Ode to a Qianlong Urn & the rise of the Easternized Occidental Girl?

THE ECONOMY OF SAMENESS

Who wants to stand out when the other peons in the Global Village may mock your differences at the market place? And for so long it has been the richer churls of the western fields that have swaggered into the village square and set the trends.

Now it seems that the formerly impoverished but more industrious peasants of the eastern margins are bringing in bigger and better bundles to trade. Are fashions about to change?

The economy of sameness is something that we all deal with on a day-to-day basis. It is natural to want the approbation that comes from conformity with ideal types and trends. And quite apart from having been a feature of ancient empires, it has obviously been wonderfully accelerated and accentuated by globalization.

Back in 1976, I worked for a spell with a US engineering company in an office in South Wacker Drive with a window overlooking a bridge that must have been close to the original Route 66 crossing of the Chicago River. Although the building was multi-storey, our floor was near enough to the ground to catch the noise of the cars as they crossed the bridge and hit the bascule plates.

Between coffees and donuts, this meant that I had good reason to reflect on the cars that crossed the bridge – and figure out that they all looked basically the same. The cult of sameness has continued to spread.

But two recent articles in the UK Independent set me thinking further about whether sameness evolves along a single trajectory – or whether it can sometimes flip.

Taking Yasmin Alibhai-Brown first, she asks ‘Why are Asian women aspiring to Western ideals of beauty?’, quoting Cambridge academic Priyamvada Gopal who says:

"There is an explicit correlation between the emergence of so-called 'international looks' and the opening up of the economy to multinational corporations from the west. Two Indian women won world beauty titles in the Nineties - Aishwarya Rai and Sushmita Sen. Their arrival on the pageant stage symbolized the arrival of India on the world stage as an economic power to be reckoned with.

It's what some scholars call the 'economy of sameness' yoking all cultures to the same idea of beauty which is linked to assimilating all countries into the same economic model".

But Yasmin also splices in a quote from Livia Wang who is an Anglo-Chinese teenager. Livia takes a more independent line:

"There was definitely a time when students dyed their hair and wore blue contact lenses, but as China opens up economically, I feel the richer classes are returning to more traditional ideas of beauty – maybe pre-communist imperial times. China is quite proud - they have their own movie and pop stars they look up to. So no I don't think the anxieties of western women are being imported."

Well, I’m with Livia on this one – particularly after the recent sale of a Qianlong period Chinese vase in London for £43 million pounds ($69 million). If you have any further doubts read Stephen King’s most recent article below. And if you want to make some money down the track, start to think oriental!

STEPHEN KING: WHO NEEDS WHO NEEDS WHO?

[by Stephen King, UK Independent, Monday, 22 November 2010]

In some areas of our lives, globalisation is more or less complete. On Friday, for example, I discovered that my birthday had become a major global event. I received unsolicited e-birthday cards from hotels in Qatar and Singapore, and from the Virgin Flying Club. It was all rather anonymous and depressing. In other areas, however, globalisation is in danger of crumbling.

As Ben Bernanke, the chairman of the US Federal Reserve, noted on Friday, "international policy coordination is especially difficult now because of the two-speed nature of the global recovery".

Mr Bernanke is absolutely right. Western nations look at the recent success of the emerging world with a mixture of admiration, envy and anger: admiration, because China, India and other nations have pulled millions out of poverty; envy, because while the global policy stimulus has been very effective in the emerging world, high levels of debt have made it a lot less effective in the developed world; and anger because, for many Western policymakers, Mr Bernanke included, the policies pursued by emerging nations – notably the deliberate undervaluation of exchange rates – are a major threat to sustainable global economic recovery.

To emphasise the point, Mr Bernanke invoked the spectre of the 1930s. "In the period prior to the Great Depression, the United States and France ran large current account surpluses, accompanied by large inflows of gold... Neither country allowed the higher gold reserves to feed through to their domestic money supplies and price levels, with the result that the real exchange rate in each country remained persistently undervalued... These policies created deflationary pressures in deficit countries...which helped bring on the Great Depression".

Today, the equivalents of the US and France are China, Russia and Saudi Arabia – all of which run large current account surpluses, providing the global offset to America's current account deficit.

Like the US and France in the 1920s and early-1930s, they're not terribly keen on either a rise in their exchange rates or, instead, a pick-up in domestic money-supply growth and inflation. And, as with the 1930s, the world's deficit nations are struggling with deflation. Last week, the US published its lowest core inflation rate in over 50 years.

