A Matter of Trust

There is a news report that Chinese trust prostitutes more than politicians and scientists. Apparently, an online survey was published by Insight China magazine. It seems that 7.9% of respondents consider prostitutes to be trustworthy putting them in third place behind farmers and religious workers. Scientists get a bad rap coming in close to politicians and teachers. Least credible were secretaries, real estate developers, agents, entertainers and directors. An editorial on China Daily on this rather surprising finding can be found here.

On the face of it, this result is quite surprising. But think about it. What is trust? Trust can be defined as a person on whom or thing on which one relies. Wikipedia defines trust as a "relationship of reliance." No moral judgment needs to be made in matters of trust. In this respect, it is paradoxically not surprising that prostitutes can be viewed as more trustworthy than say politicians. After all, when someone visits a prostitute, he knows exactly what he is getting. There are no undertones. There is a straight forward commercial transaction taking place with both parties knowing what they are getting. Of course I am not condoning prostitution in any fashion. I am simply making a statement regarding the nature of transaction.

Politicians are expected to do anything to stay in power so it is not surprising that they are not trusted. What about scientists.?These people are supposed to advance the state of our knowledge in an impartial manner. Supposedly facts rule in matters scientific. A single contrary observation is sufficient to disprove scientific "fact" that may be held for centuries. Take the case of swans. For centuries, it was a proven "fact" that all swans are white. Countless observations over the years had established this beyond any doubt. Until the first black swan was sighted. Immediately the statement "all swans are white" was disproved. So in this highly objective field, why do scientists have so little credibility? Part of the reason can be that over the years, there have been many exposes that have reduced the credibility of scientists. There is a mystique of scientists that they are supremely objective and pursue knowledge for its own sake; unmoved by monetary considerations. However, scientists are also human and many have slipped from the pedestal that they have been placed on by the average layperson. There have been too many cases of scientists colluding with companies to suppress negative research or scientists fudging their results or even stealing other people's work.

What is certain is that trust takes a long time to build and a very short time to be destroyed. What is also certain is that untrustworthy individuals and institutions ultimately suffer the ill effects of their actions. Often it seems that such people can get away with murder. However, fate has a habit of creeping up unawares and striking when you least expect it.

Is There a Purpose to Life?

Is there a purpose to life? For many people, this is probably a stupid question. We are alive. Not just that, we happen to belong to a species that can indulge in abstract thought such as this question. But really, is there a purpose to life? Perhaps more relevant can be can we supply a purpose to our lives? Surely there has to be more to life than just work and shopping. This is what the economic paradigm of the last thirty years has been telling us. We are nothing more than consumers whose sole purpose in existence is to shop and to do that we need to work like dogs. Marketing efforts have convinced a large number of us (maybe all of us) that buying products can make us cool and sexy and help us attract hot chicks (or guys) and make us successful and powerful and what not.

I don't know but this sounds rather sad and pathetic. Work like a dog during the week. Party desperately in the weekend in a sad effort to make it seem worthwhile and don't forget the shopping!

Environmental Responsibility

For far too long, we, as a species, have treated our natural environment in a most cavalier fashion. It is now acknowledged that humans are responsible for the death of mega fauna that used to roam in both the American continents and in other places like Australia and New Zealand. the initial assumption of people in first entering a new land and discovering a rich and seemingly inexhaustible menageries of animals was to assume that the numbers were infact inexhaustible. The discovery that they were not would come when species were driven to extinction and this would inevitably be followed by a crash in population numbers. However, hunter gatherer societies would subsequently adjust themselves in rough harmony with the resources subsequently available.

This calculus started to change with the development of agriculture. Farming allowed a sharp increase in population numbers which in turn allowed some members of the community to start specializing in non farm activities and this eventually led to the development of urban civilization. Pre-industrial farmers were not able to control many variables that affected them. Mortality rates remained at a high level. The development of areas under centralized rule (aka empires) would result in stable conditions conducive to population growth. The population level would slowly increase until some external or internal shock disrupted the system at which point the level would fall often dramatically. Think of the fall of the Roman empire and the Black Plague. Recovery would then restart from this lower level. Pre-industrial societies were also not capable of truly intensive utilization of resources. So a low level of utilization and periodic shocks to the system would allow the natural world to recover. This is not to say that things would return to the state they were in before humans came in. Enough of a respite would be given so that resources, specially animals, were not in real danger of being driven to extinction by human activities.

Several things changed this state of affairs. One was the development of gun powder. Guns allowed for far greater efficiencies in killing both humans and animals. While the earliest guns were cumbersome machines prone to difficulties, these were soon improved upon and the 19th century saw rapid improvement in the quality and capabilities of guns. A second element was improved means of transport. This enabled large number of people to move from one area and settle in another. These settlers came equipped with guns which enabled them to fight off the challenge posed by more primitive societies. Guns also enabled them to harvest animal resources more efficiently. Concurrently with technological developments was the development of a mind set which saw the world as subservient to humans. This viewpoint viewed anything not in the service of the community to be a waste. All of these changes combined with the ancient mind set that viewed natural resources as inexhaustible.

Industrial development resulted in vastly enhancing the impact that humans have on the planet. Since the mind set did not change, this resulted in a dramatic increase in the extinction rate of species and hugely intensified harvesting of natural resources; this resulted in extraction without regard for the environment and resulted in huge losses of forest cover (to cite one example). The net result is that our activities threaten the health of the planet and therefore threatens our continued existence. At the very least, the civilization that we have built cannot continue as before. We are dependent on the biosphere. No one has yet figured out how to survive independently of the natural world.

