International Affairs

Egypt Joins China Club

“President Mohammed Morsi’s historic trip to Beijing signifies a new direction for Egyptian foreign policy. The Muslim Brotherhood leader has sent a clear message by selecting China for his first state visit outside the Middle East. By forging closer ties with China, Morsi is warning the US government not to take Egyptian acquiescence for granted.”

economics International Affairs Societies

Southern Italy’s Hidden Economy

Many of my recent posts have been about what economic statistics tell us or don’t tell us about the reality on the ground.

Southern Italy is often portrayed as a backward region mired in corruption and sucking endless money from more prosperous parts of Italy and Europe.

I was reading a wikipedia article on organized criminals in Southern Italy and a source cited there opined that Calabria would be a “failed state” if not for the rest of Italy holding it up.

At first glance, unemployment is ridiculously high in the Mezzogiorno yet people somehow spend far more per capita than they supposedly earn.
The numbers just don’t add up.

To get a complete picture of the reality of Southern Italy and a more accurate idea of the gap between North and South, one absolutely must take the workings of the black economy into account.
This is where much of the real money is made.
And explains why organized criminals are such an embedded part of the region’s culture.
Much of their role is simply substituting for government and police: for a fee(aka taxes), they guarantee “black” commercial transactions and contracts through the threat of force.


economics International Affairs

Nationmaster – A Fun Research Resource

I found Nationmaster while looking up world statistics and found it to be a goldmine of easily accessible information.
You can compare any countries you like using any statistical criteria you like or see the world rankings for any criteria.  I just blew the last hour playing around with this shiny new toy.

Usually we get spoonfed disparate statistics in articles according to the agenda of the people allowing it to be published.

I think I learned more about the world in the last hour on this site than in years of reading magazine and internet articles.

Revelations:  For some reasons organizations using GINI as a barometer for quality of life never seem to mention that the top ranking nations by this criteria are unanimously some of the world’s poorest.

I was also stunned at Japan’s relatively low ranking on the big mac index, an index that attempts to approximate cost of living around the world by the local cost of a big mac.  I had expected Japan to be right up there with Sweden and the United Kingdom.

I was also surprised to see that Slovakia has perhaps the most equal distribution of wealth in the world without being one of the hellholes that rank highly on the GINI index.
Why is this?
I seem to recall that Slovakia split from Czech in part so they could continue having a pseudo-communist government.  Is this some byproduct of that split?  I’d love to get some input from any Slovaks out there.


economics International Affairs

Argentina: Defy the Creditors and Get Away With It

The story of what happened when Argentina defaulted on its debt.  Might events in Argentina tell us about how events could unfold in Greece?

argentine default table

International Affairs Societies

How Singapore Went From A Fishing Village With Slums Full Of Shacks To A Thriving City-State With Skyscrapers

In this reinvention keynote, native Singaporean and venture capitalist James Chan discusses how policies can help create successful cities. The age of the nation has passed and now the age of cities is upon us. The flow of power and money into cities is continually increasing so they can command their own futures. There is the possibility for cities to magnify humanity’s strength, yet as people continually aggregate in cities, urban density increases there are many lingering problems.

Chan demonstrates how the policies used in the Singapore deal with problems related to water shortage, water pollution, racial riots and lack of jobs to turn a developing city into a developed city. Education helps enable social mobility allowing for the best and brightest to step forward.

In the past I’ve gone into detail on why I think technological incentives generally favors smaller, more agile city-states. Understanding how Singapore has come so far is important to understanding how a new city-state could do the same.

Here’s my cliff notes of the talk with extra reading material from other people, he doesn’t have enough time to go into enough detail about the entire country so a lot of extra material is needed to really get the point across (in my opinion):

1. Start with the basics.

My notes: He doesn’t go into too much detail, I’d recommend reading Vinay Gupta’s Dealing In Security : Understanding How Vital Services Keep You Safe (pdf) for a clearer overview.

2. Engineer Political Stability. Attract the best and brightest from the city to serve. Success of the top 1% of leaders is no longer a functional just of intelligence and passion to serve, but also empathy. What worked before may not work now. Policies take more than one political term to take effect.

My notes: To elaborate more, let’s turn to the class notes from Peter Thiel’s class on Start-Up’s:

Everybody knows that company culture is important. But it’s hard to know exactly what makes for an ideal culture. There are obviously some things that work. Even though they didn’t necessarily look like a winning investment at the time, the early Microsoft team clearly got something right.

Then there are some things that don’t work so well. A cult is perhaps the paradigmatic version of a culture that doesn’t work. Cults are crazy and idealistic in a bad way. Cult members all tend to be fanatically wrong about something big.

And then there is what might be called anti-culture, where you really don’t even have a culture at all. Consulting firms are the classic example here. Unfortunately, this is probably the dominant paradigm for companies. Most of the time, they don’t even get to the point of having culture. People are mercenaries. People are nihilistic.

Picture a 1-dimensional axis from consultant-nihilism to cultish dogmatism. You want to be somewhere in the middle of that spectrum. To the extent you gravitate towards an extreme, you probably want to be closer to being a cult than being an army of consultants.

Good company culture is more nuanced than simple homogeneity or heterogeneity. On the homogeneity side, everyone being alike isn’t enough. A robust company culture is one in which people have something in common thatdistinguishes them quite sharply from rest of the world. If everybody likes ice cream, that probably doesn’t matter. If the core people share a relevant and unique philosophy about something important, you’re onto something.

Similarly, differences qua differences don’t matter much. In strong company cultures, people are different in a way that goes to the core mission. Suppose one key person is on an ice cream only diet. That’s quirky. But it’s also irrelevant. You want your people to be different in a way that gives the company a strong sense of identity and yet still dovetails with the overall mission. Having different kinds of problem-solvers on a team, for example, can make for a stronger culture.

In thinking about building good company culture, it may be helpful to dichotomize two extreme personality types: nerds and athletes. Engineers and STEM people tend to be highly intelligent, good at problem solving, and naturally non zero-sum. Athletes tend to be highly motivated fighters; you only win if the other guy loses. Sports can be seen as classically competitive, antagonistic, zero-sum training. Sometimes, with martial arts and such, the sport is literally fighting.

Even assuming everyone is technically competent, the problem with company made up of nothing but athletes is that it will be biased towards competing. Athletes like competition because, historically, they’ve been good at it. So they’ll identify areas where there is tons of competition and jump into the fray.

The problem with company made up of nothing but nerds is that it will ignore the fact that there may be situations where you have to fight. So when those situations arise, the nerds will be crushed by their own naiveté.

So you have to strike the right balance between nerds and athletes. Neither extreme is optimal. Consider a 2 x 2 matrix. On the y-axis you have zero-sum people and non zero-sum people. On the x-axis you have warring, competitive environments (think Indian food joints on Castro Street or art galleries in Palo Alto) and then you have peaceful, monopoly/capitalist environments.

Stephen Cohen: …That early understanding reflected the three salient properties that inhere in good company culture. First, a company must have very talented people. Second, they must have a long-term time orientation. Third, there must what might be called a generative spirit, where people are constantly creating. With this framework, hiring is more understandable: you just find people who have or contribute to all three properties. Culture is the super-structure to choose and channel people’s energies in the right direction.

One error people make is assuming that culture creates these three aspects. Take a look at the Netflix company culture slides, for instance. They seem to indicate that you can produce talent from non-talent, or that you can take someone focused on the now and somehow transform them into long-term thinking. But you can’t. Culture can always do more harm than good. It can reflect and enhance these three properties. It cannot create them.

From that insight comes the conclusion that hiring is absolutely critical. People you don’t hire matter more than people you do hire. You might think that bad hiring decisions won’t matter that much, since you can just fire the bad people. But Stalin-esque meritocracy sucks. Yes, you can shoot the bad people in the back of the head. But the problem with that is that you’re still shooting people in the back of the head.

