My book



You can find it here:
And if YOUR voice is noisy enough:
/perkurowski's/splendid/voiceandnoise/bestseller



THE CONTENTS OF VOICE AND NOISE

Introduction
 The World Bank Group? (WBG)/ The Executive Directors?/ The Nongovernmental Organizations?/ The Millennium Development Goals?/ 205 Development Topics! —listed on the World Bank Web site
My ED trips 1
Airport #1/ Airport #2/ The First Country: Gender; A rural road to the town; Motorbikes; Are we few track minded?; Death penalty for corruption!; A luxurious hospital / The Second Country/ Airport #3/ The Third Country/ As far as you can go/ The fourth country/ A fifth country—China- while an ED but not as one/ Small memories from my Central America/ The social contract of Teotihuacan/ Small memories from my transitional hometown: Assaulted; Washington and the GPS; Snowing in Washington; This would never have happened to John Wayne; A monument to transparency

The Debt Sustainability Analysis 23
Why was it such an issue for me?/ A word of caution about Financial Leverage/ An Unsustainable Sustainability/ Odious Debt/ Odious Credit
BASEL—Regulating for what? 37
Puritanism in banking/ A warning/ About the Global Bank Insolvency Initiative/ Some comments at a Risk Management Workshop for Regulators/ Let the Bank Stand Up/ BASEL and microfinance/ The mutual admiration club of firefighters in Basel/ Towards a counter cyclical Basel?/ A new breed of systemic errors
The debate about using Country Systems 55
Why did I spend so much time on this issue?/ Let them bike/ About El Zamorano and the use of country systems/ Lost in the water of globalization
My very private fight for better privatizations 65
Where do I come from?/ Transmission and Distribution—T & D/ Electricity for Brazil—and Isla de Margarita what?/ Pay now and pray for the light/ Hit in the head by the SENECA sale/ The present value and short circuits/ Reform fatigue opportunities/ Fiscal Space—Public or Private
About indexes and their disclosure 83
The Riskiness of Country Risk/ Disclosing the IDA Country-Performance Ratings/ A first round of comments/ About the Panel of Experts/ Some follow up comments/ US GAO Report
A bit on some other indexes 95
The through-the-eye-of-the-needle index/ The index of perceived Corruption/ Today, let us talk about the bribers/ A dangerously failed index/ How good or bad is your municipality?
EIR & Environment 107
My answer to the NGOs/ The Amazon/ Our quixotic windmills/ Earth, the cooperative/ A better alternative than a hybrid
Oil 121
About an Oil Market Update/ It’s an oil boom, stupid!/ Kohlenweiss 1979/ The search for transparency in an oil-consuming world/ We need the world price of gasoline (petrol)/ Sovereignty/ The Oil Referendum/ Why do they point their finger only at us?/ About accountability in energy planning
Trade, agriculture, services, and growth 135
On the road to Cancun…with new proposals/ Place us next to something profitable…/ Time to cover up?/ An encore on nudism and WTO negotiations/ Hosting the spirit of free trade/ Time to scratch each other’s backs/ Of Mangos and Bananas/ Local strawberries in season
About remittances and immigration 147
The nature of remittances/ Remittance fees: The tip of the tip of the tip of the iceberg/ What GDP?/ Family Remittances/ Some notes on the securitization of remittances/ Safeguarding resources/ Scaling up imagination about immigration/ The Skin of the United States/ A de-facto USA enlargement
About cross-border services and emigration 165
The prisoners, the old, and the sick/ A wide spectrum of services for the elderly/ The ethics of solving the shortage of caretakers/ Are we truly a World Bank?/ Get moving!
Intermission…Out of the box tourism 173
Lessons from Florence/ A niche in crookedness?/ Dead and Useful/ Adventure tourism/ Vanity tourism/ Guaranteed boring
On our own governance 181
A real choir of voices/ Voices, Board Effectiveness, and 60 Years/ WB-IMF Collaboration on Public Expenditure issues/ The Normal Distribution Function is missing/ Board Effectiveness and the ticking clock/ WBG’s fight against corruption/ The Annual Meetings Development Committee Communiqué/ Hurrah for the Queen/ Diversity/ About the board and the staff/ A very local World Bank or…the not in my backyard syndrome
Budgets & Costs 193
 On the urgency and the inertia of our business/ Medium Term Strategy and Finance Plan/ Unbudgeted costs/ Budget tools/ The remuneration of our President/ About our central travel agency
Reshuffling our development portfolio 201
Let us scale up the IFC/ An encore on the BIG capital increase for IFC/ The Multilateral Investment Guarantee Agency—MIGA
On some varied homespun issues 209
 The Poverty Reduction Strategy/ There should be life beyond 2015/ There should be new life beyond HIPC/ We need to make more transparent our harmonization/ Transparently Understandable Debt Management/ The Financial Sector Assessment Handbook —a postscript/ Too sophisticated/ About the addiction of guarantees to Municipalities/ About risks and the opportunities/ Financial Outlook and Risks
Some political incorrect Private-Sector Issues 219
Is the private sector the same private sector everywhere?/ Private vs. local investors/ Some thoughts about financial good governance/ What is lacking in the Sarbanes-Oxley Act./ Too well tuned?/ Alternative Millennium Development Goals
Communications 225
Communications in a polarized world/ Some other global communication issues/ Red and blue, or, red or blue?—a postscript
Some admittedly lite pieces 237
The World Bank Special/ Thou shall not PowerPoint/ Deep pondering on labels/ To write or not to write…by hand/ Three bullets on punctuality
On common goods and some global issues 247
Towards World Laboratories/ Daddy…the original or the copy?/ The rights of intellectual property user/ Who can enforce it better?/ Moisés Naím’s Illicit—a postscript/ Global Tax/ Labor standards and Unions
A mixed bag of stand-alone issues 259
My insecurities about the social security debate/ About the SEC, the human factor, and laughing/ Roping in the herd/ A paradise of customs illegalities/ Human genetics made inhuman/ Justice needs to begin with just prisons/ Real or virtual universities?/ Brief thoughts on Europe/ Some spins on the US economy/ Is inflation really measuring inflation?
My Venezuelan blend 283
A Proposal for a New Way of Congressional Elections/ Let’s all whakapohane!/ We enjoyed/ Hugo, the Revolution, and I/ April 11-13, 2002/ To the opposition/ Synthesizing my current messages to my fellow countrymen/ 167-to-0—a postscript/
What is the financial world to do with Venezuela?/ Massachusetts, please show some dignity!/ Colombia & Venezuela
My Farewell Speech on October 28, 2004 299
Did the Minister do right? 305
And now what? 307
The President’s succession 309
My thoughts on the issue/ The OK Corral and the World Bank/ A letter to an another new American World Bank President
On some current books, a movie, and a future book 315
The World’s Banker by Sebastian Mallaby/ The End of Poverty by Jeffrey Sachs/ The Elusive Quest for Growth by William Russell Easterly/ The World Is Flat by Thomas L. Friedman/ The Pentagon’s New Map by Thomas P. M. Barnett/ And the Money kept Rolling In (and Out) by Paul Blustein/ Confessions of an Economic Hit Man by John Perkins/ The Constant Gardener and the UN/ The future very last book about Harry Potter
My book, Amazon’s profits and the value of its shares 325
The last items in my outgoing tray 329
 Pray for us, Karol/ We must aim higher!
List of my fellow passengers who also dined at the captains table 333
A too long C.V. or a too short memoir, and acknowledgements 337
Mangoes
Some more blurring details about the MDGs 349
Shutting down 353
Keep in touch/ The Buck Stops Here

