Monthly Archives: August 2002

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Deficits as far as the eye can see 

It’s extraordinary to me that Paul Krugman seems to have become what in parliamentary systems is called the official opposition. To meet him, he’s an unlikely tub-thumper — he comes across as a friendly, serious academic, no great shakes at public speaking, happier in a conversation with other wonks. Maybe I get a distorted perspective from London, but I can’t see any Democrats hitting the Bush administration as consistently hard as Krugman. It makes me proud to be a Princetonian.

Today he focuses again on the obfuscations on the deficit. “This $7 trillion reversal of fiscal fortune has received remarkably little public attention; it has been crowded off the front page by talk of war. But its consequences will be immense.” Are they listening at the back of the class?

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Change and money 

The Daily Summit caught up with Jeff Sachs, now of Columbia, in Johannesburg. Jeff tells a depressing tale about Malawi’s plans to treat 100,000 people for Aids. Development agencies talked them down to treating 25,000 because the plan was “too big”. “I want accountability from the rich world,” Jeff says. “I want it to match action with its promises, its spin and its rhetoric. There’s one thing I understand as an economist — real change will need money.”

The return of Watson 

According to today’s Financial Times, the World Bank is to launch a consultative process to break the deadlock over genetically modified foods.

It’s hard to see where common ground will be found between proponents — largely in the US — and those opposed — most vocally in Europe. But with Robert Watson as the chair of the new project, it may actually get somewhere. Watson, chief scientist of the World Bank, chaired the Intergovernmental Panel on Climate Change, which through an open and transparent process arrived at a widely accepted scientific consensus on global warming (pace Bjorn Lomborg). It was the IPCC’s work, more than any other single factor, that led to the Kyoto Protocol on climate change. In fact, Watson was so successful that the Bush administration ensured he was replaced as chair.

The World Bank has the right man for the job, unquestionably, but Watson faces a hugely daunting task in constructing something beyond a dialogue of the deaf on GM foods.

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Warming up 

Brad DeLong shows again why he’s a professor and I’m not. When I read Bjorn Lomborg I just stew at his well-documented inaccuracies and how off target he is. DeLong provides an invaluable three points that actually turn Lomborg’s scepticism into something worthwhile.

“The managers and shareholders of companies like Halliburton that will gain from inaction on global warming are a different and distinct group from the tropical peasants who stand to lose their health and their lives. Any claim that ‘instead of Kyoto we should be doing X’ has to be accompanied by a plan to actually do X. Otherwise, the claim that inaction on global warming enhances world welfare is likely to be very false indeed, as it is hard to believe that on the scale of human happiness higher incomes in the global north will outweigh nastier, more brutish, and shorter lives in the global south. It is one thing to say that the resources the Kyoto Protocol wants to use to fight global warming could be used to provide first-class public health and economic infrastructure to the global south. It is another to say that these resources, instead, will be used to get every American household a second DVD player and every tenth American household a power boat.”

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Wise man 

I have to admit to a reflex reaction against just about anything to do with religion. But today’s interview with chief rabbi Jonathan Sacks in The Guardian contains a lot that I agree with, and several important points.

“I regard the current situation [in the Middle East] as nothing less than tragic, because it is forcing Israel into postures that are incompatible in the long- run with our deepest ideals,” he says. From many observers, even from liberal Jews like me, this is unremarkable. But from an establishment figure like Sacks, this clear criticism of the current Israeli position — however gently expressed –is an important break.

But Sacks’ remarks on Israel are in the context of his broad campaign to get people to respect and celebrate difference. We inhabit a world where “everything affects everything else”, whether it’s terror or economics. So now we need “a doctrine strong enough to allow different groups to live together without an overarching political structure”. For him, that doctrine is difference. As The Guardian explains: “To view difference not as a difficulty to be overcome, but as the very essence of life. He’s looked at the latest thinking in biology, which confirms how similar we all are — all life made up of the same four basic characters of genetic code — but also how essential difference is, with every ecosystem dependent on biodiversity.”

Encouraging reading to start the day.

