Shunya's Notes

The Dark Side of Dubai

British journalist Johann Hari goes to the desert kingdom and finds a sea of disturbing stories:

There are three different Dubais, all swirling around each other. There are the expats...; there are the Emiratis, headed by Sheikh Mohammed; and then there is the foreign underclass who built the city, and are trapped here. They are hidden in plain view. You see them everywhere, in dirt-caked blue uniforms, being shouted at by their superiors, like a chain gang – but you are trained not to look. It is like a mantra: the Sheikh built the city. The Sheikh built the city. Workers? What workers?

Every evening, the hundreds of thousands of young men who build Dubai are bussed from their sites to a vast concrete wasteland an hour out of town, where they are quarantined away. Until a few years ago they were shuttled back and forth on cattle trucks, but the expats complained this was unsightly, so now they are shunted on small metal buses that function like greenhouses in the desert heat. They sweat like sponges being slowly wrung out.

Sonapur is a rubble-strewn patchwork of miles and miles of identical concrete buildings. Some 300,000 men live piled up here, in a place whose name in Hindi means "City of Gold". In the first camp I stop at – riven with the smell of sewage and sweat – the men huddle around, eager to tell someone, anyone, what is happening to them.

More here (and some videos: one, two, three). For this article, Hari was banned from Dubai and his writing blocked from access there.

No Longer Golden

Paul Harris on the dire straits of California:

California has a special place in the American psyche. It is the Golden State: a playground of the rich and famous with perfect weather. It symbolises a lifestyle of sunshine, swimming pools and the Hollywood dream factory.

But the state that was once held up as the epitome of the boundless opportunities of America has collapsed. From its politics to its economy to its environment and way of life, California is like a patient on life support. At the start of summer the state government was so deeply in debt that it began to issue IOUs instead of wages. Its unemployment rate has soared to more than 12%, the highest figure in 70 years. Desperate to pay off a crippling budget deficit, California is slashing spending in education and healthcare, laying off vast numbers of workers and forcing others to take unpaid leave. In a state made up of sprawling suburbs the collapse of the housing bubble has impoverished millions and kicked tens of thousands of families out of their homes. Its political system is locked in paralysis and the two-term rule of former movie star Arnold Schwarzenegger is seen as a disaster – his approval ratings having sunk to levels that would make George W Bush blush. The crisis is so deep that Professor Kevin Starr, who has written an acclaimed history of the state, recently declared: "California is on the verge of becoming the first failed state in America."

More here.

The Merchant of Weapons

The NY Times reports that the leader of the free world accounted for 68.4% of all international arms trading in 2008, netting $37.8 billion, about $30 billion of it from the developing world. Thirteen of the top 25 buyers "were either undemocratic governments or regimes guilty of major ongoing human rights abuses," often with weak internal arms controls. A New America Foundation report says, "U.S. arms transfers are undermining human rights, weakening democracy and fueling conflict around the world." The top five nations that profit from the global arms trade happen to be the five original members of the nookiller weapons club: USA, UK, France, Russia, and China. They are also the only five permanent members of the UN Security Council, and the only five with veto power. No pattern there. 

Even a US President, Jimmy Carter, noted as far back as 1976, "We can’t have it both ways. We can’t be both the world’s leading champion of peace and the world’s leading supplier of arms." Now one might say that the US is just fulfilling demand that exists out there. If it doesn't sell, someone else will, such as Russia, or Italy. One might say that the leaders of developing countries are responsible, who either have their priorities all messed up or have a legitimate desire for security. The demand side of the market is the problem, warlike human nature is the problem. The problem is not the merchant of weapons.

This strikes one as almost reasonable until one recalls the US State Department's attitude to drug trading, and the moralistic war on drugs it has taken to the supply side for years, to the jungles of Colombia and to Afghanistan, while locking up hundreds of thousands of drug dealers at home. (Of course, the rise of international drug cartels was largely due to US Cold War politics and its need to finance proxy wars around the world, but that's another story.) For now, let's just reflect on this neat reversal in attitudes: when it comes to drugs, the supply side of the market becomes the problem, profiteering from it becomes the problem. The messed up priorities of American consumers, or their legitimate desire for recreational intoxication is not so much the problem. The problem, they declare, is the merchant of drugs.

An Ethnography of Wall Street

Mention the word ‘ethnography’ and a tribe in a faraway place comes to mind. But couldn’t it just as well apply to us moderns, with our own myths, rituals, assumptions, customs, and oddball ideas of the world? Here is Scott McLemee on anthropologist Karen Ho’s ethnography of bankers, traders and analysts, the tribe of elites who shape our world in the image of ‘Wall Street’s bulimic culture of expediency’.