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The Importance of History

In a modern world gone mad over materialism and obsessing over technology and gadgets, history seemingly plays an unimportant role. The global culture is forward looking. It denigrates the old over the new. The advice that older people can give is ignored as being from the fossilized knowledge of the past. History is regarded merely stories of old; of no relevance to the present and certainly not affecting the future. What is past is past right? No use crying over spilt milk after all.

This is a general view held by people at large. Governments know better. He who controls history controls society's perception of itself in the present. This is why governments have carefully controlled the presentation of history taught to students. The same events can result in wildly differing interpretations. Take the partition of India into two countries in 1947. Was it a step that gave Muslims in India a homeland or was it the division of Mother India? Similarly, was Gandhi a peace loving man who defined a new method of resisting colonialism or was he a cynical manipulator who knew how to push the right buttons to get what he wanted? Going back in the past, who was Mahmud of Ghazni: a staunch Muslim who shattered idolatry or a power mad, money grubbing invader who destroyed temples indiscriminately for the sake of booty? As we can see, one man's villain can be another man's hero.

The point that governments realize is that society's and individual's view of themselves is strongly rooted in their history. Every single nation to a certain extent mythologizes its past. Indeed every single religion has also done so. Christianity is a prime example of this. For almost 300 years after Jesus, there were massive debates within the community on how to present Jesus. Was he the son of God? Was he a prophet sent by God? Was he sent only to the Jews or was he sent to all the peoples of the world? Countless gospels, letters, epistles, acts etc., nearly all purporting to come from the disciples of Jesus circulated during this period. Each presented Jesus in a specific light in an attempt to address these and similar questions. Eventually one point of view won out over the others. Books which supported this point of view were deemed to be scripture while the rest were condemned as apocrypha. The fact remains that for almost 300 years, people who considered themselves to be pious and sincere Christians believed in these other books and yet today any Christian who professes belief in such books is considered to be heretical.

So history instead of being a dull subject; mere stories from the past is actually crucial to a society's view of itself. The same phenomenon also operates at an individual level. People who do well at their chosen careers tend rewrite their history in a more heroic light. People who do not do so well also tend to do the same. A recent interesting (albeit somewhat extreme) case has been that of Howard Manoian, an American WWII veteran who claimed a more heroic role in the war than had actually been the case. On a more prosaic level, people rewrite personal histories to justify and minimize perceived failure and highlight perceived successes.

So we see that history is actually an extremely important subject. The present is composed of decisions made in the past just as the future will be molded by decisions being made in the present. Our sense of who we are and where we come from stems from our understanding of our history at each level: personal, local, regional, national and religious.

Where is The Wisdom?

We live in an age of easy information. This is a most unusual situation. Historically, nearly everyone has been information poor. It took time for information to travel from one place to another; even between places that are relatively close to each other. Even 40 years ago, it was not common for news to be transmitted internationally. Indeed, in nearly all parts of the world, news and information was essentially local. In the early 90's, many companies were still using telexes for international communication - a decades old method of transmitting information. Locally typewriters (by this time electronic ones) and hand written memos were still being used. Fax had recently been introduced. In many subsidiaries of multinationals, fax machines were kept at the chief executive's office.

All this changed within a decade. The transformation has been astonishing. The simultaneous development of email and the web transformed the way businesses and individuals communicate. Information, which previously had been hard to find suddenly became easily accessible; to the extent that a new term - information overload - had to be coined. Earlier generations would have found this concept most intriguing. An entire generation has grown up with easy access to incredible amounts of information. Yet in all this deluge of information, we seem to have lost knowledge. More importantly, we seem to have lost wisdom - the ability to couple information with right and wrong.

A Question of Ethics

Science has advanced at a far more rapid pace than our capacity to assimilate these changes. A good example of this is the debate on stem cell research. Should this be allowed or not. Both sides have their point of view which they are unwilling to change. Proponents say that stem cell research will result in break-throughs in medical advances. New types of treatments and cures for existing ailments will be developed. Opponents generally rely on the argument that all life including fetal life is sacred.

Another example: developments in genetics will soon allow people to screen for genetic abnormalities in fetuses. However, what is to prevent couples from making changes that are cosmetic in nature like increasing height? Is it ethical to do so? What about couples who opt not to do these kind of changes? What about couples who cannot afford to have these kind of changes done? Won't these be steps towards creating a society where opportunities are not equal because of genetic manipulations? Would we want to live in a society like that? These questions have been raised in books like Brave New World (by Aldous Huxley) and in movies like Gattaca.

What about using sperm banks to inseminate a woman when her husband is infertile? Should this be allowed?

Can You Say God Willing?

I recently read The Year of Living Biblically by A. J. Jacobs. This is an account of a personal experiment carried out by Mr. Jacobs in which he attempts to live a year by adhering as strictly as possible in accordance with the various rules and regulations specified in the Bible. An often funny account, it also illustrates how disconnected the average Western person has become from their religious roots.

One thing caught my eye in the book. At one point the author starts adding the words "God willing" to every future tense sentence. This was apparently in accordance with Proverbs 27:1 which states "Do not boast about tomorrow, for you do not know what a day may bring forth." As a Muslim I found this most interesting because most Muslims as a matter of routine add "God willing" (actually its Arabic equivalent InshaAllah) whenever they have to commit to an action in the future. For most Muslims, this is a routine and natural statement said without any hesitation or embarrassment but it was obvious from reading the book that the author and his family were uncomfortable with his saying it.

This got me to thinking why this could be so. Can it be that people in the West are uncomfortable with the idea that they are not completely in control of their lives? Why is it easier to say f--k for example than to say God willing? Anyone got any idea?

Is Religion a Conservative or a Liberal Force?

Most people would answer the above question very forcefully as conservative. Throughout the world, religion - and here I am not talking of any particular religion - is considered to be a strongly conservative force. A large number of people who think of themselves as liberal would insist that religion is not only conservative, it is reactionary. This is an assessment that I would disagree with. I believe that contrary to general opinion, religion is actually a liberating force. Let me add that here I am not talking about cults; I am talking religion in the traditional sense of the word.