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Relying on oil 

“Do you think the unpopular mullahs in Iran would be able to hold power today if they didn’t have huge oil revenues to finance their merchant cronies and security services? Do you think Saudi Arabia would be able to keep most of its women unemployed and behind veils if it didn’t have petrodollars to replace their energies? Do you think it is an accident that the most open and democratizing Arab countries — Lebanon, Jordan, Bahrain, Morocco, Dubai and Qatar — are those with either no oil or dwindling oil reserves? They’ve had to learn how to tap the talents of their people rather than their sand dunes.” Tom Friedman is on form.

Live from Joburg 

The British Council is funding an excellent weblog on the World Summit on Sustainable Development, running in Johannesburg now. It’s a model of the genre.


Lucy Kellaway’s column in the Financial Times usually annoys me. She takes easy targets — the nonsense spouted by so many management consultants or CEO excesses — and makes fun of them. But today she is both more serious and on target. (Since her column is available online only to subscribers, you’ll have to take my word for it.)

Her subject is trust. Inspired by the recent decision by the BBC to allow its employees to self-approve expenses below £100, Kellaway advocates more organisations should take a more trusting stance. “Companies should… ask if [their untrusting policies] are necessary, and if they really achieve what they are supposed to. In each case, they should start from a presumption of trust, and bring in rules and checks only when they are called for.”

And she adds a worthwhile wrinkle to the BBC expenses policy: “Make everybody’s expenses public. After you had input your own claim into the system, your running totals would be available for colleagues to view. Anybody who was spending too much would be visible to all.”

Sounds analogous, to me, to the arguments that companies should encourage all employees to run a weblog. Get stuff out in the open. It’s healthy for the individual and the organisation. Interestingly, Groove is adopting this attitude, and has recently drawn up a corporate policy on weblogging by employees.

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“White House officials said they provided extraordinary access for the seven-page cover story, ‘Leader of the Pack’, because they believe it will burnish Bush’s image with Americans who don’t follow politics.” The Washington Post reports on the forthcoming cover story for Runner’s World. I’m glad the White House has its priorities straight.

“I try to go for longer runs, but it’s tough around here at the White House on the outdoor track,” the president told the magazine. “It’s sad that I can’t run longer. It’s one of the saddest things about the presidency.”

A spoonful of sugar 

The Guardian sent its correspondents to a sugar beet farmer in England and a sugar cane cutter in Mozambique. The result is a revealing portrait of the inequities of current agricultural regimes.

Joao gets paid 99 pence for a nine-hour day cutting cane (above Mozambique’s minimum wage), while Matthew made £34,000 from his 30 hectares of beets, thanks to the EU’s price-fixing regime. Mozambique is one of the world’s low-cost producers of sugar, but quotas mean that it can only export about 10% of its current crop to the EU and US. In fact, Europe exports some of its surplus sugar to Africa.

The English farmer claims, “Consumers can afford to pay these prices. I’m entitled to a decent standard of living.” According to Oxfam, the European sugar regime alone costs European consumers about $800 million a year in extra costs. And it closes a natural market to Africa.

Writing in the middle of conflict 

I hadn’t come across the Electronic Intifada before, but Arjan El Fassed, one of its creators, has started a personal weblog. The Jerusalem Post includes El Fassed in an article about blogs on both sides of the Israel-Palestine divide (since the Post requires registration, I’ve linked to El Fassed’s posting of the article).

Whatever your stance on the conflict, it’s revealing to read direct, personal accounts from the middle of a conflict. It’s a different perspective to the one received watching the BBC, CNN or Al Jazeera.

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Good news from the World Bank 

Most reports on economics and development these days make depressing reading. But the latest World Development Report, released yesterday by the World Bank, contains some hopeful noises.

The global economy could be fourfold bigger than today in 50 years — GDP of $140 trillion is forecast. In the same period, world population will reach 9 billion, before stablising around 10 billion at the end of the century.

“In the next 50 years, the world’s population will begin to stabilize, and the majority of people will live in cities for the first time in history,” says Zmarak Shalizi, lead author of the report. “By thinking long term and acting now, we can take advantage of these windows of opportunity to shift development to a more inclusive and sustainable path and achieve steep reductions in poverty in the decades ahead.”

The flip side, sadly, is that if we continue to act on the basis of short-term interests, we will end up with a world with vastly greater problems than today. Some global leaders recognise the immediacy of the issues confronting us, but I fear they are in the minority. I think an enormous shift in thinking will be required if the optimistic scenario outlined by the World Bank is to be realised, rather than the gloomy one: “social and environmental strains may derail development progress, leading to higher poverty levels and a decline in the quality of life for everybody”.

