Lots has happened — new stock market highs, new life in Japan, fresh optimism about the US and Africa.  Some of this is justified, but much I fear is not, unless new policies develop to make these gains sustainable.

There is also a strong turn toward Islamist regimes in Egypt, Libya, Turkey and now Syria (where today’s rebels, if they become tomorrow’s regime, are increasingly dominated by Al Qaeda-influenced Jihadists).

I will have a fresh blog later today on Syria; and then resume the normal 2-3 times per week schedule.

Thanks for coming back!

To followers of the long-term global economy, it should be obvious.  The US employment figures alleviated fear of a dramatic slowdown — but showed the same steady stagnation we have seen for many months.  A slow, steady economy plus a huge injection of liquidity from the Fed, the ECB, and now the Bank of Japan, adds up to one thing and one thing only — a liquidity fueled asset bubble.  Commodities have faltered, growth is slowing in China, absent in Europe (where unemployment is at all-time highs and several countries will miss their deficit targets; the latest shock is that property prices in the Netherlands — yes the Netherlands! — are now in free fall), and weak in the US.

So a sudden 15% run up in the stock market in the last few months is telling us one of two things — we can expect a sudden surge of real global growth despite continuing global debt and deleveraging, population aging and decline, and government austerity policies in the worlds two largest economies (US and EU), OR we are seeing an asset bubble driven by huge injections of money from all major monetary authorities.

Put like that, it seems obvious we are seeing a return of the NASDAQ in 2000, or the property market in 2006.  It hasn’t reached those vertiginous heights yet, and no one wants to leave the party while it is raging.  So expect the tide of market enthusiasm to run higher.  But the taller the building put up on weak foundations, the bigger the crash.

Since the 1990s, we have seen one bubble blown and popped after another:  the Nasdaq (tech stocks), real estate, equity/derivatives.  Why is that? Because the economy has simply STOPPED pumping out real growth in the wages and incomes of ordinary people.  So they demand credit, and the spouts of liquidity are turned on full, and the resulting funds concentrated among the speculating wealthy and financial institutions are turned into investments, driving up the fashionable investment of the day.

Readers of this column know I have long been a pessimist about any sudden upturn in the global economy.  What would make me change my tune?  A sustained gain in employment and wages across Europe and the US; Europe clearing off its bad debt problem and agreeing on fiscal union; the US shifting from sequestration (soft austerity) to aggressive investment in future growth via infrastructure, education, and basic research.

We can enjoy paper growth — profits growing from holding down wage costs, investment gains from holding assets while the monetary authorities offer up a feast of liquidity — but that is not the same as real growth rooted in more people producing more goods and services of higher value.

So enjoy the bubble while it lasts; but be prepared to take cover when it pops!

“Currently, the big divergence in the education which students receive in Istanbul and, say, Hakkari, which is the furthest southeastern spot in Turkey, is mainly due to differences in teacher training and quality.  Our government is trying to tackle this challenge on many fronts. We are in the process of equipping every single classroom in Turkey, even in the remotest villages, with fiber optic cable, a broadband Internet connection and providing touch screens and big whiteboards (Emph. added).

That is one way to reduce the current gap as quickly as possible, as least in terms of access to educational information. Another is that every student in Turkey from the fourth grade onwards will be given a tablet PC for free. (Emph. added)

The overall objective is that we use these technologies to level the playing field as quickly as possible by centrally developing content and making it accessible to every single student.”

Turkey now has 17.1 million students in pre-school, primary, and secondary school, just over a third as many as the US has (49 million), and a larger number than the population of many European countries.

If Turkey succeeds, it will leapfrog the quality of education given to young people in the US and in many European countries; if you think it is a powerhouse today, just wait.  Turkey could, twenty years from now, be the best educated country in Europe.

Of course, this is all just a plan, and as we know, there is often a great gap between a plan and its execution.  Still, the ambition is impressive — a tablet for every student (it sounds expensive, but actually could save a small fortune over purchase of traditional textbooks), every classroom wired; that is something we aim for in our colleges, and in our best high schools, but hardly from fourth grade.

In the US, the gap in the achievement level between children from wealthier and poorer families has greatly increased in the last few decades, and the difference in quality between suburban and private schools and major urban schools is a scandal and disgrace.  So are we marshaling ideas and spending funds to do something about that?  No — we are cutting back; even here in Fairfax county, one of the richest counties in America, the federal sequester and stagnation of property tax revenues means that school budgets face cuts.

