Mr Ngiam Tong Dow speaks again
It was another blast from the past at the JTC Alumni dialogue last night as the retired permanent secretary spoke of the unintended consequences of land pricing policy and the intellectual paucity behind gleaming buildings.
MOST civil servants hide behind the instruction manuals (IMs) as an excuse for not having to think. If you do not decide or exercise your discretion, then you are not thinking. You have to think even when you say 'No'. Otherwise, you are just flying on auto-pilot.
A 'No' decision should stand up to public scrutiny as much as a 'Yes' answer. The Auditor-General should check for acts of omission as much as he scrutinises acts of commission.
Let me illustrate this with an example from my estate officer days at the Economic Development Board (EDB). We had built some shops at the Light Industries section near the flats to provide shopping and other amenities. In accordance with the IMs, we put out the shops for public tender. As to be expected, the banks made the highest bids for space.
There was one shop left when an old barber approached us to say that he couldn't compete with the banks, as cutting hair was not a high-margin business. He offered us $400 a month. In the late 60s, it was not a sum to be sniffed at.
So I took the case to EDB chairman Hon Sui Sen and suggested that we allocate the shop to the barber as hair-cutting was an essential trade.
He agreed, but stipulated that the lease was to be for only three years. The barber should not expect to be subsidised forever. In any case, his business would grow with Jurong and the lease could be renewed, at higher rentals.
SHARING FORTUNES
MR HON was permanent secretary (PS) and commissioner of land before he was appointed PS (Economic Development) and chairman of EDB. He introduced the Torrens system of land registration to Singapore. In charging for land at Jurong, he practised what I would later learn from the Japanese as a policy of 'sharing prosperity, sharing misery'.
Under this policy, EDB did not charge the full premium for land on 30-year leases. Instead, we charged rental at 6 per cent of annual value per sq ft. This could be revised once every five years subject to a cap of 50 per cent. The lease of 30 years would be extended for another 30 years if EDB/ JTC was satisfied that the lessee was making good economic use of the land.
In this way, manufacturers need not tie up too much capital on land. Instead, they could invest in machinery and equipment. In other words, those who wished to speculate on land were not welcome. Speculation was a zero sum game.
UNINTENDED RESULT
JTC and HDB were instructed by the Ministry of Finance (MOF) in the mid-80s to return all undeveloped land to the Land Office. The financial impact on JTC and HDB was different. While both were made to pay current market rates to repurchase the land for development, HDB enjoyed a bottom-line subsidy.
In effect, whatever the Land Office charged for land, HDB received a subsidy to offset it. It was a bookkeeping exercise.
When JTC paid current market rates to repurchase its own land, it had no choice but to charge as much as the lessees could bear. Is it any wonder then that industrial and other land costs shot up?
Besides the direct impact on JTC and HDB finances, a more serious long-term structural effect on the economy is that we are subsidising consumption (housing) and penalising production (industry).
It is not a healthy road to take. Mr Hon's policy of sharing prosperity and misery is no longer feasible as JTC does not own any land stock any more.
THE ESPLANADE
MOST MOFs treat the Ministry of Information, Communications and the Arts (Mita) as Cinderella. Like Oliver Twist, it stands last in the queue for budgetary funding. The mindset is such that schools and hospitals always have priority over concert halls and theatres. So it was with Mita and its predecessor, the Ministry of Culture.
Which was the situation until BG George Yeo was appointed the minister for Mita. BG Yeo is a Cambridge-trained engineer. But he can weave magic with words. He has effervescent energy and is truly a renaissance man, a rarity in Singapore where we know the price of everything and the value of nothing.
So I told the minister that at long last, MOF is prepared to look at Mita's budget requests without prejudice, but on their own intrinsic merit. This change of mindset did not prepare MOF for the bombshell budget request which soon arrived on our desk. It was a request to build the Esplanade theatres and concert halls for $600 million.
We were shell-shocked. The highest ever request before then from Mita was for $50 million to reconstruct and refurbish the Victoria concert halls, which was approved because our minister, Dr Goh Keng Swee, placed his considerable power of persuasion behind the proposal.
MOF soon recovered its composure. As finance scrutineers, our habit is to start with scrutinising the small print before admiring the big picture. We discovered that the operating cost of the performing theatres and concert halls would amount to $50 million a year. Mr Jaspal Singh, my deputy secretary, made a quick back-of-the-envelope calculation and concluded that the Esplanade had to sell every seat every night of the year at $300 a seat just to break even on operating costs. When we put this uncomfortable fact to Mita, there was only silence, no arguments, no remonstration.
We thought that was the end of the matter. How wrong we were. Little did we know that the intrepid BG Yeo had appealed to PM, who decided that the Totalisator Board would finance the capital expenditure outside the budget below the line.
Strictly speaking, the board is only the agent for MOF and its revenue was to be credited to Finance at the end of the financial year. But as the Esplanade is to be financed out of future revenue streams, MOF has no jurisdiction over how it is to be spent, as it has not yet been received. MOF was defeated by this ingenious procedural innovation.
But personally speaking, I am glad Mita won, for without the board financing, we would not have the Esplanade Theatres on the Bay, shimmering in the noon day sun, and glowing on full moon nights.
MONUMENTS
IN OUR poor, early, austere days, MOF invariably turned down the then Ministry of Community Development's (MCD) requests to build public swimming pools. Dr Goh considered it more cost-effective to give a schoolboy 50 cents as bus fare to go to the beach to swim. We had calculated it would cost $2 a swim if we had to build the pools and maintain them. This is an example of what Dr Goh considers a robust approach to budgeting.
So I very much hope the Esplanade will sell enough tickets a year to pay its operating cost. I hope the day will never come that we give every Singaporean $150 to attend concerts when visiting the great cultural cities of London, New York, Beijing.
This is not a tongue-in-cheek proposal. It is an exercise in the cold logic of Dr Goh's robust approach to budgeting. More likely, we will suspend spending on culture when times are hard.
ON BEIJING
I HAD the privilege of visiting Beijing on several occasions. The most memorable visit was the first in 1979, before the opening up of China. There were few cars. As our motorcade went through the vastness of Tiananmen, my mind flashed back to centuries of Chinese history when envoys made the same journey to the imperial palace to pay tribute to the emperor. The vastness of the square alone would have awed them of the power and reach of China.
The imperial palace was the seat of imperial power. But to me, it is not the architectural icon of Beijing. To me, the architectural essence of Beijing is the beautiful, perfectly proportioned Temple of Heaven. The temple served as the imperial examination hall. Imperial examinations were presided over by the emperor himself. Based on the results, the emperor personally selected the ruling elite for the empire. He also offered the hand of his princess in marriage to the chuang-yuan, the top imperial scholar of the year.
The Temple of Heaven is built entirely of timber, without a nail being used. It is the product of a soaring imagination and the work of countless loving, skilled hands. But it must have cost a fraction of what it cost to build the imperial palaces. So, monuments do not need to cost a bomb.
In our years of budgetary abundance, we have often mistaken form for substance. Without being specific, our institutions of higher learning, including polytechnics and research laboratories, and even community clubs, headquarters of ministries and statutory boards, have been built to heights of elegance more than what their functions require.
GLASS PALACES
AS I drive by these gleaming glass palaces, I often wonder whether the learning, teaching and research match the grandeur of the buildings. Dr Melanie Ng Chew, who wrote The Pillars Of Fullerton, described the old Fullerton building as dark and dim. Its saving grace was that there were some bright minds working in it.
It is not just the capital cost. Maintenance is higher. A robust measure MOF can immediately impose is to charge real, not notional, rentals to be paid out of operating budgets. As operating budgets include wage costs, my hunch is that there will be an immediate reduction in space required. And ministries may even volunteer to move out to cheaper quarters.
When you read Japanese economic history, you will discover that after World War II, when Japan rebuilt its economy and industry, they spent whatever precious capital they had on machinery and equipment, and purchase of technology. They spent as little as they could on buildings, which were old, but functional.
China is going through this early Japanese phase of industrialisation. Is it any wonder then that China, and soon India, can manufacture goods and provide services cheaper than anybody else in the world? As Senior Minister Lee Kuan Yew has urged, Singapore has to reduce costs across the whole spectrum to compete, even the cost of education and government.
SM Lee once remarked that on his visits to various countries, he found an inverse correlation between the grandeur of the country's Parliament House and its per capita GDP.
In plain English, the grander the building, the poorer the people. I would like to add that the grander the building, the lower the quality of democracy practised. As our new Parliament House, though elegant, is of modest dimensions, Singapore is unlikely to suffer from one or both fates.
Nevertheless, the public sector should forever be vigilant of the cost of providing public services and not be seduced by monuments, concrete or intellectual.
This is a series of interesting articles on various issues such as politics, economics and society in general.
Saturday, February 28, 2004
Size counts: US economy will still be tops in 2050
By Janadas Devan
WHERE should one put one's money - in the euro or United States dollar?
In the short term, the answer is fairly obvious - not the US dollar, especially if its politicians insist on borrowing and spending like drunken sailors in the next few years.
But in the long term, the answer is not obvious. Indeed, a convincing case can be made that 50 years hence, the US economy will remain as powerful as now, while West Europe's and Japan's may well become second rank. Europe and Japan are literally shrinking - as in, there will be fewer of their citizens soon; while America is continuing to expand - as in, there will be plenty more of them.
In 1950, Western Europe's population was 305 million, compared to America's 152 million. Today, Europe's is about 400 million, compared to America's 292 million. But in 2050, Europe's would have declined to 360 million, while America's would have burgeoned to between 400 million and, more likely, 550 million.
India's population would have increased by a third, from 1.069 billion now to 1.628 billion. And China's would have increased marginally, from 1.289 billion to 1.394 billion.
In other words, the three most populous countries today - China, India and the US - will remain the top three in 2050. But the US' population would have almost doubled in that period, while that of India and China would have grown more slowly.
There will be roughly one American for every two-and-a-half Chinese in 2050, compared to one to four now; and roughly one American for every three Indians in 2050, about the same ratio as now.
These, of course, are all straight-line projections, which hardly ever pan out. Demography may be destiny, but that destiny can only be spied through a glass darkly.
Assuming the glass isn't a distorting mirror, what will be the geopolitical consequences of these demographic shifts? Here are a couple:
America is likely to remain a dominant power in 2050, as an Economist study predicted in August 2002.
Assuming Americans remain, like now, one-third richer per capita than Europeans, the US economy will be twice that of the European Union's in 2050, even if the EU encompassed then all of Europe. 'With 400 to 550 million rich consumers, the American market would surely be even more important to foreign companies than it is today. And if so, US business practices could become yet more dominant.'
The reason for this won't be just America's larger population, but also its age profile. According to one study, the US median age will be 36.2 in 2050, compared to Europe's 52.7. At present, the US median age is 35.5 and Europe's is 37.7. Europe's population will gallop into senility, while America's will just canter into middle age. The number of Europeans over 65 in 2050 will be equivalent to 60 per cent of its working-age population, compared with only 40 per cent in the US.
The implications of this are many and dire. The US will have problems funding its social security and Medicare programmes as its baby-boomers retire, but Europe will be burdened with even heavier social costs.
Military spending will be affected as well. The US already spends twice as much on defence as the EU. This gap will only grow, 'entrenching America's power and widening the transatlantic rift'.
China and India are likely to grow into economic giants. One reason is their demographic profiles will remain youthful for decades to come.
India, in fact, has the youngest profile among large countries - younger even than China's. More than half its population is less than 25 years old and its workforce is expected to expand for at least another 20 years.
Americans are already complaining of their jobs being outsourced to this vast pool of workers. These complaints will probably get more strident.
Meanwhile, on the periphery of Asia, the populations of Japan and many of the 'Tigers' will age relatively fast. This, combined with the sheer weight of the Chinese and Indian markets, will accelerate the shift of Asia's centre of gravity from the periphery to the mainland - with historic consequences.
For 150 years or so, since Japan's Meiji Restoration, the centre of gravity in Asia has been on its periphery. In the second half of the last century, the first nations to emerge economically were on the edge - South Korea, Taiwan, Hong Kong, Singapore, and later, Malaysia and Thailand. Historically, this was an anomaly. For centuries, the Asian centre of gravity had been on the mainland.
Singapore, in many respects, was the product of the mainland's decline. Our forefathers from China, India and elsewhere would have had little reason to emigrate here otherwise.
The 21st century will witness a reversal to the historical norm: The mainland will again dominate; the periphery will again become what it had always been, apart from this brief interregnum in the 20th century - the periphery.
Small can still be beautiful, of course, especially if it can remain reasonably youthful, and link up with other similarly situated countries in the region. But size will probably be king - and definitely so, if small becomes peripheral and old.
By Janadas Devan
WHERE should one put one's money - in the euro or United States dollar?
In the short term, the answer is fairly obvious - not the US dollar, especially if its politicians insist on borrowing and spending like drunken sailors in the next few years.
But in the long term, the answer is not obvious. Indeed, a convincing case can be made that 50 years hence, the US economy will remain as powerful as now, while West Europe's and Japan's may well become second rank. Europe and Japan are literally shrinking - as in, there will be fewer of their citizens soon; while America is continuing to expand - as in, there will be plenty more of them.
In 1950, Western Europe's population was 305 million, compared to America's 152 million. Today, Europe's is about 400 million, compared to America's 292 million. But in 2050, Europe's would have declined to 360 million, while America's would have burgeoned to between 400 million and, more likely, 550 million.
India's population would have increased by a third, from 1.069 billion now to 1.628 billion. And China's would have increased marginally, from 1.289 billion to 1.394 billion.
In other words, the three most populous countries today - China, India and the US - will remain the top three in 2050. But the US' population would have almost doubled in that period, while that of India and China would have grown more slowly.
There will be roughly one American for every two-and-a-half Chinese in 2050, compared to one to four now; and roughly one American for every three Indians in 2050, about the same ratio as now.
These, of course, are all straight-line projections, which hardly ever pan out. Demography may be destiny, but that destiny can only be spied through a glass darkly.
Assuming the glass isn't a distorting mirror, what will be the geopolitical consequences of these demographic shifts? Here are a couple:
America is likely to remain a dominant power in 2050, as an Economist study predicted in August 2002.
Assuming Americans remain, like now, one-third richer per capita than Europeans, the US economy will be twice that of the European Union's in 2050, even if the EU encompassed then all of Europe. 'With 400 to 550 million rich consumers, the American market would surely be even more important to foreign companies than it is today. And if so, US business practices could become yet more dominant.'
The reason for this won't be just America's larger population, but also its age profile. According to one study, the US median age will be 36.2 in 2050, compared to Europe's 52.7. At present, the US median age is 35.5 and Europe's is 37.7. Europe's population will gallop into senility, while America's will just canter into middle age. The number of Europeans over 65 in 2050 will be equivalent to 60 per cent of its working-age population, compared with only 40 per cent in the US.
The implications of this are many and dire. The US will have problems funding its social security and Medicare programmes as its baby-boomers retire, but Europe will be burdened with even heavier social costs.
Military spending will be affected as well. The US already spends twice as much on defence as the EU. This gap will only grow, 'entrenching America's power and widening the transatlantic rift'.
China and India are likely to grow into economic giants. One reason is their demographic profiles will remain youthful for decades to come.
India, in fact, has the youngest profile among large countries - younger even than China's. More than half its population is less than 25 years old and its workforce is expected to expand for at least another 20 years.
Americans are already complaining of their jobs being outsourced to this vast pool of workers. These complaints will probably get more strident.
Meanwhile, on the periphery of Asia, the populations of Japan and many of the 'Tigers' will age relatively fast. This, combined with the sheer weight of the Chinese and Indian markets, will accelerate the shift of Asia's centre of gravity from the periphery to the mainland - with historic consequences.
For 150 years or so, since Japan's Meiji Restoration, the centre of gravity in Asia has been on its periphery. In the second half of the last century, the first nations to emerge economically were on the edge - South Korea, Taiwan, Hong Kong, Singapore, and later, Malaysia and Thailand. Historically, this was an anomaly. For centuries, the Asian centre of gravity had been on the mainland.
Singapore, in many respects, was the product of the mainland's decline. Our forefathers from China, India and elsewhere would have had little reason to emigrate here otherwise.
The 21st century will witness a reversal to the historical norm: The mainland will again dominate; the periphery will again become what it had always been, apart from this brief interregnum in the 20th century - the periphery.
Small can still be beautiful, of course, especially if it can remain reasonably youthful, and link up with other similarly situated countries in the region. But size will probably be king - and definitely so, if small becomes peripheral and old.
Friday, February 27, 2004
What S'pore needs to boost birth rate
By Janadas Devan
WHY are fertility rates - the average number of children a woman has in her lifetime - declining throughout the world? Demographers point to the following factors: the wide availability of contraceptives; reduced child mortality rate, so parents can achieve their desired number of children with fewer births; urbanisation raising the cost-benefit ratio of children, so encouraging parents to choose quality over quantity; and the education of women equipping them to enter the workforce, so increasing the opportunity cost of their bearing children.
These factors are now operative in large parts of the world. Does that mean humanity is condemned to low fertility rates permanently? Not necessarily.
Take contraceptives: They are as widespread in Turkey as in Japan. But Turkey has a birth rate of 20 per 1,000 people, more than double Japan's nine. Unless Turkish condoms are peculiarly leaky, contraceptives obviously don't automatically result in low fertility rates.
Or take jobs for women: If it leads inevitably to fewer births, the greater the participation of women in the workforce, the lower fertility rates should be. But World Bank figures for the Organisation for Economic Cooperation and Development (OECD) countries show that the opposite is the case: the higher the proportion of women in a country's workforce, the higher is that country's fertility rate.
Spain, Italy and Greece, for instance, have the lowest female workforce participation rates among European Union countries (35 to 38 per cent of the labour force), and yet their fertility rates are also the lowest (between 1.1 and 1.3). By contrast, Finland, Sweden and Norway have among the highest female workforce participation rates in Europe (close to 50 per cent), but their fertility rates (1.75 and above) are significantly higher than the European average of 1.4.
