The second problem is the supervision, auditing and control of actual spending. This has two dimensions:1. How to make sure that the expenditures match and do not exceed the budgetary items. In some countries, this is a mere ritual formality and government departments are positively expected to overstep their procurement budgets. In others, this constitutes a criminal offence;2. How to prevent the criminally corrupt activities that we have described above – or even the non criminal incompetent acts which government officials are prone to do.The most widespread method is the public, competitive tender for the purchases of goods and services.But, this is not as simple as it sounds.Some countries publish international tenders, striving to secure the best quality in the cheapest price – no matter what is its geographical or political source. Other countries are much more protectionist (notably: Japan and France) and they publish only domestic tenders, in most cases. A domestic tender is open only to domestic bidders. Yet other countries limit participation in the tenders on various backgrounds: the size of the competing company, its track record, its ownership structure, its human rights or environmental record and so on. Some countries publish the minutes of the tender committee (which has to explain WHY it selected this or that supplier). Others keep it a closely guarded secret ("to protect commercial interests and secrets").But all countries state in advance that they have no obligation to accept any kind of offer – even if it is the cheapest. This is a needed provision: the cheapest is not necessarily the best. The cheapest offer could be coming from a very unreliable supplier with a bad past performance or a criminal record or from a supplier who offers goods of shoddy quality.The tendering policy of most of the countries in the world also incorporates a second principle: that of "minimum size". The cost of running a tender is prohibitive in the cases of purchases in small amounts.Even if there is corruption in such purchases it is bound to cause less damage to the public purse than the costs of the tender, which is supposed to prevent it!So, in most countries, small purchases can be authorized by government officials – larger amounts go through a tedious, multi-phase tendering process. Public competitive bidding is not corruption-proof: many times officials and bidders collude and conspire to award the contract against bribes and other, non-cash, benefits. But we still know of no better way to minimize the effects of human greed.Procurement policies, procedures and tenders are supervised by state auditing authorities. The most famous is, probably, the General Accounting Office, known by its acronym: the GAO.It is an unrelenting, very thorough and dangerous watchdog of the administration. It is considered to be highly effective in reducing procurement – related irregularities and crimes. Another such institution is the Israeli State Reviser. What is common to both these organs of the state is that they have very broad authority. They possess (by law) judicial and criminal prosecution powers and they exercise it without any hesitation. They have the legal obligation to review the operations and financial transactions of all the other organs of the executive branch. Their teams select, each year, the organs to be reviewed and audited. They collect all pertinent documents and correspondence. They cross the information that they receive from elsewhere. They ask very embarrassing questions and they do it under the threat of perjury prosecutions. They summon witnesses and they publish damning reports, which, in many cases, lead to criminal prosecutions.Another form of review of public procurement is through powers granted to the legislative arm of the state (Congress, Parliament, Bundestag, or Knesset). In almost every country in the world, the elected body has its own procurement oversight committee. It supervises the expenditures of the executive branch and makes sure that they conform to the budget. The difference between such supervisory, parliamentary, bodies and their executive branch counterparts – is that they feel free to criticize public procurement not only in the context of its adherence to budget constraints or its cleanliness – but also in a political context. In other words, these committees do not limit themselves to asking HOW – but also engage in asking WHY. Why this specific expense in this given time and location – and not that expense, somewhere else or some other time. These elected bodies feel at liberty – and often do – intervene in the very decision making process and in the order of priorities. They have the propensity to alter both quite often.The most famous such committee is, arguably, the Congressional Budget Office (CBO). It is famous because it is non-partisan and technocratic in nature. It is really made of experts, which staff its offices.Its apparent – and real – neutrality makes its judgements and recommendations a commandment not to be avoided and, almost universally, to be obeyed. The CBO operates for and on behalf of the American Congress and is, really, the research arm of that venerable parliament. In parallel, the executive part of the American system – the Administration – has its own guard against waste and worse: the Office of Management and Budget (OMB).Both bodies produce learned, thickset, analyses, reports, criticism, opinions and recommendations. Despite quite a prodigious annual output of verbiage – they are so highly regarded, that virtually anything that they say (or write) is minutely analysed and implemented to the last letter with an air of awe.Only a few other parliaments have committees that carry such weight. The Israeli Knesset has the extremely powerful Finance Committee, which is in charge of all matters financial, from appropriations to procurement. Another parliament renowned for its tight scrutiny is the French Parliament – though it retains very few real powers.But not all countries chose the option of legislative supervision. Some of them relegated parts or all of these functions to the executive arm.In Japan, the Ministry of Finance still scrutinizes (and has to authorize) the smallest expense, using an army of clerks. These clerks became so powerful that they have the theoretical potential to secure and extort benefits stemming from the very position that they hold. Many of them suspiciously join companies and organizations, which they supervised or to which they awarded contracts – immediately after they leave their previous, government positions. The Ministry of Finance is subject to a major reform in the reform-bent government of Prime Minister Hashimoto. The Japanese establishment finally realized that too much supervision, control, auditing and prosecution powers might be a Pyrrhic victory: it might encourage corruption – rather than discourage it.Britain opted to keep the discretion to use public funds and the clout that comes with it in the hands of the political level. This is a lot like the relationship between the butter and the cat left to guard it. Still, this idiosyncratic British arrangement works surprisingly well. All public procurement and expenditure items are approved by the EDX Committee of the British Cabinet (=inner, influential, circle of government), which is headed by the Ministry of Finance. Even this did not prove enough to restrain the appetites of Ministers, especially as quid pro quo deals quickly developed. So, now the word is that the new Labour Prime Minister will chair it – enabling him to exert his personal authority on matters of public money.Britain, under the previous, Tory, government also pioneered an interesting and controversial incentive system for its public servants as top government officials are euphemistically called there. They receive, added to their salaries, a portion of the savings that they affect in their departmental budgets. This means that they get a small fraction of the end of the fiscal year difference between their budget allowances and what they actually spent. This is very useful in certain segments of government activity – but could prove very problematic in others. Imagine health officials saving on medicines, or others saving on road maintenance or educational consumables. This, naturally, will not do.Needless to say that no country officially approves of the payment of bribes or commission to officials in charge of public spending, however remote the connection is between the payment and the actions.Yet, law aside many countries accept the intertwining of elites – business and political – as a fact of life, albeit a sad one. Many judicial systems in the world even make a difference between a payment, which is not connected to an identifiable or discernible benefit, and those that are. The latter – and only the latter – are labelled "bribery".Where there is money – there is wrongdoing. Humans are humans – and sometimes not even that.But these unfortunate derivatives of social activity can be minimized by the adoption of clear procurement policies, transparent and public decision making processes and the right mix of supervision, auditing and prosecution. Even then the result is bound to be dubious, at best.ReturnLiquidity or LiquidationLarge parts of the world today suffer from a severe liquidity crisis. The famed globalisation of the capital markets seems to confine itself, ever more, to the richer parts, the more liquid exchanges, and the more affluent geopolitical neighbourhoods. The fad of "emerging economies" has all but died out. Try telling the Macedonians about global capital markets: last year, the whole world invested 8 million USD in their poor country. Breadwinners earn 300 DM a month on average. Officially, in excess of one third of the workforce is unemployed. Small wonder that people do not pay their bills, employers do not pay salaries, the banking system has a marked tendency to crash every now and then and the average real default rate is 50%.Illiquidity erodes the trust between the economic players. Such trust is a precondition to the existence of a thriving, modern economy. We all postpone the gratification of our desires: we save now and consume later, for instance or we sell goods or services and get paid a month later. Such postponement of gratification is at the heart of the economic machine of the new age. It cannot be achieved, however, if the players do not trust each other to fulfil their promises (to pay, for example). Alternatively, the state can instate an efficient court system, aided by active law enforcement agencies. Keeping promises can be imposed to counter the natural tendency to ignore them.The countries in transition lack both: liquidity necessary to keep one's monetary word and the legal system to force him to do so if he reneges. Small wonder that solutions are actively being sought by all involved: the business community, the state, the courts and even by consumers.In this article, we will describe a few of the global trends. The trends are global, the reaction is world-wide because the problem is global. Bouncing checks have become a household reality in places as rich as Israel, for instance. The mounting crisis in Southeast Asia foreshadows bankruptcies and delinquencies on a chilling scale.The simplest method is to revert to a cash economy. Payments are accepted only in cash. This, naturally, slows the velocity of money-like products and diminishes their preponderance, obstructing the expansion of economic activity. An even more malignant variant is the barter economy. Goods and services are swapped on a no-cash basis. It is money that generates new value added (by facilitating the introduction of new technology, to mention but one function). In the absence of money, the economy stagnates, degenerates and, finally, collapses because of massive mismatches of supply and demand aggregates and of the types of goods and services on offer and demanded. Still, this system has the advantages of keeping the economic patient alive even following a massive liquidity haemorrhage. In the absence of barter economy, the economy might have ground to a complete halt and deteriorated to subsistence agriculture. But barter is like chemotherapy: it is good for a limited period of time and the side effects are, at times, worse than the disease.In many countries (Georgia, to mention one) defaults are prevented by demanding prepayment for projected consumption. Let us take the consumption of electricity as an example: many heavy users and numerous households do not pay their bills at all. To disconnect the electricity is an effective punitive measure but it costs the electricity company a lot of money. The solution? Programmable Electronic Meters. The consumers buy a smart card (very similar to phone-cards). The card allows the buyer to use a certain amount of prepaid electricity and is rechargeable. The consumer pays in advance, electricity is not wasted, the electricity company is happy, the tariffs go down for all the users. Prepayment does have a contracting effect on the demand and usage of electricity – but this is welcome. It just means that people use electricity more efficiently.A totally different tack is the verification approach. The person making the payment carries with him a card that confirms that he is creditworthy