In search of a title

1/24th

By

One of twenty four Executive Directors of the World Bank Group

November 2002–October 2004


Some respectfully irreverent questions and suggestions about a great multilateral financial public-sector institution that the world needs more than ever to be a lean and mean poverty-fighting machine and that at sixty years of age should perhaps be renewing its vows in order to move up from “knowledge” into wisdom and instead of trying to advance impossible agenda like justice and social responsibility might do better settling for fights much easier to monitor against injustices and social irresponsibility … all made by a perhaps a somewhat naive but very well-intentioned former executive director equipped only with his long private-sector experience, and his willingness to speak out … sort of.

Or

HAVE THINK-TANK, WILL TRAVEL

Or

ANOTHER MOUSE WHO TRIED TO ROAR

Or

Mr. KUROWSKI GOES TO WASHINGTON (My daughter’s suggestion)

Or
VOICE AND NOISE


That’s it!

 

VOICE AND NOISE


Having an opinion and voicing it is what Voice is all about. Putting together thousands of perfectly pure voices might synthesize into a harmonious symphony but, without some noise, it will never ring true and that is what Noise is all about.

The world I remember when I was young moved forward on carrots and hope in the belief that it was going to be a better place, while today’s drivers are more the sticks and despairs of those looking only to hang onto what they’ve got.

To stand a chance of a better tomorrow, we need the Voice to recreate our dreams but also the Noise to make us want them come true. 

A shrinking world that makes isolation impossible presents the human race with the challenge of really having to get along. If we resist facing this challenge, the world will be a much-saddened place: let me get off. However, if on the contrary we truly try to make it work, we will at least have some beautiful dreams again.

This book with all its simplicities and contradictions is but an effort to put my voice and noise on the table. All yours are needed too.

P.S. After having decided on the title I found on the Web an article by Ingo R. Titze, Ph.D., titled “Noise in the Voice” that originally appeared in the 2005 May/June issue of the Journal of Singing. It reassures me a lot, as it argues that “A little noise, turned on at the right time, can go a long way toward enlarging the interpretive tool."

A fifth country—while an ED but not as one. "The Chinese of China"

I traveled to China and was mesmerized. I assure you that, as a leisure trip, if you manage to get a bargain-priced ticket, there is nothing like it. When visiting the Great Wall of China, I took a local bus with only Chinese passengers, who sang in Chinese with the help of a karaoke-style video that underscored each Chinese character. But more than all these, for me everything was Chinese.

Nowadays in China, the majority of families have just one child. What does this mean to society? Could Latin families retain their characteristic traits with families of just one offspring? 

It is precisely when a country is getting out of poverty and seeks to position itself in an intermediate level that any improvement, such as going from a bicycle to a motorcycle and from a motorcycle to a car demands a tremendous amount of energy. Is there enough energy and oil in the world to satisfy China’s growth? 

China’s current model for economic growth seems to be taking the country in record time from being a rural country to a country where its citizens are all sardine-like packed in gigantic cities, and we presume that such a move is not good or sustainable. When we observe that recent cutting-edge technological advances in the world allow even the most isolated countryman to be present, almost live, right in the center of the Empire’s capital, we have to ask ourselves, are there really no other better and newer options? 

China’s present growth rate is colossal, and from what we can gather there will be great disparities among those who get on board today’s developed consumerism and those who lag behind with no chance of having even a peek at this new millennium. Any progress entails risks and may even require leaving behind some victims in its passing, but if injustices turn out to be too vast then those passed by are sure to complain. Could China achieve in some decades what previously took centuries to achieve, and still be China? 

Please forgive my political indiscretion, but in the early morning just as the red flags were hoisted in Tiananmen Square and I saw how human masses were mobilized and kept in certain order only when instructed by the guards’ blaring voices, I, discreetly, had to ask myself whether it could be possible to run China in the long run just like current à la mode democracies.

Finally, while climbing the Great Wall aboard a little yellow cart that looked just like an old and retired Disney theme park ride trying to make its way slowly through the crowds, I kept asking myself, will it withstand?

Let them bike

Intro: The debate about using Country Systems. Why did I spend so much time on this issue?

Whether to let the countries learn and develop on their own in their own way and assisting them by freely giving some of the very scarce resources or whether to impose some conditions on how they are to manage these resources is one of the most difficult balancing acts of any development policy.

There must be thousands of examples of how development funds have been squandered to no avail by bad governments and crooked politicians, and certainly there are thousand of examples of how good-intentioned agencies have, in a quite similar and yet opposite way, squandered these scarce funds by imposing absolutely misplaced rules and conditions.

