The Japanese Bubble — some causes and effects?

A couple weeks ago a classmate of mine clarified the whole Japanese bubble thing with a couple simple diagrams. This is my attempt to replicate them before I forget what his reasoning was. OK:

Diagram 1

The classic model of the Japanese economy (Diagram 1) was a tight-knit, government enforced structure with a number of interesting features: first, individuals couldn’t buy corporate stocks, so they had to save their wages in banks. Banks basically had to loan money to corporations regardless of those corporations’ profitability — part of this was policy, part of it was the tradition of corporate groupings or “keiretsu.” Not pictured in the diagram: corporations made money via foreign trade, which was pretty easy to do through much of the “high growth period,” partly because the Yen was pegged to the dollar at an artificially high rate.

Now in 1971 Nixon took the US dollar off the gold standard and floated it on the market, which ended the Occupation-era policy of having the Yen pegged to the dollar. So the exchange rate (which had been 360 yen to the dollar from 1950 – 1971) went down to 290 yen to the dollar by 1972

This meant that export producing industries in Japan started to suffer, since foreign folks paying foreign currency now had to pay more of it per yen.
So the government decided to introduce capital market liberalization, allowing corporations to get the capital they needed from non-traditional sources, like foreign investment and stock markets. They ditched domestic banks, which then found themselves without lenders — they should have shrunk at this point, but they were unable to do so because of strict “too-big-to-fail” type rules. So instead the banks started lending money to whomever would take it, esp. in the real estate sector. Corporations also started pumping their extra cash into real estate (Diagram 2)

Diagram 2

This elevated prices, and wages, across the board — the Bubble — which made everybody happy! Until the Bank of Japan raised interest rates, making loans more expensive, which sent artificially high prices tumbling and triggered a contraction that is still plaguing Japan.

The silver lining is that this chaos may have created the political momentum to clean up Japan’s notoriously corrupt bureaucracy and dominant political party — which make our system look like Scandanavia (or, you know, some other utopian metaphor). In 1993 the dominant party lost power for the first time since the 50’s, which everyone said was significant, but they regained it soon after. BUT this July they lost it again! And tomorrow I’m planning to go to a lecture/panel discussion that will hopefully clarify whether this is significant. We shall see.

On Hand Sanitizers

I’m currently sitting in the library, as is my wont, noticing that there has been a proliferation of alcohol-based hand sanitizers in this and every building on campus, thanks to H1N1.

But it stands to reason that anti-bacterial alcohol-based hand sanitizers, while useful in the course of every day germphobia, will have no effect on the virus!

I’m no public health professional, but I have friends/family members who are — and they agree with me. Done and done.

Two Stories

Story A: The legacy of colonialism left Third World governments with a bitter taste in their mouths, so they set up high barriers to trade, keeping Western multinationals out, and attempted to develop their own industries which would free them from having to buy imports (import substitution). But without other income or access to international capital, they had to borrow money from the World Bank/IMF to finance these operations, which turned out not to be profitable. Then they had to *keep* borrowing to keep their industries afloat or even just to pay off the interest on the original loans, which resulted in a “balance of payments crisis.” Finally, thanks to new “structural adjustment” loans which carried the condition of lowering trade barriers, multinational corporations came in and, by integrating isolated countries into the global economy, effectively helped to treat the disease of global poverty (globalization).

Story B: The great powers got together at the end of WWII to determine the way the world would be under the new rubric of “development,” which carried with it a civilizing mission more or less similar to that of the outmoded imperialist ideology, and created World Bank/IMF. They used these as instruments to assist multinational corporations in their systematic search for cheap labor and materials to fuel growth. Meanwhile multinationals are irresponsible (cf. bad working conditions, the Union Carbide disaster) pervert politics in poor countries by co-opting local elites, and depend on the militarily dominant West to secure their interests (cf. the CIA-backed Allende coup, the fall of Mossadegh in Iran, etc.) Poverty is a matter of course as the super-rich strive to get even richer (globalization).

Is it possible to believe Story A and Story B at the same time? That’s kind of where I am right now.

