ideas in motion

We Like Lists Because We Don't Want to Die

2009-11-15T18:46:00.001-08:00

By Susanne Beyer and Lothar Gorris

Italian novelist and semiotician Umberto Eco, who is curating a new exhibition at the Louvre in Paris, talks to SPIEGEL about the place lists hold in the history of culture, the ways we try to avoid thinking about death and why Google is dangerous for young people.

SPIEGEL: Mr. Eco, you are considered one of the world's great scholars, and now you are opening an exhibition at the Louvre, one of the world's most important museums. The subjects of your exhibition sound a little commonplace, though: the essential nature of lists, poets who list things in their works and painters who accumulate things in their paintings. Why did you choose these subjects?

Umberto Eco: The list is the origin of culture. It's part of the history of art and literature. What does culture want? To make infinity comprehensible. It also wants to create order -- not always, but often. And how, as a human being, does one face infinity? How does one attempt to grasp the incomprehensible? Through lists, through catalogs, through collections in museums and through encyclopedias and dictionaries. There is an allure to enumerating how many women Don Giovanni slept with: It was 2,063, at least according to Mozart's librettist, Lorenzo da Ponte. We also have completely practical lists -- the shopping list, the will, the menu -- that are also cultural achievements in their own right.

SPIEGEL: Should the cultured person be understood as a custodian looking to impose order on places where chaos prevails?

Eco: The list doesn't destroy culture; it creates it. Wherever you look in cultural history, you will find lists. In fact, there is a dizzying array: lists of saints, armies and medicinal plants, or of treasures and book titles. Think of the nature collections of the 16th century. My novels, by the way, are full of lists.

SPIEGEL: Accountants make lists, but you also find them in the works of Homer, James Joyce and Thomas Mann.

Eco: Yes. But they, of course, aren't accountants. In "Ulysses," James Joyce describes how his protagonist, Leopold Bloom, opens his drawers and all the things he finds in them. I see this as a literary list, and it says a lot about Bloom. Or take Homer, for example. In the "Iliad," he tries to convey an impression of the size of the Greek army. At first he uses similes: "As when some great forest fire is raging upon a mountain top and its light is seen afar, even so, as they marched, the gleam of their armour flashed up into the firmament of heaven." But he isn't satisfied. He cannot find the right metaphor, and so he begs the muses to help him. Then he hits upon the idea of naming many, many generals and their ships.

SPIEGEL: But, in doing so, doesn't he stray from poetry?

Eco: At first, we think that a list is primitive and typical of very early cultures, which had no exact concept of the universe and were therefore limited to listing the characteristics they could name. But, in cultural history, the list has prevailed over and over again. It is by no means merely an expression of primitive cultures. A very clear image of the universe existed in the Middle Ages, and there were lists. A new worldview based on astronomy predominated in the Renaissance and the Baroque era. And there were lists. And the list is certainly prevalent in the postmodern age. It has an irresistible magic.

SPIEGEL: But why does Homer list all of those warriors and their ships if he knows that he can never name them all?

Eco: Homer's work hits again and again on the topos of the inexpressible. People will always do that. We have always been fascinated by infinite space, by the endless stars and by galaxies upon galaxies. How does a person feel when looking at the sky? He thinks that he doesn't have enough tongues to describe what he sees. Nevertheless, people have never stopping describing the sky, simply listing what they see. Lovers are in the same position. They experience a deficiency of language, a lack of words to express their feelings. But do lovers ever stop trying to do so? They create lists: Your eyes are so beautiful, and so is your mouth, and your collarbone … One could go into great detail.

SPIEGEL: Why do we waste so much time trying to complete things that can't be realistically completed?

Eco: We have a limit, a very discouraging, humiliating limit: death. That's why we like all the things that we assume have no limits and, therefore, no end. It's a way of escaping thoughts about death. We like lists because we don't want to die.

'People Have Their Preferences'

SPIEGEL: In your exhibition at the Louvre, you will also be showing works drawn from the visual arts, such as still lifes. But these paintings have frames, or limits, and they can't depict more than they happen to depict.

Eco: On the contrary, the reason we love them so much is that we believe that we are able to see more in them. A person contemplating a painting feels a need to open the frame and see what things look like to the left and to the right of the painting. This sort of painting is truly like a list, a cutout of infinity.

SPIEGEL: Why are these lists and accumulations so particularly important to you?

Eco: The people from the Louvre approached me and asked whether I'd like to curate an exhibition there, and they asked me to come up with a program of events. Just the idea of working in a museum was appealing to me. I was there alone recently, and I felt like a character in a Dan Brown novel. (???) It was both eerie and wonderful at the same time. I realized immediately that the exhibition would focus on lists. Why am I so interested in the subject? I can't really say. I like lists for the same reason other people like football or pedophilia. People have their preferences.

SPIEGEL: Still, you are famous for being able to explain your passions …

Eco: … but not by talking about myself. Look, ever since the days of Aristotle, we have been trying to define things based on their essence. The definition of man? An animal that acts in a deliberate way. Now, it took naturalists 80 years to come up with a definition of a platypus. They found it endlessly difficult to describe the essence of this animal. It lives underwater and on land; it lays eggs, and yet it's a mammal. So what did that definition look like? It was a list, a list of characteristics.

SPIEGEL: A definition would certainly be possible with a more conventional animal.

Eco: Perhaps, but would that make the animal interesting? Think of a tiger, which science describes as a predator. How would a mother describe a tiger to her child? Probably by using a list of characteristics: The tiger is big, a cat, yellow, striped and strong. Only a chemist would refer to water as H2O. But I say that it's liquid and transparent, that we drink it and that we can wash ourselves with it. Now you can finally see what I'm talking about. The list is the mark of a highly advanced, cultivated society because a list allows us to question the essential definitions. The essential definition is primitive compared with the list.

SPIEGEL: It would seem that you are saying that we should stop defining things and that progress would, instead, mean only counting and listing things.

Eco: It can be liberating. The Baroque era was an age of lists. Suddenly, all the scholastic definitions that had been made in the previous era were no longer valid. People tried to see the world from a different perspective. Galileo described new details about the moon. And, in art, established definitions were literally destroyed, and the range of subjects was tremendously expanded. For instance, I see the paintings of the Dutch Baroque as lists: the still lifes with all those fruits and the images of opulent cabinets of curiosities. Lists can be anarchistic.

