Long live debt!

I would like to make a deal with the Right Rev Peter Selby, Bishop of Worcester from 1997 to 2007. I promise not to make public statements about the merits of the Trinitarian doctrine (a form of higher theological mathematics asserting that 3 = 1). In return I would like the Bishop not to write any more nonsense about credit and debt.

In today’s Credo column on the Faith page of the Times of London (“It’s time to stop giving credit to our culture of debt”, The Times, Saturday October 13, 2007, p. 83) the Bishop produces a number of canards about debt. Unencumbered by logic or facts, the Bishop makes a slew of assertions that are, at best, unproven and at worst plain wrong.

Assertion 1: The Jubilee 2000 campaign, advocating debt relief for the poorest nations of the world, "was a remarkable achievement". Case unproven. The Bishop makes the common mistake of confusing poor countries and poor people. The debt relief in question is the forgiving of debt owed by the governments of the poorest nations. It is quite possible, and in a many cases indeed likely, that the vast majority of the citizens of these poorest nations may have been made worse off by the cancellation of part or all of the debt owed by their governments. Most of the poorest countries have appalling governments - repressive, corrupt, incompetent and inefficient. Unlike the vast majority of the population, the rulers of the poorest countries often are rich – their wealth stolen from the people. Debt forgiveness consolidates the hold of these disastrous governments on power and postpones the day that they can be held to account. When trying to help the poor ‘do no harm’ should be an overriding concern. Jubilee 2000 violated the ‘do no harm’ maxim.

Assertion 2: The need to get across “a systemic analysis of the nature of runaway debt, its roots in the creation of money by lending and borrowing, and the potential dangers for the world of both domestic and international debt.” Here the Bishop makes a factual statement about runaway debt. Where is (was) this runaway debt? The UK? The US? Everywhere in the world? Clearly, one can point to specific instances of excessive borrowing. Some households in the US and the UK have undoubtedly engaged in this. Elsewhere there is too little debt and borrowing. In the People’s Republic of China, for instance, it would probably be welfare-enhancing for the government to raise spending on education, health and environmental investment, and to finance at least part of this by borrowing, thus absorbing the excessive saving of Chinese households and public enterprises. Apart from his factual errors, the Bishop also confuses money creation with credit and borrowing. One can have lending and borrowing without money creation and money creation without lending or borrowing. The Bishop is confused about what money is, how it is created and what it does. He is in good company. Most people haven’t got a clue about the meaning and modalities of money. But fortunately, most monetary ignoramuses don’t display their ignorance by writing about it in the Times.

Assertion 3. “It is obvious that if you allow financial institutions to make huge profits by lending large multiples of the deposits they hold, you are allowing them to create money”. This is complete gobbledegook. For those who care, there are many operational definitions of money, ranging from narrow money (coin and currency plus commercial bank deposits with the central bank) to broader monetary aggregates, typically the sum of coin and currency in circulation, plus some subset of the deposits of certain deposit-taking institutions, plus some of the close substitutes for these deposits. ‘Creating money’ – an unfortunate and imprecise phrase that appears to attribute divine powers to the ‘money creating’ institutions – does not require financial institutions to make huge profits; neither do financial institutions that make huge profits necessarily create money. If financial institutions lend huge multiples of the deposits they hold, they must be financing that lending out of non-deposit resources (the wholesale markets, for instance, as Northern Rock did). This may have been reckless, but has nothing to do with money creation.

Assertion 4. “This failure of understanding has led to the use of debt as an instrument not just for uncontrolled personal consumption but also for building hospitals, schools and even prisons. The disciplines of living within your means, of allowing public functions to be provided by democratically accountable institutions, and of not using tomorrow’s resources today are forgotten as the young are trained in indebtedness as a condition of obtaining their tertiary education”. This is complete nonsense. The institutions and financial instruments that permit borrowing and debt (the cumulative total of all past net borrowing), represent a wonderful manifestation of human ingenuity – the Bishop might even call it a gift from God; I certainly would. Without borrowing and debt, each household, each firm and each government could only invest what it saves itself. That would lead to gross inefficiency and a colossal waste of resources. The financial means for financing investment are not necessarily distributed in the same way as the capacity to come up with productive and profitable investment projects. Without debt and borrowing, each family, enterprise and government would have to be financially self-sufficient. The creation of enterprises on a scale larger than cottage industries would have been extremely difficult. Material standards of living would be at the level of India and China before the 1980s.