Frank Rich, Defender of Representation?

Frank Rich is certainly my favorite of the NYTimes columnists. His columns often revolve around the notion that the media, in a functioning democracy, should serve the public interest by informing the electorate and hence providing some structural oversight to curb the excesses of the rich and powerful. For Rich, this doesn’t occur in America because media organizations are dominated by private capital and hence dwell upon spectacle for the sake of profit, a la the film Network. I’m pretty sympathetic to this idea, which was elucidated once again in Rich’s column this morning.

But as much as Rich expressed his standard Left-y stance on media in today’s column, as befits the genre of muckraking, he also incorporated glimmers of Baudrillard’s hyperreality.

Check this out:

“Richard Heene [fame-seeking father of the "balloon boy"] is the inevitable product of this reigning culture, where “news,” “reality” television and reality itself are hopelessly scrambled and the warp-speed imperatives of cable-Internet competition allow no time for fact checking…”

And this:

“He knew how easy it would be to float “balloon boy” when the demarcation between truth and fiction has been obliterated.”

And:

“If Heene’s balloon was empty, so were the toxic financial instruments, inflated by the thin air of unsupported debt, that cratered the economy he inhabits.”

Rather than simply making fun of Fox News, I think the subject of Rich’s polemic is more fundamental. Rich is assuming a kind of existential stance that’s only tangentially related to this bubble boy thing — he’s taking the position that representations of “reality” should trump simulations of false reality. Just as nobody attempts to prove that the sun will rise tomorrow, nobody would take this obvious position unless it was somehow being called into question, i.e. unless the boundaries between truth and fiction were being blurred in some way. Now, Baudrillard gives me and everybody else a headache, but I couldn’t help thinking about him this time.

If you like, you could substitute “Truth” or even “Democracy” for “God” in this excerpt from “Simulacra and Simulations”:

“All of Western faith and good faith was engaged in this wager on representation: that a sign could refer to the depth of meaning, that a sign could exchange for meaning and that something could guarantee this exchange: God, of course. But what if God himself can be simulated, that is to say, reduced to the signs which attest his existence? Then the whole system becomes weightless; it is no longer anything but a gigantic simulacrum: not unreal, but a simulacrum, never again exchanging for what is real, but exchanging in itself, in an uninterrupted circuit without reference or circumference.

So it is with simulation, insofar as it is opposed to representation. Representation starts from the principle that the sign and the real are equivalent (even if this equivalence is Utopian, it is a fundamental ax~om). Conversely, simulation starts from the Utopia of this principle of equivalence, from the radical negation of the sign as value, from the sign as reversion and death sentence of every reference. Whereas representation tries to absorb simulation by interpreting it as false representation, simulation envelops the whole edifice of representation as itself a simulacrum.”

I don’t really know anything about Baudrillard, but he seems to dwell in this location within media studies where the set of meanings that constitute “reality” is irrelevant because (thanks to world-creating crazy new media) meaning becomes impossible — the signifier never quite resolves itself to the signified. This uncomfortable place is starting to look familiar for Frank Rich, or so it would seem.

Beautiful pictures (and music)

I look forward to many things in my daily compendium of RSS feeds via Google Reader (which, by the way, you should use!) but Astronomy Picture of the Day is by far my favorite. Regardless of what mood I’m in or what new craziness has hit the news cycle, APOD can be counted upon to produce the same reaction each morning, i.e. slack-jawed amazement! Check it out:

Credit: ESO / Stéphane Guisard – Copyright: Stéphane Guisard

Credit & Copyright: Koen van Gorp

Credit: NASA, ESA, and the Hubble SM4 ERO Team

All in all, a pretty compelling argument in favor of Robert Pirsig’s suggestion that we return to calling it ‘the heavens’ rather than simply ’space.’

In addition, if you want to the “full on” experience whilst looking at these and you enjoy downbeat techno then you should check out the vast musical archives of the Cloud Factory Collective, particularly any of the mixes from the annual Chillits festival. I am in awe of them as well!

Bad or Amazing?

I am somewhat under the gun work-wise so I don’t have too much time to elaborate on this, but I just have to get this off my chest.

