Here is a story about Meridian 180 that appeared today in the Cornell Chronicle:
March 20, 2012
by Annelise Riles
March 20, 2012
by Annelise Riles
Here is a story about Meridian 180 that appeared today in the Cornell Chronicle:
March 9, 2012
by Annelise Riles
March 9, 2012
by Annelise Riles
A year after the earthquake and tsunami, and the nuclear disaster at Fukushima Dai-ichi nuclear power plant that followed, the crisis is most definitely not over. With almost 16,000 people dead, and almost 4,000 still missing, and many people still living in shelters, the victims and the problems extend far beyond those counted in these already staggering statistics.
First, despite the government’s claims, many people still question whether the nuclear reactor at Fukushima, and the leakages from it, are really yet under control. Second, the cleanup of the radiated area is barely beginning, relative to the size of the job.
Beyond all this there is the economic toll on the country as a whole. Think of the fisher people who can’t make a livelihood because waters are contaminated, the farmers who can’t sell their livestock (and in some cases have unfortunately resorted to duplicitous tactics to sell food products that don’t meet the government’s already weak standards anyway). And then there are the many farmers who are not even in affected areas of the country who nevertheless are suffering enormous losses because foreign consumers refuse to buy their products thinking that anything from Japan must be dangerous. There is no plan for compensation for this latter group at all yet, as far as I know.
And the economic effects go far further. Think of the consequences of mandatory reductions in energy usage by factories all over the country. Think of the financial hit that the holders of TEPCO (Tokyo Electric and Power Co, the company that owns Fukushima Daichi) bonds have taken–and these bond holders, by the way, are everyone: TEPCO had special dispensations to issue large numbers of bonds, and at the informal urging of government, all the big banks, many corporations, many private individuals bought them, and bought shares in the company which are even more worthless than the bonds. And then there is the effect of a crisis like this on consumer confidence and spending. We could go on and on.
But one cost that has not been adequately discussed in my view is the human psychological cost of all of this uncertainty. Imagine what it is like to be a mother, buying vegetables every day at the grocery store and asking yourself, “are these really safe for my child to eat?” and the answer is always the same–who really knows? It depends on which expert you ask. Imagine the exhaustion older people experienced, coping without electricity at unpredictable times of day due to rolling blackouts mismanaged by the company, or the stress of office-workers stuck on unthinkably crowded train platforms (or worse yet, inside unthinkably crowded trains) as due to reductions in train service to conserve energy. All these anxieties, these new forms of stress on a population already stretched to its psychological limits has had its toll–a 20% increase in the suicide rate in the last year, an increase in divorces, in behavioral and developmental problems among children and even physical illness linked to psychological causes.
If there is a sad lesson to be gained from this situation, it is that even in a comparatively rich country like Japan, there is no easy solution to this kind of crisis, no matter what the experts tell us. I wonder if those of us with similar nuclear power plants sitting on earthquake fault lines in our own countries have fully considered the bargain we have made: do we really understand what the costs of a disaster would be? And do we really have a good reason to believe our own experts when they tell us, just as the same experts told the Japanese public, trust us, the unthinkable will never happen?
March 7, 2012
by Annelise Riles
One of my early memories of my childhood in 1970s France, with summer vacations in the Midwestern United States, crystallizes why I am an anthropologist, and what I see is the hope of comparative and international law. The memory is in two scenes. In the 1st scene, my 4th grade social studies teacher is teaching us about America. America is a country so polluted she tells us that on every street corner are meters that look like parking meters. When a certain alarm goes off, everyone grabs their oxygen mask from their handbags put the quarter in the parking meter like machine, obtains a dose of oxygen and wears the mask until the sirens tell them that it is safe to remove them. The other students are fascinated, and I go into internal tangles. Should I try to protest that this is utterly false? Should I try to point out that the image of selfish hedonists the teacher is painting does not correspond to anyone I personally know? no, everyone is enjoying the story too much to care. In the 2nd scene a few months later, I join a bunch of American kids on the playground as they throw rocks across the puddle, declaring that we are quote bombing France unquote. What follows is a chain of stereotypes of French people explaining why they deserve to be “bombed”, all negative of course, and presumably all drawn from popular media sources since none of these kids have ever been to Europe. My own recollection of all these episodes is not so much outrage as utter confusion: how can people I like and respect have so little awareness of how little awareness they have? As I grew older, of course I had plenty of opportunity to learn how that same question applied in so many ways to myself and my own myopias. The blinders become fancier, more professional, more technologically sophisticated, more entrenched in complex institutional and cultural relationships, but just as hard to notice, let alone remove, as on that fourth grade playground.