and will honour his obligations. Otherwise, the card also serves as an insurance policy: an entity, not connected to the transaction, guarantees the payment for a fee. This entity is financially viable and strong enough to be fully trusted by the recipient of the payment.This market in credit guarantees is more developed in the USA (where credit cards have overtaken cash and personal checks as a mode of payment) than in Western Europe. But even in Europe there are credit card equivalents which are very widespread: the Eurocheck card, for instance, is really a credit card, though it usually comes with physical checks and guarantees only a limited amount. One must differentiate the functions of a debit card (with direct and immediate billing of a bank account following a transaction) from those of a credit card. The latter allows for the billing of the account to take place in a given day during the month following the month in which the transaction was effected or converts the payment into a series of instalments (within the credit limits of the cardholder as approved by his bank). But in both cases, the guarantee is there and is the most predominant feature of the system. Such cards seem like a perfect solution but they are not: the commissions charged by the card issuers are outrageous. Between 2 and 10 percent of the payment made go to the pockets of the card issuers. Cards get stolen, forged, lost, abused by their owners, expire. But with the advent of new technologies all these problems should be solved. Electronic POS (point of sale) cash registers, connected through networks of communication, check the card and verify its data: is it valid, is it presented by the lawful owner, was it stolen or lost, is the purchase within the limits of the approved credit and so on. Then, the billing proceeds automatically. Such devices will virtually eliminate fraud. The credit card companies will guarantee the payments, which will be subject to residual crime.Another fast developing solution is the smart card. These are cards similar to phone cards and they can be charged with money in the bank or through automatic teller machines. These cards (in wide use in Belgium, Austria, Germany and many other countries) contain an amount of money, which is deducted from the cardholders account. The account is billed for every recharge. The card is the electronic (and smart) equivalent of cash and it can be read (=debited) by special teller machines in numerous businesses. When payment is made, the money stored in the card is reduced and the recipient of the payment stores the payment on magnetic media for later delivery to his bank (and crediting of his account).A more primitive version exists in many countries in Eastern Europe: depositors receive checks exactly corresponding to the amount of money deposited in their account. These checks are as safe as the banks that issued them because they are fully convertible to cash. They are, really, paper "smart cards".Credit cards and (more cheaply) smart cards are a way to restore confidence to a shattered, illiquid economy. Macedonia should consider them both seriously and encourage them through the appropriate legislation and assistance of the state. For Macedonia, the choice is to be liquid or, God forbid, to economically self-liquidate.ReturnThe Predicament of the Newly RichThey are the objects of thinly disguised envy. They are the raw materials of vulgar jokes and the targets of popular aggression. They are the Newly Rich. Perhaps they should be dealt with more appropriately within the academic discipline of psychology, but then economics in a branch of psychology. To many, they represent a psychopathology or a sociopathology.The Newly Rich are not a new phenomenon. Every generation has them. They are the upstarts, those who seek to undermine the existing elite, to replace it and, ultimately to join it. Indeed, the Newly Rich can be classified in accordance with their relations with the well-entrenched Old Rich. Every society has its veteran, venerable and aristocratic social classes. In most cases, there was a strong correlation between wealth and social standing. Until the beginning of this century, only property owners could vote and thus participate in the political process. The land gentry secured military and political positions for its off spring, no matter how ill equipped they were to deal with the responsibilities thrust upon them. The privileged access and the insider's mentality ("old boys network" to use a famous British expression) made sure that economic benefits were not spread evenly. This skewed distribution, in turn, served to perpetuate the advantages of the ruling classes.Only when wealth was detached from the land, was this solidarity broken. Land – being a scarce, non-reproducible resource – fostered a scarce, non-reproducible social elite. Money, on the other hand, could be multiplied, replicated, redistributed, reshuffled, made and lost. It was democratic in the truest sense of a word, otherwise worn thin. With meritocracy in the ascendance, aristocracy was in descent. People made money because they were clever, daring, fortunate, and visionary – but not because they were born to the right family or married into one. Money, the greatest of social equalizers, wedded the old elite. Blood mixed and social classes were thus blurred. The aristocracy of capital (and, later, of entrepreneurship) – to which anyone with the right qualifications could belong – trounced the aristocracy of blood and heritage. For some, this was a sad moment. For others, a triumphant one.The New Rich chose one of three paths: subversion, revolution and emulation. All three modes of reaction were the results of envy, a sense of inferiority and rage at being discriminated against and humiliated.Some New Rich chose to undermine the existing order. This was perceived by them to be an inevitable, gradual, slow and "historically sanctioned" process. The transfer of wealth (and the power associated with it) from one elite to another constituted the subversive element. The ideological shift (to meritocracy and democracy or to mass-democracy as y Gasset would have put it) served to justify the historical process and put it in context. The successes of the new elite, as a class, and of its members, individually, served to prove the "justice" behind the tectonic shift. Social institutions and mores were adapted to reflect the preferences, inclinations, values, goals and worldview of the new elite. This approach – infinitesimal, graduated, cautious, all accommodating but also inexorable and all pervasive – characterizes Capitalism. The Capitalist Religion, with its temples (shopping malls and banks), clergy (bankers, financiers, bureaucrats) and rituals – was created by the New Rich. It had multiple aims: to bestow some divine or historic importance and meaning upon processes, which might have otherwise been perceived as chaotic or threatening. To serve as an ideology in the Althusserian sense (hiding the discordant, the disagreeable and the ugly while accentuating the concordant, conformist and appealing). To provide a historical process framework, to prevent feelings of aimlessness and vacuity, to motivate its adherents and to perpetuate itself and so on.The second type of New Rich (also known as "Nomenclature" in certain regions of the world) chose to violently and irreversibly uproot and then eradicate the old elite. This was usually done by use of brute force coated with a thin layer of incongruent ideology. The aim was to immediately inherit the wealth and power accumulated by generations of elitist rule. There was a declared intention of an egalitarian redistribution of wealth and assets. But reality was different: a small group – the new elite – scooped up most of the spoils. It amounted to a surgical replacement of one hermetic elite by another. Nothing changed, just the personal identities. A curious dichotomy has formed between the part of the ideology, which dealt with the historical process – and the other part, which elucidated the methods to be employed to facilitate the transfer of wealth and its redistribution. While the first was deterministic, long-term and irreversible (and, therefore, not very pragmatic) – the second was an almost undisguised recipe for pillage and looting of other people' property. Communism and the Eastern European (and, to a lesser extent, the Central European) versions of Socialism suffered from this inherent poisonous seed of deceit. So did Fascism. It is no wonder that these two sister ideologies fought it out in the first half of the twentieth century. Both prescribed the unabashed, unmitigated, unrestrained, forced transfer of wealth from one elite to another. The proletariat enjoyed almost none of the loot.The third way was that of emulation. The Newly Rich, who chose to adopt it, tried to assimilate the worldview, the values and the behaviour patterns of their predecessors. They walked the same, talked the same, clad themselves in the same fashion, bought the same status symbols, and ate the same food. In general, they looked as pale imitations of the real thing. In the process, they became more catholic than the Pope, more Old Rich than the Old Rich. They exaggerated gestures and mannerisms, they transformed refined and delicate art to kitsch, their speech became hyperbole, their social associations dictated by ridiculously rigid codes of propriety and conduct. As in similar psychological situations, patricide and matricide followed. The Newly Rich rebelled against what they perceived to be the tyranny of a dying class. They butchered their objects of emulation – sometimes, physically. Realizing their inability to be what they always aspired to be, the Newly Rich switched from frustration and permanent humiliation to aggression, violence and abuse. These new converts turned against the founders of their newly found religion with the rage and conviction reserved to true but disappointed believers.Regardless of the method of inheritance adopted by the New Rich, all of them share some common characteristics. Psychologists know that money is a love substitute. People accumulate it as a way to compensate themselves for past hurts and deficiencies. They attach great emotional significance to the amount and availability of their money. They regress: they play with toys (fancy cars, watches, laptops). They fight over property, territory and privileges in a Jungian archetypal manner. Perhaps this is the most important lesson of all: the New Rich are children, aspiring to become adults. Having been deprived of love and possessions in their childhood – they turn to money and to what it can buy as a (albeit poor because never fulfilling) substitute. And as children are – they can be cruel, insensitive, and unable to delay the satisfaction of their urges and desires. In many countries (the emerging markets) they are the only capitalists to be found. There, they spun off a malignant, pathological, form of crony capitalism. As time passes, these immature New Rich will become tomorrow's Old Rich and a new class will emerge, the New Rich of the future. This is the only hope – however inadequate and meagre – that developing countries have.ReturnThe Solow ParadoxThe Productive HardwareThe world is debating the Solow Paradox. Named after the Nobel laureate in economics, it was stated by him thus: "You can see the computer age everywhere these days, except in the productivity statistics."The venerable economic magazine, "The Economist" in its issue dated July 24th, quotes the no less venerable Professor Robert Gordon ("one of America's leading authorities on productivity") – p.20:"...the productivity performance of the manufacturing sector of the United States economy since 1995 has been abysmal rather than admirable. Not only has productivity growth in non-durable manufacturingdeceleratedin 1995-9 compared to 1972-95, but productivity growth in durable manufacturing stripped of computers hasdecelerated even more."What should be held true – the hype or the dismal statistics? The answer to this question is of crucial importance to economies in transition. If investment in IT (information technology) actually RETARDS growth – then it should be avoided, at least until a functioning marketplace is there to counter its growth suppressing effects.The notion that IT retards growth is counter-intuitive. It would seem that, at the least, computers allow us to do more of the same things faster. Typing, order processing, inventory management, production processes, number crunching are all managed more efficiently by computers. Added efficiency should translate into enhanced productivity. Put simply, the same number of people can do more, faster, more cheaply with computers than they can without them. Yet reality begs to differ.Two elements are often neglected in considering the beneficial effects of IT.The first is that the concept of information technology comprises two very distinct economic activities: an all-purpose machine (the PC) and its enabling applications and a medium (the internet). Capital assets as distinct from media assets are governed by different economic principles, should be managed differently and be the subject of different philosophical points of view.Massive, double digit increases in productivity are feasible in the manufacturing