Monday, October 30, 2017

Nationalism as an infantile disease

I was a young economist at the International Monetary Fund in the mid-1980s, working on the IMF’s Spanish economic team. A group of us would travel to Madrid periodically to consult with the government on their economic policies and to issue reports that identified the main economic challenges facing the authorities and to take a thorough look at what was being done to address them. The early part of that decade had not been an easy period for Spain. Major sectors of the economy (e.g. steel, shipbuilding) were in crisis due to the emergence of lower cost producers in other parts of the world. Economic growth had been anemic and the rate of unemployment was one of the highest in Europe. By the time I joined the Spanish team in 1985 there was a serious program of economic reforms underway that sought to prepare the Spanish economy for its forthcoming entry into the European Community, as it was then called. What impressed me the most during these visits was the extent to which the prospect of entry into the EU was forcing the government to extend the focus of economic policies well beyond issues of macroeconomic stability to the entire range of sectoral and institutional reforms, the aim of which seemed to be the wholesale modernization of the Spanish economy. I remember, in particular, reforms aimed at liberalizing the inflow of foreign direct investment to facilitate the integration of the Spanish economy with the rest of Europe and, indeed, the world. I understood that, done well, this would lead not only to massive inflows of non-debt capital, but also to the arrival of know-how that would transform the country’s ageing productive apparatus. Coming from Latin America, then in the middle of a fearsome external debt crisis which led to a lost decade of virtually no economic growth, I remember thinking how fortunate the Spanish were: they would join a rich-country club firmly committed to democratic principles and willing to help them make that transition successfully.

Spain joined the EU on January 1, 1986 and over the next two decades it was one of the best performing economies in Europe. In the years following entry into the EU Spain not only received massive inflows of foreign capital as foreign firms sought to benefit from Spain’s lower labor costs and free access to the large European market, but was also the recipient of large and generous transfers from the EU budget, to finance regional development, including an upgrading of the country’s then decrepit physical infrastructure. Needless to say, these transformations affected, to a greater or lesser extent, all the regions of the country including, of course, Catalonia. Implicit in all of this was the exercise of an important principle embedded in EU law: the richer member states transfer resources to the poorer members as part of a process of narrowing the income divide among countries and as a result of which intra-country inequality in the EU was reduced in a significant way.   By the late 1990s I had left the IMF but continued to follow developments in Spain with keen interest and visited the country and its many beautiful regions on multiple occasions. For me the main lesson from joining Europe was more political and psychological than economic. It was the idea that Spain’s membership in the EU magnified its international influence, resulted in major gains in efficiency and was gradually leading to a change in people’s mental framework and psychological reflexes; the government in Madrid and major portions of the Spanish population seemed to be increasingly comfortable with the idea that their country was firmly embedded in the democratic traditions of its EU partners, including respect for the rule law and a fledging sense of European citizenship as a primary form of identification.

Albert Einstein, who had a visceral dislike for the deep-seated nationalisms that had caused such grievous damage during the 20th century, once said that nationalism was an “infantile disease”, the “measles of mankind.” It was undesirable and fundamentally a sign of immaturity. He agreed with Isaiah Berlin, who believed that it was “a passing phase due to the exacerbation of national consciousness held down and forcibly repressed by despotic leaders” and that like a “pathological inflammation” it would in time abate as the oppression that had induced it in the first place would itself disappear. On many visits to Barcelona over the years I often felt the fundamental incongruity of yearnings for “independence” in certain segments of the population, at a time when the region was very much part of the most ambitious and imaginative project of economic and political integration in the world: the European Union. Having benefitted from the generosity of German and Swedish and other wealthy member taxpayers which had helped turn Catalonia into a dynamic corner of the Spanish economy, these same people resented the fact that, in reflection of their new found prosperity, they were contributing budgetary resources to some of Spain’s poorer regions. But, more importantly, I had the sense that those who argued for leaving Spain and becoming an independent republic suffered from an unduly enhanced sense of victimhood, the idea that the interests of the region, to paraphrase Berlin, must rise to the supreme value “before which all other considerations must yield at all times.” I could not help thinking: in what century are these people living!
  
