Manner over Matter

Reading Obama’s book over the last couple of weeks, one of the things that struck me was his grasp of foreign policy.

It wasn’t so much that he had a plethora of innovative solutions to foreign conflicts/rogue states, or a brilliant new theory on international diplomacy. What is clear from his writing though, is that Mr Obama  possesses not only a very good understanding the world as it is, but also understands that in foreign policy, image is King.

 George, this smile...itll even win over ol Mahmoud. It couldve done Saddam real quick too. You should try it with those arabs down south sometime.

"George, this smile...it'll even win over ol' Mahmoud. It could've done Saddam real quick too. You should try it with those arabs down south sometime."

We don’t need a debate to conclude that Bush has made a mess of America’s image. In the last eight years, Bush has made America just about as popular as Iran. Obama on the other hand, has probably increased the popularity of America threefold simply by getting elected. The man is a master at communications and image-crafting. If anything, it is this skill that was primarily responsible for his election, and is probably the most significant difference between presidents 43 and 44.

Number forty-three has made a number of intensely difficult decisions over the last eight years. On a fundamental level though, most of those decisions are quite logical (minus iraq, yes) – surveillance, fighting the taleban, negotiating with Pyongyang, for example. Bush though, had two problems; he went to extremes and he had no clue how to explain or portray his decisions. On the basic level of national security see, neither Obama nor any other American  president could have afforded to differ very much, or risk being labeled an appeaser or weakling.  As Newsweek writes, “The flaw of the Bush-Cheney administration may have been less in what they did than in the way they did it.”  So don’t expect  earthshaking change in policy, per se.

On the topic of acting unilaterally in self-defense, for example, Obama states that “we have the right to take unilateral military action to eliminate an imminent threat to our security.”  – that sounds awfully like W. The truth is, most American presidents would state that without blinking an eyelid, even though the statement above  basically justifies the Iraq war.

Or take surveillance. Obama, in fact, voted for amendments to the Foreign Intelligence Surveillance Act (FISA) – one that allows a continuation of warrant-less wiretapping, albeit with more judicial oversight.  And while it is difficult to conclude the extent to which surveillance has prevented a second terrorist outbreak in America, it is in truth a very logical, and necessary step to prevention. So, whilst it remains an uncomfortable truth, it is a reality that a world with terrorism must face up to.

Later in his book, Obama says this on the need for multilateralism: “Why conduct ourselves in this way? Because nobody benefits more than we do from the observance of  ‘international rules of the road’ “. It is not the multilateral slant that is worth noting here, but the reason for the multilaterism – he understands multilateralism must be adhered to not merely because of its ideals, but because it will benefits the US as well. He understands that world public opinion really does matter, because foreign governments are also at the mercy of public opinion back home.

So I don’t think we can expect a world of difference in the ‘what’ of obama’s foreign policy. There will be a difference in the ‘way’, though.  Take the horror that is Gaza at this moment. We know that Obama is pro-Israeli. Yet notice the silence from Obama over the current Arab-Israeli conflict? He knows shooting his mouth of in a show firm support will simply lose the middle-east  battle he’s trying to win (and the rest of the liberal minded world too). And while I confess I don’t know what he will do when Jan 20 comes and he is forced to take a stand, Obama has already done something that hasn’t really been an option for Bush –  showing restraint.

Barack Obama’s greatest gift remains his ability to work the media. It requires a discretion of speech, a penchant for good impressions and the ability to juggle polarazing demands. These, I happen to think, are not unlike the fundamentals of diplomacy and foreign affairs. Thus, for all the pre-election criticism of inexperience and a weakness in foreign affairs, Barack Obama may just turn out to be a foreign policy genius.

– T.S.

December Break

Dear readers,

 

This December, we’ve decided to take a break from writing on The Lookout. Do watch out for more articles come 2009 though!

 

We wish you a blessed Christmas and happy holidays.

 

Alastair

thelookout.wordpress.com

Editor

This Is Not Great Depression 2.0

Before comparisons are drawn, important historical distinctions must be made

“The worst economic crisis since the Great Depression”. If you’re reading this statement, this is probably not the first time which you’ve come across these words. Interestingly enough, imputing this on Google search will yield a total of 94,100 hits, showing how pervasive such sentiments have become among people.

The picture is in black-and-white for a reason

The picture is in black-and-white for a reason

My concern is not with the statement itself, which is correct. Since 1929, there has been no economic crisis that has matched the scale of the current one. My concern is when people take this to mean that the new Great Depression has come, bringing to mind images of the past: scores of unemployed workers milling around, families queuing in front of soup kitchens, runs on banks as people scramble for money. Any predictions that are made on this scale must immediately be denounced as false prophecies.

