Earlier this month, the documentary version of FP Editor in Chief Moisés Naím's bestselling book Illicit aired on the TV channel PBS in the United States. The film and book documents how -- as the book's subtitle says -- "smugglers, traffickers, and copycats are hijacking the global economy."
Those copycats who profit off pirated DVDs had better be careful, though. The doggy duo of Lucky and Flo are out to get them. The black Labs are the first canines to have been trained to sniff out the polycarbonates found in DVDs and CDs. Although they can't differentiate between legit and pirated discs, their noses lead human investigators to discs that are hidden in cargo that has been declared as having other items, such as clothing. Lucky and Flo have been so successful that they've even received death threats from crime syndicates.
Check out a video of the furry crime fighters here:
"The Simpsons" is inappropriate for children, but "Baywatch Hawaii" is alright. At least that's what the government of Venezuela says. The National Telecommunications Commission opened an inquiry last week, saying that viewers had complained about "The Simpsons" and that the network airing it could be held responsible for violating the country's Law on Social Responsibility in Radio and Television. On Friday, channel Televen said it was yanking the yellow cartoon family from its 11 a.m. slot, and replacing it with the babes in bikinis of Baywatch.
I guess it doesn't sound totally crazy if you think about it from a cultural perspective. After all, Bart is constantly disrespecting his parents, and I suppose one might not want young kids to get that message. But beauty on the beach... is that a universal Venezuelan value, no matter the age? At any rate, don't have a cow, man! Televen still might still choose to air "The Simpsons" in a different time slot.
George Soros, speaking in a conference call hosted by the New America Foundation today, had some interesting remarks about the state of the world economy. Given that the first sentence of his new book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means, reads: "We are in the midst of a financial crisis the likes of which has not been seen since the Great Depression of the 1930s," I was prepared to hear some dire predictions about the road ahead.
Instead, on a number of occasions throughout the call, Soros stated that he believes the "most acute phase of the crisis is now over," and that the markets are breathing a sigh of relief following the Bear Stearns bailout. Of course, that's not to say that the fallout is over just yet, or that the boom-bust cycle that has recurred consistently since markets began to become unregulated will cease.
Soros was keen to note that the "scariest unregulated market" now is the credit default swap market, with outstanding contracts amounting to $45 trillion today. (Credit default swaps are a form of contract insurance that has been widely sold by hedge funds.) Writing in the Financial Times yesterday and repeating the warning today, Soros says, "The [CDS] market is totally unregulated and those who hold the contracts do not know whether their counterparties have adequately protected themselves. If and when defaults occur, some of the counterparties are likely to prove unable to fulfil their obligations. This prospect hangs over the financial markets like a sword of Damocles that is bound to fall." It will cause what will essentially amount to banks running on banks. The solution, Soros argues, is to urgently set up a clearinghouse or exchange where the the deals can be registered and settled. Without this type of step, the "entire banking system [will remain] weighed down with bad assets" and stay paralyzed. Even then, there is still little hope that this fallout can play out without significant effects on the real economy.
Soros's concerns extend well beyond the current financial crisis -- although he did mention that it was this crisis that forced him out of retirement. His argument is philosophical and is explained thoroughly in his fascinating new book. But the crux of it is that the idea that markets fall into equilibrium like events in the natural world is a complete myth; humans can't know "truth" and thus expectations and human actions inevitably change how the system functions, which can -- and does (hence boom-bust cycles) -- lead to non-equilibrium outcomes. The solution is finding a balance between regulation and unfettered markets. Soros is highly critical of market fundamentalism, and condemned regulators for failing to do their jobs. They have the tools, he said, but didn't use them. He believes the two Democratic presidential hopefuls are on the right track with dealing with the financial mess and re-regulation, but was careful to highlight the dangers of going to extremes either way.
One of the most interesting points Soros made was his take on the the coming fuel for the global economy:
We've had the American consumer acting as the motor of the world economy and that is what is coming to an end... [We] need a new motor. And I believe we have a tremenous challenge with global warming, where you need to make tremendous investment to reduce carbon emissions... The investments necessary to avoid global warming could replace the excess consumption by the U.S. consumer as the motor of the world economy.
Although Soros certainly didn't try to downplay the seriousness of the current crisis, I'm still left feeling slightly hopeful that the economy will improve and things could get better soon(ish). And I'm now certainly keen to buy those stocks in renewable energy companies.
CurrentTV has posted a touching short video on Bhutan, the unspoiled, mountainous kingdom that just held the first elections for its 47-seat parliament on March 24. Turnout was heavy and the monarchist party won big, but the opposition has cried foul even though the elections met international standards. As you'll see in the video, the Bhutanese are a little unsure what to make of this whole "democracy" thing, and many are unhappy about the recent arrival of another Western innovation: television. Check it out below or, if your browser can't see it, watch it here:
Tired of reading about U.S. politics? Then pick up a copy of l’Humanite. Want to follow issues in Iraq and Iran? Then Slate is for you. At least according to these cartograms, which show media coverage, by source, of the world's countries.
