In Puri, Sand artist Sudarshan Patnaik.
Original Link
Friday, December 31, 2004
Thursday, December 30, 2004
The Moral versus the Practical
A comment on Sean Carroll's blog reminds me that many people believe there is a distinction between the moral and the practical. Perhaps this distinction is viable when the belief in some idea confers morality even when that idea leads to no action, and no action may even be possible (because the moral idea conflicts with reality).
Thus, perhaps, possession of the idea that "no one in the world should go hungry" makes its possessor a moral person, even if it leads to no actions to that end. I see the attraction of valuing the sentiment "no one should go hungry" over "I don't care", a society full of "I don't care" people is perhaps less likely to do something about hunger than a people with the other sentiment. But then, the "I don't care" people may have decent economic policies in place which, in practice, mean fewer people go hungry, than, say, a overly-regulated economy of the "no-hunger" folks.
India is a case in point. It started making dramatic progress in lifting its people out of poverty only after it abandoned its several decades of socialist economic policies. Of course, we do not know the final answer yet; the widening gap between the urban rich and the rural poor may politically destabilize India to an extent that will wipe out all the economic gains.
Morality thus perhaps expresses itself in a harmony between means and ends, intentions and actions.
Thus, perhaps, possession of the idea that "no one in the world should go hungry" makes its possessor a moral person, even if it leads to no actions to that end. I see the attraction of valuing the sentiment "no one should go hungry" over "I don't care", a society full of "I don't care" people is perhaps less likely to do something about hunger than a people with the other sentiment. But then, the "I don't care" people may have decent economic policies in place which, in practice, mean fewer people go hungry, than, say, a overly-regulated economy of the "no-hunger" folks.
India is a case in point. It started making dramatic progress in lifting its people out of poverty only after it abandoned its several decades of socialist economic policies. Of course, we do not know the final answer yet; the widening gap between the urban rich and the rural poor may politically destabilize India to an extent that will wipe out all the economic gains.
Morality thus perhaps expresses itself in a harmony between means and ends, intentions and actions.
Tuesday, December 28, 2004
Pre-British India
India has always been a country of villages. Undivided India had about a million of them. The village had a degree of self-government. This was the panchayat system. This is a system of consensus, and operates mostly informally. The village was primarily agricultural. Part of its produce was used by the village for public purposes. The village had a schoolmaster. It carried out public works - the building and maintenance of reserviors, wells, public buildings. It also had the task of sanitation, of providing a police/watchman force. It engaged in poverty relief. It provided civil and some criminal justice. The village owed taxes to a central authority; but in times of distress the taxes were forgiven. One of the most important features of the system was that there were not non-cultivating proprietors in the system.
We know this from the surveys that British officers took, while these institutional arrangements were still around.
One of them, Thomas Munro wrote, in 1824:
"The ruling vice of our Government is innovation; and its innovation has been so little guided by a knowledge of the people that, though made after what was thought by us to be mature discussion, it must appear to them as little better than the result of mere caprice. We have in our anxiety to make everything as English as possible in a country which resembles England in nothing, attempted to create at once, throughout extensive provinces, a kind of landed property which had never existed in them; and in pursuit of this object, we have relinquished the rights which the sovereign always possessed in the soil, and we have in many cases deprived the real owners, the occupant ryots, of their proprietary rights, and bestowed them on zemindars and other imaginary landlords. Changes like these can never effect a permanent settlement in any country; they are rather calculated to unsettle whatever was before deemed permanent."
This destruction of the village was what was the British rule's worst crime, and what resulted in India's poverty, in its supposedly apathetic masses.
Let us talk about the evil caste system, which brutal system one Anonymous poster is certain, killed many people. Well, people like Munro observed in the Madras Presidency in the 1820s, that about one fourth of the boys received a school education, and considering those who were taught at home, about one third of the boys received an education . Who attended the schools? According to the 1823-24 survey, 45% were Sudras.