of computer hardware. The inevitable outcome is an exponential explosion in computing and networking power. The dual rules which govern IT – Moore's (a doubling of chip capacity and computing prowess every 18 months) and Metcalf's (the exponential increase in a network's processing ability as more computers connect to it) – also dictate a breathtaking pace of increased productivity in the hardware cum software aspect of IT. This has been duly detected by Robert Gordon in his "Has the 'New Economy' rendered the productivity slowdown obsolete?"But for this increased productivity to trickle down to the rest of the economy a few conditions have to be met.The transition from old technologies to a new one (the computer renders many a technology obsolete) must not involve too much "creative destruction". The costs of getting rid of old hardware, software, of altering management techniques or adopting new ones, of shedding redundant manpower, of searching for new employees to replace the unqualified or unqualifiable, of installing new hardware, software and of training new people in all levels of the corporation are enormous. They must never exceed the added benefits of the newly introduced technology in the long run. Hence the crux of the debate. Is IT more expensive to introduce, run and maintain than the technologies that it so confidently aims to replace? Will new technologies be spun off the core IT in a pace sufficient to compensate for the disappearance of old ones? As the technology mature, will it overcome its childhood maladies (lack of operational reliability, bad design, non-specificity, immaturity of the first generation of computer users, absence of user friendliness and so on)?Moreover, is IT an evolution or a veritable revolution? Does it merely allow us to do more of the same only in a different way – or does it open up hitherto unheard of vistas for human imagination and creativity? The signals are mixed. IT did NOT succeed to do to human endeavour what electricity, the internal combustion engine or even the telegraph have done. It is also not clear at all that IT is a UNIVERSAL phenomenon suitable to all climes and mentalities. The penetration of both IT and the medium it gave rise to (the internet) is not uniform throughout the world even where the purchasing power is similar and even among the corporate class. Countries post communism should take all this into consideration. Their economies may be too obsolete and hidebound, poor and badly managed to absorb yet another critical change in the form of IT. The introduction of IT into an ill-prepared market or corporation can be and often is counter-productive and growth-retarding.The Cycle of the InternetThen, of course, there is the Internet.The Internet runs on computers but it is related to them in the same way that a TV show is related to a TV set. To bundle to two, as is often done today, obscures the true picture and can often be very misleading. For instance: it is close to impossible to measure productivity in the services sector, let alone is something as wildly informal and dynamic as the internet. It is clear by now that the Internet is a medium and, as such, is subject to the evolutionary cycle of its predecessors. Central and Eastern Europe has just entered this cycle while the USA is the most advanced.The Internet is simply the latest in a series of networks, which revolutionized our lives. A century before the Internet, the telegraph and the telephone have been similarly heralded as "global" and transforming.So, what should the CEE countries expect to happen to the Internet globally and, later, within their own territories? The issue here cannot be cast in terms of productivity. It is better to apply to it the imagery of the business cycle.As we said, every medium of communications goes through the same evolutionary cycle:It starts with Anarchy – or The Public Phase.At this stage, the medium and the resources attached to it are very cheap, accessible, under no regulatory constraints. The public sector steps in: higher education institutions, religious institutions, government, not for profit organizations, non-governmental organizations (NGOs), trade unions, etc. Bedevilled by limited financial resources, they regard the new medium as a cost effective way of disseminating their messages.The Internet was not exempt from this phase, which is at its death throes. It started with a complete computer anarchy manifested in ad hoc networks, local networks, networks of organizations (mainly universities and organs of the government such as DARPA, a part of the defence establishment, in the USA). Non-commercial entities jumped on the bandwagon and started sewing these networks together (an activity fully subsidized by government funds). The result was a globe-encompassing network of academic institutions. The American Pentagon established the network of all networks, the ARPANET. Other government departments joined the fray, headed by the National Science Foundation (NSF) which withdrew only lately from the Internet.The Internet (with a different name) became public property – with access granted to the chosen few.Radio took precisely this course. Radio transmissions started in the USA in 1920. Those were anarchic broadcasts with no discernible regularity. Non commercial organizations and not for profit organizations began their own broadcasts and even created radio broadcasting infrastructure (albeit of the cheap and local kind) dedicated to their audiences. Trade unions, certain educational institutions and religious groups commenced "public radio" broadcasts.This is followed by the Commercial Phase.When the users (e.g., listeners in the case of the radio, or owners of PCs and modems in the example of the Internet) reach a critical mass – the business sector is alerted. In the name of capitalist ideology (another religion, really) it demands "privatisation" of the medium. This harps on very sensitive strings in every Western soul: the efficient allocation of resources which is the result of competition; corruption and inefficiency which are naturally associated with the public sector ("Other People's Money" – OPM); the ulterior motives of members of the ruling political echelons (the infamous American Paranoia); a lack of variety and of catering to the tastes and interests of certain audiences; the equation private enterprise = democracy and more.The end result is the same: the private sector takes over the medium from "below" (makes offers to the owners or operators of the medium – that they cannot possibly refuse) – or from "above" (successful lobbying in the corridors of power leads to the appropriate legislation and the medium is "privatised").Every privatisation – especially that of a medium – provokes public opposition. There are (usually founded) suspicions that the interests of the public were compromised and sacrificed on the altar of commercialisation and rating. Fears of monopolization and cartelisation of the medium are evoked – and justified, in due time. Otherwise, there is fear of the concentration of control of the medium in a few hands. All these things do happen – but the pace is so slow that the initial fears are forgotten and public attention reverts to fresher issues.A new Communications Act was legislated in the USA in 1934. It was meant to transform radio frequencies into a national resource to be sold to the private sector, which will use it to transmit radio signals to receivers. In other words: the radio was passed on to private and commercial hands. Public radio was doomed to be marginalized.The American administration withdrew from its last major involvement in the Internet in April 1995, when the NSF ceased to finance some of the networks and, thus, privatised its hitherto heavy involvement in the net.A new Communications Act was legislated in 1996. It permitted "organized anarchy". It allowed media operators to invade each other's territories.Phone companies will be allowed to transmit video and cable companies will be allowed to transmit telephony, for instance. This is all phased over a long period of time – still, it is a revolution whose magnitude is difficult to gauge and whose consequences defy imagination. It carries an equally momentous price tag – official censorship. "Voluntary censorship", to be sure, somewhat toothless standardization and enforcement authorities, to be sure – still, a censorship with its own institutions to boot. The private sector reacted by threatening litigation – but, beneath the surface it is caving in to pressure and temptation, constructing its own censorship codes both in the cable and in the internet media.The third phase is Institutionalisation.It is characterized by enhanced activities of legislation. Legislators, on all levels, discover the medium and lurch at it passionately. Resources, which were considered "free", suddenly are transformed to "national treasures not to be dispensed with cheaply, casually and with frivolity".It is conceivable that certain parts of the Internet will be "nationalized" (for instance, in the form of a licensing requirement) and tendered to the private sector. Legislation will be enacted which will deal with permitted and disallowed content (obscenity? incitement? racial or gender bias?).No medium in the USA (not to mention the wide world) has eschewed such legislation. There are sure to be demands to allocate time (or space, or software, or content, or hardware, or bandwidth) to "minorities", to "public affairs", to "community business". This is a tax that the business sector will have to pay to fend off the eager legislator and his nuisance value.All this is bound to lead to a monopolization of hosts and servers. The important broadcast channels will diminish in number and be subjected to severe content restrictions. Sites, which will not succumb to these requirements – will be deleted or neutralized. Content guidelines (euphemism for censorship) exist, even as we write, in all major content providers (CompuServe, AOL, Prodigy).The last, determining, phase is The Bloodbath.This is the phase of consolidation. The number of players is severely reduced. The number of browser types will be limited to 2-3 (Netscape, Microsoft and which else?). Networks will merge to form privately owned mega-networks. Servers will merge to form hyper-servers run on supercomputers. The number of ISPs will be considerably diminished.50 companies ruled the greater part of the media markets in the USA in 1983. The number in 1995 was 18. At the end of the century they will number 6.This is the stage when companies – fighting for financial survival – strive to acquire as many users/listeners/viewers as possible. The programming is shallowed to the lowest (and widest) common denominator. Shallow programming dominates as long as the bloodbath proceeds.In hindsight, 20 years hence, we might come to understand that computers improved our capacity to do things differently and more productively. But one thing is fast becoming clear. The added benefits of IT are highly sensitive to and dependent upon historical, psychosocial and economic parameters outside the perimeter of the technology itself. When it is introduced, how it is introduced, for which purposes is it put to use and even by who it was introduced – largely determine the costs of its introduction and, therefore, its feasibility and contribution to the enhancement of productivity. The CEE countries better take note.