Re: [YEDG] 23rd of Feb. SUnday session
jiyoen park
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Please find the 2 articles below we are going to cover this Sunday and a new venue
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The parable of Argentina
There are lessons for many governments from one country’s 100 years of decline
Feb 15th 2014
A CENTURY ago, when Harrods decided to set up its first overseas emporium, it chose Buenos Aires. In 1914 Argentina stood out as the country of the future. Its economy had grown faster than America’s over the previous four decades. Its GDP per head was higher than Germany’s, France’s or Italy’s. It boasted wonderfully fertile agricultural land, a sunny climate, a new democracy (universal male suffrage was introduced in 1912), an educated population and the world’s most erotic dance. Immigrants tangoed in from everywhere. For the young and ambitious, the choice between Argentina and California was a hard one.
There are still many things to love about Argentina, from the glorious wilds of Patagonia to the world’s best footballer, Lionel Messi. The Argentines remain perhaps the best-looking people on the planet. But their country is a wreck. Harrods closed in 1998. Argentina is once again at the centre of an emerging-market crisis. This one can be blamed on the incompetence of the president, Cristina Fernández, but she is merely the latest in a succession of economically illiterate populists, stretching back to Juan and Eva (Evita) Perón, and before. Forget about competing with the Germans. The Chileans and Uruguayans, the locals Argentines used to look down on, are now richer. Children from both those countries—and Brazil and Mexico too—do better in international education tests.
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Why dwell on a single national tragedy? When people consider the worst that could happen to their country, they think of totalitarianism. Given communism’s failure, that fate no longer seems likely. If Indonesia were to boil over, its citizens would hardly turn to North Korea as a model; the governments in Madrid or Athens are not citing Lenin as the answer to their euro travails. The real danger is inadvertently becoming the Argentina of the 21st century. Slipping casually into steady decline would not be hard. Extremism is not a necessary ingredient, at least not much of it: weak institutions, nativist politicians, lazy dependence on a few assets and a persistent refusal to confront reality will do the trick.
All through my wild days, my mad existence
As in any other country, Argentina’s story is unique. It has had bad luck. Its export-fuelled economy was battered by the protectionism of the interwar years. It relied too heavily on Britain as a trading partner. The Peróns were unusually seductive populists. Like most of Latin America, Argentina embraced the Washington consensus in favour of open markets and privatisation in the 1990s and it pegged the peso to the dollar. But the crunch, when it came in 2001, was particularly savage—and left the Argentines permanently suspicious of liberal reform.
Ill fortune is not the only culprit, though (see briefing). In its economy, its politics, and its reluctance to reform, Argentina’s decline has been largely self-inflicted.
Commodities, Argentina’s great strength in 1914, became a curse. A century ago the country was an early adopter of new technology—refrigeration of meat exports was the killer app of its day—but it never tried to add value to its food (even today, its cooking is based on taking the world’s best meat and burning it). The Peróns built a closed economy that protected its inefficient industries; Chile’s generals opened up in the 1970s and pulled ahead. Argentina’s protectionism has undermined Mercosur, the local trade pact. Ms Fernández’s government does not just impose tariffs on imports; it taxes farm exports.
Argentina did not build the institutions needed to protect its young democracy from its army, so the country became prone to coups. Unlike Australia, another commodity-rich country, Argentina did not develop strong political parties determined to build and share wealth: its politics was captured by the Peróns and focused on personalities and influence. Its Supreme Court has been repeatedly tampered with. Political interference has destroyed the credibility of its statistical office. Graft is endemic: the country ranks a shoddy 106th in Transparency International’s corruption index. Building institutions is a dull, slow business. Argentine leaders prefer the quick fix—of charismatic leaders, miracle tariffs and currency pegs, rather than, say, a thorough reform of the country’s schools.
They are not the solutions they promised to be
Argentina’s decline has been seductively gradual. Despite dreadful periods, such as the 1970s, it has suffered nothing as monumental as Mao or Stalin. Throughout its decline, the cafés of Buenos Aires have continued to serve espressos and medialunas. That makes its disease especially dangerous.