Of course, the US is pioneering the Massive Open Online Course (MOOC) for college students.  And according to the NY Times, state colleges in California are having great success experimenting with blends of MOOCs and on-campus tutoring to improve student learning.  Some believe that in less than ten years, the traditional large lecture course will be obsolete; instead students will absorb material from a variety of MOOCs and on-line sources, and then spend class time engaged in critical problem-solving with on-line support.

Yet students will not benefit from these opportunities unless they are prepared, and that means quality primary and secondary education.  The U.S. could well find itself in the same place as it did with the transistor and video-tape: inventing the breakthrough technology (in this case MOOCs) only to see other societies pick it up, develop and apply it, and reap the major benefits to an even greater degree.

The US needs to focus less on debt, cut-backs and instead imagine a world of growth, opportunity, and change.  If we fail to do this, we will be outrun and educationally out-gunned; just look at Turkey.

The news is usually consumed with details of the Boston bombers and the aftermath.  However, this weekend USA TODAY ran a heart-stirring story of an American veteran of the Iraqi war who is recovering from terrible burn injuries.

We can never underestimate the sacrifices our veterans have made.  Over 2 million men and women served overseas in Iraq and Afghanistan.  Over one thousand died; over three thousand came home with devastating burns or amputations; over 50,000 incurred other injuries, and up to 400,000 experienced post-traumatic stress injuries or mild head trauma.

The news flurry regarding the Boston bombers shows how short-sighted we are.  First, there is much more attention given to the handful of victims and to the perpetrators than to our vets, dozens of whom commit suicide every year because they cannot fit into a society that does not understand and appreciate what they have done.

Second, after all the sacrifices, injuries, and continued misunderstanding, the bombings in Boston demonstrate that a thousand US deaths and tens of thousands of injured have not made us safe from our supposed adversary in the “War on Terror” — the violent hatred of jihadists against innocent Americans, based on the very real damage that American foreign policy has done to Muslim communities around the world.

To be sure, America has defended Muslims too — in Kosovo, in Bosnia, and in northern Iraq (Kurdistan), the U.S. has helped Muslims find security and autonomy to run their own lives.  In Libya, US actions freed a nation and likely saved tends of thousands from being massacred by Gaddafi’s forces.   But on the whole, whether in Palestine, Syria, Chechnya, Afghanistan, or Iraq, when Muslims die or are driven from their homes and their land, the U.S. either does little or nothing to stop it, or actively supports the forces that are doing it.  And when death rains down suddenly and magically from the skies, courtesy of drones and predator missiles, the logo U.S.A. is found on the bomb fragments that remain.

What have we accomplished at the cost of so much injury and blood?   Did we punish al-Qaeda for killing 3,000 Americans on 9/11?  Yes, but that was done by a Seal team that caught up to bin Laden in Pakistan, and by special forces and drone attacks on al-Qaeda leadership — not by the massive ground invasions of Iraq and Afghanistan.

Have our efforts won the US greater support among Muslims of the world, earning their trust and help in putting an end to Islamic terrorism?  If only that were so; but most studies suggest the opposite has occurred.

And yet, one place in the Islamic world where the U.S. is applauded and thanked is in Libya.   There, the US intervened minimally and sensibly; protecting innocents and pushing back against Gaddafi’s forces just enough to stop them and let demoralization and the efforts of Libyan rebels end Gaddafi’s rule.

That is the lesson of war.  Not that it is always wrong, but that one has to be careful to make sure it is done right.  That the need is truly vital, and the actions proportionate and well-designed to reach a goal.

As much as I consider US military intervention in Iraq and Afghanistan a tragic and misguided waste, the Vietnam of our generation, I still believe the US should set up a no-fly zone along the Syria-Turkey border, and increase its lethal aid to Syrian rebels. (More about that in a forthcoming post).

But today, as I leave behind the Madrid marathon, I want to remember our veterans, and ask that they get our respect and thanks for their sacrifices.  Whatever the outcome, they did what they were called upon by our government to do; for that they deserve more thanks and support than they have received.

The answer is the same as for any person drifting toward psychopathic behavior or murder — the tell-tale clues are only visible in hindsight.  Probably hundreds of people fit the profile of Tsarnaev, none of whom go on to commit terrorist acts.  The problem is we have no way to tell which one will.