(Article written on July 26, 1999 and published August 9, 1999in "Central Europe Review" volume 1, issue 7)ReturnE P I L O G U EThe Balkans, an eternal crossroad of different civilizations and cultures even today, is considered to be the "navel of the world" or as Sam Vaknin puts it in his erratic, eruptive, intellectual volcano of a book, "After the Rain – How the West Lost the East" – "is the unconscious of the world" ("The Mind of Darkness") or worse, probably a navel, but "the Balkan is a body without a brain" ("Homo Balkanus").There are a few other, similarly neuralgic points on Earth, but what distinguishes the Balkans from the rest is that it is precisely via its central part – Macedonia – that Christianity and modern literacy invaded Europe. The Byzantine civilization – traceable in today's Balkans as a junction of the Hellenic spirit and the wisdom of Byzantium, deeply rooted in the cultures of Babylon and the old Mesopotamian civilizations – is still of high interest to modern scholars of the Balkans.Dr. Sam Vaknin is one of these contemporary detectors of the "transitions" in the East, who is trying to discover, understand and direct the Balkans and the East through his publicist work. In his book "After the Rain – How the West Lost the East", Dr. Sam Vaknin is a sincere investigator of the "Homo Balkanus", of the Easterner, his mind, culture and way of living, defining him "a full fledges narcissist". Immediately after that, in "The Magla Vocables" he says that even linguistically "it is impossible to really understand an Easterner", mocking or more precisely reaching the level of real offence in portraying the image of the intellectuals of the East ("The Poets and Eclipse").Reading this large book of essays, however, one should bear in mind that the author is limited by the clichés of his framework of values and thinking given to him by the culture and system of rules from which he originated. Thus, his articles are provocative, turbulent, irritating, revolting. The impact of his writing is terrible with the strength of hurricane. His word often kill, his defeatism nullifies. Sometimes pretentious, still "After the Rain" represents a serious, lucid and transcendent effort to make the Balkan closer, to introduce the East to the West, ignoring for a moment the pessimistic assertion that the West already lost the East.But if this were right, it would have meant that the West is lost, had disappeared in the East. The truth is completely the opposite: The West has yet to find the East. The East, which provided the foundation of contemporary Western civilization, literacy and Christianity, still hibernates within its traditional values as an essential element of the endurance of the people and perhaps as the unique salvation of mankind. The West has to burst into the wisdom of the East to keep the very roots of life, the wisdom to live in peace and in harmony with God and with nature. If this should not happen, we will all finish like in Aldous Huxley's "Brave New World".Consequently, when reading these essays, it will not be asking for much to have a dose of restraint towards Dr. Vaknin's sometimes lethal "absolute truths" regarding the Balkans and the East. After you finish reading this book, you can find out not only what the East is – but also what the East is, indeed, not. This is because Dr. Vaknin observes the Balkan and the East only from the dark side, regarding its people as zombies who do not have any idea at all why they are walking on this Earth. Unfortunately for him, life, neither in the Balkans in particular, nor in the East in general, is a pathology as he enjoys saying. That is why some of his articles contain an overly heavy-handed personal touch, momentary sensations and impressions too strong, amounting to exaggeration, or, in other words, he puts things headlong.In "The MinMaj Rule" his paranoiac fear of the "nation-state" can be felt. His perversity reaches a climax when he finds a justification for the West and its three months long NATO bombing of Yugoslavia (an act without precedent in modern history, which indeed resulted in the same pitiless kind of bombing in Chechnya) and in the acknowledgment that for the Albanian residents of Kosovo "it has not protected their right to self-determination".Dr. Vaknin likes to see the state as "a community, a majority of minorities united by common rules, beliefs and aspirations ... no longer utopian, it is a realistic model to emulate". In "Herzl's Butlers", he even goes further and in the modern nation state he sees "a reflection of something more primordial, of human nature itself as it resonated in the national founding myths (most of them fictitious or contrived)". Still, he is sufficiently honest to admit that "the Jews (and Germans) came up with the 'objective', 'genetic', 'racial' and 'organic' nation". Indeed, through the periodically harsh critique of the West's actions in the East, transferring into its body Western malignant cells of mafia, drugs, organized crime, corruption etc., the careful reader will discover the glorification of the subjugation of the East by the West.Dr. Sam Vaknin is not the first one to try to put all the books which deal with the so called "world conspiracy" in the domain of illusion or man's gullibility ("The Elders of Zion"). That was done before in a fine literary manner mixed with factography by another Jew (by father), the writer Danilo Kish from ex-Yugoslavia, in his novel "A Book about Kings and Fools". But if Danilo Kish was exploring the world archives to prove that it is only by coincidence or through an accidental knot of circumstance that "the book of Nillus" about a "world conspiracy" was created, thus far Dr. Vaknin is not only mocking the intellectuals and ordinary mortals of the East, but he humiliatingly attributes the existence of that "conspiracy" to the "paranoiac and schizoid nature" of their minds.It is interesting that the author uses a tour of the abundant history of the region just to explain the "darkness" of today's. Or, without necessity and astonishingly, he is giving a huge treatment only to the idea of the – in essence illusory and never existing – "Great Albania", adapting history for his own needs. He even smoothly, in only few lines, gives "the definite historical truths" about the Illyrians and their descendents, a subject on which historians composed large tomes and which they investigated all their lives and about which they still have dilemmas.Finally, where does Dr. Vaknin think that the West lost the East? Is it on its way from Babylon towards some new "promised lands"? Or, is it maybe – After the Rain – in a Biblical flood?Although both in the West as well as in the East, it is precisely the Jewish version of the Bible out of the thirteen existing ones that is the dominant (a version which is rather a copy of the prehistoric Bible text of the Sumerians from Mesopotamia) – nevertheless God promised himself: "Never again will I curse the ground because of man, however evil his inclinations may be from his youth upwards" and God said: "This is the sign of the covenant which I establish between myself and you and every living creature with you, to endless generations:My bow I set in the cloud,Sign of the covenantBetween myself and earth.When I cloud the sky over the earth,The bow shall be seen in the cloud.Then will I remember the covenant which I have made between myself and you and living things of every kind. Never again shall the waters become a flood to destroy all living creatures. The bow shall be in the cloud; when I see it, it will remind me of the everlasting covenant between God and living things on earth of every kind."In the Balkans, all things aside, this blessing of God – the bow – can be often felt and enjoyed. Or as one of our proverbs says – After the Rain always cometh the Sun!Emilija GelevaSkopje, February 2000ReturnT H E A U T H O RSHMUEL (SAM) VAKNINCurriculum VitaeBorn in 1961 in Qiryat-Yam, Israel.EducationGraduated a few semesters in the Technion – Israel Institute of Technology, Haifa.Ph.D. in Philosophy (major: Philosophy of Physics) – Pacific Western University, California, USA.Graduate of numerous courses in Finance Theory and International Trading.Certified E-Commerce Concepts Analyst.Certified in Psychological Counselling Techniques.Full proficiency in Hebrew and in English.Business Experience1980 to 1983Founder and co-owner of a chain of computerised information kiosks in Tel-Aviv, Israel.1982 to 1985Senior positions with the Nessim D. Gaon Group of Companies in Geneva, Paris and New-York (NOGA and APROFIM SA):- Chief Analyst of Edible Commodities in the Group's Headquarters in Switzerland- Manager of the Research and Analysis Division- Manager of the Data Processing Division- Project Manager of the Nigerian Computerised Census- Vice President in charge of RND and Advanced Technologies- Vice President in charge of Sovereign Debt Financing1985 to 1986Represented Canadian Venture Capital Funds in Israel.1986 to 1987General Manager of IPE Ltd. in London. The firm financed international multi-lateral counter-trade and leasing transactions.1988 to 1990Co-founder and Director of "Mikbats-Tesuah", a portfolio management firm based in Tel-Aviv.Activities included large-scale portfolio management, underwriting, forex trading and general financial advisory services.1990 to PresentFree-lance consultant to many of Israel's Blue-Chip firms, mainly on issues related to the capital markets in Israel, Canada, the UK and the USA.Consultant to foreign RND ventures and to Governments on macro-economic matters.President of the Israel chapter of the Professors World Peace Academy (PWPA) and (briefly) Israel representative of the "Washington Times".1993 to 1994Co-owner and Director of many business enterprises:- The Omega and Energy Air-Conditioning Concern- AVP Financial Consultants- Handiman Legal Services - Total annual turnover of the group: 10 million USD.Co-owner, Director and Finance Manager of COSTI Ltd. – Israel's largest computerised information vendor and developer.Raised funds through a series of private placements locally, in the USA, Canada and London.1995 onPublisher and Editor of a Capital Markets Newsletter distributed by subscription only to dozens of subscribers countrywide.In a legal precedent – studied in business schools and law faculties across Israel – was tried for his role in an attempted take-over of Israel's Agriculture Bank.Was interned in the State School of Prison Wardens.Managed the Central School Library, wrote, published and lectured on various occasions.Managed the Internet and International News Department of an Israeli mass media group, "Ha-Tikshoret and Namer".Assistant in the Law Faculty in Tel-Aviv University (to Prof. S.G. Shoham).1996 to 1999Financial consultant to leading businesses in Macedonia, Russia and the Czech Republic.Collaborated with the Agency of Transformation of Business with Social Capital.Economic commentator in "Nova Makedonija", "Dnevnik", "Makedonija Denes", "Izvestia", "Argumenti i Fakti", "The Middle East Times", "The New Presence", "Central Europe Review", other periodicals and in the economic programs on various channels of Macedonian Television.Chief Lecturer in courses organised by the Agency of Transformation, by the Macedonian Stock Exchange and Ministry of Trade.1999 to PresentEconomic Advisor to the Government of the Republic of Macedonia.Web ActivitiesAuthor of extensive web sites in:Psychology ("Malignant Self Love") – An Open Directory Cool Site, Philosophy ("Philosophical Musings"), Economics and Geopolitics ("After the Rain").Owner of the Narcissism Revisited Announcement and Study List (more than 830 members) and the After the Rain CEE and Balkans Announcement and Study List.Editor of mental health disorders and Central and Eastern Europe categories in web directories (Open Directory, Suite 101, Go.com, Search Europe).Weekly columnist in "The New Presence" and "Central Europe Review".Publications and Awards"Managing Investment Portfolios in States of Uncertainty", Limon Publishers, 1988;"The Gambling Industry", Limon Publishers, 1990;"Requesting my Loved One – Short Stories", Yedioth Aharonot, 1997;"The Macedonian Economy at a Crossroads – On the Way to a Healthier Economy", (Dialogues with Mr. Nikola Gruevski), 1998;"Malignant Self Love – Narcissism Revisited", Narcissus Publications, 1999;"The Exporters' Pocketbook", Ministry of Trade, Republic of Macedonia, 1999;"The Suffering of Being Kafka" (electronic book of Hebrew Short Fiction);"After the Rain – How the West Lost the East", Narcissus Publications in association with Central Europe Review / CEENMI, 2000.Winner of numerous awards, among them the Israeli Education Ministry Prize (Literature) - 1997, The Rotary Club Award for Social Studies - 1976, and the Bilateral Relations Studies Award of the American Embassy in Israel - 1978.Hundreds of professional articles in all fields of finances and the economy.Numerous articles dealing with geopolitical and political economic issues.Many appearances in the electronic media on subjects in philosophy and the sciences and concerning economic matters.Write to Me:palma@unet.com.mksamvak@briefcase.comMy Web Sites:Economy / Politics:http://samvak.tripod.com/guide.htmlPsychology:http://samvak.tripod.com/index.htmlPhilosophy:http://samvak.tripod.com/culture.htmlPoetry:http://samvak.tripod.com/contents.htmlReturnAfter the RainHow the WestLost the EastThe BookThis is a series of articles written and published in 1996-2000 in Macedonia, in Russia, in Egypt and in the Czech Republic.How the West lost the East. The economics, the politics, the geopolitics, the conspiracies, the corruption, the old and the new, the plough and the internet – it is all here, in colourful and provocative prose.From "The Mind of Darkness":"'The Balkans' – I say – 'is the unconscious of the world'. People stop to digest this metaphor and then they nod enthusiastically. It is here that the repressed memories of history, its traumas and fears and images reside. It is here that the psychodynamics of humanity – the tectonic clash between Rome and Byzantium, West and East, Judeo-Christianity and Islam – is still easily discernible. We are seated at a New Year's dining table, loaded with a roasted pig and exotic salads. I, the Jew, only half foreign to this cradle of Slavonics. Four Serbs, five Macedonians. It is in the Balkans that all ethnic distinctions fail and it is here that they prevail anachronistically and atavistically. Contradiction and change the only two fixtures of this tormented region. The women of the Balkan - buried under provocative mask-like make up, retro hairstyles and too narrow dresses. The men, clad in sepia colours, old fashioned suits and turn of the century moustaches. In the background there is the crying game that is Balkanian music: liturgy and folk and elegy combined. The smells are heavy with muskular perfumes. It is like time travel. It is like revisiting one's childhood."The AuthorSam Vaknin was born in Israel in 1961. A financial consultant and columnist, he lived and published in 11 countries. An author of short stories, the winner of many literary awards, an amateur philosopher – he is a controversial figure. This is his tenth book.
