Kruse Kronicle

Great Short Video on Declining Fertility Rates

This short video gives a wonderful presentation of declining fertility rates over the past fifty years and explains what falling fertility rates mean for the world. Go to the website here: The Baby Bust

 

How homogenizing is globalization?

Forbes: What A Wonderful World! Get Raped In Dubai And You'll Serve 16 Months In Prison  Eamonn Fingleton

Globalization continues to integrate the world into a more deeply interconnected economic system, but at the same time, it provides platforms for previously silenced and marginalized voices to be heard. It allows us to become better acquainted with each other's cultures, but it does not guarantee that familiarity will breed acceptance.

(BTW, the Norwegian woman mentioned in the story has been "pardoned" and is free to leave Dubai.)

… Why would the victim of a terrible crime receive a jail sentence? Asia is not America, let alone Norway. For me, as someone who has spent 27 years watching the world from a vantage point in East Asia, the episode illustrates in microcosm an obvious and profoundly troubling fact: globalism is a one-word  oxymoron. It has never made sense and probably never will. Cultures are different and, in their attitude to truth and human rights, the many brands of Asian culture are particularly remote from Western expectations.

Certainly, all American wishful thinking to the contrary, the world is NOT converging to American values. Yes, of course, more and more consumers around the world are drinking Coca-Cola KO +0.29% and eating Big Macs. But this is a superficial observation that says nothing about any values worth the name. …

… The larger point here is that Eastern and Western cultures are in many ways incompatible. Rudyard Kipling made the point more than a century ago: "Oh, East is East, and West is West, and never the twain shall meet."

My bet is that, on appeal, Marte Deborah Dalelv will be shown some leniency. But for globalism, the Asians will never cut much slack. This applies in spades to the naïve American view that globalization and Americanization are somehow the same thing (thank you George H. W. Bush, William Jefferson Clinton, and, of course, Thomas L. Friedman). Asians are incandescent with rage at such casual cultural imperialsm but, being Asians, rarely give any explicit indication of their anger. They expect people to read between the lines….

Saturday Links

1. The United States had its financial bubble. Europe is having one too. Is China next? If it is, it could reshape the global economy and radically reshape the Chinese government. Here is an interesting piece about China's real estate bubble.

2. Robert Tracinski thinks we are in the midst of a Third Industrial Revolution.

... I like the idea of a breaking the Industrial Revolution into stages, but I would define them in more fundamental terms. The first Industrial Revolution was the harnessing of large-scale man-made power, which began with the steam engine. The internal combustion engine, electric power, and other sources of energy are just further refinements of this basic idea. The second Industrial Revolution would be the development of interchangeable parts and the assembly line, which made possible inexpensive mass production with relatively unskilled labor. The Third Industrial Revolution would not be computers, the Internet, or mobile phones, because up to now these have not been industrial tools; they have been used for moving information, not for making things. Instead, the rise of computers and the Internet is just a warm-up for the real Third Industrial Revolution, which is the full integration of information technology with industrial production.

The effect of the Third Industrial Revolution will be to collapse the distance between the design of a product and its physical manufacture, in much the same way that the Internet has eliminated the distance between the origination of a new idea and its communication to an audience. ...

3. Tyler Cowen has some thoughts about the impact of our technological revolution as well Are we living in the early 19th century?

... Eventually all of the creative ferment of the industrial revolution pays off in a big "whoosh," but it takes many decades, depending on where you draw the starting line of course.  A look at the early 19th century is sobering, or should be, for anyone doing fiscal budgeting today.  But it is also optimistic in terms of the larger picture facing humanity over the longer run.

4. You may have seen a deeply flawed viral video about wealth inequality this past week. I am working on my own response, but economist Mark Perry's response is here.  In response to the viral 'Wealth Inequality in America' video

5. What are the contours of income inequality in the United States? This 40-minute video by Emmanuel Saez offers some important insights.

6. Futurist Ray Kurzweil is a little too sensationalist for my taste, but this vid offers interesting food for thought about nanotechnology and the future of sports. Will we even be able to have meaningful sports competitions?

7. Atlantic takes up a frequently perpetuated myth. 'Women Own 1% of World Property': A Feminist Myth That Won't Die

8. First, there was I, Pencil. Then I Smartphone. Now "I Coke." What Coke Contains

9. U.S. household wealth regains pre-recession peak but ...

The recovered wealth - most of it from higher stock prices - has been flowing mainly to richer Americans. By contrast, middle class wealth is mostly in the form of home equity, which has risen much less.

10. When looking at decisions in your own context, Seth Godin explains why Macro trends don't matter so much

11. It's a big, fat myth that all scientists are religion-hating atheists.

Whether or not you think science is wonderful, the stereotype of all scientists being atheists is unrealistic. There is, however, a special dance.

12. I consider this good news. Old Earth, Young Minds: Evangelical Homeschoolers Embrace Evolution

More Christian parents are asking for mainstream science in their children's curricula.

13. Remember to keep Syria and Egypt in your prayers. Nearly 1 in 20 Syrians are now refugees

Read more here: http://www.kansascity.com/2013/03/07/4106038/us-household-wealth-regains-pre.html#storylink=cpy

Saturday Links

1. Christian History magazine has an entire issue devoted to Christians in the New Industrial Economy: The World Changed, the Church Responded. It is a priceless collection of essays on how various religious traditions responded to (or failed to) the challenges of the Industrial Revolution.

Issue 104 examines the impact of automation on Europe and America and the varying responses of the church to the problems that developed. Topics examined are mission work, the rise of the Social Gospel, the impact of papal pronouncements, the Methodist phenomenon, Christian capitalists, attempts at communal living and much more.

2. Orange County Register says Don't count out mainline Protestants yet.

As flocks shrink, denominations that once defined America fight to stay relevant with new ways of reaching out.

3. The Washington Post reports that Megachurches thriving in tough economic times.

"Despite the tough economy, many of the nation’s largest churches are thriving, with increased offerings and plans to hire more staff, a new survey shows.

Just 3 percent of churches with 2,000 or more attendance surveyed by Leadership Network, a Dallas-based church think tank, said they were affected “very negatively” by the economy in recent years. Close to half — 47 percent — said they were affected “somewhat negatively,” but one-third said they were not affected at all. ..."

4. Harvard Business Review: Steve Blank on Why Big Companies Can't Innovate

... It's not surprising that younger entrepreneurial firms are considered more innovative. After all, they are born from a new idea, and survive by finding creative ways to make that idea commercially viable. Larger, well-rooted companies however have just as much motivation to be innovative — and, as Scott Anthony has argued, they have even more resources to invest in new ventures. So why doesn't innovation thrive in mature organizations? ...

... First, he says, the focus of an established firm is to execute an existing business model — to make sure it operates efficiently and satisfies customers. In contrast, the main job of a start-up is to search for a workable business model, to find the right match between customer needs and what the company can profitably offer. In other words in a start-up, innovation is not just about implementing a creative idea, but rather the search for a way to turn some aspect of that idea into something that customers are willing to pay for. ...

... discovering a new business model is inherently risky, and is far more likely to fail than to succeed ...

... Finally, Blank notes that the people who are best suited to search for new business models and conduct iterative experiments usually are not the same managers who succeed at running existing business units. ...

5. A fascinating, if sobering, look at the conflict over islands off the coast of East Asia. Trouble at sea

6. The rise of post-industrial China? (Economist)

7. New Geography thinks U.S. LATE TO THE PARTY ON LATIN AMERICA, AFRICA.

"President Barack Obama's proposed tilt of U.S. priorities toward the Pacific – and away from the historical link to Europe – represents one of the most encouraging aspects of his foreign policy. Although welcome, we should recognize that this shift comes about three decades too late and that it may miss the rising geopolitical centrality of sub-Saharan Africa and Latin America. The emergence of these longtime historically impoverished backwaters has been largely missed as American policy-makers and businesses are now obsessed with the challenges and opportunities posed by the emergence of China and, to a lesser extent, India. Sub-Saharan Africa, for example, over the past decade has produced six of the world's 10 fastest-growing economies. Through 2011-15, according to the International Monetary Fund, seven of the fastest-growing countries will be African, and Africa as a whole will surpass the slowing growth rates in Asia, particularly China.

This growth has caused the region's poverty rates, still unacceptably high, to fall from 56.5 percent in 1990 to 47 percent today. Further growth will likely push poverty levels down further."

8. New Geography also asks, Is the Family Finished? Some interesting thoughts about the impact of declining birthrates in the U.S.

9. A Portrait of U.S. Immigrants

Pew Research Center has compiled key findings from a new analysis of the nation’s foreign-born population, based on U.S. Census Bureau’s 2011 American Community Survey.

10. Marketing Daily says More Latinos See Themselves As Bicultural

With more than half the population of many U.S. cities who are multicultural and Hispanics comprising more and more of the U.S. population, when does it become meaningless and redundant to execute marketing strategy that is directed to a general market and a Latino market perceived to be homogenous?

11. Committee on Economic Development has an interesting piece looking at both the ideological and economic aspects underlying the debate about the minimum wage. Raising the Minimum Wage: “Which Side Are You On?”

"It is an easy call if you are either (a) a strict libertarian or (b) an enthusiastic advocate of the less fortunate with limited concern about the scarcity of resources.  (If you belong to both of those groups, there is little advice that I can offer.)  However, in between those poles of opinion, things become rather murky, rather quickly."

12. Being a Republican or a Democrat may all be in your head: Republican Brains Differ From Democrats' In New FMRI Study

... Comparing the Democrat and Republican participants turned up differences in two brain regions: the right amygdala and the left posterior insula. Republicans showed more activity than Democrats in the right amygdala when making a risky decision. This brain region is important for processing fear, risk and reward.

