Showing papers in "Journal of Social, Political, and Economic Studies in 2000"

Stocks for the Long Run

Abstract: Stocks for the Long Run Jeremy J. Siegel McGraw Hill, 1998 Jeremy Siegel has written a book that could have a great effect on the reader's wealth while challenging conventional academic views. It is written at the popular level but references the underlying academic articles (i.e. it is footnoted). Siegel is a finance professor at the University of Pennsylvania's Wharton School, so he is well qualified to draw on the academic literature. The basic message of the book is that stocks have been a wonderful long run investment, and can be expected to continue to be so. The emphasis is on the long run, because there is no doubt that stocks can be exceedingly risky in the short run. As an illustration of stocks' short-run risk, consider October 19, 1987, when the stock market dropped by 22.6% in one day (see Miller 1999 for a review of a book focusing on this episode). Because of the short-run riskiness of stocks, one who is saving for an event in the near future (such as the next vacation), runs a considerable risk of losing money. However, most saving is done not for such short-run purposes but for long-run purposes such as retirement, or to leave money to descendants. Siegel makes a convincing case that stocks are much better for such long-run purposes than either bonds or money market instruments. Bank deposits usually earn even less than money market instruments, and hence are also dominated by stocks. The textbooks I use in teaching finance present evidence that stocks have, on average, outperformed bonds since 1926. Siegel carries this evidence back to 1802, presenting data on the returns from stocks and bonds from 1802 to 1997. Over this long period stocks have had an average return of 8.4%, composed of price increases averaging 3.0%, and dividends averaging 5.4%. In contrast, long-term US government bonds have averaged 4.7%, and short-term US governments, 4.3%. This superiority of stocks held true for major subdivisions of the period studied also. Economists talk about the equity risk premium, the differential between stocks and bonds, which is usually interpreted as the reward to bearing the risks of equity. This of course varies tremendously year to year. Siegel plots a thirty-year running average of the equity risk premium. It is striking that it is virtually always well above 0% (the exceptions appear to be around 1841 and 1861, which are well over a century ago). Thus, for someone investing for the long run, it appears stocks virtually always exceed bonds in return. The riskiness of having stocks underperform bonds turns out to depend very much on the holding period. A fascinating graph (showing data from 1802 to 1997) shows the maximum and minimum real (i.e., inflation adjusted) annualized returns for various holding periods (p. 27). For short holding periods, there is the expected result that one can lose more money on stocks than on either bonds or T-bills, frighteningly more. The worst one-year return on stocks is -30.6% (the best is 66.6%). Incidentally, bonds prove to have appreciable risk over short periods also, with the worse bond performance being -21.9%, and the worst Treasury bill performance -15.6%. The bond and Treasury bill losses occur when high inflation lowers their real purchasing power. Bonds have this risk. In addition, they can experience large losses when interest rates rise unexpectedly, reducing their risk. That stocks are riskier than bonds, and bonds riskier than treasury bills (and bank deposits and other money market instruments) is standard textbook material. It is usually explained by investors disliking risk and being willing to incur higher risk only if rewarded with greater returns. Thus, investors should be willing to hold stocks only if promised much higher returns than bonds. However, most investors (especially those with large sums of money) have longer horizons than one year. However, the equity risk premium appears to shrink with holding periods. …

The Black Book of Communism: Crimes, Terror, Repression

Abstract: The Black Book of Communism: Crimes, Terror, Repression Stephane Courtois, Nicolas Werth, Jean-Louis Panne, Andrzej Paczkowski, Karel Bartosek, Jean-Locus Margolin Trans. by Jonathan Murphy and Mark Kramer Harvard University Press 1999 If someone were to ask "What are the ten most important books to have on your bookshelf?," a strong argument could be made that this book must be included on the list - high praise, indeed. It merits so preeminent a position for a number of reasons. One, of course, is that the twentieth century can hardly be understood without a detailed realization of the brutalities of Communism in all its manifestations, worldwide. Those enormities rank among the central facts of the century and yet are little known. Such a background is needed, too, if world opinion is ever to move away from the double standard that has long considered Nazism an unmitigated evil but that has granted considerable leniency, often even indulgence or preference, to Marxism-Leninism. Many of the events of the past century, large and small, are understood only in the most warped fashion because of that moral, ideological skewing. There is also a less abstract, more humanly personal, reason: that the 85 to 100 million victims as estimated in this book cry out to scholars to be noticed. These are victims whose lives have vanished in much the same way as one "unperson" after another was airbrushed out of old Bolshevik photographs. There are even now few dramas, documentaries, museums, "survivors' testimonies," war crimes trials, or other acknowledgments that these tens of millions were once living, breathing human beings. When their lives ended, they fell off into a memory hole; and even the most elementary respect for human life requires that they not stay there permanently. The Black Book of Communism states its purpose as being "to paint a true picture of all the criminal aspects of the Communist world, from individual assassinations to mass murder." It devotes more than 200 of its 856 pages to the Soviet Union, about which it gives an indispensable history; but there is in turn a detailed chronicling of events in Spain, Poland, Central and Southeastern Europe, China, North Korea, Laos, Cambodia, Latin America, Africa and Afghanistan. It centers on the atrocities and does not aspire to be a complete history of the Communist regimes or movements in those places for example, its account of the Civil War in Russia after the Bolshevik coup omits any mention of Trotsky's role commanding battlefields from his train or of the intervention of foreign troops). Such a book is of value only if it is the work of credible scholars. That requirement is well-satisfied here. The authors are primarily French historians and specialists in Communism, although Andrzej Paczkowski is Polish and Karel Bartosek a Czech. They are all connected with the Centre d'Etude d'Histoire et de Sociologie du Communisme and its review Commamisme. We are told in the Foreword that "these researchers are former Communists or close fellow-travelers" (which itself has pluses and minuses, but will certainly add to their credibility among those who share the general assumption that intellect and objective scholarship come only from the Left). There is much internal evidence in the book of its objectivity, such as when it cites the varying estimates of the Soviet deportation of Poles without attempting to insist on one at the exclusion of the others. The work is informed by the information now available through the archives that have been made public in the formerly-Communist world. The records of the Gulag administration are now open, as are the Czech archives and those of the Stasi in the former East Germany. There will be more research to do in the future, since several important archives remain closed, such as the Russian Presidential archive, the Soviet foreign intelligence archive, and the Chinese and Vietnamese archives. …

