Signs of Hope at the End of 2013

As we close out 2013 a remarkable thing happened, Peggy Noonan, former Reagan speechwriter, Wall Street Journal opinion writer and Republican darling tells the startling truth about what might be passing through the minds of the world's thinking billionaires. While many  dream of ever bigger houses and yachts some worry about the market continuing to rise. Noonan overheard a New York billionaire say these unlikely words,   "I hate it when the market goes up. Every time I hear the stock market went up I know the guillotines are coming closer."  Noonan reflects that self-made, broadly accomplished was concerned that the gap between the ever richer haves and the increasingly poverty line and below have nots "has become too extreme, too dramatic, and static," and "fears it will eventually tear the country apart and give rise to policies that are bitter and punishing, not helpful and broadening." What is arresting apart from the stark choice of imagery is the fact that this commentary is published on capitalism's flagship newspaper, the Wall Street Journal. There maybe some hope that the financial and political captains of the country (more or less the same people) maybe having second thoughts about the increasing unfairness of a system that keeps rewarding those with the wealth and will think again about continuing to fray the  safety net that keeps millions of people from destitution. Liberals who propound such views are usually vilified by the right wing media machine as well "liberals" who know nothing about the need to run profitable businesses or some such tired put down,  but they are in reality capitalists best friend, trying to make an inherently unequal system slightly more humane and by extension less unstable. Thus for example initiatives such as passing higher cost of living related minimum wage laws are designed to keep the system from not breaking down so completely that families cannot get properly fed and clothed and people cannot afford to live in dignity.  Obama with nothing left to run for but a legacy as a change agent to protect, should be dedicating his presidency to closing the wealth gap.

Dictators Handbook: Why Bad Behavior Is Almost Always Good Politics

Since the dawn of history there have been no shortages of leaders who are prepared to do anything to stay in power. By “anything” we can include starving, torturing, stealing from and even slaughtering their own people, anything includes anything. We may want to believe that we live in an enlightened freedom loving world but for the peoples of Cambodia, Equatorial Guinea, North Korea, Mynama, Cambodia. Sudan and a host of others the future is as bleak as it ever was. These scoundrels are often assisted in their task of pillaging their country’s resources by a system of international aid and a belief that the “enemy of my enemy” is my friend that keeps these ruthless tyrants well supplied with US armaments designed to fight terrorism. Although de Mesquita and Smith’s thesis in The Dictators Handbook: Why Bad Behavior is Almost Always Good Politics is broader than a critique of the way the US and the international system it supports maintains these thugs. Its theme is that once the dictator. mob boss or even CEO is in power they have to follow some well entrenched rules or risk losing power. The preeminent among these is take care of those who brought you to the table first above all things or risk being deposed. Julius Ceaser forgot this basic rule when in his efforts to reduce the tax bite he got rid of tax farmers and destroyed the livings of many of his core supporters. There are many other interesting ancetdotes like this, from Carly Fiorina’s troubles as CEO of Hewlett Packard to “Big" Paul Castellano failed efforts to survive their enemies that give flavor to a highly readable book.  One of the features that make it such an easy read is the combination of  academic insights and "ripped from the headlines" inside stories of how corrupt dictators manage the game.

The takeaway is that good governance matters and there is a way to change our approach to the giving of aid so that we do not abet their egomanical desire to stay in power and force them rather to address the needs of their own people. But for any real efforts in this direction to begin we should give up our naive notions that foreign aid does anything more for the suffering people who are unfortunately locked inside the dictators’ prison walls. Despite the billions that have been given to countries’ where dictators rule there has been neglible impact for the simple reason the authors claim that autocrats believe money spent on “people-like infants and little children who are years away from contributing to the economy is money wasted. Resources should instead be focused on those who help the ruler stay in power now, not those who might be valuable in the distant future.” The difference in belief is shown by useful contrasts between where there is a commitment to democracy and where there is a flagrant disregard of it. Take Equataorial Guinea for example, with a per capita income of $37,000 a year can only provide 44 percent of its people with clean water. By contrast Honduras with a per capita income of only $4,100 can provide 95 percent of of its people enjoy potable water.

