Athena 4, Gaia 0

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From the start of the industrial revolution to the present day, many Green critics have decried the rise of technology. Gaia (Mother Earth) worshipers — Green neo-pagans — have viewed with alarm the dramatic rise in human flourishing, and the key determinant in this flourishing, which has been the development of plentiful energy. From the year 1800 to the year 2000, the world’s average per capita income rose tenfold (in real terms), while the world’s population rose sixfold, thanks to this productive and peaceful revolution. But the Gaia cult has resisted every step of the way.

During the past half century, the Gaia groupies have achieved tremendous political power in America and Europe. (They have yet not been able to dominate in Asia — one big reason Asia is so rapidly rising economically.) It is a struggle between those who embrace technological progress and those who reflexively and viscerally oppose it. The struggle can be viewed as a contest between Greek goddesses: Athena, goddess of wisdom and technology, is fighting Gaia, and Athena keeps winning — thank goddess!

Four recent reports of technological progress in energy production are worth noting. The first is about the fracking revolution, which I believe will be viewed by future historians as one of the major turning points in the evolving industrial age. It conveys the news that the largest American railroad, BNSF, is planning to test the use of natural gas as power for its locomotives. Currently, BNSF uses diesel fuel exclusively, and by its own estimates has the largest diesel-burning American fleet, second only to the US Navy.

It is not because but in spite of the neo-pagan policies of the Oval Office that we have the natural gas miracle.

The reason BNSF is considering the move is that because of the fracking revolution, natural gas is getting very cheap. Under current pricing, while a gallon of diesel fuel costs about $4, the same power can be produced for less than 50 cents worth of natural gas — though there are additional costs when you compress or liquefy it.

This is leading BNSF to follow other industries in moving toward natural gas. Utility companies are rapidly abandoning coal for gas, and manufacturers are moving toward it as well. Many municipal bus fleets have been using compressed natural gas (CNG) for years, and other commercial vehicle fleets (such as garbage trucks) are looking into switching to CNG. Already, tugboats are being fitted to run on liquefied natural gas (LNG). And long-haul freight companies are looking at LNG as well — in fact, Shell is planning to provide LNG in Ontario and Louisiana and distribute it at 200 truck stops.

The hurdle that BNSF faces is that it costs upwards of $1 million to retrofit a diesel locomotive to run on LNG as well, and BNSF has almost 7,000 locomotives to retrofit. So this conversion likely will take time, but given that the cost advantage of natural gas shows no sign of going away anytime soon, the conversion seems inevitable.

Lest anybody be addlepated enough to thank the current Green regime for this flourishing of clean, low-cost energy, let me disabuse him now. The crony-capitalist administration has placed all of its — oops! I mean, the taxpayers’ — money on solar and wind power, bankrolling numerous projects (headed by various Obama donors) that have gone nowhere but bankrupt. The EPA and the Department of the Interior have gone out of their way to stop drilling on federal lands. This is documented in a recent report from Marc Humphries of the Congressional Research Service. The report documents the fact that the fracking revolution has increased American natural gas production by 20% over the past five years alone — a total of 4 trillion additional cubic feet of natural gas pumped into the nation’s supply. But this overall increase hides a revealing disparity: while natural gas production on non-federal (mainly private) lands is up by 40% over this period, production on federal land has plummeted by 33%.

In short, it is not because but in spite of the neo-pagan policies of the Oval Office that we have the natural gas miracle.

But the miracle just might become even more miraculous. The second story about technological advances in energy production is a news release from the Japan Oil, Gas and Metals Corporation, which notes that it is preparing the first test of commercial production of natural gas from methane hydrate layers under the ocean. Essentially, methane hydrate is natural gas (methane) trapped in ice crystals along the ocean’s floor. This source of energy is estimated by some experts as potentially exceeding all of the world’s existing coal, natural gas, and petroleum reserves — combined! Developing the resource will be tricky, given the instability of the layers that have to be processed, but then, the minds of self-interested creative individuals are tricky as well.

The third technological development in energy production worth noting is the advent of a new type of nuclear (fission) reactor.

Nuclear power, of course, can’t get no respect from nobody. Despite its exemplary safety record in the US and other advanced economies (which always excluded, of course, the Soviet Union), people fear it. These fears were only intensified two years ago when a Japanese earthquake led to the destruction of four reactors at the Fukushima Daiichi power plant.

Actually, the quake — a massive magnitude 9.0 one that moved Japan’s main island eight feet to the east and shifted the Earth’s axis by six inches — didn’t destroy the reactors. They were ruined by the tsunami it generated (a tidal wave that destroyed 300,000 buildings and killed 20,000 people). Despite the fact that the reactors’ disaster killed nobody, sickened nobody, and is likely to cause few health problems in the future, organized pressure led to the shutdown of the country’s 53 other reactors. These reactors jointly produced 30% of the country’s electric power. As a consequence, last year Japan ran a record deficit ($78 billion) because it had to import more energy, increasing the cost of its manufactured goods, and reducing exports accordingly.

But nuclear power is by no means dead. There is a new company, Transatomic Power, that is perfecting a design for a molten-salt reactor — a design that may well cut in half the cost of future nuclear reactors. It is the high cost of building reactors, especially in the face of the dramatically dropping price of electricity from natural gas plants, along with the Green Regime’s preference for solar and wind power, that has been holding up the expansion of nuclear power in the US over the past few years. But this new reactor will probably reignite that expansion.

Molten-salt reactors were explored as long ago as the 1960s in the Oak Ridge Lab, but the design now being worked on would produce 20 times the power for the same size reactor. It would allow reactors smaller than the 1,000 megawatt behemoths currently running. Besides the smaller footprint, the reactor under design would save money because it could be factory-built (as opposed to being custom-built on site).

Its chief advantage, though, would be the use of molten-salt rather than water as a coolant. Water is the coolant used in all present reactors. The problem with water is that it boils at 100o C, whereas the fuel pellets in the core operate at about 2,000o C. So in the event of an emergency shutdown, unless water can be continuously pumped over the core to cool it, the water will vaporize and the core will melt down (as one did at Fukushima).

But the salt, which is combined with the fuel, has a boiling point much higher than 2,000o C. So if the reactor core starts to overheat, the salt will expand but not evaporate, separating the pellets and thus slowing the core reaction. In a complete shutdown, a stopper at the bottom of the core container would melt, and the molten fuel and salt would flow into a holding container, where the salt would solidify and encapsulate the fuel.

If global warming is real — as all good, pious Gaia supplicants believe — then it’s either nukes or solar and wind power, and the latter is clearly not economically viable.

The clever pups behind this innovative design are the cofounders of Transatomic Power, Leslie Dewan and Mark Massie, who are still only Ph.D. candidates at MIT. These two are Schumpeterian entrepreneurs of the best sort. America is lucky to have them, as the Chinese are also working on a similar design.

This all comes at a crucial time for nuclear power. For as a recent Wall Street Journal article notes, the fracking revolution has lowered natural gas prices so much that gas powered electrical plants are driving both coal-fired plants and many nuclear plants (especially the smaller ones, and the ones facing expensive repairs) out of deregulated markets.

For examples, Excelon has announced that it will soon close its Oyster Creek, New Jersey nuke, ten years before its license expires. And Dominion Energy has announced that it will soon close its Kewaunee, Wisconsin nuke, a full 20 years before its operating license expires.

Pricing makes the reason for this clear. The fixed costs to run a nuke are $90,000 per megawatt; the fixed costs for coal fired plants are $30,000; for natural gas fired plants, only $15,000. And, of course, existing nukes require intensive security and safety costs, precisely because of the risk of meltdown. In the first 11 months of 2012, natural gas plant output rose by 24%, while the output for nuclear powered plants dropped by 2.5%.

This all presents an interesting dilemma for the Gaia communicants. As natural gas prices continue low, gas will, absent extensive subsidies or other protection for other forms of energy, supplant nuclear power. Now, natural gas emits just half the carbon that coal does, but nuclear plants emit none. So if global warming is a hoax, we could easily go all natural gas. But if global warming is real — as all good, pious Gaia supplicants believe — then it’s either nukes or solar and wind power, and the latter is clearly not economically viable. All this is clear except to the blindest Gaia devotees (and the greediest Green crony capitalists).

And indeed, there has been an interesting schism in the Green faith. In a recent piece, the excellent science writer Robert Bryce calls this “the rise of the nuclear Greens.” He notes that an increasing number of Gaia votaries now support nuclear power. One prominent convert is British environmental activist George Monbiot, who has now admitted — belatedly, to understate it massively — that solar energy (in the UK, and by extension everywhere else) is “a spectacular waste of scarce resources,” and that wind power is “largely worthless.” Referring to the Fukushima disaster, he concludes, “Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power.”

Wow.

Monbiot now joins other Gaia disciples Stewart Brand, Ted Nordhaus, Michael Shellenberger, Mark Lynas, James Lovelock, and Patrick Moore (co-founder of Greenpeace) in favoring nuclear power. This is nauseatingly ironic: it was the environmentalist zealots who stopped the growth of nuclear power 40 years ago. But the pro-nuke Gaia devotees are still a distinct minority. Most of the cult still lights candles in front of wind and solar power.

The fourth interesting development concerns an energy source that has been tantalizing but elusive for many decades: fusion power.

A news report out of Europe indicates that an important international project is moving forward. The “Iter” (Latin for “the way”) project is a collaboration of 34 nations working on building a pilot fusion nuclear reactor. Nuclear fusion is, of course, what powers the sun and other stars. In principle, it offers a chance to provide virtually unlimited supplies of reliable, consistent energy at the levels needed to power an industrial economy. And it would provide that power from clean, nontoxic fuel (extracted from water), with no possibility of any kind of core meltdown.

The new Iter experimental reactor has received an operating license. It is projected to be the first fusion reactor (“tokamak”) to generate more power than it uses — ten times more, in fact. The Iter design would serve as the prototype for the first generation of commercial fusion power plants.

The foundations for the reactor are now being laid, but the work of putting together the million or so components (made at factories all over the world) will take a long time. The tentative date for firing it up is about 15 years in the future — though with a project of this enormity, it will probably be longer. And it has cost about $20 billion. However, it signals that by the second half of this century, commercial fusion power will be a reality.

That would be nothing less than the crowning achievement of the industrial revolution. It would be the human mind harnessing the power of the stars to secure permanent prosperity for our species.

In spite of the Gaia cult, Athena is ascendant.




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The Egyptian Mess

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Behold, you are trusting in Egypt, that broken reed . . .
                                                                                   —Isaiah 36:6

No one should be surprised by the recent events in Egypt. Indeed, this analyst foretold them here. A people unable to rule itself or even get its living without foreign assistance is bound to wind up in a bad place, and right now Egyptians are in a very bad place indeed.

The history of Egypt is well known, so I will touch on it only briefly here. The valley of the Nile was home to one of the earliest and greatest civilizations created by man. That civilization eventually declined, and Egypt became the booty of foreign conquerors — Persians, Macedonians, Romans, Arabs, and Turks. Egypt was the breadbasket of the Roman Empire; the bounty of the Nile fed the Roman mob for centuries. Egypt’s population has been overwhelmingly Muslim since the Arab conquest in the 7th century CE. About 10% of its people are Coptic Christians.

Egypt enjoyed brief renaissances under the Fatimid dynasty (969–1171 CE) and then in the early 19th century under Muhammad Ali Pasha (1805–1848), an able military commander who nearly brought down the decaying Ottoman (Turkish) empire. Muhammad Ali’s descendants were the nominal rulers of Egypt until 1952, though from 1882 until the end of World War II it was Great Britain that actually ran the country. In 1952 the Egyptian Army seized power, which it held until the overthrow of Hosni Mubarak in the popular revolution of early 2011.

We should be under no illusions that there is a libertarian spirit running through the Egyptian body politic.

Mirabeau referred to Prussia as an army with a state. That description would aptly fit modern Egypt. The Army is the ultimate arbiter of politics in Egypt. It also plays a large role in the Egyptian economy, operating businesses and farms that account for a significant portion of Egypt’s GDP. Its businesses pay no license fees or taxes, and all profits disappear “off budget” into accounts under Army control. On top of this, it receives over $1 billion per year in American military aid. Its position in the state is comparable to that of the People’s Liberation Army in China — except that its political influence is probably even greater than that exercised by the PLA. The Egyptian Army projects itself as the guardian of the state and the people, but in reality it is a semi-parasitic organism whose primary goal is self-perpetuation.

The main counterweight to the Army is the Muslim Brotherhood. Founded in 1928, it has survived persecution first by the British and then by its bitter rival, the Army. For decades it too has been a state within a state, operating clinics and schools generally regarded as superior to those provided by the government, and dispensing aid to widows, orphans, and others. Indeed, the social safety net created by the Brotherhood was not only tolerated but partly funded by the government, which came to see the Brotherhood’s work as a pillar of social stability. In part, the poorest of the poor in Egypt survive because the Brotherhood has been there for them.

Of course, the Brotherhood is first and foremost an Islamist organization. Its ultimate goal has been and remains the creation of an Islamic society guided by sharia law. After the revolution of 2011 and the Army’s withdrawal from direct governance, the Brotherhood sought to fill the power vacuum thus created.

The revolution of early 2011 was not instigated by the Brotherhood, but rather by Western-oriented and social network-connected young people, more secular than religious in outlook, who wished to see Egypt become something like a European social democracy. That the revolution occurred just as European social democracy was beginning to crumble is ironic but beside the point. We should be under no illusions that there is a libertarian spirit running through the Egyptian body politic. Even American-style political economy is incomprehensible to most Egyptians.

The young revolutionaries won out in 2011 because the Army had no desire to shoot people down in the streets. Moreover, repression might have forced America to rethink its relationship with the Egyptian military, thus jeopardizing that $1 billion in lucre for the Army’s coffers. Better to stand aside, the Army calculated, and sacrifice one of its own (the dictator Mubarak) to protect its corporate interest. It could wait upon events and intervene later if necessary.

Democracy had come to Egypt. . . Or had it? Only one-third of the electorate turned out to ratify the constitution.

After the revolution the “liberal” forces swiftly fell into disarray. The various groups differed among themselves; they lacked both organizational ability and an agreed-upon program. They frittered away the goodwill they had had garnered in the heady days immediately following Mubarak’s fall. When the interim military government relinquished power in 2012, the liberals were unprepared to govern or even mount an effective political campaign.

Enter the Muslim Brotherhood. At the time of the revolution the Brotherhood had downplayed its political ambitions, even claiming that it would not offer a candidate for president. But its rallies were attended by large and enthusiastic crowds, and as it saw its liberal rivals fragmenting, the prospect of power proved too alluring. With the military partially discredited by its past association with dictatorship, the Islamists (including the Brotherhood and the very conservative al-Nour Party) were free to jump into politics with both feet. In 2012 they won a majority in the new parliament and then elected Mohamed Morsi to the presidency with an absolute majority of 52%. A constitution promulgated by the Islamists was ratified by 64% of Egyptian voters. Democracy had come to Egypt.

Or had it? Only one-third of the electorate turned out to ratify the constitution; many non-Islamists refused to vote on a document that had been shaped along Islamist lines by the majority in parliament. Meanwhile, extra-constitutional steps were being taken against the judiciary and the media. This brought the secularists together again in opposition. The Brotherhood even alienated its Salafist allies in al-Nour, who found themselves marginalized as the Brotherhood’s arrogance grew.

Perhaps most important, the Brotherhood failed to grapple effectively with Egypt’s enormous economic problems. Forty percent of the population survives on the equivalent of $2 per day. Corruption is rife at all levels of society. Services as basic as electricity are often unavailable. It was certainly too much to expect that any man or party could correct these problems in a year’s time. But the Egyptian people were impatient. Many who had voted for the Islamists turned against the government when it failed to deliver basic improvements. Morsi and his supporters understandably took umbrage when the military warned them to compromise with the opposition forces. The president had been elected to a four-year term; surely he should be given that time to work out his plans for Egypt. That he had gone beyond constitutional bounds in some respects was not particularly unusual in the context of Egyptian politics. Nevertheless, when millions upon millions of Egyptians turned out across the country demanding his fall, the Army was bound to act. And the result was the recent coup.