A year ago this week, Japan was hit by them massive tsunami and earthquake, and also suffered one of the worst nuclear crises in history. In the terrible days after that incident, as each of us reflected on what we could contribute, some of us began to think that perhaps we also needed to confront our own personal and professional and cultural myopias, and to find new ways to build relationships that would help us think in new and hopefully more transformative ways about the policies and choices of our societies. We wondered if understanding better how, for example, our own policies look for the point of view of another society, might help us to avoid disasters in the future, and also how we might find ways to work closely on problems that are transnational in character.
The question of course preceded Fukushima: many of us had a longstanding sense that the intellectual conversation across the Asia-Pacific Rim region about law and regulation broadly conceived is far thinner and less substantive than it could be, and needs to be to satisfy the needs of the current moment. In thinking about the causes, it seems that some obvious ones are persisting language difficulties and difficulties reading and writing in particular, the problems and costs associated with getting very busy people to be able to spend substantial amounts of quality time together so that they can reach a deeper understanding of one another’s positions, and some degree of lack of comfort or trust. And perhaps among some colleagues a lack of a sense that the conversation is worth investing the large amounts of time that it requires in current formats.
At the same time, many of us feel that the existing venues and formats for serious intellectual discussion are not satisfactory. How do we encourage a far more substantive dialogue between different forms of disciplinary expertise and between thinkers in different societies?
Beginning in March, 2011, we began to pull together a special group of visionary thinkers–scholars, policy-makers and professionals–and to address some of these communication difficulties by creating a closed, online platform where people can write in their own languages and have their text translated within a short period of time by postdoctoral fellows. Two Postdoctoral Fellows (one Japanese speaking and one Chinese speaking) are available to take any projects, research questions, or interventions that might surface out of these conversations forward. We called this emerging conversation and community Meridian 180, after the anti-Meridian, or international date line, that divides the Pacific. The goal of this project is to invest in the cultural and intellectual infrastructure for the next generation of trans-Pacific relations. Through a long-term multi-lingual conversation, the project seeks to make connections and facilitate the development of relations of trust among individuals who together have the capacity to generate the new ideas and to lead the publics in their respective societies to face the significant challenges of the current moment.
Meridian 180 is a project of the Clarke Program in East Asian Law and Culture at the Cornell Law School. It is a non-profit, non-political project funded through private donations and with support from Cornell Law School. It is comprised of Senior Fellows and of Members in law, the academy, private practice and policy circles who meet regularly via an on-line platform supporting multilingual conversation, as well as periodically in face to face conferences. Ideas that emerge from these conversations are then incubated and developed, with the help of Postdoctoral Fellows based in Ithaca, NY, into forms in which they can make a difference in each individual society–ranging from policy papers to academic books, blog entries, and individual conversations with policy makers.
Our current forum, “How can we bring closure to crises,” marks the anniversary of the earthquake and tsunami in Japan by reexamining this particular disaster and reconstruction project from various perspectives and by putting the issues in the context of other similar disasters around the world.
After a year of work, we are thrilled that Meridian 180 is now finally official! We still have many challenges, from finding long-term sources of funding to finding a way to convince busy elites to make room in their minds and their schedules to broaden their own cultural and disciplinary horizons. But what is really encouraging is the progress we are making on complex legal and policy questions like “what is the scope of privacy rights in the digital age?” or “what is the role of the central bank in today’s markets?” What is even more encouraging is the commitment many of our members have to the project and the sense they have that it serves a purpose in their lives. For more information please see here.