To be fair, Mr Bernanke emphasised that he had no intention of forecasting a return to the conditions last seen in the 1930s. Instead, he wanted to argue that, until and unless the world's surplus nations allowed their currencies to rise, the global economic recovery would remain lopsided, unbalanced and very vulnerable. Eventually, he argued, the two-speed world would become a one-speed world. And he clearly believed that a one-speed world would be stuck in first gear.

It's at this point that I begin to have my doubts. For all the warnings about the inability to sustain "two-speed" growth, a "two-speed" global economy has been the reality for decades.

Since the 1950s, East Asia has sustained a per capita economic expansion faster than on any other occasion in human history. Throughout the last decade, the emerging world as a whole has grown at least three times faster than the developed world. And it is this strong, persistent and seemingly resilient expansion that makes me wonder about one of Mr Bernanke's key conclusions.

In his words, "...a strong expansion in the emerging market economies will ultimately depend on a recovery in the more advanced economies..." Does this still hold true? Not obviously. Two important themes have begun to emerge in recent years.

First, strong emerging-market growth is beginning to undermine growth in the developed world. China's hunger for raw materials – now increasingly being mimicked in other parts of the emerging world – has left commodity prices high despite the depths of the recession in the West. In the "bad" old days, this would have left the West facing significantly higher inflation but, today, the risk lies more with lower output.

Even in the UK, where inflation is too high relative to target, there has been no wage response. Adjusted for inflation, wage growth has been pitifully weak, hindering the pace of both debt repayment and the economic recovery. The level of economic activity remains depressed by past standards.

Second, the underlying drivers of global economic growth are increasingly coming from the emerging world. It's easy enough to caricature China and other nations as being entirely dependent on exports – a view that Mr Bernanke is happy enough to support.

Yet the data reveal a very different picture. Of the 3.2 per cent increase in world consumer spending recorded in 1998, all but 0.3 percentage points came from the developed world.

This year, a very different story emerges. Of the 2.4 per cent overall increase in global consumer spending, more than half comes from the emerging world.
The picture on investment is even starker.

Global growth in capital spending has more than doubled since the late 1990s. At the height of the technology boom, capital spending rose at a 6 per cent annual rate, two-thirds of which came from the developed world. This year, capital spending will deliver a 10 per cent gain. Four-fifths of this rise will come from the emerging world.

We are witnessing a true revolution in global economic affairs. The engine of economic expansion is no longer to be found in the debt-ridden West. Instead, the emerging nations find themselves in the driving seat of global growth. And as their economies increase in size, so they will increasingly trade with each other. Why, for example, would a Brazilian company set its sights on selling to US consumers when Asian domestic demand is expanding so incredibly quickly?

If, though, demand in the emerging world is growing so quickly, why do these countries run current account surpluses? Why do they appear to be saving rather than spending?

The answer relates to supply and demand. Although consumption and capital spending are both rising very quickly, they are not rising quite as quickly as output.
China and other emerging nations are producing more than they are consuming and, hence, running current account surpluses. But does that mean they are dependent on US and other Western consumers?

Not necessarily. It's easier, in fact, to turn the argument on its head. Whether they like it or not, Western consumers are increasingly dependent on the low-cost production and ample credit provided by the emerging nations.

But this sense of dependency doesn't play well in the West. Whether it's Nobel peace prizes, exchange-rate policies or broader economic rebalancing, the West's voice is falling on deaf ears, partly because the leaders in the emerging world are particularly attuned to the stench of hypocrisy.

In the late-1990s, following the Thai baht crisis, the West lectured Asian and other emerging economies over their profligate ways and demanded a period of hair-shirt austerity. With the roles now reversed, the West seems not to have the stomach for the medicine that it once prescribed for everybody else.

Stephen King is managing director of economics at HSBC

Myanmar - Two Lost Decades and the Resource Curse

BRAVE LADY

I was absolutely delighted that Aung San Suu Kyi was released from house arrest on the thirteenth of November. It is a wonderful but fragile happening that amplifies hope for Myanmar in the long run - but her long incarceration and proven vulnerability to re-arrest underscore the ability of the Myanmar Government to behave badly.

As for the lady’s personal courage in seeking wider liberty for her fellow citizens, I imagine that de Tocqueville would be awed by her constancy and shamed by his sexism, even though it is hard to disagree with his general sentiments:

“Men who take up liberty for its material rewards, then, have never kept it for long.... What in all times has attracted some men so strongly to liberty has been itself alone, its own peculiar charm, independent of the benefits it brings; the pleasure of being able to speak, act, and breathe without constraint, under no other rule but that of God and Law.”

Much more mundanely, the episode has set me thinking about my own very brief involvement in the political economy of Myanmar, and how I can even start to consider her level of self-sacrifice.