As I never believed that you could create good artists by having students practice painting by numbers, this little spot number 17 blue, and as those wanting to impose more and ever stricter conditions on the borrower were in the clear majority, my devil’s advocate instincts and my normal tendency of siding with the weaker inspired me to take a very strong position in favor of allowing for a more frequent use of the countries’ own systems. 

Let them bike

Friends, listening to your exhaustive list of concerns, I was reminded of the moments when I had to teach my daughters how to ride their bikes: I heard their mother’s anxious calls in the background; I felt my own nervousness; nonetheless, I just knew I had to let them go.

One could find and read thousands of manuals about how to put a bike together safely; about all the safety implements a kid should wear, such as helmet and wrist-guards; about all the precautions he or she needs to take, not going downhill or out on the main road; but nowhere can you find even a single manual that clearly and exactly instructs you how to learn to ride a bike. Left leg up, right leg down! Or was it right leg up first? 

We need to understand that development is a bit like learning how to ride a bike and, at the end of the day it is something that must be done on one’s own. In fact, no matter how much we could help in the preparations, we will not stand a chance to achieve lasting results if we are not willing or do not know how to let them go. 

It is not easy to let go, I probably even closed my eyes for fractions of seconds after letting my girls roll away on their bikes, but I let them go and they know how to ride a bike now. 

So, my colleagues, in these discussions, not as caring parents but as caring development partners, let us try to act accordingly, letting them go, always remembering that, at the end of the day, countries need to do it on their own. What else could ownership mean?

Of course, anyone might fall trying, but that is exactly the risk we need to be able to take if they are going to achieve real sustainable development results and, if they fall, there is probably nothing more to do than to help them rebuild their confidence so that they can just have another go at it.

Moreover, if you try to hold the bike while they ride it, the bike might not really behave like a bike, and so they might never get the hang of it. What we really should be concerned about is that they have what is most needed at the time of trying: sufficient confidence in themselves. In fact, what unwillingly might be the first victim of all our other secondary concerns is precisely that, their confidence. 

So, my colleagues, let them go, again and again and again, learning to ride their bike, and as they believe a bike should be ridden.

P.S. I know it is not as easy as it sounds and in fact I would only give someone the freedom to try it on their own whenever he or she convinces me she or he is ready for it and is sufficiently confident.

A monument to transparency

I have no idea what is to come out of it and I have no idea whether it has anything to do with true accountability but, in my book at least, The 9/11 Commission Report, that in its 567 pages contains the Final Report of the National Commission on Terrorist Attacks upon the United States, and that can be bought in any supermarket for less than ten dollars is a true monument to transparency. 

I cannot imagine any other country being able to come out with so much information on a so sensitive a public issue in so short a time after the events. We, the rest of the world, should stand in awe in front of it! That, of course, does not imply not being critical of many other things going on in the United States, that land of contradictions.

This would never have happened to John Wayne

About the same week as the United States Congress refused to renew some make-it-at-least-a-little-bit-difficult rules with respect to the purchase of automatic guns, a Colombian coffee shop duly named Juan Valdez was opened quite close to the WB in Washington. 

Mr. Juan Valdez himself attended the opening and stood there outside so that anyone who so wished could have a photograph taken with him. He was clad in his traditional white country suit, patting his traditional donkey—but with a machete holster that in the new traditions of some code-alert colors had been emptied. I felt so sorry for him having to stand there with no machete! What a shame! 

How come that in the land of Hollywood they were not able to come up with an innocuous substitute for his machete? Well, this would never have happened to John Wayne. Out of solidarity, I refused to have my photo taken with Juan Valdez. You have to respect a man when he needs to be alone.

Snowing in Washington

Yes, it had snowed a little, but never would I have imagined when I arrived for an early-morning conference at the World Bank that I would find the meeting had been suspended because of “inclement weather.”

Later I came to understand. Just a minimum amount of snow creates total havoc in Washington. The snow covers the streets for days and except for those few corners that are shoveled clean by some tropical Salvadorian saviors living up to their name, it will have to melt away either through warmth or tons of salt. The schools also shut down for any little flurry and although the news of this is received with great joy by all children, my daughter first among them, but nonetheless of course, not braving it will only make it harder for Washingtonians to conquer their weakness through Darwinian evolution. 

Indeed, Washington is a great and beautiful city and although it is the capital of the world’s mightiest nation it has also its Achilles’ heel. It could be completely shut down with just a couple of strategically located snowmakers.

Washington and the GPS (Global Positioning System)

When I arrived in Washington I got to know the modern GPS systems that allow you to drive your car exactly where you want to go. Truly amazing although, as I probably said before somewhere, being able to lose yourself should still be a human right since otherwise how could you ever be able again to enjoy finding yourself. I still remember with much nostalgic enjoyment those many hours my wife and I spent, over and over again, just trying to get back into the City of London. That was true quality time together—the two of us against the world! 

But let’s not cry over times gone by. Let’s look at it all from a more constructive and positive angle. As far as I see it, with GPS, you really don’t need to have signs on poles display the street addresses any more. So, GPS opens up a world of new financial opportunities for governments. For instance: for how much could you auction away on e-Bay the rights for a corporation to have its name supplant that of Pennsylvania Avenue in Washington, for two months? Toyota Avenue? I am sure that would provide some politically correct fiscal income that could come in quite handy.

But then again, if there’s ever a place you need a GPS, it has to be here. No matter how much this country has and says it thrives on diversity, it is amazing how its citizens then blend all the diversity together to come up with an absolute uniform product. I have seen the same suburb, the same mall, and the same street with the same stores, appearing at least under a thousand different GPS coordinates.

Assaulted

Just barely 48 hours after coming to Washington, still not a full-fledged Executive Director, around seven in the evening of a dark October night, I stopped and looked up to admire the beautiful building of the National Geographic Society, especially its illumination, when suddenly I was thrown to the pavement by a third-rate version of He-Who-Must-Not-Be-Named who kept pushing a handgun into my belly while loudly demanding my watch and my wallet. The watchstrap had just broken, and so I had placed it in my pocket and had a hard time getting it out while being held down. After seconds turned into minutes, I was relieved of my wallet, with too much cash in it, although the watch, when I finally got it out, was scornfully rejected with a “Keep it!” Meanwhile my side of the street had of course emptied completely. 