SPIEGEL: But you also said that lists can establish order. So, do both order and anarchy apply? That would make the Internet, and the lists that the search engine Google creates, prefect for you.

Eco: Yes, in the case of Google, both things do converge. Google makes a list, but the minute I look at my Google-generated list, it has already changed. These lists can be dangerous -- not for old people like me, who have acquired their knowledge in another way, but for young people, for whom Google is a tragedy. Schools ought to teach the high art of how to be discriminating.

SPIEGEL: Are you saying that teachers should instruct students on the difference between good and bad? If so, how should they do that?

Eco: Education should return to the way it was in the workshops of the Renaissance. There, the masters may not necessarily have been able to explain to their students why a painting was good in theoretical terms, but they did so in more practical ways. Look, this is what your finger can look like, and this is what it has to look like. Look, this is a good mixing of colors. The same approach should be used in school when dealing with the Internet. The teacher should say: "Choose any old subject, whether it be German history or the life of ants. Search 25 different Web pages and, by comparing them, try to figure out which one has good information." If 10 pages describe the same thing, it can be a sign that the information printed there is correct. But it can also be a sign that some sites merely copied the others' mistakes.

SPIEGEL: You yourself are more likely to work with books, and you have a library of 30,000 volumes. It probably doesn't work without a list or catalogue.

Eco: I'm afraid that, by now, it might actually be 50,000 books. When my secretary wanted to catalogue them, I asked her not to. My interests change constantly, and so does my library. By the way, if you constantly change your interests, your library will constantly be saying something different about you. Besides, even without a catalogue, I'm forced to remember my books. I have a hallway for literature that's 70 meters long. I walk through it several times a day, and I feel good when I do. Culture isn't knowing when Napoleon died. Culture means knowing how I can find out in two minutes. Of course, nowadays I can find this kind of information on the Internet in no time. But, as I said, you never know with the Internet.

SPIEGEL: You include a nice list by the French philosopher Roland Barthes in your new book, "The Vertigo of Lists." He lists the things he loves and the things he doesn't love. He loves salad, cinnamon, cheese and spices. He doesn't love bikers, women in long pants, geraniums, strawberries and the harpsichord. What about you?

Eco: I would be a fool to answer that; it would mean pinning myself down. I was fascinated with Stendhal at 13 and with Thomas Mann at 15 and, at 16, I loved Chopin. Then I spent my life getting to know the rest. Right now, Chopin is at the very top once again. If you interact with things in your life, everything is constantly changing. And if nothing changes, you're an idiot.

Interview conducted by Susanne Beyer and Lothar Gorris

After 20 years

2009-11-15T17:49:00.000-08:00

Gorbachev on 1989
By Katrina vanden Heuvel & Stephen F. Cohen

This article appeared in the November 16, 2009 edition of The Nation.
October 28, 2009

On September 23, Nation editor Katrina vanden Heuvel and her husband, Stephen F. Cohen, a contributing editor, interviewed former Soviet President Mikhail Gorbachev at his foundation in Moscow. With the twentieth anniversary of the fall of the Berlin Wall approaching, we believed that the leader most responsible for that historic event should be heard, on his own terms, in the United States. As readers will see, the discussion became much more wide-ranging. --The Editors

KVH/SFC: Historic events quickly generate historical myths. In the United States it is said that the fall of the Berlin Wall and the end of a divided Europe was caused by a democratic revolution in Eastern Europe or by American power, or both. What is your response?

MG: Those developments were the result of perestroika in the Soviet Union, where democratic changes had reached the point by March 1989 that for the first time in Russia's history democratic, competitive elections took place. You remember how enthusiastically people participated in those elections for a new Soviet Congress. And as a result thirty-five regional Communist Party secretaries were defeated. By the way, of the deputies elected, 84 percent were Communists, because there were a lot of ordinary people in the party--workers and intellectuals.

On the day after the elections, I met with the Politburo, and said, "I congratulate you!" They were very upset. Several replied, "For what?" I explained, "This is a victory for perestroika. We are touching the lives of people. Things are difficult for them now, but nonetheless they voted for Communists." Suddenly one Politburo member replied, "And what kind of Communists are they!" Those elections were very important. They meant that movement was under way toward democracy, glasnost and pluralism.

Analogous processes were also under way in Eastern and Central Europe. On the day I became Soviet leader, in March 1985, I had a special meeting with the leaders of the Warsaw Pact countries, and told them: "You are independent, and we are independent. You are responsible for your policies, we are responsible for ours. We will not intervene in your affairs, I promise you." And we did not intervene, not once, not even when they later asked us to. Under the influence of perestroika, their societies began to take action. Perestroika was a democratic transformation, which the Soviet Union needed. And my policy of nonintervention in Central and Eastern Europe was crucial. Just imagine, in East Germany alone there were more than 300,000 Soviet troops armed to the teeth--elite troops, specially selected! And yet, a process of change began there, and in the other countries, too. People began to make choices, which was their natural right.

But the problem of a divided Germany remained. The German people perceived the situation as abnormal, and I shared their attitude. Both in West and East Germany new governments were formed and new relations between them established. I think if the East German leader Erich Honecker had not been so stubborn--we all suffer from this illness, including the person you are interviewing--he would have introduced democratic changes. But the East German leaders did not initiate their own perestroika. Thus a struggle broke out in their country.

The Germans are a very capable nation. Even after what they had experienced under Hitler and later, they demonstrated that they could build a new democratic country. If Honecker had taken advantage of his people's capabilities, democratic and economic reforms could have been introduced that might have led to a different outcome.

I saw this myself. On October 7, 1989, I was reviewing a parade in East Germany with Honecker and other representatives of the Warsaw Pact countries. Groups from twenty-eight different regions of East Germany were marching by with torches, slogans on banners, shouts and songs. The former prime minister of Poland, Mieczyslaw Rakowski, asked me if I understood German. "Enough to read what's written on the banners. They're talking about perestroika. They're talking about democracy and change. They're saying, 'Gorbachev, stay in our country!'" Then Rakowski remarked, "If it's true that these are representatives of people from twenty-eight regions of the country, it means the end." I said, "I think you're right."

