May I...

When the heart speaks
a thousand flowers bloom
and love flows.

Love and compassion
vanquishing all fear, misgivings and hate
healing wounds.

The Unresolved Miracle

One Reaction: MITI

Rising from its ruins of the Second World War, Japan became the second largest economy in the world within a span of fifty years. To date one of the most debated topics in Japanese economic history is the cause of this "Miracle".

The miracle theory was given much exposure by Chalmers Johnson the former CIA analyst in his 1982 book, "MITI and the Japanese Miracle” . Johnson holds the Ministry of International Trade and Industry (MITI) as responsible for achieving the Japanese economic success. The MITI has its origins in the Ministry of Munitions (MM) which had accumulated numerous powerful functions during the war. The MM during the war had permission to order any enterprise to convert to munitions production. It is said that MITI was bestow with similar powers to conduct and execute the industrial policy and dominated almost all the economic decisions that were to be made in modern Japan.

Johnson while acknowledging the contribution to the miracle made by institutions such as the “lifetime" employment system, the seniority wage system, enterprise unionism, amakudari and the keiretsu, places superiority on the role of rational and selective policies adopted by the Japanese bureaucracy. Among these were “policies concerning protection of domestic industries, development of strategic industries, and adjustment of the economic structure in response to or in anticipation of internal and external changes’. Evidently market guidance was practiced through planed rational policies and were pursued by the MITI in the “cause of the national interest”.(Johnson 1982).

Johnson’s faith in developmental states revolves upon his conviction of MITI's contribution to the Miracle. In his opinion, ‘the developmental, or plan-rational, state, by contrast, has as its dominant feature precisely the setting of such substantive social and economic goals’. Hence, ‘holding to absolute freedom will not rescue the industrial world from its present disturbances. Industry needs a plan of comprehensive development and a measure of control.’(Johnson 1982).

The Counter Augment: The Myth of MITI

In the 1950’s a small consumer-electronics company in Japan asked the Japanese government for permission to buy transistor-manufacturing rights. MITI refused, arguing that the technology wasn't imposing enough to rationalize the expenditure. Two years later, the company influenced MITI to reverse its decision and went on to be the worlds leading manufacturer in transistor radios. The company's name was Sony. (D.R.Henderson 1983) In another case, MITI tried limiting the auto industry by forcing firms to merge, but with firms rebuffing, the plans were later dropped. Had the MITI had its own way, Japan may not have had the success in both the industries it enjoys today.

Many free market theorists believe that MITI’s powers and control were greatly exaggerated. Authors such as Henderson, brings forth evidence to support this claim. “Between December 1955 and February 1973, crucial years in Japan's growth, the government had six different National Economic Plans for economic growth. But without exception, actual growth rates exceeded those required to fulfill the plan's targets. This is evidence that the plans themselves were not responsible”. (D.R.Henderson 1983)

Have Your Say

Another as always counters one argument. However, had it not been for some level of control and guidance to market forces(to which nobody denies the MITI of not doing) it probably would have been much interesting to see as to how or if Japan would have emerge out of its WWII tatters.

The Stranger

The ‘stranger’ had nothing to do with what was happening.
Calm and thoughtful of it she stood.
Speechless …………………
Yet accustomed to the unfolding events.

.

one day I see the ‘stranger’ once more
Overwhelmed with a mystifying joy
Feeling anxious
And not knowing why
I stood still.

Resolving to solve the ‘strangeness’,
I embarked on a far-off passage.

Reaching the shores of understanding
I found what I was looking for
A feeling without lust, greed or anger
Fills me in…..

And gone was the strangeness.

mind overcoming its cankers

There are cankers to be overcome by
insight, self-control, judicious use, endurance,
avoidance, elimination and development.

If cankers are not overcome,
what should be done is left undone,
but what should not be done is done;
the self important and the heedless,
For them the cankers only increase

For those who earnestly practice
the meditation on the nature of the body,
they do not do what should be not done,
They steadfastly pursue what should be done,
Hence for those mindful and clearly comprehending ones,
the cankers do come to an end.

Having rid of cankers,
like birds in the air -untraceable leaving no marks,
birth,death and rebirth ceases,
so like the bird free be!

(Dhp.292-3 and Buddharakkhita:2004)

A good offence is the best defence

Peace is the alternative to war. Yet as long as the socio-economic returns of defending a nation’s interest and its territorial integrity exceed the dividends of peace , states will choose war over peace even if they become protracted by nature.

There are three common ways to fund an economy in war times; increasing taxes, decreasing investments , and by incurring public and external debt. Whilst external spending on war shrinks national income, internal government spending can create effects similar to that of military Keynesianism. Wars can provoke shared poverty with governments tending to tax and borrow from the richer (as a means of financing the war) while increasing the income to the poor through military payrolls and subsidies. Such types of income distribution will deepen existing levels of poverty and increase its incidence.

One alternative to this dilemma is wealth creation through military industrialization (the European experience). Reverse engineering and tactical technology transfers can make room for such industrialization. Yet the majority of less developed countries (apart from,India,China and Parkistan and a few former soviet block countries) have so far not found this kind of prosperity through war.

The second alternative, the most probable, is to have sound war strategies accompanied by good economic management. Planners must find way to increase production and growth with what ever resources they could spare for non-war related activities. Cutting wastage, creating efficiency and productivity plus implementing development state mechanisms that provide fundamental infrastructure and guidance for low cost production with higher yields can be seen as primary policies adoptable by an economy in war.

As a stronger economy bares the brunt of war it can also give that little extra edge needed in winning a difficult one . Which makes one good offence in the economic frontier the best defence of all times.

Bang! you are dead: Confessions of an Economic Hit Man

John Perkin's ‘Confession of an economic hit man’ is a page runner that that make for quality reading during the holiday season!