Why do I make this claim? It is important to distinguish between what a religion teaches and the actions of the adherents of that religion. Consider Christianity. It is considered to be a religion of love. Yet throughout history, the most violent and intolerant actions have been those of people who considered themselves devout and pious Christians. Again consider Islam. A religion of peace. The very name means submission and is a root for peace in Arabic. Yet today, many non-muslims regard it as a violent religion. So the actions of a religion's adherents can be at a disconnect with the teachings of that religion. Again, take Islam. The religion gave women rights to property and inheritance at a time when they were universally considered to be the property of males with no rights of their own. This is an astonishingly liberal act done in a strikingly conservative milieu.

It has been said before that anyone can read whatever they like in the holy texts of their religion. That is undoubtedly true and generally speaking, a strongly conservative interpretation has been done on these texts. Yet the fact remains that many of the positions taken in these texts are unambiguously liberal.

I hate conspiracy theories. They reek of paranoia to me. People who ascribe to them seem to me to be living in a fantasy world where there are vast impersonal forces out to get them or their country or their religion or whatever. Name any group in the world and there are people - seemingly sane, rational people - who will fervently subscribe to such beliefs. There are a vast number of such conspiracies. So many that the Daily Telegraph has a list of the top thirty. There is nothing that one can do to dissuade someone from believing in a conspiracy theory. Such people will always find some small alleged anomaly or string of coincidences and thereby build a mountain out of a molehill.

Yet, events in the recent past have led to conclude that there is a conspiracy to isolate Pakistan internationally and damage it economically. There seems to be not one grand conspiracy but a nexus of them which may be operating independently but the effects of one are reinforcing the effects of others.

Valentine's Day

Valentine's Day has again passed with its usual share of controversies in some parts of the non Western world. It is a reflection of the current cultural strength of the West that this occasion has been adopted by cultures in parts of the world which have no such tradition. Many would argue that this day is a harmless expression of love. Others protest vociferously at perceived cultural contamination. Both have a valid but incomplete point of view.

People who enthusiastically adopt this day usually have no knowledge of the historical background. Who was Valentine and how did Valentine's Day become associated with romantic love? Valentine is the name of several early Christian martyrs. Indeed there seem to have been so many of them that until 1969, the Catholic Church recognized no fewer than eleven Valentine's Days. February 14 is associated with two (possibly three) of these Valentines. One was Valentine of Rome, a priest who was killed around AD 269; another was Valentine of Terni who was apparently killed during the reign of Emperor Aurelian; there also seems to have been a third Valentine who was killed in Africa but not much seems to be known about him. Early Christianity does not seem to have associated romantic love with any of these people. The first linkage of February 14 as Valentine's Day associated with romance seems to have been done by Chaucer. Prior to this there seems to be no evidence of any such linkage. However, in the pre Christian era, the period between mid January and mid February was deedicated to the sacred marriage of Zeus and Hera. So what seems to have happened is that a pre Christian, pagan celebration got adopted in a modified form during the European Middle Ages. The festival was reinvented in the nineteenth century starting from England and then spreading from there. While Europe and the US could be expected to naturally adopt the festival, its spread around the world was fuelled to a large extent by colonialism. The impact of colonialism was not restricted to the military sphere. The European conquerors were not content merely to physically conquer other places. They were genuinely convinced of the superiority of their culture and so in most places, there was a concerted attempt to extinguish the local (and supposedly inferior) culture and put in its place Western culture. The most determined attempt in this regard was made by the French followed by British. The colonials least concerned about cultural matters seem to have been Belgians whose main interest was economic and who went about their business in a rabidly mercenary fashion. But the full cultural impact of the West in most parts of the world came after independence was granted to the colonies. The reason for this was that the colonial authorities tended to temper the civilizing zeal of their compatriots to the exigencies of peacefully controlling the native population. After independence, such termpering instincts were removed. This period also coincided with the rise and fairly rapid spread of radio, movies and television. These proved to be excellent conduits of cultural transmission. These technologies were first developed in the US which thereby gained an unparalled transmitter of American values. The relevance of this to Valentine's Day is that it was in the US that this holiday got truly commercialized and this was then transmitted around the world via the afore mentioned electronic media. So when non Western people celebrate Valentine's Day, they are actually honoring early Christian saints. Ofcourse, by now much of the religious connotation of the festival has been stripped off by the demands of commercialization. It should also be mentioned that adoption of Valentine's Day by non Western, non Christian people reflects their cultural confusion (and in certain respects schizophrenia). This festival is associated with romance. Most of the couples celebrating this in Pakistan would actually have had arranged marriages where romantic love before marriage is generally not a factor. Even for many couples who have not gone the arranged marriage route would be opposed to their children doing the same.

So what about people who oppose this festival? Their opposition is generally visceral. It reflects a rejection of all things Western. These people tend to view things in black and white. Adoption of a festival like this is viewed as cultural contamination. They tend to forget that the culture that they are trying to keep pure is itself a result of many influences over the centuries. Generally, this is presented as a case of religious purity. Most traditional holidays and festivals around the world have their origins in religion. When a festival crosses over as in the case of Valentine's Day, then a question of perceived religious contamination can occur. Usually in such a cross-over, the receiving culture strips out the original religious connotation. A case in point is the festival of Basant which is celebrated in both India and Pakistan. Basant is a Hindu festival held in honor of Saraswati, the Hindu goddess of knowledge, music and art. The festival is held on the traditional first day of spring and is a celebration of the arrival of spring after a hard winter. During centuries of co-existence, the festival was adopted by the Muslim community which removed the original religious connotations and reduced it into a simple and secular celebration of the arrival of spring after a hard winter. Yet in recent times, this festival has become controversial purely on the basis of religious contamination. The interesting aspect about such debates is that the grandchildren of people who oppose such cross-overs may well end up celebrating them!