Meanwhile, Democrats showed more activity in the left posterior insula, a portion of the brain responsible for processing emotions, particularly visceral emotional cues from the body. The particular region of the insula that showed the heightened activity has also been linked with "theory of mind," or the ability to understand what others might be thinking. ...

... The functional differences did mesh well with political beliefs, however. The researchers were able to predict a person's political party by looking at their brain function 82.9 percent of the time. In comparison, knowing the structure of these regions predicts party correctly 71 percent of the time, and knowing someone's parents' political affiliation can tell you theirs 69.5 percent of the time, the researchers wrote. ...

13. Health Care Without the Doctors Coming to a Walmart Near You

STERLING, Va. - Perched by a computer monitor wedged between shelves of cough drops and the pharmacy in a bustling Walmart, Mohamed Khader taps out answers to questions such as how often he eats vegetables, whether anyone in his family has diabetes and his age.

He tests his eyesight, weighs himself and checks his blood pressure as a middle-aged couple watches at the blue-and-white SoloHealth station advertising "free health screenings." ...

... As Americans gain coverage under the federal health law, putting increased demand on primary care doctors and spurring interest in cheaper, more convenient care, unmanned kiosks like these may be part of what their manufacturer bills as a "self-service healthcare revolution." ...

14. Is this a case of marketing going too far? Young Japanese Women Rent Out Their Bare Legs as Advertising Space

15. Nanotechnology Rebuilds the Periodic Table

Recent developments in the field of nanotechnology might give new meaning to the phrase “nothing gold can stay.” Atoms and bonds developed not by Mother Nature, but by scientists, are gaining momentum as the building blocks for cutting-edge materials.

Using nanoparticles as “atoms” and DNA as “bonds,” Chad Mirkin, the director of Northwestern University’s International Institute for Nanotechnology, is constructing his very own periodic table. So far Mirkin has built more than 200 distinct crystal structures with 17 different particle arrangements. ...

16. ExtremeTech says NASA’s cold fusion tech could put a nuclear reactor in every home, car, and plane.

17. Atlantic Cities has some great maps showing the impact of railroads on travel time in the early 19th Century, thus shrinking the nation. A Mapped History of Train Travel in the United States

18. A soccer goalie's worst nightmare.

19. You might want to think twice before a game of horse with this cheerleader.

Higher costs forcing firms to relocate (from China)

China Daily: Higher costs forcing firms to relocate

Jobs going to other countries in China's 'great industry transfer'

Rising wages and shrinking export demand are forcing manufacturers to relocate to neighboring Southeast Asian nations and many that remain are seriously considering moving, a foreign trade official from the Ministry of Commerce said.

The official, who declined to be named, said that "nearly one-third of Chinese manufacturers of textiles, garments, shoes and hats" are now working "under growing pressure" and have moved all, or part, of their production outside China in what he called the great industry transfer.

Favored destinations are usually members of the Association of Southeast Asian Nations, especially Vietnam, Indonesia and Malaysia.

And in all likelihood, "the trend will continue" with more traditional labor-intensive manufacturers transferring production, he told China Daily. ...

... China's labor costs have surged recently by 15 to 20 percent annually, squeezing margins and driving some companies to bankruptcy.

According to the Ministry of Human Resources and Social Security, from January to June the minimum wage was raised, on average, by 20 percent in 16 provinces.

The minimum wage in Shenzhen now stands at 1,500 yuan ($238) per month, setting the highest standard for the whole Chinese mainland.

Many developing countries in Southeast Asia have lower labor costs.

The monthly wage for manufacturing jobs in Vietnam was, on average, 600 yuan in 2011, equivalent to the level of 10 years ago in Dongguan, an industrial town in South China's Pearl River Delta....

...But lower costs in other countries could soon change, some said.

"The advantage (of labor and production costs) in Southeast Asian countries will only last for a few years," said Chen Jian, a general manager of a garment company headquartered in Foshan, on the Pearl River Delta.

"The trend is just like what happened some 10 years ago when many manufacturing industries in Hong Kong and Taiwan moved to the Pearl River Delta to chase cheap labor. But now you can see how much our labor costs have gone up."

Russia reveals shiny state secret: It's awash in diamonds

Christian Science Monitor: Russia reveals shiny state secret: It's awash in diamonds

Russia has just declassified news that will shake world gem markets to their core: the discovery of a vast new diamond field containing "trillions of carats," enough to supply global markets for another 3,000 years.

The Soviets discovered the bonanza back in the 1970s beneath a 35-million-year-old, 62-mile diameter asteroid crater in eastern Siberia known as Popigai Astroblem.

They decided to keep it secret, and not to exploit it, apparently because the USSR's huge diamond operations at Mirny, in Yakutia, were already producing immense profits in what was then a tightly controlled world market.

The Soviets were also producing a range of artificial diamonds for industry, into which they had invested heavily.

The veil of secrecy was finally lifted over the weekend, and Moscow permitted scientists from the nearby Novosibirsk Institute of Geology and Mineralogy to talk about it with Russian journalists.

According to the official news agency, ITAR-Tass, the diamonds at Popigai are "twice as hard" as the usual gemstones, making them ideal for industrial and scientific uses.

The institute's director, Nikolai Pokhilenko, told the agency that news of what's in the new field could be enough to "overturn" global diamond markets. ...

What Cameras Inside Foxconn Found

New York Times: What Cameras Inside Foxconn Found

... More tellingly, the broadcast showed 3,000 young Chinese workers lining up at the gates for Foxconn’s Monday morning recruiting session.

Now, these workers know about the 2010 Foxconn suicides. They know that the starting salary is $2 an hour (plus benefits, and no payroll taxes). They know they’ll have 12-hour shifts, with two hourlong breaks. They know that workers sleep in a tiny dorm (six or eight to a room) for $17 a month.

And yet here they are, lining up to work! Apparently, even those conditions, so abhorrent to us, are actually better than these workers’ alternatives: backbreaking rural farm work that doesn’t prepare them to move up the work force food chain.

Many observers are shocked at the child labor reported at Foxconn. Not only do these Chinese factories employ a lot of young people — the legal working age is 16 — but from what we saw on the ABC broadcast, all of these employees are young.

That’s also what a former Apple executive told me this week: that Foxconn is not a career. You don’t see 30- and 40-year-old heads of households on the assembly lines. The young Chinese see it as “something like a first summer job,” he told me — a way to make some bucks for a few months before heading home, or to get some work experience before moving up.

The second enlightening twist, for me, was a note sent to me from a young man, born in China and now attending an American university.

My aunt worked several years in what Americans call “sweat shops.” It was hard work. Long hours, “small” wage, “poor” working conditions. Do you know what my aunt did before she worked in one of these factories? She was a prostitute.

Circumstances of birth are unfortunately random, and she was born in a very rural region. Most jobs were agricultural and family owned, and most of the jobs were held by men. Women and young girls, because of lack of educational and economic opportunities, had to find other “employment.”

The idea of working in a “sweat shop” compared to that old lifestyle is an improvement, in my opinion. I know that my aunt would rather be “exploited” by an evil capitalist boss for a couple of dollars than have her body be exploited by several men for pennies.

That is why I am upset by many Americans’ thinking. We do not have the same opportunities as the West. Our governmental infrastructure is different. The country is different.

Yes, factory is hard labor. Could it be better? Yes, but only when you compare such to American jobs.

If Americans truly care about Asian welfare, they would know that shutting down “sweat shops” would force many of us to return to rural regions and return to truly despicable “jobs.” And I fear that forcing factories to pay higher wages would mean they hire FEWER workers, not more.

Anyway, now my aunt has been living in New York for one year after saving up money for a plane ticket and visa, and she is wonderfully happy to have escaped Asia and reunited with our family. None of this would be possible if it wasn’t for that “sweat shop.” ...

... In other words, the lessons of this controversy have more to do with China than with Apple. This is only marginally a technology story — I imagine we could find low-wage, tiring jobs at every factory in China, making everything that China makes. Every toy, every houseware, every garment. You could do a year’s worth of exposés.

Still, we should be happy that in this corner of the Chinese landscape, things are getting better. On ABC’s show, a Fair Labor Association inspector, Ines Kaempfer, called the last month a “Nike moment” for Apple. In the 1990s, Nike’s sweatshops weren’t the worst in the business, but they’re the ones that got the negative publicity. In response, it cleaned up its act, and thereby lifted the bar for the entire industry.

Clearly, the recent spotlight on conditions at Foxconn has performed a similar service for the electronics industry. Better wages are good. More careful monitoring is good. Transparency — like letting TV cameras into your assembly lines — is good.

Arab spring cleaning

The Economist: Arab spring cleaning

Why trade reform matters in the Middle East

... The Middle East has strikingly few private companies, less than one-third of the number per person in eastern Europe. Everywhere the state dominates the economy. In Egypt the public sector accounts for 40% of value-added outside agriculture—an unusually large share for a middle-income country. Such private firms as do exist tend to be large and closely connected to the state. The average Middle Eastern company is ten years older than in East Asia or eastern Europe because new entrants are kept out by pervasive red tape. The authors reckon it costs roughly 20 times the average annual income to start a firm in Syria and Yemen (assuming anyone would want to), just over twice the average globally. In a few Arab countries, like Tunisia, some notorious personifications of crony capitalism have fallen foul of political change but the practice has by no means ended. ...