Let’s take the last first.

We were born within 13 months of each other, and some parallels and overlaps are evident in our academic interests and involvement in international development issues - and in the way that our careers and family lives evolved up to our early forties. But things diverged sharply in 1988, the year that we both returned home to cope with the severe illnesses of our mothers.

She returned to Rangoon in April 1988 and on the 8th of August there was a mass uprising in Burma. Her first public speech on the 26th April called for democratic reform in front of a crowd of half a million people. However, the protests were brutally suppressed by the military and thousands of protesters were killed. In July 1989, she was placed under house arrest for the first time.

In May 1990, Suu Kyi's National League for Democracy wins a landslide election victory but the junta refuses to recognize the results. Despite being awarded the Nobel Peace Prize in 1991, she was not released from house arrest until 1995 and was unable to travel to see her dying husband in 1999 in fear of risking exile.

In September 2000, she was placed under house arrest again after she defied travel restrictions in an attempt to visit the city of Mandalay. Released conditionally again in May 2002, she was imprisoned following violent clashes between her supporters and the government. In September 2003, she was allowed home under house arrest but this became essentially indefinite.

So 22 years passed in which for the most part, she was a prisoner living largely without companionship and communication in a crumbling colonial villa – with, so the story goes, snakes nesting under the staircase. I can only marvel yet again at her fortitude - and at my own relative good fortune in being able to continue to explore the world and build loving relationships during those two decades.

THE MYANMAR STRATEGY STUDY

In July 1997 Burma was admitted to the South East Asian regional grouping ASEAN, and pressure developed within the Asian Development Bank to attempt another rapprochement with the Burmese Junta – particularly as India - one of the Bank’s major shareholders and power-brokers was in the process of developing closer economic relations with Myanmar.

At some point in the later part of 1987, I caught the shuttle bus (almost certainly during, immediately preceding or immediately following a typhoon) from the ADB’s satellite office in Makati (which housed the Economics and Development Resource Center where I normally worked) to travel across downtown Manila for an appointment at the ADB’s HQ in Roxas Boulevard.

The meeting was with Rick Tan, an affable Filipino who was a senior manager in the Country Department. Rick explained that he had cast around for someone to head up work for Bank’s new ‘Myanmar Strategy Study’ and that my name had come up in lights. I was flattered.

But Rick was also a wily operator in the Bank’s bureaucracy and he had chosen craftily. I had the ideal mix of brashness, vanity, skills and dedication to hard work. Nor, as I later found out, could he persuade anyone else in the Country Department to enrol for what was widely regarded as an arduous and potentially pointless exercise.

So it wasn’t long before I pitched up at Rangoon (Yangon) Airport with my lugubrious colleague and friend Steve Whitmer. A local official and a driver had been sent to pick us up and I soon asked whether my counterpart was going to work with us on the Myanmar Strategy Study.

‘We’ve heard nothing about that’, said our host, ‘We were told that you were coming to inspect progress on the Concrete Pipe Factory’. Rick had of course wisely neglected to inform the Burmese Government of the real purpose of our mission.

Not surprisingly, we had to work hard to get meetings and although I was proud for a while of the research and its recommendations, the work came to nothing. Even before the August 1988 Uprising, the Government was becoming ever more difficult to deal with. The homilies about the need for partnership, evolution and participation in the liberalization of the economy and society met stony-faced rejection or wry smiles.

Still I see faint references on the Internet that there had been an attempt to develop a strategy for ADB lending around 1987, with the note that this marked the end of policy dialogue. However, there is an eight page Economic Update that was issued in 2001 that may have drawn on some of the material. Some of it sounds very much like me:

‘This report draws on official data that are of variable quality and are sometimes incomplete. To help better inform those who make policy and other decisions, there is an urgent need to upgrade Myanmar’s statistical system’.

As for the main messages, they are pretty basic:

‘There is a pressing need to increase the flow of public resources to basic health and education services and other areas where developmental needs are not being met.

Investment has remained stagnant for more than a decade at only 13% of annual national production - this is less than a third of the investment levels the rest of South East Asia has managed over the past three decades.

Taxation is amongst the lowest in the world, preventing the government from investing in essential services and infrastructure development. Only three people out of every 20 have access to electricity and the country's road network is totally inadequate. Only one person in 200 has a telephone and most rural areas lack even a single phone link to the outside world.

Government expenditure on education and health is low - amongst the lowest in the world says the bank, while the country's state economic enterprises are inefficient and a drain on the economy’.