The Menace of Multiculturalism: Trojan Horse in America

Abstract: The Menace of Multiculturalism: Trojan Horse in America Schmidt, Alvin J. Praeger Publishers, Westport, CT. (1997) ISBN 0-275-95598-2. The word multiculturalism is commonly used with two opposing meanings. On the one hand, there are those who would like to strengthen what is known as Western or European culture by including the best ideas from all other cultures so that it might become a universal model for human behavior. These might be called "cultural inclusionists." On the other hand, there are those who want to destroy Western society by reducing it to chaos so that they can rebuild it according to the same naive egalitarian dream that motivated Pol Pot of Cambodia. These insist that all existing cultures are equal in value except for European culture, which is bad. Schmidt's book is about the second kind of multiculturalism, and that is the meaning your reviewer will adopt when using the word. Schmidt acknowledges the first kind of multiculturalism by calling it "multicultural education," of which he heartily approves. The strength of the book lies in the fact that it can be read with interest by readers at any level of intelligence if it matched by an appropriate level of sophistication. Schmidt is a sociologist and is perhaps not aware that most natural scientists, if they have an opinion, believe that: (1) Homosexuality has a genetic basis. (2) The fully established 15-point average 10 difference between U.S. blacks and whites is largely genetic. (3) The population/environment problem is the foremost challenge of our time, outweighing all others by far. (4) With millions dying of starvation and disease elsewhere in the world, and with our country facing an uncertain future, abortion is not a transcendent evil but must be weighed against its realistic alternatives both at home and abroad. Chapter 1: Schmidt defines multiculturalism as follows (p. 3): Multiculturalism is a leftist political ideology that sees all cultures, their mores and institutions, as essentially equal. No culture is considered superior or inferior to any other; it is merely different. Criticism of other cultures, especially non-Western/minority cultures, is labeled "insensitive" and "bigoted." Chapter 2: "False, Deceptive Portraits." In this chapter Schmidt discusses the use and misuse of the word culture by multiculturalists. He analyses slogans that are used by multiculturalists to give the appearance of being cultural inclusionists. Chapter 3: "Multiculturalism's Leftist (Marxist) Concepts." This chapter presents the ideal behind multiculturalism, namely, total equality for all people and all cultures, and the slogans and ideology derived from that ideal. He warns vaguely about the claim that "knowledge and truth are socially constructed" but does not delve into "postmodernism" and its materialist roots. Chapter 4: "All Cultures Are Not Equal." Schmidt examines a number of cultures and shows that the multiculturalist's claim that all cultures are equal is too absurd even to postulate. His emphasis is on moral differences. Among his more colorful examples are the "giraffe women" who had their necks enormously elongated beginning at age five by adding brass rings until they are carrying perhaps 20 pounds of brass on atrophied neck muscles. If a woman committed adultery, the rings were removed, the head fell over, and the sinner suffocated. Chapter 5: "The Facts Be Damned: Omissions, Distortions, and Noble Lies." In discussing slavery in the U.S., history textbooks fail to mention that slavery was already widespread among American Indian as well as African tribes. Nor is there any mention of the fact that slavery lasted much longer in Africa and Asia than in the British Empire and the U.S. Today, slavery still exists in the Sudan. A 1993 "multicultural" textbook describes the Aztec and Mayan civilizations "as impressive as those found anywhere in the world. …

Third World Corruption: A Brief Survey of the Issues

Abstract: The author examines the problem of corruption which is widespread in most Third World countries, and finds that although it facilitates effective action in some cases it generally imposes a severe restriction on economic development which is particularly harmful when political leaders transfer the financial resources they have stolen to other countries rather than investing them in commercial or industrial enterprises within their own country The theft of funds and resources provided by international donors is a common form of corruption, and private enterprise and efficiency at all levels is customarily vitiated by corruption at any level While poverty is commonly blamed for corruption, any successful efforts to combat the economic effects of this debilitating disease require not only a determined and sustained anti-corruption campaign and the cooperation of donor nations and international organizations Key Words: Third World, Nigeria, Pakistan, Zaire, Transparency International, corruption The problem of corruption within or across nations is not a recent phenomenon, nor is it exclusively a Third-World concern The English historian Edward Gibbon called "corruption the most infallible symptom of constitutional liberty" Further, "James Madison and the Founding Fathers took for granted the corruption of government by business, and business by government" (McDougal, 1) The Berlin-based Transparency International annual develops a global "Corruption Perception Index," and in 1998, based on a scale of zero to 10 (zero being highly "corrupt" and 10 being highly "clean"), Cameroon was ranked the most corrupt, but USA tied with Austria for 17th place, Denmark being the "cleanest" (Washington Times, 9/23/98) Thus, depending upon definitions and interpretations, corruption plagues almost every nation, though there is variation in degree and intensity Further, while it may prevail in any sector of the economy, public-sector corruption, especially in the Third-World nations, has received considerable attention in recent years; there is a plethora of recent literature (see bibliography) Corrupt public officials, from low-level bureaucrats to national leaders, can have negative economic, social and political effects on a country's process of modernization and development It is a major problem in countries where due to weak institutions and enforcement, often accountability is low but where national development needs and aspirations are intense and resource scarcity is acute There are many different forms of corruption, as well as several different groups who may engage in corrupt behavior Third-world corruption has been receiving close scrutiny at various public and private forums, with calls for rapid ameliorative steps, for the resultant negative effects serve as a huge drain on national/international efforts to promote development There are already grassroots campaigns, from Nigeria to Thailand, gaining strength in fighting corruption The developing countries, in conjunction with developed countries, international agencies and various non-governmental organizations, are increasingly focusing on this corrosive issue When President Mobutu Sese-Seko of Zaire left office in 1996, he had a vast personal fortune virtually stolen from the nation that he had ruled for about 30 years It was reported that he diverted between $50 million and $70 million a year from the Bank of Zaire to personal accounts in Europe; estimates of his personal fortune run over $6 billion (Wedeman, 463) These types of stories are not uncommon in various nations of Africa, Latin America and Asia The former prime-minister of Pakistan, Mohammed Nawaz, overthrown by a military coup in October 1999 and already sentenced to life imprisonment on charges of hijacking of a commercial airliner that carried his military chief and 200 other passengers, has recently been indicted on charges of mass corruption (Infotimes, Pakistanjournal@egroups …