The main similarity between the current crisis and the 1929 crisis is the extent to which financial markets have been ravaged. In 1929, excessive speculation in the stock market created a bubble that burst and damaged confidence everywhere. In 2007, poorly monitored sub-prime loans created a housing bubble that likewise burst and damaged markets.

Beyond this point though, the narrative changes. In 1930, in response to the crisis, the US administration enacted the the Smoot-Hawley Tariff, believing that protectionism would solve their woes. As history would later demonstrate, this was a grave error, setting into motion a beggar-thy-neighbour policy that only threw the world into further depression.

In contrast, notice how little protectionist reflex countries have shown in recent events. On the contrary, acknowledging their mutual dependence, world leaders were quick to rally together in a number of summits to discuss solutions to the crisis: the G20 summitthe gathering of notable trade officials in London, and most recently, APEC’s meeting in Peru. Not only was international cooperation witnessed between political leaders; leaders in other fields also demonstrated a similar unity, such as when heads of central banks gathered to mutually back credit. This change in worldview, from unilateralism to multilateralism, is an important historical contrast that merits our attention.

Cynics will be quick to point that such summits are mere talk shops, yielding little tangible solutions. However, while this is true, it does reveal a more important fact: that world leaders are at least on the same level in principle, understanding each other’s need to survive. Even the US has shown an unusual willingness to cede its hegemony, acknowledging the shift of power to emerging economies. The climate in the early 30’s was the opposite, a climate of fear, suspicion and growing resentment, eventually giving way to extremist regimes like Nazi Germany and a belligerent Japan. Where the financial crisis in 1929 left a world beaten and divided, the financial crisis now has left a world similarly beaten, but united.

This is not to say that times ahead will not be bad. The effects of the crisis so far have only shown itself in the financial sector; only time will show how badly the real economy will be affected. No one is doubting that the crisis will prove to be a deep one; but as long as favourable relations are maintained between key countries and protectionist instincts aren’t acted upon, we should not witness history repeating itself.

Therefore, there is still hope in the midst of the crisis. Expect stormy weather ahead, but don’t look to your history textbooks for any help.

-A.S.

Fleas In A Jar

The lid is slowly being uncovered. But why are the fleas still dancing inside?

In his National Day Rally speech this year, Prime Minister Lee Hsien Loong promised a series of initiatives that would “progressively open up” Singapore’s political space, acknowledging the need for the government to keep in tandem with a more educated, globalized public. Such measures would include things like lifting bans on political videos and relaxing rules concerning usage of the Speaker’s Corner, hopefully encouraging greater debate and political participation among Singaporeans.

Three months later, a spot check is due. And here’s the writer’s verdict: nothing much’s changed. Surprised? Despite a spike in activity around the Speaker’s Corner, and maybe one or two more dissenting voices, Singapore’s still very much the same as before.

One may argue that it’s too early to make a call. Political liberalisation is a process that takes many years, and we’re still in its nascent stages. If so, allow me to make a prediction then: even if other political avenues are opened up significantly, Singapore will still be the same as before. Even without the lid, the fleas will still be dancing inside the jar.

Understanding why this is so requires some knowledge of Singapore’s political and social history. Singapore was born in tough circumstances, annexed from Malaysia in 1965 with little natural resources. Thus, tough leadership was required. The People’s Action Party (PAP) built its regime upon a doctrine of survival, where social and political freedoms were sacrificed for economic expediency. So, as the government focused on increasing productivity, raising technology levels, creating jobs, personal liberties were suppressed, and anybody who opposed this agenda was forcibly dealt with.

Surely enough, the PAP’s strategy has been very successful. It prided itself as a government that could deliver results, so critics were silenced by the dramatic changes that took place, as the sleepy colony transformed into a modern city. But more importantly though, beyond just effecting external changes, the PAP also raised a generation of self-reliant, pragmatic and resourceful Singaporeans. Therefore, providing more than just political leadership, the PAP helped to define our values as citizens. Things like freedom of speech, civil society and human rights are seen as “Western concepts”, whereas things like job security, economic competitiveness and efficiency are prized as our core needs.

The PAP and me

The PAP and me

Such PAP-inspired psyche can be seen in the recent activities at the Speaker’s Corner. Traditionally, the Speaker’s Corner acts an avenue for political expression in most countries; but in Singapore, it is a place where economic grievances are voiced. The most exciting event so far, for instance, was a rally held by investors affected by the financial fallout. The forum section in the newspapers is also another example, where little or nothing is said about the ruling polity. The Sunday Times has recently called us a “petition nation”; the description is apt, as our form of civil society mainly involves providing feedback about everyday concerns.

