Sunday, October 26, 2008

unlikely oracle: taipei blues band

This is a year wheels have been coming off the tracks. The tracks themselves are groaning and twisting as strains on the American world order become unbearable. Oil reached 147.00 a barrel over the summer. Food prices rose: a bowl of dry noodles normally 30 reached 50, 60 yuan in Taiwan. Even as Iraq quieted in relative terms (not for the families of the murdered, or course, but for the world media), the tracks groaned louder. China put stars in our eyes with monumental performance engineering in the Olympics’ opening ceremony.

In October came the avalanche, a cascade of stock crashes echoing from one country to the next: losses in the night on the other side of the globe inspiring fear in the morning on our side, and vice-versa, night and day and day and night. Night was only a time for news nightmares from the other side. News anchors appeared peculiarly animated. For once their reports were not about tiny glitches in the machine’s operation, and their predictable solutions, but about real events. There was a sense, with the fear, of other possibilities. The future was, for once in a long time, not dictated by the monotonous ticking of a market metronome.

By chance watching a jug band perform one late October Saturday night in Taipei, this innocuous happening was infused with an uncanny historical mirage. Brian had insisted we go by high-speed rail in order to catch their performance; we chewed Japanese-style hamburgers and saw lights whizzing below like from a plane coming in for a night landing. “I asked Louise if she wanted to come,” he said, laughing, “and she said, ‘don’t you know there’s an economic disaster happening?’” He told me about the band’s leader, a young Taiwanese man whose mother had sent him to a middle class household in Mississippi as an exchange student. She hoped he would learn good English and become a doctor. He fell in love with early blues music.

We sat in a big room in the Taipei Artists’ Village after the performance as the musicians, some attired in antique, early 20th century hats and suspenders, played and frolicked in spontaneous combinations. Their instruments talked back and forth delightfully. People danced, clapped, stared, gathered close, hooted, sang. “This is what music used to be,” said Brian, “about people getting together – simple and alive. Once music was recorded, it was removed from this energy.” I thought of accounts I had read of literary and artistic circles, and of all the romance accumulated around these soap operas and their late-night music and affairs. The example I know best is of the American expatriates in Paris after World War One.

So this is why these circles are hung with such nostalgia, I thought as the musicians played, mingled, stamped their feet, whirled. They were not just emitters of sound, as they are in recordings, but human presences, heated, rollicking, generous, free, instantaneous. Those storied circles’ rarity makes their memory persist out of all proportion to their tiny size and duration. But why should only those past generations be so blessed with this vitality? Is it not available to us, here and now?

Looking at the man grating the washboard on his chest, or at David Chen, the bandleader, cradling the banjo, and thinking of economic crisis and the Paris circle, and musical energy in general, I had a tiny hallucination. An old-time dress-up band’s performance suddenly became a portentous oracle for the future: a period of cultural vitality and economic chaos last seen in the 1930s is upon us once again. Conversations will feel laden with meaning again, and there will be a zest of danger in the air as things teeter on the brink, refreshingly undetermined.

The world awakens, and hundreds of cities will see a rich ferment of music and thought and politics, freed of the stale repetitions of fashion and political stasis. The air will clear a little as factories close down. The earth will breathe. People will suffer – and ponder.

Wednesday, October 22, 2008

the word "den"

the word refers in general to an animal's lair. but in the US after world war 2, it took on another meaning: a study in a house. growing up in suburban connecticut, i learned the word by visiting friend's homes or overhearing them talk. the impression i had was clear: the den was a place for dad, his books, his computer.

i wonder how "study" got to be associated with the word "den." isn't it odd? my theory is this: that the word was created by marketers for suburban housing developers to spice up an old concept. for a more current example, think of the odd (to me) word "breakfast nook." this word did not just come out of nowhere: marketers made it. and some ordinary people actually use it.

but why did marketers use the word "den" and not something else? i guess it had to do with the obsession with gender after world war 2. war and depression and industrialization had rendered old gender categories more and more irrelevant. corporations and citizens after the war found ways to recreate gender lines. even if it was clear that with machines, for example, women could do the exact amount of work as a man, male-dominated society (with the acquiescence of most women) found new ways to prove that women were essentially "different" from men: their "natures" were domestic. they were born to be inside. they were not as rational. etc etc.

