Okay,
A quicky post. Just when I wrote what I did yesterday, the senior editor at large at CNN.money wrote this one.
Of course, I think he put it much nicer than I did. So here it is.
http://money.cnn.com/2008/09/29/magazines/fortune/colvin_economic_cycles.fortune/index.htm?postversion=2008093009
Regards
Tuesday, September 30, 2008
Free Market Spiral
This is such a momentous period in history. I've often thought about it hypothetically but I never believed that it could happen.
The Free Market Spiral.
Free markets in my opinion are the greatest and most efficient allocation mechanism in the entire world. Using the concept of utility, which is the satisfaction that an individual derives from a good, the market it able to use a price mechanism to indicate their level of utlity and thereby promote the allocation of resources to the production of the good. Using an established demand curve derived from utility and a supply curve derived from cost of the resource, we can attain an equilibrium where the market pays for exactly what that good can provide in terms of utility.
If we're in an agrarian or pure production state, this would have been pretty straightforward.
Then enters the complex world of commerce and leverage. With the establishment of banks that are able to collect deposits and make loans based on the fact that not everyone will draw their money out at the same time, we now have essentially a system that runs excesses or what I call money in circulation. Because of the innate and inherent trust in the system, everything will be fine and dandy.
Unfortunately, this is no longer the case in recent times. With fear at all time highs, the trust to lend has corroded. This seizes up the circulation of the financial system and basically disrupts the price mechanism. Eventually, this will warp the notion of utility and shift the demand curves itself and reset the equilibrium. In real terms, the financial crisis will damage the brick and mortar business as well.
People have been mistaken all this while, thinking that they have a free-market economy but have actually been living with an anomaly which is known as the banking system which is not based on 'real' resources but on a flow model. Hence, the free-market model is not really free and that this banking system is guarded by a regulator which is the central bank, otherwise known as the lender of last resort.
Today however, we witness something quite remarkable which I see as a real paradox. The democratic system (a political equal of the free-market) has been exercised by the people to curtail the government and in doing so tied the hands of the regulator who has been doing the job of regulating and mitigating the quasi-free market/banking system.
The end result is the demise of the effectiveness of the very system and the potential destruction of the ideology.
I guess people have forgotten that it was not idealogy failure that lead to the fall of communism but more of the lack of pragmatism that lead to its demise. It's only attractive when it works.
Hence, I leave you with a nice Op-Ed from the Asia Journal of Public Affairs. The emphasis that good governance is a necessity, because nothing is a given.
http://www.lkyspp.nus.edu.sg/ajpa/issue1/Dean_Op_Ed.pdf
The Free Market Spiral.
Free markets in my opinion are the greatest and most efficient allocation mechanism in the entire world. Using the concept of utility, which is the satisfaction that an individual derives from a good, the market it able to use a price mechanism to indicate their level of utlity and thereby promote the allocation of resources to the production of the good. Using an established demand curve derived from utility and a supply curve derived from cost of the resource, we can attain an equilibrium where the market pays for exactly what that good can provide in terms of utility.
If we're in an agrarian or pure production state, this would have been pretty straightforward.
Then enters the complex world of commerce and leverage. With the establishment of banks that are able to collect deposits and make loans based on the fact that not everyone will draw their money out at the same time, we now have essentially a system that runs excesses or what I call money in circulation. Because of the innate and inherent trust in the system, everything will be fine and dandy.
Unfortunately, this is no longer the case in recent times. With fear at all time highs, the trust to lend has corroded. This seizes up the circulation of the financial system and basically disrupts the price mechanism. Eventually, this will warp the notion of utility and shift the demand curves itself and reset the equilibrium. In real terms, the financial crisis will damage the brick and mortar business as well.
People have been mistaken all this while, thinking that they have a free-market economy but have actually been living with an anomaly which is known as the banking system which is not based on 'real' resources but on a flow model. Hence, the free-market model is not really free and that this banking system is guarded by a regulator which is the central bank, otherwise known as the lender of last resort.
Today however, we witness something quite remarkable which I see as a real paradox. The democratic system (a political equal of the free-market) has been exercised by the people to curtail the government and in doing so tied the hands of the regulator who has been doing the job of regulating and mitigating the quasi-free market/banking system.
The end result is the demise of the effectiveness of the very system and the potential destruction of the ideology.
