Failures of United Nations (part 3 – WFP and WHO)

The first two parts exposed some historic snippets of Security Council and other UN agencies.

How do UN affiliates fare? Let’s review World Food Program (WFP) and World Health Organization (WHO) who are in charge of health and food correspondingly in the UN world of affairs.


Before reading on about food issues, make sure to read these stats from World Food Program (WFP) and these hunger myths by Rehydrate project.

Few organizations that were created after WW2 – including the FAO, the World Bank and the World Food Program – tasked with weaving together a safety net for the world’s poorest.  Some analysts claim that decades of neglect of agriculture by those agencies have left many countries with less food to feed their people.

The FAO has become the target of increasing criticism. In 2007, an independent review concluded that the agency had lost the confidence of donors, who have steadily reduced funding to the organization over the past decade. That same year, World Bank commissioned an internal review of its agricultural programs in Africa, concluding that “over time, the importance of agriculture in the Bank’s rural strategy has declined.” The bank’s Independent Evaluation Group noted that total international agricultural aid fell from $1.9 billion in 1981 to less than $1 billion by 2001, and that the bank cut its number of agricultural specialists for Africa from 40 to 17 over the past decade.

Over 80% of the world’s poor are in rural areas, but the World Bank seems to have decided, for past 30 years, that if market signals don’t support agriculture – they support low-end tech and junk finance mostly – so it won’t support it either.

Both the EU and the US Congress passed tweaked their legislations, writing off billions for farm subsidies, including for the production of ethanol. That last coupled with the fact that Western (European) governments have continued to stick to an import ban on high-yielding, genetically modified crops, thus dissuading African nations from using a technology that could increase production.

Nonetheless, WFP has been receiving and wielding billions of dollars on poor countries. Where does that money go and what purpose does it serve?

One investigative article sheds light on that question. According to it,

…tens of millions of dollars of aid to Ethiopia during the 1984–1985 famine were used for arms.

…an estimated 50 percent of food delivered by the U.N. agency is essentially being stolen—not only by the WFP’s own personnel and contractors, but also Somalia’s armed militias, some of whom are radical Islamists.

Three Somali businessmen won about 80 percent of the agency’s $200 million in transport contracts last year, in what is described as a 12-year-old “de facto cartel.” One of them, Abdulqadir Nur “Enow,” apparently staged a hijacking of his own trucks in order to sell the food. In another case, the report cites witnesses saying Enow’s company sold hundreds of thousands of dollars of food aid in local markets, an outcome made possible by the fact that WFP depended on a local agency run by Enow’s wife to verify his deliveries. Meanwhile, a second WFP trucking contractor, Abukar Omar Adaani, used his wealth to finance a rebel militia that launched an offensive in Mogadishu last year against Somalia’s U.N.-backed transitional government and African Union peacekeepers. Adaani also persuaded the WFP to fund a road officials said was designed to give Islamist insurgents access to an airstrip, according to the report.

…in Ethiopia (one of the largest recipients of food aid in the world), the WFP has spent millions on contracts with transport companies controlled by the country’s increasingly authoritarian ruling party… claimed the Ethiopian government uses food as a weapon, a mere 12 percent of food reached the people for which it was intended in 2008, according to figures from the U.S. State Department.

…for its $1.2 billion, three-year food-relief program in Afghanistan, the WFP’s trucking and shipping costs for food were two to three times above commercial rates… noted that less than 40 percent of the mission’s budget was actually for food.

WFP’s planned shipping costs to send more than a half billion dollars of food aid to North Korea were inflated — prompting the agency to admit that some of its shipping budget went to companies owned by dictator Kim Jong Il’s government.

All this looks like a morbid plot planned by evil malfaisants, whose sole objective is to waste huge amounts of money in their attempt to perpetuate the end of the (poor parts of the) world. But is it? How is it not then?

Has the demonic Common Agricultural Policy (CAP) been scrapped – it accounted for 48% of the EU’s budget in 2006, i.e. circa 50 billion Euros of keeping alive zombie farming businesses?

  • Have the debts of the world’s poorest nations been cancelled?
  • Is each country in the world paying its fair share into helping those most in need?
  • What about China and Russia and Malaysia and other countries with oil interests in Sudan and other places where their corporate not only damage environments but also cause (indirectly and sometimes quite directly) civil unrest and political turmoil?


World Health Organization (WHO) is considered by many one of the most successful UN affiliates. While unquestionably impactful, it had its fair share of failures in the past. Starting on the positive note though, WHO’s greatest triumph was in 1977 when it announced that it had achieved its aim of eradicating smallpox from the globe. But some of its successes were marred and look bleak in the wake of facts such as that cholera, diarrhoea and tuberculosis still kill thousands of children and adults each year in the developing world despite cures being available. In the case of the latter, misuse of antibiotics has caused severe problems with the disease becoming resistant to the initial treatments.

But before we plunge into its past, let’s review one of its biggest to-date efforts on vaccination and immunization, Global Immunization Vision and Strategy (GIVS).

GIVS was launched in 2006 in cooperation with UNICEF being first of its kind first 10-year plan of tackling global vaccination and immunization matters for most endemic deceases. Its goals are noble and ambitious. But some of its strategies, at least seem to be, quote strange. For example, the “Strategic Area I:  Protecting more people in a changing world” contains:

  • Strategy 2:  Increase community demand for immunization
  • Strategy 3:  Ensure that unreached people are reached in every district at least four times a year
  • Strategy 4: Expand vaccination beyond the traditional target group

What does the Strategy 2 imply? Why would we want an increase in demand for immunization? There is a natural demand, driven by carriers of deceases and those potential at risk of contagion. It is this demand that has to be met, not less, not more. Unless we are talking business, revenue increase and improvement of margins for pharmas regardless of whether there is or not a need for more immunization medicine, something that has had its spotlight and caused much embarrassment for those high flying firms.

Strategy 3 propounds and advocates a quarterly reach for everyone. Why is it 4 times?? Is it because there are four seasons in year? There seems to be no other logic as any infectious decease or epidemic has its own embryo-time, cycles and post-contagious period. Or it is a rule of thumb, a sort of a “just-in-case check-up/immunization”? That would be even dumber as we are dealing here with billions of taxpayer money, significant human and other resource commitments, economies of scale and whatnot. All this is easily convertible into monetary units.

And last but not even close to the least, Strategy 4 sounds like a new idea of a push-sales strategy of a firm that sees its sales stagnate. Traditional group – or so anyone would assume – is the target group which are those who need vaccination/immunization. To propose to enhance it beyond this group sounds little – well, not quite – silly, unless again commercial interests of pharmas are at stake.

Now that the bigger picture and mentality behind GIVS give us some notion about its inspiration – read between the lines – and goals, let’s have a look at numbers. 35% of estimated vaccine costs for 72 poorest countries (which host an estimated 733 million people) comprise 35% of total costs (an estimated $35 billion), the rest of expenditures (65%) spent on systems costs (maintenance of current system and scale up) and campaigns. GIVS assessed that US$ 11–15 billion of the overall resource needs are unmet in those 72 countries, if the GIVS goals are to be reached.