The world is, inherently and irredeemably, complex.   By this I do not mean complicated.  Sending rockets into space is complicated; analyzing the human genome is complicated.  But these remain systems that are analytically simple — you can pull them apart into many small elements, and the total of the system is the sum of those elements.  The problem with the social world is that it is complex in the sense that the big picture does NOT simply emerge from adding up the elements.  In decoding the human genome, there are basically four nucleotide bases that appear as the basic terms in DNA sequencing, and the hard part is to take the millions of bases in a DNA molecule and figure out their order.  We do this by splitting many strands of DNA from an organism into smaller pieces, identifying the sequence in those pieces, looking for overlaps, and then putting the whole thing together from the bits.  Fortunately, every strand of DNA from the same organism has the same sequence (that is, except for random mutations), so get enough strands and enough pieces and enough computing power and you can figure out the sequence of the entire molecule.

Now imagine how much harder this would be if each nucleotide was an individual thinking and acting bit, that could change its order at will, disguise itself or pretend to be another base to fool observers, and in which no two sets of interactions were exactly the same twice.   The whole system we use would be useless.

It would be nice if the analysis of terrorism, or the psychology of individuals, was amenable to accurate predictions, like that of rockets or DNA.  But the phenomena are just different, and always will be.

In fact, people find it immensely hard to deal with situations that involve more than a few variables, especially when those variables can interact with each other and act in non-linear ways (another way of saying you can’t simply add up the bits to get the whole).    This is why interventions to improve society so often fail.

I recently learned one reason our education programs in Afghanistan went so badly.  Citing a study showing that investing in primary education produced the greatest return, better than investing in secondary or tertiary education, USAID decided to put ALL of its educational investment into primary education — after all, that gives the best bang for the buck.  So they set a target of getting ALL Afghan children into primary school.

Yet that program has been in many ways a failure, because schooling is not the same as education.  That is, you can herd children into a newly built school, but if you have inexperienced, barely literate teachers who show up only half the time, very little learning goes on (a recent Center for Global Development study shows that this a common problem in developing countries).

Yet if you seek to expand primary education by millions of children, how can you expect to teach them unless you train hundreds of thousands of teachers?   The math is simple:  if you put 5 million children in school, and you aim for a 50 to 1 student to teacher ratio, you need at least 100,000 teachers, not counting administrators, substitutes, and other support staff.  But how do you get those people if you invest nothing in secondary and tertiary education?  Answer — you don’t.  And your goal of actually providing primary education falls to the practice of setting targets for bodies in classrooms, never mind about actual learning.

Why does such folly occur?  Because to deal with the problem requires thinking in terms of complex systems with many interrelated elements – how many secondary and tertiary teaching graduates do you need, and how fast can they be produced, and how can we adjust the expansion of primary schooling to the availability of qualified teachers?   That is a complex problem; among other things it may take years to determine how many people actually complete a teaching credential among those that sign up (in the US, the drop-out rate from colleges is over 40%, largely due to admitting students who are not prepared to do college work).  So how you can you tell how fast teachers can be produced?

It is much simpler to simply pick a target that CAN be approached in linear fashion – you build a school, get students to attend, and the total number of students schooled is just the sum of those bits.

All too often, companies and governments and individuals in all walks of life make decisions on the basis of habit (this worked before), rules of thumb, easily measured targets, simple analogies, and other approaches that lend themselves to few variables and linear thinking.

You might say that we should then put people in charge who can think in terms of many dimensions, non-linear relations, and complexity.  And you would be right — except for the fact than many such folks are academics who cannot manage people at all, and who master this approach because they only focus on a tiny slice of life and can’t generalize it to real-world problems.  What you need are managers who understand complexity, can harness the judgment of experts to guide their decisions, and then manage people to effectively carry out those decisions.  That combination does not arise very often.

So we should be very glad that for most of the things we do — growing food, building highways, generating electricity — the world responds pretty well to simplifications that involve breaking down complicated problems into lots of smaller simpler problems and that the solutions to the simpler problems can be added up to create the solution we need to the complicated one.

Sadly, that just does not work well for truly complex problems – like picking out in advance, from hundreds or thousands of jihad-influenced individuals, which ones will actually set up a bomb or where and when they will do so.

So don’t be too hard on our homeland security folks — they have done a pretty good job.  And learn to accept that the real, living, breathing world of people is darn hard to manage.  The main thing we can do is always be learning from, and resilient to, the things that we will inevitably miss.

Until this week, U.S. law enforcement efforts succeeding in stopping any attacks on U.S. soil.  This week, the terrorists succeeded.