I guess people have forgotten that it was not idealogy failure that lead to the fall of communism but more of the lack of pragmatism that lead to its demise. It's only attractive when it works.
Hence, I leave you with a nice Op-Ed from the Asia Journal of Public Affairs. The emphasis that good governance is a necessity, because nothing is a given.
http://www.lkyspp.nus.edu.sg/ajpa/issue1/Dean_Op_Ed.pdf
Friday, September 26, 2008
Information Overload
What a wild and whacky two weeks.
I've never be inudated with so much information and so much perspective. I sought to understand. In good naval tradition, I needed to find anchor and get back to first principles. What I found was back on my pet peeve topic of good governance. Righteous, morally courageous leaders who would do the right thing.
It's not about democracy. It's not about free-markets only or government intervention or the lack of it. It's all down to looking at the basic axioms of the problem. In this case it was the root of human nature. That there would be greed that would motivate creativeness and would defeat the most brilliant of legislature. As the good book by Confucius writes in the Analects.
The Master said, “If the people be led by laws, and uniformity sought to be given them by punishments, they will try to avoid the punishment, but have no sense of shame.
“If they be led by virtue, and uniformity sought to be given them by the rules of propriety, they will have the sense of shame, and moreover will become good.”
Anyhow, this was also the week of debate for McCain and Obama on Foreign Policy. Thanks to the superior peer quality, I was directed to this wonderful exchange and debate of their foreign policy advisors hosted by the NBR (National Bureau of Asian Research)
or link here. http://www.nbr.org/asiapolicydebate/apdebate.html
It was also in this speech that a McCain advisor mentions a Washington Post of article by Singapore's founding father, Lee Kwan Yew on the cost of withdrawal from Iraq.
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702429.html
I then found a whole slew of recent articles on the current affairs which he has made comments on which continues to illustrate my shared belief of good governance.
On China and bouquets for China:
http://news.xinhuanet.com/english/2008-09/25/content_10107642.htm
On the Financial Crisis:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_282299.html
A related piece by Inquirer.net, quoting my other role model Kishore Mahbubani:
http://opinion.inquirer.net/inquireropinion/columns/view/20080924-162482/End-of-an-era
On the accepting the Rise of China and India:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_281940.html
On why I like my brand of customised governance for my own home:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_281940.html
This really ties in with my Conflict Resolution Theory classes which featured good reading by Mohammed Ayoob (State Making, State Breaking and State Failure) and Edward D. Mansfield and Jack Synder (Why Emerging Democracies go to war) from "Leashing the Dogs of War" - Conflict Management in a Divided World.
I end of with a quote again from the Analects.
The Master said, “To rule a country of a thousand chariots, there must be reverent attention to business, and sincerity; economy in expenditure, and love for men; and the employment of the people at the proper seasons.”
I've never be inudated with so much information and so much perspective. I sought to understand. In good naval tradition, I needed to find anchor and get back to first principles. What I found was back on my pet peeve topic of good governance. Righteous, morally courageous leaders who would do the right thing.
It's not about democracy. It's not about free-markets only or government intervention or the lack of it. It's all down to looking at the basic axioms of the problem. In this case it was the root of human nature. That there would be greed that would motivate creativeness and would defeat the most brilliant of legislature. As the good book by Confucius writes in the Analects.
The Master said, “If the people be led by laws, and uniformity sought to be given them by punishments, they will try to avoid the punishment, but have no sense of shame.
“If they be led by virtue, and uniformity sought to be given them by the rules of propriety, they will have the sense of shame, and moreover will become good.”
Anyhow, this was also the week of debate for McCain and Obama on Foreign Policy. Thanks to the superior peer quality, I was directed to this wonderful exchange and debate of their foreign policy advisors hosted by the NBR (National Bureau of Asian Research)
or link here. http://www.nbr.org/asiapolicydebate/apdebate.html
It was also in this speech that a McCain advisor mentions a Washington Post of article by Singapore's founding father, Lee Kwan Yew on the cost of withdrawal from Iraq.
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702429.html
I then found a whole slew of recent articles on the current affairs which he has made comments on which continues to illustrate my shared belief of good governance.