Applying an elementary algebra, we divide the total budget ($35 billion) by a total population (733 million) for those 72 countries. $47 – this is the average to be spent on each person for vaccination/immunization.  Next step was to see whether this sum is big or small for stated goals? According to this abstract, the average cost per fully immunized – only against malaria – child (FIC) in Tanzania increases almost linearly from US 4.2 dollars per FIC at a vaccine price of US 1 dollar per dose to US 31.2 dollars at vaccine price of US 10 dollars per dose. What does this tell us? That even nominal costs to fully immunize against malaria are high, and not inclusive of marketing and other administrative expenses. Thoughts? There seems to be something wrong with numbers – or with my brains.

Let’s now focus on WHO’s treatment of swine flu and AIDS.

Swine flu

World Health Organization conceded serious shortcomings in the agencies handling of the H1N1 swine flu pandemic. The most worrying problem included a failure to communicate uncertainties about the new virus as it spread around the world. Keiji Fukuda, the WHO’s top influenza expert, said “The reality is there is a huge amount of uncertainty (in a pandemic). I think we did not convey the uncertainty. That was interpreted by many as a non-transparent process.” Fukuda targeted the U.N. agency’s six-phase system for declaring a pandemic had sown confusion about the flu bug which was ultimately not as deadly as the widely-feared avian influenza.

A vocal minority of scientists and government officials around the world have accused WHO of overplaying the danger of the virus, while others have claimed its decision to declare a pandemic was unduly influenced by commercial interests. Critics have said the WHO created panic about the swine flu virus, which turned out to be moderate in its effect, and caused governments to stockpile vaccines which went unused. Questions have been voiced regarding the WHO’s links to the pharmaceutical industry after companies like GlaxoSmithKline and Sanofi-Aventis made massive profits from producing H1N1 vaccine.

Falsely reassuring words of the officials regarding the “safety” of the swine flu vaccines, developed in haste, are now openly incriminated by the Finnish authorities for causing narcolepsy, a serious neurological disorder, which has been observed in several children and adolescents.


The WHO’s failure to hit its “3 by 5” target – a plan to put 3 million AIDS sufferers on life-extending antiretroviral treatment by the end of 2005- is the result of it placing too much emphasis on treatment, and not enough on prevention. As a result of this misprioritisation, new cases of AIDS are piling up faster than they can be treated.

Philip Stevens, director of health projects at International Policy Network said: “Instead of learning from its mistakes and changing direction, the WHO is actually asking for more money so it can beef up a strategy that is clearly failing. This is entirely the wrong way to go about fighting AIDS in Africa.”

That was swine flue and AIDS. How is WHO fairing in on other infectious deceases and endemics? According to the Wikipedia entry of “eradication of infectious deceases,” resulting from the global health efforts, smallpox was successfully by WHO in 1977. Rinderpest, on the other hand was finally declared to be eradicated by FAO in 2010. Global eradication is underway for polio (led by WHO, UNICEF and Rotary Foundation) and dracunculiasis (led by Carter center, not WHO).

In regional efforts of elimination established or under way for malaria (initiated by  Bill and Melinda Gates and creation/funding of Roll Back Malaria Partnership and their Global Malaria Action Plan), lymphatic filariasis (treatments donated by GlaxoSmithKline and Merck), measles, rubella (WHO missed its own set eradication target of 2010), onchocerciasis (Onchocerciasis Control Programme, a joint collaboration of WHO, World Bank, UNDP and FAO, eliminated onchocerciasis as a public health problem by 2002 but as of 2008, about 18 million people were still infected of which 300,000 permanently blinded, the decease still currently endemic in 30 African countries, with circa 120 million people being at risk for contracting the disease), yaws (WHO has moderate success tackling it), bovine spongiform encephalopathy and Creutzfeldt–Jakob disease.

The above illustrates that, with one important exception of smallpox, WHO has a sidekick’s role (polio, malaria, onchocerciasis), is a loser (tuberculosis, rubella) or almost entirely absent (dracunculiasis, lymphatic filariasis, measles, bovine spongiform encephalopathy, Creutzfeldt–Jakob disease) from the global health playground, shielding itself by (co-) commissioning studies and conducting surveys.

I leave it up to you to judge success rate and “RoI” of WFP and WHO.

Failures of United Nations (part 2 – other UN agencies)

In the first part of the “Failures United Nations,” I started off by documenting some of most glaring blunders of the Security Council, in charge of global peace/security- related  matters. As far as military and political interventions were an issue, the UN SC showed itself incapable to say the least.

What about other agencies of the UN and their areas of responsibility and action? Besides the maintenance of global peace/security, the UN has a three-pronged raison d’être: economic, social and political betterment of the world. How has the UN been fairing on these dimensions?

Ivory Coast (political)

The United Nations had a plan for Ivory Coast: to oversee elections and install a “winner-takes-all” state president.  Having failed to secure a political solution, the UN joined with French forces and one side in the civil war in Ivory Coast to forcibly overthrow the government that had lost the election but refused to quit. The discovery of mass graves of civilian victims of gruesome violence suggests that the UN may have reignited the North-South civil war instead of healing it.

Kenya (health/society)

The orthodox account of how HIV is transmitted in African countries is inherently racist.

UNAIDS have rarely been heard to refer to any kind of non-sexually transmitted HIV except to deny that it exists. And they have to spend their time thinking up ad hoc explanations of why a virus that is difficult to transmit sexually is almost always transmitted sexually in (some) African countries and hardly ever in non-African countries.

Syria (political)

It is deplorable that some members of the United Nations Security Council – most disappointingly, Brazil, India and South Africa – were reluctant to pass a resolution condemning the Syrian military’s continual attacks on unarmed demonstrators. At long last, on Wednesday, the council issued a “statement,” which does include the verb “condemn,” but carries less authority than a resolution.

Iraq (economic/social)

“I went to the U.N. as a die-hard supporter of that organization. I left as one of its most outspoken critics,” Spertzel, who formerly led the U.N. biological weapons inspection team in Iraq after the first Gulf War.

“The Oil-for-Food people spent most of their time in the cafeteria, as opposed to being out in the field making sure that the material was going to the locations that it was supposed to,” Spertzel said. “It was such common knowledge it had to be known.”

In an arrangement negotiated by U.N. Secretary-General Kofi Annan, the UN collected 2.2% of every oil sale — totaling $1.4 billion in all — to ensure Oil-for-Food was on the up-and-up. Instead, Saddam stole billions, collecting kickbacks from oil buyers and dishonest aid suppliers who often stuck the Iraqi people with third-rate food and medicine that was unfit for human consumption.

DR Congo (human rights/social)

The UN has consistently failed Congolese women, at every level from the troops on the ground to the Security Council that deploys them, from the array of UN agencies present in the DRC to the Secretariat in New York and the Secretary-General charged with leading the bureaucracy. It has failed to understand the problem, to address it, to acknowledge its own mistakes, to assign responsibility, and to substitute effective action for rhetoric.

Hutu members of the Democratic Liberation Forces of Rwanda (FDLR) who had participated in the 1994 Rwandan genocide fled that year over the border into the DRC. By 1996 they had penetrated deep into the Congo. Now there are about 6,000 FDLR fighters who use the DRC as a base, and are deeply involved in exploiting that country’s minerals. They have raped women without pause or hesitation since arriving.