The second problem is the supervision, auditing and control of actual spending. This has two dimensions:
1. How to make sure that the expenditures match and do not exceed the budgetary items. In some countries, this is a mere ritual formality and government departments are positively expected to overstep their procurement budgets. In others, this constitutes a criminal offence;
2. How to prevent the criminally corrupt activities that we have described above – or even the non criminal incompetent acts which government officials are prone to do.
The most widespread method is the public, competitive tender for the purchases of goods and services.
But, this is not as simple as it sounds.
Some countries publish international tenders, striving to secure the best quality in the cheapest price – no matter what is its geographical or political source. Other countries are much more protectionist (notably: Japan and France) and they publish only domestic tenders, in most cases. A domestic tender is open only to domestic bidders. Yet other countries limit participation in the tenders on various backgrounds: the size of the competing company, its track record, its ownership structure, its human rights or environmental record and so on. Some countries publish the minutes of the tender committee (which has to explain WHY it selected this or that supplier). Others keep it a closely guarded secret ("to protect commercial interests and secrets").
But all countries state in advance that they have no obligation to accept any kind of offer – even if it is the cheapest. This is a needed provision: the cheapest is not necessarily the best. The cheapest offer could be coming from a very unreliable supplier with a bad past performance or a criminal record or from a supplier who offers goods of shoddy quality.
The tendering policy of most of the countries in the world also incorporates a second principle: that of "minimum size". The cost of running a tender is prohibitive in the cases of purchases in small amounts.
Even if there is corruption in such purchases it is bound to cause less damage to the public purse than the costs of the tender, which is supposed to prevent it!
So, in most countries, small purchases can be authorized by government officials – larger amounts go through a tedious, multi-phase tendering process. Public competitive bidding is not corruption-proof: many times officials and bidders collude and conspire to award the contract against bribes and other, non-cash, benefits. But we still know of no better way to minimize the effects of human greed.
Procurement policies, procedures and tenders are supervised by state auditing authorities. The most famous is, probably, the General Accounting Office, known by its acronym: the GAO.
It is an unrelenting, very thorough and dangerous watchdog of the administration. It is considered to be highly effective in reducing procurement – related irregularities and crimes. Another such institution is the Israeli State Reviser. What is common to both these organs of the state is that they have very broad authority. They possess (by law) judicial and criminal prosecution powers and they exercise it without any hesitation. They have the legal obligation to review the operations and financial transactions of all the other organs of the executive branch. Their teams select, each year, the organs to be reviewed and audited. They collect all pertinent documents and correspondence. They cross the information that they receive from elsewhere. They ask very embarrassing questions and they do it under the threat of perjury prosecutions. They summon witnesses and they publish damning reports, which, in many cases, lead to criminal prosecutions.
Another form of review of public procurement is through powers granted to the legislative arm of the state (Congress, Parliament, Bundestag, or Knesset). In almost every country in the world, the elected body has its own procurement oversight committee. It supervises the expenditures of the executive branch and makes sure that they conform to the budget. The difference between such supervisory, parliamentary, bodies and their executive branch counterparts – is that they feel free to criticize public procurement not only in the context of its adherence to budget constraints or its cleanliness – but also in a political context. In other words, these committees do not limit themselves to asking HOW – but also engage in asking WHY. Why this specific expense in this given time and location – and not that expense, somewhere else or some other time. These elected bodies feel at liberty – and often do – intervene in the very decision making process and in the order of priorities. They have the propensity to alter both quite often.
The most famous such committee is, arguably, the Congressional Budget Office (CBO). It is famous because it is non-partisan and technocratic in nature. It is really made of experts, which staff its offices.
Its apparent – and real – neutrality makes its judgements and recommendations a commandment not to be avoided and, almost universally, to be obeyed. The CBO operates for and on behalf of the American Congress and is, really, the research arm of that venerable parliament. In parallel, the executive part of the American system – the Administration – has its own guard against waste and worse: the Office of Management and Budget (OMB).
Both bodies produce learned, thickset, analyses, reports, criticism, opinions and recommendations. Despite quite a prodigious annual output of verbiage – they are so highly regarded, that virtually anything that they say (or write) is minutely analysed and implemented to the last letter with an air of awe.
Only a few other parliaments have committees that carry such weight. The Israeli Knesset has the extremely powerful Finance Committee, which is in charge of all matters financial, from appropriations to procurement. Another parliament renowned for its tight scrutiny is the French Parliament – though it retains very few real powers.
But not all countries chose the option of legislative supervision. Some of them relegated parts or all of these functions to the executive arm.
In Japan, the Ministry of Finance still scrutinizes (and has to authorize) the smallest expense, using an army of clerks. These clerks became so powerful that they have the theoretical potential to secure and extort benefits stemming from the very position that they hold. Many of them suspiciously join companies and organizations, which they supervised or to which they awarded contracts – immediately after they leave their previous, government positions. The Ministry of Finance is subject to a major reform in the reform-bent government of Prime Minister Hashimoto. The Japanese establishment finally realized that too much supervision, control, auditing and prosecution powers might be a Pyrrhic victory: it might encourage corruption – rather than discourage it.
Britain opted to keep the discretion to use public funds and the clout that comes with it in the hands of the political level. This is a lot like the relationship between the butter and the cat left to guard it. Still, this idiosyncratic British arrangement works surprisingly well. All public procurement and expenditure items are approved by the EDX Committee of the British Cabinet (=inner, influential, circle of government), which is headed by the Ministry of Finance. Even this did not prove enough to restrain the appetites of Ministers, especially as quid pro quo deals quickly developed. So, now the word is that the new Labour Prime Minister will chair it – enabling him to exert his personal authority on matters of public money.
Britain, under the previous, Tory, government also pioneered an interesting and controversial incentive system for its public servants as top government officials are euphemistically called there. They receive, added to their salaries, a portion of the savings that they affect in their departmental budgets. This means that they get a small fraction of the end of the fiscal year difference between their budget allowances and what they actually spent. This is very useful in certain segments of government activity – but could prove very problematic in others. Imagine health officials saving on medicines, or others saving on road maintenance or educational consumables. This, naturally, will not do.
Needless to say that no country officially approves of the payment of bribes or commission to officials in charge of public spending, however remote the connection is between the payment and the actions.
Yet, law aside many countries accept the intertwining of elites – business and political – as a fact of life, albeit a sad one. Many judicial systems in the world even make a difference between a payment, which is not connected to an identifiable or discernible benefit, and those that are. The latter – and only the latter – are labelled "bribery".
Where there is money – there is wrongdoing. Humans are humans – and sometimes not even that.
But these unfortunate derivatives of social activity can be minimized by the adoption of clear procurement policies, transparent and public decision making processes and the right mix of supervision, auditing and prosecution. Even then the result is bound to be dubious, at best.
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Liquidity or Liquidation
Large parts of the world today suffer from a severe liquidity crisis. The famed globalisation of the capital markets seems to confine itself, ever more, to the richer parts, the more liquid exchanges, and the more affluent geopolitical neighbourhoods. The fad of "emerging economies" has all but died out. Try telling the Macedonians about global capital markets: last year, the whole world invested 8 million USD in their poor country. Breadwinners earn 300 DM a month on average. Officially, in excess of one third of the workforce is unemployed. Small wonder that people do not pay their bills, employers do not pay salaries, the banking system has a marked tendency to crash every now and then and the average real default rate is 50%.
Illiquidity erodes the trust between the economic players. Such trust is a precondition to the existence of a thriving, modern economy. We all postpone the gratification of our desires: we save now and consume later, for instance or we sell goods or services and get paid a month later. Such postponement of gratification is at the heart of the economic machine of the new age. It cannot be achieved, however, if the players do not trust each other to fulfil their promises (to pay, for example). Alternatively, the state can instate an efficient court system, aided by active law enforcement agencies. Keeping promises can be imposed to counter the natural tendency to ignore them.
The countries in transition lack both: liquidity necessary to keep one's monetary word and the legal system to force him to do so if he reneges. Small wonder that solutions are actively being sought by all involved: the business community, the state, the courts and even by consumers.
In this article, we will describe a few of the global trends. The trends are global, the reaction is world-wide because the problem is global. Bouncing checks have become a household reality in places as rich as Israel, for instance. The mounting crisis in Southeast Asia foreshadows bankruptcies and delinquencies on a chilling scale.
The simplest method is to revert to a cash economy. Payments are accepted only in cash. This, naturally, slows the velocity of money-like products and diminishes their preponderance, obstructing the expansion of economic activity. An even more malignant variant is the barter economy. Goods and services are swapped on a no-cash basis. It is money that generates new value added (by facilitating the introduction of new technology, to mention but one function). In the absence of money, the economy stagnates, degenerates and, finally, collapses because of massive mismatches of supply and demand aggregates and of the types of goods and services on offer and demanded. Still, this system has the advantages of keeping the economic patient alive even following a massive liquidity haemorrhage. In the absence of barter economy, the economy might have ground to a complete halt and deteriorated to subsistence agriculture. But barter is like chemotherapy: it is good for a limited period of time and the side effects are, at times, worse than the disease.
In many countries (Georgia, to mention one) defaults are prevented by demanding prepayment for projected consumption. Let us take the consumption of electricity as an example: many heavy users and numerous households do not pay their bills at all. To disconnect the electricity is an effective punitive measure but it costs the electricity company a lot of money. The solution? Programmable Electronic Meters. The consumers buy a smart card (very similar to phone-cards). The card allows the buyer to use a certain amount of prepaid electricity and is rechargeable. The consumer pays in advance, electricity is not wasted, the electricity company is happy, the tariffs go down for all the users. Prepayment does have a contracting effect on the demand and usage of electricity – but this is welcome. It just means that people use electricity more efficiently.
A totally different tack is the verification approach. The person making the payment carries with him a card that confirms that he is creditworthy and will honour his obligations. Otherwise, the card also serves as an insurance policy: an entity, not connected to the transaction, guarantees the payment for a fee. This entity is financially viable and strong enough to be fully trusted by the recipient of the payment.
This market in credit guarantees is more developed in the USA (where credit cards have overtaken cash and personal checks as a mode of payment) than in Western Europe. But even in Europe there are credit card equivalents which are very widespread: the Eurocheck card, for instance, is really a credit card, though it usually comes with physical checks and guarantees only a limited amount. One must differentiate the functions of a debit card (with direct and immediate billing of a bank account following a transaction) from those of a credit card. The latter allows for the billing of the account to take place in a given day during the month following the month in which the transaction was effected or converts the payment into a series of instalments (within the credit limits of the cardholder as approved by his bank). But in both cases, the guarantee is there and is the most predominant feature of the system. Such cards seem like a perfect solution but they are not: the commissions charged by the card issuers are outrageous. Between 2 and 10 percent of the payment made go to the pockets of the card issuers. Cards get stolen, forged, lost, abused by their owners, expire. But with the advent of new technologies all these problems should be solved. Electronic POS (point of sale) cash registers, connected through networks of communication, check the card and verify its data: is it valid, is it presented by the lawful owner, was it stolen or lost, is the purchase within the limits of the approved credit and so on. Then, the billing proceeds automatically. Such devices will virtually eliminate fraud. The credit card companies will guarantee the payments, which will be subject to residual crime.
