More of Mr Potter’s Magic

Last night I was in the downtown bookstore to pick up some stuff for travel planning, and I glanced over at their bestseller rack. Number one was Harry Potter and the Deathly Hallows. In English. The German edition won’t come out until October.

The best-selling book in the store is in a foreign language. That’s some powerful enchantment, Ms Rowling.

Live Blogging The Japan Elections

As most of you will have already picked up, Japan today is having upper house elections. Japan’s current leader Shinzo Abe is widely thought to be in for a drubbing. Normally elections to the Japanese upper house would not be considered to be particularly important, but this time there are reasons to believe that things may be different. So I am taking the unusual step of live blogging todays elections on the Japan Economy Watch blog. Maybe most European readers assume that what is happening today in Japan is of little concern to them. Such a view is understandable, but in an increasingly globalised world it may be too provincial, especially in the light of Japan’s increasing importance in the global liquidity phenomenon. I can think of three major reasons for keeping a weather eye on Japan over the next couple of days.

The first of these, as the Economist indicates here, is that an elderly Japan may now be suffering from reform fatigue. The recent muddle over 50 million pension records which cannot be attributed to their contributors means that the Japanese electorate are now in no mood at all to be presented with yet another pension reform whose objective would be to downgrade the payout which they can expect to receive after all those years of contributions. This, however, is all that, even under the best case scenario, can be reasonably expected. As the Economist notes, the young are now voting with their feet:

Can a working population support such a number of future retirees? Today’s younger workers appear not to think so. Two-fifths of them are not paying contributions towards the fixed portion of their state pension scheme (current contributions fund present, not future retirees), suggesting they don’t believe that the scheme will be viable when they retire. And they may be right.

This is a very clear example of a “self-fulfilling expectations” process, if you don’t think something can work you pull out, and as a result the thing certainly can’t work. And all those countries which have an outstanding problem with their pension and health systems (hint, hint, Germany and Italy) may well look to Japan and be warned.

A second issue which is looming on the horizon in tandem with these elections is the forthcoming August decision from the Bank of Japan on whether or not to raise interest rates another quarter percentage point. Personally I had been growing rather skeptical about whether the BoJ would be able to live up to market expectations here (Ken Worsley on the excellent Japan Economy News blog has also been worrying about all of this), but if this election turns into the rout for Abe that many people are expecting it is hard to see the poor old BoJ soldiering on regardless, and keeping a clear head whilst all those around it are busy losing theirs.

But losing your head (metaphorically speaking) is one thing, and losing your shirt is quite another. Which brings me to my third point. As the British historian AJP Taylor liked to stress, history is often nothing more than the sum-total product of a sequence of minor accidents, and on this occasion the governing structure may not be railway timetables but rather stock market opening hours. Tokyo, as luck would have it, needs to lead off tomorrow’s global response to last Friday’s drubbing on Wall Street. Right lads, best foot forward now……

Postcript: Manuel Alvarez of Election Resources on the Internet is maintaining a page on the elections which will be updated as the results come in, and is also posting commentary at Global Economy Matters.

The Economist and Population Decline

Well, fresh from my recent exchange with the Economist’s Central European correspondent (and see my original Afoe post which sparked the reply), it is pleasing to be able to announce that that very same journal this week contains a series of interesting articles on some of the very topics which were at issue. In the first place there is a leader on the central big-issue question of population decline, and its possible short and longer term consequences. There is also a very timely account of just how population ageing is starting to affect the political process in Japan, together with a brief review of Italy’s most recent endeavour to pedal backwards on the topic which takes the shape of a pensions system “anti-reform”.

Dare I say that it is possible to note an ever-so-subtle shift of emphasis here? I personally am convinced you can, especially in statements like the following:

If the world’s population does not look like rising or shrinking to unmanageable levels, surely governments can watch its progress with equanimity? Not quite. Adjusting to decline poses problems, which three areas of the world—central and eastern Europe, from Germany to Russia; the northern Mediterranean; and parts of East Asia, including Japan and South Korea—are already facing.

