The Political Economy of Int'l Beauty Pageants

OK, some qualifiers about the post title here: First, I am not quite attracted to beauty pageant contestants since I generally find them too skinny. Second, I didn't actually watch the Miss Universe 2013 finals in Russia since I didn't bother to figure out what time it was showing. Third, I am probably biased since our country's bet didn't win despite making it to the last five contestants for yet another year without actually winning. (Then again, if you are looking for unbiased commentary from blogs, you are probably looking in the wrong place.) So, with those caveats in mind, here is what the most recent event has taught me about the international political economy of beauty pageants. Excerpts here from the Manila Bulletin:

(1) It often helps if you *can't* speak English, the language of the event:

Fans expressed disappointment when it was announced that [Philippine contestant Ariella] Arida finished third runner-up. They said she was the only candidate who did not use an interpreter in the field of Latina co-semifinalists [from Brazil, Ecuador, Spain, and Venezuela. In 2011, Filipino fans expressed the same sentiments when [Shamcey] Supsup won third runner-up in the beauty contest in which she was the only one in the Top 5 who did not use an interpreter.

The idea is that you are more "exotic" when you cannot speak English. (I'd like to confess that I've been using Google Translate for six years to write this blog, but few of you will believe me.) Some will say that's a nonsense argument since Miss USA won last year, but consider the rarity of straight English answers in the Q&A portions and that the event's promoter is some Yank with a weird hairdo who stands to benefit massively from a ratings jump in the States.

(2) It doesn't help to be smart. This is a beauty contest, not a brains contest.  Ask the Philippine contestant--a chemistry major--who finished fourth:

Born on Nov. 29, 1988, to public school teachers Alresito and Estella, Arida graduated from the University of the Philippines Los Banos [UPLB] in Laguna...

Arida began studying veterinary medicine at UPLB in 2005 but shifted to chemistry on her second year. Her undergraduate thesis entitled “Virtual Binding of Synthetic Nucleoside Analogues and Phyto-brassino steroids to NS5 Dengue Virus mRNA 2’-o-Methyltransferase Domain Using Dock Software” was presented in the 2010 Philippine Chemistry Congress held at Subic Bay in Zambales.

Looks matter, and passable answers will suffice during the Q&A portions--especially if delivered in a language other than English.

(3) So the Latin bloc is not doing so well economically, but hey, they do fantastically well in beauty pageants! 4 out of the top five ain't bad, and the award haul of Latin countries like Venezuela is astounding. I suppose beauty pageants act as the opiate for the masses in an increasingly secularized world--especially in Venezuela, a country run by nutters that has made a successful cottage industry of preparing young women for these events. (And don't speak English for crying out loud.)

Consider that the Philippines was a Spanish colony for over three hundred years and the domination would become even more pronounced. Ah well, roll on 2014; we're bound to win this damn thing sometime soon...

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The Washington Consensus Lives On In Pakistan

There is a photo essay on American shopping malls that I found quite amusing on Yahoo! featuring pictures taken by an obviously obsessive chap who took lots of them during that era of high consumerism, the Eighties, entitled "Big Hair, Smoking, and Record Stores." While the IMF now styles itself as not your grandpa's IMF in being a kinder, gentler lender of last resort, I had a distinct 45 RPM retro flashback while reading its latest press release concerning its recent staff mission to Pakistan (where they are not quite fond of Yanquis).

Much as the IMF would like to say otherwise, it seems we have not yet gotten away from the greatest hits of one-size-fits-all quite yet. Liberalization, privatization, deregulation...structural adjustment austerity....is there anything new?

Structural adjustment:

The mission was also pleased with the strong fiscal performance in the first quarter of 2013/14 and the steady implementation of the government’s structural reform agenda...

Belt-tightening:

Fiscal consolidation remains a key component of the government’s economic reform program. The mission was encouraged by the government’s efforts to enhance tax revenues, which slightly exceeded the program target level.

Privatization:

The government is moving forward with the privatization or restructuring of 31 public sector enterprises to improve public sector resource allocation and limit poor performance.

Liberalization:

The authorities are also working towards significant structural reforms in the areas of trade and the business climate to encourage higher investment.

Everything old is new again, and I am afraid that we have not quite gotten into the New Wave, let alone the Alternative era at the IMF since the song remains the same. Is that doom metal? Would you like to, ah, break dance?

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American Exceptionalism: Why So Few Diesel Cars?

