Sunday, July 1, 2018

On growth and people: my reply to Kate Raworth's reply

Let me focus on two most important issues on which Kate Raworth and I differ.

(My original review of Kate Raworth's very good and challenging Doughnut Economics can be found here; Kate’s response is given here.)


When Kate allows that growth is necessary for poverty reduction and that countries with income levels less than $12,500 per capita should be “allowed” to grow, she fails to either tell us up to what level they should be “allowed” to grow or to provide an estimate of how much the world GDP would have to increase in order to accommodate such growth. As I mentioned in my review, any back-of-the-envelope calculation shows that “allowing” everybody in the world to live at an income level that is today considered barely acceptable in the rich countries  involves a tripling of global GDP. Kate should show us what are, according to her, correct numbers. But the reason why I think she prefers not to do so is because it allows her to leave the whole issue in an area of deliberate vagueness where poor countries are “allowed” to grow but the issue of “unsustainability” of that growth is elided.

Now, in the next stage of vagueness, it is acknowledged that perhaps the space for future growth of poor countries can be provided by voluntary restraint of growth in the rich world (“high-income countries and individuals have a moral obligation to create ecological space so that others have the chance to lead lives free of deprivation”). Technically, it should imply a voluntary reduction of rich countries’ real GDP (that is, negative growth) in order to create the “space” into which poor countries can grow. Is this realistic? I already wrote about that in my discussion with Jason Hickel and I do not think that it is necessary to repeat the arguments here or to highlight the obvious fact that no rich country (or rich countries’ populations) display any observable inclination either to degrow (for if they did, they should have been cheerfully accepting the Global Recession) or to share their income with poor people (for if they were, they would not be creating right now such a fuss with migration both in Europe and the US).

So, we can take it as given: (1) if poor countries are “allowed” to grow, today’s GDP envelop will have to be expanded severalfold, and (2) rich countries’ populations will not voluntarily immiserate themselves nor will they share, out of the goodness of their heart, their income with poor countries.


The second issue is less amenable to such (in my opinion) clear cut conclusion. It is the issue of human behavior under conditions of hyper-commercialized global capitalism.
I have already explained my views (and will do so  further in my forthcoming Capitalism, alone), so those interested can find them here.

Let me make just two paints.

The fact that people cooperate does not invalidate at all that people are motivated by self-interest alone. Self-interest can often be more effectively realized in cooperation than by trying to do everything alone. This is why companies, clubs and mafia (indeed, mafia) do exist. If accomplishment of self-interest required that one do everything alone, there will be no society, no family, and everybody would be self-employed. None of that is true. But none of that invalidates the notion that cooperation will be  a form in which, at times, self-interest will be best realized.

The next point has to do with human nature under hyper-commercialized global capitalism. Here I respectfully decline to be moved by the results of any of  the “games” that Kate cites and that are supposed to reveal human nature. These games are indeed games; they are not the way people behave in real life.  Games are good in generating publishable papers but they tell us nothing about how the same people would (or do) behave in real life. There, if Kate wants to convince me and others of our “improving” nature and greater willingness to share, I would like to find the evidence that we are becoming less engaged in market transactions, that we contribute more to charity, that we care less about income, wealth and prices…

But all the real world evidence I see goes exactly in the opposite direction. And for a reason. Globalized capitalism has to create new goods and services and it moves into what was hitherto a personal sphere (homes, cars, leisure hours). It pushes us to exploit these in order to make more money (because money is the sole indicator of success). Thus marketization (and numeracy which goes together with marketization) is greater than ever in history, and the more developed a society, the more marketized and money-conscious it is.

What we observe is that people have become ever more aware of small differences in incomes and prices. This is why Internet has brought such fierce competition between airline companies, hotels, restaurants, retailers. People consider the tiniest differences in prices. They go to stores, take a picture of an item, and then purchase it on the Internet from Walmart or Amazon. If people  were less commercially motivated, Walmart and Amazon would not be the behemoths they have become: people would have been happy to purchase the same item for a higher price in their local store. But they are not.