KVH/SFC: That is, after the Soviet elections in March 1989, the fall of the Berlin Wall was inevitable?

MG: Absolutely!

KVH/SFC: Did you already foresee the outcome?

MG: Everyone claims to have foreseen things. In June 1989 I met with West German Chancellor Helmut Kohl and we then held a press conference. Reporters asked if we had discussed the German question. My answer was, "History gave rise to this problem, and history will resolve it. That is my opinion. If you ask Chancellor Kohl, he will tell you it is a problem for the twenty-first century."

I also met with the East German Communist leaders, and told them again, "This is your affair and you have the responsibility to decide." But I also warned them, "What does experience teach us? He who is late loses." If they had taken the road of reform, of gradual change--if there had been some sort of agreement or treaty between the two parts of Germany, some sort of financial agreement, some confederation, a more gradual reunification would have been possible. But in 1989-90, all Germans, both in the East and the West, were saying, "Do it immediately." They were afraid the opportunity would be missed.

KVH/SFC: A closely related question: when did the cold war actually end? In the United States, there are several answers: in 1989, when the Berlin Wall came down; in 1990-91, after the reunification of Germany; and the most popular, even orthodox, answer, is that the cold war ended only when the Soviet Union ended, in December 1991.

MG: No. If President Ronald Reagan and I had not succeeded in signing disarmament agreements and normalizing our relations in 1985-88, the later developments would have been unimaginable. But what happened between Reagan and me would also have been unimaginable if earlier we had not begun perestroika in the Soviet Union. Without perestroika, the cold war simply would not have ended. But the world could not continue developing as it had, with the stark menace of nuclear war ever present.

Sometimes people ask me why I began perestroika. Were the causes basically domestic or foreign? The domestic reasons were undoubtedly the main ones, but the danger of nuclear war was so serious that it was a no less significant factor. Something had to be done before we destroyed each other. Therefore the big changes that occurred with me and Reagan had tremendous importance. But also that George H.W. Bush, who succeeded Reagan, decided to continue the process. And in December 1989, at our meeting in Malta, Bush and I declared that we were no longer enemies or adversaries.

KVH/SFC: So the cold war ended in December 1989?

MG: I think so.

KVH/SFC: Many people disagree, including some American historians.

MG: Let historians think what they want. But without what I have described, nothing would have resulted. Let me tell you something. George Shultz, Reagan's secretary of state, came to see me two or three years ago. We reminisced for a long time--like old soldiers recalling past battles. I have great respect for Shultz, and I asked him: "Tell me, George, if Reagan had not been president, who could have played his role?" Shultz thought for a while, then said: "At that time there was no one else. Reagan's strength was that he had devoted his whole first term to building up America, to getting rid of all the vacillation that had been sown like seeds. America's spirits had revived. But in order to take these steps toward normalizing relations with the Soviet Union and toward reducing nuclear armaments--there was no one else who could have done that then."

By the way, in 1987, after my first visit to the United States, Vice President Bush accompanied me to the airport, and told me: "Reagan is a conservative. An extreme conservative. All the blockheads and dummies are for him, and when he says that something is necessary, they trust him. But if some Democrat had proposed what Reagan did, with you, they might not have trusted him."

By telling you this, I simply want to give Reagan the credit he deserves. I found dealing with him very difficult. The first time we met, in 1985, after we had talked, my people asked me what I thought of him. "A real dinosaur," I replied. And about me Reagan said, "Gorbachev is a diehard Bolshevik!"

KVH/SFC: A dinosaur and a Bolshevik?

MG: And yet these two people came to historic agreements, because some things must be above ideological convictions. No matter how hard it was for us and no matter how much Reagan and I argued in Geneva in 1985, nevertheless in our appeal to the peoples of the world we wrote: "Nuclear war is inadmissible, and in it there can be no victors." And in 1986, in Reykjavik, we even agreed that nuclear weapons should be abolished. This conception speaks to the maturity of the leaders on both sides, not only Reagan but people in the West generally, who reached the correct conclusion that we had to put an end to the cold war.

KVH/SFC: So Americans who say the cold war ended only with the end of the Soviet Union are wrong?

MG: That's because journalists, politicians and historians in your country concluded that the United States won the cold war, but that is a mistake. If the new Soviet leadership and its new foreign policy had not existed, nothing would have happened.

KVH/SFC: In short, Gorbachev, Reagan and the first President Bush ended the cold war?

MG: Yes, in 1989-90. It was not a single action but a process. Bush and I made the declaration at Malta, but Reagan would have had no less grounds for saying that he played a crucial role, because he, together with us, had a fundamental change of attitude. Therefore we were all victors: we all won the cold war because we put a stop to spending $10 trillion on the cold war, on each side.

KVH/SFC: What was most important--the circumstances at that time or the leaders?

MG: The times work through people in history. I'll tell you something else that is very important about what subsequently happened in your country. When people came to the conclusion that they had won the cold war, they concluded that they didn't need to change. Let others change. That point of view is mistaken, and it undermined what we had envisaged for Europe--mutual collective security for everyone and a new world order. All of that was lost because of this muddled thinking in your country, and which has now made it so difficult to work together. World leadership is now understood to mean that America gives the orders.

KVH/SFC: Is that why today, twenty years after you say the cold war ended, the relationship between our two countries is so bad that President Obama says it has to be "reset"? What went wrong?

MG: Even before the end of the cold war, Reagan, Bush and I argued, but we began to eliminate two entire categories of nuclear weapons. We had gone very far, almost to the point when a return to the past was no longer possible. But everything went wrong because perestroika was undermined and there was a change of Russian leadership and a change from our concept of gradual reform to the idea of a sudden leap. For Russian President Boris Yeltsin, ready-made Western recipes were falling into his hands, schemes that supposedly would lead to instant success. He was an adventurist. The fall of the Soviet Union was the key moment that explains everything that happened afterward, including what we have today. As I said, people in your country became dizzy with imagined success: they saw everything as their victory.

In Yeltsin, Washington ended up with a vassal who thought that because of his anticommunism he would be carried in their arms. Delegations came to Russia one after the other, including President Bill Clinton, but then they stopped coming. It turned out no one needed Yeltsin. But by then half of Russia's industries were in ruins, even 60 percent. It was a country with a noncompetitive economy wide open to the world market, and it became slavishly dependent on imports.

