wealth and poverty of a nation (part 5) final

In conclusion, its in ruling classes own interest to have a libertarian view on regulation, for Pakistan it would make sense for everyone to think about the following:

1- Tighter population control: no matter how much a country produces the population is growing at an unsustainable rate it will eat it self up.

2- education: not just quantity but quality, we have a generation that was raised with out any civic sense, they have no idea what it means to be a democratic capitalist society (in contrast to feudalist), its now ok to take bribes (ok meaning, some one can very casually say that they take bribes amongst family and friends, like there is no 'sharam' (shame), to cut lines, to not stop on stop lights, to splash public restrooms(if you can find any) in the name of ablution with total disregard towards others who might also want to use a dry and clean restroom, anything goes as long as you can say inshaAllah /mashaAllah before and after every sentence that you utter.

3- Wide power base: meaning they should not rely on only a particular segment of the society for legitimacy (not just the rich, not just the literate, not just the young, not just liberals)

4- Genuine power sharing formula that has real representative of the people empowered: it’s not enough to have politicians and businessmen on your side, what’s most important is having people who have really served the community that they represent, people who have a history of social work behind them and so the people they represent really trust them. They represent there people out of there genuine interest in there constituencies well being

5- establish politics as a profession hence an institution: since we are living in the World envisioned by Adam Smith, it might not be in the interest of the people themselves to take the attention of social workers away from there calling, the next best thing is to have professional bodies that regulate a politicians conduct, also folks can take subjects and hence can be trained to think in terms that make there representation more useful for the people and for the government

6- give up control : , there is too much control on everything people do, lets embrace capitalism in its truest form, let people practice there faith and follow morals anyway they like and let businesses do what they do, make money, governments role is to facilitate those things not to raise barriers as Thomas Jefferson once said “That government is best which governs the least, because its people discipline themselves.”

7- create a sense of belonging to a single cause of progress amongst the masses, let them have clear goals and tell them what there role will be, that message can be delivered through the community representatives ( union/labor unions can tell the labors what is expected of them, teachers can tell there pupil what they need to do, teachers can be told by the principle what is needed from them, (see why we need strong institutes?? if nothing else just to better organize the society in to more efficient specialist units).

8- tell the people about the golden age of Islam, and for a change be honest and precise about the details make them realize how great things were but make sure to tell them that those times were great because there was wide spread religious tolerance, appreciation for art and craft, you will see statues of dogs in the veranda of great mosque in Spain you will learn about great Muslim musicians, its all the finer things that make that era a golden era, when people praise the time they praise the civil law and order, the arts and crafts , the city municipality, they don’t praise the role of mullahs or the role of prayers 5 times a day or that every woman use to wear a naqab, or that all men use to ride there pants above there ankles?? those aren’t the reasons why the Muslims in Spain were so successful, I think Muslims of that era were like a blank slate where ever they went they took interest in there surrounding, in all the new things , just like when a kid goes to a candy store, and with a kids learning agility they embraced all that and become a guiding light for the rest of the World of that time, what people need to understand is that one of the things that happened towards the end of the golden era was that Muslim fundamentalists from the northern African countries raided Spain and burnt down as many books as they possible could, they believed that the Muslim rule was crumbling in Spain due to the relaxed religious atmosphere, what they failed to see was it was a system that worked since the 8th century and it could have been the many other factors that were present at that time (too many ambitious Muslim generals, crusades, the awakening of the Christian Europe etc. etc.) Warren Buffett describes three phases in the economic life cycle of a company, first stage is development stage when the company looses money as it develops products and establishes markets, next stage is rapid growth when is company is profitable and generating enormous profits (Islam’s Golden age?) , third is when the company matures and growth rate slows, In the last stage the company suffers decline, I think we as Muslims are right now in the 3rd phase, there are not many great examples of turn around at this stage (IBM is one success story) but still there is, and the only way a turn around is possible is by being more creative and being accepting of the new ground realities.

Empires and nations also go through the same cycle, Greeks, Egyptians, Aztecs, Incas, all were great empires at one time, the Hindu ideology has faced extinction several times during the course of history, but its ability to bring change from with in in response to changing times has made it last this long.

Since we live in the post industrial world we need to learn and apply the new rules of the game, if we try and run a circus with out teaching the dog any new tricks I don’t think there is going to be any crowds looking our way.