Here is a quote (from http://www.hvk.org/articles/1204/50.html), regarding the survey:
Begin quote:
In the Tamil speaking areas where the twice-born ranged between 13% in the south Arcot to some 23% in Madras, the Muslims were less than 3% in South Arcot and Chingleput to 10% in Salem, while the Soodras and the other castes ranged from about 70% in Salem and Tinnevelly, to over 84% in South Arcot.
In Malayalam-speaking Malabar, the proportion of the twice born was still below 20% of the total. Because of a larger Muslim population, however, the number of Muslim school stu-dents went up to nearly 27%, while the Soodras and the other castes accounted for some 54% of the school going students.
In the largely Kannada-speaking Bellary, the proportion of the twice-born (the Brahmins and the Vysees) went up to 33%, while the Soodras, and the other castes still accounted for some 63%.
The position in the Oriya-speaking Ganjam was similar: the twice-born accounting for some 35.6%, and the Soodras and other castes being around 63.5%.
It is only in the Telugu-speaking districts that the twice born formed the major proportion of the school going students. Here, the proportion of Brahmin boys varied from 24% in Cuddapah to 46% in Vizagapatam; of the Vysees from 10.5% in Vizagapatam to 29% in Cuddapah; of the Muslims from 1 % in Vizagapatam to 8% in Nellore; and of the Soodras and other castes from 35% in Guntoor to over 41% in Cuddapah and Vizagapatam.
End quote.
(Sudras or Soodras are the lowest caste.)
The other area that fell early to the British, Bengal/Bihar had a similar situation regarding schooling, and participation in it.
Several points -
1. All this is based on British writings data, and not that of Indian nationalists.
2. The wiser of the British recognized the damage they were doing.
3. When the indigenous school vanished, it was the upper castes who used the schools provided by the English. For a variety of reasons, the lower castes did not or could not.
4. India's 1800 figures compare well with those of Europe of that time.
5. Whatever we may think of caste today in terms of today's standards, it was not "brutal" as Anonymous thinks, and it was more humane than the institutions that the British introduced.
We know this from the surveys that British officers took, while these institutional arrangements were still around.
One of them, Thomas Munro wrote, in 1824:
"The ruling vice of our Government is innovation; and its innovation has been so little guided by a knowledge of the people that, though made after what was thought by us to be mature discussion, it must appear to them as little better than the result of mere caprice. We have in our anxiety to make everything as English as possible in a country which resembles England in nothing, attempted to create at once, throughout extensive provinces, a kind of landed property which had never existed in them; and in pursuit of this object, we have relinquished the rights which the sovereign always possessed in the soil, and we have in many cases deprived the real owners, the occupant ryots, of their proprietary rights, and bestowed them on zemindars and other imaginary landlords. Changes like these can never effect a permanent settlement in any country; they are rather calculated to unsettle whatever was before deemed permanent."
This destruction of the village was what was the British rule's worst crime, and what resulted in India's poverty, in its supposedly apathetic masses.
Let us talk about the evil caste system, which brutal system one Anonymous poster is certain, killed many people. Well, people like Munro observed in the Madras Presidency in the 1820s, that about one fourth of the boys received a school education, and considering those who were taught at home, about one third of the boys received an education . Who attended the schools? According to the 1823-24 survey, 45% were Sudras.
Here is a quote (from http://www.hvk.org/articles/1204/50.html), regarding the survey:
Begin quote:
In the Tamil speaking areas where the twice-born ranged between 13% in the south Arcot to some 23% in Madras, the Muslims were less than 3% in South Arcot and Chingleput to 10% in Salem, while the Soodras and the other castes ranged from about 70% in Salem and Tinnevelly, to over 84% in South Arcot.
In Malayalam-speaking Malabar, the proportion of the twice born was still below 20% of the total. Because of a larger Muslim population, however, the number of Muslim school stu-dents went up to nearly 27%, while the Soodras and the other castes accounted for some 54% of the school going students.
