Years of Poems and Spirits

1. Feel somewhat vindicated when I saw Time’s “Decade from Hell” soon after I posted the last entry on the gloomy 00’s. One thing I forgot to add: the constant talk of Global Warming–just another example of how pervert scientific advancement feels in this decade. Sometimes I wonder how I would look back at the last 10 years when I am really old. It was exciting, but what does it mean?

2. Liked Krugman’s idea about taxing financial transactions, a.k.a., the Tobin tax. Tobin thinks such a tax will “throw some sand in the well-greased wheels” of speculation. Keywords: “well-greased”–the Monetarists always compared credit to “engine oil fir the economy”. And “speculation”. It is a word few mentioned in the current debate. But during the Depression Era, it was the received wisdom that excess speculation was what caused the Wall Street crash and the subsequent economic melt-down.

Now we do have a much more sophisticated understanding of why we should not use the S word as a catch-all phrase to describe all financial activities. Yet I am still at a loss at why people are not seeing the obvious: whatever the apologists say, there are speculations that are so rotten and everyone knows it. By taxing financial transactions–all of them, not just a few, the State can establish a framework within which it regulates an activity with not only economic but profound socio-political importance. I hope one day people will wake and say, hey, credit market is a public asset!

For this reason, I am very disappointed at the makeup of Obama’s economic team. The Monetarists dominate the decision-making (e.g. Geithner, Summers, Bernanke and their supporters vs. the likes of Paul Volcker) in a time their theory is fundamentally questioned. The rise of the Wall Street Gang is closely linked to the rise of the Monetarists.  Yet at a time when the Wall Street is totally discredited, the Monetarists protects them with the same tactics the NRA uses to let drug gangs keep their assault rifles.

3. The question about excessive debt. First read James Surowiecki’s column, soon after heard an interview of an author on private equity. The gist: the tax code that allows deduction on interest payment unintentionally created a debt-happy society. Particularly, the code that applies to business enables LBO. The consequence is that heavy interest payment (vs. flexible dividend) depleted several industries. Something I never really thought about. Thoughts now -

a. If LBO is such a risky proposition, why there are banks still willing to lend money to the buyers (or is junk bond still a viable alternative to bank lending)?

b. Are there industries that, for better or worse, call for this type of attack? E.g. mature industry,  fixed competitive landscape, good cash flow, etc. In other words, are there situations where earnings are better distributed to investors through interest payments than dividends?

c. How do I look at this issue using capital structure theories? e.g. M2 theory? Or they are not related at all?

d. Can I look at national finance using capital structure terms? Say credit/liquidity as equity and public debt as debt? Wish I can catch Jennifer K. in the hall way and ask her that …

What will this decade be remembered for?

50s … that was fun, full of post-War burst of energy. Dow finally recovered from the Great Depression.

60s? Crazy but not short of sparks: feminism, civil rights, anti-poverty … a succession of promises of a fairer, more just future.

70s? That is probably comparable to the doldrums we live in now. But the post-structuralist ideas boomed and man reached deeper beyond Positivism.

80s, pretty bleak too. Yet there was Said’s Orientalism. In China, that was my Enlightenment Age, epitomized by the 读书 magazine.

90s? That was the high time, tech innovations, the promise of a new economy and new paradigm. If anything, you know your material life will be quite different and exciting in the future.

2000s, Terror plus GWB. The Preemptive War doctrine, the Patriot Act, the renditions, unauthorized domestic surveillance, the great cave-in to the Executive Power by the other two branches.  And now the financial crisis that put the entire legacy of Economic Man on trial. In the tech field, it is full of echoes of popping false promises (social networking), dark prediction of new breakthroughs (brain scan, bio-engineering, gene altercation, etc.) or incessant chatter from a narcissistic crowd.

If Evolution is as what Jay Gould suspected–a cyclical pattern of bursts and slumps, I suspect human thoughts goes the same. And I feel like living in the Dark Age nowadays.

The other day on the DR show, someone asked Pei Minxin about Internet, civil society and democracy in China. Pei’s answer is very interesting: Yes, Internet does forge a virtual civil society but No, it doesn’t mean more democracy.

In the State-Society literature, civil society is always linked to democracy. But I do agree with Pei that in China this is not necessarily the case. Very interesting, wished the thought had occurred to me while I was in school.

Some angels, assumptions I can think of -

Separate Internet from traditional civic organizations from the “cost of participation” angle. That is obvious. How about the link b/w the State and the virtual/online civil society? Intuitively, the direction of influence b/w State and Society is almost always from Society to State. I haven’t come across a lot of literature on the other direction, since many of the examples of civic organizations seem to have been there forever (e.g. sports club, church, etc.)

Internet would be an interesting case study of how the modus operandi of a state could influence the formation and the shape of an organic community.

Need to think more: what part of state’s modus operandi matter? Institutions (or lack there of) and policies I suppose? And how do they matter? Access, level of monitoring? In China’s case, lack of an independent media must be a focus of any study: how the state’s media policy shaped the Internet culture?

Wish I could come up with more.  The old well is drying …