Wednesday, July 29, 2009

NYU Students: U.S. Should Lead by Example

This week I facilitated a class debate on U.S. foreign policy toward East Asia for a course I am teaching at NYU called Inside East Asia. At the Woolworth Building campus downtown, we critiqued George W. Bush's National Security and created our own priorities given the realities of the world today.

The big news was that the students felt the need to end tyranny and fight terrorism was overstated during the Bush administration and that the United States instead should lead by example. To repair U.S. image abroad, the students emphasized the need for fairer global institutions and a more equitable global economy.

Below are the impressions of student Shira Levine, who participated in the debate.

Debate: U.S. Policy toward East Asia at New York University

It took exactly 44 minutes for the Inside East Asia class at NYU's Summer Institute to determine the U.S.'s overall national security strategy. Our class led by Devin Stewart represented four East Asian regions: China, Japan, North and South Korea, and ASEAN.

Professor Stewart had us go over America's National Security Strategy issued by former President George W. Bush in 2006 and do a bit of prioritizing.

We reviewed the Bush administration's strategy and its order of importance because as Stewart told us, policymakers like to list things in order of what they like or prefer first. Here are Bush's priorities:

Human dignity
Alliances to defeat terrorism
Defuse regional conflict
Addressing weapons of mass destruction, etc
Economic opportunity
Increase and expand economic development
Cooperative action
Transform American national security institutions
Engage and confront challenges of globalization

It was quite clear that the order for Bush 2 didn't quite gel with our progressive thinking so we reprioritized and got... well it wasn't so easy. That took an hour alone to determine but chances are good it took us less time then the paid policymakers do.

First we started with repairing the image of the United States as the first on the to do list. Some classmates said this goal should be the top priority because people need to have trust the U.S. again. Plus, we unanimously recognized the kind of sway soft power garners.

The class was a bit divided on where to begin. Our Canadian comrade suggested it was to "engage globalization by creating more balanced trade agreements." He was pushing for "fairer" and "smarter" soft power diplomacy. By a fairer trader agreement, he wanted agreements that were balanced and where both parties receive true mutual gain.

Another classmate said, "Hey, it's not so easy. The interest groups are in control and need to change their goals to help." A Chinese American classmate then brought up the notion of reducing military spending since the U.S. has the biggest military budget. He felt reducing the military budget should be a priority.

A Coloradan classmate agreed and said, "Lets close the bases!" But our Iraqi war veteran classmate immediately spoke up and said, no way to closing bases--that there were a lot of jobs and livelihoods at stake. Why not instead get rid of F-22s she suggested.

Another classmate brought up how history is repeating itself, as Fareed Zakaria has argued. The U.S. was repeating all the mistakes Britain made before it fell. Our Mongolian classmate was understanding of U.S. mentality. In a debate over whether the U.S. should accept that it's not a global superpower, the class was divided. Surrender to the rest rising or stick to the history the U.S. has fought for? Bottom line says our Mongolian friend: The U.S. isn't actually in any danger. Where is the threat to America?

We spoke about restructuring global institutions as a key list topper too. An Indian classmate coined the phrase "a la carte coalitions." Another said: "Let's make a four-year checklist for what the U.S. wants for its future. Let's retool and reposition the U.S." A South Korean classmate was prepared to end tyranny with donuts. She brought in a box of the delectable treats for the debate. (If only that worked with Kim Jung Il!)

Ultimately, we decided the goal for the U.S. in East Asia was for the U.S. to exercise a form of global accountability that was best described as "leading by example" or "exemplarism."

So with examplarism the overall policy list changed to:

Examplarism, leading by example
Engage the opportunities and confront the challenges of globalization.
Transform America's national security institutions to meet the challenges and opportunities of the 21st century
Economic development
Green development

So what is the U.S. goal in Asia? To maintain U.S. influence or relationships. We want economic growth and good relations.