I’m often preoccupied with the mysterious line between bad and amazing in media. Sometimes a movie or show is so bad that it can be viewed as absurd, a (conscious or unconscious) self parody, which makes it amazing…like Breakin’ and its magnificent sequel Breakin’ 2: Electric Boogaloo or, say, any work featuring C. Thomas Howell.

Then you have movies or shows that are so bad that they really are painful to watch, like the movies reviewed by Something Awful. (Did you know that the film Nukie holds the coveted title ‘Worst Movie Ever’? As far as I know, it is the only film ever to receive an actual rating of -50)

But here are two shows that, unfortunately, I have seen the commercials for, that I *really* am having a hard time with. Not having had the opportunity to actually see them, I don’t know how to evaluate them. Bad or amazing? Surely, by now, with the amount of time I’ve invested watching low brow media, I should be able to tell!

Here are the sources of my anguish:

Steven Segal: Lawman is a real show, firstly, in case you were wondering. Is it gonna be sweet? or terrible? There really is no way to tell.

And then comes Celebrity Ghost Stories This could be amazing! or it could be nauseating. I have no idea which, and this makes me sad. That is all.

An apocryphal story

A US Admiral was apparently schmoozing with military folks from various countries and playfully proposed a thought experiment to a high-ranking Russian officer.

“Suppose we got serious about nuclear disarmament,” he says, “and both our countries really went through with it, destroying every last warhead.”
The Russian nods.
“But then a few days later you guys realize that there are three or four that you didn’t destroy — what would happen?” asks the American.
Not one to miss a beat, the Russian responds, “of course we would then call the White House with our ultimatum.”

No player wants to be caught with their proverbial pants down, so you’re never going to see any real effort at nuclear disarmament. Hence the moral outrage over Iran’s nuclear program is silly, and probably a result of political calculations, especially when you’ve got a nuclear Israel that never even bothered to go through the motions of signing the Non-Proliferation treaty.

Come, that’s Capital! or, harbingers of wasted time pt II

Take, say, sports — that’s another crucial example of the indoctrination system, in my view. For one thing because it — you know, it offers people something to pay attention to that’s of no importance, that keeps them from worrying about things that matter to their lives that they might have some idea of doing something about. And in fact it’s striking to see the intelligence that’s used by ordinary people in [discussions of] sports [as opposed to political and social issues]. I mean, you listen to radio stations where people call in — they have the most exotic information and understanding about all kind of arcane issues.

- some interview with Chomsky

————

I can’t claim to have any information or understanding about this topic, but I am experiencing a peculiar strain of nationalism: Capitals mania.

Last season the rag tag Mighty Ducks Capitals went up against their hated enemies the Pittsburgh Penguins. The Penguins were sleek, clad in black, mechanically precise with their movements on the ice. The Caps were clad in American flag colors, full of gusto and charm, if perhaps rough around the edges. So obviously this confrontation was sufficiently sports-movie-esque to get me interested in sports for pretty much the first time ever.

Now hockey season has begun anew and the Post recently published a magnificently detailed NHL page to get suckers like me primed for it. Hockey has even entered my morning routine: once I look through the style and front page sections of the Post, I head right down to sports for Tarik el-Bashir’s daily Capitals updates. Will newly acquired veteran Mike Knuble work out as planned? Will Ovechkin continue live up to the ever-escalating hype? Eep!

Two Development Economists — No Conclusions

The poor remain in poverty not because they want to, but because of the many barriers deliberately built around them by those who benefit from their poverty

– Mohammad Yunus, founder of Grameen Bank

——————————————

Last month I read two development econ books which appeared to be radically at odds with each other, representing a colorful and much-publicized conflict amidst what is generally presumed to be a fairly drab sub-field of study. The books were “The End of Poverty” by Jeff Sachs (2005) vs. “The White Man’s Burden” by Bill Easterly (2006). One makes the case for ramping up foreign aid, the other is adamantly opposed. (These authors’ ongoing feud was made public when Easterly delivered a scathing review of Sachs’ book for The Washington Post, to which Sachs has responded at least once.) But should we internalize one author’s points and discard the other’s? Or is there something to be learned from reading both books in tandem?

