Wednesday, June 29, 2011

The Father of Counter-Globalization Experiments

It's funny how some books lead you to other books. Earlier this summer I read Wendell Berry's Long-Legged House and Susan Maushart's Winter of our Disconnect--both of which referred to Henry David Thoreau (left) and his famous living experiment on Walden Pond in Concord, Massachussetts. So I decided to follow the lead of these other authors and read Walden (published in 1854 and based on Thoreau's experiences between 1845 to 1847).

Having never read all of Walden, I was able to fill a gap in my education and discover that Thoreau could easily be credited with inventing a genre of non-fiction that has exploded in recent years: the counter-globalization-living-experiment-turned-into-a-book.

One of my Advent 2010 posts listed several examples of these books, with Sara Bongiorni's A Year Without "Made in China" serving as a typical model. A new and notable model of the alternative living genre, though, is Susan Maushart's experiment, aptly described by the lengthy subtitle of her book: "How Three Totally Wired Teenagers (and a Mother Who Slept with Her iPhone) Pulled the Plug on Their Technology and Lived to Tell the Tale."

Maushart is the first author I've encountered in this genre who openly turns to Thoreau for inspiration--an appropriate move, since Thoreau is famous for his experiment move to the woods on Walden Pond, which even then was not exactly in the wilderness. But the turn to Thoreau is also appropriate because he has an eye on global economic trends (among other things).

The reader expecting a simple chronological account of Thoreau's two years in his little cabin will be surprised to discover that he opens the book with a lengthy and digressive chapter entitled "Economy," in which he points out that modern people depend heavily on others for transportation, clothing, and shelter. In the name of economy and efficiency, the division of labor supposedly frees us. But Thoreau believes that such dependence on others actually enslaves us. And he even shows us his financial accounts, to prove that his simple way of living is actually cost-effective.

Furthermore, contends Thoreau, the desire to connect disparate parts of the globe through technology often goes unexamined, and questions about the purposes of such connections go unasked. As he puts it,
Our inventions are wont to be pretty toys, which distract our attention from serious things. They are but improved means to an unimproved end, an end which it was already too easy to arrive at . . . . We are in great haste to construct a magnetic telegraph from Maine to Texas; but Maine and Texas, it may be, have nothing important to communicate. . . . We are eager to tunnel under the Atlantic and bring the old world some weeks nearer to the new; but perchance the first news that will leak through the broad, flapping American ear will be that the Princess Adelaide has a whooping cough. ("Economy," Everyman's Library edition, p. 46)
All this global media technology provides instantaneous updates to everyone all over the world, all at once. And we await important newsflashes . . . about Lady Gaga's outfits or Lindsey Lohan's misdeeds or George Clooney's new movie. We have iPhones, iPads, Twitter and Facebook, but do we communicate any better now than we do sitting face to face? Or is all this noise and distraction making it harder to communicate about important matters? Thoreau would have us ask such questions.

One benefit of living a simpler life, says Thoreau, was that
life itself was become my amusement and never ceased to be novel. It was a drama of many scenes and without end. ("Sounds," p. 100)
News Flash: Simple reality can often be more engaging than the diverting dramas on television.

In his chapter, "Sounds," Thoreau muses about railroads (a symbol of the creeping modernization and industrialization and globalization that Thoreau was resisting). One particular point echoes the introduction to chapter 1 of my book about railroad time:
The startings and arrivals of the [railroad] cars are now the epochs of the village day. They go and come with such regularity and precision, and their whistle can be heard so far, that the farmers set their clocks by them, and thus one well-conducted institution regulates a whole country. Have not men improved somewhat in punctuality since the railroad was invented? Do they not talk and think faster in the depot than they did in the stage-office? . . . To do things "railroad fashion" is now the by-word; and it is worth the while to be warned so often and so sincerely by any power to get off its track. ("Sounds,"p. 105)
In the second half of the book, Thoreau closely observes nature in and around Walden Pond. Even the earth itself, he says, is
not a mere fragment of dead history, stratum upon stratum like the leaves of a book, to be studied by geologists and antiquaries chiefly, but living poetry like the leaves of a tree, which precede flowers and fruit--not a fossil earth, but a living earth . . . . ("Spring," p. 273)
It is this section of the book that Wendell Berry clearly echoes in The Long-Legged House, with his evocative descriptions of the landscapes on his family's land near the Kentucky River. Attachment and attention to a particular place is a powerful and healthy antidote to the placeless landscape of globalization.

It should have come as no surprise, then, that a whole generation of people worried about the unsettling processes of globalization have consciously or unconsciously emulated Thoreau's desire to "live deliberately, to front only the essential facts of life" and "live deep and suck all the marrow of life" ("Where I Lived," pp. 80-81).

Wednesday, June 22, 2011

Capital Reserves? No Thanks, Say the Banks

Joe Nocera, a business-reporter-turned columnist for the New York Times, ran an informative column yesterday about raising the required amounts of capital that international banks must have in reserve to cover their lending. As he notes, the Basel III agreement being negotiated in Switzerland would require the banks to have 7 to 10 percent of reserve capital on hand, far less than the 14 percent preferred by Federal Reserve Governor Daniel Tarullo. (Nocera is a co-author of one of the best books on the mortgage meltdown, reviewed in this space in a previous post.)