Above and between the lines, the ADB unmasked a country that was suffering from massive economic mismanagement, international indebtedness, political instability and social stagnation after decades of military rule - necessitating extensive economic reform and international financial and technical assistance.

Based on a household income and expenditure survey, and using a national poverty
line, the Central Statistical Organization had calculated that 22.9 percent of the population was below the poverty line in 1997. This suggested that by 2001 there were approximately 11.7 million people in Myanmar who lacked basic subsistence.

A variety of social and health indicators also gave cause for concern. In 1999, expected life expectancy for urban males was 61 years. In 1997, the incidence of malnutrition in children under five years of age was reported to be 31 percent and the under five mortality rate was 77.77 per 1000 live births.

Estimates made by international organizations painted an even worse picture. Tuberculosis was still seen as a serious threat to health in Myanmar and malaria control remained a key concern. While there were no official estimates of the prevalence of HIV/AIDs, informal sources suggest that it has reached epidemic proportions’.

Revealingly, when the Economic Update was tabled at a Mekong Secretariat meeting in 2002, the Burmese military intelligence chief Lt General Khin Nyunt was pleased tell a fairy story to fellow Ministers from neighbouring countries. He claimed that the economy had been growing at over 8% a year over the last five years - and had done so without international assistance. He also predicted the economy would continue to grow at 6% per annum over the next five years.

Things have probably not changed that much since 2002 – especially for ordinary people – and have probably worsened in the aftermath of Typhoon Nargis.

Economics Professor Sean Turnell at Sydney’s Macquarie University in Australia, who has been following Burma’s economic situation, earlier was reported early in 2010 as confirming that the Burmese economy has been dragged to abysmal depths by the ruling junta’s mismanagement.

‘Burma, once known as the ‘Rice Bowl’ of Southeast Asia, since 1962, when dictator General Newin assumed power in a military coup, has been facing economic deterioration forcing the United Nations to categorize it among the Least Developed Countries (LDC)’.

OLIGARCHY AND THE ‘RESOURCE CURSE’

Why on earth then doesn’t the Burmese Government do more for its people?

Well, it is a convenient assumption of most western economists that governments are concerned about the welfare of their citizens – but one that is very open to debate in the case of countries like Myanmar.

I caught a whiff of the way the Government thinks in one of my interviews with officials. When I raised the possibility of funding social development by collaborating with foreign investors (under the right conditions) in the export of natural resources, the spokesman quickly put me right about where the preferences and trade-offs lay.

‘We know that everyone wants our resources and that natural resources will be in ever increasing need internationally. We will keep the resources in situ under our control until until demand increases and then we will be able to sell in a rising market'.

Well quite apart from issues of resource substitution and discovery, the statement makes little sense if you accept a pressing responsibility to provide physical infrastructure and social services to today’s citizens and their children – and to generate surpluses for investment in other forms of productive activity that will grow the economy.

The real issue is that the Government is fraudulently farming the economy and the population for the benefit of the members of the military clique and the associated business oligarchy.

Yuki Akimoto puts this into a wider perspective in her 2006 report for the Open Society Institute. ‘Preparing for Burma’s Economic Transition’:

‘Natural-resource-rich countries like Burma are more likely than resource-poor countries to experience flat economic growth, endure greater poverty, incur unwieldy debt, develop authoritarian and repressive governments, and suffer armed conflict.

Receiving significant revenues in payment for natural resources can free a country’s government from the need to collect taxes from its citizens; this severs a vital bond between the citizen taxpayer and the government and dampens the government’s incentives to implement sound economic, social, and fiscal policies in a transparent and accountable manner.

In many countries, revenues from extraction of natural resources actually trigger a decline in living standards and exacerbate social problems. Revenues generated by exploitation of Burma’s natural resources are helping to sustain the country’s military dictatorship, contributing to human rights abuses and conflict, and failing to alleviate the poverty and poor governance most Burmese suffer.

Natural resource extraction in Burma has produced long-term damage to the environment; contributed to a decline in agricultural productivity; aggravated corruption of the government and civil society; exacerbated the illegal drug trade, the exploitation of sex workers, and the spread of HIV/AIDS; and funded warring factions’.

So given impending world-wide shortages of natural resources, it is worth reflecting that, rather than Myanmar evolving into an open economy and a liberal democracy, many more countries may fall prey to military juntas and business oligarchies. Not such an unreal prospect as income differentials rise and it becomes impossible to deliver even in the illusion of rising living standards to the mass of people.

But there again, why stand on a podium in a military uniform half the day with the other members of an obnoxious clique when you can simply juice the rising commodities markets by buying and selling futures?