The Catastrophic Bug in Nationalism and Why Trump is Working to Remove The Globalization Code that Fixes It

A bug can cause a piece of software - or even a civilization - to crash.

The new invention of the nation-state spread throughout the West during the 1800s. Inspired by Americans breaking away from the British Empire and French decapitating royalty, Europeans began turning themselves into nationalists. This new software of nationalism was largely installed by about 1900, but also had some catastrophic bugs that resulted in two tragic world wars between 1900 and 1950.

The West found out that nationalism worked great with the addition of new code called globalization, creating institutions like the UN, NATO, and the World Bank. Now neo-nationalists like Trump, Duda in Poland and Orban in Hungary are trying to un-install the globalists code. If they’re successful, it could repeat some of the catastrophes of the early 1900s.

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The idea behind nationalism was to align a people with a government. Sometimes that meant breaking away: Czechoslovakia could break away from the Austro-Hungarian Empire. Sometimes it meant consolidating: isolated, feuding regions could be combined into a nation state like Italy, Germany or the United States. (The American Civil War ended in 1865, turning a confederation into a union. In 1870 and 1871, Italy and Germany became nation-states.)

As a concept, nationalism is a great idea. In practice, it’s messy. At one point, Czechoslovakia is part of an Austro-Hungarian Empire, at another it is a country and at another point it is two countries - Czech and Slovak. And of course, no one can tell you which is “real.”

It took a long time to make nationalism real for everyday people. One bureaucrat who went out into the French countryside in the late 1800s asked a room full of school children what country they lived in. None could tell him. At the time of the French Revolution 75% of the country spoke a language other than French; a century later it was still a third.

In the US, the variety of language and cultures were even greater than it was in France. By 1900, 20% of Iceland had moved to the US and the US was home to more people who’d been born in Ireland than still lived in Ireland. Another 5 million had come from Germany. Immigrants weren't just coming from Europe. By 1870, Chinese immigrants and their children made up nearly 9 percent of California's population, and one-quarter of the state's wage earners, and one-third of Idaho's settlers. These new immigrants merely added to the variety of cultures and languages already here. 

The Mexican War and the Louisiana Purchase of the 1800s had left the US with large numbers of people who spoke Spanish and French. That variety persists. In California, 220 languages are spoken and 44% of Californians speak a language other than English at home. Some states have declared English as their official language; the US never has.

For the West, nationalism had become normal about 1900. And then the West discovered that nationalism contained a catastrophic bug.

World War 1 killed 10 million soldiers and 10 million civilians. (And the pandemic that spread as soldiers came back home at war’s end – the Spanish Flu – killed another 50 million around the world.)

The second world war killed four times as many people as the first, leaving 80 million dead.

One world war might be an accident. Two world wars suggest a terrible bug in this new phenomenon of nationalism.

Nationalism could work, world leaders realized, if they created global organizations like the United Nations, NATO, the World Bank, and GATT. These institutions greatly decreased wars and increased prosperity. Since 1950, only 100,000 people have died in warfare in Europe, about 1% of the total killed in the two world wars. And GDP growth accelerated. Between 1900 and 1950, GDP in England grew 50%. Between 1950 and 2000, it grew 234%.

It bothers me that people are not more bothered by Trump’s focus on dismantling globalization. Who benefits from his vandalism? Well, Putin certainly would. Russia is no match for NATO but Russia can easily match any single country within Europe. If we’re back to nationalism, Putin is far more powerful.

But I don’t think that Trump’s nationalism is all about helping his buddy Putin. It is a way to rally the base. Talk about international law or trade deals and normal people will glaze over and conspiracy theorists will light up. Globalization may let people live in peace and prosperity but – oddly – it is not going to win any elections. Now talk about how “they” are rapists and murderers or our stealing our jobs and you’ll rally the base. Nationalism excites tribal impulses.

We have instincts for sex and violence; folks who write scripts exploit that to get higher ratings. We have instincts for tribalism and nationalism; folks who run campaigns exploit that to get more votes. Those impulses make for terrible guides to actual behavior, though. They can create chaos. We’ve seen the chaos that the worst impulses of nationalism and tribalism could create in the first half of the 20th century. If we don’t protect the project of globalization, we could see it again.