Nicolas Kayser-Bril and Gilles Bruno have created 11 such maps for media sources ranging from La Croix, to the New York Times (shown above), to the "blogosphere." Not surprisingly, each source allots a disproportionate degree of coverage to its own country – Slate less so than the New York Times and The Economist much less so than, say, the Guardian.
Oddly enough, the blogosphere –- an amorphous source not exactly known for credibility –- does not appear too different in its global coverage from The Economist.
(Hat tip: BoingBoing)
What's one of the latest products to be outsourced to China? The kaffiyeh, the black-and-white checkered scarf popularized as a symbol of Palestinian identity and unity by late leader Yasir Arafat. In the last eight years, two thirds of Hebron's textile factories have shut down, in part due to cheap imports from the Middle Kingdom. Even Arafat's Fatah party now gets some of its kaffiyehs from China.
Liu Jin Feng, 30, was a manager for a joint venture company in his native Zhejiang province with a newly pregnant wife when the concept of womb-broking occurred to him.
He spent six months investigating. Four hundred babies later, he is confident he has picked a sustainable industry. Couples need to budget for at least 300,000 yuan ($A50,000). About 40,000 yuan is for the surrogate, a fee for the agent, and the rest covers extensive medical, travel and living costs.
Of course, China is far behind India, where commercial surrogacy was made legal in 2002 (it's illegal but tolerated in China). And if you turn to the classified section of any elite U.S. university, it's easy to find advertisements from infertile couples looking for an egg donor with an Ivy League pedigree. In fact, California has some of the most liberal surrogacy laws in the world, and parts of Europe have become links in a globalizing commercial surrogacy industry. If anything, the Chinese are just playing catch-up -- though I imagine further digging would show that the phenomenon is not quite as new as the above article would have us believe.
(Hat tip: China Digital Times)
Today, emerging-market countries account for 85 percent of the world's population but generate just 20 percent of global gross national product. By 2035, however, the combined economies of emerging markets will be larger than (and by the middle of this century, nearly double) the economies of the United States, Western Europe, or Japan. The reality of globalization—which is only slowly and reluctantly sinking in—is that outsourcing means more than having "cheap labor" toil away in mines, factories, and call centers on behalf of Western corporations. Yet in the West, business leaders and government officials cling to the notion that their companies lead the world in technology, design, and marketing prowess.
Increasingly, that just isn't so.
When we think of these emerging markets, we tend to think of places like India and China. But the world's biggest emerging market is actually Brazil, according to a new index from Morgan Stanley. So, when will Lou Dobbs start railing against "the great Brazilian menace"?
The world's best-selling board game is finally going global. Hasbro, the makers of Monopoly, are creating a version wherein instead of snatching up the deeds to Atlantic Avenue or Park Place, players can build up property in global cities such as Moscow or Tokyo.
The company is letting people vote online through Feb. 28 on what cities to include. Originally, the cities listed on the game's Web site included the countries where they are located -- "Dublin, Ireland," for example.
An early version of the site listed "Jerusalem, Israel" as a potential place on the board. But then pro-Palestinians wrote in to complain, because Jerusalem, they hope, will be the capital of a future Palestinian state. So, a mid-level employee dropped the word "Israel" from Jerusalem's place name. Then pro-Israelis complained because of the inconsistency, since other country names were still there.
In a truly Solomonic feat, Hasbro decided to drop all country names (though the company claims they were only there in the first place "as a geographic reference to help with city selection"). And now capitalism is free to run amok without any borders. At least in Monopoly.
As more people all over the world -- mostly notably in China and India -- enter the ranks of the middle class and are able to afford the calorie-rich diets of the Western world, their increased appetites have helped drive up prices of foods such as bread, milk, and chocolate, notes FP Editor in Chief Moisés Naím in his latest column, "Can the World Afford a Middle Class?"
Chocolate companies such as Nestlé, Mars, Ferrero, and Hershey are eager to satisfy the cravings of budding chocoholics in Asia, where consumption of the sweet stuff lags far behind that of Europe, as shown in the following table, based on numbers from a recent BusinessWeek article. To boost sales, these companies have sometimes had to adapt flavors to Asian tastes, such as with green-tea Hershey Kisses and azuki-bean Kit Kats, which the slide show here details.
|Chocolate consumption, per capita annually||24 lbs. (11 kg), in Britain and Switzerland||3.5 oz. (99 g)||5.8 oz. (165 g)|
|Annual sales||$35 billion||$813 million||$394 million|
|Sales growth||1-2% annually||nearly doubled in past 5 years||64% in past 5 years|
Photos: SEBASTIAN WILLNOW/AFP/Getty Images; MIKE CLARKE/AFP/Getty Images; SEBASTIAN D'SOUZA/AFP/Getty Images
Flowers are so delicate, so perishable, so pretty. It's hard to believe they often travel thousands of miles and across multiple continents to get to your local store in colorful, unwilted, shape.
