Tag Archives: New York University

Start Spreading the News: New York City ‘Will Rival Silicon Valley’ By 2020!

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iPad 1, Firearm 0: The New Knowledge Society and the Keiser-Fukuyama Parallel

Mediolana’s CSO has a schedule that’s probably as spoken for as most, but even he made time for a recent episode of The Keiser Report (‘TKR’), RT’s flagship economics and finance current affairs programme presently going out thrice-weekly. The title of TKR episode 264Guns vs Gadgets – sees the fabled former Wall Street broker and New York University alumnus Max Keiser riff (in the presence of the consistently excellent Stacy Herbert) on two differing visions of the future. The first is defined by the iPad, a magical device that symbolises an economy and society defined by near-immediate access to copious amounts of worldly knowledge; the second is the humble yet ultimately lethal gun, often placed great faith in by those who have less faith in the ability of contemporary society to live up to its promise.

Keiser, who brilliantly and memorably forecast the collapse of the Icelandic asset bubble of the mid 2000s in his Al Jazeera English film Money Geyser, states that these two models of the future are essentially mutually exclusive: the existence of a knowledge utopia cannot exist at the same time as a Hobbesian state of nature. It is this claim which set us thinking:

1. The Keiser-Fukuyama Parallel. In his epic The End of History and the Last Man, Francis Fukuyama posited a similar position insofar as he saw the coexistence of a feudal-style social structure and a high-technology economy as virtually impossible. Yet there is a strong argument that can be made for the opposite: as long as the basic informational infrastructure of the knowledge economy (electricity, telephone lines and cellular towers) remains intact, the potential for any kind of society at all, including those profoundly lacking in social capital, remains. The penetration of the Internet into some of the world’s most dangerous, impoverished and unstable countries amply illustrates this point.

2. The New Knowledge Society. Only a few years ago, the Internet was so defined by its predominantly American users that in www terms, Athens, Georgia mattered more than Athens, Greece; the Web of the 1990s and early 2000s very much reflected the values of the United States at that time, in which consumerism and voyeurism ranked highly. However, with America’s rapid globalisation and the worldwide spread of both the Internet and the research university, the acquisition of knowledge has become a pillar of the Web: electronic encyclopaedia Wikipedia, lest we forget, has an Alexa ranking of 6. Countries and cultures which prize education, particularly those in emerging markets, are using the Internet to propel themselves up the value chain in ways we have barely begun to understand; we can’t even say we know what the New Knowledge Society will end up producing nor resembling.

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Fonduenomics: They Won’t Say They Weren’t Warned

Here at Mediolana HQ, we have been signalling for quite some time that structural changes in the global economy are leading to a new modus operandi – at the very least in the developed world – where recessions, those mysterious phenomena which appear to be looming ever-larger in the forefront financial collective’s consciousness, will become a normalised and, at least within the present economic conceptualisations, inescapable fact on the ground. A world of fonduenomics which is being defined by seemingly insatiable demand for rather finite resources is at best one characterised by price volatility; at worst, it is one where prices for commodities which are the lifeblood of what we conventionally understand as the global economy will have to be paid for a little more realistically.

We regret to note that few commentators – perhaps with the partial exceptions of that omniscient Professor of Economics and International Business at the Stern School of Business, NYU, Nouriel Roubini; the extraordinarily prescient financial analyst Max Keiser; and Warner-in-Chief Alessio Rastani – have begun to grasp the implications of this; even what is in many respects an excellent article, Financial crisis has world teetering on the brink: welcome to the new normal (authored by Guardian economics editor Larry Elliott), which at least acknowledges, in the perhaps rather more predictable context of the all-enveloping financial crisis in Europe, that the idea of ‘business as usual’ in the context of the global economy is not really that salient anymore, resists the connection of too many dots.

In the realm of social psychology, theorists have posited that opinions held by a majority can be swayed or even reversed if a minority is persuasive and consistent enough in their viewpoints, while being perceived as flexible and rational, but perhaps philosophy holds the key as to how new, initially jarring economic orthodoxies will someday be seen as natural; as Arthur Schopenhauer (1788-1860) reminds us: ‘All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.’

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Capitalism: Not Doomed, But Elusive (in the West)

From time to time, we at Mediolana get posed the seemingly eternal question: whither the economy? Sometimes the best course of action is to point the questioner in the direction of the ostensibly omnipresent Nouriel Roubini, that stalwart of the Stern School of Business at New York University and, like this company’s chief blogger, one of the very few commentators to note – during the ‘perpetual boom’ years of the mid-2000s – that all was not well with the global economy. Professor Roubini has recently composed a masterful analysis for Al Jazeera – one evincing his usual, tight prose – entitled Is capitalism doomed?

Roubini believes that ‘Great Depression 2.0’ may well be upon us shortly owing to a number of factors, including high oil prices and the psychological, ecological and physical devastation afflicting Japan. But the leitmotiv of his article is the central paradox confronting Western economies: the United States, the eurozone and the United Kingdom are all not merely experiencing slow or negative growth, but are seemingly bankrupt in terms of policy prescriptions; in Roubini’s words, ‘[Western policymakers] have run out of rabbits’. Particularly sobering in this respect is the fact that the American administration’s combination of a second round of quantitative easing and US$1trn in tax cuts – a desperate card to play in virtually any context – did not produce any significant economy-wide gains in the United States.

Extrapolating from Roubini’s perspicacity, Mediolana would proffer the following thoughts on the general direction of the global economy:

1. Western Stagnation. At least in the medium-term, the structural economic problems in the West are unlikely to be solved anytime soon. The eurozone crisis could conceivably dominate the EU for the first half of the current decade and beyond, and should Italy or Spain need bailing out then all bets are off concerning the ultimate status of the euro itself. The United States looks to be in an even worse predicament, with its transformation from hyperpower to fading world power well underway. In both regions, the awesome levels of debt now in play threaten to choke off any return to economic growth as we know it; sovereign governments are essentially being used as guarantors of the debts of the financial sector, leading one to question what form of capitalism is actually being practiced here.

2. Eastern Promise. Fast-emerging economies such as China, India, Turkey and Indonesia are posting hugely impressive growth rates – all four of these countries are scheduled to enjoy GDP growth of between approximately 6% and 10% this year – and have remained at least relatively immune from the contagion sweeping the EU and the United States, despite having intimate trade ties with these regions. This may change as the financial crisis in the West deepens, but emerging economies such as these boast massive potential for development of their own internal markets – a significant trump card in a period of pronounced global instability.

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NYU: Redefining ‘East Village’

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