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A Delusional State

The world has been living in a state of delusion for a long time now. It is now payback time for the excesses of the last several decades. The delusion was that the world can be endlessly exploited without thought of consequences. The growth of consumerism as a leading global ideology has contributed enormously to this delusional mindset. Modern capitalism has both driven and is being driven by consumerism. Short term financial thinking and an emphasis on the bottom line has led companies to try and condition people into equating personal happiness with consumption and the purchase of material possessions in general and their own specific product in particular. Take virtually any advertisement and you will see this element at work. To take an example: I recently saw an ad for a fridge which showed a glamorous woman behaving excitedly and dancing with joy around it. There was no mention of the specific characteristics of the product itself; why should anyone buy it, what made this brand superior to others, what specific benefits did this brand deliver that others did not or if they did in what fashion were these benefits superior to the offerings of competitors? None of these questions were addressed by the ad. Instead the focus was on convincing viewers that purchase of this particular brand would make them feel better or enhance their status. To take another example: you see people wearing branded shirts and the like. Sometimes these have messages written on them. Generally these messages aim to amuse or shock. If you see the ads for such clothing, the message will emphasize how this particular item will help a person express his or her unique individuality. Yet there will be several thousand people (at the very least) who will be wearing such clothes.

It is this equating of personal happiness and consumption that drives the current model of capitalism. If consumers are not made to feel that they have to buy items which they generally do not require, then the whole edifice starts coming down. The result was that consumers in the developed countries ended up with massive debts and this debt fueled consumption model was exported around the world. Now, however, the credit crunch has exposed the limitations of this model. It seems that this method of business has reached its limits and a painful period of adjustment has started.

New Year, New Hope?

New year has usually been seen as a signal of a new dawn; a new hope. A year in which we can shake off the mistakes of the past year and begin afresh from a clean slate as it were. Such hopes never come to pass and the new year resolutions that are so piously made every year are promptly broken and quickly fade from memory. So far, signs are not good to justify having a new hope but lets see....

Collapse of the Washington Consensus

Milton Friedman must be rolling over in his grave. The economic ideas he espoused throughout his life have imploded in a spectacular fashion. Keynesianism which he derided has thus far withstood the test of time. Friedman's ideas were packaged to the world as part of the Washington Consensus.

"Washington Consensus" as a term was first coined by an economist working in the Institute of International Economics. It proposed ten recommendations which were:

1. Fiscal policy discipline.
2. Redirection of public spending from subsidies (specially those defined as indiscriminate) towards provision of pro-poor, pro-growth policies like primary education, primary health care and infrastructure development.
3. Tax reform aimed at broadening the tax base and reducing the marginal tax rate to "moderate" levels.
4. Market determined interest rates.
5. Competitive exchange rates.
   
6. Trade liberalization.
7. Liberalization of inward foreign direct investment.
8. Privatization of state enterprises.
9. Deregulation i.e. abolition of regulations that impede market entry or restrict competition.
10. Legal security of property rights.

These policies were strongly supported by international financial institutions like the World Bank and the International Monetary Fund. However, these proposals degenerated quite rapidly into market fundamentalism. The key characteristic of market fundamentalism is a strong, indeed dogmatic belief that markets tend towards a natural equilibrium and the best interests in a society "are achieved by allowing its participants to pursue their own self interest" (Wikipedia definition).

There are a few assumptions at play in both points of view and in market fundamentalism in particular. First of all, the fundamental assumption in the belief in the efficacy of markets is the assumption that conditions of perfect competition exist in all cases. Perfect competition assumes that there are no barriers to entry and exit, buyers and sellers have equal (and perfect) information and both parties have the same (or at least similar) economic power. These are all highly unrealistic assumptions. There is no market in the world where these conditions apply. The nearest approximation we come to are the stock exchanges and even there not all the assumptions hold true.

There is another problem with market fundamentalism. It assumes that everyone is either a buyer or a seller and that all buyers and sellers find each other. In other words, markets will find their own level of employment which may or may not correspond to full employment although the underlying assumption is that this will result in full employment. People who cannot play either role are ignored and under conditions of perfect market fundamentalism will be left to their own devices. The implicit assumption here is that buyers and sellers have access to the same amount of information regarding the transaction.

Friedman advocated a set of policies that have proven to be deeply unpopular everywhere. Furthermore, they have failed repeatedly in country after country where they were imposed. Take two test cases: Chile and Argentina.

Chile was the first country where the full weight of the Washington consensus and market fundamentalism was imposed. The country's murderous ruler Pinochet was assured that imposing these policies would result in short term pain but long term gain. How short is short term? The answer given was in months. The reality proved to be somewhat different. The downturn lasted several years instead of the promised months. A large number of people were thrown out of work. Poverty increased sharply along with income inequality. The local business community which had strongly supported the coup found itself at a severe disadvantage vis-a-vis foreign competitors for whom the economy was thrown wide open. Government revenues collapsed. The promised utopia never arrived. Instead, after a few years, the government found itself nationalizing the entire banking sector to save it from complete collapse.

Argentina was a similar case. To a greater extent than Chile, the country was a poster child for the IMF. This is the one country which followed the dicates of the consensus and market fundamentalism faithfully. The result was repeated economic collapse. In the nineties, the government went to a much further extent than previously in following the dictates of the IMF. For several years, Argentina was touted as a success story. This was a country which had become lean and mean. A country which had laid the foundations for long term success. And then the whole edifice came crumbling down. The foundations turned out to be built of sand. Economic growth was only achieved after Argentina defaulted on its debts and repudiated the recommendations of the IMF.