Each day, though, as described in last year's FP article "Flower Power," about 20 million beautiful blooms are auctioned each day in the Bloemenveiling Aalsmeer, the world's largest commercial building, near Amsterdam. The flowers are flown in from places such as Ecuador, Israel, and Kenya, and after being auctioned, are shipped as far away as Tokyo.
One fourth of Europe's cut flower imports come from Kenya (whose flower exports are mostly roses), which has been wracked by chaos since its disputed election on Dec. 31. Flower farmers there have been resorting to extreme measures to ensure that the complicated supply chain that brings roses to Valentine's Day lovers in Europe isn't disrupted by violence.
To get roses from farms to the Nairobi Airport, growers are enlisting armed escorts to protect convoys of trucks filled with flowers. Where roadblocks are a concern, some farms have used emergency airlifts to get blossoms to the capital. And because of decreased flights out of the country, more cargo planes are being chartered to get those precious petals to Amsterdam.
These efforts seem to be a success. No shortages of Kenyan roses have been reported in Europe. For Kenyan flower growers at least, everything seems to be coming up roses.
As Blake pointed out earlier, Barack Obama has taken aim at free trade in the run-up to the upcoming blue-collar-dominated primaries in Ohio and Wisconsin. The attack that began in earnest last night in Obama's Potomac Primary victory speech will continue at noon today in Janesville, Wisconsin, where Obama is promising to deliver a detailed speech on economic policy. The Illinois senator, who is big on hopes and dreams but not so big on details, apparently plans to tell suffering Americans that globalization is to blame for their plight. Here's a sneak preview:
The fallout from the housing crisis that's cost jobs and wiped out savings was... the culmination of decades of decisions that were made or put off without regard to the realities of a global economy and the growing inequality it's produced...
[D]ecades of trade deals like NAFTA and China have been signed with plenty of protections for corporations and their profits, but none for our environment or our workers who've seen factories shut their doors and millions of jobs disappear...
I also won't stand here and accept an America where we do nothing to help American workers who have lost jobs and opportunities because of these trade agreements...
I will not sign another trade agreement unless it has protections for... American workers."
This is the same guy who keeps promising to heal America's relationship with the world, right? Maybe it's just me, but forcing protectionist agreements down our trading partners' throats doesn't sound like such a good start. Neither does blaming them for America's subprime fiasco, a home-grown crisis fueled by Alan Greenspan and the Fed, which now threatens to wreak havoc on many of the globe's biggest economies. Good luck with that line, Barack.
Further proof that blogging is injurious to your plans to enjoy Davos: Having sent off my previous post after 3 a.m., I awoke too late to show up at a UNICEF panel with the former child soldier Ismail Beah, whose bestselling memoir has just come under attack from a section of the Australian media. Last night, with my blogging duties in mind, I managed to forget the Google After-Hours Party, a much sought-after event where the likes of Bono, Bill Gates, and Tony Blair hobnob with the regular pass-holders. So this will definitely be my last post: In future years, if I return, it will be to enjoy myself fully rather than enlighten the cognoscenti.
The last full day of the Forum, Saturday, began to show a slight slackening of the pace, as many attendees started bidding farewell to Davos. (The official closing is on Sunday, with a final session expected to attract so few that it has been shifted from the plenary Congress Hall to a smaller room, and a lunch in the mountains, both of which are likely to be feel-good events and neither of which I intend to blog about.) There was a strong session on the global economic outlook, which nonetheless only confirmed that the outlook is mixed and that economic forecasting is usually slightly less reliable than meteorology.
I attended one of the prestige private events, a lunch with the Japanese prime minister (who had flown down to Davos in the midst of a regular session of his country's parliament, the Diet, something that in the previous 37 years had only been done once by any of his predecessors). But the number of empty seats at the half-dozen tables around the PM testified to the declining salience of Japan, a country that two decades ago was seen as the world's economic powerhouse and, bluntly, no longer is.
Otherwise, it was a day of conversations—some accidental, some planned—with a host of friends from the multilateral world: Juan Somavia, the head of the International Labor Organization, EU Commissioner Peter Mandelson, Amnesty International Secretary General Irene Khan, former Mexican President Ernesto Zedillo of the Yale Center on Globalization, and my old U.N. colleagues Zohreh Tabatabai and Nick Van Praag. Talking to these dedicated servants of the international system was itself a reminder of how little Davos had focused this year on multilateral institutions, once seen at the Forum as the foundation of global cooperation and now largely treated as somewhere between an irrelevance and an afterthought.
So, how would I wrap up this week's experience of Davos? A few observations, not meant to be comprehensive:
Finally—as the debris of the extensive Bahrain-sponsored lunch is cleared away and preparations begin for tonight's concert and the black-tie Gala Soirée—it is time to reflect on those peculiar habits of Davos Man (and Woman) that they will have to struggle to shed when they fly away from this snow-capped wonderland. These include, but are not limited to:
Enough amateur anthropology. Now for the real thing—time to don my glad rags and get ready for the Gala Soirée, which begins at 9 p.m. and goes into the wee hours—a veritable smorgasbord of food, drink, music and last-minute networking. Your faithful blogger relinquishes his keyboard at last. Ladies and gentlemen, it's been a pleasure.