Each social group has its particular mixture of small-scale habits, large-scale rationalisations and everyday assumptions about the how the world really works. Like a good journalist, the ethnographer will find and describe telling details about what goes on within a subculture. But the ethnographer takes an additional few steps by trying to understand how even the most taken-for-granted aspects of behaviour within a group reflect a set of powerful but largely implicit rules and beliefs. Daily experience tends to reinforce the subculture’s shared outlook in ways that make it seem inarguable.

It’s one thing to do this with, say, Albanian shepherds – and something else to attempt it with those financial titans who Tom Wolfe once satirically called the Masters of the Universe. But the same general principles apply. The ethnographer has to spend time observing what the Albanian shepherd expects from the sheep, and from himself – and also figuring out how either may be different from what a Greek shepherd expects. A significant part of Wall Street’s outlook is available in documents, of course, unlike with a rustic subculture; but the really interesting dimension of Liquidated comes from its account of how the financial sector’s members understand their own daily experience.

More here (via 3QD). I wonder if anyone has done a similar ethnography of today’s professional scientists (esp. the neo-atheist type).

Food, Inc.

If you see only one documentary this summer, make it Food, Inc. Here is Roger Ebert's review, and the first 3-1/2 minutes of it.

The next time you tuck into a nice T-bone, reflect that it probably came from a cow that spent much of its life standing in manure reaching above its ankles. That's true even if you're eating the beef at a pricey steakhouse. Most of the beef in America comes from four suppliers.

The next time you admire a plump chicken breast, consider how it got that way. The egg-to-death life of a chicken is now six weeks. They're grown in cages too small for them to move, in perpetual darkness to make them sleep more and quarrel less. They're fattened so fast they can't stand up or walk. Their entire lives, they are trapped in the dark, worrying.

All of this is overseen by a handful of giant corporations that control the growth, processing and sale of food in this country. Take Monsanto, for example. It has a patent on a custom gene for soybeans. Its customers are forbidden to save their own soybean seed for use the following year. They have to buy new seed from Monsanto. If you grow soybeans outside their jurisdiction but some of the altered genes sneak into your crop from your neighbor's fields, Monsanto will investigate you for patent infringement. They know who the outsiders are and send out inspectors to snoop in their fields.

Food labels depict an idyllic pastoral image of American farming. The sun rises and sets behind reassuring red barns and white frame farmhouses, and contented cows graze under the watch of the Marlboro Cowboy. This is a fantasy.

China's Final Frontier

Prospect Magazine has an interesting article by Parag Khanna, who "visits China's remote, rebellious western provinces of Tibet and Xinjiang—and sees how China's government is today bending central Asia to its will." (Thanks, Peony.)

Both Tibet and Xinjiang have the geographic misfortune of lying either on top of resources China wants, or on the path to resources it needs. Texas-sized Xinjiang has the country’s largest oil, gas, coal, uranium and gold deposits, while Tibet has timber, uranium and gold.... Since most of the ethnically dominant Han Chinese are in the east, and most of China’s resources are in the west, this ongoing westward march [of the Han Chinese] is inevitable. And it has meant the wholesale, systematic repression of the indigenous inhabitants by a mix of military, economic and, above all, demographic means. Like the native Americans, the Tibetans and Uighurs have been cornered, corralled and relocated under a system which condescends and harasses at every level. Han Chinese have been taught to think of Tibetans and Uighurs as barbarians, viewing their mission civilatrice today the way American settlers did: they are bringing development and modernity to people and places that have always lacked them.

Free Market Prisons

Ever heard of the Corrections Corporation of America, "the nation’s industry leader of privately-managed corrections solutions for federal, state and local government"? Traded on the NY Stock Exchange, it runs "more than 64 correctional facilities and detention centers from coast to coast, in small cities, metropolitan areas and destinations in between" in 21 states. As one might guess, the interests of its shareholders are singularly aligned with — you guessed it — growth in the number of prisoners. Each quarter, its financial results report key metrics like the growth of inmate populations and the number of new beds placed into service. If these numbers fall, the stock price falls. That's no good for a corporation, is it?

The land of the free already incarcerates 2.2 million people, or 1% of its adult population (the highest rate in the world; five times higher than in W. Europe and twice as high as in Singapore, which is infamous for its spartan legal system). British columnist George Monbiot describes what tends to happen when the prison industry becomes part of the free market system:

It’s a staggering case; more staggering still that it has scarcely been mentioned on this side of the ocean. Last week two judges in Pennsylvania were convicted of jailing some 2000 children in exchange for bribes from private prison companies.

Mark Ciavarella and Michael Conahan sent children to jail for offences so trivial that some of them weren’t even crimes. A 15 year-old called Hillary Transue got three months for creating a spoof web page ridiculing her school’s assistant principal. Mr Ciavarella sent Shane Bly, then 13, to boot camp for trespassing in a vacant building. He gave a 14 year-old, Jamie Quinn, 11 months in prison for slapping a friend during an argument, after the friend slapped her. The judges were paid $2.6 million by companies belonging to the Mid Atlantic Youth Services Corp for helping to fill its jails. This is what happens when public services are run for profit.