so i think the word "den" was a way for marketers to link maleness to a certain special space within the female space of the home. a den is for animals. it was also to be for men looking to retreat to a more primal identity. in the "den" he would not be feminized, but retain his power in splendid isolation. isn't it funny that a place for books, associated with civilization, should be relabelled as savage and animalistic? but savage and primordial in a good way. . .

i wonder if the word is still used by builders or by suburbanites themselves. or was it just a transient usage from the 80s that disappeared later.

am i wrong? i would look in the OED online, but i do not have a subscription.

spirit guard

this fierce dude is standing just inside the doorway of a small mazu temple in an old settlement not far from my in-law's house. Mazu is a goddess worshipped on the south china coast especially by seafarers. she was originally a mere mortal, many centuries ago, who stood on the shore with a light after her father and brother were lost at sea. these guards are used in processions during ghost month; men hoist them on their shoulders and walk with them, the long arms swinging imposingly. the carrier looks out through a small opening in the belly.

taiwan coast

this is the coast i saw with geoff last week in Da'an village. the cement wave-breaks have an odd beauty when lined up this way. the coast is lined with windmills, which sound like a plane overhead when you get near.

pipi, eating

little skin has given birth, but her pups are still squirreled away somewhere unknown. we don't hear any yaps from the empty ground out on the other side of the complex. she is suffering a lot now; her skin condition is worse. i am now feeding her medicine, but am not sure it is the right one. i told the vet i think it might be scabies, but i am just guessing.

Sunday, October 19, 2008

Sister Gozuwa

last night Sara's mom got a call from the Great Love television channel, which is run by the Ciji Buddhist Charitable Foundation. Sara's mom is an active member of Ciji. they wanted to do an interview with her on her involvement with Ciji.

but mother-in-law did not like this idea. "Why don't you interview Sister Gozuwa?"
she said. "She is out there doing recycling 12 hours a day, every day! Why am I more qualified than her?" i admired her for making this point with them, but is she really in the dark about media people's motives? the people in charge of publicity for any organization are going to choose people deemed "attractive" to represent the organization. they care nothing for the truth. Sister Gozuwa, an old, humble, poor woman unskilled with words, will never get an interview with Great Love. Eddie Klaus senior will never become a Mormon bishop: he is small of stature and working-class. it does not matter that these people are backbones of their respective religious organizations. they do not fit the (image) bill.

i assume the interview will go ahead. maybe they will squeeze Gozuwa into some shots.

recent pictures

the top photo was taken at the Italian restaurant where we had dinner with our friends in Hsinchu. my friend Brian, who i roomed with in Taiwan 8 years ago, pushed a red envelope with money in it into my hands. giving red envelopes is a Chinese practice for events like weddings. even though this was not a wedding, Brian is no traditionalist. i resisted very properly, and we pushed back and forth. it was funny, two white men in an Italian restaurant, enacting a Chinese custom. Sara was not in good health, but as soon as her friends and students arrived, she was in high spirits.

the bottom photo is a doorway in a temple in Chingshui Geoff and I visited on our bike trip.

the middle photo was taken in the mountains east of Dongshi a couple of days ago.

Saturday, October 18, 2008

end of history?. . .

Fukuyama was the ultimate triumphalist of the neoliberal order, proclaiming liberal democracies under "free markets" as the "end of history." not so fast. here is his article in newsweek.

The implosion of America's most storied investment banks. The vanishing of more than a trillion dollars in stock-market wealth in a day. A $700 billion tab for U.S. taxpayers. The scale of the Wall Street crackup could scarcely be more gargantuan. Yet even as Americans ask why they're having to pay such mind-bending sums to prevent the economy from imploding, few are discussing a more intangible, yet potentially much greater cost to the United States—the damage that the financial meltdown is doing to America's "brand."