Shashi Tharoor, a former Under Secretary General of the United Nations, was India's candidate in the 2006 race to succeed Kofi Annan as Secretary General and came second out of seven contenders. He is the award-winning author of 10 books, most recently The Elephant, the Tiger and the Cellphone: Reflections on India in the 21st Century. Visit him at www.shashitharoor.com.
You can find Tharoor's previous Diary entries here or at the following links:
It's well past midnight in the Bidwell-Azarm apartment in Klosters as I sit down to review another long day at the World Economic Forum in Davos. Last night, I got to bed at 2:45 a.m. after giving you all a blow-by-blow(hard) account of all the panels I went to. Since I woke up three hours later and have staggered through the day, I'm going to be a lot more telegraphic about Thursday. In fact, I'm going to summarize the day in a different style altogether, just for a change. (If there are enough protests, I'll return to prose reporting on Friday). Herewith, my day in 10 easy points:
2. Morning panel highlights: Fascinating discussion on peace and stability featuring four beleaguered Muslim leaders: President Karzai of Afghanistan, President Musharraf of Pakistan, "Chief Adviser" (de facto Prime Minister) of Bangladesh Fakhruddin Ahmed, and Deputy Prime Minister Bahram Salih of Iraq. All inveighed against terrorism and extremism, defended the ways in which their countries were run and sought the world's help in promoting economic growth and political stability in their lands. Musharraf proved the ablest at swatting back tough questions; Karzai at ducking them. Asked (by me) what exactly he meant when he said that in his region extremism had been a "tool of policy," and whether this related to his previously expressed view that terrorism was being exported his way from across his border with Pakistan, Karzai replied, "Mr. Tharoor, I have just had a good visit with President Musharraf. I'm not going to say any more."
3. Panel disappointments: A bland performance by Musharraf in a hugely attended double-bill with Henry Kissinger, who was supposed to ask him three questions but tossed him two softballs instead. Musharraf repeated the points he'd just made at the previous panel.
4. Afternoon panel highlights: A first-rate discussion on the perils of Internet terrorism, featuring such heavy hitters as U.S. Secretary of Homeland Security Michael Chertoff, Israeli Foreign Minister Tzipi Livni, Britain's Leader of the Opposition David Cameron, head of Human Rights Watch Kenneth Roth, and feisty Pakistani journalist Ahmed Rashid. Lots of pithy insight about the use of cyberspace to recruit terrorists and to wage war, plus a side argument about the definition of terrorism and whether Israel was shooting itself in the foot by denouncing even attacks on its soldiers, not just civilians, as terrorist attacks.
5. Afternoon panel disappointments: A wasted hour-long Middle East panel chaired by Tony Blair and oddly featuring three Israelis (President Shimon Peres, Foreign Minister Livni and Defense Minister Barak) and only one Palestinian (Prime Minister Salam Fayyad). Not one person from this impressive galaxy said a single thing we hadn't heard before, and the audience wasn't allowed to ask questions.
6. Dinner panel: I found myself speaking on whether "globalization = cultural homogenization," along with the likes of Québec Premier Jean Charest, London Mayor Ken Livingstone, genius cellist Yo-Yo Ma and the CEO of Burger King. We all agreed that it doesn't, but had fun coming up with ideas and anecdotes about cultural diversity.
7. Uneven discussions: First, the water panel, an interesting but complicated topic that had been discussed earlier in the Forum and which left me feeling I'd walked in halfway through a suspense movie and couldn't quite figure out the plot. Second, a discussion on "Brand America" with impressive panelists (starting with Rupert Murdoch) and chaired by FP's own Moisés Naím, which nonetheless went all over the place—including a bizarre attack on the United Nations by Murdoch, supported by a Bahraini royal—rather than focusing on its declared purpose of devising recommendations to the next U.S. President on how to improve America's global image.
8. Memorable informal encounters: An animated conversation on the margins with the top leaders of Bangladesh's interim government, and another at the Tata reception with two of India's more impressive cabinet ministers. Also a chat with Bombay society maven Parmeshwar Godrej, currently under pressure from Muslim fundamentalists to apologize for having hosted Salman Rushdie at her home, who is refusing to buckle under despite threats of a boycott of her company's products.
9. One-liners of the day:
10. Change of plan: Thanks to the lateness of the hour and President Musharraf's repeating himself in the two sessions I've heard him on already, I'll skip a breakfast with him organized by a Pakistani businessman Friday morning. Midway through the Forum, and particularly at the end of a Davos day featuring six panels, three breakfasts, two lunches, four receptions, and a blog diary to maintain, my borrowed bed looks a lot more inviting than a 7 a.m. bus from Klosters. Good night...
In his first Diary entry, Shashi Tharoor noted about Davos, "Invitations are prized and much sought after, even though they have to be paid for in real money." So, how much does it cost to go to Davos? Andrew Ross Sorkin reports for the New York Times:
Merely to be eligible for an invitation, a corporate leader must pay an annual fee of 42,500 Swiss francs, or nearly $39,000. On top of that, he or she has to pay an additional $20,000 or so to attend the conference. (That's just the cost of admission — private planes, limousines and fancy ski outfits are, of course, extra.)