How Our Technology Continually Expands Our Notion of Us: An argument for globalization

In 1968, this iconic shot of earth was broadcast by NASA. Inspired by this new perspective, earthlings quickly organized themselves differently

"In three remarkable years between 1969 and 1971, Friends of the Earth, the National Resources Defense Council, Greenpeace, and U.S. Environmental Protection Agency (EPA) were created and the first Earth Day was proclaimed." [from Jamie Metzel's Hacking Darwin.]

What is globalization?

The music you listen to is your own concern. The volume and time at which you listen to it is of concern to your entire apartment complex.

Some issues will always be personal. Your favorite music, for instance. Technology - like a stereo that can play at 100 decibels - can turn personal issues into community issues.

Factories that made enough goods to sell across state lines, trains to carry those goods across state lines, and telegraph lines to rapidly communicate across state lines changed us from a confederation of states into a union. Before Lincoln, nearly all communication stated, "The United States are ..." After Lincoln, it stated, "The United States is ...." Technology changed states' issues into national issues.

Today, container ships have driven down the price of transportation to effectively make ours one global market. The marginal cost to transport one can of beer or soda 3,000 miles is one cent. A sweater is 3.5 cents. The internet lets you have a video conference with someone in Croatia as easily as you would talk to your neighbor. The technology of the late 1800s made us a nation. The technology of the early 2000s has made us a globe.

You will hear - you have heard - a lot of nonsense about globalization from nationalists who want you to believe that those globalists in the apartment complex want to dictate what music you listen to. Nobody cares about your taste in music but they do want to sleep uninterrupted at 2 AM. The fact that you find it exasperating to think about how dependent we are on foreigners and they are on us doesn't mean that it is effective policy to ignore it. Globalization is not about 7.5 billion people dictating how you live; it is about acknowledging how many people depend on you - and how many people you depend on - to live.

It is likely cliche and probably minimally helpful to say that some issues are truly personal, some involve your family, some the folks in your neighborhood, some the people in your state and some are global. Where the proper boundaries lie for determining whose concern those are will shift and be subject to debate. That's true. But what is also true is that just as our space program let us see the earth as a whole, our technology continues to make our world larger, making us increasingly dependent on faraway people. Just as you can't un-see this picture, you can't undo the inter dependencies that define our world. Globalization isn't about creating those inter dependencies; it is about having mechanisms - like the UN and WTO - to address them.

Exclusion: What the Black Lives Matter and Trump Supporters Have in Common

I've read a ton of history and it has made me think that I know something about the dominoes that fall across a generation. Even history has a history and things in one generation define another. For example, Sir Edward Coke introduced patent law in 1624, a Brit invented the first steam engine in 1699 and by 1800 the West was in the midst of an industrial revolution that raised productivity and wages for the first time since the ancient Greeks. A string of dominoes that fell across generations.

It goes the other way as well. John Maynard Keynes protested the Treaty of Versailles that ended WWI. He was British but knew that the allies' insistence that Germany pay for World War One would be an impossible burden for Germany and would devastate its economy. A big reason Hitler came to power was because Germans were impoverished and humiliated by their defeat and were susceptible to the rantings of a madman who promised a return to greatness. A string of dominoes that fell across a generation.

The people who elected Donald Trump and the Black Lives Matter protesters have something in common. Both are protesting exclusion, showing disdain for systems they think don't benefit them.
Globalization - the shift away from the nationalism that fueled two world wars - has been a clear success. It has made rich nations richer and drastically lowered poverty in poor nations and dramatically reduced deaths from war.

But progress is always disruptive and while globalization has made goods cheaper for everyone and profits and wages higher for some, it has also meant the loss of jobs and industries for some people and regions. Globalization is wonderful but we have not done enough to make its benefits widespread. Trump supporters protest this globalization that they feel excluded from.

Our law enforcement and legal system has been a clear success. Crime rates are lower than at any time in history. The odds that you will be killed go down every decade. But these benefits have not been evenly shared. Blacks still disproportionately get arrested and even killed by police. This weekend people have protested this legal and law enforcement protection from which they feel excluded.

I am so upset when I see Trump destroy, vandalize or attack another institution that supports globalization, that makes the world and not just our country better. Last week he announced - in the middle of a pandemic - that he would stop funding the World Health Organization. Nothing could be more destructive and stupid and yet his supporters cheered him on. Same when he has attacked the WTO, NAFTA, NATO and the UN. He's wantonly destroying these international alliances that support a better world in which we trade goods rather than bullets across borders. As I mentioned, I have a strong opinion about how dominoes fall. Unchecked, his vandalizing international organizations will mean less prosperity and more warfare in the future. It might happen within a year or two. It may take a generation. It will lead to tragedy. You either move in the direction of more harmony between nations or less. Nothing is static. I know that almost no one believes me in this but I'm horrified and gut sick at what Trump is doing and even more so by the fact that all the Trumpbros are cheering him on.

