Thinking past the first step?

During one of my walks over the weekend, passing through Dupont Circle I stumbled across a sleeply 3rd year anniversary protest of the War in Iraq. It had all the common characteristics of such protests: bad poetry slams by wanna-be Jello Biafras, lots of people in need of a bath, a heaping helping of ill-conceived self-righteousness, Lyndon Larouche zombies, and more stupid signs than I could count.

I didn’t have my camera with me, so I had to search the web for something similar, and I think this does the trick, well illustrating one of the most foolish signs I saw that afternoon:

I wonder if these people are actually thinking about what they’re asking for. I say America sould give them their wish. Impeach Bush; bring on President Cheney!

A question of national economic security

I’ve been posting recently on the global backlash against FDI. So, in scanning today’s news, this headline caught my eye: “INTERVIEW-China official slams foreign investment spree.”

Here’s a sample:

Li Deshui, head of the National Bureau of Statistics, called for legislation to curb “ill-willed” acquisitions of domestic companies by foreign firms… Echoing recent concerns over China’s sale of stakes in its major banks to foreign investors, Li said that unchecked acquisitions by foreign multinationals could pose a threat to China’s economic security.

Reading this latter remark made me wonder just how one nation’s “economic security” should be defined. Where does one draw the line? Borders are the obvious place to start, but everyone knows that this is no longer true. The same may be said of nationality.

Let’s face it, when it comes right down to it, when someone (be it a company or an individual investor) stands to lose millions or even billions of dollars on an investment, national economic security goes right out the window along with concern for everything else but one’s own ass.

Think about a bank run: are those people lining up to withdraw their deposits before the next guy concerned with national economic security? Of course not. They’re worried about their own damned money.

I don’t mean to downplay the seriousness of the issue. “Bank runs” on an international scale are exactly what governments are worried about. But they should consider other ways of preventing such things from happening (i.e. better policy or more effective regulation) than by prohibiting them altogether. You don’t deal with bank runs by outlawing banking; you deal with them by creating systems of deposit insurance, by providing lenders of last resort, and by requiring banks to keep a certain percentage of deposits on hand at all times.

Some weekend humor

This is probably my favorite Monty Python skit:

Good evening!

The last scene was interesting from the point of view of a professional logician because it contained a number of logical fallacies — that is, invalid propositional constructions and syllogistic forms — of the type so often committed by my wife.

“All wood burns,” states Sir Bedevere. “Therefore,” he concludes, “all that burns is wood.”

This is, of course, pure bullshit! Universal affirmatives can only be partially converted. All of Alma Cogan is dead, but only some of the class of dead people are Alma Cogan. Obvious one would think.

However, my wife does not understand this necessary limitation of the conversion of a proposition. Consequently, she does not understand me. For how can a woman expect to appreciate a professor of logic if the simplest cloth-eared syllogism causes her to flounder.

For example: given the premise, “All fish live underwater” and “All mackerel are fish”, my wife will conclude, not that “All mackerel live underwater”, but that “If she buys kippers it will not rain” or that “Trout live in trees” or even that “I do not love her any more.”

This she calls “using her intuition”. I call it “crap” and it gets me very IRRITATED because it is not logical!

“There will be no supper tonight,” she will sometimes cry upon my return home.

“Why not?” I will ask.

“Because I have been screwing the milkman all day,” she will say, quite oblivious of the howling error she has made.

“But,” I will wearily point out, “even given that the activities of screwing the milkman and getting supper are mutually exclusive, now that the screwing is over, surely then, supper may, logically, be got.”

“You don’t love me any more!” she will now often postulate. “If you did, you would give me one now and again so that I would not have to rely on that rancid Pakistani for my orgasms!”

“I will give you one after you have got me my supper!” I now usually scream, “but not before” — as you understand, making her bang contingent on the arrival of my supper.

“God, you turn me on when you’re angry, you ancient brute!” she now mysteriously deduces, forcing her sweetly throbbing tongue down my throat.

“Fuck supper!” I now invariably conclude, throwing logic somewhat joyously to the four winds, and so we thrash about on our milk-stained floor, transported by animal passion, until we sink back, exhausted, onto the cartons of yoghurt….

I’m afraid I seem to have strayed somewhat from my original brief. But in a nutshell, sex is more fun than logic. One cannot prove this, but it IS in the same sense that Mount Everest IS, or that Alma Cogan ISN’T.


ア・ミリオン・リトル・ピーシーズ Japan Version?