When is a coup not a coup? When American law says that a country in which the military overthrows a democratically elected government cannot receive American aid. And so for the last few days we have witnessed the contemptible performances of the president and the chairman of the Joint Chiefs of Staff, as they wrestle to avoid the obvious. The ongoing massacre of language and truth being perpetrated by these men is prompted by the inexorable demands of empire: the Suez Canal remains a vital link for US forces deploying to the east. And the SUMED oil pipeline that crosses Egypt is vital to the transportation of Gulf oil to Europe. Already the current troubles in Egypt have caused West Texas intermediate to spike above $100 a barrel. If Egypt descends into chaos, that price could go to $140 or $150 a barrel, with terrible consequences for the American economy. So the servants of empire practice the art of obfuscation, and hope for the best.

Egypt is incurably dysfunctional. But as a member of the 21st century’s global society, it will limp along for many years, a charity case too important to be ignored.

What is the best that can come out of the current crisis in Egypt? It is important to recognize the naked truth: Egypt is not a functioning society. Its problems are insurmountable. To declare that something cannot be fixed is discordant to American ears. But Egypt is a basket case that lacks even a basket. Consider the following facts:

  • Two-fifths of the population lives in great poverty, surviving on that $2 a day. Necessities are subsidized by the state; how long this can continue, given the increasing wariness of international lenders, is an open question.
  • The official unemployment rate is 12.5%, but likely much higher, and youth employment is higher still.
  • The country’s principal source of hard currency is drying up as tourism declines.
  • Egypt would in fact be bankrupt were it not for the money it receives in the form of handouts from the US and the Gulf States, and from Suez Canal tolls. National debt is approaching 100% of GDP.
  • Business is mired in bureaucracy and corruption and suffers from a lack of innovation and entrepreneurship (despite recent reforms), not to mention unfair competition from state enterprises.
  • The population has tripled in the past 50 years. It is expected to double again by 2050. Self-sufficient in food as recently as 1960, Egypt now imports over 40% of its total food needs, and 60% of its wheat.
  • Domestic oil production is declining while domestic consumption is increasing.
  • Egypt has virtually no tradition of self-government. The Egyptian people certainly failed to exhibit any real talent for democracy in the 18 months just past.

Egypt is in reality a fellahdom; its people, aside from the small middle class, are a fellah-people. In other words, they are an undifferentiated mass, a rabble incapable of governing or even sustaining itself. As it happens, this fellah-people occupies a strategic piece of real estate; therefore it will continue to receive enough in handouts from outsiders to keep starvation at bay. Egypt is incurably dysfunctional. Left to its own devices, it would undergo cataclysms that would probably kill millions. But as a member of the 21st century’s global society, it will limp along for many years, a charity case too important to be ignored.

The principal actors in Egypt remain the Army and the Islamists. It should be noted that on July 6 the al-Nour party imposed a veto upon the appointment of the liberal, pro-Western Mohamed ElBaradei as prime minister. Nevertheless, the Army, by drawing the secularists to its side, can guarantee continued support from the West. But if Western support should end — the result perhaps of a future crisis in the West itself — then the Islamists might again come out on top. The cry of “Islam is the answer” could resonate once more with the poor and disenfranchised. A descent into religious fanaticism would likely follow. What sort of Egypt would finally emerge is anybody’s guess.

I don’t pretend to know precisely what “solution” will be found for the present, short-term crisis. A patched-up one, no doubt, assuming civil war is avoided. But the long-term trend is clear. There is no way out for Egypt as it is presently constituted.




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The Arab Spring and After

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What we term virtues are often but a mass of various actions and divers interests, which fortune or our own industry manage to arrange; and it is not always from valour or from chastity that men are brave, and women chaste. —François de La Rochefoucauld

A few years back, people of Pakistan were fighting for democracy. I thought that Pervez Musharraf, their dictator, was the best they could get. But fashionable women were protesting and burning his effigy. The educated wanted democracy. They got democracy. Now, women cannot protest. And educated people have disappeared from the demonstration scene. The case with Nepal is similar. Since the end of monarchy, it has become a basketcase. How many people can remember places called East Timor and South Sudan? Not too long back the Western world was on the streets fighting for the social movements in these countries without a clue about the social or cultural contexts there.

 The Arab Spring brought a huge amount of excitement in the Gulf countries. The Western world had very romantic views about the protests in Egypt and Libya. Now it will blame the Muslim Brotherhood for what has been happening, rationalizing its initial support as good intentions. Or perhaps it will blame the military for the coup of July 3, 2013 that removed the democratically elected President, who soon after his election had catapulted into an autocrat. Is Egypt rapidly heading toward massive civil unrests and disintegration similar to that of Algeria in 1991? Only time will tell, but a few years down the road, one may well look at Egypt under the autocracy of Hosni Mubarak with nostalgia. 

India has had massive protests against social ills and corruption.

If you are not supporting the protestors you are seen to be against democracy, liberty, hope, and change. The phenomenon is being repeated in Turkey and Bulgaria, where I have just spent two months. In both these countries, protests seem — from my rather limited outsider’s perspective but verified by my Turkish friends — to have developed for wrong reasons. More than listening to what the protestors say, one must delve more deeply into what they really want, for language is often a tool for deception and self-deception.

Democracy has given credibility to the state and to those psychopaths who aspire to rule in it.

Turkey and Bulgaria have progressed significantly over the past two decades. They are very significantly freer. The military in Turkey has increasingly taken a back seat. The mafia in Bulgaria is still a big problem, but a tourist, if he is not totally gullible, can move around safe and unmolested.

But what change is sweeping the developing world? Those with wishful thinking might suggest that it is, according to a survey, libertarians who are protesting in Turkey. They are completely wrong. Alas, even in the United States most people until not too long back did not really know what “libertarian” meant. A Turk explained to me that in the survey done in the Turkish language respondents had chosen what could be translated as “freedom-loving.” The newspaper that reported it decided to translate the word to “libertarian.” And we all know that the world is almost 100% freedom-loving. The question is what the people mean by “freedom.”

The very possibility of joining the masses makes me cringe. Not only do those who protest make jackasses of themselves, but there can hardly be any specific collective aims, for people have different motivations that are often in conflict with one another. Mostly even an individual’s protest is based on sound-bites rather than a coherent philosophy. Even when such groups have a coherent aim, they are often in opposition to some other, less vociferous group. And those who have nothing to do with any of the protests must suffer, for protestors disrupt the public space, aggressing against the uninvolved. While I do understand that it might make sense to protest publicly when the issues are of grave and immediate significance — the likelihood of a nuclear war, for example — it is generally true that only voluntary interactions among people have principled value.

So, if not for liberty, what underpins these protests — in Arab countries, Turkey, Bulgaria, and now in Brazil?

They are a result of several issues, all centred on democracy.

The weed of democracy has spread and rooted itself deeply in the psyche of people almost everywhere in the world. It is no longer seen as a new-age Western religion, which is what it is. When I was a kid in India, it was common for people to discuss why democracy — aka mob-rule — does not work. You would be called too simplistic and blamed for blindly following the West if you talked in favour of democracy. They would make fun of you for trying to look westernized. The winds have changed. I have not heard anyone saying anything against “democracy” for more than a decade now.

Democracy has given credibility to the state and to those psychopaths who aspire to rule in it. These people no longer have to show their fangs. They no longer have to show that they are ruthless exploiters, trying to steal a cut from wealth producers. Democracy has given them a garb of acceptance and the look of doing good. Psychopaths can now openly work their way up to rule others.

Given that democracy is in the DNA of today’s societies, there is no resistance to increasing its size. The size of the state — its power to tax, regulate, and control — has grown everywhere. It is the one-size-fits-all democratic institution in most parts of the world. Given its lack of connection with the underlying culture in many parts of the world, it cannot accommodate changes in society, including the fact that people are now more informed and much more mobile. The state had depended on a stable populace. But by encouraging people to get involved in democracy, it has opened a can of worms.

What we have is an expanding State that is no longer in control and is increasingly brittle, exactly when people are becoming more dependent on it.

Democracy is a much worse virus than dictatorship or monarchy. In those systems of mafia organizations called the state, people see themselves in opposition; they retain the ability to see the state for what it is: a group of people who cannot take responsibly for their own lives but believe that they can, through threats of violence, tell others how to live, meanwhile skimming off a large portion of wealth generated by the people. Democracy has made the state an inherent part of the society. The chains are no longer visible ones, but the ones within people’s minds. Those are the worst chains.

My Russian friend tells me that after the breakup of the USSR, people had no interest in standing up to sing hymns at a piece of their cloth or salute it. In Canada, until the Vancouver Winter Olympics, there were hardly any displays of nationalism. Now, flags fly everywhere in Vancouver. In India, when I was a kid, people used to walk away or ignore it when the national anthem was sung. But recently movie theaters have started running the national anthem. On a recent visit, everyone — except me — stood up. I could even see their glutes tightened — muscles that their personal trainers had failed to help them isolate — while they stood in complete discipline. I couldn’t shake the feeling of how much the State has become a part of society’s DNA.

Democracy is now in the DNA of individual people, too — a cultural meme that has found no competition. Even the ultra-religious in the Middle East must now give at least lip service to democracy, for they have failed to counter the ideological challenge. Democracy is seen as a given and a universal good, as if it were a first principle.

Democracy has encouraged herd instincts and lack of self-responsibility. Democracy has given equal participation to those who have no interest in social affairs, to those who are driven mostly by a 9-to-5 materialistic lifestyle, forever waiting for the next weekend.

Democracy has been propagandized as something that provides wealth as if by a magic. Young people in the developing world have grown up to think that democracy is a cure for all their problems. Somewhere in their minds, they have come to believe — as is the case even in the West today — that democracy creates something from nothing. They are on the streets asking for their share of this something.

Their protests have absolutely nothing to do with any libertarian mindset developing in the world. People around the world have come to depend more — emotionally and materially — on the state. They are not asking for a smaller state but for a more efficient state, which to them means a bigger and more influential one. Alas, given that democracy is a one-size-fits-all, alien institution for most societies, it has made the state less malleable than it would have been had those countries continued with the system of governance they had naturally evolved.

But even in the West the state has been increasing in size exactly at the time when the state, having hijacked emergency services and the maintenance of law and order, is very brittle and its structure completely unsuitable for the changing, mobile, and informed society. As Doug Casey would say, the State is on its way out.

What we have is an expanding State that is no longer in control and is increasingly brittle, exactly when people are becoming more dependent on it. Only time will show how this conflict — of the State falling apart while the people are becoming more dependent on it — will be resolved.




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Arrested Metamorphosis

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Over a year ago, in two articles titled “A Living Wage?” and “The Metamorphosis” in the December 2011 and March 2012 issues of Liberty, I reported on the proposed and partially implemented economic reforms of the Castro regime in Cuba. Included was an analysis of their impact by Luis R. Luis, former director, Latin America Department, of the Institute of International Finance and chief economist at the Organization of American States (OAS). Luis and The Economist have recently provided an update, which I think only fair to pass on.

The reforms allowed more small private businesses, shifting labor from the state to the private sector, thereby freeing selected retail prices and improving management of state enterprises. They also permitted the purchase and sale of residential housing and cars among private parties. Additionally, enabling legislation was passed to encourage joint development ventures with foreign investors.

A couple of years back The Economist reported that Cuba’s internet speed was the second slowest in the world, behind the island of Mayotte, a French territory of around 200,000 people.

One notable reform passed since the original proposals purports to allow Cubans to travel abroad. In practice however, it’s an Enganche-22 for perfectly logical albeit unreasonable reasons. Since the Cuban government provides everyone with a “free” education, it claims a lien on the benefits of that education. Graduates’ expertise and earnings are subject to strict state controls. Travel abroad is regulated according to how essential the state deems one’s job to the economy. As you might guess, with the Cuban economy treading water, most jobs are considered essential. The perverse result of this policy is that those fortunate enough to be able to afford and desire foreign travel, are unlikely to benefit from the new freedoms; while those who can’t afford to travel and are unlikely to apply for a visa are the main beneficiaries. Now you know why Orlando’s Disney World’s queues haven’t been lengthened by Cuban tourists.

As of June 4, those denied actual visas will have unlimited access to virtual travel. The Christian Science Monitor reports the opening of 118 public internet providers across the island. However, the $4.50 per hour cost might prove prohibitive. The average salary in Cuba is $15 per month. Service speed is another impediment. A couple of years back The Economist reported that Cuba’s internet speed was the second slowest in the world, behind the island of Mayotte, a French territory of around 200,000 people just northwest of Madagascar in the Indian Ocean. Facebook is not bracing for a slew of new Cuban accounts.

Nearly all the other reforms include such self-correcting provisions. In Gauging Cuba’s Economic Reforms (May 2013), Luis R. Luis gives us an update. He uses the Transition Indicators of the European Bank for Reconstruction and Development (EBRD) to measure progress on the road to a full-blown market economy. But he demurs that his approach is inappropriate because official government policy firmly states that Cuba is not pursuing a “transition” to a market economy. As Raul Castro famously declared in 2009, “I was not elected to restore capitalism to Cuba.” Luis justifies his approach stating that, “Nonetheless, it is quite useful to make an analysis of the present state of Cuban reform as if it were on the road to establish a market economy and to provide a comparison with transition economies in Eastern Europe, Central Asia and the Near East as measured by the EBRD indicators.”

So how does Cuba score? The EBRD rating scale is calibrated from 1 (little to no change) to 4+ (for fully liberalized market economies). Luis gauges progress in six policy areas.

  1. Large scale privatization: Cuba scores 1.
  2. Competition policy: Cuba scores 1 — no competition legislation and institutions.
  3. Trade and foreign exchange system: Cuba scores 1.2, meaning that there are widespread import and/or export controls.
  4. Small scale privatization: Cuba scores 1.5
  5. Governance and enterprise restructuring: Cuba scores 1.7. A score of 2 is moderately tight credit and subsidy policy; weak enforcement of bankruptcy laws; and little action to strengthen competition and corporate governance (Luis warns that his grade in this area is probably generous).
  6. Price liberalization: Cuba scores 2 — some lifting of price controls, but with substantial state procurement at controlled prices. Still, more progress has been made in this area than in any other, especially on retail pricing by private farmers and the self- employed.

For a grand total of 8.4 — below any of the 34 transition countries where indicators have been calculated using the EBRD methodology. For comparison, the next lowest ranking is achieved by Turkmenistan with a 10.7, followed by Belarus at 13, and Uzbekistan at 13.7.

Comparing price liberalization with all the other items, a cynic might conclude that the only benefits of the reforms to the Cuban man-on-the-street are price hikes. Luis summarizes that, “The pity is that Cuban policy as stated appears to aim at maintaining a low score.”

In spite of Fidel Castro’s declaration that golf was a “bourgeois” hobby unsuitable for communists, the government has just given the go-ahead to a new $350 million golf resort.

And what about the proposed and existing foreign joint ventures? I’d previously reported that several foreign businessmen had been arrested for engaging in corrupt practices: paying wages and bonuses to employees above the legal limit. The Economist drolly reports some progress in the status of the jailed managers: “Now, in a move which could be a precursor to their release, they are about to go on trial.”

As to the real estate tourism developments, not many shovels have broken ground. But that’s no impediment to forging ahead with more plans. In spite of Fidel Castro’s declaration after he took power that golf was a “bourgeois” hobby unsuitable for communists, and building upon most of the island’s existing courses, the government has just given the go-ahead to a new $350 million golf resort near Varadero. It’s “the start of a whole new policy to increase the presence of golf in Cuba,” declared a spokesman. Fidel’s son Antonio, garbed in a comandante’s olive green fatigues and sporting a full beard, even posed for a photo putting on a green. Antonio Castro then went on to win a promotional golf tournament staged by Esencia, the British joint venture company developing the Carbonera Club. The resort will also include residential properties available for purchase by foreigners.