How many things were affected! All our plans for a new Europe and a new architecture of mutual security. It all disappeared. Instead, it was proposed that NATO's jurisdiction be extended to the whole world. But then Russia began to revive. The rain of dollars from higher world oil prices opened up new possibilities. Industrial and social problems began to be solved. And Russia began to speak with a firm voice, but Western leaders got angry about that. They had grown accustomed to having Russia just lie there. They thought they could pull the legs right out from under her whenever they wanted.

The moral of the story--and in the West morals are everything--is this: under my leadership, a country began reforms that opened up the possibility of sustained democracy, of escaping from the threat of nuclear war, and more. That country needed aid and support, but it didn't get any. Instead, when things went bad for us, the United States applauded. Once again, this was a calculated attempt to hold Russia back. I am speaking heatedly, but I am telling you what happened.

KVH/SFC: But now Washington is turning to Moscow for help, most urgently perhaps in Afghanistan. Exactly twenty years ago, you ended the Soviet war in Afghanistan. What lessons did you learn that President Obama should heed in making his decisions about Afghanistan?

MG: One was that problems there could not be solved with the use of force. Such attempts inside someone else's country end badly. But even more, it is not acceptable to impose one's own idea of order on another country without taking into account the opinion of the population of that country. My predecessors tried to build socialism in Afghanistan, where everything was in the hands of tribal and clan leaders, or of religious leaders, and where the central government was very weak. What kind of socialism could that have been? It only spoiled our relationship with a country where we had excellent relations during the previous twenty years.

Even today, I am criticized that it took three years for us to withdraw, but we tried to solve the problem through dialogue--with America, with India, with Iran and with both sides in Afghanistan, and we attended an international conference. We didn't simply hitch up our trousers and run for it, but tried to solve the problem politically, with the idea of making Afghanistan a neutral, peaceful country. By the way, when we were getting ready to pull out our troops and were preparing a treaty of withdrawal, what did the Americans do? They supported the idea of giving religious training to young Afghans--that is, the Taliban. As a result, now they are fighting against them. Today, again, not just America and Russia can be involved in solving this problem. All of Afghanistan's neighbors must be involved. Iran cannot be ignored, and it's ill-advised for America not to be on good terms with Iran.

KVH/SFC: Finally, a question about your intellectual-political biography. One author called you "the man who changed the world." Who or what most changed your own thinking?

MG: Gorbachev never had a guru. I've been involved in politics since 1955, after I finished university, when there was still hunger in my country as a result of World War II. I was formed by those times and by my participation in politics. In addition, I am an intellectually curious person by nature and I understood that many changes were necessary, and that it was necessary to think about them, even if it caused me discomfort. I began to carry out my own inner, spiritual perestroika--a perestroika in my personal views. Along the way, Russian literature and, in fact, all literature, European and American too, had a big influence on me. I was drawn especially to philosophy. And my wife, Raisa, who had read more philosophy than I had, was always there alongside me. I didn't just learn historical facts but tried to put them in a philosophical or conceptual framework.

I began to understand that society needed a new vision--that we must view the world with our eyes open, not just through our personal or private interests. That's how our new thinking of the 1980s began, when we understood that our old viewpoints were not working out. During the nuclear arms race, I was given a gift by an American, a little figure of a goose in flight. I still have it at my dacha. It is a goose that lives in the north of Russia in the summer and in the winter migrates to America. It does that every year regardless of what's happening, on the ground, between you and us. That was the point of this gift and that's why I'm telling you about it.

KVH/SFC: Listening to you, it seems that you became a political heretic in your country.

MG: I think that is true. I want to add that I know America well now, having given speeches to large audiences there regularly. Three years ago I was speaking in the Midwest, and an American asked me this question: "The situation in the United States is developing in a way that alarms us greatly. What would you advise us to do?" I said, "Giving advice, especially to Americans, is not for me." But I did say one general thing: that it seems to me that America needs its own American perestroika. Not ours. We needed ours, but you need yours. The entire audience stood and clapped for five minutes.

KVH/SFC: And do you think President Obama will be the leader of such an American perestroika?

MG: As far as I know, Americans did not make a mistake in electing him. Barack Obama is capable of leading your society on a very high level and of understanding it better than any political figure I know. He is an educated person with a highly developed capacity for dialogue, and that too is very important. So I congratulate you.

reality seems to stubbornly follow its own ways

2009-11-15T14:19:00.000-08:00

From today's NYTimes:

In a July meeting, Chinese officials asked their American counterparts detailed questions about the health care legislation making its way through Congress. The president's budget director, Peter R. Orszag, answered most of their questions. But the Chinese were not particularly interested in the public option or universal care for all Americans.

"They wanted to know, in painstaking detail, how the health care plan would affect the deficit," one participant in the conversation recalled. Chinese officials expect that they will help finance whatever Congress and the White House settle on, mostly through buying Treasury debt, and like any banker, they wanted evidence that the United States had a plan to pay them back.

In the face of so much conversation about modeling our way out of the current problems, reality seems to stubbornly follow its own ways. Even a happy accident may be possible, but not before we see higher taxes, I said it then, I say it now. One of the effects of this situation is probably a more common understanding in the US of what national interest is.

When action speaks louder than words, yet the message remains... oracular

2009-09-09T08:04:00.000-07:00

Here's an interesting comment on a recent decision of Warren Buffett to sell Moody stock:

Rob G
Niskayuna, NY

Buy low, sell high depends on the QUALITY of information one receives from reputable sources.

Over the past decade or so, there's been a disturbing decrease in the quality and clarity of reporting from organizations normally tasked to report fundamentals. Where are all the big accounting houses that used to audit and certify financial statements? What happened to responsible, effective government oversight? Why is everyone keen on moving to the "mark to model" securities valuation methods when those models are NOT PUBLISHED and therefore not critically scrutinized?

That Buffett is divesting Moody's should sound alarms everywhere. Moody's makes money publishing quality research. "Moody's Investors Service is among the world’s most respected and widely utilized sources for credit ratings, research and risk analysis," its website reads. If Buffett sees no future (especially in light of the recent past) in that critical and iconic institution, what is he thinking?