It routinely surprises insular Yanks who dare venture abroad that the rest of us are quite fond of diesel cars. In this day and age of dear fuel, improved mileage has it attractions. Americans would beg to differ: They shake! They stink! That's what trucks run on! are among the things you hear them say. Such stereotypes hold only for older generations (up to, say, Eighties vintage) of passenger vehicles. By the Nineties, consumers elsewhere embraced advances in diesel technology that have made them the fuel of choice not only on fuel saving grounds but also performance given the wider torque spread of cars running diesel. Nowadays, of course, the poshest of brands--Audi, BMW, Mercedes-Benz, etc--feature model ranges replete with diesel models. They certainly don't shake, stink, or run like trucks anymore...from Auntie:

A 1.6-litre turbodiesel delivers the torque surge of a much larger gasoline engine, yet with the fuel efficiency of a much smaller one. In the UK, diesel sales account for more than half of all cars sold, and even with a stat like that, Britain lags the rest of Europe, which has long preferred diesel to gas.

So why would more Americans not drive diesels? From the European perspective, it would suit the driving style of the States perfectly, with lots of relaxed muscle available at low rpms to cruise vast interstate networks that are the envy of the world. Better mileage means fewer fill-ups, and the on-paper improvements in fuel economy would, overnight, take the US fleet one massive step toward President Obama’s targeted 54.5 mpg national average by 2025. Simply stated, diesel should “work” in the US.

EPA rules on mileage will probably "force" US consumers to adopt diesels alike Europeans have. OTOH, you can argue that the US market is more primitive in this respect, resembling a pre-enlightened Europe:

In the UK of the 1980s, diesel drivers were outcasts. They were required to fill up around the back of the station, over by the truckers, to be looked upon by gasoline burners with a mixture of pity and smugness. And that presumed diesel drivers could even find somewhere to fill up, as not every filling station bothered to stock their fuel.

This sheer lack of availability led to great variability in pricing. As the only filling-station proprietor in 25 miles to stock diesel, Mr. Smith could subsequently charge more or less whatever he wanted. A survey of diesel prices in the US illustrates a similarly maddening snapshot of how scarcity can produce wide price fluctuations, with pump prices varying by up to 50 cents a gallon. But with more diesel purchasers, the laws of the marketplace would kick in, bringing prices into greater alignment.

Given the need for low-sulphur refining, diesel would not necessarily become cheaper than premium in the US. It is pricier on the other side of the Pond, too, but although Europeans gripe about it, they still know the savings add up. Diesel generally returns 30% better mileage than gas, and in the dominion of $8 gallons, this is no small advantage.

So the Yanks are a bunch of eco-primitives; tell me something new about these folks who still debate about whether climate change exists when the rest of the world has moved on to doing something about it. 

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Are the Port of Hong Kong's Glory Days Over?

How the mighty are falling. Here's another one from the Far East shipping files: Hong Kong ranks regularly among the world's top three busiest container ports in terms of twenty-foot equivalent units (TEUs) handled. Yet, its previously unassailable status is coming under attack due to a number of factors. First, rising labor costs in the Pearl River Delta mean it is being less used to handle shipments of manufactured goods from that part of China. Second, "industrial action" hit Hong Kong for the first time in many years earlier in 2013...

Like Shenzhen, Hong Kong’s throughput has been pinched by the decline of South China manufacturing, as high labour costs impel factory owners to shift operations to China’s interior or elsewhere in Asia. Hong Kong narrowly missed losing its third place position against Shenzhen, which marginally increased volumes in 2012 by 1.6%.

The biggest operator in the port, Hutchison International Terminals, was hit by the first major industrial action in Hong Kong in 20 years that began on March 28, 2013. The strike involved 450 port workers, including crane operators and stevedores, and lasted for 40 days. The strike caused a 20% drop in throughput at the Hong Kong operations of HPH Trust — a Singapore-listed Hutchison spin-off that comprises many of Hutchison’s Hong Kong assets.

As a result, many major port operators are divesting themselves of Hong Kong.  Indeed, the years it served as the world's gateway to China are numbered since, well, the former crown colony was reabsorbed by the mainland in 1997 and became a special administrative region (SAR). The handover happened a long time ago, and there is certainly no lack of mainland ports companies can now use--no need to use HK as an intermediary with the Reds in charge here as well:

Dropping volumes in Hong Kong was a factor in divestments by major port operators. In March 2013, HPH Trust bought Asia Container Terminals Holdings for $503m from joint owners Dubai-based DP World and Singapore-based PSA. Simultaneously, DP World sold 75% of its interest in Hong Kong’s Kwai Chung Terminal berth 3 and in ATL Logistics Centre Hong Kong for $463m to Goodman Hong Kong Logistics Fund.