In the 10 years between 1971 and 1981, Perkins worked for an international consulting firm where he earned impressive job titles and salaries. Yet in reality Perkin’s job was to implement policies that promoted the interests of the U.S. corporatocracy while confessing to alleviate poverty.

Perkin calls himself “an economic hit man”. “Economic hit men are highly paid professionals who cheat countries around the globe out of trillions of dollars," he writes. People recruited in to this capacity facilitate lending to third world countries that are strategically important for U.S interest. A necessary conditionality of these loans is that U.S. engineering companies be given the construction contracts of these development projects. So the money once again makes it way back to the U.S economy. Yet “the recipient country is required to pay it all back, principal plus interest.” The debts are so large that eventually the debtor country has to default. The more the debt ,better the result. The debt becomes a lever forcing that country to serve U.S. and corporate interests, whether with “United Nations votes, the installation of military bases or access to precious resources such as oil.”

Citing Ecuador for example, the country Perkins served in as a Peace Corps volunteer in 1968, Perkin writes “ We loaned it billions of dollars so it could hire our engineering and construction firms to build projects that would help its richest families. As a result, in ... three decades, the official poverty level grew from 50 to 70 percent, public debt increased from $240 million to $16 billion, and the share of national resources allocated to the poorest citizens declined from 20 percent to 6 percent”.

Confessions of an Economic Hit Man landed on The New York Times Bestseller List, and in 19 other bestseller lists including the Los Angeles Times, San Francisco Chronicle, USA Today, Wall Street Journal, and Washington Post.
What better way to start the Holiday reading!!!

Post Script (2013): I wonder if the "economic hit man" strategy is in the preview of  modern Chinese policies. The billions thrown into economies in South Asia (Sri Lanka etc) and in Africa are mainly for infrastructure development. Unless these infrastructure turn into productive  income generating avenues the shadows of underdevelopment and aid dependency will remain at large.

Best practices? Whtz that?

The developing credit crisis in the United States, linked to the bursting of the housing market bubble, is beginning to reveal the accounting manipulations employed by major US financial institutions to engage in speculative activities and hide risks. The mortgage market – which loans to borrowers with a poor credit history - has been reeling under large losses for months and some of these losses have been incurred by hedge funds. In July number of hedge funds closed down and now in to the 4th quarter many large banks are reporting massive losses running into billions of dollars. Among the affected is Citigroup—an American financial conglomerate that is the world’s largest company measured by asset value and Morgan &Stanley—a forerunner among American banking dynasties. Morgan & Stanley’s reported losses for 2007 is a first in its 73 year old history.

Guess who is baling America out? For Morgan and Stanley it is good old China!(Chinese sovereign funds) While Citi had to latch on to the Moslem world to find a breather with Saudi funding.

The whole crisis coerces one to wonder why there is a duplicity when it comes to “Best Practices and Good Governance” for preachers of these have hardly practiced any to reach and to maintain the “now developed” status. One other thing, gone are the good old days of Allen Greenspan!!!!

The Greenspan Drama

Remember the great Allen Greenspan?

In 1980's Greenspan's predecessor, Paul Volcker, made the bold -- but widely unpopular -- decision to send the American economy into a major recession in order to curb the rampant inflation of the time. Many in the likes of Milton freedman believed that recessions were missteps of the federal reserves, thus Volcker was a prime example for a Fed induced recession. Unlike Volcker, Greenspan didn’t have to take dramatic steps to manage the economy. Greenspan was also accredited for steadying things during the "Black Monday" market crisis in 1987, the late 90's currency crisis and the hedge fund collapse that resulted due to Russian loan defaults. Even after 9/11 the American economic recovery was widely attributed to Greenspans voice of reasoning and strength.

Greenspan unlike many was the luckiest of the lot. He reigned during the longest period of an American economic boom, a result of a rapid technological advancement and trade. Thus inflation remained low and unemployment was less, making Greenspans job a lot easier. He was famous for his "inflation targeting", in which the Fed makes public a projected inflation rate, effecting a greater transparency in likely Fed moves to raise or lower short-term interest rates, a practice which Bernanke later replaced by providing a "targeted minimum level of inflation".

Greenspan was a keen supporter of the Bush administration. Economist Paul Krugman, a frequent Greenspan critic, wrote in the New York Times that Greenspan was a "three-card maestro" with a "lack of sincerity" who, "by repeatedly shilling for whatever the Bush administration wants, has betrayed the trust placed in the Fed chairman'". Yet Allen Greenspan wrote in his 2007 book, "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil". One wonders whether his close relationship with the famous American philosopher Ayn Rand (who advocated objectivism against positivism) might have influenced him to develop this objectivistic insight into American politics.

Shel Silverstein

I recently fell in love with Shel Silverstein's work. Shel is an American children’s writer. His poetry is what took me by surprise. In almost all his work he tries to put forth an "alternative view". His famous poems including Danny O'Dare, Its dark inside here, rain, young boy and the old man, are just to name a few examples where this "alternative" perspective gets a sizable amount of attention. He voices his opinions as to how thankless can the thanksgiving dinner be, and how blue and dark the turkey feels on the happy Christmas table. What struk me most was the fact that he writes these for little children. Yet adults too can learn a thing or two by reading Silverstine's poems.

Point of View by Shel Silverstein
“Thanksgiving dinner’s sad and thankless
Christmas dinner’s dark and blue
When you stop and try to see it
From the turkey’s point of view.
Sunday dinner isn’t sunny
Easter feasts are just bad luck
When you see it from the viewpoint
Of a chicken or a duck.
Oh how I once loved tuna salad
Pork and lobsters, lamb chops too
Til I stopped and looked at dinner
From the dinner’s point of view”