Plans to increase shipping and storage capacity at ports have inched forward. Brazil, through its Brazilian Development Bank (BNDES), has provided credits of over $800 million for the expansion of the port of Mariel and related infrastructure. “This seems generous and it involves the well-connected Brazilian construction giant Odebrecht,” according to Luis. The government has also approved construction of a 1,300-berth marina near Varadero, which — if developed — would be the largest in the Caribbean. Finally,The Economist reports that the BNDES is also providing funds to upgrade the island’s airports.

We see that the Cuban government treats its people as if they were a dog in training, giving them tiny tasty tidbits accompanied by lavish verbiage. One Cuban housewife told a radio station, “something is better than nothing,” adding “the majority is not going to stop eating just to connect to the internet.”




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Imperium Sinarum Delendum Est

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On June 7 and 8 President Obama will meet Chinese president Xi Jinping at the Sunnylands estate in Rancho Mirage, California. The meeting is being billed as an informal, “shirtsleeves” summit with a minimum of ceremonial distractions, allowing the two leaders to focus on the issues dividing their respective nations.

Make no mistake, this meeting of the uncrowned emperors of East and West is serious business. The world’s sole superpower and its up-and-coming rival are jockeying for prestige and influence around the globe. Remarkably, it is a mystery just which side asked for the meeting; neither wants to appear to be a supplicant. Yet for the moment at least it is we who are more in need of the other side’s help. Obama’s national security advisor, Tom Donilon, was in Beijing from May 26–28, laying the groundwork for the summit by speaking to Xi and the vice chairman of the Central Military Commission (roughly equivalent to the chairman of the Joint Chiefs of Staff), General Fan Chanlong. Donilon and the president are seeking Chinese cooperation to —

  1. Halt the People’s Liberation Army’s repeated hacking of US computer networks, and the theft of US intellectual property and government and industrial secrets.
  2. Persuade North Korea to cease its highly provocative behavior toward South Korea, Japan, and the US.
  3. Obtain a negotiated settlement to the Syrian civil war and the removal of the Syrian dictator Bashar al-Assad.
  4. Further tighten the sanctions regime imposed on Iran because of its nuclear program.

That the Chinese are playing us on all these fronts is patent. After temporarily halting the cyberattacks when the US government went public about them in February, the PLA’s notorious Unit 61398 resumed operations (using somewhat different techniques) in May, on the very eve of Donilon’s visit. The Chinese then agreed to hold “talks” with us about hacking! (What’s to talk about? Stop the hacking!)

On North Korea, the Chinese are supposedly putting denuclearization of the Korean peninsula above their concerns for stability there. The Chinese have described this as a “big gift” to the US. In fact, the change has been merely rhetorical. North Korea depends upon China for its economic survival. China has the power to dictate to North Korea; it refuses to do so because it fears a collapse of the North Korean regime. China’s biggest concern is that a unified, democratic Korea will bring US troops and weaponry even closer to Northeast China. Verbiage aside, it prefers to leave the North Korean thorn in America’s flesh.

China has in reality been most unhelpful to us on every big issue affecting our bilateral relations. Nor should we expect any real changes.

As for Syria and Iran, China’s role has been anything but helpful. China has important economic and military ties with Syria, and supports the continuation of the Assad regime. And although it voted for the last round of United Nations sanctions against Iran, it continues to enjoy valuable economic relations with that country (particularly in the energy field), and will never put these in jeopardy. Two months ago its foreign ministry publicly deprecated the idea of “blind” (i.e., more comprehensive) sanctions.

China has in reality been most unhelpful to us on every big issue affecting our bilateral relations. Nor should we expect any real changes as a result of this summit. China, although wary of US military power and political influence, sees itself as ascending toward its rightful place as the world’s leading state, the Middle Kingdom reborn. Its economy will eventually surpass that of the US to become the largest in the world. Its military spending has been rising dramatically, though still far below that of the US. Its self-confidence is clearly growing. A recent New York Times article (“Chinese President to Seek New Relationship With U.S. in Talks,” May 28), contained the following paragraph:

It is a given, Chinese and American analysts say, that Mr. Xi and his advisors are referring to the historical problem of what happens when an established power and a rising power confront each other. The analysts said the Chinese were well aware of the example of the Peloponnesian War, which was caused, according to the ancient Greek historian Thucydides, by the fear that a powerful Athens instilled in Sparta.

Contemplate for a moment the bizarre notion of China, an authoritarian, reactionary, and (if truth be told) semi-barbarous state, comparing itself to Periclean Athens. The true historical paradigm for the current US-China relationship is the Anglo-German rivalry in the years leading up to World War I. Fortunately, our position vis-à-vis China is somewhat more favorable than the one Britain found itself in before 1914. But we are in danger of squandering the important advantages that accrue to us. We must, first and foremost, recognize the true nature of present-day China.

The Han Chinese empire is the last great colonial empire on earth. About 40% of its national territory is non-Chinese. Tibet and Xinjiang are truly captive nations, ruled from Beijing with an iron hand, exploited and colonized by Chinese carpetbaggers. But Chinese ambitions extend far beyond the current imperium. Already eastern Siberia is being quietly converted into a Chinese colony (on this, and also Tibet and Xinjiang, see Parag Khanna, The Second World, 71–84). China’s most important long-range task is not the recovery of Taiwan, but rather the conquest and colonization of sparsely populated and resource-rich Australia. This obvious objective for an overpopulated and resource-hungry China goes unmentioned in conventional diplomatic and media circles today because it remains a distant prospect, and a frightening one. But its logic is irrefutable.

We should be cutting defense for the sake of our own economic wellbeing. Victory without war is the goal, and it can be achieved.

Without question, China’s long-range goal is to dominate the area between Hawaii and Suez. Its economic penetration of Africa and Latin America continues apace. Ideally, from the Han point of view, the later 21st century will find Europe (geographically a mere peninsula extending from the Eurasian supercontinent) and North America isolated in an otherwise Chinese-dominated world. If China can achieve this, the fate of both Europe and America will, of course, be sealed.

Like those of all past would-be world dominators, China’s ambitions are fantastic and unlikely to be realized, assuming we take the steps necessary to prevent their realization. The Obama administration has made a good first move in the global chess game with its pivot to Asia. In ten years’ time most of the US Navy will be based in the Pacific. But much more needs to be done. I am not talking about war or even an arms race. War with China is the last thing we should want. Nor should we burden ourselves economically by trying to spend China into the ground, as Ronald Reagan did with the Soviet Union. Indeed, we should be cutting defense for the sake of our own economic wellbeing. Victory without war is the goal, and it can be achieved.

The following steps would constitute a rational program to contain China and, eventually, break up the Han empire:

  1. Recognize that the Middle East is of dwindling importance and that East Asia is now the focal point of world affairs.
  2. Tighten America’s military and economic bonds with Japan, South Korea, the Philippines, Australia, Vietnam, and India with the objective of establishing a cordon sanitaire against Chinese expansionism.
  3. Apply economic pressures (naming China a currency manipulator, tariffs against dumping, etc.) designed to throw a wrench into the Chinese economic juggernaut.
  4. Initiate an active propaganda campaign designed to foster internal dissatisfaction with the Communist Party’s monopoly of political power, highlight corruption within the Party and the PLA, foster tensions between Han Chinese and other ethnicities, and encourage Muslim and other religious opposition to the atheist regime.
  5. Cyberwarfare should be reserved as an ultima ratio should the Chinese persist in their impertinent hacking.

While it would be going much too far to describe China as a giant with feet of clay, the Chinese state has its weak points. Corruption is rife and the rule of law mainly absent. The political class is inbred and largely divorced from the population. Economically, the state capitalist model that China is following, while superior to socialism, contains serious flaws and inefficiencies that would be periodically flushed out in a freer market. Environmental and other necessary regulatory regimes are in their infancy, or yet to be established, with consequences in terms of pollution, disease, and manmade disasters that dwarf anything seen in the West. Tensions between Han Chinese and the subject peoples are real, and probably growing. Centrifugal forces lie just beneath the surface of Chinese society. We should be working to bring these forces to life.

World politics in the so-called Modern Era (16th century to the present) has been marked by a series of political-economic-military struggles between the English-speaking peoples and a succession of powers seeking world domination. Spain, France, Germany, and Soviet Russia all failed in their efforts to master the world, foiled as much by the political aptitude and coalition-building of the English speakers as by the latter’s economic and military power. Until 1917 Britain bore the main weight of these struggles. In 1917 and 1941, when Germany proved too powerful for Britain to defeat, America weighed in with what proved decisive effect. In the Cold War against the USSR, America took the lead, with Britain a junior partner. Now, in the 21st century, the last in the line of would-be world dominators is reaching for global supremacy. This does not mean war is inevitable, or even likely. But a political and economic struggle is underway from which one side or the other will emerge triumphant.

What was practiced upon the Soviet Union must be practiced upon China as well. Containment combined with economic and political steps to weaken and finally break up the Han empire should be our policy in this struggle that will decide the fate of the world, probably for centuries to come. The idea that we can allow China — a corrupt, repressive, and brutal imperium, an evil empire whether we care to recognize it as such or not — to dominate the world, is unthinkable.




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Whence Comes This Evil?

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On the night of December 16, 2012, a couple boarded a bus in Delhi. There were already six men on the bus. They allegedly raped the girl, using an iron rod to torture her. She died of fatal injury in her abdomen, intestines, and genitals. A minor among the six men may have been the most brutal rapist. He allegedly inserted the iron rod into her vagina and ripped out her intestines, only 5% of which were still inside her body when she was thrown on the roadside. She died a few days later in a hospital in Singapore.

The response has been massive, nonviolent protests in most Indian cities. The protestors — men and women — blamed the government for not providing enough security to women. They asked for death sentence for rapists. The incident was widely covered in media around the world. Government was forced to provide her with top medical care. She was flown to Singapore at public expense. The case was transferred to a fast-track court. Two police commissioners were suspended for their failure to prevent this gang rape. New Year celebrations around the country were cancelled.

For some, this rape was a turning point in India. For them, India is now leading the way for the world in fighting against the violence against women. The US government posthumously awarded the 2013 “International Women of Courage Award” to the raped girl. Intellectuals praised Indians for staying non-violent during their protests. Recently Indian government promulgated a law that provides the death penalty for rapists.

Has India finally awakened?

A minor event in the scheme of things?

Honestly, I am not sure what is supremely significant about this case. Violence is an inherent part of the Indian cultural fabric. Poor people get openly beaten up by the police. Even well-off people must be obsequious when dealing with those in the government — a crime against their sense of self, a poison to their humanity and integrity.

A few months back, in Bhopal, I saw a kid being very badly beaten by a bunch of policemen right in the middle of the main square. They had circled him and were slapping him so hard that he was almost flying around from one policeman to another. Other kids had been forced to stand and watch while this was happening. People continued to walk around, enjoying their ice cream without the slightest — not the very slightest of slight — strain on their faces. Some of the kids who were forced to watch were giggling. Was a criminal, insensitive, unsocial, numb future in the making? I bet it was.

The circle of violence is far, far wider and deeper and much more irrational than people would like to think.

The sad irony about India is that even animals are scared of you — children pass on the torture they receive to those less capable of defending themselves. The circle of violence is far, far wider and deeper and much more irrational than people would like to think.

Should I blame these kids if they rape when they grow up? Or should I blame the policemen who were behind the future rapists? Or should I blame the normal people who were too numb to feel any strain? But were they themselves the product of abuses in their homes while they were growing up? Should I just blame men in general, as feminists demand? Or should I blame women, who in India are mostly responsible for bringing up children and forming their character? Or should I blame the culture — which has huge medieval, superstitious aspects — a culture that through its rationalizations and justifications and discouragement of critical thinking carries the ingredients that do not allow for a break from the cycle of violence and drudgery?

Hypocrisy and apathy

In the past I reported to legal authorities about such abuses — and once in a while still do — along with evidence. Mostly nothing happened. Instead I was made an utter fool. People laughed at me. In a very rare case when the victimizer was cornered, the abused compromised for pennies in bribes or for the satisfaction of torturing the weaker. But talking about this would be too much of a digression for now.

Anyone who has been in India knows full well that you don’t have to search for crimes. You see abuses all around you, nonstop. At the Delhi airport, in full view of everyone, conmen operating out of booths provided by the airport rip off newly arrived tourists. I once went to the head of aviation about this, pointing out that it could easily lead not only to financial troubles for the tourist but also to sexual risks for female tourists (they face many, and most go unreported). He put me on a conveyor belt of such horrendous bureaucracy that I gave up. Nonstop troubles persist for tourists from the time one’s plane comes in until one finally departs. And of course, Indians face the same, self-inflected problems. Bribery and corruption are so open that you hardly need to look for news on the TV to feel horrified. But Indians need the TV to feel horrified, in the safe confines of their houses.

About 135,000 die on Indian roads each year. If you spent a day driving around in India, you would see at least a couple of dead bodies lying on the streets or highways. As the traffic speed is rather low in India — because of the chaos that exists — immediate fatalities are rare. A lot of people could be saved. But they die of slow bleeding and trauma. People just stand and watch. Ambulances never arrive. China is well known for bad driving, but in comparison to India, it has only about one-ninth as many fatalities per vehicle.

Apathy and desperation, two characteristics that are common among the lower class elsewhere, are common even among the middle class in India. I can understand that if poor people cared or had long time-preferences, fear and anxiety would dominate their moment-to-moment lives. To exist they must stay numb. But why apathy and desperation have never left the middle class in India, as any student of sociology would expect, is a mystery to me. Is it that Hinduism or some other aspect of the local culture preempts individuals and the society from self-analysis or thinking beyond material well-being? I don’t know, but at best those becoming richer seem to be moving from apathy to debauchery, at best.

If you spent a day driving around in India, you would see at least a couple of dead bodies lying on the streets or highways.

When a crime happens in India the first reaction of most people I know is to want to keep the police out of the picture. They know that the police would rape them again (figuratively, if not literally). Every Indian whom I know, knows this. But what is surprising is that as soon as they think in terms of groups, they want police control over people to increase. And really, how could police have stopped rapes unless they converted the society into an Orwellian surveillance state? To make a real, significant change in society, people should have looked at the underpinnings. In essence, the protests did not come out of a passion to stop crime but from something else.

Who were the protestors?

I was extremely curious about these people protesting so vociferously against the rape. I have hardly ever met such individuals. Were they protesting for entertainment? Or is this something they have recently copied from the West? I do find the way they light candles on the photographs of victims a bit out of place, for India has had no such custom. Or maybe protesting is their way to feign that they care? Or maybe they watch too much TV and want to adopt Western ways of showing care, or to feel that they have arrived? Or maybe they feel so isolated socially that the crowd gives them a feeling of catharsis? Or maybe this was just another of series of hysterias that Indians are prone to suffering, now made much worse by television, which make the non-thinking gyrate at the same rhythm with increasing frequency?

Protestors have accused the alleged rapists before due process and want the minor to hang as well as the others. (According to the law he could be walking free within the next three years.) Indians don’t understand that it is only the due process that can give integrity to the legal system. One of the accused rapists has already died in an alleged suicide. No one wants to know how he actually died. Another ended up in the hospital after being beaten. If people care about justice, they should care most about those in the frontline of dealing with the law. It is exactly these alleged rapists who should get a very fair trial. What if those arrested are not really the rapists? Would the courts tell the true story behind the circumstances, given the nature of public opinion? And will we ever hear the story of why the rapists became such vicious people? Of course, one must understand that what these men did was not just sex. They had a huge amount of hatred for society bubbling inside them.

Is the issue over-feminized?