To a lesser extent - because riots and a few buildings is so much less destructive than war and the cost to national economies from trade wars - I'm horrified by the looting and rioting in cities this weekend. But it comes from the same place. People who don't feel like they are benefiting from something don't care if it burns. Trumpbros cheer the destruction of international institutions and some protesters cheer the destruction of businesses or police stations.

We have to do a better job of inclusion. The difference between how fast I can run and how fast you can run is trivial compared to how much faster we both can go riding in a car or plane. Prosperity is not about individual self-reliance. It is about the systems individuals are included in, from education and financial systems to business and legal systems. When a country does better from trade, it needs to do more to include the communities hurt by trade, to heavily subsidize their re-training, re-location and even pump huge sums into the area in the form of startup funding to let that community of talent find a new market, new set of products that can provide wages and a sense of pride.

The same thing needs to occur within our minority communities. These communities need to feel like this is "our police force," not a group of strangers who view them suspiciously and treat them badly. 

The same thing with the courts.

When people feel excluded from an institution or a privilege or a system, they won't care if it gets destroyed. They might even cheer as it burns down.

My visceral reaction to Trump supporters and protesters destroying things is one of incredulity and anger. I'm trying to change that, to figure out what we need to do to make those people feel included in the story of progress that transformed our grandparents' lives and will transform our grandchildren's lives. Progress is a beautiful thing. Rather than get angry at the people who are angry about not being included in it, I need to figure out how we better include them in it rather than tell them that they should care about the systems they don't believe care about them.

Global Antipathy Towards Globalization

Sadly, globalization has fewer defenders than nationalism. It's easier to excite the masses with cries of "Us vs. them" than "Us."

Since 1945, globalization has lessened global inequality, dramatically lowered deaths due to war, and increased prosperity. Put more simply, globalization fuels the twin goals of peace and prosperity that only ideologues dismiss as the most important goals of policy.

Here Martin Wolf explains how growing tensions between the US and China are reminiscent of the growing tensions between the US and Germany nearly a century ago.

https://www.ft.com/con…/5887ec6c-9d97-11ea-b65d-489c67b0d85d

Globalization and Today's Reality

Markets across the West are down 9 to 15% today. It's important to talk globalization.

The most defining issues of our day are not national. Pandemics, economies, financial markets, global warming, immigration, culture, ideas, research .... all of these issues are about as neatly contained within borders as are clouds.

The US went to war in 1860 to settle a really important question: would we be a confederacy of independent states or a union of states? Before Lincoln, the most common phrase was "The United States are." After Lincoln, the most common phrase was, "The United States is." Lincoln made us a nation. By 1860, railroads, a nascent stock market, and factories able to make enough goods for a nation and not just a neighborhood had transformed the US from a collection of neighborhoods and states into a nation. The world had become bigger and our government needed to adapt. At that point, state economies had become less meaningful than the national economy and we needed a national government to match that.

Today a similar thing has happened in regards to national borders. We cannot resolve the big issues of the day with national policy. It requires international alliances and strong international organizations, just as the growth of the economy in the late 1800s required a national government.
Globalization is not just about international trade. It is about creating strong alliances and organizations that enable coordination and cooperation. National today is what states were 150 years ago. And just as states still have distinct cultures and policies, so will nations. That said, our reality is global. We need institutions that match that reality.

The Truly Bizarre Policies of Donald Trump

How abnormal is Trump?

Today Jeffrey Immelt wrote in his annual letter to GE stockholders that basic concepts like "innovation, productivity, and globalization" were being challenged and that he still believed in globalization's future.

George W. Bush called a free press indispensable to democracy. (And said that a special prosecutor may need to be appointed to investigate the connection between Russia and Trump.)

This is seen as news and - rightfully as it turns out - a criticism of Trump's policies. A CEO in favor of globalization and a president in favor of the first amendment is like a mother who loves children. It's lovely but it's hardly remarkable. And yet, with a Trump presidency, it is news.