...  Obstacles to regional trade are legion. Costly “trade logistics”—non-tariff barriers, red tape and poor infrastructure—add 15% to the value of Egyptian clothes and 10% to the total value of all goods shipped in the region. It costs companies an average of 95 man-days a year just to deal with trade bureaucracies. It takes longer and is more expensive to ship goods between two Middle Eastern ports than to send them from the Middle East to America. Such market fragmentation, the authors argue, is the consequence of the region’s centralised, state-led economic policies.

More trade would have familiar benefits: larger markets should enable firms to reap greater economies of scale, increase returns to investment and adopt more new technology. Just as important in the Middle Eastern context, more open trade would begin the process of dismantling over-centralised states and create a constituency for further economic change.

Of course, trade liberalisation is no substitute for privatisation, financial reform and other domestic measures. But it has a political advantage over those reforms. Because the steps required are relatively small ones (reductions in red tape, for instance) they should provoke less resistance from insiders; and because regional trade can be presented as a pan-Arab goal, it does not have the same taint of “Westernisation” that discredited earlier reform efforts. Regional trade would be only a start. But the main thing is to start somewhere.

 

Solar bottle lights in the Philippines

Paul Collier on Sustainability and Nonrenewable Resources in Emerging Nations

I've been reading Paul Collier's The Plundered Planet: Why We Must - And How We Can - Manage Nature for Global Prosperity. He is writing about natural resource extraction in emerging nations and its impact on local economies. I thought this excerpt was especially helpful:

We have now reached the heart of what is distinctive about the role of government in societies that are rich in nonrenewable natural, assets. The exploitation of the natural asset is intrinsically unsustainable. At some stage the oil well is going to run dry, the vein copper ore will be exhausted, and the revenue stream will cease.

That word "unsustainable" sends shivers down the spine every environmentalist. But just because the exploitation of a natural asset is unsustainable does not mean that it should be avoided. The only sustainable rate of use of a nonrenewable natural asset zero. But were we never to use any nonrenewable assets they might as well not be there in the first place: the baby has disappeared with the bathwater. So, literal sustainability sets the bar absurdly high. Here economics is helpful in imagining a more meaningful conception: sustainability does not imply preservation. The world has sustained overall economic growth, albeit with hiccups, for two centuries yet virtually no Single economic activity has been sustained. Growth has not been a matter of everything getting bigger. Rather, it has been like running across ice flows: if you stand still you fall in and drown; if you keep going - even if each individual step is unsustainable - you survive. In the nineteenth century the British government was worried that it was going to run out of tall trees for the masts of ships. What happened, of course, is that at a certain point ships no longer needed trees.

The decision to deplete a nonrenewable natural asset is therefore not intrinsically an economic sin. The ethics of depletion depend upon how the money generated gets used. I have suggested that it is ethically incumbent on us to respect the rights of future generations. We may not be the curators of natural assets, but we are the custodians of their value. We are not obliged to turn the earth into a gigantic museum, with nature neatly preserved in its display case. Nonetheless, we have a responsibility not to plunder natural resources because we do not own them in the way that we own created assets. We can fulfill our ethical obligations by bequeathing to the future other kinds of assets of an equivalent value. This boils down to whether to consume the revenues or save them. We have a responsibility to save.

This represents the golden rule for the ethical use of revenue from nonrenewable natural assets. It implies that the use of this revenue should be quite unlike that of normal tax revenue. Normally, tax revenue can be presumed to rise as the economy grows: it is sustainable and thus can be spent on consumption. A good test of whether the government of a resource-rich country is being ethically responsible is whether it has a higher savings rate of its revenues from natural-asset depletion than from other tax revenues. As it depletes the natural asset is it accumulating man-made assets in its place?

Do you have a higher savings rate of unsustainable income than income you expect to continue? Perhaps you have not consciously thought about it; you just have an overall savings rate out of your total income. It might equally be difficult for a government to identify which part of its overall savings is attached to which part of its income. However, we might reasonably expect that those governments whose revenues are largely generated by the depletion of natural assets should have higher savings rates than those whose revenues are fully sustainable. For example, Africa, where so much revenue comes from resource extraction, should tend to have a higher savings rate than "Developing Asia," where revenues are linked to industry. In fact, the opposite is the case. Africa's savings rate averages around 20 percent of national income, whereas that of Developing Asia has been approximately double. (98-99)

Cargill and Economic Development for the Poor

Fortune: Cargill: Inside the quiet giant that rules the food business

Here is just one example of a large "evil" multinational corporation's positive impact on economic development among the poor. There are many other stories similar to these that are rarely seen in the press.

... Seventy percent of the world's cocoa grows in West Africa, and most of that in one country, Ivory Coast. Since 1999, Ivory Coast has been through a bloody succession of military coups, rigged elections, and civil wars. "We were concerned about running into a ceiling on production there," says Harold Poelma, managing director of Cargill Cocoa. So Cargill began looking for other options. The solution that it came up with perfectly illustrates the company's global reach and long view.

Cocoa trees look like something Dr. Seuss would draw, with clusters of hard-shelled pods, as big and colorful as Halloween gourds, sprouting directly from the trunk and limbs. They don't grow just anyplace. They need shade, warmth, and humidity, as well as deep, rich soil -- conditions generally found within a band 20 degrees north and south of the equator. That band passes through Vietnam.

Cargill was one of the first U.S. multinationals to return to Vietnam when President Bill Clinton normalized relations with the government in Hanoi in 1995. Today it is the country's largest domestic producer of livestock feed and a central player in Vietnam's fast-moving shift from a state-controlled agricultural economy to one where small farmers are encouraged to work private plots for private gain. The effect of that shift has been transformative. Not long ago, Vietnam was importing a million tons of rice a year. Last year it became the world's second leading rice exporter. "Same people, same land," Vietnam's director of crop production, Dr. Nguyen Tri Ngoc, told me in his Hanoi office, speaking through a translator. "Before, farmers were not really farmers. They were workers in the fields, and they worked under the supervision of the government." And the difference now? "Free markets!" he says in English.

In 2004, Cargill launched a public-private partnership with one of its biggest customers, chocolate giant Mars, and the governments of Vietnam and the Netherlands. The aim: to create something that had never before existed in Vietnam, a cocoa-export economy.

First, Cargill had to convince a front line of growers to switch to cocoa from well-established crops like coffee, black pepper, and cashews. Two years before the first harvest (it takes at least that long for cocoa seedlings to produce fruit), before there was anything to buy, Cargill opened two fully staffed cocoa buying stations on major roads, in Ben Tre and Dak Lak provinces. It made an early commitment to transparency, posting on the Cargill website and offering by text message both the daily international price on the London market and what Cargill is paying locally; growers can lock their price for three weeks, the time it takes to ferment and dry the beans after harvest. Cargill also built a network of more than 100 demonstration farms, where curious growers can learn from their neighbors. And in February 2011 the company took delivery of the first Vietnamese cocoa beans to carry UTZ certification -- an independent sustainability program through which growers can earn an extra $100 per ton.

This year Vietnamese farmers will produce about 2,500 metric tons of cocoa, 70% of which will go to Cargill. That's a tiny sliver of the 3.4 million-ton global market, but the growth trend is impressive: 40,000 acres under cultivation in 2010, compared with 1,200 in 2003, and already 32,000 active growers in 12 provinces. Poelma sees the potential for 100,000 tons by 2020. Instead of shipping all of that to Cargill's North Sea Canal processing plant in Wormer, the Netherlands -- a voyage that takes 24 days -- Cargill hopes to have a Cargill factory in Vietnam by then, processing cocoa liquor, cocoa butter, and cocoa powder for export to growing markets in China and India.

None of that happens without the eager participation of thousands of small growers. One I met last summer was Trinh Van Thanh, a smooth-cheeked 43-year-old with a wife, three daughters, and roughly four acres of land in Baria-Vungtau province, a two-hour drive southeast from Ho Chi Minh City. Five years ago Thanh was growing pepper and coffee and raising pigs, and he was struggling. His pepper trees were afflicted by blight. The yield from his mature coffee trees was declining year by year. He says he was $5,000 in debt.

Thanh planted his first cocoa saplings, as Vietnamese farmers often do, in the shade of his coffee trees. He enrolled in an agricultural extension program in Ho Chi Minh City, where he learned how to build a specialized slow-drip irrigation system based on technology invented on an Israeli kibbutz. When the first crop came in, Thanh made the ambitious choice to ferment and dry the cocoa beans himself. Ultimately, he built more fermentation boxes and drying tables than he needed for his own crop, which meant he could perform those value-adding services for other growers. Soon he wasn't just farming, he was running a collection station. Next he planted a cocoa-tree nursery. Then he launched an irrigation consulting business. (The man gets the concept of a virtuous cycle.) Thanh still sells all his beans to Cargill but maybe not for long. What he really wants to learn how to do next, he told me, is make and sell chocolate.

Thanh's success so far almost defies belief. He says his mini cocoa conglomerate will gross more than $850,000 this year. And if his daughter, who's about to graduate from high school, wants to go to college in America -- and he hopes that she will -- he can easily afford it.

Later in Hanoi, I tell Ngoc all about my visit to Baria-Vungtau province. When does a farmer like Thanh, I ask him, become too much of a capitalist for the Socialist Republic of Vietnam? Ngoc beams. "No limit!" he says. Again in English. ...

The World of Seven Billion

National Geographic has a fascinating interactive map on its website that gives some valuable socio-economic perspective. The World of Seven Billion

 

International Public Opinion on the Free Market

From the Economist

Measuring growth from outer space

Aid Watch: Cool Maps: Measuring growth from outer space

For many of the world’s poorest countries, figures measuring economic growth are unreliable, and in some cases they don’t exist at all.  In an NBER working paper, Brown University professors J. Vernon Henderson, Adam Storeygard, and David N. Weil came up with an interesting proxy for GDP growth: the amount of light that can be seen from outer space.