Similarly, the United States has a fertility rate slightly below the replacement level of 2.1, but women constitute close to 48 per cent of its labour force; whereas Japan has a fertility rate of just 1.34, but women constitute only slightly above 40 per cent of its labour force.
What explains this strange discrepancy? Can it be that American women prefer the 'super-mum' route, juggling careers and homes, whereas Japanese women dislike children, and are lazy to boot, since they don't seem to like work much either? That obviously cannot be so.
A more credible explanation suggests itself when one looks at the low-fertility-rate countries. What do they have in common? One, they are in Southern Europe or East Asia. And two, traditional attitudes towards women are still dominant in them. Is that a coincidence?
Professor Lena Sommestad, an economic historian at Sweden's Uppsala University, doesn't think so. 'Birth rates are particularly low in countries that support traditional patterns of marriage and breadwinning,' she observes. Mr Martin Wolf of the Financial Times agrees: 'What is happening in Italy, Spain and Japan,' he says, 'is the war of women against male chauvinism. Women are winning' - by, in effect, declaring a womb-strike on society. 'If the men who dominate these countries do not surrender, they will soon not have much of a society left.'
That sounds extravagant, but it makes perfect sense. Japanese and Italian women have as much access to education as their Swedish and American sisters do, but they don't enjoy as much equality. Getting hitched and having babies in these societies all too frequently means being subject to traditional male authority. When the reality at home does not match the emancipation that their education entitles them to, it makes sense for women to choose childlessness.
But the problem here is not female emancipation. The problem is the failure of family structures in particular, and of society in general, to adjust to that emancipation - an emancipation that these societies themselves nurtured. Isn't that the root reason why fertility rates are falling in Singapore too?
The close correlation between female workforce participation and fertility rates suggests also that the more fulfilled women feel, the more likely they are to have children. Women need not necessarily choose between children and careers, Prof Sommestad says, and a fertility rate of 2.1 is not impossible.
General 'social confidence' may also be a factor. US fertility rates, for instance, fell in the 1970s and 1980s, to around 1.8, below West European levels. But in the 1990s, they jumped to around 2.1, not only among immigrants but also native-born Americans, while West Europe's fell to 1.4. The booming US economy of the 1990s was a factor, US demographers believe. Japanese economist Tadashi Nakamae told this newspaper he is convinced the current dearth of babies in Japan is not unrelated to its decade-long economic slump.
But a booming economy alone is probably not enough to boost fertility rates. If the experience of Scandinavian countries - and to some extent, the US as well - is any indication, social programmes to enable couples to have babies are also needed. That means parental leave, flexi-work arrangements, child-care facilities, tax breaks - the whole expensive caboodle.
In other words, merely promoting 'family values' will not do. Practical measures to foster families are needed. The past is gone for good - it wasn't all that great, in any case, for half the human race.
What high-income, low-fertility-rate countries, including Singapore, need, are:
A social ideology that not only approves of women having careers, but also encourages equality both at work and at home;
Practical programmes to help them have babies and continue to work.
If Iceland, which has the highest fertility rate among OECD countries, can do this, there is no reason why other high-income countries can't.
By Janadas Devan
WHY are fertility rates - the average number of children a woman has in her lifetime - declining throughout the world? Demographers point to the following factors: the wide availability of contraceptives; reduced child mortality rate, so parents can achieve their desired number of children with fewer births; urbanisation raising the cost-benefit ratio of children, so encouraging parents to choose quality over quantity; and the education of women equipping them to enter the workforce, so increasing the opportunity cost of their bearing children.
These factors are now operative in large parts of the world. Does that mean humanity is condemned to low fertility rates permanently? Not necessarily.
Take contraceptives: They are as widespread in Turkey as in Japan. But Turkey has a birth rate of 20 per 1,000 people, more than double Japan's nine. Unless Turkish condoms are peculiarly leaky, contraceptives obviously don't automatically result in low fertility rates.
Or take jobs for women: If it leads inevitably to fewer births, the greater the participation of women in the workforce, the lower fertility rates should be. But World Bank figures for the Organisation for Economic Cooperation and Development (OECD) countries show that the opposite is the case: the higher the proportion of women in a country's workforce, the higher is that country's fertility rate.
Spain, Italy and Greece, for instance, have the lowest female workforce participation rates among European Union countries (35 to 38 per cent of the labour force), and yet their fertility rates are also the lowest (between 1.1 and 1.3). By contrast, Finland, Sweden and Norway have among the highest female workforce participation rates in Europe (close to 50 per cent), but their fertility rates (1.75 and above) are significantly higher than the European average of 1.4.
Similarly, the United States has a fertility rate slightly below the replacement level of 2.1, but women constitute close to 48 per cent of its labour force; whereas Japan has a fertility rate of just 1.34, but women constitute only slightly above 40 per cent of its labour force.
What explains this strange discrepancy? Can it be that American women prefer the 'super-mum' route, juggling careers and homes, whereas Japanese women dislike children, and are lazy to boot, since they don't seem to like work much either? That obviously cannot be so.
A more credible explanation suggests itself when one looks at the low-fertility-rate countries. What do they have in common? One, they are in Southern Europe or East Asia. And two, traditional attitudes towards women are still dominant in them. Is that a coincidence?
Professor Lena Sommestad, an economic historian at Sweden's Uppsala University, doesn't think so. 'Birth rates are particularly low in countries that support traditional patterns of marriage and breadwinning,' she observes. Mr Martin Wolf of the Financial Times agrees: 'What is happening in Italy, Spain and Japan,' he says, 'is the war of women against male chauvinism. Women are winning' - by, in effect, declaring a womb-strike on society. 'If the men who dominate these countries do not surrender, they will soon not have much of a society left.'
That sounds extravagant, but it makes perfect sense. Japanese and Italian women have as much access to education as their Swedish and American sisters do, but they don't enjoy as much equality. Getting hitched and having babies in these societies all too frequently means being subject to traditional male authority. When the reality at home does not match the emancipation that their education entitles them to, it makes sense for women to choose childlessness.
But the problem here is not female emancipation. The problem is the failure of family structures in particular, and of society in general, to adjust to that emancipation - an emancipation that these societies themselves nurtured. Isn't that the root reason why fertility rates are falling in Singapore too?
The close correlation between female workforce participation and fertility rates suggests also that the more fulfilled women feel, the more likely they are to have children. Women need not necessarily choose between children and careers, Prof Sommestad says, and a fertility rate of 2.1 is not impossible.
General 'social confidence' may also be a factor. US fertility rates, for instance, fell in the 1970s and 1980s, to around 1.8, below West European levels. But in the 1990s, they jumped to around 2.1, not only among immigrants but also native-born Americans, while West Europe's fell to 1.4. The booming US economy of the 1990s was a factor, US demographers believe. Japanese economist Tadashi Nakamae told this newspaper he is convinced the current dearth of babies in Japan is not unrelated to its decade-long economic slump.
But a booming economy alone is probably not enough to boost fertility rates. If the experience of Scandinavian countries - and to some extent, the US as well - is any indication, social programmes to enable couples to have babies are also needed. That means parental leave, flexi-work arrangements, child-care facilities, tax breaks - the whole expensive caboodle.
In other words, merely promoting 'family values' will not do. Practical measures to foster families are needed. The past is gone for good - it wasn't all that great, in any case, for half the human race.
What high-income, low-fertility-rate countries, including Singapore, need, are:
A social ideology that not only approves of women having careers, but also encourages equality both at work and at home;
Practical programmes to help them have babies and continue to work.
If Iceland, which has the highest fertility rate among OECD countries, can do this, there is no reason why other high-income countries can't.
Justice on trial
Feb 26th 2004 | THE HAGUE
From The Economist print edition
The long, slow trial of Slobodan Milosevic, former Yugoslav president, is raising questions about international courts
IT HAS been neither as short nor as salutary as believers in international justice had hoped. Moreover, the trial of Slobodan Milosevic, ex-president of Yugoslavia, has run into many practical snags. This week, just as the prosecution at the International Criminal Tribunal for the former Yugoslavia (ICTY) was preparing, at long last, to wind up its case, the 62-year-old defendant, whose illness had already interrupted proceedings a dozen times, fell ill yet again. And the presiding judge, Britain's Richard May, announced that he was to step down, also for health reasons.
The tribunal's American head, Theodor Meron, says that Mr May's departure should “not have an unduly disruptive effect on any proceedings”. But Mr Milosevic may now be able to demand a retrial. And that could conceivably mean abandoning two years' worth of hearings, involving nearly 300 witnesses and 30,000 pages of evidence.
Under the ICTY's rules, a replacement judge can be appointed if one of the three-judge panel dies or resigns in mid-trial. So Mr Meron could order the continuation of proceedings—but only if the defendant agrees. If Mr Milosevic, who has always refused to recognise the authority of the court anyway, will not agree, the two remaining judges could still decide to continue the trial if it would “serve the interests of justice”. They probably will. But Mr Milosevic would have a right of appeal, causing yet more cost and delay.
Charged with 66 counts of war crimes, crimes against humanity and genocide during the Balkan wars in the 1990s, Mr Milosevic is the first head of state since the second world war to have to answer for such atrocities. At the trial's opening, Carla del Ponte, the chief prosecutor, declared that it was “the most powerful demonstration that no one is above the law.” Human-rights groups predicted that it would set a “new benchmark”. Nobody wants to throw all that away, especially at a time when the very concept of international justice is under fire.
The ICTY, set up in The Hague in 1993, was the first international court of its kind since the Nuremberg and Tokyo tribunals after the second world war. In the years since, ad hoc war-crimes tribunals have been set up for Rwanda, East Timor, Kosovo, Sierra Leone and Cambodia. Hopes were high that they, together with a new permanent International Criminal Court (ICC) in The Hague, would end any notion of impunity for the chief perpetrators of atrocities—and so help to deter future ones.
But as the proceedings have lengthened and the costs have risen, disillusion has set in. The long American campaign against the ICC (not to be confused with the International Court of Justice, also in The Hague) has not helped. Last August, the UN imposed a “completion strategy” on both the Yugoslav and the Rwandan tribunals, requiring them to end all trials by 2008 and appeals by 2010. Financing (some $120m for the ICTY this year alone) will then cease.
Some criticisms of the ICTY are justified. All pioneers make mistakes, and the Yugoslav tribunal is no exception. But other shortcomings are inherent to international courts. The ICTY has had to harmonise different legal traditions, cope with multiple languages (of judges, lawyers, perpetrators and victims), and translate mountains of documents. Most of the cases before it are hugely complex, involving dozens of charges and hundreds of witnesses. Those convicted have a right of appeal against both conviction and sentence, which they always seem to exercise.
Evidence for war crimes is generally hard to come by, and suspects can be more elusive still. International tribunals do not have police powers: they cannot send in sheriffs to make arrests. They rely on the co-operation of foreign governments, which is not always forthcoming. The ICTY was lucky to have NATO and UN forces in Bosnia to help. But 20 of its chief suspects are still on the run, including Radovan Karadzic, the former Bosnian Serb leader, and Ratko Mladic, the general who allegedly organised the massacre of 7,500 Bosnian Muslims at Srebrenica in 1995. Mrs del Ponte has accused Serbia of giving these suspects a “safe haven”, and of failing to hand over vital evidence.
Based in The Hague, operating only under international law, and with no judges from former Yugoslavia, the ICTY has been criticised for its distance from the scene of the crimes, for making victims feel irrelevant and for leading the Serbs, who make up the great majority of defendants, to talk of “victors' justice”. Some even blame the court for the nationalists' revival in Serbia—both Mr Milosevic and Vojislav Seselj, a radical nationalist awaiting trial in The Hague, played a part in the elections in December and the political manoeuvring since.
But the ICTY deserves praise as well as criticism. After an admittedly slow and shaky start, it has streamlined its operations and scored some notable successes. Between four and six trials are now being held in shifts every day, in the tribunal's three chambers. Of the 94 accused who have so far appeared before the court, half have been convicted, including Milan Babic, the former Croatian Serb leader. Eight are still on trial, including Momcilo Krajisnik, the Bosnian Serb leader accused of masterminding the Serbs' ethnic-cleansing campaign—the darkest chapter in a war that left some 100,000 Bosnians dead and forced a further 2m from their homes. Another 25 await trial; five have died after being charged; and five have had their charges withdrawn. Only five have so far been acquitted.
The prosecution has now agreed to rest its case forthwith, forgoing two days that had been allocated to it. The court has suspended its hearings until June 8th, so as to allow Mr Milosevic the extra time that he had requested to prepare his defence. This will also give time for a substitute judge for Mr May to get abreast of the proceedings. The court has given Mr Milosevic 150 days to complete his defence. Given a rhythm, on doctor's orders, of around three court days a week, proceedings could last well into 2006.
Will Mr Milosevic agree to a simple continuation of the trial? Officials suggest he has nothing to gain by prolonging things. But if he faces a life sentence anyway, he has nothing to lose either. More grandstanding on a public podium may be far more appealing than rotting quietly in a prison cell for the rest of his days.
Feb 26th 2004 | THE HAGUE
From The Economist print edition
The long, slow trial of Slobodan Milosevic, former Yugoslav president, is raising questions about international courts
IT HAS been neither as short nor as salutary as believers in international justice had hoped. Moreover, the trial of Slobodan Milosevic, ex-president of Yugoslavia, has run into many practical snags. This week, just as the prosecution at the International Criminal Tribunal for the former Yugoslavia (ICTY) was preparing, at long last, to wind up its case, the 62-year-old defendant, whose illness had already interrupted proceedings a dozen times, fell ill yet again. And the presiding judge, Britain's Richard May, announced that he was to step down, also for health reasons.
The tribunal's American head, Theodor Meron, says that Mr May's departure should “not have an unduly disruptive effect on any proceedings”. But Mr Milosevic may now be able to demand a retrial. And that could conceivably mean abandoning two years' worth of hearings, involving nearly 300 witnesses and 30,000 pages of evidence.
Under the ICTY's rules, a replacement judge can be appointed if one of the three-judge panel dies or resigns in mid-trial. So Mr Meron could order the continuation of proceedings—but only if the defendant agrees. If Mr Milosevic, who has always refused to recognise the authority of the court anyway, will not agree, the two remaining judges could still decide to continue the trial if it would “serve the interests of justice”. They probably will. But Mr Milosevic would have a right of appeal, causing yet more cost and delay.
Charged with 66 counts of war crimes, crimes against humanity and genocide during the Balkan wars in the 1990s, Mr Milosevic is the first head of state since the second world war to have to answer for such atrocities. At the trial's opening, Carla del Ponte, the chief prosecutor, declared that it was “the most powerful demonstration that no one is above the law.” Human-rights groups predicted that it would set a “new benchmark”. Nobody wants to throw all that away, especially at a time when the very concept of international justice is under fire.
The ICTY, set up in The Hague in 1993, was the first international court of its kind since the Nuremberg and Tokyo tribunals after the second world war. In the years since, ad hoc war-crimes tribunals have been set up for Rwanda, East Timor, Kosovo, Sierra Leone and Cambodia. Hopes were high that they, together with a new permanent International Criminal Court (ICC) in The Hague, would end any notion of impunity for the chief perpetrators of atrocities—and so help to deter future ones.
But as the proceedings have lengthened and the costs have risen, disillusion has set in. The long American campaign against the ICC (not to be confused with the International Court of Justice, also in The Hague) has not helped. Last August, the UN imposed a “completion strategy” on both the Yugoslav and the Rwandan tribunals, requiring them to end all trials by 2008 and appeals by 2010. Financing (some $120m for the ICTY this year alone) will then cease.
Some criticisms of the ICTY are justified. All pioneers make mistakes, and the Yugoslav tribunal is no exception. But other shortcomings are inherent to international courts. The ICTY has had to harmonise different legal traditions, cope with multiple languages (of judges, lawyers, perpetrators and victims), and translate mountains of documents. Most of the cases before it are hugely complex, involving dozens of charges and hundreds of witnesses. Those convicted have a right of appeal against both conviction and sentence, which they always seem to exercise.
Evidence for war crimes is generally hard to come by, and suspects can be more elusive still. International tribunals do not have police powers: they cannot send in sheriffs to make arrests. They rely on the co-operation of foreign governments, which is not always forthcoming. The ICTY was lucky to have NATO and UN forces in Bosnia to help. But 20 of its chief suspects are still on the run, including Radovan Karadzic, the former Bosnian Serb leader, and Ratko Mladic, the general who allegedly organised the massacre of 7,500 Bosnian Muslims at Srebrenica in 1995. Mrs del Ponte has accused Serbia of giving these suspects a “safe haven”, and of failing to hand over vital evidence.
Based in The Hague, operating only under international law, and with no judges from former Yugoslavia, the ICTY has been criticised for its distance from the scene of the crimes, for making victims feel irrelevant and for leading the Serbs, who make up the great majority of defendants, to talk of “victors' justice”. Some even blame the court for the nationalists' revival in Serbia—both Mr Milosevic and Vojislav Seselj, a radical nationalist awaiting trial in The Hague, played a part in the elections in December and the political manoeuvring since.
But the ICTY deserves praise as well as criticism. After an admittedly slow and shaky start, it has streamlined its operations and scored some notable successes. Between four and six trials are now being held in shifts every day, in the tribunal's three chambers. Of the 94 accused who have so far appeared before the court, half have been convicted, including Milan Babic, the former Croatian Serb leader. Eight are still on trial, including Momcilo Krajisnik, the Bosnian Serb leader accused of masterminding the Serbs' ethnic-cleansing campaign—the darkest chapter in a war that left some 100,000 Bosnians dead and forced a further 2m from their homes. Another 25 await trial; five have died after being charged; and five have had their charges withdrawn. Only five have so far been acquitted.
The prosecution has now agreed to rest its case forthwith, forgoing two days that had been allocated to it. The court has suspended its hearings until June 8th, so as to allow Mr Milosevic the extra time that he had requested to prepare his defence. This will also give time for a substitute judge for Mr May to get abreast of the proceedings. The court has given Mr Milosevic 150 days to complete his defence. Given a rhythm, on doctor's orders, of around three court days a week, proceedings could last well into 2006.
