The gated community motto: Come and live in a lie while ignoring life!

The papers, books and studies related to the urban development of gated communities in the Global South have provided lots of information by problematizing the history and politics behind the imaginary of these projects. Urban developers all over Latin America, Africa and Asia are building hundreds of communities and apartment buildings that imitate European and Western Styles of construction, lifestyle, norms and regulations. This morning I got my hands in one more of these advertisements for a housing project located in a recently developed dormitory city near Guatemala City, Guatemala.

The community is called “Residenciales Pasaje Español” and the development aims at replicating the lifestyle of a Spaniard ideal of a community  (while, of course, ignoring reality about Spain’s complexities).  The advertisements are all directed at the appeals of the growing middle-class market in Guatemala which is backed by a search for: affordable housing, accesible parks, gated walls around the housing project, 24/7 private police service, white houses that offer access to parking spaces for family-sized cars.  All of this providing a “theme-park” feeling that enables you to transport yourself from the violent and insecure life outside of the gates.

plano del proyecto

Guatemala City and the dormitory cities around it are inhabited by aprox. 3.5 million people with more than 1 million cars and the figures are quickly rising. Many of the gated communities are 1 or 1.5 hours away from most of the office and industrial areas and traffic jam is a constant worry for this people. Alienated from crime and lack of rule of law, these gated-communities offer an escape from public worries to taxpayers and an excuse to ignore the country’s multiple problems.

torres de luz

But as any other theme-park there are many flaws and dangers in the aim to replicate the “ideal society”.  The complex is located straight next to a line of huge power towers that represent a health menace to the people that will live in the houses. Also, the gated-community is surrounded by hundreds of new houses and dozens of new gated-communities that once completed and sold will represent an increase in the traffic jam outside of the “housing dream”.

Perhaps it is still time to Rethink the future of our cities. We still have time to further problematize our development model and think about the contradictions behind these city-building dystopias. And bring to light more information regarding how these gated-communities further weaken collaboration, cooperation and citizenship in our societies…

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Piketty’s “Capital,” and the Rest of the World

Video: Thomas Piketty Discusses, “Capital In The 21st Century” with Ryan Grim and Alexis Goldstein

The book by the French economist Thomas Piketty’s Capital in the Twenty-First Century has already become part of everyday discussions and is being referenced among academics. The research by Piketty has come in the perfect time and there are plenty of reasons why. Piketty’s book discussion brings some light to the study of income quintiles and deciles into a new debate of the “the skyrocketing incomes of the 1% — and the mind-boggling gains of the 0.1% and 0.01%  — by gathering and publishing income tax data that nobody had bothered with before. Piketty was behind similar projects in France, Britain, Japan, and other countries.” (via Justin Fox at the Harvard Business Review)

I finished reading the book this weekend and it was eye-opening. The book presents great challenges to the study of capital and inequalities in the developed economies as well as in the rest of the world. The book also opens the doors for a wider discussion on the effects European Capital has had in the global economy. Further, the book invites globalists to challenge our understanding of European-centric terms that over longer periods of time become, perhaps, insufficient to comprehend global economic processes over the passing of centuries and how these processes have changed and transformed themselves by a complex evolution and redefinition.

It can’t be denied that capital during all of the 19th Century and in the beginning of the 20th Century was centered in the main European metropolises and extracted most of the goods from the periphery. Few Capital remained in colonies and protectorates. Wealth belonged to the Empires and Poverty remained in colonial territories. Even the poorest of the European was considered Rich by comparison to the inhabitants of Colonies.

Today, European Empires are gone for a while, U.S. Capital increased and gained from the fall of the European Empires and new economies started developing in former Colonies. Giant Economies like China and Russia woke up after decades of isolation from global trade and today reconfigured our understanding of Capital. Piketty’s book somehow fails to explore this Global political changes and its economic effects.

Piketty’s central argument has a gigantic weakness since it is tied to nation-states and cannot be compared or understood in reference to Global Capital flows in today’s multinational economy. Very few references are made to the role played by Multinational Companies and foreign national investments and savings by State Companies in the world.  And less is mentioned of global inequalities and the North-South divide that has been increased by the investments done by Developed and Developing Economies in the rest of the world.  Piketty argues that Capital has tended over time to grow faster than the overall economy (he focuses on European and US economies); and that income from capital is invariably much less evenly distributed than labor income (again he focuses on European and US economies). Thus failing to acknowledge how Labor income stopped been localized during the 20th Century and it involved multiple polities far away from the metropolis.  Piketty argues that together (Capital growth and its uneven distribution) amount to a powerful force for increasing inequality.