January 25, 2012
by Annelise Riles
Most of the chatter about financial regulation in the blogosphere focuses on the issues of the moment. But what are the big questions? What does all the debate about the detail add up to?
To me, the big question is this: What comes after the collapse of the neoliberal consensus? What will be the prevailing common understanding of the proper relationship between governments and markets, and between actors in the market (financial entities, labor, enterprises, and yes, the academy?)
This question has so many dimensions, but it is the big challenge of our day, and most of the fights on the front page of the Financial Times–whether it is about disclosure policy at the Fed or what kind of collateral the ECB should accept–come down to versions of this Big Question.
Here are some possible subparts to this question:
-Is New Governance (peer review, self monitoring, naming and shaming, soft law etc) as now practiced at key international financial organizations such as the Financial Stability Board the answer?
-How do we balance democratic participation with the need for expertise? Can these things be “balanced”? What other models might we have of how democracy and expertise can coexist?
-What new forms of collaboration between the government and the market might be possible?
What do you think is the key question? What do you think about these questions?
October 27, 2011
by Annelise Riles
Here is a question that intrigues me about the current protests: How can, and should the targets of these protests (investment bankers, lawyers, regulators, journalists, politicians, etc.) respond?
Among the many legends surrounding Dean Guido Calabresi of the Yale Law School is the following story, which I am sure is only partially true: One day, law students organized a protest against the dean–what the reason for the protest was is long forgotten, but they chanted and held signs that read “Down with Dean Guido!” Guido, hearing this protest, raced down from his office, smiling, with open arms, and grabbed one of the signs in one hand, while throwing himself at the most angry protester in a giant hug. Soon they were all chanting and smiling together–Down with Dean Guido!–while hugging and laughing at the absurdity of it all. The protest ended as a love-fest.
Now we could read Dean Guido’s actions as cynical or we could read them as signs of the immaturity of the students and their lack of clarity about what their protest was about in the first place. And there are certainly differences between whatever causes may have motivated the Yale Law students on that day and the very serious issues at stake in debates about the regulation of global markets. But I would rather read Dean Guido’s actions as the political version of the old martial arts move of absorbing and deflecting your opponent’s power not simply as a means of defeating him but an instantiation of your commonality with him. From this point of view, this incident offers a more complicated insight about the nature of protest, as political ritual which, like all ritual, is about many things at the same time and not simply about “demands,” which can turn in unexpected directions and offer opportunities for unexpected political outcomes if the parties can see beyond their own positions long enough to imagine unexpected ways of intervening, and which, above all, requires a response.
So how will “Wall Street” broadly conceived, respond? Are there opportunities for doing like Dean Guido, and embracing the protesters and the protests, thereby transforming this political moment?
July 22, 2011
by Annelise Riles
Today is my last day as a visiting researcher at the Bank of Japan’s Institute for Monetary and Economic Studies, where I have been working on global financial governance issues, particularly as concerns the Financial Stability Board. It has been a fantastic experience to have a chance to exchange ideas with the people responsible for making monetary and financial regulatory policy at all levels in Japan. What emerges most clearly for me is how provincial is the world view reflected in current international financial governance. I have taken to calling this world view the NAPL model–the North Atlantic Post-Lehman Model–to suggest that it has been made largely by regulators in North American countries, very much with their own experience of the Lehman crisis in mind. As one bank manager in Tokyo put it, “they caused the last financial crisis, we didn’t–so why do they get to write all the rules on how to fix things?”
As the Financial Stability Board grows more diverse and more global, the emerging conflicts between developed economies and emerging markets about what exactly are the key problems that global financial governance should be addressing should be watched closely. If global financial governance is to be truly global, at a minimum it needs to address the key challenges faced by most economies, and not just some economies. This could begin with the FSB expanding its focus from the Lehman crisis to the experience with other financial crises, such as the Asian Financial Crisis, in which the causes and consequences were somewhat different. Japan is sometimes on one side of these debates, sometimes on the other, and sometimes has other concerns altogether. For example, its problem is not banks that take too much risk; its problem is that banks sit on stockpiles of cash and refuse to take risk at all, and this too can be highly damaging to an economy.