Consider the state of UK infrastructure (social overhead capital). Transportation infrastructure is sub-standard and clapped-out. Many hospitals are a disgrace; many primary and secondary schools are in need of further capital investment; there is prison overcrowding. Clearly, there is a strong case for large-scale catch-up investment in infrastructure. To finance all of this temporary investment boom with a balanced budget would be inefficient, as it would require large temporary increases in average and marginal tax rates. It would also be unfair, because the benefits from the improved infrastructure will benefit future generations as well as current ones. These future beneficiaries should contribute towards the cost of the investment.

There is another reason why borrowing by governments may be fair. Government borrowing tends to shift the burden of financing the government from the old to the young and from current to future generations. If the pattern of the past 225 years persists, future generations are likely to be better off than us. Shifting the tax burden to future generations that are likely to be better off than ourselves, is something even the Bishop might not object to.

The same holds for student loans to finance tertiary education. It is efficient and can be made fair. The returns to investing in a tertiary education accrue overwhelmingly to the student in the form of higher future income and greater job satisfaction. It is only fair that those who benefit should pay. Taxing the average Briton to subsidize the tertiary education of persons who, after completing their tertiary education, may well be richer than the average Briton, is unfair. Clearly, the risk of failing to complete the tertiary education programme or of failing to achieve a higher income for some other reason should not be a deterrent to enter tertiary education for students from poor backgrounds. That’s why repayment of the student loans should only begin once the income of the former student is above some appropriate threshold level. Requiring students to pay for their own tertiary education, if necessary by borrowing, is both efficient and fair if income-contingent debt service is built into the programme.

Finally, as regards “…not using tomorrow’s resources today..”, the only way to shift physical resources from tomorrow to today is by reducing investment and, in the limit, consuming capital. Investing in tertiary education, likely all investment, shifts resources from today to tomorrow, regardless of how it is financed. A closed economic system has to reduce current consumption (and possibly also early future consumption) temporarily in order to increase investment today and thus achieve higher future consumption in the longer run. By borrowing, it may be possible, in an open economic system, to avoid any absolute decline in consumption, today and tomorrow, provided the return on the investment is sufficient. Borrowing and then repaying principal and interest is a wonderful mechanism for achieving a more even, smooth consumption profile over the life cycle.

Assertion 5. “Most serious of all, we fail to notice where the resources are coming from: all the talk in the world about climate change and the depletion of the resources of the planet will be fruitless if we do not limit our appetite for eating up tomorrow’s bread and burning tomorrow’s oil today.” The Bishop may well be correct that were are depleting exhaustible natural resources too fast. However, excessive resource depletion and destruction of the environment have nothing to do with the culture of credit and debt. The former Soviet Union had very little credit and debt. Its financial system consisted of a single monobank that provided virtually no consumer credit. Its government debt was low. Other communist countries, like Romania, paid off all their public debt (at great cost to the population alive at the time). Yet despite being as far removed from the culture of credit and debt as one could get, the communist countries depleted scarce natural resources and vandalised the environment on a scale never seen before or since (except for China today).

Assertion 6. “The communities of faith – Jewish, Christian and Islamic - have a proud history of criticising the institutions of credit and debt”. Fortunately, that is not true now and never has been. There is a tradition in the Abrahamic faiths of periodic limited debt forgiveness. In the Old Testament, this takes the form of the Sabbatical year and the Jubilee year. A creditor could, following a borrower’s inability to service his debt, take possession of the debtor’s land and cultivate it in order to be paid. Sometimes the debtor had to sell his own and his family's labour to the creditor - a form of slavery known as bondage. Every 7th year was a sabbatical year in which the debt would be erased. The sabbatical also applied to the land itself, which was to be left fallow every 7th year. Every 7th Sabbatical, that is, every 49 years, was a Jubilee year. Debtors were released from both debt and bondage, and the land was restored to the debtor. The Sabbatical and Jubilee tradition limited the extent and duration of indebtedness. It did not do away with the institutions of debt, bondage (or other forms of slavery), or declare them ungodly.

There is also, in the Abrahamic tradition (and in even older traditions on the Indian subcontinent), a prohibition of interest, or usury – making money just by lending money. Today, only the literalist, fundamentalist followers of Judaism, Christianity and Islam consider the charging of interest to be sinful and ungodly per se. The best-financed and most vocal forms of Islam today come from the oil- and gas-rich theocracies of the Middle East (often taking the fundamentalist and literalist Wahabbite form of Islam found in and exported from Saudi Arabia). Today, therefore, the prohibition of interest (riba) is only an economically significant issue for Islamic finance. Sharia permits financial contracts, including securities, that involve the sharing of profit and loss. A stream of payments must be associated with an underlying real asset with risky returns or with an underlying risky productive activity. Collateral is also allowed.

