Friday, October 16, 2009

Grave diggers of Capitalism

According to newspapers, the managing director of IIF – Institute of International Finances, which represents world’s major banks, during an interview held on September, 14, 2009, declared to be against a “fixed limit” of indebtedness, enforced by government, for banks. He suggested this limit to be variable, depending on assets risks, according to the subjective opinion of bankers themselves, which implies on difficulty or no alertness. To acclaim his “advanced” or “ultra comfortable” opinion that banks cannot have any governmental really limiting control, concluded giving a crowning touch on contributor’s shoulders, saying “not being desirable to use moralist behavior to approach the payment problem” of bank top executives. It is really audacious on nowadays circumstances.
In other words, according to him, “no moralist behavior” because “war is war”, “ the squeaky wheel gets the grease”, “finance is a subject for real males”, “ without competence one cannot settle”.
What happens is that, when things go wrong and boat begins to sink, those fearless supporters of the slogan “only a competent person can survive”, they are not ashamed of crying, run to government’s “mother lap”, asking for a help of trillions of dollars. This money at the end will come from idiot contributors’ patrimony. But, not as could be right, from the patrimony of those hasty executives, not so “competent” as demonstrated, and who enriched with the generous bonuses self given before the facts demonstrated that they were right on loan policy.
Why did they have the courage to risk? Because they knew that if something would get wrong, government could not deny the “safeguarding” loans and donations. On the contrary, it would happen a collapse with unimaginable consequences, demoralizing banking system and, consequently, all the rest of American economy, reflecting internationally. Authentic blackmailing, with chances of succeeding, as really happened.
However, after reaching the top of tidal wave, loaded, “risk” supporters (in theory), they attack once more, arrogantly, pleading that government does not have to be concerned with this story of risks of bank loans and bonus immediately paid to executives. That’s why the mentioned speech of the managing director of the Institute of International Finance is understandable, because each representative from any group feels the necessity of “call to his side or to himself” for his peers benefit. The problem is that, in the case of being analyzed, financial power behind IIF is so, that many heads, in the political and media areas, will hurry, as is happening, to launch doubts to the public about the necessity of imposing limits and responsibilities to the handling of money deposits on banks which cannot allow the luxury of “bankrupting”. They know that medium reader has not much time, or sometimes even cultural conditions, to distinguish with absolute certainty right from wrong.
This article’s title talks about “grave digger”. Could be an exaggeration? Let’s see.
Socialism supports the wonderful ideal of promoting solidarity, enlarged planning, and equality among human beings. The problem is that behind the theoretical and sincere intention of most idealists, some of them murdered by tough realistic ones, also existing, perhaps mixed with the equalitarian ideal, the purest selfishness and power sickness of the “boss”, Stalin, Fidel Castro, Hugo Chávez, etc. and their minor partners in their power enjoyment. This group, due to an impressing “coincidence” “do not leave the sugary”, sorry for the expression, used only because of its force. When strong opposition exists, brutal repression becomes almost inevitable against those who think differently and oppose to the lifetime staying of the “leader”.
The one that is occupying the “democratic throne” knows that if he would leave power and stay in the country could be assassinated. The dictator of the left, or even the one of the right, concludes that there is no “healthy” back path. The eagerness for revenge observes him at each corner. Maintain himself as lifetime dictator becomes, after some years on office, kind of legitimate body self-defense.
The basic failure of “real Socialism” is in restraining citizens’ creativity which all together, summing up individual intelligences, can see better and farther than a bunch of autocrats. Even if among these exist brilliant minds, they suffocate some own ideas, pretty good ones…, because they fear to arise the jealousy of the “big boss”. He will not approve the contrast between his mediocrity and the special intelligence of some subordinates who can ambition his place.
In summary, only a really democratic Socialism, but responsible, with free initiative stimulus, will allow future generations the union of entrepreneurs creativity anxious for some security or protection that saturates all citizens souls. They want the State to take care of them from birth to death, since they work well and obey the laws enforced from their representatives. I do not feel anything wrong on it. Wrong is the State ignoring the necessity of security in unemployment, old age and illness for all hand or intellectual laborers.
With Capitalism, the spontaneous individual creativity even originated at mean greed, or wished of having and being better than the neighbor, meets a favorable field to generate richness which can benefit all, even if this benefit is not in the beginning plans of the “selfish”. The general benefit, though unintentional is a useful collateral effect that justifies the maintenance of Capitalist system. This happens because generates jobs and taxes. But, the legislation must impose limits to human being’s greed, a powerful psychological force, ubiquitous and useful, since being watched or maintained under the limits, as happens with all forces being of any type. If it would not be controlled, apparently, as the IIF intends, it is feared and demoralized. That’s why, the word “grave digger” was used.
By the way, one of the smartest inventions of Capitalism was the creation of the “corporate entity”, namely corporation, a legal fiction at the same time useful and “smart” as it allows the intelligent and balanced entrepreneur to earn unlimitedly when his company has earnings and to loose in a moderate way when there are losses, unless the stockholder would be very careless investing all his money in stocks of the only company which did not work.
When a corporation goes bankrupt, bankrupt is the company, the partnership, the abstract entity, not flesh and blood. The stockholders never become “bankrupt”. Only the bankrupt entity’s properties, when something remains, are seized and sold, for the profit of creditors. The alert, precautious stockholder when previews that the company is going to bankruptcy sells his stocks and does not loose or loose less. Anyhow, his personal status is not affected by the bankruptcy. When the company has earnings, these earnings totally go to stockholders, of course, discounting the taxes that everybody has to pay, rich or poor. In the case of large banks which gave origin to the present situation, one might ask, it was by chance examined if CEOs were much affected by bankruptcy in terms of patrimony?
Such elementary notions, well-known by the reader, are remembered here to stress that judicial world already allows this great privilege of allowing unlimited earnings when the corporation has no problems or minimum losses, or even none, at the moment of business liquidation. And now they want the growth of the irresponsible bonuses?
Ralph Byron Perry, a famous American philosopher, dead in 1957, president of the American Association of Philosophy and Pulitzer prize holder for Biographies and Autobiographies, objectively defined where is the legitimacy for moral support to Capitalism. He said in other words that the fundamental idea of modern Capitalism is not only on the individual right of owning and enjoying what he earned, but on the thesis that exercising this right benefits everybody.
In the case of bankers who rushed to receive high bonuses, before their policies correctness were verified, there were not of general benefit. And now, they want us to allow them to once again go ahead. Another crisis like this and Socialism will feel recovered from the economical failure of the Soviet Union. Therefore, the “grave diggers” of the title, is a relevant qualification. Unless they prove, in a great trial, not necessarily judiciary, that they were victims of fate, an apparently impossible mission. A good criterion to know if there were acting in bad faith or frivolously when verifying this little detail: when crisis became clear, top executives, who earned the bonuses, lost money at the bank they administrated? If they lost plenty, they have acted on good faith. If they would not have lost anything or very little, they deserved to receive an economical punishment.
However, it is not all lost defending, when brightly, Capitalism. The German magazine “Der Spiegel” published an interview with Dominique Strauss-Kahn, managing director of , IMF, that appeared in the “O Estado de São Paulo” newspaper on September15, 2009, B3, where the experienced economist contests Goldman Sachs executive director’s arguments after the crisis. The banker would have said that the “crisis” was inevitable; a “perfect storm” there weren’t any ways to protect from it. Dominique Strauss-Kahn, an expert on the topic, disagreed: “It is a mistaken metaphor. Human society is not a force of Nature. The financial crisis was a catastrophic event, but an event created by human action. The lesson which all of us must learn is that even an economy needs some kind of regulation, on the contrary, its functioning is compromised”.
As can be seen, the opinion of some grave diggers of the system itself can be neutralized by bright minds that can, in this case an obstinacy of Nature, be at any place, even in the polemic International Monetary Fund so many times in the past, attacked by us, Brazilians.
09/18/2009