Therefore, ask any Singaporean whether he would like greater freedom of speech, and the reply would be: “I’ll take that, if it helps to pay my electricity bills.” No matter how much our political liberties our expanded, no change will ever come. The new generation has never even tasted what its like to have expanded freedoms, eroding whatever appeal the opposition will ever have. So unless the PAP performs a huge strategic error, the opposition will probably never win. We’re like the fleas inside the jar, where our pattern of behaviour has been established by the government, passing on from each generation to the next.

So basically, in other words, you don’t need to look forward to the next big rally to see the PAP. Just do some soul searching, and you’ll find them deep within you.

-A.S.

(This article was originally published at the Online Citizen.)

When Ratings Don’t Work

In the wake of the Lehman minibonds debacle a lot has been said. A vicious blame game has begun between the banks and their investors — should investors be blamed for not reading the danger signs, or were they wrongly informed by bank salespeople? Amid the discussion, a common consensus that has emerged though. To prevent such a fiasco from repeating itself, some have suggested some kind of agency be established to rate the safety financial products in the future, so consumers can make better informed decisions about the risk they make. This has been raised in the ST forums, as well as by Andy Ho in yesterday’s column

If only life were so simple.

If only life were so simple.

As logical as this sounds, actually creating a successful agency isn’t as simple as it seems. In fact, it’s probably impossible to come up with satisfactory rating system that rates products accurately, like every other thing in Singapore.

The reason for this is the risk linked to financial products is ever-changing and almost impossible to quantify. Andy Ho has compared such financial products to “toys” and “microwaves” lacking proper safety measures, but this is a false comparison. The risk inherent in a microwave exploding is very much unlike the risk inherent in a bond defaulting, for two reasons.  

The first is complex interdependency of financial markets. To borrow George Soros’s theory of reflexivity vaguely, markets are the result of the constant feedback between participants biases and their actual behaviour: thousands of interactions taking place in an instant, affecting each other interdependently. With an infinite number of possible permutations, this makes calculating risk accurately a nearly impossible task. 

Furthermore, the second challenge in calculating risk is the human factor in markets. One of economic’s greatest assumptions — the assumption of rational behaviour — also is one of the subject’s greatest flaws. Hence, while there are so many experts in the field of statistics, econometrics and finance soothsaying about the market, only one Warren Buffett exists. As Keynes rightly pointed out, the market is often governed by emotions and gut feelings (“animal sentiments”) and not rational behaviour assumed in models. So tell me: how do you articulate animal sentiments into a mathetical equation?

The point here is that is almost impossible to gauge an appropriate level of risk. Risk in itself is a constantly changing thing. I often take ratings by agencies like Moody’s with a pinch of salt — witness how many times “AAA” products have turned foul within moments. The logical response is to perhaps factor in the fluctuations arising from market uncertainties, but if this method is used, then only ultra-conservative estimates are likely to result. This would defeat the value of even using ratings in the first place, with all products automatically downgraded.  

Instead of establishing a ratings agency, what should be present are a clear set of laws which prevent abuses of consumers. By abuses, I mean portraying incorrect information, or in some cases, incorrectly portraying correct information. In the first case, for example, I personally know someone who was told by the bank last year that these minibonds were “risk-free”. This is portraying incorrect information, as even the fine print did not guarantee a full return of principal. In the latter case, sometimes financial product sellers only reveal select pieces of information, painting an incomplete picture. This too is considered consumer abuse. Laws need to make sure transaction processes are more transparent, so that both sellers and buyers of these products are properly informed of the products they buy, and in the case of abuse, proper penalties are awarded. Other than this, there’s really little else that can be done. 

-A.S.

Recession In, Environment Out?

Is environmental spending just a luxury good?

How quickly things change within the passage of time. Months ago, global warming and the environment was the talk of the town. The very first article on The Lookout, incidentally, commented about this year’s G8 conference, where leaders convened to discuss on how to tackle environmental issues together. Now, everyone’s suddenly scrambling for their wallets and the environment is forgotten. When the presidential campaign was once about the “healing” of the planet, now its all about how whether you can trust Obama or McCain to put food back on the table. 

In recession no one can hear you scream. Or pollute for that matter

In recession no one can hear you scream. Or pollute, for that matter

This is especially so since this crisis affects the lower and middle-income groups the most. Practically speaking, when there are bills to pay and a possible retrenchment to worry about, paying more premiums for goods that “help the environment” suddenly feel like a luxury.

In short: why should I care about rising carbon dioxide levels when I have a family to feed?  

This spells bad news, because it is incidentally these lower to middle income groups that contribute to most of world’s greenhouse gas output. For the households in the developed world, “green goods” like hybrid cars or organic foods no longer affordable. And as primary and secondary industries begin to cut back costs, its clear that environmental standards will be the first to be compromised. 

