US-led Global Capitalism is Dead! Long Live US-Led Global Capitalism!

The first part is the title and opening while the second is the ending line of my today's article in the Jakarta Globe.

The editor change the title and cut the opening/closing line, I guess to make it more sexy and rebelling. Hope the careful reader still get my intended meaning.

The system of buying and selling with market is still the preferred option when it is the best means to increase welfare but stronger transparancy and government regulation is needed more than ever. The same with the role of US, they are still there in pedestal but maybe not much longer if they stumble again.

The Upcoming Financial Crisis... in US?

Germany's market was down 7.4 percent, Japan's 3.9 percent and Britain's 5.5 percent. Hong Kong's Hang Seng index nosedive 8.6%, Tokyo's Nikkei 5.7% and Mumbai's Sensex 12.9%.

Time Magazine call it a worldwide mini-meltdown. George Soros declare it as the the worst market crisis in 60 years

In his book entitled The Return of Depression Economics, Paul Krugman wrote on how bad things could happened to good economy largely due irrational expectation and market psychology.

But can good thing happened (for a while) to a badly managed economy? Let me quote rather lengthily from Krugman’s recent article on New York Times:

“Mexico. Brazil. Argentina. Mexico, again. Thailand. Indonesia. Argentina, again.

And now, the United States.

The story has played itself out time and time again over the past 30 years. Global investors, disappointed with the returns they’re getting, search for alternatives. They think they’ve found what they’re looking for in some country or other, and money rushes in.

But eventually it becomes clear that the investment opportunity wasn’t all it seemed to be, and the money rushes out again, with nasty consequences for the former financial favorite. That’s the story of multiple financial crises in Latin America and Asia. And it’s also the story of the U.S. combined housing and credit bubble. These days, we’re playing the role usually assigned to third-world economies.”

America, you are next!

P.S.

Stiglitz propose a series o policy to stop the downturn here

tak TKI berkalang Tanah

Derita TKI Ceriyati yang lari dari majikannya di Malaysia patut menjadi renungan (disini). Pertanyaan kenapa seseorang mau mengadu nasib menjadi tenaga kerja migran, saya kira masih relevan. Pertanyaan ini sebagian terjawab dengan melihat kaitan antara penguasaan lahan pertanian yang terkonsentrasi akibat proses industrialisasi khususnya di wilayah pedesaan. Dalam hal ini menarik jika melihat analisis Lenin tentang struktur agraria di Rusia ketika itu (disini). Perubahan lanskap sosial terkait dengan penguasaan lahan pertanian menyebabkan polarisasi kelas antara borjuis desa (gabungan antara petani kaya dan menengah) dan kelas pekerja pertanian yang berasal dari petani miskin. Petani miskin yang tidak punya tanah akhirnya hanya punya sedikit pilihan, bekerja pada petani kaya atau migrasi. Pilihan migrasi ini pada jaman Lenin sepertinya kurang dikenal. Namun, film Far and Away yang menceritakan keadaan imigran Irlandia di Dunia Baru Amerika menunjukkan kondisi yang mirip (sebab dan tujuan migrasi) antara imigran Irlandia dan para TKI kita di luar negeri.
Tidak ada yang bisa melarang seseorang memperbaiki kehidupannya bahkan pergi ke luar negeri. Disisi lain negara berkewajiban mengamankan rakyatnya dari penderitaan dan kesengsaraan. Untuk itu persoalan penguasaan lahan yang semakin sempit misalnya di Jawa Tengah penurunan pengusaan lahan pertanian 0.15% pertahun harus ditangani secara baik jika tidak dapat berpotensi mengganggu pasokan pangan yang dapat menjalar ke krisis lainnya. Solusi untuk saya saat ini adalah redistribusi lahan, bahwa kepemilikan lahan perlu pembatasan yang menjamin akses petani miskin (terutama perempuan) kepada tanah. Harapannya akses tanah yang cukup bisa mengurangi keinginan menjadi TKI. Satu lagi prasyaratnya pemerintah mengembalikan perhatian kepada sektor pertanian.

Let’s Go Glocal!

by Berly

I agree that the term “globalization” is probably the most overused, misused and abused term in the last ten years (“millennium” surpassed it briefly in 1999 though).

A derivative term is made by combining the centralizing force globalization with centripetal force of localization, resulting in a somewhat awkward “glocalization”. Wikipedia defines the term as “The creation of products or services intended for the global market, but customized to suit the local culture.” It also explained that the terms come from Japanese business practices and brought to English speaking world by a British sociologist named Roland Robertson in the 1990s.

A quick online search by Google revealed that the term has over 117000 hits. There is even a Conference on Glocalization that will conduct the fourth annual meeting this year. So, I guess we must accept that the term is here to stay.