Shocked, I walked a block and entered a liquor store (I don’t know why) where they immediately called the police, who arrived in seconds. We started to discuss the incident. As it all had happened just blocks away from the World Bank building and the White House, I inquired whether this really could be considered a dangerous area of the city. The policeman told me no, it was a safe area, but, as people did not go any longer to the unsafe areas, all these small-time criminals had to come and search for their victims here. Although I strongly disagreed with reducing my assaulter to a “small-time criminal,” as an economist I could identify with his looking for the appropriate market for his activity.

The policeman, very kindly, perhaps because he also had a Polish surname, presented his sincere excuse on behalf of Washington, with a “You know, this happens in all big cities.” I, though grateful for his attitude, could just not resist letting out an “I know, but I come from Caracas, Venezuela, and we never see such incidents there.” At that moment, I felt a lot better, so much so that I even left the liquor store empty-handed.

Days later, I found the incident reported by the police in “District Events,” and that clipping became my first souvenir from Washington.

P.S. The last time I had been attacked, it was at knifepoint in the very shady port of Buenaventura, in Colombia, in 1966. At that time, the events featured the following incredible dialogue: “Give me your money!” “I don’t have any money” “Come on, you must have hidden it—perhaps in your shoes?” “Well . . . perhaps?” “Well, if you care about the money enough to hide it in your shoes, then we don’t take it.” And that was it! 

I always think back to this incident as the night I discovered some very particular ethics among Buenaventura’s hoodlums.

My insecurities about the social security debate

About disseminating our knowledge

It really is not possible for the value of investment funds to grow, forever, at a higher rate than the underlying economy, unless they are just inflating it with air, or unless they are taking a chunk of the growth from someone else. Therefore when we observe how many Social Security System Reforms are based on the underlying assumption that they will be growing 5 to 7 percent, in real terms, forever. I wonder when we are going to use our knowledge, and inform the world that this is just plain crazy.

When we speak of expected returns, let say a real 3%, this is just an average of a distribution curve where there are a lot of winners, with higher returns, and a lot of losers, taken to the cleaners. Knowing this, how come we allow the debate on Social Security reforms to use the averages? In systems where you are supposing to pay someone to manage the funds, you should expect the managers to produce different results. Yes of course the returns could be average, but for that you just buy a stock index, and pay no fees.

A question

Are there any real differences between a pay-as-you-go, governmentally backed pension system, and a pension fund that invests completely in government paper?

About the timing and the losers

Any individual Social Security accumulation system that has the luck to start when the markets are close to rock bottom will always perform better than those systems that start when the markets are at the top. This has been the real beginner luck of the Chilean system and future generations of Chilean accumulators might not be as happy with the results as the pioneers were. 

When we now read how investment funds publicly state that they do not wish to receive more funds since they do not know where to invest them and we also observe how many private pension schemes in the United States are running for public cover, we need perhaps to ask ourselves whether the timing for those Social Security reforms that might be en route is really that good.

Those who beat the market average will always love to be on their own, and therefore the problem does always reside with the losers. The difficult question is whether in an individual security accumulation system all of the future losers have truly surrendered their expectations of receiving official assistance and, even if they have, proudly preferring to starve than to ask for help, whether the governments could really get away from their social responsibilities by answering the losers with a “Hard luck, pal, you had a private plan.”  

And so, at the end of the day, to me it seems that you might just be substituting a pay-as-they-fall for a mean-based pay-as-you-go system. So, when we add it all up, it all boils down to the same—except of course for the fees.

On Social Security in Real Terms

In order for your savings and social security investments to be worth something when you need them, the real economy must be in a reasonable condition at the time of your selling your investments. When I hear the many discussions about the financial preparation needed to accommodate for the upcoming demographic changes, I find it truly amazing how little is being said about the economy in real terms.

Considering that there will be many fewer young ones to drive people around and shovel snow, much of today’s beautiful real estate might drop in value when the elderly start selling their houses to live close to a metro, hospital, and more reasonable weather conditions. So, before putting the money away in a private accumulation trust I think we need to rethink the whole retirement strategy.

***
Jim, my editor: “The Philadelphia suburbs have many Metro stations where it is safe to wait, many outstanding hospitals, and fairly good weather. Philadelphia proper has stations where it is not safe to be, hospitals overcrowded with uninsured indigent patients who are certainly not going to get the cutting-edge high-tech expensive care available in the suburbs, and somewhat worse weather (hotter in summer, less effective snow and ice removal in winter). Any sensible elder would move to the suburbs. Doing the opposite is like swimming towards a sinking ship.” 

I: “That’s OK Jim. I did not mean that my real-terms projections are necessarily correct, but, now that I have you thinking of the future in real terms may I also suggest looking into beautiful Isla de Margarita off the coast of South America?”
Now back to my voice (and noise)
***

Also we should never forget that historically, through all economic cycles, there is nothing so valuable in terms of personal social security as having many well-educated loving children to take care of you, and that you can’t, in real terms, beat that with any social security reform.

Two current updates on the social-security issue

Sir, Delphi’s (a company that supplies General Motors) problems do indeed pose a threat to public-pension institutions, but it also evidences the structural weakness of the alternative of accumulations in private-investment accounts. The fact is that when the old retire and might need to sell their stocks, the young might not be willing to buy them. 

Sir, With respect to GM’s pension woes, you claim that the company recorded a return of 5 per cent in the first half of the year, putting it on track for its assumed annual return of 9% but also that if GM’s pension funds produced the same poor returns as the equity and bond markets, this would of course have a dramatic negative impact. What is thereby implied makes a case for developing a formula that calculates how much arrogance it must take to promise to pay 9% on funds over a life span, and/or to beat the markets continuously.

Red and blue, or, red or blue?—a postscript


On the radio, C-Span recounted details about “Intelligent design,” which according to its defenders is a valid scientific alternative to the evolution theories of Darwin. I could not resist postscripting the following to my American friends. 

