Thursday, February 19, 2009

Riders on the Storm

The world economy has recently experienced several slowdowns that have US security experts, including Director of National Intelligence Dennis Blair, worried about long-term US economic interests. Furthermore, shifts in world economic paradigms, ushered in by the weakness and instability of world markets, are likely to wreak havoc on the current system of international trade. While some degree of protectionism is prudent in such dangerous waters as these, it is critical that the US remains focused on its long-term interest of emerging from this storm in a continued position of competitive dominance. In order to do so, we must not practice protectionism as a tool of beggar-thy-neighbor mercantilism, but we should continue the time-proven US policy of unilateral trade liberalization.

Worldwide consumer demand, economic growth and globalized finance – those engines of shared economic prosperity that have kept globalization humming along – are suddenly screeching to a halt. Developing countries are dumping their decades-long export-led economic growth strategies as US consumer demand turns out not to be insatiable.

The immediate consequence of this is worldwide rioting as many countries have taken a free-fall jump toward the culture of capitalism but haven't yet built up social welfare programs. The safety nets of community support that existed just a decade ago in many countries have disintegrated as cultures around the world have become more urban, more work-oriented, less family-oriented and less community-oriented. This will likely cause great social upheaval and a re-examination of cultural values as city slums fill with the recently employed and urban immigrants return to their old villages and farms.

In the longer term, this pressure from their constituents will push world leaders in favor of protectionism and government policies directed toward social welfare. Many free-market theorists are already either keeping quiet or have outright switched camps as liberal economic theorists have been vilified as the wizards behind the economic crisis.

As economies contract and as trade and finance become less globalized, developing countries will have to adapt culturally, economically and politically. All change inevitably helps some and hurts others; this change too will certainly be unhealthy for some parties’ interests. The overall growth of the world economy and competitiveness of the large economies will most likely suffer as trade liberalization is associated with growing economies as it is helping high-wage economies maintain their competitive edge in the marketplace.

On the other hand, more regulation of imports will be good for local businesses and will lessen the likelihood of social disruption caused by the increasingly unstable demand and supply of such commodities such as food and energy in the international marketplace. As their unemployed constituents demand affordable food and oil, world governments will be forced to provide it in spite of rising international prices. The only way to do this is to produce it internally and subsidize the price inefficiencies. Just as many US families are already planning to grow more of their own food, many governments will invest their dollars into looking out for their own security, in the form of protectionist trade and financial laws, like the Buy-American provision in the latest stimulus bill passed by US President Obama.

Of course, some protectionist measures in the interests of maintaining an adequate supply of affordable food and energy, especially if done sensitively to avoid retributive protectionism from other nations, would be reasonable precautions toward protecting our nation’s most vulnerable citizens. However, outright discouragement of all forms of economic liberalization, such as the provision in the stimulus bill, is short-sighted, politically motivated and is likely to hurt our long-term economic and political interests.

The US would do well to remember that it is an economic trading superpower, i.e. the biggest lemonade stand on the block – and if any economy is going to be hurt by a worldwide retreat of capital back inside of its owners’ pockets, it is ours. Furthermore, a history lesson in basic economics by David Ricardo’s theory of comparative advantage, a theory practically considered a law by modern-day economists of all persuasions, would remind us that even one-sided trade is better than no trade at all. So even if our neighbors refuse to buy our lemonade, we should continue to buy theirs.

In short, the current pull toward protectionism is due to a desire by governments to avoid an unreasonable amount of risk. As a reliance on international markets today makes for unreasonably risky waters, people are willing to give up in efficiency what they hope to gain in security. When economies eventually recover, however, people will begin to feel that the international marketplace is a treat from which they are being deprived, rather than a dangerous threat from which they demand to be protected.

When that happens, governments will again be pressured to release their hold on the markets and allow the invisible hand to find the best product, the best borrower and the best builder for the best price. If we are too successful in “protecting” ourselves against the world economy, our businesses will no longer have the cheap parts, capital and labor they need to remain competitive, other nations will not be as able to afford our products and we may lose our dominance in the global marketplace.

In summary, the distant shouts of those who were not on board the globalization gravy train to begin with, mainly labor groups and some local business owners, are suddenly being echoed all around us by the newly unemployed and those disadvantaged by the global economic tumult. While taking some measures to protect its citizens most basic needs, the US government should keep its eye on the prize – the long-term goal of ensuring that when the storm clears and the clouds part that we still have the busiest lemonade stand on the block.