Without quality and clarity of information, effective financial transactions become the domain of large investors who have access to inside, non-public information - that being the only way left to accurately judge risk. Smaller investors, who have no such access, shut themselves out for their own good.

Buffett may have trusted public sources before, and that may have contributed to his losses. But his methodology of using fundamentals to gauge risk remains valid. The real question is, can we trust the fundamentals?

In other words, is the world of rating agencies as we know them over? If so, what does it mean? For Buffett it means at least the chance for lower income. That lower income may be the result of a loss of market--outside US capital markets may come up with their own rating mechanisms, and/or the revenue model will be impaired by regulatory constraints placed on rating agencies. For the rest of us it changes the way we get our information about capital and its working. Rob G. seems to think we'll enter an even darker age...

The Remote Control Presidency

2009-09-03T20:16:00.000-07:00

I think the current healthcare debate reveals we may have a problem ourselves. Could it be that too much reward relative to the effort for too many of us has eroded the culture of the people? Indeed, how else could the current disenchantment with, say, Obama be justified if not by the fact that many think they must have voted for the remote control presidency? Such arrangement, ideally, requires little engagement, lest commitment for action, other than the equivalent of operating a remote control button.

Assuming that a good man can make all the needed difference by himself, even if he inhabits the residence at 1600 Pennsylvania Ave., is oversimplifying, if not outright delusional. For one, insurance companies are one of the capitalism pillars, by supplying investment capital (together with banking, retirement funds and the state itself). Then, proving commitment in terms of some sort of action is the best way to be taken seriously.

Yukio HatoyamaThe New Prime Minister of Japan

2009-09-03T16:31:00.001-07:00

We are currently standing at a turning point in global history, and therefore our resolve and vision are being tested, not only in terms of our ability to formulate policies to stimulate the domestic economy, but also in terms of how we try to build a new global political and economic order. I would like to conclude by quoting the words of Count Coudenhove-Kalergi, the father of the EU, written 85 years ago, when he published Pan-Europa.

"All great historical ideas started as a utopian dream and ended with reality".

"Whether a particular idea remains as a utopian dream or it can become reality depends on the number of people who believe in the ideal and their ability to act upon it."

Excerpted from “My Political Philosophy”, by Yukio Hatoyama, Prime Minister of Japan

The above excerpt, as well as the entire text, would not mean much unless Mr. Hatoyama were not the head to the government whose country is the 2^nd largest buyer of US treasuries.

still enjoying the internet while it's here

2009-08-12T09:24:00.000-07:00

By now, most of us take the internet for granted, not unlike any utility resource. Its popularity is seldom considered together with its vulnerability--technical, behavioral, political, etc. In fact, I would ponder as whether or not the vulnerability of the internet grows with its popularity, especially beyond reaching some adoption threshold.

Here are two directions in which the internet as we know it today may go into:

Stuff of any value won't be free of charge;
Countries, or groups thereof, will enforce permanent or temporary "safe areas;" communications in and out of such areas will have to be cleared at router level.

In evaluating the above suggestions, just consider the "unipolar world" as a brief between bi- and multi-polarity, and the fact that advertising alone cannot pay for it all. In fact, if one really understood the eventual costs of the "free stuff," one might volunatrily want to pay for it, no strings attached. Just like paying to have your phone number unlisted...

Chinese VP Wang Qishan, center, holds the autographed basketball given to him by Obama

2009-07-28T17:42:00.001-07:00

P072809PS-0458, originally uploaded by The Official White House Photostream.

The US-Chinese train has left the station long ago; We are only checking the roadmap and recalculating the schedule now.

back from the summit

2009-07-15T10:43:00.001-07:00

yohaku-no-bi: beauty of extra white

The implicit magnificence makes you cry--for joy, or otherwise.

on the nature of work

2009-07-01T07:27:00.000-07:00

Timothy Garton Ash, in a recent Der Spiegel interview implicitly talks about the nature of work in our society.

Garton Ash: [..]We must make the social market economy credible again as the central solution for the middle class.

SPIEGEL: How?

Garton Ash: There are two major domestic policy challenges for the European Union. First: Creating meaningful work for the majority of society. And second: the integration of fellow citizens of non-European descent.

In fact, it was Albert Camus who spoke earlier (cca. 1951) about work's lacking meaning. Making a living has become comparatively much easier than ever before. But we lost something in the process, which, despite Mr. Garton Ash prescription, won't be easy to come by.

It still can go anywhere

2009-05-31T14:13:00.000-07:00

As Secretaries Clinton and Geithner went to China, I wondered if and how long before we had a roadmap for the reunification of Taiwan. Such roadmap would be a prerequisite of Chimerica.

However, some important voices consider the notion of a duopoly between China and America (Chimerica) a mirage and suggest that a way out would be for the US and other countries to speak to China with one voice. Moreover, from Der Spiegel, we learn that:

Last month, Beijing completed the last of a series of so-called currency swaps -- providing yuan to other central banks for use in trade with China -- with Argentina, Hong Kong, Indonesia, Malaysia, South Korea, and others. These arrangements theoretically removed any need for these trading partners to use the dollar as an intermediary currency in dealing with China. Last week, Beijing denominated a bilateral trade deal with Brazil in the two countries' currencies, rather than in dollars; the value of the agreement was not specified. The value of the other agreements comes to $95 billion (€68 billion). By way of comparison, US-Chinese trade amounted to $333 billion (€238 billion) in 2008.

So China is using bilateralism, not unlike the US has since the end of the Cold War, to grow its status. Moreover, China is coopting US friends as well into her bilateralism.

One can only ask, where is multilateralism when you need it? Bush, the president about whom the Economist wrote that there had been no multilateral agreement to his liking, and his neocon apparatus have a lot to answer for this. The most that camp could come up with was the group of democracies, through the writings of Robert Kagan, during John McCain's electoral campaign.

The challenge now is for Obama to convince the US allies, and the world at large, that there is in the self interest of everyone to continue to support Pax Americana, and the US dollar. In other words, it's worth paying protection tax, as it were. However, the challenge then becomes how to frame LARGE the loses of leaving the US shrinking umbrella when countries and peoples suffer what they may soon imagine as a deluge.