Unity is a very precious thing for a country (I should know as a Venezuelan), and there are some issues better left alone. This is clearly one. Pitting “intelligent design” against “evolution theories” can never lead to anything good, and you surely must all be aware that you will never ever reach something close to a mutually satisfactory conclusion. 

As a Christian, I know we are challenged by a lot of apparent contradictions in our faith but, as a Christian, I also believe that we are supposed to find ways to make peace with those demons of contradiction, so as not to let the devil triumph. Friends, how can I put this warning any clearer to you? Well, if we were still in the “good old days” of the Cold War, I could have advanced the thesis that the very bad Communists had seeded this destructive and divisive debate in the heart of your heartland. 

That said, I cannot refrain from mentioning that, if you absolutely have to, I would prefer the term “Divine Design,” since “Intelligent Design” sounds to me like opening the door to an equally unnecessary debate about more mundane issues such as quality controls. 

I switched channels and I heard Faith Hill singing “Is everything A-OK in the good old USA?”


PS. How do Americans communicate when only red or blue are to be recognized? In response to its social and main media they are being mutated to suffer specific colors blindness. How far away are Americans from never be able to hear/read/see violet again?


Voice and Noise questions donated to Dropping Knowledge

Someone urged me to donate questions included in my Voice and Noise to http://www.droppingknowledge.org/ and after I saw what they were up to I went fishing and came up with the following 64! that I sent them, and there are even many more in the pond where these came from.

Comments or answers, please!

From my CV: Mangoes

With the aid of friends, I dappled in some ventures and one of them was exporting mangoes. We actually managed to get into Harrods’ delicacy department with our beautiful multicolored and individually wrapped mangoes and we were doing great … until. Our largest individual cost was the airfreight to London, that we had to pay in advance and so when a finance minister woke up in Venezuela and announced, that according to him, the Bolivar was undervalued and then he executivized it from 36 to 24 to the dollar (something perfectly feasible in the short term in an oil country) the day before we were to convert into Bolivars all our British Pounds, he bombed our cash flow. Having to fight against the mosquito in the mangoes or the flight schedules of British Airways was one thing, having also to fight against the ego of a finance minister, was just too much.

Local strawberries in season

Although I appreciate being able to eat strawberries-in-winter I still miss those very special strawberries that you could only get only once a year, early summer, in strawberry season. As an economist I would have to say they had that very special taste of scarcity—and scarcity allowed them to provide their growers a quite decent return. Their disappearance happened when such strawberries were forced to compete, marginal cost against marginal cost, with other brutally efficient quasi-strawberries that could be transported overnight, into your local supermarkets, at anytime and in any quantities. 

As the world allowed those coming from anywhere at anytime to count as the same as your neighbor’s at-their-right-time strawberries, we—if I may mix a metaphor—mixed apples with pears, created confusion, and destroyed important economic value. This mess in the strawberry patches of the world can still be corrected though. Currently as a result of World Trade Organization’s negotiations only champagne from Champagne can be called champagne and the rest has to be labeled as produced by the Méthode Champenoise. If we were to broaden these criteria there is nothing that stops us from marketing any local-strawberries-in-season as strawberries, while requiring all others to label themselves as close-to-being-strawberries berries—and this way all strawberries would survive. 

It is quite clear from the awakening of protectionism that something dramatic has to be done, and perhaps a much clearer market segmentation could be the key to keep borders from closing up, and having to wave good-bye to all those ersatz strawberries that even while never the same as their summer cousins, are still quite nice to have in winter. But if the worst happens, let’s find some consolation in the fact that strawberries-in-winter could turn out to be a new and profitable smuggling alternative for some of the uglier cartels, while being much less harmful to us all.

Is inflation really measuring inflation?

Sir, over the years, the Central Banks have grown a lot more independent, which is good, as long as it does not diminish their accountability and allow them to focus blindly on goals of their own choosing, monitor the results, and live for ever after happy in a big club of mutual admirers.

Inflation is the number one of those monsters that central bankers proudly show off as having been tamed but sometimes we must have our lingering doubts about whether it really is so. In an economy where whatever few savings we can set aside buy fewer and fewer assets like houses, it is sometimes hard to accept that there is no inflation, no matter how much central bankers tells us so. 

As inflation is just the result of the formula, or the basket, or the sampling techniques that we use for measuring it and is therefore a truly incestuous economic concept, there might be very good reasons for revisiting the whole issue of what, how, and why we measure it, even if this means some new hard work load for our overburdened central bankers. With the world going through major changes, inflation, as we think we know it, might very well have degenerated into something quite different from what we initially had in mind when we first thought about how to measure it. 

Meanwhile just to put some check on their egos, every time I see a central banker I urge him to take a shopping trip to the closest IKEA so as to see who really should get the credit for controlling inflation as we currently know it.

The World Bank needs to go truly Global

Many seem to opine that if only the votes and the composition of the Executive Boards of the World Bank (and the IMF) reflected better current economic size, then global imbalances had a better chance to disappear, like magic. It might not be as easy as that, and just for a starter why would GDP or the market share of the world trade be more important than market capitalizations for assigning voting power. Also if we are at it, why should we not then go for a full Monty on democratic reform and use population as the basis?

If and when a possible reshuffling of the current 24 Executive Directors should happen, I hope it will be to give representation, perhaps not to Civil Society, which is sort of intangible, but to that very tangible piece of land, water, and air that we all know as earth.

Although we proudly name ourselves the World Bank, the fact is that we are more of a “Pieces of the World Bank”, with 24 Executive Director representing parochial interests. As a consequence I sadly had to conclude in that the World itself, call it Mother Earth if you want, in these times of globalization, is in fact the Bank’s most underrepresented constituency.

This needs to be fixed, urgently, as we need to be able to stimulate a profoundly shared ownership for the long-term needs of our planet, if we want to survive as a truly civilized society, worthy of the name civilization. As I see it, adding a couple of truly independent seven-year-term Executive Directors, whose role would be to think about the world of our grandchildren, way beyond the 2015 of the Millennium Development Goals—could be what the World Bank most needs now.