On China and bouquets for China:
http://news.xinhuanet.com/english/2008-09/25/content_10107642.htm
On the Financial Crisis:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_282299.html
A related piece by Inquirer.net, quoting my other role model Kishore Mahbubani:
http://opinion.inquirer.net/inquireropinion/columns/view/20080924-162482/End-of-an-era
On the accepting the Rise of China and India:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_281940.html
On why I like my brand of customised governance for my own home:
http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_281940.html
This really ties in with my Conflict Resolution Theory classes which featured good reading by Mohammed Ayoob (State Making, State Breaking and State Failure) and Edward D. Mansfield and Jack Synder (Why Emerging Democracies go to war) from "Leashing the Dogs of War" - Conflict Management in a Divided World.
I end of with a quote again from the Analects.
The Master said, “To rule a country of a thousand chariots, there must be reverent attention to business, and sincerity; economy in expenditure, and love for men; and the employment of the people at the proper seasons.”
Wednesday, September 17, 2008
Global Citizens
Okay,
I admit that I am a little behind the curve but nevertheless I will endeavour to continue to log as many ideas as possible.
Today, I present to everyone the notion of a global citizen.
I thought it was absolutely cool that a speaker Reggae Life was asked to speak to us about having a global perspective and being a global citizen during Orientation. There was a wonderful presentation and was speckled with short film clips that were made by Reggae himself.
He essentially featured the Africa-American that had moved to Japan and how they were initially repelled by society. He then dealt with the complex isssue of inter-racial marriages between the African-Americans and Japanese. It was a difficult struggle to belong and establish an identity. Communities in Japan and America would view them as the other side. Last but not least, it spoke of Americans that had to re-adjust and re-adapt to Amercian society after living in Japan for many years. It would be hard for me to bring out every point in the presentation but the key idea was to imbue with us a sense that we should establish an abstract concept of a new form of citizenry. One that is without borders and that we as global citizen will have perfect mobility and fit everywhere and anywhere.
The deep desire and instinct to belong is often a strong emotion and the journey can be ardous due to racial divides as spoken by Reggae. This made me related to Singapore.
Singapore is essentially an immigrant country. We're multi-racial, multi-cultural and multi-religious society. We therefore epitomize this notion of global citizenship. However, in recent times, I found out that divides are not necessarily racial but due to group dynamics even. For years, we sought a common identity for Singapore and now, I think it might have just worked too perfectly against the ideal.
With the introduction of foreigners into Singapore society, my fellow Singaporeans have grown increasingly xenophobic. Imagine that we can now even divide Singapore Chinese and Chinese from Mainland China. The difference is slight but these rifts are obvious. In my opinion, this is a negative development.
For a globalised city like Singapore, it is still not truly globalised yet. We can only claim that when we as citizens acknowledge that we are truly global citizens and adopt an all inclusive global perspective.
I admit that I am a little behind the curve but nevertheless I will endeavour to continue to log as many ideas as possible.
Today, I present to everyone the notion of a global citizen.
I thought it was absolutely cool that a speaker Reggae Life was asked to speak to us about having a global perspective and being a global citizen during Orientation. There was a wonderful presentation and was speckled with short film clips that were made by Reggae himself.
He essentially featured the Africa-American that had moved to Japan and how they were initially repelled by society. He then dealt with the complex isssue of inter-racial marriages between the African-Americans and Japanese. It was a difficult struggle to belong and establish an identity. Communities in Japan and America would view them as the other side. Last but not least, it spoke of Americans that had to re-adjust and re-adapt to Amercian society after living in Japan for many years. It would be hard for me to bring out every point in the presentation but the key idea was to imbue with us a sense that we should establish an abstract concept of a new form of citizenry. One that is without borders and that we as global citizen will have perfect mobility and fit everywhere and anywhere.
The deep desire and instinct to belong is often a strong emotion and the journey can be ardous due to racial divides as spoken by Reggae. This made me related to Singapore.
Singapore is essentially an immigrant country. We're multi-racial, multi-cultural and multi-religious society. We therefore epitomize this notion of global citizenship. However, in recent times, I found out that divides are not necessarily racial but due to group dynamics even. For years, we sought a common identity for Singapore and now, I think it might have just worked too perfectly against the ideal.
With the introduction of foreigners into Singapore society, my fellow Singaporeans have grown increasingly xenophobic. Imagine that we can now even divide Singapore Chinese and Chinese from Mainland China. The difference is slight but these rifts are obvious. In my opinion, this is a negative development.
For a globalised city like Singapore, it is still not truly globalised yet. We can only claim that when we as citizens acknowledge that we are truly global citizens and adopt an all inclusive global perspective.
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