And the Nation-State Gradually Grows More Obsolete

Political crises in the Middle East are spilling across borders in the same way that the financial crises did in the West in '08.

This latest burst of panic and protests seems to support the notion that whether it is pandemics, ecological issues, economic issues, or, yes, political and financial issues, national borders seem less and less relevant.

In places like the Middle East and Africa where colonial powers imposed national borders where no clear nations existed, borders have long seemed confusing and of little use in protecting one country from issues in the next. But now, even in the West where national identities date back centuries, national borders are becoming less meaningful.

The big question in '08 was whether the financial crisis could be averted before we had another Great Depression. The big question in 2011 is whether the political crises will create democracies, theocracies, or even more severe autocracies in the Middle East.

To me, the even bigger question is how the idea and even very fact of the nation-state is going to survive in this new stage of globalization.

Obama's Unilateral Economics

We've had a global economy since Marco Polo made Venice rich by turning it into a trade center linking Europe and the Orient. By degrees, local economies have become more intertwined ever since.

This matters when assessing Obama's stimulus package. I suspect that historians biggest criticism will be that Obama is trying to do in the world of economics what Bush tried to do in the world of diplomacy - go it alone.

It is possible to save a single house on a block of burning buildings. It is meaningless to save a single room in a burning house. My own feeling is that our national economy is so intertwined with the global economy that our situation is closer to that of the room in the house than house on the block.

Today's economic problem is not contained to any one country. It spills across continents. There is no market immune from the global troubles or any market that is going to rise back up alone.

I still believe that Keynesian economics is powerful and offers a lesson worth remembering: in a down economy, if everyone does what makes sense they'll make things worse. As people cut costs to adapt to a drop in sales, sales everywhere drop and the ripple effect is to make a bad situation worse. A stimulus package in this context makes every kind of sense and is necessary.

But Keynes did not like the idea of allowing capital flows across borders. It made it difficult to effect national policy. But we'll never get back to this world of self-contained national economies, and yet the lesson of Keynes holds: when individuals do what makes the most sense in a recession we can easily tip into a depression.

So, what to do? I'll write more about it, but the real point of this post is simple: any solution that Obama tries to hammer out with the Senate is going to be too small in scope. Not because nearly a trillion dollars falls short of absurdly sufficient to stimulate. No. By too small in scope, I mean that any solution focused on a national economy is going to do little to reverse a global slow down. Until Obama focuses his attention on jointly creating a global solution, we'll likely scratch our heads and wonder what we got for our trillions.

Why the Bailouts Don't Seem to Be Calming Markets

The value of financial derivatives is about $500 trillion.
Global GDP is about $70 trillion.
The U.S. Economy is about $13 trillion.
The U.S. Federal Budget is about $3 trillion.

Is it any wonder that markets seem to doubt the U.S. government's ability to actually stem the tide of financial crisis? The whole of our government's budget is not enough to cover a movement of even a few percent in global financial markets.

During this age of globalization, when financial markets around the world are increasingly interconnected, we should have been moving towards global regulatory mechanisms, replicating the success of Keynesian policies within national economies. Instead, conservatives have been busily deregulating even within national economies.

Time for Neo-Keynesian Economics

We're all Keynesians now."
- Richard Nixon

The Tipping Point for Crisis: When Actors in an Environment Become the Environment
When Long-Term Capital Management (LTCM) was formed, the founders were intent on making monster money. LTCM’s board included two Nobel Prize winning economists. For a few years, they had annual returns in excess of 40%, before losing more than $1 billion a month for about four months in 1998 and folding in 2000. It is not just LTCM that collapsed. UBS was founded in the mid-18th century; because of the money it lost betting on LTCM, it would have likely collapsed had it not “merged” with Swiss Bank. LTCM was so heavily leveraged that it hurt lots of firms when it imploded.

LTCM’s method depended on fairly complex algorithms and a simple idea: use historical data to determine fair spreads between, for instance, various kinds of bonds. Using this data, they bet on particular convergence trends. And they bet heavily. They had leveraged about $4 billion with about $120 billion in loans. (If you are confident that you can make 6% on money you borrow at 5%, the only thing that limits the amount of money you can make is the amount of money you can borrow.)