Moreover, with credit lines contracting, this means alternative energy companies — the heart of the solution — are less able to raise capital to sustain research and development. Banks, looking to cut back on loans, are unlikely to lend as freely as they did before, but not until the whole crisis blows over. Until that happens, researchers like Ron Surdam will have to halt their programmes. 

On the upside, a slowdown in growth will also cause demand for fossil fuels will also fall, reducing emissions for a time. This however, is only a small consolation. This is because the global warming problem needs a sustainable, not a temporary solution: improvements to technology that will allow alternative energy sources to compete with fossil fuels in terms of cost and effeciency. But scientists will tell you there is a long, long way to go before this point is reached, and this was even before the crisis occured. 

A ray of hope though is Obama and his talk of the “Apollo Project“. Unveiling it in his interview with Time, Obama briefly outlined how he would use new energy as a means to drive America’s economy in the coming years, with consumption bubble finally burst. This sounds good in theory, but many challenges await. Firstly, research and development requires years before any dividends are paid. If new energy is to be a part of the US, can the public wait before this breakthrough is reached? Furthermore, old habits die hard. America, the leading producer of greenhouse gases, will certainly not be able to mend its ways overnight. The decision to “go green” requires a deal of commitment – such as a willingness to change spending habits, deal with possible inconveniences – a decision i’m not sure many American households are willing to make. 

Taking a step back, maybe its just a matter of time before global warming returns to the table. Then again, now, not later, is the best time to test the worlds’ leaders resolve about the environment. Based on what happens from here, it will be clear whether they genuinely see global warming as something important, or just another coffee-and-tea item to discuss when times are good.

A.S.

Obama Must Win

For most, the US Presidential Debate held a few days back revealed nothing new. It presented two sound candidates with their obvious strengths and weaknesses. For McCain, it was his superiority in experience at foreign policy and an extensive political record. For Obama, what struck me was his intelligence, the clarity of his thoughts and his consummate ability to articulate them. In selecting the next president though, the criteria  shouldn’t be simply weighing each candidate against the other like on a balancing scale, but rather, which candiate is better equipped to battle America’s woes. If this criterion is used, then Obama proves far superior. Here is why.

First, let us contextualise America’s current position. Unlike before, America is a country on the decline, not one on the rise. The failure of the Iraq War, the unpopularity of President Bush, Guantanamo Bay, the financial crisis, are events in past years that have undermined America’s credibility and reduced its soft power. Furthermore, the America now is that has to contend with an incredibly amount of certainty — much more than in previous years. Globalisation has acceleated the pace of change, and as the dust of the financial crisis settles, America’s role in the world will inevitably be re-defined. To steer America out of such unclear waters, this requires someone who has broad-mindedness and to a great deal, the ability to improvise.

For these reasons, Obama emerges a superior candidate. Firstly, Obama demonstrates a deep awareness of America’s lost and the urgent need to reclaim it, stressing time and time again the need to “restore America’s standing in the world”. This means he has his first foot on the right position. Moreover, Obama seems well-equipped for this role, ironically because his seeming weakness — his lack of experience, may actually be his trump card. In order to successfully reconcile America to the world again, America needs to have a clean slate. This is something Obama offers.

McCain on the other hand, looks like someone with a lot of baggage. His greatest strength and selling point, his experience, may quickly turn into a weakness if he relies on his past experiences to make new judgements. This was clear in his choice of examples throughout the debate, mentioning historical figures like Reagan, Kissinger, and Vietnam. This worries me as somone who may not be able to to perform the task of re-learning new paradigms, the proverbial dog unable to learn new tricks. Granted, McCain may be superior to Obama in delivering a winning military strategy. However, Obama’s “broader strategic vision” is something that makes far more sense. Soft power is the power of the future and is something America despearately needs back. I don’t want to take away anything from McCain. In a different era, perhaps what he would have made a superior choice. But in this context, he seems very out of place.

Having said this, Obama also huge for failure. Based on the campaign so far, he comes across as one who can be very evasive on issues he lacks the experience about. If this evasiveness swings into indecision, or hesitation, then this can only spell dire consequences. Also, there’s the danger that his McCain rightly pointed out this week Obama lacks the record to match the scale of his promises. But this is a risk Americans must be willing to take, surely a lesser evil to McCain’s flaws.

In final analysis, America can no longer possibly be the America of the past. Trapped in the experiences of the past century, this is fact McCain cannot seem to accept. On the other hand, this is the very fact Obama is banking his whole campaign on, and for that reason, America must vote him as the next leader.

-A.S.