Max Levchin: The notion that diversity in an early team is important or good is completely wrong. You should try to make the early team as non-diverse as possible. There are a few reasons for this. The most salient is that, as a startup, you’re underfunded and undermanned. It’s a big disadvantage; not only are you probably getting into trouble, but you don’t even know what trouble that may be. Speed is your only weapon. All you have is speed.

So how do you move fast? If you’re alone, you just work really hard and hope it’s enough. Since it often isn’t, people form teams. But in a team, an n-squared communications problem emerges. In a five-person team, there are something like 25 pairwise relationships to manage and communications to maintain. The more diverse the early group, the harder it is for people to find common ground.

The early PayPal team was four people from the University of Illinois and two from Stanford. There was the obligatory Russian Jew, an Asian kid, and a bunch of white guys. None of that mattered. What mattered was that they were not diverse in any important way. Quite the contrary: They were all nerds. They went to good schools. (The Illinois guys had done the exact same CS curriculum.) They read sci-fi. And they knew how to build stuff. Interesting to note is that they did not know how to build stuff the right way. It turned out that scaling up would be very challenging for PayPal because the 26 year-olds who were managing hundreds of thousands of credit cards didn’t make all the optimal choices from the beginning. But there was great clarity in the early communications. There was no debate on how to build that first database. And that alone made it possible to build it.


3. Educate and attract talent above the population average. Education is viewed as the great enabler of social mobility. He talks about how he studied alongside poor kids, rich kids, and minorities. All of them were given the same opportunities via standardized testing to prove themselves. Education is used as a filter to find top talent, give them scholarships and groom them for positions in the bureaucracy. Secondly, do your best to attract foreign talent as your own well is only so deep. At the younger level, they give scholarships to all of the cities and countries around Singapore to encourage them to come and study there. Create a skilled immigration policy so that you can inject hunger and fresh experiences into the city.

My notes:

Excessive standardized testing curbs understanding in favor of reaching a higher score. If you’re pulling a city-state from the third world into the first world, having a solid metric you can judge performance on is great. However if this is taken too far, you end up with a situation like China is in, where cheating becomes a huge industry:

The difference is that corruption is punished much more harshly in Singapore. Officials collaborating  and accepting bribes to rig scores would not be taken lightly, unlike in China where the system is too weak and corrupt to enforce laws uniformly.

See this study about the perception of Singaporean students on cheating, note that not contributing your fair share to group projects is considered “cheating”:

There is still a high rate of students reporting some form of cheating, so there is only so much good a focus on scores at the expense of understanding can do. The weakest link in the contrasting Finnish model is that Finland has no universities in the top 50 rankings. If you’re using your system to find and ID talent, you need some metric to judge that by. So the Finnish method comes up missing there.

For more info on contrasting the systems, see the previous post on Finnish v. Singaporean education systems:

Next on the subject of skilled immigration:

With state-of-the-art laboratory technology, an environment devoid of ethical watchdogs and, most importantly, plenty of research funding, he is attracting some of the West’s leading biotechnology experts to this authoritarian island nation.

Yeo is constantly on the lookout for new talent. His office is filled with stacks of articles from NatureScience and other leading scientific journals. The authors’ names are highlighted, clearly an indication that he has already picked out his next ideal candidates. “Some people collect butterflies. I collect scientists,” says Yeo, who likes to walk around his carpeted office without shoes.

One of his biggest catches is the German-born Axel Ullrich, a cancer researcher from the Max Planck Institute for Biochemistry, a man seemingly tailor-made for Yeo’s needs. Ullrich is well-known among molecular biologists because he was one of the first to translate some of his profession’s grand promises into medical practice.

There are few legal restrictions. For example, researchers in Singapore have already obtained six stem cell lines from human embryos, something that would be prohibited in Germany. “We just happen to be more pragmatic here,” says Yeo. He says that Singapore is a multitheistic state where Buddhists, Taoists, Christians and Muslims are able to live in harmony because no one insists that his religious convictions are absolute.


The other burgeoning sector of foreign labor — skilled workers — is usually referred to as “foreign talent” in both government and public discourse. Currently, skilled workers and professionals account for 22.0 percent (about 240,000) of Singapore’s total nonresident workforce, eclipsing the 14.6 percent recorded for 2006. Link

4. Share the wealth. Singapore has a GDP per capita that puts it in the top 5, depending if you use the CIA, IMF or World Bank ranking. The 2 keys to sharing the wealth:

Asset Appreciation, built on the back on widespread public housing. This is possible because of economic growth and housing value appreciation. A public apartment that was bought in 1990 for 100,000 is worth 600,000 now.

The 2nd tool is the Central Provident Fund. It’s similar to the 401k in it’s roots, that evolved into a tool that fulfills the medical, investment and education needs of it’s people. In times of economic strife or years of surplus the government can make deposits into individual’s accounts. He received 700 Singapore dollars ($560ish) this year from the fund. It’s a handout, but you can’t take it out for cash, just for government approved expenses.

The second part is income taxes. The average college graduate from Singapore would earn about $35,000 a year, but he wouldn’t have to pay anymore than $500 in income taxes for the year.

The government covers subsidizes healthcare costs. Costs are much lower all around.

My notes:

The housing situation sounds like a long-term government funded bubble. Good for attracting investment, as we saw in the US, when markets are growing and confidence is high people will assume that prices can only go up. A very simple “investment” with a guaranteed return.

On the Central Provident Fund, we find a common problem with retirement schemes, too many old people:

In Singapore, the Central Provident Fund (Abbreviation: CPF; Chinese: 公积金, Pinyin: Gōngjījīn) is a compulsory comprehensive savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare and housing needs. It is administered by the Central Provident Fund Board, a statutory board under the Ministry of Manpower.

Working Singaporeans and their employers make monthly contributions to the CPF and these contributions go into three accounts:

  • Ordinary Account(OA) – for housing, pay for CPF insurance, investment and education.
  • Special Account(SA) – for old age and investment in retirement-related financial products.
  • Medisave Account(MA) – for hospitalisation and approved medical insurance.
  • Retirement Account(RA) – created when one turns 55 using the savings in OA and SA. It is set up to meet basic needs during old age.

The CPF savings earn a minimum risk-free interest of 2.5% guaranteed by the Government. In 2008 and 2009, Special, Medisave and Retirement Account savings earned a guaranteed minimum 4% interest. In addition, the first $60,000 in the combined CPF balances, with up to $20,000 from the Ordinary Account, earned an extra 1% interest

The greatest threats presently facing the CPF schemes are the dwindling birth rate and persistent low yield returns from Hold-To-Maturity financial instruments. The dwindling CPF contributions due to aging population will test the future government’s ability to meet CPF savings redemptions if population continues to age without raising existing taxes. The various schemes e.g. CPF Life annuities schemes and Minimum Scheme Sum provided the means to stagger CPF withdrawals or pool longevity risks. However they will not fundamentally solve the problem of re-investing the massive CPF savings to ensure that the low yields are able to provide substantial retirement savings for citizens.

Next, the tax code, which appears to be dramatically simpler than the IRS code:

  • Singapore follows a progressive tax rate starting at 0% and ending at 20% above S$320,000.
  • There is no capital gain or inheritance tax.
  • Individuals are taxed only on the income earned in Singapore. The income earned by individuals while working overseas is not subject to taxation barring few exceptions.
  • Tax rules differ based on the tax residency of the individual.


Singapore tax regime recognizes the importance of easing cash flow for startup companies in their initial years of operation, therefore the system, extends support in the form of sizeable exemptions to resident companies.