Proposals for Reforming the International Monetary Fund: A Review

Abstract: The international monetary system as it was originally designed at the Bretton Woods Conference and subsequently amended stands in marked contrast to today's global economy in terms of the size. complexity and speed of capital markets. This paper presents an evaluation of some of the key elements of the main proposals for reforming the IMF. The analysis reveals that. with the exception of a regime of complete flexibility, all other proposals relegate the IMF to a minor and ineffectual role or assign it an impossible task of co-ordination. One direct consequence of the globalization of financial markets is the need for non-inflationary monetary policies. Consequently. under the best proposals. the IMF reconfigures itself as a public rating service and an agency for rescheduling debt. and withdraws from foreign exchange rate stabilization. Key Words: International Monetary Fund. IMF. Bretton Woods. globalization, international finance, monetary policy, exchange rates. An animated debate over the future of the International Monetary Fund has begun. The institution's present unpopularity appears to be on the increase while a wide variety of fixes have been proposed; including outright abolition. It has become obvious, fifty years after Bretton Woods, that the global economy is characterized by a slow growth, third world debt crisis, and currencies crisis, with no sign of reversing. Even during periods of deflation of the 1990, inflationary expectations remain so deeply ingrained that the slightest sign of economic recovery is sufficient to trigger another round of price hikes. These changes in the global economy suggest that the international monetary fund is in need of a major overhaul. Historically, the IMF has shown some ability to adapt to changing times. After several rounds of negotiations, the General Arrangements to borrow (GAB), was agreed in December 1961 and by the end of sixties, when confronted with the Triffin dilemma, it created special drawing rights (SDRs).1 The 1970s witnessed the implementation of flexible exchange-rate regimes. As of the second half of the eighties, the IMF adopted the approach of surveillance over the economic policies of its member nations. At the same time, the literature on possible reforms of the Fund expanded. The objective of this study is to present a critical analysis of the various proposals pertaining both to the exchange mechanism and to other essential aspects of the smooth functioning of the IMF, and to identify viable alternatives. As to the current policy of surveillance, a cross-examination of both its feasibility and its real impact will be provided. To lay the groundwork for this study, a brief discussion of some of the main aspects of the difficulties currently facing the IMF, is first outlined. The IMF and the Global Economy, or David and Goliath A Mixed Record If GATT's success in liberalizing trade among its member countries is uncontested, the same cannot be said for the IMF's record in achieving its goals as laid out at the Bretton Woods conference. Recall the first article of its Articles of Agreement: ...To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustment in their balance of payments without resorting to measures destructive of national or international prosperity. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members. Article 4 invites each member to co-operate with the Fund in order to promote exchange rate stability and to avoid competitive devaluations. Thus, as a financial institution, the IMF was assigned the task of helping its members defend their currencies on financial markets and of preserving equilibrium in the balance of payments. Has the IMF performed these functions well? …

Capital Ideas and Market Realities

Abstract: Capital Ideas and Market Realities Bruce J. Jacobs Blackwell 1999 Capital Ideas and Market Realities deals with modern financial theories, financial engineering, and causes of financial crashes. There is a brief forward by Nobel Prize winner Markowitz. Incidentally, Jacobs, although a holder of a doctorate in finance from the Wharton School of the University of Pennsylvania, is a principal in a successful quantitative portfolio management firm (Jacobs Levy Equity Management) with over $5B under management. He thus can bring both theory and experience to the problem of managing market risk. Much of the book discusses the major market crashes of recent years, notably the market crash of 1987. The Dow-Jones lost 22.6% of its value on one day, October 19, 1987, the largest percentage decline.in history. From its intra-day high on August 25 to the intraday low on October 20, the market declined by 37%, eliminating over a trillion dollars in investment value. Jacobs makes a convincing case that the severity of the crash can be blamed on an esoteric financial technique called portfolio insurance. A little financial background here may be useful. An American put option gives the privilege of selling a stock at a fixed price within a fixed period of time. Put options are frequently used to provide insurance against loss for a particular stock. For instance, purchasing a put at $100 means you can always (within the term of the option) sell the stock for $100. Worried about the risk of a stock going down, individual investors sometimes buy put options to assure that they do not lose too much if it declines, while retaining the chance of making a profit if it goes up. Other investors who write (sell) the puts are providing the "insurance" in exchange for the price paid for the put. This is conceptually similar to a standard insurance contract. However, portfolio insurance is a trading strategy for managing risk, not a real insurance contract that transfers risk. Modern financial theory shows that if stock prices move without gaps, that one can construct the equivalent of a put option by a suitable trading strategy (an appendix explains how this works for the non-specialist, and another appendix discusses option theory). In the eighties such strategies (often called portfolio insurance) were marketed to institutional investors (notably by Leland, O'Brien, Rubenstein Associates). These investors wanted to participate in the rising equity market, but were worried about the losses they could encounter in a market decline, what such loses would do to their clients and to their relationships with their clients. While the earlier plans provided for trading stocks, most of the later plans provided the desired exposure to stocks by trading index futures. Part of the book deals with the case against portfolio insurance, and why it is likely to be an unwise strategy for institutional investors. The theory behind portfolio insurance requires that price changes be smooth, but in practice gaps occur. Obviously, if the option replication strategy depends on sales at a particular price, and the market drops suddenly to below that price, a key assumption behind the strategy is not met. Portfolio insurance strategies are designed to limit losses over a specified period, often one year. This is inconsistent with optimal (rational) behavior for investors whose planning period is much longer than a year (such as the pension funds and endowments insurance was sold to). The arguments against portfolio insurance are powerful enough that one wonders why managers of at least 68 billion dollars in assets (total of list on p. 140) bought into such a strategy. The answer probably relates more to good salesmanship by the vendors of such schemes and to the desire of managers to be protected against loss of their jobs in the next market decline than to rational managers making decisions in their clients' interest. …

Chinese Intelligence Operations

Abstract: Book file PDF easily for everyone and every device. You can download and read online Chinese Intelligence Operations file PDF Book only if you are registered here. And also you can download or read online all Book PDF file that related with Chinese Intelligence Operations book. Happy reading Chinese Intelligence Operations Bookeveryone. Download file Free Book PDF Chinese Intelligence Operations at Complete PDF Library. This Book have some digital formats such us :paperbook, ebook, kindle, epub, fb2 and another formats. Here is The Complete PDF Book Library. It's free to register here to get Book file PDF Chinese Intelligence Operations.