Another fast developing solution is the smart card. These are cards similar to phone cards and they can be charged with money in the bank or through automatic teller machines. These cards (in wide use in Belgium, Austria, Germany and many other countries) contain an amount of money, which is deducted from the cardholders account. The account is billed for every recharge. The card is the electronic (and smart) equivalent of cash and it can be read (=debited) by special teller machines in numerous businesses. When payment is made, the money stored in the card is reduced and the recipient of the payment stores the payment on magnetic media for later delivery to his bank (and crediting of his account).
A more primitive version exists in many countries in Eastern Europe: depositors receive checks exactly corresponding to the amount of money deposited in their account. These checks are as safe as the banks that issued them because they are fully convertible to cash. They are, really, paper "smart cards".
Credit cards and (more cheaply) smart cards are a way to restore confidence to a shattered, illiquid economy. Macedonia should consider them both seriously and encourage them through the appropriate legislation and assistance of the state. For Macedonia, the choice is to be liquid or, God forbid, to economically self-liquidate.
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The Predicament of the Newly Rich
They are the objects of thinly disguised envy. They are the raw materials of vulgar jokes and the targets of popular aggression. They are the Newly Rich. Perhaps they should be dealt with more appropriately within the academic discipline of psychology, but then economics in a branch of psychology. To many, they represent a psychopathology or a sociopathology.
The Newly Rich are not a new phenomenon. Every generation has them. They are the upstarts, those who seek to undermine the existing elite, to replace it and, ultimately to join it. Indeed, the Newly Rich can be classified in accordance with their relations with the well-entrenched Old Rich. Every society has its veteran, venerable and aristocratic social classes. In most cases, there was a strong correlation between wealth and social standing. Until the beginning of this century, only property owners could vote and thus participate in the political process. The land gentry secured military and political positions for its off spring, no matter how ill equipped they were to deal with the responsibilities thrust upon them. The privileged access and the insider's mentality ("old boys network" to use a famous British expression) made sure that economic benefits were not spread evenly. This skewed distribution, in turn, served to perpetuate the advantages of the ruling classes.
Only when wealth was detached from the land, was this solidarity broken. Land – being a scarce, non-reproducible resource – fostered a scarce, non-reproducible social elite. Money, on the other hand, could be multiplied, replicated, redistributed, reshuffled, made and lost. It was democratic in the truest sense of a word, otherwise worn thin. With meritocracy in the ascendance, aristocracy was in descent. People made money because they were clever, daring, fortunate, and visionary – but not because they were born to the right family or married into one. Money, the greatest of social equalizers, wedded the old elite. Blood mixed and social classes were thus blurred. The aristocracy of capital (and, later, of entrepreneurship) – to which anyone with the right qualifications could belong – trounced the aristocracy of blood and heritage. For some, this was a sad moment. For others, a triumphant one.
The New Rich chose one of three paths: subversion, revolution and emulation. All three modes of reaction were the results of envy, a sense of inferiority and rage at being discriminated against and humiliated.
Some New Rich chose to undermine the existing order. This was perceived by them to be an inevitable, gradual, slow and "historically sanctioned" process. The transfer of wealth (and the power associated with it) from one elite to another constituted the subversive element. The ideological shift (to meritocracy and democracy or to mass-democracy as y Gasset would have put it) served to justify the historical process and put it in context. The successes of the new elite, as a class, and of its members, individually, served to prove the "justice" behind the tectonic shift. Social institutions and mores were adapted to reflect the preferences, inclinations, values, goals and worldview of the new elite. This approach – infinitesimal, graduated, cautious, all accommodating but also inexorable and all pervasive – characterizes Capitalism. The Capitalist Religion, with its temples (shopping malls and banks), clergy (bankers, financiers, bureaucrats) and rituals – was created by the New Rich. It had multiple aims: to bestow some divine or historic importance and meaning upon processes, which might have otherwise been perceived as chaotic or threatening. To serve as an ideology in the Althusserian sense (hiding the discordant, the disagreeable and the ugly while accentuating the concordant, conformist and appealing). To provide a historical process framework, to prevent feelings of aimlessness and vacuity, to motivate its adherents and to perpetuate itself and so on.
The second type of New Rich (also known as "Nomenclature" in certain regions of the world) chose to violently and irreversibly uproot and then eradicate the old elite. This was usually done by use of brute force coated with a thin layer of incongruent ideology. The aim was to immediately inherit the wealth and power accumulated by generations of elitist rule. There was a declared intention of an egalitarian redistribution of wealth and assets. But reality was different: a small group – the new elite – scooped up most of the spoils. It amounted to a surgical replacement of one hermetic elite by another. Nothing changed, just the personal identities. A curious dichotomy has formed between the part of the ideology, which dealt with the historical process – and the other part, which elucidated the methods to be employed to facilitate the transfer of wealth and its redistribution. While the first was deterministic, long-term and irreversible (and, therefore, not very pragmatic) – the second was an almost undisguised recipe for pillage and looting of other people' property. Communism and the Eastern European (and, to a lesser extent, the Central European) versions of Socialism suffered from this inherent poisonous seed of deceit. So did Fascism. It is no wonder that these two sister ideologies fought it out in the first half of the twentieth century. Both prescribed the unabashed, unmitigated, unrestrained, forced transfer of wealth from one elite to another. The proletariat enjoyed almost none of the loot.
The third way was that of emulation. The Newly Rich, who chose to adopt it, tried to assimilate the worldview, the values and the behaviour patterns of their predecessors. They walked the same, talked the same, clad themselves in the same fashion, bought the same status symbols, and ate the same food. In general, they looked as pale imitations of the real thing. In the process, they became more catholic than the Pope, more Old Rich than the Old Rich. They exaggerated gestures and mannerisms, they transformed refined and delicate art to kitsch, their speech became hyperbole, their social associations dictated by ridiculously rigid codes of propriety and conduct. As in similar psychological situations, patricide and matricide followed. The Newly Rich rebelled against what they perceived to be the tyranny of a dying class. They butchered their objects of emulation – sometimes, physically. Realizing their inability to be what they always aspired to be, the Newly Rich switched from frustration and permanent humiliation to aggression, violence and abuse. These new converts turned against the founders of their newly found religion with the rage and conviction reserved to true but disappointed believers.
Regardless of the method of inheritance adopted by the New Rich, all of them share some common characteristics. Psychologists know that money is a love substitute. People accumulate it as a way to compensate themselves for past hurts and deficiencies. They attach great emotional significance to the amount and availability of their money. They regress: they play with toys (fancy cars, watches, laptops). They fight over property, territory and privileges in a Jungian archetypal manner. Perhaps this is the most important lesson of all: the New Rich are children, aspiring to become adults. Having been deprived of love and possessions in their childhood – they turn to money and to what it can buy as a (albeit poor because never fulfilling) substitute. And as children are – they can be cruel, insensitive, and unable to delay the satisfaction of their urges and desires. In many countries (the emerging markets) they are the only capitalists to be found. There, they spun off a malignant, pathological, form of crony capitalism. As time passes, these immature New Rich will become tomorrow's Old Rich and a new class will emerge, the New Rich of the future. This is the only hope – however inadequate and meagre – that developing countries have.
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The Solow Paradox
The Productive Hardware
The world is debating the Solow Paradox. Named after the Nobel laureate in economics, it was stated by him thus: "You can see the computer age everywhere these days, except in the productivity statistics."The venerable economic magazine, "The Economist" in its issue dated July 24th, quotes the no less venerable Professor Robert Gordon ("one of America's leading authorities on productivity") – p.20:"...the productivity performance of the manufacturing sector of the United States economy since 1995 has been abysmal rather than admirable. Not only has productivity growth in non-durable manufacturingdeceleratedin 1995-9 compared to 1972-95, but productivity growth in durable manufacturing stripped of computers hasdecelerated even more."
What should be held true – the hype or the dismal statistics? The answer to this question is of crucial importance to economies in transition. If investment in IT (information technology) actually RETARDS growth – then it should be avoided, at least until a functioning marketplace is there to counter its growth suppressing effects.
The notion that IT retards growth is counter-intuitive. It would seem that, at the least, computers allow us to do more of the same things faster. Typing, order processing, inventory management, production processes, number crunching are all managed more efficiently by computers. Added efficiency should translate into enhanced productivity. Put simply, the same number of people can do more, faster, more cheaply with computers than they can without them. Yet reality begs to differ.
Two elements are often neglected in considering the beneficial effects of IT.
The first is that the concept of information technology comprises two very distinct economic activities: an all-purpose machine (the PC) and its enabling applications and a medium (the internet). Capital assets as distinct from media assets are governed by different economic principles, should be managed differently and be the subject of different philosophical points of view.
Massive, double digit increases in productivity are feasible in the manufacturing of computer hardware. The inevitable outcome is an exponential explosion in computing and networking power. The dual rules which govern IT – Moore's (a doubling of chip capacity and computing prowess every 18 months) and Metcalf's (the exponential increase in a network's processing ability as more computers connect to it) – also dictate a breathtaking pace of increased productivity in the hardware cum software aspect of IT. This has been duly detected by Robert Gordon in his "Has the 'New Economy' rendered the productivity slowdown obsolete?"
But for this increased productivity to trickle down to the rest of the economy a few conditions have to be met.
The transition from old technologies to a new one (the computer renders many a technology obsolete) must not involve too much "creative destruction". The costs of getting rid of old hardware, software, of altering management techniques or adopting new ones, of shedding redundant manpower, of searching for new employees to replace the unqualified or unqualifiable, of installing new hardware, software and of training new people in all levels of the corporation are enormous. They must never exceed the added benefits of the newly introduced technology in the long run. Hence the crux of the debate. Is IT more expensive to introduce, run and maintain than the technologies that it so confidently aims to replace? Will new technologies be spun off the core IT in a pace sufficient to compensate for the disappearance of old ones? As the technology mature, will it overcome its childhood maladies (lack of operational reliability, bad design, non-specificity, immaturity of the first generation of computer users, absence of user friendliness and so on)?
