Unleashing African Ingenuity

5 observations I made while in Africa related to I.P.E.:

1. There are many intelligent people with many ideas for business startups.
2. There is a lack of know-how in terms of actually starting a business.
3. There is a lack of capital and credit availability, making it next to impossible to put a plan into action.
4. The access to Internet is very limited, especially in the villages.
5. In the rural areas, a "business" typically is little more than a glorified lemonade stand.

According to the BBC, the workplace of Africa's future might consist of technology hubs with wifi connection and meeting rooms, where many entrepreneurs can sit side-by-side and develop a business plan or continue their business in a more legitimate setting. Not only does having an "office space" give a business legitimacy, causing investors from around the world to be more likely to divulge their funds, it also gives entrepreneurs a system of support. Some of these tech hubs that have already successfully taken root, such as Hive CoLab, coach business people on how to protect their intellectual property. They also offer entrepreuners a chance to collaborate.

I think these cooperative tech hubs are a great way to encourage innovation and economic growth in Africa. Having a community of support is crucial for an entrepreneur. Another crucial component to starting a business: soliciting and maintaining investors, which is possible through reliable access to the Internet.

In my village in Ghana, Vodaphone, a major African telecommunications company had already built a relatively elaborate compound containing hundreds of computers, wifi, and the only airconditioning for miles. Though it seemed that many of the locals were simply using the wifi for Facebook, chatting, and YouTube, an ambitious Ghanaian may seize the opportunity to connect with investors from around the world. Nevertheless, Vodaphone's purpose for building the compound was not explicitly related to supporting entrepreneurs, and I think that having a tech hub with this explicit purpose would improve the success rate for startup businesses, simply due to the community of support.

Trade War?

The trade disputes between the U.S. and the E.U. over illegal subsidies to the aircraft-making industry continued today with the E.U. appealing to the W.T.O. for permission to impose $12 billion in annual trade sanctions against the U.S. for illegal Boeing subsidies. They claim that this steep punishment would make up for the unfair advantage that the U.S. has enjoyed the past several years. This latest step in the seven-year dispute leaves many, including the NY Times, wondering if we are headed for "an open trans-Atlantic trade war." In fact, the U.S. has said that it could impose up to $10 billion in trade sanctions against the E.U. for their (illegal) subsidies to Airbus. While the individual governments are ready to impose heavy sanctions, it seems that both Boeing and Airbus would like to negotiate. Hopefully this sentiment will prevail. We will have to continue to watch this story... The E.U.'s request is expected to be formally submitted to the W.T.O. on October 23.

Creativity Conference

I found this blog on the NY Times website about a technological creativity festival that recently took place in Oregon. At the conference, many developers of new technology--technology that will serve to connect people all over the world--spoke. However, the emphasis of the conference was NOT on the technology itself, but rather on the people that have used their creative abilities in developing and/or using new technology. According to the article, the festival was meant to "emphasize a new economy that is being reshaped."

I think this directly relates back to Friedman's flat world argument. The Internet connects people from all over the world, and allows people to fully explore and utilize their creativity, regardless of location. In this sense, the economy indeed is being reshaped. The article goes on to describe the new economy: "It defies tradition and prizes creativity, seeks direct contact with customers and an audience, and formalizes that process and scales it, so that instead of asking your relatives to finance your next film, people can make use of the network effect and generate support, social and financial, from a large network of people online." Indeed, the Internet not only cuts out the middle man, it exponentially expands the market.

The market can only be expanded to the point that people know about, have access to, and understand the new technology. Though the conference provided entertainment and a forum to celebrate creativity, it also posed these issues to conference-goers. Ensuring that people from all over the world are able to use new technology may undermine the relative dominance of the U.S. and other world powers, but more importantly, in the long-term all will benefit from a free flow of ideas and creativity.

Current State of the International Economy

As we pointed out in class the other day, it is important to pay attention to the date on which the author wrote the article/book we are studying. Because the two main texts we have been reading (Wolf and Stiglitz) were written 7 and 5 years ago, respectively, I wanted to see if there have been any reports published recently about whether the international community is tending toward protectionism or open trade. Unfortunately, according to the WTO, protectionist policies are on the rise.