Will Mr Milosevic agree to a simple continuation of the trial? Officials suggest he has nothing to gain by prolonging things. But if he faces a life sentence anyway, he has nothing to lose either. More grandstanding on a public podium may be far more appealing than rotting quietly in a prison cell for the rest of his days.
Wednesday, February 25, 2004
Multicultural London
Changing shadows
Dec 18th 2003
The many mansions in one east London house of God
DURING Friday prayers, shoes spill down the steps of the Jame-e-masjid mosque in Spitalfields. The main doors, giving on to Fournier Street, are thrown open, and the supplications of the faithful mingle with the noise of the perpetual building work in the City, a little way to the west. When the devotions end, thousands of men reclaim their footwear and congregate in Brick Lane to natter in English, Bengali and “Benglish”. Most wear the kufi, the Muslim prayer cap.
A hundred years ago, similar assemblies formed in the same spot on Friday evenings and Saturday lunchtimes, except that instead of the kufi the men wore yarmulkes, and they and the accompanying women spoke Yiddish instead of Bengali. Between 1898 and 1976, the building on the corner of Fournier Street and Brick Lane was the Spitalfields Great Synagogue. Before that, it was occupied by the Methodists, who had inherited it from the displaced Huguenots—Calvinists fleeing persecution in France—who had built it in 1743. On the pediment at the top of the Fournier Street façade, the Huguenots had placed a sun-dial, inscribing it with an allusion to a Horatian ode that has turned out to be a fitting motto for their temple: “Umbra sumus” (“We are shadows”).
The mosque is a bricks-and-mortar correction to those Britons who think that immigration is a new and harmful phenomenon. It is a symbol of the way history is packed as tightly into poor neighbourhoods as their residents. And its past suggests that while everything changes in this most chameleonic part of London, some things stay the same. Disparate groups of strangers have looked for a better life in this neighbourhood, have faced the same difficulties and reactions, and have found their solace under the same roof.
Models in the making
The Huguenots have long been extolled in Britain as model immigrants, in contradistinction to the feckless hordes that followed them. But most people's perceptions of them were very different when they first arrived.
The first mass migration to Britain since the Normans took place in the 50 years after 1680. French Protestants, known as Huguenots (the name may derive from eyguenot, the term in Genevan dialect for an opponent of Geneva's annexation by the Roman Catholic Duke of Savoy), had first trickled into London in the 16th century, along with some of their Swiss and Walloon co-religionists. Later, after 1681, the Huguenots became subject to a form of persecution known as the dragonnades, in which rowdy soldiers were billeted in their houses, and in 1685 Louis XIV revoked the Edict of Nantes, which had given them a semblance of security. Most stayed in France, officially abjuring their faith, but around 250,000 fled, illegally. Many slipped out by sea, hiding their children in beer barrels. Customs officers slid their swords between the planks of the decks to skewer anyone concealed below.
Some 40,000-50,000 came to England, giving the country a new word—“refugee”, from “réfugié”, one who seeks sanctuary—and a largely new industry, silk-weaving. Around half settled in Spitalfields, close to the Thames, where raw silk from Italy and China was unloaded. Lying just outside the bounds of the City, the area was free of the restrictions imposed on craftsmen by the City guilds. They built broad windows in their weaving lofts, planted mulberry trees to sustain their imported silkworms, and installed canaries to ameliorate the racket of their looms.
In 1742 the ministers, elders and deacons of the Huguenot church in Threadneedle Street petitioned King George II for a licence to erect a new church to accommodate their overflow. Nicholas Hawksmoor, a pupil of Christopher Wren, had only just completed Christ Church, at the other end of Fournier Street. It may have acted as a spur, because when work began on the Huguenot church in 1743 only the very finest materials were used. The Neuve Eglise, as it was known, was a brick building with a stone cornice and plenty of windows, its austere yet elegant classicism contrasting sharply with its neighbour's Baroque exuberance. Its founders stipulated that it was not “to be used for any other purpose but for the worship of God”, but leased its vaults to brewers and vintners, who occupied them until late in the 19th century.
The Huguenots had two main advantages over subsequent immigrants: they were white, and they were Protestants. England was in a frenzy of anti-popery, and their devotion to their faith was widely admired. The lord mayor of London organised a collection for them in 1696, and both Charles II and James II donated cash to help them resettle.
A plague of Frogs
Unfortunately, they were still foreigners, a class of people widely (and wrongly) believed to have started the Great Fire of London of 1666. Just as any spending on newcomers does today, royal and mayoral charity embittered the indigenous poor. And worse than simply being foreign, they were French, the very worst type of foreigner to be. A wretched French visitor to London in the 18th century recorded how “at the corner of every street” he suffered “a volley of abusive litanies...The constant burthen of these litanies was, French dog, French b—.” An MP described the Huguenot influx as a “plague of Frogs”. In 1702 a commentator labelled them “scum”, a term that has been popular with anti-immigrant demagogues ever since. Natives complained that English was barely spoken in Spitalfields.
Like their successors, the Huguenots were accused of doing to the city what in reality the city had done to them. London's population grew tenfold between 1500 and 1700, mainly because of migration from the English provinces, creating overcrowding and squalor. The Huguenots took the blame, and anti-French riots broke out in 1675, 1681 and 1683. The immigrants were also ridiculed for their funny eating habits and effete dress—though, with the perennial duality of Anglo-Saxon attitudes to France, the locals also copied their clothes, flowers and recipes.
For a while, these habits, and the bonds of trade, religion and language, preserved the Huguenots' sense of separateness. But in time many changed their names, especially when regular wars with France made them a liability, just as Germanic names would be changed during the first world war. The immigrants' grandchildren married English men and women, and eschewed weaving for the professions and Calvinism for the Church of England. Rich Huguenot families moved out of Spitalfields (sometimes returning to be buried in the grounds of Christ Church), leaving behind their street names—Fleur-de-Lis, Leman, Fournier—and their enlarged weavers' windows.
In 1855 there were still old women in London who had been born there yet spoke only French. But the Huguenot community's departure from the Neuve Eglise in 1809 was the symbolic end of the Frenchness of Spitalfields. For a short time the chapel was occupied by the London Society for Promoting Christianity among the Jews, which proselytised in it (not very successfully) to the small Jewish community in the district. In August of 1819, a Methodist congregation moved in; John Wesley, the father of Methodism, is said to have preached in the church in 1760. The building was “restored to Beauty and Comfort” at a cost of £1,300.
Huguenot assimilation was both a cause and a consequence of the decline of the Spitalfields weaving trade, which in the 18th century was undermined by mechanisation and cheap imports. The area became notorious for its unemployment and poverty. In 1851 Charles Dickens wrote about its “squalid streets, lying like narrow black trenches...where sallow, unshaven weavers...prowl languidly about, or lean against posts, or sit brooding on doorsteps.” The weavers were joined by refugees from Ireland's potato famine. The Irish were already in London: in 1736, a mob of weavers protesting at their cheap labour stormed two Irish pubs, yelling, “Down with the Irishmen!” Then, a century later, they came en masse.
The City of Dreadful Night
This was the period in which Spitalfields and the neighbouring parishes became “the East End” of the popular imagination: liminal, lawless, deprived and depraved. To visiting writers and sociologists it was “the Abyss”, “the Empire of Hunger” and “the City of Dreadful Night”. All the bad publicity made it an affordable place of settlement for the Jews who began to arrive in droves in the 1880s.
Jews had trickled back to England since Cromwell readmitted them in 1656. But between 1881 and 1914 they came in a gush. New restrictions governing where they could live and work in the Russian empire, plus pogroms, war and revolution, drove more than 2m Jews out of eastern Europe. Many came to London only to make their way to Liverpool and re-embark for New York. But some stayed, and London's Jewish population exploded.
Like other communities that were later to cluster around London's airports and railway stations, the Jews mainly settled in Spitalfields and Whitechapel, close to their point of arrival in the docks. Today the only mementoes of their sojourn in Brick Lane are an always-open bagel bakery and the odd fading Jewish name above a shop. But gentile visitors of a century ago felt they had been transported to a foreign country. Charles Booth, a sociologist, wrote that “[the Jews] live and crowd together and work and meet their fate independent of the great stream of London life surging around them.” They ate strange foods, spoke a foreign tongue, and made their livings from the markets, from boot-making and cabinet-making and, especially, from tailoring, toiling in small workshops, which, like the Huguenots, they crammed on to or into their homes.
These days the east European Jews are often extolled as model immigrants, in contradistinction to the feckless hordes that followed them. But most people's perceptions of them were very different when they first arrived.
The Jews had one main advantage over some later arrivals: they were white. At first, that availed them little. As the Ripper murders of 1888 illustrated, they were convenient scapegoats for the ills of their adopted city. Jack (“the Ripper”) met some of his victims at the Ten Bells pub, at the other end of Fournier Street from what is now the mosque, and opposite Christ Church. He attributed his handiwork to “the Juewes” in graffiti scrawled near the scene of his fifth evisceration (the scribble was removed by the police lest it ignite a pogrom). The Huguenots, it was agreed, had been “profitable strangers”; but the Jews stole the natives' jobs and, at the same time (an impressive trick), were a burden on the rates. They were “flotsam” and “vermin”, as well as “scum”. Their admission made Britain a laughing-stock. The strength of these feelings led, in 1905, to a law restricting immigration, the ancestor of the stricter ones in place today.
Beggars and barbarians
There were also divisions within the Jewish community: between bosses and the workers who plotted in the pubs of Brick Lane, as journeymen weavers had done 200 years previously; between sub-groups of Litvaks, Galizianers, Romanians and Polacks; and between believers and atheists. A two-day riot took place in 1904 after Jewish radicals invited the rabbis to a concert on the Day of Atonement, provoking worshippers in the Brick Lane synagogues by smoking and brandishing ham sandwiches. There were also tensions between the old, established Jewish families and the newcomers. As one of the new arrivals put it, the “English” Jews thought of their co-religionists as “ignorant beggars, as barbarians, who must be civilised through Sabbath sermons, soup kitchens and such like”. For their part, the devout immigrants considered the English Jews doctrinally lax to the point of apostasy.
This hostility led to the next mutation of the Neuve Eglise. In 1891 the Machzike Hadath (“Upholders of the Law”) Society was formed to promote religious orthodoxy. In 1895 its members occupied the schoolhouse adjoining the Fournier Street chapel, a house that, since the Wesleyans left, had become “a common lodging-house, and the resort of thieves”. In 1898 they moved into the church itself, marching down Brick Lane in procession with their scrolls and a band. They reorganised the pews around a central prayer platform, and made a shrine on the eastern wall. The organ, which had been given to the Huguenots by George III, was removed. The building became known as the Spitalfields Great Synagogue. The piety of its congregation was proverbial.
In time, the Jews, like the Huguenots, left Spitalfields for less cramped parts of London. Most who had not gone already were bombed out by the Luftwaffe. The Spitalfields Great Synagogue was damaged, then done up, but by the 1970s it had fallen into disrepair. It seemed it might be demolished or—against the Huguenots' wishes—become a theatre. Then, in 1976, it was bought for the Bangladeshi community by the Jame-e-masjid Trust.
London's Bangladeshis form one of the largest minority groups in the capital, and one of the oldest. Like the Jews, its earliest members arrived by boat. Sailors from the Indian subcontinent, some of them from the region that is now Bangladesh, were recruited by the East India Company from the early 18th century. Some jumped ship in the London docks; a few later found work and lodgings with the Jews of Spitalfields. More came during the world wars.
But the big boom in Bangladeshi migration—mostly from the eastern Sylhet region—came in the 1950s and early 1960s. Though natural disasters and political instability played a part, the influx was driven more by economics than were the Huguenot and Jewish ones. Families or small villages pooled resources to send a young man to the bidesh (foreign land). Villages that prospered through their remittances became known as Londoni. The advent of new immigration rules in 1962 induced a last-chance rush; since then more Bangladeshis have come to join (or marry) those already in London. Like the Huguenots and Jews, the Bangladeshis started work mainly in textiles—at first in the rug trade, later in leather and suede—and sewing machines once again hummed in the Spitalfields sweatshops.
Tower Hamlets, the borough that now contains Spitalfields, plays host to the largest community of Bangladeshis outside their native country. The streets around Brick Lane once known as “Petty France”, then as the “ghetto”, now comprise “Banglatown”. In place of the kosher butchers, fish-fryers, boot-makers, furriers and tailors who lined Brick Lane itself a century ago, and the weavers and cheese-makers of Huguenot days, there are now sari centres, halal restaurants and vendors of exotic produce. And at the corner of Fournier Street stands the Jame-e-masjid mosque.
Apart from a sign in Arabic, Bengali and English, the building's exterior looks much the same as ever. Inside, things are different. The gallery in which Jewish women once prayed behind lace curtains has been removed, and another floor installed. (A plan to add a minaret was scotched by the local council.) Except for its chandeliers and the ornate carving around its doors, the main prayer hall is much more austere than in its Christian and Jewish phases. A Hebrew plaque outside one of the upstairs classrooms, now used by the madrassa (Islamic school), is the only reminder of the Jewish occupants. The church minister's house next door is home to the Bangladesh Welfare Association. The defunct Soup Kitchen for the Jewish Poor is round the corner.
The same again, but different
The Bangladeshis have the disadvantages of being neither white nor Christian. Like the Huguenots and Jews before them, they have been lambasted for stealing jobs, poor hygiene, monopolising housing and spongeing from the state. In 1993 a racist councillor (slogan: “Do you want to end up like Brick Lane?”) was elected nearby, and his supporters rampaged through the streets in celebration.
The Bangladeshi experience has also been affected by the fact that, like some Huguenots, many of the first arrivals from Sylhet intended to go home once their fortunes were made. Compared with other immigrants, they have rarely married outside the community and have stuck together geographically, suffering grave poverty and unemployment.
The world, however, has come to them. Because the area's poverty has inhibited redevelopment, the streets around the mosque now comprise one of the best-preserved Georgian enclaves in London. This architectural time-warp has attracted well-heeled artists and yuppies, and some of the old silk-weavers' lofts are now pricey apartments. Meanwhile, like the adventurous Victorians who used to day-trip to the Jewish ghetto, visitors now flock to Brick Lane. Bangladeshi entrepreneurs have tarted up their restaurants to provide them with sustenance.
Because it is a human entrepot, Spitalfields remains one of London's poorest and most conservative districts; but now, for the same reason, it is also among the hippest. When old men in traditional dress congregate beneath the mosque's prophetic sundial, immodestly clad young women weave between them.
Changing shadows
Dec 18th 2003
The many mansions in one east London house of God
DURING Friday prayers, shoes spill down the steps of the Jame-e-masjid mosque in Spitalfields. The main doors, giving on to Fournier Street, are thrown open, and the supplications of the faithful mingle with the noise of the perpetual building work in the City, a little way to the west. When the devotions end, thousands of men reclaim their footwear and congregate in Brick Lane to natter in English, Bengali and “Benglish”. Most wear the kufi, the Muslim prayer cap.
A hundred years ago, similar assemblies formed in the same spot on Friday evenings and Saturday lunchtimes, except that instead of the kufi the men wore yarmulkes, and they and the accompanying women spoke Yiddish instead of Bengali. Between 1898 and 1976, the building on the corner of Fournier Street and Brick Lane was the Spitalfields Great Synagogue. Before that, it was occupied by the Methodists, who had inherited it from the displaced Huguenots—Calvinists fleeing persecution in France—who had built it in 1743. On the pediment at the top of the Fournier Street façade, the Huguenots had placed a sun-dial, inscribing it with an allusion to a Horatian ode that has turned out to be a fitting motto for their temple: “Umbra sumus” (“We are shadows”).
The mosque is a bricks-and-mortar correction to those Britons who think that immigration is a new and harmful phenomenon. It is a symbol of the way history is packed as tightly into poor neighbourhoods as their residents. And its past suggests that while everything changes in this most chameleonic part of London, some things stay the same. Disparate groups of strangers have looked for a better life in this neighbourhood, have faced the same difficulties and reactions, and have found their solace under the same roof.
Models in the making
The Huguenots have long been extolled in Britain as model immigrants, in contradistinction to the feckless hordes that followed them. But most people's perceptions of them were very different when they first arrived.
The first mass migration to Britain since the Normans took place in the 50 years after 1680. French Protestants, known as Huguenots (the name may derive from eyguenot, the term in Genevan dialect for an opponent of Geneva's annexation by the Roman Catholic Duke of Savoy), had first trickled into London in the 16th century, along with some of their Swiss and Walloon co-religionists. Later, after 1681, the Huguenots became subject to a form of persecution known as the dragonnades, in which rowdy soldiers were billeted in their houses, and in 1685 Louis XIV revoked the Edict of Nantes, which had given them a semblance of security. Most stayed in France, officially abjuring their faith, but around 250,000 fled, illegally. Many slipped out by sea, hiding their children in beer barrels. Customs officers slid their swords between the planks of the decks to skewer anyone concealed below.
Some 40,000-50,000 came to England, giving the country a new word—“refugee”, from “réfugié”, one who seeks sanctuary—and a largely new industry, silk-weaving. Around half settled in Spitalfields, close to the Thames, where raw silk from Italy and China was unloaded. Lying just outside the bounds of the City, the area was free of the restrictions imposed on craftsmen by the City guilds. They built broad windows in their weaving lofts, planted mulberry trees to sustain their imported silkworms, and installed canaries to ameliorate the racket of their looms.
In 1742 the ministers, elders and deacons of the Huguenot church in Threadneedle Street petitioned King George II for a licence to erect a new church to accommodate their overflow. Nicholas Hawksmoor, a pupil of Christopher Wren, had only just completed Christ Church, at the other end of Fournier Street. It may have acted as a spur, because when work began on the Huguenot church in 1743 only the very finest materials were used. The Neuve Eglise, as it was known, was a brick building with a stone cornice and plenty of windows, its austere yet elegant classicism contrasting sharply with its neighbour's Baroque exuberance. Its founders stipulated that it was not “to be used for any other purpose but for the worship of God”, but leased its vaults to brewers and vintners, who occupied them until late in the 19th century.