5. Remain relevant. Reinventing a city never ends. It must remain relevant to it’s people and the world. The Singapore leadership is extremely paranoid about it’s relevance.

Yet not all that glitters is gold. The bottom 20% are not earning anymore than $500-600(USD) every month. There is still an underclass in Singapore. The city has to trade-off growth versus inclusiveness.

As the city grows political stability may become harder. For the first time in history, 82 out of the 87 seats in the Singapore elections are contested. The opposition used to be pathetic, but as the city grows and becomes more diverse it will have to walk the line between political diversity and political stability.

Singapore is an 80 story building on marshy land – Lee Kuan Yew

The foundation of Singapore is built on racial and religious harmony, without it the city will descend into petty squabbling.

Next, see Foseti’s review of Lee Kuan Yew’s book:

Everybody loves multiculturalism, but the dirty little secret of the multicultural society is that no one has any idea how to govern one. Lee’s Singapore is the first attempt to create a system of governance that seriously attempts to deal with the problems associated with a multi-racial/ethnic/religious society (hint: the answer is not more democracy).

The first thing Lee did when he took over was build a defense force. To do this, Lee turned to Israel and Switzerland for examples of how a small country should go about defending itself. The next think he did was ensure the safety and security of the country and provide a stable legal system.

A Singapore with a totally free press would have in the best case scenario been plagued by ethnic or racial or religious violence and in the worst case become an actual Communist country. Instead, it became what it is today and everyone is immensely better off.

Lee defends his policies by noting that totally free presses are highly over-rated. Lots of countries with free presses still have high levels of corruption. He also noted that in his dealings with the press, USG (specifically State) would get involved quickly.

Lee had no intention of trading freely with anyone at first. He wanted everyone in Singapore employed (so they wouldn’t riot, among other reasons) and he didn’t want them competing with low-cost Malaysian labor. Singapore specifically protected cars, appliances, consumer electronics and other consumer goods. The protections were all phased out later, as national industries matured, the population got richer and better educated and other sources of employment became available.

Many in the West believe that the government is capable of fulfilling the obligations of the family when it fails, as with single mothers. East Asians shy away from this approach. Singapore depends on the strength and influence of the family to keep society orderly and maintain a culture of thrift, hard work, filial piety, and respect for elders and for scholarship and learning.

One of the reasons Lee was so successful was that he changed his mind quickly if something he tried didn’t work. For example, he instituted several programs to try to scatter people of the same race. However, no matter what he tried, the groups eventually recongregated. Instead of mandating desegregation, the Singapore government eventually changed election laws so that some minority representation was required and, for similar reasons, got rid of jury trials. This system combined with some geographic quotas on concentrations seemed to work.

Ceylon and Singapore became independent commonwealth Commonwealth countries and both are island nations. Anyone looking at the two countries at independence would have bet that Ceylon had the brighter future. However, both countries had diverse populations and Ceylon pursued a more democratic route following its independence. Lee sums up the results: “During my visits [to Ceylon] over the years, I watched a promising country go to waste. One-man-one-vote did not solve its basic problem,” which was ethnic conflict. Link

Prime Minister Lee Hsien Loong said this at the Economic Society of Singapore’s annual dinner on Friday evening.

Since 2003, Singapore’s economy grew an average 6.3 per cent per year.

Mr Lee said: “Singapore cannot avoid slower growth in the next decade and beyond. This is natural because we are now more developed and we are also running up against land and labour constraints, especially as we reduce the inflow of foreign workers.

“Plus competition is fiercer, not only from hundreds of millions of hungry workers in the emerging economies, but also from new technologies that will transform industries all over the world.”

Mr Lee noted that some Singaporeans may desire slower growth, but deliberately slowing growth beyond Singapore’s economic potential could have irreversible consequences.

“For Singa­pore, slow growth will mean fewer new investments. Good jobs will be scarcer, and unemployment will be higher,” he said.

“Enterprising and talented Singaporeans will be lured away by the opportunities and the incomes they can earn in other leading cities. Low-income workers will be hardest hit, just as they were each time our economy slowed down in the last decade. Over time, our confidence will be dented.”

The government is also prioritising low-income Singaporeans through skills upgrading and sharing productivity gains.

Low-income households are also not neglected.

According to Mr Lee, a low-income household will receive more than S$500,000 in transfers from the government over a lifetime.

And to boost their assets more than incomes, Mr Lee said the bottom 20 per cent of households have an average of more than S$200,000 of equity in their HDB flat.

To continue doing so, he pointed out that Singapore must have a successful thriving economy to improve the collective well-being of its people.

But Mr Lee cautioned that the Singapore government must strike a balance between raising social spending and taxes.

Expenditure has so far been 17 per cent of GDP including defence, while tax revenue is only 15 per cent of GDP.

“For decades, we have gradually reduced our income tax rates, and partially made up with indirect taxes like the GST, in order to stay competitive with other Asian economies like Hong Kong. This has helped to foster growth, and increase the resources available to strengthen our social compact,” said Mr Lee. Link

Now some more from Peter Thiel:

Most companies are killed by internal infighting, even though it may not seem like it. It’s like an autoimmune disease. The proximate cause may be something external. But the ultimate cause of destruction is internal.

When we overlay the noting of intracompany fighting on the Marx vs. Shakespeare framework, we get two theories as to why colleagues fight. Marx would say people fight internally because they wildly disagree about what the company should do, or what direction it should take. The Shakespeare version is precisely the opposite; people fight because they both want to do the same thing.

The Shakespearean dynamic is almost invariably correct. The standard version is that two or more people each want the same role in a company. People who want very different things don’t fight in well-functioning companies; they just go and own those different things. It’s people who want to do the same things who actually have something to fight about.

At PayPal, the center of conflicts tended to be the product team. David Sacks wanted the product to be a single seamless whole. That was a good approach, but a less good byproduct was that it was a recipe for product people overlapping with everyone else in the company. Product couldn’t do anything without infringing on someone else’s turf. A big part of the CEO job is stopping these kind conflicts from happening in first place. You must keep prospective combatants apart. The best way to do this is by making clear definitions and precise roles. Startups, of course, are necessarily flexible and dynamic. Roles change. You can’t just avoid internal war by siloing people away like you can in big companies. In that sense, startups are more dangerous.

PayPal solved this problem by completely redrawing the org chart every three months. By repositioning people as appropriate, conflicts could be avoided before they ever really started. The craziest specific policy that was enacted was that people were evaluated on just one single criterion. Each person had just one thing that he or she was supposed to do. And every person’s thing was different from everyone else’s. This wasn’t very popular, at least initially. People were more ambitious. They wanted to do three or four things. But instead they got to do one thing only. It proved to be a very good way to focus people on getting stuff done instead of focusing on one another. Focusing on your enemy is almost always the wrong thing to do.

Reid Hoffman:… A side note on invention and innovation: when you have an idea for a startup„ consult your network. Ask people what they think. Don’t look for flattery. If most people get it right away and call you a genius, you’re probably screwed; it likely means your idea is obvious and won’t work. What you’re looking for is a genuinely thoughtful response. Fully two thirds of people in my network thought LinkedIn was stupid idea. These are very smart people. They understood that there is zero value in a social network until you have a million users on it. But they didn’t know the secret plans that led us to believe we could pull it off. And getting to the first million users took us about 460 days. Now we grow at over 2 users per second.


The PAP has enjoyed an indestructible monopoly in the field of local politics since the founding of Singapore. A portion of each member’s paycheck goes to the party fund, while other parties are denied funding from corporations and companies. Singapore is divided into constituencies, with the parties vying for control for these individual constitutencies by garnering votes during elections. Opposition party-controlled constitutencies are denied privileges granted to PAP-controlled ones, such as public apartment upgrades, new amenities and facilities. These constituencies are usually promptly broken up and assimilated into other constituencies to divide opposition support. Potong Pasir GRC is one of the few remarkable constituencies that still remain under opposition control. However, since the government hasn’t screwed up yet, few people complain about this lack of political diversity.