I remember reading about this book when it first came out and I actually considered picking up a used copy.

From Chris Kohler’s GameLife column at Wired:

I just finished up reading Wrong About Japan, a travel memoir by novelist Peter Carey about a trip he took to Japan with his anime- and manga-obsessed son. It’s a short book, mixing the dubious results of Carey’s interviews with anime directors with the story of his ever-changing relationship with his oh-so-typically withdrawn and moody tween.

As it turns out, most of the story was fiction.

Carey told Seattle Weekly that the character Takashi, Charley’s similarly anime-obsessed Japanese friend, was invented. As the author put it, he “had to” make up a character to “get to” the conflict, which is what a phenomenally self-assured person says when they mean they “felt like” making up a character so they could “pretend there was” conflict.

Gaimusho fires back

This is a bit out of date, but I thought it was worth posting anyway.

Gaimusho’s response to the NYT 02/13/05 editorial (click here to read) criticizing Foreign Minister Aso Taro:

To the Editor:
Re “Japan’s Offensive Foreign Minister” (editorial, Feb. 13):

Foreign Minister Taro Aso has neither justified nor denied Japan’s past history of colonial rule or wartime aggression. His recent speech on Asia made this crystal-clear, and Prime Minister Junichiro Koizumi’s statements on the subject on numerous occasions have reflected this notion. History classes in Japan do as well.

Nor did Mr. Aso say the emperor ought to visit Yasukuni Shrine in the present circumstances. He simply pointed out the need to consider a way that government representatives, as well as the emperor, could naturally honor the Japanese war dead without causing discomfort to neighboring countries.

Japan, by adhering to strictly defensive security policy, has never posed any threat to any other countries, including China, for the past 60 years. Mr. Aso welcomes China as a responsible partner, and its rise as an opportunity. He simply referred to international concerns over China’s consistent and nontransparent military activities and buildup. Given the regrettable incident of the trespass of a submerged nuclear submarine into Japan’s territorial waters, China must strive to meet your criterion of “no recent record of threatening Japan.”

Japan continues to encourage China to improve transparency in its military affairs in accordance with the Japan-United States Joint Statement issued by our countries’ foreign and defense ministers in February 2005.

Hiroshi Sato
Acting Consul General of Japan
New York, Feb. 18, 2006

Codependent OPEC?

“Opec accuses Bush of threatening energy security”

So reads a headline in the Financial Times. One might (wrongly) expect the story to be about the latest barrage of criticism of Bush’s foreign policy in the Middle East. So if it’s not about Iraq, Afghanistan or the Palestinians, what the heck is Opec so upset about?

The Opec oil cartel on Tuesday hit back at President George W. Bush, criticising the US and other consuming countries for pursuing energy policies that threatened energy security and the global economy.

Energy policies that threatened energy security, what?

Here’s an excerpt from the actual Opec statement:

“Alas, uncertainties are compounded by consumer government policies aimed at moving away from oil – moreover, oil from specific global regions – principally, as expressed by such consumers, for security of supply reasons.”

The group argues that the only way to ensure security of supply is by ensuring security of demand.

Is your head spinning yet?

They do have a point. Less demand leads to falling prices and falling revenues for producers, which means there’s less money to invest in new exploration or extraction activities.

Fair enough, but do these people honestly think that more money in the pockets of a few rich oil magnates is going to increase the security of the region? They’ve had plenty of time (during which demand has been rather high, one might add) to stabilze things and the only thing many have managed to accomplish is to worsen domestic inequalities by poorly managing massive oil revenues.

FDI Addendum

This is exactly what I was talking about.

From today’s FT:

Yesterday Italian politicians called for French takeover bids for Italian groups to be blocked, in retaliation for France’s efforts to protect its energy sector.

“There is a risk that over time this dynamic triggers a series of tit-for-tat reactions,” said Mr Casey [of the Centre for European Policy Studies]. “That is precisely how the great depression started: one country after the other erected barriers and finally free trade just ground to a halt.”

I don’t expect a new great depression anytime soon, but let’s hope everyone will soon calm down and come to their senses.

FDI (not in Japan), Part II

In past posts I’ve been critical of the Japanese government and various forces inside Japan for their sometimes anti-foreign capital mentality. Given a recent spate of similar behavior spanning three regions of the globe, I thought it would be a good opportunity to turn the focus away from Japan momentarily just to show that there is nothing uniquely Japanese about the fear of foreign capital.

