Putin Power

Putin Power

refugeesOne of South Africa’s most prominent businessmen has called on President Obama to align with Russia and Iran to end the Syrian conflict.

Kalim Rajab told Obama this weekend to “dance with the devil” and compared the current situation in Syria to that of World War II.

Rajib is Director of the New National Assurance Company, South Africa’s first entirely black owned insurer, and one of the country’s largest.

The refugee crisis caused by the Syrian conflict is troubling every part of the world. Immigration is an issue that caused a series of violent outbursts earlier this year in South Africa, where dozens were killed.

Like Germany, South Africa had an open-door immigration policy since the end of apartheid, and the country is the clear beacon of hope for many in sub-Saharan Africa.

But since the violence in May, South Africa has deported more than 15,000 people it considered “illegal immigrants,” although the country’s laws are unclear about exactly who is considered a refugee and who is an illegal migrant.

Every stable country in the world has some sort of migrant problem. Who would have thought only a year ago that one of the EU’s most troubled countries, Hungary, would become the focus of this problem?

Kenya has twice tried to close the massive nearly million-person refugee camp of Dadaab located on its border with troubled Somali. Only pressure from the U.S. and Britain has stopped them.

Social media has widened the opportunities for those who wish to flee an unstable place, and greatly increased their chances of making safe haven.

Rajib views the refugee crisis in a similar vein to the Nazi’s methodical and ever increasing assumption of territory in Europe prior to the outbreak of World War II.

“The irony of Churchill’s finest hour is that in opposing two ideologies he abhorred – Nazism and its twin, fascism – he had to temporarily reconcile himself with another ideology he abhorred – communism.

“How appalling it must have been to Churchill to find common cause with the butcher of the Ukraine,” Rajib concludes referencing Stalin and Obama’s need to discount Russia’s current occupation of Crimea in order to forge an alliance to if not end massively diminish the Syrian conflict.

I’m not so sure.

Isolationism has never had a good rap, and I’m not one to fully embrace it. But in this case I worry about anything that America might do.

It seems in my life time that we’ve never done the right thing in international conflicts and that all we’re capable of doing is escalating them.

So I disagree with Rajib, not because the alignment with Russia might not result in a better outcome than we currently have, but because such an alignment should occur first with Europe, not with the U.S.

We must defer. Deference to those who are actually feeling the problem far more than we are I feel is essential to any future policy we embrace. Europe is moving with the speed of a glacier, encumbered by a new global nature that morally is exciting and encouraging.

It’s a tricky time for Europe. There’s no need for America to muddy the waters.

Prayers Are Not Enough

Prayers Are Not Enough

prayers“Is it safe?” is the question I get most often from travelers considering visiting Africa.

Today is the anniversary of the ebola outbreak in West Africa. What has transpired since then?

11,331 deaths from ebola. Around 30,000 gun deaths in the U.S., of which nearly the same number of ebola deaths were homicides including about 300 mass shootings. What else?

The most amazing panic by Americans, especially conservatives, that ebola was doomsday. Billions of dollars of unnecessary and unworkable precautions were spent. The “ebola threat” consumed the American psyche. Travel to Africa stopped.

When a potential vacationer asks me if “it’s safe” that person means much more than those few words, and it’s hard for me to answer.

Statistically, it’s safer than driving on the interstate, but that’s trivial because the questioner feels confident driving the interstate … whether she should or not. He believes “the chances” of his being in an accident are small, because he practices safe driving, knows the way, and maintains his vehicle.

In that sense what he’s asking me: Does the vacation you envision for me carry little risk vis-a-vis all the vacations out there; do you undertake due diligence in protecting your clients; and do you have experience and knowledge?

It still doesn’t matter that I can convince her the answer is “Yes.”

Americans’ perceptions, I believe, more than any other culture’s are formed by the media they watch, the spiritual leaders they trust, and the politicians they hate.

We are truly as impressionable as we believe we are free.

There is evil in the world and there’s a lot of money to be made with evil-ness. The manufacturers of weapons, the owners of cable, the paymasters of our politicians are all heavily invested in evil.