Well. Sachs, he of the Earth Institute at Columbia University, weaves the interesting story of his own involvement in the field, mostly helping middle-income post-communist countries get into the groove of market capitalism and economic orthodoxy. Sachs claims that the way to end poverty is to strategically deploy foreign aid by investing in basic infrastructure (like water, sewage, roads) low cost public health initiatives (like malaria nets, preventive medicine) technology for boosting agricultural output, education (the so-called improvement of human capital) and so forth. Sach’s goal is to help extremely poor folks — about one sixth of humanity — break free from the “poverty trap” comprised of “disease, physical isolation, climate stress, environmental degradation, and…extreme poverty itself. Even though life-saving solutions exist to increase their chances for survival…these families and their governments simply lack the financial means to make these crucial investments.”

Easterly, a professor at NYU, wants to debunk wishful thinking about aid by pointing out how the gross failures of the current system actually fit into a long history. Western aid agencies, rather than being part of the solution, have been a big source of the problem: they’re usually politically motivated, unaccountable to the people whom they are supposed to serve, they often funnel money to brutal and corrupt regimes throughout the Third World, and they possess a kind of evangelical certainty and utopian idealism that smacks of old school colonialism. Easterly claims that the “poverty trap” is an invented notion to drum up support for the aid industry. For Easterly, instead of writing out a big plan for strategic investment via IMF/World Bank et al., what we should be doing is looking for piecemeal solutions to local problems…or acting to encourage local entrepreneurs who would do so in our stead.

On the one hand, I agree with Easterly: I’m swayed by the notion that aid bureaucracy is harmful and dysfunctional largely because it’s common knowledge that Western aid propped up evil dictators in Haiti, the DRC, Zimbabwe, etc. Also, generally in big organizations it is considered advantageous to spend what’s in the budget, and quickly, if you expect to see more next year. Paul Collier (economist #3) puts it succinctly: “people get promoted by [within aid agencies] by disbursing money, not by withholding it.” Plus, the historical context of the emergence of the World Bank after World War II suggests that said agencies are in fact instruments of imperialism and Cold War political posturing on the part of the US.

(Historical Interlude! Anthropologist Arturo Escobar does a good job of describing the context for the “development of development” at the end of World War II: “The end of the war…confronted the advanced countries, particularly the united Sates, with the need to find overseas investment opportunities and, at the same time, markets for their goods, a reflection of the fact that the productive capacity of US industry had nearly doubled during the war period. Economic development, trade liberalization under the aegis of the nascent giant corporations, and the establishment of multi-lateral financial institutions (such as the World Bank and International Monetary Fund, founded in 1944) were to be the main instruments to satisfy these requirements and advance the new strategy.”)

On the other hand, I agree with Sachs: it’s absurd to claim that “poverty traps” do not exist. The poorest sub-Sarahan countries, for example, are landlocked, riven with ethnic conflict, hit by drought and subsequent famine…and for people who live in this situation there is no way to simply apply gumption or entrepreneurial spirit to lift a country out. When there is a total lack of basic goods and capital in an area, then there is no way out of poverty without some kind of outside assistance. Meanwhile, the folks who can escape from such grim situations obviously will; hence massive migration to urban slums — a problem which will only escalate as climate change worsens.

I also see some points where the authors themselves agree: both writers criticize previous efforts at eradicating poverty, which they see as having failed largely because they were one sided, relying upon one-size-fits-all formulas for economic growth, blind to regional particularities of culture, geography, and history. Both writers also criticize the way that Western aid agencies tend to focus on hot topics — the AIDS epidemic, for example — while avoiding the more severe if less sexy ones, like diarrhea, malaria, basic sanitation, etc. And of course both agree that *something* needs to be done to help the billion + people at the very bottom of the ladder, not just for obvious moral reasons and both (being economists) see “development” as the ultimate goal.