The 1997 Asian crisis too was a result of the consensus and market fundamentalism. Under pressure from the World Bank and the IMF, the Asian tigers loosened capital controls allowing so called hot money to come roaring in. For some time all was hunky dory. Foreign capital flowed in and massive investments were made in different sectors specially real estate. Then a rumour started concerning economic weakness regarding Thailand and suddenly all the hot money that had come roaring in was abruptly yanked out leaving economic devastation in its wake. The countries that were not affected were those which had resisted the pressure to loosen capital controls. Amongst the tigers, the one exception was Malaysia which rejected IMF advice and imposed capital controls. Other countries accepted IMF's advice and suffered from massive downturns. By contrast, the downturn in Malaysia was shallower and growth resumed more quickly and at a faster pace as compared to the other tigers.

Look at the situation today. The global financial system faces collapse and threatens to take the global economy down with it. In each and every case, markets have completely failed to find their equilibrium. Even Alan Greenspan has recently admitted the failure of the self regulating markets paradigm. Again it boils down to the assumptions made by market fundamentalism. Economics assumes conditions of perfect competition in order to make analysis of supply and demand easier. However, real world markets do not behave like this. Especially under free market fundamentalism, the effect of unfettered competition is actually to increase concentration and reduce consumer choice as larger firms swallow smaller ones. This increased concentration results in asymmetric information. Buyers generally do not have the amount of information that sellers have. This results in greater power accruing to the seller. As various scandals over the years have shown, such power is inevitably abused.

The financial crisis of 2008 has shown that the set of policies advocated by Friedman and the market fundamentalists results in an economic disaster of massive proportions. The policies taken to combat this crisis are in direct contradiction to those of the consensus and are more in line with those of Keynes. Thirty years of market fundamentalism have shown the economic philosophy (if it can be called that) to be a house of cards which cannot withstand the test of time.

Changing Economic Paradigm

The world seems to be on the cusp of major economic changes. For too long now, patently harmful economic ideology has been pushed onto the world under the garb of liberalization. These policies were designed to enhance the economic and by extension military power of already developed economies. The existing developing economies were relegated to the role of commodity producers who would buy the manufactures of the existing developed economies. Those developing economies that did develop did so by ignoring the Washington Consensus. When they bought into the particular set of policies that define the Consensus, they suffered a painful economic meltdown.

Another aspect of the Consensus was that there was a massive asset grab by the rich at the expense of the middle class. Over time, the middle class shrank. Its members moved in both directions: people becoming poor and people becoming richer. However, the number of people moving into the ranks of the poor was far greater than the number of people moving into the ranks of the rich.

Yet another aspect was that this was a period marked by deregulation. In some cases, deregulation helped and in other cases it proved to be a blunder if not an outright disaster. Take the case of telecommunications. Before deregulation, this area was controlled by stodgy monopolies which charged high prices and poor service for voice and data services. After deregulation, this area was shaken up and today consumers and businesses have low prices and high data transfer rates. Definitely a plus. The airline industry on the other hand has lurched from crisis to crisis (barring a few extremely well run airlines) since deregulation. In the US, airlines have become bankrupt several times. This is despite continuously rising demand for air travel. The financial services industry has also faced repeated crises. Each time, the disaster has been bigger than before. The end result is the situation today in which the global financial system is stuttering and threatening to shut down. This would have severe consequences for the real economy. Although the problem originated in one country, thanks to the interconnected nature of the modern world, virtually every country in the world is being affected to some degree or the other.

What will be the end result of this turmoil? For atleast a generation, there will be a switch back to greater regulation and an effort to smooth boom and bust cycles. However, there will eventually rise a generation to whom these events will be ancient history and who will be convinced that something like this cannot happen to them. And so the cycle will repeat.

Does Pakistan Need The Nuclear Bomb?

Pakistan is one of seven countries in the world which possesses a nuclear bomb. It is the only Muslim country with the knowledge and technology to manufacture these weapons. This is a source of pride for virtually every Pakistani. It is accepted as a given that the country needs the nuclear bomb for its survival. It is this assumption that I have come to question.

Like most of my countrymen, I think it is a great achievement that Pakistan developed the nuclear bomb and an associated advanced delivery system on its own. It speaks volumes of the talent and expertise that is available in the country today. What I have come to question is the need to actually possess a nuclear device.

Why should Pakistan have a nuclear bomb? Whenever I ask this question, the visceral answer is that we need it in order to defend ourselves against India. Without the bomb, India will destroy Pakistan. Let's examine this issue in a little more detail.

Advocates of the bomb argue that this is necessary for self defense. The question is self defense against whom? Pakistan borders four countries - China, India, Iran and Afghanistan. The country has had strong relationship with China and there is a negligible probability of an active war against that country. Iran is highly unlikely to attack Pakistan. In the Iranian calculation, Pakistan does not pose a credible threat to its integrity. The same is true on the Pakistani side. The Pakistan army is fully capable of countering whatever indigenous forces that Afghanistan can muster. In any case, the main supply route to Afghanistan runs through Pakistan and in the highly unlikely event of a conventional war with that country, all Pakistan needs to do is cut off this supply line and Afghanistan's ability to wage war will be significantly curtailed. This leaves India. Partition left a legacy of mistrust on both sides. The Indian side initially expected Pakistan to collapse of its own accord while the Pakistani side was convinced that India wanted to reabsorb the country. This legacy has ebbed and flowed over the years. A series of measures taken over time has cut off the two populations from each other. As a result, most people in the two countries developed distorted views of the other side. The distortion is greater on the Indian side. Pakistanis have two sources of access to events and people in India. First, a large number of people have relatives living on the other side; second, Bollywood movies are hugely popular in the country. Of course, Bollywood provides a fairly distorted view of the life in India, nevertheless there is some indication of what Indian life and culture are.