And, while at it, we should perhaps also ask one of the current Directors to give up his Chair for a new constituency—call it, if you will, the Constituency of the International Rovers, by which I mean all those workers, skilled or unskilled, legal or illegal, who nowadays represent jointly one of the largest economies of the world. By the way, the first thing that the Rovers’ ED would need to do is to make clear the enormous difference that exists between an immigrant with a long-term plan to emigrate from motherland and forever assume a new nationality, and, on the other hand, a temporary worker who just wants to make a buck in order to help his family to a better life, and who wishes with all his heart and soul to return home as soon as possible. Forcing temporary workers to swear allegiances to foreign flags, just so that they can have the right to a better income, cleaning toilets, seems only like a new generation of artificial trade barriers.

Currently we are too stuck in the geography of the non-globalized world to be able to see what is truly happening around us. For instance, El Salvador has about 2 million of its people working abroad, more than a third of its total workforce and so if to the current GDP figures of El Salvador we add what these workers are earning, gross, well then perhaps El Salvador’s growth rate could actually be higher than China’s. And you tell me, why should we not do it this way? Is not an El Salvadoran still a real El Salvadoran just because he or she is working abroad? The internal emigration in China from west to east might take a Chinese from 50 to 150 dollars per month, but the El Salvadorans going south to north go from 120 to 1.200, and no one is heard complaining about an over or undervalued currency.

(Extract from a presentation of Voice and Noise at InfoShop on May 16, 2006)

On the World Bank’s fight against corruption

A global world that requires so many sacrifices to solve its global problems will not be able to do so if it must swim in too dirty corrupt waters. Therefore, fighting against corruption must be at the top of the World Bank’s agenda. But for that fight to signify more than another flavor of the month, it needs to be completely internalized into a deeply felt organizational modus vivendi. In this respect, the World Bank, while fighting corruption, needs to keep the following in mind:

To invest more scarce resources into anticorruption efforts than what the corruption could itself potentially cost is managerial corruption.

To fight corruption among third parties without fighting it first and foremost among your own is hypocritical corruption.

To create the impression that certain risks of corruption are effectively taken care of is collaborating with and camouflaging for corruption.

To focus the attention on the small fish while letting the big fish free, even though the small can grow to be big, is plain cowardly corruption.

To believe it is only when money is involved that it really matters creates the space for self-righteous corruption.

And finally, to believe that corruption can be contained to some pockets and not contaminate the rest of the world, and that some nations are by nature more immune to it, has nothing to do with corruption; it is just plain stupidity.

And so what shall it do? Well, as Dori in the Finding Nemo movie would have said, “Just keep fighting . . . just keep fighting!” I would start by recommending that all projects, urgently, include in their documentation, a very simple one-page Public Notice that lays out the most important risks of corruption in the operation, making clear what World Bank is doing to diminish them but, much more importantly, what it is not in their hands to do. That page should then transparently surf the Web in order to enlist the civil civilians in the fight.

(Extract from a presentation of Voice and Noise at the InfoShop on May 16, 2006)

Diversity

Dear Mr. Bourguignon:

I wish to extend to you my most sincere congratulations for your appointment as World Bank Chief Economist and I am certain we will all benefit immensely from your presence among us. 

Though I feel that we need always to have one foot firmly placed on each of our development pillars, I very much welcome your “plan to focus more on the second goal, that is, social inclusion,” as inclusion is exactly why I want to make the following comment. 

When the search for a new Chief Economist for the World Bank was announced we were told that although it was obviously quite a delicate task, it should not take too long, as the search had to be carried out within “quite a small and exclusive community of development economists.” 

As I am certain you realize, that characterization illustrates in itself one of the many daunting challenges we face in the WBG. I beg you, in parallel to your many other responsibilities, to dedicate some time to the challenge of developing that small-and-exclusive-community, so that perhaps in a couple of generations, the Bank could choose one of your successors from a larger and more diversified group—even though that would mean a somewhat more extended search. Again, very much welcome, do count on our support and I wish you a very heartfelt good luck.

Yours sincerely,

Per Kurowski

Just one of 24

To write or not to write … by hand

My father always thought good handwriting to be one of the foremost proofs of a good education and he was most certainly right, in his own time and way. Unfortunately, nowadays, you do not have that many opportunities to show off your good education by handwriting. Every year that goes by, the less I write and the more cramps I get in my arm when I try.

As an economist, concerned about input/output productivity, I have to question whether there still is a valid reason for including learning to write by hand in the general school curricula. Just think of the number of hours you put into that effort and then calculate the estimated number of letters you are expected to handwrite in the future where even your signature is perhaps about to be supplanted by a scanned image of your right eye pupil.

“Dear God, another economist gone mad believing life is just about efficiency!” I can hear the purist cry out. No, friends, I am among the first to acknowledge a real human need for inefficiencies but perhaps even from this perspective, we should be able to find more enjoyable and useful inefficiencies than writing—and also with much less potential for creating conflicts with our perfectionist fathers.

Many write-defenders will put forward the argument that it promotes coordination of mind and muscle. However, if this were the whole purpose of the exercise and if we look at what seems to be future needs for coordination, derived from the many hours children invest playing handheld games, then I would argue that what we have to do away with is single-hand writing. Forget about right handed or left handed, let Darwin work, and have children learn to write with both their hands.

“But writing helps you to understand the language!” Nonsense! That you do by reading, listening, speaking, and nowadays by typing. If you really must cling to writing because of contractual clauses carefully crafted by your writing teachers association, then, at a minimum, you should convince them to use those sessions to teach writing in Chinese.

Want your children truly to stand out and be able to master future technologies with the same flair as Cirque du Soleil acrobats? Let them then practice to write with both hands in Chinese and Arabic, simultaneously, while humming Bob Dylan’s “The Times They Are A-Changin'.” That should do it!

But my purpose is not to eliminate writing as an art form but to recapture it as a true art form. You know how much I worry about how the world seems incapable of creating new good-paying jobs. Well, limiting the teaching of writing now allows us to visualize in a couple of years the resurrection of the profession of writing clerks. May I offer you my services then?

What on earth has this to do with the World Bank? If you can’t figure it out, you should not be in the business of development!