And, for whatever reason, I now feel compelled to make the following observation: There is no tax cut, or at least not as it's been defined by the conservative camp. It's only a taxation position along a continuum defined between front-loading and back-loading.

Trends in Work Attire 2009-2010

2009-05-28T19:16:00.001-07:00

2009-04-30T10:17:00.000-07:00

Beethoven was just like you and I, only that much more.

Ten principles for a Black Swan-proof world

2009-04-18T19:18:00.000-07:00

Published: Financial Times, April 7 2009

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.

6. Do not give children sticks of dynamite, even if they come with a warning . Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.

8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).

10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.

Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.

In other words, a place more resistant to black swans.

Nassim Nicholas Taleb

The deregulation before deregulation

2009-04-15T06:36:00.000-07:00

We are where we are, don't like it so some soul searching is in order. Thomas Geoghegan, a Chicago (labor) lawyer, takes a historical detour to search for the root causes of today's situation beyond the deregulation of the last decade or so. In a recent Harper's article “Infinite Debt: How Unlimited Interest Rates Destroyed the Economy ,” Geoghehan is looking at:

Interest rates deregulation--worth mentioning is that both Adams Smith and JM Keynes were in favor of capping interest rates, for otherwise, in addition to hurting the masses, capital flees from production to banking due to higher rates of return;
Weakening of labor unions, which in turn led to lower negotiating power for skilled labor--as the author puts it, the side effect was that union cards were replaced by credit cards;
The ability of corporations to eliminate contractual employee-liabilities (read pensions and health-care obligations) through Chapter 11 reorganization.

Following is a Democracy Now! interview where the main points in the article and suggestions for the future are provided:

Obama - Gorbachev

2009-03-30T09:33:00.000-07:00

Due either to the vagaries of the body-politik in Washington DC, or to his own temperament and biases, Obama is taking the Japanese way out of the current problems--read, long.

On the other hand, at times, it's hard to resist a growing sense of déjà vu: Obama as the Financial Capitalism's Gorbachev.

Click here to read what the LinkedIn professionals think of this subject.

(Photo Source: President Barack Obama drops by VP Joe Biden's meeting with former Soviet Union President Mikhail Gorbachev in the Vice President's Office, West Wing 3/20/09. Official White House Photo by Pete Souza)

Home to Roost or the banker as chicken

2008-11-18T11:51:00.000-08:00

The chickens

are circling and
blotting out the
day. The sun is
bright, but the
chickens are in
the way. Yes,
the sky is dark
with chickens,
dense with them.
They turn and
then they turn
again. These
are the chickens
you let loose
one at a time
and small—
various breeds.
Now they have
come home
to roost—all
the same kind
at the same speed.

...and now click here to hear it in the voice of the author, Kay Ryan

The following YouTube Kay Ryan insert illustrates how interestingly beautiful life can turn amidst language commons.

On Obama's tax Plan

2008-10-20T17:12:00.000-07:00

Paying taxes is a suckers' game for many. Too often, big money is being spent on tax avoidance schemes, which in turn distort behavior. Apparently, some individuals cannot think of what it takes to run modern states, while corporations have become states within states.

Our presidential hopefuls make all kinds of tax-related promises that are either unrealistic or incompletely specified. Even if McCain were to win, he could only raise taxes. Obama has come out as favoring tax-increases for those families making more than $250,000/year. Since Obama appears to have better chances to win, I will quote a couple of tax-related comments pertaining to his tax plan:

1) I'm a Democrat and an Obama supporter -- a volunteer, in fact. I am also a salaried professional, married to Joe the construction manager. Together, we earn about $250,000 a year, after deductions, and therefore will be paying higher taxes under Obama's tax plan. This even though we live in the NYC metro area, where the cost of living is 2.5 times the national average. That means that our income has the purchasing power of $100,000 in Podunk. We ain't starving, but neither are we Mr. & Mrs. Richie the Hedge Fund Manager.

My point is that Obama's plan will in fact impact the urban, professional middle class. Most of us are voting for him, but let's be honest; we are paying high taxes already here in Westchester County, plus high energy costs, plus high health care costs, and the extra $3,000 or so per year that Obama's plan will cost a family in my income bracket will not come easily.

I wish that Obama would include a "cost of living" adjustment in his tax plan, so that middle-class professionals in big cities wouldn't take a hit. On the other hand, if I have to sacrifice so that Richie finally pays his share, then I'll bite the bullet.
— KT, Chappaqua, NY
2) My husband and I have worked hard over the course of our careers. Now that we are in our late 50s, we are mature in our professions and in our earning capacities. After many years of post-graduate education, we each attained the credentials necessary for our respective professions, and we have each subsequently put in countless hours (and immeasurable passion) to serve, in his case, patients, and, in my case, clients. We net more than $250,000 annually. Although we are now worried about the value of our investments, we are still looking forward to a comfortable retirement in the next decade.

While we don't particularly enjoy paying taxes, we do enjoy being citizens of the United States. We do expect to contribute to the education, infrastructure, public health, social welfare, safety, and culture of the country we live in. We do want to do our part to insure its future. So, while we may sigh when we write checks to the IRS, we also take some satisfaction in the belief that we are integral to the success of our country. Moreover, because we can afford to pay a larger share of our income than others can, we expect to do so.

Regardless of our professional success, however, we still are limited in our income potential by our relying principally on reimbursement for our labor. There are many others in the over $250,000/year category with incomes much greater than ours. There are many whose earnings come from their investments or their executive positions enabling them to partake of large shares of corporate earnings. Fairness requires that these individuals pay even greater amounts/percentages of their income than those of us who are essentially high-earning workers do. The tax rate needs to continue to slide upward, for top incomes go way, way, way above $250,000 annually. Those corporate executives who take millions in cash, bonuses, and stocks do not even breathe the same air as my husband and I. Their tax rate has to be greater than ours. In the tax realm, that's all I ask of Obama when he takes over the reins of this country, which he will do, and not a moment too soon.
— Shelley, Santa Barbara

For the middle of the road family of professionals, I would say, expect to pay about 10 - 15 percentage points more in taxes. In other words, a 30% rate will go to about +40%. And, judging by the way Democrats on Capitol Hill voted for all financial issues, I would not hold my breath on the points raised in the above two comments, unless one really believed in transformational presidencies.