So there is a legacy of mistrust which is bolstered by a lack of large scale contact between the general populations. In this context, nuclear weapons are deemed to have essential survival value for Pakistan against perceived aggressive designs of India. But is this really true? The Indian economy is much larger than the Pakistani economy and has been growing at a faster pace over a longer period of time. As a result, it is better able to support the burden of a large military. Not only that, it is better able to keep its armed forces equipped with the latest equipment. It is conceded that in a conventional war, Pakistan cannot hope to win. The best it can do is force a draw and even that is not sustainable because of a weaker economy. In this context, it is asserted that nuclear weapons can be used if survival is threatened. My question is what happens the day after? Lets say there is a nuclear exchange. India and Pakistan lob nuclear tipped missiles at each other. There is no guarantee that either side will restrict itself to military targets. Both parties would also want to hot economic targets. However, industrial capacity is usually situated in urban centers. The result would be the incineration of major cities on both sides with massive loss of life. What will happen to the survivors of such an exchange. Pakistan cannot survive a nuclear exchange intact. Its physical and logistics infrastructure will be shattered. It will need to take care of a large number of radiation poisoned survivors with a shattered resource base. There will be the threat of mass starvation. It will be a humanitarian and economic disaster. (Interestingly, Lahore/Amritser will almost certainly not suffer a nuclear attack. Any attack on either city will devastate the other one).

Given that Pakistan cannot hope to win a conventional war and a nuclear exchange will result in a shattered state, the question is what is the utility of nuclear weapons to the country? Now consider a scenario in which India has nuclear weapons while Pakistan does not. Again a conventional war is unwinnable. (This does not mean that Pakistan will be a roll over. In this case, there will be enormous pressure on India not to resort to nuclear war against a non-nuclear opponent. The end result is the same but at the end of the day, international pressure will force a draw and the state will emerge relatively intact. So it seems to me that there is a case for Pakistan to actually give up its nuclear weapons. This does not mean that Pakistan should not pursue nuclear technology for electricity production. I just don't see a compelling case for nuclear weapons.

Holocaust

A lot has been written about the Holocaust since the end of World War 2. My thoughts on this topic were triggered by a news report on Iran publishing a books which seeks to debunk the number of people killed. For some time now, writings about the holocaust have essentially degenerated into a numbers game. The officially accepted figure is 6 million. Debunkers try to point out that reaching this figure would entail a high death rate from the first day of the war right till the last day of the war. Obviously that did not happen. It took time to build the infrastructure and the logistics network necessary to transport and process large number of people. I feel that a numbers game really misses the lesson of the Holocaust.

First what are the undisputed facts? What is undisputed is that a regime created a network of camps designed to kill people in the most efficient manner possible. The victims were chosen on the basis of their belonging to a particular religious group. Thus an accident of birth was enough to condemn a large group of people to death. Why is this undisputed? The reason is that the physical infrastructure exists; a large number of prisoners were discovered in the camp and the belongings of former prisoners who had been killed were also present. The principle involved was that people were worthy of condemnation and death because they were born into a certain religious group. the individual actions of these people were irrelevant.

I feel that the principle on which the holocaust camps were operated upon; the philosophy behind the incarceration and death of individuals is what needs to be condemned. Such a principle is dangerous because it condemns people not because of what they do but because of who they are. A principle like this is dangerously open to abuse. It is the principle which matters and not debate about numbers. It really doesn't matter if 6,000 people were killed like this or 6,000,000. The death of even 1 person based on a principle like this is one death too many.

Terrorism Redux

Terrorism (noun): The unlawful use or threatened use of force or violence by a person or organized group against people or property with the intention of intimidating or coercing societies or governments, often for ideological or political reasons.

(Source: American Heritage Dictionary)

Terrorism is constantly in the news nowadays. Sometimes it seems as if the world is being overrun by anarchic (read terrorist) forces that are beyond the control of any individual or any government. Terrorism is increasingly resembling an elemental force of nature which strikes at random, without warning, without mercy and for obscure reasons that seem to hark back to medieval times.

The American Heritage Dictionary quoted above (definition taken from Dictionary.com) defines terrorism in a fashion that implies that only the nation state has a legitimate monopoly on violence. Indeed, this has been one of the defining characteristic of all empires and nations down the ages. Without a monopoly on violence, no empire/kingdom/nation can survive for long. Once the state loses the monopoly on violence, then internal disorder starts to overwhelm its smooth functioning. This is a major reason why terrorism is so strongly denounced by all governments no matter their ideology.

Terrorism often seems to be a uniquely modern and since 9/11 a specifically Muslim phenomenon. This impression is reinforced for a large number of people by the many pseudo-experts who pontificate on the genetic and cultural shortcomings of Muslims as a people and Islam as a religion. However, terrorism is by no means a modern phenomenon. A large number of actions can be identified throughout history which fulfill the definition of terrorism quoted above. Many of these actions are usually not viewed as terrorist activities. Some examples:

The Revolt of the 13 Colonies Against the British
The American revolution is generally viewed by Americans as the start of a grand experiment in modern democratic values. In the traditional history, this is portrayed as a significant, history changing event which served to put the old European monarchies with their class distinctions on notice that a new fresh force has erupted in the world. A force whose values were decreed to be universal and eternal; values which will sweep the world and move the old world into a new egalitarian phase. Yet this brave new world (no pun on Aldous Huxley intended) started out with an action that fulfills the definition of terrorism. The Boston Tea Party was an unlawful use of force against property which had the intention of forcing the Imperial government to repeal the tax on tea which the British parliament using its legitimate authority had imposed. (It is somewhat ironic that tea is not a popular drink in the US today having long been supplanted by coffee). After the British tried to restore order (from their point of view), there were acts of resistance and violence by many (but not all) colonists. Again we have unlawful use of force against a legitimate authority trying to restore order. So the American revolution was rooted in terrorism. Since history is written and disseminated by the victors, this view of those events is never propagated.