The Huguenots had two main advantages over subsequent immigrants: they were white, and they were Protestants. England was in a frenzy of anti-popery, and their devotion to their faith was widely admired. The lord mayor of London organised a collection for them in 1696, and both Charles II and James II donated cash to help them resettle.
A plague of Frogs
Unfortunately, they were still foreigners, a class of people widely (and wrongly) believed to have started the Great Fire of London of 1666. Just as any spending on newcomers does today, royal and mayoral charity embittered the indigenous poor. And worse than simply being foreign, they were French, the very worst type of foreigner to be. A wretched French visitor to London in the 18th century recorded how “at the corner of every street” he suffered “a volley of abusive litanies...The constant burthen of these litanies was, French dog, French b—.” An MP described the Huguenot influx as a “plague of Frogs”. In 1702 a commentator labelled them “scum”, a term that has been popular with anti-immigrant demagogues ever since. Natives complained that English was barely spoken in Spitalfields.
Like their successors, the Huguenots were accused of doing to the city what in reality the city had done to them. London's population grew tenfold between 1500 and 1700, mainly because of migration from the English provinces, creating overcrowding and squalor. The Huguenots took the blame, and anti-French riots broke out in 1675, 1681 and 1683. The immigrants were also ridiculed for their funny eating habits and effete dress—though, with the perennial duality of Anglo-Saxon attitudes to France, the locals also copied their clothes, flowers and recipes.
For a while, these habits, and the bonds of trade, religion and language, preserved the Huguenots' sense of separateness. But in time many changed their names, especially when regular wars with France made them a liability, just as Germanic names would be changed during the first world war. The immigrants' grandchildren married English men and women, and eschewed weaving for the professions and Calvinism for the Church of England. Rich Huguenot families moved out of Spitalfields (sometimes returning to be buried in the grounds of Christ Church), leaving behind their street names—Fleur-de-Lis, Leman, Fournier—and their enlarged weavers' windows.
In 1855 there were still old women in London who had been born there yet spoke only French. But the Huguenot community's departure from the Neuve Eglise in 1809 was the symbolic end of the Frenchness of Spitalfields. For a short time the chapel was occupied by the London Society for Promoting Christianity among the Jews, which proselytised in it (not very successfully) to the small Jewish community in the district. In August of 1819, a Methodist congregation moved in; John Wesley, the father of Methodism, is said to have preached in the church in 1760. The building was “restored to Beauty and Comfort” at a cost of £1,300.
Huguenot assimilation was both a cause and a consequence of the decline of the Spitalfields weaving trade, which in the 18th century was undermined by mechanisation and cheap imports. The area became notorious for its unemployment and poverty. In 1851 Charles Dickens wrote about its “squalid streets, lying like narrow black trenches...where sallow, unshaven weavers...prowl languidly about, or lean against posts, or sit brooding on doorsteps.” The weavers were joined by refugees from Ireland's potato famine. The Irish were already in London: in 1736, a mob of weavers protesting at their cheap labour stormed two Irish pubs, yelling, “Down with the Irishmen!” Then, a century later, they came en masse.
The City of Dreadful Night
This was the period in which Spitalfields and the neighbouring parishes became “the East End” of the popular imagination: liminal, lawless, deprived and depraved. To visiting writers and sociologists it was “the Abyss”, “the Empire of Hunger” and “the City of Dreadful Night”. All the bad publicity made it an affordable place of settlement for the Jews who began to arrive in droves in the 1880s.
Jews had trickled back to England since Cromwell readmitted them in 1656. But between 1881 and 1914 they came in a gush. New restrictions governing where they could live and work in the Russian empire, plus pogroms, war and revolution, drove more than 2m Jews out of eastern Europe. Many came to London only to make their way to Liverpool and re-embark for New York. But some stayed, and London's Jewish population exploded.
Like other communities that were later to cluster around London's airports and railway stations, the Jews mainly settled in Spitalfields and Whitechapel, close to their point of arrival in the docks. Today the only mementoes of their sojourn in Brick Lane are an always-open bagel bakery and the odd fading Jewish name above a shop. But gentile visitors of a century ago felt they had been transported to a foreign country. Charles Booth, a sociologist, wrote that “[the Jews] live and crowd together and work and meet their fate independent of the great stream of London life surging around them.” They ate strange foods, spoke a foreign tongue, and made their livings from the markets, from boot-making and cabinet-making and, especially, from tailoring, toiling in small workshops, which, like the Huguenots, they crammed on to or into their homes.
These days the east European Jews are often extolled as model immigrants, in contradistinction to the feckless hordes that followed them. But most people's perceptions of them were very different when they first arrived.
The Jews had one main advantage over some later arrivals: they were white. At first, that availed them little. As the Ripper murders of 1888 illustrated, they were convenient scapegoats for the ills of their adopted city. Jack (“the Ripper”) met some of his victims at the Ten Bells pub, at the other end of Fournier Street from what is now the mosque, and opposite Christ Church. He attributed his handiwork to “the Juewes” in graffiti scrawled near the scene of his fifth evisceration (the scribble was removed by the police lest it ignite a pogrom). The Huguenots, it was agreed, had been “profitable strangers”; but the Jews stole the natives' jobs and, at the same time (an impressive trick), were a burden on the rates. They were “flotsam” and “vermin”, as well as “scum”. Their admission made Britain a laughing-stock. The strength of these feelings led, in 1905, to a law restricting immigration, the ancestor of the stricter ones in place today.
Beggars and barbarians
There were also divisions within the Jewish community: between bosses and the workers who plotted in the pubs of Brick Lane, as journeymen weavers had done 200 years previously; between sub-groups of Litvaks, Galizianers, Romanians and Polacks; and between believers and atheists. A two-day riot took place in 1904 after Jewish radicals invited the rabbis to a concert on the Day of Atonement, provoking worshippers in the Brick Lane synagogues by smoking and brandishing ham sandwiches. There were also tensions between the old, established Jewish families and the newcomers. As one of the new arrivals put it, the “English” Jews thought of their co-religionists as “ignorant beggars, as barbarians, who must be civilised through Sabbath sermons, soup kitchens and such like”. For their part, the devout immigrants considered the English Jews doctrinally lax to the point of apostasy.
This hostility led to the next mutation of the Neuve Eglise. In 1891 the Machzike Hadath (“Upholders of the Law”) Society was formed to promote religious orthodoxy. In 1895 its members occupied the schoolhouse adjoining the Fournier Street chapel, a house that, since the Wesleyans left, had become “a common lodging-house, and the resort of thieves”. In 1898 they moved into the church itself, marching down Brick Lane in procession with their scrolls and a band. They reorganised the pews around a central prayer platform, and made a shrine on the eastern wall. The organ, which had been given to the Huguenots by George III, was removed. The building became known as the Spitalfields Great Synagogue. The piety of its congregation was proverbial.
In time, the Jews, like the Huguenots, left Spitalfields for less cramped parts of London. Most who had not gone already were bombed out by the Luftwaffe. The Spitalfields Great Synagogue was damaged, then done up, but by the 1970s it had fallen into disrepair. It seemed it might be demolished or—against the Huguenots' wishes—become a theatre. Then, in 1976, it was bought for the Bangladeshi community by the Jame-e-masjid Trust.
London's Bangladeshis form one of the largest minority groups in the capital, and one of the oldest. Like the Jews, its earliest members arrived by boat. Sailors from the Indian subcontinent, some of them from the region that is now Bangladesh, were recruited by the East India Company from the early 18th century. Some jumped ship in the London docks; a few later found work and lodgings with the Jews of Spitalfields. More came during the world wars.
But the big boom in Bangladeshi migration—mostly from the eastern Sylhet region—came in the 1950s and early 1960s. Though natural disasters and political instability played a part, the influx was driven more by economics than were the Huguenot and Jewish ones. Families or small villages pooled resources to send a young man to the bidesh (foreign land). Villages that prospered through their remittances became known as Londoni. The advent of new immigration rules in 1962 induced a last-chance rush; since then more Bangladeshis have come to join (or marry) those already in London. Like the Huguenots and Jews, the Bangladeshis started work mainly in textiles—at first in the rug trade, later in leather and suede—and sewing machines once again hummed in the Spitalfields sweatshops.
Tower Hamlets, the borough that now contains Spitalfields, plays host to the largest community of Bangladeshis outside their native country. The streets around Brick Lane once known as “Petty France”, then as the “ghetto”, now comprise “Banglatown”. In place of the kosher butchers, fish-fryers, boot-makers, furriers and tailors who lined Brick Lane itself a century ago, and the weavers and cheese-makers of Huguenot days, there are now sari centres, halal restaurants and vendors of exotic produce. And at the corner of Fournier Street stands the Jame-e-masjid mosque.
Apart from a sign in Arabic, Bengali and English, the building's exterior looks much the same as ever. Inside, things are different. The gallery in which Jewish women once prayed behind lace curtains has been removed, and another floor installed. (A plan to add a minaret was scotched by the local council.) Except for its chandeliers and the ornate carving around its doors, the main prayer hall is much more austere than in its Christian and Jewish phases. A Hebrew plaque outside one of the upstairs classrooms, now used by the madrassa (Islamic school), is the only reminder of the Jewish occupants. The church minister's house next door is home to the Bangladesh Welfare Association. The defunct Soup Kitchen for the Jewish Poor is round the corner.
The same again, but different
The Bangladeshis have the disadvantages of being neither white nor Christian. Like the Huguenots and Jews before them, they have been lambasted for stealing jobs, poor hygiene, monopolising housing and spongeing from the state. In 1993 a racist councillor (slogan: “Do you want to end up like Brick Lane?”) was elected nearby, and his supporters rampaged through the streets in celebration.
The Bangladeshi experience has also been affected by the fact that, like some Huguenots, many of the first arrivals from Sylhet intended to go home once their fortunes were made. Compared with other immigrants, they have rarely married outside the community and have stuck together geographically, suffering grave poverty and unemployment.
The world, however, has come to them. Because the area's poverty has inhibited redevelopment, the streets around the mosque now comprise one of the best-preserved Georgian enclaves in London. This architectural time-warp has attracted well-heeled artists and yuppies, and some of the old silk-weavers' lofts are now pricey apartments. Meanwhile, like the adventurous Victorians who used to day-trip to the Jewish ghetto, visitors now flock to Brick Lane. Bangladeshi entrepreneurs have tarted up their restaurants to provide them with sustenance.
Because it is a human entrepot, Spitalfields remains one of London's poorest and most conservative districts; but now, for the same reason, it is also among the hippest. When old men in traditional dress congregate beneath the mosque's prophetic sundial, immodestly clad young women weave between them.
Friday, February 20, 2004
One last push for peace
Feb 19th 2004
From The Economist Global Agenda
After a breakthrough at the United Nations, fresh peace talks on the divided island of Cyprus have begun, and will be followed by a referendum. If all goes well, the whole island will join the European Union on May 1st—also boosting Turkey’s chances of joining eventually
EVER since Turkish troops invaded the north of Cyprus 30 years ago, leading to its division into Greek and Turkish zones, repeated rounds of internationally backed talks have failed to reunite the Mediterranean island. The United Nations maintains a 1,200-strong peacekeeping force along the “Green Line” boundary between the two sectors. Turkey, the only country that recognises the northern, Turkish sector as an independent state, keeps about 30,000 troops there. Greece has about 12,000 troops on the other side. As recently as last March, the two sides came close to agreement, only for the talks to collapse. But now, following a breakthrough at the UN late last week, a fresh round of talks opened on Thursday February 19th, in the UN buffer zone that runs through the divided capital, Nicosia. Their chances seem better than the last attempt to reach a lasting peace.
Last Friday, after three days of tough talks at the UN’s headquarters in New York, its secretary-general, Kofi Annan, announced that Greek Cypriot and Turkish Cypriot leaders had accepted his proposals for rapid negotiations on a peace deal that will then be put to a referendum of all Cypriots on April 21st—just ten days before the Greek part of Cyprus (with or without the Turkish part) will join the European Union. The talks will be based on the UN’s existing plan to stitch Cyprus back together as a loose federation, in which the Greek and Turkish sectors largely run their own affairs but a power-sharing central government runs the island’s foreign relations.
Under the deal agreed on Friday, if the Greek and Turkish Cypriot leaders cannot agree by March 22nd, the governments of Greece and Turkey will be brought in for a week of intensive talks. If there is still no final text of an agreement by the 29th, Mr Annan will fill in the blanks and the referendum will go ahead anyway. If the last-ditch attempt to forge a settlement fails, the Turkish Cypriot sector’s isolation will only increase, and Turkey’s own hopes of joining the EU may be set back by years.
When Cyprus gained independence from Britain in 1960, its constitution guaranteed power-sharing between the ethnic Greek majority and Turkish minority. But these arrangements broke down in the 1960s and the Greek Cypriots were left in control of most of the island, leading to years of inter-communal violence. In 1974, Greece’s then military dictatorship backed a coup on the island, staged by militants who wanted to make Cyprus a part of Greece. This prompted Turkey’s invasion of northern Cyprus. Many thousands of people were forced to leave their homes and the island was left divided, with the Turkish side holding 37% of its land, even though Turkish Cypriots were only 18% of the population before the conflict. The UN’s plan envisages returning several chunks of land to the Greek Cypriot sector (see map) but the two sides have been unable to reach agreement on the details. Among the other important issues that remain to be resolved are: how many Greek Cypriots will be allowed to return to live in the north; and how many Turkish and Greek troops will be allowed to remain on the island.
One of the main reasons that the talks collapsed last March was that Turkey’s government failed to put enough pressure on Rauf Denktash, the notoriously stubborn Turkish Cypriot leader. His people, much poorer than their ethnic Greek counterparts, have become increasingly frustrated at their isolation and at Mr Denktash. A few weeks before the talks, he faced a huge protest, with demonstrators carrying placards saying “Yes to peace, Yes to the EU”. But Mr Denktash rejected the UN’s proposals, arguing that a land transfer on the scale envisaged would lead to a refugee crisis among Turkish Cypriots.
An election on the Turkish Cypriot side, in December, ended more or less in a dead heat between supporters and opponents of unification. A coalition government was formed, led jointly by Mr Denktash’s son and a pro-unification leader. In January, the new government regained the initiative by calling for fresh talks, in which the UN plan would be a “reference point”.
A change in stance by Turkey seems to have played an important role in the revival of the talks. Its prime minister, Recep Tayyip Erdogan, is said to have put firm pressure on the various Turkish Cypriot leaders to form a coalition and return to the negotiating table. Mr Erdogan is also thought to have persuaded the Turkish armed forces—which have clung to northern Cyprus as a military asset—to accept an eventual deal. Other international powers have also been leaning hard on both Greek and Turkish Cypriot leaders: diplomats said America’s secretary of state, Colin Powell, and his British counterpart, Jack Straw, had intervened personally during last week’s talks at the UN.
Even now, though, successful talks, followed by a successful outcome in the referendum, are not guaranteed. If all goes well, and the Turkish sector of Cyprus joins the EU along with the Greek part in May, this will boost Turkey’s own hopes of starting EU membership negotiations by early next year. “After we have done everything and solved the Cyprus problem, nobody can say no to starting the talks,” the Turkish foreign minister, Abdullah Gul, said at the weekend.
The EU’s leaders will hold a summit in December to review Turkey’s candidacy. But there are some in the EU—such as Germany’s opposition Christian Democrats—who argue that Turkey is too big and too Muslim to be given full membership. However, the EU already has millions of Muslim citizens; and the entry of hundreds of thousands of Turkish Cypriots would make such arguments look increasingly unconvincing. Turkey will be more likely to continue pursuing its democratic and economic reforms, and to contain Islamic militancy, if its aspirations to join the EU are met. So a lot more than the future of Cyprus is hanging on the talks that the island’s leaders have commenced.
Feb 19th 2004
From The Economist Global Agenda
After a breakthrough at the United Nations, fresh peace talks on the divided island of Cyprus have begun, and will be followed by a referendum. If all goes well, the whole island will join the European Union on May 1st—also boosting Turkey’s chances of joining eventually
EVER since Turkish troops invaded the north of Cyprus 30 years ago, leading to its division into Greek and Turkish zones, repeated rounds of internationally backed talks have failed to reunite the Mediterranean island. The United Nations maintains a 1,200-strong peacekeeping force along the “Green Line” boundary between the two sectors. Turkey, the only country that recognises the northern, Turkish sector as an independent state, keeps about 30,000 troops there. Greece has about 12,000 troops on the other side. As recently as last March, the two sides came close to agreement, only for the talks to collapse. But now, following a breakthrough at the UN late last week, a fresh round of talks opened on Thursday February 19th, in the UN buffer zone that runs through the divided capital, Nicosia. Their chances seem better than the last attempt to reach a lasting peace.
Last Friday, after three days of tough talks at the UN’s headquarters in New York, its secretary-general, Kofi Annan, announced that Greek Cypriot and Turkish Cypriot leaders had accepted his proposals for rapid negotiations on a peace deal that will then be put to a referendum of all Cypriots on April 21st—just ten days before the Greek part of Cyprus (with or without the Turkish part) will join the European Union. The talks will be based on the UN’s existing plan to stitch Cyprus back together as a loose federation, in which the Greek and Turkish sectors largely run their own affairs but a power-sharing central government runs the island’s foreign relations.
Under the deal agreed on Friday, if the Greek and Turkish Cypriot leaders cannot agree by March 22nd, the governments of Greece and Turkey will be brought in for a week of intensive talks. If there is still no final text of an agreement by the 29th, Mr Annan will fill in the blanks and the referendum will go ahead anyway. If the last-ditch attempt to forge a settlement fails, the Turkish Cypriot sector’s isolation will only increase, and Turkey’s own hopes of joining the EU may be set back by years.
