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Reflections on 2001: Greed the only certainty

SCMP December 17

 

It's the time of year for reflection. That's not just a matter of remembering some events from 2001 in Hong Kong and overseas, but placing them in a larger historical and geographical perspective.

It's also a time to consider how dramatically situations can change so that what seemed a given today could somehow become irrelevant tomorrow. A familiar cycle suddenly ceases and we find ourselves in uncharted territory.

That is surely what has happened over the past year to expectations of a Japanese economic recovery. What used to be merely a question of ''when'' has become ''if'' and ''how''. The tools of 20th century economics - Keynesian, monetarist or whatever - are not working. Has the business cycle once regarded as normal perhaps been superseded?

So do we now have to ask whether the Japanese fate also awaits other ageing, rich societies - Europe in particular? Is 2001 the year when we began to wake up to the fact that countries with static or declining workforces and without the drive of youth must inevitably have minimal economic growth, whatever technological progress is being made?

Meanwhile, China has joined the World Trade Organisation. This is widely trumpeted as being of huge significance. But it might be better to view it as a result of the huge changes in China since 1980 rather than as heralding a further great leap forward in its commercial relationship with the rest of the world. For sure, great achievements in low-cost exports have financed broader development.

But it is worth remembering that in the two decades before 1914, Russia was the world's leading exporter of grain, creating external surpluses that helped rapid industrialisation. There was widespread expectation in the advanced capitalist world that Russia would - despite its oppressive and feudal political system - soon catch up with Western Europe. But war and the inflexibility of that political system led to disaster.

Some things do not change, however. One is greed, and it can become so powerful a force at the highest levels of society as to undermine the trust on which civilised society depends. I am grateful to www.prudentbear.com, one of the most insightful Web sites on financial and economic issues, for drawing my attention to the remarkable parallel between the affairs of Enron, the 2001 representative piece of financial failure, and the novel The Way We Are by late 19th century British novelist Anthony Trollope.

The BBC recently adapted the book for television, so providing a global audience with some historical insights into a world driven by Wall Street and City of London speculators and financiers for whom the name of the game is not to create but to divert wealth as much as possible into a few pockets by all kinds of illusions and heads-I-win-tails-you-lose devices.

Trollope had scams in shares in South American railways. We have had dotcoms and derivative products which line the pockets of executives and their investment bankers and other ''professional'' leeches while bankrupting the company.

The contemporary equivalents of Trollope's cast of fraudsters and stock manipulators have been given plenty of help in their endeavours by the media. Is the media guilty, or merely gullible? Celebrity journalism is evidently one ingredient, a means by which people of moderate achievement are built into icons of wealth, glamour - or evil, like Osama bin Laden.

Journalism driven by the need to please advertisers has undercut its role in open, pluralistic societies. Agglomeration helps that process. I have in front of me a Freedom Forum calendar with this 1959 quote: ''The bigger the information media, the less courage and freedom they allow.'' Given the Time/Warner AOL-CNN combine's closure of Hong Kong-based Asiaweek, that is even more relevant now than in the past.

2001 also happens to be the year when the Freedom Forum closed its Hong Kong office. This closure may be a relief as well as a disappointment for the head of its Asian operation, Arnold Zeitlin. Mr Zeitlin has spent decades practising free, fearless and fair journalism in Asia and preaching this gospel throughout the region. As a bureau chief and media educator, he has acquired innumerable friends of all nationalities who trust his judgment and goodwill.

But with the US media's self-censorship, the military tribunals and imprisonment without trial for foreigners which have come in the wake of September 11, it is going to be very much harder in future for Westerners to sell the merits of a free press and habeas corpus to Asian governments ever ready to justify arbitrary actions on the basis of national security or communal peace.

Bin Laden has lost his battle in Afghanistan, but he is winning his war against Western liberal values. Al-Qaeda is being ousted from the Hindu Kush mountain passes but it will stay deep underground in the West where we can expect more outrages - while Afghanistan will probably vanish from world attention as Cambodia has done.

For all that, the episode has left behind questions over the borders of Central Asia, mostly created by compromises between the Russian (and later the Soviet), the British and Chinese empires post-1850. Former Soviet leader Josef Stalin drew the borders of his central Asian ''autonomous'' republics to ensure that each contained large minorities of a neighbouring, rival ethnic group.

So we should be asking now: should we change these borders to make states more manageable? Is Afghanistan itself really necessary any more? Its present shape was designed to make it a Pashtun-dominated buffer state between a Russia expanding into Central Asia and a Britain pushing its Indian empire into the hills overlooking the great plains and the passes through which many had invaded India. With the Russian retreat, is a buffer state needed? Would not Afghanistan's Tajik and Uzbek minorities (the core of the warlord gang known as the Northern Alliance) be better off joining up their lands with those of the Uzbek and Tajik ex-Soviet states? They have never been offered this option.

Likewise, the Uygurs and other Turkic-speaking Islamic peoples of Central Asia have never had the option in recent times of being anything other than a part of China. They were the vast majority in what is still known to many as Eastern Turkestan until Mao Zedong undertook massive colonisation by Han Chinese to try to ensure that Xinjiang (which translates as ''New Territories'') would be perpetually Sinocised. It is too early to tell whether Beijing will ultimately be any more successful than Moscow was in installing Russian majorities in Kazahkstan and elsewhere.

What is not in dispute - because none other than the US Federal Reserve Board tells us is that the US now owes the rest of the world a net US$2.6 trillion (HK$20.3 trillion). That just happens to be three times the amount per head of blighted and broke Argentina and 50 per cent more than the combined debt of all developing countries.

The US can carry on regardless so long as the rest of us accept these greenbacks now being printed by Federal Reserve chief Alan Greenspan at the rate of one trillion a year. It is all a matter of confidence. It's fine while it lasts. At some point it may be tested by the markets to the point where the rules of the game have to be changed, just as Argentina has had to change its peso/dollar convertibility rules recently or as former US president Richard Nixon suddenly ended the dollar's convertibility into gold in 1971. Remember?