Sunday, February 8, 2009

The Emperor's New Economics

We all know who the victims of this economic crisis are -- WE are (particularly, ME and YOU.) It's not so easy, however, to sort out who the culprits of this crisis are. Are they the sub-prime mortgage lenders? The borrowers, maybe? What about the greedy investment bankers who invested in them?

And let's not forget our favorite blame magnet of the times, former President George W. Bush who de-regulated financial markets until they were as free as the Iraqis are now thanks to Operation Iraqi Freedom.

Blaming these obvious targets may be emotionally satisfying but is not especially helpful. After all, the usually rhetorical question "What were you THINKING?" actually has an answer this time. All of these guys were getting fat on the intellectual fast food that a few fancy economic theorists sold to the world a few decades ago: namely, that greed is good, untrammeled markets can be trusted and cowboys make good world leaders.

Let's face it -- the investment bankers and mortgage lenders are the "practical thinkers" and Bush and his devoted followers are the "madmen in authority" that John Maynard Keynes referred to in his General Theory of Employment, Interest and Money: "Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." Year published? 1935.

Now that these economic theories are defunct -- or at the very least -- deflated, it seems that Cowboy/Emperor Bush was in fact marching through his presidential term wearing nothing but a bunch of fanciful theories spun out of thin air.

Have the neo-liberal, free market theories really been shown to be lacking in substance, or are you still a follower? Vote now!

Wednesday, February 4, 2009

Got Gigs? The New "Gig Economy"

Today on NPR's radio show Talk of the Nation, Tina Brown discussed what she calls "The Gig Economy." She is referring to people who work several jobs at once, doing several different types of work at once -- as opposed to having the old-fashioned and quickly vanishing "career" with full-time job, one boss, paid vacation and health insurance. Brown herself is a veritable "gigonomist" -- she runs her own online magazine and blog, wrote a bestselling book on Princess Diana and has edited a whole host of fancy magazines.

"Now that everyone has a project-to-project freelance career, everyone is a hustler," says Brown on her blog.

While I would prefer the term "multi-tasker" over "hustler", I have to admit that my own life seems to epitomize this idea. I am one of those industrious people who are always working on some task or another -- some paid work, some volunteer, some hobby.

Each week, I teach online classes in international politics, I teach writing for another university, I co-teach healthy cooking classes, write for 3 blogs, and then I volunteer tutoring Hispanic kids and cooking for the homeless. My newest "gig" is a travel course where I'm taking my university students to Turkey for two weeks.

In my spare time, I swim nearly every day, do yoga weekly, travel to 2-3 new countries per year and couchsurf around the US -- but of course, I'm never really on vacation and my laptop gets lugged around between beaches and train stations like a ball and chain around my wrist.

In Talk of the Nation, questions were raised as to whether free-wheeling freelancers like myself are:

1. Exploiting ourselves -- Endangering our futures by not getting employer-paid health insurance, unemployment coverage and the like.

2. Exploiting others -- "Spreading ourselves too thin," so to speak, and thus sacrificing quality for quantity in our work.

3. Simply products of our environment -- a downsizing economy, a multi-tasking culture

Personally, I tend to agree only with the third conclusion. I am certainly a product of my environment, but I'm not complaining. The freedom I gain from being 100% in charge of my time makes up for any false sense of security I might get from getting a 9-to-5. No job is 100% secure, just as nothing in life is 100% certain, and once you accept that, I find that there is little to gain from having a full-time job.

As for health insurance, HSA's are great ways to buy your own health insurance and get tax breaks for doing it. In fact, when you work as a freelancer, all kinds of things are tax deductible. When you think about it, you can find everything you can get from the highly touted and overrated full-time job from other sources quite easily.

On the other hand -- Not being trapped in an office all day long? Priceless.

What do you think about these fly-by-night part-timers? Vote now!

Friday, January 30, 2009

Is Globalization Beginning to Backpedal?

