Thursday, 1 September 2016

My review of this brilliant non-fiction title

THE INDIAN OCEAN FROM ADMIRAL ZHENG HE TO HUB AND SPOKE CONTAINER MARITIME COMMERCE

by Jacques COULARDEAU & Ivan EVE


Grab the ebook here: https://www.amazon.com/INDIAN-ADMIRAL-CONTAINER-MARITIME-COMMERCE-ebook/dp/B01AY2H0JC/

Review by Serban V.C. Enache


Note: this piece was considered ineligible for publishing by the reviewers at Indialogs for the following reasons: "This review is written in a colloquial, non academic style and it is full of personal opinions, inappropriate for an academic journal. It seems more a journalistic insight."


The Review itself:


This book tackles the New Silk Road from a number of different perspectives, historical, social, economic, and from the standpoint of geopolitics. The reader is given a background regarding the Old Silk Road – its human cost and the socio-economic implications in the present, typified by what is called Post-Traumatic Slavery Disorder and Post-Traumatic Slave Syndrome.


We learn about the 13 centuries of slave trading done by the Muslim powers, and of the Trans-Atlantic slave trade, which lasted 300 years, but produced approximately the same number of casualties. We learn about slavery in India and about the slave-trade in the Indian Ocean. That it had existed since probably the emergence of agriculture, something like 12,000 years ago. Slavery existed in America before the arrival of Europeans. And the book concludes that slavery was and still is a global or universal phenomenon. Religious motivations for slavery are also highlighted, alongside the changes in thought and values, from Judaism to Islam, and of course, Christianity.


It’s always a pleasure to read an objective take, no matter how brief, on slavery. Because there are myths flowing around out there, which claim that slavery and the slave trade are purely an invention of “the white man”. And these two evils are not only an invention of secular institutions and practices, but they are also enshrined in mythology, dogma, religion. To sum it up in a humorous expression, treat thy neighbor as thyself if he’s not a foreigner or a heathen. But if he is, then kill the bastard or take him in thralldom.


I wholeheartedly agree on how the authors tackle the issues of Post-Traumatic Slavery Disorder and Post-Traumatic Slave Syndrome. They insist on a process of proper information and open dialog. And they emphasize the requirement of meritocracy. If we are to have true equality and meritocracy, then the rise and fall of individuals within the hierarchical system of any civilized society must occur based on their own merits, not based on favor or prejudice. Any system or policy that’s designed to ignore a merit-based argument in favor of a non-merit-based argument can only be of a discriminatory nature. One cannot be granted favor without someone else receiving an injury as a consequence. One is either an egalitarian, or one’s not. One either believes people should be judged based on their own merits, or one believes that they should be judged based on favor or prejudice. Like the authors, I count myself among the former.


There is also a worrisome phenomenon occurring, particularly in the USA, in which unpopular speech is being censored, not only by right wing reactionaries, but by left wing progressives as well. The latter are called mockingly as “regressive leftists” or “the regressive left”. I will quote the Thomas Jefferson Center on this issue.1


"An epidemic of anti-speech activity swept across the campuses of American colleges and universities in 2015 and shows little sign of abating in 2016. Not long ago, these same institutions were at the vanguard of First Amendment issues; students demanded—then made powerful use of—expanded speech rights on campus, and administrators held academic freedom sacrosanct. These positions reflected a shared understanding that intellectual inquiry requires an environment in which debate is uninhibited, robust, and wide-open, even if it occasionally results in unpleasant or offensive exchanges.

Today, however, the focus seems to be on limiting rather than promoting the open exchange of ideas. Students who once protested to have their voices heard now seek to silence those they disagree with or find threatening. Meanwhile, university administrators appear locked in a competition to determine which school will take the toughest stand against offensive, unpopular, and hurtful speech. First Amendment principles have given way to identity politics, trigger warnings, and so-called “safe spaces,” and the Free Speech Movement has, at many colleges, become the Anti-Speech Movement.

Since 1992, the Thomas Jefferson Center has awarded Jefferson Muzzles to those individuals and institutions responsible for the more egregious or ridiculous affronts to free speech during the preceding year. Our usual practice has been to select eight to twelve recipients each year, reflecting the unfortunate reality that threats to free expression regularly occur at all levels of government. This year, however, we were compelled to take a different approach.

Never in our 25 years of awarding the Jefferson Muzzles have we observed such an alarming concentration of anti-speech activity as we saw last year on college campuses across the country. We are therefore awarding Jefferson Muzzles to the 50 colleges and universities discussed [...] both as an admonishment for the acts already done and a reminder that it is not too late to change course."


Afterwards, the book presents the Old Silk Road proper, the ancient network of trade routes that were central to economic and cultural interactions among different regions of Asia, connecting the West and East from China to the Mediterranean Sea. The religious implications associated with the various countries and trade interests are also approached (Buddhism, Hinduism, and Islam).

We learn from that ancient epoch and we’re moved to the 15th century, to Admiral Zheng He, his great fleet of merchant ships – and the reader learns of his visits to foreign lands. Most notably, his repeated journeys into India, Africa, and Arabia.