From an economic point of view, interest (strictly the nominal interest factor), is just an intertemporal relative price - the price today of borrowing money. Prohibiting interest, or setting caps on interest rates to avoid ‘excessive’ interest rates is a constraint on exchange that limits intertemporal trade and therefore will tend to be inefficient and welfare-decreasing. It is true that in an economy where there also many other distortions in credit markets and insurance markets, and where the scope for targeted redistribution is limited by informational and administrative constraints, caps on interest rates can sometimes be rationalised as a second-best policy. However, I have yet to encounter a problem to which the prohibition of interest is the solution. The prohibition of interest, a constraint on voluntary exchange and on the right to determine the terms of a contract freely, makes no economic sense.

Religious fundamentalism and literalism, in economic and financial affairs as in all others, is obscurantism, based on a perverse mixture of fear and muddled thinking. Fortunately, the more enlightened Christianity that has evolved since Thomas Aquinas condemned usury, recognises the social value of the institutions of debt and credit and the welfare-enhancing potential of borrowing and lending. The Bishop is more than 700 years behind his church.

The explosion of wealth, much of it held in financial form, among oil- and gas-exporting nations, many of which adhere, at least notionally, to fundamentalist-literalist forms of Islam, has led to an explosion of financial engineering aimed at circumventing the Quranic ban on riba. Considerable ingenuity and vast amounts of resources are devoted to the construction of financial products that are economically equivalent to interest-bearing loans or interest-bearing bonds, but theologically equivalent to permissible Islamic risk-sharing instruments. The process of certifying financial products as Sharia-compliant is time-consuming and costly; those with the religious authority to provide the desired certification (typically Islamic scholar-jurists) often don’t understand finance. Financial experts tend not to be well-versed in Sharia law and its application to financial structures. Those with the power of certification can extract significant rents from the issuers and buyers of Sharia-compliant problems.

From an economic point of view, it is costly theological window-dressing, in the sense that no Sharia-compliant product I have ever studied passed the interest rate ‘duck test’[1]: if it looks like interest, compounds like interest, imposes on both parties to the contract obligations equivalent to those associated with interest, and – the bottom-line test – provides the parties to the contract with equivalent contingent payment streams, then it is interest, even if it is stamped “profit sharing”.

Take a car loan as an example. Under Islamic banking a conventional car loan is reproduced by the bank buying the car from the dealer, selling the vehicle at a higher-than-market price to the buyer of the car (with the buyer often paying in instalments), and with the bank retaining ownership of the vehicle until the car (i.e. the loan) is paid in full. This is functionally equivalent to a car loan with interest where the car is the collateral for the loan. An Islamic mortgage loan would have the bank buying the property from the seller and reselling it at a profit to the buyer, allowing the buyer to pay the purchase price in instalments. In order to protect itself against default, the bank asks for the property as collateral until the ‘purchase price’ (loan) is paid in full. The property is registered to the name of the buyer from the start of the transaction.

In sum: debt and credit are good. Borrowing and lending are good. Abuses and misuses are certainly possible. They ought to be addressed through legislation and regulation if the benefit from so doing exceeds the cost of the intervention. Ranting against the culture of debt and credit from a position of matching moral authority and ignorance is not good.

The Bishop’s column is unmitigated twaddle. It is a disgrace that such manifestly uninformed nonsense is put out on a ‘Faith page’. One of God’s great gifts to humanity was the brain. It behoves us to use it.

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[1] If a bird looks like a duck, swims like a duck and quacks like a duck, then it's probably a duck.

Those whom the gods wish to destroy…

The United Nations Office on Drugs and Crime (UNODC) has published a new report on poppy cultivation and opium production in Afghanistan, the Afghanistan Opium Survey 2007. The report contains some useful and sobering facts. In 2007, the acreage cultivated with opium poppies in Afghanistan increased by 17% over the 2006 level. The amount of Afghan land used for opium is now larger than the corresponding total for coca cultivation in Latin America (Colombia, Peru and Bolivia combined). Opium yields also increased (to 42.5 kg/ha in 2007 from 37.0 kg/ha in 2006). Afghanistan therefore produced an extraordinary 8,200 tons of opium in 2007 (34% more than in 2006 and 93% of the global opiates market).

The report also contains some some ludicrous assertions and cockamamie analysis, which one suspects was dropped on the authors of the report from on high. This suspicion is strengthened by the singularly loopy statements at the launch of the document and in its Introduction by Antonio Maria Costa, Executive Director of the UNODC (and my former colleague on the Executive Committee of the European Bank for Reconstruction and Development). Mr. Costa is one of those bureaucrats for whom the conventional scientific modes of proof - proof by deduction and proof by induction - take second place to a third mode of proof (not yet recognised as fully legitimate in scholarly discourse - proof by repeated assertion.