Wouldn’t the equivalent of a Brazilian “Sorbonne” be useful?

(Word 2003)



Our esteemed President Lula intends to acquire 36 Rafale fighter aircraft, 4 submarines, the hull (how?!) of a nuclear submarine and 50 helicopters, besides other associated items. By all accounts, total spending amounts to 12 billion euros. For the time being. Costs to be paid by future governments. Just what is happening with Brazil?

In all certainty, many Brazilians - or even foreigners - feel perplexed, asking themselves what is the possible explanation of such bellicose concern (far from modest) when there are so many non-military and urgent needs that have not yet been addressed. Could it be that this is the inevitable result of some kind of “thinking big”? Is it to protect us when the “pre-salt” is closer to becoming concrete wealth from which it is possible to reap benefits?

It is difficult to reply with certainty, given that I lack specialized information in this field. For a long time, the Brazilian armed forces - which need to be valued as they are really comprised of people who are capacitated, patriotic and underpaid - have been insisting on the need for modernizing our means of defense, currently almost reduced to scrap. If the defenseless and ill-policed Amazon region were not enough, a black goldmine - the pre-salt - has now appeared on the horizon. This something new that will result in our country being seen in a new light, as in the case of other countries with significant oil reserves. If Iran, Iraq and Libya were only rich in rocks and sand, with no oil, they would not have appeared in international news with the same polemic intensity.