And what if business executives want to get invited to some private sessions for industry leaders? The annual cost for that is close to $230,000.
The tab rises to about $412,000 (450,000 Swiss francs) if you want to be counted among the conference's strategic sponsors and bring a delegation of up to five along for the fun.
Yikes. The funny thing about business leaders is that they could probably get the same information and meet the same intellectual and government contacts elsewhere for free, but they pay the exorbitant fees anyway. After all, such individuals are famous and sought after because they're always sharing their ideas in the public arena. Of course, any such encounters probably wouldn't be as convenient, and they certainly wouldn't be as fun. As Tharoor put it, there is "something heady and exhilarating about being able to have them all in one spot in such a short span of time."
The first real day of the formal Forum got off to a lively start Wednesday morning with a panel on the geopolitics of a divided world. At least it did for me: There were several other panels to choose from. Selecting which of six or seven alternative (and parallel) panels to attend is the most difficult thing you can do in Davos (other than learning to suffer silently through security). It's possible for two people to spend the same week here and experience two entirely different Forums.
But a divided world is one of my concerns, so I made a beeline for that session (assuming that bees negotiate paths involving makeshift temporary passageways, wood-plank paths, tent-flaps, and multiple floors). The shuttle from my home base in Klosters was late, but that meant shorter security lines, since the majority of participants follow Swiss norms of punctuality and throng the airport-style scanners early in time for the first panels.
By the time I snuck in, the discussion had warmed up nicely. There was much intelligent talk about the changing world that will confront the next American president, and thoughtful concern about the need to restore U.S. soft power — defined by a panelist as America's reputation for legitimacy and competence internationally, both categories in which it has suffered under the Bush administration. A senior Chinese participant (I'm trying to honor Davos's non-attribution policies here) argued convincingly that China has no interest in promoting any division in the world: "It's our first chance since the Opium Wars of the 1840s to develop and modernize our country, and all we want is peace, not confrontation anywhere in the world." Reacting to comments about China's lack of democracy, he pointed out to the Americans (and the Frenchman) present that neither country had given the vote to women until the 1920s, and the United States had denied it to many blacks until the 1960s. "Give us time, too," he said, adding for good measure, "And don't expect us to be like you."
An Indian strategic analyst pointed out that power and influence are not the same thing: the United States is the world's sole superpower but its influence is on the wane, and the need for coalition-building is increasing. He dismissed the moderator's talk of "Chindia" — a convergence between India and China—by tartly observing that the two countries do not share norms and values. In today's world, he pointed out, economic interdependence has nothing to do with political closeness—an intriguing insight given that China will overtake the United States as India's largest trading partner in the next two years. The moderator observed in closing that the panel had featured the rare spectacle of a Chinese offering lessons in democracy and an American offering lessons in humility!
It was 11 years ago that I first discovered the sleepy little village of 10,000 snowbound inhabitants in the heart of Switzerland that had already become a synonym for what's hot in global economic thought. As a United Nations official working with then Secretary General Kofi Annan, I accompanied him to Davos several times starting in 1997. I haven't been back for many years now, and having left the U.N. nine months ago, I'm returning for the first time in an individual capacity, as an Indian writer and columnist (for The Times of India and the Hindu) and as chairman of the Dubai-based but India-focused Afras Ventures.
I am intrigued, of course, that this ski resort in the Swiss Alps, blessed with essentially one main street and 20 overcrowded hotels of varying quality, annually hosts a five-day talkfest that attracts an astonishing number of the world's top entrepreneurs, thinkers, and political leaders. What began in 1971 as a European affair—originally intended by its founder, Geneva Professor Klaus Schwab, to help Europe's businessmen learn American management techniques—has become a World Economic Forum "committed to improving the state of the world." Invitations are prized and much sought after, even though they have to be paid for in real money. The atmosphere of cutting-edge policy debate is sustained by an impressive array of intellectuals, thinkers, and writers among the "faculty," and the consistently high quality of the attendees has ensured that Davos gathers more heads of government in one spot than any other place bar the United Nations General Assembly.
The prime ministers and presidents do appear on panels, but they are largely in Davos to chat up the big businessmen present, who might, after all, be persuaded to channel millions of dollars in productive investment to their countries. And they're there to talk to each other in private, away from the glare of the TV cameras and free of the cumbersome trappings of a formal state visit. The real action in Davos isn't the televised panel discussions—on subjects ranging from "Believing in the Future" to "Beyond Bretton Woods: Who Should Lead the Way?"—that are what the outside world sees of the Forum.