Even someone widely acknowledged as not the sharpest arrow in the quiver should have caught the manifest absurdity of the characterisation, in his own Introduction to the Survey, of opium as "... the world’s deadliest drug...". As regards deadliness, opium and its derivatives isn't a patch on tobacco and alcohol.

Mr. Costa’s most accurate reported statement is "The Afghan opium situation looks grim, but it is not yet hopeless,"; this statement is half right: the Afghan opium situation is both grim and hopeless. He goes on to say: "Where anti-government forces reign, poppies flourish," a correct statement of the observed statistical association between poppy production and the degree of Taliban control in Afghanistan since Taliban’s de-facto rule over the country was ended by the US-led Allied troops almost six years ago.

As a (former) social scientist, Mr. Costa must be aware of the pitfalls associated with the causal interpretation of a statistical association between two phenomena, A and B, say. The statistical association could mean that A causes B, that B causes A, that A and B are interdependent, or that some third factor (or set of phenomena), C, say, is driving (causes) both A and B, without either A influencing B or B influencing A – the ‘common third factor’ interpretation.[1]

Mr. Costa, however, has no doubt; as far as he is concerned, Taliban control of an area causes poppy cultivation to expand in that area. The fact that when the Taliban controlled all of the country, poppy cultivation was almost wiped out, is conveniently forgotten. The Report’s policy recommendation that tackling the Taliban insurgency is key to stemming opium cultivation misses the point completely. Key to tackling the Taliban insurgency is the legalisation of the production, sale and consumption of poppy and its currently illegal derivatives, opium and heroin. This will deprive the Taliban both of political support from farmers who see their livelihoods destroyed or threatened by the Allies’ eradication efforts, and of a ready-made tax and extortion base.

Let me expand slightly: there is indeed a third ‘common (set of) factor(s)’ at work here: the main one is the fact that poppy cultivation and the production, sale and consumption of poppy derivatives such as opium and heroine are illegal almost everywhere. US anti-drugs policy, driven by a bizarre mixture of mindless moralising and complete idiocy and inability to learn from repeated abject failure, is especially vehement, ruthless (at home and abroad) and ineffective. The US government is both the leading opponent of the Taliban and the world’s leading proponent of eradication of drugs ranging from poppy derivatives to coca and cannabis. Poppy cultivation for the illegal market in Afghanistan is more profitable for many local farmers than any other realistically cultivable crop. Attempts by the US, its allies and the Karzai government to eradicate the cultivation of poppy destroy political support for the government and increases support for the Taliban, which can offer protection to illegal poppy growers. The Taliban then tax the poppy crop and the growing share of the opium production that takes place in inside Afghanistan.

The case for legalising currently illegal drugs like opium, heroin, cocaine, and various cannabis derivatives can be made on both utilitarian and libertarian grounds. The utilitarian case has recently been effectively restated by Ethan Nadelmann, in the September/October issue of Foreign Policy. The website of the Drug Policy Alliance, of which Mr. Nadelmann is founder and Executive Director, contains useful statistics, arguments, and information about drug policies worldwide. The resurgence of the odious Taliban in Afghanistan, the illegal drug-related violence and corruption of politics in Columbia and Mexico, Peru, Bolivia and Morocco are a direct result of the criminalisation of drug use.

US anti-drugs policy is not only causing massive harm domestically, it is destroying countries that most Americans have never even visited. Whenever the Taliban extends its control over another city or province, and their barbaric suppression of women and general cult of ignorance destroys the human dignity of yet another generation of Aghanistanis, the anti-drugs Czar (the Director of the White House Office of National Drug Control Policy (ONDCP), currently John P. Walters) and his boss in the White House can take a large share of the credit. Those whom the Gods wish to destroy, they first make mad.

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[1] There could also be a common third factor, C, as well as interdependence between A and B.

© Willem H. Buiter 2007

Trouble in the home of Tolerance

Two news bulletins from the Low Countries:

First, Ehsan Jami, a Dutch local authority councilor for the Labour party, of Iranian origin, announced a few months ago that he was creating a Committee for Ex-Muslims. Since then has been beaten up by islamist thugs and has received dozens of threatening phone calls. His life has been threatened, Islamic prayers have been screamed down his phone line as well as many an 'Allahu Akbar.'

Second, Geert Wilders, Chair of the Dutch party PVV (Partij voor de Vrijheid - Party for Liberty) wants to have the Quran banned in the Netherlands. His reasons are that the Quran calls for the death of those guilty of apostasy, blasphemy, homosexuality and pre-marital or extra-marital sex, condones slavery, supports the subordination of women, and asserts the superiority of Islam over any other religion and accordingly assigns greater rights to Muslims than to non-Muslims.

