Highway to Nowhere

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In the annals of human weirdness Turkmenistan is top of the line.

Its capital is called Ashgabat, which in Modern Persian means City of Love. Ashgabat’s claim to fame is that it contains the world’s largest conglomeration — 5,000, according to our guide/minder — of white marble buildings. She asked us if we could guess why that would be the case. “Because Turkmenistan has a big marble quarry?” I posited. No, Silly, she seemed to think. “Because our president likes white marble.” The marble is imported from China and India and, in special cases such as the mausoleum of the first president, it’s genuine Carrera from Italy.

Along with the marble buildings, Ashgabat is also in the Guinness Book of World Records for having the tallest flagpole and the largest indoor Ferris wheel. The wheel is not set up in the oversized atrium of some hypermodern hotel, as I’d supposed, but is enclosed in a sheath that must make riding it feel very claustrophobic and, from a distance, gives the appearance of an outsized alarm clock, which our guide/monitor seemed unaccountably pleased about. The flagpole has been supplanted by a taller flagpole in Arabia but not to worry, she consoled us, it’s still the world’s tallest jet-powered flag pole. Because desert winds can’t be trusted to make a flag flutter, and nobody likes a limp flag, the government has installed a jet engine to keep the air moving 153 meters above the ground.

The president also likes white cars. You can tell this because all the cars in Ashgabat are white. He also closed the rural clinics so if you live in a rural area and get sick you have to hunt around for a white car to drive to Ashgabat. This could be quite a trip in a country that’s big enough to support an airline flying 737s between cities.

Because desert winds can’t be trusted to make a flag flutter, and nobody likes a limp flag, the government has installed a jet engine to keep the air moving.

The president disappeared this spring and everybody, at least everybody who knew enough to know, was hoping he’d died, but no such luck. A few days later he showed up doing doughnuts at the Darvaza Gas Crater. Or, maybe, he was doing donuts at the Darvaza Gas Crater. It was hard to tell. The video of the donuts was taken from a drone at something like three-hundred feet and showed somebody in an ATV doing donuts.

Could be it was him. Where else would the president of Turkmenistan go to take a few days off from brutally ravaging an entire nation? The Darvaza Gas Crater is the major . . . maybe the only . . . tourist attraction in the country. And what an attraction it is.

It’s a sinkhole in the Karakum Desert gushing huge amounts of natural gas into the atmosphere. Back in the Sixties or Seventies or, maybe, Fifties, nobody seems to know exactly when, geologists tossed in a match and it’s been burning ever since. Nobody seems to know . . . or want to say . . . why, exactly, geologists would do such a thing. The excuse is that they didn’t want natural gas wafting around what was then the Turkmen Soviet Socialist Republic and killing goats. But if they wanted to protect their goats from gas, why didn’t they just gather it up and pipe it to some goat-free place that needed natural gas? Our guide/minder said the crater burns a million dollars’ worth of natural gas every day. She seemed proud of the fact.

Something else nobody talks about is why there’s a sinkhole in the center of the Karakum Desert in the first place. Apparently it just sort of opened up while geologists were innocently doing geology nearby. Given Soviet history with environmental stewardship, one suspects there is more to the gas-crater story than we’ve been told.

The president closed the rural clinics so if you live in a rural area and get sick you have to hunt around for a white car to drive to Ashgabat.

For whatever reason it’s there, the government is taking full advantage of the moneymaking possibilities. To accommodate the hordes of foreigners they intend to lure into the country they’ve erected six yurts so tourists can spend the night basking in the warm glow of what they seductively advertise as The Gates of Hell. To help with this project they have photos of the president sitting on a traditional rug in front of one of the yurts. He is attended by a smiling Turkmen woman in a traditional gown, a long black braid down her back. Long, black braids are de rigueur among ladies in Turkmenistan on the ground that “men like them,” meaning, of course, that the president likes long braids on pretty, dark-haired women. On the rug next to him is a platter mounded with fruit.

The night we stayed at the gas crater we didn’t find any mounds of fruit, or gorgeous women with long braids. Or ATV’s to do donuts in. But the yurts were there and the crater . . . well, the crater was really something. You’re not going to see anything like that anywhere else in the world. As ecological disasters go, it’s a UNESCO World Heritage class disaster although, as far as I know, UNESCO has yet to lend its name to this particular bit of heritage.

Another thing nobody seems to know is who, exactly, the president is. It’s not like they don’t know his name. Everybody knows his name. It’s Gurbanguly Berdimuhamedov (Birdie-Muhammed-off) and, according to the official bio, he was Deputy Director of the Ministry of Health when the old president kicked off. Deputy Director of Ministry of Health seems like an unlikely platform from which to catapult yourself to the presidency so, perhaps, he was the old president’s nephew. Or, maybe, his son-in-law. Or a dentist, or somebody else. Everybody has an opinion. Nobody seems sure.

When the Soviet Union fell apart the old president turned the country into his private fiefdom and set about de-Sovietizing the place. Among the changes he made were the street names, which he replaced with serial numbers; the days of the week, which he renamed after whatever seemed to have popped into his head (First Day, Justice Day, Spirit Day); and the days of the month, three of which he renamed after himself, his mother, and the book he wrote. The book is the Ruhnama (the Book of the Soul) and is always referred to as THE Ruhnama, the way the Qur’an is THE Qur’an.

As ecological disasters go, it’s a UNESCO World Heritage class disaster although, as far as I know, UNESCO has yet to lend its name to this particular bit of heritage.

He wrote his book as a spiritual guide for the Turkmen people, and it has become a bestseller in certain circles. Those circles include everybody who owns a car, because the ability to recite passages from the book verbatim is required to pass the driver’s exam. The book’s being spiritual and all, he had its title carved into the side of the largest mosque in Turkmenistan, along with the words “Holy Book.” Then, in a kind of author-to-author comity, he had “Qur’an” inscribed on the opposing wall along with the words, “Allah’s Book.”

To bring the benefits of his spiritual teachings to the community at large, he placed an enormous statue of the Ruhnama, its cover a tasteful chartreuse and violet, in the center of a fountain in a park in downtown Ashgabat. At 8:00 every evening, the cover opens, a video starts to play, and a passage from the book is read aloud. By good fortune, I was never anywhere near that park at 8:00 in the evening.

In a separate park he built a 39-foot tall statue of himself, perched on top of a 230-foot tower. The statue had its arms outstretched, and it rotated so that the old president always faced the sun.

As part of his liberalization program, President Birdie changed the names of the streets back to street names, renamed the days and months back to days and months, and tore down the 230-foot tower with the statue of the old president . . . then thought better about what he’d done and had the statue replaced, this time atop a 290-foot triple arch thingy that looks like a rocket ship from a 1930’s pulp sci-fi magazine. He never had the rotator connected back up, though, so now his predecessor just faces north. Also, and I say this from personal experience, he placed a very grumpy guard to keep watch over the thing.

The ability to recite passages from the old president's book verbatim is required to pass the driver’s exam.

As becomes a second president, he had a more modest, egalitarian sort of golden statue made of himself, arm raised, looking heroic astride a horse on top of a 69-foot high cliff of white marble that was dragged in from somewhere and plunked down in yet another park in Ashgabat. The statue of the book remains in its fountain, still being squirted at with water.

The 5,000 marble-clad buildings derive from some kind of manic building program. Many are architectural fancies that would have made Disney drool: spirals and curves, gold and white, arches and domes and swirls and eight-pointed stars gleaming against the night sky because every building in Ashgabat gleams against the night sky. They are all lit up with spotlights. All five thousand of them. All night. According to our guide/monitor, folks in the know call the city Ash Vegas. From space, it must show up as a bright as Singapore.

Some of the domes are perched on top of skyscrapers and some aren’t domes at all, but spheres. One, set into the top of a white, soft-edged vertical structure, makes the place look like a stick of roll-on deodorant. And these are just the commercial buildings. At least they would be commercial if there were any actual commerce in Ashgabat. And if anybody used them. From the street they look as sterile and empty of people as every other major building in Ashgabat.

There are big, sprawling public buildings, too, all fitted out with gold and marble and tilework and pointed arches in garish, movie-set Muslim, some of which we were allowed to photograph, some not. “That one,” our guide/minder would say in tobacco-auctioneer English as we motored past, “not that one. No. No. Yes. No yes. Yesno. YesNoNonono. Yes.” She must have had to pass a very strict set of qualifying exams to get the job.

Every building in Ashgabat gleams against the night sky. They are all lit up with spotlights. All five thousand of them. All night.

Nobody seemed to be using these, either, which makes sense where Parliament is concerned, but not so much for the ministries and other government offices. The two-story and three-story high, gold-encrusted ceremonial doors were shut as tight as the doors painted on the backdrop of a DeMille Bible extravaganza. The side doors were closed, too. “Everybody uses the back doors,” our guide/monitor informed us.

The only people on the street, besides police, were occasional women sweeping the gutters with the kind of brooms that witches use in medieval fairy tales. Outside of town people were using donkey carts and picking cotton by hand. According to Human Rights Watch the people picking cotton did not volunteer for that job.