Rwanda's genocide spilled over into Congo

Rwandan Genocide was the killing of hundreds of thousands of Tutsis by two extremist Hutu militia groups, the Interahamwe and the Impuzamugambi, The Interahamwe had the backing of the Hutu-led government. A majority of the killings were perpetrated by the Interahamwe. After the genocide many of these malitia members ran in to neighboring Congo and continue to carry out there barbaric actions.

Mike Thomson from Radio 4 interviewed a young Congo mother who had been abducted, raped and forced to kill her own baby, there are a 1000 people killed in any given day in Congo today. We cannot turn our eyes away and let them butcher themselves.

wealth and poverty of a nation (part 4)

As we move forward in time another big reason for Muslims in particular was there inability to realize the importance of strong institutions and professional bodies to promote or protect various aspect of life other then religion, Muslim scholars made huge inroads in science and philosophy, but there knowledge did not help form think tanks that would influence the people long after they were gone, there books were more regarded as badge of honors among the Muslim society rather then a source of useful knowledge, Europeans on the other hand took those books and since they had no reason to associate any reverence or pride to the text , just utilized them objectively taking what was useful (and perhaps proved in an experimental lab) and leaving what they didn’t find of any particular application, there intent to benefit from the real world prizes with in that text was an early sign of entrepreneurial ship.

Another reason for Europe’s emergence was that unlike the constant turmoil faced in the Muslim empires around the world, they were relatively shielded from out side attacks, when they become too rowdy the church was smart enough to raise the banner of crusades to get all trouble makers out of the city and send them away to far off lands to fight and die, I guess the combine effect of 1- yearning for maximum profit, 2- lack of man power (a-due to plague, b-due to crusades, c- due to generally low birth rates) 3-less regulation; was what lead to the industrial revolution, and then nations that jumped on that bandwagon early on had an enviable lead over the nations that didn’t.

In England, even before the start of the industrial revolution it was common to have two levels of workers in and around the city, when the work for the city workers was too much to handle they use to 'outsource’ it to the workers in the suburb, and so there were certain rules of the game being followed way before it became a global phenomenon.

Industrial revolution was the final leap that set Europe way ahead of any thing that any other civilization had ever achieved, this revolution was only a natural extension of all the activities that were already going on in that region, once trade started flourishing demand rose, it rose to such extents that there was no other way but to look for automation, and hence countries who had already hoarded wealth and know-how were able to invest in bigger and better means ( say machines) of production to handle that demand.

As the size of a factory started growing it became almost impossible for the cottage industry to compete with the factory and so the entry requirement in the industrial segment become so high that countries who had earlier missed the boat were left out for good, only now in the 21st century when the demand has again risen so much that the work needs to be outsourced further out is when we see the poor nations getting in to the industrial revolution (and that too mostly thanks to investment from the West).

Unlike the Europeans who had the Greek school of rational thought to fall on, Muslims had no such school, people like Ibn Rushd who tried to bring the Greek philosophy in the Islamic fold was not successful in the long term, due to lack of institutions.

On the political front the big win for the western civilizations was the French revolution where they proved that there was no need for religion to play any kind of a role in governance hence one more layer of regulation removed.

Other then the Muslim Spain, amongst most Muslim countries innovation and research was driven not by reason but by faith, which is to say that if any scholar came to a conclusion which even hint at a difference from what is in the holy book would be put down, and so only that research was sanctioned that yielded results that were in tune with what the theocracy of the time believed was in the book.

As mentioned earlier west was infatuated with mechanical toys and gadgets, reasons for the gadget and machine to flourish was the low birth rate and the plague (which at that time was seen in the Muslim circle as a curse on the infidels) which further exacerbated the labor conditions, This adoption of machines did not happen over night, west was eager to find new avenues for finding cheap (read slave) labor and once production was high there started a search for open markets, the British made it in to a science, for example they took over the Indian Sub-Continent, used the readily available cheap labor to grow tea, made that very nation addicted to the product, and made a fortune doing that, repeated the same formula all over the World (this is where the present day corporations learn there lessons for developing a market for a product) and hence the vicious circle of capitalism saw its roots first in mercantilism/imperialism.