There are times that losing my Dutch passport because I voluntarily took on another nationality is distinctly less bothersome. The day I read these two news items was one of those days.

Mr Wilders and the thugs that beat up and persecute Ehsan Jami deserve each other. It is clearly of the utmost importance that those who treasury liberty and an open society be aware of just what they are up against when confronted with Islamic fundamentalism and islamist fanatics.

Apostasy in Islam (the rejection of Islam in word or deed by a person who has been a Muslim) is, according to Sharia law, punishable by death. All five major schools of Islamic jurisprudence agree that a sane male apostate must be executed. The fatwahs targeting Salman Rushdie were therefore fully consistent with the prevailing interpretations of Sharia law. A female apostate should be put to death, according to some schools, or imprisoned, according to others. Whether this contrasting treatment of the female and the male is good news or bad news, I leave as an exercise for the reader. (For that matter, proseletyzing targeted at Muslims is likewise forbidden by Sharia law; punishments vary according to the legal and cultural traditions but can include death for the would-be missionaries.)

Blasphemy, according to Sharia law, is also punishable by death or exile: "... execution, or crucifixion, or the cutting off of hands and feet from opposite sides, or exile from the land: that is their disgrace in this world, and a heavy punishment is theirs in the Hereafter;”[Surah Al-Maidah 5:33]). The assassination of the Dutch cineast Theo van Gogh by an islamist fanatic was justfified on the grounds of van Gogh's blasphemous work, including his film Submission.

The Islamic view of apostasy is clearly incompatible with western views of human rights and religious freedom. No compromise is possible. People must have the right to change their religion as often as they change their underwear. To observe any religion or none is a fundamental human right. End of story.

Blasphemy laws still survive in various forms in some western countries, although the penalties fall short of what Sharia law demands. All blasphemy laws should be relegated to the scrap heap of history, together with any lèse majesté laws that may survive.

Homosexuality is a sin according to Islam; according to fundamentalist Islam, it is punishable by death. Extra-marital and pre-marital sex can be punishable by imprisonment, corporal punishment or death. This intolerant barbarism is not acceptable and must be fought. Of course, the same intolerant views can be found in the Christian bible and in the Hebrew Scriptures.

It is true that the Quran condones slavery and supports and mandates the subordination of women. So do the Bible and the Hebrew Scriptures. A very clear statement of the common roots of female subordination in Judaism, Christianity and Islam by the Egyptian feminist Dr. Nawal Saadawi (1990) : "the most restrictive elements towards women can be found first in Judaism in the Old Testament then in Christianity and then in the Quran",..., "all religions are patriarchal because they stem from patriarchal societies" and "veiling of women is not a specifically Islamic practice but an ancient cultural heritage with analogies in sister religions".

It is not the Quran, or the Bible or the Hebrew Scriptures that are dangerous and should be banned. The danger comes from a fundamentalist, literalist reading of selected passages of these bewildering, complex and contradictory writings. Most modern Christians and Jews (and many modern Muslims) recognise that the time and place of their holy books' creation deeply influenced, constrained and at times distorted the manner in which these books' authors or chroniclers expressed themselves. The message needs to be constantly adapted and adjusted to remain relevant to changing times and circumstances, and indeed to remain true. Believers also tend to subscribe to the view that there is a deep core of the divine message that is unvarying - permanent. But that essence need not even be expressed in any of the exact words or phrases found in the holy books.

Fundamentalism is a curse, no matter which religion it infects. Fortunately, Christian fundamentalism and Judaic fundamentalism are less of a political force today than they used to be in days gone by. They are not completely irrelevant, unfortunately. Christian fundamentalism has poisoned the Republican Party in the US and polarised US political life at home and abroad since the days of Reagan. Jewish fundamentalism has a destructive influence quite disproportionate to its small numbers in the state of Israel.