When Cyprus gained independence from Britain in 1960, its constitution guaranteed power-sharing between the ethnic Greek majority and Turkish minority. But these arrangements broke down in the 1960s and the Greek Cypriots were left in control of most of the island, leading to years of inter-communal violence. In 1974, Greece’s then military dictatorship backed a coup on the island, staged by militants who wanted to make Cyprus a part of Greece. This prompted Turkey’s invasion of northern Cyprus. Many thousands of people were forced to leave their homes and the island was left divided, with the Turkish side holding 37% of its land, even though Turkish Cypriots were only 18% of the population before the conflict. The UN’s plan envisages returning several chunks of land to the Greek Cypriot sector (see map) but the two sides have been unable to reach agreement on the details. Among the other important issues that remain to be resolved are: how many Greek Cypriots will be allowed to return to live in the north; and how many Turkish and Greek troops will be allowed to remain on the island.
One of the main reasons that the talks collapsed last March was that Turkey’s government failed to put enough pressure on Rauf Denktash, the notoriously stubborn Turkish Cypriot leader. His people, much poorer than their ethnic Greek counterparts, have become increasingly frustrated at their isolation and at Mr Denktash. A few weeks before the talks, he faced a huge protest, with demonstrators carrying placards saying “Yes to peace, Yes to the EU”. But Mr Denktash rejected the UN’s proposals, arguing that a land transfer on the scale envisaged would lead to a refugee crisis among Turkish Cypriots.
An election on the Turkish Cypriot side, in December, ended more or less in a dead heat between supporters and opponents of unification. A coalition government was formed, led jointly by Mr Denktash’s son and a pro-unification leader. In January, the new government regained the initiative by calling for fresh talks, in which the UN plan would be a “reference point”.
A change in stance by Turkey seems to have played an important role in the revival of the talks. Its prime minister, Recep Tayyip Erdogan, is said to have put firm pressure on the various Turkish Cypriot leaders to form a coalition and return to the negotiating table. Mr Erdogan is also thought to have persuaded the Turkish armed forces—which have clung to northern Cyprus as a military asset—to accept an eventual deal. Other international powers have also been leaning hard on both Greek and Turkish Cypriot leaders: diplomats said America’s secretary of state, Colin Powell, and his British counterpart, Jack Straw, had intervened personally during last week’s talks at the UN.
Even now, though, successful talks, followed by a successful outcome in the referendum, are not guaranteed. If all goes well, and the Turkish sector of Cyprus joins the EU along with the Greek part in May, this will boost Turkey’s own hopes of starting EU membership negotiations by early next year. “After we have done everything and solved the Cyprus problem, nobody can say no to starting the talks,” the Turkish foreign minister, Abdullah Gul, said at the weekend.
The EU’s leaders will hold a summit in December to review Turkey’s candidacy. But there are some in the EU—such as Germany’s opposition Christian Democrats—who argue that Turkey is too big and too Muslim to be given full membership. However, the EU already has millions of Muslim citizens; and the entry of hundreds of thousands of Turkish Cypriots would make such arguments look increasingly unconvincing. Turkey will be more likely to continue pursuing its democratic and economic reforms, and to contain Islamic militancy, if its aspirations to join the EU are met. So a lot more than the future of Cyprus is hanging on the talks that the island’s leaders have commenced.
Human nature is spanner in the works
By Janadas Devan
FOREIGN MATTERS
'DEMOGRAPHY,' said Auguste Comte, 'is destiny'. He might have added that demography is an inexact science, which explains why destiny is inscrutable.
Plato believed cities couldn't have more than 5,040 landholders. Economist Thomas Malthus famously argued in 1825 that since human populations grew at a 'geometric' rate, they will outstrip food supplies. Historian Thomas Carlyle found this prospect so frightening, he coined the term 'dismal science' to describe economics. The epithet has survived, but not Malthus' theory.
Too many people still don't have enough to eat - about 60 per cent of South Asian children, for instance, suffer from malnutrition - but global food production has far outpaced population growth, thanks in large part to the Green Revolution. As the economist Amartya Sen has noted, 'not only is food generally much cheaper to buy today, in constant dollars, than it was in Malthus' time, it also has become cheaper during recent decades'.
Malthus, however, did enjoy a boom in the 1960s, when books like Paul Ehrlich's The Population Bomb appeared. In 1972, a group of Massachusetts Institute of Technology researchers, using computer models, went so far as to predict that growing populations would place such pressure on the environment that arable land would be exhausted by 2000, oil by 1992, gold by 1981, and civilisation itself would collapse by 2070.
With countries like India bursting at the seams with pullulating humanity, and suffering famines as a result, such predictions didn't seem outlandish.
The world's population was only one billion in 1825, a figure it took the species 150,000 years to reach. But within 100 years, it had doubled to two billion; and within another 50 years, it doubled again to four billion. Humanity seemed to be growing at a galloping 'geometric' rate.
And yet, as early as 1974, it became clear to demographers that there was a 'demographic transition' under way, with the pattern shifting from the high birth rates and low death rates of the preceding 150 years, to the low birth and death rates of today.
The experts assumed, however, that birth and death rates would somehow equalise at some point, and the global population would stabilise around 10-12 billion in the 21st century. As it turns out, they were both right and wrong - right, in that the 'demographic transition' is indeed real; but wrong, in that there is no sign of the population stabilising at any level.
Indeed, the consensus now is that if fertility rates continue to fall at the current pace, the world's population will increase from six billion now to eight billion in 2050 - and then decline rapidly after that. How rapidly? Nobody knows. By one estimate, if the global birth rate were to fall to as low as Japan's or Italy's today - 1.32 and 1.24 respectively - it is conceivable that several centuries from now, the planet may hold fewer people than the United States does today. It will be a 'small world' indeed.
But why have demographers been wrong so often? How could the world experience two diametrically opposite trends within the space of 250 years - an epochal doubling, and then re-doubling, up to 2050; to be followed by an equally epochal decline thereafter? It is important to understand why we can be surprised by such shifts if we hope to meet the challenge of falling birth rates. The first thing to note is that demography is inexact precisely because the material it deals with - human beings - is unpredictable.
Just consider: If US death rates had remained the same at the end of the 20th century as at the beginning, its population would be 140 million today, not 292 million. Nobody could have predicted the astonishing progress of modern medicine.
Just consider: If fertility rates remained at current levels - with developing countries breeding at 3.1 and developed countries de-breeding at 1.5 - there would be 296 billion people in 2150! Even if the fertility rate stabilised at 2.5 children per woman, the world's population would reach 28 billion.
Just consider: If Korea's population grew by 2 per cent each year, and the rest of the world's declined by 1 per cent, Koreans would constitute 10 per cent of the world's population within a generation, instead of today's 1 per cent.
What all this tell us is that it is impossible to make precise demographic forecasts. Minute changes can balloon into astronomic consequences. Nobody could have predicted 50 years ago that 44 per cent of humanity today would be living in countries where the fertility rate has fallen below replacement levels, that even China's fertility rate would fall below 2.1, or that Japan will shrink from 128 million people today to 45 million in 2100. And we couldn't (and can't) because this is ultimately not a matter of biology or instinct, but values.
An analogy might be useful here. Consider the two theories which dominate evolutionary biology today: One, Steven Jay Gould's notion that natural selection occurs at the level of whole organisms, even species; the other, Richard Dawkin's theory that it is the gene, the 'selfish gene', not the species, that drives natural selection.
We worry about demography as destiny at the level of whole societies, when we conceive ourselves as part of a greater whole. But the engine that drives demography is not whole societies, but individuals - 'selfish individuals'. We will not come to grips with the problem of declining birth rates till we understand the 'selfishness' that drives modern men and women.
What do modern wo(men) want?
This is the first in a series of three articles
By Janadas Devan
FOREIGN MATTERS
'DEMOGRAPHY,' said Auguste Comte, 'is destiny'. He might have added that demography is an inexact science, which explains why destiny is inscrutable.
Plato believed cities couldn't have more than 5,040 landholders. Economist Thomas Malthus famously argued in 1825 that since human populations grew at a 'geometric' rate, they will outstrip food supplies. Historian Thomas Carlyle found this prospect so frightening, he coined the term 'dismal science' to describe economics. The epithet has survived, but not Malthus' theory.
Too many people still don't have enough to eat - about 60 per cent of South Asian children, for instance, suffer from malnutrition - but global food production has far outpaced population growth, thanks in large part to the Green Revolution. As the economist Amartya Sen has noted, 'not only is food generally much cheaper to buy today, in constant dollars, than it was in Malthus' time, it also has become cheaper during recent decades'.
Malthus, however, did enjoy a boom in the 1960s, when books like Paul Ehrlich's The Population Bomb appeared. In 1972, a group of Massachusetts Institute of Technology researchers, using computer models, went so far as to predict that growing populations would place such pressure on the environment that arable land would be exhausted by 2000, oil by 1992, gold by 1981, and civilisation itself would collapse by 2070.
With countries like India bursting at the seams with pullulating humanity, and suffering famines as a result, such predictions didn't seem outlandish.
The world's population was only one billion in 1825, a figure it took the species 150,000 years to reach. But within 100 years, it had doubled to two billion; and within another 50 years, it doubled again to four billion. Humanity seemed to be growing at a galloping 'geometric' rate.
And yet, as early as 1974, it became clear to demographers that there was a 'demographic transition' under way, with the pattern shifting from the high birth rates and low death rates of the preceding 150 years, to the low birth and death rates of today.
The experts assumed, however, that birth and death rates would somehow equalise at some point, and the global population would stabilise around 10-12 billion in the 21st century. As it turns out, they were both right and wrong - right, in that the 'demographic transition' is indeed real; but wrong, in that there is no sign of the population stabilising at any level.
Indeed, the consensus now is that if fertility rates continue to fall at the current pace, the world's population will increase from six billion now to eight billion in 2050 - and then decline rapidly after that. How rapidly? Nobody knows. By one estimate, if the global birth rate were to fall to as low as Japan's or Italy's today - 1.32 and 1.24 respectively - it is conceivable that several centuries from now, the planet may hold fewer people than the United States does today. It will be a 'small world' indeed.
But why have demographers been wrong so often? How could the world experience two diametrically opposite trends within the space of 250 years - an epochal doubling, and then re-doubling, up to 2050; to be followed by an equally epochal decline thereafter? It is important to understand why we can be surprised by such shifts if we hope to meet the challenge of falling birth rates. The first thing to note is that demography is inexact precisely because the material it deals with - human beings - is unpredictable.
Just consider: If US death rates had remained the same at the end of the 20th century as at the beginning, its population would be 140 million today, not 292 million. Nobody could have predicted the astonishing progress of modern medicine.
Just consider: If fertility rates remained at current levels - with developing countries breeding at 3.1 and developed countries de-breeding at 1.5 - there would be 296 billion people in 2150! Even if the fertility rate stabilised at 2.5 children per woman, the world's population would reach 28 billion.
Just consider: If Korea's population grew by 2 per cent each year, and the rest of the world's declined by 1 per cent, Koreans would constitute 10 per cent of the world's population within a generation, instead of today's 1 per cent.
What all this tell us is that it is impossible to make precise demographic forecasts. Minute changes can balloon into astronomic consequences. Nobody could have predicted 50 years ago that 44 per cent of humanity today would be living in countries where the fertility rate has fallen below replacement levels, that even China's fertility rate would fall below 2.1, or that Japan will shrink from 128 million people today to 45 million in 2100. And we couldn't (and can't) because this is ultimately not a matter of biology or instinct, but values.
An analogy might be useful here. Consider the two theories which dominate evolutionary biology today: One, Steven Jay Gould's notion that natural selection occurs at the level of whole organisms, even species; the other, Richard Dawkin's theory that it is the gene, the 'selfish gene', not the species, that drives natural selection.
We worry about demography as destiny at the level of whole societies, when we conceive ourselves as part of a greater whole. But the engine that drives demography is not whole societies, but individuals - 'selfish individuals'. We will not come to grips with the problem of declining birth rates till we understand the 'selfishness' that drives modern men and women.
What do modern wo(men) want?
This is the first in a series of three articles
Taking the long view in countering terrorism
By BARRY DESKER
FOR THE STRAITS TIMES
THE emergence of the Jemaah Islamiah (JI) threat in South-east Asia has spawned a cottage industry of books and commentaries discussing terrorism in the region.
Most of the analyses are by counter-terrorism specialists, theorists in international relations and political pundits.
Those who have spent years studying the region, including area specialists and scholars in Islamic studies, have been absent from the debate. Instead, they have decried the lack of depth in these analyses.
One reason for their late involvement: Most were mesmerised by the moderate character of Islam in the region. There was denial that there are groups intent on disrupting the peaceful evolution of societies, such as Indonesia, in a transition to democratic governance.
Lacking the long view these specialists could provide, the debate on JI resulted in the perception that militancy in Islam is a recent phenomenon.
In reality, radical interpretations of Islam are not a new development. In the 1870s, religious Muslims who returned from the haj inspired by the austere Wahabbi fundamentalism they encountered in Mecca embarked on the Padri wars in West Sumatra.
The use of the term 'padri' was an astute recognition of the overlap between fundamentalists of different religious faiths: The white robes of the Wahabbi followers and their religious zeal reminded local villagers of Christian missionaries or padres.
At the beginning of the 20th century, pamphleteers and editors in Singapore, then the hub of the regional Malay-language media, spread competing Islamic doctrines around the region. They set the stage for a political contest between the Kaum Muda (the reformists) and the Kaum Tua (the traditional establishment).
In the 1950s, the new Indonesian republic faced a major challenge from the Darul Islam revolt, which was supported by Abdullah Sungkar and Abu Bakar Bashir, the leaders of today's JI.
Colonial regimes in the region, as well as post-colonial leaderships, agonised over the role of Islam and recognised the challenge posed by Islamic radicals bent on overturning the existing state order.
Radical interpretations of Islam will be a recurrent challenge, as today's JI shows. Like other similar movements in the Islamic world which describe themselves as Salafi, JI sought a revival of the pristine Islam of the founding ancestors (salaf), by replicating the historic conquest of pagan Arabia.
The JI redefined jihad to justify revolutionary violence against internal and external enemies of Islam. Like Osama bin Laden, its leaders justified violence against Muslim rulers on the grounds that they suppressed Islamic law and were therefore apostates to be punished with death. Violence against Americans and other 'Crusaders' was justified on the grounds that they promoted secular societies which subjugated Islam.
One fascinating aspect is the unintended consequences of earlier actions. United States support for the mujahideen who opposed Soviet occupation of Afghanistan in the 1980s led to the creation of a multinational network of Afghan veterans who returned to their home countries desiring to replicate their successful jihad.
The late Abdullah Sungkar laid the groundwork for future cooperation between JI and Al-Qaeda when he went to Afghanistan to participate in the resistance. The decision by the US to withdraw from Afghanistan after the end of the Cold War allowed Al-Qaeda to use this failed state as a sanctuary and training ground for a global jihad.
The networks created in Afghanistan formed the building blocks for Al-Qaeda's global reach, as local concerns were fused with its global agenda.
To appreciate Al-Qaeda's global as well as regional impact, one should look at the organisation as a venture capitalist acting as a revolutionary catalyst. It provides training and funding while allowing for local initiative and a sense of empowerment.
Instead of a hierarchical transnational organisation, Al-Qaeda is a hydra-headed network linking operatives with shared beliefs. Although Al-Qaeda has provided logistics support and financial assistance to JI, its most significant role lay in the creation of a shared identity and a global vision.
HEARTS AND MINDS
IT IS frequently argued that the rage within Muslim communities arises from the conflicts in the Middle East - the Israel-Palestine conflict and now the American occupation of Iraq. We should not ignore the radicalising impact of these developments.
However, a closer reading of Osama's pronouncements and of jihadist literature suggests that even if these conflicts were resolved, a host of new issues would arise, such as Chechnya, Kashmir, the southern Philippines and domestic governance in Algeria.
The aborted Singapore JI plan in 2002 to hijack an Aeroflot aircraft after its stopover in Bangkok and crash it into the Changi Airport control tower illustrates this new dimension. A Russian aircraft was chosen to demonstrate Singapore JI's solidarity with the struggle in Chechnya.
While attention has been focused on the globalising impact of MNCs, even terrorist movements have become globalised. The CNN effect has magnified the impact of the Middle East and other conflicts.
In meeting the threat of terrorism, a critical aspect will be the use of soft power, the use of non-military strategies to respond to this threat, which go beyond military, law enforcement and intelligence collection responses. It is a battle for hearts and minds.
The important role of strengthening cooperative networks tends to be underestimated.
In South-east Asia, counter-terrorism cooperation is at the bilateral and trilateral levels. Asean agreements are primarily declaratory in intent. Asean has been most useful in establishing norms and in capacity building through the sharing of expertise.
Nevertheless, the current level of intra-Asean cooperation is considerably improved today compared to the mutual recriminations when the first evidence of the JI network emerged in December 2001.
The writer is director of the Institute of Defence and Strategic Studies.
By BARRY DESKER
FOR THE STRAITS TIMES
THE emergence of the Jemaah Islamiah (JI) threat in South-east Asia has spawned a cottage industry of books and commentaries discussing terrorism in the region.
Most of the analyses are by counter-terrorism specialists, theorists in international relations and political pundits.
Those who have spent years studying the region, including area specialists and scholars in Islamic studies, have been absent from the debate. Instead, they have decried the lack of depth in these analyses.
One reason for their late involvement: Most were mesmerised by the moderate character of Islam in the region. There was denial that there are groups intent on disrupting the peaceful evolution of societies, such as Indonesia, in a transition to democratic governance.
Lacking the long view these specialists could provide, the debate on JI resulted in the perception that militancy in Islam is a recent phenomenon.
In reality, radical interpretations of Islam are not a new development. In the 1870s, religious Muslims who returned from the haj inspired by the austere Wahabbi fundamentalism they encountered in Mecca embarked on the Padri wars in West Sumatra.
The use of the term 'padri' was an astute recognition of the overlap between fundamentalists of different religious faiths: The white robes of the Wahabbi followers and their religious zeal reminded local villagers of Christian missionaries or padres.