To boil it all down, both authors argue that top-down strategies by aid agencies and their political benefactors have been ineffective because they are too simplistic and out of tune with the complexities on the ground. Sachs seeks to remedy this by raising awareness (e.g. having Bono pen the forward to his book) and proposing a vast, very complex strategy that he hopes will cover all bases. Easterly, on the other hand, hopes for reform that will enact incentives for aid agencies to succeed or fail according to their effectiveness, thus using “market magic” to generate better outcomes.

Fascinating points made by all, but I must admit I remain skeptical of both. Here’s why: neither one of them really looks at the mechanics of power in this situation. Easterly comes closer to the mark with his Chomsky-esque revisionist treatment of foreign aid as a tool for US global governance. But while both authors are critical of current patterns of aid disbursal, neither looks at the way that this system became institutionalized as part in parcel with the global growth of capitalism and the *idea* of development. What I mean is: both authors seek to tweak the current model of development by getting rid of some of the inefficiencies produced by the top-down hierarchical element of it, but they miss the point that hierarchy is wired deep into the world system. Power thrives on powerlessness, something which economists tend to leave out of their calculations.

OK I hope you enjoyed this book review, I am off to make chicken pot pie(s)! yay!

TV Spin-offs, Wikipedia, and other harbingers of wasted time

Watching reruns of The Sopranos Tivo-ed off of daytime A&E is a pretty silly affair. The curse words and sex (though NOT the violence) are ludicrously censored out. Gangsters poignantly call each other “blood suckers” (since they are in fact leeching off ordinary folk) and urge sudden and violent memory loss upon one another, with cries of “forget you!” (which implies that, like Tony, they subconsciously wrestle to repress bad memories.)

Sillier still is the *other* crap on daytime television, which one sometimes gets exposed to during this process. The other day I stumbled upon, for example, re-runs of the 80’s TV spin-off “In the Heat of the Night.” Can this really exist? According to Wikipedia, the show’s premise has the famous Mr. Tibbs re-visiting small town Mississippi where he is “persuaded to remain by the city government, which wanted to make its police department more diverse.” Come on, that’s hilarious! The film was an exploration of institutional racism…but the revamped TV show is a celebration of diversity!

So this got me wondering about other film-to-TV spin-offs and (not unexpectedly) I was able to find what looks like a pretty comprehensive list on Wikipedia.

Sometimes you’ll run across a show based on another show that itself was originally based on a film, like Trapper John M.D., but I say TV to TV spin-offs are a whole different universe.

Also as a rule I’m more interested in live action spin-offs than animated series’ simply because the later is way more common and, I think, easier to pull off. Live action spin-offs have a kind of quixotic element, as in who could believe that it’s possible to emulate a film’s success by re-casting the main roles and downgrading the budget?

Of course, M*A*S*H and The Odd Couple managed to pull this off…classic exceptions that prove the rule maybe? On the other hand, that Highlander show was pretty entertaining, while by no means classic. So you never know.

At any rate, some trivia highlights:

• The 1990 Fall line up included an NBC Ferris Bueller spin-off (featuring Jennifer Aniston in the role of Jeanne) *as well as* a CBS Uncle Buck spin-off! Two John Hughes spin-offs in the same season. Pure madness.
• The actress who replaced Alicia Silverstone in the role of Cher in the “Clueless” TV show also played Sally in “Flight of the Concords.”
• Moon Unit Zappa provided “teenage consultation” for the shortlived TV spinoff of “Fast Times at Ridgemont High” (which had Kirk Cameron in place of Sean Penn). Evidently “Ms. Zappa was hired in order to research slang terms and mannerisms of teenagers, as she had just graduated from high school at the time and had a much better grasp of then-current high school behavior than the writers.”
• Mr. Belvadere is actually a spin-off of a 1948 film, which itself spawned sequels. In fact, the show represents the last in a number of attempts to make a spin-off of said film(s).
• Freddie’s Nightmare’s, a Nightmare on Elm Street spin-off, is described thusly: “Anthology series in the style of Tales from the Crypt. Freddie’s involvement was often limited to presenting the story.” I don’t know, I just like the succinct, matter-of-fact tone.

OK we all have more useful things to do!