Professors, claiming altruism in their writings, bargain (as Kate must know) to the last possible cent when it comes to their salaries and fees. I have not noticed many of them foregoing higher income or altruistically declining higher fees. The same behavior is prevalent in all professions. I would like to be given examples of academics  (among others) who have seriously discarded the pecuniary motivation. The majority of them are like the real-world people depicted in “Inside Job”. I wrote before that out of almost 80 top economists who are recipients of the Nobel Prize, I understand that only Jan Tinbergen donated about a half of his prize. Everybody else kept it in full. And here we are talking about a group of old, very rich, extremely successful people. Yet they hoard the money. What can be expected from those who are less rich?

Again, this does not mean that we care only about money (income). Other considerations certainly do play a role. But the key consideration is that of money.

Thus, on this point I see close to zero evidence that Kate’s picture of today’s Homo Sapiens is accurate. Actually, for the reasons that are intrinsic to hyper-commercialized capitalism, I see us moving further away from the idealized picture that Kate depicts. 

Finally, let me mention that at times I think  a peculiar hypocrisy creeps into people’s discussion of human behavior because the authors seem to think that by claiming that humankind is altruistic they are thereby showing their own munificence. I think that this feeling was not entirely absent even in Adam Smith’s explicit critique of Mandeville—even if Smith himself gives us in The Wealth of Nations innumerable examples of the behavior fully consistent with the view of human nature advocated  by Mandeville.

Thursday, June 28, 2018

Memories of my World Cups

My first World Cup was the one in Chile in 1962. In those days, there were no satellites to beam the picture directly from South America to Europe so the live games were listened on small transistor radios that you would grab in your hands, ever more tightly as the attack seemed more dangerous. My one big memory:  the Yugoslavia-Chile game for the third place. I went with my family to dinner and we carried the radio. It turned out that everybody else did the same. And then a huge silence that enveloped the restaurant when Chile scored the winning goal.

The World Cup then was not a very big affair. Few people travelled to Chile and some games were played in front of empty stadiums, with only a couple thousand of spectators. These were still football’s heroic days.

The first World Cup I watched live was 1966 England. My memories of that Cup are incredibly vivid. In June that year I got a viral pneumonia and spent a week in a hospital. I was so keen to get out of the hospital on time for the World Cup. Luckily, I did and watched many of the games (in those days, not all the games were shown). Single memory. The brilliant Hungarian dismantlement of Brazil sans Pelé (3-1), and Varga’s incredible goal. These were the days when Hungary still displayed some of the Puskas era scintillance before it dropped into the footballing black hole, seemingly forever.

The 1970 World Cup was, I believe, the best ever. It was also the first World Cup I watched on a color TV. Technology was making big strides (just compare Chile 1962 and Mexico 1970). One special memory: rather conventionally, the semi-final slugfest between Italy and W. Germany that I watched alone (my parents having decided it was too  late and gone to bed).

The 1974 Cup was held in West Germany. The quality of the games was still outstanding, mostly thanks to the great Dutch team. A memory: a quasi waterpolo match played by West Germany and Poland on an inundated field.  

For the 1978 World Cup, I was in the United States where soccer was an exotic sport. No games were shown on national TV: no games, period. So I would read the results of the previous day's games in the newspapers. But since I watched all finals since 1966, I could not miss this one: I travelled three hours by car to Gainesville, Florida where in a movie theater with an audience about equally divided between the Argentinian and Dutch fans, I watched  the final. People climbed the chairs and jumped across the aisles

The 1982 World Cup found me traveling. I was in Cameroon when Cameroon tied  Italy 1-1. The World Bank arranged a high level meeting exactly at the time of the match. It was clear to all, except to the leader of the World Bank team, that the Cameroonian counterparts were not interested in structural adjustment but in dribbles and shots. Suddenly, half-way through the meeting, the minister jumped and started yelling “le poteau, le poteau”. Cameroon failed to score.