While Hong Kong still retains an edge for operational efficiency, it also faces continuous erosion of demand, as more operators make direct calls to mainland ports. The competitiveness of Shenzhen ports has been boosted by easing of customs requirements for ocean to ocean transhipment.

Hong Kong retains its place as the world's freest economy, but certain parts of its portfolio no longer dominate its unique selling proposition as others have caught up. I hate to say it, but the port business may truly be a "sunset industry" for HK as some have presaged.

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The Mother of Market Manipulation In Forex Trading?

With their often haughty attitudes and tendency to focus on short-term profits in the (unfortunately) correct belief that they are too big too fail, banks are easy targets for regulators and critics of capitalism-slash-globalism alike. However, I believe that there are still grey areas and that banker-bashing is not a morality play. It was perhaps inevitable after going after price-fixing in reference-rate (LIBOR) setting that regulators' attention would turn from money markets to the mother of all markets--foreign exchange. This time, the dragnet is not just led by US or UK regulators. Befitting the forex market's global reach, regulators the world over are closing in:

At least six authorities globally – the European Commission, Switzerland’s markets regulator Finma and the country’s competition authority Weko, the UK’s Financial Services Authority, the Department of Justice in the US and the Hong Kong Monetary Authority – are looking into allegations that bankers colluded to move the currencies market.

Banks including UBS, Deutsche Bank, Citigroup, Barclays, HSBC, Royal Bank of Scotland, JPMorgan and Credit Suisse have launched internal probes or received requests for information from regulators, according to people familiar with the situation. “This is an industry-wide issue,” a top executive at a large European bank says. “It is very complex but what is clear is that there are more than just a few big market players involved.”

Anti-globalization activists and Occupy Wall Street flunkies enjoy using gross figures (to paraphrase Carl Sagan, trilyuns and trilyuns) to cast the foreign exchange market as an enormous manifestation of financial depravity with no clear social purpose. Believe it or not, I myself question the benefits of sending money back and forth without a corresponding need for foreign exchange for "real" purposes such as settling trade in goods and services. My point though is that if you recognize that money is not really changing hands long-term but merely goes back and forth, volume in the foreign exchange market is much less impressive. Especially when you realize it's mostly just large banks buying and selling currencies among one another in 5-10 million dollar trades. Absent unusual circumstances, banks' positions generally square at the end of the trading day.

In any event, the much more informal nature of interaction among FX traders is what is causing regulators to look into "collusion":

The probes hit a business area that with $5.3tn in daily volume [sigh, there they go again] is the largest financial market in the world. “I always thought that if there’s a market that’s least manipulated it’s the FX market,” says one investor. Among bankers, the foreign exchange market is often viewed as the less sophisticated relative of the rates market, whose traders are seen to have a reckless culture on the forex trading floor.

In what is a largely unregulated and off-exchange market, traders have devised their own rules of what constitutes fair play. Traders say it is perfectly normal to chat to traders at other banks, sharing views on pieces of economic data due out, or simply gossiping. One senior trader told the Financial Times that it was normal for traders to share details of their positions with each other – so long as they did not name their clients.

So, for example, traders trying to work out whether the euro would rise or fall at the daily 4pm fix – a WM/Reuters benchmark that is crucial for many large client orders – might tell traders at other banks they needed to buy, or sell, euros. From there it could be a short step for the regulator to deduce collusion. One investor says he was very surprised to hear that traders would even share their positions with each other.

This one should be interesting: If found guilty, the stakes would naturally be much higher given the international character of this market and--pardon--its ostensibly larger volumes. That said, I am not certain whether having an informal trading culture is necessarily a smoking gun for culpability. Having been stung before, banks like RBS and Barclays are not exactly waiting around and are now jettisoning forex traders in the belief doing so may help them avoid penalties. We'll see...

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American Stasi: Work for the NSA, Spy on the World

I've been watching the Academy Award-winning drama The Lives of Others based on the operations of the East German-era secret police, the Stasi. Vast improvements in technology have enabled gathering ever-more information on the activities of you and me, and the United States has come under massive fire from virtually every continent in the world for its surveillance activities. Even Malaysia--Malaysia! is now complaining. Under the excuse of thwarting the proliferation of terror, it appears the US is rather indiscriminate in snooping on friend and foe, netizens and "terrorists" alike. Commercial data mining usually has a purpose in detecting consumption patterns of people; NSA snooping does not seem to have any underlying logic save for annoying everyone else with Yanqui intrusiveness. To be honest, I find these busybodies appalling: don't they have anything better to do than, as the movie title suggests, monitor the lives of others? Sure the United States' National Security Agency pays its operatives well, but the broader question remains--is this a morally acceptable occupation? If you are a Yanqui with no scruples, however, and are a dab hand with computers and software, I have the ideal job for you--"cyber professional" at the NSA:

The National Security Agency has a complex mission: to gather foreign intelligence and to defend U.S. government information systems.  Communications have evolved from the past.  Today, the IT infrastructure is digital from start to finish.  America's national security information depends on technology as never before.