Malay is the official national language. The lesser-known reason for this is that the indigenous people were Malay, and this is done out of respect for our origins. The current majority of the population is Chinese (76.5%). The other races include Malays (13.8%), Indians (8.1%), and other races (1.6%).

Any place that doesn’t serve an economic, commercial or residential purpose will have green stuff planted on it. This widespread greenery is readily apparent in bird’s-eye views of the country.

The average Singaporean is well-educated, but isn’t exactly creative (a side-effect of the rigid education system). He/she can speak 2 languages: English, and his/her own native tongue.

Don’t you get me started on cost of living. The cars cost 3 times as much here. Add COE to this, and it means you’ll have to work like mad to earn enough for one. But since the public transport system is very well-developed (Point A to B anywhere on mainland island within 1.5 hours), cars usually serve as a symbol of wealth, and not much more.

Singapore has no tourist spots, no matter what your travel agency might say. Don’t come for them.

In order to ensure that overseas investors would view Singapore in a good light, the government keeps property prices high – and they keep on rising. The high cost of living in Singapore can be largely attributed to the high cost of property, and when coupled with the low wages, it means that the quality of life of average Singaporeans is low – the problem is, what can be done about it? The more I think about it, the government is doing the only thing that it can do with what it has to work with – but Singapore is in a rather precarious position at the moment. China, one of the world’s largest markets, is opening up; and it is getting rather difficult to ensure that Singapore will be chosen above it. Let me try to explain:

Singapore has next to no natural resources, it cannot function without the constant flow of goods into the country. China has all the resources that it needs to be self-sufficient – for a long time it functioned in total isolation from the rest of the world. Singapore has no minimum wage requirements, but wages have to be high enough for the population to be able to survive with such a high cost of living. China has no minimum wage requirements, and because the cost of living is one of the lowest in the world, wages don’t have to be high for the population to be able to survive on them.

China is a market which has only started emerging recently; already a sizable portion of the world’s manufactured goods are made there. Cost of living is low; wages are low; property prices are low – unfortunately for China, educational standards are also low, at least when compared to Singapore. Singapore’s possession of a highly-skilled workforce would seem to be the only distinguishing feature that the island possesses, but China can be expected to devote much effort into improving the educational standards of its workforce – what happens to Singapore then?

So what about all the criticism of Singapore? The fact is that much of what the government has been doing over the past several decades is the only thing that it can do. It has positioned itself in the only way it could, and our criticism comes from believing that there must be a better way to run a country. Take minimum wage for instance, many people believe that having a minimum wage is almost a requirement for “civilized countries.” Last time the government tried to adopt a minimum wage the entire country went into recession – it conflicted with the need for big businesses to be able to operate in Singapore at a low price.

Singapore is one country that cannot afford to go into recession, all the things that are needed for human beings to live are imported from overseas. Our water comes across from Malaysia, our meat comes mainly from Australia, etc. The government has no choice but to do things which which may not seem to be good for the people, but are good for the country itself. Making sure that thecrime rates are low, the country is clean, the people are educated are all things which are necessary in order to promote Singapore as being a prime location for big, Western businesses to set up shop here.

As for the things like compulsory National Service, the country needs to be able to defend itself – just like any country. In Singapore however, given it’s relatively small population, if joining the army was something that you only did by choice then there would be hardly enough of a force to repel any would-be invader. However, somewhere along the line the government got so preoccupied with making sure that the people would do things which were for the good of the nation, they managed to create a state where the people can barely operate without someone telling them what to do. They are trying to repair some of this damage, and they are doing it in the same way that they caused the problem in the first place, but in reverse.


International Affairs

Welcome to the Kurdish Spring

“Ankara used to routinely chase and bomb Kurdish PKK guerrillas crossing from Anatolia to Iraqi Kurdistan. Now it may be positioning itself to do the same in Syrian Kurdistan…The Kurdish Spring is at hand. And it is already hitting Turkey’s borders. “

International Affairs Religion

Islamic Extremists in London

International Affairs

Video Of Afghan Insurgents Showing Off

Fourteen Taliban fighters, seven civilian workers, and a US soldier were killed in the attack; more than 100 US soldiers were wounded.

Equally troubling for the Pentagon, analysts warn that these attacks serve as growing evidence that Pakistani security services (ISI) is stepping up its support of insurgent groups to jockey for position ahead of the scheduled 2014 departure of US combat troops from the country.

On Wednesday, two attacks in eastern Afghanistan killed three US troops and at least 25 Afghans, prompting the US Embassy to condemn the Taliban’s “murderous campaign.”

International Affairs Politics

How to Be a Modern-Day Dictator

Putin chooses to send tax inspectors or health inspectors to close down or shutter a dissident group.

In Venezuela, laws are written broadly and then used like a scalpel against any group that is deemed a threat. The Chinese Communist Party frequently refers to democracy and makes sure that all of its top leaders only serve two terms. There are all sorts of different ways in which regimes are finding how to move and navigate through forces that challenge their regimes that make them appear to be other than what they are.

I was in China about 10 days after Mubarak fell.

And it was an incredible moment, because, on the one hand, there was no visible sign of revolution, but there was a tremendous tension. And there had been a call for people to assemble at different points around China at a particular moment on a particular day.

And the regime knew that. I went to one of those spots at 2:00 p.m. on that Sunday, and it was an incredible thing. You saw the fear that the regime exhibited by just the sheer number of police that were present. But more than the police were the number of plainclothes policeman.

There were moments when I was walking through crowds, and literally, three, four, five people around me, they all had earpieces.

They have really developed excellent crowd control techniques, where they would move the crowds through with street-cleaning equipment. And they would push people through with lots of water, cleaning the same street corner again and again and again.

Mind you, no one is actually coming out to protest. No one is actually declaring, down with the Chinese Communist Party. If you were to do that, then you would be rushed away in no time by security. But, rather, the call had been for people just to come out for a stroll.

And that was a very clever way of going about it, because you can’t really arrest someone for just walking down the street.

One of my favorite examples is actually from Egypt before the revolution, where you had members of the April 6 Movement, who they put out a call on Facebook for people to rally around a strike that was going happen in another part of the country.

And they said to people, on that day, just don’t go to work, another easy way to sort of show your protest without actually taking enormous risk. Just stay within your home on that given day. And the support for this was enormous on Facebook. And so the regime’s initial response was to start putting out a ticker on all television broadcasts saying, on April 6, everyone must go to work.

They inadvertently broadcast this message in a way that the members of April 6 never could have imagined. Egypt is a country of 81 million people. The regime had mistakenly, inadvertently communicated this protest to everyone.

Link h/t Isegoria

See previous:

history International Affairs

Hazaras: Afghanistan’s Outsiders

This post is inspired by a commenter who added some insight to a post about the destruction of the Buddha statues in Afghanistan by the Taliban. A major motive may have been ethnic reprisals.

“At the heart of Afghanistan is an empty space, a striking absence, where the larger of the colossal Bamian Buddhas once stood.
Hazaras, residents of an isolated region in Afghanistan’s central highlands known as Hazarajat—their heartland, if not entirely by choice. Accounting for up to one-fifth of Afghanistan’s population, Hazaras have long been branded outsiders. They are largely Shiite Muslims in an overwhelmingly Sunni Muslim country. They have a reputation for industriousness yet work the least desirable jobs. Their Asian features—narrow eyes, flat noses, broad cheeks—have set them apart in a de facto lower caste, reminded so often of their inferiority that some accept it as truth.”