Cultural Amnesia: America's Future and the Crisis of Memory

Abstract: Cultural Amnesia: America's Future and the Crisis of Memory Stephen Bertman Praeger Publishers, 2000 The six Regents universities in Kansas host a summer academy for the top high school graduates before they go on to college. It rotates among the universities, and comes to Wichita State University, where this reviewer teaches, every six years. During the summer three years ago, I was invited to be one of the academy's speakers in a panel on "Racism in America." In my opening talk, I sought to place the racial experience of the United States into historical context. My message essentially was that the presence of slavery, brought in by the slave trade, had run counter to the central ethos of American sensibility, which was powerfully oriented toward the Enlightenment. It was Britain, with its navy, that abolished the slave trade, responding also to the classical liberalism that predominated in its thinking. It wasn't long before slavery itself was abolished. The century and a third since that time has not been easy, but has marked the efforts of a society, again moved predominantly by humane instincts, to grapple with difficult human issues. My remarks were followed by those of a vivacious, highly articulate "black activist." She excoriated virtually everything about "a racist United States," and was eloquent in her complaints of "victimization." She was followed by a black state senator, who mildly seconded her point of view and devoted most of his attention to refuting mine. The fourth panelist was a conservative from Pakistan who did a much more effective job than I did of countering the charges of American "racism." During the question and discussion period, the response by the thirty or so students present was revealing. Unanimously, they were vehement in support of the activist's attacks on the United States; and no one voiced any sympathy whatsoever with the perspective I had presented. The three or four black students among them were asked by the activist whether they thought of themselves primarily as black or primarily as American, and they all answered, "black." What this episode illustrates is the enormity and success of the ideological attack that has been made on American institutions and ideals by the alienated intellectual culture that has, virtually without rebuttal, reached this generation of students through the schools they have attended. The image of the United States that I grew up with is not only obsolete, it is held in contempt. There is no "cultural memory" of the United States as a decent, humane and classically liberal repository of the best aspirations of humanity. The emphasis is entirely on negative factors, seen with hindsight, without any historical context, and with an outraged, alienated emphasis. In any discussion of the loss of cultural continuity and consensus in the United States today, it is indispensable to take into account the profound alienation of the artistic-literary culture for as far back as the 1820s. …

The Post-Cold War American Interventions into Haiti, Somalia, Bosnia and Kosovo

Abstract: During the 1990s, the United States. in cooperation with its allies. intervened in several parts of the world, including Haiti, Somalia, Bosnia and Kosovo. Those four interventions in particular raise several questions about the policy of intervention. This article reviews the interventions and seeks to address the questions in light of them. Key Words: United States foreign policy, foreign interventions, Haiti, Somalia, Bosnia, Kosovo. media accounts of foreign crises, humanitarian crises. political crises, conceptual basis for foreign intervention. Early in the twentieth century, the United States intervened in Cuba, the Dominican Republic, Haiti, Mexico and Nicaragua without appreciable effect on the problems that existed in those countries. More recently, since the end of the Cold War, the United States (together with those with whom it cooperates closely) has intervened in many parts of the world. In this article, we will review the 1990s interventions into Haiti, Somalia, Bosnia and Kosovo. Following that review, it will be valuable to see how each intervention can be evaluated in light of certain questions they raise in common: 1. Whether the decision to intervene was in major part a response to sensational media accounts, leading to a selectivity that may have had little basis in principle. 2. Whether the problems that the intervention sought to address were in fact soluble. 3. Whether the intervention was undertaken with a clear vision of an outcome that was both achievable and desirable (or, as is often said, whether there was a foreseeable "end-game"). 4. Whether there was conceptual clarity about the ends and the means to attain them. 5. Whether Americans had any profound understanding of the situation into which they were intervening. 6. Whether the intervention created animosities toward the United States that may make the world a more dangerous place for the United States and its allies. Review of the Interventions Haiti The Duvalier dictatorship was overthrown in 1986 and was followed by what Haitians call "dechoukaj" (uprooting), about which we are told that "mobs from Cite Soliel [Port-au-Prince's largest slum] and other miserably poor parts of the city roamed the streets, hunting down their tormentors, hacking them to death with machetes or burning them alive."1 In his recent book The United States and Post-Cold Wear Interventions, Lester Brune says that the overthrow of the Duvalier dynasty "did not change Haiti's authoritarian structure."2 Conflict among four competing factions in the Haitian army, plus the terrorist "Tontons Macoutes" who had been the brutal secret police under the Duvaliers and continued to support the Duvalier faction, resulted in three coups between 1987 and 1990. Brune says that by mid-1990 "Haiti was near political anarchy."3 The December 1990 presidential voting resulted in the election of Jean-Bertrand Aristide, a young Roman Catholic priest who was a devotee of "liberation theology" and had supported the "dechoukaj." Aristide called for "a nationalist, socialist government."4 Aristide held office only seven months before lie was overthrown in 1991 by an army junta headed by Lt. General Raoul Cedras. While Aristide was in office, his administration received United States and World Bank aid, but the organization Human Rights Watch reported that Aristide stood by with an "apparently ambivalent attitude" while mobs carried out 25 lynchings, including four "neck-- lacings" (the grotesque burning of a person to death by lighting a gasoline-filled tire that had been placed around the victim's neck).5 After Aristide's overthrow, the United States continued to recognize him as Haiti's president (a reversion to the Tobar Doctrine, the previously abandoned policy that had earlier denied recognition to a regime brought into being by a coup d'etat), and an embargo was placed against Haiti. …