The really stark map is this one of North and South Korea:

New method yields more rice with less water: Oxfam

Reuters: New method yields more rice with less water: Oxfam

(Reuters) - Rice farmers could boost their yields by 50 percent with a new method that uses less water Oxfam America said on Wednesday as climate change and drought threaten the staple crop.

Growing rice -- considered the major calorie source for about half the world's population -- is water-intensive, accounting for as much as one-third of the planet's annual freshwater use, said Oxfam, a development group.

Rice farmers normally rely on flooding their fields to keep seeds covered in water throughout the growing season.

But the new method, known as the System of Rice Intensification, or SRI, involves planting seedlings farther apart, keeping fields moist instead of flooding them, transplanting seedlings to fields earlier and weeding manually, Oxfam said in a report.

Farmers using SRI in parts of Africa, Southeast Asia and India have been able to produce as much as 50 percent more rice with less water, and often with less labor, said the report, written with U.S.-based nonprofit Africare and the Worldwide Fund for Nature. ...

Does culture affect long-run growth?

Vox: Does culture affect long-run growth?

Does culture affect long-run growth? This column argues that countries with a more individualist culture have enjoyed higher long-run growth than countries with a more collectivist culture. Individualist culture attaches social status rewards to personal achievements and thus provides not only monetary incentives for innovation but also social status rewards. ...

Two interesting graphs:

 

WHO - Maternal Deaths Fall

IPS: WHO - Maternal Deaths Fall

NAIROBI, Sep 16, 2010 (IPS) - The number of women dying from pregnancy related causes around the world is falling. Sub-Saharan Africa remains one of the most dangerous place for pregnant women, despite recording a 26 percent reduction in maternal mortality rates.

The statistics in the "Trends in Maternal Mortality" report released by the World Health Organisation. on Sep. 15 cover the period from 1990 to 2008, revealing that maternal mortality fell from 540,000 deaths worldwide in 1990 to 358,000 in 2008 - a 34 percent decline.

Several reasons are cited for the reduction in number of maternal deaths, including improvement in health systems to assist pregnant women and increased education of women, raising awareness of the importance of delivering with skilled help.

Around the world, more midwives are also being trained. The proportion of deliveries attended by skilled health personnel rose from 53 percent in 1990 to 63 percent in 2008. The proportion of women who attended a pre-natal clinic at least once during their also rose from 64 percent to 80 percent.

The use of contraceptives by women aged 15-49 also rose: East Asia which experienced the greatest reduction in maternal deaths has a contraceptive prevalence rate of 86 percent. Sub-Saharan Africa, where contraceptives are used by just 22 percent of women, recorded one of the lowest declines of maternal mortality.

Sub-Saharan Africa and South Asia still account for 87 percent of global maternal deaths.

Nearly two thirds of all maternal deaths take place in just eleven countries - Afghanistan, Bangladesh, the Democratic Republic of Congo, Ethiopia, India, Indonesia, Kenya, Nigeria, Pakistan, Sudan and Tanzania.  ...

Garment Factories, Changing Women’s Roles in Poor Countries

New York Times - Economix: Garment Factories, Changing Women’s Roles in Poor Countries

While visiting garment factories in Bangladesh on assignment recently, I met young women who had migrated from villages to the city in search of jobs that they needed to support their families back home. It is a fairly standard story in this part of the world.

What struck me, however, was how their journeys had changed them and their views about life. Take Maasuda Akthar, who moved to Gazipur, a town 30 miles outside  Dhaka, when she was 16 with her sister. (I wrote about her in this article about how the Bangladesh garment industry was benefiting from increased labor costs in China.) She married a man whom she met at the factory. As an experienced seamstress, she now makes more money than him. Ms. Akthar, 21, told me that her husband had offered to become the sole breadwinner in the home so that she could stay at home and “be comfortable,” but she refused because she enjoys working. Not only that, she told me she did not plan to have children for a few years.

My conversations with Ms. Akthar and the other woman appeared to confirm what economists, policy makers and businessmen had told me: By giving women an independent source of livelihood, Bangladesh’s garment industry has changed this conservative Muslim country’s society in immeasurable ways. (More than 80 percent of the three million people who work in the industry are women.) ...

... Mr. Mobarak also found that girls who live in villages with garment factories tend to marry later and have children later than the girls who grow up in villages without factories. In other countries, this has typically happened as women get more educated, but Mr. Mobarak’s survey of 1,500 families suggests that it is happening slightly differently in Bangladesh, which has a literacy rate of just 55 percent.

“Girls do seem to take advantage of these jobs at 17 to 19 years old, and that allows them to delay marriage and child bearing,” Mr. Mobarak told me in a telephone interview. “Even if it’s not happening through education, it is happening through work.” ...

... Wages in Bangladesh’s garment industry are among the lowest in the world. The minimum wage, which the government is expected to increase soon, is just 1,662 taka (about $23) a month. Labor groups are demanding a sharp increase and their protests and clashes with the police have periodically shut down factories in recent weeks.

Still hundreds of thousands of women flock to Dhaka and other garment hubs in Bangladesh every year because factories pay more than the women could earn in villages. ...

Bubble Trouble? China vs Japan

The Economist: Bubble Trouble? China vs Japan

China is set to overtake Japan in the world economic rankings

NEXT year China will overtake Japan to become the world’s second-largest economy. Its rapid ascent has led some to question whether China will follow in Japan’s footsteps, with the bursting of a massive bubble followed by years of decline. But China is still far poorer than Japan was at its peak, and thus has more room to improve productivity. A transition of surplus labour from agriculture to industry and services would increase efficiency and bring its economy more in line with the developed world. And China’s stimulus package has produced much needed infrastructure that will reinforce future growth. But in the long run, a shift away from investment and exports towards domestic consumption would make China’s output more sustainable, and help it to avoid experiencing a bubble like Japan's.

Emerging Asian economies: On the rebound

Asia’s emerging economies are recovering much more quickly than economies in other parts of the world. Can they keep it up?

MORE green shoots have appeared in America in recent weeks, but they are nothing by comparison with the lush jungle sprouting in the East. Asia’s emerging economies probably grew at an average annualised rate of over 10% in the second quarter, while America’s GDP fell by 1%. In 2009 as a whole, recent forecasts suggest that emerging Asia could grow by at least 5%, while the G7 economies contract by 3.5%. The growth gap between the two has never been wider. How have these export-dependent economies managed to decouple from the developed world? And can their recovery last?

Average growth figures conceal big differences within Asia over the past year. China, India and Indonesia were among the few economies in the world that continued to expand throughout the global downturn (though China’s virtually stalled late last year). But the smaller, more open Asian economies were badly hit. Between September and March real GDP fell by an average annualised rate of 13% in Hong Kong, Malaysia, South Korea, Singapore, Taiwan and Thailand.

Yet the countries that have so far published second-quarter GDP figures show an impressive bounce. Comparing the second quarter with the first at an annualised rate, China’s GDP grew by 15%, South Korea’s by almost 10%, Singapore’s soared by 21% and Indonesia’s managed a respectable 5%. Other countries in the region are also likely to show a rebound. It is true that output in South Korea and Singapore was still lower than a year earlier, but quarterly changes are more useful for spotting turning points—and this is how growth rates are most commonly measured in America. ...

Shopaholics wanted

The Economist: Shopaholics wanted

Can Asians replace Americans as a driver of global growth?

ASIA’S emerging economies are bouncing back much more strongly than any others. While America’s industrial production continued to slide in May, output in emerging Asia has regained its pre-crisis level (see chart 1). This is largely due to China; but although production in the region’s smaller economies is still well down on a year ago, it is rebounding in those countries too. Taiwan’s industrial output rose by an annualised 80% in the three months to May compared with the previous three months. JPMorgan estimates that emerging Asia’s GDP has grown by an annualised 7% in the second quarter.

Asia’s ability to decouple from America reflects the fact that the region’s downturn was caused only partly by the slump in American activity. In most Asian economies falling domestic demand was more important than the drop in net exports in explaining the collapse in GDP growth. The surge in food and energy prices in the first half of 2008 squeezed profits and spending power. Tighter monetary policy aimed at curbing inflation then further choked domestic demand.

The recent recovery in industrial production reflects the end of destocking by manufacturers as well as the large fiscal stimulus by most governments. But the boost from both of these factors will fade. Meanwhile, export markets in developed economies are likely to remain weak. So the recovery in Asian economies will stumble unless domestic spending, notably consumption, perks up.

Consumers’ appetite to spend varies hugely across the region. In China, India and Indonesia spending has increased by annual rates of more than 5% during the global downturn. China’s retail sales have soared by 15% over the past year. This overstates the true growth rate because it includes government purchases, but official household surveys suggest that real spending is growing at a still-impressive rate of 9%. In the year to May, sales of household electronics were up by 12%, clothing by 22% and cars by a stunning 47%.

Elsewhere in the region, ...

World hunger 'hits one billion'

BBC: World hunger 'hits one billion'

One billion people throughout the world suffer from hunger, a figure which has increased by 100 million because of the global financial crisis, says the UN.

The UN's Food and Agriculture Organisation (FAO) said the figure was a record high.

Persistently high food prices have also contributed to the hunger crisis.

The director general of the FAO said the level of hunger, one-sixth of the world's population, posed a "serious risk" to world peace and security.