Against this background, the UN’s actions and inaction over the last 14 years have led to the latest episodes in Luvungi and other areas in eastern Congo. Local Congolese rebels together with the FDLR took over Luvungi from July 30 to August 3 and raped hundreds of women. The world was informed not by the UN, but by an NGO, International Medical Corps, which was approached by victims who sought help. This is astonishing until one looks carefully at the UN’s role in the DRC.

Pakistan (environment/social)

“The United Nation’s One UN Joint Program is a wonderful project, but unfortunately this pilot and test project was totally failed due to the recruitment of the incompetent staff at the key posts.”

… people hired are only those who have been recommended by the incumbent government. He said that the hiring process favors hiring family members of other UN employees.

… initiated by the United Nations Development Program (UNDP). A best example of these failures is the Mountains Areas Conservancy Project (MACP), which has failed badly. This project was considered a failure because the UN didn’t generate any awareness among the Pakistani people about the conservancy of the mountains.

Needless to say that the bigger picture here looks quite as bleak as for the SC.

What is to be done – if there is anything possible – to make the United Nations to live up to its name and act more responsibly, effectively and in a more considerate and impactful manner? The part-3 will elaborate on that..

Failures of United Nations (part 1 – Security Council)

January 1, 1942. WW2 is raging. There is misery, chaos and destruction. Representatives of 26 countries, including America, are gathered and pledge in “Declaration by United Nations” – Franklin D. Roosevelt coins the term “United Nations” – to continue fighting the evil of Axis powers.

1945. War is over, but the term coined by FDR lives on as representatives of 50 countries meet in San Francisco at the United Nations Conference on International Organization to draw up the United Nations Charter, which has the following pre-amble.

  • To save succeeding generations from the scourge of war, which twice in our lifetime has brought untold sorrow to mankind, and
  • To reaffirm faith in fundamental human rights, in the dignity and worth of the human person, in the equal rights of men and women and of nations large and small, and
  • To establish conditions under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained, and
  • To promote social progress and better standards of life in larger freedom

What about results it has achieved in its 60 years of history? According to one groundbreaking report UNICEF conducted in 1996:

  • Increasingly, wars are fought in precisely those countries that can least afford them. Of more than 150 major conflicts since the Second World War, 130 have been fought in the developing world. The per capita gross national product (GNP) of war-torn countries in 1994 included: Afghanistan (US$280), Angola ($700), Cambodia ($200), Georgia ($580), Liberia ($450), Mozambique ($80), Somalia ($120), Sri Lanka ($640), the Sudan ($480).
  • Since the 1950s, more wars have started than have stopped. By the end of 1995, wars had been running in Afghanistan for 17 years, Angola, 30; Liberia, 6; Somalia, 7; Sri Lanka, 11; Sudan, 12.
  • The global case-load of refugees and displaced persons is growing at alarming speed. The number of refugees from armed conflicts worldwide increased from 2.4 million in 1974 to more than 27.4 million today, the report notes, with another 30 million people displaced within their own countries. Children and women make up an estimated 80 per cent of displaced populations.
  • In 6 out of 12 country studies prepared for a research report … the arrival of peace-keeping troops has been associated with a rapid rise in child prostitution.

The UN’s elephant in the room that no one pretends to heed is the infamous UN Security Council (SC), which issues resolutions, which – the SC is the only UN agency with such power – are binding by law for all UN members. Not only the balance of power is tilted towards the UK, France, the US, China and Russia – the veto-wielding powers that can block any decision even if remaining ten non-veto members vote yes – but this tilt itself is archaic, driven by the then political and economic realities, and not representing 21st century power distribution.

It is not only this but the fact – and this is the most important factor in deciding the “usefulness” of the SC – that scrambling over each other at times and staying mum at other times and closing their eyes and ears at yet others is a typical mode of functioning of this UN body. Furthermore, if it were only numerous debates with foregone decisions, meticulously planned and executed-to-perfection speeches containing no sense or petty, nitpicking droolings over a single word resonating in the halls and assemblies around the world, that would still be bearable. Reality is different. The result is a list of failures, lack of actions sanctioned by and plain inactivy on the part of the SC, notably:

  • UN voice re Hungary and Czechoslovakia was ignored by the Soviet Union in 1950s.
  • No emphatic role/inefficiency/late action in crisis of worst kinds such as  Sierra LeoneCuban Missile Crisis, Korean War, Vietnam War, Soviet military occupation of Afghanistan, the US-sponsored Islamic Jehad via Pakistan on Afghanistan against the Soviets, the three Gulf Wars and the wars leading to the break up of Yugoslavia.
  • Number of nuclear powers (and their nuclear activities) has been increasing despite UN’s and its nuclear watchdog IAEA’s best efforts. Notably, China’s assistance in development of nuclear weapons and its supply of nuclear capable missiles and missile technology to Pakistan, assistance in building up of DPRK’s long-range and nuclear capable missiles, and finally, Pakistan’s supply of nuclear weapons technology to DPRK.
  • Iraq (American intervention was bereft of a UN SC mandate) and Afghanistan have large contingents of UN peacekeepers – yet the situation has become worse despite – or perhaps because of – their arrival and inefficient operations.
  • Inability to resolve/mediate in politically unstable or conflicting situations diplomatically.
  • Inability to define, grasp the scope of and resolve the war on terrorism.

According to the UN entry on Wikipedia the main issue is the UN’s intergovernmental – and that’s 192 governments with different agendas – nature, which defies its consensus-based logic. The UN itself published and acknowledged its two biggest blunders: Rwanda (1994) and Srebrenica (1995). UN peacekeepers in Rwanda stood by as Hutu slaughtered some 800,000 Tutsi. In Bosnia, the UN declared safe areas for Muslims but did nothing to secure them, letting the Serbs slaughter thousands in Srebrenica.

Additionally, petty disagreements, procrastination and narrow-minded bureaucracy of the SC delegates failed to provide humanitarian aid in the Second Congo War, failed to relief starving Somalia and Uganda, failed to intervene and save countless lives in Sudan, failed to resolve the Israel-Palestine issue.

The UN was the very reason, back in last months of 1947, reluctant to decide upon partitioning of Jews, the minority, and Palestinians when the UK handed it the sovereignty mandate that caused Jews to take on all strategic administrative posts – they were better educated thus more fit – the subsequent outcry of Arabs who were a majority to take to streets with weapons, ushering in a full-fledged civil war, which in May 1948 turned into a war between Israel and neighboring Arab countries.

The much touted and hope-inspiring UN peacekeepers have been marred with problems of their own. They were accused of child rape and sexual abuse during various peacekeeping missions in Congo, Haiti, Liberia, etc. Around 100,000 UN peacekeepers make up UN peacekeeping operations – currently, Pakistan, Bangladesh being the biggest contributors – are sent by a number of contributing governments in exchange for a monthly stipend of about US$1,400 per soldier – a significant amount for main contributing countries. Trying to coordinate all the disparate, differently-trained and equipped, multi-lingual units is quite a challenging, if not impossible, task.