Hot Money and the Emerging Markets: Global Political and Economic Determinants of Portfolio Capital Flows

Abstract: At the international level the scale and composition of so-called 'hot money' or portfolio equity capital inflows to emerging markets is a function of the globalization of international capital markets, and the securitization of these markets. Countries with a fast rate of economic growth and where governments are committed to privatization, liberalization of domestic markets, and the development of domestic stock markets, are more likely to attract foreign portfolio equity investments. Key Words: Global Finance, Emerging Markets, International Stock Markets, International Political Economy I. Introduction Foreign portfolio equity investments (FPEI) are capital flows that enable foreign investors and global financial market participants to purchase securities (stocks and bonds) in the equity markets of foreign countries. FPEI flows are a recent phenomenon dating back to the early 1990s, and have generally grown over this decade. FPEI flows trebled in 1993 compared to a year earlier. However, there was a short-term decline in FPEI flow growth in emerging markets in 1995, primarily in FPEI to Latin America in response to the Mexican financial crisis of December 1994. Investment flows resumed a few months later and by 1996 the volume of new equity raised on international capital markets by countries with emerging markets increased by 34 percent, or $15 billion, over 1995.(1) This large increase illustrates the resilience of the emerging markets as an attractive destination for portfolio investments. The dramatic rise in the value of the stock markets of the emerging economies attests to the interest of global investors in the emerging economies of Asia and Latin America. Between 1986 and 1995, stock market capitalization in emerging countries grew at a much faster rate than market growth in the developed countries. The emerging countries' stock markets grew more than ten-fold, from $171 billion to 1.9 trillion. At the same time, the market share held by emerging countries in the world stock market capitalization increased from 4 percent to 11 percent. Asia and Latin America were the primary destination for investments. Between 1992 and 1993, investment flows to Asia increased by 560 percent and to Latin America by 230 percent. FPEI flows rose sharply to both regions in 1996. The objective of this article is to discern and critically examine the global determinants of the explosive growth of the foreign portfolio equity investments in emerging markets. This paper will identify and examine the so-called 'push' factors in the international financial, economic and public policy environment, stimulating large-scale capital flows to emerging markets in the 1990s.(2) This framework can be characterized as the 'international system' level. The push factors encompass structural and cyclical developments at the level of the international financial markets that stimulate capital flows to emerging markets. They facilitate access to global portfolio capital as an external source of financing for newly industrializing economies of Asia and Latin America. The sheer size and potential of portfolio equity as a source of external financing for emerging market enterprises make this subject extremely important. As of 1997, institutional investors managed $20 trillion in assets, only a small portion of which was invested in emerging markets. Just one percent reallocation of these managed assets toward the emerging market economies would constitute a capital flow of $200 billion, an amount vastly exceeding other forms of capital flows such as commercial bank lending, official government or international organization flows (IMF, World Bank), and foreign direct investment. More importantly; portfolio investments are highly yield-sensitive, more volatile, and of shorter duration compared to other forms of capital flows. These flow characteristics allow FPEI to be easily reversed in a very short time, and such changes can result in severe negative impacts on macroeconomic stability and growth. …

Politics versus Economics a Comparison of Ghana and South Korea

Abstract: The ability of governments to promote development depends more upon cultural and political factors than economic ones Political elasticity (PE) theory is used to analyze these factors Ghana and South Korea are compared, underscoring the fact that economic activity is heavily affected by the political system South Korea with its effective governmental machinery has been able to over-achieve economic expectations, whereas Ghana, with a weak and inefficient political system, has underachieved While both Ghana and South Korea have suffered from corruption, Korean political reform is likely to be more successful In Ghana, corruption takes the form of a political illness, rather than merely a political problem, and until this political illness can be addressed, any hope for significant economic progress in Ghana is unlikely, regardless of the policies the government may be persuaded to undertake Key Words: Ghana, South Korea, political elasticity theory, agricultural development, industrial development, corruption, foreign aid Introduction: The Weakness of Econommics The editors (Krueger, De Long, and Taylor, pp 3-5) of the Winter, 2000 issue of The Journal of Economic Perspectives point to the fact that, despite newer theoretical models, using better computers, mathematical and statistical approaches, and data, economists have failed to provide an unassailable foundation for long-term forecasts and anti-poverty policies Economics, therefore, has never really become the "hard science" that it was expected to be For example, one of the conclusions reached by way of economic theory - that the gap between poor and rich countries will ultimately diminish - appears sadly unrealistic Part of the problem, according to Professor Richard Thaler (2000, pp 133-141), is the assumption of "human rationality" Since people do not behave in the "rational way" anticipated by economists, they undermine economic assumptions about "rational choice" and "rational behavior" Consequently, Thaler (2000, p 140) advocates a closer linkage between economics and psychology: "As economists become more sophisticated, their ability to incorporate the findings of other disciplines, such as psychology, improves" Perhaps because I am a political scientist, I would suggest that, while recognizing this psychological dimension and emphasizing it in my conclusion, the current weakness of economics has primarily to do with the failure of economists fully to understand politics and to incorporate it into their thinking This is perhaps understandable inasmuch as many political scientists also fail to understand their own subject, treating it as a "behavioral science," thereby neglecting "political software" considerations (as here explained) In any case, what is as important as "the determination of rational choice" is "the implementation of rational choice;" and this inevitably brings us into "politics" in its classical meaning: "the relationship of leadership to followership for the purpose of governance" Because economists seldom understand the power of politics, their analysis of economic problems and opportunities can be quite misleading When political leaders are as firmly committed to economic development as they were (and still are) in Korea, they can cause the most rational recommendations stemming from comparative advantage, cost-benefit, and other forms of analysis to appear mistaken and even ridiculous In other words, they can achieve economic progress while disregarding the prevailing economic advice This consept has been advanced by Alice Amsden, who points out that in the Korean case "getting prices wrong" has been a contributing factor to its amazing industrialization success (see Lim, 1999, p 3) On the other hand, when political leaders are opposed to rational economic management, they pay lip service to economic advice, but actually block it For example, according to a World Bank division chief responsible for Ghana, in 1990 the Country Strategy Paper "was endorsed by senior management one day but the next day it was back to business as usual" (Armstrong 1996, p …