The reason I go an extra mile to explain the origin of the term is simply that I want to describe glocalization at work in medieval city that I am living now.

If you pass Siena’s main street to Il Campo, you would not miss a neat and spacious modern supermarket like store own by Consorzio Agrario Siena (Agricultural Consortium of Siena), the windows has writing in English "Specialist Grocery Store - Typical Foods and Wines".

The majority of the products come directly from the local farm and most of the packed goods were packed up locally. You can find local fresh meat and wines together with more gastronomically palatable delicacies. Marmellata di mandarino (orange jam) taste great on any bread while funghi porcini (mushroom sauce) is suitable to almost any dish. Or you have a royal taste bud, then salsa tartulafa (black truffle) and ragu di capriolo (tomato sauce with and deer mince meet) is yours to taste.

Consorzio Agrario Siena is a farmer co-op that founded in 1901. Since then it has grown to provide various services from wheat grinding to specialty store, from agricultural technology consulting to gas station. It even has its own protein certification labs.

I have yet to study its history, membership and profit sharing method with it is very close to an ideal in term of production. It buys directly from farmer and sells directly to costumer. By cutting cost of unproductive middle man it can (and should) give more profit share to the farmers. Furthermore, the by obtaining the form of modern organization it can extend the reach beyond its borders. I am sure they also serve numerous specialty shops around Europe.

What does it take to bring it to other (especially developing) countries?

1. Heterogeneous products

The scheme would not work as well if they only sell olive oil and bread. The types of products need to be sufficiently numerous (beside few local specialty) to be able to command attention of customers.

2. Costumer taste

Designated customers need to develop a taste for “genuine” and “biologically friendly” products. After all, in term of production scale it is hard to compete with giants such as Nestle and Parmalat. Most likely that the price in CAS store’s can not be set to be lower than those giants. Customers need to have enough reasons for such a premium.

3. Modern organization

Having a vertical food processing company required modern management technique with high regard for efficiency. Family relationship should not be the main factor of employments. The need to obtain capital through banks or capital market also demands a professional and open organization.

4. Export oriented

The big money is out there in other countries. So are the customers with consciousness and willingness to pay. If local producer can tap those markets, it will greatly increased the sustainability of the co-op. After all, it is a natural next move for a glocalization phenomenon. The entire barrier to export and possible assistance to find global market from government is appreciated.

World need more glocalization! And while we are at a far flung part of the world looking for market access for a local producer, let also search for a better term for it.

A Hat-trick for Globalization

by Berly

All the world is a football field,

And all the men and women merely players

Forgive my pun on that Shakespeare sonnet, but if you live in Italy football is everywhere. Even if those magnificent churches are empty on Sunday, the stadium and pubs are never empty when a game is on. Sunday night’s TV is full with football coverage and Monday morning in class in time to tease between supporters of different teams.

I came across an excellent essay by Branko Milanovic, an economist at the Carnegie Endowment for International Peace, entitled Learning Globalization From Football.

So, let us set to watch a football match between near-ideal globalization represented by football (F) and real world (RW) globalization.

In football the markets works since supply met their demand. A team can hire any player they like if they can pay the price and a player can look for team that suits its taste after the contract expire (one can even break the contract, for a price). No monopoly and price fixing. Compare that with real world oligopolistic business arrangement and trade restrictions.

The whistle is sounded and the game begins… the F team make a beautiful breakthrough and Inzaghi scored with high curve that elude the goal keeper. 1-0!

In football, there is no limitation of player mobility. All of Arsenal’s players are non-British nationals and the coach is French. Most of top European clubs employed non European in their team. And how does an African or Asian get spotted? Just play well in World Cup or regional cup and flood of offers will come. Meritocracy is at work here and eveyone has a chance. Compare with real world where it’s very difficult (especially for non western) to work across countries with all the licenses and legal limitations.

The keeper of RW is making illegal move and resulted in Penalty. Totti took the shoot and make a powerful curving banana. 2-0!

Remember when Senegal beat France in 2002 World Cup? A French friend of mine give excused that it’s actually French against French since most of Senegal team play on French league. In football, after learning to play with the best and in the toughest league the players will go back to play for their own countries in World Cup and Olympics. Thus, spreading their hard gained skills to their fellow countrymen and brings pride for their country. Similar arrangement need to be made in globalization where the ex-pat from developing countries can share their skill and network to their countrymen beside sending remittance to their immediate family.

Ibrahimovic and Del Piero bring the ball crossing defensive line and work toe-to-toe in order to face the lonely goal keeper. A soft touch by Ibrahimovic brings the score to 3-0! ... Long wistle is sounded and time is up.

If only the whole globalization is a football field…



Errata:
There are still 3 British citizens on current Arsenal team.