It wasn’t until the 19th century when the sub continent first started using the printing press (I guess this reflects on another aspect of our nature, for any meaningful change we have always looked outward, it was the Mughals who introduced a love of finer things in life to the region and then it was the British who introduced us to the industrial revolution.

wealth and poverty of a nation (part 3)

Eastern civilizations are more willing to comply and willing to make compromises with there surrounding probably because of over exposure to ultra strong leaders (as in emperors) and extremely hot weather (one can wear warm clothes to deal with harsh cold weather, but what can one do to deal with hot and humid weather) the same attitude is seen in there behavior towards following religion (absolute servitude, no questioning, no will to rebel) on the contrary the Europeans even a thousand years ago were seen as vulgar barbaric, ill mannered , loud and of course promiscuous by the eastern civilizations, which if you think about it might be a sign of there free spirit :)

This mind set is somewhat common amongst all humanity, Stanley Milgram in the 1960s proved through well documented obedience studies that human instinct is to not to question higher authority. I think this in turn reflects on the dual nature of democracy, if practiced amongst politically immature people it can yield undesirable results (point in case German Nazis party victory in the mid 20th century ) .Fareed Zakaria (editor Newsweek international) in his book future of freedom discusses why Democracy is not inherently good, I am of the opinion that there is no better political system then democracy given that there are strong institutions that breed great leaders, yes leaders are bred, they are sculpted there innate abilities are cultivated just like pedigree dogs or championships horses, you need a good set of genes to begin with but without the right environment, a dedicated teacher (who knows what he is doing) and the right opportunities there is no leader.

wealth and poverty of a nation (part 2)

wealth is a by-product of progress.

Progress has taken different meaning in different times. Thousands of years ago, the Greeks were considered progressive for there unique approach towards the understanding of a variety of subjects ranging from health, politics, philosophy, etc. Egyptians were once considered progressive for there construction and people(read slave) management skills. Muslims were also once the most progressive force on Earth for there works in the fields of medicine, philosophy and architecture. They were considered the teachers of the World in the post-Roman era.

I think since the industrial revolution progress means the application of science and technology in everyday life to make life more organized, hence freeing up time for more intellectual pursuits.

(have we gone back a full circle? Are we living the Greek philosopher's dream?)

The story goes that on the broad spectrum of time we can see Eastern civilization’s infatuation with empires, we had the Chinese empire, the mogul empire, the ottoman empire , the Egyptian empire etc etc., the last great empire that the Europeans saw was the Roman Empire (the British empire was there more for business reasons then anything else, plus the Western Civilization had already established itself as a progressive power to reckon with by the time the Empire theme emerged, I will also comment on mercantilism and imperialism in a later post), which was essentially different on many levels from its Asian counterparts.

The bad thing about empires is that they tend to regulate all and every aspect of the society which hinders free thinking which in turn hinders innovation, Chinese invented paper, water clock, printing press and so many other things hundreds and thousands of years before anyone else but all there inventions were geared towards the dynasty's rulers and not for the service of common populace, hence no concept of free market economy, anything and everything that the people got was due to the benevolence of the emperor.

Weather was also a factor, in Algeria when the French took over the place, the hot weather made it next to impossible to spend long hours outdoors, working in the fields and even those who did try doing that use to become victims of malaria and so many other diseases, (on a side note the French came over that problem by draining a lot of stagnant water pools no idea why the indigenous didn’t think of it) .

wealth and poverty of a nation (part 1)

picked up a book couple of months back (right now alternating between 'the Warren Buffett Way' and this one) titled 'the wealth and poverty of nations, though I might differ with David Landes's opinion on a few things but generally he makes a sound analysis, in his book he talks about the vast disparity of wealth and progress that one sees between todays developed and not so developed nations. Being from Pakistan, I couldn't help but draw analogies between his reasons for failure of the Eastern civilizations and the state of affairs in Pakistan, I will try and do a series on what I think are issues that threaten Pakistan's present and future in historical perspective (my opinion may seem effected in large by the book in question).

fastest guitar solo 1000 NPS

ok so it turns out the original 1000NPS video on youtube was fake, check out this video where this guy has blown the cover off the fastest guitar solo.

security analysis

these have been testing times for many of us invested in the stock market one way or the other and so this has become an opportunity for me to reflect on my own investing strategy/idiosyncrasy. Lately I have been skimming through works of Ben Graham and Philip Fisher on the behest of a friend of mine, who I respect for his investing acumen and also for sharing his valuable investment ideas with me. I don't think I am any better at understanding intrinsic value or margin of safety than I understood them before but then the way the market has behaved in the last week or so its really hard to find anything that meets the conditions to pass Ben's quantitative analysis. It kind of makes you humble when you look at your portfolio and wonder how much does one really knows about the underlying securities, if nothing else I can at least make out the difference between an investment and a speculation, but then as Descartes reminds us 'It is not enough to have a good mind. The main thing is to use it well.'