The Russian Revolution
A seminal event of the 20th century, the Russian revolution eventually resulted in the polarization of the world into two hostile camps. Europe was effectively partitioned into two parts for more than 40 years. At least once, the world came to the brink of destruction through nuclear war. This event too started from acts of terrorism. The Bolsheviks (who became the Communists) came to power through acts of violence against the legitimate government which had come to power after the last Tsar Nicholas II abdicated.

The Indian Mutiny of 1857
This is an interesting case. I have deliberately included this because the act of terrorism was not committed by the obvious candidate. For those who do not know, a short background to the Indian mutiny of 1857. The British East India Company was formed in 1600 and given a charter by the British government granting it a trading monopoly with respects to the East Indies (what is now called South Asia and South East Asia). In 1617, the company was given trading rights by the Mughal Empire which ruled most of India at the time. The company's activities were restricted to trading throughout the 1600s. In the next century, with the gradual erosion of Mughal authority, the company's activities started to extend beyond mere trading. At that time, other European powers were also trying to establish themselves exclusively in India; the most prominent European threat being the French. The French challenge was successfully seen off and in 1757, the company acquired territorial control over Bengal after the Battle of Plassey. By 1857, the company had extended its rule over virtually all of India. In that year, the company's native army revolted for a variety of reasons which cannot be enumerated here because of lack of space. The revolt was in the name of the Mughal emperor who at that time was a pensioner of the company. After the revolt was rather brutally put down, the Mughal emperor was put on trial for rebelling against the authority of the company.

Now, in this particular case, there was a legitimate authority and there was an act of violence against that authority. The interesting point is that the legitimate authority was not the East India Company as most people would assume. The company ruled its territory in the name of the Emperor. Its legitimacy stemmed from the permission granted by the Mughal emperor. When the native army revolted in the name of the emperor and were not repudiated by him, the company's legitimacy was legally revoked. Thus the company in restoring its rule was engaged in an act of violence against the legitimate authority (in this case the Mughal emperor). Therefore the company's actions were those of a terrorist!

As these examples show, many actions through history which traditionally are not seen as acts of terrorism easily fit the dictionary definition of the same. Another point about the dictionary definition of terrorism: These are acts of violence which are deemed to be unlawful by a state. Same acts of violence perpetrated by agents of the state (police, paramilitary forces, army etc.) are not deemed to be acts of terrorism.

The most pertinent question to ask about terrorism is why do such acts occur in the first place? What compels people to take their own lives and the lives of others in a fairly dramatic fashion? Although the ostensible causes of terrorism can be many, ultimately nearly all such acts have at their base the exercise of power.

A Thought on Capitalism

There is a fatal flaw in the basic capitalist model specially as it is practiced by the Anglo-American world. The flaw is that capitalism assumes infinite growth. The problem is that the world has finite resources. As a result, over the very long term, the capitalist model as it has evolved is inherently unstable.

Whenever I have postulated this thesis, I have encountered strong opposition. The immediate answer relates to the cycle of growth and recession. Ever since the industrial revolution, all capitalist economies have experienced regular periods of boom and bust. In nearly every boom period, the enabling factor has been either technological change or the discovery of a major source of a mineral resource that is in great demand. Examples in the former category are railways in the 19th century, automobiles in the early 20th, electricity in the early to mid 20th and internet in the late 20th century. Examples in the latter category are the California gold rush in the mid 19th century, the Alaska gold rush in the late 19th century, the Philadelphia oil boom of the mid 19th century and the Middle East oil boom in the mid 20th century.

The effects of technological change tends to leave economies and people better off than before. Railroads, to take an example, dramatically reduced the cost of transportation from coastal areas to interior areas. They helped form a uniform internal market in countries. by linking interior rural areas to major urban areas that are usually concentrated on the coastal areas. They helped to avert major famines by allowing rapid transportation of food items to affected areas from surplus areas. Similarly electricity made all of us better off by giving us superior lighting thereby extending the amount of time for work and leisure. Electricity also allowed the development of labor saving devices specially in the household arena for tasks which previously were done by hand. Electricity also allowed the development of refrigeration which vastly expanded the availability of food items at a reasonable cost and of course the computer and the Internet would not have been possible without electricity.

All of this is upheld to summarily dismiss my contention. Let me state at this point that I acknowledge the reality of boom and bust cycles in economies. I also know that companies like people have a lifecycle. Unlike people, a mature company has the option of reinventing itself when it finds its growth slowing thereby kicking off a new growth phase and a renewed lifecycle. But therein lies the nub of the problem. Notice an unspoken assumption. A mature company can reinvent itself to kickstart a new growth phase. The assumption here is that growth is necessary for a company to survive. What does it mean for a company to grow? There are two commonly held grounds for company growth. One is year on year increase in sales. The other is year on year increase in profits. Normally the two go together. However there is a possibility of increasing profits in the face of stagnating sales. This can be done by increasing prices and/or aggressively cutting costs. But again notice that the emphasis is on increase.