Along with the public buildings are enormous apartment buildings in duplicate and quadruplicate facing one another from opposite sides of intersections, or running to the vanishing point like medieval armies in a computer-generated sword-and-nipples epic. They’re fifteen or sixteen stories high with manicured lawns and welcoming colonnaded entrances, each at least as big as the Plaza in New York. And empty. No signs of life anywhere. No lights, no laundry draped on balconies, no shades half pulled, no plants in windows. Just vacant and lifeless, each with a huge, neon corporate logo on top flashing NOKIA . . . HUA WEI . . . TOYOTA into the desert night. The government had apparently sold the naming rights. Our guide/minder told us it was for the convenience of the residents, “so they can tell each other what building they live in.”

“But they’re empty,” I objected. “Nobody lives in those buildings.”

“You just don’t see anybody because they never have to come out. They have everything they need inside.”

“Like what?”

“Like swimming pools. They have swimming pools inside.”

Just vacant and lifeless, each with a huge, neon corporate logo on top flashing NOKIA . . . HUA WEI . . . TOYOTA into the desert night.

The odd part is, the swimming pool thing may be true. It was certainly true of the hotel we stopped at to use the bathroom. There it was, a beautiful, indoor pool fed by a gushing waterfall. A lovely, five-star swimming pool with the heat cranked up to Fiji, the waterfall gushing, the lights off, no lifeguard and not a single person swimming. The corridors were empty and darkened. There was a fully equipped gym, unused and unlit; a hotel shop, fitted out with local knickknacks, dark inside with doors locked; and a beautiful, sun-drenched dining room . . . tables set, wine and water glasses at the ready, napkins folded in complicated folds . . . all devoid of people.

A dimly lit clerk sat at the front desk but nobody was checking in or out. There was no concierge and no bellhops and nobody was lounging in the lobby. Off to the side through a gold-filigreed door I finally heard voices, many voices, and, peeking through the filigree, saw people. Scores of people in a darkened hallway on the wrong side of a locked door. Not hotel guests, just ordinary Turkmen in an unadorned, unlit corridor. What they were doing there and why they were locked out of the hotel part of the hotel remains unexplained. The street outside was lined with dozens of similar hotels, gorgeously clad in white marble, none showing any sign of life. It spooked me out.

The street itself was an eight-lane divided highway. President Birdie calls it an autobahn, and he’s not exaggerating. Paralleling it was a two-lane road. On each side. Twelve lanes of pristine motorway WITH NO CARS. No cars at all, not even white cars, at 8:30 on a Thursday morning in the middle of the capital city. Our guide/monitor said there really were cars, “Just not here.”

She was right about the cars. Later in the day we encountered some genuine traffic. Not much by the standards of small-town America, but there was a bit in the district where people actually live . . . old, shabby, overcrowded, cracking, stained, tumbledown Soviet apartment blocks with laundry hanging on balconies and lights in the windows and grass eroded away by foot traffic.

A lovely, five-star swimming pool with the heat cranked up to Fiji, the waterfall gushing, the lights off, no lifeguard and not a single person swimming.

Right now, you’re probably asking yourself, “How does one even get an indoor Ferris wheel into the Guinness Book of World Records?” Or the world’s tallest jet-powered flagpole, for that matter? It turns out there are records, and then there are records, and not to put too fine a point on it, some records . . . deepest dive underwater while holding your breath, highest number of apples held in your mouth while being cut in half with a chainsaw in one minute . . . are more highly sought after than others. I, for instance, hold a few of my own. Most people to ride in the backseat of my car (4, 19 Apr 2017) jumps to mind. It was crowded in there but worth it to become a world record holder. But proud as I am of this title, you won’t see it in the Guinness Book because I didn’t pay Guinness to certify it.

That’s the key. To get your name in the Guinness book, you pay Guinness . . . sometimes up to a quarter of a million dollars . . . to send somebody out and certify your record.

At the price, I decided to forego the honor and, next time, will just pay Uber to haul people wherever they need to go. But President Birdie is made out of sterner stuff. That is to say, he’s made out of money. In a country of almost 6 million people, he’s got most of it. Any time he’s willing to dip into his pocket for a new world’s record, Guinness is more than happy to send somebody out to certify it.

Here’s a record you won’t find in the Guinness Book because President Birdie didn’t pay to have it certified even though he had to beat out North Korea for the honor: most dangerous country in the world for journalists. Here’s another: world’s most repressive state.

President Birdie is made out of money. In a country of almost 6 million people, he’s got most of it.

Despite the fact that he has brought Turkmenistan to the edge of economic catastrophe, President Birdie recently announced plans to extend the autobahn into the desert, past the Darvaza Gas Crater, past all six yurts, all the way to the northern border where it will come to a dead stop in the Uzbeki part of the Karakum. If anybody actually lived in the Karakum, this might make it easier to get into Ashgabat for medical care. But nobody much does.

So if President Birdie wants to brighten the image of his country with another record, Guinness will be pleased to sell Turkmenistan the honor of having the World’s Longest Highway to Nowhere.




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Never the Same Again

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Hong Kong ranks among the freest societies in the world. Not only economically, but socially it is a very liberal place. It was marinated in British ways until 1997, much longer than Singapore and other colonies. Then China took it over as a special administered region, which according to the agreement with the UK meant that it was only nominally to be under Chinese control for the next 50 years. It was possibly the only colony in which a vast majority of citizens did not want the British to go.

For most of the past 22 years, China has been easy on Hong Kong, despite the fact that the People’s Liberation Army’s garrison headquarters is one of the most visible landmarks of Hong Kong island, a constant symbol of the fact that China can fully take over Hong Kong in minutes, if it wants to. This alone is enough to generate fear and hate among the people of Hong Kong. It does not help that they are conscious and made aware every day by the hordes of visiting tourists from China — through what are seen as their rather less sophisticated ways, their rudeness and misbehavior — that a far less developed country of China controls one of the richest societies on the planet.

Nouveaux riches from China buy properties in Hong Kong, driving up prices, their children take up slots in good schools, and they put buying pressure on edible goods, such as milk powder, etc., that have a high risk of being adulterated in China. Or at least this is what the people of Hong Kong think.

The People’s Liberation Army’s garrison headquarters is one of the most visible landmarks of Hong Kong island, a constant symbol of the fact that China can fully take over Hong Kong in minutes.

China has built ultramodern infrastructure in the region. It is now possible to cross the sea from Hong Kong to Macau using the world’s longest bridge, which is 55 kilometers long and cost a whopping $19 billion to build. Bullet trains now run from the heart of Hong Kong to Shenzhen in a mere 15 minutes for a cost of $10, and to Guangzhou in a mere 50 minutes. Shenzhen and Guangzhou are cities that were the fountainhead of the Chinese economic miracle when Deng Xiaoping made them the places for experiments in free-market capitalism in 1979.

The area adjoining Hong Kong continues to be the heart of Chinese manufacturing. It is a hive of energy, activity, progress, and optimism unlike anywhere else on the planet. In many ways, technology is more customer friendly in East Asia than it is in the West. The enormity of this can be appreciated only by those who visit. I often go to China, where I hold a long-term visa, and I go to Hong Kong often enough that I am allowed to pass the immigration eChannel that its citizens use, without a need to talk with any officer.

I am extremely fond of China, and see it as the future of humanity, and certainly as the only Third World country — if at all it can be considered that any more — that has the potential to become a developed society. Culturally and economically, it has been on a rapid upward trend. Chinese today compete with the best in the world, and their creativity has been unleashed. In many areas of research, Chinese organizations produce more quality and quantity of output than any other country on the planet, including the US. The reading habit is increasing rapidly among Chinese. There are tens, perhaps hundreds, of Chinese cities whose downtowns look more modern than those in the most developed parts of the world.

China owes a lot of its growth to Hong Kong, Taiwan, and Singapore, countries that were able to channel both Western technology, adapted for Chinese culture and language, and Western investments. China became successful by copying Western technology and often improving on it, something that I, unlike others in the West, see as a massive achievement — because copying is not all that easy, as is demonstrated by the failure of the other Third World countries to do the same. China owes its gratitude to the West for enabling this.

I see China as the future of humanity, and certainly as the only Third World country — if at all it can be considered that any more — that has the potential to become a developed society.

Time has moved on, and gratitude has faded, or perhaps it never existed — the concept of national gratitude hardly exists outside the West and Japan. And China’s egocentric president Xi Jinping has inserted his thoughts in the constitution of China, declared himself a lifetime president, implemented a tyrannical social credit system, and taken a heavy-handed policy toward neighboring countries. In his overconfidence, he appears to think that China has arrived and could fight a trade war with the US head-on.

Xi has likely surrounded himself with yesmen and with others too fearful to speak. His arrogance and his distance from the ground realities are weaving a web of entanglements for China. Xi has helped to accentuate a sense of nationalism among Chinese. Out of jealousy and an inferiority complex, Chinese nationalists act big-brotherly toward Taiwan and Hong Kong, both highly developed societies. But in a country where face value is very important, where the central government is the key stabilizing force, and where decisions once taken cannot be easily reversed, Xi cannot afford to look weak. In a country of 1.39 billion people, this has created a massive systemic risk.