No doubt Islam will evolve, given enough time, towards a less fundamentalist interpretation of the faith and its core writings - the Quran and the Hadith. God gave the same brains to Muslims, Christians and Jews; it just so happened that Islam emerged more than six centuries after Christianity and some 29 centuries after Judaism; one might therefore expect Islam to still need a few more centuries to work out some of the teething problems of becoming a religion fit for an emancipated, educated humanity. Actually, six centuries ago, Christianity was in its Ferdinand and Isabella phase - something much closer in spirit, practice and level of violence to the role of religion held by today's islamist fanatics, and inferior in most ways to the enlightened Islam of El Andalus and the Ottoman Empire. The scientific, scholarly, indeed secular approach to sacred texts like the Quran was pioneered in the 12th century by the great Arab philosopher - physician - mathematician - scientist Ibn Rushd, known as Averroes. It's been a long road downhill from Ibn Rushd, and even today it is hard to see the shoots of an intellectual, cultural and enlightened religious revival in the Islamic world. The struggle against fanaticism, intolerance, fear, hate, the worship of suicide, the glorification of mass-murder and the underlying cult of nihilism, death and destruction has only just begun. I doubt even my teenage children will live to see the end of it, even if they achieve their Biblical entitlement of three score and ten. But banning the Quran? What a stupid, destructive, trust-destroying publicity stunt to even suggest it. Why not ban the Bible as well. And the Gita. And Harry Potter.

Legalising assisted suicide

I would like to thank the US social worker working with senior citizens and people with disabilities for the comment on my earlier post on this subject (link).

I agree that my proposal (1) to recognise the right of any adult of sound mind to take his/her own life and (2) to make it legal for others to assist in the suicide of someone who satisfies (1), carries with it the risk of abuse. While steps can be taken to minimize that risk, it cannot be eliminated altogether. But if “People with disabilities (and or terminal illness) who want to commit suicide are going to fit the criteria for clinical depression”, then they would not, under the guidelines I envisage, qualify for legal assisted suicide. I doubt, actually, whether someone who is reasonably depressed about his appalling medical prospects would easily be confused with someone suffering from clinical depression, but it clearly behoves us to tread very carefully here.

Yes, it would be some committee consisting of psychiatrists, psychologists, social workers, other health professionals and secular or religious experts on ethics, that would have to reach a view of whether the person wishing to end her life was of sound mind - any potentially conflicted party should be kept well away from the process. That’s a tough decision, but one that comes with the territory. Heroic modern medicine allows us to keep people alive well beyond what their bodies evolved for. We are paying the price for a disjuncture between what we can do medically and what we ought to do morally.

Against the risk of abuse of the right to die and of the legalisation of assisted suicide, we must put the existing certainty of the widespread abuse of those kept alive against their will. I have witnessed friends and relatives who begged to be allowed to die but were denied that right. People trussed up like Christmas turkeys with tubes, needles, sensors, monitors and other medical contraptions, with every vital organ supported by some engineering miracle, and with no realistic hope of a change for the better in their condition. I have seen too much torture in the houses of the dying to be willing to sit back and whisper supportive nothings about sharing your pain.

If we could really share in the suffering, that is, take for ourselves some of the pain and agony of those living a slow death, and in so doing diminish the pain and agony of those who are suffering, that would be a true alternative to what I propose. Unfortunately, that is not possible. According to my faith, Christ took away the sins of the world, but even He did not, through His suffering, take away the world’s, that is, our pain and suffering. We all have to bear our own pain and cannot volunteer to bear even the smallest part of another’s.

Sympathy, empathy and love are great blessings, but they don’t alleviate pain. It is therefore an abuse of language to speak of sharing someone else’s suffering or pain, because this choice of words implies that suffering or pain are what economists call ‘rival goods’ (or bads), that is, something of which there is less for you when I take more of it. ‘Sharing pain and suffering’ instead really means that the person in pain continues to suffer as he would have without the sharing, and that, in addition, the person sharing the pain now is miserable and depressed as well. Any psychological benefits of the sharing for the original person in pain are likely to be minor, if the original sufferer has empathy for those who wish to share his pain.

I believe that the caring professions, including psychologists, social workers, physicians, other medically qualified people like nurses, have a duty of care towards their clients/patients, but that this duty of care does not amount to keeping them alive at all cost, even against their will. The medical profession should work to reduce human suffering, not to prolong life regardless of the pain and suffering this inflicts on those whose lifespan is being stretched beyond endurance. For a Christian, the second commandment is to love your neighbour, not to torture your neighbour by keeping him alive well beyond his appointed time.

I hope to be in a position, when my time comes, to use my God-given intellect to find a way to avoid living past my sell-by date. I also believe that my sell-by date should be determined either by blind fate or by myself, not by a committee of utilitarian economists or by some other group of servants of the state.

Whatever Happened to the New American Era?

Last superpower standing In 1991 the Soviet Union collapsed. The USA was left as the world’s only superpower, dominant not only in the military and diplomatic domains, but also economically, politically and culturally. A New American Era (NAE) was supposed to begin. The first decade following the collapse of the USSR appeared to confirm that a new American hegemony had indeed started. Around the middle of the 1990s, the era of low productivity growth in the US, which had started with the oil crisis of 1973, transformed into an era of high productivity growth, driven by what became known as the New Economy (the application of information and communication technology (ICT) to a growing number of manufacturing and services products and processes). Nobel Laureate Robert Solow’s quip that “You can see the computer age everywhere but in the productivity statistics”, at last ceased to be true, at any rate in the US. The stock market found itself launched on a massive ‘hausse’.