Andrew Lahde's Farewell Letter

2008-10-18T18:31:00.000-07:00

October 17, 2008
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say good-bye.

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list of those deserving thanks know who they are.

I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.

So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don’t worry about my employees, they were always employed by Mr. Springer’s company and only one (who has been well-rewarded) will lose his job.

I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life – where I had to compete for spaces in universities and graduate schools, jobs and assets under management – with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.

On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government. Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man’s interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft’s near monopoly. I believe there is an answer, but for now the system is clearly broken.

Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won’t see it included in BP’s, “Feel good. We are working on sustainable solutions,” television commercials, nor is it mentioned in ADM’s similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant – marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other addictive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let’s stop the rhetoric and start thinking about how we can truly become self-sufficient.

With that I say good-bye and good luck.

All the best,
Andrew Lahde

Andrew Lahde's Farewell Letter -

Gimme the next bubble!

2008-10-15T16:41:00.000-07:00

After a long sequence of not doing the right thing-s, our western world is headed if not down then lower. " Down" is probably too sudden relative to how history evolves and the preparedness of the Chinese, or lack thereof.

The "low," as I see it, can be described in terms of under-, and un-employment, but one can think of many other metrics.

In the US, even if the ever shifting targets of the (now) $700Bn TARP are reached, how does this address the more real problem of jobs creation? For the time being, the voices one can hear, from the House Speaker Pelosi to über-investor Buffet, sound optimistic about the financial prospects of the system and pessimistic about jobs.

So, one gets the feeling that the government has extricated itself from several of the responsibilities associated with running the state. We've come to rely on Wall Street to sort out most society decision-making needs--from pensions to child-care, from environment to efficient allocation of resources, from war to peace.

That free markets have more in common with flea markets than financial markets is a fact we painfully reckon with periodically. And, re-adjusting for such facts, read bailing the system out, is probably a tax on our beliefs (e.g. in smaller government) and hope that the next bubble will rescue ME. Somehow, the growing problem with Wall Street is that it needs more money each time it's crying for rescue.

Bush tried to privatize social security for he most probably learned about the real problem in the economy 8 years ago to these days. Failing to privatize social security, and succeeding only moderately to stimulate jobs growth with the Iraq War, he had given free hand to the bankers.

Yet, for people like us, the recession started in 2000-2001. By “us” I mean people who have not worked in: defense, real estate, healthcare (insurance, included), banking. Now, one can only wish the military Keynesianism had been applied towards national infrastructures instead of sand castles in Iraq…

Most probably, the upcoming elections will effect a kind of Keynesianism different from the one characterizing the last 8 years. If this is going to be the case, healthcare automation and alternative energy would be two areas where bubblets, if not bubbles, are likely to develop.

As a side issue, the huge size of our economic/financial actors has dealt these days' near fatal blow to our system, yet nobody seems to notice that most all solutions lead to even further size increases and fewer players.

Wall Street: How good of an approximation for market-based capitalism?

2008-09-23T18:57:00.000-07:00

Four months ago I challenged the LinkedIn community with a topic titled "Survival of Capitalism." Last week, one of my LinkedIn connections asked the question "Is capitalism dead?"

Needless to say, within the time between these two almost identical questions, the answers have taken quite different paths. Here's what I've learned myself, or how I replied to the second question:

There is a useful distinction between capitalism and free markets as illustrated by Arrighi and others. According to Arrighi, the US form of capitalism entered its final stage in the 1970s. Moreover, capitalism does not die, it just goes to live in another country, with better/more accommodating systems.

At this point in time, increasingly, the answer to your question is in the hands of the US creditor(s). They'll have an increasing say in how the capitalism evolves from here on.

On the other hand, I raised a very similar question to yours, about 4 months ago. I was not aware at that time of the distinction between capitalism and free markets, yet I felt there was something rotten in capitalism. Worth reading are all the answers at that time--see also the implicit "socialist" cries from folks in very regulated industries....

As I've been writing about markets and their actors for some time, allow me to reference the following: Wall Street: How good of an approximation it makes? ... for market-based capitalism?

“No Directions to the Solzhenitsyn(s)”

2008-08-04T08:30:00.000-07:00

my takes on the short and medium term future

2008-07-14T14:28:00.000-07:00

There is a lot of talk about the upward gyrations in prices and one can easily look for answers in whatever quarter suits one's taste. Here in the US, the loudest voice seems to attribute this to the growth in demand from places like China and India. Across the Atlantic, speculation is considered as source if the problem.

Recently, I wrote the following in response to a question posted on LinkedIn by a fellow professional (Would you agree with these predictions).

In the best case scenario, we are one to two years away from an unqualified uptrend.

Internationally speaking, follow: Iran-Israel-NATO, the ability and willingness of the Chinese to maintain growth in today's terms.

In the US, follow: elections, war(s) cost/debt, interest rates vs. inflation, policy, institutional restructuring, immigration.

Upon deciding which way the above variables are likely to swing, the particular answers to your questions come closer to one's reach. Right now, it is not the intrinsic state of any one economy that creates as much problem as the general level of uncertainty.

boltzmann's brain

2008-02-27T20:50:00.000-08:00

A recent NYTimes article on Boltzmann's Brain poses a few problems about our being (self aware as) the result of a stochastic fluctuation in the level of entropy, or the sense of time. Especially in our (en-)lightened cities, where star gazing has become a mere metaphor, such problems are as powerful as disturbing.

a world of change

2008-01-31T15:36:00.000-08:00

Amidst the electoral noise, ranging from Ron Paul's ghost state to John McCain's 100-year long involvement in Iraq, Waving Goodbye to Hegemony, a recent NYTimes piece by PARAG KHANNA, makes for a timely and noteworthy change in perspective. Even though business people are not its main target, they would learn a great many lesson, as well. In fact, the aforementioned article, together with works like The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century should give business people plenty of food for thought. Indeed, in a recent LinkedIn Q&A exchange, Steve Terry, President with Triact Associates, had to say the following about the The 86 Percent Solution:

I think the biggest challenge is for product marketing pros in the wealthy nations to get their minds wrapped around the daily concerns of folks with very litte money. Things we take for granted (reliable utilities, quality medical care, cheap transportation) are top-of-mind for the 86% of humanity.