The rich world is not immune. California is in one of its stable phases, but it is not clear that it has quit its addiction to quick fixes through referendums, and its government still hobbles its private sector. On Europe’s southern fringe, both government and business have avoided reality with Argentine disdain. Italy’s petulant demand that rating agencies should take into account its “cultural wealth”, instead of looking too closely at its dodgy government finances, sounded like Ms Fernández. The European Union protects Spain or Greece from spiralling off into autarky. But what if the euro zone broke up?
The bigger danger, however, lies in the emerging world, where uninterrupted progress to prosperity is beginning to be seen as unstoppable. Too many countries have surged forward on commodity exports, but neglected their institutions. With China less hungry for raw materials, their weaknesses could be exposed just as Argentina’s was. Populism stalks many emerging countries: constitutions are being stretched. Overreliant on oil and gas, ruled by kleptocrats and equipped with a dangerously high self-regard, Russia ticks many boxes. But even Brazil has flirted with economic nationalism, while, in Turkey, the autocratic Recep Tayyip Erdogan is blending Evita with Islam. In too many parts of emerging Asia, including China and India, crony capitalism remains the order of the day. Inequality is feeding the same anger that produced the Peróns.
The lesson from the parable of Argentina is that good government matters. Perhaps it has been learned. But the chances are that in 100 years’ time the world will look back at another Argentina—a country of the future that got stuck in the past.
Ethnic minorities
Into the melting pot
The rapid rise of mixed-race Britain is changing neighbourhoods—and perplexing the authorities
Feb 8th 2014
ZADIE SMITH, a novelist born to a black Jamaican mother and a white British father, recently recalled that when she was growing up in Willesden Green, a London district with a large immigrant population, “nothing could be more normal than a mixed-race girl”. The surprise, she said, was entering publishing and finding that people thought it unusual. Nobody could get that impression now: Britons are mixing at extraordinary speed.
The 2011 census revealed a country that is decreasingly white and British: England’s ethnic-minority population grew from 9% of the total in 2001 to 14%. But the biggest single increase was in the number of people claiming a mixed-ethnic background. This almost doubled, to around 1.2m. Among children under the age of five, 6% had a mixed background—more than belonged to any other minority group (see chart). Mixed-race children are now about as common in Britain as in America—a country with many more non-whites and a longer history of mass immigration.
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As Britain’s mixed-race population swells, another group appears destined to shrink. The Labour Force Survey reveals that 48% of black Caribbean men and 34% of black Caribbean women in couples are with partners of a different ethnic group—with higher proportions still among younger cohorts. Black Caribbean children under ten years old are outnumbered two-to-one by children who are a mixture of white and black Caribbean.
Rob Ford of Manchester University points out that Caribbean folk are following an Irish pattern of integration, in that their partners are often working-class. The Irish parallel also suggests they will eventually be fully absorbed into the British population. Polls show that adults who are a mixture of white and black Caribbean tend to see themselves not so much as black, Caribbean or even as British, but rather as English—the identity of the comfortably assimilated.
Indians, who began arriving in large numbers in the 1960s, were slower to mix. They are now doing so—but along Jewish, rather than Irish, lines. For them, assimilation follows education: according to research by Raya Muttarak and Anthony Heath, Indians with degrees are far more likely to marry whites. Indians are not so much marrying into the white majority as into its suburban middle class, says Shamit Saggar at the University of Essex.
Their children are quietly transforming Britain’s suburbs and commuter towns. Whereas Asians are still concentrated in cities such as Leicester and in London boroughs like Tower Hamlets and Harrow, mixed Asian and white children are widespread (see maps). In Chiltern, an affluent commuter district in Buckinghamshire, 5% of children under five years old were mixed Asian and white in 2011—more than in most of London. Their parents may have met at university or while working in the capital. Within Birmingham, too, mixed Asian and white children are especially common in the largely middle-class white suburbs of Edgbaston, Moseley and Harborne.