Unfortunately, by fuelling nationalism, by engaging in trade war with the US — a war that could have been avoided had he agreed to play fair — by being heavy-handed in contrast to tilting toward the rule of law, and by constantly interfering in Hong Kong, Xi is making China unstable, and at best seriously retarding its progress.

In his overconfidence, Xi appears to think that China has arrived and could fight a trade war with the US head-on.

When in 2014 Xi tried to influence Hong Kong’s electoral process, massive protests arose. Today, Hong Kong again finds itself in the crosshairs of China. The new protests, enormous and intense, are against China’s attempt to institute a law enabling extradition of Hong Kong residents to mainland China. Xi miscalculated. The protestors have come to conclude that China wants — by hook or by crook — to incorporate Hong Kong fully into China, something the people of Hong Kong are very paranoid about.

Hong Kong people are not like those who were at Tiananmen Square in 1989. The people of Hong Kong lack conditioning in fear-based control. They will fight much longer and harder, and will do everything possible to attract international attention.

According to the agreement that China had with the UK, it was to keep Hong Kong politically independent until 2047. But Xi cannot keep his hands off the golden-egg-laying goose. He and nationalist Chinese fail to understand that Hong Kong under the party’s control will no longer be Hong Kong, and will break one of the major channels of progress for China. But if he has to pull back, the reverberation will embolden those elements within China that want democracy. This is a lose-lose interference — because democracy would be a disaster for China.

Let me explain.

Across the spectrum from the Right to the Left, the people of Hong Kong tend to like the West. Many would have preferred to be continued to be ruled by the UK. They fly the Union Jack or the American flag to show their affiliation. The central theme organizing the protestors is a desire for a democratic process, unrestrained by China.

Hong Kong people are not like those who were at Tiananmen Square in 1989. They will fight much longer and harder, and will do everything possible to attract international attention.

But despite their liking for the West, a large number of people in Hong Kong exist in situations that would not be approved of in the West. Live-in maids who must stay away from their families in Indonesia and the Philippines, lower-class workers who must share a small room, often with the same bed shared among those working in shifts — many examples are possible. They all go against the sensitivities of the egalitarian forces in today’s West. Of course, these people exist because they get a better deal in Hong Kong than they would have where they grew up. Insisting that they get better working conditions would only mean that they would not have a place in Hong Kong and would be forced to stay in their home countries. Life is tough, but the free market offers them the best deal.

Democracy, by igniting populist forces, will destroy this arrangement. Taxes will go up and interference in private property and business — the kind of interference that gets socially generated in a democracy — will significantly reduce the freedoms that make Hong Kong what it is.

Hong Kong has no minimum wages. And, interestingly, wages in Hong Kong go down when the economic situation requires. No doubt there is a huge underclass. In a democratic system, the underclass will vote for economic egalitarianism, exactly what will destroy Hong Kong’s free market — damaging the underclass the most.

But anyway, it is impossible to see Hong Kong becoming democratic. China won’t let that happen. China cannot even afford to find a compromise, for losing face would mean nationalists going against the government, destabilizing China.

Taxes will go up and interference in private property and business will significantly reduce the freedoms that make Hong Kong what it is.

The need of Xi and China not to lose face means that this situation can no longer be disentangled. Given Xi’s constant interference, democratic desire in Hong Kong is going to stay. Several of my friends living in Hong Kong are seriously contemplating moving to Singapore. I myself am investing in property companies in Singapore, but I feel sad that, irrespective of which side wins, Hong Kong will never be the same again.

I go to China often. Chinese people are clearly fearful of discussing politics in the open, often even among friends. I like the fact that they are politically not active and focus on their own circle of influence. They lack the sense of entitlement. They also lack political freedom (which often translates into a sheep expecting the fox to steal from another sheep), but they enjoy social and economic freedoms. Unlike in other poor countries, women walk around feeling mostly safe.

If Xi now gives in, even partially, to the demands of Hong Kong protestors, it will embolden those demanding democracy in China. But a democratic China would be a disaster. It would create entitlements among its people, waste their resources on political activism, and introduce short-term-minded politicians and outright goons to power. Stability would be replaced by political infighting, and with that would also go whatever liberties there are. Measuring liberty is subjective, but I cannot think of a poor country that offers more liberty than China. I certainly feel far freer in China than in India — although the Chinese generally dislike Indians.

Whatever happens, Hong Kong will no longer be the same Hong Kong. Nor will China be the same China. And Xi is responsible for the mess, and for creating massive systemic risks against stability within China. I am a big fan of China and hope it finds a way out. But in retrospect, China would have been much better off never acquiring Hong Kong.




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In Hong Kong, Carrying Signs

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The news from Hong Kong reminds me of lyrics of a song from my youth — “a thousand people in the street, singing songs and carrying signs.” Except it wasn’t a thousand on June 9, 2019. It was a million. Repeat: a million. One-seventh of Hong Kong’s population.

Imagine one-seventh of the population in the city closest to you, out on the street demanding that legislators not pass a law concerning extradition of criminal suspects.

Years ago, I lived in Hong Kong. I was among the Hong Kong Chinese for three years. They were hard-working, versatile, street-smart. Proud, too. They regarded the British as weakened by the welfare state, the Singaporeans as rigid, and the Middle Easterners as religious fanatics. The Hong Kong people were not hotheads. They did not yell and shake their fists at one another in public, like the Italians. They did not go on strike for inscrutable reasons, like the French. They were not like the Indonesians, who celebrated the heroes who had fought for their independence and won, or the Filipinos, who celebrated the heroes who had fought for their independence and lost. The Hong Kong people did not grow up singing the national anthem, saluting the flag, and praising the military, like the Americans. They didn’t have a flag that was really theirs or a real military, either. When I got there in 1989, they had no political parties, though they were about to create one.

It was a million. Repeat: a million. One-seventh of Hong Kong’s population.

The first piece I ever wrote for Liberty (as R.K. Lamb, in the March 1990 issue) was about Hong Kong, where I was living along with 40,000 or so American expatriates. (More than double that, now.) The territory was governed by the British. They had cut a deal with China to turn it over in 1997. They hadn’t asked the Hong Kong people about that deal, and China hadn’t asked, either. On its face, the deal seemed all right. Under Deng Xiaoping’s formula of “one country, two systems,” China had agreed to let Hong Kong retain its legal system for 50 years, until 2047.

In those days 2047 was an unimaginably long time away, and 1997 was coming up. The question was, how was “one country, two systems” going to work? The Hong Kong press — one of Asia’s freest — was reassuring. Things would be fine. China has promised to let us be! Outside the spotlight, Hong Kong professionals were quietly “voting with their feet,” emigrating to Australia, Canada, the United States, and several countries in Southeast Asia.

I didn’t think “one country, two systems” was going to work. In 2006, I wrote a piece for Liberty admitting that I had been too pessimistic: China had done better by Hong Kong than I thought it would.

Overall it still has — so far. I have to give China credit for that.

The Hong Kong people did not grow up singing the national anthem, saluting the flag, and praising the military, like the Americans.

Milton Friedman had proclaimed in his Free to Choose TV series that Hong Kong had more economic freedom than any place on earth. The Fraser Institute and the Heritage Foundation, both of which annually survey economic freedom, verify that it still is. But an economy requires a foundation of politics and law, which Friedman well knew. Hong Kong’s legal foundation was, and is, British law, which is a product of centuries of the politics and history of the people of England. When I’d ask a Hongkonger why Hong Kong was rich, the answer was, “hard work.” Nobody ever said, “British law.” The Hong Kong people had worked hard to build their prosperity, but they hadn’t built the system of law that supported their personal and business freedom. They had inherited it. If they wanted to keep it after 1997 they were going to have to fight for it, and I wasn’t sure whether they would.

Well, they have. Whether they will prevail is another matter.

The British never gave the Hong Kong people political freedom, meaning the right to vote out their government and institute a new one. The handover in 1997 gave the people only a limited vote. They formed a number of “pro-Beijing” and “pro-democracy” political parties. In the 2016 elections, the pro-democracy parties got 36% of the public vote and the pro-Beijing parties (a weird mixture of pro-communist and “patriotic” business conservatives) 40% of the public vote, so the pro-democracy parties do not have a claim to rule. Hong Kong’s political system makes that nearly impossible anyway. Of 70 seats in the unicameral legislature, half are elected by public vote and half by the union federations, the chambers of commerce, the lawyers, the teachers, the social workers, and other “functional constituencies.”

When I’d ask a Hongkonger why Hong Kong was rich, the answer was, “hard work.” Nobody ever said, “British law.”

For more background, take a look at the Council on Foreign Relations report “Democracy in Hong Kong.” Under this hybrid system the pro-Beijing parties have held on to their majority for 22 years. Hong Kong’s chief executive has never been elected by the people; the current executive, Carrie Lam, was chosen by a select group of 1,200 Hongkongers acceptable to Beijing. The pro-democracy forces have been pushing for more than a decade to have the executive be elected by the people, but China will not allow it.

On to the current matter. I am no expert; I haven’t lived in Hong Kong since 1993, and I haven’t followed the story as it has been building these past four months. I have done my catching up on the Internet.