In the largely Kannada-speaking Bellary, the proportion of the twice-born (the Brahmins and the Vysees) went up to 33%, while the Soodras, and the other castes still accounted for some 63%.
The position in the Oriya-speaking Ganjam was similar: the twice-born accounting for some 35.6%, and the Soodras and other castes being around 63.5%.
It is only in the Telugu-speaking districts that the twice born formed the major proportion of the school going students. Here, the proportion of Brahmin boys varied from 24% in Cuddapah to 46% in Vizagapatam; of the Vysees from 10.5% in Vizagapatam to 29% in Cuddapah; of the Muslims from 1 % in Vizagapatam to 8% in Nellore; and of the Soodras and other castes from 35% in Guntoor to over 41% in Cuddapah and Vizagapatam.
End quote.
(Sudras or Soodras are the lowest caste.)
The other area that fell early to the British, Bengal/Bihar had a similar situation regarding schooling, and participation in it.
Several points -
1. All this is based on British writings data, and not that of Indian nationalists.
2. The wiser of the British recognized the damage they were doing.
3. When the indigenous school vanished, it was the upper castes who used the schools provided by the English. For a variety of reasons, the lower castes did not or could not.
4. India's 1800 figures compare well with those of Europe of that time.
5. Whatever we may think of caste today in terms of today's standards, it was not "brutal" as Anonymous thinks, and it was more humane than the institutions that the British introduced.
Monday, December 27, 2004
The Eastern Trade
Arrighi, Ahmad and Shih write
"The original and most enduring source of Western power in Asia has been the capacity of Western states to disrupt the complex organization that linked Asian societies to one another within and across jurisdictional and civilizational divides. This capacity has been rooted in Western advances in military technology on the one side, and in the vulnerability of Asian societies to the military disruption of their mutual trade on the other side."
Before the 17th century, Asia dominated world trade. Then the western nations stuck their oar in. Now, the pendulum is swinging back towards Asia.. Will this be the cause of the wars of the future?
"The original and most enduring source of Western power in Asia has been the capacity of Western states to disrupt the complex organization that linked Asian societies to one another within and across jurisdictional and civilizational divides. This capacity has been rooted in Western advances in military technology on the one side, and in the vulnerability of Asian societies to the military disruption of their mutual trade on the other side."
Before the 17th century, Asia dominated world trade. Then the western nations stuck their oar in. Now, the pendulum is swinging back towards Asia.. Will this be the cause of the wars of the future?
Civilizing the Natives
A little about Congo
Quote:
The territory has a long history of plunder. After the slave trade ended, ivory and rubber made it the bloodiest European colony in Africa, the real-life setting for Joseph Conrad's "Heart of Darkness." For 23 years, it was the private property of King Leopold II of Belgium, who made a huge fortune by turning most adult male Congolese into slaves to gather wild rubber. His private army worked hundreds of thousands of men to death and shot down 20 years of uprisings. Just as today, disease took the greatest toll, ravaging a traumatized, half-starving people, many of whom hid unsheltered in the rain forest. Demographers estimate that the population was cut by half - a loss of some 10 million people - during Leopold's rule and its immediate aftermath.
End quote.
Quote:
The territory has a long history of plunder. After the slave trade ended, ivory and rubber made it the bloodiest European colony in Africa, the real-life setting for Joseph Conrad's "Heart of Darkness." For 23 years, it was the private property of King Leopold II of Belgium, who made a huge fortune by turning most adult male Congolese into slaves to gather wild rubber. His private army worked hundreds of thousands of men to death and shot down 20 years of uprisings. Just as today, disease took the greatest toll, ravaging a traumatized, half-starving people, many of whom hid unsheltered in the rain forest. Demographers estimate that the population was cut by half - a loss of some 10 million people - during Leopold's rule and its immediate aftermath.
End quote.