Still warming up
Pakistanis and Bangladeshis mostly remain in cities, and are mixing more slowly. Just 8% of Pakistani men and 7% of Bangladeshi men in couples are with people of a different ethnic group, and the proportions for women are smaller. Oddly, older Pakistani men are more likely to have partners of another ethnicity, perhaps because many early migrants were single men. But even these groups are assimilating: another study finds that Pakistanis and Bangladeshis born in Britain are far likelier to socialise with whites than their parents were.
Britain’s newer minorities are blending into the larger population, too, but in ways that defy easy categorisation. Mixed black- African and white children are particularly common in working-class suburbs and commuter towns such as Croydon and Southend-on-Sea, possibly because black Africans are rarely tied to city centres through social-housing tenancies. They are also mixing with new immigrants from continental Europe. Most of the 21,000 children born to Polish mothers in 2012 had Polish fathers; but of the rest, 23% had African or Asian fathers.
Such esoteric partnerships can confuse the authorities. Last November the Home Office invited journalists to accompany officers on a raid of an apparent sham wedding between an Italian man and a Chinese woman in north London. After interrogating the bride, groom and guests, the officers emerged sheepishly to admit that the union was probably real.
As race becomes less clear-cut, schools, hospitals and police forces, which record people’s ethnic identity at almost every opportunity, will have to deal with more fragmented definitions. So too will researchers trying to measure racial injustices. Confusingly, police officers now record the ethnicity of the people they stop and search according to two separate systems: observed ethnic appearance (which does not include a mixed-race category) and self-identified ethnicity (which does).
Politicians in the habit of treating Britain’s ethnic groups as distinct “communities” will also have to adapt. The shrewder black and Asian politicians have already built power bases that do not depend on ethnic block votes (see Bagehot). Speeches such as the one made by Tony Blair in 2007 about the culture of black youth violence will look silly when so many black teenagers have white parents too. Crude racist politics, thankfully now rare in Britain, ought to become almost impossible as more white families acquire non-white members. Englishness, which has remained distinctly a white identity for many, may become less exclusive.
Most of all, the rise of mixed-race Britain shows that Britain is capable of absorbing even large numbers of newcomers. For the young, who are used to having people of all backgrounds in their midst, race already matters far less than it did for their parents. In a generation or two more of the melting pot, it may not matter at all.
2014년 2월 15일 토요일, 김은영<sophia...@naver.com>님이 작성한 메시지:
Greetings all,
Please find the articles we are going to cover this Sunday and a new venue
* coffee place in Sinchon station #7. just besides Grand Mart( Coffeenie)
Please, have a look at the map
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Geopolitics
The petrostate of America
The energy boom is good for America and the world. It would be nice if Barack Obama helped a bit
http://www.economist.com/news/leaders/21596521-energy-boom-good-america-and-world-it-would-be-nice-if-barack-obama-helped
“RISE early, work hard, strike oil.” The late oil baron J. Paul Getty’s formula for success is working rather well for America, which may already have surpassed Russia as the world’s largest producer of oil and gas (see article). By 2020 it should have overtaken Saudi Arabia as the largest pumper of oil, the more valuable fuel. By then the “fracking” revolution—a clever way of extracting oil and gas from shale deposits—should have added 2-4% to American GDP and created twice as many jobs than carmaking provides today.
All this is a credit to American ingenuity. Commodities have been a mixed blessing for other countries (see our leader on Argentina). But this oil boom is earned: it owes less to geological luck than enterprise, ready finance and dazzling technology. America’s energy firms have invested in new ways of pumping out hydrocarbons that everyone knew were there but could not extract economically. The new oilfields in Texas and North Dakota resemble high-tech factories. “Directional” drills guided by satellite technology bore miles down, turn, bore miles to the side and hit a target no bigger than a truck wheel. Thousands of gallons of water are then injected to open hairline cracks in the rock, and the oil and gas are sucked out.