Piketty doesn’t take things as far as Marx and this is a pitty. Marx’s methodology involved the State but it also referenced to its effects both and from the peripheries through the pass of longer periods of time. This is one of the most important contributions of Marx: his global understand of the economy.

Piketty shows how over the two-plus centuries for which good records exist, the only major decline in capital’s economic share and in economic inequality was the result of World Wars I and II, which destroyed lots of capital and brought much higher taxes in the U.S. and Europe. However, he again fails to acknowledge how Capital grew in the Global South after these wars as a result of increased inequalities in the Colonies and Agriculture-centered States in South America and Asia. During the wars Capital destruction was followed by a spectacular run of economic growth that involved the entire globe and not only Europe and the U.S.  The Cold War is a good reference for finding how Capital flows went from Europe to Asia, America and Africa.  As well, the run of economic growth started involving non-State actors in which Capital continue increasing at a higher and faster rate than the one he references and studies. Failing to study this shows in Piketty’s book that after decades of peace, slowing growth, and declining tax rates, capital and inequality are on the rise all over the developed world only, and it’s not clear what if anything will alter that trajectory in the decades to come.  However, the declining tax rates, capital and inequality are on the rise at a faster pace in the developing economies and in the “puppet states” (Nigeria, Chile, the Middle East countries) which have emerged around them as sources of petrol, minerals and rare earths.

Piketty’s main worry as points out Justin Fox is that “growing wealth in Europe will bring a return to 19th century circumstances in which most affluent people get that way through inheritance.” Plus, “U.S. median income will continue lossing ground relative to other nations in the following years”. But this are not the only worries that we should identify.  The BRICS countries are probably a good source of comparison to see how the growing wealth of the 20th Century remains on the hands of the few rich and is currently been passed through inheritance. Further, developing economies in South America and Africa are an extreme case of the last.

Piketty’s solution to Europe’s and U.S. problems is that a progressive global wealth tax be established. But this tax will fail to be the best response to the current dynamics of inequality if Capital continues flowing outside of Europe into multinational capital investments overseas and into State companies overseas. 

I enjoyed this political economy analysis and will continue learning a lot from it. Piketty’s solution is a challenge for the study of global political economy and the reconfiguration of the global economy in the 21st Century. Perhaps if a new book is published studying the shareholders who own the most stock in almost every Fortune 500 company and the Capital of any major global company instead of only the economies of France, Germany or the United States more accurate insights will be found.

 

Walmart’s Irrational “buy American” Campaign

Walmart-Stores-home-offic-007

Walmart‘s latest push to Buy American and Hire Veterans is irrational.  In a world of interconnectedness in which products from pencils to airplanes are produced with parts and components made all over the world the “buy American” argument falls into pieces.

In today’s world mass consumption economy there is not a single product that can be claimed to be “national” or “unique” without ignoring the intertwined network of global production.  If your argument is “yes” there is such a thing as “100% national” or “100% American” then I will still be able of arguing against your position.  Why?  Because the economy of the United States of America is not only part but dependent on the global economy.

By 2012, only about 32 cents for every dollar of U.S. debt, or $4.6 trillion, was owned by the federal government in trust funds, for Social Security and other programs such as retirement accounts, according to the U.S. Department of Treasury.

The largest portion of U.S. debt, 68 cents for every dollar or about $10 trillion, is owned by individual investors, corporations, state and local governments and, yes, even foreign governments such as China that hold Treasury bills, notes and bonds.

Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury.

In total, China owns about 8 percent of publicly held U.S. debt. Of all the holders of U.S. debt China is the third-largest, behind only the Social Security Trust Fund‘s holdings of nearly $3 trillion and the Federal Reserve‘s nearly $2 trillion holdings in Treasury investments, purchased as part of its quantitative easing program to boost the economy. (Data via: How Much U.S. Debt Does China Really Own?)

So, the next time you think you are “Buying American“, I invite you to reconsider how irrational such an argument is.