Crime is crime. Trying to show rape as a crime that one subgroup commits against another leads to faulty understanding of the issues. Nevertheless, over the years, law and social pressure have increased the age at which people can marry. Feminist movements have been vociferously behind this. No thinking has gone into the fact that premarital sex is still a major taboo in India. Prostitution is illegal. Of course, not getting sex gives men no justification for rape! But does it not create conditions for it? It would have been far better if poor Indians had been allowed to marry earlier if that is what they wanted.

India’s legal structure is weak to nonexistent. But the feminist movement has encouraged women to go out and do whatever they want, without letting anyone add a word of caution that even when the pedestrian light is green it is worth taking a glance on both sides. Some Indian laws unfairly favour women, leading these laws to be hugely misused. New laws would of course be used for political purposes, and sane men would be scared of interaction with women. Would the death penalty stop rape? Only a naïf can believe that the thought of capital punishment acts as an adequate restraint on prospective rapists, their blood full of sex hormones.

In the blame game in which men as a subgroup are isolated as standalone culprits, no one dares bring up the fact that in India women have the responsibility for raising children. In today’s world, suggesting to women that they might be abusing children at home or forming a wrong character in them is no longer allowed.

Of course, rapists should get severe punishment. But if Indians are serious about meaningfully improving their society, they need to start some serious introspection.




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Stealth Stars

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The Stealth Star motto is, “Safety does not exist, but courage does.” While I sit in my space pod, about to land on what the Concord of Trading Star Systems has designated as Rediscovered Unknown Planet Omega 12774, I repeat that motto to myself, because I cannot afford to feel any fear right now. Fear is a nervous reaction that gives energy to the muscles at the expense of taking energy from the thinking centers in the brain — and I will need my mind to be at its sharpest when I face these potential hostiles. The planetary scan of Omega 12774 showed signs of electronic technology, but no star ships or long-range communications. It is possible that the humans of this planet might have that unpleasantness which every Stealth Star loathes: a mix of technological progress and political retrogression which is the precondition for hostile soldiers capable of taking on our star technology.

The space pod penetrates the atmosphere; I jerk back in my seat and then slam forward as I crash into the ground below. I open my pod and see a vast stretch of stagnant brown fields around me. The brown extends outward in all directions, like a sea of mud. A few faded, half-alive trees sprout in the distant horizon, their frail green branches sagging down like the skin of an old woman. I am several miles from the perimeter of what showed up as the largest collection of life-forms on the planetary scan. My hope is that it is the capital city; I also hope that the leaders of this society’s social cooperation (assuming that the natives cooperate, and have leaders) will reveal themselves as kind, benevolent, freedom-loving organizers who will welcome the opportunity to trade with other planets — there’s nothing wrong with being naïve enough to wish for good luck, is there? I set my visual scanner on long range and begin to run toward the city on my technologically enhanced legs.

Fear is a nervous reaction that gives energy to the muscles at the expense of taking it from the thinking centers in the brain — and I will need my mind to be at its sharpest when I face these potential hostiles.

I come to the top of a hill and the city is spread out before me. It is not what I had expected. The planetary scan detected sophisticated electronic technology, but this city looks like something out of a picture book of Origin Earth’s dark ages. The wooden buildings have thatched yellow straw roofs, a few squat structures are built from red stone bricks, and various open squares dot the streets. The city blocks are broken up by narrow unpaved dirt roads laid at random. Humans, hundreds of them, bustle about in the streets, and a crowd of people fills some sort of marketplace beneath rainbow-colored tents on the western side of the city — but the goods they are trading appear to be live animals, mainly chickens, pigs and goats, as well as bags of corn and wheat, and the most valuable goods up for sale are small iron tools or jewelry made of glass and crystal. The people are dressed in clothes that are little more than rags. The colors are dull shades ranging from midnight black to smoke gray. These people are emaciated, dirty and haggard-looking, their skin stretched tight across hungry bones and their eyes sunken into their faces. I see no energy, no excitement, no smiles. Nowhere do I see anything resembling electronic technology — but wait!

At the far side of the city, on the other side of a series of building-covered hills, I can see a massive stone castle. Its shadow cuts across the city like a knife. I see glittering red lights emanating from the small windows in the castle’s upper towers — bright lights, unmistakably electric lights. I run a visual scan and see that the castle is full of technology; there are laser guns mounted on turrets around the castle’s outer walls, the scan detects the electromagnetic outline of super-computers, and small nuclear generators are buried in the castle’s lower levels. So! This civilization is ruled by someone who takes the technology for himself and gives nothing to his people. I sense that a conflict between the Stealth Stars and the ruling power inside that castle is inevitable.

I use an optical mirage device to make my star armor look like peasant’s rags, and I descend into the city. The computer in my brain quickly decodes the language of these people, which is derived from the Post-English that was spoken in this part of the galaxy before the Apocalypse. I walk into a building with a sign above the door proclaiming “Bet’s Inn and Tavern.” Inside I am greeted by an attractive young woman with long blonde hair that shimmers as though it were made of gold; her healthy glow has not been dampened by the dirt in her hair or her missing teeth or the numerous stitches desperately holding together her moon-gray dress.

“Hello, good sir. A traveler, are we? Yes? Well, if you’ve got the gems to pay for it then there ain’t no better place than Bet Matil’s Inn and Tavern. A bed and a good meal will be three blue gems, yes? And you, well, have the gems? Good, good!”

“I am from distant lands,” I say to this woman, presumably Bet, “and I would like to talk to you, to educate myself. What is the name of this city, and this land? And who lives in that castle? I might like to visit there and meet the leaders of your city.”

Three men sitting at a nearby table playing some form of dice game hear me, and the men laugh heartily.

“Don’t no one gets to go into that castle, what?” one of the men says with a grin. He has a long copper-red beard and a face so round and red that it reminds me of an apple. “Nobody,” he continues. “That castle is the home of our beloved leader, Prince Regisoph. That’s the Prince’s Tower, Tower Regisoph. This city is Rej, and our lands and farms, as far as the eye can see, that’s Rej too. Where do you come from, good sir, the fairy tale lands across the ocean, not to know this? One of the fair folk, are you?”

“Rej” appears to mean “power,” and “Regisoph” “wise and powerful.”

“I’m a human being, same as you,” I reply in a friendly tone. “So, this Regisoph is a Prince? And his father is King, I presume?”

“Father?” one of the men says, and they explode in raucous, wheezing laughter. This man who just spoke smiles at me with mirth; his teeth are yellow and rotten. “Prince Regisoph has been Prince for hundreds of years. It’s been so long that nobody around here can remember the time before he ruled. Ah, legend says that those were dark times, before the Prince’s enlightened rule. Bah! Let’s not dwell on the horrors of legends. You rolled a four so you owe me four, Jerem!”

“He has ruled for centuries? Then the Prince is not human?” I ask. No known alien species inhabits this part of the galaxy. And anti-aging technology capable of extending human life beyond 150 years is virtually impossible for people at the level of technology detected by my scan of the castle.

“Oh, he’s human, all right, although no one really knows for sure since he never comes out of the Tower and the public isn’t allowed to go inside his Tower. We haven’t seen him for over a hundred years,” Bet says. “But everyone knows that he’s human.”

“The Prince remains hidden,” I muse. “And what makes him such a great man, in your opinion? What is it about his rule that is so enlightened?”

“The Prince’s greatness?” Bet replies. There is a strange intensity in her pale grass-green eyes, a look of glowing exuberance, and I suddenly realize to my horror that she is proud to be among those ruled by her Prince. “Why, he’s made everyone equal! We all get the same number of gems at the start of each month, as our allowance, regardless of how much work we did, so that the farmers up north can’t hog all the gems just because they produce so much and we artisans and shopkeepers and innkeepers of the south aren’t so lucky. We get our gems, and we trade them during the month, and then at the end of the month they go away and we get a clean slate and a new set of gems. Some of the ones up north grow mighty rich in the later weeks, but it all goes away — pow! — it all goes up in smoke at the end of the month. It isn’t fair for the north to be rich while the south lives in poverty. Why shouldn’t we take their gems away from the northerners, at least after they’ve had an entire month to play with them? They say that equality is a great thing, so why shouldn’t the north suffer along with us southerners? Why shouldn’t I share my pain with you and with everyone else? We are all given enough gems to buy the things we need to survive — and really, do we need any more than that? The Prince’s way is better than the unrestrained greed of our ancestors, or so the legends say. And if you can’t trust the Prince and his wise men’s legends then who can you trust?”

The space pod penetrates the atmosphere; I jerk back in my seat and then slam forward as I crash into the ground below.

“Um, yes, the Prince certainly seems to be wise,” I reply in a voice that hides my revulsion. So, the land of Rej is ruled by a technology-hoarding tyrant named Prince Regisoph who has enacted a scheme of socialism to keep his peasants from acquiring enough wealth and technological progress to challenge his rule. The people live in misery and poverty and filth, while the Prince (and his soldiers, I’m sure) have all the benefits of modern medicine, entertainment, and the other wonders of electronics — and the Prince’s propaganda has his people believing in the justice and virtue of being ruled. These people seem like good-natured, hearty folk, who could prosper and trade with the rest of the galaxy if they were allowed to know the miracles of capitalism and free trade. But for the people to be freed I must defeat Prince Regisoph. Can one single Stealth Star agent do it? To be a Stealth Star you really do need to have a death wish.

Bet tugs on my arm. “Come, good sir, I’ll show you to your room. And what did you say your name was, by the way?”

“Anth Benj,” I reply, translating my name into its rough equivalent in the Rejian language.

“Anth,” she says, as if to see how my name feels upon her lips. She guides me up a narrow, creaking wooden staircase and into a small room with a straw mat for a bed on one side across from an open window. A warm, soothing wind is blowing in from outside. The window has a view of a few wooden hovels across the street, but above it I can see a wide cloudless emerald-green sky with four white-gray moons visible. Then Bet motions for me to sit down on the bed, and I comply. She smiles at me with a strange, mysterious, purposeful look.

“I listen better than those men down below, and I can tell that you’re not keen on the Prince,” Bet says. “You might be dressed like a Rejian, but your face don’t look like us and your voice don’t sound like us. You are . . . different. I know you must be an ambassador or herald from the lands beyond the ocean, sent to parlay with our Prince. But before you go storming into the Tower, there’s something about the Prince that you should know.”

I am shocked that this woman so easily decoded my disguise. The Rejians are surprisingly clever. We can always use clever people in the Concord, and there are special jobs reserved for people who can think and analyze new situations quickly. In fact, when I look at Bet I can almost picture her cleaned and clothed in the crisp white uniform of a star pilot. But then I smell the odor of horse manure wafting in through the window and the daydream fades.

“What?” I ask.

“There is no need for you to hate the Prince, Anth Benj, because, you see, I am Prince Regisoph,” Bet says.

“I think I’m having a translation problem. Say that again?”

“That’s right. I am the Prince,” Bet says. “So please, don’t oppose me. I am willing to listen to you. Rej can reach an agreement with the lands beyond the ocean.”

“How is that possible?” I ask. Could I have been so lucky as to stumble upon the ruler here, so that I can duel her one-on-one right now?

The planetary scan detected sophisticated electronic technology, but this city looks like something out of a picture book of Origin Earth’s dark ages.

“I keep my identity a secret, but I am the ruler who sits in the Tower,” Bet says. “I rarely even enter the Tower now, but my desires are the law in Rej. So stay in my city for a while and see what it has to offer, and look at our good things and what works before you condemn me for my problems and my flaws. Quick to judge is quick to die, as the wise men say. Don’t be reckless in changing everything to suit the tastes of some strangers from across the sea.”

“Well…” I say. “Then I assume that you know where I really come from?”

“Yes, of course,” she says. She heads for the door, but then looks back over her shoulder and gives me a coy smile. “You come from the fairy world beyond the ocean. I serve chicken stew for dinner at the eighth chime, so be sure to come down, Anth. I look forward to seeing you!” Bet vanishes down the stairs.

This is weird! Is Bet really the Prince, or do these people have some sort of psychological complex in which they become insane and identify with their ruler? I must learn more. I search the rooms next to mine, and in another room I find one of the men who had been playing dice downstairs, the man with the apple-red face. He sits at a table, counting his winnings from dice — a set of small gemstones, some green and some blue, and one red. He holds the red gem in his hands, a look of intense pride lighting up his eyes.

“Excuse me? May I come in?” I ask.

“Ah, the stranger!” the man says when he notices me. “My fellow traveler. I am Jerem, and yes, come in, come in, more is happier! I too am a stranger in this city, you know. I am from a northern farm, here to sell our chickens, but, ah, yes, lady luck, what? Lady luck has blessed me as much as the chickens! It seems so wrong that these gems will all be gone so soon, so soon, so soon . . .”

“Yes, it is a shame,” I agree.

“Shame, yes, but it is what we want, after all,” Jerem says. “I feel greed, yes, but it wouldn’t be fair to all the other good people for me to own too many gems and for them to have none. Wouldn’t be right.”

“Yes,” I say, continuing to observe the brainwashing effect of the Prince’s propaganda. “Speaking of which, could we talk about the Prince? I have some more questions that Bet didn’t quite answer.”

Jerem’s eyes become secretive and shifty. He coughs nervously. “The Prince? Why would you want to talk about the Prince with me? It’s not like I am the Prince in reality and I pretend to be a farmer.”

“No, of course not,” I say. Then a thought occurs to me. I do a quick visual scan of Jerem with the scanner implanted in my left eye, and my fear is confirmed: a small neuro-computer is implanted in Jerem’s brain with an internet feed broadcasting to a remote signal. I adjust my scanner to scan through the walls and sweep the entire building, and everyone here, all the Rejians, have brain jacks. But they seem oblivious to the computers in their brains, just as they seem ignorant of all the technology in the Prince’s Tower. What is going on here?

"Ah, legend says that those were dark times, before the Prince’s enlightened rule. Bah! Let’s not dwell on the horrors of legends!"

“Well, what? What? You seem like an honest chap, so I have a confession to make,” Jerem says, and my scanner detects activity in Jerem’s brain computer. “I am the Prince. Yes, I am Prince Regisoph. Best not to hide it. But don’t tell my wife, she’d be furious. Anyway, this is my city and my land and my Tower, and I’m bloody well proud of it. So don’t mess it up. That’s all I’ve got to say.”

I say goodbye to Jerem and return to my room, sit on my uncomfortable bed, and think things over. Clearly this used to be a society of sophisticated electronic technology. But their ruling class, led by someone named Prince Regisoph, took away all of the technology, barricaded themselves in the Tower, and left the people to starve in poverty. In order to ensure that the public would not revolt and storm the castle the Prince installed computers in all the peasants so that he could centrally control their thoughts and preempt any dissidence. The neural interference from the Prince’s brain computers manifests itself as the peasants’ insane belief that they are really in control of the society, that they are the Prince. The rulers in that Tower are absolutely, incorrigibly evil. I cannot tolerate the thought. I must set the people free.

You don’t become a Stealth Star unless you have a love of freedom that burns like a wildfire, unflinching bravery in the face of the unknown, and a mastery of modern star technology — and also (I am afraid to admit) a tendency toward performing acts that border on suicide. Because when the Stealth Star Corps sends you out as the spy-scout on a mission to see what has become of the humans on a rediscovered planet that hasn’t been heard from since the Interstellar Apocalypse, 10,000 years ago . . . you might never return.

We Stealth Star scouts explore to see if newly rediscovered planets have evolved economic and social freedom or decayed into tyranny and dictatorship, and to evaluate whether the newly explored planets might become trading partners and join the Concord. Some of the time the humans are peaceful and happily sign up with the Concord — but most of the rediscovered planets are primitive and barbaric. I lost my best friend Charl when he was dropped onto a planet that turned out to be the home of a society of cannibalistic cyborgs. I also led the team of Stealth Star soldiers who wiped that planet out after Charl’s final broadcast warned us that the cyborgs were developing star ships and planning to become space pirates. I am primarily a scout but I do have experience as a warrior.