In this section
From the point of view of the rest of the world, the new American petrostate is useful. Fracking provides a source of energy that is not only new but also relatively clean, cheap and without political strings. It should reduce the dependence on dirty fuels, such as coal, and extortionate suppliers, such as Russia. Moreover, fracking is unusually flexible. Setting up an oil rig in the Gulf of Mexico can take years. But America’s frackers can sink wells and start pumping within weeks. So if the oil price spikes, they drill more wells. If it falls, they let old ones run down. In theory, fracking should make future oil shocks less severe, because American producers can respond quickly.
Fracking all over the world
Some foreign-policy wonks argue that this dramatic change in America’s fortunes argues for a fundamental change in the country’s foreign policy. If America can produce its own oil, they argue, why waste so much blood and treasure policing the Middle East? Yet even if it were politically sensible for America to disengage from the world—which this newspaper does not believe it is—the economic logic is flawed. The price of oil depends on global supply and demand, so Middle Eastern producers will remain vital for the foreseeable future. It is in the superpower’s interest to keep Gulf sea lanes open (and not to invite China to do the job instead).
Although America’s foreign policy should not change, its energy policy should. Its ban on the export of crude oil, for instance, dating from the 1970s, was intended to secure supplies for American consumers. But its main effect is to hand a windfall to refiners, who buy oil cheaply and sell petrol at the global price. Barack Obama should lift it so that newly fracked oil can be sold wherever it makes the most cash. And he should approve the Keystone XL pipeline, which would carry oil from Canada’s tar sands to American refineries; an exhaustive official study has deemed the project environmentally sound.
America does not ban the export of natural gas, but it makes getting permits insanely slow. Fracking has made gas extraordinarily cheap in America. In Asia it sells for more than triple the price; in Europe, double. Even allowing for the hefty cost of liquefying it and shipping it, there are huge profits to be made from this spread. The main beneficiaries of the complicated export-permit regime are American petrochemical firms, which love cheap gas and lobby for it.
Mr Obama should ignore them. Gas exports could generate tankerloads of cash. To the extent that they displace coal, they would be good for the environment. And they could pay foreign-policy dividends, such as offering Europeans an alternative to Russian gas and so reducing Vladimir Putin’s power to bully his neighbours. Allowing exports might cause America’s domestic gas prices to rise a little, but it would also make American frackers pump more of it, cushioning the blow.
A world in which the leading petrostate is a liberal democracy has much to recommend it. But perhaps the biggest potential benefit of America’s energy boom is its example. Shale oil and gas deposits are common in many countries. In some they may be inaccessible, either because of geology or because of environmental fears: but in most they go unexploited because governments have not followed America’s example in granting mineral rights to individual landowners, so that the communities most disrupted by fracking are also enriched by it. Become a champion of a global fracking revolution, Mr Obama, and the world could look on America very differently
Global monetary policy
Countervailing motion
The Fed may be “tapering” but central banks in Japan and Europe are still easing
Red rags to Kuroda
THOSE looking for someone to blame for the upheaval in financial markets tend to finger the Federal Reserve. By phasing out its scheme of suppressing interest rates through bond purchases, the theory runs, it prompted capital to stampede from emerging markets into the rich world in expectation of rising yields. Yet the Fed’s shift to a less expansionary monetary policy is only half the story: central banks in the euro area and Japan, the world’s second- and fourth-biggest economies (at market exchange rates), are still moving in the opposite direction.
In Japan, the government of Shinzo Abe is striving to exorcise the deflation that has haunted its economy for a decade and a half, in part through a bond-purchasing scheme on a par with America’s. If Japan is confronting the ghost of deflation past, the euro zone is spooked by deflation yet to come. Preliminary figures show headline inflation falling to 0.7% in January, matching the October low that prompted the European Central Bank (ECB) to cut its main policy rate to 0.25%. The bank’s council, which was meeting on February 6th as The Economist went to press, was facing pressure to loosen monetary policy again, either through a further rate cut or by providing more liquidity.
