Egypt ... and the "Mystery of Capital"

I have been recommending to friends and netizens for years now two excellent books on economics by Hernando de Soto, viz., The Mystery of Capital  and The Other Path.  Both of these books focus primarily on the impact real property rights have on freeing up capital and wealth in third-world countries.  Richard Curtis (Girl in the Cafe) might want to read one of these tomes before he lectures the West again on simply writing checks to these ravaged countries.

Recently, I had a conversation with a national talk-show host and his guest from the American Enterprise Institute, and reminded him on the air that when Reagan was lecturing Gorby at the Brandenburg Gate in Berlin to "tear down this wall" two years before it did fall, there were Vaclav Havel's and Solzhenitsyn's and others who were ready to pick up the mantle of freedom and democratic leadership once their countries were freed from their shackles of tyranny.  We don't have that now in Egypt.  I am not suggesting a paternalistic approach in Egypt, just a fundamental focus on what matters during this transition for the Egyptian peoples (the 97% of whom are not in Tahrir Square!) early on, e.g., the primacy of property rights.

I also expressed my disappointment with President Obama (No. 44) and the missed opportunity regarding his speech in Cairo (University of) in 2009 where Obama could have called out (politely, in his inimitable fashion) the ruling oligarchs in the middle east (i.e., billionaire despots) who are sitting on stacks and stacks of blackened, oil-slicked cash, to recognize officially the underground economies that are worth hundreds of billions of dollars.  Who better than our President to reach across the Persian rug aisle to the skeptical and tribal (sectarian?) leadership of the Middle-East? If only ... What we got instead was pablum and banal talk of past greatness to placate his audience.  No one was challenged. No leadership awkwardly called to the carpet in front of the world.  A mere two years later (a timespan ironically similar to Reagan's post-Brandenburg Gate speech), Egypt is changed forever and US statecraft under this administration was revealed to be sorely lacking and feckless ... again.

Nature and tyrants abhor a vacuum.  And, when this wide-body kleptocracy of Mubarak exits the Sinai Peninsula, I fear we will have radicals entering the vacated public square ready to bring new direction and dictates to the masses that do not have the rights of man at the fore of their agendas. I'm afraid that radicalism will replace corruption, and then the West will have both to contend with.

Mr. de Soto in his WSJ editorial discusses the radical transformation possible in Egypt IF a fundamental shift in socio-economic policies is encouraged and implemented.  I post (in part) here for you:

By HERNANDO DE SOTO 3 Feb 2011

After years of fieldwork and analysis—involving over 120 Egyptian and Peruvian technicians with the participation of 300 local leaders and interviews with thousands of ordinary people—we presented a 1,000-page report and a 20-point action plan to the 11-member economic cabinet in 2004. The report was championed by Minister of Finance Muhammad Medhat Hassanein, and the cabinet approved its policy recommendations.

Egypt's major newspaper, Al Ahram, declared that the reforms "would open the doors of history for Egypt." Then, as a result of a cabinet shakeup, Mr. Hassanein was ousted. Hidden forces of the status quo blocked crucial elements of the reforms.

Today, when the streets are filled with so many Egyptians calling for change, it is worth noting some of the key facts uncovered by our investigation and reported in 2004:

• Egypt's underground economy was the nation's biggest employer. The legal private sector employed 6.8 million people and the public sector employed 5.9 million, while 9.6 million people worked in the extralegal sector.

• As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title.

• We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and 55 times greater than the value of foreign direct investment in Egypt since Napoleon invaded—including the financing of the Suez Canal and the Aswan Dam. (Those same extralegal assets would be worth more than $400 billion in today's dollars.)

The entrepreneurs who operate outside the legal system are held back. They do not have access to the business organizational forms (partnerships, joint stock companies, corporations, etc.) that would enable them to grow the way legal enterprises do. Because such enterprises are not tied to standard contractual and enforcement rules, outsiders cannot trust that their owners can be held to their promises or contracts. This makes it difficult or impossible to employ the best technicians and professional managers—and the owners of these businesses cannot issue bonds or IOUs to obtain credit.

Nor can such enterprises benefit from the economies of scale available to those who can operate in the entire Egyptian market. The owners of extralegal enterprises are limited to employing their kin to produce for confined circles of customers.

Read the rest of his excellent piece here in the WSJ.  What are your thoughts?

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Eleven in '11 ... No. 5 (the grand gesture)

No. 5

the grand gesture.

There he is.  Standing.  Outside.   Attitudinal hip jutting out contrapposto to one side.  Ratty raincoat draping his kick-boxing svelte frame. Full head of hair spiked just so.  Boombox hoisted above his head, and Peter Grabiel's enduring, endearing and searing "Your Eyes" raps gently on the heart of Ione Skye, knocking her to the core.  Indeed, the grand gesture has hit its mark.