The collapse of the Soviet Union was more than the defeat and disappearance of a rival power – events like that litter the history books and are of no great interest except for those living through them. The collapse of the Soviet Union represented the death of a political and economic system, and of the quasi-religious ideology associated with it. Communism and central planning in the former Soviet Union and in Central, Eastern and South-Eastern Europe, were defeated by, and made way, for market economics and pluralistic, democratic political systems. It was viewed by many in America as the triumph of the American Way over the forces of darkness.

Globalisation The triumph of capitalism over communism and of liberal pluralistic democracy over totalitarian one-party rule appeared a natural complement to the wider processes of globalisation that were transforming the global economic, political, social and cultural domains. During the 1990s, globalisation looked to many commentators, not only American, as though it was made for (and in the views of some even made by) the United States. By globalisation I mean the steady decline in importance of national boundaries and geographical distance as constraints on mobility. A new phase of this process began following the end of World War II and picked up speed and widened its scope relentlessly. People, goods and services, factors of production and their owners, financial capital, enterprises, technology, brand names, knowledge, ideas, culture, values and religious beliefs all move more easily across national frontiers than at any time since the beginning of World War I.

This process of globalisation affects virtually every nation or region in the world. The phenomenon is driven, first, by technological advances reducing the cost of transportation, mobility and communication, and second, by deliberate political decisions to reduce or even to eliminate man-made barriers to international mobility.

The first of these two driving forces is irreversible, barring a catastrophe on the scale of the fall of the Roman empire that causes major technical regress. Setbacks to the processes reducing the cost of transportation, mobility and communication can occur. An example is the global increase in the cost of air travel and in other costs of engaging in international trade resulting from the 9/11 terrorist attacks on the US. The recent proposals for inspecting (and scanning) every container entering the US by sea is an example of negative productivity growth caused by the response to a terrorist threat.

The political forces driving the lowering of man-made obstacles to international trade and mobility cannot be taken for granted. They have been reversed in the past. They can be reversed again. Between 1870 and 1914, international trade in goods and services was as free as it is today. International lending and borrowing were also highly developed and subject to few official restrictions. The range of financial instruments traded internationally was of course much more restricted than it is today. However, mobility of people, including international migration, was less restricted during the Gold Standard days than it is today.

Pathological globalisation In 2000, the election of George Bush and Dick Cheney as President and Vice-President of the USA represented the high-point of American economic, political and cultural triumphalism. Its expression in foreign policy and international relations was a form of high-handed unilateralism not seen before in the annals of the country.

Then the worm turned. The horrors of 9/11 suddenly brought home to America the fact that globalisation meant that everything has become more mobile: the good, the bad and the ugly. For a country that had not been attacked at home by agents of foreign powers since 1812, the trauma and fear created by the events of 9/11 was quite without precedent, both for the leaders and for the people. Globalisation became increasingly seen, also in the USA, as a source of problems and threats rather than as an opportunity.

The events of 9/11 brought home to America the negative side of globalisation, what I have called elsewhere pathological globalisation. Some dimensions of pathological globalisation were, of course, already familiar to the American public and leadership.

• The international spread of contagious diseases affecting humans has accompanied the increased mobility of humans and animals. Historically, smallpox and measles have destroyed societies. Today, TB, HIV-AIDS, Ebola virus, Nile virus and flu virus can spread with alarming speed. So can BSE and foot and mouth disease.
• The threat of international contagion in financial markets, manias and panics, irrational euphoria and despondency is but a phone call, news flash or e-mail message away.
• Many conventional criminal activities (the drugs trade, money laundering, human trafficking, tax evasion) hare now organised on a global scale.
• Global warming, or global climate change in general, results from CO2E emissions anywhere affecting the climate everywhere.
• Threats to national or regional cultures, religions and identities whether posed by materialist consumerism or an aggressively proselitising Saudi-financed Wahhabi form of Islam, made more acute because of the global reach of the modern media, including the internet.

The events of 9/11 added international terrorism to this little shop of horrors - a global threat perpetrated by loose global networks of terrorists and those who support them.

All these pathological forms of globalisation can only be tackled effectively through global action, that is, through world-wide co-ordinated actions by governments, international organisations and civil society. Safety and security through withdrawal, exclusion or isolation is not an option. Neither is shouting “he who is not with me is against me” and charging ahead, guns blazing (literally or metaphorically) to confront enemies you don’t understand.