The only interventions that achieved anything worthwhile in the 1990s were conducted outside the standard UN “jurisdiction.”  They were achieved through great-power action and traditional balance-of-power calculations – both anathema to orthodox UN mentality. In Bosnia, a Croat onslaught and NATO bombing and artillery bombardment combined to roll back Serb forces and to push Slobodan Milosevic to cut a deal. In Kosovo, a rebel ground offensive, NATO air power, and the threat of a NATO invasion again bludgeoned Belgrade into submission. The UN’s role was negligible in both cases.

NATO won a victory in Kosovo and unwisely turned over its management to the UN and its chief Bernard Kouchner, who faced the challenge of running Kosovo but inability to prevent its eventual return to Serbia, resulting in delayed schedules, lags in reconstruction and suffering/dispossessed population.

Thus the SC is clearly problematic and not in some aesthetic or theoretical, but in a manner that caused and causes suffering, death and abuse in many corners of the world, the very opposite of their claimed objectives.

But what other alternatives are there, at least as far as global peace and security are concerned? “Might Is Right” cause is as arcane as one country being the leader of world peace. What government would accept that? Also, we can safely assume that no country has the moral high ground or a universally accorded carte-blanche or even a sheer logistical capacity to become the world police, peacemaker/keeper/sustainer.

There are proposed alternatives (a bit paraphrased and complemented by links).

David Rieff has argued for the US and its allies to undertake “liberal imperialism,” while William Kristol and Robert Kagan have called for the US to assume a “benevolent global hegemony” – which will imply fighting wars in places like Kosovo. Contrary to received wisdom, this would not be a new role for the US, for it had been involved in other countries’ internal affairs since at least 1805, when, during the Tripolitan War, the US tried to topple the pasha of Tripoli and replace him with his pro-American brother. US Marines landed abroad 180 times in the period of 1800-1934. In the 19th century, they stayed only a few days but still helped open up the world to Western trade and influence, their most spectacular successes being Commodore Perry’s mission to Japan and the defeat of the Barbary pirates. After 1898, US forces stayed longer in order to run countries such as the Philippines, Haiti, and Cuba. The US rule was not democratic, but it gave those countries the most honest and efficient governments they have ever enjoyed.

Another way that the UN shows its archaic nature is its inability to cope with the new and increainslgy popular networked terrorism. The UN does not formally recognize any country as a terrorist state, nor has its own definition of terrorism, vowing for “operational definition” of a specific terrorism act.

“Is it worth (read: pros/cons analysis) having a Security Council at all, given all its past and present fails?” is the question we need to really think about.

Obama fails – America fails

A famous story from IBM told of a man who made a $10M error. He was hauled up before the big boss where he expected to be sacked. Pre-empting this, he apologized and offered his resignation. Refusing the resignation, the boss said ‘Goodness, man, we can’t lose you now! We’ve just spent $10M on your education!’

Have you heard? America and EU – the developed, 1st world, civilized West – is on decline.

Let’s focus on America and its incumbent leader, the 1st ever African-American to become a president of the US. Do you remember his promise and inspiration he induced in the entire world? Internet was abuzz with positivity, hope and visions of a truly positive America. That was back in 2008.

We are in the 3rd quarter of 2011. A quick search of term “Obama failures” brings in an excess of 12 million search results on Google. Isn’t this something?

There is “Obama fail blog” which aims to document all Obama blunders and eventually publish a book with all stories.

There is also “Obama lies” which features an impressive list of lies and failures – videos and articles from WSJ, Huffington Post, CNN, and other non-scam or radical/extremist-type media – in addition to a “Submit Editorial” section, which starts off by saying that the online visitor is likely to be on that page “by searching for ‘Obama Lies’. is a stage for people upset with the unkept promises of this administration to share their frustrations.” Its “Obama lies directory” section contains a big number of resources, including blogs, video links, and articles. Not forgetting about its own “commercial” side, the site sells branded t-shirts with “Obama Sucks” and alike for $20-30 apiece. This site has been up – if blog archive is any indicator – since March 2008 but contains entries starting June 2008, in itself a telling sign.

Curious about this “blog,” I had a quick look at, the web ranking engine of the Internet.  According to, the audience (with an estimated 86% being in America) of this website comprises mostly of 35-64, predominantly male visitors with some college education who have no children. Doesn’t this sound like a middle class, average-educated, unemployed/freelance divorced/single American?

Is this all? Few blogs and other peripheral hate-mongering – even Mohandas Gandhi and even till now has his haters gather here, or more social ones here.

There are high flyers. Last year, Arianna Huffington, founder of Huffington Post who ranks 28th on “The world’s 100 most powerful women“, gave an interview to the Time magazine about her book “Third World America,” in which, the first 165 pages look like a catalog of horrors describing the decline of America and an undeniable and obvious role of Obama 2008 campaign and its subsequent “execution.”

There are the Republicans. Mitt Romney, the former governor of Massachusetts who currently leads in early polls for the Republican nomination, issued a video of a shuttered steel plant (that closed down in January 2011 after struggling for years) Allentown Metal Works, which Obama visited in 2009, to attack the president.

There are heavyweights. Nouriel Roubini aka Dr. Doom, the influential Italian economist who predicted the current economic recession, was forthcoming when he said, among others, that Obama’s presidency was heading for “fiscal trainwreck,” that his economic proposals “won’t make a difference” and that Obama’s spending freeze is just a “spare change.”

There are creative Wall-Street types too who churn out both wheat and chaff. A recent WSJ article, features “Snapshots from President Obama’s efforts to improve America’s standing in the world, 923 days into his administration” and an alphabetic list – all English letters are present – of info snippets offering statistical details, historic comparisons (not in Obama’s favor), and broken promises. Conspicuous are some comparisons such as the fiscal deficit of 3% in 2008 as opposed to an estimated 11% of GDP in 2011 and the then (November 2008) president-elect Obama’s promised creation of 2.5 million new jobs by 2011, whereas having shed 3.3 million jobs by October 2010.

Let’s be frank. We all commit mistakes, some big, some small; our employers, families and spouses, being considerate, shoulder those mistakes and think of them – best case scenario – as “investments” in our education like in the opening story about IBM or sunk costs/wasted resources – worst case scenario – which entail lay-off/other forms of downgrading.

Obama is no exception. Admittedly, he made and still makes errors, but with the particularly burdensome fiscal debt, the reeling economy, the ever-increasing unemployment and the real scope of the 2008 economic crisis finally unraveling itself, his (under) reactions might eventually have an even more grave consequences for America and the world. As it succinctly points out here, it is not clear

which tragedy is the more troubling: the failure to see the true scope of the disaster when accurate numbers weren’t available, or the failure to see it now that they are.

If Obama only did?

Curiously though, does Obama Google his name from time to time? What would he think/do if he saw what there is to see?

How and why America is declining

“One man with courage is a majority.”  Thomas Jefferson

My last post was about the disarray in Europe. What about America?

Let’s start with some interesting statistics. The famous American “fruit” company, Apple, according to the latest financial report, now has more cash to spend than the American government. While in itself not a critical factor, this still poses a sort of dilemma – is business so much ahead of the government in America?

In the backdrop of the on-going debt debate, Barack Obama looks like a man who picked a fight he is unable to finish. But wait. Obama just announced that Republican and Democratic leaders reached an agreement on raising the US debt limit and avoiding default. The deficit reduction is meant to happen over the period of 10 years. And both sides went to a seemingly lose-lose compromise just to get the deal. Will it hold or even pay off?