The UN said almost all of the world's undernourished live in developing countries, with the most, some 642 million people, living in the Asia-Pacific region.

In sub-Saharan Africa, the next worst-hit region, the figure stands at 265 million.

Just 15 million people are left hungry in the developed world. ...

Rape's vast toll in Iraq war remains largely ignored

Christian Science Monitor: Rape's vast toll in Iraq war remains largely ignored

Many rape victims have escaped to Jordan but still don't have access to treatment and counseling.

Amman, Jordan -  As though recoiling from her own memories, Khalida shrank deeper into her faded armchair with each sentence she told: of how gunmen apparently working for Iraq's Interior Ministry kidnapped her, beat and raped her; of how they discarded her on a Baghdad sidewalk.

But her suffering did not end when she fled Iraq and became a refugee in Jordan's capital, Amman. When Khalida's husband learned that she had been raped, he abandoned her and their two young sons.

Rumors spread fast in Amman; soon, everyone on her block knew that she was without a man in the house. Last month, her Jordanian neighbor barged into her apartment and attempted to rape her.

Khalida never reported the incident. Like tens of thousands of Iraqi refugees in Jordan, she does not have a permit to live or work here, and she is afraid that if she turns to authorities for help she will get deported. So instead of seeking punishment for her assailant, she latched the flimsy metal door of her apartment and stopped going outside.

Her story sheds light on a problem that is little researched, poorly understood, and largely ignored: Iraqi rape victims who now live in Jordan illegally and without protection. ...

Jordan copper mines from biblical times could be King Solomon’s

Times Online: Jordan copper mines from biblical times could be King Solomon’s

An ancient copper works in Jordan may have been the location of the fabled King Solomon’s mines, new archaeological investigations suggest.

The dig at Khirbat al-Nahas, once a thriving copper production centre in the Faynan district, about 30 miles (50km) south of the Dead Sea, has found evidence that it dates back to the 10th century BC, making it at least two centuries older than was thought. The new date means that the mine was almost certainly active during the time of the biblical Jewish kings David and Solomon.

Scientists who conducted the excavations are now working to establish whether the kings controlled the copper mine at this time. “Given the unambiguous dating evidence presented here for industrial-scale metal production at Khirbat al-Nahas during the 10th and 9th century BC in ancient Edom, the question of whether King Solomon’s copper mines have been discovered in Faynan returns to scholarly discourse,” the researchers said.

 

As costs climb in China, manufacturers look elsewhere

Kansas City Star: As costs climb in China, manufacturers look elsewhere

If Americans watching the Beijing Games were stunned by China’s changing economy, wait until they see price tags on Chinese-made goods this Christmas and beyond.

What’s bad news for consumers may be good news, experts say, for humanity: China is losing its distinction as the world champion of cheap manufacturing.

With pressures building against sweatshops and pollution in China, however, “Indonesia and Vietnam are just waiting to take their turns,” said Chris Kuehl of the Kansas City business consultant Armada Corporate Intelligence. ...

... A tangled Bird’s Nest of factors — from labor reforms to shipping costs to the slashing of subsidies for exporters — has driven up the cost of making the $159 SteamMax and Top’s other household products by nearly 30 percent in two years.

“Until this year we’ve been able to absorb a lot of the increases” and kept pricing competitive, said company executive Benny Lee. “But you can’t absorb 30 percent.”

Costs have climbed so dramatically that about one in five multinational manufacturers in China has decided to move operations to other developing nations, according to a recent survey by Booz Allen Hamilton consultants.

Countries most cited in the study as alternatives were India, Vietnam, Thailand, Malaysia and Brazil, in that order....

 

Why Georgia is not start of 'Cold War II'

Christian Science Monitor: Why Georgia is not start of 'Cold War II'

Despite tensions over missile deals and NATO expansion, the West's ties with Russia are far more nuanced than in Soviet days.

Paris - Two weeks into the Georgia crisis, Russia maintains leverage, adroitly playing a great game of obfuscation and tit-for-tat – both militarily and diplomatically – with a disunited West struggling to determine whether this is a new cold war.

Vladimir Putin's idea of the 21st century appears different from that described by President Bush in calling for Russia to withdraw. As NATO officials this week fought to show strong support for Georgia without irreparably damaging ties to Russia, the "new world order" described by Mr. Bush's father as the Soviet empire collapsed seems a faint memory.

Yet while Russia's action has been termed a new cold war, that concept doesn't capture the dramatic global changes since Mikhail Gorbachev disbanded the Soviet Union in 1991, say diplomats and Russian area specialists. In a more globalized world, Russia is at once a competitor, a partner, and an opponent. ...

...To be sure, thinkers – diplomats, scholars, writers – say the Russian blitz into Georgia represents a new world, but what kind of new world is undefined.

Cold war certainties have given way to an international climate that is mixed up, unpredictable, contrary, and quite corrupt. Russia's action is creating "a new context of fear rippling through its border regions," says Goble, causing "effects we can't even understand yet."

In the post-cold-war world of 2008, there's no one overarching reality that provides an orienting stability. Russians again feel Moscow's power and authority, and are assured by it. Wars in Iraq and Afghanistan make NATO, the US, and Europe appear weak. In this world, "if you take one action, it can boomerang and harm something else," says Hassner. The "war on terror" isn't an adequate principle around which to center all focus, he adds.

Some East European analysts say Russia doesn't want to attack or allow hostile relations with the West à la cold war; Rather, Moscow's intent is to exploit the riches and technology of the West.

"Russia's strength is made possible by oil at $150 a barrel," says Bartosz Weglarczyk, foreign editor of influential Polish daily Gazeta Wyborcza. "If oil is cut to $60 a barrel, Russia is sunk. [Russians] spend less on research and development than Poland. They want bank accounts in the West, to make millionaires off sales to Europe. They don't want a big war. They want to gain influence and manipulate."

Estonia, Google Help 'Cyberlocked' Georgia

Wired: Estonia, Google Help 'Cyberlocked' Georgia

Civil.ge, the Georgian news site, is "under permanent [cyber] attack." So they've switched their operations to one of Google's Blogspot domains, to keep the information flowing about what's going on in their country.

The attacks against Civil.ge are part of a larger set of online assaults, originating in Russia, against Georgian websites. ...

...Meanwhile, Estonia (once the victim of Russian-based hackers) is now hosting Georgia's Ministry of Foreign Affairs website. And "in a historic first, Estonia is sending cyberdefense advisors to Georgia," Network World observes.

And, of course, the strikes aren't just made up of ones and zeros. The Russians are reportedly bombing Georgia's telecommunications infrastructure -- including cell towers. "It's still very difficult to get a call anywhere around the country right now," an NPR reporter says.

UPDATE: Two Azerbaijani media outlets claim they're under assault, too. And some Russian sites are getting hit, in what appears to be a bit of cyber-payback.

Welcome to 21st Century warfare.

The bare necessities

The Economist: The bare necessities

Where people spend most on food and fuel

THE soaring cost of food and fuel is a concern for the governments of rich and poor countries alike. Many households in Africa and Asia shell-out more on food and fuel as a share of total spending and so are disproportionately hit by rising prices. But in some poor countries fuel subsidies help to ease the pain.

One thing to note is that China and India (with about a third of the world population) are in the yellow group, not the 40% or higher. Most of Southeast Asia and Latin America are less than 40% as well. This was not the case just twenty years ago. In many of these regions, 60-75% would have been common. Thus, as bad as the problem is (and it is bad), it would be far worse had worldwide economic growth not happened.

Related: Why everything costs more

From Baghdad to London: Lessons from one thousand years of urbanisation in Europe and the Arab world

Vox: From Baghdad to London: Lessons from one thousand years of urbanisation in Europe and the Arab world

Baghdad was a wonder of the world in the year 800 while London was an economic backwater. By 1800, London was the largest city in the world while Arab cities languished. Recent research attributes this ‘trading places’ to institutional differences: Arab cities were tied to the fate of the state while European cities were independent growth poles.

Why did the Industrial Revolution begin in northwestern Europe? At the turning of the first millennium, Europe was a backward part of the world economy with low levels of urbanisation and income. But between 1000 and 1800, Europe surged from a backwater of the world economy to its most dynamic region. Understanding this development is a major challenge for economists and economic historians. ...

...The sociologist Max Weber introduced a distinction between ‘consumer cities’ and ‘producer cities’. Using this classification, Arab cities were – much more than their European counterparts – consumer cities.8

The classical consumer city is a centre of government and military protection or occupation, which supplies services – administration, protection – in return for taxes, land rent and non-market transactions. Such cities are intimately linked to the state in which they are embedded. The flowering of the state and the expansion of its territory and population tend to produce urban growth, in particular that of the capital city.

In Europe cities are instead much closer to being producer cities. The primary basis of the producer city is the production and exchange of goods and commercial services with the city’s hinterland and other cities. The links that such cities have with the state are typically much weaker since the cities have their own economic bases. It is this aspect that accounts for the fact that Arab cities suffered heavily with the breakdown of the Abbasid Empire, while European cities continued to flourish despite political turmoil.

Between 1000 and 1300 Europe acquired an urban system dominated by typical producer cities, which prospered in spite of Europe’s political fragmentation. In fact, this fragmentation was strongly enhanced by the rise of independent communes – city-states, or cities with a large degree of local authority – which form the core of the political system of Europe’s urban belt stretching from Northern Italy to the Low Countries. Indeed, we still find this pattern in the so-called ‘Hot Banana’ – the industrial agglomeration that stretches from the southern UK to the Netherlands, through Germany and down to northern Italy.