The problem was, they were successful. Not only did they grow, but others began to imitate them. Suddenly, LTCM had changed the environment they’d assumed to be stable. The historical trends and relationships had changed because LTCM and their imitators assumed that these relationships would not change. You might say that one ingredient for creating a crisis is for the actors in an environment to change that environment in ways that obsoletes the old assumptions. At a certain point, one is no longer weaving in and out of the slalom poles but is, instead, weaving in and out of other skiers who are also moving. To put it mildly, this changes things.

Managing a system depends on clearly distinguishing between the environment, the system, and the parts. In LTCM’s case, their system grew to encompass the environment and then collapsed. A similar thing might be happening with regards to economic policy; globalization has changed the line between the system (nations and their policies) and the environment (the global economy).

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Time for Neo-Keynesian Economics
John Maynard Keynes defined modern economic policy. His ideas are still genius, but given that the system boundary has shifted from nation to globe, his ideas need to be updated.

Keynes made a small fortune trading stocks while having breakfast in bed. A recent college graduate, his response to missing questions on his civil service exam on economics was, "Hm. How odd. I must know more about economics than they do." And Keynes was the first to articulate a theory that explained how it was that the actions best for households or firms might not be best for the whole - the macro - economy.

Put simply, Keynes invented macroeconomics. Before him, there was only microeconomics, but no one knew it was micro. The pre-Keynesian view didn't really distinguish between what drove optimal behavior for firms or households and what drove optimal behavior for the economy as a whole.

His insight seems simple now. Indeed, like other brilliant ideas such as representative government and gravity, his insight now seems obvious. He pointed out that a slumping economy could make it rational for firms to spend less - saving money by spending less. However, when firms spend less, households have less income, so they, too, spend less. As households spend less, firms spend less. As firms spend less, households spend less. When everyone does what is good for the individual, the result is something that is bad for the economy. (Which is, of course, bad for individuals.) Keynes said that the government could reverse this by spending money, lowering interest rates, or injecting some cash into the system. As it should be, this has become accepted and is now common practice in most every country.

Keynes invention of macroeconomics arose from a distinction between the behavior of systems and their parts. He looked at the whole system and made conclusions that seemed counterintuitive at the level of parts.

Keynes, however, wanted limits to capital flows between countries. For him, the system of consequence was the nation-state; his definition of macroeconomics was a prescription for national economic policy. His system was the country.

And yet today’s economy is global. We live in a post-national economy. Many Americans are about to receive checks as part of a stimulus package that gained broad support among all parties in DC. This package will be financed by loans from China and will be used to buy goods from China. Keynesian economics might not work as planned.

Worse, all this teeters on top of global financial markets that no longer have proven mechanisms for stability – like the mechanisms created by Keynesians to stabilize national banking systems and financial markets during the last century. Given how tightly coupled markets now are – a crisis in Thailand can quickly create a crisis in Brazil’s stock market – any attempt to devise system-level controls and checks suggests the need for neo-Keynesian policies that directly deal with the global economy we’re in.

It’s time for a neo-Keynesian economics. This will probably be less a matter of formulating new philosophy than putting in place new mechanisms, agencies, and regulations that do for the global economy what Keynesian economics have done for national economies.

Riding the Wave of Globalization

I recently found this globalization gone wrong joke in my email:

I was depressed last night so I called Lifeline.
I got a call center in Pakistan. I told them I was suicidal.
They got all excited and asked if I could drive a truck.

Monday, on my flight up from Dallas to Indianapolis, I rode by a woman who worked for Delphi, the auto parts manufacturer. She’s managing a project to move a factory from a rural area of Indiana to Mexico. “I can’t stay in the town,” she said. “The locals are pretty angry about losing their jobs.” This factory is one of the main sources of employment, and now it is gone. I’m not sure what’ll happen to the town, but I’m sure about why it is happening. “Machine operators here in the US cost $40 an hour. In Chihuahua,” she said, “they cost $70 a week.”

That night in the hotel, I get an email from my buddy Jeff. He’s getting laid off from his job in database design, along with 40 coworkers. The positions are being outsourced to a contractor in the Philippines.

Every color collar jobs – from blue to white – are being exported.

Globalization is not going to be stopped by legislation. It is not going to slow. It is not going to reverse. It is a reality for which politicians have given two very unsatisfactory solutions: either they tell constituents suck it up and deal with it; or they promise to stop it through legislation, a plan about as likely to work as outlawing lust.

It took us decades to adapt our school system to the creation of knowledge workers who could thrive in corporations and succeed in the information economy. Now, policy makers need to begin finding ways to prepare the next generation of workers to compete and thrive in a period of globalization.