Yesterday I gave a seminar to researchers and policy makers inside the Bank of Japan. We had a lively discussion about whether the fancy new tools of financial governance deployed by the FSB to create global consensus and ensure global compliance such as “supervisory colleges,” peer review and the like help to broaden the global agenda in practice or not. I think we need serious empirical research to help us understand better when exactly these new tools work to promote greater mutual understanding across jurisdictions and when they do not. We also had a good discussion of my proposal that we look to develop other regulatory tools, in particular, private international law doctrines and protocals, to supplement the weaknesses of the FSB in the short to medium-term.
July 7, 2011
by Annelise Riles
As we look ahead toward how we can do a better job of preventing, or at least lessening the effects of the next financial crisis, I think we can all agree that the more information regulators have about the real world conditions in the market–the nature of the products, the institutional contexts in which business decisions are being made, and the character of the risks–the better. The question is, what is the best way for regulators to get such information?
One of the big Ahas of my current research at the Bank of Japan is that different regulatory systems, or cultures, may have different approaches to getting such information. In the United States and in the UK, there is a big emphasis on hiring regulators with practical market experience. US and UK regulators know that such individuals can be invaluable because they understand the thinking of market insiders. Ironically, such individuals often turn out to be the toughest regulators of all as they are least likely to be snowed by bogus excuses about the impossibility of implementation of a certain reform, or the unavailability of a certain kind of information. Think Gary Gensler, former Goldman Sachs executive now head of the Commodity Futures Trading Commission for example.
There is no doubt that this kind of talent is one important route to information. Japanese regulatory institutions have relatively few such people, and in my interviews some Japanese regulators have suggested that it would be helpful to have more.
But Japanese regulators have a different approach: they maintain much more intensive, almost real-time contacts with their counterparts in the industry. For example, a junior regulator may have his counterpart in a given bank on the phone two or three times a day. In addition there are yearly on-site inspections that last several weeks and provide mini “fieldwork” opportunities for regulators to sit on the inside, as well as multiple “targeted inspections” also on-site. There are daily or weekly contacts at every level of the bank and government, too, from the most junior to the most senior, since one gets a different picture of what is going on inside a financial institution depending on who one talks to.
One advantage of this approach is that in a world in which market realities change very quickly the regulator’s information is very current. In contrast one problem with the US-UK approach is that after only a few years in government, a former banker’s experience quickly becomes relatively obsolete.
Perhaps here regulatory theory could benefit from the insights of the field of comparative law. Comparative lawyers know that it is pointless to argue about which system in the world is “best” in some absolute sense. French law and American law each have their relative strengths and weaknesses, but more importantly reflect an adaptation to the wider culture and values of the societies out of which they emerge. Studying these differences can sometimes provide insights for reform (a French court may wish to borrow some precedent from an American court or vice versa) and can also help sharpen, through the contrast, each side’s appreciation of what they value the most. In much the same way, regulatory cultures are different, and interesting in their differences. Perhaps rather than throw all our energies into defining one global regulatory approach or standard, we could start by noticing these differences, describing them, and analyzing their relative strengths and weaknesses as well as their cultural sources and purposes within each institutional and economic context.
June 30, 2011
by Annelise Riles
The Fukushima nuclear disaster is causing Americans to begin to ask important questions about the safety of our own nuclear reactors. Meanwhile, in Japan, many people are making comparing their government’s response to the US experience with Katrina or the BP oil spill. Yet the lead-up and fall-out of Fukushima is eerily reminiscent of the conditions that led to the US financial crisis of 2007. This suggests we might ask where the makings of the next crisis—financial, environmental, political, security-related—might be: where else do we find the same conflation of causes?
Here are some similarities:
A collusive relationship between regulators and industry, facilitated by mobility of staff between the two, facilitated a group-think consensus that downplayed risks and placed great faith in industry self-regulation.
As in the case of financial firms at the center of the American financial crisis, a company—TEPCO—was implicitly understood to be Too Big To Fail. Hence the moral hazard problem was enormous.