Moreover, is IT an evolution or a veritable revolution? Does it merely allow us to do more of the same only in a different way – or does it open up hitherto unheard of vistas for human imagination and creativity? The signals are mixed. IT did NOT succeed to do to human endeavour what electricity, the internal combustion engine or even the telegraph have done. It is also not clear at all that IT is a UNIVERSAL phenomenon suitable to all climes and mentalities. The penetration of both IT and the medium it gave rise to (the internet) is not uniform throughout the world even where the purchasing power is similar and even among the corporate class. Countries post communism should take all this into consideration. Their economies may be too obsolete and hidebound, poor and badly managed to absorb yet another critical change in the form of IT. The introduction of IT into an ill-prepared market or corporation can be and often is counter-productive and growth-retarding.
The Cycle of the Internet
Then, of course, there is the Internet.
The Internet runs on computers but it is related to them in the same way that a TV show is related to a TV set. To bundle to two, as is often done today, obscures the true picture and can often be very misleading. For instance: it is close to impossible to measure productivity in the services sector, let alone is something as wildly informal and dynamic as the internet. It is clear by now that the Internet is a medium and, as such, is subject to the evolutionary cycle of its predecessors. Central and Eastern Europe has just entered this cycle while the USA is the most advanced.
The Internet is simply the latest in a series of networks, which revolutionized our lives. A century before the Internet, the telegraph and the telephone have been similarly heralded as "global" and transforming.
So, what should the CEE countries expect to happen to the Internet globally and, later, within their own territories? The issue here cannot be cast in terms of productivity. It is better to apply to it the imagery of the business cycle.
As we said, every medium of communications goes through the same evolutionary cycle:
It starts with Anarchy – or The Public Phase.
At this stage, the medium and the resources attached to it are very cheap, accessible, under no regulatory constraints. The public sector steps in: higher education institutions, religious institutions, government, not for profit organizations, non-governmental organizations (NGOs), trade unions, etc. Bedevilled by limited financial resources, they regard the new medium as a cost effective way of disseminating their messages.
The Internet was not exempt from this phase, which is at its death throes. It started with a complete computer anarchy manifested in ad hoc networks, local networks, networks of organizations (mainly universities and organs of the government such as DARPA, a part of the defence establishment, in the USA). Non-commercial entities jumped on the bandwagon and started sewing these networks together (an activity fully subsidized by government funds). The result was a globe-encompassing network of academic institutions. The American Pentagon established the network of all networks, the ARPANET. Other government departments joined the fray, headed by the National Science Foundation (NSF) which withdrew only lately from the Internet.
The Internet (with a different name) became public property – with access granted to the chosen few.
Radio took precisely this course. Radio transmissions started in the USA in 1920. Those were anarchic broadcasts with no discernible regularity. Non commercial organizations and not for profit organizations began their own broadcasts and even created radio broadcasting infrastructure (albeit of the cheap and local kind) dedicated to their audiences. Trade unions, certain educational institutions and religious groups commenced "public radio" broadcasts.
This is followed by the Commercial Phase.
When the users (e.g., listeners in the case of the radio, or owners of PCs and modems in the example of the Internet) reach a critical mass – the business sector is alerted. In the name of capitalist ideology (another religion, really) it demands "privatisation" of the medium. This harps on very sensitive strings in every Western soul: the efficient allocation of resources which is the result of competition; corruption and inefficiency which are naturally associated with the public sector ("Other People's Money" – OPM); the ulterior motives of members of the ruling political echelons (the infamous American Paranoia); a lack of variety and of catering to the tastes and interests of certain audiences; the equation private enterprise = democracy and more.
The end result is the same: the private sector takes over the medium from "below" (makes offers to the owners or operators of the medium – that they cannot possibly refuse) – or from "above" (successful lobbying in the corridors of power leads to the appropriate legislation and the medium is "privatised").
Every privatisation – especially that of a medium – provokes public opposition. There are (usually founded) suspicions that the interests of the public were compromised and sacrificed on the altar of commercialisation and rating. Fears of monopolization and cartelisation of the medium are evoked – and justified, in due time. Otherwise, there is fear of the concentration of control of the medium in a few hands. All these things do happen – but the pace is so slow that the initial fears are forgotten and public attention reverts to fresher issues.
A new Communications Act was legislated in the USA in 1934. It was meant to transform radio frequencies into a national resource to be sold to the private sector, which will use it to transmit radio signals to receivers. In other words: the radio was passed on to private and commercial hands. Public radio was doomed to be marginalized.
The American administration withdrew from its last major involvement in the Internet in April 1995, when the NSF ceased to finance some of the networks and, thus, privatised its hitherto heavy involvement in the net.
A new Communications Act was legislated in 1996. It permitted "organized anarchy". It allowed media operators to invade each other's territories.
Phone companies will be allowed to transmit video and cable companies will be allowed to transmit telephony, for instance. This is all phased over a long period of time – still, it is a revolution whose magnitude is difficult to gauge and whose consequences defy imagination. It carries an equally momentous price tag – official censorship. "Voluntary censorship", to be sure, somewhat toothless standardization and enforcement authorities, to be sure – still, a censorship with its own institutions to boot. The private sector reacted by threatening litigation – but, beneath the surface it is caving in to pressure and temptation, constructing its own censorship codes both in the cable and in the internet media.
The third phase is Institutionalisation.
It is characterized by enhanced activities of legislation. Legislators, on all levels, discover the medium and lurch at it passionately. Resources, which were considered "free", suddenly are transformed to "national treasures not to be dispensed with cheaply, casually and with frivolity".
It is conceivable that certain parts of the Internet will be "nationalized" (for instance, in the form of a licensing requirement) and tendered to the private sector. Legislation will be enacted which will deal with permitted and disallowed content (obscenity? incitement? racial or gender bias?).
No medium in the USA (not to mention the wide world) has eschewed such legislation. There are sure to be demands to allocate time (or space, or software, or content, or hardware, or bandwidth) to "minorities", to "public affairs", to "community business". This is a tax that the business sector will have to pay to fend off the eager legislator and his nuisance value.
All this is bound to lead to a monopolization of hosts and servers. The important broadcast channels will diminish in number and be subjected to severe content restrictions. Sites, which will not succumb to these requirements – will be deleted or neutralized. Content guidelines (euphemism for censorship) exist, even as we write, in all major content providers (CompuServe, AOL, Prodigy).
The last, determining, phase is The Bloodbath.
This is the phase of consolidation. The number of players is severely reduced. The number of browser types will be limited to 2-3 (Netscape, Microsoft and which else?). Networks will merge to form privately owned mega-networks. Servers will merge to form hyper-servers run on supercomputers. The number of ISPs will be considerably diminished.
50 companies ruled the greater part of the media markets in the USA in 1983. The number in 1995 was 18. At the end of the century they will number 6.
This is the stage when companies – fighting for financial survival – strive to acquire as many users/listeners/viewers as possible. The programming is shallowed to the lowest (and widest) common denominator. Shallow programming dominates as long as the bloodbath proceeds.
In hindsight, 20 years hence, we might come to understand that computers improved our capacity to do things differently and more productively. But one thing is fast becoming clear. The added benefits of IT are highly sensitive to and dependent upon historical, psychosocial and economic parameters outside the perimeter of the technology itself. When it is introduced, how it is introduced, for which purposes is it put to use and even by who it was introduced – largely determine the costs of its introduction and, therefore, its feasibility and contribution to the enhancement of productivity. The CEE countries better take note.
(Article written on July 26, 1999 and published August 9, 1999
in "Central Europe Review" volume 1, issue 7)
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E P I L O G U E
The Balkans, an eternal crossroad of different civilizations and cultures even today, is considered to be the "navel of the world" or as Sam Vaknin puts it in his erratic, eruptive, intellectual volcano of a book, "After the Rain – How the West Lost the East" – "is the unconscious of the world" ("The Mind of Darkness") or worse, probably a navel, but "the Balkan is a body without a brain" ("Homo Balkanus").
There are a few other, similarly neuralgic points on Earth, but what distinguishes the Balkans from the rest is that it is precisely via its central part – Macedonia – that Christianity and modern literacy invaded Europe. The Byzantine civilization – traceable in today's Balkans as a junction of the Hellenic spirit and the wisdom of Byzantium, deeply rooted in the cultures of Babylon and the old Mesopotamian civilizations – is still of high interest to modern scholars of the Balkans.
Dr. Sam Vaknin is one of these contemporary detectors of the "transitions" in the East, who is trying to discover, understand and direct the Balkans and the East through his publicist work. In his book "After the Rain – How the West Lost the East", Dr. Sam Vaknin is a sincere investigator of the "Homo Balkanus", of the Easterner, his mind, culture and way of living, defining him "a full fledges narcissist". Immediately after that, in "The Magla Vocables" he says that even linguistically "it is impossible to really understand an Easterner", mocking or more precisely reaching the level of real offence in portraying the image of the intellectuals of the East ("The Poets and Eclipse").
Reading this large book of essays, however, one should bear in mind that the author is limited by the clichés of his framework of values and thinking given to him by the culture and system of rules from which he originated. Thus, his articles are provocative, turbulent, irritating, revolting. The impact of his writing is terrible with the strength of hurricane. His word often kill, his defeatism nullifies. Sometimes pretentious, still "After the Rain" represents a serious, lucid and transcendent effort to make the Balkan closer, to introduce the East to the West, ignoring for a moment the pessimistic assertion that the West already lost the East.
But if this were right, it would have meant that the West is lost, had disappeared in the East. The truth is completely the opposite: The West has yet to find the East. The East, which provided the foundation of contemporary Western civilization, literacy and Christianity, still hibernates within its traditional values as an essential element of the endurance of the people and perhaps as the unique salvation of mankind. The West has to burst into the wisdom of the East to keep the very roots of life, the wisdom to live in peace and in harmony with God and with nature. If this should not happen, we will all finish like in Aldous Huxley's "Brave New World".
Consequently, when reading these essays, it will not be asking for much to have a dose of restraint towards Dr. Vaknin's sometimes lethal "absolute truths" regarding the Balkans and the East. After you finish reading this book, you can find out not only what the East is – but also what the East is, indeed, not. This is because Dr. Vaknin observes the Balkan and the East only from the dark side, regarding its people as zombies who do not have any idea at all why they are walking on this Earth. Unfortunately for him, life, neither in the Balkans in particular, nor in the East in general, is a pathology as he enjoys saying. That is why some of his articles contain an overly heavy-handed personal touch, momentary sensations and impressions too strong, amounting to exaggeration, or, in other words, he puts things headlong.
