The Clash of Civilizations?

In 1992, the Harvard-based political scientist Samuel Huntington suggested that future conflicts would be driven largely by cultural differences. He went on to map out a new world order in which the people of the world are divided into nine culturally distinct civilizations.

His argument was that future conflicts would be based around the fault lines at the edges of these civilizations. He published this view in a now famous article called “The Clash of Civilizations?” in Foreign Affairs.

credit: Bogdan State et al.

credit: Bogdan State et al.

Now Bogdan State at Stanford University and associates have analyzed a global database of e-mail messages and their locations, sent by more than 10 million people over the space of a year, MIT Technology Review reports [link to original article].

They say he global pattern of connections reflects the cultural fault lines thought to determine future conflict, clearly reflecting the civilizations mapped out by Huntington.

Toilet 2.0

No joke: Bill Gates wants to reinvent the toilet.

Gates is focusing on the need for a new type of toilet as an important part of his foundation‘s push to improve health in the developing world. Open defecation leads to sanitation problems that cause 1.5 million children under 5 to die each year, Gates said, and Western-syle toilets are not the answer as they demand a complex sewer infrastructure and use too much water. As a matter of fact, toilet technology has not fundamentally changed since the invention of the flush toilet in 1775.

One year ago, the foundation issued a challenge to universities to design toilets that can capture and process human waste without piped water, sewer or electrical connections, and transform human waste into useful resources, such as energy and water, at an affordable price. California Institute of Technology in the United States received the $100,000 first prize for designing a solar-powered toilet that generates hydrogen and electricity.

In addition to health issues and equal opportunities, this represents a huge potential market for business. As reported in an interesting article on the Harvard Business Review by Alfredo Behrens:

The largest markets will be seen around the axis of India and China, because both countries have huge populations, with a significant share still living in rural areas. India, for instance, expects to see some 350-400 million people becoming urban residents in the next three decades. That could mean demand for as many as 150 million new toilets.

Beherns estimates that in 2010, the two world’s largest toilet suppliers have shipped about 6 million units to emerging markets where, altogether, there are about 2.8 billion people without access to sanitarily acceptable toilet systems.

It looks pretty clear that demand and supply gap is daunting. Moreover, additional demand for new toilets, and derived demand for raw materials and energy, is only the tip of the housing demand iceberg coming from emerging markets. This will far outstrip the current demand coming from the advanced economies.

Globalization, anyone?

John Maynard Keynes

Sovereign Wealth = Sovereign Power? (2/2)

Second and final part of a short essay I wrote in 2009 (but still relevant in many aspects). Here you can find the first part and all the details.

A new world order (continued)

The rise of emerging economies (China, India and Russia on all) emphasizes the fact that in a growing proportion of the world economy, the state governance plays a fundamental role in allocating resources for international investment. In the last twenty years, the political leaders of Western countries have followed the dictates of Ronald Reagan and Margaret Thatcher, trying to subtract as much as possible the influence of the government from economic life. Markets should be working (only) on three key principles: Privatisation, Liberalisation and Deregulation. However, the problems faced by the financial markets since the end of 2006 following the outbreak of the subprime mortgage bubble, have brought black clouds on the “market-only approach” to modern capitalism. After the near collapse of the U.S. and EZ banking system and the serious problems posed by the world credit crunch, on the horizon is looming the return to state governance crucially more involved in international economic and financial affairs.

In other words, we are finally beginning to understand that the dichotomy that opposes the “more government, less market” to “more market, less government” is false, and that the historic changes set in motion by globalization and technological revolution require much more complex response of the old-fashioned statism or of a liberism preaching the “laissez-faire capitalism”. Probably, the answer can be found in the scheme “more government, more market”, meaning for “more government” not necessarily a stronger presence of public money, but certainly a stronger ability to determine policies, indicating the strategic guidelines to move the productive forces, and for “more market” a set of simple rules that should ensure the greatest possible transparency to the dynamics of profit.

Somebody may wonder if that could mean a return to a Keynesian economic system. In my humble opinion, the theory of John Maynard Keynes cannot be proposed “as is”. Instead, if returning to Keynesianism means the rediscovery of the need to definitively overcome the dichotomy liberalism – statism, and recovering the role of public policies in the market, then it is useful and appropriate to return to speak of the man who is rightly considered the father of modern macroeconomics. With his theories, Keynes argued the need for regulatory intervention by the state, primarily by using the instruments of monetary policy and credit. His thinking is certainly useful when reasoning about the future of globalization: there is no doubt, in fact, that we have entered a sort of “phase two” of the process of integration of global economies and markets, and this season should not be characterized from a return to protectionism, but from the definition of common rules and new world organizations that go beyond technical ones, such as IMF and World Bank, and political ones, such as various G7-G20 .

Here is a very convincing statement of Dani Rodrik of Harvard University [click for reference]

The first three decades after 1945 were governed by the Bretton Woods consensus — a shallow multilateralism that permitted policymakers to focus on domestic social and employment needs while enabling global trade to recover and flourish. This regime was superseded in the 1980s and 1990s by an agenda of deeper liberalisation and economic integration. That model, we have learned, is unsustainable. If globalisation is to survive, it will need a new intellectual consensus to underpin it. The world economy desperately awaits its new Keynes.