Naturally, of course, the big Wall Street banks and their allies in Congress are resisting this push, citing the dangers of "over-regulation." But we've tried de-regulation of the financial industry over the last 30 years and ended up with the worst financial crisis since the Great Depression (and it may yet equal the Great Depression).

Which raises a rhetorical question. Why can't the banks and politicians do the right thing for the nation and the world, even it means some modest sacrifice?

Monday, June 20, 2011

Executive Pay and Globalization

 In the Lexus and the Olive Tree, Tom Friedman has a catchy chapter on the dangers of a winner-take-all, free-market society--the kind of society rewarded by processes of globalization. He uses a professional basketball analogy to make his main point. A few top competitors--those like Michael Jordan or LeBron James--reap massive rewards, while the average competitors in the market--the lesser-known teammates of the superstars--get much less. Friedman's concern is a real one: How sustainable is a team that includes both mega-rich and not-so-rich players? We have cause to worry about the erosion of social solidarity between the affluent and the ordinary.

U.S. income data since the 1970s suggest that this concern is valid. "The rich are getting richer, while the poor are getting poorer" is one of those thoughtless cliches that turns out to have some truth in it. The undisputed fact here is that the top 1% of income earners now account for at least a quarter of the nation's total income.

But who are these people and how do they get their money? Are they executives, doctors, lawyers, or financiers? According to a recent study of tax returns by three researchers reported in today's Washington Post, "executives, managers, supervisors, and financial professionals" accounted for around 60 percent of this group by 2005. Executives, managers, and supervisors alone were 40 percent of the group. 

The study itself is pretty dry material for the average reader, but the Post story by Peter Whoriskey frames their findings with a comparison of the top executives at Dean Foods, a Fortune 500 national dairy company. 

His lead paragraphs capture the reality of today's executive compensation problem:
It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.
Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time — two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.
Meanwhile, as Whoriskey reports, 
while pay for Dean Foods chief executives was rising 10 times over, wages for the unionized workers actually declined slightly. The hourly wage rate for the people who process, pasteurize and package the milk at the company’s dairies declined by 9 percent in real terms, according to union contract records. It is now about $23 an hour.
The concern here is about relative gains. The ordinary workers, probably because of union power, are not destitute; $23 an hour is a decent wage. But their share of the overall wealth generated by the company is declining, just as ordinary workers' shares of national wealth are declining. And whose shares are gaining? The bosses'.

CNN reported in 2007 that the average American CEO was making 364 times more than the average American worker. With stock options and salaries and all the rest, the top bosses were doing quite well, even while they were downsizing and outsourcing and union-busting. As a result, CEOs became the single largest group within the top 1 percent of American income earners.

Back in the day people like Kenneth Douglas were willing to turn down raises out of a sense of solidarity. But people like Gregg Engles--and other winner-take-all executives--are jeopardizing the stability of our society. They might blame globalization, but they we all know that greed is the real problem.

Thursday, June 9, 2011

Bahrain and Saudi Arabia

In today's New York Times, columnist Nick Kristof posted an open letter to King Hamad of Bahrain, requesting the release of Hassan al-Sahaf, a 57-year old Shia moderate. Like many other Bahrainis, including relatives of our friend Shubbar, al-Sahaf remains under arrest. Here's hoping that King Hamad will listen to such reasonable voices and free political prisoners. We're thankful that our friend Shubbar is out, but we won't rest until all the unfairly detained political prisoners are free.

Today's Times also has a story by Neil MacFarquhar on how Saudi Arabia's King Abdullah has spent $130 billion to buy off opposition critics and forestall the kind of pro-reform protests that have rocked nearly every other Arab state. In addition to deep pockets, the royal family has a loyal religious establishment that has been preaching against revolt as un-Islamic. And the police have arrested anyone with the temerity to test restrictions against public protest.

As a result, and contrary to my expectations, the al-Saud family has managed to forestall any major protests, turning an announced Day of Rage on March 11 into a Day of Duds. Given the lack of protests so far, the al-Saud family wins the Donkey award for the most skillful use of carrots and sticks

But will this strategy work in the long run? As MacFarquhar writes, 
Saudi Arabia’s efforts have succeeded in the short run, at home and in its Persian Gulf backyard. But some critics call its strategy of effectively buying off public opinion unsustainable because it fails to address underlying problems.
Keep watching Saudi Arabia. The Arab Spring hasn't ended yet.

Monday, June 6, 2011


Good news! After 50 days of detention, our friend Shubbar was freed. We were in Italy, with limited Internet access, when we got the news, so it took some time to get the word out after we got the updates from Hajar and Shubbar. Sadly, Shubbar's father-in-law and brothers-in-law remain in captivity.

Bahrain remains under a state of siege, as the McClatchy reporter Roy Gutman has shown in a series of informative dispatches from the island, including a recent one on Bahrain's plans to sentence two protestors to death. Pressure from the U.S. may have contributed to a slight easing of the crackdown.

Whatever the cause, we're just glad that our friend is free.