Ukraine - about oil?
The struggle for democracy in Ukraine may really be all about oil. Oil transit really, see this article from 2003.
Tuesday, December 21, 2004
On the nature of belief
As noted, the holding of a (religious) belief has been given a moral value. In an example from modern Indian history, Maulana Muhammad Ali said of Mahatma Gandhi : ""However pure Gandhi's character may be, he must appear to me from the point of view of religion inferior to any Mussalman, even though he be without character.".... 'Yes, according to my religion and creed, I hold an adulterous and a fallen Muslim to be better than a Mr. Gandhi." Belief trumps conduct.
Now, the belief-based systems have been dominant in the world for many centuries - Islam, Christianity, etc., and the moral value of belief has been secularized, i.e., it now exists independent of its religious origin. Thus, for instance, it seems to matter more to people, that George W. Bush is by belief a fiscal conservative than the fact that he is running up enormous deficits. His heart is in the right place, and that counts more than anything else. Belief in an ideology now makes one good or bad.
The dominance of belief has also made the social scientists interpret every culture in terms of belief. Thus, for instance, Hinduism is analyzed in terms of "beliefs". (Let me add that the modern Hindu has lost his bearings, and also is beginning to embrace the notion of belief).
Finally, belief is conflated with truth. The belief in Jesus, for instance, requires belief in the truth, the factuality, of a particular narrative of history. So far has this conflation gone, that it is very difficult for the modern mind to disentangle the two. How can belief have anything other than truth-value going for it? It is difficult to explain, but let me try.
The "Hindu belief system" is not a belief-system, such as, e.g, is represented by, say, the Nicene Creed. Rather, at its most basic level, the "belief" lies in the idea that performing certain actions (call them rituals, if you like) is efficacious. Being a possessor of this belief/creed confers no value. Value lies in the performance of the actions. Overall, the "belief-system" is a kind of manual of "how to go about in the world", and the "belief-system" explicitly recognizes that there is no unique or best manual to living. Moreover, the "belief-system" is not tied to the factuality of its stories and symbols, any more than the teaching of Jesus in the story of the prodigal son is tied to the specifics of any such incident. The stories or so-called myths are not pseudo-history, nor are they explanations.
The best I think of for the modern Western/Westernized soul is the metaphor of music. Music is not based on fact, and thus has not truth-value. There is no virtue in "believing in" classical music or jazz or whatever. We would not say of someone, he's a great musician, if all he produces is noise. The value lies in the performance - playing or composing - and not in any belief. A school of music, or a musical tradition represents an accumulation of knowledge of method and style of performance. Musicians explicitly realize that there are many other valid ways of producing music other than the ones they know.
The metaphor ultimately fails, because one does not see how to go from "good music" to "good person". The point is that the belief "Classical music is true" is merely a point of view, and the belief "Classical music is the best music" confers no moral elevation to its holder.
Certainly, I'm not claiming that within the "Hindu belief-system" Hindus don't fall prey to errors of fact or judgment. It doesn't mean that Hinduism doesn't have explanations which are simply wrong - it is just that these explanations are not essential to the system. Since belief (need to perform certain actions) and factuality are separated, Hindus may keep doing something even when the context in which the actions made sense has passed. This is the dreary desert sand of dead habit in Tagore's poem. The point is that this is a different approach to life, with no claims of being a better one or a worse one than the one the modern person is likely to be familiar with.
Now, the belief-based systems have been dominant in the world for many centuries - Islam, Christianity, etc., and the moral value of belief has been secularized, i.e., it now exists independent of its religious origin. Thus, for instance, it seems to matter more to people, that George W. Bush is by belief a fiscal conservative than the fact that he is running up enormous deficits. His heart is in the right place, and that counts more than anything else. Belief in an ideology now makes one good or bad.