The Global Politics of the Diaoyu Islands

By Bryant Arnold. via:http://www.cartoonaday.com/china-vs-japan-at-sea/

As The Japanese government’s moved to purchase the Diaoyu Islands (also known as Senkaku Islands) three days ago the government of the People’s Republic of China reacted energetically.  Initially, Chinese media reporters influenced mediatic understanding of the situation by emphasizing the nationalization of the islands by Japan (ringing the history bells to Chinese people on how Japan had previously nationalized Manchuria and renamed it as the puppet state of Manchukuo during the WW2 period).  And later, by making strong diplomatic statements on how Chinese sovereignty and control of the islands had been violated by the Japanese purchase.

The purchase of the islands is of relevance regionally and globally.  Why China, Japan, and S. Korea aren’t backing down on this islands should be understood by taking a look at the map and see how the position of the islands is central for the passage of containers and oil that comes all the way from Middle East via the Strait of Malacca.  A route that is of priority importance for China and which I explored in the essay “The Strait of Malacca as one of the most important geopolitical regions for the People’s Republic of China” which ca be read in pdf at Academia.edu for free.

Locally, the geography of the islands is meaningless. The island group consists of five uninhabited islets and three barren rocks which zooming out are located approximately 120 nautical miles northeast of Taiwan, 200 nautical miles east of the Chinese mainland and 200 nautical miles southwest of the Japanese island of Okinawa. And which zooming out are in the center of the route of all the containers that go to the ports of East and North East China, of which the most important is Shangai.

The Japanese central government formally annexed the islets on 14 January 1895. And after WW2 they were occupied by the United States. The islets were later returned to Japan during the 70s and it was only until the last two decades that they became of relevance as the People’s Republic of China started to project is New Economic and Global Plans for economic sustainable expansion.  Plans in which they have invested billions of  dollars in military expansion, naval trade/military shipbuilding, regional economic investment via state-owned companies and diplomatic sovereignty claims all over the region.

The islands are officially Japanese territory, but as Chinese official statements continue being broadcasted they claim a violation of sovereignty that could takes decades to be resolved via a diplomatic arbitrage and/or scalate to more direct military statements and naval occupations of the beaches of the islets.

Whoever said that trade is the most (or only) pacific way of organizing society should reconsider this evaluations when thinking about how global trade works and on how diplomatic and economic control of trade routes is sometimes more powerful and dangerous than a bunch of battleships.

The role of Ethics, Economic Power and Political Power in Big Corporations

Today in class we had a short discussion on which is the economic and political power of Corporations and Transnational Companies in the Global Political Economy as compared with the power that have states and governments.  Undoubtedly, the scope and array of political activities of  companies is huge and their economic activities are even more diverse.

More so, the power of these corporations to shape culture, politics and media is widely studied and written about in books, journals and documentaries. What is usually not mentioned is that these huge and powerful companies have acquired political power by the use of their profits for the sake of protecting their interests.  These interest and the means used are subject of ethical judgement.s

Generally, the political power to which we usually identify this corporations is that of lobbying.  However, many other ways of achieving global economic and political power are open for corporations by allying with ruling governments, offering loans and investment for countries and/or new cities; but also by the enforcement of specific news agendas and in the Media to inform citizens.

It is of particular interest for me the ethics of the political and economic power that a company has.  The pursuit of profit is the goal of a company by the provision of services to its consumers.  It is profit which fuels a company to continue growing and providing services.  However, this activity of pursuing profit is subject for ethical judgements that historically have been judged by/from immoral philosophical backgrounds. (For further information on what I consider to be Morality or Ethics please visit: http://aynrandlexicon.com/lexicon/morality.html)

The pursuit of profit is a moral action when undertaken in consistency with the respect of individual rights.  As such, a company should and can influence politicians by lobbying when it considers it necessary for them to increase their profits.  The lobbying that is ethical is that which doesn’t creates privileges but that which eliminates regulations on competition that was previously benefiting special interest groups.

Historically, the role that Corporations and Transnational Companies have had  should be analysed in context when judged about its morality or immorality.  Thousands of pages of research that demonstrate how corporations have used its political power to achieve special privileges can be found everywhere.  The immorality of the actions of many corporate managers has been demonstrated and data on how they have violated human rights can easily be found in newspapers.  But this is not an absolute; just because some (or most) of the companies have violated and abused of their economic and political power it doesn’t make of them to be intrinsically evil or corrupt.