There’s no better market for them than us.

Pick The Winner

Pick The Winner

PikettyinSAThe guru of anti-capitalism has received a warm welcome in South Africa in advance of his Saturday lecture in Soweto.

The young French economist rocked the world last year with his book, “Capitalism in the 21st Century,” claiming that income inequality is intrinsic to capitalism.

Thomas Piketty will deliver the prestigious Nelson Mandela annual lecture this weekend. He follows such eminent persons as Bill Clinton and Kofi Anan, taking a stage intended to highlight South Africa in the forefront of global development.

Piketty’s explanation for income inequality caught the economist world by surprise last year, leaving many jaws still open. His rather simple thesis is that accumulated wealth, capital, will always grow faster than the growth of the community in which that capital is held.

In other words, get rich just by accumulating wealth and renivesting it.

Piketty contends this works regardless of your financial acumen, regardless that the world around your bank account might be in a depression, and regardless of the particular currency in which your capital is held.

In other words, do nothing but reinvest.

Remember, this is a macro idea. Don’t go out and put all your marbles in the penny stock offering just appearing in your inbox. It isn’t true for every unique, individual case, but Piketty believes in the global context, it always works. There will never be enough bad unique individual cases to reverse the overall thesis.

Moreover, even if your portfolio is linked to the S&P, if the economy sinks 3% and your portfolio tumbles only 2.5%, that’s not exactly a compelling reason to embrace his theories.

Piketty therefore has no strong message for personal investors. His message is much more poignant: in today’s capitalist world, he explains why the rich get richer while the poor get poorer… no matter what.

Needless to say, this reportedly shy and now overwhelmed scientist has not received an especially welcoming reception by his peers here. Paul Krugman is an exception, embracing what he calls the Piketty “phenomenon.”

Robert Reich, now an announced supporter of Hillary Clinton, likes him …. sort of.

Except for those two, though, most American economists are in the throes of trying to dissect Piketty’s simplicity for the devil detail, even while they fear its truth.

So Thomas Piketty hasn’t been invited to give a lecture here.
450px-U.S._Distribution_of_Wealth,_2007
Piketty’s own data for South Africa shows that between 1910 and 1950, the top 1% took home between 22% and 25% of the national income. Though this declined to 11%-12% between 1950 and 1980, the alarming finding is that it has risen again to between 16% and 18% today.

That isn’t as bad as the chart for America from Wikipedia shown to the right. But, of course, America is the bastion of capitalism, so it stands to reason that Piketty’s theories would be most accentuated here.

So should I find it remarkable that it is a much smaller economy, albeit a very capitalist one like South Africa, that embraces Piketty?

No, because while in America the ignorant who hold much of the wealth are fostering greater ignorance, in the rest of the world the ignorant are becoming increasingly educated and powerful.

“Globally, we have rejected the equal sharing of misery that was the result of the socialist experiment,” the editor of South Africa’s top financial newspaper, Tim Cohen, wrote this week. Yet: “Personally, I find Piketty’s ideas fascinating…what I think is really unassailable is his central notion that … the disparity between economic growth and investment growth … is the foundation of inequality.”

I don’t think the disagreements over Piketty’s so obvious thesis are as complicated as critics suggest.

Economists like Cohen who embrace Piketty, like most of the South Africans, don’t want inequality. They might cherish it as much as Donald Trump, but they know in their society that it is the fuel of bloody revolution.

Economists like Paul Krugman embrace Piketty because they’re socialists who hate inequality with a passion.

Robert Reich doesn’t like inequality, but he likes Hillary, he likes being a capitalist Secretary of the Treasury and he’ll search till hell freezes over for some exception to the notion. Economists writing in The National Review know Piketty is right … and want it to stay that way.

Americans to a man are not pressed like South Africans. Our society is too stable. But when capitalism as practiced here in America begins to fall because of forward thinking from places like South Africa, we’ll have to pivot.

I don’t think that day is too far away.