Hazarajat Map
Hazarajat Region Shown Within Afghanistan


International Affairs Politics

North Korean Film Exposes Western Propaganda

>North Koreans in charge of the truth

They even call South Korea “our limp wristed brothers and sisters”. It’s better than 95% of the films from the alt-left/alt-right entertainment pundits who make a career out of  pretending to scrutinize the “powers that be”.

Edit: Someone is saying there is a third voice, a slowed down version of the woman’s voice? Also, part 9 at 10:30 says there are 38 million homeless Americans. 1.8 million Iraqi civilian casualities? Polls in the US show that 87% of Americans think 9/11 was a false flag designed to take their rights? Oh North Korea, you’ve always been the most entertaining Korea.


Apparently this was made by a New Zealander named Slavko Martinov

economics Intelligence International Affairs Societies Uncategorized

US-China Economic & Defense News

The current Chinese system is interdependent with the West,  they are in a fast-follower position but lack the political infrastructure to take over as innovators. Here are some assorted pieces of economic/defense related news:

I’ve made previous posts on Chinese espionage attempts, however as we see here bribery can be much more effective than outright theft:

A six-year U.S. probe found that Pratt & Whitney, a key military hardware supplier to the U.S., sold China the software and engines needed to make its first-ever modern attack helicopter.

Nothing in the settlement agreement, in which Pratt & Whitney and two related companies, United Technologies and Hamilton Sundstrand agreed to pay a total of $75 million for multiple violations of export rules, directly threatens Pratt’s existing or future government contracting.

HONG KONG, China — U.S. satellite maker Loral Space & Communications Ltd. has agreed to pay a $14 million fine for passing missile technology to China.

The satellite and communications company will pay the fine over seven years to the U.S. State Department, through its Space Systems/Loral Inc. subsidiary.

The subsidiary neither admitted nor denied the charges but has agreed to pay the fine. It contends the information was “mistakenly sent to the Chinese.”

The investigation started as a criminal case, after the U.S. government adjudged Space Systems/Loral might have broken export laws when it gave technical help to China, on its rockets.

On the other hand, what we get sent isn’t known to be of the highest possible quality. China is extremely diverse and fragmented, the quality products varies highly. Fraud is endemic inside the country. In some cases it might be deliberate sabotage, but we don’t have too much of a reason to believe that most of China’s own parts are in much better condition:

Remember how the Senate Armed Services Committee held a rather dramaitc hearing on the flood of counterfeit weapons parts coming from China a few months ago?

Well, as part of the committee’s investigation into the problem, lawmakers asked the Government Accountability Office to buy weapons parts from Chinese companies (that U.S. weapons companies sometimes buy from) to see if the Chinese government is doing anything to crack down on the massive problem. A shadow company set up by GAO to buy the parts specifically requested brand new parts for F-15 Eagles, MV-22 Ospreys and two nuclear submarines. What did they get? You guessed it, fake parts from China!

How massive is the problem? Over one million fake weapons parts have been identified as coming from Chinese companies since 2009. You don’t have to be  genius to see the safety nightmare presented by fake parts on incredibly complex systems like submarines, fighter jets and tiltrotors.

Of course, that’s not to say that they only spy on the US:

Prosecutors in Seoul, Korea, indicted an ex-LG employee for spying for a Chinese company in a case they say cost the South Korean economy more than $1 billion. The Chinese company, Changhong-Orion PDP-Chaihong, reportedly paid the LG manager $300,000 per year, an apartment and a car (he was still collecting his LG salary) in exchange for copying 1,182 files from the LG network and giving it to the Chinese company

If you’re interested in finding out more examples of China leveraging it’s fast follower advantage, look to Bruce Hall.

As the US Government has found out, tech companies are required to create the infrastructure for a true “big brother” state.

The Golden Shield hardware — supplied by Cisco and other US companies — is supplemented by human censors who are paid about $170 a month. They sit at screens in warehouse-like buildings run by the Public Security Bureau. These foot soldiers in China’s information war monitor domestic news sites, erasing and editing politically sensitive stories. Some sites provide the censors with access so the authorities can alter content directly. Others get an email or a call when changes are required. Similar methods are applied to blogs. Sensitive entries are erased, and in the most egregious cases blogs are shut down altogether.

The censors also monitor email traffic, looking for politically sensitive content like calls for protest marches and anti-government tracts. Because it would be impossible to screen millions of Internet users, they home in on watchlists of potentially suspicious emailers — known dissidents, suspicious foreigners — and notify investigators of possible violations.

Most of our manufacturing base is directly dependent on Chinese materials in one form or another, supply chain disruption can wreck havoc on even the largest companies. In the event of a serious conflict, large companies will be easy targets for supply chain disruption and cyber attacks. They are slower moving, larger targets that cannot quickly innovate in the face of disruption. Kevin Mitnick showed that you don’t even need superior technical knowledge to break open networks, the people will always be the weakest link in security. In the meantime we are reliant on China for an ever widening base of commodities:

Concerns about Chinese drugs have become so intense that just three weeks ago, the Health and Human Services secretary, Michael O. Leavitt, announced that the F.D.A. would open an office in Beijing by the end of the year and offices in Shanghai and Guangzhou next year. The agency still plans to send inspectors to China from the U.S., but the offices will provide “an infrastructure that will make those people more effective,” Leavitt said at the time of the announcement.

China’s leap to one of the biggest suppliers of pharmaceutical ingredients in the world happened over the last decade, as the Chinese government subsidized the construction of manufacturing plants that have undercut prices everywhere. Generic drug makers in the United States, where price competition is fierce, were the first to seek cheaper drug ingredients in China. Last year, generic drug applications to the F.D.A. listed 1,154 plants providing active pharmaceutical ingredients: 43 percent of them were in China, and another 39 percent were in India. Only 13 percent were in the United States. 

We’ve been having on-going problems with obtaining Rx drugs in the US:

In 2005, the Food and Drug Administration reported 61 drugs in short supply. By 2011, the number had almost quadrupled, the majority injectable drugs used for cancer treatment, anesthesia and intravenous feeding.
The FDA reports that among many reasons, 43 percent of shortages stem from below-standard drug manufacturing facilities. Numerous FDA accounts describe drugs coming out of manufacturing plants contaminated with microbes, impurities, bits of metal and rust and other particulates.
If you read the FDA inspections of these plants, basically it’s scary,” said Erin Fox, pharmacist and manager of the Drug Information Service at University of Utah Hospitals and Clinics. “It’s crumbling buildings with mold on the walls, rust on the equipment. It doesn’t seem like what you would think a factory in the U.S. would look like.”

Visit this link if you want an educated guess on what’s next to be rolled out by big brother:

The Pentagon has made a lot of noise about cyberwarfare, which has generally been dismissed by pundits. However the pundits rarely mention “who” the threat might be, generally thinking that the government is worried about anonymous haktivists. They aren’t, the FBI keeps them under control as much you can for a decentralized movement.

For 18 minutes in April, China’s state-controlled telecommunications company hijacked 15 percent of the world’s Internet traffic, including data from U.S. military, civilian organizations and those of other U.S. allies.

This massive redirection of data has received scant attention in the mainstream media because the mechanics of how the hijacking was carried out and the implications of the incident are difficult for those outside the cybersecurity community to grasp, said a top security expert at McAfee, the world’s largest dedicated Internet security company.

In short, the Chinese could have carried out eavesdropping on unprotected communications — including emails and instant messaging — manipulated data passing through their country or decrypted messages, Dmitri Alperovitch, vice president of threat research at McAfee said.

Nobody outside of China can say, at least publicly, what happened to the terabytes of data after the traffic entered China.