Stealth Stars are spies and soldiers, but we’re not an army. We are not affiliated with any government, and we are staffed entirely by volunteer recruits. We believe that everyone has the right to freedom. The interplanetary trade associations (mainly the Concord but also some of the smaller groups) donate to us happily enough, because we keep space clear of the space pirates and planetary dictators who like to blockade trade routes. But our real motive is not economic; it is political. We aim to spread the ideals of freedom to every planet so that everyone can enjoy the reality-given rights of life, liberty, and property. Our critics within the Concord call us crusaders, but we believe that every war we fight is a war of self-defense. We are like soldiers hired by oppressed peoples to free them from dictatorship, except that we work on credit and take payment once they join the Concord. No, they didn’t actually tell us that they wanted us to rescue them — but how could they while their voices were silenced by their rulers? We give to the peoples of the outer planets precisely what they want, what they would choose if they were free to make choices.

I send a long-range communication to the local Stealth Star mother ship and wait for night to fall. Soon the city of Rej is enshrouded in darkness and illuminated only by the four pale moons and a nearby constellation of stars in the night sky. I set my star armor in stealth mode and sneak up to the outer wall of the Prince’s Tower. With the protection of my stealth mode and its cloaking device the castle’s cameras cannot detect me as I scale the outer walls. I use a laser-razor to cut a hole in the stone wall and slide myself through.

The inside of the Tower is as amazing and resplendent as the city below is ugly and base. The place is a spider’s web of interconnecting rooms and hallways, and each room is filled with banks of super-computers from floor to ceiling which blink with constantly changing red and blue lights. The rooms buzz and crackle with electrical energy. Floating guard robots hover up and down the halls with laser rifles at the ready, but the guards cannot see through my stealth cloak and they float past me, oblivious. I see no humans anywhere in these rooms. I scan the area and detect the largest source of electromagnetic energy, which I assume is the central control station where the leaders will be. It is at the top of the highest tower.

For the people to be freed I must defeat Prince Regisoph. Can one single Stealth Star agent do it?

I snake my way up the various stairs and ramps that riddle this Tower, and eventually I reach a set of double doors. Their gold lettering proclaims “Prince Regisoph.” My scan reveals that the door is made of solid plastic-steel laced with synthetic diamond — difficult to make and impossible to cut. Clearly the Prince does not want to be interrupted by unexpected company. It is a shame for him that Stealth Star technology is up to this challenge and I am about to ruin his day.

I clamp an antimatter mine to the double doors and retreat around the corner of the nearest hallway. The mine goes off; the physical matter in the doors is destroyed by the antimatter and implodes into nothingness. I run down the hall, exit stealth mode and enter attack mode, and draw a laser gun in each hand. I am about to face the worst military power that the Prince has to offer. If I die, my death will be worthwhile. I switch on my attack scope and activate the cameras in the back of my head so I can see in three hundred and sixty degrees. My body armor can withstand most armor-piercing rounds and my lungs have implants to filter most poisonous gasses, but there is no telling what deviltry the Prince may have waiting. I run into the middle of the room, my heart racing and my nervous system at its peak, ready to fight and willing to die . . .

There is no one in here.

“Hello?” I ask.

“Hello,” a strange, hollow, mechanical voice answers.

I look around and see that the word “Hello” is lit up on a large computer monitor on the far side of the room. A huge bank of super-computers fills the other side of the room — the electromagnetic activity I picked up. But my scanner detects no human beings. I am alone.

“Who are you?” I ask.

“I am the Project Prince Regisoph computer interface operating system. Please state your identity, user.”

This society was able to achieve what we of the Concord, even with all our scientific marvels, could not: artificial intelligence. “So, you are Prince Regisoph!”

“Negative,” the computer replies. “User, are you an integrated user with a damaged integration device? Please state yes or no.”

“Integrated? What do you mean?”

“Invalid response. Background presentation loading. Please wait.”

This computer is not talking as if it could think. It is speaking like a mindless automaton. What in the Universe is going on here?

Suddenly the screen is lit by the image of an old man dressed in fancy green robes. “Greetings, people of the future,” the image says.

His robe is various shades of deep green, and he wears a spiked crown glittering with accents of diamonds and gold. He has a triumphant, fanatical gleam in his little brown eyes, almost like a young man recently converted to a new religion, but his face is aged with the wrinkles of years of thankless toil. “I am Grego, Prime Chancellor of Rej — or, at least, up until now I was, as soon there will no longer be any need for me. It is to be hoped that nothing has gone wrong and we have created the utopia we wished for. But to meet any problem that may arise, we are encoding this message explaining Project Regisoph, so that repairs can be made by people who understand the plan.”

“What plan?” I ask. But of course the recording of Grego cannot hear me.

“In order to create a truly democratic society we must have a system that counts the votes of the public’s desires and enacts the will of the people into law. Our politicians have become hopelessly corrupt and inefficient, so we are automating the process of politics. As an infant, each human will be fitted with a mental interface connection. The interface will examine the person’s desires and count them as one vote. The Tower computer will tabulate all votes from the integrated brains of the voters, and the robot drones will then act out and enforce whatever is the political desire of the majority. If the people want capitalism, then there will be capitalism; if they want socialism, then the Tower will provide socialism. If the people want all the technological advances that we have discovered then technology will be distributed; but if they grow weary of technology and long for a simpler, more natural era, then technology will be taken away from them.

We give to the peoples of the outer planets precisely what they want, what they would choose if they were free to make choices.

“The system has no limits and will do whatever the public wants it to do. We leave it to the people themselves to decide the substance of the ideal society. We today are merely giving them the procedural form of that ideal. For all our faults, at least we will know that the people will get what they desire; the world of tomorrow will be what everyone wants.”

This is ghastly. Bet and Jerem and all the others really are Prince Regisoph — but it now seems apparent that if everyone is the ruler then everyone is the slave. Democracy is a Concord ideal, but only a republican democracy in which the rights of individuals are held sacred and inviolate against the will of the majority. The Rejian people want their stone-age socialism, so they get it, but what they want is bad for them. I laugh for a minute, realizing the irony: the socialist dissidents within the Concord often complain that they know what’s best for the planetary citizens and that therefore the socialists should make everyone else’s economic choices for them — yet here I am thinking with absolute certainty that I know what is best for the Rejians and I should make the choice of capitalism for all of them. Still, irony aside, that is what I believe — isn’t it? I had thought that I wanted to kill Prince Regisoph. But Prince Regisoph is Bet Matil. I want to save her, not kill her. So what do I really want to do?

“Computer, deactivate. Terminate Project Regisoph.” It’s still my job as a Stealth Star to bring freedom to the planet. This is worth a shot.

“Negative. Project Regisoph can be terminated only by a majority vote of the integrated users. User, you have been identified as a threat. Activating protection procedures.”

My calm is immediately replaced by panic: the walls slide open and swarms of guard robots rocket into the room. I drop attack mode and return to stealth. The robots lose me on their scanners and can’t detect me. They sweep across the room and go right past me. I consider shooting a missile into the Regisoph super-computer control center, but I hesitate . . . there are probably backups throughout the Tower, and my sensors detect self-destruct nuclear mines hidden in the command center that, once activated, might destroy the entire city, or continent.

But what really stops me is this: if the people want to be ruled by Prince Regisoph, if that is actually what the majority of Rejians desire, then I could raze the Prince’s Tower to rubble and they would simply rise up and build another Tower in its place. Maybe you can’t force people to be free when they want to be slaves, any more than you can force a people to be ruled when they insist upon freedom and give their lives to win it. The battle for the freedom of this people will be won out there, out in the streets and in the minds and hearts of individual men and women, not here in the Prince’s Tower. Prince Regisoph will die once the Stealth Stars convince the people down in that city that capitalist freedom, ownership of property, and free trade are superior to their socialist nightmare. It’s my new job to educate the Rejians about the happiness that comes from trade and technology. To try, anyway. I had thought that when the Stealth Stars liberate a planet, we give the people precisely what they want — but now, in retrospect, I realize that the truth may be a bit more complicated.




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R.O.C. On!

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We were nearly out of money.

Taiwan, a small country, controls its foreign exchange. Not for nefarious purposes (think Venezuela and Zimbabwe), but because — when it comes to monetary policy — size has consequences. Though fiscally and economically sound, Taiwan is vulnerable to currency manipulation from a multitude of sources.

Our guidebooks recommended changing money at the airport kiosks. But George, our Taiwanese contact in Taipei, told us not to fret — ATMs were everywhere and banks exchanged currency at will without a commission. Since we’d arrived at midnight, were thoroughly jet-lagged, and still faced an hour’s ride into Taipei, we followed George’s advice.

The following day, with George translating and easing the procedure at his bank, we changed only a portion of our funds — mostly because of my innate conservatism and the ease of the transaction. However, we weren’t run-of-the-mill tourists or business visitors to Formosa, as the Taiwanese still proudly, and often, refer to their country.

Tina, my wife, and I were planning to bicycle Taiwan’s perimeter — about 850 miles — eating at street stalls and night markets, and sleeping in modest lodgings such as B&Bs. But what we hadn’t foreseen caught up with us. Taiwan’s banks stick to the big cities and, while ATMs are everywhere, they rejected our US cards like an organ transplant gone bad. Moreover, only big hotels and fancy restaurants accepted credit cards.

Riding through Neipu, two-thirds through the trip, I spotted a bank and yelled to Tina to pull over. We carved out a parking space between the road and the wall-to-wall buildings, among the throng of cars, scooters, bikes, pedestrians, and dogs milling about or settled. It was the kind of place that in the US usually contains official parking spaces, a sidewalk, driveways, and front set-backs in the form of lawns, patios, porches, or business foyers, but in Taiwan is a chaotic jumble of all of the above, along a narrow strip — with the addition of street vendors and wall-less, brick-and-mortar businesses fully exposed to the hubbub. It was 3:30 in the afternoon, the bank closed at 4:00, and we were still 20 kilometers from Pingtung, our day’s destination. So we had plenty of time.

The bank’s door guard welcomed me and asked my business.

Now, Mandarin is so radically different from the Indo-European languages that the Taiwanese compensate for the difficulties with acutely tuned inferential antennae and artfully adept sign language. It’s not that Chinese has a difficult grammar (like German); it has none that seems like grammar to us. Simply string words together and you can make sense. It’s the tones, four in most instances, that to someone who is tone-deaf are impossible. And the pronunciation of some of the consonants. The differences betweent’s and d’s; b’s and p’s; ch’s, zh’s, q’s, s’s, ts’s, x’s,and jh’s, plus others — in Roman pronunciation transcriptions — are so subtle that it was like trying to speak French with a mouthful of pebbles.

On the island, Chinese culture continued uninterruptedly — more or less — while on the mainland, much of it was brutally obliterated by Mao’s insistence on reconfiguring human nature.

If I want to ask a question in an unfamiliar language when traveling abroad, I’ll enunciate the key word with a rising tone to indicate a question. That’s nearly impossible in China. Once the tone of a word is fiddled with, the meaning changes unpredictably. In China, one must use a complete phrase so that, if one’s tone isn’t just right, the listener can infer the gist of one’s query from its context.

I hesitate to try to explain written Chinese with its 8,000 or so characters. Memorizing the key characters in important words such as “men” and “women” — for going #1 and #2 — or “hotel” on a sign — for going #3 — was a distraction that we turned into a game. It’s a very unpretentious language, almost prosaic, with — mostly — descriptions instead of actual names. “China” in Chinese literally means “Middle Country”, a reference to its central location between India and Japan, and Russia and the Malay Archipelago. The character for “middle” is a rectangle with a vertical line through its middle. Months don’t have “names”; their “names” are “First Month”, “Second Month”, etc.

So I asked George how my name, Bob Miller, would be rendered in script. “Bob”becomes bo, or ‘knowledgeable’; “Mi”is ‘rice’; and “ller” becomes lo, meaning ‘joy’ — a propitious rendering, according to my friends.

Everyone in the bank turned to look at the westerner with the biking helmet. In response to the door guard’s inquiry, I pulled out a US $100 bill to indicate I wanted to change currency. The entire staff rolled their eyes and threw up their arms — not in an off-putting manner, but rather in an inclusive “we’re-all-going-to-share-a-root-canal-at-closing-time-and-we’re-going-to-pull-together-and-actually-have-fun.”

A teller ushered me to a seat, placed a cup of tea in my hands, and indicated that I should wait. Two minutes later the manager brought me a snack and tried to engage me. Placing my fists close to each other, I rotated them to duplicate the motion of pedaling a bike, uttered “Taiwan”, and signed an oval in the air to say that I was biking around Taiwan. The staff erupted in smiles, hung haos(very good), and thumbs up. More tea, more snacks, more encouraging glances, more waiting.

Twenty minutes later, only the foreign exchange teller was engaged — with what looked like an Indonesian lady. When she stood up, he motioned me over. I handed him my passport and counted out $400 US in $50 and $100 bills. He scrutinized the passport, including the tourist visa stamped in the back, and then the US money, first separating the denominations, then collating the bills. He rejected three $50 bills: two that were well-worn and one that was brand new, saying in English, “too old.” So I gave him one more $100 bill, which he accepted. He counted the money — twice — wrote down the amount, and asked for my confirmation. Then he stood up and approached the vault.

I got the impression that this bank branch had little experience with US money and had never seen a US $50 bill. While waiting for his return, various tellers brought more tea, more snacks, and more friendly attempts to communicate. One snack consisted of dry, pickled prunes, the pits of which I needed to spit out. The attractive teller who’d offered them to me was well aware that she might be pushing the limits of a westerner’s tastes, and so was expectantly attentive to my reaction. She pulled a handkerchief from her purse, put it on her palm and indicated that I should spit the pit onto it. Apprehensive that spitting into her hand might cross some sort of intimacy line, I hesitated. She understood perfectly well and reassured me by repeating “is OK, OK.”

The foreign exchange teller’s cubicle had a small poster touting remittances to Vietnam and Indonesia, thus serving two populations — along with Filipinos — that regularly seek work in Taiwan. Another laminated, placemat-sized poster portrayed various denominations of Renmimbi, the currency of the mainland (People’s Republic of China, or PRC; as opposed to ROC, Republic of China, or Taiwan), with highlights and closeups showcasing what to look for in counterfeit Yuan (Renmimbi notes).

In 2008 President Ma Ying-jeou (reelected in 2012) negotiated a liberalized trade deal with the PRC that included an easing of travel restrictions for mainlanders, the first time since the Communist victory that they would be allowed to travel to Taiwan. The island was seeking an economic boost, while China was hoping that contact between travelers and locals would help lead to eventual political unification with Taiwan, which Beijing considers a renegade province. Mainlanders refer to Taiwan as “Treasure Island”: for its fabled beauty (as did the Portuguese: Formosa means “beautiful”); its trove of historical treasures brought over by Chiang Kai-shek in 1949; its democracy; and, most importantly, its shopping.

Anti-Communist demonstrations, often spear-headed by the Falun Gong, nearly always greet the mainlander tour buses at their scheduled stops.

The demand is overwhelming. If every mainlander who wanted to visit Taiwan were allowed in, the island would sink. So the numbers are strictly controlled and relegated to organized tour groups. In many respects Taiwan is considered more Chinese than China. On the island, Chinese culture continued uninterruptedly — more or less — while on the mainland, much of it was brutally obliterated by Mao’s insistence on reconfiguring human nature.

And there are other restrictions, lately further liberalized in 2011 (such as allowing a small number of mainlanders to travel by themselves). Though the mainlanders are indeed an economic boost, the social disruption they cause would be catastrophic, were they given free range. We were advised to visit popular tourist sites early in the morning, before mainlanders’ tour buses arrived. Taiwanese scuttlebutt is that they’re uncouth slobs who litter, spit and urinate willy-nilly; foul the bathrooms; are rude and unwilling to queue; and dress inappropriately — either like hillbillies or like ne’er-do-wells. So they’re limited to two-week visits. Roadside rest stops for their tour buses have temporary, purpose-placed bathrooms (Taiwanese bathrooms, both public and private, are spotless). Anti-Communist demonstrations, often spear-headed by the Falun Gong (a religious sect outlawed on the mainland), nearly always greet the tour buses at their scheduled stops. Most Taiwanese doubt the efficacy of the placard exhibits and displays in making conversions; but the mainlanders never fail to gaze in wonder at the mere fact that such demonstrations occur at all.