Corporations are not humans.  However, corporations are managed by humans whom depending on their philosophies of life can respect or violate individual rights and disobey the rule of law.  It are only those companies which act ethically which at the end of the day will profit the most and benefit the rest of society in a positive sum game.  Those companies and their managers who are willing to violate rights and act unethically have brought the Global Political Economy into zero sum game results in which only one side of the exchange has benefited.

And here, once again, the enlightment of Ayn Rand comes to play particular interest when identifying which is the difference between economic power and political power.  As well, as what is ethically correct for a company to do or not to do.

Rand wrote that,

What is economic power? It is the power to produce and to trade what one has produced. In a free economy, where no man or group of men can use physical coercion against anyone, economic power can be achieved only by voluntary means: by the voluntary choice and agreement of all those who participate in the process of production and trade. In a free market, all prices, wages, and profits are determined—not by the arbitrary whim of the rich or of the poor, not by anyone’s “greed” or by anyone’s need—but by the law of supply and demand. The mechanism of a free market reflects and sums up all the economic choices and decisions made by all the participants. Men trade their goods or services by mutual consent to mutual advantage, according to their own independent, uncoerced judgment. A man can grow rich only if he is able to offer better values—better products or services, at a lower price—than others are able to offer.

Wealth, in a free market, is achieved by a free, general, “democratic” vote—by the sales and the purchases of every individual who takes part in the economic life of the country. Whenever you buy one product rather than another, you are voting for the success of some manufacturer. And, in this type of voting, every man votes only on those matters which he is qualified to judge: on his own preferences, interests, and needs. No one has the power to decide for others or to substitute hisjudgment for theirs; no one has the power to appoint himself “the voice of the public” and to leave the public voiceless and disfranchised.

Now let me define the difference between economic power and political power: economic power is exercised by means of a positive, by offering men a reward, an incentive, a payment, a value; political power is exercised by means of a negative, by the threat of punishment, injury, imprisonment, destruction. The businessman’s tool is values; the bureaucrat’s tool is fear.

And by this she meant that economic power is always ethical because it pursuits a reward for men everywhere and anytime (in the entire process of designing, production, transportation and distribution of products and services).  And as such that the political power of a company appears when the businessman becomes a bureaucrat or lobbyist that uses the power of government to achieve privileges for himself and his company.

This discussion comes from observing the following table which presents the GDP-PPP of the Top 100 Economies in the World (2009) which was prepared by the World Bank.  Particularly relevant from this table is the fact that among the top 100 economies the authors included also the largest companies in the world in base of their Revenues-PPP (2009).  In position #32 appears Royal Dutch Shell as the largest company of the list with revenues of 458 billion dollars and it is followed by ExxonMobil in position 35 with 426 billion dollars.  These two companies had Revenues-PPP in 2009 which surpassed the size of the GDP-PPP of countries like Venezuela (#48), Greece (#52) and Switzerland (#53).

Even though is not commonly done; I have always studied Global Political Economy by remembering clearly what is ethical human behavior and what is not.  Starting from this point then I try to understand what is or can be the effects of a government’s or corporation’s decisions in real world cases.  Unfortunately, the ruling ethical code among Academics today considers it to be evil to pursue profit, self-interest, individualism and collaboration in order to create positive sum games in global exchange.

Indeed, historical examples are not the best reference for illustrating how we can benefit from an Objectivist ethics perspective when understanding the role of Companies in Global Economy.  However, it is this lack of many examples which should make it easier for us to identify how a Businessman success depends on “his intelligence, his knowledge, his productive ability, his economic judgment—and on the voluntary agreement of all those he deals with: his customers, his suppliers, his employees, his creditors or investors. A bureaucrat’s success depends on his political pull.” (Rand, The Ayn Rand Letter, III, 26, 5. 1971-76).

Now, it is time for me to continue reading history and seeking for those few exemplary examples of ethical businessmen who have given us the best products and services in positive sum games for the entire world.