This summer, The Economist published an article entitled "Protectionism Alert." (http://www.economist.com/node/21557766).  The article explained that though many policy makers understand that protectionism contributed to the 1930s Depression, they continue to enact "short-term" trade barriers that they think will not have a major impact on the global economy. But the aggregate of all of these "inconsequential" barriers does impact the overall international economy negatively. According to a more recent article in The Economist, world trade declined sharply in 2011 (http://www.economist.com/node/21562221). And no doubt due, at least in part, to protectionist policies, "the outlook is pretty bleak." The WTO is concerned, and we should be too.

Though the members of the G20, who together make up for 85% of world GDP, claim to support an open market, their actions often do not reflect their words. Nevertheless, According to the article, the "HSBC predicts that world trade will grow by close to 90% over the next 15 years—advancing modestly at first, because of the euro crisis, then vigorously." Let's hope that policy makers heed this warning from the WTO so that this prediction can come true.

Right Does NOT Make Might

Though some of Wolf’s passages seem overly biased toward western values and culture, (i.e. “Dynamism was the product of institutions, practices, and attitudes the emerged in western Europe over an extended period” (Wolf, 44)), I tend to agree with his implied view that American capitalism, somewhat moderated by features of a developed country, such as the welfare system, is the best, or at least “least worst” of the potential economic systems. I guess my public education, at one time promulgated by Thomas Jefferson as the way to perpetuate American democracy, has done its job. I am sufficiently patriotic. Nevertheless, I realize that America is far from having a completely liberalized economy. As I talked about in my previous post, I believe that a laissez-faire economy is ideal, but there are many complications in our imperfect world that make economic regulations necessary. America has a long ways to go to try to find the perfect balance between too much economic freedom and too much regulation, but I believe that America is ultimately on the right track.

After reading Friedman’s article “It’s a Flat World After All”, it struck me that we, as American citizens, have generally become too content in our assumption that America will remain a world leader. I think most Americans take for granted that liberty and equality, in the form of a democratic political system—or what we typically consider the American way— will continue to spread throughout the world, and as a result other countries will continue to bow to us, forever grateful to us for our contributions to humanity. As Friedman acknowledges, this is far from reality. The Internet and other communication technology allows ideas to disseminate throughout the world, in essence opening up the “marketplace of ideas” virtually everywhere. The playing field is being leveled, and being born in a developing country no longer excludes you from the possibility of contributing to innovation and technology.

The leveling of the playing field began many years ago. In fact, in my class on “Lincoln’s Statesmanship,” we have already read a speech from Frederick Douglass this term in which he describes the effects of globalization in 1857! : “Walled cities and empires have become unfashionable. The arm of commerce has borne away the gates of the strong city. Intelligence is penetrating the darkest corners of the globe. It makes its pathway over and under the sea, as well as on the earth. Wind, stream, and lightning are its chartered agents. Oceans no longer divide, but link nations together. From Boston to London is now a holiday excursion. Space is comparatively annihilated. Thoughts expressed on one side of the Atlantic are distinctly heard on the other.”

Though globalization was very pronounced during this period, as it is now, the sentiments of many Americans were different.  Instead of believing that the United States should be a leader in the global market economy, as many do now, there was a sizeable minority during that period that did not believe that there should even be a union of states. Many abolitionists believed, and reasonably so, that the slavery—a practice made possible through globalization—was such a gross atrocity that it would be better for the world if America did not exist, let alone lead. In fact, William Lloyd Garrison was one of the abolitionists who promulgated the idea that might, in this case American preeminence on the world stage, does not always make right.

The idea that might makes right—but only in the state of nature—was championed by political philosopher John Locke. He believed that without a system of government, if men are left to their own devices, might would determine what was right. However, he did not believe that this was a practical or desirable way to establish what is right, so he theorized that men could, and did, give up some individual rights in order to form a social contract to protect them against each other and foreign entities. When law ruled, instead of men, the minority could theoretically prevent the majority from encroaching on their rights. Under the rule of law, right could, theoretically, make might.