The debt-related stand-off in Washington is political in nature, having been initially thrust upon incredulous investors. Increasing America’s overdraft (which, according to Government Accountability Office, GAO, has been increased 74 times over the past 50 years) beyond $14.3 trillion (or facing the very 1st default in its history) should have been relatively simple. But Republican congressmen, furious about big government, have recklessly used it as a political tool to embarrass Obama.

America’s fiscal problem is not now — it should be spending to boost recovery — but in the medium term. Its absurdly convoluted tax system (allegedly changed 579 times only during last year) is very inefficient, and there is speculation that ageing of its baby-boomers will push its big number of entitlement programmes into bankruptcy. Obama set up a commission to examine this issue and until recently completely ignored its sensible conclusions. For long time, Obama also held the illusion that the panacea to the deficit is to tax the rich (top 5% who already pay 60% of taxes).

The problem, in America like in Europe, lies not just in the weak/inconsistent leadership and inability to commit to radical economic measures necessary to cure the ailing economy, but also in the political structures. Just like in Japan, its dysfunctional politics were stemming from its one-party system, in American Congress, the (moderate) centre — conservative Democrats and liberal Republicans — has collapsed, in part because partisan redistricting has handed over power to the extremes, ushering it into a radical quasi-one-sided system, not unlike the Japanese.

But American politics is less broken than many think or allege. Since 2009, Congress has passed a huge stimulus bill, ARRA (although there are 1.3 million fewer private-sector workers today than when the ARRA was passed), aimed at economic recovery, evidence that the legislature is still able to get things done.

American economy is becoming increasingly vulnerable. New data continue to reveal just how weak growth was in the 2nd quarter of 2011. The economy has expanded at a 1.3% annual pace. Markets are declining, and businesses are building up cash reserves as insurance against the worst. After two years of pitifully slow recovery, while tens of millions of workers are unemployed (currently at about 14 million) and wages are flat, the government is doing little to get back to economic growth.

Some possible solutions to the ailing American economy include:

  1. Government size to be reduced (public sector, expenditures) in order to put a dent in this debt.
  2. Congress to accept cuts on entitlements.
  3. Government to create a favorable environment for job creation; the private sector does the rest (recently, McKinsey conducted a research asking, “What is the single most important step the U.S. should take to create more jobs” and published the responses here).
  4. Continue pursuing/following-up with taxes for the top 5% (to be invested, for example, in increasing financial aid for college students).
  5. Move some (according to certain criteria) of 46% of American population, who pay no Federal income tax, into the ranks of the remaining 54%.
  6. Impose a national sales/VAT tax. Tax consumption (not investment) and reward savings.
  7. Let the capitalism (supply and demand) solve the housing problem instead of introducing artificial measures.
  8. Let the zombie (aka bailed out) banks/firms go, which might result (for some of them at least) in chapter 11/bankruptcy and making them (in majority of cases) downsize and restructure rather than liquidate.
  9. Wind down American military engagements abroad (two wars, Iraq and Afghanistan, would save up to $150 billion/year in addition to withdrawing, at least partially, 53,000 military personnel from Germany, 36,000 from Japan and thousands more in another 133 countries).

I started by quoting Jefferson and so I shall finish, hoping that Obama and Congress will act before it is too late.

“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” Thomas Jefferson

How and why the EU is declining

Europe is in disarray.

Appearance-wise and disregarding petty differences, the EU-27 are marching on the spot on foreign policy, defence, Schengen and the single market with the exception, notable but again not yet really convincing, of progress on financial regulation and supervision.

A layer deeper though, one encounters seemingly impassable hurdles of sovereign debt, vulnerable and domino-like arrangement of banks, and a poorly-designed Eurozone, the combined effect of which risk to disintegrate the Euro (for which the crisis was originally brought on by investors with genuine worries about the solvency of several euro-zone countries), on whose foundations the united European economic system was built. It is clear that economic integration has exhausted its potential, which is more limited than anyone had imagined at the beginning, for ensuring structural convergence of industry between Member States and ameliorating weak growth performances.

Presently, Europe appears to be heading towards a decade of stagnation with the triple threat of nationalism, populism and protectionism which is being dragged behind unemployment (9.9% and among young workers, more than twice that much). Industrial activity is already shrinking in Greece, Ireland, Italy, Portugal, and Spain. The time is coming when a new path towards integration, political this time, will reveal itself as indispensable. But no consensus exists for a new treaty. Ad-hoc formulas will therefore have to emerge as short term Band-Aids, exploiting the existing potentialities of the Lisbon treaty to be followed by long-term formulas, based on a complete revisit and revamp of European economic, social and political values and vision driven by a need for sustainability and prosperity.

Europe also finds itself faced with the colossal challenge of having to mobilize public opinion. But because of the lack of a real consciousness of European citizenship, public opinion is at best passive and at worst euro-sceptic. To mobilize it will demand the unveiling of a “European plan” and the rallying of a majority buoyed by the perception of a commonality of destiny on the economy and defence, two inseparable pillars.

European politicians, led by Angela Merkel, have gone to absurd lengths to avoid admitting two truths: that Greece is bust; and that north Europeans (Germans in particular) will end up footing a good part of the bill. The current rescue package reduces Greece’s debt, but not by enough to give it a genuine chance of recovery. As a result, Greece, and maybe other European countries, will need another bail-out rather sooner than later. To face this (upcoming) problem in a united manner, Europe might get “tighter together” by spawning a fiscal union, hitherto unprecedented, while trying to run away/re-distribute immediate problems.

There is also a part of blame to be laid on dysfunctional politics. In Europe national politicians, answerable to their own electorates are struggling to confront continent-wide problems – thus a crucial misalignment between expectations (by national electorates) and commitments (towards European policies) yielding, on average, ”value-less” results.

European leaders do however know what they need to do. They have been slow in doing for two reasons:

  • magnitude of the commitment necessary to save the union is uncertain, and they don’t want to pay a penny more than is necessary, and;
  • distribution of commitment costs is uncertain and not guaranteed, and no individual entity wants to pay a penny more than is necessary.

So what are those possible solutions to the ailing EU economy that EU leaders so far fail to carry out? Some might be:

  1. Peripheral debts to be addressed through austerity.
  2. Like in case of Ireland, to drop all unsustainable debts, not to continuously slowly the economic recovery.
  3. The Euro to compete with the national currencies, putting pressure on the ECB, which will ensure that the Euro is a low-inflation currency.
  4. A form of Eurozone bond, which would largely replace the national eurobonds issued by the individual countries.
  5. To bolster European emergency funding, which fight failing European banking contagion.
  6. Financial/fiscal integration to take place, including fiscal transfers to support peripheral economies while they get their budgets in order.
  7. European Central Bank to stop raising interest rates and being illusioned about inflation.

Just as in Japan two decades ago, politicians have failed to make the structural labor- and product-market reforms essential to spurring growth. Lack of strong leaders was the underlying problem of Japanese economy, which has not recovered yet. The turn has now come for European leadership to show what it is capable of, but there seems to be no leadership.

Emergence and failure of societies: first take

How do societies fail? Not just average, but also successful ones?

