Many years ago when I first thought about the study of Economics, there was the prevailing concern about oil reserves running out and the world running out of fuel. It was 2005 and the economist even had an issue where the cover page was showing the reflective colorful swirls of oil. The economists would argue that the world will never run out of oil because towards the last drop of oil left, the price of oil would be so high no one would want it. And perhaps many other alternative technologies which were not commercially viable would have become so before oil runs out.
Those were days when we technically already know about greenhouse effect and the global warming potential of carbon dioxide. And I was particularly fascinated with the recurring debates between the Malthusians (and neo-Malthusians) and the others weigh on the hope of technology (and possibly economics).
It is funny how more than 17 years later, I’m in a career to try and reduce (and eventually end) the dominance of oil. Not to promote an alternative technology, not to rail against the political power of oil but to create a future that we all want to step into. Because climate change is an existential danger for us all and the planet as we know it. And because I believe our current economic system can be superceded by one that works for the future and not the tradition notions of wealth and fortune.
Economics is not a discipline of the capitalist though they might think so. Because the communist had their study of economics and the manner of trying to deploy the calculations and understanding in central planning. But I digress. What I’m pondering over recently, is that intricate link between the market and capitalism. I wonder, if there was something apart from market capitalism. And as it turned out, there are ideas of alternatives around state-capitalism which is where the state tries to accumulate capital and operate an economy dominated by state-owned firms. But to some extent, that is what communist regimes have sought to do. So ultimately, the ideas of capitalism, when taking the notion of the market away, actually represents something very different from what we commonly believe to be capitalism.
In that sense, capitalism as we conceive it probably still has the market principles and ideals at the fore in the manner it is perpetuated. In that sense, the ills of modern capitalism isn’t necessarily the notion of capitalism per-se but allowing the (unguided) market to take the lead in too many of the things that actually matter. The idea of markets regulating themselves is honestly a little ludicrous to me. In an older world where there were many things in our lives that dominate including ideas around moral, characters, and virtues, we tend to be keen to govern the market and regulate it, seeing that there are higher laws to follow.
But in the world today, we increasingly allow the market to dominate our judgment of things, especially with regards to value of things – tangible or not. That means that what the society needs to care about, which might not be valued by the market properly, may just fall off the radar. It happened for the climate of the world; and who is to say that market capitalism is not coming for other things that truly matter to us as humans.
In which direction should one direct his or her efforts? Would it be in the direction of goals? Or the direction of one’s preference and interests? I’ve come to discover more and more than following one’s interests and one’s goals are different and we can set ourselves and our outcomes on very different paths when we pursue one or the other.
Being aware of what journey we are on becomes important when we look at what we are trying to get from it. Often, when pursuing a journey towards goals like career, money and recognition, we forget that we signed up to something that sacrifices our interest and passion, then we get upset about not getting those. Meanwhile people who might find themselves trying to follow their interest complaining about lack of income or opportunities.
We can’t have the best of both worlds no matter how many examples we find in the world to hold up. And we don’t always fully understand the sacrifices and pains involved until we eventually reach that level. When we direct our efforts we must be reminded which path we’re moving along; that determines what the path yields.
In any civilisation, you’re in a system; so there are rules to follow, structures to abide by, and hence a sort of order emerges from the system. Of course the order can be disorderly but you get my drift. When however, certain realities don’t line up the way they do in a system, we think that it is broken.
I’m not too sure about that. Sometimes, we think that a system is broken because it is leading to an outcome which we don’t desire nor think is desirable. Whilst the designer or perpetrator of the system may agree with you on the outcome and results, they may not think the system is broken.
The reason being that their key objectives for the system does not align with yours. What you think as an undesirable outcome may be an unintended but necessary consequence of the system; and the results which you don’t agree with may not even be part of the consideration.
And that is the challenge when one works within a system. It is terribly difficult for a system to start paying attention to a new attribute that is worth looking at when measured against the values that inherently power the system. Effectively, the conversation goes like this:
You: ‘Hey system, you need to start looking more into the environmental damage you are causing while trying to make profits!’
System: ‘Ah, environmental damage. Does looking into it generate more profits?’
You: ‘Well, the point is thinking about we are trading-off environmental sustainability in our process of profit. Maybe we can rethink about the way we make a profit?’
System: ‘Sure! Come back to me when there’s a profitable way to reduce the environmental damage. Meanwhile, we carry on with what works.’
The reason we are facing climate change is not really because the system is broken but because the system we designed is working perfectly well – it is just trying to solve a completely different problem than the one we are facing or trying to get it to solve.
The only way is to establish new rules and new ways of doing things, of structuring our lives, our companies and our economy. This is why Enea Consulting, where I work at, has combined efforts with Isabelle Kocher de Leyritz to form Blunomy.
For now, the branding might still feel very foreign to an Asian mind, the URL quite strange (is the firm French or Malaysian?), the fonts on the website feels a tad bit too avant garde for the liking of the general masses. But the message, the intentions and planned actions are clear. We understand that the systems are not broken but they are simply not designed for the challenge that confronts us today. That is why we are not here to fix the system; we need new ones to replace them.