Arab cities at this time were, by contrast, heavily influenced by strong, predatory states that could, and oftentimes did, impose a heavy tax or military burden on the cities in their realms. Under these predatory regimes it was typically only the capital city thrived, with this honour shifting from Baghdad to Damascus, Fez, Cairo and finally to Istanbul. ...

 

Bush administration lifts North Korea sanctions

Yahoo! News: Bush administration lifts North Korea sanctions

WASHINGTON - President Bush said Thursday he will lift key trade sanctions against North Korea and remove it from the U.S. terrorism blacklist, a remarkable turnaround in policy toward the communist regime he once branded as part of an "axis of evil."

The announcement came after North Korea handed over a long-awaited accounting of its nuclear work to Chinese officials on Thursday, fulfilling a key step in the denuclearization process.

Bush called the declaration a positive step along a long road to get the nation to give up its nuclear weapons. Yet, he remained wary of the regime, which has lied about its nuclear work before. And North Korea's declaration, received six months late, falls short of what the administration once sought, leaving it open to criticism from those who want the U.S. to take an even tougher stance against the regime.

"We will trust you only to the extent you fulfill your promises," Bush said in the Rose Garden. "I'm pleased with the progress. I'm under no illusions. This is the first step. This isn't the end of the process. It is the beginning of the process." ...

 

Japan's 'monster' parents take centre stage

Fox News: Japan's 'monster' parents take centre stage

The stage was set, the lights went down and in a suburban Japanese primary school everyone prepared to enjoy a performance of Snow White and the Seven Dwarfs. The only snag was that the entire cast was playing the part of Snow White.

For the audience of menacing mothers and feisty fathers, though, the sight of 25 Snow Whites, no dwarfs and no wicked witch was a triumph: a clear victory for Japan's emerging new class of “Monster Parents”.

For they had taken on the system and won. After a relentless campaign of bullying, hectoring and nuisance phone calls, the monster parents had cowed the teachers into submission, forcing the school to admit to the injustice of selecting just one girl to play the title role.

Across Japan teachers are reporting an astonishing change in the character of parents, who, after decades of respectful silence, have become a super-aggressive army of complainers. ...

Roots of Asia's rice crisis

Christian Science Monitor: Roots of Asia's rice crisis

Tight supplies reflect population boom and neglect of farming.

BOHOL, Philippines - Gantallan Plorensio's farm is a paradox at the heart of Asia's growing rice crisis. The fields that get enough water have never been more productive, contributing to a 5 percent annual increase in rice production over the past two years.

"We have a lot of rice fields, but no irrigation," he says. "They're just sitting there."

As a regional rice crisis looms, threatening political instability and social unrest, the idle fields in Mr. Plorensio's village underscore a failure of policy and foresight repeated across the region: For decades, governments have been encouraging a boom in services and skyscrapers, but not the capacity to grow more rice. Financing in agriculture has stagnated, and fewer farmers are expected to produce more rice for exploding populations.

That neglect is one of the central causes of what some analysts call the "perfect storm" – including rising global oil prices, drought in Australia, and inclement weather – behind the rice crisis.

"It's a failure to recognize the importance of agriculture," says Duncan Macintosh, a spokesman for the International Rice Research Institute, based in Laguna, about 40 miles from Manila, the capital of the Philippines. "Agriculture is becoming a very unfashionable industry." ...

Taiwan’s Solution to Traffic Accidents

New York Times: Taiwan’s Solution to Traffic Accidents

About a year ago in Taiwan, they started installing countdown timers at traffic lights at a number of intersections. Some counted down the amount of time remaining ’till a green light turned yellow and then red, while others counted down the amount of time remaining before a red light turned green. ...

...It’s a fact that a certain number of accidents are caused both by people who jump the gun on the red light, and those who try to make it through the intersection after the light has already turned red. Ostensibly, the reason for the timers was to give people more precise information about exactly how much time they had remaining before the light changed, in the hope of reducing accidents.

The results are quite interesting. A research institute within Taiwan’s Ministry of Transportation released a report showing that at 187 intersections which had the timers installed, those that counted down the remaining time on green lights saw a doubling in the number of reported accidents, with a 33 percent increase in the number of injuries, while those that counted down until a red light turned green saw a halving in both the number of reported accidents and injuries. Intersection that had both red and green light timers saw a 19 percent increase in reported accidents and a 23 percent increase in injuries.

The world's silver lining

The Economist: The world's silver lining

(Note: To my Emergent friends in particular, specifically those who are enamored with Brian McLaren's Everything Must Change, and the popular video clip by the radical left Tides Foundation called The Story of Stuff. Here are the consequences of our modern economy (or as McLaren refers to it, "The Suicide Machine"). I plan to extensively review McLaren's neo-Malthusian treatise toward the end of February. This will have to do for now.)

In a week of financial uncertainty we look behind the headlines to a world that is unexpectedly prosperous and peaceful.

..........

In China 25 years ago, over 600m people—two-thirds of the population—were living in extreme poverty (on $1 a day or less). Now, the number on $1 a day is below 180m. In the world as a whole, a stunning 135m people escaped dire poverty between 1999 and 2004. This is more than the population of Japan or Russia—and more people, more quickly than at any other time in history.

..........

...in South Asia, for instance, the number of those without clean water has been nearly halved since 1990.

..........

In 2007 Unicef, the United Nations child-welfare body, said that for the first time in modern history fewer than 10m children were dying each year before the age of five. That is still an awful lot but it represents a fall of a quarter since 1990. Life expectancy has increased a bit in low- and middle-income countries. The long march to literacy is nearing an end: three-quarters of people aged 15-25 were literate in 1975; now the rate is nearly nine-tenths.

..........

Globalisation, it seems, leads to a shift in the direction of “replacement fertility”: the rate at which the size of a population eventually stabilises. This is a remarkable development. In closed agrarian societies, families need a lot of children as insurance against disaster. But in countries that have opened themselves up, families can rely on other sorts of protection, such as urban jobs or trade.

..........

Last year the global economy entered its fifth year of over 4% annual growth—the longest period of such strong expansion since the early 1970s. Despite financial turmoil and soaring oil and commodity prices, world growth barely dipped in 2007 and trade grew at 9%, even though trade talks fell apart. Unlike previous expansions, inflation remained more or less under control.

Moreover, growth was spread around fairly evenly....Growth in East Asia was 10%, in South Asia over 8%, in eastern Europe almost 7% and in Africa, thanks to the commodity boom, over 6%. This was unprecedented. In earlier booms, fast growth seemed to have been the preserve of a few miracle countries, such as the Asian tigers. No longer. Almost half of humanity, spread over more than 40 nations, lives in countries growing at 7% a year or more, a rate that doubles the size of an economy in a decade. This is twice the number of fast growers that existed in the years between 1980 and 2000.

..........

A more plausible culprit for rising inequality seems to be technological progress (see chart below). This is associated with inequality in poor countries because in emerging markets the people best able to take advantage of new technology are those who already have an education and who are usually among the richest in society. The more technological progress, therefore, the better the well-off do.

But to limit technology to reduce inequality would be a cure worse than the disease. Technology in its broadest sense—the flow of new ideas—is the only way of getting growth rates up to 5-10% a year, the rate which enables poor countries to catch up with the West. ...

..........

...since the mid-1990s, the incomes of the poorest fifth have risen everywhere except, marginally, in Latin America, where they have been affected by the after-shocks of debt crises. In Asia, the real incomes of the poorest fifth rose 4% a year; in Africa, by 2% a year, faster than the rise for other income groups.

..........

In 1990 those on $1 a day accounted for more than a quarter of the population of developing countries. By 2015, on current rates, the proportion of very poor people should have shrunk to 10%. Moreover, these monetary measures probably understate the real gains from things such as lower child mortality, safer water, literacy and other social achievements. A rich man appreciates his extra cash but this does not compare with what a poor family gains from seeing an infant survive childhood or learn to write.

..........

The number of conflicts (both international and civil) fell from over 50 at the start of the 1990s to just over 30 in 2005 (definitions are obviously fluid; these are the ones used by scholars at the universities of Uppsala and British Columbia for a project called the “Human Security Report”). On their definitions, the number of international wars peaked during the 1970s and has been falling slowly since. The number of civil wars continued to rise until about 1990 and then fell precipitately. In total, the death toll in battle fell from over 200,000 a year in the mid-1980s to below 20,000 in the mid-2000s.

Chinese goods transform life in Southeast Asia

International Herald Tribune: Chinese goods transform life in Southeast Asia

LONG LAO GAO, Laos: The pineapple that grows here on the steep hills above the Mekong River is especially sweet, the red and orange chilies unusually spicy, and the spring onions and watercress retain the freshness of the mountain dew.

For years, getting this prized produce to market meant carrying a giant basket on a back-breaking, daylong trek down narrow mountain trails that cut through the jungle.

That is now changing, thanks in large part to China.

Villagers ride their cheap Chinese motorcycles, which sell for as little as $440, down a badly rutted dirt road to the markets of Luang Prabang, the charming city of Buddhist temples along the Mekong that draws flocks of foreign tourists. The trip takes just one and half hours.

"No one had a motorcycle before," said Khamphao Janphasid, 43, a teacher in the local school whose extended family now has three of them. "The only motorcycles that used to be available were Japanese and poor people couldn't afford them."

Cheap Chinese products are flooding China's southern neighbors and consumers in Myanmar, Laos, Vietnam and Cambodia are laying out the welcome mat.

The products are transforming the lives of some of the poorest people in Asia, whose worldly possessions only a few years ago typically consisted of not much more than a set or two of clothes, cooking utensils and a thatch-roofed house built by hand.