A Vision for Space

Abstract: New initiatives are needed by the U.S to maintain a strong space program, inclouding the develop of the moon. This program will help the U.S. to build a missile defense system in space. Key Words: Ballistic missile defense, Brilliant Pebbles, Space Based Laser, space transportation, heavy lift booster, the moon, water on the moon. Our vision for space has changed since Wernher von Braun led the space program and Apollo moonshot.1 The growth of computers, development of sophisticated infrared, radar, and optical sensors, and innovative use of satellite networks have created new roles for space, especially in telecommunications. But one essential element is missing: the pioneer with the vision, passion, and understanding to develop space. On July 20, 1969, Neil Armstrong stepped on the moon's surface. But since then, more than 25 years ago, man has yet to return to the moon. In spite of the discovery of water on the moon, greatly simplifying the development and operation of a manned lunar base, the United States has yet to send a man back to the moon.2 We need a vision for space with new horizons, including man in space. A vision for space will help the United States keep ahead of Russia, China, Europe, Japan, and India, who are actively challenging American leadership.3 A vision for space can lead to a surge of technological and scientific progress, benefiting the U.S. economy and military with long-term improvements in basic technological infrastructure. A vision for space will develop manned bases on the moon.4 A vision for space will build various two-stage reusable rocket and Single Stage To Orbit designs to dramatically cut the cost of space launches.5 The economic and military implications of a Single Stage To Orbit (or two-stage reusable rocket) - lower launch costs - are enormous. It will open wide the door to space. A vision for space would exploit the technological advantages of deploying ballistic missile defenses in space to meet the growing threat of intermediate and long range ballistic missiles. In March 1999, the House and Senate, recognizing the growing threat of long range ballistic missiles, voted overwhelmingly for deploying a national missile defense.6 Strategy for Space There is an essential link between space programs and defense.7 The German V-2 rocket spawned the American and Russian ballistic missile and space programs. The linkage between space and defense extends to the deployment of ballistic missile defenses in space. There are inherent advantages to deploying ballistic missile defenses in space: automated operation; continuous, global coverage; higher position compared to ground based defenses or a boosting rocket; long lines of sight especially for high energy lasers; and a boost phase defense capability, which ground-based defenses lack. A strong space program will deploy ballistic missile defenses in space to control space.8 A strong space program will also result in spin-offs assisting the deployment of ballistic missile defenses. Improved space launch capabilities such as a heavy lift booster, and faster turnaround at spaceports are key ingredients for a strong space program and the deployment of ballistic missile defenses in space. A strong space program will require the means to defend itself, lending itself to develop ways to control space, including the destruction of satellites and rocket boosters. The ability to control space, essential for a strong space program, will also provide means for intercepting long range ballistic missiles. The current administration, adverse to deploying ballistic missile defenses in space, is also critical of developing the means to control space. John Hamre, an administration spokesman, is emphatic about not developing ways to control space by intercepting rocket boosters or destroying satellites, seeking instead "soft" solutions, relying on the disruption of satellite communication links. …

Taiwan and Theater Missile Defense

Abstract: In responding to perceived new threats in the post-Cold War era, the US is now collaborating with Japan to deploy a theater missile defense (TMD) system in Northeast Asia. Confronting a mounting military threat from China, Taipei has seized on Washington's program as an opportunity to acquire anti-missile capability from the US. Interpreting US and Taiwanese actions as attempts to contain China and to undermine unification efforts with Taiwan, Beijing leaders strongly object both to the deployment of TMD in Northeast Asia and to the introduction of the related technology and equipment into Taipei. While Washington will continue its plan of deploying TMD, it is taking an ambiguous position regarding Taiwan's access to missile defense technology and equipment by deferring the sale of AEGIS destroyers to Taipei. The Clinton administration's ambiguous policy represents an unbalanced approach to cross-Strait relations and could inadvertently precipitate a dangerous crisis in the Taiwan Strait. Key Words: China, Taiwan, Theater Missile Defense (TMD), Northeast Asia, Clinton administration foreign policy, Chinese-Taiwanese relations, Chinese military threat across the Taiwan Strait. Introduction The annual arms acquisition meeting between Taiwan and the US has recently concluded in Washington, D.C. While US arms sales to Taiwan have always been contentious,2 Taipei's 2000 acquisition request has attracted even more attention. Among the weapon systems being asked for this year, the request for four Arleigh Burke-class destroyers equipped with the highly advanced AEGIS battle management system has proven to be the most controversial. Because the AEGIS system is one of the crucial components of the US-planned theater missile defense (TMD) system in Northeast Asia, Beijing has repeatedly issued severe warnings against the sale, fearing that the transfer of the AEGIS system would bring Taiwan under the TMD umbrella. The US Congress, with its serious concern over China's missile threats to Taiwan, has undertaken legislative action demanding that the executive branch sell the AEGIS system to meet Taiwan's defense needs. After considerable deliberation, the Clinton administration has decided to sell a batch of air-to-air and air-to-ground missiles and the Pave Paws long-range radar.3 However, it has deferred a decision on Taipei's request for Burke-class destroyers, pending a comprehensive study of Taiwan's defense needs and its ability to absorb such equipment.' The Clinton administration's ambiguous decision represents a mixture of good news and bad news for both Beijing and Taipei. While Washington's decision is certainly a disappointment to Taipei and a victory for Beijing, both sides know that the sale of TMD-related technology and equipment to Taiwan is not a dead issue. As a new US administration will take office next spring, the sale of AEGIS destroyers to the island country will most likely be revived considering the strong support that Taipei has enjoyed in Congress. Thus, Taiwan's quest for anti-missile technology and equipment will remain a major political issue for both Taipei and Washington and a serious challenge to US-Taiwan-China relations. This study attempts to assess the strategic considerations of Beijing, Taipei and Washington regarding the sale of TMD-related technology and equipment to Taiwan. It starts with an, examination of the proposed US-planned TMD program in Northeast Asia, followed by an analysis of the concerns about the program held by Taiwan and Theater Missile Defense Taipei and Beijing. It then discusses US strategic considerations regarding Taiwan's possible access to TMD-related technology and equipment. The conclusion will comment on Washington's deliberately ambiguous decision to defer the sale of AEGIS destroyers to Taipei and the policy implications for China-Taiwan-US relations. TMD and US Ballistic Missile Defense Program The US ballistic missile defense (BMD) program underwent a fundamental change in 1989 when the Bush administration initiated a review of the program as part of a broader examination of US strategic requirements for an emerging "new world order. …