By 1986, US television was showing all the games (notice again the tremendous progress over eight years). I remember being late for an important meeting because France-Brazil went into extra-time and then penalty kicks. But I just could not leave without knowing if Platini or Zico will play in the semis.

1990 was, I think, the worst World Cup ever. I remember rather badly attended games, and the Italian stadiums that, contrary to what happens now at the World Cups, were left in their fairly dilapidated state. Yugoslavia, which had an excellent team, was imploding. Slovenian Football Federation recalled its players before the World Cup began. A couple of team staggered after a tournament full of 0-0s, to the pathetic final, complete with fist fights, doubtful penalty, dubious ejection.

The 1994 World Cup was perhaps just slightly better in quality. The 1990s were not very good years for soccer in general. In a somewhat blasé way I did not care to watch the games played in Washington DC, but then as the tournament progressed I got excited. My former girlfriend very kindly helped me get three tickets for the final in Pasadena. (In those days, you still had to buy tickets on the spot and she bought them just a week before the final—when instead of Italy-Brazil, there was a possibility that we might watch Sweden-Bulgaria).

The French 1998 Cup was yet another, very modest, improvement in the level of the game. I spent that month travelling with my family across France and was surprised how little interest the World Cup elicited. It was hard to find restaurants that would show the games—except when France played. I watched the final after paying a sizeable amount of money to a FIFA official who got his ticket for free. He asked for even more money than what I had in my pocket but his wife convinced him not to press the price further.

The 2002 Cup was in Japan and South Korea.  Now the whole world was watching. One big memory: when Cafu climbed to the top of the makeshift podium and in a flurry of confetti and with music blaring lifted the Cup. I thought a new pagan religion had overwhelmed the world and Cafu, Ronaldo o fenomeno and Rivaldo were its chief priests.

In 2006, we travelled through Germany. Unlike eight years ago in France, football was everywhere: in all bars, hotels, fan zones. I watched Germany-Sweden QF match in a beautiful hotel in Berchtesgaden. Perhaps because the hotel was expensive and the guests quiet or perhaps because of the place where it was built, German tourists who watched the game just politely applauded each German goal. It was almost like attending a chamber concert. But for other games and in other surroundings, the atmosphere was different.

I remember rather badly the 2010 World Cup. I watched the Uruguay-Ghana match with my son in an outdoor café in Belgrade. Suddenly the storm descended and the connection was lost. I insisted that the owner try several times to restore it. Eventually, he succeeded: we witnessed Suarez’s incredible save and Ghana’s unlucky penalty miss. It was the closest that an African team came to the semis.

The 2014 Cup in Brazil transformed the whole country. You had the feeling that had the nuclear war broken out, the news would be relegated to page 4 of the newspapers. Despite all the fears, the Cup was excellently organized—surpassing in some areas even German organization.  I remember a beautiful starry night at Ipanema, dining in a terrace restaurant, with Henry and FIFA officials just a few tables away.

The 2018 so far looks great. The quality of the games has steadily risen: it is one of the better World Cup, I think, and we yet have to see the best.

I am very optimistic about the Qatar Cup. I am glad it will be played in an Arab country: Arabs love football and their teams are getting steadily better (and they were singularly unlucky this year). The Cup  will be played in Winter when top players are less tired.

It has been a great ride of more than half century for me, and when we compare machines and organization used today as well as the global reach of the sport with how  things looked in 1962, we can more easily grasp the role of both technology and globalization. Immense progress in both. But we also have to be modest in judging what was accomplished. We are proud that the Olympics and the World Cup have an almost unbroken record of respectively more and slightly less than a century. But Greek Olympics were held continuously for four centuries. Who will win the 2318 World Cup? Will countries compete? Or perhaps only Oceania, Eastasia and Eurasia? Will there still be football? Will the Cup be held at all?  Qui sait.