Monday, November 14, 2005

Intelligent Design, Enlightenment, Jihad, and Crusade

The recent controversy over intelligent design is a sign of Christian fundamentalism gaining strength. Their ideology is an effort to take the country back to the European Dark Era before Enlightenment, a time when God or the people claim to have the word of God, rules the world. Worriedly, Muslim fundamentalism is also gaining strength in the Middle East, as evidenced by Mohammad Khatami, a religious conservative, being elected as Iran’s president.

History tells us that religious wars are rampant in the Dark Era. A Jihad is responded by a Crusade, which is in turn responded by another Jihad, and then by another Crusade. People on both sides are religiously zealous and eager to be a martyr. This is a scary picture of the future. The great achievement of the Enlightenment is that people use their ration and reason instead of a strong religious belief. Secularism and science flourished after the Enlightenment and the standard of living progressed quickly.

Human being has a dark side (religious zealous) and a bright side (ration and reason). In the Renaissance the bright side, after a long struggle, won. How would people in the 21st century choose their path? Is the September 11 the first Jihad of the 21st century? Is a crusade a right response?

update : News September 7, 2010: Petraeus warns over Koran burning

Friday, September 30, 2005

Taiwan’s independence movement

From a 50-year separate rule and a Japanese heritage from the colonial time, Taiwan is gradually discovering and asserting her identity as a country. Only with a huge obstacle: the opposition of the Chinese.

It is instrumental to consider the independence movement around the world. Use as case studies, I think people who are interested in either side of the argument should look at the case of Quebec in Canada, East Timor in Indonesia, Basque in Spain, Latvia, Estonia and Lithuania in Russia, Tibet in China, Mongolia in China, Xinjiang in China, Porto Rico in the US, Northern Ireland in the UK, William Wallace story of Scotland, and many more.

Some succeeded, some failed, in their aspiration to become a country. Many are violent and some very bloody. In each case, a desire to self-rule and freedom from an upper government is evident. Cultural difference usually justifies the request to self-rule, so cultural assimilation is used as an important tool for the federalists. Economic interest is certainly in the mind of the leaders. Better governance is hoped but not always realized.

Small countries are usually better governed. Homogeneous culture reduces infighting. Large area usually guarantees different regional interest. Different life style almost always points to different value. Religious belief plays an important role, too. If a large country is to remain integral, either a high degree of autonomy and democracy, as in the case of the US, or a high degree of cultural assimilation, as in the case of Japan, or a high degree of military and central control, as in the case of China, will be needed.

Armed forces usually play an important part of the independence movement. Timing is also important, as in the case of the three Baltic countries and Mongolia. Separation or union, the utmost goal should be better governance and happier people. But I am aware I am idealistic.

Business volatility and Voyage volatility

It is interesting how similar a business venture and a voyage in the sea is. With business the CEO and the rank and file workers have to face business cycles. With a voyage the captain and the crew has to face the wave of the sea. Usually with a larger ship, such as a cruise ship, the passenger feel less volatile ride. People going up and down in sync but the movement is usually gentler. With a small ship, however, the ride can be bumpy and seasick inducing. Two near by small ships may experience the opposite: while one is at the peak of the wave the other is at the trough. What would happen if we join the two small ships to form a larger ship? Take a look at the following research from Fed Reserve NY branch.

“Bank Integration and Business Volatility,” with Bertrand Rime and Philip Strahan (Staff Report no. 129, May 2001)
The authors investigate how bank migration across state lines over the last quarter century has affected the size and covariance of business fluctuations within states. Starting with a two-state version of the unit banking model in Holmstrom and Tirole (1997), they conclude that the theoretical effect of integration on business cycle size is ambiguous, because some shocks are dampened by integration while others are amplified. Empirically, Morgan, Rime, and Strahan find that integration diminishes employment growth fluctuations within states and decreases the deviations in employment growth across states. In other words, business cycles within states become smaller with integration but more alike. Their results for the United States bear on the financial convergence under way in Europe, where banks remain highly fragmented across nations.

We can learn some wisdom from the seafaring fellows.

Monday, August 22, 2005

Taiwan's retirment fund management

Taiwan passed a law that requires mandatory contribution for retirement fund. Employer and employee each has to come up with 6% of salary that goes into the Employee Retirement Fund (ERF) for the benefit of employees. This is similar to the defined contribution (DC) plan in the US, except that contribution is required by law.

The problem at issue is whether the government or professional money managers should direct the fund's investments. Government directed investments is always viewed with suspicion. Politically motivated investments can divert funds to non-performing companies, at the cost of employees and possibly tax payers. But using professional money managers pose the same dilemma - which firms should be awarded the contracts, and how should their performance be reviewed?

I am soliciting advices regarding this issue. Your thoughts are welcomed and appreciated.