The key meetings happen elsewhere: in private dinners, at receptions (hosted by companies, governments, and companies trying to woo governments), and over drinks in hotel bars. The most vital ones are "bilaterals," one-on-ones organized precisely to take advantage of the excuse Davos gives both parties to be present at the same place at the same time. On my first visit, Yasser Arafat and Benjamin Netanyahu met, Microsoft wiz Bill Gates (not yet creator of the world's most generously endowed foundation) rubbed shoulders for the first time with the then newly elected U.N. chief, and the president of the World Bank had a friendly chat with U.S. House Speaker Newt Gingrich, something surprisingly more difficult to orchestrate in Washington. The World Economic Forum works extraordinarily well as a place to meet and be met. And for all its elitism, there's a curious leveling involved in a place where even prime ministers need to introduce themselves occasionally to strangers—especially if the strangers happen to be world leaders or titans of industry who aren't planning to visit their capitals any time soon.
But if the real business of Davos is business, ideas are the currency of exchange. So, I'm going to spend a fair amount of my time watching the movers and shakers at work, in addition to attending some of the more intriguing panel discussions (three of which I'm slated to speak on myself). I'll pay close attention to the sizable Indian presence, partly because I'm Indian myself but partly because Davos is where the new India announced its coming of age as a global economic presence over the years, culminating in a starring role at the 2006 Forum. And as a former U.N. hand, I'll be attentive to the tension between the Forum's stated aim of improving the state of the world and its image in the eyes of its critics as a crony gathering of globalization's winners, determined to protect their interests at the expense of the world's poor and marginalized.
Kofi Annan used his attendance in 1998 to call for a new partnership between the U.N. and the global private sector, which led to a "Global Compact" under which businesses promise to adhere to U.N. human rights, labor and environmental principles. His successor, Ban Ki-moon, is not on this year's preliminary list of participants, but other U.N. and non-governmental organization officials will be on hand to remind the denizens of Davos that they cannot afford to overlook the poor. As Annan once put it: "We cannot be secure amidst starvation. We cannot build peace without alleviating poverty. We cannot build freedom on foundations of injustice."
Or can we? Maybe, in the course of the week, we'll find out.
Shashi Tharoor, a former Under Secretary General of the United Nations, was India's candidate in the 2006 race to succeed Kofi Annan as Secretary General and came second out of seven contenders. He is the award-winning author of 10 books, most recently The Elephant, the Tiger and the Cellphone: Reflections on India in the 21st Century. Visit him at www.shashitharoor.com.
The first temporary denizens, of Davos, Switzerland, are beginning to trickle in for this year's annual meeting of the World Economic Forum. (The meeting doesn't officially start until Wednesday, Jan. 23, and it lasts until Sunday, Jan. 27, but the pre-meetings are getting underway.)
One person who's not going to make it to Davos this year? U.S. Treasury Secretary Hank Paulson, who has his hands full at home with the subprime mortgage crisis and canceled at the last minute. Also not coming: Brangelina, the Hollywood power couple whom many Davoisie complained were a distraction from the real business at hand (I have some sympathy for this gripe, having witnessed firsthand the hoopla surrounding Brad and Angie at last year's Clinton Global Initiative).
There are still plenty of names to watch, of course. Bono is back, for one. U.S. Secretary of State Condoleezza Rice is attending for the first time and will be giving Wednesday's opening address. Pakistan's tottering president, Pervez Musharraf, is sure to attract attention wherever he goes. And many of the usual Davos suspects are returning: Microsoft's Bill Gates, Larry Page and Sergey Brin of Google, Tony Blair and his protégé, Gordon Brown, not to mention former U.S. Vice President Al Gore, fresh from winning the Nobel Peace Prize.
Here on Passport, our main guide to this year's festivities will be Shashi Tharoor, an acclaimed author, one of India's most influential foreign-affairs pundits, and a former Under Secretary General of the United Nations to boot. We'll also be checking in periodically with noted author and columnist Ian Buruma, who will be giving us his take on the people and ideas he comes across at the conference, and we may hear from some other folks as time allows. And finally, my colleagues at FP and I will be keeping an eye out for the most interesting moments from among the 233 sessions on offer and from coverage elsewhere. So check back all week by clicking on the davos08 category, and enjoy the show!
It's generally hazardous to extrapolate too much from one day's numbers. Stock prices are inherently volatile, and Monday's selloff can set the stage for Tuesday's rally. Having said that, I think it's safe to say that traders around the world have finally realized just how shaky the U.S. economy really is. The New York Times has a handy infographic that shows just how bad it is out there:
The question everyone is asking now is, just how much does the rest of the world depend on continued U.S. growth? We'll have some expert answers from Harvard economist and National Bureau of Economic Research chief Martin Feldstein later this week. But for now, the markets have weighed in, and it doesn't look good.
For some reason, my mom always told me that fortune cookies were invented by Jews from Brooklyn. I have no idea where she got that from. And it turns out she was wrong. But her main point was right: that fortune cookies were not Chinese, never were Chinese, and never would be. Go to China, and what's for dessert? Fruit! Go to Taiwan, and what's for dessert? More fruit! Fortune cookies are a pure American invention. They caught on in Chinese-American restaurants. But they aren't Asian.