At the beginning of the 20th century, pamphleteers and editors in Singapore, then the hub of the regional Malay-language media, spread competing Islamic doctrines around the region. They set the stage for a political contest between the Kaum Muda (the reformists) and the Kaum Tua (the traditional establishment).
In the 1950s, the new Indonesian republic faced a major challenge from the Darul Islam revolt, which was supported by Abdullah Sungkar and Abu Bakar Bashir, the leaders of today's JI.
Colonial regimes in the region, as well as post-colonial leaderships, agonised over the role of Islam and recognised the challenge posed by Islamic radicals bent on overturning the existing state order.
Radical interpretations of Islam will be a recurrent challenge, as today's JI shows. Like other similar movements in the Islamic world which describe themselves as Salafi, JI sought a revival of the pristine Islam of the founding ancestors (salaf), by replicating the historic conquest of pagan Arabia.
The JI redefined jihad to justify revolutionary violence against internal and external enemies of Islam. Like Osama bin Laden, its leaders justified violence against Muslim rulers on the grounds that they suppressed Islamic law and were therefore apostates to be punished with death. Violence against Americans and other 'Crusaders' was justified on the grounds that they promoted secular societies which subjugated Islam.
One fascinating aspect is the unintended consequences of earlier actions. United States support for the mujahideen who opposed Soviet occupation of Afghanistan in the 1980s led to the creation of a multinational network of Afghan veterans who returned to their home countries desiring to replicate their successful jihad.
The late Abdullah Sungkar laid the groundwork for future cooperation between JI and Al-Qaeda when he went to Afghanistan to participate in the resistance. The decision by the US to withdraw from Afghanistan after the end of the Cold War allowed Al-Qaeda to use this failed state as a sanctuary and training ground for a global jihad.
The networks created in Afghanistan formed the building blocks for Al-Qaeda's global reach, as local concerns were fused with its global agenda.
To appreciate Al-Qaeda's global as well as regional impact, one should look at the organisation as a venture capitalist acting as a revolutionary catalyst. It provides training and funding while allowing for local initiative and a sense of empowerment.
Instead of a hierarchical transnational organisation, Al-Qaeda is a hydra-headed network linking operatives with shared beliefs. Although Al-Qaeda has provided logistics support and financial assistance to JI, its most significant role lay in the creation of a shared identity and a global vision.
HEARTS AND MINDS
IT IS frequently argued that the rage within Muslim communities arises from the conflicts in the Middle East - the Israel-Palestine conflict and now the American occupation of Iraq. We should not ignore the radicalising impact of these developments.
However, a closer reading of Osama's pronouncements and of jihadist literature suggests that even if these conflicts were resolved, a host of new issues would arise, such as Chechnya, Kashmir, the southern Philippines and domestic governance in Algeria.
The aborted Singapore JI plan in 2002 to hijack an Aeroflot aircraft after its stopover in Bangkok and crash it into the Changi Airport control tower illustrates this new dimension. A Russian aircraft was chosen to demonstrate Singapore JI's solidarity with the struggle in Chechnya.
While attention has been focused on the globalising impact of MNCs, even terrorist movements have become globalised. The CNN effect has magnified the impact of the Middle East and other conflicts.
In meeting the threat of terrorism, a critical aspect will be the use of soft power, the use of non-military strategies to respond to this threat, which go beyond military, law enforcement and intelligence collection responses. It is a battle for hearts and minds.
The important role of strengthening cooperative networks tends to be underestimated.
In South-east Asia, counter-terrorism cooperation is at the bilateral and trilateral levels. Asean agreements are primarily declaratory in intent. Asean has been most useful in establishing norms and in capacity building through the sharing of expertise.
Nevertheless, the current level of intra-Asean cooperation is considerably improved today compared to the mutual recriminations when the first evidence of the JI network emerged in December 2001.
The writer is director of the Institute of Defence and Strategic Studies.
EDITORIAL Straits Times Feb 20 2004
Foreigners' second home
THE belief is that a skilled foreign worker in Singapore is an economic mercenary who is here only for the benefits. The reality is that many foreigners want to sink roots here. The point is made in a sample survey of 400 Singaporeans carried out in 2001 but included in a recently-published book, which found seven out of 10 saying that foreigners are here only for the economic benefits and are not committed to Singapore. But more than four in five of 501 foreigners who were interviewed for the survey said they hoped to continue working here over the next five years, and more than half of the 301 employment pass-holders interviewed wished to become permanent residents. The mismatch of perceptions is problematic for a global city like Singapore which thrives on the quality of its workforce, whether indigenous or imported. What is good, however, is that underlying local perceptions is the implied hope that foreigners will go local. And to the extent that foreigners want to do so, there is no contradiction with what Singaporeans expect of them. This convergence is important given the large number of foreigners in this country. According to figures cited by the survey's authors, the non-resident workforce rose from 248,200 in 1990 to 612,000 in 2000. The number of the better-educated holding employment passes also grew sharply. In 1997 they numbered about 55,000; by 2000 the figure had doubled to 110,000.
The presence of skilled foreigners is an intrinsic part of Singapore's attempts to move up the achievement scale. What they deserve, by way of reciprocity from Singaporeans, is a recognition of the contribution which they make to the country's total welfare. The best way for Singaporeans to look at workers here is not to compartmentalise them mentally into 'foreigners' and 'locals', 'them' and 'us', but to see everybody as being part of an integrated national effort to stay one step ahead in the global race. Of course, this is easier said than done, not least because unemployment and the threat of losing one's jobs have wounded the Singaporean psyche. A Gallup poll last year found that 56 per cent of Singaporeans and permanent residents believed that foreign infusions were necessary for the country's continued economic vitality, but this was down from 64 per cent two years earlier and 72 per cent in 1997. The eroding sentiment cannot be ignored, but the reality is that if foreigners were not to compete with Singaporeans and ultimately make companies here more competitive, they would raise the competitiveness of firms abroad that would be taking on Singaporean companies. Then, entire companies - including their Singaporean workers - could be at risk.
Harsh though it sounds, the globalisation that is changing the demography of Singapore's workforce is at least as old as the founding of Singapore itself. The ancestors of today's Singaporeans who came here in search of a living before sinking roots turned it into a thriving entrepot. Those arriving today are doing nothing different. Now, as then, a country which survives by exporting to the rest of the world cannot close its doors to the import of capital - and talent. A country predicated on success cannot shut out the successful just because they were not born in it. And why should it? The latest survey suggests that many foreigners want to make Singapore their home. Enlightened Singaporeans create a second home for them on the road to what, it is hoped, will become a permanent home and a more prosperous one for all.
Foreigners' second home
THE belief is that a skilled foreign worker in Singapore is an economic mercenary who is here only for the benefits. The reality is that many foreigners want to sink roots here. The point is made in a sample survey of 400 Singaporeans carried out in 2001 but included in a recently-published book, which found seven out of 10 saying that foreigners are here only for the economic benefits and are not committed to Singapore. But more than four in five of 501 foreigners who were interviewed for the survey said they hoped to continue working here over the next five years, and more than half of the 301 employment pass-holders interviewed wished to become permanent residents. The mismatch of perceptions is problematic for a global city like Singapore which thrives on the quality of its workforce, whether indigenous or imported. What is good, however, is that underlying local perceptions is the implied hope that foreigners will go local. And to the extent that foreigners want to do so, there is no contradiction with what Singaporeans expect of them. This convergence is important given the large number of foreigners in this country. According to figures cited by the survey's authors, the non-resident workforce rose from 248,200 in 1990 to 612,000 in 2000. The number of the better-educated holding employment passes also grew sharply. In 1997 they numbered about 55,000; by 2000 the figure had doubled to 110,000.
The presence of skilled foreigners is an intrinsic part of Singapore's attempts to move up the achievement scale. What they deserve, by way of reciprocity from Singaporeans, is a recognition of the contribution which they make to the country's total welfare. The best way for Singaporeans to look at workers here is not to compartmentalise them mentally into 'foreigners' and 'locals', 'them' and 'us', but to see everybody as being part of an integrated national effort to stay one step ahead in the global race. Of course, this is easier said than done, not least because unemployment and the threat of losing one's jobs have wounded the Singaporean psyche. A Gallup poll last year found that 56 per cent of Singaporeans and permanent residents believed that foreign infusions were necessary for the country's continued economic vitality, but this was down from 64 per cent two years earlier and 72 per cent in 1997. The eroding sentiment cannot be ignored, but the reality is that if foreigners were not to compete with Singaporeans and ultimately make companies here more competitive, they would raise the competitiveness of firms abroad that would be taking on Singaporean companies. Then, entire companies - including their Singaporean workers - could be at risk.
Harsh though it sounds, the globalisation that is changing the demography of Singapore's workforce is at least as old as the founding of Singapore itself. The ancestors of today's Singaporeans who came here in search of a living before sinking roots turned it into a thriving entrepot. Those arriving today are doing nothing different. Now, as then, a country which survives by exporting to the rest of the world cannot close its doors to the import of capital - and talent. A country predicated on success cannot shut out the successful just because they were not born in it. And why should it? The latest survey suggests that many foreigners want to make Singapore their home. Enlightened Singaporeans create a second home for them on the road to what, it is hoped, will become a permanent home and a more prosperous one for all.
Wednesday, February 18, 2004
The fight against spam
Make 'em pay
Feb 14th 2004 | SAN FRANCISCO
From The Economist print edition
The dismal science takes on spam
THE short history of society's fight against spam—usually defined as unwanted commercial e-mail—may be about to pass into a significant third phase. In the first phase, it was geeks who led the resistance, using techie weapons such as e-mail filters with fancy Bayesian mathematics. In the second phase, politicians joined in, eager to get their names on to new legislation—in America, for instance, 36 states and Congress have passed laws of some sort against spam. Now, in the third phase, the economists are taking over.
The market opening for the economists is obvious. Both the geeks and the politicians are widely seen to have failed miserably. E-mail filters, though helpful, often block genuine e-mails, while still letting through some spam. And legislation, so far, seems to have had no effect at all, probably because hard-core spammers have moved offshore. More than half of all e-mail is now spam, and the share is rising.
To an economist, the reason for this mess is obvious. “At the moment, both the sender and the receiver of an e-mail pay a marginal price of zero,” says Benjamin Hermalin, a professor at Berkeley. “That must be wrong,” for e-mails do have marginal costs (such as electricity, storage and network congestion). For spammers, this presents a sure-win strategy: mail as much as you can, because even one hit out of a million is profitable.
An obvious solution, then, is to charge for e-mail, or at least for the sort that spammers send. This idea has even been endorsed by the über-geek, Bill Gates of Microsoft. At the World Economic Forum in Davos last month, he predicted that fancy technology and payment schemes would together defeat spam within two years. (Sceptics noted that Microsoft could also help by fixing security flaws in its products—the latest confessed to this week—that can be exploited by spammers.)
To libertarians, among the earliest internet enthusiasts, the notion that e-mail should be un-free is anathema. They would fiercely oppose any economist daring to suggest charging “ordinary” people. Besides, any system that would rely on processing millions of tiny “micropayments” would be an administrative nightmare. In short, a good system has to remedy the perverse incentives that attract spammers, but leave everyone else alone, and thus better off.
Goodmail Systems, a start-up in Silicon Valley, hopes to launch such a solution this summer. Its idea, says Richard Gingras, its boss, is to create “a new, trusted class of e-mail from volume senders” which recipients would instantly spot as such in their inboxes. An example: Amazon, keen that its automatic order-confirmations not be filtered out as spam by mistake, would buy a million e-mail “stamps” for $0.01 each from Goodmail, which would share the $10,000 with participating internet service providers (ISPs). Goodmail fixes the stamps to Amazon's e-mails as encrypted e-mail headers, and sends the decryption key to the ISPs. The ISPs can then identify Amazon's e-mails as they arrive, and pass them on to the inboxes of consumers.
Under Goodmail's egalitarian system, spammers would also be free to buy stamps, just as senders of junk-mail buy postage from the post office. This, however, would introduce into their equation the normal economics of marketing. For most hawkers of penis enlargements, one can assume, the numbers would not add up, so they would not buy postage. They would therefore be left in a shrinking subculture of illegitimate spammers, which ISPs can filter out more easily. Thus, says Mr Gingras, Goodmail's system would reduce (though not eliminate) spam, even if it is adopted only partially.
A different approach is not to charge senders for every message upfront, as Goodmail will, but only for those that lead to complaints from recipients, and in arrears. This is the route taken by IronPort Systems, another firm in Silicon Valley. For a bit over a year, it has been offering a service in which legitimate bulk e-mailers, such as newsletters, post a financial bond in return for assured delivery past spam filters into inboxes. Senders have to honour the bond and pay only if recipients complain. “We've designed the financial incentives to be insurmountable for spammers,” says Craig Sprosts, a director. The idea, as with Goodmail, is that this whitelist eventually grows so large that spammers will in effect be quarantined, as though they were on a blacklist. About 18,000 ISPs have already joined the system, and over 200 senders, including Google, a search engine, have posted bonds.
Some people want to go even further. Balachander Krishnamurthy, a boffin at AT&T Labs, the research arm of the phone company, proposes a system in which ISPs would establish a consortium—similar to banks creating Visa—that would act as a clearing house. ISPs would then give all of their subscribers credit limits. From then on, every time a recipient declares an e-mail “unwanted” to the clearing house, the sender is charged, say, $1. Once his credit limit—$200, for instance—is reached, the ISP shuts down his account.
This neatly addresses another big problem. The most insidious way of spreading spam these days is by writing software viruses, such as last week's MyDoom, that turn the computers of innocent consumers into spam machines. In Mr Krishnamurthy's system, however, the credit limits of infected users would max out within seconds of a new virus spreading, stopping it from travelling further. Presumably, ISPs will know enough to realise that grandma was the victim, not the hacker, and will eventually reconnect her.
Make 'em pay
Feb 14th 2004 | SAN FRANCISCO
From The Economist print edition
The dismal science takes on spam
THE short history of society's fight against spam—usually defined as unwanted commercial e-mail—may be about to pass into a significant third phase. In the first phase, it was geeks who led the resistance, using techie weapons such as e-mail filters with fancy Bayesian mathematics. In the second phase, politicians joined in, eager to get their names on to new legislation—in America, for instance, 36 states and Congress have passed laws of some sort against spam. Now, in the third phase, the economists are taking over.
The market opening for the economists is obvious. Both the geeks and the politicians are widely seen to have failed miserably. E-mail filters, though helpful, often block genuine e-mails, while still letting through some spam. And legislation, so far, seems to have had no effect at all, probably because hard-core spammers have moved offshore. More than half of all e-mail is now spam, and the share is rising.
To an economist, the reason for this mess is obvious. “At the moment, both the sender and the receiver of an e-mail pay a marginal price of zero,” says Benjamin Hermalin, a professor at Berkeley. “That must be wrong,” for e-mails do have marginal costs (such as electricity, storage and network congestion). For spammers, this presents a sure-win strategy: mail as much as you can, because even one hit out of a million is profitable.
An obvious solution, then, is to charge for e-mail, or at least for the sort that spammers send. This idea has even been endorsed by the über-geek, Bill Gates of Microsoft. At the World Economic Forum in Davos last month, he predicted that fancy technology and payment schemes would together defeat spam within two years. (Sceptics noted that Microsoft could also help by fixing security flaws in its products—the latest confessed to this week—that can be exploited by spammers.)
To libertarians, among the earliest internet enthusiasts, the notion that e-mail should be un-free is anathema. They would fiercely oppose any economist daring to suggest charging “ordinary” people. Besides, any system that would rely on processing millions of tiny “micropayments” would be an administrative nightmare. In short, a good system has to remedy the perverse incentives that attract spammers, but leave everyone else alone, and thus better off.
Goodmail Systems, a start-up in Silicon Valley, hopes to launch such a solution this summer. Its idea, says Richard Gingras, its boss, is to create “a new, trusted class of e-mail from volume senders” which recipients would instantly spot as such in their inboxes. An example: Amazon, keen that its automatic order-confirmations not be filtered out as spam by mistake, would buy a million e-mail “stamps” for $0.01 each from Goodmail, which would share the $10,000 with participating internet service providers (ISPs). Goodmail fixes the stamps to Amazon's e-mails as encrypted e-mail headers, and sends the decryption key to the ISPs. The ISPs can then identify Amazon's e-mails as they arrive, and pass them on to the inboxes of consumers.
Under Goodmail's egalitarian system, spammers would also be free to buy stamps, just as senders of junk-mail buy postage from the post office. This, however, would introduce into their equation the normal economics of marketing. For most hawkers of penis enlargements, one can assume, the numbers would not add up, so they would not buy postage. They would therefore be left in a shrinking subculture of illegitimate spammers, which ISPs can filter out more easily. Thus, says Mr Gingras, Goodmail's system would reduce (though not eliminate) spam, even if it is adopted only partially.
A different approach is not to charge senders for every message upfront, as Goodmail will, but only for those that lead to complaints from recipients, and in arrears. This is the route taken by IronPort Systems, another firm in Silicon Valley. For a bit over a year, it has been offering a service in which legitimate bulk e-mailers, such as newsletters, post a financial bond in return for assured delivery past spam filters into inboxes. Senders have to honour the bond and pay only if recipients complain. “We've designed the financial incentives to be insurmountable for spammers,” says Craig Sprosts, a director. The idea, as with Goodmail, is that this whitelist eventually grows so large that spammers will in effect be quarantined, as though they were on a blacklist. About 18,000 ISPs have already joined the system, and over 200 senders, including Google, a search engine, have posted bonds.
Some people want to go even further. Balachander Krishnamurthy, a boffin at AT&T Labs, the research arm of the phone company, proposes a system in which ISPs would establish a consortium—similar to banks creating Visa—that would act as a clearing house. ISPs would then give all of their subscribers credit limits. From then on, every time a recipient declares an e-mail “unwanted” to the clearing house, the sender is charged, say, $1. Once his credit limit—$200, for instance—is reached, the ISP shuts down his account.