Historically, there are a number of complex, developed and highly-civilized societies that rose, became very successful and the, just as magnificently/incredibly fell, leaving behind testimonies of their greatness.

Jared Diamond outlines few glaring examples in his excellent book “Collapse.” Let’s take Easter Island. Its society built and dragged 80-ton 33-feet-high statues for 10-15 miles, in addition to navigating the Pacific Ocean to and from the most remote islands in the world, also managed to cut down its rich rain-forest and doom itself. With no trees left for making canoes, the Easter Islanders turned to devouring each other. The typical insult to a member of a rival clan was, “The flesh of your mother sticks between my teeth.” The population fell by 90% in a few years, and neither the society nor the island ecology have recovered ever since.

Or take other examples. Failures/collapses of once-powerful societies — the Mayans with the most advanced culture in the Americas, the Anasazi who built six-story skyscrapers at Chaco, the Norse who occupied Greenland for 500 years  — or  successes of, for example, Tokugawa Japan, which reversed its lethal deforestation, and Iceland, which learned to master a highly fragile environment. Modern times have their parallels to those of history. Rwanda, which lost millions in warfare caused by ecological pressure, and Australia, with its ambitions to overcome a rough environmental history, which still struggles to find a comprehensive solution.

Diamond contends that it’s a society’s failure to think long-term, which has many causes. One common reason is that elites become insulated from the consequences of their actions. Mayan kings could ignore the soil erosion that was destroying their crops just like  modern wealthy Americans enjoy sufficient security, education, and retirement benefits, ignoring national as well as global issues that are already affecting their lives, indirectly, and will continue to do so increasingly for future generations.

But is it the only or even the most important problem that causes a society to fail?

Societies are complex entities, and as such failure/success factors, let alone underlying reasons, would hardly be simple to pinpoint – nor would they most probably be simple in their nature, embedding a combinations of smaller factors. There are concurrent conjectures/theories that attempt to explain away one or another aspect of functioning of societies and their subsequent lows/ups. They all, one way or another, base their claims on what is called theory of emergence.

In briefly, “emergence” – popularised in Steven Johnson’s book “Emergence” – is about how complex systems organise themselves, without any apparent direction/plan. Individual units of systems “do their own thing” without knowledge of any overarching aim/scheme, but out of this “chaos” order, pattern and system emerge. In Johnson’s book, classic emergent systems are ant colonies, cities and self-learning software, which, he claims, will bring self-organised order to the chaotic Internet in the not too distant future.

There is a need to differentiate, marked by Mark Bedau and others, between two categories of emergence:

  1. Weak emergence. Systemic phenomena that are theoretically but not practically reducible to characteristics/functioning of its composite parts. Most complexity theories (for example, modeling, simulation, system laws, etc.) study this form of emergence. Calculations required to predict the resulting phenomena are so complex as to be effectively impossible but instead, these calculations are carried out by means of simulation.
  1. Strong emergence. Systemic phenomena that are fundamentally not reducible, but are distinct and can exert downward causation on the system from which they emerge. It is mostly a subject of philosophical discourse or considered in competing conjectures/theories of human consciousness, which didn’t evolve much since Nobel laureate Roger Sperry‘s research in 1969. No simulation is possible for this type of emergence.

Why is this relevant to the question of complexity in societies and the question of collapse? There seems to be an important interface between emergence and failure/collapse of complex societies as noted by Joseph Tainter in his book “The Collapse of Complex Societies.”

Tainter looked at several societies that gradually arrived at a level of remarkable sophistication then suddenly collapsed. Everyone of those groups had rich traditions, complex social structures, advanced technology, but despite their sophistication, they collapsed. He looked for some explanation common to these sudden collapses. The answer he arrived at was that they hadn’t collapsed despite their cultural sophistication, but because of it.

According to Tainter, a group of people, through a combination of social organization and environmental luck, found itself with a surplus of resources – management of this surplus made societies more complex, eventually resulting (at least for some of them) in the shift from rural- to urban-centric societies. Early on, the marginal value of this complexity is positive — each additional bit of complexity more than pays for itself in improved output — but over time, the law of diminishing returns reduces the marginal value, until it disappears completely. At this point, any additional complexity becomes a cost. Tainter’s thesis is that when a society’s elite members add a layer of bureaucracy or demand one tribute too many, they end-up extracting all the value from their environment possible to extract and then some more. This overstretching is what ushers complex societies into systemic collapse because, when a stress comes, those societies have become too inflexible to respond. In retrospect, it seems mystifying. Why didn’t these societies just refashion themselves into simpler ones? The answer Tainter gives is that when societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, but because they can’t.

In such systems, there is no way to make things a little bit simpler – the whole edifice is by then a huge, interlocking system not readily adjustable to change/simplification. Tainter doesn’t regard the sudden incoherence of such societies as a conincidence, mistake or failure to think long-term: “Under a situation of declining marginal returns collapse may be the most appropriate response.” Furthermore, even when moderate adjustments could be made, they tend to be resisted, because no simplification fits or is satisfactory to elites.

Let’s now shift gears and look at how emergence theory is (bluntly) being applied to describing modern social frameworks. If we can think of “democracy” as meaning a system through which members of communities organize themselves, rather than a system for controlling them, our democratic systems would be getting closer to being complex, adaptive and self-organizing. But what is wrong in the transference of the insights of “emergence” to political democracy and economic systems is its false analogy between physical systems (for example, ant colonies) on the one hand, and political/social organisation on the other.

Nobody knows exactly how ants organize themselves, but it is obvious each individual ant can’t possibly have any knowledge of the overall system. In fact, ants pick up signals from chemicals called “pheromones,” which they secrete. Scientists showed that if two ants go foraging for food, the ant, which finds food closer, will return quicker, and thus deposit more pheromones than the other ant. This trail will then be followed by others, and an efficient pattern of food foraging is thus established.

Another author, Steve Marcus, in his book “Engels, Manchester and the Working Class” argues that the clear-cut separation of upper and middle classes from workers which “emerged” around the working class areas of Manchester in 19th century was too complex a system to have been planned and thought up in advance. It was perhaps not planned in advance but certainly the outcome of conscious decisions, i.e. decisions of middle and upper class people to live as far away from the workers as possible. This may not have been a planned decision, but it was conscious.

Johnson thus considers cities as classic examples of “organised complexity” or more a “self-organised complexity”. Cities are in fact – like any human society – a dynamic interaction of planning and spontaneity. No one plans in advance the complex system whereby thousands of people get off a train. But that it takes place at all is a function of the underfunding of public transport, and (not least) the decision to build the train station in the first place. Decisions of this kind may not have been simultaneous and may have aggregated over time, but they did not just “emerge” out of thousands of random local/individual decisions. Self-organised complexity interacts with a rather well-organised complexity. Johnson proceeds showing that through the generations cities replicate their basic structure, even if all the individuals and businesses change; they are “patterns in time.”