This principle was the basis for Abraham Lincoln’s proclamation in 1860: “Let us have faith that right makes might, and in that faith, let us, to the end, dare to do our duty as we understand it.” This statement clearly shows Lincoln’s opposition to a popular ideology of the time—popular sovereignty, or unfettered majority rule. People who advocated popular sovereignty during that time period wanted each of the states to have the power to decide whether there would be slavery in that particular state. Lincoln believed that there were some things—such as human captivity—there were inherently wrong and diametrically opposed to the principle of equality set forth in our nation’s Declaration of Independence. In other words, there are some things that were so wrong that might—or the majority—could never make right.  In cases like these, Lincoln hoped that right would make might—the wickedness of slavery would cause a majority to unite in support of an end to slavery, because he realized that the current majority--or might--was not making right.

To go even further with the notion that might doesn’t necessarily make right, William Lloyd Garrison, a leading abolitionist, went so far as to say, “Might is never right, excepting when it sees in every human being, ‘a man and a brother,’ and protects him with a divine fidelity.”

Though globalization was quickly growing in 1860 as it is now, I think our debate needs to change, and Friedman’s article addresses the contemporary issue that many have overlooked: It is no longer a debate about whether might makes right, it is a matter of whether what many Americans consider right—the principles of liberty, equality, democracy, capitalism, etc.—makes might. America is quickly losing its dominant position in the world, and I believe, as does Friedman, that we are not responding to the changing times. The fact that many Americans likely believe that the American Way is the best way, does not ensure that America will continue to lead on the world stage. Though right made might in Lincoln’s day, we need to recognize that on the modern-day world stage, right does not, it itself, make might, and move forward with provisions—such as measures to increase educational effectiveness (like I talked about in the previous post)—that will ensure that America remains a world leader.

Combating the Effects of Offshoring through Education

In his article "Offshoring: The Next Industrial Revolution," Alan S. Blinder posits that it is not necessarily the low-skilled jobs that will be offshored in the future. He predicts that jobs that can be done by means of communication technology anywhere in the world are more likely to be offshored from the developed countries to the developing countries than service-sector jobs that must be (or preferably are) done face-to-face. He does not think that the exponential increase in offshoring is, in and of itself, a problem for developed countries, such as the U.S., rather he thinks that how developing countries choose to manage it (or not manage/ignore it) will cause problems for their domestic economies, and the international economy as a whole.

Blinder emphasizes the importance of reforming the American educational system to proactively prepare for future offshoring. He believes the solution is not necessarily more education; some of the face-to-face jobs that he predicts will stay in the U.S. are low-skilled jobs, such as taxi driving, cleaning, and crane operating. He states, "In the future, how children are educated may prove to be more important than how much" (Blinder 125). I think this intriguing statement requires further discussion.

As a student at a liberal arts college, I have at times questioned the practical application of some of more theoretical classes that I have taken. When I talk with some of my friends from high school who have already completed technical/vocational school for their area of interest and have started working full time at jobs that they love, I sometimes wonder whether a significant number of students at 4-year universities are wrongly advised to get their Bachelor's Degree.

This idea is the premise behind the "UnCollege" movement: http://www.uncollege.org/manifesto/. The members of this group argue that many self-motivated individuals are actually held back from truly furthering their education when they enter the university setting. Instead, they believe that many young people would be better off using the money that they would spend getting a degree to start their own businesses. This entrepreneurial spirit would no doubt help America's economy.

More education is not necessarily better. Not only is the cost of education in America inflated, (one of my friends is considering the possibility of attending graduate school in Zurich, Switzerland because it is approximately $1000 per year... Though education in Switzerland is highly subsidized, there has to be some middle ground between highly inflated and highly subsidized education...) it is sometimes wasted. Because the American joblessness rate is so high, many college graduates simply enroll in graduate school or law school to bide their time before entering the job market. This phenomenon is no doubt contributing to the high job dissatisfaction rate among lawyers.

I think Blinder would agree that their should be more than one "conventional" track for education. People have different skills and abilities, and as such, their should be different educational programs with varying curricula and durations. If this more practical educational atmosphere is actualized, America will have a more efficient transition into the third Industrial Revolution--that involving information technology and offshoring--that Blinder predicts will happen.