The dominance of belief has also made the social scientists interpret every culture in terms of belief. Thus, for instance, Hinduism is analyzed in terms of "beliefs". (Let me add that the modern Hindu has lost his bearings, and also is beginning to embrace the notion of belief).
Finally, belief is conflated with truth. The belief in Jesus, for instance, requires belief in the truth, the factuality, of a particular narrative of history. So far has this conflation gone, that it is very difficult for the modern mind to disentangle the two. How can belief have anything other than truth-value going for it? It is difficult to explain, but let me try.
The "Hindu belief system" is not a belief-system, such as, e.g, is represented by, say, the Nicene Creed. Rather, at its most basic level, the "belief" lies in the idea that performing certain actions (call them rituals, if you like) is efficacious. Being a possessor of this belief/creed confers no value. Value lies in the performance of the actions. Overall, the "belief-system" is a kind of manual of "how to go about in the world", and the "belief-system" explicitly recognizes that there is no unique or best manual to living. Moreover, the "belief-system" is not tied to the factuality of its stories and symbols, any more than the teaching of Jesus in the story of the prodigal son is tied to the specifics of any such incident. The stories or so-called myths are not pseudo-history, nor are they explanations.
The best I think of for the modern Western/Westernized soul is the metaphor of music. Music is not based on fact, and thus has not truth-value. There is no virtue in "believing in" classical music or jazz or whatever. We would not say of someone, he's a great musician, if all he produces is noise. The value lies in the performance - playing or composing - and not in any belief. A school of music, or a musical tradition represents an accumulation of knowledge of method and style of performance. Musicians explicitly realize that there are many other valid ways of producing music other than the ones they know.
The metaphor ultimately fails, because one does not see how to go from "good music" to "good person". The point is that the belief "Classical music is true" is merely a point of view, and the belief "Classical music is the best music" confers no moral elevation to its holder.
Certainly, I'm not claiming that within the "Hindu belief-system" Hindus don't fall prey to errors of fact or judgment. It doesn't mean that Hinduism doesn't have explanations which are simply wrong - it is just that these explanations are not essential to the system. Since belief (need to perform certain actions) and factuality are separated, Hindus may keep doing something even when the context in which the actions made sense has passed. This is the dreary desert sand of dead habit in Tagore's poem. The point is that this is a different approach to life, with no claims of being a better one or a worse one than the one the modern person is likely to be familiar with.
No to Victimhood
The past few posts began on Lubos' blog, where Lubos and I had a fundamental disagreement about the rightness of interference in Ukraine's elections by the US and the Russians, and spilled over into other areas, such as current affairs in Iraq and colonialism.
The burden of history is not on me. The world owes me nothing. I claim no privileges, no consideration for past injustice done to my ancestors. I do not seek to convert anyone to my religion, my beliefs, my culture, my way of life. To you, your way, to me mine!
The burden really is on those who believe that they somehow represent a civilizing force, something so wonderful and great, that they have the right to shove it down the throats of others, like a doctor giving a recalcitrant patient his medicine, with sanctions and war and aerial bombardment of cities. Examine history, go past the shallow lies, and find out what happened, the whitewashed record.
---
One more thing. Belief and intention have no moral value. In the ancient "pagan" world, belief may have served as a marker of a boundary or identity. Perhaps with the first Christians, the idea that belief has a moral value began. It was not possible to be saved without a belief in Jesus as the savior. Those who did not believe in Jesus had lesser moral value, and would be barbecued into eternity (borrowing a phrase from Vivekananda). It was not just that the unbelievers were outsiders, not part of the family; they were evil. This has been now secularized, and believing in some ideology or the other makes one either a good person, or the enemy to be feared and dehumanized. The moral stature of a person is determined by conduct, not by belief. Hypocrisy is a major vice of societies of belief, where public statements of the upholding of a belief confer stature to a person, and thus, benefits. Our polity is so corrupted because we focus so much on what the politicians say and not what they do. Just as a scientist or artist is finally known by her works, so is every person.