The concerns in the West about the safety of Chinese toys and pet food are largely moot for the people living in the remote villages here, although some residents complain about quality. As the first introduction to global capitalism, Chinese products are met with deep appreciation.

"Life is better because prices are cheaper," Khamphao said. ...

A landslide in South Korea

The Economist: A landslide in South Korea

Does a new era beckon?

AS VOTING ended in South Korea’s presidential election, exit polls indicated what most in the country had anyway expected: the opposition Grand National Party’s Lee Myung-bak was to be the country’s president. Mr Lee won a thumping endorsement, securing close to 50% of the vote in a 12-man presidential field. Mr Lee’s victory brightens the conservative GNP's prospects of also winning control of the legislature in elections next April.

So ends a decade of liberal rule by Kim Dae-jung and his successor Roh Moo-hyun. South Koreans are disillusioned with Mr Roh, who talked about improving their lot but failed to deliver robust economic growth. His divisive rhetoric angered many. “A president has to bring the country together,” Hyundai's chairman and a legislator, Chung Mong-joon, suggested. “Roh Moo-hyun divided the country.” ...

Sweatshops, Sweatshops Everywhere

Dani Rodrik's Weblog: Sweatshops, Sweatshops Everywhere

Rodrik is reacting to an article in the New York Times about Con Edison discovering their manhole covers are being made in a sweatshop in India.

An embarrassed Con Edison says that it is now rewriting its international contracts to include safety requirements.

Fine, but what if these requirements now raise the cost sufficiently for the utility to want to switch its supplies to another source? And what if these West Bengali workers now find themselves out of a job, or earning less in even worse working environments?  Would we have we done them any favors by becoming outraged at their condition?

This is one of the trickiest issues in international trade, and one for which there is no straightforward answer that I can think of.

Libertarians and fair-traders, which make an odd couple, do have a solution: they would say let consumers have information about the full hedonics--all the characteristics of a good, including the manner in which they are manufactured--and then let markets take care of it.  So if Con Edison believes its customers value the welfare of West Bengali workers, it ought to be willing to pay for the extra costs its suppliers incur for running safe factories. No regulation is required; just better information.

But if you believe information and markets can address this problem, you must also believe that consumers have a good idea about the costs of improving workplace conditions and can solve complicated general-equilibrium models each time they decide how much to pay for toys from China or towels from Pakistan.  For what is at issue is not just "do you care for workers over there?" but also "do you understand the full general-equilibrium consequences of what would happen to the workers concerned?" Market intermediaries can help, but we need to ask in turn who will keep them straight and honest.

Bingo! A great case study in discerning economic justice.

Our Presbyterian Witness in Asia

Linda Valentine, Executive Director of the GAC, is doing a blog on her journey in Asia.

Our Presbyterian Witness: A Faith Journal from my Journey

She writes:

Going on a mission trip, meeting people face to face who live in circumstances so very different than our own can be transforming. I know, because it has happened to me.

And it’s about to happen to me again.

I am about to set out on an Asian journey with my trusted friend and PC(USA) colleague, Insik Kim, to experience firsthand the vibrant congregations and the vital witness of our brothers and sisters in Thailand, China, and Korea.  It will be a time of tremendous learning, in which I know my knowledge and my faith will be greatly increased.

I invite you to share in my journey with me by visiting my new blog for this trip.  It’s true.  I have launched a blog.  Upon the encouragement of many of my colleagues across the PC(USA), I have gladly taken on the challenge of this new medium in order that you might travel virtually with me.  I look forward to receiving your comments and feedback. ...

Yeah Linda! We have talked about blogging more than once, so I guess I'm one of those many colleagues. I'm looking forward to the coming posts.

Asia's skills shortage: Capturing talent

The Economist: Asia's skills shortage: Capturing talent

Despite its booming economies and huge numbers of people, Asia is suffering a big shortage of skills. And it is about to get worse.

IT SEEMS odd. In the world's most populous region the biggest problem facing employers is a shortage of people. Asia has more than half the planet's inhabitants and is home to many of the world's fastest-growing economies. But some businesses are being forced to reconsider just how quickly they will be able to grow, because they cannot find enough people with the skills they need.

In a recent survey, 600 chief executives of multinational companies with businesses across Asia said a shortage of qualified staff ranked as their biggest concern in China (see chart 1) and South-East Asia. It was their second-biggest headache in Japan (after cultural differences) and the fourth-biggest in India (after problems with infrastructure, bureaucracy and wage inflation). Across almost every industry and sector it was the same.

Old Asia-hands may find it easy to understand why there is such concern. The region's rapid economic growth has fished out the pool of available talent, they would say. But there is also a failure of education. Recent growth in many parts of Asia has been so great that it has rapidly transformed the type of skills needed by businesses. Schools and universities have been unable to keep up. ...

Micro coverage a big help for Mexico's poor

Christian Science Monitor: Micro coverage a big help for Mexico's poor

A new plan to promote microinsurance could have a ripple effect in the region.

Mexico City - Adela Amaya Chavez never considered life insurance. In fact she had no idea what it was.

But on a recent day when inquiring about a loan at Banco Azteca to repair the leaky drains in her home in Mexico City, she was told that if she paid an additional $2 a week her family would receive $6,000 if she were to die. Her first thought: the death of her nephew in a car accident in 2003 and the devastation it caused his family. "It was so sudden," says Ms. Amaya Chavez, who cleans office buildings for a living.

She signed up.

Once just a safeguard for the middle and upper classes, insurance is finding its way to all sectors of Mexico. For the poorest, microinsurance policies – often simple plans worth tiny sums of money – are giving protection to those Mexicans who work in the informal economy, often don't have bank accounts, and never dreamed of the luxury of having a Plan B.

Asia and Africa have pioneered microinsurance coverage for everything from death to droughts. But a new government-sponsored plan to promote such micropolicies in Mexico – with its sophisticated banking sector and second-largest population in Latin America – could have a ripple effect in the region, experts say. The plan is the first of its kind in Mexico and will focus first on basic life insurance, and later target health and property. What began as a community-based and nonprofit effort is now moving to a commercial venture expected to grow quickly – and could lead millions of Mexicans one step further away from poverty. ...

China's great game in Asia

The Economist: China's great game in Asia

Why are there so few takers outside China for its self-proclaimed doctrine of “peaceful rise”?

LIKE the emergence of Germany in the 19th century and of America in the 20th, China's rapid rise to superpower status generates as much fear as admiration. The fears are most acute in its own neighbourhood. Yet from an historical perspective, one of the more remarkable developments of recent years may be China's submission to the tiny threads of international constraint, especially in its own region. It belongs to the Asia-Pacific Economic Co-operation Forum, whose members span the Pacific. The East Asia Summit and the regional forum of the Association of South-East Asian Nations (ASEAN) tie it closer to its Asian neighbours. The Shanghai Co-operation Organisation links it with Russia and Central Asia.

More than this, it has shown active good-neighbourliness. A generation ago, China disputed most of its borders. Almost all have been settled, with the notable exceptions of those with Japan at sea and India in the Himalayas. Even in the case of the huge claims China and India have on each other's territory, China has acquiesced in seemingly never-ending talks allowing relations to improve in other areas. It no longer routinely provokes its southern neighbours by flexing naval muscles around the sand-and-coral specks in the South China Sea where six countries' claims overlap. It has begun to “consult”, after a fashion, the lower riparian states affected when it dams its rivers, such as the Mekong and the Salween. ...

Iraq economy roars despite woes

Globe and Mail: Iraq economy roars despite woes (HT Scott Gilbreath)

OTTAWA -- More than U.S. troops are surging in Iraq. As the international edition of Newsweek magazine reported at year-end, the Iraqi economy is expanding at a rapid rate: "Civil war or not," writer Silvia Spring says, "Iraq has an economy and -- mother of all surprises -- it's doing remarkably well." Amid anarchy and savage violence, Iraq's construction industry is booming.

Retail and wholesale trade sectors are thriving. Real estate prices are soaring -- up by several hundred per cent in the past couple of years. Iraqi oil production (at two million barrels a day) approaches Venezuelan production (2.4 million barrels a day) and could easily double in the next few years. On average, Iraqis earn 100 per cent more, in real terms, than they did under Saddam Hussein.

Public opinion surveys indicate that Iraqis are now, in economic expectations, at least, expansively optimistic.

Newsweek describes Iraq's economic revival as a product of "vibrancy at the grassroots." Three years ago, Iraq had 8,000 registered companies. Last year it had 34,000. Two years ago, Iraqis owned 1.4 million cellphones. Last year, they owned 7.1 million. (Iraqna, the country's leading mobile phone company, reported revenue of $333-million [U.S.] in 2005, $520-million in 2006.) Baghdad now has five times as many cars as it had before the war.

Global Insight, the economic research company, puts Iraq's GDP growth for 2005 at 17 per cent and for 2006 at 13 per cent. "The U.S. wanted to create the conditions in which small-scale enterprise could blossom," the magazine quotes Jan Randolph, head of sovereign risk at Global Insight's office in London. "In a sense, they've succeeded." ...

Just more evidence of what an unmitigated disaster Iraq is.  :)

Second thoughts about the Promised Land

The Economist: Second thoughts about the Promised Land

Jews all around the world are gradually ceasing to regard Israel as a focal point. As a result, many are re-examining what it means to be Jewish.

Right from its foundation, the existence of Israel created new questions for world Jewry. If Israel's purpose was to accommodate a nation that could never be safe or fully itself in any other place, was it still possible for self-conscious Jews to flourish in “exile”? Some felt Jews had only two options: assimilate in the countries where they lived, or identify very closely with the new state, if not migrate there.