Ideas are one of our most important exports, and two fundamentally American ideas have dominated global thinking since the early 1980s, when Ronald Reagan was elected president. The first was a certain vision of capitalism—one that argued low taxes, light regulation and a pared-back government would be the engine for economic growth. Reaganism reversed a century-long trend toward ever-larger government. Deregulation became the order of the day not just in the United States but around the world.

The second big idea was America as a promoter of liberal democracy around the world, which was seen as the best path to a more prosperous and open international order. America's power and influence rested not just on our tanks and dollars, but on the fact that most people found the American form of self-government attractive and wanted to reshape their societies along the same lines—what political scientist Joseph Nye has labeled our "soft power."

It's hard to fathom just how badly these signature features of the American brand have been discredited. Between 2002 and 2007, while the world was enjoying an unprecedented period of growth, it was easy to ignore those European socialists and Latin American populists who denounced the U.S. economic model as "cowboy capitalism." But now the engine of that growth, the American economy, has gone off the rails and threatens to drag the rest of the world down with it. Worse, the culprit is the American model itself: under the mantra of less government, Washington failed to adequately regulate the financial sector and allowed it to do tremendous harm to the rest of the society.

Democracy was tarnished even earlier. Once Saddam was proved not to have WMD, the Bush administration sought to justify the Iraq War by linking it to a broader "freedom agenda"; suddenly the promotion of democracy was a chief weapon in the war against terrorism. To many people around the world, America's rhetoric about democracy sounds a lot like an excuse for furthering U.S. hegemony.

The choice we face now goes well beyond the bailout, or the presidential campaign. The American brand is being sorely tested at a time when other models—whether China's or Russia's—are looking more and more attractive. Restoring our good name and reviving the appeal of our brand is in many ways as great a challenge as stabilizing the financial sector. Barack Obama and John McCain would each bring different strengths to the task. But for either it will be an uphill, years-long struggle. And we cannot even begin until we clearly understand what went wrong—which aspects of the American model are sound, which were poorly implemented, and which need to be discarded altogether.

Many commentators have noted that the Wall Street meltdown marks the end of the Reagan era. In this they are doubtless right, even if McCain manages to get elected president in November. Big ideas are born in the context of a particular historical era. Few survive when the context changes dramatically, which is why politics tends to shift from left to right and back again in generation-long cycles.

Reaganism (or, in its British form, Thatcherism) was right for its time. Since Franklin Roosevelt's New Deal in the 1930s, governments all over the world had only grown bigger and bigger. By the 1970s large welfare states and economies choked by red tape were proving highly dysfunctional. Back then, telephones were expensive and hard to get, air travel was a luxury of the rich, and most people put their savings in bank accounts paying low, regulated rates of interest. Programs like Aid to Families With Dependent Children created disincentives for poor families to work and stay married, and families broke down. The Reagan-Thatcher revolution made it easier to hire and fire workers, causing a huge amount of pain as traditional industries shrank or shut down. But it also laid the groundwork for nearly three decades of growth and the emergence of new sectors like information technology and biotech.

Internationally, the Reagan revolution translated into the "Washington Consensus," under which Washington—and institutions under its influence, like the International Monetary Fund and the World Bank—pushed developing countries to open up their economies. While the Washington Consensus is routinely trashed by populists like Venezuela's Hugo Chávez, it successfully eased the pain of the Latin American debt crisis of the early 1980s, when hyperinflation plagued countries such as Argentina and Brazil. Similar market-friendly policies are what turned China and India into the economic powerhouses they are today.

And if anyone needed more proof, they could look at the world's most extreme examples of big government—the centrally planned economies of the former Soviet Union and other communist states. By the 1970s they were falling behind their capitalist rivals in virtually all respects. Their implosion after the fall of the Berlin Wall confirmed that such welfare states on steroids were an historical dead end.

Like all transformative movements, the Reagan revolution lost its way because for many followers it became an unimpeachable ideology, not a pragmatic response to the excesses of the welfare state. Two concepts were sacrosanct: first, that tax cuts would be self-financing, and second, that financial markets could be self-regulating.