According to a report in the Irish Times, the matter began in 2018 with a 19-year-old Hong Kong man who went to Taiwan with his 20-year-old girlfriend, who was four months pregnant. The man returned alone and admitted to police he had strangled her, stuffed her body in a suitcase, and dumped it near a subway station. Under an extradition treaty, the man would have been extradited to Taiwan for trial for murder. Hong Kong has extradition treaties with some 20 jurisdictions, including the United States, but not Taiwan and not China, the sovereign power over Hong Kong.

In February 2019 the Hong Kong government said it needed to remedy this problem by amending its Fugitive Offenders Ordinance. The changes would allow the Hong Kong government to extradite a person to a non-treaty jurisdiction. This proposal is what a million people are in the street about. They are worried that the new law will allow innocent people to be extradited to China.

The pro-democracy forces have been pushing for more than a decade to have the executive be elected by the people, but China will not allow it.

The Hong Kong government says not to worry. The proposed law stipulates that no person can be extradited for the expression of political views, for a political crime, or for a political motive; that no person can be extradited in a case of double jeopardy or any crime for which the sentence is less than seven years; and that if there is a possibility of a capital sentence the destination country must promise not to impose it. (Hong Kong does not have the death penalty. China does.) The law says that any person extradited has the right to appeal to Hong Kong courts, and can be extradited only if the chief executive agrees.

I’m no lawyer, but on its face the proposal seems all right. The law is strong in Hong Kong. The courts have been good. And yet a million people are in the street. The story, I think, is not about what the proposed law says. It is about the fear of how such a law might be used, and the political consequences of its passage. The people of Hong Kong remember what China’s government did in 1989 to the protesters at Tiananmen Square, and they still do not trust the Chinese state.

One group that has come out against the law is the American Chamber of Commerce in Hong Kong. This is notable. The AmCham is not Human Rights Watch. It represents US corporations, which are primarily interested in commerce. But commerce and human rights are connected in ways AmCham is quite aware of. In its public statement, AmCham expresses the worry that “the new arrangements could be used for rendition from Hong Kong to a number of jurisdictions with criminal procedure systems very different from those of Hong Kong — which provides strong protections for the legitimate rights of defendants — without the opportunity for public and legislative scrutiny of the fairness of those systems and the specific safeguards that should be sought in cases originating from them.”

This proposal is what a million people are in the street about. They are worried that the new law will allow innocent people to be extradited to China.

What recent reasons are there to worry? Martin Lee, the Hong Kong lawyer who founded the territory’s first political party, wrote a piece for the Washington Post, naming some of the reasons. In 2017, mainland agents abducted Chinese Canadian billionaire Xiao Jianhua, who has not been seen since. In 2015, five Hong Kong publishers were taken; one of them, Lam Wing-kee, was forced to make a televised confession.

“Why were these people abducted?” Lee wrote. “Because there is no extradition law between Hong Kong and China. There is no extradition law because there is no rule of law in China, where the Chinese Communist Party dictates who is innocent and who is guilty. For the same reason, the United States has no extradition arrangements with China (though it does with Hong Kong).”

Lee wrote, “The Hong Kong government is poised to pass an extradition law that will legalize such kidnappings and threatens to destroy Hong Kong’s free society . . . Beijing could extradite Americans in Hong Kong on trumped-up charges . . .”

I remember Martin Lee from my time in Hong Kong, and later, when he came through Seattle and I interviewed him. Lee is an old-time liberal, dogged to the point of ouch. He sometimes cries wolf when the wolf doesn’t come — that is, he imagines things that don’t happen — but a smart lawyer may imagine various futures in order to protect his client. And that would be the Hong Kong people. They are worried about what might happen.

What to do, if you're China? You inhibit Hong Kong’s democratic institutions now.

And think about what the world looks like from their shoes. They have 28 years left of “one country, two systems.” After that comes one system — China’s. In 2047, Hong Kong’s British law goes away.

Poof.

Put yourself in the shoes of the Communist Party of China. You really didn’t like Deng Xiaoping having to grant that pushy Englishwoman, Margaret Thatcher, “one country, two systems.” Hong Kong’s system is alien, bourgeois-liberal, British. You want it to go away. You want Hong Kong to be Chinese — fully. But if Hong Kong’s British-derived law survives intact up to 2047, millions of Hong Kong people will demand that you extend their system for another 50 years. You don’t want that. You want to make sure that never happens.

What to do? You inhibit Hong Kong’s democratic institutions now. You stop any expansion of the number of publicly elected seats in Hong Kong’s legislature, and you do not allow Hong Kong’s chief executive to be publicly elected — ever. You don’t have to say “ever”; you just have to drag your feet, wave your arms, declare emergencies, make excuses, whatever it takes, to make sure full elections don’t happen by 2047.

For the Hong Kong people, accepting Deng Xiaoping’s “one country, two systems” was always a bet that China would change politically.

You also want to cut holes in the Hong Kong legal system — with a public security law, or a law requiring political content in public education, a law that allows you to extradite criminals to China, etc. The extradition law can promise not to grab anyone for political offenses, but some person decides what those are. And if people like you get to choose that person, then you’re fine.

As a Communist, you want to chisel away at Hong Kong’s British law until by 2047 it’s not worth anyone fighting for.

Defenders of China will say I am making things up, and they will be right. I am imagining things. I believe that’s what the Hong Kong people are doing — imagining their future.

For the Hong Kong people, accepting Deng Xiaoping’s “one country, two systems” was always a bet that China would change politically — that after 50 years, China would be enough like Hong Kong that the people living then could work things out. Economically and socially China has already changed a lot. Politically not so much — and the years tick by.

Margaret Thatcher and Deng Xiaoping cut the “one country, two systems” deal 13 years before Britain’s lease on Hong Kong was set to expire in 1997. They needed to do it then because Hong Kong people, and foreigners also, had to have some assurance about life after 1997 so they could make business investments, take out mortgages, start careers, and decide where to live their lives.

Thirteen years before 2047 is 2034. That’s a milepost to think about. And it’s coming up.

Unable to secure their future at the ballot box, they are attempting to do it, peacefully but urgently, in the street.

Most readers of Liberty live in jurisdictions in which the great political questions are settled. We argue over the remaining issues, and occasionally work ourselves into a lather about them — imagining that the next election is the most important in our lives, that Barack Obama is going to usher in socialism, that Donald Trump is going to suspend the Constitution, or that Bernie Sanders is going to hoist the red flag. It’s fun, you know, and some of the issues are important, but it all pales before the political questions faced by the people of Hong Kong.

Almost 30 years ago I wrote in Liberty that I thought the Hong Kong people had failed to take charge of their political future, being “too busy in Mr. Friedman’s capitalist paradise, making money.”

Not anymore. The Hong Kong people don’t have the British to protect them or anyone, really. Unable to secure their future at the ballot box, they are attempting to do it, peacefully but urgently, in the street.

How did the song go? “A thousand people in the street, singing songs and carrying signs, mostly saying ‘hooray for our side’.”

Damn right, hooray for their side.




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Meddle Not!

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“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights. . . . that to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”

That’s the theory of the Declaration of Independence.  This is my deduction: if a government has no just power to exist, anyone is morally free to go to work and try to shut it down. We should not assume, however, that everyone should start trying that stunt, right here and right now. It’s possible that foreigners, for example, should mind their own business. Here’s a principle that used to be honored in America: our government shouldn’t meddle with the affairs of other countries, unless it has a self-defensive reason for doing so.

That principle has been interpreted to mean that all governments are created equal, and that their so-called rights should always be respected. In other words, “We have the Bomb, but, to be fair, why shouldn’t North Korea have the Bomb as well?” I can tell you why North Korea shouldn’t have the Bomb, but you know it already.

Here’s a principle that used to be honored in America: our government shouldn’t meddle with the affairs of other countries, unless it has a self-defensive reason for doing so.

Now to my subject. Venezuela is ruled by a socialist dictatorship that is as mean and oppressive and just plain stupid as you would expect a socialist dictatorship to be. Very well. What follows from that?

Does it follow that our government should try to remove the government of Venezuela? That it should plot with the Venezuelan military to remove the country’s dictator? That it should, in effect, wage war against Venezuela as currently constituted?

This, it appears, is what our government is doing.

Does it follow that our government should try to remove the government of Venezuela? That it should plot with the Venezuelan military to remove the country’s dictator?

It’s not as if Venezuela had the Bomb. It’s not even as if Venezuela constituted an economic threat to us, now that we have enough of our own oil not to need any more of Venezuela’s. Besides, the socialists have wrecked the country’s oil industry. If crass self-interest were our guide, we would be happy to lose a competitor, in the political as well as the economic realm. The best advertisement for capitalism and limited government is the hideous failure of Venezuelan socialism.

It is reported that the vast majority of Venezuelans think it’s impossible for them to remove their own government, and that they want some foreign power to do it (guess which). I admit that if I were a Venezuelan, I’d probably be praying for an American invasion. In the current crisis, I probably wouldn’t have enough presence of mind to remember how badly the interference of “international Boy Scouts,” as Isabel Paterson called them, has turned out for some of the intended beneficiaries. But the truth, the truth on which self-interest and moral principle agree, is that the Venezuelans got themselves into this mess, and they need to get themselves out of it.




