens become US-huge and encounter all sorts of related problems. Aside from the aesthetic pitfalls of being a nation of fatties, there is an all-you-can-eat buffet of illnesses associated with mega-tubbiness.

Venerable medical journal The Lancet recently featured a series of alarming studies about the consequences of what medical types call "obesogenic" cultures--of which the United States is the prime (rib?) example with forecasts predicting that half of all Yanks will be obese by 2030. Which is not much of a stretch given that over a third of them already are obese. Definitely, health is a very understudied issue in IPE and this gap should be addressed since the health of nations will certainly shape patterns of national indebtedness. A study out of Emory estimates that obesity-related costs for the US will amount to $344B by 2018--about 21% of a gargantuan health care tab. For several nations, health care is the largest line item in the national budget and will only become more so given their aging populations.

Certainly the likes of the United States ought to concern themselves more with their cellulite-superindebtedness complex than their military-industrial one. American indiscipline is a multifaceted construct, with their legendary fiscal depravity combined with physical inactivity and unprecedented gluttony resulting in a health crisis that turbocharges the national debt via endlessly mounting health care costs. Perhaps it's in the genes, though I hope that's not the case.

Such despair. It's depressing enough to make a Yank down a milkshake or twenty. Is there any way out of this bottomless American-style debts 'n' fats trap? Thankfully, there is. Just as Singapore shows the potential way forward for the intensely wasteful and mediocre US education system, so does its lesser known fat-fighting tool of military conscription show a way out. To be sure, many other industrialized countries also have mandatory national service. However, Singapore alone makes it a continuing exercise apart from a few months to a year in your late teens / early twenties. You see, Singaporean males need to devote a couple of weeks each year after completing basic training to military drills. Further, they need to undertake fairly strenuous tests annually to prove their worth lest they be sent off to boot camp indefinitely until they pass. From the Singaporean Ministry of Defence website comes this description:
All PES A, B and C1 active NSmen [national servicemen or "reservists" which include practically all younger Singaporeans] below the age of 45 years for Officers and 40 years for Warrant Officers & below are required to take the IPPT [Individual Physical Proficiency Test] annually. All IPPT eligible NSmen must attempt IPPT once within their IPPT year. They may attempt IPPT during or outside their ICT [in-camp training] and may make as many attempts as they want to improve their IPPT results. The best result achieved will be taken as the record for the IPPT year.
Make no mistake: the IPPT is no wussy exercise, either:
As frontline soldiers, it is essential for all NSmen to maintain physical fitness. The IPPT is designed to test the basic components of physical fitness and motor skills of the NSmen. It comprises the following tests (see diagram below):
Test Item Fitness Component(s)
Sit-Up Abdominal muscular strength and endurance
Standing Broad Jump Lower limbs extensor muscular power
Chin-up Upper limbs muscular strength and endurance
4 * 10m Shuttle Run General speed, agility and co-ordination
2.4Km Run Cardio-respiratory endurance and lower limbs muscular endurance


Your typical sofa-ridden, iPad-fondling Yankee would probably keel over after a 0.24 km run [lotsa wheezing in the background], but that would be no surprise. As I like to say, there are good reasons why even (unbiased) Americans take the example of a society that works rather than one that doesn't--and hasn't for a very long time now. In the case of Singapore, there's a strong incentive to stay fit or face pretty negative consequences. There's no subtle "nudge"-style nannying here. It's so un-American--being practically forced to stay fit, but hey, just see how fat land is faring to see what their indiscipline has resulted in.


Singaporean children are quite a fit bunch, then they have years of military training to keep things that way. While obesity rates have inched up in recent years, they are far from American levels and haven't gone unnoticed. There are noticeable government efforts to fight the fat. To be sure, there too are whingers who would rather park themselves on the La-Z-Boy and fondle the iPad in Singapore. One justification for doing away with the practice is lost economic productivity:

Military service works this way: At 18 all youths have to report for a two-year stint, followed by 10 years of reservist duty, potentially frontline troops in the event of war. The reservists are recalled for annual in-camp training or military exercises, which last one or two weeks. The government has done much to recognise the sacrifice of NS men, giving perks that range from tax incentives to higher savings top-ups and fee discounts. The civil service also offers a slightly higher salary scale for employees who have completed their service.

With Singaporeans facing growing competition from foreign workers, however, national service has become a strain when bosses pass them over in favour of permanent residents (PRs) because of their “cumbersome” reservist duties. Singaporean employers who have gone through it are generally more ready to employ reservists, but foreign companies often feel no such responsibility. They often turn away locals who are still doing reservist duty, preferring to hire foreigners or PRs, who are free of the obligation...

Recently, a fresh Singaporean 26-year-old graduate related his interview at a foreign-owned fabrication plant here. The first question the Taiwanese manager asked him was: “I see you are a Singaporean. Do you need to go back to serve NS every year?” When he replied that he had to report back for in-camp training every year, the manager reacted negatively, observing that reservists who failed fitness tests would need to train until they passed.
Ah, "economics"--the last refuge of a modern-day scoundrel. From talking to folks from Singapore, however, I gather that the couch potatoes are outnumbered (though this assertion can definitely be subject to surveys). Certainly there's no mass movement at present to do away with the practice. Aside from escaping the tedium of office slaving, many young Singaporeans actually look forward to spending some time away with their school buddies. Add in the benefits of camaraderie and fitness and the equation should be clear. Moreover, Singaporeans take their training seriously and are rewarded accordingly. Unlike many other countries' mandatory services, it is possible to become a pilot or suchlike as NSMen.

So yes, it's not only military conscription but also the way the programme is designed with strong disincentives to becoming American-sized at work here. Execution matters. As in so many other things, Singaporeans take pride in their accomplishments and don't tolerate Bart Simpson-esque brattiness which contemporary America is renowned for. While they may be smugly self-superior sometimes, they achieve things the likes of which bumbling America can only dream of nowadays. As a basis of comparison, that Charles "Guantanamo Ghraiber" Graner remains the world's best known US reservist tells you something.

As I said, indiscipline manifests itself in so many ways, but in the end such pathologies are reflective of the societies from whence they came. Anyone else want to end up with American obesity rates? No? That's what I thought.