In this section
Last April the Bank of Japan (BOJ), under the freshly appointed Haruhiko Kuroda, started buying ¥7 trillion ($70 billion) of assets a month—close to the Fed’s monthly purchases, then of $85 billion but now $65 billion, and a far greater sum relative to the size of the Japanese economy. The BOJ is widely assumed to be about to expand this “quantitative easing” (QE). So far, the results have been promising.
The yen, which had already started to depreciate in 2012, lurched down still further last year, causing corporate profits and the stockmarket to soar. The currency depreciation has in particular pushed up headline inflation, which reached 1.6% in December (see chart). But core inflation (ie, excluding energy and food) has also moved into positive territory and is rising at its fastest pace since 1998. Although many observers still doubt that the BOJ will hit its target of generating inflation of 2% by the spring of next year, that no longer looks implausible. Moreover, Mr Kuroda, echoing the euro-saving phrase of Mario Draghi, the boss of the ECB, has vowed to do “whatever it takes”.
Mr Kuroda’s no-holds-barred QE has become all the more important since one of the other main elements of Mr Abe’s economic resuscitation plan—big supply-side reforms such as making it easier to sack permanent employees, and thus encourage hiring—is not making much headway. Indeed, with Kurodanomics now dominating Abenomics, the question preoccupying markets is how soon and how dramatically the BOJ will increase its QE. A spur to action may be the first of two scheduled increases in Japan’s consumption tax, which is due to rise from 5% to 8% in April. The last time the unpopular tax was raised, in 1997, the convalescent economy sickened again.
This time will be different, Mr Abe hopes, not least because his government will temper the contractionary effect with a temporary fiscal stimulus worth ¥5.5 trillion. The prime minister is also leaning on large firms to raise wages this spring in the annual shunto pay negotiation with unions. The need for higher wages was spelt out in official figures this week showing that earnings fell in real terms by 1.1% in the year to December. Mr Abe’s tactics have had some success. Keidanren, a lobby for big business, said in mid-January that it was backing pay rises by its members for the first time in six years. But small firms may not follow suit and the shunto round will not touch the ranks of low-paid, part-time and temporary workers upon whom Japanese firms increasingly depend.
Kurodanomics, meet Draghinomics
Mr Abe has other reasons to be nervous about raising the consumption tax. This year’s turmoil in emerging markets evokes unpleasant memories of the Asian crisis of 1997-98, which curbed Japanese exports and exacerbated the ill-effects of the consumption-tax rise. As global investors seek refuge in financial havens, the yen has started to appreciate again. That has cast a pall over the stockmarket: the Nikkei 225 fell by over 4% on February 4th, bringing its decline since the start of this year to 14%.
The difficulties facing Japan in trying to slough off deflation show why it is so important to try to avoid it in the first place. Mr Draghi has argued that the euro zone is not turning Japanese, but there are some worrying similarities. The single-currency area has for example been slow to deal with its lame banks. The asset-quality review and stress tests that will be carried out this year offer an opportunity to root out the bad loans and recapitalise the weak banks, but it is long overdue. The delay has contributed to a dearth of credit as undercapitalised banks retrench, which in turn has hindered growth.
With output in the euro zone still 3% lower than its pre-crisis peak of early 2008, it is hardly surprising that inflationary pressures are conspicuous by their absence. Core inflation in January was 0.8%, just a notch up from the record low of 0.7% at the end of 2013.
The ECB’s main hope is that the weak recovery that started last spring will put down deeper roots. That hope will be nourished by a report this week from Markit, a data-research firm, which showed manufacturing conditions at their most buoyant since mid-2011. Even so, the ECB’s declared bias is to ease monetary policy.
In what remains a dollar-based international monetary system, emerging economies are undoubtedly affected most of all by what the Fed does. But the rich world’s central banks are not conducting synchronised tightening; instead their monetary stances are diverging. Emerging markets may have benefited in particular from an era of cheap money and swelling liquidity—but that era is still far from over.
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