In summary, we should give a vote of confidence in the common sense of our Armed Forces and the President of the Republic regarding the need for so much spending on defense. If in doubt, pro-government. There being, as promised, effective technology transfer, our engineers and technicians will learn - in practice and not just from books - how to penetrate the complicated secrets of a technology that has always been too distant from developing countries. Besides this, jobs will be created. Our country appears to be taking its first steps towards becoming a great power. Let it be so; however, it is to be hoped that Brazil continues to maintain it current pacifist aura.

A possible undesirable side effect of the acquisition of these modern arms - in such quantity - is that of providing an incentive for an arms race in South America. In fact, this has already been initiated by Hugo Chaves, with a treasury full of oil money and constantly worried about a non-existent or remote real American threat. In addition, some more competitive Argentines will certainly come to put pressure on the government in Buenos Aires in order to not be left behind, also purchasing aircraft and submarines. Those who, in theory, may come to suffer indirectly from this policy are the poorest sectors of both countries, in the event that the jobs created do not compensate for such high spending.

With a view to compensating for this apparent “warlike spirit” of our president (only apparent, as Lula is patient, does not lose his temper easily and is a diplomat by temperament), I would like to take the liberty of suggesting to Your Excellency, or the next president, whoever he or she may be, an idea which would not involve such significant expense and would neutralize the somewhat bellicose aspect of the acquisition in progress (although no contract has as yet been signed). Once transformed into reality, this “idea” would give a great deal of impetus to establishing the presence of Brazil on the international stage, in a rare combination of events so favorable to my country.

I refer to the creation of a kind of Brazilian “Sorbonne”, so to speak. With another name, of course. An International Relations and Law study center that would not only be a “first” in the Southern Hemisphere, but which could have an “edge” over its equivalents in the Northern Hemisphere (Sorbonne, Cambridge, Oxford, Harvard and wherever there are similar study centers). For example, in Tokyo there is a center that prepares young people for working at the UN - something that we do not have here in South America.

What would this “edge” be? A greater emphasis on well-founded studies and suggestions for remediating, to the greatest possible extent, current deficiencies in international justice and the actual United Nations Organization.

In respectable circles, there are thoughts, and not only at the present time, of reforming the UN. Perhaps a contingent of “new blood” - not actual blood, spilt in battles and terrorism - composed of Brazilians and South-Americans - can help to convince the world that current Public International Law has already become a little outdated and, for this reason, needs to be rejuvenated. There is no lack of examples of this lack of modernization of international norms: uncontrolled immigration of the destitute from Africa and Eastern Europe, forcing the European Union to close borders, giving rise to racism of economic origin; Jews and Palestinians who cannot manage to come to an agreement, meaning that an international decision is desirable - “coming from outside”. It should be remembered that, as a Palestinian State does not exist, they cannot bring proceedings against Israel at the International Court of Justice. This court, which unites the world’s best judicial minds, has its hands tied, as its judges cannot alter its statutes, established based on political criteria by the UN. In addition, it would not look good, morally, if its magistrates, after being nominated, came to claim greater decision making powers.

This evident international legal inadequacy encourages, for example, some bad Israeli politicians (the good ones, being more discerning, have not yet managed to attain positions of power) to create obstacles in peace negotiations with the Palestinians, tolerating amplification of settlements. Besides this, even if a Palestinian State does come to be created, proceedings can only be brought against countries at the International Court if they have agreed to this. Knowing that they are not in the right, they obviously do not agree. How, in legal terms, is something so grotesque still permissible in a century so advanced in learning?

Another issue that is evidence of a need for changes in the existing model of international justice is that regarding the current prohibition of advances in nuclear knowledge in the case of certain states, whereas others are not subject to any restrictions. The USA, France, England, Russia, China, India and Pakistan openly admit to possessing nuclear arms and could, in all certainty, augment their destructive power. In the case of Israel, everyone knows that it is in possession of nuclear arms, but the Israelis do not confirm or deny this and they do not allow inspectors to enter the country to investigate the situation. It is simply inferred that Israel is in possession of “the bomb”, allegedly as a means of protecting itself from Arab resentment. It is clearly stated that, if the western world does not act against Iran, Israel will conduct the necessary aerial attacks, according to its own particular understanding of the situation. And it is easy to imagine what could result from “preventive strikes”, without the prior authorization of international justice.

The Security Council demands that North Korea and Iran not only be prohibited from manufacturing atomic weapons, but also that they open up their nuclear facilities to international agency inspections, in order to accompany the way in which the technology used is evolving, and with a view to ensuring that they do not manufacture - now or ever - “elementary” atomic bombs which, much more advanced, can be stockpiled in their hundreds or thousands in the arsenals of great powers. Such countries, quite rightly, feel that they are the victims of a double standard. They think: “It is only us that do not have the right to fear the possibility of aggression?” Because the principal underlying reason or excuse for possession of nuclear weapons lies in the need for defense.