That's why NSA employs a wide variety of cyber professionals: to help protect and defend U.S. government IT systems, and to help exploit the intelligence of adversaries [my emphasis--and that category would obviously include anyone and everyone since US identification friend or foe (IFF) is evidently non-existent in this respect].

As our use of technologies grows exponentially, so do our country's vulnerabilities.  Our national security depends on the stability and reliability of our communications infrastructure.  The cyber threat to IT and national security systems has never been greater.

In fact, with the increased number of cyber events around the world, it’s more important now than ever to stay a step ahead of our cyber adversaries [my emphasis again--by spying on them before they spy on you, obviously]. At NSA, knowing cyberspace matters. As a cyber professional, you will become a part of a tradition of excellence, poised to lead the nation in the protection of our country’s national interests in cyberspace for years to come.

Even the normally placid and US-loving German chancellor from former East Germany has taken exception to the Americans' nefarious activities. Catch Angela (Merkel) gossiping about Schweini and other matters of great security to American national security in the global war on terror (GWOT).

That an NSA job is considered a cushy one in today's America says all you need to know about it in this day and age. These people--especially those jerks at the NSA--should spend more time minding their own business, not least because it's going nowhere fast economically, politically or morally.

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Come to Texas: Can Tyler Cowen Say "FM Radio"?

Koch Industries of Tea Party fame-funded arch-libertarian Tyler Cowen has an interesting piece in TIME about how Texas is America's future. Having stayed there for a time, I am of somewhat more mixed opinions about its virtues and vices than he is. Read for yourselves and see what you think.

Before you do so, I have two things to point out: First, he seems to have thrown his lot with the Internet-makes-our-lives-so-much-better crowd in arguing that, actually, our standards of living have improved immeasurably because of it:

For Americans heading to these places, the likelihood is that they'll be facing slow-growing, stagnant or even falling wages. Yet it won't be the dystopia that it may sound like at first. Automation and globalization don't just make a lot of goods and services much cheaper--they sometimes make them free. There is already plenty of free online education, graded by computer bots, and free music on YouTube. Hulu and related online viewing services are allowing Americans to free up some money by cutting the cable cord. Facebook soaks up a lot of our free time, and it doesn't cost a dime. The near future likely will bring free or very cheap online medical diagnosis.

If I were a leftist, I'd say that this Koch Industries-funded arch-libertarian is trying to excuse growing income inequality Stateside by arguing that the Internet has improved the quality of our lives anyway, so economic disparities and wage stagnation don't really matter. You can raise any number of objections to this idea, from the Internet making us rather misanthropic to its essentially inegalitarian premises. That said, "free music on YouTube" is a most curious elision: Has Cowen never heard of FM radio--"free music"? For over half a century and most especially so in poor countries, the transistor radio has been the dominant source of free music. What's more, YouTube is not really quite as costless as FM radio since you have to pay for that Internet connection. 

Next, Cowen's Koch Industries funders may not be so happy with the idea that people are moving to Texas to take advantage of "European" lifestyles: less work, more quality of life:

This suggests that wages and GDP statistics may no longer be the most accurate gauges of real living standards. A new class of Americans will become far more numerous. They will despair at finding good middle-class jobs and decide to live off salaries that are roughly comparable to today's lower-middle-class incomes. Some will give up trying so hard--but it won't matter as much as it used to, because they won't have to be big successes to live relatively well.

"The world of work is changing, and what we are learning is it's no longer about the 9-to-5, it's about the work itself," says Gary Swart, CEO of oDesk, a global job marketplace that sells tools to allow businesses to hire and manage remote workers. "Millennials, they are about how to make an impact ... They want freedom in their lives, and they care more about that than they do the financial rewards."

I hope this sort of "European" argument is taken in stride by the Tea Party crowd, guardians of whatever remains of the Protestant Work Ethic and other cornerstones of their conception of being "American" lest the people become...like Europeans [eek!].  If Senator Joseph McCarthy were still around, Cowen would probably have been called by the House Un-American Activities Committee by now.

As the Beach Boys sing, I guess that's why God made the radio.

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