Or are they? It turns out that fortune cookies have their roots in Japan, not China. According to the New York Times's Jennifer 8. Lee (who, natch, has a book coming out in March, The Fortune Cookie Chronicles, about Chinese Americans and food), a Japanese scholar named Yasuko Nakamachi has dug up evidence that fortune cookie-shaped biscuits were crafted by hand near a temple in Kyoto as early as 1878. They made their first appearance in California in the early 1900s, possibly brought over by Japanese immigrants, and then were co-opted by Chinese immigrants. Nakamachi suspects that it happened because Japanese immigrants often owned Chinese "chop suey" (also American, not Chinese) restaurants in the United States during the first part of the 20th century. Chinese owners then took over the restaurants when the Japanese were rounded up and placed in internment camps during WWII. It wasn't until the 1950s that they became popular throughout the United States, after cookie-makers learned how to mass-produce them.
The funny thing is, in discussions of inter-Asian rivalry, many Chinese often complain that elements of Japanese and Korean culture actually stem from China, if you go back far enough. Now we've got a modern Chinese-American food that actually stems from Japan. But the most important question for Nakamachi and Lee is: Who decided it would be fun to tack on the words "in bed" to the end of every fortune?
The French automaker Citroën learned this week what billions of Chinese already know: Don't mess with Mao Zedong.
Citroën was forced to pull ads from several prominent Spanish newspapers, including El Pais, touting the company's new hatchback and featuring a computer-altered image of China's ruthless revolutionary, sporting a smirk.
Apparently, the Chinese were none to happy about this and, well, nobody wants to tick off the world's fastest-growing consumer market.
Ironically, the language of the Citroën ad struck a decidedly Maoist tone:
Render unto Caesar the things which are Caesar's. It's true, we are leaders, but at Citroën the revolution never stops. We are once more going to put in motion all the machinery of our technological ability, in order to repeat in 2008 the successes obtained in previous years."
Yes, and we will crush the weak, capitalist pigs. Needless to say, the company's apology was less bold: "Citroën expresses regret for any displeasure caused by the advertisement and apologizes to all who have been hurt by it." Mao surely would have been disappointed by such a display of weakness.
On the eve of Tuesday's Michigan primary, Republican presidential hopefuls made an obligatory stop at the Auto Show in Detroit. While they all lamented the fragile state of Michigan's economy—a declining auto industry and the U.S. mortgage crisis have combined to give Michigan the nation's highest unemployment rate at 7.4 percent—two leading candidates advanced starkly different strategies for solving the state's economic woes.
McCain took the tough-love approach. Referring to auto-industry jobs lost in recent years, he asked:
Does anyone think they're coming back?" he told reporters. "There's going to be a lot of new jobs. Anyone who thinks the old jobs are coming back is either naive or not being straight with the people of Michigan and America. There's going to be a flood of new jobs because of this green technology."
In other words, Michigan will be saved by investing in new technology. Mitt Romney, however, fell back on a familiar tactic: Blame the foreigners. "I do not believe that the transportation sector of our economy has to be ceded to other nations," he told the crowd.
Mitt may be fighting the proverbial last war here. There's a reason the Detroit Auto Show is now known as the North American International Auto Show: The U.S. auto industry is already a composite of U.S.- and foreign-owned companies. By last year, foreign car manufacturers accounted for nearly half of all U.S. auto sales.
The Level Field Institute, an organization formed by retired GM, Ford, and Chrysler employees to encourage U.S. citizens to "buy American," reports that roughly 30 percent of U.S. autoworkers now work for foreign companies. How does Romney propose to protect these roughly 83,000 U.S. jobs (pdf) and rescue a drowning industry at the same time? By standing athwart the tide of globalization and yelling "stop"? Somehow, I don't think that's going to work.
In 2005, China's trade surplus was "only" $102 billion. In 2006, it jumped to $177.5 billion. And now the numbers for 2007 have just come out: Last year, China's trade surplus jumped 47 percent and is now an astonishing $263 billion.
But before you go jumping on the alarmist bandwagon about cheap Chinese goods flooding the global markets, know that in the last three months, import growth actually exceeded export growth. That means that means that the trade imbalance may be peaking. And that could be a good thing for everyone. Obviously, trading partners such as the United States have their own interests in seeing the trade surplus slow down. But inside China, there are also worries that the economy is growing too fast. Inflation in China is the highest it's been in 11 years, and according to a recent public opinion survey, the number one thing that Chinese are most worried about is the rising prices of consumer goods.
Although the Chinese government has been making some moves in recent months to curb inflation—Prime Minister Wen Jiabao froze energy prices earlier this week, and Beijing has also been letting the yuan run up modestly—some economists think it's not enough. Check out "China's Currency Crunch" in the latest issue of FP. Marvin Goodfriend and Eswar Prasad argue that China needs to let the yuan float completely—not just because it would ease American concerns about unfair practices, but because it would be good for the Chinese themselves. Check it out.
More trouble at Citigroup:
Two of the biggest names on Wall Street are going hat in hand, again, to foreign investors.