A Republic, Not an Empire

Abstract: A Republic, Not an Empire Patrick J. Buchanan Refinery Publishing, Inc. 1999 Patrick Buchanan was a senior White House adviser to Presidents Nixon, Ford and Reagan; has long been a political commentator, syndicated columnist and television panelist; is the author of four books; and is in 2000 making his third run for the presidency, for which he recently moved to the Reform Party. A Republic, Not an Empire devotes several chapters to a review of American foreign policy going back to Washington's first administration. Its scholarship, grasp of essential facts, and easy readability make it an ideal primer on a central feature of American history. A strength over most other works is that Buchanan, as an independent thinker, sees many things that orthodox histories omit. (An example is his simple observation that the British-American blockade of Germany was continued for many months after the armistice in November 1918, causing hundreds of thousands to die of starvation. The importance of such a fact, which others usually don't mention even in a footnote, is that it, in combination with a number of other things, set the stage for Hitler in Germany). More than anything, however, the book is valuable both for its broad themes and its specific ideas. Its leading theme is that the United States, while certainly not "isolationist" in any true sense, managed to eschew interventionism in the affairs of other countries from the founding of the country in 1789 until finally the country embraced imperialism in 1898. Even though the public soon became disenchanted with imperialism itself, the impulse toward interventionist overreach was a major feature of America's relations with other countries in the twentieth century. Often this impulse has come from a globalist idealism that has sought to set the world straight along the lines of democracy, free trade and of pressure toward world government. Other times, it has stemmed from a unilateralist sense of America's hegemonic power and influence, whereby American superpower status would itself work wonders. Buchanan sees the interventionism as fraught with danger, and calls instead for an "enlightened nationalism" that will assess what is truly in America's "vital interest" (things people are willing to die for) and intervene only with regard to them, quite deliberately staying out of everything else. Among many other grounds for objection to rampant interventionism, he mentions that in an age of growing potential for nuclear, biological and chemical terrorism it invites national tragedy to make oneself feared and despised by the upholders of other nations and cultures all over the world. The United States, he argues, can cut down on that fear by minding its own business, and satisfying itself with being an example to the world of how a free society works. A second theme has to do with maintaining American sovereignty as against the continuing pressure to subordinate sovereignty to the institutions of an incipient world government. Buchanan's realism does not allow him to think the world is constituted in such a way that American lives, fortunes and liberties can safely be subordinated to externally-made decisions. His two main themes, accordingly, run counter to received opinion today; i.e., to the opinion held by America's and the "world community's" dominant opinion-forming elite. That would be enough to cause a pointing with alarm. An added feature of the book, though, is that it contains many specific insights that are as provocative as the main themes. Buchanan is relentlessly honest, although there is no tone of having a chip on his shoulder. …

Global War and the Human Population Problem

Abstract: The author examines the likelihood that global war, utilizing nuclear or other weapons of mass destruction, will halt the ongoing destruction of Earth's biosphere by human overpopulation and industrial activity. After summarizing the current state of the global environment, he speculates on what will happen if present trends continue and then examines the possible impact of such a war as a natural counterbalance to human destruction of the biosphere. He concludes by addressing the question of the size and composition of a sustainable human population. Key Words Ecology, biosphere, world overpopulation, migration, endangered species, weapons of mass destruction, global war. The current threat to life in the biosphere is of overwhelming dimensions.1 The planet is currently experiencing the greatest mass extinction of species since the time of the dinosaurs, 65 million years ago, and it is being caused solely by mankind's massive numbers and industrial activity.2 Most of the species extinction is being caused by rampant destruction of wildlife habitat, such as forests and wetlands. In other cases, species are being deliberately singled out for destruction, as in the case of rhinoceros horn (for Yemeni dagger handles), or tigers and leopards (for traditional medicine in China, Japan, and other East Asian countries), or whales (for Japanese whale-meat shops). Apart from causing the extinction of thousands of other species by depriving these life forms of their natural habitat, mankind's increasing numbers and industrial activity are causing such great changes to the atmosphere that numbers of concerned scholars are today warning that it is conceivable that all advanced forms of life on the planet's surface could be extinguished in a relatively short time.3 Industrial gasses are poisoning the atmosphere to such an extent that the ozone layer that protects all biological life from extreme radiation is being destroyed. These gasses are contributing to global warming. Signs of global warming are dramatic and ubiquitous.4 And as the masses of Asia increase in number and industrialize, the rate of ecological damage is rising rapidly. Without denying the possibility that the ongoing explosion of the human population, exacerbated by increasing industrial activity, may result in the catastrophic destruction of the planet's biosphere, it has to be admitted that the human species is at the very least causing a tremendous and irreversible changes in global biodiversity. Of the 5-30 million species on the planet's surface, an estimated 30,000 are currently being exterminated every year.. With each passing year the world becomes a less and less varied and interesting place to be. Mankind is in the process of destroying, in an instant of evolutionary time, the global environment in which it evolved and on which it depends. At the very least, human overpopulation and increasing industrial activity are causing the extinction of large numbers of other species, and could potentially lead to the biological death of the planet. This destruction began with the advent of modern technology several centuries ago, and accelerated tremendously with the advent of the petroleum age. The human population continues to grow by about 1.3 percent a year, and economic activity (industrial production) is increasing by about three percent per year. With ecologically diverse forests being destroyed at the rate of 16 million hectares per year, the pace of destruction is relentless. Current Trends, and What Will Happen if They Continue The world total human population is exploding. In 1999 it passed the six billion mark, and it increases by about 80 million every year. It will continue to do so not just because birth rates in many areas are far above the "replacement" level of 2.1 children per female in her lifetime, but also because of population "momentum" (the continued growth of a population at replacement-level fertility because previous generations of higher fertility have not yet had all of their children). …