At 4 PM the door guard closed the bank. No one got up to leave. My teller returned with my passport, two photocopies of it, and a form to fill out. He was stumped by my name. In Chinese, the first name is the family name; the following two, hyphenated, names are given names. So I wrote out “Chiang Kai-shek” and “Miller Robert Howard” and drew arrows between the equivalents. He smiled, and then asked for my phone number by pointing to his cell phone. I responded bushi dianhua (no phone).

The whole staff turned to look at me, amazed and incredulous. Taiwan is the Silicon Valley of Asia. The Taiwanese can no more conceive of an individual without a cell phone than they can imagine a meal without rice. My teller grimaced and looked lost. I started to sense that the lack of a phone could be a dealbreaker. Then I remembered that Tina had one, loaned to us by Jorie, George’s wife. It had proved useless, however, because all the displays were in Chinese script. I motioned the teller to wait and went to fetch Tina outside where she’d been babysitting the bikes.

Her wait hadn’t been boring. The next-door juice stand had refused payment for the smoothie she’d ordered. A nearby resident had let his house-broken pet piglet out for a pee, after which the pig nuzzled the man’s ankle with overwhelming affection, which the man returned with scratches to its head as they both ambled back inside. Passers-by stopped to ask her about us and our trip. Tina dug out the cell phone, brought it inside, and handed it to the teller, who quickly retrieved its number. Another teller brought her a cup of tea and snacks while the door guard indicated that he’d keep an eye on the bikes.

Passing the snake restaurant, where delicacies included snake semen and blood dishes, Tina and I demurred.

My teller then began writing the serial numbers from each of the US bills on the form. When he was finished, he asked me to check his work and initial it. I did, and he wrote down the exchange rate for me: NT$28.60=$1.00 US (later confirmed independently). My 2011 Lonely Planet guidebook reported an exchange rate of NT$32.20 to the US dollar and stated that rates were very stable, because of Taiwan’s fiscal probity. Nonetheless, this was either an 11% devaluation of the US dollar or an equivalent appreciation of the Taiwan dollar, in one year. Guess which one.

He went back to the vault and came back quickly with my New Taiwan Dollars (NT$), placed them in a bill counter, and then hand counted them twice. Finally, he wrote their serial numbers on the form and placed the wad in front of me without counting it, along with a copy of the completed form. He looked at me, awaiting my counter-count of the NT$s. It was 4:30 PM.

I picked up the wad, waved my other palm in front of me, and said in English, “I trust you.” The whole staff broke out laughing; my teller smiled — broadly. The reasons for the laughter were both ironic and post-ironic.

The Taiwanese are honest to a degree that beggars credulity. Bikes are parked outside without locks; street vendors leave their stalls out overnight, fully stocked, with only a blue tarp to keep rain off. We saw two separate instances of million (US) dollar jewelry displayed in regular glass cases without added security or guards; one instance of a lost Malaysian’s wallet full of cash returned whole; and two instances of returned tips, one from a woman who was both cook and waitress. She was so proud of her dish and our appreciation of it that she insistently pressed the gratuity back into my hands. In Beipu, Tina got into a gesture argument with a street vendor, which soon drew a crowd of adjacent vendors. Apparently, she’d inadvertently paid too much for her purchase and the vendor was attempting to return her overpayment. Tina adamantly refused. The vendor won. To top it off, we saw no beggars or homeless people; no graffiti or evidence of vandalism; and we were never warned away from any neighborhood, anywhere on the island.

After 20 days of uniformly guileless and transparent interactions and transactions, I instinctively trusted the teller. The irony is that his superiors took a formalprecautionary approach — doubtless necessary to the banking business — that required an assumption of no trust. My teller had to perform tasks associated with my transaction that — other than running a grease pen across a bill — we usually find unnecessary in the US. I understood why they laughed.

It was nearly 4:45 PM when we mounted our bikes and headed for Pingtung. The bank’s staff wrapped things up, gathered at the door to wish us a good trip, waved us goodbye, and headed home.

Taiwhat?!

The Taiwan Tourism Board’s ad in The Economist had caught my eye because ittouted the island’s biking opportunities. Biking in Taiwan? That overcrowded and industrial corner of Asia that not long ago inherited Japan’s post-war reputation for mass-producing cheap and tacky stuff? I read on: “gorgeous scenery . . . dense forests . . . 22 National Parks & Scenic Areas . . . hundreds of kilometers of bike trails . . . more than 500 species of birds . . . a food-lover’s paradise . . .” Further research revealed that the heaviest population density is concentrated along the flat plains of the west coast, with the rest of the country resembling Vancouver Island, but with even taller peaks.

As to biking, with Taiwan manufacturing the world’s share of decent-end bicycles — Giant, Merida, Surly, Schwinn, Cannondale, et alia — a biking craze had grabbed the country about seven years ago and never let go. In cities, bike rental and loaner kiosks are ubiquitous. Nearly every road hosts a bike lane, and politicians run on campaigns to build even more bike paths. Some sections of the highway along the precipitous east coast offer more bike paths than car lanes. On days off, entire families from two-year-olds to grannies in coolie hats, take to their bikes. Police stations provide bikers with air, water, tools, flat-repair kits, and free camping (an indication that Taiwan is as crime-free as it gets). There are even plans to build a dedicated, circum-Taiwan bike trail.

I’d always wanted to visit Asia, where the real 99% live. However, Japan is too expensive, mainland China is a health hazard, the Philippines are crime-ridden, and Indochina is too third world. Taiwan, fully first world yet affordable, seemed perfect, especially for the sort of adventure tourism my wife and I have become addicted to: crossing or circling a country by human power alone, either biking, walking or paddling a boat. These methods provide for an intensive immersion into the country, people, and culture. Still, communication in a strange, tonal language with an ideographic written form seemed an insuperable obstacle. Until I remembered George Yen.

Our acquaintance replied that anyone could camp out anywhere and wouldn’t be troubled. Hard to imagine the “Don’t Tread on Me” bumper sticker resonating in Taiwan.

George, one of my dormmates in college, was Taiwanese. Though he’d only been an acquaintance and at that, 45 years ago, I decided to look him up in a not-so-old alumni directory. There he was with a Taipei address and a “.tw” email postfix. I wrote him hoping he remembered me, and asked for his thoughts on biking around Taiwan.

Not only did he answer that, yes, he remembered me, but that he was an avid biker, would put us up, lend us a cellphone for on-the-spot translation, and even ride a few days with us to ease our transition into the Taiwanese milieu.

In the 45 years since I’d seen him last, George had done well. He is President of Toastmasters International — what he calls his real passion — and has done the “Taiwanese Big Four”: climbed Mt. Yushan, at 12,966 ft, Taiwan’s highest peak; circled the island on a bike; swum across Sun Moon Lake; and climbed Taipei 101, the world’s third tallest building. But his day job is Chairman of the Board of Great Sequoia Corporation, an international trading company based in Taipei, and he’s managed three international joint ventures. He speaks four languages and holds an MA ininternational relationsfrom the Wharton School, along with having spent a night in a Texas jail during the ’70s (but that’s another story).

George and his wife Jorie threw out the plushest red carpet I’d ever curled my toes in. He owns the nine-story building where he lives, in one of Taipei’s nicest districts. Two stories are underground parking, accessed by a rotating car elevator. The first ground floor is his mother’s home (at 91, she still works); the second floor he rents out; the third floor is their Filipino housemaid’s digs; and he and Jorie inhabit the fifth and sixth floors (there is no fourth floor for reasons similar to Americans’ not having a thirteenth floor). The seventh floor is the family shrine and the family pug’s hangout. The eighth is a patio. Tina and I got the fifth floor.

Our first day of biking was a warmup along the Tamsui River and its tributaries’ (and distributaries’) many bike paths through Taipei to its old downtown. To rephrase the old saw, we were hippies in a head shop. Our first rest stop was next to an imposing standing stone inscribed with careful red calligraphy in a small manicured garden. When we asked its meaning, George took a Platonic approach, giving us hints about the characters in hopes we’d infer the full meaning. We could recognize the script for “two,” and he pointed out the script for “water”. While Tina and I were thinking along profound and contemplative lines, George smiled and said it was the sign for the Taipei Water District’s second water pump. We all had a good laugh.

The next stop was Taipei’s night market — not quite as bustling during the day. We were looking for lunch. Passing the snake restaurant, where delicacies included snake semen and blood dishes, Tina and I demurred, opting instead for fresh coconut water and deep-fried, ground pork dumplings at another stall.

On the way back we stopped at a large Taoist temple, the first of many temples and shrines we would pass, whose contrast with Christian churches in the west was almost too much to absorb, much less digest on a first encounter. While the baroque architectural elaboration — including gargoyles — riot of color, intricate carving and painting, main and subsidiary altars, candles and incense, icons and statues of cathedrals all had analogues — albeit radically different — it was the gestalt of the place that was striking.

There was no overarching atmosphere of awe and human insignificance, no hushed solemnity. Real or ritualized forms of abasement such as silence, a dress code, the donning or removing of head coverings or shoes, or “donations” were not required, and cameras were not prohibited. Functionaries such as monks or nuns — when present — didn’t stand out; nor did they exude an air of authority or officious sanctimoniousness so much as recede into the background like lowly maintenance staff. Individualism ruled: while some visitors performed obeisance, knelt quietly in prayer, left offerings on tables, or threw divining blocks, others conducted business, visited with acquaintances, ambled aimlessly, photographed, or just hung out. Some laughed, some sobbed, and some were inscrutable.

Taiwanese temples are not only spiritual centers; they’re community centers, marketplaces, recreation centers, parks, and museums. There are over 15,000 registered temples in Taiwan, or about one for every 1,500 people, not counting unregistered temples and roadside shrines. And the number is growing. Mosques, synagogues, and Christian churches, on the other hand, serve less than 5% of the population, with the latter catering mostly to aboriginal tribes along the east coast and up in the mountains.

Cash My-check

We headed out on our rideabout on a clear, warm day along the Tansui River bike path toward the northwest coast. George had arranged to have his cousin, Dr. Yang, a family practice M.D. and an avid biker, accompany us on the first day. Dr. Yang gave us a map of Taiwan labeled in English and Chinese script: in case we needed to ask directions, it would be legible to a local. In Tansui town we lunched on tuna hot dogs, BBQ’d squid, and sugar cane juice. An hour later George stopped at a convenience store, saying this was the last likely bathroom stop for a stretch, since we’d be heading into a more rural area. Recalling the American custom of declaring that “restrooms are for customers only,” I asked him if it was alright to use a business’s facilities without patronizing it. He answered that Taiwanese can’t conceive of refusing a bathroom to someone who needs it; in fact, we later experienced that all businesses’ bathrooms are hospitably available to anyone.

The Taiwanese are strong free marketers and proponents of private property, but they’re neither defensive nor insecure about it. In a recent poll by The Economist, people from various countries were asked whether they agreed with the statement, “Capitalism is a system that works well and should be preserved”. Only 13% of French respondents agreed, and only 52% of Americans. While 65% of mainland Chinese agreed, no separate figures for Taiwan were reported. Given the mainlanders’ responses, Taiwanese figures were doubtlessly much higher.

We saw no “No Trespassing” signs. When we were asked whether we were camping out during our ride, we answered no, because there were few campgrounds on the island, and decent lodging, in many cases, was actually cheaper than Canadian campgrounds. Our acquaintance replied — rather glibly, I thought, but echoing attitudes about bathrooms — that anyone could camp out anywhere and wouldn’t be troubled. Hard to imagine the “Don’t Tread on Me” bumper sticker resonating in Taiwan.

Our first night’s lodging was at the Chinshan Youth Activity Center, an over-the-top, towering, Fascist-architecture edifice built on splendid grounds in 1960. The accommodations were Japanese style: impeccable and tasteful, with shoji screens demarcating space, an elevated bedroom floor supplied with tatami mats, hard pillows and a comforter. Not accustomed to sleeping on the floor, Tina piled as many mats as the cupboard supplied to make us a bed.

Taiwan was ruled by the Japanese from 1895 to 1945 as an integral part of Japan. Though forcibly imposed, the occupation wasn’t brutal, except towards those who resisted — in particular the aboriginal tribes, who held out against the Imperial Army for seven years to retain their independence. The Japanese built roads and railways, modernized the bureaucracy, developed an industrial base, and treated the rest of the population as fellow citizens. Though many Taiwanese were drafted into a losing cause during WWII, today perceptions of the occupation remain mixed, with many Japanese customs surviving.

The Youth Activity Center was built by Chiang Ching-kuo (brother of Chiang Wei-kuo, and Chiang Kai-shek’s elder son) when he ran the Youth Activity Corps, long before he followed his father as president of Taiwan. Chiang pere had a yin-yang relationship with his two sons: Ching-kuo was to be taught; Wei-kuo — the adopted one — was to be loved. The Chiangs were Machiavellian, stubborn but practical, misunderstood and polarizing — while being polarized among themselves — and, ultimately, survivors all at the same time: a bit like China itself.

Until 1911, China had endured centuries of more-or-less stable, dynastic Imperial rule, the preceding 40 years or so under the Empress Dowager Cixi, a vain but cultivated woman. She was an obstinate reactionary and murderous despot who amassed a fortune in Swiss banks. History had dealt her a bad hand, which she tried to make the best of; but in the end, her malfeasance provoked insurrection.

The inspiration and intellectual catalyst for the upheaval was Sun Yat Sen, an American-educated medical doctor. Dogged, but impractically idealistic and politically naïve, Dr. Sun failed a dozen times to ignite the spark of revolution before the blaze finally caught in 1911 — ironically while he was in exile.

Back in China, he tried to guide unfolding events by founding the Nationalist Party, or Kuomintang, in 1912. But he was thwarted by remnants of the old order, provincial sectarianism, and internal factionalism. He rolled with the punches. When he sought help from abroad but was rebuffed by the democracies’ noninterventionist policies, the newly established Soviet Union came to the rescue, sending money, advisors and materiel. This aid and Sun’s declared belief in “government ownership of the means of production” fired up his leftwing base, composed of students and peasants who, with some professional help, founded the Chinese Communist Party in 1923, but alienated landlords and business, who hadn’t yet organized themselves. Enter Chiang Kai-shek.

Chiang had studied military science in Japan — which he admired — and in the Soviet Union — which he didn’t, except for its strongarm methods. After once risking his neck to save Dr. Sun’s life, he first became the doctor’s right-hand man, then leader of the Kuomintang upon Sun’s death in 1925.

Chiang covered his cards well. Not only did he manage to raise funds from opposing interests (he would acquire the nickname “Cash My-check”) — internationally from Stalin, the US, and Hitler, and internally from the moneyed classes (including China’s mafias) — but he artfully turned up the heat on the Communist frog, boiling it out of the Kuomintang in two years’ time. Afterward he embarked on a 22-year effort to annihilate the Reds, preferring to muster his resources against Mao Zedong while appeasing Japanese aggression in the belief that the Japanese would overstretch themselves in the immensity of China and finally collapse. Moreover, to Chiang the “rebels were a disease of China’s vitals, the barbarians an affliction only of the limbs.”

Disenchanted with (or perhaps not understanding) his father’s policies, Chiang Ching-kuo, left revolutionary China in 1925 to study in Moscow, a move his father did not approve, but accepted. One of his classmates there was Deng Xiaoping, the future Chinese Communist Party leader. Both would, much later, reform each of their Chinas.