The psychologist Erich Fromm referred to nationalism as a form of incest, idolatry and insanity. Bertrand Russell, who thought of nationalism as the manifestation of herd instinct once wrote:

“It is rather odd that emphasis upon the merits of one’s own nation should be considered a virtue. What should we think of an individual who proclaimed: ‘I am morally and intellectually superior to all other individuals, and, because of this superiority I have a right to ignore all interests except my own?’ There are, no doubt, plenty of people who feel this way, but if they proclaim their feeling too openly, and act upon it too blatantly, they are thought ill of. When, however, a number of such individuals, constituting the population of some area, collectively make such a declaration about themselves, they are thought noble and splendid and spirited. They put up statues to each other and teach schoolchildren to admire the most blatant advocates of the national conceit.”

Nationalisms will gradually die because, faced with a range of serious global problems, from climate change to nuclear proliferation to poverty and inequality, in coming years we will be forced to strengthen our mechanisms of international cooperation and to learn to think, in an increasingly interdependent world, about the interests of the whole world, not this or that particular nation or region. Our ability to find solutions to these problems will be based on a growing acceptance of the oneness of mankind, of our coming together to act with a unity of purpose. We can choose to be part of this inevitable process of global economic and political integration, or to yearn in vain for a world of limited loyalties that is rapidly disappearing. Hopefully sooner rather than later our Catalan brothers and sisters will have to awaken to this fact.

Monday, May 29, 2017

Jonathan Schell and the End of the Cold War

A few months ago, in the course of trying to reestablish contact with a dear friend, Jonathan Schell, I learned, to my consternation, that he had passed away.  It was more than a shock, after the many years of silence that had intervened between us.  It felt like an immeasurable loss, not just to me personally but to the world.

I first met Jonathan in 1986 when I invited him to the International Monetary Fund to speak to a group of about twenty colleagues about his brilliant book The Fate of the Earth. I had read it years before and had been impressed not only with the content—a clinical analysis of the after-effects of a limited nuclear war between the two major powers— but also by the elegance of the writing, the beauty of the logic, and the power of Jonathan’s arguments. He combined an incisive mind with an exceptionally articulate pen.

 “Usually, people wait for things to occur before trying to describe them,” he writes in the book’s opening section. “But since we cannot afford under any circumstances to let a holocaust occur, we are forced in this one case to become the historians of the future — to chronicle and commit to memory an event that we have never experienced and must never experience.”

Jonathan made a deep impression on us during that 1986 visit.  We were bowled over by his luminous mind, and his wholly unpretentious character which seemed impervious to the dangers of self.  We invited him back in 1988 and once more in 1990, in order to listen to him expand upon the themes he had first touched upon in The Fate of the Earth.  On each occasion his words moved us as being entirely free of the usual egoism to which the famous often fall prey.

The next time I saw Jonathan was in 1993, in Moscow, where I had been posted as resident representative for the International Monetary Fund. My wife, Mirta, and I together with our two teenage children, Olivia and Sebastian, had moved to Russia a few months after the collapse of the Soviet Union in early 1992 and Jonathan came and stayed with us there on two occasions. The issue which seemed to occupy his mind most during his Moscow meetings—some of which I had the privilege to attend—was what had led to the demise of the Soviet Union.  What were the factors, what were the reasons, what were the forces and influences and conditions that had brought about the extraordinary collapse of a seemingly solid system of governance?

One night, during that first visit, we organized a special gathering at home, so that Jonathan could speak to a select group of prominent Russian thinkers and experts, including several who had been closely associated with and supportive of Mikhail Gorbachev’s policy of glasnost or “opening up.” It was a memorable evening, not only for the quality of the discussion, but also for the warmth and deep respect shown to Jonathan by the group. In the course of the evening, two of the most eminent Russians among them shared some particularly poignant memories with us.  One was a leading Dostoevsky scholar and former member of the Supreme Soviet (the highest legislative authority during the time of the Soviet Union); the other was a senior member of the Duma (the Russian parliament), a former ambassador and significant figure in Russia’s foreign policy establishment.

