Tuesday, 17 June 2008

Would you like an extra $173 in your pocket?

By the end of the 2007 financial year the war in Iraq has cost Australia $2.94 billion (that's nothing compared to the United States which would have spent as much as $938 billion in our currency).
For Afghanistan the Australian Government's budget was $290 million in the year 2006-7 and for 2007-8 an additional $703 million was allocated to be spent over the next four years. Therefore at the end of the 2008 financial year the amount poured into that enterprise would have been around $466 million.
By the middle of 2008 Australia's population has reached 21 million. If the government had not engaged in those two wars and today suddenly decided to hand over the money to every Australian man, woman and child they all would have received $173 in their pockets. (Given the cross-over of timelines you might say that's playing with figures, but the fact is the money, as it turns out, has been used after all)
If $173 doesn't sound like much take the overall view: the government would have had an extra $3.6 billion at its disposal to be spent on its people.
Let's say someone approached the prime minister with a proposal that required almost $4 billion to be implemented. There must be pretty good reasons to prevent being shown out the door there and then.
But marketers know this is not how it's done. You don't tell a customer, "Come and spend a thousand bucks!". You lure them into the shop on the premise of buying an item worth a fraction, and hope they spend enough time to get enticed into filling their trolley as they walk through the aisles.
It's a form of progression lock, the phenomenon of an event continuing through its paces because the preliminaries have been set. It happens with shopping, with urban planning, with large-scale contracts. Start at a convenient point and progress from there, because eventually the costs of retracing your steps outweigh the expenses piling up.
Nevertheless, some consideration must have been given to the ultimate viability of implementing an idea that involved moving into a place like Iraq or Afghanistan in order to remodel those nations. Had the initial evaluation involved the Otoom model the data gleaned would have painted a critical picture. In the case of Iraq see the notes on a US report and its British equivalent.
As for Afghanistan, its history alone would have given pause for thought. Here is a region that for centuries was beset by tribal warfare and conflict. Every now and then a strong-man regime was able to subdue the factions but it never lasted more than a few decades. Apart from Asian expansions the British tried during their Anglo-Afghan wars in the 18/19th century, more recently it was the Russians, and now the US and its allies are at it once again. None of them succeeded since firstly, although an army may achieve a military victory that does not translate into societal assimilation in the long run (even the ancient Romans learnt their lessons in this regard, and they too build a lot of infrastructure throughout their colonies). Secondly, the demographics of this world differentiate themselves through their respective customs and their rigidity, their religion and its pervasiveness, and their degree of intransigence when it comes to side-stepping the traditional links between family and tribe. If those factors were negligible an invasion would not have been necessary in the first place. And if they are not what is the point of invading unless the reasons are only temporary and sufficiently pressing?
Yet Iraq did happen, and then Afghanistan. The conventional approach would have entailed military-style reasoning, the spectre of terrorism, and, in the absence of a comprehensive means to analyse the cognitive/societal conditions on the ground, a considerable amount of optimism stemming from good old-fashioned projection: we are happy with our Western democracy, so why can't they be?
The information based on the Otoom model had been around since late 2003. Why it struggles to be taken seriously here and there is a topic in itself. Quite apart from any personal frustration the damage covers more than useless and damaging wars (as if that wasn't enough!) - there is also the question of diminishing oil resources.
If the issue of peak oil would really be taken seriously the huge amount of fuel necessary for the Iraq and Afghanistan adventure alone should ring the alarm bells.
One can argue about the precise figures marking the gradual disappearance of that resource. One could even question the original premise, the Hubbert peak theory, even though it proved itself correct already.
What cannot be argued with is the stark difference between the rates of creation and consumption of oil. In addition the onset of scarcity gives rise to speculation and perception which in some cases can evolve towards panic. Against these latter factors the amount of oil still in the ground somewhere recedes into the background.
Long before the actual volume of remaining oil reserves will appear in the media, long before the number of countries struggling with supplying their own population has risen to double-digit figures, the perception-induced panic will have surpassed a few demonstrations here or there. At that point we can either retreat into 19th century novels or wake up to the inevitable consequences of disregarding the realistic analysis of demographic mindsets under precarious conditions.

Friday, 6 June 2008

World crisis: food and oil

In his opening remarks at a press briefing after the UN conference in Rome on the international food crisis Secretary-General Ban Ki-moon urged the world to adopt a series of reform measures. According to him the initiatives will cost as much as US$15 to $20 billion a year once the process gathers momentum.

Also at the conference the use of biofuels had come under fire. Once heralded as one answer to dwindling oil supplies it now emerges as a major concern for countries which see the issue from a different perspective.

On the previous Wednesday the UN World Food Program announced it is providing an additional US$1.2 billion in food assistance to help the tens of millions of people in more than 60 nations who are most affected by the crisis.

Take Ethiopia as an example. As the figures from the International Food Policy Research Institute show, agriculture makes up about half of the country's total goods and services, and at least eight out of every ten workers in Ethiopia are involved in agricultural activities. Only 24 percent of the population have access to safe drinking water, 47 percent of children under the age of five are malnourished, and for every 1000 children born there 174 will die before their fifth birthday. At the same time Ethiopia's population is expected to increase from 67 million to 100 million in less than 20 years.