If western companies don't change their mindset, or create subsidiaries to address these markets, the consequence is that producers in India and China will clean up. While we may think of China as the manufacturer for the (rich) world, their local talent is better able to imagine and design products for the 86% market than the industrial giants of the west.

And now, here's an excerpt with Parag Khanna's recommendations. See what's in them for you and your business.

Less Can Be More

So let’s play strategy czar. You are a 21st-century Kissinger. Your task is to guide the next American president (and the one after that) from the demise of American hegemony into a world of much more diffuse governance. What do you advise, concretely, to mitigate the effects of the past decade’s policies — those that inspired defiance rather than cooperation — and to set in motion a virtuous circle of policies that lead to global equilibrium rather than a balance of power against the U.S.?

First, channel your inner J.F.K. You are president, not emperor. You are commander in chief and also diplomat in chief. Your grand strategy is a global strategy, yet you must never use the phrase “American national interest.” (It is assumed.) Instead talk about “global interests” and how closely aligned American policies are with those interests. No more “us” versus “them,” only “we.” That means no more talk of advancing “American values” either. What is worth having is universal first and American second. This applies to “democracy” as well, where timing its implementation is as important as the principle itself. Right now, from the Middle East to Southeast Asia, the hero of the second world — including its democracies — is Lee Kuan Yew of Singapore.

We have learned the hard way that what others want for themselves trumps what we want for them — always. Neither America nor the world needs more competing ideologies, and moralizing exhortations are only useful if they point toward goals that are actually attainable. This new attitude must be more than an act: to obey this modest, hands-off principle is what would actually make America the exceptional empire it purports to be. It would also be something every other empire in history has failed to do.

Second, Pentagonize the State Department. Adm. William J. Fallon, head of Central Command (Centcom), not Robert Gates, is the man really in charge of the U.S. military’s primary operations. Diplomacy, too, requires the equivalent of geographic commands — with top-notch assistant secretaries of state to manage relations in each key region without worrying about getting on the daily agenda of the secretary of state for menial approvals. Then we’ll be ready to coordinate within distant areas. In some regions, our ambassadors to neighboring countries meet only once or twice a year; they need to be having weekly secure video-conferences. Regional institutions are thriving in the second world — think Mercosur (the South American common market), the Association of Southeast Asian Nations (Asean), the Gulf Cooperation Council in the Persian Gulf. We need high-level ambassadors at those organizations too. Taken together, this allows us to move beyond, for example, the current Millennium Challenge Account — which amounts to one-track aid packages to individual countries already going in the right direction — toward encouraging the kind of regional cooperation that can work in curbing both terrorism and poverty. Only if you think regionally can a success story have a demonstration effect. This approach will be crucial to the future of the Pentagon’s new African command. (Until last year, African relations were managed largely by European command, or Eucom, in Germany.) Suspicions of America are running high in Africa, and a country-by-country strategy would make those suspicions worse. Finally, to achieve strategic civilian-military harmonization, we have to first get the maps straight. The State Department puts the Stans in the South and Central Asia bureau, while the Pentagon puts them within the Middle-East-focused Centcom. The Chinese divide up the world the Pentagon’s way; so, too, should our own State Department.

Third, deploy the marchmen. Europe is boosting its common diplomatic corps, while China is deploying retired civil servants, prison laborers and Chinese teachers — all are what the historian Arnold Toynbee called marchmen, the foot-soldiers of empire spreading values and winning loyalty. There are currently more musicians in U.S. military marching bands than there are Foreign Service officers, a fact not helped by Congress’s decision to effectively freeze growth in diplomatic postings. In this context, Condoleezza Rice’s “transformational diplomacy” is a myth: we don’t have enough diplomats for core assignments, let alone solo hardship missions. We need a Peace Corps 10 times its present size, plus student exchanges, English-teaching programs and hands-on job training overseas — with corporate sponsorship.

That’s right. In true American fashion, we must build a diplomatic-industrial complex. Europe and China all but personify business-government collusion, so let State raise money from Wall Street as it puts together regional aid and investment packages. American foreign policy must be substantially more than what the U.S. government directs. After all, the E.U. is already the world’s largest aid donor, and China is rising in the aid arena as well. Plus, each has a larger population than the U.S., meaning deeper benches of recruits, and are not political targets in the present political atmosphere the way Americans abroad are. The secret weapon must be the American citizenry itself. American foundations and charities, not least the Gates and Ford Foundations, dwarf European counterparts in their humanitarian giving; if such private groups independently send more and more American volunteers armed with cash, good will and local knowledge to perform “diplomacy of the deed,” then the public diplomacy will take care of itself.

Fourth, make the global economy work for us. By resurrecting European economies, the Marshall Plan was a down payment on even greater returns in terms of purchasing American goods. For now, however, as the dollar falls, our manufacturing base declines and Americans lose control of assets to wealthier foreign funds, our scientific education, broadband access, health-care, safety and a host of other standards are all slipping down the global rankings. Given our deficits and political gridlock, the only solution is to channel global, particularly Asian, liquidity into our own public infrastructure, creating jobs and technology platforms that can keep American innovation ahead of the pack. Globalization apologizes to no one; we must stay on top of it or become its victim.

Fifth, convene a G-3 of the Big Three. But don’t set the agenda; suggest it. These are the key issues among which to make compromises and trade-offs: climate change, energy security, weapons proliferation and rogue states. Offer more Western clean technology to China in exchange for fewer weapons and lifelines for the Sudanese tyrants and the Burmese junta. And make a joint effort with the Europeans to offer massive, irresistible packages to the people of Iran, Uzbekistan and Venezuela — incentives for eventual regime change rather than fruitless sanctions. A Western change of tone could make China sweat. Superpowers have to learn to behave, too.

Taken together, all these moves could renew American competitiveness in the geopolitical marketplace — and maybe even prove our exceptionalism. We need pragmatic incremental steps like the above to deliver tangible gains to people beyond our shores, repair our reputation, maintain harmony among the Big Three, keep the second world stable and neutral and protect our common planet. Let’s hope whoever is sworn in as the next American president understands this.

Additional material: "Global trends," a McKinsey paper by Ivo J. H. Bozon, Warren J. Campbell, and Mats Lindstrand