Prior to the 1980s, conservatives were fiscally conservative— that is, they were unwilling to spend more than they took in in taxes. But Reaganomics introduced the idea that virtually any tax cut would so stimulate growth that the government would end up taking in more revenue in the end (the so-called Laffer curve). In fact, the traditional view was correct: if you cut taxes without cutting spending, you end up with a damaging deficit. Thus the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax increases of the 1990s produced a surplus; and the Bush tax cuts of the early 21st century produced an even larger deficit. The fact that the American economy grew just as fast in the Clinton years as in the Reagan ones somehow didn't shake the conservative faith in tax cuts as the surefire key to growth.

More important, globalization masked the flaws in this reasoning for several decades. Foreigners seemed endlessly willing to hold American dollars, which allowed the U.S. government to run deficits while still enjoying high growth, something that no developing country could get away with. That's why Vice President Dick Cheney reportedly told President Bush early on that the lesson of the 1980s was that "deficits don't matter."

The second Reagan-era article of faith—financial deregulation—was pushed by an unholy alliance of true believers and Wall Street firms, and by the 1990s had been accepted as gospel by the Democrats as well. They argued that long-standing regulations like the Depression-era Glass-Steagall Act (which split up commercial and investment banking) were stifling innovation and undermining the competitiveness of U.S. financial institutions. They were right—only, deregulation produced a flood of innovative new products like collateralized debt obligations, which are at the core of the current crisis. Some Republicans still haven't come to grips with this, as evidenced by their proposed alternative to the bailout bill, which involved yet bigger tax cuts for hedge funds.

The problem is that Wall Street is very different from, say, Silicon Valley, where a light regulatory hand is genuinely beneficial. Financial institutions are based on trust, which can only flourish if governments ensure they are transparent and constrained in the risks they can take with other people's money. The sector is also different because the collapse of a financial institution harms not just its shareholders and employees, but a host of innocent bystanders as well (what economists soberly call "negative externalities").

Signs that the Reagan revolution had drifted dangerously have been clear over the past decade. An early warning was the Asian financial crisis of 1997-98. Countries like Thailand and South Korea, following American advice and pressure, liberalized their capital markets in the early 1990s. A lot of hot money started flowing into their economies, creating a speculative bubble, and then rushed out again at the first sign of trouble. Sound familiar? Meanwhile, countries like China and Malaysia that didn't follow American advice and kept their financial markets closed or strictly regulated found themselves much less vulnerable.

A second warning sign lay in America's accumulating structural deficits. China and a number of other countries began buying U.S. dollars after 1997 as part of a deliberate strategy to undervalue their currencies, keep their factories humming and protect themselves from financial shocks. This suited a post-9/11 America just fine; it meant that we could cut taxes, finance a consumption binge, pay for two expensive wars and run a fiscal deficit at the same time. The staggering and mounting trade deficits this produced—$700 billion a year by 2007—were clearly unsustainable; sooner or later the foreigners would decide that America wasn't such a great place to bank their money. The falling U.S. dollar indicates that we have arrived at that point. Clearly, and contrary to Cheney, deficits do matter.

Even at home, the downside of deregulation were clear well before the Wall Street collapse. In California, electricity prices spiraled out of control in 2000-2001 as a result of deregulation in the state energy market, which unscrupulous companies like Enron gamed to their advantage. Enron itself, along with a host of other firms, collapsed in 2004 because accounting standards had not been enforced adequately. Inequality in the United States rose throughout the past decade, because the gains from economic growth went disproportionately to wealthier and better-educated Americans, while the incomes of working-class people stagnated. And finally, the bungled occupation of Iraq and the response to Hurricane Katrina exposed the top-to-bottom weakness of the public sector, a result of decades of underfunding and the low prestige accorded civil servants from the Reagan years on.