Investigators hot on the trail of cyberspies trying to infiltrate the computer networks of US natural-gas pipeline companies say that the same spies were very likely involved in a major cyberespionage attack a year ago on RSA Inc., a cybersecurity company. And the RSA attack, testified the chief of the National Security Agency (NSA) before Congress recently, is tied to one nation: China.

Three confidential alerts since March and a public report on May 4 by the Department of Homeland Security warn of a “gas pipeline sector cyber intrusion campaign,” which apparently began in December. That campaign, against an undisclosed number of companies, is continuing, DHS said in the alerts, which were first reported by the Monitor.

Operation Aurora was a cyber attack which began in mid-2009 and continued through December 2009.[1] The attack was first publicly disclosed by Google on January 12, 2010, in a blog post.[2] In the blog post, Google said the attack originated in China. The attacks were both sophisticated and well resourced and consistent with an advanced persistent threat attack.
The attack has been aimed at dozens of other organizations, of which Adobe Systems,[3] Juniper Networks[4] and Rackspace[5] have publicly confirmed that they were targeted. According to media reports, Yahoo, Symantec, Northrop Grumman, Morgan Stanley[6] and Dow Chemical[7] were also among the targets.
As a result of the attack, Google stated in its blog that it plans to operate a completely uncensored version of its search engine in China “within the law, if at all”, and acknowledged that if this is not possible it may leave China and close its Chinese offices.[2] Official Chinese media responded stating that the incident is part of a U.S. government conspiracy.[8]

Cyberwarfare is important, even if most pundits downplay it, because of the vulnerability of our SCADA systems, in the event of conflict an entity would only need to put out a bounty on the system, not even needing it’s own skilled personnel to subvert the system:

In the past two years, hackers have in fact successfully penetrated and extorted multiple utility companies that use SCADA systems, says Alan Paller, director of the SANS Institute, an organization that hosts a crisis center for hacked companies. “Hundreds of millions of dollars have been extorted, and possibly more. It’s difficult to know, because they pay to keep it a secret,” Paller says. “This kind of extortion is the biggest untold story of the cybercrime industry.”

This was compounded by news of the hack at the Texas water plant, where on 20 November a hacker named “prof” gained access to the plant’s systemsusing a three-character default password on an internet-accessed SCADA made by Siemens of Germany. “No damage was done to any machinery; I don’t really like mindless vandalism. It’s stupid and silly. On the other hand, so is connecting your SCADA machinery to the internet,” he wrote on the Pastebin website.

International Affairs

Iran Won’t Crack

“Washington ‘softened’ up Iraq for over a decade with extremely hardcore sanctions before it could launch Shock and Awe and destroy a debilitated, fragmented nation. Regardless of the wishful thinking fog enveloping neocons and fake liberals alike, this “strategy” won’t work with Iran…
Treating Iran like a pariah will only lead to a blunder equaling the Bush administration’s – whose Shock and Awe ended up with a Baghdad closely aligned with Tehran.”

Africa International Affairs

UN calls for ‘billionaires tax’ to help world’s poor

UN backed programs have a very poor track record. They have never taken the time to develop the distribution infrastructure needed to make development work. They also haven’t focused on the right programs, people think Africans need computers more than diarrhea medication (which kills them more than the diseases they are getting vaccinated against).

The UN Army & Police force are primarily composed of poorly trained 2nd and 3rd world soldiers. Their track record is so legendarily horrible that I won’t bother to cite it. Mercenaries that work for cash are a welcome relief from the incompetence of undisciplined troops who will abandon you and your family to be senselessly slaughtered by ruthless murderers because a bureaucrat is afraid of jeopardizing his or her political career because of a single bad press release. Which particular instance am I talking about? Pick one of dozens.

A mandate written by the UN is toilet paper. If you want to help people, work with people like Vinay Gupta. Look at the environment of the people you are helping and figure out what they really need, whatever solution organizations like the UN create is more likely to destroy the economic ecosystem of a given country rather than help it.

The annual World Economic and Social Survey says it is critical to find new ways to help the world’s poor as pledged cash fails to flow.

The report estimates that the number of people around the globe worth at least $1 billion rose to 1,226 in 2012.

There are an estimated 425 billionaires in the United States, 315 in the Asia-Pacific region, 310 in Europe, 90 in other North and South American countries and 86 in Africa and the Middle East.

Together they own an estimated $4.6 trillion so a one percent tax on their wealth would raise more than $46 billion, according to the report.

The document gives other ideas for international taxes, including:

— a tax of $25 per tonne on carbon dioxide emissions would raise about $250 billion. It could be collected by national governments, but allocated to international cooperation.

— a tax of 0.005 percent on all currency transactions in the dollar, yen, euro and pound sterling could raise $40 billion a year.

— taking a portion of a proposed European Union tax on financial transactions for international cooperation. The tax is expected to raise more than $70 billion a year.

It also suggests expanding a levy on air tickets that a number of nations already impose to raise money for drugs for poor states through UNITAID, a UN initiative.

The report says more than $1 billion has been handed over to UNITAID since the levy started in 2006. Link

By US law, 75% of US food aid must be bought from US sources and processed, bagged and shipped by US companies. Most of the contracts, therefore, go to the big US-based grain traders who bid for them.

Prices have in recent years been, on average, 11% above market rates.

Nearly 40% of total US food aid costs is paid to US shipping companies, where restricted bidding again limits competition, so prices tend to be higher than on the open market, according to Oxfam.


economics International Affairs

Europe Can’t Economically Integrate Immigrants

Awhile ago, Giovanni posted:

The Dutch and Flemish speak a mutually intelligible language, are of similar ethnic stock yet could not agree to be in the same nation. In fact, they violently disagreed.
One of the big causes for the divide:
The Dutch are protestant.
The Flemish are Catholic. Link

I also pointed out that there are also economic roots to the problem:
Since the 1960s and continuing into the present time, Flanders is significantly richer than Wallonia. Based on population[16] and GDP [17] figures for 2007, GDP per capita in that year was 28286 € (38186 $) in Flanders and 20191 € (27258 $) in Wallonia. Although equalization payments between richer and poorer regions are common in federal states, the amount, the visibility and the utilization of these financial transfers are a singularly important issue for the Flemish Movement. A study by the University of Leuven[18] has estimated the size of the transfers from Flanders to Wallonia and Brussels in 2007 at 5.7 billion euros. If the effect of interest payments on the national debt is taken into account the figure could be as high as 11.3 billion euros or more than 6% of Flemish GDP.[19][20] Flemish criticism is not limited to the size of the transfers but also extends to the lack of transparency and the presumed inability or unwillingness of the recipients to use the money wisely and thus close the economic gap with Flanders.

Later I posted about how different Protestantism is from the Catholic Church, namely that it was created to increase productivity by introducing strict work ethic while discouraging extravagant behavior. In this case the Flemish Protestant culture was more economically viable but tied with the Catholic/Brussels Bureaucracy by the Nation-State, forcing them to make up for the inefficiencies of the other side. Generally the largest wedge between already different cultures is  their inability to integrate into each others economics systems while they still compete for the same roles and responsibilities.

This causes tension, generally whoever is footing the tax bill will want to be in control of the policy decisions. Appeals to democracy do not sway the minority that must pay the taxes without seeing any return on their investment or improvement in the social situation.

It’s extremely difficult to economically integrate groups which come from different cultures and have different abilities. It’s easy to get nerds of different ethnicity’s to cooperate for example, they usually don’t believe in zero-sum games and have a shared sub-culture (like anime) which brings them closer together than they would be with others of the same race.