Kenneth Waltz, a highly respected “neorealist” professor at the University of Columbia, USA, says that “the world exists in a perpetual state of international anarchy”. Without a “central enforcer”, means that states must act in a way that ensures their security above all, or else risk falling behind. “This is a fundamental fact of political life faced by democracies and dictatorships alike: except in rare cases, they cannot count on the good will of others to help them, so they must always be ready to fend for themselves”. In summary, in the case of the Iranians and North Koreans, it is difficult to understand why they are prohibited to do what others, who are stronger, do without any kind of hesitancy. If nuclear proliferation is unadvisable, which it obviously is, it becomes necessary to create international mechanisms that provide absolute security for weaker countries, even though they may make a verbal show of force. Such total security still does not exist and is something that needs to be thought about. Perhaps in greater depth at the possible Brazilian “Sorbonne”.

This article would become too long if one continued to expose all the weak points of our international regulation. To give another example, the World Trade Organization cannot manage to prevent the USA and France from protecting their farmers. Commercial “reprisals” (or what other name they may have) could be taken, but everything requires a lot of time, in a highly changeable market. For its part, accepting a denouncement, the International Criminal Court ordered that the president of Sudan, Omar al-Bashir, be apprehended in view of an accusation of several massacres. However, it is unlikely that such an order will be fulfilled, given that he has the support of neighboring countries. If, eventually, the ICC authorizes a “commando” operation (perhaps not established in the Court statute) in order to kidnap the accused, it is difficult to foresee what would happen afterwards, with a possible terrorist “reprisal” by his followers. The current impasse will likely end up in cancellation of the arrest order, with a view to preserving the prestige of an institution that could still come to represent an immense and effective advance in global criminal justice. Another case: Cesare Battisti is currently a thorn in the side of the Brazilian justice system. There is a subjective margin for completely opposite interpretations.

The “edge” over its equivalents of the Brazilian “Sorbonne” suggested above, would be that of studying, in greater depth, possible and necessary modifications regarding international justice, obviously without neglecting the usual curriculum of subjects studied at the University of Paris and other centers. This “home-grown Sorbonne” (so to speak) will not have any political connotation of the “leftist” kind or opposition to currently existing universities established for the same purpose. It will be just one more university teaching International Law and Relations, although the first, as I have already said, in the Southern Hemisphere.

Another, practical, objective of the Brazilian “Sorbonne” would be that of allowing not only Brazilians, but also other South Americans (especially the sons and daughters of more modest families) to acquire preparation, without having to live in more distant countries, that enables them to work at the UN headquarters, its agencies and in various international agencies.

Some will say that several Brazilian universities have professors of International Law who are versed in, for example, North American Law as well as or even better than many attorneys in that country, the same occurring with respect to International Law.

This cannot be denied. However, such professors, or attorneys, are knowledgeable in International Law in Portuguese. This makes a difference, as Portuguese is not the language officially used at the UN. When and if it does become the official language, it will be less necessary to have an understanding of new languages. In Spanish-speaking countries, there are moves with respect to also making Spanish an official language at UN level. If the most competent monolingual Brazilian professor in International Law wishes to orally defend the interests of a client at international courts, he will have to delegate his mandate to a foreign colleague who speaks English or French fluently.

In the case of those who wish to work at the International Red Cross, World Bank, International Monetary Fund, UN Headquarters, etc, it is not enough to present oneself with in-depth knowledge - solely in Portuguese - of the necessary topics.

Hence the need for the suggested Brazilian “Sorbonne” to also hold its classes in English and/or French. Besides this, ordinary “tourist-level” English is not sufficient to work abroad in really important centers.

Some may say: “If the language is so necessary, it would be easier and more practical for the father of the student to send his son or daughter to study in Europe or the USA”. It may be practical, but it is not always easy in economic terms. More wealthy families already do this, and are likely to continue, given that it is possible to learn the language more quickly. However, more modest families cannot give themselves the luxury of this option, due to a scarcity of financial resources. Private universities are costly and there are the problems of accommodation and sundry expenses. Promising talents lose the opportunity of projecting the image of Brazil abroad, for reasons associated with a lack of family resources.

The Brazilian “Sorbonne” could invite several foreign lecturers of particular prestige in order to give classes, which would be recorded and made into DVDs (with payment of copyright fees) and subsequently used to accustom the “ear” of students to understanding that which they perhaps already know in Portuguese. Perhaps it would be advantageous to first attend the class in Portuguese “live”, given by Brazilian lecturers, and then listen to the “English or French version” of the same topic, with the lecturer present to “pause” the DVD when necessary in order to explain, in Portuguese, anything that has not been well understood.

As this article is only an exemplification of what the Brazilian “Sorbonne” could come to be, I will not go further into the matter.

Let’s see whether the government, or some educational entrepreneur of greater vision, reacts to this suggestion, which could not be outlined in greater detail for reasons of space.

(21-9-09)