But who are these terrorists?   Kids, top students, long-time U.S. residents, one an American citizen.  Radicalized how?  By the violence in Chechnya, their homeland?  Or by the internet?  Or by experiences here?

Sadly, the basic grievances that fueled Jihad — illegitimate governance, crony domination, lack of justice, lack of opportunities — are still rampant in the world, despite the Arab Spring.  A few countries may have shed their dictators, but that does not mean that justice and opportunities have arisen.  And in many countries — Afghanistan, Syria, Yemen, Iraq, Sudan, and the province of Chechnya, to name just a few — huge cohorts of young men encounter illegitimate government, corruption, and violence on a daily basis.  This much is old, that is true.  What is new is internet-fueled recruitment and hate speech, instructions on how to commit terrorism, and easy travel between hot-beds of unrest and Western nations.

Perhaps even worse, the promise of opportunity and acceptance in the liberal nations of the West is often a promise denied.  Islamophobia, anti-migrant sentiment, high unemployment, diminishing opportunity for the working and middle classes, blatant conspicuous consumption and self-righteousness by the ever-richer rich all make it easier for frustrated youth to justify striking out at any target.

Terrorists are criminals, and we need to punish the crimes and do all we can to deter criminal action.  Yet let us not fool ourselves.  We live in a world of ever-rising inequality, pervasive youth frustration, and deep distrust across regions and religions.  We will need to be on guard for a very long time.

Until we know more about the composition of the explosives and have evidence pointing to a clear person or group, it is best not to jump to conclusions.  Both the Oklahoma City Bombing and the Norway youth massacre were first blamed on Islamic terrorists, only to be found to be the work of native extremists.

So let us applaud the resilience of Americans, pray for the victims and their families, and trust that the Homeland Security professionals — who have trained for just such a situation — can identify and locate the perpetrator.

Meanwhile, just as with traffic accidents and gun violence, we need to make sure we do not turn all of our lives upside down in reacting to this tragedy.  Yes, we want to do everything we can to stop terrorism — but that should not mean making our daily lives even more like living under 24-7 surveillance and suspicion.   After all, tens of thousands of lives are lost in traffic accidents each year, mostly to drunk drivers — yet we have not banned alcohol (although putting breathalyzers into steering wheels and locking the ignition if the driver’s breath shows he or she has been on a binge is not a bad idea).  We know that disordered people with guns can kill dozens of children, as we just saw in Connecticut.  Yet no one in America is going to ban all households from having guns (although strict background checks and licensing laws again seem like good ideas).

The same is true with terrorism.  We need to figure out the best ways to protect ourselves within reason, without destroying the freedoms that give our life meaning.

Boston, my thoughts are with you.

The drop is, of itself, not alarming — but that it comes after a year of effort by authorities to pump up the economy for the new leadership, it suggests that we are in a slump that can’t be fixed by a simple dose of standard fiscal tools.  China is struggling as it need to import ever more energy and raw materials, while its major export markets remain weak.

China’s fate shows that it is harder and harder for global growth to be driven by any one region, or for any one region to grow vigorously while the rest of the world economy contracts.  There is just too much interdependence now for that to happen.

It is thus crucial that Europe — still the world’s largest single economy (and it is, via the Euro, a single economy) — get off its austerity bug and focus on growth.  Austerity has led to larger, not smaller, debt burdens in the UK and club Med countries, and is wiping out the opportunities for a generation of young people to establish themselves in the labor force, gain experience, and start families.  All this makes the demographic squeeze on Europe even worse.

This is no way to run a global economy!  Oops, I forget that there is no one running the global economy — just national leaders running their own national economies.  But with national economies all trying to recover on the backs of others by austerity and devaluation, they are just dragging the world economy down.

A half-century from now, economists will scratch their heads and ask how leaders of our era could have been so misguided, repeating the exact mistakes of the Great Depression even though we (unlike those of the 1930s) had the experience and the economic knowledge to avoid this.  The problem is that politics is not economics, and our global governance structure remains overly dependent on immediate post World War II structure.  I hope we can change those, and soon!

What Korea and Syria both have in common is unexpected rulers with shaky legitimacy.

In Syria, the regime of Hafez al-Assad was ruthless, but canny and supple.  Hafez knew how to wield power as well as keep it; he balanced Syria between the USSR, the US, Egypt, and Israel, always keeping control, but getting support from varied sources, and exercising a persistent influence in the region.   His regime was personal, but also had a strong party (Ba’ath) behind it.