They told the assembled guests that when The Fate of the Earth had been published in the West in 1982, the Central Committee of the Communist Party of the Soviet Union had ordered the book to be translated.  One hundred, carefully numbered, top-secret copies were then printed and circulated, on a strictly “need-to-know” basis, among leading members of the Soviet political and military establishment. These two gentlemen managed to get hold of a copy from a friend who had temporary access to it, and locked themselves up for a weekend in a dacha outside Moscow to read it from cover to cover. It was an experience they described as being utterly mind-expanding and soul-stirring. They told us that in the years immediately following, these one hundred copies as they made the rounds, contributed to an unprecedented degree in transforming the mindset of top policymakers. They were read by the top echelons of Soviet power, many of whom began to recognize as a result the futility of the arms race and the extent to which a Soviet economy based on an oversized military industrial complex was unsustainable. Jonathan’s arguments made them see that even in the best of circumstances, the arms race was a recipe for continued economic misery and, at worst, it would lead to the nuclear annihilation of mankind.

Jonathan visited us in Moscow for a second time in 1996 and my wife and daughter were guests at the Schells’ home in New York several years later, when Mirta was representing the Baha’i International Community at a gathering of the United Nations Commission on the Status of Women. And that was the last time we were to have the privilege of meeting this great man before he died of cancer in 2014, aged 70.  Margalit Fox in her obituary written for the New York Times on March 26 of 2014, spoke for many of us when she said:
“With The Fate of the Earth Mr. Schell was widely credited with helping rally ordinary citizens around the world to the cause of nuclear disarmament. The book, based on his extensive interviews with members of the scientific community, outlines the likely aftermath of a nuclear war and deconstructs the United States’ long-held rationale for nuclear buildup as a deterrent.”
While I regard our friendship as one of our family’s blessings and while he will always remain in my mind as an exemplar of the very best of America——I do have one regret. Jonathan deserved greater, world-wide recognition than he was given. He was worthy of the Nobel Peace Prize. And had I been in a position to do so I should have moved (as we say in Spanish) “earth and heaven” to bring his writings to the attention of the Committee in Oslo. In the minds of those of us assembled in Moscow that night in 1993, few deserved such recognition more than Jonathan. At that moment of history, at any rate, he played his part in saving us from collective disaster.  Let us pray that we will not regret our collective failure to heed his warnings in the future.
“We have organizations for the preservation of almost everything in life that we want but no organization for the preservation of mankind. People seem to have decided that our collective will is too weak or flawed to rise to this occasion. They see the violence that has saturated human history, and conclude that to practice violence is innate to our species. They find the perennial hope that peace can be brought to the earth once and for all a delusion of the well-meaning who have refused to face the “harsh realities” of international life—the realities of self-interest, fear, hatred, and aggression. They have concluded that these realities are eternal ones, and this conclusion defeats at the outset any hope of taking the actions necessary for survival.”
Jonathan Schell, The Fate of the Earth*

 
*Schell, Jonathan. 1982. The Fate of the Earth, Jonathan Cape, London, p. 185.

Thursday, March 16, 2017

Equal Opportunity, Equal Outcomes?


Understandably, the literature has often seen gender inequality as a human rights issue. Article 7 of the Universal Declaration of Human Rights introduces the concept of equal protection under the law. When governments use the law to discriminate against women in some way, to create a legal environment that places her at a disadvantage with respect to men, they are clearly in violation of the letter and the spirit of the Declaration.

However, gender inequality obviously has an economic dimension as well. The Women, Business and the Law project (WBL) at the World Bank has, over the years, built up an impressive database that identifies the restrictions faced by women embedded in the law (the Constitution, the Civil Code, family law and other legal instruments) in 173 countries. From this data we have learned, for instance, that the higher the number of such restrictions in a country, the lower the secondary school enrolment rate of girls relative to boys; the bigger the wage gap between women and men; the lower the share of women-owned businesses in the formal private sector; and the lower the labor force participation rate of women relative to that of men.