There they are.  Sitting in squalor in the big city.  Rags on their backs, stomachs empty. Children of all ages, wander the streets or live in abusive homes in New York City.  Because of displacement and death and disease, tens of thousands of these starving children are left uncared for as the line between abundance and dearth is a hair's breadth of chance or fate or poor parental choices in the big city of the Industrial Revolution.  Charles Brace witnessed this spectacle in 1854 and was moved into action.  His response was to found an organization removing children from big city squalor, transporting them out on "orphan trains" to awaiting pioneers and farmers for adoption throughout the mid-west who wanted to add to their families or needed working hands to help take care of the family farm or homestead.

30,000 children lived on New York City streets

Some statistics suggest upwards of 200,000 orphaned or abandoned children were placed throughout the mid-west over 50 years of the program's existence.  While there were reported cases of abuse or indifference (Billy the Kid was an "orphan train" kid), over 85% of the children themselves thought it worked for them, with many becoming successful businessmen and  politicians (two state governors).  And, it all started with one bold, grand gesture.

What exactly is the grand gesture?  To my way of thinking it is doing something that you would not normally do in your typical course of the day or year for that matter.  It is not ordinary, but is, by definition, extraordinary.

I know that many romantics think this is all about the love.  The Valentine's Day proposal (like the billboard pic above) is a big one here.  But, that's a little too on the nose, somehow, to my way of thinking.  It certainly is not unique, but it does genuinely touch the recipient to be sure.  As far as that goes, well done, you for making a memory for you and your betrothed.  However, I'd like to suggest that the true grand gesture is about the noblesse oblige that moves and touches all of us.  It's not just for the one recipient, but the whole of us, as far as that's possible.  Which is one of the reasons a very practical "orphan train" grand gesture can have an impact on an entire society.  The grand gesture can be cute, sure, but hopefully  it can also be impactful as well as heartfelt.

Many people find themselves today running marathons several times a year, raising money for cancer causes who only a few short years ago had never imagined they could run 26 miles.  There are teams of these like-minded marathon runners who became runners because they wanted to "do something good" to help find a cure for the disease that harmed their respective families.  They raise awareness and monies and set an example for all of us. This is a grand gesture.

If you've never volunteered to help someone read or put some time in at the soup kitchen or coach a team sport, well, then perhaps you've found a grand gesture for you personally.  It certainly is a noble obligation, and over the course of a lifetime of volunteering you will have touched many, many individuals in your community.  I like that.  Goodbye Mr. Chips shows us all the impact our involvement in the lives of people can have over a lifetime of being engaged.

Other grand gestures are massive, public spectacles.  Take the art work of Christo, who came to California in the early 1990s to place over a thousand large umbrellas throughout the rolling, golden hills of the Golden State.  He did the same in Japan, though with blue umbrellas.  Here in this one project you have thousands of large umbrellas, blue and gold, dotting the countrysides of two countries separated by an ocean, a culture, but sharing a wonderful grand gesture.  Many argued this was pointless and a waste of time.  Others lauded the project with high praise.  Either way, it was a very grand gesture.

What are some examples of grand gestures that you'd like to share with us?  Leave a comment or two!

Up next?

No. 6

the museum.

  

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Code-Shifters Unite! ... Redux

In honor of a two-year anniversary of the first "official" FatScribe article, I offer a redux post that is my favorite ("Code Shifters," below the fold) and a few facts about the website.  With your kind indulgence, over the last 24 months:

• Almost 110 countries have visited FatScribe.com
• From over 2,500 cities
• That's tens of thousands of visitors (I know that some of you get that in a month, but still ... right?)
• Over 120 articles written for this humble column  (that's only five a month, but it's like giving birth!)
• The average reader (Dear Reader) spends over 7 minutes reading each visit.

As Aaron Sorkin wrote for A Few Good Men, "These are the facts of the case, and they are undisputed."  What I do dispute, however, in my typical cognitive dissonance sort of way, is why anyone would even bother to read one jot or tittle of this website, besides you, Dear Reader (we enjoy each other's blog company, you and I), or any of our blogger websites for that matter.  The answer, I think, must be a lack of conversational, personal sharing on the typical big (or small) city sheet, fish wrap, rag, er, newspaper.  I say this, because here in LA, the LATimes.com website is replete with blogs now.  And, frankly, the paper is much more personal and appealing to me because of the blogger presence.

Now, back to your regularly scheduled programming ... "Code Shifters" (my fave)

________________________________

13 JULY 2009

Code-shifters Unite! "Oh, No You Di'int!"