It seems to me that a strategy for successful globalization would rest on at least three things:

1. Changing our attitude towards all things foreign. There is this odd tendency to think that foreigners have to learn English to talk to us. They do. And then they sell to us. We, by contrast, refuse to learn their languages, their cultures, etc. And we can't sell to them. The result? Huge trade deficits even when the dollar falls.

2. Dedicating our education more towards entrepreneurship. Low cost labor represents a threat to someone who is working and a great opportunity to an entrepreneur.

3. Give employees who own stock more say in company policy. Pension funds are the biggest owners of stock. It’s not obvious that they would chose to up their returns to capital by 5% if it meant that they would see their salaries fall by 50%. Employees own these companies. Let them have a say in how work is allocated and contracted.

Bucky Fuller said, “Use forces, don’t fight them.” Globalization is too big to fight, but it can be harnessed. I've ridden waves and been ridden by waves. I know for a fact that it is much better to ride them.

Why Send Jobs Abroad When We Can Find One Here?

Outsourcing seems to provoke both liberals and conservatives. There is something about losing jobs that unites people, whether they use their discretionary income to pay for subscriptions for The Nation or The National Review. The purpose of outsourcing is to find lower cost labor. There are many problems with outsourcing, ranging from phone conferences at 9:30 PM after the children are in bed to the impact of confusion on quality, rework, and productivity.

So, why not get the benefits of outsourcing without actually leaving the country? This graph from Swivel suggests that its possible. Women still make considerably less than men, on average. About 40% less. Under the category of management, for instance, men's median wage was about $79,000 and women's merely $44,000 (a discount of 44%). Professional or scientific and technical jobs: men, $70,000 and women $43,000 (discount of 38%). It seems to me that it's silly to go abroad when we can merely find one here.

[Red = men's median income, Blue = women's median income]

Fortress America - the Bi-Partisan Fantasy of Globalization Deniers

Globalization is a reality that activists on the right and left deny. Globalization deniers on the left fear shadowy groups of corporate elites who conspire to suppress wages and destroy jobs. Globalization deniers on the right fear shadowy groups of radical Muslims who conspire to suppress freedoms and destroy lives.

Globalization is a reality. Today, a guy in the Ukraine and a gal in Fresno can collaborate via the web to create a new product and then subcontract to a company in India to manufacture it. If this new product is better or cheaper than what is currently designed in Germany and made in Mexico, Germans and Mexicans will lose their jobs. It’s not clear that anyone is going to reverse the technological advances that have led to this reality.

Globalization is a reality. Every year, there are about 172 million people coming into the United States across our borders. Nearly 6,000,000 visas are granted each year. Our economy depends on the tourism revenues and the cross-pollinating of business and academic professionals. It's not clear that anyone is going to shut down our borders in order to eliminate illegal immigration.

Any policies that pretend to reverse globalization ought not to be taken seriously. The bad news? We can’t isolate ourselves from the rest of the world. The good news? We can’t isolate ourselves from the rest of the world.

Globalization Through the Lens of 2 Million Year-Old Genes

Q: Why do men have bigger brains than dogs?
A: So they won't hump women's legs at parties.

Jesus taught about the dangers of the world and flesh. Csikszentmihalyi, who I would judge to be an agnostic based on his writings and conversations with him, warns about how capitulation to social conformity (i.e., the world), or genetic impulse (the flesh) distracts from the engagement that characterizes our most productive, creative, and enjoyable moments. Doctors tell us that genetic impulse can be a misleading guide in a world of abundance - an environment with more sugars, fats, alluring foods, and drugs than at any time in evolution's long history.

Whether it is drawn from religion thousands of years old or research only days old, the advice seems to be the same: distrust the genetic impulse that would turn us into rotund, chemically-dependent, serial adulterers or serial killers, leaving behind us a trail of broken promises, broken relationships, and broken zippers.

Yet the genetic impulse need not trumpet its influence. It can be subtle. We're wired for relationships, not abstractions. We're wired to respond to the individual rather than the statistical norm. Research has indicated that we're more likely to respond to the plight of an individual ("This little girl is an orphan. You can feed her for only $2 a day.)") than to a group ("This people has been through a devastating catastrophe. It has left thousands orphaned. Please help with a donation of $2 a day.") This genetic impulse can be at least as harmful as the impulse for excess food or drugs.