Chiang Ching-kuo had the unfortunate but transformative experience of becoming a Trotskyist just before Trotsky was purged, and being in Stalin’s grasp during his father’s purge of the Chinese Communists. Nonetheless, he was allowed to marry a Russian and remained in the USSR for 12 years. Some speculate that Stalin kept him as a hostage. However, Chiang Kai-shek had absolutely no intention of stopping the war against the Communists, declaring, "I would rather have no offspring than sacrifice our nation's interests."

Meanwhile, Chiang Kai-shek sent his other son, Chiang Wei-Kuo, to study at the Munich Military Academy. There he distinguished himself and rose to the rank of lieutenant in the Wehrmacht. He commanded a Panzer unit during the Austrian Anschluss in 1938 but was recalled to China just before Hitler’s invasion of Poland.

After WWII Taiwan was returned to China. On the mainland, the balance of the civil war between the Nationalists and Communists was tilting towards the Reds. The increasingly beleaguered Nationalist government, acting like a jealous husband, treated the island like a violated woman who had “enjoyed” the experience of Japan’s occupation, by unleashing a bloody crackdown that took at least 28,000 lives and initiated 40 years of martial law known as the “White Terror.” With massive aid from the Soviet Union, Mao finally defeated Chiang Kai-shek in 1949 and drove the remnants of the Kuomintang army and anti-Communist refugees — two million in all — across the Formosa Strait to refuge in Taiwan.

Years ago, a correspondent for The Economist traveled the countryside. His starkest observation was the conspicuous absence of bugs and birds — free food obviously.

In 1978, following Chiang Kai-shek’s death in 1975, Chiang Ching-kuo assumed the presidency of the ROC at the ripe age of 68. His character having been forged in a cauldron of extremes, Ching-kuo’s wisdom had reached Confucian and Taoist proportions. In power, he undertook a series of radical changes, including lifting martial law and tolerating opposition, reforming land tenure, and — most importantly — laying the groundwork for the Taiwan Miracle with free market policies. His hand-picked successor and vice-president, Lee Teng-hui, fully democratized Taiwan during his 1988-2000 tenure.

Chiang Wei-kuo, on the other hand, commanded a tank battalion against the Japanese and Chinese Communists during WWII and the Chinese Civil War. In Taiwan, he continued to hold senior positions in the R.O.C. Armed Forces. He was promoted to Major General in 1975, and served as president of the Armed Forces University. In 1980, he became joint logistics commander in chief; then in 1986, he retired from the army, and became National Security Council secretary-General.

Christmas in Kenting

We rose at 6 AM and breakfasted on a buffet of steamed buns, scrambled eggs with corn, pork and noodle soup, salad, hard tea-boiled eggs, cabbage with extra-fatty bacon, rice gruel, green beans, and fried rice — with sesame oil, vinegar, scallions, peanuts, chili paste, and dried pork shavings for toppings (no soy sauce). The Chinese don’t care for salty food: neither salt nor soy sauce was available as a condiment; this was a bit problematic during hard, sweat-inducing exercise. Rice is consumed at every meal, though the portions are tiny. Chicken and fish are seldom boned or skinned, while meats are served with their full complement of untrimmed fat and gristle.

With its fish heads, chicken feet, whole miniature crabs, snake semen, scorpions, and countless other gag-inducing (to a westerner) ingredients, Chinese cuisine is a consequence of centuries of poverty and famine. During times of want everything remotely edible was tried and consumed. Years ago, after the People’s Republic cracked open the door to foreigners, a correspondent for The Economist traveled the countryside. His starkest observation was the conspicuous absence of bugs and birds — free food obviously. But like the trend in utilitarian clothing fashions, survival food moved upmarket, becoming — like bird’s nest soup and hundred-year-old eggs — expensive delicacies of the elite. It is all, however, impeccably prepared.

We rounded the top of the island in two days, once stopping to visit the preserved Kinkaseki forced-labor prisoner-of-war camp, where British and American servicemen mined copper for the Japanese. Before us lay the wild and precipitous east coast, home to Taiwan’s 14 aboriginal tribes, and traversed by a narrow and tunnel-studded road subject to landslides. One of them had occurred just a few days previously, closing a 15 km section. Luckily, it had not affected the railroad, which at that point ran through a long tunnel. Before leaving us, George gave instruction on using the train, and a pep talk reassuring us that we’d be all right without him. It didn’t bode well that winter’s winds and rains had returned in force and that we got lost on our first day without him.

On our fifth day we reached Taroko National Park, Taiwan’s crowning natural beauty and most visited park. In the Taroko Gorge the Liwu River has cut an extremely deep, narrow fissure through the limestone bedrock. Most of the road that traverses it has been bored through sheer rock faces like a tunnel but with one side missing, making for a spectacular ride. Picturesque shrines, waterfalls, and hanging gardens dot the wide spots and tributaries. High up in the mountains, the Taroko aboriginal tribe runs top-notch lodgings modeled on its traditional villages and serves traditional Taroko food. No way were we going to pass that up.

The ranger at the National Park information desk referred us to another ranger whose English was better. After answering our questions, she befriended us, engaging us in discussing just about everything imaginable. After an hour of conversation, she gave us gifts — DVDs, books, and souvenirs — finally hugging us and thanking us for visiting and letting her be of service to us. She was about to invite us to lunch but hesitated — I sensed — so as not to make us feel obliged.

She wasn’t unique. The rangers at Kenting National Park and the Maolin National Recreation Area were cut from the same mold, with the ranger at Maolin even bidding us goodbye with a kiss — all this from a people otherwise reputed to be shy in the display of physical affection. Can you imagine that at Yosemite?

Taiwan, as its branding logo says, had already “touched our heart.” We found somewhat wanting the otherwise misanthropic WWII US Military Attaché “Vinegar” Joe Stilwell’s description of the Chinese as “the smartest, in many ways the most civilized, in general the most charming, and certainly on the average, the best looking people in the world,” and his assistant David Barnett’s dittos to their “innate dignity and self-respect, humor, stamina, quickness of mind, and lovely women with exquisite figures.” To that list we’d add ”generosity, forbearance, patience, tolerance, hospitality, and industriousness.”

These traits are not limited to the adult population. Teenagers, sometimes edgy in the best of places, are not just polite in Taiwan; they’re warm and deferential, as well as industrious. We were mobbed by high schoolers on a field trip who wanted to practice their English. Convenience store staff — all teens and twenty-somethings — greet customers, microwave purchases, constantly scrub the floors and the use-surfaces, provide free cups, and bend over backwards to ensure a pleasant experience. In one instance they even requested a photo with us. One attendant, who’d worked at a hotel in Canada, praised his Canadian coworkers’ personalities but bemoaned their slacker work ethic.

The run down to Kenting at the southern tip of the island was relaxed, lightly populated, and brushed by Pacific winds. Near the end we were again blocked by a landslide. But this time, an alternate and very comely single-lane road, crossing over Taiwan’s central mountains through aboriginal villages, provided a welcome change of pace.

Halfway through the trip and with Christmas the following day, we took three days off to rest and see the sights in Kenting. No problem finding lodging: an enterprising B&B owner on a scooter led us to her nicely apportioned digs — only $20 per night. On Christmas day we toured the National Park with Beatriz, a 29-year-old soccer and swimming coach from Galicia. With Spanish unemployment at record levels, she’d moved to Shanghai, where wages were adequate, to work as a teacher. She was on a short holiday break, had had a bellyful of the mainland, and was hungry to speak Spanish.

Up the backside

Our strategy for the return ride up the west side of the island was to avoid the densely populated and industrial western plains by hugging the foothills of the central massif. Though the riding would be a tiring, up-and-down, rollercoaster ride across high ridges and deep river valleys, it would meander through quiet villages, medium-sized towns, tidy agricultural areas, and forest preserves — and minimize traffic.

Not that traffic was much of a problem. Stilwell’s observations applied equally to Taiwanese drivers. On the face of it, Taiwan traffic is congested and anarchic — a bicyclist’s nightmare — with vehicles sometimes going up on sidewalks or even going against the designated flow. But look deeper, and another pattern emerges. Traffic conventions are followed as rules-of-thumb, not immutable laws. In general, only speeding and turning-on-red-light violations are enforced. Accidents are usually negotiated on-the-spot, without police. Traffic is aggressive yet polite and very sensitive, giving way once you nose or step out into it. Drivers don’t honk petulantly but gently, often adding a thumbs up and a hen hao (very good). Most amazing of all was that bicyclists are not only respected but actually liked!

Weddings and funeral services — for those who can’t afford to rent a purpose-built venue — appropriate a portion of the road under elaborately tented blue tarps. In consideration of traffic, most are held on weekends. But it was the garbage collection system that really touched our hearts. Garbage trucks make their rounds in the evening, announcing their approach with a distinctive ice cream van tune. Folks hand over their bags to the collector, exchanging a few pleasantries; or he picks them up off the curb.

After restocking our wallets in Neipu we headed up into the mountains. Riding through the Maolin National Recreation Area and aboriginal preserve on a particularly long, cold, hard, rainy day we decided to rest the following day in Jia-xian. A picturesque provincial village nestled in a high river valley, Jia-xian proclaims itself the taro capital of Taiwan. Taro is a root starch one eats sautéed, fried, and even as ice cream.

We got in late, shivering and wet, and approached a group of ladies. Tina performed her where-can-we-sleep pantomime by joining her hands as if in prayer at the side of her head and angling both. One old lady motioned us to follow her. Two blocks and one turn later we arrived at a nondescript building. Tina checked out the $18 rooms but — never picking the first option — decided to look for others. The old lady who’d led us there suddenly looked disappointed and agitated. Thinking, we soon realized, that an $18 room was too expensive for us, she invited us to stay at her home — a kind offer we turned down, unable to explain.

Word soon got around of our presence at the other hotel, and we were joined for breakfast by our innkeeper’s niece, Ma Jo-shan, a local artist married to Josh, an American. They’d moved to Jia-xian to live with her elderly parents above the small grocery store they owned and ran, so her parents could share the joy of raising their grandkids. Jo invited us to tour the temples and mountaintops with her.

Mazu is my beacon, I shall not shipwreck . . .

Jia-xian’s old temple is dedicated to Mazu, Taiwan’s patroness, saint, or deity, depending on one’s outlook. While Christianity has traditionally been organized from the top down, with an authority (such as the pope) declaring who is beatified, sanctified or deified (from a non-believer’s point of view), most Eastern religions are ground-up, based on “ancestor worship,” animist traditions, and the teachings of Buddha, Lao Tzu, and Confucius (the three sages dating from about 500 BC). With no central planning, many strains of thought evolved, and are still evolving, ranging from the highly superstitious (non-empirical) to the merely respectful; and from schools of “pure tradition” to custom-built, individualized beliefs.

Eastern spiritual thought is hard to grasp from Western reports. Having first been described to the west by Christians, in often patronizing — even derogatory — terms that ignore translation difficulties and missed the depths and subtleties and the complex relationships between philosophy and religion; dogma and opinion; or worship and reverence, it’s understandable. It helps, as Lao Tzu in the Tao advised (and I paraphrase), “to have no dog in the fight.” Unlike Middle Eastern religions, which are often intolerant of one another, Eastern believers are not only tolerant of others; they also respect and even admire them, resulting in much syncretism. China has fought many wars, but they have very seldom had a religious tendency.

The garbage collection system really touched our hearts. Garbage trucks make their rounds in the evening, announcing their approach with a distinctive ice cream van tune.

Even the term “ancestor worship” is too glibly bestowed as it is not a religion but rather a practice, one that is a part of nearly all religious traditions. A better term is “ancestor veneration,” a more accurate description of what practitioners actually do, which is to cultivate kinship values such as filial piety, family loyalty, and family continuity, with rituals such as visiting graves, offering flowers and grave decorations, burning candles or incense, reciting genealogies, or simply displaying photographs in special locations. Prayer, actual worship, belief in the transformation of dead relatives into deities, or communication with them may or may not be present.

Likewise, animism is commonly misunderstood. The word literally refers to a belief thateverything — living or inanimate — has an essence: a soul, or anima, if you will; that soul need not be a spirit or ghost-like being with a potentially independent existence. Animism usually regards human beings as on a roughly equal footing with other animals, plants, natural forces and even objects — all deserving respect. Humans are considered a part of nature, not superior or separate from it. However, it is not a type of religion in itself but rather a constituent belief or virtue — analogous to polytheism, monotheism, or even filial piety — that is found in many belief systems.It is Aristotle’s elaborated version of animism that according to some scholars was appropriated by the early Christian church into the modern “soul” most of us are familiar with.

Taoism and Confucianism are often mentioned in the same breath as if they were complementary beliefs, while in reality their philosophical differences are as marked as Plato’s and Aristotle’s. Living at a time in China when Neolithic egalitarian tribes were evolving into hierarchical kingdoms, Lao Tzu and Confucius were exposed to dynamic change, the pace of which varied considerably geographically. Lao Tzu (the older of the two) came from a rural, conservative area. Confucius, on the other hand, was swept up in the new order. While Lao Tzu’s philosophy centered on preserving the old ways, Confucius embraced change. His philosophy stressed acceptance and adaptation to changing times through universal education in science and the classics. Lao Tzu advocated passivity; Confucius advocated wise action — Lao Tzu’s Ned Ludd to Confucius’ John Dewey.

Of the two, Lao Tzu was the more esoteric and metaphysical. In contrast, Confucius, fearing he might be deified after his death, ordered his disciples to burn his writings. They reluctantly did so, but then compiled what they remembered in The Analects. Today Taoism in Taiwan is a very big tent, incorporating many sages, saints, gods; beliefs, practices and ceremonies. On the other hand, Taipei’s Confucian Temple is a memorial to a man and his thought, with ceremonies held to commemorate him, not worship him or anyone.

Taiwanese Buddhism is not as ascetic, martial, or world rejecting as its Indian, Tibetan and Mongolian antecedents. It is personified by the “Happy Buddha”, a fat, smiling and goodie-laden effigy popular on vehicle dashboards and family shrines. Known as Tzu Chi or Renjian Fojiao (this-worldly) Buddhism, it encourages socially active involvement, stress reduction, and even fun. With its de-emphasis on ritual and superstition, the strain took off in the 1960’s and is now the religion of choice for middle-class urbanites and professionals. Taiwan's Buddhist population grew from 800,000 in 1983 to 4.9 million in 1995, a 600 percent increase and still growing.

As Taiwan’s patroness, Mazu is the closest thing to a pan-Taiwanese deity and gets the lioness’ share of festivals and celebrations. She is loosely lumped into the Taoist or Folk Religion pantheons, and is widely worshiped on the mainland and in Thailand, Vietnam, Malaysia, Singapore and the Chinese diaspora. It’s interesting to compare and contrast her life and legend with one of the west’s preeminent deities, Jesus Christ.

Born Lin Mo-niang in 960 in Fujian province, she died at the young age of 28 (JC at 33) — in one version — while attempting to save fishermen, including her father and brothers, from shipwreck after a typhoon (JC died attempting to save mankind from original sin — an alleged transgression by our legendary ancestors). Many stories, and later miracles, of seafaring rescues are attributed to her. Of exceptional intelligence, she was a sponge for knowledge, mastering Taoist and Buddhist texts at an early age and gaining repute as a female priest (though little is known about Jesus’ education, he sought what I would summarize as enlightenment through fasting and isolation in the desert for 40 days — a transcendent approach — in contrast to Mazu’s world-immersion education). She never claimed to be divine, as Jesus did. Nonetheless, she is — mostly — worshiped as the Goddess of the Sea and Empress of Heaven; in addition to being the patroness of childbirth, because she didn’t cry at birth (Jesus was, reputedly, virginally conceived).

Today she’s even become a political soccer ball, with the PRC getting her inscribed on UNESCO’s intangible heritage list in order to win hearts in the ROC.