Luxury and Status: Why Money Fails to Satisfy in an Era of Excess

Abstract: Luxury and Status: Why Money Fails to Satisfy in an Era of Excess Robert H. Frank The Free Press, 1999 Robert H. Frank's book is dedicated to showing that excessive real resources are devoted to conspicuous consumption when other uses for these resources would be better for society. Of course, many others have said this. However, Professor Frank does a better job of explaining why this is so, and discussing the resulting policy implications. The basic reason is that human wants are interdependent. What one has affects what another wants. Frank is one of the few economists seen at evolutionary psychology meetings. Given this, it is a little surprising that his lucid explanations don't include a better explanation of why human wants are so interdependent. Evolutionary psychology is built on the idea that the genes that increase in frequency are those that contribute to the individual's leaving the most descendants, not necessarily those that contribute most to human happiness. One of the necessities for leaving lots of descendants is survival. As part of this, humans desire food and shelter..Medical care and medicine also contribute to survival. Many human wants can be explained in terms of such simple needs. Traditional economics, where the individual is taken as having a set of wants that are fundamentally independent of the wants of others, deals adequately with these material needs. People can be visualized as trading off the desire for meat versus the desire for vegetables. The gain in one person's happiness (economists use the term utility) from sating his hunger, or from warming his body in winter, or from eliminating the pain of a disease does not have much effect on others' happiness. At one time, most economic activity, at least among the working classes and peasants, was directed toward meeting such material needs. It was in such conditions that Adam Smith's book The Wealth of Nations was written. Even today, economics textbooks implicitly have such needs in mind. However, today in the industrial world most people have their material needs for food, shelter, and medical care met. Instead, our efforts are devoted to seeking status, and conspicuous consumption. Today, most consumption is not to meet material needs, but to impress others. Frank frequently uses a large house or a fancy automobile as examples of conspicuous consumption. While such consumption raises the status of those that have the items, it also lowers that of those that do not have them, leaving little net benefit. He argues convincingly that if we all bought less expensive versions of such items we would derive equal satisfaction, while additional income would be freed up for other purposes, some of which would actually increase our happiness without lowering that of others. Frank provides empirical evidence for the folk wisdom that material goods do not bring happiness. Surveys of happiness and satisfaction with life conducted at regular intervals show that happiness has not increased even over time-frames where the level of material consumption has greatly increased. In spite of his evolutionary psychology background, Frank does not go deeply into why we derive pleasure from conspicuous consumption. The evolutionary psychology literature provides the explanation (for a recent exposition see Low 2000). The reason is that humans compete for mates, and especially, men compete for women. Over the thousands of years of human evolution, women who selected high-status males for mates enjoyed more protection and resources for themselves and their children. This permitted them to leave more grandchildren, and this caused the genes for such behavior to spread. By now humans have a built-in tendency to seek status and to seek to impress other humans. Because our mating success over the years has depended on our status, we are status-seekers. Much of our desire for conspicuous consumption evolved because signaling our resources increased our reproductive success. …

Poverty Trends in a Metropolis

Abstract: Objective. This study develops a technique to estimate and project annual rates of poverty for various population segments within a metropolitan area. Methods. The annual estimates and projections are based upon official rates of poverty compiled by the Census Bureau. The setting for the study is the Los Angeles/Long Beach SMSA/PMSA and covers the years 1959 through 2000. Using Census benchmark years, linear regression models are developed for All Residents, Whites, Blacks, Hispanics, Female Family Heads, the Elderly and Children. Results. The evidence reveals an increasing trend in the incidence of poverty for the overall metropolitan population. This increase is caused by dramatic rises within the Hispanic and the Children population subgroups. Poverty trends are negative, however, for the Elderly, Blacks, Female Family Heads and Whites. Conclusion. The evidence for the Los Angeles/Lng Beach metropolitan area mirrors the overall findings for the state of California. Key Words: Poverty, Los Angeles, Long Beach, Hispanics, whites, blacks, children Article I, Section II of the U.S. Constitution specifies that an enumeration of the population shall be made every 10 years. Consequently, the Bureau of the Census conducts decennial counts of the population and, at the same time, compiles data on family and individual incomes (for the year immediately preceding each census year). Since 1960, the Bureau also estimates poverty at 10-year intervals for the nation, regions, states, counties, urban and rural areas, and tracts. The census surveys of poverty have been obtained from samples ranging from 15% to 25% of housing units. Since 1960, the Bureau has also obtained annual survey data on income and poverty (for 1959 on) and has published it in March issues of the Current Population Reports. This data has been collected, however, only for the nation and for states. These annual Current Population Surveys are based upon national samples over the years of between 33,500 and 65,500 noninstitutional civilian households. But, except for the decennial censuses, no data on poverty have been compiled regularly for substate levels. The purpose of this study is to establish a methodology to provide annual estimates of poverty for an urban area over time. The methodology is patterned after a technique that was used successfully in obtaining time series estimates for the state of California (Mogull, 1991, 1993, 1998). According to one prominent observer, "The real importance of a ... poverty measure is not the number who are poor in any one year but the indicator's ability to show whether the number is decreasing or increasing over time" (Primus,1995:27). The assumption made by the planned methodology is that smoothed linkages between the benchmark years (which have been established by the decennial censuses) will yield a valid and reliable charting of long-term trends. Methodology and Data As an example, annual poverty estimates and projections will be created for the Los Angeles/Long Beach Standard Metropolitan Statistical Area (SMSA) since 1959 and Primary Metropolitan Statistical Area (PMSA) since 1983. This urban area is currently the second largest in the nation and the largest west of the Mississippi River, with a Consolidated Metropolitan Statistical Area population in 1996 of nearly 15 million. Annual rates of poverty will be estimated and projected separately for seven (nonmutually exclusive) segments of the population - All Residents, Whites, Blacks, Hispanics, Female Family Heads (without a resident spouse), the Elderly (age 65 and over), and Children (related by blood or adoption to the householders and under the age of 18). So far, official estimates of poverty have been established by the Census Bureau for the years 1959, 1969, 1979 and 1989 (Bureau of the Census, 1972, 1973abc, 1975, 1985, 1993). These estimates are to be used here as benchmarks or points of reference. …