It's one of the questions we political science educators having been posing to students since the term "globalization" was coined -- can it go backwards? "We've all been building this big, integrated financial system," said James Rosenfield, a co-founder of Cambridge Energy Research Associates. "We didn't consider what would happen when it disintegrated."[1]

According to this article in the IHT reported from the World Economic Forum in Davos, countries are pressuring banks to lend only to borrowers in their own countries. Furthermore, the stimulus package (a term that sounds a LOT more exciting than it actually is) passed yesterday by the House revives a "Buy American" provision that states all projects must operate with only American-made goods. (See Washington Post article.)

This may at first sound like a safe move meant to ensure that big government bail-outs help out at home before going overseas. However, the world economy (of which ALL national economies are just a part) doesn't work that way.

To demonstrate, let's say that I want to stimulate the economy in my own family. My plan is to give lots of money to my relatives. (NOT that I necessarily think that this is the best way to achieve this, OR that I would ever have the resources to help out any of my family members NOR the kindness to want to do so -- just in case any of them are reading this -- but I'm trying to make the metaphor match what's actually happening). Then I tell them that they can't spend any of this money on anything outside of the family.

"You dork," my imagined brother then might comment, "How are we supposed to make money without spending money outside of our family?" And he would be, totally true to his actual character, both insightful and tactless.

BUT! -- you protest, the US economy is not like your stupid little family's petty economy! There are plenty of Americans to buy things from and sell things to, and we don't need any of that cheap crap they sell us from foreign lands where monkeys pick your pockets and pirates bury their treasure instead of buying American!

Oh, but it is, my pretty little nationalist. I'll try to avoid the cliches about globalization that use sappy words like interconnectedness and dependency, but come on -- we are all spinning on the same ball of dirt! As if it's not tough enough to run a competitive business these days without using foreign suppliers, there's also the little problem of tit-for-tat economic protectionism which did more than a little to contribute to the collapse of the world economy the last time things looked this bad.

Is it really wise (or even possible) to try to undo the globalization of financial capital markets? Vote now!

Tuesday, January 27, 2009

Mass Starvation Predicted by Basically Everyone


I have just officially reached my breaking point with how many think tanks, rock stars, American Presidents, impersonators of wannabe American Presidents, UN Chiefs, economists with chia-pet hair, economists with the opposite problem, KFC, these irritatingly thoughtful high schoolers and my own students (sorry no pic) that I can hear describe the looming scenario of mass starvation and not totally wig out.

Everyone seems to agree that there is enough food to go around. Furthermore, most countries are capable of growing all the food that they need to feed themselves. It's the system that determines what food goes where that is the problem. As Gandhi put it, "There is enough food to meet everyone's need, but not everyone's greed."

To avoid making this blog into another online classroom, I will avoid going into any lengthy lectures and explanations. (Don't mention it.) If you're interested in finding out why there are so many hungry people in the world, you can probably figure it out yourself with the smallest effort. Instead, I'll let Liza Minnelli and this German midget detail the argument for you with this nifty little dance number from the musical Cabaret -- just substitute the word "food" for "vorld."


This is not just a third-world problem. One day a week, I cook lunch at a local kitchen for hungry Americans, where one day a week at 9:00 a.m. I shoulder my way past a couple of dozen people (who are never properly dressed for the weather like I always am) lined up waiting in the falling snow to get a hot meal in a big, cold, dark room where they will sit on hard wooden benches elbow-to-elbow with smelly people (yes, I did) to eat the food that local grocery stores could not sell to people who have homes, lawn mowers, laptops and warm winter clothes.

Not that the chef doesn't work wonders with very limited resources, but my point is that it sucks to be hungry and hunger is spreading. It is not hiding in far-off exotic locations famous only for pirates, E-mails from elderly widows who want to deposit $5.5 million into your bank account if you will only give them enough information to clean you out, or soaring disease rates. It's in your town, and it's knocking on the door of more people everyday thanks to economic meltdown which is merely the umbrella in the triple martini of ill-will, hopelessness and rampant confusion that Bush II has left for us as a souvenir of his eight years in office.

So here I am, joining in the chorus of people who very likely remind you of your mother's tiring habit of trying to get you to finish your plate with common logical fallacies. Well, rest assured: Your cold, half-eaten dinners did not cause any African children to go hungry or even to wish that they could finish your plate (that's gross -- even starving kids have standards!), but there are some real connections between your behavior and people who are hungry.

Remember that I'm not going to go into any long lectures about these connections between you and starving African kids (Clue #1: where you shop), but I hope (Clue #2: what you buy) that you will make the connection (Clue #3: who you vote for) completely on your own without any influence from me.