A recent example of initiating a complex social system, without a recourse to traditional, hierarchic governance system is the Zapatista movement. On August 9 2003, the Zapatistas in the state of Chiapas (Mexico) presented their newly created Zapatista municipal authorities. This was an archetypal example of self-organisation from the bottom up and (not with reference to but) against state authority. This formidable achievement has taken ten years of work in difficult circumstances. In 2000, when 500 Zapatista activists from the communities arrived in Mexico City as part of their national consulta campaign, at least half of them were ill, suffering from different infections and other illnesses. What made them ill? Poverty and a lack of basic medicines like antibiotics, which would have immediately cured most of them. They were lacking basic social, economic and health factors that are usually institutionalized and supprted by a typical centralized government.

Zapatista example proves exactly the point Johnson is trying to make, namely that when delving deeper into the theory of emergence, one discovers that emergent systems are rule-governed. In natural systems the rules are established independently of the units whereas in human society rules and norms of behaviour have to be established consciously.

Stephen Wolfram writing in his book “A New kind of Science” confirms the same idea of complexity being based on a set of simple entities. “Whenever a phenomenon is encountered that seems complex it is taken almost for granted that the phenomenon must be the result of some underlying mechanism that is itself complex. But my discovery that simple programs can produce great complexity makes it clear that this is not in fact correct.” He has devised rules of interaction for those simple entities, known as “cellular automata” which as Ray Kurzweil writes can result in “patterns that are neither regular nor completely random. It appears to have some order, but is never predictable.”

It seems therefore that there is some sort of agreement that many systems (societies, economies, etc.), themselves based on or representing simple entities, are complex in their nature and not necessarily reducible to characteristics of their parts. We do however need to differentiate complex human systems, a mixture of conscious schemes and random choices, and other complex systems (such as ant colonies) where the emerging properties of a complex system are defined by individual random choices only.

Bouazizi, Ghonim and MENA regime failures

There is a change in the Middle Eastern air.  It is getting “purified” of its autocrats.

Tunisia (with its subsequent toppling of regime) and now Egypt is on fire, with further political ripples spreading all over the region. Given that Middle East features a number of dictatorial/autocratic/monarchic regimes, it is not surprising that some of those rulerssix out of top ten autocrats being from the MENA region – stay in power for decades or for life.

What is interesting to witness however is not that semi-oppressed/disgruntled nations are not prosperous/happy – a rather expected outcome – but that they are able to express themselves and use (with increasing efficiency) Internet as a tool to get concessions from or even changes of regime (as with Tunisia kicking off and Egypt and other countries following in step).

Tunisia, a country of 10 million, with more than 30% of it on Internet and 18% on Facebook, succeeded in using Twitter and Facebook to  self-organize and centralize protests and manifestations. The regime’s clamp-down came a little too late – the incumbent president got ousted.

Egypt, on the other hand, is a country of 80 million, with about 25% of it on Internet and  an estimated 6.25% (5 million) on Facebook. Egyptian unrest really started on January 25, 2011, by peaceful marches and manifestations organized in the center of Cairo accompanied/coordinated by Facebook groups such as April 6 movement and #jan25 Twitter activism. There was, as in Tunisia, no real/serious political power behind it, initially (Muslim Brotherhood, El Baradei and other opposition groups joining in later). But Egyptian government was more “proactive” in its response, with gradual slowdown of Facebook/Twitter, followed by a complete closure of  Internet and mobile services  from January 28 and until  February 2.

While Tunisian regime change was spurred by and centred around the suicide of Mohamed Bouazizi (an unemployed college graduate), Egyptian voices escalated after the arrest (by Egyptian authorities) of Wael Ghonim, Google MENA’s marketing boss, on January 28 and release on February 7. During this time, he has emerged as an inspiration/idol, especially for Egyptian Internet-savvy youth who were a significant force behind two weeks worth of manifestations and protests in downtown Cairo. One telling sign and a measure is Ghonim’s astronomic growth in popularity online (and subsequent “offline”): his Twitter following grew from about 4,400 on January 29 to more than 23,000 currently (more than 12,000 of them on the day of his release) and a Facebook fan page in his honor grew, in only 4 hours, to 84,000 fans and counting.

Which direction do these two cases point in? To me at least, that given a right cause, an accumulated discontent and an inspirational/visionary persona with whom to identify, a little spark can ignite not only a fireworks but a complete purge/revamp of a regime in however big a country.  And while the outcome is not clear yet for Egypt – according to  likes of Fisk, the regime is “on its final cusp of departure” – the people’s path (so far, ministers sacked, promise from Mubarak and his son not to run for office in few month, Mubarak’s resignation as a head of NDP and counting) is being paved.

Let’s wait and see.

Update (February 11, 2011)

Ghonim’s Facebook fan page reached a staggering 285,000 and counting in addition to his Twitter followers of almost 54,000. From the moment of his release, his stance changed from a humble “I am not a hero” to a rather self-righteous claim of “Revolution 2.0. Mission Accomplished.”

However, in yesterday’s much anticipated televised appearance of Mubarak, he conceded to relish only some of his powers to the VP Soleiman, without an immediate abdication as was demanded  and expected by demontrators in Tahrir square. This latest move on part of Mubarak left a bitter taste and a sense of deception – even the US president Obama “seemed to be euphoric, preparing for Mr Mubarak to step down”. Many predict that Friday (today, February 11) the masses would explode and Mubarak might try once again to sow dissent among protesters and bring in the army to contain the “chaos.”

It seems that everyone, including foreign powers, underestimated tenacity, stubbornness and will of the incumbent Egyptian president. Besides the fact that few organizations initiated strikes (thousands of Egyptian railway workers went for strikes yesterday) and that a group of protestors slept, for the first time, in front of the parliament on February 9, not much has been accomplished.

Update (February 12, 2011)

Around 7pm on February 11, Mubarak’s abdication was announced by the VP Soleiman. The power passed to the Defense Minister Tantawy (Egyptian Army), absolving the rest of existing structures of the government.

Since that moment on the crowds went crazy celebrating on streets till little hours of the next day. Music, songs, poems, dancing – a nation-wide party where all differences, problems and obstacles are forgottten, at least for the time being, in their unity of celebration and moment of euphoria.

Congratulations Egypt! Revolution 2.0 – as it became known online – was just the preface in the book of Egypt 2.0. It is time for the new Egypt to start writing its first chapter.

Inspired to fail – inspired to succeed

He was defeated for the legislature in ’32. Failed in business in ’33. His sweetheart died in ’35. Had a nervous breakdown in ’36. Defeated in election in ’38. Defeated in nomination for Congress in ’43. Lost renomination for Congress in ’48. Defeated for Senate in ’55. Defeated for Vice President in ’56. Again defeated for US Senate in ’58. Elected President in ’60.

This man was Abraham Lincoln.

A child prodigy shunned by aristocracy. Lived much of his adult life in poverty. Died in his 30s. Buried in a paupers grave.

This man was Wolfgang Amadeus Mozart.

Fired by bosses after other workers refused to work with him. Homeless and impoverished throughout his youth. Survived as a poster artist. Rejected from an Arts Academy. Initially rejected as unfit by the army. Never rose above Corporal. Became the leader of his country.

This man was Adolf Hitler.

These are part of the long chain of other inspiring failures. It seems to be really successful, one has to really fail, badly, deeply.

How does failure happen?

