Monthly Archives: October 2013

D is for Debt Part I: Human History

1-2debt-slaver As our government returns to work and prepares for the next debt debate it seems the world has spent the years since 2008 stumbling from one debt crisis to another.  If we include the Third World debt crisis, which affected most human beings on the planet, the world has been in continual debt crisis since the 1970’s.  This might seem like a new period of human history brought on by virtual credit but a broader view shows credit and debt have been the predominate form of money in the world.  In Mesotopamia, elaborate credit systems predate coinage by thousands of years. The remarkable thing is that they were able to maintain these system without a large state but instead relied on two aspects: honor and overarching insitutions typically religious in nature.

Honor held most agreements together as merchants needed to develop reputations of integrity.  Not just of paying their debts and being a pillar of the community but also forgiving other people of theirs if they were in difficult times.  Thus driving the idea that money was not the most important thing. This allowed merchants in Ethiopia and other Indian Ocean trading posts to avoid written contracts preferring to seal contracts with a handshake and ” a glance at heaven.” If there were problems they referred to Sharia Courts who had no power to arrest anyone but could destroy someone’s reputation or “credit worthiness.”

The religious institutions, which were larger than states, ensured that debt didn’t fly out of hand. Periods of history dominated by credit money where everyone realized that money is just a promise or “social agreement” need some mechanism to protect those in debt. Often Mesotoapia kings would declare slates clean and simply start over when debates became to great.  In Judea traditions this became known as the seventh year Jubilee.  In the Middle Ages Islam and Christianity both put restrictions on debt bondage making trade possible as ordinary people  knew they would not be entirely impoverished and had the ability to make purchases. These religious institutions then became the foundations for honor and trust while protecting the citizens who had fallen into debt.

Trojan-Debt-Horse

This explains our current global debt crisis. We have established a global system of debt through the International Monetary Fund and S&P (who manages U.S. credit rating)  which protects the creditors and not the debtors.  There is no debt forgiveness, and the people cannot restart.  As developing nations pay off interest worth 10 times their GDP and many Americans fall into debt bondage we should look to our past for inspiration.

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Walking Dead and International Relations Part 2: Human Edition

Rick-Grimes-Michonne-The-Governor-the-walking-dead-33819289-648-365  Continuing with the analysis of The Walking Dead and its implications for International Relations we will take a closer look at the non-Zombie communities and the choices they make that are similar to the classic Prisoners Dilemma.

The central idea to a prisoner’s dilemma is that two actors face a situation where cooperation is mutually beneficial but both sides are tempted to cheat for maximum gain, thus taking advantage of the other player.  Arguably, the best outcome is when I cheat but my partner tries to cooperate, the worst is the reverse.  The second best is when we both cooperate and of course there is the possibility that both sides try to cheat. Another school of thought is that in any Prisoner’s Dilemma or negotiation the chance for mutual gain is present hence the mutual cooperation is the best possible outcome. The logic being that once Player 1 has exploited Player 2, the relationship is ripe for conflict, leading neither party to cooperate in future talks. However this only works if neither party prefers conflict and focuses more on what is right rather than what works.  In standard math terms…..

Exploitation>(I cheat & You don’t)>Cooperation (We both cooperate)>Conflict(Neither of us cooperate)> Loss( I cooperate & you don’t)

  OR 

Cooperation (We both cooperate)>Exploitation>(I cheat & You don’t)>Conflict(Neither of us cooperate)> Loss( I cooperate & you don’t)

The Walking Dead has two groups one led by Rick, a former sheriff whose people find shelter in a prison and another led by the Governor. The negotiation revolves around a land bargain that would led to peace between the groups as long as Rick hands over Michonne who the Governor hates…but is also one of Rick’s best people. Ideally, peace is worth more than Michonne so Rick should cooperate, but the Governor prefers conflict and so he is a spoiler.

Luckily Rick has a change of heart at the last second…but he has an agent problem in Merle.  Merle decides to take matters into his own hands and attack the Governor’s people.

merle-knife-hand

In the absence of law and order the world of The Walking Dead is similar to that of world of international relations. Without a hierarchy to enforce behavior or agreements, the temptation to cheat, and fear that the other might cheat is very high.  As this show reminds us with the Governor, not everyone is playing the same game. Furthermore, those negotiating the agreements may not always be able to control their team, or militia as Rick couldn’t control Merle. Another reason why civil wars are often harder to end than inter-state ones is because one side may in fact prefer war, and because the elites at the table may be unable to control those they are supposed to command.

Who’s Afraid of the IMF?

fiscal-cliff-cartoonWith the debt ceiling debate in the news, it’s a good time to ask what the global institutions charged with regulating the international economy have to say about U.S. fiscal policy.  When countries borrow money from the International Monetary Fund, what the IMF says can affect markets and policies of those governments. But the U.S. receives only advice and no funds so how much leverage can the IMF have with its largest shareholder?

The goal of the IMF is to make sure that nations are adopting policies that prompt a stable currency and produce economic growth.  Starting in 1999 the IMF began publicizing report cards on countries in order to engage their politicians in a policy minded debate.  The IMF review and its impact was seen when the review was published in July of 2011 and then the debate between Congress and the White House was settled in April of the same year.

Much like criticizing your boss, when the IMF talks about the policies in the U.S. there is a tendency to stress the positive. Lately however this has not been the case. The 2011 IMF  report called the U.S. model “unsustainable” and recommended an array of changes including raising the retirement age, cutting Social Security and nationalizing the sales tax.  With changes to the social safety net and increasing protections for labor, the recommendation had something for everyone.  Despite this, there were few in Congress that took to the report and no mention of it by the White House.

Just because information is available doesn’t mean it will find its way into the hands of policy makers.  Just as the IMF wishes the U.S. would learn from the debt ceiling debate in 2011, it needs to adapt how its message gets out there.

The Walking Dead and IR Theory Part 1: Zombie Edition

18870-the-walking-dead-the-walking-deadThis week ushers in the start of the fourth season of The Walking Dead and it got me thinking about the conflict between the zombie and non-zombie communities. In The Walking Dead a few survivors are struggling to survive in a world infested with flesh-eating zombies and are forced to decide which fellow humans they should help in a world of very limited resources and flesh-eating undead. Thus a dualism is established of zombie = bad, human=good, along with a healthy dose of prisoner’s dilemma between the remaining humans. This kind of binary thought is common in conflict. While sometimes one side is clearly the aggressor most of the time there are factors that lead groups to be active participants in the chaos that violent conflict generates.

The dualism can be traced back to the prophet Mani and the establishment of Manichaeism which saw the universe as a struggle between the forces of dark and light.  This dualism has been adopted by many religions  and cultures overtime and poses some problematic political questions.  Randy Borum a terrorism expert elaborates, ” When individuals identify a problem, blame another for this problem and view the other as evil, it justifies any actions taken against them.”  He goes on to suggest that this is a common pathway that an individual takes in order to justify acts of terrorism. How can you negotiate with flesh-eating zombies? Is there an appropriate policy response? Are we guilty of applying Manichaeism thinking to the zombies? Few conflicts have a clear division of good and bad. For instance who is bad in Syria? The Assad government? The opposition groups? The Russians? The U.S.? The larger takeaway is that in most cases there are interests and there is gray, not black and white…or zombie.The Walking Dead1.1 Days Gone ByBehind The ScenesAndrew Lincoln