The authors conclude, “The availability and technology of clean water doesn’t favor democratic socieities; democratic regimes favor ensuring that drinking water is clean.” While many dictators do provide their people with a reasonable if basic education system and adequate health care that is because they need workers to be productive and pay taxes. Transportation systems may be more of an option since on the face of it new roads would increase productivity, the threat that a system of roads poses to a fortress like dictatorship can outweigh the benefits. Take Zaire’s Mobutu Sese Seko who once told the President of Rwanda that the reason why he never built one road despite staying in power for thirty years was he did not want them driving down his roads to get him. In fact so worried was he about the danger of roads that he made his life work destroying as many roads as possible. When he came to power in 1965 there were 90,000 miles of roads in Zaire, when he was finally deposed in 1997, 32 years later there were only 6,000 miles. Enough roads to take goods to market but not enough to make an armed uprising easy. Autocracy and corruption feed of each other much like symbiotic bacteria. According to Brookings Insitute’s Daniel Kaufman more than a trillion dollars is spent annually on bribes worldwide and much of that pocketed by government officials who live under dictators or the dictators themselves. Among the many features of the book that calls out for action is the discussion concerning the abuse of foreign aid.

If you want to get a lasting picture of how corrupt and ruthless these dictators are  you can take a look at what happened in Sri Lanka which suffered a massive earthquake followed by a tsunami that hit that country in December 2004  killing over 230,000 people across 14 nations. Assistance totalled over $14 billion contributed by people throughout the world. Oxfam sent 25 four wheel drive trucks to the region which the Sri Lankan government promptly impounded "insisting that Oxfam pay a 300 percent import duty. For over a month (the first critical month after the tsunami) the trucks sat idle and people went without food and shelter. Eventually Oxfam paid over a $1 million to have the trucks released."

Those who protest and fight against the obvious corruption find themselves in extreme danger. The dictators’ lifeblood is providing a source of riches to their most loyal supporters. Since the plunder is to be had not from their own citizens who they have for the most part bled dry they must gain the funds from the outside. The anti-corruption movement represents a large threat to their rule. Kaufman notes that the fate of some courgeous individuals who have joined the few anti-corruption commisions is that they are “either embattled or dead.” The leader can make no mistakes when dealing with dissent he must not give any signal to his core supporters that he can be toppled by being perceived as weak. Dictators constantly fear they will be deposed by an even more ruthless tyrant. But donors, most notably the World Bank, the IMF continue to cosy up to the dictators “like people so desperate to eat at a restuarant that they continued to ignore the health department warnings that the kitchen was overrun by rats.” The donors cannot pretend they are having the wool pulled over their eyes. When the IMF gave Kenya a $252.8 billion loan following the new president’s hollow promise to clean up corruption, the finance minister was whistling “pennies from heaven” and the new anti corruption minister had to flee to Britain carrying with him the tapes of how corrupt the new administration was. His information was ignored as whistleblowers routinely were in the circles where secrecy and non accountability is king. Nor can we have any illusions about the benefits bestowed by agencies like USAID which is more about advancing American foreign policy interests than about relieving poverty. If we ever wondered why we can never really make a dent in poverty we have to look not only at the World Bank and its fellow travellers as they turn a blind eye as the dictators siphon off cash and the western consultants and companies take their share, but to agencies like USAID.  They often provide a way for dictators to discharge themselves of their responsibility to feed the hungry and provide medical assistance due to weather emergencies etc so that they can better concentrate on their business of maintaining power. For example, half of Cambodia’s budget is made up of foreign aid. “Rather than supplementing government programs. these donor funds are largely directed toward the bank accounts of government officials.” Cambodia ranks among the world’s most corrupt countries. The USAID report notes that fact “a significant portion of funds earmarked for schools, teachers and textbooks and for clinics, health care workers and medications are diverted.” The NGOs are similarly taken advantage of and all these outside bodies the authors contend are “facilitating the government’s opportunity to steal more money..helping to further entrench a bad government in power to plague the people for many more years to come.”


What can be done? This is the subject of the last chapter and one that might be usefully read by all foreign policy students and future world bank bureacrats and aid executives. The danger is of course to become cynical and just put the entire miserable if not tragic history of aid down to the inevitable weakness built inside the human soul towards corrupt behavior. The anitidote is transparency and accountability, just like corporations that go off the rails when CEOs get drunk with power countries can do the same. In the case of companies it is frequently when the board and the shareholders lose track and a small proportion of them get wined and dined to go along. As the authors state we live in an age of networking. Much of the world although certainly not all of it is on Facebook or LinkedIn we can express our outrages at corportate excess--unjustified bonuses and the like in a more personal fashion using highly powerful social shaming techniques. For dictators who have armies the challenge is greater but by no means different. One of the reasons the Arab spring started in Tunisia is that the dictator there was concerned about a fall off in tourism. Tunisia had a relatively free press and the ability to assemble but tourism was a big ticket item and tourists wanted access to the internet and a feeling of less oppression. “Free assembly on line ..was translated into mass assembly in the streets.”