Think of twentysomethings as a single workforce, the best educated there is. In Japan (see article), that workforce will shrink by a fifth in the next decade—a considerable loss of knowledge and skills. At the other end of the age spectrum, state pensions systems face difficulties now, when there are four people of working age to each retired person. By 2030, Japan and Italy will have only two per retiree; by 2050, the ratio will be three to two. An ageing, shrinking population poses problems in other, surprising ways. The Russian army has had to tighten up conscription because there are not enough young men around. In Japan, rural areas have borne the brunt of population decline, which is so bad that one village wants to give up and turn itself into an industrial-waste dump.

Now it may be that from where I am sitting there is still rather a long and hard road to be traveled here (if you want a concise – or maybe on second thoughts, not so concise – summary of the major points check the comments section on the Economist blog post linked above), but it would be singularly uncharitable of me not to recognise progress where progress has indeed been made. The great debate is finally moving on. Well done Economist!

Et in Formentera ego; or, où sont les flaons d’antan?

We’ve just returned from two weeks on Formentera, the smallest and southernmost of the inhabited illes Balears. We try to spend some time on the island at least once every two or three years; for it is an unspoilt place, a place time has left behind, a place untouched by the imperatives of vulgar economics.

No, that’s bollocks, of course. It is no such thing, nor could it be. Continue reading

France and the United States

France needs to abandon its rejection of globalisation, right? Get with the programme? Join the war against terrorism? Or face simply becoming irrelevant? We’ve blogged plenty at AFOE about the bizarre notion that France and the United States are suddenly irreconcilable foes, but here is some definitive refutation. reports that the USS Enterprise had some French Dassault Rafales over to visit in the Mediterranean recently.

History doesn’t repeat, it rhymes

The flipside of the European dream is that by its nature, the vision of “non-imperial empire” as Barroso calls it is a powerful encouragement to the paranoid imagination. Curiously, the vision remains much the same across different paranoid styles; almost uncannily so.

In Britain, a surprisingly large number of people in the Conservative Party – not just UKIP and the BNP – think that the existence of “regions” is a secret plot to dismantle the UK, somehow associated with a scheme to reduce the British Army to 100,000 men, at which point it magically becomes “a defence force” – that the Israelis call their military that doesn’t seem to register.

In the United States, fascinatingly, the know-nothing hard right is gradually developing an ideological position that can be best described as American Euroscepticism. Supposedly, George W. Bush is scheming to replace the dollar with a new currency for a tyrannous North American Union; it will be called the “amero”. The upshot is that Mexicans are coming to take your stuff. It seems clear that the Gedankengut of the British far right is being repurposed in the US.

And in Turkey, right-wing generals apparently think the AKP’s drive for EU membership is part of a cunning plan to Talibanise Turkey. By joining the EU, the army’s role in politics will be terminated. Then, the AKP will unmask itself and convert Turkey into Afghanistan. It’s astonishing how similar these paranoid structures are. They clearly bear some similarities to well-known cultural tropes about the seductions of prosperity and peace, which go back to the ancient Greeks, and to the fascist idea sometimes described as the “city as whore”. After all, there is no real future for a military-ruled Turkey that beats EU membership.

But it’s an occupational hazard of being the Borg.

Turkey’s Balancing Act

Well, the financial markets are happy at any rate. The Turkish stock market jumped 5% on Monday while the lira closed at a two-year high against the US dollar. Tayyip Erdogan (leader of the victorious Justice and Development party, the AKP) was also a happy man: “The new government will bring peace and stability” he informed us. I guess we had all better hope he is right.

Indeed there are plenty of reasons for satisfaction with the outcome of Sunday’s elections in Turkey, and despite the very large number of outstanding problems still to be addressed, things could, at the end of the day, have turned out far, far worse. However, given the complex and tangled web of relations which surround Turkey’s political life right now, there are also reasons, and plenty of them, for being at least a little nervous. Continue reading

Staying aware of the dynamics behind public discourse: Sunday morning musings

It is Summer, the silly season. So, let me chase some chirping crickets here at AFOE with some silly thoughts on public discourse before my more interesting AFOE colleagues spring into action again. And they will, so stay tuned even if my little essay here should turn out to be a bit tedious.

Public discourse, or vox populi, is largely based on perception. People cannot be expected to do investigative journalism for each and every news item. We are dependent on what authorities tell us, be it journalists, scientists, politicians, etcetera.