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Notes on the Extinctions at the Top of the World

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Between bouts of ducking and covering under my second-grade desk in case the Russians dropped an atom bomb on our classroom, I spent a lot of time studying geography. Not because my teacher emphasized matters geographical, but because she had a thing about homework. And not in a good way.

On the first day of class she handed out the first assignment and I did the obvious thing. I forgot about it. She didn’t forget, though, and the next morning, while the other kids were enjoying recess, I got invited to sit at my desk and complete the work. I passed the time staring at islands on the big world map next to the blackboard. On the third day I owed two homeworks, both of which would have to be turned in before I could head out to recess. Come April, I owed a hundred-and-some homeworks and all possibility of recess had forever receded below the horizon. If my family hadn’t moved to another city, I’d still be in second grade, puzzling over the Rorschach shapes of faraway islands.

Svalbard has the most polar bears of anywhere in the world — more even than Churchill, Manitoba, where bears sashay down Main Street eating people’s dogs.

There are a lot of islands in the world, and I came out of that experience with a geographical bucket list of almost bottomless capacity. It was, looking back, a list based on shape and remoteness instead of anything particular my seven-year-old self knew about any of the islands. Which is how my seven-year-old self wound up sending me to Svalbard more than half a century later, still thinking the place should be called Spitzbergen, the way it used to be.

The two things that I knew about Svalbard were that it is very far north, farther north, even, than Siberia, as far north as the northernmost reaches of Greenland; and that Svalbard had the most polar bears of anywhere in the world — more even than Churchill, Manitoba, where bears sashay down Main Street eating people’s dogs. Also, my seven-year-old self wanted to be there in the winter for the true Svalbard experience, and to see the Northern lights.

Longyearbyen, the capital of Svalbard, is the former silver medalist for the title of northernmost civilian place on the planet. In the ’90s it got defaulted up to northernmost when the model Soviet city 50 miles west and a dozen or so closer to the pole was disqualified on account of going out of business. My wife and I lodged in a room in Longyearbyen, in barracks that housed coal miners before the miners rioted over their poor living conditions. Longyearbyen seemed an apt enough name for somewhere to be stuck on a yearlong contract digging coal. No wonder the miners rioted. It took a while for me to find out that the town was named after John Munro Longyear, the Michigan timber baron who began the mining operations in 1906.

It looked like a rundown middle-school gym, if middle-school gyms came plastered with posters of heroic Red Army soldiers from the Great Patriotic War, tarted up with gold CCCP’s on red backgrounds.

People who didn’t riot were the inhabitants of the Soviet model city. According to the young Russian who showed us around, it had been a very desirable place to be, Soviet-Unionwise. It’s called Pyramiden and people waited years to be assigned there. Like Longyearbyen, Pyramiden was a coal-mining town. We boated over one day to check it out.

There was a big, brass, snow-blown bust of Lenin welcoming us to the Sports Palace. The Palace had a basketball court and a tawdry little music room and an even tawdrier niche fitted out with shelves that some wag had designated as a library. It looked like a rundown middle-school gym in a community that had experienced a property-tax revolt, if middle-school gyms came plastered with posters of heroic Red Army soldiers from the Great Patriotic War, tarted up with gold CCCP’s on red backgrounds. There was also a sinister sounding building called the Tulip Hotel, which, since we weren’t Soviet royalty off on a junket, we weren’t allowed inside of. “Everything here was free,” beamed the Russian who showed us around. He was too young to know better.

Free included a bleak apartment in the men’s building, if you were a guy. In the ladies’, if you weren’t. There were rumors of a secret tunnel connecting the two which were hard to credit since both buildings were constructed several feet off the ground because of permafrost. Still, if you could manage to hook up with a coal miner of the opposite sex you hit the jackpot because married people got upgraded to a couple’s apartment. There must have been a limited number of those apartments, though, or people would have been allowed to meet out in the open rather than having to sneak around in tunnels.

Free also, of course, included all the labor those miners put in. And the food, the food was free, too. Evidence about what kind of food you can get for free lurks in the abandoned institutional kitchen. Mostly it seemed to have been canned peas stirred in huge electric-powered tubs that reminded me of the first-generation washing machines you see in photographs from the Depression. Free industrial peas at the end of working all day in the mines — no wonder the vodka was free, too. The vodka is still there. You can purchase a shot at the northernmost bar in the world. One taste, and you realize why it hasn’t migrated to a more competitive locale. And why it had to be free.

“Everything here was free,” beamed the Russian who showed us around. He was too young to know better.

High class people. Doctors. Lawyers. Folks with political pull pulled strings to get sent to a place farther north than Siberia so they could work in mines all day and eat cafeteria peas at night and hook up in tunnels like horny junior-high kids and shoot down vodka that would have etched the chrome off the fancy ZiL limousines the nomenklatura were chauffeured around in back home. A few miles away, Norwegian miners were rioting because they didn’t like the rooms they were given, but these poor schnooks thought they were living in paradise. There may have been Northern lights somewhere, but I wouldn’t know. It turns out the Northern lights are easier to see when it isn’t snowing all the time.

Also, I should have given a bit more thought to that business about seeing polar bears. Even my seven-year-old brain could have put it together. Bears. Winter. Hibernation. But I wasn’t any more analytical when I planned the trip than I’d been about not turning in my homework.

Or the bear thing may have had something to do with the fact that polar bears are dying out. All the right people say so. The pack ice is melting and bears all over the Arctic are falling into the water and starving to death, so if you live in Churchill, keep a close eye on your pets. There are a lot of hungry bears wading ashore. But people in Svalbard didn’t seem to be worried about polar bears dying out. They were worried about being eaten by bears. On Svalbard, you’re required by law to carry a high-powered rifle when you step outside of town.

Longyearbyen has a university, the Harvard of the Arctic, according to the Toronto Star, where you can study oceanography, but I wouldn’t. Studying oceanography involves SCUBA diving, and there are plenty of fine programs at places more equatorial than the Barents Sea. They have a nice museum at the university, though, a museum that focuses on geology and, this being Svalbard, the glaciers that sit on top of the geology. It was while I was reading about those glaciers that I came across this:

For the past four to five thousand years the Earth has been subject to a marked cooling, which gradually has created better conditions for the growth of glaciers and permafrost. Five thousand years ago the average temperature in Svalbard was around 4 degrees warmer than today. Then, one would probably have had to climb 200-400m up in the mountains in order to find permafrost, and many of today’s glaciers would not then have existed. The largest glaciers would have existed in a much reduced size. Many of Svalbard’s glaciers, therefore, are less than three to four thousand years old.

They were worried about being eaten by bears. On Svalbard, you’re required by law to carry a high-powered rifle when you step outside of town.

Svalbard has gotten a lot of attention over the past few months for being the ground zero of global warming. Maybe, even, a bit above zero, sometimes. Degrees on Svalbard have shot up quicker than degrees anywhere else on earth, which got me to wondering about those polar bears. Polar bears have been floating around in the Arctic for something like 200,000 years. Even if Svalbard is warming up today, what were they floating on 5,000 years ago? The sign didn’t say, so I had to look it up on my own. And discovered that there are two schools of thought on the bear situation.

The first is the one you’ve already heard. The other is that the bear population has exploded in recent years, mainly because of an international ban on polar bear hunting. When I tried to look up the exact numbers, I found some in the articles that thought there were more bears than ever. Twenty-five thousand, and climbing. Thirty-thousand, with populations of bears well established in dozens of locations throughout the polar region. The articles that thought the bears were dying out talked about pack ice. Less pack ice than ever. You can drive to the North Pole in your bass boat, if you want to.

Now I’m not a polar bear scientist and I’m not qualified to judge the quality of those articles, but it did seem to me that one side was willing to commit to real numbers and the other, well, the other weaseled out of addressing the question.




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Cashless and Thoughtless

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There has been a lot of push from international organizations to make poor societies around the world copy Western institutions, and recently to go cashless. Blind to differences in cultures, these international organizations have hugely over-estimated the organizational capabilities of people in the emerging markets — in the Middle East, South Asia, Central Asia, Africa, and Latin America.

Anyone who has spent a sensible amount of time in emerging markets — not in five-star settings but as a normal person — knows that in these countries, an organization of two people often has one person too many. It is also evident that the two tends to expand into dozens, hundreds, and thousands, either because of the local desire to subsidize more people or because of the need to instigate a Western-style bureaucracy to control the whole thing.

Erroneously assuming that we are all the same, that specific cultures do not matter, and that all that matters is training and incentives, there was a huge push for globalization.

In these culturally very different markets, companies and institutions — Western concepts, which do not transplant well without the underlying European culture and values — can never stay nimble. To maintain control, internal bureaucracies must grow to provide checks and balances, because workers fail in independent thinking, work ethics, honesty, and cooperation. Creativity stays conspicuous by its absence.