Academics largely failed to serve as objective and independent sources of expertise: in both crises, elite academics generally sided with the industry and testified in court cases on behalf of the industry, thus creating a sense that criticisms or doomsday scenarios were the work of less elite non-experts who did not really understand the science.
Prior to the crisis, there was a lack of appreciation on the part of the general public of how ordinary actions fed the vicious cycle that in the end endangered us all. Just as it easy to demonize Wall Street and forget the role of ordinary Americans in gaming the sub-prime system, it is easy to forget how our own vociferous appetite for energy fed this beast.
The ultimate cause of each crisis then, is the repeated lack of imagination and courage–on the part of -the executives who might have invested in safer technology, the middle level managers who might have made different recommendations to their higher ups, the bureaucrats who pushed the reports along rather than risk their reputations on challenging the group think that said the industry was totally safe and should be left alone, the professors who might have asked different questions, lawyers who fashioned logically defensible but ultimately counterproductive arguments on behalf of their corporate clients, the journalists who didn’t push too hard, the citizens who might have used the power of the purse more effectively.
The consequences too have some similarities:
The costs to ordinary citizens’ property, physical and psychological well-being, and quality of life will be long-lasting and on-going—perhaps for generations.
A government bail-out is eminent and it is likely that most of the large financial players—the executives, bond holders, and even shareholders—will end up getting off much better than they might have while victims will receive much less than they deserve.
The costs of this bail-out to the national treasury, and its implications for the long term economic health of the country, will be enormous.
Although there is public outrage, the outrage still seems largely unproductive: unfocused, lacking in creative leadership about what reforms to demand in return for the significant public assets this disaster will cost, and tainted by a kind of nationalist rhetoric that deflects attention away from the ongoing institutional and political causes of the crisis.
One of my conclusions after watching with despair the hollowing out of the Dodd-Frank Act and now the Japanese failures at Fukushima is that ordinary citizens and market participants must stop waiting for the government to make things safe. The interests involved are such that politicians are probably the most unlikely sources of leadership. Instead, we should start thinking about our markets, our environment, and our security more generally as something akin to a public park—a commons that we value together and that we all need to pitch in to maintain from whatever vantage point we participate in it—whether as consumers, traders, regulators, scholars, and so on. As the old slogan goes, if the people lead, the leadership will follow. But for those of us—that is almost all of us—who have some measure of responsibility for these crises, daily pressures often get in the way—a fear of risk-taking, a lack of imagination, or just the pressures of time and the fact that it is quicker and easier to go along than to buck a trend. But what if we began to see that the millions of small choices we all make in those moments in the aggregate are challenging our collective security?
In this respect, one of the only encouraging trends coming out of Japan’s nuclear disaster is the efforts ordinary citizens and corporations alike are making to conserve electricity (even in the almost unthinkably tone-deaf suggestion by TEPCO that it now will have to raise rates to make up for lost revenue). Ordinary people are moving beyond retrospective blame and starting to do what they can—from the little corner of the problem they can influence, to make change and collectively it is making a big difference.
It will be interesting to see what the next step will be. Will some TEPCO employees be inspired to wage a battle within the company to steer a more socially responsible course? Will judges, begin to think about their own accountability for public security when faced with a lawsuit by a citizens’ group? Will bureaucrats inside the relevant ministries begin to think about what creative work they can do, from where they stand inside the bureaucracy, even if they imagine that there is a risk that it might come at some personal cost to their careers? Will academics think more carefully about their public responsibilities in defining topics of research and evaluating the evidence? Will journalists begin to see more independent, and meaningful information about the causes, dangers, and alternatives to this disaster might anger some corporate interests but also will gain them the respect of readers? As with the financial crisis, there is an opportunity here, amidst the devastation.
January 28, 2011
by Annelise Riles
(this post was originally published on Jan. 27, 2011 in the business section of the Huffington Post website. Link)
There’s a glaring omission in all the talk over financial reform, the question of whether legislation goes far enough to rein in the bad behavior that led the economy off the precipice.