For me taking part in a democracy means informing myself as much as possible, but simply watching the news is not enough. Yet, like most people I simply do not have the time, knowledge or energy to delve deeper, even when there exists a whole myriad of books, films, documentaries etcetera that pierce through perception to get at some sort of truth. Everything the critical mind needs is out there, in abundance. And with this abundance comes a second, related, problem. How to choose between all those experts and authorities? The process of finding the most objective sources possible can itself be a tremendously time-consuming investment with no guarantee for success. More often than not you have to read a book first, for example, before you can judge its merits. And considering the complexity of many real-life events reading one book will not suffice. Before you know it you can be totally engrossed in just one, tiny little aspect of “reality” without ever coming close to something like an objective truth. There is a reason why good scientists spend so much time on research alone. And even though science may very well be the best instrument we have at our disposal for obtaining a modicum of objective truth, most scientists will also acknowledge that it remains a ‘process’. The truth is never final. Something is only true until proven otherwise. However, scientific progress has proven that the process works. At least in the world of academics.

But for those of us who are not academics investment in the search for truth is a constant trade-off between engagement and the exigencies of our daily lives. In short, how much are we willing or able, both practically and empirically, to invest in a personal quest for objective information? We can never beat an academic who spends his or her entire life studying a particular subject and we shall never be able to fully know what goes on behind the closed doors of much policy-making. We shall never have at our disposal all the information necessary to make an informed choice on so many things that transcend our individual lives. In other words, the challenge is enormous.

I am not saying anything new here, but sometimes it can be good just to become aware again of our limits and, most of all, of the sobering fact that we are in a large way dependent on perception, if only for practical reasons.

Still, we do have to make choices even when we do not know the complete truth. And we are making those choices, every day. And every day people are trying to influence us in the process. Pundits, marketing gurus, politicians, corporate lobby groups, think tanks, special interest groups etcetera are all, consciously or not, promoting their brand of the truth. We do this ourselves as well. No one in their right mind will present themselves objectively on, say, a first date. We all tend to show only our good sides. Hiding, or even distorting, the truth temporarily is common sense. And who has not succumbed to peer pressure at least once in their lives? Who has not closed an eye to the truth in order to please someone or just “to belong”?

Simply put, when it comes to the truth there is always ample room for manoeuvring since there are so many “unknowns”. Those unknowns provide a margin of error where illusions, lies, distortions, manipulations and dreams alike can thrive. In a best case scenario what we do not know cannot hurt us. There is this famous saying in Dutch “liefde maakt blind” or “love makes people blind”. Sometimes this is definitely a good thing, since it can lower the threshold to a possibly enduring relationship. But let’s leave aside social interaction and let’s talk about the room for manoeuvring in public discourse.

In a worst case scenario our inability to verify everything can ultimately threaten our well-being. The best known and most dramatic example is that of political propaganda ultimately leading to massacres of minorities and to oppression. All it takes is one self-appointed authority who can, thanks to, among many other things, personal charisma, rhetoric skills and the echo chamber effect provided by a hardcore group of devoted followers, suspend critical disbelief in enough people to elevate his personal ideas to the status of a general truth that everybody can follow blindly. In extreme cases, like cults for instance, a whole group of people will deftly bridge the gap between truth and all those bothersome unknowns by declaring one authority the undisputable source of truth. They will not only suspend disbelief, they will suspend thinking altogether. It goes without saying that authorities can also force through positive developments in society, but since those are not really problematic I have chosen negative examples to illustrate my conceptual point.

The gap between truth and unverifiable unknowns creates an area of doubt, as it were, where mere opinions can become authoritative, where rhetoric skills flourish, where charism wins the day, where applied psychology rules supreme and where, cherry picked, “facts” are being instrumentalised not to come closer to a truth but to control and to dominate others mentally.

Nazi propaganda minister Joseph Goebbels understood these dynamics, Oliviero Toscani, the man behind the famous Benetton campaigns understands them and explains them well in his 1995 book La pub est une charogne qui nous sourit – advertising is a seducing corpse** -, politicians understand them and hire pr and media consultants to try and take advantage of them, media pundits understand them and use them to build up a large group of dedicated readers. In weblog discussions you will find commenters asking an opponent to “prove your point” in the safe knowledge that the opponent will inevitably fail unless he offers a multiple page in-depth analysis with loads of references and links to a myriad of different sources that will be constantly challenged.