All this suggests that the Reagan era should have ended some time ago. It didn't partly because the Democratic Party failed to come up with convincing candidates and arguments, but also because of a particular aspect of America that makes our country very different from Europe. There, less-educated, working-class citizens vote reliably for socialist, communist and other left-learning parties, based on their economic interests. In the United States, they can swing either left or right. They were part of Roosevelt's grand Democratic coalition during the New Deal, a coalition that held through Lyndon Johnson's Great Society in the 1960s. But they started voting Republican during the Nixon and Reagan years, swung to Clinton in the 1990s, and returned to the Republican fold under George W. Bush. When they vote Republican, it's because cultural issues like religion, patriotism, family values and gun ownership trump economic ones.

This group of voters will decide November's election, not least because of their concentration in a handful of swing states like Ohio and Pennsylvania. Will they tilt toward the more distant, Harvard-educated Obama, who more accurately reflects their economic interests? Or will they stick with people they can better identify with, like McCain and Sarah Palin? It took an economic crisis of massive proportions from 1929 to 1931 to bring a Democratic administration to power. Polls indicate we may have arrived again at that point in October 2008.

The other critical component of the American brand is democracy, and the willingness of the United States to support other democracies around the world. This idealistic streak in U.S. foreign policy has been constant over the past century, from Woodrow Wilson's League of Nations through Roosevelt's Four Freedoms to Reagan's call for Mikhail Gorbachev to "tear down this wall."

Promoting democracy—through diplomacy, aid to civil society groups, free media and the like—has never been controversial. The problem now is that by using democracy to justify the Iraq War, the Bush administration suggested to many that "democracy" was a code word for military intervention and regime change. (The chaos that ensued in Iraq didn't exactly help democracy's image either.) The Middle East in particular is a minefield for any U.S. administration, since America supports nondemocratic allies like the Saudis, and refuses to work with groups like Hamas and Hizbullah that came to power through elections. We don't have much credibility when we champion a "freedom agenda."

The American model has also been seriously tarnished by the Bush administration's use of torture. After 9/11 Americans proved distressingly ready to give up constitutional protections for the sake of security. Guantánamo Bay and the hooded prisoner at Abu Ghraib have since replaced the Statue of Liberty as symbols of America in the eyes of many non-Americans.

No matter who wins the presidency a month from now, the shift into a new cycle of American and world politics will have begun. The Democrats are likely to increase their majorities in the House and Senate. A huge amount of populist anger is brewing as the Wall Street meltdown spreads to Main Street. Already there is a growing consensus on the need to re-regulate many parts of the economy.

Globally the United States will not enjoy the hegemonic position it has occupied until now, something underscored by Russia's Aug. 7 invasion of Georgia. America's ability to shape the global economy through trade pacts and the IMF and World Bank will be diminished, as will our financial resources. And in many parts of the world, American ideas, advice and even aid will be less welcome than they are now.

Under such circumstances, which candidate is better positioned to rebrand America? Barack Obama obviously carries the least baggage from the recent past, and his postpartisan style seeks to move beyond today's political divisions. At heart he seems a pragmatist, not an ideologue. But his consensus-forming skills will be sorely tested when he has to make tough choices, bringing not just Republicans but unruly Democrats into the fold. McCain, for his part, has talked like Teddy Roosevelt in recent weeks, railing against Wall Street and calling for SEC chairman Chris Cox's head. He may be the only Republican who can bring his party, kicking and screaming, into a post-Reagan era. But one gets the sense that he hasn't fully made up his mind what kind of Republican he really is, or what principles should define the new America.

American influence can and will eventually be restored. Since the world as a whole is likely to suffer an economic downturn, it is not clear that the Chinese or Russian models will fare appreciably better than the American version. The United States has come back from serious setbacks during the 1930s and 1970s, due to the adaptability of our system and the resilience of our people.

Still, another comeback rests on our ability to make some fundamental changes. First, we must break out of the Reagan-era straitjacket concerning taxes and regulation. Tax cuts feel good but do not necessarily stimulate growth or pay for themselves; given our long-term fiscal situation Americans are going to have to be told honestly that they will have to pay their own way in the future. Deregulation, or the failure of regulators to keep up with fast-moving markets, can become unbelievably costly, as we have seen. The entire American public sector—underfunded, deprofessionalized and demoralized—needs to be rebuilt and be given a new sense of pride. There are certain jobs that only the government can fulfill.