Another dilemma arose from the idiosyncrasies of religious life in the new state. Many Israelis are secular—but religious authority in the country is in the hands of the Orthodox. Where does that leave Jews outside Israel who practise more liberal forms of the faith? And the biggest dilemma is this: however proud world Jewry felt of Israel during its early struggle to survive, how should a conscientious Jew react to Israel's new image as military giant and flawed oppressor? Faced with these puzzles, Jews all over the world are finding new ways to assert their identity and a new relationship with Israel.

.......

But Jews too young to have watched Israel rout three Arab armies in six days in 1967 are less likely to see it as heroic, morally superior, in need of help, or even relevant. “Israel in the Age of Eminem”, a report written in 2003 for the Andrea and Charles Bronfman Philanthropies, a Jewish charity, concluded that “There is a distance and detachment between young American Jews and their Israeli cousins that does not exist among young American Arabs and has not existed in the American Jewish community until now.” In Mr Cohen's survey, only 57% of American Jews said that “caring about Israel is a very important part of my being Jewish”, down from 73% in a similar survey in 1989.

.......

The trouble, says Mr Bennett, is that the mainstream American Jewish institutions were born to make the case for Israel and to fight anti-Semitism. Young Jews today, however, are searching for identity, spirituality, meaning and roots. Unlike their grandparents, they are not concentrated among other Jews but spread out across society. They do not meet people in synagogues or other Jewish forums, but form their own networks. “Jewish” is just one part of their multi-faceted American identity, and Israel does not seem that relevant.

.......

Then there is the growth of synagogues that welcome gay and transsexual Jews; of Jewish cultural centres; and of museums that celebrate Jewish history instead of mourning the Holocaust. New York has produced avant-garde projects such as Reboot, a forum for creative young Jews that in turn has spawned a magazine, a record label and a publishing house. As all these new ways of “doing Jewish” reanimate young Americans' sense of belonging, the far-off country where they could in theory go may start to matter even less.

.......

In fact, a Jewish cultural revival is going on not just in Russia and Germany, but all across Europe. Tony Lerman of the Jewish Policy Research Institute in London cites steep rises in the numbers of Jewish museums, Jewish day schools and academic Jewish studies courses; more people are studying Yiddish, a dying language not long ago; Jewish film, music and cultural festivals are flourishing everywhere, even in Poland, a cradle of anti-Semitism.

Partly this reflects a fad for exotica among non-Jews. Still, it suggests that many Jews are reacting to anti-Semitism and fears of assimilation not by moving to Israel, but by rediscovering what it means to be Jewish outside it. Mr Shneer and Ms Aviv make the intriguing prophecy that in ten years, American Jewish foundations “will spend as much money sending young Jews to Vilnius to study Yiddish or Prague to study Jewish art or architecture as they do sending young Jews to Israel.”

 

Democrats Are Heroes... and Villains

From TCS Daily: Democrats Are Heroes... and Villains

The Democrats are being lauded in Europe and much of the Americas as the heroes of the hour, rescuing the USA from those mad neocons. But in most of Asia the perception is quite different -- of the Democrat majority as a threat, an enemy of trade, and a busybody across a broader range of issues than the Republican human rights campaigners with their predictable religious focus.

In China especially, where the mid-term election itself attracted little media interest, its outcome is now starting to arouse loudly expressed concern about the future relationship of the two great powers.

.......

Wang Yiwei, associate professor at the American Studies Centre at Fudan University, Shanghai, said Rep. Pelosi is "quite prejudiced against China, so we may expect more noise on human rights and the trade deficit." Jin Canrong, vice dean of Renmin University's International Relations faculty in Beijing, commented on her "great bias against China." A number of newspapers editorialized on the same theme.

China is becoming more sophisticated about letting such commentators pre-emptively off the leash, hoping to head off potential conflict while it remains mainly a matter of rhetorical flourishes amplified in the electoral arena.

Maintaining smooth relations with Washington is at the core of Beijing's foreign policy. But if Congress keeps kicking China, Beijing will not hesitate to launch a contest for influence in the region at a time which least suits a distracted USA.

Imperial History of the Middle East Map

This interesting animated map shows 5,000 years of Middle East Empires in 90 seconds. My mother-in-law sent me the link. I saw this link at another site last month, but there were link problems. Hopefully, my embed here will work okay in your browser. (From Maps of War)

Nobel Peace Prize goes to Bangladeshi economist Muhammad Yunus

From Asia News: Nobel Peace Prize goes to Bangladeshi economist Muhammad Yunus. Those of you who have followed my blog for any time are aware of my interest in micro-finance. My link to Kiva in the right blog column is just one organization involved in micro-finance. This article is about the founder of the micro-finance movement and his Nobel Prize recognition.

Dhaka (AsiaNews) – Bangladesh's Muhammad Yunus, 66, the inventor of micro-credit and founder of Grameen Bank (Villages’ Bank in Bangla), has been awarded the 2006 Nobel Peace Prize. PIME missionaries operating for years in the country explain that the choice of Yunus is doubly significant. On the one hand, there are the positive financial and economic aspects to his ‘invention’; on the other, there are the moral and human components closely linked to Yunus himself, “a man of upstanding character, source of hope for all those who are honest”. But they warn to beware “of not idealising” everything.

.....

Micro-credit is based on small loans without collateral given to the poor to help them finance their small-scale activities. Founded in 1983, the Grameen Bank now has more than a thousand branches with 12,500 employees. It has 2.1 million clients in 37,000 villages; 94 per cent are women.

Always with them (Poverty in Indonesia)

From the Economist: Always with them (Poverty in Indonesia)

WHEN two scavengers died last week under a landslide at Jakarta's main rubbish dump, the extensive television coverage that resulted provided a too-rare glimpse into the plight of some of Indonesia's poorest people. And their ranks are swelling. After declining for six years the number of poor people has increased sharply. Some 39m, 18% of the population of 220m, are now officially poor, according to data just released by the government's statistics bureau, 4m more than in 2005.

.....

Admirable though it is, this policy does not tackle the root cause of Indonesia's rising poverty. A report on the subject being prepared by the World Bank argues that artificially high rice prices are much more to blame than the effects of the fuel-price increase. This is because most poor people spend a quarter of their earnings on rice, which has risen in price by more than a third in the past year. Keeping domestic rice prices higher than international prices by severely limiting imports makes little sense, the World Bank argues. It claims that 75% of the poor earn their living from agriculture but that at least 75% of the poor are net rice consumers.

"Iraq Is Bound to Fail, Based on Squiggly Index" Amity Shlaes

From Bloomberg.com: Iraq Is Bound to Fail, Based on Squiggly Index: Amity Shlaes

It is obvious that Iraq will never make it. Afghanistan may do a little better.

The reason lies not with Donald Rumsfeld's policies, whatever you feel about the Defense secretary. Nor does the answer have to do with religious fundamentalism. The problem with Iraq is, it is insufficiently squiggly.

That is the conclusion of a recent paper published by the National Bureau of Economic Research, a non-partisan research group in Cambridge, Massachusetts. The paper's approach is not the traditional political or diplomatic one. Rather, it is based on maps and geometry -- angles and lines.

Authors Alberto Alesina and Janina Matuszeski of Harvard University and William Easterly at New York University divided countries into two categories: natural and artificial. A natural state is one defined by ethnicity and geographic features such as mountain ranges. Mountains reinforce ethnic communities -- if only by isolating them. Natural national borders would tend to be bumpy.

The map of an artificial state by contrast looks like it was drawn with a ruler, which it often was. Its straight borders sometimes partition ethnic communities, placing them in two countries. Other times, they place tribes that are hostile to one another in the same nation.

Most nations have borders that are a combination of lines and bumps, so the authors developed a mathematical measure to quantify the extent of border bumpiness, which they called squiggliness. Since borders on oceans are extremely squiggly, the authors controlled for that and studied only the squiggliness of national borders with other nations. Their thesis is that it is better to be natural than artificial, and that squiggliness is good for growth and stability.

Democracy in the Arab World: Not yet, thanks

Democracy in the Arab World: Not yet, thanks is an interesting article in the Economist about the prospects of democracy in the Middle East and Africa.

Similar signs of a return to realpolitik have been noted with relief by Arab governments. Concerns over Iran's nuclear plans have restrained Western criticism of democracy-shy but pro-Western neighbours like Azerbaijan and the countries of Central Asia. America restored ties with Libya, rewarding its government for scrapping weapons programmes while for the most part overlooking its appalling treatment of its own people. Even Syria, forced out of Lebanon and diplomatically isolated, has escaped severe punishment for defying a long list of Western demands.

The more I watch and learn, the more I agree with the theory that prosperity leads to democracy and not democracy to prosperity. When people have become stakeholders in society, they will begin to demand democratic reforms. When democracy is imposed, and few are stakeholders, they will vote for the least objectionable thug or the most charismatic candidates. True reform never happens.

Voters opt for change in S. Korea

Voters opt for change in S. Korea is an article in the Christian Science Monitor about politics in South Korea.

The perception of a central government unable to deal with economic problems and weak in the face of North Korean demands lies at the crux of a reaction that guaranteed conservative victories in two-thirds of the races for provincial governorships and mayors of major cities.

For Korea, the reversion to conservatism portends the downfall of a decade of liberal leadership in the next presidential election in December 2007. While the ruling party's efforts at reconciliation with North Korea were not the paramount issue, the sense of forever making concessions to the North was a factor in the voting - and could be among the policies that change if the liberals are ousted next year.