What this means in practical terms is that Princess Di still gets more news coverage than 8 million dying each year because of extreme poverty. Paris Hilton's ... well, you get the point. We're absorbed in personalities and their dramas, the resolution of which will have no impact, and ignore issues that might actually make a difference to real lives, lives that appear to us in more abstract form.

We do make some attempt to warn - even legislate against - the genetic impulse when it comes to issues like rape, obesity, alcoholism, drugs, and violence. We seem less generally interested in warning against genetic impulses when they have to do with the alpha male impulse for place, or the tribal instincts that disregard the abstract issues that define our fate in a world of global interconnections and dominoes that fall over the horizon of time and space. Yet it is likely that history will show these genetic impulses to have robbed us of more years and more quality of life than those against which we've placed prohibitions.

Small World

David pointed me to this stark and stunning bit of video.

Globalization - tipping the hat to reality

Since about the 16th century, a form of globalization has been in full swing. Trade, conquest, and information exchange has simply increased since then, as Portuguese and Dutch trader's exotic 16th century travels has now become the stuff of today’s spring break vacations.

But it is difficult to talk about globalization when the term is so fuzzy. I’d like to suggest two dimensions to globalization. One is the increased trade of goods, services, and information that spills across national boundaries like trade winds. The other is the construction of agreements and institutions to give a structure to this reality. Call the first globalization flows and the next globalization structures.

At this point, it is hard to imagine anything short of a catastrophe limiting globalization flows. It takes far less imagination to envision hiccups, disruptions, and derailing of the process of globalization structures.

In this country, conservatives and liberals are united in their fear of globalization flows as a force that will erode national autonomy. For liberals, globalization threatens a return to the days before Teddy Roosevelt when labor and the environment lay unprotected from the rapacious advances of robber barons. For conservatives, globalization means that the US will be like Europe, our masculine independence threatened by blue helmeted troops more inclined to act like bureaucrats than cowboys. Some conservatives even see the emergence of global institutions as heralding the coming apocalypse.

American fundamentalists are not the only ones who see globalization flows as a threat. It is no coincidence that Al Qaeda terrorists brought down the World Trade Center Towers. Trade brings with it strange customs and ideas that defy regional cultures. The Renaissance and Enlightenment were led by communities active in trade; along with the taste for foreign products came openness to foreign ideas. Local clerics, just as much as local merchants, could be put out of business by foreign trade. If Al Qaeda could disrupt world trade, they might succeed at protecting their daughters from the bump and grind of hip hop, their sons from the allure of materialism.

For now, globalization structures have been largely left to the institution best suited to the realities of globalization flows – the modern corporation. And the corporation has seemed to do the most to define the globalization structures. The WTO, GATT, IMF, and the World Bank regulate globalization flows in ways that seems to most clearly benefit corporations.

Many people forget that one of the key motivators for the emergence of the modern nation-state was the gain in trade. In 1550, a European trader would literally pay tolls about every six miles. Nation-states created a huge free trade zone that encouraged trade and specialization - two boons to productivity. Globalization structures is similar in that it suggests the creation of institutions that do for world trade what the nation-state did for "national" economies.

But done wrong, globalization structures could be a realization of the fears of liberals and conservatives alike. If these institutions are lackeys to the corporation, they could indeed become an instrument for direct attack on the progress of labor unions and environmental activists, a race to the bottom for wages, benefits, and regulations. Conservatives fears of a loss of autonomy, an inability to stand up against countries with different traditions and values, could also be realized. But done well or done poorly, globalization structures is a deed that must be done. To ignore the importance of these institutions is to ignore the degree to which globalization flows can destroy or build communities.

The reality is that we live on a globe and the use of nation-states is a convenience, a tool to improve quality of life. Ideas like Sweden, South Africa, and Canada are social constructs. Greenhouse gases may emerge from a particular national economy, but they disperse perfectly throughout the atmosphere. Terrorist’s cells may meet in a particular country, but their ideology - like McDonald's - is not constrained by national boundaries.

The nation-state has evolved since the time of Louis XIV. Advances like human rights, environmental protection, and worker rights need to be built on, not crowded out as the work of globalization structures takes places.

The good news is the bad news. We’ve entered a phase of human history when no community can be isolated from this simple truth – we live on a globe and share a fate. Institutions that pretend otherwise are institutions that will become increasingly ineffective.