So, the U.S. doesn't want to lose its stake in Asia. The U.S. wants to maintain influence. Meanwhile our Chinese classmate suggested the U.S. find a way to back off and give these countries space. An Australian classmate said let everyone do it on their own. But another said the U.S. should help when possible. The class wondered, what the consequences would be if the U.S. left the region. Would the region destabilize?

One classmate said keep the trade relations, secure the waters, and probe in that way but beyond that leave Asia alone. A Korean classmate said that the military is really important to Korea despite some emotional challenges. So the order the class listed the relationships in by importance was:


South Korea



We asked the question: Is Japan the cornerstone for U.S. Asia policy? We battled over saying which country was more important: Japan or China and left Japan first. Japan has a sensitivity issue and everyone knows China is important. It's smart to leave Japan our ally first, and place China last since everyone knows China really isn't last.

1. Japan – the pedestal nation light years ahead of China in democratic values. Japan can lead by example in Asia.

2. South Korea without a mention of DPRK because we determined we only work with allies.

3. ASEAN and talk about increasing military exercises with COBRA GOLD.

4. We discussed the idea of taking Australia out of the East Asian category and bringing in India, but even our Indian classmates ultimately said no, that it would be too hard.

5. China we say is a responsible stakeholder. We like Bob Zoellick's idea that China should feel that it has a stake in the status quo. As Stewart said, America's diplomacy is bipolar toward China: It is to persuade China to be peaceful and to dissuade China from being aggressive. We should take a hedging posture and use inclusive tactics with China in order to garner some transparency.

Who knows? Our Chinese classmate advised the U.S. to leave China alone and that China will never improve its transparency--not even 1,000 years from now.

Photo "Woolworth Building" by laverrue.

Friday, July 17, 2009

Agahozo-Shalom Youth Village: Views from Rwanda: A Liquidnet Community Perspective

Fairer Globalization today obtained permission to post this letter from Liquidnet CEO Seth Merrin, who was in Rwanda last month to dedicate the Agahozo-Shalom Youth Village for Rwandan orphans.

Views from Rwanda: A Liquidnet Community Perspective

Last week, eight of my Liquidnet colleagues accompanied me to Rwanda for the ceremonial opening of the Agahozo-Shalom Youth Village (ASYV) , a home for Rwandan orphans that the Liquidnet community helped to build (The village actually “unofficially” opened in December when the first 125 orphans began living and learning there.). Even though we have been involved since the inception of this project and I have been to the village site previously, being at the village now that is was fully operational and talking to the students, counselors and teachers had a profound effect on all of us. It gave me new perspective, especially in these times. I thought I would share some of my thoughts with you.

With names like Innocent and Patience, every kid and counselor has a story that could best be expressed only in the goriest of horror movies.

Innocent, a counselor, sat down with our group for more than an hour telling us his story. Over the course of 100 days, he narrowly escaped death no less than seven times: Fleeing from a line he was made to stand in where one by one the people in front of him were being hacked to death by machete; running away from a group of soldiers who were too tired from the physical labor of hacking people to death to chase him; being waved through a checkpoint because a soldier was lighting his cigarette. Innocent was ultimately caught, shot, hacked three times in the head with a machete and left for dead. A few days later he woke up. on a mound of dead bodies. It took him a while to realize he was alive; the revelation came as he looked around and realized that he was actually lying on a mound of corpses.. Innocent climbed out of the mass grave and, aided by the instinct to survive, knew he had to get to a hospital to live. His head was so swollen he had to lift his forehead over his eyes just to see. His terror continued as between him and the hospital were the roaming bands of genocidaires who continued their government sponsored killing sprees. Before finally making it to safety, Innocent was captured again and tortured. It is nothing short of miraculous that he managed to live to tell his story and eventually to help others.

There are approximately 200 people living at ASYV today, each with a past of similar atrocities inflicted on them or on one of their family members, often with them as a powerless witness. Six months ago, theirs was an unimaginable story of adversity and survival, and many debated whether these survivors should be considered the ones lucky to live or instead the ones doomed to remain alive.