Closing the circle

North of Jia-xian we passed through soursop and wax apple orchards; coconut groves, pineapple fields, and rice paddies; shrimp farms, and kowtowed papaya trees bent short to ease picking and to allow the entire grove to be covered by protective netting. A couple of days from Taipei a young biker caught up to us. Taking a break between high school and college, she was on the first day of a solo ride around the island, and was bursting at the seams with enthusiasm tinged with just a touch of apprehension. Feeding the former, we allayed the latter.

Taiwan’s school system is hard to fathom, and I still haven’t quite worked out its incentives. Generally, the better performing kids go to public schools, while the remainder attend private ones. Huh? Yes, public schools are free, but there’s a catch — they have high admission and retention standards. Private schools accept all comers, but they charge. Individual tutors — outside the formal education system — are ubiquitous, affordable or not.

Riding into Taipei, we were again joined by a lone biker, this time a fit elderly gentleman, who, spotting our kit, assumed we were circumnavigating the island. We confirmed his suspicion. To celebrate, he invited us out to dinner, an invitation that took us by surprise but that Tina immediately accepted. He was 73, just retired (opining that Asians work too much), and had just graduated his youngest from college. Free at last from parental obligations, he was ready to bike the world and wanted to plumb our experience. Kung Gung-ho, besides his good English, spoke French: he had his eyes on the Atlantic coast of France. He’d already rounded Taiwan. His dream was to do one big bike trip a year for the next five years.

Over dessert, it was my turn to pick his brain. I asked him about Taiwan’s health care system. Surprised at my interest in something so mundane, he accommodatingly switched gears.

Taiwan has a compulsory, government-run, single-payer National Health Insurance scheme established in 1995, modeled — according to Dr. Michael Chen, CFO of the NHI — on America’s Medicare system. Public and private providers coexist, and the system covers traditional Chinese medicine. At 2%, the NHI has the lowest administrative costs in the world. Private insurance is available alongside the NHI for greater freedom of choice. There is a 70% patient satisfaction rate. Nevertheless, the NHI is unsustainable and going broke.

The government is not taking in enough money to cover the services it provides, so it is borrowing money from banks. Because the revenue base is capped, the plan does not keep pace with the increase in national income, or increased costs. Premiums are regulated by politicianswho are afraid to raise premiums because of the voters. Price controls are beginning to rear their ugly heads.

Office visits are as low as $5 US. Gung-ho (literally, work together) blamed his own age group for abusing the system. Believing they’ve paid up front for a service, the elderly set out with a vengeance to get their money’s worth by visiting doctors regularly and often, and getting prescriptions they didn’t intend to use.

Gung-ho ordered a round of green tea ice cream, paid the bill, and parted with this “ancestor worship” blessing:

Around me I wear an invisible coat of many colors, fabrics and texture. It is made of friends and family, here and no longer here, far and not so far. They are all part of my coat which keeps me warm wherever I go. It is a coat that is always in style and never wears out. You are now part of my coat.

George and Jorie welcomed us back in typical Taiwanese fashion: by taking us out to a traditional banquet. Over one too many sakes, Tina and I embarrassed ourselves with superlatives: about the dinner, the trip, our hosts, the country, the people, their religious and philosophical views, the infrastructure, even EVA Airlines our carrier — you name it.

So I asked them what the overall Taiwanese tax burden was. After a little reflection, doubtlessly influenced by the conviviality, George answered, “25%”, adding a rant about the cost and red tape of doing business in New York. If true, a light bulb flashed in my head.

Reflecting back to countless times when my leftwing friends had threatened to emigrate to Canada (or France, or wherever) if such-or-such rightwing politician got elected president of the United States, I realized that my rightwing friends had no such prospective refuge. Well, I can now offer them one: Taiwan — a destination that ought to be equally attractive to my other friends as well.




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The Budget Charade

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On April 10 President Obama submitted his fiscal 2014 budget to Congress. Sixty-five days late and 2,400 pages long, it calls for $3.77 trillion in spending, with a projected deficit of $744 billion. It turns off the automatic budget cuts imposed by sequestration, and thus increases federal spending by some $160 billion over fiscal 2013. Its projections assume that over $5 trillion will be added to the national debt during the next ten years.

One never quite gets used to these figures; they boggle the mind. Only 50 years ago the federal government’s annual budget was under $100 billion (about $700 billion in today’s money), and deficits were small. Then the irresponsible policies of Lyndon Johnson (guns and butter: massive domestic spending increases and a major war fought without raising taxes) and Richard Nixon (fiat money replacing gold) began America’s descent into virtual bankruptcy. Johnson opened the floodgates of deficit spending. Nixon launched the lamentable decline of the once almighty dollar.

Deficit spending and fiat money have a symbiotic relationship; they march together on the path to fiscal doom. The policies of every succeeding president have only made these problems worse. Needless to say, Congress has been equally irresponsible, whether under Democrat or Republican leadership. It is the votes of Congress, after all, that transform bad economics into law.

Only 50 years ago the federal government’s annual budget was under $100 billion (about $700 billion in today’s money), and deficits were small.

The president’s budget proposals were preceded by those of the Senate and the House. In late March the Democrat-controlled Senate passed a budget that increases taxes by almost $1 trillion over ten years, while still adding over $5 trillion to the national debt. “The only good news is that the fiscal path the Democrats laid out in their budget resolution won’t become law,” said Senate Republican leader Mitch McConnell. That’s true, but on the other hand I can’t see the Congress passing a budget that will be much of an improvement over the Democrats’ plan. Certainly the Republican-led House provided nothing but faux leadership on the issue.

The Republicans in the House unveiled their budget a few days before the Senate acted. House Budget Committee chairman Paul Ryan produced a plan based on political impossibilities. It repeals Obamacare. It turns Medicare into a voucher program. Neither of these ideas has the slightest chance of becoming law anytime soon, and Ryan knows it. Ryan’s budget reduces the top tax rate from 35 to 25%, eliminates the alternative minimum tax, and repeals the tax increases contained in Obamacare, yet assumes that revenues will remain level. It says nothing about which loopholes it will close and which deductions it will eliminate to make the revenue projection real. In other words, it is a through-and-through political document, and not a serious plan designed to bring spending and deficits under control. Even if its fantastical proposals were enacted, it would still require ten years to bring the budget into balance.

Given the Great Recession, it is practically impossible to balance the budget in ten years’ time — the risk of sending the economy into a tailspin of 1930s proportions is just too great. But no officeholder has put forward a serious proposal to balance the budget on any timetable. The one attempt to do so, flawed though it may be, is the plan offered in 2010 by the Simpson-Bowles commission. Unfortunately, the politicians, led by the president (Obama) who created the commission, have done nothing to implement its recommendations. Simpson-Bowles allows 40 years to get to a balanced budget. Yet no politician will touch it, beyond giving it mild and passing praise. The “sacrifices” it entails are apparently too great for politicians to contemplate.

In his budget Obama proposed a change in the way in which cost-of-living increases for Social Security recipients are figured. This small, helpful step saves a few billion a year, but does not address the root problem, which is demographic. And while Obama claims he will cut $400 billion from Medicare over ten years, the savings are supposed to be found by cutting payments to providers, a sure recipe for reducing the number of doctors who will take Medicare patients. In any case, if this is all the Democrats are prepared to do on entitlement reform (and the left wing of the party is up in arms about even these small changes), then surely insolvency (for Medicare at least) is inevitable.

We have a spending problem. It’s a problem that cannot be resolved by simply raising taxes. Both the welfare and the warfare state require drastic reform, as does the tax code. And generational oppression — the old sucking up resources at the expense of the young — must be curbed. Yet where is the political will or wisdom to accomplish these necessary things? It is utterly lacking. What then does the future hold?

I predict that the idea of inflating our way out of debt will at some point take hold in political, academic, and media circles. Such a course would deal a death blow to the dollar, and leave wage earners, savers, and other responsible people even worse off than they are now. But it might get the politicians off the hook, at least temporarily. The pols will blame anyone and everyone but themselves for the inflation they have created, and retire on indexed pensions while the rest of us eat grass.

We seem set on this course already. In the 1980s Federal Reserve chairman Paul Volcker killed the inflationary dragon that had plagued the world economy for a decade and more. It has until now stayed dead; indeed, deflation is the worry of the moment. But in the wake of the Great Recession, central bankers, egged on by politicians, have been printing money like crazy. With the Federal Reserve, the Bank of Japan, the European Central Bank, and the Bank of England all engaged in “quantitative easing,” the return of the dragon looks inevitable at some point. A world awash in fiat money must suffer inflation eventually.

Where is the political will or wisdom to accomplish these necessary things? It is utterly lacking.

Central bankers believe that they will know when to turn off the printing presses. They envision themselves acting at just the right moment to prevent the outbreak of serious inflation. This seems about as likely as an investor timing the market correctly — that is, the chance of getting it right appears very small. The question of timing aside, turning off the presses is certain to cause a crash in the bond market and a rise in interest rates, with dire consequences not just for the arbitrageurs, but for the world economy. History provides little comfort for those who believe in the capacity of central bankers to prevent economic catastrophe. Volcker may have saved the world economy back in the early ’80s, but he stands almost alone. The behavior of central bankers today reminds one of Alan Greenspan’s abysmal performance during his last decade as Fed chairman. One may even be justified in comparing the central bankers of today to John Law.

A bargain (grand or otherwise) between Democrats and Republicans over the federal budget is unlikely to do more than put off the day of reckoning. The necessary, thoroughgoing reforms are so politically unpalatable that they will almost certainly never be enacted. The budget process in Washington is a charade. And so I ask myself, can I learn to like the taste of grass?




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The Clichés Come Home to Roost in Cyprus

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The clichés are frequent, abundant, and apt: have your cake and eat it too; kick the can down the road; squeeze the tube of toothpaste; see the chickens come home to roost — in that order. They are being used these days to describe financial crises and political responses to financial crises. A couple of years ago, writing about the role of Greece in the ongoing euro monetary-financial crisis, I said that the “contradiction is between the love of state largesse and the limits of governments’ ability to raise revenue,” and I suggested (unoriginally) that Greece might be a domino to tip other dominos (more clichés).

Now Cyprus. It’s the latest hotspot in the euro crisis. If you read or listen to news supplied by the mass media here in the US, you know that Cypriot banks are on the ropes. You know that they have a lot of euro-denominated deposits, including somefrom tax-dodging or money-laundering Russians. And you know that a bailout is in the works. However, unless you think or read more deeply, you don’t know how the situation in Cyprus fits into the bigger picture of euro zone troubles.

Even if you read The Economist, as I do, you only get a hint. In its March 30, 2013 issue, it got through two articles on the Cyprus bailout while barely mentioning how that was precipitated by Greece. I’m not saying there is a media conspiracy to obscure the facts, but there is a tendency to avoid speaking of and maybe even to avoid thinking of the complex and unsettling cause and effect relationships among the various financial unbalances in European banks, treasuries, and currencies. (Yes, I know there is supposed to be only one euro, but more on that below.)

Why would those rich Russians trust banks in miniscule Cyprus? Because the deposits were in Europe, in the euro zone, denominated in euros, and implicitly guaranteed by Europe.

The Economist said, “The troubles of the two banks were caused, some believe, by a decision to buy Greek government bonds that were then restructured.” It said thisonly in the context of an article mentioning that Cypriots feel like victims, in this case of the “restructuring.”

That sentence from The Economist does everything wrong. It directs us away from the truth that the euro mess is a great tangle of interrelationships with “moral hazard” at every knot. And it downplays important circumstances, employing euphemisms. “Troubles” should be “failures”; “some believe” should be deleted; “a decision” should be followed by a statement of the reasons and motivations for the decision; and “restructured” means “defaulted.”

As a corrective, I’ll tell you what I think is going on, preferring clichés to euphemisms.

How does a miniscule country get pumped up on foreign deposits? Why would those rich Russians trust banks in Cyprus? Because the deposits were in Europe, in the euro zone, denominated in euros, and implicitly guaranteed by Europe. That’s an example of having your cake and eating it too. The “cake” is having a hard currency that does not fluctuate against any other currency in the euro zone and can be freely transferred among all euro-zone countries, since it’s supposed to be the same currency. “Eating it too” is failing, as a nation, to have the reforms, institutions, sovereign finances, and controls in place that would justify the currency’s value and stability.

The deposits in Cypriot banks, like all deposits, are loans. The banks had to invest the money. They bought Greek government bonds — more cake being had and eaten. The Greek bonds were paying better interest than, say, German bonds. That should tell you something, but they were supposed to be risk-free, again because of the implicit guarantee of Europe.

The Greek crisis, going back at least to 2004, is now nearly a decade-long process of kicking the can down the road. The can is, of course, severe economic pain that may take the form of extreme austerity, high inflation, and currency devaluation (which would require exit from the euro and, in the case of Greece, the dreaded “Grexit”). The bits of pain that were inflicted along the way — on bondholders, employees, and taxpayers — have always and ever been insufficient to constitute really doing something with the can other than kicking it.

The crisis in Cyprus demonstrates that Europe’s restructuring of Greek debt and bailouts of the Greek treasury were also largely examples of squeezing the tube of toothpaste. One pinches the problem here, and it bulges out over there. One collapse delayed begets another threat of collapse that demands immediate attention.

Cyprus may remain in the euro in name only. A euro that cannot leave Cyprus has a value different from and lesser than a euro that can travel freely.

Now, one or two birds at a time, the big flock of chickens is beginning to come home to roost. In the Cypriot bank bailout deal, bank shareholders are wiped out. They get nothing. Some bondholders are wiped out. Depositors are restricted from getting their money; there are daily withdrawal limits; and currency controls are in place. Some depositors, the uninsured with balances above 100,000, will not get all their money back; they will see their deposits converted to bank shares, probably worthless. In theory, smaller deposits are secure, and Cyprus keeps the euro.

The tough conditions for the bailout, ostensibly required by a commission composed of the European Central Bank, the European Commission, and the IMF, but in substance required by Germany, are the price for Cyprus “staying in the euro,” and that is the main goal of the bailout. But it is not clear that Cypriot euros are still the same as other euros. In other words, Cyprus may remain in the euro in name only. A euro that cannot leave Cyprus has a value different from and lesser than a euro that can travel freely. Such a euro sits in Cypriot banks, from which it can’t be freely withdrawn. The bailout may fail to render the banks solvent. The risk of insolvency, the restrictions on withdrawal, and the currency controls all undermine the value of the deposits.

Enter Gresham’s law: bad money drives out good — if the exchange rate is fixed by the state. In this case the bad money, Cypriot euros, drives out the good money, other euros, other currencies, precious metals, and other stores of value, because the exchange rate is fixed by law and by definition: euros are supposed to be euros. That’s what monetary union was supposed to mean. The troika cannot let the Cypriot euro float; that would be an immediate, rather than slow, failure of the bailout plan; therefore, the official exchange rate between the Cypriot euro and the real euro will be 1:1. Cypriots will withdraw their bad money as fast as they can. They will hoard good money. They will seek opportunities to spend or exchange their bad money at the official rate. Goods will leave the country to be sold for good money to be held abroad. Scarcity will reign. Cyprus will impose export controls (a usual next step after the imposition of currency controls), turning many of its people into criminals. In the 1980s, I saw this in Bénin, where after a period of currency controls, the markets were utterly bare and smugglers were being shot on sight. Next door in Togo, the markets overflowed with goods, including, I suppose, goods from Bénin.

There is much more to be said, about the near-certain collapse of the Cypriot economy, about “contagion” — the fear that similar blows will strike depositors in other weak euro zone countries, and the resultant capital flight — about many more chickens coming home to roost, about the suffering of men, women, and children, and about whose fault it is.

But the topic is depressing. I begin to feel sympathy for the journalists and reporters who do not dwell on these things. I’ll kick this can down the road.

How does a miniscule country get pumped up on foreign deposits? Why would those rich Russians trust banks in Cyprus? Because the deposits were in Europe, in the euro zone, denominated in euros, and implicitly guaranteed by Europe. That




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