It was a double tragedy that the leadership of Bush and Cheney, fed by a mixture of ignorance about the world beyond the US, overconfidence alternating with irrational fear, arrogance and plain stupidity, came to guide and lead the most powerful nation in world at the very moment that creative, intelligent multilateralism was more necessary than ever.

Preview:

In future posts on this subject, I plan to discuss (not necessarily in this order), some of the reasons behind the swift decline of American power and influence. At the moment I plan posts on the following topics:

• Limits to what can achieved with military firepower.
• High-handed unilateralism and ignorance of the world beyond the 49 contiguous states.
• Economic weaknesses
• Lower productivity growth
• Rent-seeking vs. wealth-creating entrepreneurship: cronyism, corruption and myopia
• Oil and energy-dependence
• External indebtedness
• Tax distortions
• Weak economic institutions
• Monetary policy
• Financial sector regulation and supervision
• Distorted fiscal federalism
• Weak political institutions
• A nation run by and for lawyers
• Checks and balances or paralysis?
• Inequality of wealth and income and the erosion of representative democracy and the rule of law.

• The unholy alliance of Christian fundamentalism and market fundamentalism

• Loss of moral authority: Guantanamo Bay and extraordinary renditions

• The rise of Chindia and the rest of the Bricks and of the N11

When living is a fate worse than death; the case for voluntary euthanasia

Too many people I cared for have died before their time, killed by cars or cancer. Too many others have lived well beyond their time. With the progress of medicine and the widespread increase in longevity, the second category is likely to increase relative to the first. The issue is not, however, a new one. Job 42:17 reads: “So Job died, being old and full of days”. The Dutch version is rather more direct: Job dies “oud en der dagen zat.”, which is best translated as ‘old and over-filled with days’. The word ‘zat’ - related to ‘sated’ and ‘satisfied’ - has a strong connotation of too much of a good thing. In Afrikaans, the characterisation is ”old and ’lived out’” (‘afgeleefd’).

The three grandparents I got to know well all went through an absolutely dreadful final two years of life – all three were in their eighties when they died. When I say dreadful, I mean dreadful for them, and not just for those who loved them and witnessed their humiliating and undignified decline into pain, incontinence and incoherence laced with flashes of understanding, despair and horror at what was happening to them. The problem of living too long has now reached my parents’ generation. Some day (if I am lucky enough to live that long) it will be my problem too. Unlike my grandparents and my parents, I intend to be ready when that day arrives. Unfortunately, my proposed course of action would be illegal under the laws of most countries (the enlightened Netherlands are an exception), including the UK and the USA. Were I to require assistance to carry out my plan, the person(s) assisting me could be tried for manslaughter or murder.

Here is my position:

Suicide is a fundamental human right. Assisting someone to commit suicide should, subject to proper safeguards and oversight, be legal.

It is clear to me that the right to commit suicide must be restricted to adults who are of sound mind and who are not suffering from treatable but untreated forms of clinical depression. Assisted suicide should, as it is in the Netherlands, be supervised and accompanied by qualified medical personnel, and be subject to clear guidelines and judicial oversight and accountability.

There are risks associated with assisted suicide and voluntary euthanasia. The main risk is that voluntary euthanasia becomes euthanasia (‘good death’) in the eyes of the just the party or parties administering it rather than in the eyes of the person seeking to end his life. From that point, it is but a small step to involuntary euthanasia or murder. Getting the doctor to quadruple granny’s morphine dose to get at the inheritance in time for the summer holidays, is not part of the package. It is therefore essential that full, informed consent be given by the person wishing to end his life, without any external pressure. Only an adult of sound mind, not blighted by treatable but untreated clinical depression, can make the determination to end his life. This means that those in a coma should be kept on life support, unless they have left clear instructions, say in the form of a notarised living will, that they are not to be kept alive under such circumstances. It may be sensible to make it mandatory for all adults to have living wills covering these contingencies.

I believe that these views on suicide and assisted voluntary euthanasia are fully compatible not just with enlightened humanist ethics, but also with the fundamental tenets of the Christian faith I grew up in and confess to this day. I can see no conflict or tension between my views and the moral imperatives emanating from the two great commandments, quoted by Christ from the Books of Moses: “First, you shall love the Lord your God with all your heart, all your soul and all your mind; and, second, you shall love your neighbour as yourself”.

We have no say in how and when we enter this world. We can have a say in how and when we leave it. That freedom - the right to choose and, if necessary, the right to die, and to choose the time and manner of our dying - is a gift of God – a precious gift.