Recommended Articles: Business, Economic and Financial History

List of selected articles that I read last week that may be of your interest:

  1. Super-cycles of commodity prices since the mid-ninteenth century. Bilge Erten
  2. Against Liberty: Adorno, Levinas and the Pathologies of Freedom. Nelson, Eric S.
  3. Lords of Uhuru: the political economy of elite competition and institutional change in post-independence Kenya. Bedasso, Biniam
  4. The Euro crisis: a historical perspective. Mourlon-Druol, Emmanuel
  5. Economics and ethics: a historical approach. Ciani Scarnicci, Manuela

On the fallacies of an Emerging Global Left

Socialism is unrealizable as an economic system because a socialist society would not have any possibility of resorting to economic calculation. This is why it cannot be considered as a system of society’s economic organization. It is a means to disintegrate social cooperation and to bring about poverty and chaos.” Ludwig von MisesMoney, Method, and the Market Process.

Recently, an article from the blog Poverty Matters (supported by the Bill and Melinda Gates Foundation) authored by Jayati Ghosh in the Guardian elaborates on how a new global left is emerging as a result of a transcendance of the traditional socialist paradigm.  Ghosh explains that this new global left has is currently transcending the traditional socialist emphasis on “centralised government control over an undifferentiated mass of workers, to incorporate more explicit emphasis on the rights and concerns of women, ethnic minorities, tribal communities and other marginalised groups, as well as recognition of ecological constraints and the social necessity of respecting nature.”  This transcendance is occurring via what Ghosh considers to be seven common threads that are not new but a result of a “collective failure of memory”.

These threads are:

  1. An attitude to what constitutes democracy,
  2. the rejection of overcentralisation,
  3. a more complex approach to property rights,
  4. a discourse in the language of “rights”,
  5. a realization that addressing issues only in class terms is not sufficient,
  6. a emphasis on gender as a a cause for addressing issues,
  7. an emphasis on environmental conservation, the protection of ecosystems, biodiversity and the integrity of a country’s genetic assets.

I wonder what Ghosh considered to be the traditional socialist paradigma.  Socialism and the ideas behind this socioeconomic system of collective ownership of the means of production is very diverse and it is incorrect and inaccurate to speak of a single socialist paradigm.  More so, what seems a New emergence of the left is in fact not occurring anywhere in the world.

Collectivism (inaccurately generalized as “the left”) in its many names and shapes continues developing itself within the same framework of ideas that have been used for centuries. While the historical context has changed the principles continue being the same.  As such, the thread number 1 which seems for Ghosh as a new attitude toward democracy is the result of the failure of the previous collectivist governments that have ruled the world.  There is no real change in the attitude toward democracy since collectivist ideas consider democracy as a means to the value they aim to achieve: collective power over the collective.  The only way of having a new attitude toward democracy would be in fact to reject it as a mean to achieve any end successfully.  This of course is not happening anywhere in the collectivist groups of the world.

As well, the point number two of overcentralisation is false since collectivism is a centralized system of organization in which at the end of the day the sole power over everything resides in the collective government.  The only change is not of how centralization happens but on how many people are to be managing that collective government (the Party, elites, corporations, oligarchies, et al).

Point number three and four have nothing new and are the same exact approaches that collectivism has had since it origin in regard to property and rights.  Collectivist philosophies consider all in essence the private ownership of the means of production to be evil, static in nature and inefficient to satisfy the needs of humanity. Its approach to rights is rooted on the principle that the only important rights are those of the collective and thus reject the individual rights of its members.

Points five, six and seven have also not changed in the collectivist mindset since they are rooted in the principles of class struggle that have only continued the trend of understanding society as a competing/destructive system based on gender, race, culture, religion, etc.  The principle continues the same: The so called  tension or antagonism continues to exists in their interpretation of society due to competing socioeconomic interests between people.

By definition, the only way in which any real change, evolution or overcoming of a collectivist philosophy in the globe will arise when the discourse starts by rejecting the philosophical principles in which they are rooted.  As such, unless they understand how and why the collectivist philosophy is full of fallacious principles that have caused death and poverty for centuries, there is nothing that will change.  There is no emergence of a new left, there is no resurgence of collectivism and the dialectics of historical materialism continue existing in the core of all collectivist philosophies.  It will be only until intellectuals have the common-sense and moral courage to question their philosophies of life that we may seem an end to centuries of collectivist failed projects of organizing society.  Until that day what we will continue seeing is the same social system that has destroyed the best within man for ages.