Past that point, the book moves the reader into the present and reveals great information regarding planned investments in new port infrastructure and upgrades, new trade routes, cross-judicial and economic cooperation between countries for safety and development. Figures regarding freight capacity and throughput are given for some key trade nodes in China, Africa, Singapore, Hong Kong, Dubai, and South Korea.


The authors make important observations, especially regarding China. This nation isn’t placing its eggs in the same basket. The Chinese are preparing different scenarios. China is open to the Indian Ocean. In maritime trade, it’s investing in the port of Colombo and in Hambantota. It is developing the hub-and-spoke model; but China is also developing alternatives to it. To reach America, the railroad option via the Behring Strait. To reach Europe, via the Arctic approach and westward along its ancient route – by linking virtually the whole of Europe through railways, down to Spain.

I’d like to add that there are many ideas on the table, ready to be carried out with Chinese help. For instance, a second Panama Canal in Nicaragua, to connect the Pacific and the Caribbean (albeit voices of skepticism and dissent haunt this proposal).2-3 The Brazil-Peru transcontinental railroad – a massive undertaking meant to link via rail the Atlantic coast and the Pacific coast, and thus open Brazilian exports to Asian markets.4 There are also plans for China to create an alternative transcontinental route from Brazil, through Bolivia and Peru.5


Deals between India and China are also underway. Collaboration on atomic science, especially regarding the thorium-based nuclear reactor and the Chinese pebble-bed solid fuel 100Mw demonstration reactor.6 It’s also important to note that atomic power still remains an important outlet of investment and energy generation with near zero CO2 emissions, particularly when looking at 2 billion souls seeking to attain western living standards. India holds around 25% of the world’s major thorium reserves, and it is actively developing the thorium fuel cycle.7-8


Coulardeau and Eve take special note of India and Sri Lanka, and do not dismiss them from the greater scheme in the wake of such big projects like the Trans-Pacific Partnership deal – which, for political reasons that the authors identify, are left outside by the main geopolitical power. We’re referring of course to the USA.

Globalization is a multi-door street, but some doors are bigger and wider than others. Such free trade agreements can only push for lower sovereignty at the regional and national level, enforce strict intellectual property laws, and diminish the collective bargaining power of labor. Supposedly, consumers and firms are the ones who profit from such deals – but history shows that’s not really the case everywhere all the time. Otherwise protectionism would not have resurged in the West. And Britain would not have practiced protectionism to grow its own industries first, before projecting the comparative advantage doctrine (whilst ignoring absolute advantage) upon others through threat of violence and outright war.9 I am, of course, referring to the British Empire’s bloody tally in imperialism and colonialism. The exploitation of India’s people and the artificially-induced famines, and the Opium-wars with China leap to mind.


The so-called race to the bottom is a true phenomenon. It manifests itself when governments of signatory countries (pacts of free trade or ‘fiscal responsibility’) implement policies meant to keep domestic purchasing power lower & living standards low, in the hope of gaining market share for their export-oriented enterprises. These countries are thus deliberately keeping their domestic levels of Aggregate Demand low, and they rely on imports of Aggregate Demand from abroad in order to keep their economies working (albeit with considerable unused capacity to spare).10 Aggregate Demand means income plus the change in private debt.11 Private debt inflation adds to Aggregate Demand – it translates into more spending, more sales, more income. While private debt deflation (what much of the world is experiencing after the Great Financial Crisis of 2008) decreases Aggregate Demand – it translates into less spending, fewer sales, less income. Accounting-wise, every net exporter of goods and services is a net importer of Aggregate Demand and vice-versa. Spending is income. Debt is equity. All government debt in the world represents world-wide private sector financial savings (equity).12-13


Issues of flags of convenience are explored in the book, alongside those of safety. Ships and harbors require protection. Merchandise requires tracking. Elements of corruption, bureaucracy, and the relationship between capital and labor must not endanger the flow of goods and services, or add undesired and unnecessary costs to it. The authors state that what’s required for true security is the existence of an international agency, with satellite monitoring capabilities, and with the legal mandate and military means to combat terrorism, human trafficking, drug smuggling, and illegal weapons trade. Whether one is personally in favor of globalization or not, the soundness of the above proposition is indisputable.


I believe the many countries involved in the New Silk Road must follow the two principles behind the Peace of Westphalia of 1648, which ended successfully 150 years of religious war and established the notion of co-existing sovereign states; peace between them being reached through diplomatic congress.14 The first tenet said that for the sake of peace, the crimes of all sides must be forgotten. While the second tenet maintained that foreign policy must be carried out with the “interest of the other” in mind. What relevance do these Westphalian principles have on our present imperfectly globalized world? It is geopolitics that makes or breaks progress. That makes or breaks nations. That promotes war and strife, or peace and development. And it is precisely this lack of Westphalian sovereignty among nation states today, as well as the desire to severely outsource national and local sovereignty to super-state bureaucracies, that endangers the peaceful process of globalization – and turns it into a deliberate phenomenon of exploitation carried out by financial interests for the interest of financial elites, rather than for the shared benefit of countries as a whole.