I am afraid I "di'id," err, I mean I do, "code-shift" that is. Code-shifting (sometimes called code-switching) is a long-standing tradition of those amongst us who can be having dinner with our friends from the ole neighborhood (the ones called "stinky", "nails" and "princess" even though their names are Steve, Theo and Paulie), and with a "wait one" finger in the air to our pals we can take a call from a senior editor at The Times to give a comment on the Secretary of State's recent gaffe regarding an overseas speech which seemingly is at cross-purposes with current White House policy. We'll use words like "statecraft" and "hegemony" with Mrs. Senior Editor, and then when we hang up we'll use words like "bite me" and "that's what your wife said" to our pals who were mocking us brutally whilst we were on the phone. (Did you notice, btw, that I used the words "amongst" and "whilst" when its clear that I am a simpleton from SoCal? Now that, dear reader, is an affectation and not code-shifting.) Now ... wherest was I?

With our business colleagues on the road we mock-n-curse each other and the naughty competition with a toolbox rich with colorful insults, and then we insist that our youngins riding in the back of the car on the 2-hour ride to San Diego not say "sucks" when "stinks" will suffice. Or as Kate Hepburn's mom in The Philadelphia Story (1939 or thereabouts) said to her youngest, "Don't say stinks, Dinah. Say 'smells,' but then only if absolutely necessary."

I can see both sides of this controversy (it's only controversial because I say it is ... I want this article/website to have some substance after all) because on the one hand, it's axiomatic that we should all behave in a consistent and principled manner toward our fellow man (but not the fallow man, damn him!). This seems to be at odds with the code-shifting crowd's natural wont, but, upon deeper examination, not so much. We ALL code-shift. When we talk to our kids; when we speak to our child's homeroom mom; when we go on job interviews; when we're on The Tonight Show with Conan O'Brien; and, yes, even when we go to church.

There are lines that we shouldn't cross to be sure. If you are personally offended by cursing or sarcastic humor, then by all means behave consistently across each population of your friends (and here is where I take the 5th, dear friends). However, I am willing to bet that even amongst your most ardent of anti-swearers, there are phrases or slang that you feel comfortable using and yet would not venture to use that same vocab at the PTA meeting. See my meaning? Catch my drift? Are you pickin' up what I'm laying down? Code-shifting is natural and I believe helps grease the wheels of communication.

"How so?" you ask. First, it puts all at ease. When you speak formally toward your octogenarian grandmother, the one whom you still call "grand mere", she feels at ease, and believes that her 80-some odd years on this earth were not in vain, and that sending you to Smith Colllege (her alma mater) was in fact not good money after bad. When the President (Mr. BHO himself, the grand pubah of community organizing) talks with White House groundskeepers or staffers around him (say, Kal Penn, formerly of the hit series, House) he will in his inimitable way put them at ease and probably reference the Chicago White Sox's (his favorite team) recent win against the Nationals. This is how it works with those who are naturally gifted in this regard. They seek to put others at ease, yes, but secondly, it primes the pump of information. People talk more when they feel that someone is actually interested in them, but especially if they can relate to the person addressing them ... and that someone is you and I.

If you try code-shifting -- even if you feel silly at first -- then you'll begin a life-long journey of knowing our fellow man if not in a deeper way, then perhaps in a richer one. Greatness in this regard can indeed lead to accomplishing great things. Let's consider President Lincoln, from poverty to becoming arguably one of the greatest writers ever; President Truman (also from humble beginnings, he worked at a men's clothing store); Frederick Douglas, the former slave who became a leading abolitionist, is another personal hero of mine, who crossed color lines, even in his marriage, and could chat with Presidents and paupers alike; Queen Elizabeth is also said to be excellent at this and has met well over 500,000 people in her life time. She might not dap you up or high-five you, but she can ask you about cars (she was a mechanic during WWII), sheep, dogs, and anything else considered to be "common." Former President Bill Clinton was especially strong-suited here, although his touch was a little too common if you know what I mean, but I digress into truth. Sorry.

To my way of thinking, the single best modern example I can think of in this regard, is business leader extraordinaire, Richard Branson. Completely without guile (from news articles and his books that I've read, at any rate) and is just unabashedly immune to bruised ego syndrome. That is the downfall of so many leaders, viz., not considering that others may be right or at least should have a voice (insert here, Mssrs. Steve Jobs, Al Gore, certain religious leaders, et. al., for examples of impolitic behavior and those without code-shifting abilities). Branson flies around the world and has a beer with mates (aka, his employees) in Australia, the US, and the UK with abounding aplomb. He has meetings on his Necker Island with world leaders as well with equal ease. Indeed, he receives the FatScribe code-shifting award for 2009. Well done, you, Sir Richard!

And, that is, after all, what code-shifting is all about, viz., the common touch, the kind that Kipling wrote about in his If: "If you can talk with crowds and keep your virtue, Or walk with Kings -- nor lose the common touch." Even the Apostle Paul said "I become all things to all people." I think his point was that we have to reach folks where they're at if we want to be their friends or at least help them understand where we're coming from. That's the essence of code-shifting. I've been seeing a lot more of it recently, and that to me is a good thang!

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