This neatly addresses another big problem. The most insidious way of spreading spam these days is by writing software viruses, such as last week's MyDoom, that turn the computers of innocent consumers into spam machines. In Mr Krishnamurthy's system, however, the credit limits of infected users would max out within seconds of a new virus spreading, stopping it from travelling further. Presumably, ISPs will know enough to realise that grandma was the victim, not the hacker, and will eventually reconnect her.
Monday, February 16, 2004
FEB 16, 2004
It pays to invest in the environment
By CLAUDE MARTIN
FOR THE STRAITS TIMES
IN ITS simplest sense, a good investment is one that either creates wealth, or prevents the destruction of wealth. The world's natural environment does both. So one might think that governments and the international community would invest heavily in the protection of natural ecosystems and biodiversity to ensure the continued economic benefits they provide. Sadly, this is not the case.
Current global spending on protected areas - national parks, reserves and the like - is pitifully small. These areas cover 12 per cent of the earth's surface, yet, according to the World Conservation Monitoring Centre, total government spending on them is only about US$3.2 billion (S$5.4 billion) a year.
By comparison, the United Nations Food and Agriculture Organisation estimates that global government spending on fishing subsidies is at least five times this amount. It has also been estimated that the scientific community spends more money on the search for extra-terrestrial life than in looking for ways to preserve the biological diversity on earth. Perhaps this search will one day yield returns, but the fishing subsidies definitely will not: thanks to oversized fleets, over 75 per cent of fisheries are suffering from over-fishing, putting the long-term future of the fishing industry at risk.
The economic benefits of natural ecosystems are huge. The World Wildlife Fund (WWF) has calculated that oceans and coasts contribute 40 to 60 per cent of Asia's GDP. Independent research has shown that coral reefs contribute US$30 billion in net benefits to global economies each year, through tourism, fisheries and coastal protection. Similarly, WWF recently estimated that the world's wetlands provide US$70 billion worth of goods and services annually, including water filtration and flood control.
Tourism is one of the world's fastest growing industries - and one that often relies on natural areas and charismatic species. Whale and dolphin watching is but one example. This sector has grown 18 per cent a year since 1991, with direct and indirect spending associated with the industry now worth an estimated US$1.1 billion annually. But this can only continue if there are whales and dolphins to watch.
Natural areas can also be a cost-effective alternative to engineering projects. By protecting coasts against storms, mangrove swamps save coastal areas millions each year in sea-defence costs. And by capturing and storing water, and filtering pollutants, forests provide a cost-effective means of supplying cities with high-quality drinking water. In New York, for instance, protecting forests will be seven times cheaper than building a water treatment plant.
Biodiversity, too, offers huge economic benefits. Plants, marine animals and micro-organisms are extremely valuable raw materials to many industries. Indeed, around half of all drugs are derived from natural products, and the search for more is ongoing.
Natural areas can also help save on social costs. They provide jobs, income, food, medicine and other natural resources for some of the world's poorest, especially those living in remote areas. If these areas are protected and managed properly, these communities can live in and look after their traditional homelands without being forced to already overcrowded urban areas.
But despite the evidence for the economic, social and cultural benefits of biodiversity and natural ecosystems, they are still being destroyed and degraded. Each day, wetlands are drained or dammed, forests are cleared, the seas are over-exploited and species die out.
Increased investment in well-managed protected areas is desperately needed to properly safeguard biodiversity and ecosystems. This money is not a one-off expenditure with no return. And neither must it all come from new government spending. WWF has identified 30 innovative ways to raise billions of dollars for marine conservation. These include redirecting harmful subsidies, conservation fees from tourism and fines paid by the ocean's polluters. Similar mechanisms could be used to fund terrestrial protected areas.
The 187 governments meeting in Kuala Lumpur now for a major conference of the Convention on Biological Diversity must commit to increasing protection of endangered species and ecosystems, and to adequately financing these protected areas. Failure to do so will be a missed investment opportunity - and one
The writer is director-general of WWF International, based in Gland, Switzerland. The seventh Conference of Parties to the Convention on Biological Diversity is on in Kuala Lumpur until Friday.
It pays to invest in the environment
By CLAUDE MARTIN
FOR THE STRAITS TIMES
IN ITS simplest sense, a good investment is one that either creates wealth, or prevents the destruction of wealth. The world's natural environment does both. So one might think that governments and the international community would invest heavily in the protection of natural ecosystems and biodiversity to ensure the continued economic benefits they provide. Sadly, this is not the case.
Current global spending on protected areas - national parks, reserves and the like - is pitifully small. These areas cover 12 per cent of the earth's surface, yet, according to the World Conservation Monitoring Centre, total government spending on them is only about US$3.2 billion (S$5.4 billion) a year.
By comparison, the United Nations Food and Agriculture Organisation estimates that global government spending on fishing subsidies is at least five times this amount. It has also been estimated that the scientific community spends more money on the search for extra-terrestrial life than in looking for ways to preserve the biological diversity on earth. Perhaps this search will one day yield returns, but the fishing subsidies definitely will not: thanks to oversized fleets, over 75 per cent of fisheries are suffering from over-fishing, putting the long-term future of the fishing industry at risk.
The economic benefits of natural ecosystems are huge. The World Wildlife Fund (WWF) has calculated that oceans and coasts contribute 40 to 60 per cent of Asia's GDP. Independent research has shown that coral reefs contribute US$30 billion in net benefits to global economies each year, through tourism, fisheries and coastal protection. Similarly, WWF recently estimated that the world's wetlands provide US$70 billion worth of goods and services annually, including water filtration and flood control.
Tourism is one of the world's fastest growing industries - and one that often relies on natural areas and charismatic species. Whale and dolphin watching is but one example. This sector has grown 18 per cent a year since 1991, with direct and indirect spending associated with the industry now worth an estimated US$1.1 billion annually. But this can only continue if there are whales and dolphins to watch.
Natural areas can also be a cost-effective alternative to engineering projects. By protecting coasts against storms, mangrove swamps save coastal areas millions each year in sea-defence costs. And by capturing and storing water, and filtering pollutants, forests provide a cost-effective means of supplying cities with high-quality drinking water. In New York, for instance, protecting forests will be seven times cheaper than building a water treatment plant.
Biodiversity, too, offers huge economic benefits. Plants, marine animals and micro-organisms are extremely valuable raw materials to many industries. Indeed, around half of all drugs are derived from natural products, and the search for more is ongoing.
Natural areas can also help save on social costs. They provide jobs, income, food, medicine and other natural resources for some of the world's poorest, especially those living in remote areas. If these areas are protected and managed properly, these communities can live in and look after their traditional homelands without being forced to already overcrowded urban areas.
But despite the evidence for the economic, social and cultural benefits of biodiversity and natural ecosystems, they are still being destroyed and degraded. Each day, wetlands are drained or dammed, forests are cleared, the seas are over-exploited and species die out.
Increased investment in well-managed protected areas is desperately needed to properly safeguard biodiversity and ecosystems. This money is not a one-off expenditure with no return. And neither must it all come from new government spending. WWF has identified 30 innovative ways to raise billions of dollars for marine conservation. These include redirecting harmful subsidies, conservation fees from tourism and fines paid by the ocean's polluters. Similar mechanisms could be used to fund terrestrial protected areas.
The 187 governments meeting in Kuala Lumpur now for a major conference of the Convention on Biological Diversity must commit to increasing protection of endangered species and ecosystems, and to adequately financing these protected areas. Failure to do so will be a missed investment opportunity - and one
The writer is director-general of WWF International, based in Gland, Switzerland. The seventh Conference of Parties to the Convention on Biological Diversity is on in Kuala Lumpur until Friday.
Saturday, February 14, 2004
8 Things Stores Don't Want You to Know
An insider's guide to the strategies stores use to make you spend.
1. Music makes you buy more
Stores boost sales by adjusting the tempo of the music they play. Research has determined that people buy more when listening to slow ballads.
2. The sweet smell of success
Studies show that customers in shops filled with soothing fragrances, such as vanilla or lavender, browse longer and buy more. Similarly, supermarkets have learned to locate their bakeries in a place where the smell of fresh bread wafts throughout the store -- which means they wind up selling more of everything.
3. The color of money
Colors speak a definite language. In the 1970s and '80s, the late color researcher Carlton Wagner put the same coffee in four different colored canisters. Samplers judged the brew from the yellow can too weak, from the brown can too strong, from the blue can mild and from the red can, ideally rich.
Red is not the only red-hot hue. Pink is another strong seller. Research shows that people say pastries taste better in a pink box than any other color, and they'll willingly pay more for them. Cosmetics packaged in pink are also more likely to sell.
4. Location, location, location
Research shows that items at eye level outsell goods on other shelves by as much as three to one. And interestingly, products near the floor do better than those on the top shelf. Savvy sellers also nestle items with something that complements them -- for instance, cookies next to the milk, barbecue sauce above the spareribs -- so that you'll buy both.
5. The price is right
Ever notice how many items are priced at $10.99, $15.99 and $20.99? Nine is the most popular final digit on products because, according to researchers, it makes people feel they're getting a bargain.
6. The power of touch
Placing everything from sweaters to bed linens on displays that consumers can touch increases store sales. That's because people like to feel fabrics before they buy them.
7. Getting personal
Each year, 78 percent of us cash in coupons. The newest twist: personalized product pitches. Working with Internet coupon firms, some companies are creating customized coupons and sending them to consumers in hope of luring them into stores and boosting sales.
8. The shopping-cart strategy
Carts are no longer just for grocery or discount stores. Studies show that shoppers buy more at other retail outlets when they have a cart than when they don't. Retailers such as Sears and Old Navy are now making carts available in some of their stores. And beware the size of shopping carts: The larger the cart, the more goodies we're likely to put in it. --Bernice Kanner
An insider's guide to the strategies stores use to make you spend.
1. Music makes you buy more
Stores boost sales by adjusting the tempo of the music they play. Research has determined that people buy more when listening to slow ballads.
2. The sweet smell of success
Studies show that customers in shops filled with soothing fragrances, such as vanilla or lavender, browse longer and buy more. Similarly, supermarkets have learned to locate their bakeries in a place where the smell of fresh bread wafts throughout the store -- which means they wind up selling more of everything.
3. The color of money
Colors speak a definite language. In the 1970s and '80s, the late color researcher Carlton Wagner put the same coffee in four different colored canisters. Samplers judged the brew from the yellow can too weak, from the brown can too strong, from the blue can mild and from the red can, ideally rich.
Red is not the only red-hot hue. Pink is another strong seller. Research shows that people say pastries taste better in a pink box than any other color, and they'll willingly pay more for them. Cosmetics packaged in pink are also more likely to sell.
4. Location, location, location
Research shows that items at eye level outsell goods on other shelves by as much as three to one. And interestingly, products near the floor do better than those on the top shelf. Savvy sellers also nestle items with something that complements them -- for instance, cookies next to the milk, barbecue sauce above the spareribs -- so that you'll buy both.
5. The price is right
Ever notice how many items are priced at $10.99, $15.99 and $20.99? Nine is the most popular final digit on products because, according to researchers, it makes people feel they're getting a bargain.
6. The power of touch
Placing everything from sweaters to bed linens on displays that consumers can touch increases store sales. That's because people like to feel fabrics before they buy them.
7. Getting personal
Each year, 78 percent of us cash in coupons. The newest twist: personalized product pitches. Working with Internet coupon firms, some companies are creating customized coupons and sending them to consumers in hope of luring them into stores and boosting sales.
8. The shopping-cart strategy
Carts are no longer just for grocery or discount stores. Studies show that shoppers buy more at other retail outlets when they have a cart than when they don't. Retailers such as Sears and Old Navy are now making carts available in some of their stores. And beware the size of shopping carts: The larger the cart, the more goodies we're likely to put in it. --Bernice Kanner
Friday, February 13, 2004
FEB 13, 2004
Ho Ching lifts veil over Temasek - partly
Often shrouded in a mystique, not many people know much about Temasek Holdings. Its executive director, HO CHING, gave some clues in a speech at the Institute of Policy Studies yesterday. Excerpts from her speech:
--------------------------------------------------------------------------------
WE WERE incorporated in 1974 to hold the Singapore Government's investments in companies and businesses. As the monitoring arm of the Finance Minister, we were responsible for tracking the performance of the various investments and companies, and for reviewing and appointing directors and chairmen to the boards of various companies to represent the Government's interest as a shareholder.
This thoughtful move to interpose an investment holding company between the Government and its investee companies also clearly separated the incidental role of government as an owner and shareholder, from its over-arching responsibility as policymaker and market regulator. A mandate was thus tacitly given for government-owned companies to operate purely as commercial enterprises, and for Temasek to deliver value as an investment holding company.
Since then, much has come to pass, and Singapore too has evolved in that process.
Throughout, Temasek acted very much as a commercial entity, investing as well as divesting our stakes in companies, where it made commercial sense.
NatSteel is a case in point. Temasek first invested $2.9 million in 1975, and fully divested its stake 11 years later in 1986. A further 12 years passed, before Temasek reinvested in NatSteel in 1998, convinced of the commercial merits for co-investing with NatSteel overseas in Brazil. Today, Temasek is again completely out from NatSteel as well as NatSteel Brasil, achieving an overall internal rate of return of 14 per cent in the process, with net profits of $98 million. Perhaps we should have used a three-digit name, instead of 98 Holdings, for the general offer vehicle to help us get even better profits!
On its part, the Government took care not to be involved in the business decisions of the government-linked companies, whether in the choice of aircraft that Singapore Airlines (SIA) buys, or in the overseas investment decisions of PSA Corp or SingTel.
This voluntary abstinence from direct involvement in the operational management of state-owned enterprise is a unique and admirable ownership stance that sets the Singapore state-owned enterprises apart from many of their counterparts in the world. Credit is overdue to the far-sighted founding fathers of modern Singapore.
To date, Temasek has given its shareholder a total return of more than 16 per cent compounded annually over the last 30 years, based on dividend flow and growth in shareholders' funds. If we consider the market value of our investments, then the total shareholder returns to the Government would be a compounded annual return of more than 18 per cent over a 30-year period, including an average annual dividend yield of some 6.7 per cent.
Our TSR or total shareholder return over the last 10 years was more than 13 per cent based on dividends and market value of our shareholdings. While this is well below General Electric's TSR of 27 per cent for the same period, it is comparable or better than some of the large international groups, which we benchmark ourselves against. Dividend yield to the Ministry of Finance over the last 10 years averaged a respectable 7 per cent annually, partly bolstered by the return of proceeds from full or partial divestments of companies, large and small, from SingTel to CPG Corp.
GOVERNMENT AS SHAREHOLDER
IN TERMS of our relationship with the Government as our shareholder, I would like to note two points.
First, Temasek holds and manages its investments for the long-term benefit of Singapore, as distinct from the Singapore Government per se. To use a corporate analogy, we could regard the government of the day as a shareholder representative, which is chosen at every election. The ultimate shareholders of Temasek are the past, present and future generations of Singapore.
This analogy is consistent with Temasek's position as one of the three Fifth Schedule companies under the constitutional provisions for the Elected President.
Appointments to the board or CEO positions of a Fifth Schedule company or statutory board are subject to the approval of the Elected President. The implication is that the Temasek board and CEO have a responsibility to safeguard the value and assets of the company against profligate or value-destroying government directives. In other words, we have a responsibility to preserve and create value not just for the present generation but also the future generations of Singapore.
Second, the addendum to the Temasek charter outlined examples of companies or businesses, which the Government deems to need ownership or control of, for specific policy or strategic reasons. For these companies, Temasek will continue its traditional role as a responsible steward to ensure sound management and financial discipline.
Beyond these, Temasek will act to enhance long-term value, and will not divest for divestment's sake. We don't intend to raid the larder, nor sell the family jewels. We will jealously guard our interest, and invest, rationalise, consolidate or divest where it makes sense, and where we can achieve clear sustainable value.
To this end, we will look to institutionalise a framework for ourselves to maintain discipline and deliver value. Apart from the transformation that we have gone through over the last five years, I am pleased to note that we have recently obtained board approval and shareholder endorsement for a credit rating of Temasek. We hope to do this some time this year or next. This will be part of a measured process of opening up and demystifying Temasek. More importantly, such changes will help reinforce and sustain focus and financial discipline.
ACTIVE SHAREHOLDER
LIKE the Government, Temasek does not believe in getting involved in the operational decisions of its investee companies.
We believe the best way for Temasek to add value to our companies is to ensure that we constitute high-quality, commercially experienced and diverse boards to complement outstanding business leadership and dedicated staff.
In our minds, outstanding leadership is not simply consistency and discipline in operational delivery, but also a passion and commitment to people inside and outside the company, in particular, their staff and the customers of the company.
In short, we believe in finding the best people to lead, and in getting ourselves out of the way of honest, capable and competent people.
However, where there is a need, we have not hesitated to engage the boards and management as active shareholders to ensure that we preserve value and create a sustainable position for our companies. Other than that, we limit ourselves to the issues of value systems, business focus, human capital, sustainable growth and strategic development.
In general, we are, and have been, very fortunate to have active board members who take their responsibilities seriously, some at considerable personal sacrifice. Several have been contributing and acting with deep commitment, no different than if they had economic ownership of their companies. To these chairmen and board directors, we owe a great debt of gratitude and thanks for the success of our companies.
Just as a small example of what Mr S. Dhanabalan (Temasek chairman) would describe as promoting good governance, we have made known our expectations to the boards of our key companies that they should actively review the performance of their CEOs through executive sessions without the presence of management.
Such sessions should also regularly review succession options from internal and external sources for the immediate, medium and longer term. Such processes formalise the framework for building professionalism and meritocracy in business leadership and management. It enables the board to work openly and proactively with its management to put in place a robust and deep bench of talents from around the world.
In terms of the process for CEO succession, our participation extends to searching for names and possibilities to add to the search pool. The boards themselves constitute their search committees, define the selection criteria, and make the CEO choice themselves. We will clear the underbrush if needed, to ensure that the boards can exercise this single most important responsibility with full authority and clarity.
Our focus on board governance is not an end in itself, but one of the means to ensure that there is sustainable future.