A quite interesting spin on this same issue is made by Willam Easterly in his book The Elusive Quest for Growth, since when he argues that “the productivity gains of the computer are slow to be realized . . . because there are still too many traditional people out there with ink and paper,” he is actually making the point that perhaps we should prohibit handwriting as such, so that the world can move forward. [Jim, my editor: “Plato suggested—I suspect jokingly—that the invention of writing was a bad thing that ruined human powers of memory.”]

In the WBG cafeteria, we read that by using its napkins made with 100%-recycled paper, the WBG Food Services was proudly saving 268 trees annually, 110,000 gallons of water, 47 cubic yards of landfill space, 65,000 Kwh of electricity, and 945 pounds of greenhouse gas emissions. As the WB Board’s 100% paper-intensive proceedings alone might consume several times these “savings,” not being able to write by hand could presumably also have some favorable environmental implications.

Thou shall not PowerPoint

• Dear Colleagues,

• When we were small, our fathers taught us never to FingerPoint anyone, and today we also need to teach kids not to PowerPoint one another.

• Yes, I have seen some splendid use of PowerPoint presentations, but, in general terms, the world is not a better place for it.

• PowerPoint has empowered so many people with so little to say with a deep belief that the world is waiting for them to predicate, for hours.

• PowerPoint is little by little replacing all decent readable issue papers with thick bundles of copies of PowerPoint sheets, each one containing less than 15 words, in beautifully irrelevant colors, except when replaced by thin bundles containing miniature unreadable copies of aforementioned sheets.

• PowerPoint is forcing the world to structure its whole thinking process in terms of bulletpoints.

• NO, thou shall not PowerPoint me and I promise not to PowerPoint you … too
much.

• Happy Holidays

• Per

• December, 2003

The ethics of solving the shortage of caretakers

An older population, many of whom will experience longer periods of chronic illness and dependency before dying will require a growing number of caretakers. If there are enough caretakers, the issue will be to find the resources to compensate them. However, if there are not enough trained caretakers, no financial resources would suffice, and you have to find practical solutions.

The practical solutions available for solving the shortage of caretakers in developed countries are the following four:

Increase their productivity, but unless you wish to run the risk of being dehumanized on a Charlie Chaplin Modern Times assembly line cared for by robots… there might be a limit to how much this can help. 

Move the careneeders to another place (if there are caretakers available anywhere else), and this you should do as early as possible if at an older age you do not appreciate finding yourself in strange surroundings as much as you did when younger.

Import caretakers, and this you should do as early as possible if when older you do not appreciate finding yourself in the company of strangers as much as you did when younger.

Give incentives for having more children and grandchildren—which is not such a crazy idea when you start considering how much society is, one way or another, currently rewarding people for not having children. (Talk about externalities!) 

The Presidents Council of Bioethics www.bioethics.gov (USA) published in September 2005 its report titled Taking Care. It makes all types of thoughtful recommendations about the issue of Ethical Caregiving in Our Aging Society. As much I appreciate its effort, I do not think that the report spells out sufficiently the need for much more forceful and immediate work on achieving practical solutions. If those solutions are not found, the frontiers of what is currently considered ethical caretaking will just have to move to take up for the slack. No matter how horrendous it sounds, euthanasia and other flexibilities needed to bridge intergenerational conflicts might then turn out to be thought of as the only ethical solutions to the problems. In this respect, the most clear and real unethical behavior today is that of not anticipating and providing timely solutions.

Of Mangos and Bananas

For several reasons, the debate about the global economy has recently reminded me of fruit. The wise Henri Pittier wrote his Manual about Common Plants in Venezuela in 1926. In it he wrote the following about the mango:

“It is harvested in abundance, and there are many who, during the season in which they are ripe, dedicate all of their time to the search for this fruit which for some time then becomes their only source of nourishment, very often to the detriment of their health. One can vacillate, then, on deciding whether the introduction of this tree [from Asia] has been a blessing or a curse. The writer of these words is inclined to believe the latter since the mango leads to idleness, to the invasion of another’s property and to vagrancy; additionally, no matter how good or healthy it may be, when ingested in moderation, it sometimes provokes digestive disorders and is far from being wholesome food. It alters, then, both morality as well as public health.”

This interesting quotation shows us that, in addition to oil, the mango should be classified high on the list of culprits that have been the cause of our poor economic development. Most assuredly, in addition to the mango and oil, we must also add to this list the sun, the beaches and all those variables that undoubtedly make it easier to survive an economic recession in a tropical Caracas than in a wintry Moscow.

Since it seems evident that the simplicity of living in the tropics leads to laziness while the hardship of winter promotes the discipline and work ethics that have ultimately inspired today’s global economic development, it behooves us to view global warming with renewed preoccupation and from a totally new angle.

I have made my own empirical observations about the evolution of global warming. Every Carnival weekend, for example, I stroll out to my beach in Margarita, the tropical Venezuelan island in the Caribbean Sea, and take note of the width of the shore from the water line to the roadway. Even when I had terrible difficulty in finding a spot in which to anchor beach umbrella, I never really worried about it. I simply attributed this difficulty to the increased popularity of the island and not to an invasion by the oceans.

Today, however, I harbor serious doubts as to the validity of my method of measurement since wherever I look I find much new and more concrete evidence of a very advanced state of global warming.

How else, other than by assuming a certain displacement toward the north of the parallel of the Banana Republics, can we explain the current enormous fiscal and commercial deficits that currently thrive in the United States.

How else, other than by assuming a certain displacement toward the north of the geographical boundary of the Banana Republics, can we explain the opposite positions recently sustained by superpowers like Europe and the United States on the issue of bananas, as if they were some modern versions of Lilliput and Blefuscu.

How else, other that by assuming the creation of climatic conditions conducive to the cultivation of mangos, can we understand why Japan has not been able to combat idleness and stimulate the reactivation of its economy? We have all read that Japan has reduced interest rates to an annual rate of one per one thousand. Can you imagine how impressed a botanist like Henri Pittier would be upon observing this unique specimen of a mango?