Now shift the focus to Madagascar. In a paper studying the link between agricultural performance and rural poverty Bart Mintena and Christopher Barrett point out that higher rates of adoption of improved agricultural technologies and therefore higher crop yields also make for lower food prices. Improved agricultural production is seen as an important aspect in reducing the high poverty and food insecurity currently suffered by that nation's rural population.

On to Australia. In this first-world country the rises in the price of food and oil are causing the spending habits of people to change [1]. Suddenly many goods are seen as luxuries one can do without. In Queensland retail clothing sales are down by 20 percent, domestic appliances and recorded music sales are down by 7 percent, and watch and jewellery sales decreased by 20 percent. As the chief executive officer of the Queensland Hotels Association is quoted as saying, "the mood of the nation has changed".

Whenever overall conditions change significantly the response comes firstly from the general population; the ruling class follows later. To what extent it responds (if at all) depends on the force of the mindset pushing for change as well as the severity of the conditions themselves. Be they issues such as relating to sustainability, climate change, or civil rights, governments are beset with inertia.

On the other hand, if the new conditions are sufficiently stark that their effects are impossible to hide behind the official curtains, even governments begin to act. Hence the increasing number of conferences dealing with the world's dwindling food and oil resources. It will only be a matter of time when in the West the initial reluctance by individuals to spend will have moved across to official policy.

Over the last decades various pressure groups have managed to persuade their governments to formulate laws which address their specific concerns. From the readiness to provide compensation for the results of irresponsible acts, to upholding the morals of self-appointed guardians, to throwing cocoons around dysfunctional demographics, they all found their way into the public environment implicitly approved by and resourced through Mr. and Ms. Citizen.

The effects can be seen on an almost daily basis. They could manifest in needing to finance an additional 255 paramedics by the Queensland government to take care of the expected increase in calls for help, where over 100 nuisance and hoax calls are made to the 000 number every week [2].

They could further exacerbate the pressure on the federal government trying to deal with the escalating costs of child care, with carers caught between the need to provide an income and the obligation to rear their children [3], a situation induced by feminist idealism and national wealth.

They can also be seen in the activation of the New South Wales police and court system in response to complaints about a Bill Henson exhibition showing photographs of naked boys and girls (that's nothing - wait until Caravaggio's works hit a local gallery).

For every law that exists society bears the costs of the executive and judiciary. The final ledger entry comes from the prison system. In New South Wales for instance the yearly costs of its prisons amount to over A$530 million, in addition to another $90 million for building and upkeep. Such numbers are not insubstantial, and when they represent a steady increase over the years it becomes obvious something has to give sooner or later.

Or take sport. A holy cow in Australia conducted under auspices which reflect more the ideological side behind rather than a serious attempt at elevating the fitness levels in young and old. According to figures provided by the Australian Institute of Health and Welfare for the year 2004-05 hospitalisations for all the football codes alone numbered 14,147. The costs for the same category during the same period amounted to $43,931,202.

Over the coming years a realistic and objective re-assessment of how and why we spend our money will become paramount. Even years ago people at a rally in Berlin protesting against the moralistic selectivity by the Catholic Church carried placards that read, "Kondome nicht Dome" ("Condoms not cathedrals"). Now the scope has widened considerably.

As the tables of the top and bottom 20 countries selected according to general living standards show, the single common denominator deciding a nation's place is its adherence or otherwise to ideological mindsets. It matters whether a general population insists on what it regards as traditional customs or whether it is capable of stepping outside those bounds for the greater good. The analysis of agricultural practices in Madagascar mentioned above demonstrates the point in one area. Regarding East Timor the focus was on that country's birth rate, now one of the world's highest, when the idea had been raised in a Senate Estimates hearing to provide aid money for abortions [4]. Only 1 percent of men there use condoms and the reproductive health of women is very poor.

Such an issue acquires further poignancy when considering that the suggestion was made under the umbrella of improving the treatment of women in developing countries, but would also encompass the strict rule sets by which these women are forced to exist in their societies. If implemented these kind of policies have consequences at the local level. Nevertheless, could this be one of the future relationships between developed and under-developed nations?

On a larger scale still it is yet possible for the US presidential candidate John McCain to suggest that US troops could be left in Iraq for 100 years [5]. To even articulate such a number speaks volumes about the man's general perception. (On that note, if the Otoom model had been known to certain decision makers the necessary analysis ahead of the invasion would have taken no more than two days, with the result that the plan would have been abandoned there and then)

The ballooning constraints imposed by the scarcity of food and oil and its resultant upheavals around the planet confront the social unrests on one side with the very real prospect of being unable to follow through with the intended aid programs on the other.

For a prediction of the future in another 40 years see "2050: Age of the Silverback", but the beginnings of global reorientations are already with us. The coming years will demonstrate how well they are being managed around the world.

Further references:

1. Courier Mail, 5 Jun 08, "Luxuries off radar as spending wanes".

2. Courier Mail, 5 Jun 08, "Hoax callers face triple-0 crackdown".

3. Courier Mail, 4 Jun 08, "Daycare worries hit Swan".

4. Courier Mail, 4 Jun 08, "Abortion aid plan".

5. Courier Mail, 5 Jun 08, "Now for the real economy - Iraq".