Despite seemingly low labor costs — as low as a couple of dollars a day in wages — the costs of keeping such organizations together grows exponentially with size. Growing bureaucracies require additional checks and balances. Without the cleaning mechanism of European values and the control systems they provide, these organizations invariably accumulate dead mass, which keeps growing cancerously until they crumble under their own weight. Organizations that do not have constant blood transfusions and external subsidies tend to disintegrate rather rapidly. The price of keeping them together is extremely high.

In a climate already characterized by political correctness, a certain wisdom that Europeans had accumulated about the colonized world had evaporated by the time the USSR era ended in the late 1980s. Erroneously assuming that we are all the same, that specific cultures do not matter, and that all that matters is training and incentives, there was a huge push for globalization.

German companies moved their factories to Eastern Europe, a region of relative cultural closeness to Germany. But many factories have since moved back. The anticipated cost savings turned out to be the exact opposite. All kinds of configurations of Western corporate investment in emerging markets were tried, with similar results.

The problem is that these emerging markets’ societies are tribal. In such cultures you need the glue of violence, subsidies, and massive bureaucracies to keep organizations in place. The experiments of the past 500 years with colonization and Western education show that it is not easy — when it is even possible — to wean societies away from tribalism. Bigger and bigger organizations were put in place in emerging markets, but they tended to remain poor and in strife. The intervention of Western economic methods created an unnatural gap between the poor and an entrenched elite, rendered more entrenched by the possession of whatever new wealth was produced.

Many factories have since moved back. The anticipated cost savings turned out to be the exact opposite.

There is only one solution: keep organizations in these emerging markets as small as possible, remembering that tribal instincts ironically propel them to make their organizations big. Never subsidize big organizations, for if you do, besides providing services that add value you create operations that are a massive drag on the economy, full of endeavors that consume wealth instead of producing it.

This brings us to the current drive to go cashless.

India has recently attempted to reduce the use of cash, ostensibly to reduce corruption but actually to further centralize the economy by creating a medium of exchange that the government can constantly monitor. Naturally, it is also creating a national ID card system. Both of these are in direct conflict with what India should do as a tribal, medieval society.

Let’s consider the sequence of steps required to operate an online bank account in India.

Start with slow internet connections and frequent interruptions in electricity. Add extremely unwieldy websites, websites that do not open properly. My browser often gets hung up on these sites. My password has a limited validity and must be renewed regularly by using the old password and a one-time password sent to my mobile phone; and a lot goes wrong during this “simple” process. Once inside the account, however, I may need another one-time password and an additional transaction password to complete my business.

Most people actually walk down to their bank branch to do the so-called online transaction — a clear instance of the fact that trying to modernize any system beyond its natural capacity in a tribal society increases the costs and makes it more difficult. This is the persistent irony of modernization.

My Indian banks charge me fees and commissions I never agreed on. They then top it up with taxes on “services” provided. Bank statements are ridden with so many charges that only the rare person has time or patience to sort them out, particularly when the banks are crowded, and getting someone to talk to you on the phone is extremely difficult. When you get through to an agent, he usually knows nothing.

The frustration of the people has been steadily increasing. Instead of easing their lives, the reduction of cash has added significantly to the burden.

It gets worse, especially if you are the so-called common man. I know my way around pretty well, but I frequently get stuck. And here is a country where 25% of the population is officially illiterate and where engineers and doctors choose to apply for jobs as janitors, mostly because their degrees are no more than paper. It is a country where a large proportion of those who claim to be literate struggle to sign their own names, let alone show themselves capable of reading a sentence. Imagine how they would deal with forced digitalization of the currency system. This will end in disaster.

Even now, in the last six months that India has been trying to reduce the usage of cash, the frustration of the people has been steadily increasing. Instead of easing their lives, it has added significantly to the burden.

Notably, however, none of this means that people have gone against the Indian prime minister, Narendra Modi. He is winning election after election, and most people simply love him. When not facing banking problems in real time, they are actively in support of Modi’s attempt to go cashless. One must remind himself that this is a tribal, irrational society. People often cannot connect simple dots that are right in front of them; not even the so-called educated ones can do that. They tend to do exactly more of what created the original problem, which in this case is irrational authority.

Any tribal society contains the impetus to make bigger, and more complex systems of authority. Tribal people want nannies. They feel secure in big structures, despite the fact that such structures actually make them less safe. Tribal people demand free stuff, without any feeling of gratitude to any real source of wealth. Governments meet that emotional need, while doing little else for their subjects.

Any rational leader would make an aggressive attempt to counter a tribal society’s willingness to increase the sizes of its institutions. But tribal societies do not easily produce rational leaders. They operate through expediency, not through rationality or objective moral thinking.

The IMF and the World Bank think that these emerging markets need better institutions. They think these countries need to reduce corruption, which is one of the reasons for the push towards going cashless. Locals in these countries agree. The irony is that these locals haven’t a clue about what corruption means — their tribal worldview means that they do not see corruption from a moral perspective. They merely look at the need to end corruption as a tool of expediency to improve their personal lives. They may think that everyone should stop asking for bribes, but they do not include themselves individually in that equation. Any sane, non-tribal person can see that this does not add up.

Tribal societies do not easily produce rational leaders. They operate through expediency, not through rationality or objective moral thinking.

Contrary to the view of many libertarians, even when privatization does happen, there can only be limited improvements. Indian companies — for they have tribal people as ingredients — are instinctively dishonest. They lack a work ethic and, unconstrained by morals, they rampantly abuse their clients. For example, I used an online Indian travel agency to buy an international ticket. After tens of attempts the money left my bank account — but I never got my ticket. The company said I never paid. No one knows whether it was the bank or the agent that was at fault. Eventually the agent refunded my money to the bank, but then the bank blocked that money. I had to run around the bank, which could not trace that blocked money. I shouted, screamed, and threatened, but in this entangled mess, I don’t really know who was the culprit. I do know that big organizations and forced-from-the-top digital money simply do not work.

Given the low-trust culture, Indians prefer immediate exchange of goods for money and vice versa. If you pay for a later delivery, you undertake huge risks that your goods might never arrive, and if they do arrive it is not unlikely that you might receive substandard goods. If you sell goods for payment at a later date, your money might never come. No wonder 95% of Indian consumer transactions happen in cash, with goods exchanging hands exactly at the same time that cash is paid.

India’s attempts to go cashless will end in a disaster. This will become obvious in a few months, not years. But India is merely an example. The situation with most of the emerging markets is exactly the same (with China, perhaps, as the only exception).

The lesson is that poor countries are poor for a reason, despite all kinds of tools of technology — particularly the internet — that are available to make their economies rapidly converge with that of the West. Western institutions worked in the ex-colonies as long as Europeans ran their institutions. With Europeans long gone and European values no longer underpinning them, the institutions have increasingly become hollow structures — what one sees everywhere in Africa, South Asia, and the Middle East, with the exception of a few small countries. An attempt to go cashless is a tribal attempt to centralize, exactly when their institutions, including the institution of the nation-state, another European import, are imploding.




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Corruption Revisited

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I was born in India, and not long ago I returned for an extended visit — which occasioned many thoughts that might be used in answer to the question that people frequently ask me: “Has India changed?” By this people usually mean, Is India on its way to “development”? Here is an attempt to answer.

What is the free market?

Ask middle-class Indians what they mean by the “free market.” They will often define it as a system in which corporations are given free rein to expropriate properties of rural people so they can build modern factories. They believe that the government should be allowed to pay a fraction of the market price to acquire farmers’ land to build infrastructure. They think that India would not grow if corporations and government were not subsidized by the rural segment of society. For them, the “free market” is a system in which individual forces are pooled for the greater good of India.

In India, an overt caste system has continued to disappear, particularly in urban areas — but scratch the surface and you find that it is deeply entrenched. When reminded of wretchedness and poverty, the well-off middle class likes to counter with talk about a high standard of living. In a country where more than 50% of the people have no toilets, and similar numbers have no electricity, water supply, or access to primary healthcare, one has to ask what is meant by that high standard.

Middle-class Indians think that India would not grow if corporations and government were not subsidized by the rural segment of society.

In fact, the Indian middle class is devoid of empathy for poorer brethren. Its members often fail to count their chauffeurs, maids, guards, and servants as human beings. These poor people are lucky if they get $100 per month for 12 or more hours of work a day, with no days off or vacations. The situation gets much worse outside the urban areas.

In India one must pay a bribe for everything one gets, and paying a bribe is usually not enough; one must grovel at the feet of those in power. Any sane person who wants to survive must stay politically well-connected, learning to exchange favors in an entangled mess. One can understand why Indians who must live in India may need to tone down their opposition either to the backwardness of society or to the tyrants that backwardness creates.

Most of the media is indirectly controlled by the government, for without government advertisement revenue it is hard to survive. Meanwhile, India consistently ranks among the most dangerous places for journalists. Freedom of speech in India is a myth, and even the richest and most powerful live in chronic anxiety.

Speaking of riches — the Indian GDP is $1,718 per capita. The average Indian is economically poorer than the average African. It is understandable why Indians try to emigrate. Given a chance, most would. Those who fail prefer to sing to the glory of mother India — and those who emigrate, alas, end up doing the same thing.