Just to reiterate that views presented here are entirely personal and do not represent the stance of any organisations I’m employed by or have any affiliations with.
This is the first time I utter this two words that don’t really mean anything but definitely not the last time. I started a podcast (yes, finally!) and it’s called Mondo Gondo. I picked those words because it rolls off the tongue well. And it’s probably a whitespace in the minds of people what it could mean.
So yes, Mondo Gondo. It’s like a trip into my mind. I’ll be ranting, riffing, ideating, and mostly talking. I wished I could ramble but I designed them to be concise and <15minutes pieces. One of the requirement I have for myself is that they must have some ideas (not answers, just ideas) to make things better.
And why did I do that? Because it’s always worth taking action that allows each and everyone of us to step into a future that we all want to be in. At least one that I’d like to be in. So yes, a podcast. With some show notes here. And thank you in advanced for listening.
When you participate in a lottery, you stand a chance to win. If you don’t buy the ticket – well then you don’t. I don’t believe in buying the ticket however, because I don’t want to play in that game of chance. The odds are stacked against me – and I’d think to myself ‘you don’t stand a chance’. Because buying the lottery ticket serves me no other purpose other than the chance.
Most other things in life are not like that. We participate in tenders knowing we won’t win. We come up against strong sports teams knowing we will lose. We go for auditions knowing our performance probably won’t make the cut. Why do we do all that? Not because of a blind hope but because we achieve more than just getting the chance when we take part in those. We leverage that opportunity to showcase ourselves, to show up, to prove to ourselves a part of our identity – as a musician, a dancer, as a professional who can do the work. We also use the chance to connect with audience, or prospective audience. Maybe it’s just one person, the judge, but it’s still an audience whom you did not previously have.
And that’s why we have to care enough to take action about sustainability, to change the way we consume, to speak up against actions that sets us on a course of no return, and ask for leadership that can lead us into a future we actually want to be in. Because it is saying something about ourselves, it is connecting with our future, and those same people who are going to live in it.
In general, The Economist adopts a rather sarcastic tone when discussing Alan Greenspan’s role in the build up to the Subprime Mortgage Crisis in 2007. They are arguing that central bankers are around to ensure macroeconomic stability and therefore are expected to ‘play safe’ and manage the economy. That is, if reducing short-term interests rates could rein in the housing boom, that should have been applied. Even if Greenspan couldn’t have identified the bubble, and that the house prices are not related to the interest rates that central bankers could influence, the leverage growth in securitised markets might be worth managing:
By looking only at the effect of monetary policy on house prices, Messrs Bernanke and Greenspan also take too narrow a view of the potential effect of low policy rates. Several economists have argued convincingly, for instance, that low policy rates fuelled broader leverage growth in securitised markets.
Of course, having just read Dot.con and Lord of Finance, I do realise that central bankers’ attempts at interfering with specific market booms have often been ineffective or with rather disastrous results and thus choose to focus only on economic fundamentals like price inflation. Greenspan does have a point when he suggests that the central bankers are unable to deal with a global force that are changing the conditions of the economy. Very often, these efforts may create further imbalances that merely postpones a crisis.
Like I say, no one claims monetary policy is easy to conduct – it’s too often more of an art than a science.
Many have attributed the housing bubble that eventually resulted in the Subprime Mortgage Crisis to the previous, one of the longest serving Federal Reserve Chairman, Alan Greenspan. We are pretty familiar with Greenspan, who have written Age of Turbulence. In his book, he highlighted his general argument against anyone who would finger-point him as allowing a bubble to inflate. He pronounce that it is impossible for anyone, whether the regulatory body or not, to accurately identify a bubble.
As for the Subprime Mortgage Crisis, politicians in the United States still blames it somewhat on Alan Greenspan and now that everything is cooling down, Greenspan offers his own defence. Although Greenspan was nicknamed ‘the Maestro’, he subtly attributes the period of great prosperity and low inflation to the globalization forces and technological advancement more than his skills at handling the monetary policy of US. In any case, he outlines his job at the Federal Reserve as an observer trying his best to keep to fundamentals of the economy and the crisis therefore comes as a surprise both because of how the economic agents have basically defied market assumptions namely on the issue of counter-party surveillance. Essentially the government cannot possibly provide the ‘self-interest’ that is supposed to drive the free market.
No one says that managing the economy is an easy job. Sound economics decisions by governments often turns out to be political disasters anyways so sometimes politicians stop heeding economists altogether. The recent issues that confront Tim Geithner is essentially similar; the economy is picking up thanks to his plans but people are unhappy with him. Figures on employment are not helping him anyways since the recovery is ‘jobless’ so to speak. Management of the economy is a huge balancing act for the government.
The idea of government has gone really far since the days of Locke’s conception of the social contract. The philosophy of governance in the modern world is just getting more complicated.
I’ve previously introduced Michael Sandel’s lectures on Justice in Harvard. I haven’t finished the series despite great interest in it but I recently watched another of his lectures, one at Chautauqua where he talks about the Morality of Markets. In some sense, I was particularly interested in this issue and believe that all those trained in Economics should be made to study it. After all, Adam Smith was a Moral Philosopher. The philosophical element of Economics is becoming lost in our study of it today.