As mentioned earlier, our Temasek-linked companies (TLCs) have grown and prospered because the Government took care not to get involved in the operational or commercial decisions of its companies. Many companies around the world, whether family- or government-owned, have failed because there is no separation between ownership and management responsibilities.
For example, unlike most national airlines in the world, SIA does not go to Temasek, much less the Government, on commercial decisions such as the aircraft it buys or the routes it flies. True, the Government contributed to SIA's success as a sound regulator, and as chief negotiator for bilateral air rights. However, it is totally at SIA's discretion whether particular routes make commercial sense for SIA from a short- or long-term business perspective. As Mr J.Y. Pillay, former chairman of SIA, likes to explain modestly, his key contribution to SIA's success was to keep the Government out of SIA's business.
Perhaps benign neglect is a good strategy for all governments when it comes to their direct involvement in companies and businesses.
But really, the success story of so many of our TLCs is really the story of a dedicated and capable people, of bold men and women and visionary leadership, past and present, coupled with the trust and delivery of honest dedicated staff at all levels. It is a story very much like the story of Singapore itself. The integrity, commitment, competence and hunger to achieve and build for our children have driven our people to create very good companies on the back of Singapore's success. From the pilots who fly, to the quay crane operators who move container boxes, from the engineer working on his computer screen to the accountant working her numbers late into the night, from CEO to tea lady, they have not just put in their sweat capital, but also their emotional capital to build great companies.
Clearly, as shareholders, we owe these fine men and women our thanks.
However, as fund managers will qualify in their promotional materials, past success is no guarantee for future gains. The world is changing. Singapore is part of an increasingly open and highly competitive world. There is no way we can isolate or insulate ourselves from the tidal shifts of globalisation. Our businesses need to ask themselves what they hope to be when they grow up. If they think they have already grown up, they will need to figure out how to stay young and fit, to take on newcomers or to move into the next league championship. As leaders, we need to ask of ourselves, our people and our businesses: 'Where can we make a difference?', and 'Where can we achieve sustainable advantage and turn that into sustainable value?'
This transformation will not be easy. It will take hearts and minds, as well as guts and hands, to think, to act and to drive change. Companies in Asia are already rapidly transforming, in all aspects, from efficient operations to sleek designs. A top resort playground of American movie stars was surprised to find not just highly competitive linen and silverware from India, but also really world-class standards in terms of quality, delivery and designs. A top American IT company is putting a Chinese company on its radar screen as the competitor to watch. Companies which believe in their own hype are lulled by false confidence and will be swamped by the rising tide.
Even as Temasek continues to make its own investments in promising companies and businesses, we will continue to work and learn with our existing TLCs to challenge ourselves and to transform, to think and to partner, to create and to stretch, in order to give ourselves the best chance for long-term success. But from time to time, don't be surprised if Temasek invests in an emerging competitor, or makes its own judgment, which may differ from those of our TLCs.
ACTIVE INVESTOR
A COMMON theme that cuts across all boundaries will be our interest in companies and businesses with competitive strengths and potential to grow regionally or globally.
First, at the macro level, we are bullish about the medium- to long-term prospects for Asia. While the 1997 financial crisis has severely set back many of the Asian economies, the macro indicators point to a steady recovery.
Not only are foreign reserves at record highs from Pakistan to China, from Thailand to Indonesia, inflation and interest rates have come down sharply. Companies within many of these economies, from India to South Korea, have not only restructured but have also dramatically transformed themselves into internationally competitive players, adopting and adapting best practices such as lean manufacturing or fast quarterly closing of their financial numbers. They are not just pushing the envelope against domestic competitors, but also taking on international leaders.
This learning takes place constantly, across industries and geographies. As an example, the staff of a leading private bank in India, ICICI, has an average age of below 30 years, and it hires service quality managers from the airline industry to develop and sustain a strong service culture among its branches and staff.
Second, with the recovery and growth in Asia, comes the rise of the middle class, and the emergence of consumer sophistication. This will be a common engine of growth across Asia.
Third, there is a shared view among most governments and populations, that market economies and free trade bring benefits. While still sporadic in some countries, the heavyweights like China and India are pushing ahead with liberalisation, restructuring and reform. There is no turning back.
In the short term, we will still need to watch the impact of the US, while Europe and Japan continue their gradual revitalisation. But in general, we see broad-based recovery and growth in Asia, with increasing demands in the consumer sector and also in supporting sectors such as energy and resources.
In such a scenario, we believe there is an opportunity to invest in the services such as the banking and finance sector as a leveraged proxy to ride on the broad recovery of the respective economies. The other services of interest would be telecommunications, health care and education, which ride on the emergence of the middle class.
Each investment we make must stand on its own merits, including our existing portfolio of TLCs. We are fully open to diluting our stakes in our existing TLCs to minority positions, especially if it creates an opportunity for us to enhance our long-term returns. Likewise, we are happy to take both minority or majority stakes in promising companies with international potential in the sectors of our interest.
Just as many of our TLCs have grown offshore with a large part of income and profits now derived from offshore operations and investments, the Temasek portfolio will in time reflect our presence and interest in Asia and further afield. This portfolio in turn will reflect the dynamism and vibrancy of Asia as a whole.
In short, we will work to transform our portfolio from a proxy for the Singapore gross domestic product, into a balanced gross national product portfolio leveraging on the growth and promise of Singapore, Asean, Asia and the world.
--------------------------------------------------------------------------------
FOR PAST, PRESENT AND FUTURE GENERATIONS
TEMASEK will act to enhance long-term value, and will not divest for divestment's sake. We don't intend to raid the larder, nor sell the family jewels. We will jealously guard our interest, and invest, rationalise, consolidate or divest where it makes sense, and where we can achieve clear sustainable value.
BEHIND THE SUCCESS STORY
Temasek-linked companies have grown and prospered because the Government took care not to get involved in the operational or commercial decisions of its companies... Perhaps benign neglect is a good strategy for all governments when it comes to their direct involvement in companies and businesses.
Ho Ching lifts veil over Temasek - partly
Often shrouded in a mystique, not many people know much about Temasek Holdings. Its executive director, HO CHING, gave some clues in a speech at the Institute of Policy Studies yesterday. Excerpts from her speech:
--------------------------------------------------------------------------------
WE WERE incorporated in 1974 to hold the Singapore Government's investments in companies and businesses. As the monitoring arm of the Finance Minister, we were responsible for tracking the performance of the various investments and companies, and for reviewing and appointing directors and chairmen to the boards of various companies to represent the Government's interest as a shareholder.
This thoughtful move to interpose an investment holding company between the Government and its investee companies also clearly separated the incidental role of government as an owner and shareholder, from its over-arching responsibility as policymaker and market regulator. A mandate was thus tacitly given for government-owned companies to operate purely as commercial enterprises, and for Temasek to deliver value as an investment holding company.
Since then, much has come to pass, and Singapore too has evolved in that process.
Throughout, Temasek acted very much as a commercial entity, investing as well as divesting our stakes in companies, where it made commercial sense.
NatSteel is a case in point. Temasek first invested $2.9 million in 1975, and fully divested its stake 11 years later in 1986. A further 12 years passed, before Temasek reinvested in NatSteel in 1998, convinced of the commercial merits for co-investing with NatSteel overseas in Brazil. Today, Temasek is again completely out from NatSteel as well as NatSteel Brasil, achieving an overall internal rate of return of 14 per cent in the process, with net profits of $98 million. Perhaps we should have used a three-digit name, instead of 98 Holdings, for the general offer vehicle to help us get even better profits!
On its part, the Government took care not to be involved in the business decisions of the government-linked companies, whether in the choice of aircraft that Singapore Airlines (SIA) buys, or in the overseas investment decisions of PSA Corp or SingTel.
This voluntary abstinence from direct involvement in the operational management of state-owned enterprise is a unique and admirable ownership stance that sets the Singapore state-owned enterprises apart from many of their counterparts in the world. Credit is overdue to the far-sighted founding fathers of modern Singapore.
To date, Temasek has given its shareholder a total return of more than 16 per cent compounded annually over the last 30 years, based on dividend flow and growth in shareholders' funds. If we consider the market value of our investments, then the total shareholder returns to the Government would be a compounded annual return of more than 18 per cent over a 30-year period, including an average annual dividend yield of some 6.7 per cent.
Our TSR or total shareholder return over the last 10 years was more than 13 per cent based on dividends and market value of our shareholdings. While this is well below General Electric's TSR of 27 per cent for the same period, it is comparable or better than some of the large international groups, which we benchmark ourselves against. Dividend yield to the Ministry of Finance over the last 10 years averaged a respectable 7 per cent annually, partly bolstered by the return of proceeds from full or partial divestments of companies, large and small, from SingTel to CPG Corp.
GOVERNMENT AS SHAREHOLDER
IN TERMS of our relationship with the Government as our shareholder, I would like to note two points.
First, Temasek holds and manages its investments for the long-term benefit of Singapore, as distinct from the Singapore Government per se. To use a corporate analogy, we could regard the government of the day as a shareholder representative, which is chosen at every election. The ultimate shareholders of Temasek are the past, present and future generations of Singapore.
This analogy is consistent with Temasek's position as one of the three Fifth Schedule companies under the constitutional provisions for the Elected President.
Appointments to the board or CEO positions of a Fifth Schedule company or statutory board are subject to the approval of the Elected President. The implication is that the Temasek board and CEO have a responsibility to safeguard the value and assets of the company against profligate or value-destroying government directives. In other words, we have a responsibility to preserve and create value not just for the present generation but also the future generations of Singapore.
Second, the addendum to the Temasek charter outlined examples of companies or businesses, which the Government deems to need ownership or control of, for specific policy or strategic reasons. For these companies, Temasek will continue its traditional role as a responsible steward to ensure sound management and financial discipline.
Beyond these, Temasek will act to enhance long-term value, and will not divest for divestment's sake. We don't intend to raid the larder, nor sell the family jewels. We will jealously guard our interest, and invest, rationalise, consolidate or divest where it makes sense, and where we can achieve clear sustainable value.
To this end, we will look to institutionalise a framework for ourselves to maintain discipline and deliver value. Apart from the transformation that we have gone through over the last five years, I am pleased to note that we have recently obtained board approval and shareholder endorsement for a credit rating of Temasek. We hope to do this some time this year or next. This will be part of a measured process of opening up and demystifying Temasek. More importantly, such changes will help reinforce and sustain focus and financial discipline.
ACTIVE SHAREHOLDER
LIKE the Government, Temasek does not believe in getting involved in the operational decisions of its investee companies.
We believe the best way for Temasek to add value to our companies is to ensure that we constitute high-quality, commercially experienced and diverse boards to complement outstanding business leadership and dedicated staff.
In our minds, outstanding leadership is not simply consistency and discipline in operational delivery, but also a passion and commitment to people inside and outside the company, in particular, their staff and the customers of the company.
In short, we believe in finding the best people to lead, and in getting ourselves out of the way of honest, capable and competent people.
However, where there is a need, we have not hesitated to engage the boards and management as active shareholders to ensure that we preserve value and create a sustainable position for our companies. Other than that, we limit ourselves to the issues of value systems, business focus, human capital, sustainable growth and strategic development.
In general, we are, and have been, very fortunate to have active board members who take their responsibilities seriously, some at considerable personal sacrifice. Several have been contributing and acting with deep commitment, no different than if they had economic ownership of their companies. To these chairmen and board directors, we owe a great debt of gratitude and thanks for the success of our companies.
Just as a small example of what Mr S. Dhanabalan (Temasek chairman) would describe as promoting good governance, we have made known our expectations to the boards of our key companies that they should actively review the performance of their CEOs through executive sessions without the presence of management.
Such sessions should also regularly review succession options from internal and external sources for the immediate, medium and longer term. Such processes formalise the framework for building professionalism and meritocracy in business leadership and management. It enables the board to work openly and proactively with its management to put in place a robust and deep bench of talents from around the world.
In terms of the process for CEO succession, our participation extends to searching for names and possibilities to add to the search pool. The boards themselves constitute their search committees, define the selection criteria, and make the CEO choice themselves. We will clear the underbrush if needed, to ensure that the boards can exercise this single most important responsibility with full authority and clarity.
Our focus on board governance is not an end in itself, but one of the means to ensure that there is sustainable future.
As mentioned earlier, our Temasek-linked companies (TLCs) have grown and prospered because the Government took care not to get involved in the operational or commercial decisions of its companies. Many companies around the world, whether family- or government-owned, have failed because there is no separation between ownership and management responsibilities.
For example, unlike most national airlines in the world, SIA does not go to Temasek, much less the Government, on commercial decisions such as the aircraft it buys or the routes it flies. True, the Government contributed to SIA's success as a sound regulator, and as chief negotiator for bilateral air rights. However, it is totally at SIA's discretion whether particular routes make commercial sense for SIA from a short- or long-term business perspective. As Mr J.Y. Pillay, former chairman of SIA, likes to explain modestly, his key contribution to SIA's success was to keep the Government out of SIA's business.
Perhaps benign neglect is a good strategy for all governments when it comes to their direct involvement in companies and businesses.
But really, the success story of so many of our TLCs is really the story of a dedicated and capable people, of bold men and women and visionary leadership, past and present, coupled with the trust and delivery of honest dedicated staff at all levels. It is a story very much like the story of Singapore itself. The integrity, commitment, competence and hunger to achieve and build for our children have driven our people to create very good companies on the back of Singapore's success. From the pilots who fly, to the quay crane operators who move container boxes, from the engineer working on his computer screen to the accountant working her numbers late into the night, from CEO to tea lady, they have not just put in their sweat capital, but also their emotional capital to build great companies.
Clearly, as shareholders, we owe these fine men and women our thanks.
However, as fund managers will qualify in their promotional materials, past success is no guarantee for future gains. The world is changing. Singapore is part of an increasingly open and highly competitive world. There is no way we can isolate or insulate ourselves from the tidal shifts of globalisation. Our businesses need to ask themselves what they hope to be when they grow up. If they think they have already grown up, they will need to figure out how to stay young and fit, to take on newcomers or to move into the next league championship. As leaders, we need to ask of ourselves, our people and our businesses: 'Where can we make a difference?', and 'Where can we achieve sustainable advantage and turn that into sustainable value?'
This transformation will not be easy. It will take hearts and minds, as well as guts and hands, to think, to act and to drive change. Companies in Asia are already rapidly transforming, in all aspects, from efficient operations to sleek designs. A top resort playground of American movie stars was surprised to find not just highly competitive linen and silverware from India, but also really world-class standards in terms of quality, delivery and designs. A top American IT company is putting a Chinese company on its radar screen as the competitor to watch. Companies which believe in their own hype are lulled by false confidence and will be swamped by the rising tide.
Even as Temasek continues to make its own investments in promising companies and businesses, we will continue to work and learn with our existing TLCs to challenge ourselves and to transform, to think and to partner, to create and to stretch, in order to give ourselves the best chance for long-term success. But from time to time, don't be surprised if Temasek invests in an emerging competitor, or makes its own judgment, which may differ from those of our TLCs.
ACTIVE INVESTOR
A COMMON theme that cuts across all boundaries will be our interest in companies and businesses with competitive strengths and potential to grow regionally or globally.
First, at the macro level, we are bullish about the medium- to long-term prospects for Asia. While the 1997 financial crisis has severely set back many of the Asian economies, the macro indicators point to a steady recovery.
Not only are foreign reserves at record highs from Pakistan to China, from Thailand to Indonesia, inflation and interest rates have come down sharply. Companies within many of these economies, from India to South Korea, have not only restructured but have also dramatically transformed themselves into internationally competitive players, adopting and adapting best practices such as lean manufacturing or fast quarterly closing of their financial numbers. They are not just pushing the envelope against domestic competitors, but also taking on international leaders.
This learning takes place constantly, across industries and geographies. As an example, the staff of a leading private bank in India, ICICI, has an average age of below 30 years, and it hires service quality managers from the airline industry to develop and sustain a strong service culture among its branches and staff.
Second, with the recovery and growth in Asia, comes the rise of the middle class, and the emergence of consumer sophistication. This will be a common engine of growth across Asia.
Third, there is a shared view among most governments and populations, that market economies and free trade bring benefits. While still sporadic in some countries, the heavyweights like China and India are pushing ahead with liberalisation, restructuring and reform. There is no turning back.
In the short term, we will still need to watch the impact of the US, while Europe and Japan continue their gradual revitalisation. But in general, we see broad-based recovery and growth in Asia, with increasing demands in the consumer sector and also in supporting sectors such as energy and resources.
In such a scenario, we believe there is an opportunity to invest in the services such as the banking and finance sector as a leveraged proxy to ride on the broad recovery of the respective economies. The other services of interest would be telecommunications, health care and education, which ride on the emergence of the middle class.
Each investment we make must stand on its own merits, including our existing portfolio of TLCs. We are fully open to diluting our stakes in our existing TLCs to minority positions, especially if it creates an opportunity for us to enhance our long-term returns. Likewise, we are happy to take both minority or majority stakes in promising companies with international potential in the sectors of our interest.
Just as many of our TLCs have grown offshore with a large part of income and profits now derived from offshore operations and investments, the Temasek portfolio will in time reflect our presence and interest in Asia and further afield. This portfolio in turn will reflect the dynamism and vibrancy of Asia as a whole.
In short, we will work to transform our portfolio from a proxy for the Singapore gross domestic product, into a balanced gross national product portfolio leveraging on the growth and promise of Singapore, Asean, Asia and the world.
--------------------------------------------------------------------------------
FOR PAST, PRESENT AND FUTURE GENERATIONS
TEMASEK will act to enhance long-term value, and will not divest for divestment's sake. We don't intend to raid the larder, nor sell the family jewels. We will jealously guard our interest, and invest, rationalise, consolidate or divest where it makes sense, and where we can achieve clear sustainable value.
BEHIND THE SUCCESS STORY
Temasek-linked companies have grown and prospered because the Government took care not to get involved in the operational or commercial decisions of its companies... Perhaps benign neglect is a good strategy for all governments when it comes to their direct involvement in companies and businesses.
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