The war with Iraq is evil. If Iraq indeed posed an imminent threat with weapons of mass destruction, then the war may have been the least of evil choices. Our responsibility is always to choose the good, or under force of circumstances, the least of the evils. We should not delude ourselves that in choosing the least evil choice we are doing good. The burden of having to make a choice is always upon us, we cannot abdicate it. Our beliefs and intentions cannot sanctify an evil choice, even the least evil of choices. If moral order underlies the universe, then consequences are inevitable, and we should be prepared for these, call it blowback or karma. The struggle is to create at least some good out of the consequences of an evil choice.
The burden of history is not on me. The world owes me nothing. I claim no privileges, no consideration for past injustice done to my ancestors. I do not seek to convert anyone to my religion, my beliefs, my culture, my way of life. To you, your way, to me mine!
The burden really is on those who believe that they somehow represent a civilizing force, something so wonderful and great, that they have the right to shove it down the throats of others, like a doctor giving a recalcitrant patient his medicine, with sanctions and war and aerial bombardment of cities. Examine history, go past the shallow lies, and find out what happened, the whitewashed record.
---
One more thing. Belief and intention have no moral value. In the ancient "pagan" world, belief may have served as a marker of a boundary or identity. Perhaps with the first Christians, the idea that belief has a moral value began. It was not possible to be saved without a belief in Jesus as the savior. Those who did not believe in Jesus had lesser moral value, and would be barbecued into eternity (borrowing a phrase from Vivekananda). It was not just that the unbelievers were outsiders, not part of the family; they were evil. This has been now secularized, and believing in some ideology or the other makes one either a good person, or the enemy to be feared and dehumanized. The moral stature of a person is determined by conduct, not by belief. Hypocrisy is a major vice of societies of belief, where public statements of the upholding of a belief confer stature to a person, and thus, benefits. Our polity is so corrupted because we focus so much on what the politicians say and not what they do. Just as a scientist or artist is finally known by her works, so is every person.
The war with Iraq is evil. If Iraq indeed posed an imminent threat with weapons of mass destruction, then the war may have been the least of evil choices. Our responsibility is always to choose the good, or under force of circumstances, the least of the evils. We should not delude ourselves that in choosing the least evil choice we are doing good. The burden of having to make a choice is always upon us, we cannot abdicate it. Our beliefs and intentions cannot sanctify an evil choice, even the least evil of choices. If moral order underlies the universe, then consequences are inevitable, and we should be prepared for these, call it blowback or karma. The struggle is to create at least some good out of the consequences of an evil choice.
Monday, December 20, 2004
The Salt Tax
For more than a hundred years in India, the British levied a tax on salt. No some small tax, but so much that it would take about one-sixth of a laborer's income to obtain enough salt to live. You can find easily enough the effects of chronic salt deprivation, including susceptibility to diseases, of which epidemics raged in India. Remember, India is a tropical country, and the body needs more salt. Of course, with high taxes came smuggling and attempts to evade the tax; and the British built the Great Hedge.
Gandhi's Salt Satyagraha in 1931 was much after the punitive taxes were abolished. Westernized, Anglicized India had forgotten, apparently, but India's villages seemingly still remembered.
When you read the link above, remember that the native Oriental despot typically would not collect land revenue in famine years, unlike the East India Company or, later, the British Government.
This is just one tiny way in which the British compete with the Nazis. Did people rise up against the British for such deprivation? Yes, they did! What happened to them?
More later.
In the meantime, read about the European locusts in India. Seek and ye will find!
Gandhi's Salt Satyagraha in 1931 was much after the punitive taxes were abolished. Westernized, Anglicized India had forgotten, apparently, but India's villages seemingly still remembered.
When you read the link above, remember that the native Oriental despot typically would not collect land revenue in famine years, unlike the East India Company or, later, the British Government.
This is just one tiny way in which the British compete with the Nazis. Did people rise up against the British for such deprivation? Yes, they did! What happened to them?