That is what makes this particular Michael Sandel lecture extremely insightful. He starts with the idea that we’re now plagued by market triumphalism and he tries to question what is wrong with that. As often in his lectures, he poses a scenario either hypothetical or based on actual proposals in the real world and then solicits opinions from the audience. He eventually surfaces his points and ideas from the responses of the audience and does a brilliant summary of the issue.
He gives a good and important point in his conclusion of this lecture that explains why we should not allow markets to expand indefinitely in our lives. In other words, there are areas where markets can, indeed serve the best interests of the societies especially when we all can agree that the market system gives an accurate and fair valuation of the good or service involved. Unfortunately there are values out of the consideration of the market that we might cherish and therefore we should not allow particular goods or services to become commodities to be traded and transacted. The danger of the markets is that it leaves its mark on the commodities that are traded; the values that we cherish becomes diluted, corrupted by the market system.
The example of paying a child to read is important in illustrating this. We should cherish reading not because of the monetary gains but the intrinsic value derived from joy of reading and learning. Therefore when we start paying children to read, it sends out the wrong messages and distorts the valuation of reading. The trick then, perhaps is a solution around this limitation of the market, to be able to remove that mark that market leaves on the thing traded. Unfortunately there’s no easy solution and possibly none. This is a strong argument against markets and while it is applied to a small group of tricky issues, they are worth pondering over.
Michael Sandel makes Political Philosophy and Moral Philosophy not only accessible to the public and ordinary, non-philosophy students but also makes extremely relevant connections between traditional Western Philosophy and the issues plaguing us in the modern world. It’s really fortunate that we are able to access his lectures even though we are not studying in Harvard or in America. There are other videos of his public lectures available on FORA.tv.
Who would think that Colin Goh, a Singaporean columnist, writer and film-maker based in New York, would write something about politics in The Sunday Times? Best (or worst, depending on what you think about politics) of all, his column usually features in the generally light-hearted Lifestyle segment. I normally skip his columns because he keeps writing about his baby and his otherwise banal life in New York, but I was intrigued by his column title for today’s article: “Mad Hatters and US politics”. I read on, to much curiosity and realisation.
He describes how US politics is now quite farcical thanks to the tea party movement that is taking root across much of America. This tea party movement is against big government, and wishes to claim back ground it thinks the government is infriging upon. And of course, this tea party movement is aligned with the Repbulican party and most (if not all) of its values: free markets and no government intervention “whether in the economy, healthcare or the environment”. I felt quite vindicated by his views, as someone who’d profess to be a Democrat if living in America. But let’s not argue about the views of the Democrat. The whole farce about politics in America today is that Republican opposition to policies and initiatives that the Democrats are proposing, can range from sensibly valid to stubbornly nonsensical.
Colin says that “The US government is ‘broken’ because of the political impasse between the two dominant parties, and the revival of the conservative movement.” And he uses Newton’s Third Law of Motion, that “every action is met by an equal and opposite reaction”, to describe the resistance of the Republicans to Democratic measures. He then writes that the conservatives seem unable to see the light about the whole crisis: that “lack of regulation just caused the biggest economic meltdown in years”, and that “the loudest opponents of regulation just happen to be… those evil bankers and corporations”. And I totally agree with him when he finds it “baffling… that conservatives are blaming the sorry state of the nation on the Democrats, who merely inherited the mess” from George W Bush.
And the Republicans are becoming a party of No just as Obama is saying that they should not be doing, for the sake of the nation. While I find it quite wrong for Obama to continue pushing through, by force, legislation on health care reform, the fact that no Republican agrees at all on anything despite already having some of their suggestions integrated into the policy does not make sense. I shall not go into details about health care reform, but suffice to say that as a Singaporean and someone who’s more liberal, I believe that health care reform is necessary and many people sadly are just unwilling to feel the pain in the short term for potential benefits in the long term (as much as this piece of legislation is flawed… which piece of legislation isnt?).
Donna Brazile, in The Mercury, also alludes to the tea party movement (the Republicans and the tea party movement are almost one and the same now) and their vehement resistance to President Obama’s health-care reforms. It gives more detailed examples of how Republican senators who campaigned for certain ideas in the bill to be included in the legislation but yet did an about-turn and dropped support for it in this final stretch of the race towards implementing the bill. It is not like President Obama did not offer them an open hand to reconcile differences, but the chasm between the two sides is probably too huge to surmount.
So has the Mad Hatter (what a coincidence, Tim Burton’s Alice in Wonderland is coming to screens near you now!) taken over the Tea Party in America, and made all these Tea Party-goers bonkers?
The source might be slightly biased given that Donna Brazile was a former campaign manager for Al Gore, former vice-president of America and a Democrat. Nevertheless, the problem remains: two polarised parties unable to agree on anything, unwilling to compromise, and hence unable to govern. For the good of all America, please come together to do something. It might be true that President Obama’s views might not reflect the views of the WHOLE population, but to sit there and just say “No” without concrete action (they provided the suggestions to change, but they tend dropped the support for those changes… those are concrete suggestions, but is that concrete action?) will not move the nation forward.