As we undertake these changes, of course, there's a danger of overcorrecting. Financial institutions need strong supervision, but it isn't clear that other sectors of the economy do. Free trade remains a powerful motor for economic growth, as well as an instrument of U.S. diplomacy. We should provide better assistance to workers adjusting to changing global conditions, rather than defend their existing jobs. If tax cutting is not a path to automatic prosperity, neither is unconstrained social spending. The cost of the bailouts and the long-term weakness of the dollar mean that inflation will be a serious threat in the future. An irresponsible fiscal policy could easily add to the problem.

And while fewer non-Americans are likely to listen to our advice, many would still benefit from emulating certain aspects of the Reagan model. Not, certainly, financial-market deregulation. But in continental Europe, workers are still treated to long vacations, short working weeks, job guarantees and a host of other benefits that weaken their productivity and will not be financially sustainable.

The unedifying response to the Wall Street crisis shows that the biggest change we need to make is in our politics. The Reagan revolution broke the 50-year dominance of liberals and Democrats in American politics and opened up room for different approaches to the problems of the time. But as the years have passed, what were once fresh ideas have hardened into hoary dogmas. The quality of political debate has been coarsened by partisans who question not just the ideas but the motives of their opponents. All this makes it harder to adjust to the new and difficult reality we face. So the ultimate test for the American model will be its capacity to reinvent itself once again. Good branding is not, to quote a presidential candidate, a matter of putting lipstick on a pig. It's about having the right product to sell in the first place. American democracy has its work cut out for it.

Fukuyama is professor of International Political Economy at the Johns Hopkins School of Advanced International Studies.

Geoff's visit

My Australian friend Geoff visited Sara and I for almost a week. It was great. Best of all was a day-long bike ride we took, 80 kilometers all over the Taiwan countryside. At 56, he was still way ahead of me on the hills -- and there were some big ones. How my pores open to the world when I am out in it, in the open air, sweating, in love with life. How well I eat when I am on my bike. How well I sleep when I get home.

A bridge was out -- victim of a recent typhoon -- meaning we arrived home two hours later than expected, and much tireder. my poor rear end. we had to find an alternate, and much farther, bridge.

privatize the profits. . .

but socialize the losses!

note that Hugo Chavez of Venezuela is now referring to Bush as "Comrade Bush," because he has gone farther to the Left even than Chavez in taking over banks.

the grand illusion of the last 30 years -- of a market, floating free of states and institutions, a magical place where anyone and everyone makes money -- has suddenly collapsed. good riddance, i say. "the end of history" -- what an egotistical dream! as if all of history were just leading up to US. but Vietnam was the beginning of the end of American empire.

there is no such thing as market without governments. the Right's fantasy, pushed successfully all these years (even Clinton loved the market), that the state was the enemy of the market, has finally been shown to be untrue. and in how spectacular a fashion.

so what are we left with? these thirty years of profits have all gone into private hands. the losses these fat cats wrought in recent months, however, have all been shared by taxpayers. in other words, they can get rich off the labor of others. and the government is only allowed to take a small amount of tax money for redistribution to the public. anything more bold -- raising taxes for health care, etc -- is labelled "government interference in the workings of the free market." the moment losses pass a certain line, however, these same fat cats cry out for help from the despised government. which is us, by the way.

so -- we socialize losses, but are not allowed to socialize profits. this is not a fair deal. i wonder how long Americans will put up with it.

if nothing else, this financial crisis is putting paid to the apolitical, lazy, self-centered attitude that characterized the American mainstream for so long. as long as i get my piece of the pie, goes that thinking, i could not care less for the evils wrought by this system. how tired i have been of this know-nothing attitude! how could it be that market proponents could hitch their message of greed up to Christianity, a message of selflessness! and worse, those in love with the system viewed anyone not in love with it with contempt. mere hippies! losers! sour grapes! the cynicism of these market believers, as if to them, life could contain nothing more than the love of material gain and power: that idealists are just hiding their secret lust for money.

they are wrong. and their bubble of a world is gone.