But the regime became naked patrimonial rule when instead of picking the best qualified person, or a military or party favorite, he chose his son Bashar as his successor.  Bashar had never intended to rule; he trained as a  physician and ophthalmologist.  At age 29, when his older brother died, he was suddenly thrust into the role of dictator-in-waiting.

When Bashar took power after his father’s death, he lacked the skills to manage a complex regime alliance and deal with rebels.  He proved ruthless, to be sure, but also inflexible, over-reactive, and lacking deep support.  He has led Syria into a horribly bloody civil war, although I doubt that was his intent.  Rather, he simply did what he thought was needed to appear strong and keep power.  It is not clear whether he is being led by his military and political commanders, or is just running things poorly on his own.  But either way, the caliber of rulership declined with Bashar, and his response to the spread of the Arab Uprising into Syria has been to become a pariah to many of his people and dependent on the Hezbollah/Iran connection that wishes to keep his country as a transit lane between Tehran and Beirut.

The parallel with North Korea is strong.  Kim il-Sung was a strong leader, liberation hero, and Communist Party strongman, much like Stalin.  He moved toward personalist rule by appointing his son Kim Jong-Il as successor.  But this was no unexpected rise.  The younger Kim was groomed by 30 years of political life, and was a member of the Politburo and military commission for 14 years before taking power.  The transition was not only expected, but involved a successor with strong positions, legitimacy, and control in the Party and military taking power.  Under Kim Jong-Il North Korea remained a party state, where Kim Jong-Il’s legitimacy came as much from his role and experience in the Party as his parentage.

The same cannot be said of Kim Jong-un.  A virtual unknown, like Bashar he expected his older brother, Kim Jong-nam, to take power.  But Kim Jong-nam fell out of favor and Kim Jong-Il settled on Kim Jong-un to be his successor.   Kim Jong-un, was, however, young and inexperienced, and time was short.  It was only in 2010 that he became a general and vice-chairman of the Central Military Commission, despite having no prior political or military experience!  A major propaganda campaign was carried out to persuade N. Koreans to support their new “brilliant leader.” Two years later, Kim Jong-Il died and Kim Jong-un became leader of North Korea.

Kim Jong-un is thus also a pure patrimonial leader; he is in power solely by virtue of his parentage, not through working his way up the Party and military ladder.  That is a dangerously weak position.

It is thus not surprising that Kim Jong-un has been a saber-rattler as he attempts to shore up his position with the military and convince North Koreans that they need him as shield against mortal dangers.  He has to be a war-monger for domestic consumption.  The problem is how much he can maintain this role without stumbling into a real shooting war with the south. He has already overstepped several times by testing missiles, sinking a South Korean submarine, and firing on a South Korean island.  And we do not know how much he is being guided by military and party officials, or is just pushing himself forward in a way that manifests his deep inexperience.

Patrimonial or personalist regimes are profoundly vulnerable in times of stress, precisely because their legitimacy is weak.  They depend on patronage and personal loyalty, both of which can vanish if people perceive the ruler as weak.  Such regimes therefore often over-react to provocations, suffer defections, and fall to revolution or rebellion, as they lack the corporate strength of party-based or military-based regimes.

Even before the current troubles, the position of Kim’s government in North Korea was weakening.  Cell phones were bringing in news of the outside world, and how much more prosperous South Koreans are.  China was growing impatient with supporting an economically failing regime, prone to recurrent famines due to its insanely rigid non-market economy (although limited market openings have proved essential to avoiding more severe famines).  China has been urging N. Korea to adopt Deng Xiaoping style economic reforms, but N. Korea has resisted, knowing that if it tries to win people’s support by promising economic growth, South Korea wins that game hands down.

The one card that Kim Jong-un can play to keep himself and his party in power is fear.  We thus should not be surprised that he aims to keep his country on the edge of war, raise fears of international alliances against his country, and indulges the military in tests of ever more weapons.  What we have to watch out for is that these domestically motivated maneuvers create threats and attacks that the rest of the region cannot tolerate.  At that point, a real shooting war could arise.  On my last trip to Korea, I visited the DMZ — it is a war zone, on a war footing.  It would take very little to start a military conflict.

Still, Kim’s position is weak; if he starts a war that North Korea is certain to lose, it is likely that his own position would quickly fail and his government be overthrown.  So I do not expect he will actually act to start a war on his own.  But his inexperience is such that he may blunder into a war without intending, and like Bashar al-Assad, destroy his own country in the process.

Kim Jong-un thus lacks both experience in politics and legitimacy with the Party and military elite.