Sometimes failure is a result of bad leadership. According to Denny’s “Motivate to Win,” reasons of leadership failures are:

  1. Inability to organize details
  2. Unwillingness to do what they would ask another to do
  3. Expectation of pay for what they know instead of what they do
  4. Fear of competition from others
  5. Lack of creative thinking in setting goals and creating plans
  6. The “I” syndrome
  7. Over-indulgence, destroying endurance and vitality
  8. Disloyalty to colleagues
  9. Leading by instilling fear instead of encouragement
  10. Emphasis of title instead of knowledge and expertise
  11. Failure to face negative reality
  12. Being ultra-positive

Sometimes, it is the change, with intention of improvement, that causes failure, as Kotter elaborates in his “Leading Change, change will not succeed if the leader is:

  1. Allowing to much complacency
  2. Failing to create a sufficiently powerful guiding coalition
  3. Underestimating the power of vision
  4. Undercommunicating the vision
  5. Permitting obstacles to block the vision
  6. Failing to create short-term wins
  7. Declaring victory too soon
  8. Neglecting to anchor changes firmly in the corporate culture

Detroit’s 6 Mistakes and How Not to Make Them

First Wall Street and now it seems GM and Chrysler came begging at the governments doors for additional $20+ billion dollars. What do they offer in exchange for this money? They want to give buyouts and early retirements packagesin their effort of cost cutting and layoffs. This means essentially that the two companies aim at reviving themselves the old, traditional way adding perhaps an edge of efficiency, leanness and flair of cautiousness in these new realities or do they offer a radical shift, a ideological quantum leap enabling reconstruction of an automotive industry that befits well the expectations, technological progress and strategic vision inherent in the 21st century?

GM and Chrysler so far seem to have chosen what is best characterised by Albert Einstein’s saying, “You can never solve a problem on the level on which it was created.”

Below is an illuminating piece on what (six) mistakes were made by Detroit industries during the 20th century from Umair Haque, one of visionary thinkers on this aspect. These errors, while allegedly bringing automobile industry to their knees in the 21st century, were largely paralleled, ideologically, by other mainstream industries of the 20th century.

1. Old rule: Choose evil. Industrial era business is unrepentantly and almost sociopathically evil: shifting costs onto others, while striving to internalize benefits. Detroit chose lobbying, marketing wars, and low-cost hardball – to always and everywhere try to socialize costs and privatize benefits. Never was this truer than Detroit’s lobbying against public transport throughout the 20th century. Why does public transport in the States suck? Because Detroit’s lobbying machine doesn’t.

New rule? Choose good. In the 21st century, every moral imperative is also a strategic imperative:doing good – for customers, employees, suppliers, or society – is a radical strategic choice that unlocks new pathways to innovation and growth. The opportunity cost of defending evil for Detroit was never learning how to choose good – and that’s a crucial mistake other auto players didn’t make. Tata chose to make a car that was accessible to the world’s poor. Porsche and BMW chose to invest in talent, people, and imagination. Honda and Toyota chose to invest in renewables and partnerships with the public sector. All opened new avenues to growth for an industry at the brink of extinction.

2. Old rule: Selfishness is self-interest.What’s strategic is supposed to be what’s in the firm’s self-interest. But how do we define self-interest? Consider for a second the fact that as recently as this year, Detroit’s lobbyists were hard at work, opposing stricter fuel efficiency standards. That’s 20thcentury self-interest at its finest – not authentic interest for one’s own long-run outcomes, but simply a childlike selfishness, both myopic and narrow, where cutting off the nose to spite the face is as rational as mutual nuclear annihilation.

New rule? Purpose is self-interest. The 21stcentury demands a more enlightened self-interest: one factoring in a longer timescale, fuller contingencies, and an honest and broad consideration of hidden and unintended consequences to people, society and the environment. When we understand all that, have begun to develop a purpose – a way in which we will change the world radically for the better. By confusing selfishness with self-interest, Detroit vaporized it’s own purpose – and will stay trapped in a wilderness of economic meaninglessess until it rediscovers it.

3. Old rule: Maximize destructiveness. The goal of orthodox strategy is to destroy the ability of others’ to imitate or commoditize you. And Detroit was a master of the art of destructive strategy: patenting, trademarking, and litigating; playing hardball to control distribution channels, defending brands with disproportionately steep marketing investment, and building entire new marques to gain share in key markets and segments. The point of all these tired, stale 20th century strategic moves was the same: strategy as an exercise in exclusion, isolation, and barrier-building.

New rule? Get constructive. True 21st century businesses can be judged in the blink of an eye: how intensely do they put the “co” in constructive? Can they let demand spark and fuel co-creation, can they co-produce from a pool of shared resources, are they capable of letting value activities be co-managed, are they tuned to cooperate? Detroit can’t get constructive because it’s spent the better part of a century playing the games of destructive strategy.

4. Old rule: Seek differentiation. When is a Jaguar really just a Ford? When it’s an S-Type. Under Alfred Sloan, GM famously organized itself divisionally – Pontiac, Buick, Cadillac… – for the sole purpose of differentiation. But industrial era differentiation is too often just skin-deep: the same lemons with slightly different marketing, distribution, and branding. So why pay a steep premium for a Buick if it’s just a Chevy with slightly nicer trim? Detroit discovered the hard way that in the 21st century, the concept of differentiation is increasingly stale.

New rule? Seek difference. Ultimately, the problem is simple: differentiation is about perception. Difference is about reality. People in the 21stcentury aren’t the zombified, braindead consumers of the 20th century. And so the 21st century demands not mere differentiation – a bean counters’ eye view of the world if ever there was one – but true difference. True difference is built by making different choices from the ground up – different in the very essence of the value activities that make the wheels of production and consumption spin. Porsche and BMW strove for difference – not mere differentiation – and it is that choice that is at the heart of their global leadership of the automotive sector.

5. Old rule: Seek agility. Strategy is in many ways simply the avoidance of crisis – the evasion of threat, weakness, and vulnerability. The goal of strategy as the avoidance of crisis is simple: agility. Industrial-era corporations seek agility, in other words, by insulating themselves from real-world economic pressures – that’s what Detroit did bar none, by always seeking to game the system: lobbying, marketing, and wheeling-and-dealing it’s way straight into oblivion.

New rule? Seek crisis. By insulating themselves from real-world economic pressures, boardrooms also dilute and sap incentives for innovation and renewal. Detroit wasn’t innovating because the opportunity cost of strategy as gamesmanship was, ultimately, foregoing innovation itself. In the 21stcentury, gamesmanship – and its attendant dilution of incentives – is a sure path to near terminal strategy decay. Forget Detroit – just ask big music, big pharma, or big food.

6. Old rule: Advantage happens against. Orthodox econ holds that it is through the pursuit of competitive advantage that corporations create the most value most quickly and reliably. And that’s a mistake Detroit made to the hilt. It sought a nakedly competitive advantage – against suppliers, dealers, consumers, and society alike. The result is an industry crippled by structurally antagonistic relationships with labour, buyers, suppliers, consumers, and society alike.

New rule? Advantage happens for. Competitive advantage against bears a striking resemblance to simply bullying. Bullying is easy: just as in the sandbox, any boardroom with market power can jack up margins by forcing others – buyers, suppliers, consumers, society – to bear costs. But if every corporation across the economy is playing that game, the economy’s just a game of musical chairs.