It’s an extreme example, but it hints at the wider consequences of the trade in human lives created by private prisons. In the US and the UK they have a powerful incentive to ensure that the number of prisoners keeps rising.

More here.

On Credit Default Swaps

The recent meltdown in the US financial markets has been attributed to subprime lending practices that, along with low interest rates, had fueled a housing bubble since the mid-90s. In a feeding frenzy of sorts, lenders kept lowering the bar for home mortgages. As adjustable interest rates kicked up, defaults and foreclosures began and the bubble finally burst. Housing demand and prices fell, leading to a liquidity crunch for financial institutions. Thanks to economic globalization, the malaise quickly spread across the pond.

Many pundits have adequately explained the crisis (especially listen to George Soros—video below) and why the US government had to devise a massive bailout for Wall Street and recapitalize the banks (think of it as an emergency liver transplant for one who had turned to a reckless, binge drinking lifestyle). It also brought home another fact of modern capitalism: bankruptcy is only for the little folks; those big enough can't be allowed to fail for their irresponsibility, lest they bring down the whole house. Neat, aye?

But now, having traded a pressing liquidity crisis with a higher national debt, is the worst finally behind us? In other words, do we now simply need to hunker down and ride out an economic recession that may be, at worst, longer than usual (say, lasting up to 18-24 months, instead of the average 10 months) and wait for the eventual market rebound?

Not so fast, Speedy Gonzales. Besides the long-term fiscal instability from a $10+ trillion debt that is set to rise by $1-2 trillion next year with no end to annual deficits in sight, there may be more ticking time-bombs just ahead. Enter credit default swaps and other derivatives. Invented in the mid-90s by math and physics PhDs, these financial instruments were designed and adopted by money lenders to mitigate risk but have managed to achieve the precise opposite due to some shockingly naive assumptions about economics and human nature. Their advent encouraged subprime loans by giving lenders an (ultimately illusory) instrument for reducing their risk from loan defaults.

Credit default swaps (CDS) are contracts between private institutions that trade in a completely unregulated market. They "resemble an insurance policy, as they can be used by debt owners to hedge, or insure against a default on a debt. However, [unlike insurance,] because there is no requirement to actually hold any asset or suffer a loss, CDS can also be used for speculative purposes." Since 2000, the CDS market has grown from near $0 to a staggering $55 trillion, i.e., about four times the combined worth of all companies traded on the NY Stock Exchange! CDS trading has added huge, unaccounted-for liabilities and exposure to corporate balance sheets. Their deleterious impact surfaced with the recent subprime crisis, but this may well be just the tip of the iceberg.

A significant and ominous, if also brave, admission came last week from none other than the godfather of US capitalism in the last two decades: Alan Greenspan. An economist of the libertarian, Ayn Rand stripe, he admitted that he is shocked to have found a flaw in his model of how the world works and that he had been wrong in resisting regulations for these new-fangled instruments. Known for his cryptic-diplomatic phrases (recall "irrational exuberance"?), the sage simply predicted, “The financial landscape that will greet the end of the crisis will be far different from the one that entered it little more than a year ago.” Whoops! Sorry, people. Hope you don't have to spend your retirement years working at Walmart.

Here is a primer on credit default swaps that explains why Warren Buffet has called CDS the "financial weapons of mass destruction" and why others call it "the dark matter" of the financial universe. "Like rogue nukes, they've proliferated around the world and now lie hiding, waiting to blow up the balance sheets of countless other financial institutions." (Read more overview articles here, here, and here.)

(Video: George Soros in conversation with Bill Moyers, 25 mins.)

The Lives of Animals

"Life on the farm isn't what it used to be. The green pastures and idyllic barnyard scenes portrayed in children's books have been replaced by windowless sheds, tiny crates, wire cages, and other confinement systems integral to what is now known as 'factory farming.'" Here is a sobering look at how farm animals are transformed into food today (viewer discretion advised. Also see my previous post on this topic.)

(Click image to go to video site. The source of the image above here.)

Combating Human Trafficking

Here's an arresting short talk (25 minutes) on the realities and prevalence of human trafficking and slavery given recently by Julia Ormond at the  Global Philanthropy Forum in Redwood City, CA. According to Ormond, slavery is alive and well today. Worldwide, tens of millions of people live in slavery; and while this is the smallest fraction of the human population ever to live in bondage, they are nevertheless the largest number of slaves in history. She tells us that the institution is economically tied to powerful international crime syndicates and terrorists and involves more horror than one should ever have to imagine.

From FORA.tv: Julia Ormond, President of Alliance to Stop Slavery and End Trafficking (ASSET) and UN Goodwill Ambassador in Human Trafficking addressed the Global Philanthropy Forum. Julia Ormond reveals statistics in human trafficking and slavery and why it often goes unreported. Ormond recalls stories from child victims from around the world to shed light on the growing problem (from April 11th, 2008).