The Balancing Act: The Greatest Challenge Facing Leading Countries

As the debate turns from whether or not globalization should happen to how to manage the globalization that is happening, the leading countries of the 21st century have a great challenges to overcome. Not only do they have to contend with the misinformation, miscommunication, and misunderstanding that is inherent whenever one engages in cross-cultural commerce, they have to balance the welfare of their own domestic population with the desire to lead the charge of human progress that is occuring by way of globalization.Though misunderstandings can be remedied through ambassadors and more frequent contact with other cultures, I believe the leading countries will continue to struggle to juggle leadership in the global economy with the welfare of individual citizens.

This balance has been elusive throughout U.S. history. For instance, Wolf criticizes the lack of "will and wisdom" that the U.S. displayed in the aftermath of the First World War (Wolf 128). He cites the protectionist tendency of the U.S. as evidenced by the Smoot-Hawley tariff. However, the U.S., in reverence to its revolutionary leader George Washington, was simply abiding by the isolationist policies that had worked so well for the first 150 years of its existence. The U.S. realized that foreign entanglement had ruined and/or ended the lives of many of its valued citizens, and it wanted to prevent this in the future by protecting itself from the outside world. This is a natural response, but Wolf would say that protectionist policies like these led to the Second World War because without the ability to trade with the mega-nation of America, other countries, such as Germany, suffered.

It is not only developed nations that have problems balancing involvement in foreign trade with protecting and promoting general welfare among its citizenry. The Gold Coast (modern-day Ghana) permitted, and even asked for Britain to colonize it to prevent an all-out war from occuring between the Ashantis and the Fantis in the mid-nineteenth century. This allowed Britain to further involve themselves in, and expand, the West-African slave trade. Though the slave trade had been going on for some time, Britain's colonization of this area definitely opened the Gold Coast up to more exploitation. It simply didn't have the government, infrastructure, or educational systems in place to prevent abuse. On the one hand, Britain's colonization prevented much of the bloodshed that may have occured between the Ashantis and the Fantis, but it also hurt the Gold Coast's development in the long run. Modern-day Ghana did not become independent until 1957, though it was supposed to gain its independence long before that. It had been subject to the whims of the British for much too long. Even today, though Ghana is developing rapidly due to the development of the oil industry, its growth is still somewhat retarded due to globalization. For instance, many of its educated citizens leave the country to go to Europe or America after they have finished their education in Ghana. This brain drain severely impedes the progress of Ghana in relation to other countries because not only has it lost its greatest minds, other countries have gained these great minds.

However, Ghana and other developing countries have a somewhat easier task than the developed countries because they are not expected to lead other countries in the pursuit of an open global market. For the most part, its domestic policies, and even foreign trade policies (tariffs, etc.) have little to no effect on the global economy. In contrast, American and European domestic and international trade policies can have a huge effect on the markets of other countries. For instance, if America decides to substantially increase its trade barriers or its agricultural subsidies, other countries will have no choice but to pursue more protectionist policies as well in order to protect their own markets. The decisions of a leading developed country not only can serve to further promote or hinder the spread of globalization and open-market policies within the country itself, but also across the globe. This responsibility should not be taken lightly. Developed countries need to understand their potential impact and analyze the affect of domestic and foreign trade policies in light of not only their own circumstances, but also in light of global circumstances. Failure to do so can suspend or reverse the gradual, but continual progress that has been made throughout human history to increase the standard of living. The day has come and gone that America and other leading countries were able to take a break/retreat from the global community and, once sufficiently isolated, contentedly sit back and watch the world move.

Leading countries, like all other countries, have a responsibility to their citizenry to pursue policies that will promote domestic peace and prosperity. But leading countries, unlike all other countries, have an additional responsibility that cannot be overlooked: leadership of the management and spread of globalization. While developing countries may be able to pursue individual interests without much though of how certain policies will affect the global community, leading countries must attempt to fully consider all consequences and ramifications of their actions. For instance, if America were to eliminate some or all environmental protection laws in an attempt to attract more corporations, other developed countries would then feel the need to do so in order to compete in the global market. Then the world would be off to a fast start in the global race to the bottom. Leading countries need to consider the affect their actions will have on the rest of the world, while at the same time pursuing favorable a favorable domestic economy and environment.