John Maynard Keynes said that the unregulated movement of international capital endangers that self-governing experiment we call democracy.15 How prophetic his words were, especially if we look at the wealthiest and strongest nation on earth – at the extreme income inequality in the US today, which resembles not a capitalist economy, but a feudal economy.16

In short, if households are doing well, then so are the firms. GDP growth not seen in wage growth appears in profit growth.17 As an adept of Chartalism18, I can tell you that macro fiscal policy is more important to public purpose than trade. Whether a country is practicing free trade or protectionism, so long as it has monetary sovereignty (so long as the national government spends and taxes in its own free-floating nonconvertible fiat currency) it can do away with permanent and involuntary unemployment. The currency sovereign faces no solvency risk. He can never miss a payment.19 The real constraints are of a physical nature; unused physical resources, available labor (people willing and able to work), and know-how.


Brazen corruption, political instability, and natural disasters are conducive to high inflation or hyperinflation episodes for countries, alongside fixed exchange rate regimes with strong currencies. Inflation is not always everywhere a monetary phenomenon, like mainstream (orthodox) theory likes to claim.20 The overproduction of money is always a consequence of a crisis of hyperinflation, never the cause of it. The Weimar Republic had to print (deficit spend) many figures as % of GDP in order to purchase foreign currency with which to make war reparation payments. That money didn’t go to the creation of roads, railways, industries, schools, or hospitals. In Zimbabwe, a favorite example employed by inflation mongers, a number of different factors triggered the hyperinflation episode. First, Mugabe’s failed land reform, which crippled agricultural output. And secondly, persistent political instability and brazen corruption and the need to import more food from abroad contributed to the overproduction of money.21


And of course, in all aspects of human society, one cannot ignore or reject that great element called geopolitics. When powerful interests converge, either deliberately or through random opportunity/chance, the weaker party incurs the terms of the stronger ones.

I would recommend this title to any investor or public servant that is looking to familiarize himself or herself with the historical realities of the Old Silk Road, and with the challenges posed by the New Silk Road in proper context. People seeking to invest in the New Silk Road – either in a specific supply chain, in a particular technology, service, or financial institution – must realize the complexity of this trans-national region and the many competing geopolitical and economic interests within it. Public servants, those placed in key government agencies that hold important positions, must also study carefully this tapestry of interests, challenges, and must weigh all the potential consequences (both positive and negative), if they are to draw up pertinent national policies that take into account not only the interests of wealthy lobbying parties, but also the interests of the common citizens and their natural environment.


Footnotes:

1-http://jeffersonmuzzles.org/complete-list/

2-Michael D. McDonald, Bloomberg, 2015 http://www.bloomberg.com/…/china-s-building-a-huge-canal-in…

3-Lily Kuo, Quartz, 2015 http://qz.com/…/why-is-a-chinese-tycoon-building-a-50-bill…/

4-Brianna Lee, International Business Times, 2015http://www.ibtimes.com/china-brazil-peru-eye-transcontinent…

5-China Daily, 2015 http://www.chinadaily.com.cn/…/2015…/17/content_21031116.htm

6-Fiona MacDonald, Science Alert, 2016 http://www.sciencealert.com/china-says-it-ll-have-a-meltdow…

7-Stratfor, 2016 https://www.stratfor.com/…/gauging-indias-nuclear-power-pot…

8-BBC News, 2006 http://news.bbc.co.uk/2/hi/south_asia/6219998.stm

9-John M. Legge, 2016 http://www.johnmlegge.com/…/comparative-versus-competitive…/

10-Warren Mosler, 2011 http://moslereconomics.com/…/the-euro-zone-race-to-the-bot…/

11-Steve Keen, 2012 http://www.debtdeflation.com/…/economics-in-the-age-of-del…/

12-Steve Keen, Private Debt Project, 2016http://www.privatedebtproject.org/view-articles.php…

13-Bill Mitchell, 2015 http://bilbo.economicoutlook.net/blog/?p=32396

14-New World Encyclopedia, 2015http://www.newworldencyclopedia.org/ent…/Peace_of_Westphalia

15-Noam Chomsky, Hegemony or Survival, page 138

16-Laura Tyson, The Huffington Post, 2015 http://www.huffingtonpost.com/…/us-income-inequality-costs_…

17-Anna Louie Sussman, The Wall Street Journal, 2015http://blogs.wsj.com/…/inside-the-fight-over-productivity-…/

18-Bill Mitchell, 2009 http://bilbo.economicoutlook.net/blog/?p=5402

19-Brett W. Fawley, Luciana Juvenal, St Louis Fed, 2011https://www.stlouisfed.org/…/Why-Health-Care-Matters-and-th…

20-Antonella Tutino, Carlos E. Zarazaga, Fed In Print, 2014https://www.fedinprint.org/items/feddel/00008.html

21-Edward Harrison, Naked Capitalism, 2010http://www.nakedcapitalism.com/…/mmt-fear-of-hyperinflation…

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