More later.
In the meantime, read about the European locusts in India. Seek and ye will find!
Sunday, December 19, 2004
Friday, December 17, 2004
Illusions of European History
The English history of India is akin to one written from the point of view of the locusts, not of the farmer. The scale of destruction the English wrought in India would rank them with Stalin and Hitler and Pol Pot as the great destroyers of the world. But history is written by the victors, and so they claim they brought Civilization.
Hitler, in a way, and unintentionally, of course, was a great liberator. His war once and for all put an end to the colonial powers, and after World War II, European empires were dismantled and Asia and Africa were decolonized. But the damage these empires wrought was enormous, and the world is yet to recover.
Hitler, in a way, and unintentionally, of course, was a great liberator. His war once and for all put an end to the colonial powers, and after World War II, European empires were dismantled and Asia and Africa were decolonized. But the damage these empires wrought was enormous, and the world is yet to recover.
Thursday, December 09, 2004
Messing up the world, one country at a time
John Pilger writes about the US intervention in Kosovo as being justified by lies. Claims were made of genocide, of hundreds of thousands killed. All lies. This quote sums it up : "The Kosovo-Albanians played us like a Stradivarius," wrote the UN Balkans commander, Major-General Lewis MacKenzie, last April. "We have subsidised and indirectly supported their violent campaign for an ethnically pure Kosovo. We have never blamed them for being the perpetrators of the violence in the early 1990s and we continue to portray them as the designated victim today in spite of evidence to the contrary."
Jude Wanniski says that the evidence for mass killings in Iraq by Saddam is scant. "It turns out that in 19 months H[uman] R[ights] W[atch]’s experts have not been able to find the missing 100,000 bodies it said were of Kurds who had been rounded up and trucked south of Kurdistan, machine-gunned to death and buried in mass graves."
Congressman Ron Paul remembers how upset we all were at the possibility that the Chinese tried to interfere in an American election, by channeling money to the Clinton campaign, and asks what are we doing in Ukraine? "Consider the Ukrainian NGO International Center for Policy Studies. It is an organization funded by the U.S. government through PAUCI. On its Web site, we discover that this NGO was founded by George Soros' Open Society Institute. And further on we can see that Viktor Yushchenko himself sits on the advisory board!"
Wherein lies the truth?
Jude Wanniski says that the evidence for mass killings in Iraq by Saddam is scant. "It turns out that in 19 months H[uman] R[ights] W[atch]’s experts have not been able to find the missing 100,000 bodies it said were of Kurds who had been rounded up and trucked south of Kurdistan, machine-gunned to death and buried in mass graves."
Congressman Ron Paul remembers how upset we all were at the possibility that the Chinese tried to interfere in an American election, by channeling money to the Clinton campaign, and asks what are we doing in Ukraine? "Consider the Ukrainian NGO International Center for Policy Studies. It is an organization funded by the U.S. government through PAUCI. On its Web site, we discover that this NGO was founded by George Soros' Open Society Institute. And further on we can see that Viktor Yushchenko himself sits on the advisory board!"
Wherein lies the truth?
Saturday, December 04, 2004
Dollar meltdown
The New York Times says that the falling dollar tests nerves of Asia's central bankers [subscription required].
There is a gigantic money circulation pattern that has made East Asia prosperous. In this cycle, Americans spend to the hilt, in the process, absorbing an enormous quantity of goods manufactured in Asia. The Asians get a flood of dollars, which presumably should drive up the value of their currencies relative to the dollar, making their goods more expensive, and exerting a brake on this cycle. Instead, the Asians buy US securities, making going into debt cheaper for the Americans, and spurring further consumption. The Asians get rapid economic growth, driven by exports, and the Americans get to live the good life with plenty of goods. There are some unfortunate effects, such as the distress of American workers who lose jobs in manufacturing industries that are no longer competitive, but statistically, the world is overall better off. And who can deny the evidence of the sparkling new skylines of the burgeoning cities of China?