As most everyone reading this is aware, Congress is currently outraged over the decision by the Committee on Foreign Investment in the United States (CFIUS) to approve the sale of terminals at six ports to Dubai Ports World. The ostensible reason is, of course, national security. Speculation as to alternative motives (political and otherwise) is rampant, and coming on the heels of CNOOC’s failed bid for the California energy firm Unocal, it is only natural that parallels will be drawn.

Receiving slightly less attention is the French government’s decision to allow Gaz de France, in which the government holds an 80 percent stake, to merge with a privately held energy and water company, Suez. The deal itself would likely not have raised any eyebrows (or tempers) had the announcement not come just days after Italian energy company, Enel, had made a bid for Suez. The government was not at all coy about its intention and much like Congress was quick to play the national security card. According to the NYT:

Speaking at his central Paris office in the presence of his finance minister and the chief executives of the two companies, Prime Minister Dominique de Villepin said the merger was important to protect France’s energy supplies.

“The independence of our country for energy supplies is of strategic importance for France,” Mr. Villepin said. “The merger of Gaz de France and Suez seems the most appropriate solution.”

Last up, we have South Korea, where the government has announced it is considering strengthening measures to protect domestic firms from foreign takeover. The announcement follows a rejected bid for the country’s largest tobacco company, KT&G, by American investors Carl Icahn and Warren Lichtenstein.

These three cases touch upon a fundamentally important question that governments, corporations and private citizens all must consider in a world so intricately interconnected by trade and capital flows.

The global nature of corporate ownership and free flow of capital across borders has made it possible to invest in foreign assets ranging from real estate, to government debt to private equity, the latter of which can result in foreign ownership of domestic firms. Yet, the change in attitudes has failed to keep pace with economic globalization and such investments often incite fierce opposition in countries where it takes place. Sometimes this opposition is motivated largely by xenophobia or ignorance, but one must ask if there are cases where such caution is warranted and indeed necessary.

In some instances the distinction is obvious. There is a clear difference between foreign ownership of a cannery verses foreign ownership of a firm that produces ballistic missile components or some kind of sensitive dual-use technology.

But tobacco? From the scant statements coming out of Seoul, I am inclined to write this one off as a combination of anti-foreign sentiment and a clash of capitalisms, possibly amplified by still smarting wounds from the 1997 financial crisis, which was in part caused by (some would say) hasty removal of capital controls in order to join the OECD.

According to one Song In Ho at Kyobo Investment Trust Management in Seoul:

“It’s still unclear whether Icahn and Lichtenstein are here for a quick profit or are really serious about the takeover.”

I’d say a little bit of both. People out to make a profit are generally pretty serious about it. But few people in Korea would be happy to see these guys come in, hack up the company, drive up the share price and dividends, and then make out like bandits at the expense of the employees — especially since this baby used to be state-owned. On the other hand, and I really hate to sound like Thomas Friedman here, FDI is really a double-edged sword. It can bring with it new and more productive technologies, better management techniques and fresh capital that can really benefit a company (But that still leaves the question of whether the company = shareholders or employees. Let’s save that nasty debate for another post.)

So, how about something like energy?

This one is a much tougher question. For starters, energy is a fungible commodity. Under normal circumstances (by this I mean the moron from whom you import hasn’t cut off the supply, or your country has no outstanding UN embargoes, etc…) as long as the market is functioning properly it is reasonable to expect that as long as one is willing to pay the price the market bears, actually purchasing it should present no problem.

Of course, this might one day change if the world nears the end of its finite supply, no suitable alternative energy technologies have been developed, and governments decide it is to be a game of every man for himself. But for now, even if China buys up oil fields somewhere, should it really matter in the long run? If they don’t get it one place, they can always buy it elsewhere. (The real problem is the growth in Chinese demand, their inefficient usage of energy, and the effect these have on global prices. But let’s save that too for another post.)

As for the French, I think I’ll hold off on judgment until we know a little more. While the Italians have already been throwing around the p-word, there is some evidence that the deal could cut French dependence on Russian gas imports (which recently falls under one of those abnormal circumstances I mentioned above.)