The gap between truth and unverifiable unknowns, on a personal non-academic level, is a realm where perception is king and where authority, real or perceived and accepted or imposed, is the general in the king’s army. That is why, in my opinion, authority on this level should always be challenged and, more importantly, why we should always try to find out who or what is “leading” the vox populi. Is it hard reality or is it misguided perception?

One silly, hugely simplified example, through juxtaposition of two questions, to illustrate the theoretical importance of this concept.

Are people massively buying a certain product, hamburgers for instance, because it is really good or because some clever marketing authority convinced them it is good? Are some people afraid of Islam because Islam is a real threat or because some clever pundits and politicians managed to make them believe that?

In the case of marketing leading to mass consumption of hamburgers, perception brings about real, quantifiable consequences. People are eating hamburgers. And that is fine. But just imagine the same underlying strategy of marketing also works in the case of the perceived muslim threat. Do we really want to be “eating” muslims any time soon merely on the basis of well-marketed perception? Or do we want to know the truth before we decide to act?

Forget about Islam for a moment, it is just a silly example taken from contemporary discourse, and think about it in a more general way. How many of our policies are based on manipulated perception? How independent and reality-based are we, the common people, in our thinking? Are we always aware of the influences, overt and covert, that guide our perception of things?

I’ll give you one more example, less silly this time, from an article by former spin doctor Lance Price in The Guardian (emphasis mine):

It may be that Rupert Murdoch has never once vetoed a government decision, nor tried to do so. I just don’t know. What I do know is that, as the entries in my book show, I spent far too much time trying to stop ministers saying anything positive about the euro. When two prominent Conservatives, furious at Tory policy on gay rights and Section 28, decided to defect to Labour, I made them say that it was over our management of the economy.

Propaganda, or spin doctoring as we call it nowadays, in action. Professionals are working every day on manufacturing and guiding our perception of things. And, finally, a quote from the same article concerning the element of doubt or “manoeuvring room”:

It’s true that Rupert Murdoch doesn’t leave a paper trail that could ever prove his influence over policy, but the trail of politicians beating their way to him and his papers tells a different story.

Rupert Murdoch is arguably hugely influential, regardless of the assumptions, true or not, made in this article and, yet, we cannot “prove” the extent of that influence. Is not that interesting? Lack of objective knowledge on our part provides this man with an enormous amount of virtually unverifiable power to influence public perception and, subsequently, concrete policy. And he is “just” a media mogul. And he is more or less visible. Just imagine what “invisible” lobbyists are ramming down our blissfully ignorant throats. I am afraid imagining is the only thing we can do most of the time. And that leaves a whole lot of people with a whole lot of “manoeuvring room”, or doubt, to work with.

** I could not find the official English title of Toscani’s book. I would be very grateful if one of our readers could provide me with either the title or a more idiomatic and elegant translation. It is raining again in this so-called Summer and I am somewhat uninspired.

The Lure of Membership in action

If the EU didn’t exist, would we have to create it? Arguably, one of the best reasons for doing so would be the power it has demonstrated to spread democracy, constitutionalism, peace, and other good stuff through the accession process. Today, we had an excellent example of this. On the 7th of July, the European Commission updated the list of airlines that aren’t allowed to land in the EU. In the wake of the ban, the Moldovan government decided to solve the problem by shutting down a succession of really dodgy operations, revoking the Air Operator’s Certificate that is required by international law and grounding the planes.

The reason for such dramatic action is simple enough – it’s not just flight safety that was at stake. The list of dodgy airlines includes one that was involved in a regrettable incident in which 99 tonnes of assorted firearms were purchased from Bosnian war surplus by the US Government, and flown in a couple of Ilyushin 76s to Iraq for the use of the Iraqi government. However, the guns never arrived, and their fate remains a mystery – perhaps the least disturbing theory being that they were never actually shipped, and the Americans were defrauded. More disturbing options include the suggestion that the weapons were offloaded somewhere else, switched with another cargo, and sold God knows where, or that they were delivered all right, but to the former Iraqi army. The airline which was meant to move the guns, Aerocom, was itself later shut down after a plane was seized in Belize with a load of cocaine – but it actually subcontracted the job to one of the current crop, Jet Line International.