I hope that you and your loved ones can stay warm and well-fed this winter; just remember that not everybody will. Let's reach our breaking points, before it does. (Sorry that sounded like a mix between a closing prayer and a PSA. I promise I'll get back to making callous observations that don't ask you to do a damn thing after this post.)

Sunday, January 25, 2009

Obama, Marx and The Big Lebowski

Preface: In my class this week, we are studying Marxism and its more modern offspring, Structuralism, World Systems Theory, Cultural Hegemony and others. Since I challenged my students to find an example of Marxism in modern pop culture, I thought it is only fair that I put myself up to the task, so here goes:This is my Marxist interpretation of The Big Lebowski applied to the current economic crisis and President Obama.

(Yes, I have noticed that the title of this post reads like it should end with "all walk into a bar," but that is not the challenge I have set before myself today. I would, however, welcome comments from readers who would enjoy taking on such a challenge.)

In The Big Lebowski, The Dude would be Marx's hero who refuses to fit into the role of either worker or consumer in the economic system. The wrongdoers in the movie are the spineless pacifists [Steve Buscemi], senseless post-modernists [Julianne Moore], violent realists [John Goodman], thoughtless nihilists [The Nihilists] and the greedy bourgeois capital owner [The Big Lebowski] and his materialist trophy wife [Bunny].

By refusing to cave into the demands of these false ideologies or capitalist systems that try to force The Dude into denying his true self -- a job-avoiding, white russian-slurping, bathrobe-wearing, joint-puffing hero -- he emerges at the end of the movie unscathed by the crisis that has left all the others dead, maimed or otherwise scarred in its wake.

If we further exhume these ideas from the past, swirl them around with a 90's cult movie and slap them into the present-day economic nightmare, it becomes clear that President Obama is meant to be our guide through this mess, our own national version of The Dude's missing rug.

What's that you say? Don't you see the stunning similarities between Obama, the Economic Crisis and The Dude?

Exhibit A. Exhibit B. Exhibit C.

Back to Marx: Since Marx's version of the story doesn't allow for happy endings, let's skip to one of his ideological buddies who, unlike Marx, was taking his Zoloft: Antonio Gramsci. According to his Cultural Hegemony Theory, the powerful elite now control the working class through ideas; they define what is in, what is out, what is patriotic, what kind of jokes are funny, what kind of haircuts are so 2004 and whether a celebrity is considered saintly, sexy or sleazy. Sort of like this clique-ish bunch from Mean Girls.

According to Gramsci, the only way to defeat the mean-girl-bourgeois-moral-authority is for a strong leader to emerge from the uncool group -- an "organic intellectual" (which sounds REALLY uncool) who can challenge and eventually win over the ruling ideology to his way of seeing things, but he must stay true to his uncool roots instead of becoming one of them. Sound familiar? (No -- it's NOT Lindsay Lohan! Think Nerd-In-Chief!)

Dear President Obama: The Marxist lesson behind The Big Lebowski is that the only way out of the current global crisis of capitalism is to stay true to who you are, win a ticket to the White House (which you did) and then tell everybody what's what (which you are). Now let's go bowling.

Saturday, January 24, 2009

Krugman on Obama's Plan with Evil Cat

While much more flattering photos of Paul Krugman undoubtedly exist, I was thrilled to find this one of him holding a rather sinister-looking feline companion -- which kind of makes him look like the evil dude on Inspector Gadget.

Krugman is a Nobel-prize winning economist (he is a Keynesian economist) who was recently hailed as a prophet of doom for predicting the sub-prime mortgage crisis. He says here in the IHT that he did not hear what he had hoped for in Obama's Inaugural Address. Apparently Obama is all things to all people -- except Paul Krugman.

Specifically, Krugman says that resolving the economic crisis will require some serious government spending rather than the let's-all-tighten-our-belts talk that Obama put forth.

Would you rather see the government tighten its belt or shop until it drops?

Vote now!

(BTW, if you are an academic snob who is offended by my references to Wikipedia should submit a complaint here -- I can't exactly put a hyperlink to our class textbook. Plus, Wiki is easy for beginners [if you have to click on the Wiki links, then you are a beginner] to understand and most articles are just as well-referenced as any academic paper. Frankly, being anti-Wiki is just a little bourgeois -- yuck!)