There is only one way to make sense of all this: by understanding the underpinning cultural forces.

India is a pre-rational society. It is deeply tribal and superstitious, allowing little space for forward planning or long-term thinking. In such a society, people are driven by a compulsive need for material gains but not by compassion, fairness, or goodwill for others. An irrational society has by definition no moral instincts; life is lived not by values but by expediency.

One must pay a bribe for everything one gets, and paying a bribe is usually not enough; one must grovel at the feet of those in power.

India has imported the easy, entertainment aspects of Western society, but it has forgotten to import — actually completely failed to see — the way of reason, of continuity between cause and effect. The Indian diaspora sings to the greatness of India, not because it believes in it — for if it did, it would return to India — but because to the tribal mindset a glorified India gives increased self-confidence. If lobbying for India in the West adversely affects the poor, downtrodden people who live in India, this is of no significance to the voluntary exiles.

Deep culture is entrenched and resistant to change, even after people — including very well educated people — have moved to a new society. It may not change for generations, if it changes at all.

Why international organizations fail

Financial corruption is only the tip of the cultural iceberg.

Economists and international organizations long to help India set up big factories and enter the modern world. Yet despite flashy isolated data, during the 70 years of so-called post-independence, modernization has impoverished the country. The problem is that much of it proceeds by force.

Indian corporations are extremely dependent on government support: direct subsidies, regulatory favors, and overt transfer of wealth from poor people. One might call it legal plunder or corruption.

In India’s tribal society, in which any organization of two people has one person too many, real growth comes from the informal sector. The formal economy is often the pest, but money lent to the informal sectors earns as much as 36% a year — while the same money lent to the formal sector earns a negative real-interest rate. Of course, the informal sector contributes little to taxes.

International organizations should be, but are not, encouraging growth in the informal sector. These organizations operate with a very shallow definition of corruption. For them, tax avoidance, bribery and the exchange of favors are the only corrupt practices. They endeavor to fine-tune institutions in emerging markets so as to remove corruption in public institutions, unconcerned that these institutions might be incompatible with growth.

They also want to educate voters. They want to enforce the separation of judicial, executive, and political functions, and they invariably fail. They fail to understand that to a pre-rational culture, separation of the three arms of the government is unimaginable.

Despite flashy isolated data, during the 70 years of so-called post-independence, modernization has impoverished the country.

Indian institutions have continued to degenerate since the British left. What exists today is merely the facade of what the British abandoned 70 years back. Western institutions did work in India as long as the British ran them, but those days are over. Once destruction of those institutions has been completed — and they are now in an advanced stage of decay — they can never be rebuilt. India will then be on course to becoming a recognized banana republic.

International organizations fail because they don’t think that culture matters. They think that people are blank slates. They think that locals always strive for the “right” institutions. To them, local history, religion, habits, and values have no significance. They believe that all people care about is economic growth and as long as the “right” institutions can demonstrate better growth, locals will offer their support.

But corruption in India exists because of the underlying corruption in the culture. Given the circularity of the statement, “corruption” is perhaps the wrong word. “Irrationality” is a better replacement.

Managed disintegration

With the best efforts, changing a culture is a long affair. It is entirely possible that cultures never fundamentally change. They cannot be changed unless the institutions that might reform them are compatible with them. Without compatible institutions, evolution of culture cannot happen — a society with incompatible institutions is confused and fails to see causality. The more irrational a culture, the more decentralized its institutions must be; but ironically, the tribalism of such societies creates the poison of totalitarianism from the bottom up. An enlightened ruler — one who cannot come into existence through democratic means — would allow such a society to disintegrate politically, for he would know that eventually nature would lead it to that future. Decentralization and the managed disintegration of India is what international institutions should be striving for.

Corruption in India, in the rest of South Asia, and in the Middle East, Africa, and South America is a product of irrational cultures, worsened by incompatible institutions. International organizations might do a patch-up job, but they will eventually fail and will make the situation worse if they focus on financial corruption, which is only a distressing symptom.




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Corruption Revisited

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I was born in India, and I recently returned for an extended visit — which occasioned many thoughts that might be used in answer to the question that people frequently ask me: “Has India changed?” By this people usually mean, Is India on its way to “development”? Here is an attempt to answer.

What is the free market?

Ask middle class Indians what they mean by the “free market.” They will often define it as a system in which corporations are given a free rein to expropriate properties of rural people so they can build modern factories. They believe that the government should be allowed to pay a fraction of the market price to acquire farmers’ land to build infrastructure. They think that India would not grow if corporations and government were not subsidized by the rural segment of society. For them, the “free market” is a system in which individual forces are pooled for the greater good of India.

In India, an overt caste system has continued to disappear, particularly in urban areas — but scratch the surface and you find that it is deeply entrenched. When reminded of wretchedness and poverty, the well-off middle class likes to counter with talk about a high standard of living. In a country where more than 50% of the people have no toilets, and similar numbers have no electricity, water supply, or access to primary healthcare, one has to ask what is meant by that high standard.

For many Indians, the “free market” is a system in which individual forces are pooled for the greater good of India.

In fact, the Indian middle class is devoid of empathy for poorer brethren. Its members often fail to count their chauffeurs, maids, guards, and servants as human beings. These poor people are lucky if they get $100 per month for 12 or more hours of work a day, with no days off or vacations. The situation gets much worse outside the urban areas.

In India one must pay a bribe for everything one gets, and paying a bribe is usually not enough; one must grovel at the feet of those in power. Any sane person who wants to survive must stay politically well connected, learning to exchange favors in an entangled mess. One can understand why Indians who must live in India may need to tone down their opposition either to the backwardness of society or to the tyrants that backwardness creates.

Most of the media is indirectly controlled by the government, for without government advertisement revenue it is hard to survive. Meanwhile, India consistently ranks among the most dangerous places for journalists. Freedom of speech in India is a myth, and even the richest and most powerful live in chronic anxiety.

The Indian middle class often fail to count their chauffeurs, maids, guards, and servants as human beings.

Speaking of riches — the Indian GDP is $1,718 per capita. The average Indian is economically poorer than the average African. It is understandable why Indians try to emigrate. Given a chance, most would. Those who fail prefer to sing to the glory of mother India — and those who emigrate, alas, end up doing the same thing.

There is only one way to make sense of all this: by understanding the underpinning cultural forces.

India is a pre-rational society. It is deeply tribal and superstitious, allowing little space for forward planning or long-term thinking. In such a society, people are driven by a compulsive need for material gains but not by compassion, fairness, or goodwill for others. An irrational society has by definition no moral instincts; life is lived not by values but by expediency.

India has imported the easy, entertainment aspects of Western society, but it has forgotten to import — actually completely failed to see — the way of reason, of continuity between cause and effect. The Indian diaspora sings the greatness of India, not because it believes in it — for if it did, it would return to India — but because to the tribal mindset a glorified India gives increased self-confidence. If lobbying for India in the West adversely affects the poor, downtrodden people who live in India, this is of no significance to the voluntary exiles.

Deep culture is entrenched and resistant to change, even after people — including very well-educated people — have moved to a new society. It may not change for generations, if it changes at all.

Why international organizations fail

Financial corruption is only the tip of the cultural iceberg.

Economists and international organizations long to help India set up big factories and enter the modern world. Yet despite flashy isolated data, during the 70 years of so-called post-independence, modernization has impoverished the country. The problem is that much of it proceeds by force.

The Indian diaspora sings the greatness of India, not because it believes in it, but because to the tribal mindset a glorified India gives increased self-confidence.

Indian corporations are extremely dependent on government support: direct subsidies, regulatory favors, and overt transfer of wealth from poor people. One might call it legal plunder or corruption.

In India’s tribal society, in which any organization of two people has one person too many, real growth comes from the informal sector. The formal economy is often the pest, but money lent to the informal sectors earns as much as 36% a year — while the same money lent to the formal sector earns a negative real-interest rate. Of course, the informal sector contributes little to taxes.

International organizations should be, but are not, encouraging growth in the informal sector. These organizations operate with a very shallow definition of corruption. For them, tax avoidance, bribery, and the exchange of favors are the only corrupt practices. They endeavor to fine-tune institutions in emerging markets so as to remove corruption in public institutions, unconcerned that these institutions might be incompatible with growth.

They also want to educate voters. They want to enforce the separation of judicial, executive, and political functions, and they invariably fail. They fail to understand that to an irrational culture, separation of the three arms of the government is unimaginable.

International organizations fail because they don’t think that culture matters. They think that people are blank slates.

Indian institutions have continued to degenerate since the British left. What exists today is merely the facade of what the British abandoned 70 years back. Western institutions did work in India as long as the British ran them, but those days are over. Once destruction of those institutions has been completed — and they are now in an advanced stage of decay — they can never be rebuilt. India will then be on course to becoming a recognized banana republic.

International organizations fail because they don’t think that culture matters. They think that people are blank slates. They think that locals always strive for the “right” institutions. To them, local history, religion, habits, and values have no significance. They believe that all people care about is economic growth and as long as the “right” institutions can demonstrate better growth, locals will offer their support.