From The Daily Journal, Caracas, March 1999 (Abridged version)

An encore on nudism and WTO negotiations

The worst part of free-trade agreements might be the negotiation of free-trade agreements. I am not at all recommending nudist camps—after all I am the father of three girls—but, if you really have to speak out in their favor, you do so in the understanding that all those who are present in the camp find nudity perfectly normal. But what if those who were to approve entrance to the nudist camp derived special enjoyment from playing strip-poker? That would certainly go against the spirit of it all. In this same vein, I believe that many of the negotiators of trade agreements do not themselves believe in free trade but are taking a perverse satisfaction from the negotiating process. I refer especially to those from the developed world who are especially good at poker and have much more clothes on to start out with. The spirit of free trade does not stand a chance against these saboteurs.

Small memories from my transitional hometown (Washington D.C.)

Assaulted

Just barely 48 hours after coming to Washington, still not a full-fledged Executive Director, around seven in the evening of a dark October night, I stopped and looked up to admire the beautiful building of the National Geographic Society, especially its illumination, when suddenly I was thrown to the pavement by a third-rate version of He-Who-Must-Not-Be-Named who kept pushing a handgun into my belly while loudly demanding my watch and my wallet. The watchstrap had just broken, and so I had placed it in my pocket and had a hard time getting it out while being held down. After seconds turned into minutes, I was relieved of my wallet, with too much cash in it, although the watch, when I finally got it out, was scornfully rejected with a “Keep it!” Meanwhile my side of the street had of course emptied completely. 

Shocked, I walked a block and entered a liquor store (I don’t know why) where they immediately called the police, who arrived in seconds. We started to discuss the incident. As it all had happened just blocks away from the World Bank building and the White House, I inquired whether this really could be considered a dangerous area of the city. The policeman told me no, it was a safe area, but, as people did not go any longer to the unsafe areas, all these small-time criminals had to come and search for their victims here. Although I strongly disagreed with reducing my assaulter to a “small-time criminal,” as an economist I could identify with his looking for the appropriate market for his activity.

The policeman, very kindly, perhaps because he also had a Polish surname, presented his sincere excuse on behalf of Washington, with a “You know, this happens in all big cities.” I, though grateful for his attitude, could just not resist letting out an “I know, but I come from Caracas, Venezuela, and we never see such incidents there.” At that moment, I felt a lot better, so much so that I even left the liquor store empty-handed.

Days later, I found the incident reported by the police in “District Events,” and that clipping became my first souvenir from Washington.

P.S. The last time I had been attacked, it was at knifepoint in the very shady port of Buenaventura, in Colombia, in 1966. At that time, the events featured the following incredible dialogue: “Give me your money!” “I don’t have any money” “Come on, you must have hidden it—perhaps in your shoes?” “Well . . . perhaps?” “Well, if you care about the money enough to hide it in your shoes, then we don’t take it.” And that was it! 

I always think back to this incident as the night I discovered some very particular ethics among Buenaventura’s hoodlums.

Washington and the GPS (Global Positioning System)

When I arrived in Washington I got to know the modern GPS systems that allow you to drive your car exactly where you want to go. Truly amazing although, as I probably said before somewhere, being able to lose yourself should still be a human right since otherwise how could you ever be able again to enjoy finding yourself. I still remember with much nostalgic enjoyment those many hours my wife and I spent, over and over again, just trying to get back into the City of London. That was true quality time together—the two of us against the world! 

But let’s not cry over times gone by. Let’s look at it all from a more constructive and positive angle. As far as I see it, with GPS, you really don’t need to have signs on poles display the street addresses any more. So, GPS opens up a world of new financial opportunities for governments. For instance: for how much could you auction away on e-Bay the rights for a corporation to have its name supplant that of Pennsylvania Avenue in Washington, for two months? Toyota Avenue? I am sure that would provide some politically correct fiscal income that could come in quite handy.

But then again, if there’s ever a place you need a GPS, it has to be here. No matter how much this country has and says it thrives on diversity, it is amazing how its citizens then blend all the diversity together to come up with an absolute uniform product. I have seen the same suburb, the same mall, and the same street with the same stores, appearing at least under a thousand different GPS coordinates.

Snowing in Washington

Yes, it had snowed a little, but never would I have imagined when I arrived for an early-morning conference at the World Bank that I would find the meeting had been suspended because of “inclement weather.” Later I came to understand. Just a minimum amount of snow creates total havoc in Washington. The snow covers the streets for days and except for those few corners that are shoveled clean by some tropical Salvadorian saviors living up to their name, it will have to melt away either through warmth or tons of salt. The schools also shut down for any little flurry and although the news of this is received with great joy by all children, my daughter first among them, but nonetheless of course, not braving it will only make it harder for Washingtonians to conquer their weakness through Darwinian evolution. Indeed, Washington is a great and beautiful city and although it is the capital of the world’s mightiest nation it has also its Achilles’ heel. It could be completely shut down with just a couple of strategically located snowmakers.

This would never have happened to John Wayne

About the same week as the United States Congress refused to renew some make-it-at-least-a-little-bit-difficult rules with respect to the purchase of automatic guns, a Colombian coffee shop duly named Juan Valdez was opened quite close to the WB in Washington. Mr. Juan Valdez himself attended the opening and stood there outside so that anyone who so wished could have a photograph taken with him. He was clad in his traditional white country suit, patting his traditional donkey—but with a machete holster that in the new traditions of some code-alert colors had been emptied. I felt so sorry for him having to stand there with no machete! What a shame! How come that in the land of Hollywood they were not able to come up with an innocuous substitute for his machete? Well, this would never have happened to John Wayne. Out of solidarity, I refused to have my photo taken with Juan Valdez. You have to respect a man when he needs to be alone. 

A monument to transparency.

I have no idea what is to come out of it and I have no idea whether it has anything to do with true accountability but, in my book at least, The 9/11 Commission Report, that in its 567 pages contains the Final Report of the National Commission on Terrorist Attacks upon the United States, and that can be bought in any supermarket for less than ten dollars is a true monument to transparency. I cannot imagine any other country being able to come out with so much information on a so sensitive a public issue in so short a time after the events. We, the rest of the world, should stand in awe in front of it! That, of course, does not imply not being critical of many other things going on in the United States, that land of contradictions.

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