Citigroup Inc. and Merrill Lynch & Co., two companies that just named new chief executives after being burned by the troubles in the U.S. housing market, recently raised billions of dollars from outside investors. Now, they are in discussions to get additional infusions of capital from investors, primarily foreign governments.
Merrill is expected to get $3 billion to $4 billion, much of it from a Middle Eastern government investment fund. Citi could get as much as $10 billion, likely all from foreign governments.
That's from the subscriber-only Wall Street Journal, but you can read a Bloomberg summary of the article here. Bloomberg notes, "Banks and securities firms in the U.S. and Europe have turned to Asian and Middle Eastern governments for about $34 billion to prop up balance sheets battered by writedowns from the collapse of the U.S. subprime market." In other words, those scary sovereign wealth funds are saving your ass right now.
The World Bank released a report Wednesday entitled Global Economic Prospects 2008: Technology Diffusion in the Developing World. As the name implies, the report details what kind of technical progress developing countries are making—how many people have computers, access to the Internet, that kind of thing. The report is quite long, so I'm going to focus on a few key points:
The number of people living in absolute poverty in developing countries has decreased from 29 percent in 1990 to 18 percent in 2004. This is one of the upsides of globalization and the spread of technology. As technology spreads to poor countries, incomes grow. Yet as the World Bank acknowledges, it's very difficult to quantitatively prove a relationship between technology and income growth, so the causation here is murky.
There is a large technology gap between the rich and poor. This is one of the downsides of globalization. A good example of this phenomenon is India. India has a robust high-tech industry concentrated in its cities. However, in poorer rural areas less than 10 percent of people have access to a telephone let alone a computer, according to the Bank's own figures. Such stratification is dangerous and becomes a self-fulfilling prophecy. Look at income growth in the United States over the last few decades: the gap between the rich and the poor has grown dramatically. Once this separation starts, it's hard to stop.
Developing countries have difficulty absorbing new technologies and are incapable of innovations. Because of low literacy rates and infrastructure shortcomings in poor rural areas, poor countries have difficulty embracing technology. For instance, computers are great, but are pretty worthless if the person trying to use one can't read. And cell phones are a great way to connect people, but many rural areas in developing countries don't get coverage. These difficulties embracing basic technology make it impossible to innovate.
The spread of technology is inevitable, and it does have enormous benefits. But the second and third points listed above have dangerous implications. Once the fortunes of rich and poor begin to diverge, the trend is nearly impossible to reverse. And problems in developing countries make it very difficult to get technology into the hands of the poor. Hundreds of millions of people are being dug into a technological hole that they can't emerge from. They're being left behind by the global economy.
Do you know what your children are cuddling?
A Chicago woman was sentenced to six months in prison for her role in an international counterfeit pharmaceutical drug network that federal authorities said had planned to distribute $8 million worth of tablets from Houston.
Amal Alrub, 28, was arrested in Houston in April after meeting with authorities and arranging to buy about 800,000 loose counterfeit Viagra tablets hidden in cardboard boxes filled with stuffed animals that were shipped from China.
It's a problem with global dimensions:
French customs officials yesterday said they intercepted a shipment of 224,000 fake Viagra and Cialis pills, worth $3.5 million, that was en route to Brazil from India.
The boxes were branded Powergra and Erectalis.
Erectalis? That's a dead giveaway. The secret to good pharmaceutical names is to invent a word that sounds vaguely like what the drug does, not one that is too literal.
The Writers Guild of America strike has been going on for nine long weeks and one day now, and so far there's no end in sight. True, David Letterman has been back on the air for a few days with writers, and Jay Leno without. And fake news stalwarts Jon Stewart and Stephen Colbert were back on last night, with mixed results. (My verdict? Stewart: meh. Colbert: in fine form.) But this Sunday's Golden Globes awards show ceremony has been reduced to a news conference, and despite the premieres of several mid-season TV shows, fresh content is quickly running out.
The Writers Guild has created a series of ads called "Speechless" as part of their campaign to get their plight noticed. In the first spot, we see a depiction of what might happen if the strike continued indefinitely. What if the writers' jobs were sent to India?
A fun game that's been making the rounds on Facebook lately is also available directly online. TravelPod's Traveler IQ Challenge is a 21st-century version of a geography bee. The site presents a blank world map with country borders, and asks you to click as closely as you can to various cities and famous locations. There are 12 rounds, starting with easy world cities (think London and Paris) and getting progressively harder (think Niamey, Niger and Honiara, Solomon Islands). You're only allowed to pass on to the next level after you've passed each round. It's incredibly addictive, because you can take the test as many times as you want, and the program will generate different locations each time you take it. It also gets really, really difficult. I had a particularly hard time locating cities in West Africa and anyplace in Australia besides Sydney and Ayres Rock. Also, because the map is so small, a little twitch of the the hand when you mean to click your mouse on Vancouver can easily put you in Seattle. I can't seem to get past Round 11, but I bet plenty of Passport readers would do better. Have fun!
Passport, FP’s flagship blog, brings you news and hidden angles on the biggest stories of the day, as well as insights and under-the-radar gems from around the world.