As an anthropologist who has spent ten years studying financial markets from the inside, I have learned that reforming market culture is as crucial as any regulation. And we all have a duty to change the culture. “Move Your Money” may be your first effort, but it shouldn’t be your last.
What we found during the financial crisis is that the most agile players (like those of Janine Wedel’s Shadow Elite) can get around regulations and legislation, in part, by influencing the culture. They encourage deference to anonymous expert opinion–a sense that markets are something far away from the ordinary person’s experience or ability to understand, and hence are best left to the shadow elite themselves. And they help normalize shady activities, like, say, so-called “liar loans”, things banned on the books, and even actively enforced as illegal, but not considered entirely wrong by ordinary people. The result is that the government can’t prosecute violations fast enough and illegal behavior nevertheless continues.
Thus, changing policies or even laws has an impact, but they won’t do the job alone. Reforming culture is what’s needed, and that is best supported by social movements made up of people of all types — ordinary citizens, market professionals, people inside government who believe in the cause and are not just pursuing the policy because it is their job.
So what should we do?
If you are an ordinary investor, someone who has a 401k, or a bank account, or a loan, or a credit card, you should consider, as Arianna Huffington has suggested, moving your money out of big banks whose policies you do not support. You also have a responsibility, as a citizen, to educate yourself about how the economy works, who are the players, what are the policy proposals.
If you are a regulator, or in a position to influence a regulator, don’t be afraid to listen to voices, opinions or suggestions that have not been historically at the table. Former Commodity Futures Trading Commission chair Brooksley Born or FDIC Chair Sheila Bair were considered out of touch when they engaged in aggressive regulation efforts. Had we acted on their warnings, the financial crisis might well have been greatly mitigated.
If you are a stock broker, lawyer, banker, analyst, a paralegal, or bank clerk, you have a special role to play in changing market culture. In my experience such people from the bottom to the very top often claim that they are just cogs in the wheel, and yet they have tremendous latitude to make very small changes–to push for option A over option B, both of which are plausible alternatives for their organization but one of which might steer a slightly better course for the economy as a whole. These are the changes that matter. If each person in such a position resolved to take small steps we would see dramatic change. These need not be altruistic steps; they need only be wiser actions that reflect a sense that, in the case of a bank loan administrator, for example, choosing not to foreclose immediately on a loan but to put in the extra hours on a Friday night to see if a solution can be worked out, takes commitment but might be good for the distressed homeowner, the bottom line and the economy as a whole.
If you are a neighbor, friend, or relative of one of these market professionals, you can let them know what you expect of them, let them know that you view them as stewards of a very important public good, our economy, and share with them why this matters to you personally. My research shows again and again that market players are motivated not only by money but also by what other people — their spouses, their children, their friends, their colleagues, their former classmates — think of them. They don’t want to be bad actors. They want to be respected and appreciated. Use your social influence to change market culture.
If you are part of the media, or in the education professions, you have an obligation to make the market understandable and accessible to citizens and not just to pander to insiders. You should encourage a conversation about the common good in markets.
And there are also some things that all of us can do, no matter who we are. No one is wholly disconnected from the market. You can behave in a responsible, ethical, constructive way — whether it is paying your babysitter fairly or living by your own obligations in your workplace or bringing your own spending under control. Every time we act based on an appreciation that our own long-term self-interest is tied up with the self-interest of others, we change our own corner of market culture.
All of this involves taking risks and making hard choices. If everyone in your company talks as if ordinary investors are bumbling fools who exist only to be taken advantage of, it is hard to begin to articulate the view that the firm also has a social obligation towards average investors. If all your friends are running up large credit card bills, it is hard to live within your means. If you are a bureaucrat who has qualms about dominant paradigms, it is hard to go against the group think and risk looking silly or ignorant. Moving your money might not be costly, but moving your talent to a company that upholds the common good could be a gamble.
So changing market culture takes courage. But my research convinces me that it is the only way forward. I liken it to efforts by citizens to clean up a decrepit park frequented by drug dealers. It’s time to pick up the trash left by the financial destruction, and challenge each other to clean up our acts.