However, most cultures are zero-sum. There are social winners and losers, they don’t envision the power to create value and drag themselves up by their bootstraps. Instead of focusing on improving their internal dynamics, they attack and compete against those who are perceived as weak or close to their immediate social position. Most cultures also have a short future-time orientation, with the exception of Western and North-East Asian ones. While this is at least partially genetic (50-80% is the current guess), having a large number of individuals with low executive function, low future time orientation and a belief in zero-sum competition makes trust extremely difficult. Without trust the 21st century economy, with it’s dependence on virtualization and large amounts of information that no one can keep track of at any given time, simply cannot operate. Older economic models are also extremely impaired by it as well.

There are two commonly held views on conflict, the Marx class warfare version where people are so different from each other that they inevitably end up fighting each other. All of the angels and demons are lined up to fight. The other is Shakespearean, it holds that people fight because they are trying to do things that are similar. When people want the same things, the greatest, bloodiest conflicts spring up. Innovation suffers because of the opportunity costs of unbridled competition.

 Move forward to 6 minutes in Video to see Peter Thiel talking about how people trying to do the same thing causes conflict:

Alt link:

Any culture that wants to survive must protect itself from zero-sum predators and focus on it’s internal dynamics. Whenever a culture has people within it with a wide range of differences, the lowest common denominator of social norms tends to be the end result. Your culture must clearly define the roles of it’s inhabitants to restrict some of the competition while encouraging the exploration of new frontiers. Otherwise most of the advantages will be competed away and people will suffer from having too many options at the same time. Aptitude testing is a great aid, and it must be capable of testing a wide range of talents while keeping an eye on those with very little executive function. Excessive competition is nothing more than war by attrition. Competition without innovation means no profits and no ability to plan for the future.

Public opinion in most countries are not in favor of immigration

Trust Tends To Be Lower In Ethnically Diverse Neighborhoods Worldwide:

Increased diversity depresses social capital, community behaviour, charitable behaviour and increases fear and isolation:

6 out of 10 students in mentally handicapped school in Copenhagen are bilingual (likely because of cousin marriage)

Immigrants in Norway Not Integrating Into Labor Market

Immigrants in Sweden Not Integrating Into Labor Market

See also:

The Problem With The Israeli Economy

Intelligence International Affairs

Find Out Your States Corruption Ranking (US)

Africa Intelligence International Affairs Uncategorized Warfare

US Expanding Intelligence Operations In Africa

OUAGADOUGOU, Burkina Faso — The U.S. military is expanding its secret intelligence operations across Africa, establishing a network of small air bases to spy on terrorist hideouts from the fringes of the Sahara to jungle terrain along the equator, according to documents and people involved in the project.

At the heart of the surveillance operations are small, unarmed turboprop aircraft disguised as private planes. Equipped with hidden sensors that can record full-motion video, track infrared heat patterns, and vacuum up radio and cellphone signals, the planes refuel on isolated airstrips favored by African bush pilots, extending their effective flight range by thousands of miles.

International Affairs Politics

Democracy In The Americas – Beyond Elections

From Venezuela’s Communal Councils, to Brazil’s Participatory Budgeting; from Constitutional Assemblies to grassroots movements, recuperated factories to cooperatives across the hemisphere- This documentary is a journey, which takes us across the Americas, to attempt to answer one of the most important questions of our time: What is Democracy? (Click through to link for full list)

economics International Affairs

Map of Global Marine Traffic

Accurate to one hour

International Affairs

EU should ‘undermine national homogeneity’ says UN migration chief

The EU should “do its best to undermine” the “homogeneity” of its member states, the UN’s special representative for migration has said.

Peter Sutherland told peers the future prosperity of many EU states depended on them becoming multicultural.

He also suggested the UK government’s immigration policy had no basis in international law.

He was being quizzed by the Lords EU home affairs sub-committee which is investigating global migration.

Mr Sutherland, who is non-executive chairman of Goldman Sachs International and a former chairman of oil giant BP, heads the Global Forum on Migration and Development, which brings together representatives of 160 nations to share policy ideas.

He told the House of Lords committee migration was a “crucial dynamic for economic growth” in some EU nations “however difficult it may be to explain this to the citizens of those states”.


Profile of Peter Sutherland

Bilderberg Participants 2011

International Advisory Board member, Eli Lilly & Co

Business International Affairs

1 in 5 Korean Women Get Plastic Surgery

Most commonly ‘eyelid surgery’ to remove their Asian epicanthic fold.

economics International Affairs Societies

The Logic of North Korea

Assuming that North Korea is insane and illogical is a counter-productive approach. Once one has given in to such a sentiment, there can be no reasoning, no progress, and no predictions of what will happen next.

Famine conditions serve a purpose:
-The state concentrates its resources in and around the capital.
-The state keeps its most valuable and loyal citizens in the capital
-The less loyal and less valuable you are, the further away you have to live from the capital.
-The further away from the capital you are, the less state resources you receive, the poorer the farmland and farming equipment becomes.
-Thus the less loyal and valuable you are to the state, the less likely you or your progeny will survive.
-Thus the state all but breeds its citizens for obedience and productivity.

Insane or chillingly rational?”

*Kim Jong Il was alive when this article was written but the principles of the North Korean state are unchanged.*

Truly nothing is permanent, the site I posted this article was posted on was deleted by yahoo over a year ago. And perhaps all of wordpress is deleted 10 years from now or less?  I remember working in an archives once, their worship of paper documents that cannot be changed or deleted except by fire or decay:

Here’s the original text updated 11/28/2015:

Confused with the state of North Korea, many foreigners dismiss the country, its Dear leader, and everything in its borders as ‘insane.’

Assuming that North Korea is insane and illogical is a counter-productive approach. Once one has given in to such a sentiment, there can be no reasoning, no progress, and no predictions of what will happen next.
There is in fact a method to the ‘madness’ and assuming insanity constitutes a refusal to analyze or understand a potentially dangerous government and its policies.

* Firstly, the North Korean government very much has a purpose in mind when it menaces its neighbors with weapons tests and undertakes nuclear development.


-Wishes to give the impression of erratic, frightening behavior so it can be more intimidating.

-Wishes to be more intimidating so it can get what it wants through threats.

-Wishes to make threats because:
It is a relatively easy way to increase the resources, income, and political clout of the regime.
Intimidation is a deterrent to invasion.
It Is a way for a nation perpetually on the brink of famine to feed itself.

* Even a state with a weak centrally planned economy is not implemented irrationally. Famine conditions serve a purpose:
-The state concentrates its resources in and around the capital.
-The state keeps its most valuable and loyal citizens in the capital
-The less loyal and less valuable you are, the further away you have to live from the capital.
-The further away from the capital you are, the less state resources you receive, the poorer the farmland and farming equipment becomes.
-Thus the less loyal and valuable you are to the state, the less likely you or your progeny will survive.
-Thus the state all but breeds its citizens for obedience and productivity.

Insane or chillingly rational?

* The cult surrounding Kim Jong Il and his family is not insanity, but rather a continuation of tradition.

-Extravagant stories of a ruler’s birth were common in historical East Asian monarchies.
-The Kim family is essentially a modern day Korean dynasty. Korea was traditionally the most Neo-Confucian state on earth. In this system, the common people owed obedience to their ruler just as a child did to its father. This relationship of ‘filial piety’ was regarded as the foundation of society. Exceptional obedience of the populace was not insanity but the proper order.
-‘The great Juche idea’ is in part a modern continuation of the philosophies behind traditional Korean monarchies.

* Much of the North Korean approach is determined from the perspective of Korean history:

-Korea was historically caught in between larger neighbors and periodically suffered devastating invasions. This fostered an attitude of fear towards the outside world. Korea, even more than other East Asian nations has been known as a ‘hermit kingdom.’ This tendency towards xenophobia and isolation continues in both modern day Koreas. It is only much more pronounced in the North.