The question is, can this cycle continue indefinitely? If not, can the world wean itself off of this cycle in a gradual fashion, avoiding major economic disruptions, and moving smoothly into a new pattern? The answer to both questions is, seemingly, no. As US deficits and debt climb to record levels as a percentage of the US economy, the limits to the cycle are becoming evident. And it seems that getting off this cycle is not going to be easy.
Japan now has around $820 billion, China around $600 billion, Taiwan $235 billion, South Korea around $193 billion of foreign currency holdings. The bulk of these holdings is in dollars, and are thus vulnerable to a fall in the value of the dollar. Ideally, these countries would gradually diversify their holdings, and also let their currencies rise gradually against the dollar. Gradually domestic spending would take the place of exports in driving their economies. They would also buy more from the Americans. This would enable the Americans to gradually get their economic house in order.
But as the NYT puts it : "The problem for Japan is that it is in so deep that to a large degree it is chained to its American debtor....anything Japan might do to slow its dollar purchases would only create a self-inflicted wound". The economist Richard Koo is quoted "If they could move it all out of dollars in one day, I am sure they would do it in an instant. But if they move 10 percent, and the dollar goes down by 20 percent, they are stuck with 90 percent of the portfolio worth 20 percent less." NYT reiterates: "Japan and China hold too much American debt to be able to diversify discreetly".
What could happen is that the dollar drops rapidly. American interest rates will have to rise to finance the ongoing deficits. American consumption will slow. Asian export-driven growth will vanish. The global economy might shrink.
We are living in interesting times.
There is a gigantic money circulation pattern that has made East Asia prosperous. In this cycle, Americans spend to the hilt, in the process, absorbing an enormous quantity of goods manufactured in Asia. The Asians get a flood of dollars, which presumably should drive up the value of their currencies relative to the dollar, making their goods more expensive, and exerting a brake on this cycle. Instead, the Asians buy US securities, making going into debt cheaper for the Americans, and spurring further consumption. The Asians get rapid economic growth, driven by exports, and the Americans get to live the good life with plenty of goods. There are some unfortunate effects, such as the distress of American workers who lose jobs in manufacturing industries that are no longer competitive, but statistically, the world is overall better off. And who can deny the evidence of the sparkling new skylines of the burgeoning cities of China?
The question is, can this cycle continue indefinitely? If not, can the world wean itself off of this cycle in a gradual fashion, avoiding major economic disruptions, and moving smoothly into a new pattern? The answer to both questions is, seemingly, no. As US deficits and debt climb to record levels as a percentage of the US economy, the limits to the cycle are becoming evident. And it seems that getting off this cycle is not going to be easy.
Japan now has around $820 billion, China around $600 billion, Taiwan $235 billion, South Korea around $193 billion of foreign currency holdings. The bulk of these holdings is in dollars, and are thus vulnerable to a fall in the value of the dollar. Ideally, these countries would gradually diversify their holdings, and also let their currencies rise gradually against the dollar. Gradually domestic spending would take the place of exports in driving their economies. They would also buy more from the Americans. This would enable the Americans to gradually get their economic house in order.
But as the NYT puts it : "The problem for Japan is that it is in so deep that to a large degree it is chained to its American debtor....anything Japan might do to slow its dollar purchases would only create a self-inflicted wound". The economist Richard Koo is quoted "If they could move it all out of dollars in one day, I am sure they would do it in an instant. But if they move 10 percent, and the dollar goes down by 20 percent, they are stuck with 90 percent of the portfolio worth 20 percent less." NYT reiterates: "Japan and China hold too much American debt to be able to diversify discreetly".
What could happen is that the dollar drops rapidly. American interest rates will have to rise to finance the ongoing deficits. American consumption will slow. Asian export-driven growth will vanish. The global economy might shrink.
We are living in interesting times.