But today theirs is no longer the story of adversity but the story of life, of hope and of future. Innocent lived, his massive wounds healed and he put himself through university. He was hired as an informal education counselor to care for and counsel the children of the ASYV.

Emmanuel is one of our ASYV students. He has never been on a plane but wants to be a pilot. His father was studying to be a pilot when he was killed in the genocide. A form of self healing, Emmanuel is determined to honor his father’s memory by completing that mission and learning to fly a plane. Six months ago, Emmanuel knew no English, had never seen a computer and went to school where obedience and submission through various forms of punishment were the main subjects taught by teachers who themselves had very little education. The day of the village inauguration, visitors went to the different classrooms in the Liquidnet Family High School where students taught classes in the subjects they were studying. I got to watch Emmanuel teach a physics class entirely in English using PowerPoint slides that he created.

I will tell you with no uncertainty that we, the vast majority of us, do not truly know the meaning of adversity. We all experience hardships and difficulties, but what these kids survived requires words that I don’t believe have been invented yet.

Every student I spoke to said they spent the first few months not believing the village was real, going to sleep expecting the next day they would be returned to their former lives.

For most of us, the significance of what the village has created came in the form of a song the kids and the school’s principal wrote and sang at the inauguration of the Liquidnet Family High School. As it was a song for their parents, the children sang it in the Rwandan native language of Kinyarwanda. They sang to tell their parents in heaven that they can finally rest, that they (the kids) had found a new family, new parents who love and care for them, and new siblings to care for. They wanted their parents to know that their long journey from the genocide was over, that their children will be okay.

I think it became clear to all of us with the culmination of that song that the Liquidnet community has helped to give to the kids of the ASYV. It is the gift of easing their burdens of why they survived but their families did not. It is the gift of giving them a purpose to live. It is the gift of allowing them to comfort the souls of their parents and set them free. It is the gift of a better life.

What we learned from our trip to Rwanda is that we all have a greater purpose today. That what we consider adversity, we should be thankful for; that we should look to the kids of the ASYV to teach us that any adversity can be overcome. That we should use this troubled time and attack it with everything we’ve got. Our collective determination to succeed and improve the lives of our own families today extends beyond our personal needs. We have proven that together that we can change industries; that we can do well while doing good; that we can help change the world.

If you have any interest in learning more about the ASYV or some of the other projects the Liquidnet community is doing on its behalf, below are a couple of Web sites to check out.

Best regards,

Seth Merrin


Thursday, July 9, 2009

The Unequal Impact of the Financial Crisis: From CEIP

From our sister institution the Carnegie Endowment, a recent report shows the unequal impact of the US-originated financial crisis on developing economies and the need for a fairer globalization:

The Unequal Impact of the Economic Crisis

G8Leaders of the G8 nations meeting in L'Aquila Italy acknowledged in a joint statement that there are signs the world economy is stabilizing, but cautioned that "significant risks remain."

Analysis from Carnegie's International Economic Bulletinsupports this conclusion, finding that although the preconditions for economic recovery have begun to develop, it is still too early to say that a sustained global recovery is imminent.

The Bulletin explores how the impact of the crisis and the chance for recovery vary in regions around the world, with a particular focus on Africa, Central Asia, China, the Middle East, and Russia. It shows that although the United States is at the epicenter of the global economic crisis, it is one of the countries least affected by the financial fallout. Large industrialized nations like the United States, Japan, and Germany have benefited from increasing global demand for relatively stable economies in which to invest. Instead, it is several developing countries, notably those with vulnerable capital accounts and weak macroeconomic fundamentals, that are experiencing severe economic downturns disproportionate to their roles in the crisis.

Top 10 Most Affected Countries: Sept. 2008–May 2009
* The difference between a country's bond interest rate and the interest rate on the U.S. treasury bond. The higher the number, the less confidence there is that a country can repay its loan.