-The twentieth century was incredibly traumatizing for Korea. Resistance groups under Kim Il Sung spent years fighting the Japanese in both Korea and in China. In the Korean war, conflict surged repeatedly up and down the peninsula. By the end Korean civilization, was in ruins. The North especially had been bombed back into the stone age by the Americans, mostly with lots and lots of napalm. Millions of civilians were killed during the war. The bitter resentment caused by this death and destruction endures to the present day.

— Korean pursuit of nuclear weapons is in part a reaction to precedent set by the Americans:
-Macarthur requested about thirty nukes with the intention of turning the entire border region of North Korea into a radioactive no man’s land through which no Chinese or Russian troops could possibly pass.
-Truman kept the possibility of nukes open even after he fired Macarthur.
-North Korea is loathe to stop its nuclear program when it has already come so close to being nuked.

* Playing the role of North Korea satisfies the needs of its most important client. There is market demand for a North Korea.
-The last thing China wants is to share a border with a staunch US ally that hosts a large garrison of US troops. North Korea is a friendly socialist government that serves as a buffer zone.
-The collapse of North Korea would result in millions of refugees flooding into China.
-The recalcitrance of North Korea serves as a distraction and ties down US troops.
-The ability of North Korea to brazenly stand up to US demands makes the US lose face. The US loses clout when it makes ultimatum after empty ultimatum.
-North Korea is a litmus test that allows the Chinese to see how far the Americans can be pushed. Brinksmanship is risky, it is grand to have someone who’s willing to do it for you.

So long as North Korea serves Chinese interests (it serves as a buffer zone just by existing), it will continue to receive plenty of energy and food aid from China. China might publicly scold the DPRK and even briefly place sanctions, but it will just be for show.

Intelligence International Affairs

Understanding Wikileaks and Julian Assange’s Strategy

“To radically shift regime behavior we must think clearly and boldly for if we have learned anything, it is that regimes do not want to be changed. We must think beyond those who have gone before us, and discover technological changes that embolden us with ways to act in which our forebears could not. Firstly we must understand what aspect of government or neocorporatist behavior we wish to change or remove. Secondly we must develop a way of thinking about this behavior that is strong enough carry us through the mire of politically distorted language, and into a position of clarity. Finally must use these insights to inspire within us and others a course of ennobling, and effective action.”

Julian Assange, “State and Terrorist Conspiracies”

The problem this creates for the government conspiracy then becomes the organizational problem it must solve: if the conspiracy must operate in secrecy, how is it to communicate, plan, make decisions, discipline itself, and transform itself to meet new challenges? The answer is: by controlling information flows. After all, if the organization has goals that can be articulated, articulating them openly exposes them to resistance. But at the same time, failing to articulate those goals to itself deprives the organization of its ability to process and advance them. Somewhere in the middle, for the authoritarian conspiracy, is the right balance of authority and conspiracy. Link

It’s tempting to read Julian Assange’s 2006 essays as the master-key to understanding what Wikileaks represents now, tempting because it makes a really hard problem easy. But it’s also quite clear that Wikileaks has changed quite a bit since 2006, and when Wikileaks tweeted my post (which was sort of where the whole experience became surreal for me), it seems important that they praised it as explicating “one of the key ideas behind WikiLeaks.” That is, one of them, and maybe not even the primary one.

So what are the others? What else is it that Wikileaks is actually trying to do?… Link

Future Trends Intelligence International Affairs

China Plans to Open Military Bases Worldwide

Dated 2010:

“It is baseless to say that we will not set up any military bases in future because we have never sent troops abroad,” an article published on Thursday at a Chinese government website said. “It is our right,” the article said and went on to suggest that it would be done in the neighborhood, possibly Pakistan.

Dated 2011:

China is weighing up whether to open an Indian Ocean naval base in the Seychelles in a move which will heighten tensions with India amid fears of a regional arms race.

Dated 2012:

China plans military base in Pakistan

International Affairs Warfare

Fundamentals of Company-Level Counter-Insurgency + Urban Infrastructure Disruption + Black Market Supply Chain

Break any rule, sooner than lose the initiative.

In counterinsurgency, the initiative is everything. If the enemy is reacting to you, you control the operation and, provided you mobilize the population, you will win. If you are reacting to the enemy – even if you are killing or capturing him in large numbers – then he is controlling the environment and you will eventually lose. This is because, in counterinsurgency, the enemy almost always has the tactical initiative. He initiates most attacks, targets you unexpectedly and withdraws too fast for you to react. So instead, you must focus on the local population, build your own solution to the environment and its systemic problems, further your own game plan and fight the enemy only when he gets in the way. This helps you keep the initiative. Link

The key to unlocking the disruptive potential of cities within this new form of warfare, is to attack key points (systempunkts) within target infrastructure and social networks to force a change in the city’s dynamic. Infrastructure attacks, particularly on power/fuel/water, negate the ability of the government to deliver political goods (for example, in October Baghdad only received 2.4 hours of electricity a day). This halts economic activity and forces the population to rely upon primary loyalties for daily survival (families, neighborhoods, religious organizations, gangs, etc.). It also damages the ability of the government to deliver political goods, which are the key to legitimacy. As a result, primary loyalties rise and nationalism falls. Next, attacks on the social fabric along fault lines (religious, ethnic, class, etc.), are then used to force these primary loyalty groups to arm themselves for security. Finally, as these manufactured groups naturally come into conflict (for access to resource, protection, or revenge), the city’s intrinsic interconnectedness allows it to assume its own emergent dynamic, replete with feedback loops that accelerate conflict. Link

By all accounts the amount of money involved is immense. In aggregate, the networks that form this parallel “black” global supply chain, have a “GDP” of $1-3 trillion (some estimates are as high as 10% of the world’s economy) and are growing seven times faster than legal trade. These networks supply the huge demand for:

  • Drugs (both recreational and pharmaceutical).
  • Undocumented workers (for corporations, home services, and the sex trade).
  • Weapons (from small arms to RPGs, many come from cold war arsenals).
  • Rip-offs of intellectual property (from digital content to brand named consumer goods).
  • Laundered and unregulated financial flows.

This supply chain isn’t run by the vertically integrated cartels and mafias of the last century (those hierarchies are too vulnerable, slow, and unresponsive to be competitive in the current environment). The new undifferentiated structures are highly decentralized, horizontal, and fluid. They specialize in cross border movement and therefore can handle all types of smuggling simultaneously. They are also very reliant on modern technologies to rapidly transport and coordinate their global operations.

The similarity between these commercial networks and those of modern terrorism (my global guerrillas) is not incidental. These networks are optimized for the melted map we currently live in. There is also considerable crossover between these networks since terrorists/guerrillas use these networks to both fund and execute their operations – and – smugglers see terrorists/guerrillas as a means to free areas from state control. Link

What’s more interesting than the actual fighting is what the conflict was about. In summary, the government made an attempt to slow the expansion Hezbollah’s fiber optics network, which provides secure/robust communications and surveillance (via automated cameras) to the group. Specifically, the government tried to shut down surveillance nodes of the network overlooking Beirut International Airport. Hezbollah responded by defining the network as a core part of its organization and that they were willing to defend it with violence if necessary.

So, we can now conclude that in addition to 4GW militias and parallel social services, a parallel communications/surveillance network is a core feature set of virtual states. This tracks with our emerging experience in Sadr City. It also implies we may see interesting virtual variants of this via the parasitic piggybacking of open source insurgencies (the PCC, al Qaeda, etc.) on cell phone networks and the Internet. Link

Understanding how to break the back of an insurgency will be very useful for individuals creating communities in proximity to unstable areas.

See also:

How To Be The Biggest Tribe

Narco-Cartels & Tunnels

Osama Bin Laden Didn’t Use Encyrpttion

Informal Banking: The Hawala Systtem