In "The MinMaj Rule" his paranoiac fear of the "nation-state" can be felt. His perversity reaches a climax when he finds a justification for the West and its three months long NATO bombing of Yugoslavia (an act without precedent in modern history, which indeed resulted in the same pitiless kind of bombing in Chechnya) and in the acknowledgment that for the Albanian residents of Kosovo "it has not protected their right to self-determination".
Dr. Vaknin likes to see the state as "a community, a majority of minorities united by common rules, beliefs and aspirations ... no longer utopian, it is a realistic model to emulate". In "Herzl's Butlers", he even goes further and in the modern nation state he sees "a reflection of something more primordial, of human nature itself as it resonated in the national founding myths (most of them fictitious or contrived)". Still, he is sufficiently honest to admit that "the Jews (and Germans) came up with the 'objective', 'genetic', 'racial' and 'organic' nation". Indeed, through the periodically harsh critique of the West's actions in the East, transferring into its body Western malignant cells of mafia, drugs, organized crime, corruption etc., the careful reader will discover the glorification of the subjugation of the East by the West.
Dr. Sam Vaknin is not the first one to try to put all the books which deal with the so called "world conspiracy" in the domain of illusion or man's gullibility ("The Elders of Zion"). That was done before in a fine literary manner mixed with factography by another Jew (by father), the writer Danilo Kish from ex-Yugoslavia, in his novel "A Book about Kings and Fools". But if Danilo Kish was exploring the world archives to prove that it is only by coincidence or through an accidental knot of circumstance that "the book of Nillus" about a "world conspiracy" was created, thus far Dr. Vaknin is not only mocking the intellectuals and ordinary mortals of the East, but he humiliatingly attributes the existence of that "conspiracy" to the "paranoiac and schizoid nature" of their minds.
It is interesting that the author uses a tour of the abundant history of the region just to explain the "darkness" of today's. Or, without necessity and astonishingly, he is giving a huge treatment only to the idea of the – in essence illusory and never existing – "Great Albania", adapting history for his own needs. He even smoothly, in only few lines, gives "the definite historical truths" about the Illyrians and their descendents, a subject on which historians composed large tomes and which they investigated all their lives and about which they still have dilemmas.
Finally, where does Dr. Vaknin think that the West lost the East? Is it on its way from Babylon towards some new "promised lands"? Or, is it maybe – After the Rain – in a Biblical flood?
Although both in the West as well as in the East, it is precisely the Jewish version of the Bible out of the thirteen existing ones that is the dominant (a version which is rather a copy of the prehistoric Bible text of the Sumerians from Mesopotamia) – nevertheless God promised himself: "Never again will I curse the ground because of man, however evil his inclinations may be from his youth upwards" and God said: "This is the sign of the covenant which I establish between myself and you and every living creature with you, to endless generations:
My bow I set in the cloud,
Sign of the covenant
Between myself and earth.
When I cloud the sky over the earth,
The bow shall be seen in the cloud.
Then will I remember the covenant which I have made between myself and you and living things of every kind. Never again shall the waters become a flood to destroy all living creatures. The bow shall be in the cloud; when I see it, it will remind me of the everlasting covenant between God and living things on earth of every kind."
In the Balkans, all things aside, this blessing of God – the bow – can be often felt and enjoyed. Or as one of our proverbs says – After the Rain always cometh the Sun!
Emilija Geleva
Skopje, February 2000
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T H E A U T H O R
SHMUEL (SAM) VAKNIN
Curriculum Vitae
Born in 1961 in Qiryat-Yam, Israel.
Education
Graduated a few semesters in the Technion – Israel Institute of Technology, Haifa.
Ph.D. in Philosophy (major: Philosophy of Physics) – Pacific Western University, California, USA.
Graduate of numerous courses in Finance Theory and International Trading.
Certified E-Commerce Concepts Analyst.
Certified in Psychological Counselling Techniques.
Full proficiency in Hebrew and in English.
Business Experience
1980 to 1983
Founder and co-owner of a chain of computerised information kiosks in Tel-Aviv, Israel.
1982 to 1985
Senior positions with the Nessim D. Gaon Group of Companies in Geneva, Paris and New-York (NOGA and APROFIM SA):
- Chief Analyst of Edible Commodities in the Group's Headquarters in Switzerland
- Manager of the Research and Analysis Division
- Manager of the Data Processing Division
- Project Manager of the Nigerian Computerised Census
- Vice President in charge of RND and Advanced Technologies
- Vice President in charge of Sovereign Debt Financing
1985 to 1986
Represented Canadian Venture Capital Funds in Israel.
1986 to 1987
General Manager of IPE Ltd. in London. The firm financed international multi-lateral counter-trade and leasing transactions.
1988 to 1990
Co-founder and Director of "Mikbats-Tesuah", a portfolio management firm based in Tel-Aviv.
Activities included large-scale portfolio management, underwriting, forex trading and general financial advisory services.
1990 to Present
Free-lance consultant to many of Israel's Blue-Chip firms, mainly on issues related to the capital markets in Israel, Canada, the UK and the USA.
Consultant to foreign RND ventures and to Governments on macro-economic matters.
President of the Israel chapter of the Professors World Peace Academy (PWPA) and (briefly) Israel representative of the "Washington Times".
1993 to 1994
Co-owner and Director of many business enterprises:
- The Omega and Energy Air-Conditioning Concern
- AVP Financial Consultants
- Handiman Legal Services - Total annual turnover of the group: 10 million USD.
Co-owner, Director and Finance Manager of COSTI Ltd. – Israel's largest computerised information vendor and developer.
Raised funds through a series of private placements locally, in the USA, Canada and London.
1995 on
Publisher and Editor of a Capital Markets Newsletter distributed by subscription only to dozens of subscribers countrywide.
In a legal precedent – studied in business schools and law faculties across Israel – was tried for his role in an attempted take-over of Israel's Agriculture Bank.
Was interned in the State School of Prison Wardens.
Managed the Central School Library, wrote, published and lectured on various occasions.
Managed the Internet and International News Department of an Israeli mass media group, "Ha-Tikshoret and Namer".
Assistant in the Law Faculty in Tel-Aviv University (to Prof. S.G. Shoham).
1996 to 1999
Financial consultant to leading businesses in Macedonia, Russia and the Czech Republic.
Collaborated with the Agency of Transformation of Business with Social Capital.
Economic commentator in "Nova Makedonija", "Dnevnik", "Makedonija Denes", "Izvestia", "Argumenti i Fakti", "The Middle East Times", "The New Presence", "Central Europe Review", other periodicals and in the economic programs on various channels of Macedonian Television.
Chief Lecturer in courses organised by the Agency of Transformation, by the Macedonian Stock Exchange and Ministry of Trade.
1999 to Present
Economic Advisor to the Government of the Republic of Macedonia.
Web Activities
Author of extensive web sites in:
Psychology ("Malignant Self Love") – An Open Directory Cool Site, Philosophy ("Philosophical Musings"), Economics and Geopolitics ("After the Rain").
Owner of the Narcissism Revisited Announcement and Study List (more than 830 members) and the After the Rain CEE and Balkans Announcement and Study List.
Editor of mental health disorders and Central and Eastern Europe categories in web directories (Open Directory, Suite 101, Go.com, Search Europe).
Weekly columnist in "The New Presence" and "Central Europe Review".
Publications and Awards
"Managing Investment Portfolios in States of Uncertainty", Limon Publishers, 1988;
"The Gambling Industry", Limon Publishers, 1990;
"Requesting my Loved One – Short Stories", Yedioth Aharonot, 1997;
"The Macedonian Economy at a Crossroads – On the Way to a Healthier Economy", (Dialogues with Mr. Nikola Gruevski), 1998;
"Malignant Self Love – Narcissism Revisited", Narcissus Publications, 1999;
"The Exporters' Pocketbook", Ministry of Trade, Republic of Macedonia, 1999;
"The Suffering of Being Kafka" (electronic book of Hebrew Short Fiction);
"After the Rain – How the West Lost the East", Narcissus Publications in association with Central Europe Review / CEENMI, 2000.
Winner of numerous awards, among them the Israeli Education Ministry Prize (Literature) - 1997, The Rotary Club Award for Social Studies - 1976, and the Bilateral Relations Studies Award of the American Embassy in Israel - 1978.
Hundreds of professional articles in all fields of finances and the economy.
Numerous articles dealing with geopolitical and political economic issues.
Many appearances in the electronic media on subjects in philosophy and the sciences and concerning economic matters.
Write to Me:
palma@unet.com.mk
samvak@briefcase.com
My Web Sites:
Economy / Politics:
http://samvak.tripod.com/guide.html
Psychology:
http://samvak.tripod.com/index.html
Philosophy:
http://samvak.tripod.com/culture.html
Poetry:
http://samvak.tripod.com/contents.html
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After the Rain
How the West
Lost the East
The Book
This is a series of articles written and published in 1996-2000 in Macedonia, in Russia, in Egypt and in the Czech Republic.
How the West lost the East. The economics, the politics, the geopolitics, the conspiracies, the corruption, the old and the new, the plough and the internet – it is all here, in colourful and provocative prose.
From "The Mind of Darkness":
"'The Balkans' – I say – 'is the unconscious of the world'. People stop to digest this metaphor and then they nod enthusiastically. It is here that the repressed memories of history, its traumas and fears and images reside. It is here that the psychodynamics of humanity – the tectonic clash between Rome and Byzantium, West and East, Judeo-Christianity and Islam – is still easily discernible. We are seated at a New Year's dining table, loaded with a roasted pig and exotic salads. I, the Jew, only half foreign to this cradle of Slavonics. Four Serbs, five Macedonians. It is in the Balkans that all ethnic distinctions fail and it is here that they prevail anachronistically and atavistically. Contradiction and change the only two fixtures of this tormented region. The women of the Balkan - buried under provocative mask-like make up, retro hairstyles and too narrow dresses. The men, clad in sepia colours, old fashioned suits and turn of the century moustaches. In the background there is the crying game that is Balkanian music: liturgy and folk and elegy combined. The smells are heavy with muskular perfumes. It is like time travel. It is like revisiting one's childhood."
The Author
Sam Vaknin was born in Israel in 1961. A financial consultant and columnist, he lived and published in 11 countries. An author of short stories, the winner of many literary awards, an amateur philosopher – he is a controversial figure. This is his tenth book.