This latter observation is particularly important because a key driver of economic growth associated with the narrowing of employment gender gaps has to do with bargaining power within families. Not surprisingly, when women work and earn income, they will be more empowered within the home. Beyond the direct personal benefits to her, the economics literature has identified a number of other favorable effects such as higher savings, more productive investments and better use and repayment of credit, all of which are beneficial for economic growth.

Other studies have shown that with greater female power within the household there will be higher investments in the health and education of children, thereby planting the seeds for the accumulation of human capital in the next generation.

One area that has received increasing attention in recent years has to do with the economic dimensions of violence against women. Quite aside from the physical, emotional and psychological costs, violence can also have tangible economic consequences, ranging from women’s reduced capacity to function in society, from permanent disabilities and trauma costs to lower economic productivity and the increased fiscal burden placed on public services and employers. Data from a large number of countries indicate that the economic cost of intimate partner violence is typically between 1 to 2 percent of GDP.

 So violence against women is not only a serious crime, but a critical factor influencing a woman’s financial autonomy and agency; it has a direct impact on her ability to seek economic opportunities and stand on a par with men in society. Beyond the human rights perspective, there is strong social and economic rationale for ensuring that women are protected from this pervasive historical form of inequality. In recent years the WBL project has expanded its database to include data on domestic violence and sexual harassment and other forms of abuse. A review of this data suggests at least three important insights:

•    Life expectancy for women is higher where they are legally protected from domestic violence. Considering that as recently as 1990 there were only a handful of countries in the world where such legislation existed, one cannot help but think about a century of premature mortality of women associated with the lack of elemental legal protections, most often from intimate partners. A recent paper attempts to quantify the extent of excess mortality associated with the absence of laws addressing domestic violence against women and the results suggest millions of casualties for 95 economies between 1990 and 2012.

•    Over the past 25 years the number of countries introducing laws addressing domestic violence has risen rapidly from close to zero to 127 today. Significantly, this increase has been encouraged by international and regional human rights conventions and campaigns. This is encouraging, as there is at times skepticism about the real world impact of UN declarations or other multilateral initiatives. The WBL data clearly shows, for instance, that within 5 years following the adoption of CEDAW (Convention on the Elimination of all forms of Discrimination Against Women) in a particular country there is a significant reduction in the number of restrictions embedded in the law against women.

•    There is much that remains to be done. There are at least 46 countries that have no laws on domestic violence (e.g., Iran, Egypt, Afghanistan, Russia, Tanzania), many of them in Sub-Saharan Africa and the Middle East and North Africa regions. Furthermore, there are various forms of domestic violence (physical, emotional, sexual, financial/economic) and coverage of the legislation, where it exists, is spotty. Economic violence, for instance, is rarely covered.

Despite the above progress and the growing recognition that societies pay a heavy price for the absence of laws protecting women from violence--from direct costs in terms of health care, social services, police deployment, court and incarceration expenses, to indirect costs in terms of time lost from paid work, second generation effects of violence on children, as well as lost income from premature deaths—there is resistance in many countries to move more aggressively in extending such protections to women. Women’s lack of political empowerment in many countries, for instance, has sometimes led to weak implementation of existing legislation or resistance to the introduction of new legislation due to low levels of female representation in legislative bodies. A recent example of a setback in this area is the adoption by the Russian parliament of a provision which de-criminalizes physical abuse within the family against intimate partners, making domestic violence an administrative offense and reducing the penalty for domestic violence for first time offenders to an administrative punishment.

Nevertheless, there is a shift underway in the debate and the attitudes about the consequences of gender inequality. In particular, we have begun to move away from an emphasis on the desirability of equality of opportunities (e.g, the removal of barriers preventing women to vote) to the need to ensure equality of outcomes (e.g. the speedier elimination of the multiple hidden barriers which have curtailed women’s political empowerment). Accordingly, the Women, Business and the Law project has moved beyond simply documenting the legal restrictions women face by exploring how such restrictions have disempowered women as evident in the 2016 report. Along the way, more and more people have come to realize that gender equality need not be a zero-sum game implying loss for men, but rather that gender equality is about moving to a stage in human evolution where being born a boy or a girl does not determine anymore one’s rights and opportunities to develop one’s human potential.