The authors see tourism as a key tool for helping to democratize countries--places like Kenya, Fiji and Palestine either are or want to become big tourist destinations. Aid does not just have to advance security interests it can be used more effectively as a tool for foreign policy--the aid needs to be contingent on criteria being met and “if the performance does not come up to agreed upon standards the money reverts to the donor.” We need to find more incentives for leaders to step down and the authors have no qualms in granting them immunity and keeping a portion of their ill gotten gains. The world is moving rapidly for the dictators --they cannot keep the lid on the ability to organize through cell phones and the internet forever. The Arab spring spells one hopeful sign that the era of dictators, one which thrived on isolation, ignorance and fear maybe coming to an end but it will take the concerted efforts of people who can pay attention and stand up for the injustices and outrages. It could all begin anywhere with someone carrying a simple device like a smart phone. Will we take the call?

Any More Need to Be Said?

Correcting The Harm Global Elites Do

In a brilliantly perceptive piece Chris Hayes wonders why elites are so incompetent. Why they always seemed to create messes of sometimes global proportions behind them. It is due to the tendency of all those in power whether they be left or right wing to leave the mechanics of governing to others.

 Hayes credits Robert Michels,a German social theorist for putting his finger on the mechanism involved.

"At first, he joined the Social Democratic Party, but he ultimately came to view it as too bureaucratic to achieve its stated aims. “Our workers’ organization has become an end in itself,” Michels declared, “a machine which is perfected for its own sake and not for the tasks which it could have performed.”
Any organization must delegate to the few professionals who must run the machine. Sooner or later the professionals become so expert in the machine they cut off conversation with the rest of us and believe that they have the magic solutions to solve complex problems. Meanwhile we cannot understand what they are talking about.

“Without wishing it,” Michels says, there grows up a great “gulf which divides the leaders from the masses.” The leaders now control the tools with which to manipulate the opinion of the masses and subvert the organization’s democratic process. “Thus the leaders, who were at first no more than the executive organs of the collective, will soon emancipate themselves from the mass and become independent of its control.”All this flows inexorably from the nature of organization itself, Michels concludes, and he calls it “The Iron Law of Oligarchy”: “It is organization which gives birth to the dominion of the elected over the electors, of the mandataries over the mandators, of the delegates over the delegators. Who says organization says oligarchy.”

Within these governing organizations--elite financial, legal and other groups find ways to maintain their power and justify entrance through succeeding in the meritocracy. Intelligence becomes " a vitally necessary characteristic for those with powerful positions. But it isn’t just a celebration of smartness that characterizes the culture of meritocracy. It’s something more pernicious: a Cult of Smartness in which intelligence is the chief virtue, along with a conviction that smartness is rankable and that the hierarchy of intelligence, like the hierarchy of wealth, never plateaus. In a society as stratified as our own, this is a seductive conclusion to reach. Since there are people who make $500,000, $5 million and $5 billion all within the same elite, perhaps there are leaps equal to such orders of magnitude in cognitive ability as well."

Hayes focuses on the way that this cult of intelligence becomes divorced from morality through the example of the one man who was "behind many of the Bush administration’s most disastrous and destructive decisions"  David Addington, counsel and then chief of staff to Dick Cheney.

"Addington was called “Cheney’s Cheney” and “the most powerful man you’ve never heard of.” A former Bush White House lawyer told The New Yorker’s Jane Mayer that the administration’s legal framework for the “war on terror”—from indefinite detention, to torture, to rejection of the 1949 Geneva Accords, to denial of habeas corpus—was “all Addington.” Addington’s defining trait, as portrayed in numerous profiles, is his hard-edged, ideologically focused intelligence. “The boy seemed terribly, terribly bright,” Addington’s high school history teacher told Mayer. “He was scornful of anyone who said anything that was naïve, or less than bright. His sneers were almost palpable.”

And Hayes gives other examples of how the "cult of smartness" ruined the financial industry with such serious consequences for the rest of the world. How to avoid the cult of smartness? How about, as a first step having ordinary people, at the table to ask that simple questions have intelligible answers. Additionally, how about clearer conflict of interest regulations that prevent all the elites thinking that important institutions like government and banks are there for career advantage rather than for a public good. Hayes refers to Janine Wedel's book, the Shadow Elite, about the new global ruling class, who "recalls visiting Eastern Europe after the fall of the Berlin Wall and finding the elites she met there—those at the center of building the new capitalist societies—toting an array of business cards that represented their various roles: one for their job as a member of parliament, another for the start-up business they were running (which was making its money off government contracts), and yet another for the NGO on the board of which they sat. Wedel writes that those “who adapted to the new environment with the most agility and creativity, who tried out novel ways of operating and got away with them, and sometimes were the most ethically challenged, were most rewarded with influence.”