But corruption in India exists because of the underlying corruption in the culture. Given the circularity of the statement, “corruption” is perhaps the wrong word. “Irrationality” is a better replacement.

Managed disintegration

With the best efforts, changing a culture is a long affair. It is entirely possible that cultures never fundamentally change. They cannot be changed unless the institutions that might reform them are compatible with them. Without compatible institutions, evolution of culture cannot happen — a society with incompatible institutions is confused and fails to see causality. The more irrational a culture, the more decentralized its institutions must be; but ironically, the tribalism of such societies creates the poison of totalitarianism from the bottom up. An enlightened ruler — one who cannot come into existence through democratic means — would allow such a society to disintegrate politically, for he would know that eventually nature would lead it to that future. Decentralization and the managed disintegration of India is what international institutions should be striving for.

Corruption in India, in the rest of South Asia, and in the Middle East, Africa, and South America is a product of irrational cultures, worsened by incompatible institutions. International organizations might do a patch-up job, but they will eventually fail and will make the situation worse if they focus on financial corruption, which is only a distressing symptom.




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Customer Care

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Report From Iquitos

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I am writing from Iquitos, a town in Peru, encircled by the jungle of the Amazon. The only connection to the external world is by air. Boats — loaded with cattle, exotic animals, human beings, and forest-produce that in the US would put you in prison for several lives — go downstream and upstream, providing access to smaller villages and tribes, but not to anything beyond. Iquitos is very spacious and well-planned. The mighty Amazon and its tributaries surround the town, and most people have come here from its tribal areas.

For less than $40 a day, I can have a very good style of life. It costs me $22 for a good, clean, air-conditioned hotel, with full breakfast included. A tip of 30 cents a day gets me all the attention I want. A very good meal at an “expensive” restaurant costs me $8. The cost is much less — about $3 — if I go to a good, busy place for locals. Most taxi rides cost 60 cents. Yet because most things are flown in, Iquitos tends to be about 25% more “expensive,” in my estimation, than similar places I have visited in Peru.

During 30 minutes of my sitting in a boat one evening, several fish jumped in, without a need for bait.

I tend to eat at local places. I buy fruit from roadside vendors; a handful costs me 30 cents. This helps the local economy the most, for the money that I spend in touristic areas mostly accrues to the well-connected, entrenched interests. Moreover, spending money directly with locals ensures that their emotions get aligned with my interests and safety — eventually they will go out of their way to win my favors. People are very friendly.

The Amazon offers cheap and good food. During 30 minutes of my sitting in a boat one evening, several fish jumped in, without a need for bait. Fruit trees are easy to find. It is hard to go hungry.

Not too far away is dense jungle and animals of all sorts, all of which are hunted down, irrespective of the diktats of the federal government, the World Wildlife Fund, and so forth. If something “protected” is not killed, it is because its meat is not tasty. In the local market every endangered or protected species can be bought. Locals might show revulsion if you asked them directly whether they hunt monkeys and dolphins. But ask them subtly — without evoking any implanted defences — what dolphin and monkey meat tastes like, and they will describe it.

I feel very free in Iquitos. But for locals it is not a libertarian paradise, not even close. Outside the core, touristic area, Iquitos is very dirty, because people utterly lack the concept of hygiene.

The receptionist at my hotel works every single day, from 3 PM to 11 PM. She works 365 days a year, with no vacation or weekends. This is how they all exist. In the morning she looks after her younger siblings while her own parents go to work. She has nine siblings, all younger, six of them are girls. When asked, she had to count to remind herself how many there are. All of them share a couple of small, dark rooms. Every woman is loaded with children, mostly girls.

The rule is babies first, with whomever, with no thought whatsoever about the future.

There is something about this area that results in a high female-to-male ratio. Some say there might be twice as many — or more — female births than male births in this area; anecdotal evidence shows this. One possible reason is a local fruit called aguaje, which apparently encourages certain hormones in women, although I failed to find a properly researched document to support this.

Girls here want to get pregnant quickly, partly because they have very strong maternal instincts, and being a single mother is perfectly acceptable socially — in fact this is the only way. The rule is babies first, with whomever, with no thought whatsoever about the future. My travel guide, who speaks fluent English, sees absolutely no reason why he should have any discussion with his daughters about the risks of unplanned, early, single motherhood. At the age of 23, he has three daughters, from three different women. Mostly he does not care what the woman he has a relationship with does when he is not with her. Incest is not uncommon.

People have enough to eat, so major crimes do not happen. But when crime must be controlled, it is through fear of punishment and much more importantly through real-time policing; those who cannot think much into a future don’t worry about punishment tomorrow. This reminds me that in many parts of Africa there is no word for “tomorrow” or “future.”

As I have seen elsewhere among people lacking reflective, critical reason — which is the situation in most of the non-Western world — petty crime, such as seizure of cellphones, is not considered immoral and hence is very common. The police and military must stand on every corner.

The area around Iquitos could be better than Switzerland. It isn’t. But you cannot blame lack of resources, lack of space, or even lack of educational possibilities. People here have a very high time-preference. A remote village of 500 people that I went to, about two hours away by boat from Iquitos, started getting surplus money through its interactions with jungle-related tourism, so it set up a night club and two bars. Not a piece of machinery was bought.

Contrary to what a rational person might have expected, Iquitos isn’t a peaceful paradise — the situation got worse with the influx of money.

Any excess money over basic needs gets spent on pleasure, right away. Iquitos is very noisy, because people like loud music and other loud sounds. Girls in very short skirts stand outside shops to attract people to buy motorbikes, TVs, and big, high-capacity sound systems, all playing at full blast. Casinos (and I am told brothels, in this rather promiscuous society) are everywhere, showing how bored people are. They are addicted to constant distractions.

Any rational person would have expected the surplus to go into investments in capital. But of course, the World Bank with its Ivy League educated “economists” must be happy, for they want consumption to go up. Contrary to what a rational person might have expected, Iquitos isn’t a peaceful paradise — the situation got worse with the influx of money.

Outside the supermarket here, there are several women sitting with scales, to let people weigh themselves for a few cents. None has business. There are shops after shops after shops, all well stocked, selling exactly the same wares, with none too busy. Hundreds of women sit next to one another selling exactly the same vegetables and fruit, all staring in oblivion, from early morning to late in the evening. Everywhere people, including the receptionist at my hotel, sit glued to the soap operas on their TVs. Soap operas are packed with fighting and exaggerated emotional dramas.

Anyone who tried to understand the situation might come, quite contrary to what the mainstream developmental economists would suggest, to the conclusion that in the final analysis the problem here — as elsewhere in the developing world — is not lack of capital, space, resources, safety, or property rights; nor is it overpopulation. The World Bank, the IMF and most economists are looking in the wrong direction.

The problem of poor societies is their lack of imagination, creativity, and reason, which is the dominant characteristic of the non-Western world. Modern education has completely failed to inculcate these human qualities. Perhaps it has made the situation worse, for education has been marketed to people in the non-Western world as something that offers a better material future, not a bigger vision of life. This has encouraged rote learning, not a passion for understanding the universe. In the end the education instilled in such students becomes just another baggage of beliefs, burdening them and distancing them from imagination, creativity, and reason.

Material prosperity without intellectual and spiritual growth does not add up and is not sustainable.

In most parts of the poor world (Africa, India, Peru, Central America, the Middle East, etc.) economic growth — the kind encouraged by international institutions — has had many bad consequences. These regions did not develop the concept of reasoning, planning, and strategic thinking. In the absence of these things, removing people from their tribal lives leads to emptiness and confusion. Any money they get goes into showing off and into too much drinking and partying. Noise, smell, chaos seem to develop quickly wherever surplus money comes to exist. Obesity and other lifestyle diseases are growing rapidly in all of these poor countries. And most rational people in the West fail to understand the situation: rational people’s rationality preempts them from understanding how irrational the developing world really is.

In such places wealth does not lead to peace, hygiene, improved health, and enlightened living. Even what could be an oasis becomes noisy, dirty, and diseased. The developing world has been the economic beneficiary of easy imports of technology, almost all of it attributable to the internet and telephony — both of which, during the past two decades, opened the floodgates of quick economic growth. Contrary to the claims of international institutions, growth in most of the developing world cannot be shown to be a product of liberalization, the spread of democracy, or public education.

For now, the World Bank and the IMF can justify their existence, but correlation is not causation. Liberalization didn’t really happen, although democracy is rearing its ugly head everywhere in the developing world. It has involved masses of people in public policy, masses who cannot think and reason, and are mostly driven by the desire for bread and circuses. Public education hasn’t delivered.

At the core, material prosperity without intellectual and spiritual growth does not add up and is not sustainable. Now the low-hanging fruit has been plucked, and growth rate in the developing world is falling rapidly. The consequences of overconsumption and lack of capital investment are becoming visible.

A true developmental economist should look at the reality beyond the superficial economic numbers. I am extremely happy and free in Iquitos, but what a tourist and an outsider with money can experience is not the full reality. Never trust economists who do a quick fly-in and fly-out of a poor country and while there get driven around in Mercedes cars and stay in five-star hotels. Ask them if they have been to Iquitos, and the jungles with mosquitoes and naked tribes.




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