Will the Nation-State Be Obsolete by 2100?

I wonder if the nation-state hasn't outlived its usefulness.

City-states had largely disappeared by the time of the Enlightenment. By the time that Germany and Italy became nation-states in the late 19th century, most of the West had coagulated into nation-state form. A nation-state had more military power than a city-state and by eradicating trade barriers within the country, nation-states stimulated trade and prosperity. Conditions of the 18th and 19th centuries seemed to make the city-state obsolete; perhaps the conditions of the 21st century will make the nation-state obsolete.

In today's world, the nation-state seems increasingly ineffectual at dealing with real problems. It isn't particularly suited to the major issues of the present. Pandemics, terrorism, financial crisis, immigration, trade, economic prosperity and, of course, global climate change are all issues that thumb their noses at national boundaries. Already in Europe, nation-states are gradually giving more power over to the EU. I suspect that this is a trend (that will, as all such trends, suffer reversals).

It is difficult to think of what nation-states are still uniquely suited to do; they still seem to have a monopoly on starting truly horrific wars. We now have about 200 nations on this little planet. It's not obvious that we can afford for even 10 or 20 percent of them to be strutting around with nuclear-equipped armies. It might make sense to emasculate the nation-state before this creation of ours destroys us.

“If you said, ‘Let’s design a problem that human institutions can’t deal with,’ you couldn’t find one better than global warming.”
- Henry Jacoby, MIT School of Management

Capital Glut and the Popularization of Entrepreneurship

http://www.knowledgeconcierge.com/WEFPublic/kc_theme.asp?eventName=3EIKXLI8HNGK&theme=CK

This intriguing graph indicates that the capital globally raised is about $400 billion more than capital invested. In simple language, there is more money available to fund ventures than there are credible ventures to pursue. We can create those ventures by transforming corporations and what it means to be an employee.

One of the biggest sources of potential innovation is from within corporations. In 1900, very few of those working were knowledge workers. It was an elite role. By 2000, many in developed countries were knowledge workers and we'd popularized education and information technology that drove unprecedented inreases in productivity. In 2000, very few of those working play the role of entrepreneurs. In order to raise the percentage of entrepreneurs by 2050 in a growth path similar to that for knowledge workers, we'll have to do a variety of things. One huge factor in the growth of knowledge workers traced back to the transformation of financial markets. (Knowledge workers need big capital investments to be productive. Russia and Eastern Europe have delightful education rates but are unable to put graduates into labs and corporations where their knowledge can be translated into valuable products and services.) In order to popularize entrepreneurship, we will need a transformation of the corporation that has echoes of the transformation of financial markets.

Imagine a corporation where employees could choose to pursue roles as traditional employees, as old-fashioned entrepreneurs, or some hybrid of the two. Employees who don't want to gamble the ability to put their children through college but are willing to gamble their ability to retire early or to buy a second home may take a role that is some kind of a hybrid, employee-entrepreneur, with some mix of shared profits with their employer, some mix of salary and loan or deferred compensation. This is more possible than ever because there is more capital than ever. As a global community, we have more money to finance more ventures.

There are a variety of benefits that would flow from this. Imagine that funding for, and even the team members provided to, new ventures was a function of employees’ perception of the value of that venture, or project. Internal markets would naturally indicate where the employees felt highest future returns lie. Imagine how much companies would learn about where to invest if they simply let employees vote on where to put their time and even a portion of their 401(k) funds in anticipation of shared returns? Imagine that employees would not just have investment opportunities (as they do now through stock markets) but have the ability to influence the success of those ventures (as entrepreneurs who take on start ups do).

The technology and practice within financial markets has been transformed since the days of JP Morgan a century past. As a result we have trillions of dollars sloshing around the globe in search of higher returns. Imagine transforming our corporations in a way that realizes this potential, popularizing entrepreneurship as we have previously popularized knowledge work. Such a move could easily stimulate an increase in demand for investment capital - an increase that could increase returns, levels of innovation, and the potential for the average employee within corporations.

Because of the transformation in financial markets during the last century, the average employee has become the most influential capitalist. Through mutual and retirement funds, typical households now control more of the equity market than do large investors. This popularization of financial markets is unique in human history. Now, financial markets and corporations have to collude to create mechanisms that give these new capitalists greater control over their equity, allow them to more directly influence corporate innovation and policy in a way that will most benefit these workers, in a way that gives them the most autonomy.