Both rankings were determined by comparing currency devaluations, equity market declines, and rising sovereign bond spreads because these measures tend to track developments in the real economy during times of economic crisis when financial strain handicaps consumption, investment, and in many cases government spending, which limits GDP and employment growth.

Top 10 Least Affected Countries: Sept. 2008–May 2009
United States0-240
South Africa1.5-2039
* The difference between a country's bond interest rate and the interest rate on the U.S. treasury bond. The higher the number, the less confidence there is that a country can repay its loan.

The global economic meltdown has shown that even when a crisis originates in industrialized countries, developing countries pay the highest price. This underlies why developing countries have a crucial interest in the financial soundness of large economies like the United States. This helps explain why the G20, rather than the G8, is leading the effort to design a regime to govern international finance, and why Brazil, Russia, India, and China (the BRICs) organized their first summit to discuss, among other things, the role of the dollar as its reserve currency.

For more details on countries most and least affected by the crisis, please visit the International Economic Bulletin.

Wednesday, July 1, 2009

Socratic Investigation of Business Ethics

I just got back from spending four days at the Aspen Institute's Socrates Society conference in Aspen, Colorado. Many luminaries were present, including Thomas Friedman, Jim Woosley, Nouriel Roubini, and Walter Isaacson. The Socrates Society conferences are unique in that they explore issues by using the Socratic method, so the entire group carries the conversation, which is moderated. My group focused on the relationship between business and government since the 2008-09 financial crisis and the discussion was moderated by Clive Crook of the Financial Times.

Some of our group discussion was devoted to cataloging the many "improbable" causes of the financial crisis, including: the ambiguous status of Fannie and Freddie; financial deregulation; incentives that encouraged risk-taking without accountabilty; financial innovation; rating agencies' relationships with financial sector; tax incentives for borrowing; a culture of debt in the United States; and the assumption that the housing bubble would continue indefinitely. Of course, I also added the global elements of high savings rates in East Asia, the huge demand for US debt in Asia, and the low interests rates that occurred as a consequence. I was surprised that another global factor didn't come up: The demand for American financial products in Europe.

The US financial reform plan was described as having three basic components: 1. new regulations for non-bank financial institutions that were acting like banks; 2. the government category of tier one or "too big to fail" banks, which will become more regulated with stricter capital requirements as well as an "early resolution authority" (the FDIC); 3. the establishment of a consumer finance protection agency, which will tighten mortgage lending. Some gaps in US reform include the lack of action on US regulatory reform complexity and a question about whether local consumer protection may be better than a central US agency. Finally, many people expressed the need for short, plain English contracts that go with loans rather than long, arduous documents with lots of fine print.

A great deal of discussion dealt with the notion of "libertarian paternalism" or soft paternalism. Basically, people were split on the morality of framing questions or "nudging" people to choose what is best for them through, for example, "opt-out" forms at the motor vehicle department. For example, is it ethical to ask people to opt-out (instead of opt-in) of organ donation or participating in 401K schemes? I took the view that framing questions like this is analogous to persuasion along the lines of commercials, public service announcements, or speeches. But some participants complained that this strategy was a "slippery slope" that could lead to abuses; one participant cited an example of a state using the "opt-out" tactic for license plate forms to fund a private party for a foreign dignitary--an example of abuse.

At the end of the three-days of Socratic investigation into business ethics, we turned to corporate social responsibility (CSR). Much of the discussion centered around whether CSR activities should help the corporate bottom line. One person suggested that CSR was OK as long as it improved a company's business. But what about the long-term effects on employee relations, marketing, brand, etc? Most of the discussion about CSR treated corporate responsibility as if it were something separate from the core business model; it seemed to be a dated perspective. To me, the most cutting-edge understanding of CSR is when companies integrate into their business models regulations that ultimately advance a broader, social interest. That's why many people say that companies that are truly responsible don't need a separate CSR department.

The whole experience was extremely rewarding. I felt my time in Aspen sharpened my mental blade and I would recommend it to anyone!