Choices need to be made; inaction is a choice that leads inexorably to a very dark century ahead.

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Scandal map 

This map of current corporate scandals is a work of genius.

Scandal map update: Current corporate scandals

The spectre of deflation 

Brad DeLong outlines the prospects of deflation in the US. A grim way to start the day. “It is disturbing that the consensus forecast seems to paint a picture of the US economy two years hence in which production remains substantially below potential output, and in which slight deflation has taken hold and robbed the Federal Reserve of its power to offset adverse shocks.” (Brad helpfully has posted it on his site, since the Financial Times, where it runs today, only lets subscribers access the article.)

Yesterday’s Guardian had what I consider a bizarre story on how well Japan has coped with deflation. “Free-market capitalism — which works effectively if painfully in a normal recession — is at best useless and at worst counter-productive in a depression. Supporters of this theory claim Japan has achieved a second economic miracle in keeping its economy afloat for so long with interventionist government spending.”


Like everyone, I am constantly irritated by spam email. I agree with Dan Gillmor that it’s only a few minutes work to delete offenders, but as my young children increasingly use my computer, I don’t want the filth that I’m sent to be anywhere on my screen at any time.

So I read with interest Paul Graham’s Plan for Spam. Given I’m a non-techie, it’s extraordinary how often Bayes’s Theorem is popping into my life. It permeates the excellent book Reckoning with Risk by Gerd Gigerenzer, which I’ve just finished and which I can recommend highly. (Incidentally, I first encountered Bayes in an article in my then-own magazine in 1999.) At the bottom of Graham’s article, there are a few early attempts at Bayesian spam filters, but none of them have the support that I need to make it work.

If you want to see the wrong way to approach spam, read what happened to computer scientist Ed Felten. Outrageous.

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Sense and sterling 

While I was away, the economist Daniel Davies launched an interesting weblog, D-squared Digest. I like his opening gambit: “Lots of people are providing intelligent economic comment. But nobody’s providing actively stupid ideas, supported by tendentious economic reasoning. Well, nobody except the Cato Institute, Eric Raymond, and more or less everybody when you come to think about it. Anyway, this is my site motto: ‘Going to the edge of lunacy, and staying there’.”

Today he offers some thoughts on whether Britain should join the European single currency. His conclusion? “The official position of D-squaredDigest is that Europe should adopt the pound sterling as its single currency.”

On one aspect of the single currency debate he is surely right. The high-profile supporters on both sides of the issue are a pretty unappealing lot. Today’s Financial Times has a half page of “big names” lined up for the “euro battle” (not available, as far as I could discover, online even though I subscribe to — don’t get me started on everything that’s wrong with On balance, however, the no campaigners have the more unappetising list — would you want to be a member of a club that included Marco Pierre White, Bob Geldof, Baroness Thatcher and Tony Parsons?

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Language and personality 

I’ve just returned from two wonderful weeks in Italy. One of the striking things about returning to London is how I return to my English-speaking personality.

Years ago, I worked in Italy for a year. I learned a lot in that time (particularly about enhanced respect for the currently derided Anglo-Saxon business culture) but perhaps most valuable was good fluency in Italian. I’m unsure whether it’s the language or the culture of Italy that in small but important ways changes my personality when I’m there.

Each morning in Italy, I took a morning constitutional through our villa’s vineyard to the local village. There I bought the bread for breakfast and La Repubblica, my newspaper of choice in Italy.

As is proper, I greeted both the baker and the newsagent. (There’s just about no insult in Italian worse than being described as maleducato, which translates as badly educated, but has the deeper sense of ill-mannered and rude. The bella figura is about more than looks.) With the newsagent in particular I had a daily conversation about the area, the weather, whatever. One of the first things I did when we returned to London on Saturday was go to my local newsagent to buy the papers. I’ve known my newsagent here for seven years, but I’ve never exchanged more than a few words with him.

It’s my fault, I’m sure. But in English I’m closed and private; in Italian I’m open and (comparatively) garrulous. Like so many people who visit an extraordinarily beautiful part of the world, my wife and I have had loose chats about what it would be like to live in Italy — or other non-English places. There are pluses and minuses, but I think the daily experience of a different personality would be a big positive.