The question then arises, how can a company keep increasing sales year after year indefinitely? This can only happen if the economy (or economies) in which the company operates grows indefinitely. This in turn means that there has to be an indefinite increase in the amount of goods and services that the economy produces. That in turn implies that end consumers have to consume ever increasing quantities of goods and services. We must keep in mind that all economic activity is ultimately geared towards end consumption. For example, take a rather specialized product like tobacco paper which is used in cigarettes. There are only a few companies in the world which make paper that satisfies the requirements of tobacco companies. But why would tobacco companies need to buy this kind of paper? The reason is that they need it to make cigarettes which are sold to end consumers. Take another example: the material used in manufacturing a Boeing (or Airbus) aircraft. This is ultimately sourced from mining companies. Why would Boeing want this material? Because it is needed to make the aircraft. But why make the aircraft? In order to sell to airlines. But why would airlines want to buy these aircraft? The reason is that there is a demand to transport people (and cargo) from point A to point B in a fast, safe, convenient fashion. So the end result is that there is a consumer demand which needs to be met which makes possible this entire chain. The point of quoting these examples (and there are countless examples that can be similarly quoted) was to show that ultimately there has to be end consumption and this has to grow indefinitely over a long period of time for the current capitalist paradigm to work.

Now, let me return to my basic thesis and the objections to it. As I mentioned earlier, my thesis is that capitalism (in its current form) is inherently flawed because it assumes infinite growth in a world of finite resources.

The first objection is that all capitalist economies experience boom and bust cycles and in the latter, there is a contraction in the output of goods and services in an economy and so therefore the thesis is flawed. I agree that there are boom and bust cycles. However, during a normal course of the cycle, the contraction is not sufficient to permanently depress economic growth. It is assumed that once the economy recovers, it will recover lost ground and forge on ahead. Consequently, when the next bust comes along, it will be from a higher level than the start of the previous bust. Thus over time, the economy will continue to grow.

The second objection is that organizations operating in a capitalist economy have definite lifecycles. There is a continuous process of birth, growth, maturity and death (or sometimes re-birth) of companies. The response to this objection is that I have never made any claims regarding a single company. My claim is about a system. Even if we take an individual company, there are many assumptions that are made. It is assumed that the company will exist forever. No assumption is made regarding the nature of an individual company's business. A company can start in one area and end up in a completely different area within a short time. But it is assumed that during the company's existence, it will show ever increasing sales and profits. Expand this assumption for the totality of companies existing in an economy and you have a situation where it is assumed that the output of goods and services in an economy will grow indefinitely over time. Contractions will occur but each contraction will occur from a higher base than the previous one and the lost ground will be more than covered in the subsequent recovery. As I also discussed above, this continuous expansion over time can only occur if the ever increasing output of goods and services are ultimately consumed.

Now, this assumption runs into the reality of finite resources. Modern civilization rests on a base of industrial agriculture and industrial scale mining. The real problem stems from the mining leg. We need to extract various resources from the ground for our civilization to function. These resources are non-renewable. A ton of aluminium extracted today cannot be extracted tomorrow. It is gone forever. Similarly a barrel of oil extracted today is gone forever. It doesn't help that existing financial models actually encourage maximum extraction for immediate gain. This is because of the concept of Net Present Value (NPV) which essentially states that a dollar today is more valuable than the same dollar tomorrow because of the effects of inflation. There is therefore a basic incompatibility between the inherent assumption of capitalism (infinite growth over time) and the reality of finite resources. Thus the current capitalist system is flawed and ultimately doomed.

Final Point: An immediate objection to this conflict is the effect of technological change. This is a very important factor in mitigating the reality of finite resources. Better extraction and waste reclamation technologies allow us to stretch available resources. But that's the point. The available resources are fixed. They are not increasing. At some point, no improvement in extraction and waste reclamation technologies will enable us to extract any more.

Ruminations of the War on Terror

The American War on Terror has inspired much writing on the so-called Islamic terrorism problem. In the name of securing global peace, the world has been turned upside down and the lives of hundreds of innocent people severely affected. Along the way, there have been some high profile captures but the vast majority caught in the dragnet have been innocents or at the very most minor characters who had clearly been brainwashed into believing a distorted version of religion. The upshot of all this effort and money has been a vast increase in insecurity not just for the developing (mostly Muslim) countries bit also in the US itself. A massive culture of fear has been cultivated which has resulted in the Americans allowing a massive erosion of their civil liberties. It is not as if the integrity of the country is threatened. While Al-Qaeda can hit isolated and even high profile targets, there is no way that it can seriously affect the US in a fashion that the country's existence would be threatened.

So if the integrity of the US is not threatened and right now there is no country in the world which can pose a serious military threat to it, why are the Americans so scared that they are willing to see their constitution mangled and their civil liberties erode? Perhaps it is because they have not yet registered what a true erosion of civil liberties can be like. Till now, the life of the average American has remained unchanged. But what is clear now is that the US is in the process of turning itself into a police state. Right now, the steel fist is clothed in a velvet glove as far as the home population is concerned. But the danger is that at some point in the future, the steel fist can emerge. If arbitrary powers are granted to someone, then at some point they will be exercised. Remember that Hitler was democratically elected. It was only after they came to power democratically did the Nazi regime turn Germany into a police state. How? By burning down the parliament building and then spreading fears of a communist takeover. The question often asked is why did a cultured nation like Germany allow itself to be turned into a state where civil liberties were squelched and undesirables as defined by the state extrerminated. I think the answer is that initially the life of the average German was not affected. By the time the average German was materially affected, there was a pervasive atmosphere of fear which translated into a willingness to look the other way at blatant acts of violence.

Right now the war on terror has largely affected countries that physically are very far from the US and not strong enough to pose a direct threat. Even Iran, the current bogeyman, can pose an indirect threat; the manner of that threat is such that it will drag the global economy into a recession (infact it will probably be a depression akin to the Great Depression). So once again, given that the average Joe American is far more likely to die in a car accident than in a terrorist strike, why is he (and Jane American) so scared?

Writer's Block

It has been a long time since I posted my last entry. I developed a form of writer's block in that I was unable to think of any topic. Time however to get back into the thick of writing!