One final and very important consideration to which the above indirectly points is how worrisome are such attitudes? Blocking sales of sensitive assets to foreigners in the interest of national security is an understandable and necessary measure that must sometimes be taken and isolated incidences of such behavior are no real cause for concern. But in the absence of a genuine threat, governments in this day and age should not use national security as a fig leaf to cover protectionist sentiment motivated by xenophobia or a desire to protect inefficient or well-connected domestic industries. In theory, such desires may sound reasonable (especially in election years), but in practice they send the wrong message to would-be investors and that message is: don’t bring your money here. Openness is the very foundation upon which is founded the prosperity of the United States and other developed countries. And it is one potential tool for this prosperity to spread to less-developed economies. Where would Japan or China be today without access to U.S. markets? And for that matter, where would the U.S. be today if it weren’t for Japanese and Chinese access to our government financial markets?

GOJ Awesomeness

podcastThe GOJ has really been on the ball lately about updating agency websites and I must admit, they have been surprisingly savvy about the whole business. I wish I had time to do an entire post introducing each site, but being pressed for time I must limit this to an announcement of the latest bit of GOJ awesomeness, the Council on Economic and Fiscal Policy’s press conference podcast!

From the site:


Okay, so it’s the same thing as the press conference streaming video that has been on the site for months. But it’s still cool.

“However fake the subject, once photographed, it’s as good as real.”

Those are the words of Japanese photographer Hiroshi Sugimoto, who’s exhibition I checked out today at the Hirshhorn Museum and Sculpture Garden. Sugimoto’s black and white photographs were delightfully unlike anything I’ve ever seen done with a camera before, and more than once I caught myself smiling at his insight into his subjects.

BearThe entire collection consists of a series of large (around 4 by 6 feet), black and white photographs, separated by theme into a number of galleries. It opens with a series called “Dioramas,” which are photos taken of displays in some of New York’s natural history museums. When he first moved to New York in the 1970s, Sugimoto spent a lot of time wandering around the city’s museums. He was struck by how fake the three dimensional displays of animals in their various habitats with painted backgrounds appeared to the human eye. By closing one eye, he discovered that all perspective vanished and the displays seemed more life-like. From even a close distance, his photographs of a polar bear and its kill, or a group of carrion birds feasting on a carcass in the savanna appear indescribably real.

All of Sugimoto’s “Portraits” were taken in Madam Tussaud’s Wax Musuem in London, and through his camera’s lens these wax figures take on a degree of realness that is impossible to believe without actually standing in front of them. One room of the gallery features a very large, and very real-looking image of Henry the VIII, flanked on both sides and three walls by photographs of all six of his wives. But it gets better. The wax figure of Henry was based on a methodical study of portraits painted in the 16th century by Flemish artist Hans Holbein the Younger. Sugimoto conducted extensive research into lighting techniques used by painters of the period, applied them to the wax figure at Madam Tussaud’s and shot. The result is spectacular. From real life, to canvas, to wax, and then back to real life again.

TheatreThe rest of the collection departs somewhat from his theme of fake can be just as good, but in no way dissapoints. The series titled, “Theatres” is a number of smaller black and white shots taken inside darkened movie theatres or at drive-ins during the screening of a film. Sugimoto left his camera’s shutter open for the entire duration of the film, essentially capturing the entire film in a single shot. The contrast between the darkened interior of the theatres, many with classical design on the walls and ceilings, and the bright, white rectangular void of the glowing screen is haunting.

Sea of Japan“Seascapes” occupies the entire length of a long, darkened gallery that gently curves along the Hirshhorn’s rounded design. Each image is illiuminated individually by bright lights in the ceiling. Viewing the photos while sitting on one of the sofas in the gallery is almost like staring out many windows onto misty seascape horizons. The shots were taken of various seas around the globe (image to the right is of the Sea of Japan), at different times of day, so that the contrast between sea and sky vary from barely distinguishable, with the horizon line fading into each, to lightness and darkness that are as clear as day and night.

BuddhaThe adjacent gallery features the series, “Sea of Buddha,” which is a panorama constructed of forty eight photographs of the thousand and one Kannon statues in the Sanjusangen-do Temple in Kyoto. Sugimoto waited through seven long years of red tape perhaps only the Japanese are capable of serving up before he was allowed to shoot inside the temple. Prior to doing so, he had all non-period items removed from the room and the electric lights turned off so that the figures would reflect the morning sunlight filtering in from Higashiyama. Like “Seascapes” here too the gallery is darkened, with only the panorama lit, and curves along the wall of the building. Again, the effect is stunning.

There is of course more on display, and I strongly encourage any of our DC readers to get to the Hirschhorn as soon as possible and have a look at this man’s work. It’s free, open seven days a week from 10 a.m. to 5:30 p.m, and on display until May 14th.