Cambodia Update

I write regularly about my doings in Cambodia for a website http://khmer440.com so I forget that some of you might also be interested.

So to recap: after six years in Phnom Penh I decided I had to find an escape from the big city. No matter how great a city is there’s something about it that demands I get some respite. As cities go, especially as Asian cities go, Phnom Penh is eminently livable but that doesn’t change the imperative to find greener pastures.

I’d been to quite a few places in Cambodia and easily settled on Kampot as my second home. It’s on a wide estuary (it’s officially called a bay, we all call it a river) with a national park as a back drop: hiking trails there are an easy bike ride away. It’s got a large old town with many centenarian buildings, some of which are in a terrible state of disrepair - gives it a little character. It has only 30,000 people so everyplace is within a ten minute bike ride and there is no traffic stress whatever.

It’s also close enough to Phnom Penh – 93 miles/ 148 kilometers - to be a tolerable commute, two-and-a-half to three hours. I make about three round trips a month. Kampot is a heavenly place – quiet, green, friendly, easy, beautiful – but it has no night life to speak of. As a result, I’ve been living in both places for almost two years now.

I also made a commitment to the area by buying land: actually I have a 50 year, renewable lease; non-citizens cannot own land here. It’s a sweet little piece of Cambodia and I have long-term plans to turn it into a tropical mini-Eden.

Buying land here is a bit of a gamble, but I’m hardly alone, lots of expats are doing it. Cambodia is in a very peaceful state and we expats are very welcome here: it has the easiest visa requirements for long-term residence that I know of. On the other hand, considering its morbid past, it’s hard to predict with total assurance what might happen in the future.

It wasn’t a whole lot of money so losing it through instability or other unknowable events wouldn’t be a big deal. I paid $14,000 for 3/4 of an acre, two miles from town. Ironically enough, I purchased at the same time was I counseling others to hold off buying property saying prices were going to go down. In the event, they have gone down. I’ve heard of people offering land at much lower prices (as well as some who are still clinging to the sky high prices of the past) but Kampot is an up-and-coming place. It’s Cambodia’s equivalent to an Oregon beach town in vibes and amenities, so I expect prices will rise back up soon. The same acreage on river frontage, even miles from town, still goes for three or four times the price.

One thing that will certainly help to raise its value is the planned upgrading of my access road. It is now a dirt track, which gets very muddy in rainy season and, for my Camry, impassible. It’s 2 maybe 300 meters from the highway so I’ve been able to bring plants and tools there quite easily.

Once the road is done I can theoretically build a house there. My latest plan is for a modest 1 1/2 story octagonal house of about 60 square meters – 660 square feet – which would cost 8 to 10,000 dollars. Typical ceilings here are nearly four meters – 12 to 13 feet - so they leave lots of room for interesting mezzanine levels. Windows would be an inexpensive type but all the floors would be in ceramic tiles. That cost estimate also includes all wiring and plumbing – third world style, of course – and a full bathroom - and accompanying septic tank - with the wall tiled up to at least shoulder height.

Alternatively I could build a wooden shack for a couple grand, with another grand for a separate toilet. Problem is, I’m not ready to live there full time and anything less requires hiring a caretaker; if not, everything not firmly safeguarded will get ripped off. Not long after I put up a barbed wire fence one of the neighbors cut it to bring cows in to graze. Ripe fruit also disappears very fast. Having a caretaker also means building a shack for him.

In addition to neighbor problems is the simple idea of taking care of an ‘estate’. Maintaining property is a chore under the best circumstances. Here the task is made a might easier because of the very low wages one is able to pay for help but made much more difficult from the language barrier. I am in a very lazy lifestyle mode at present so I wonder if living out at the land is what I really want to do.

Every time I go I visualize great things that can happen there but I still have my doubts. From my rental house at the edge of Kampot everything is an easy bike ride; out there, I’d tend to use the car. Owning property ordinarily affords a lot more security but not if you suddenly become persona non grata. I think Cambodia will fare relatively well in the coming ecological/resource-depletion/economic crisis since it has a relatively small population in a fertile land with ample water supplies, but who knows. And even if it did fare well, it’s not certain where we expats would fit in.

The other great irony is that Kampot is at sea level and we all know what global warming does to sea levels. The land wouldn’t be directly affected, but with the town under water everything would change.

I have absolutely no interest in living in the states at this point (nor could I afford to if I wanted) and I can’t imagine anywhere else I’d rather be than Cambodia so for now this is it.

I am, however, going to have to make a major lifestyle change before too long since my finances are not going to allow me to continue maintaining two residences without going back to work teaching. Problem is, there’s no work in Kampot so I’d be teaching in the capitol and visiting the small town only on weekends, holidays and term breaks.

Cambodia has lots of public holidays, 26 days a year, so some months I’d be able to go quite often, but it would still be painful to spend so much time in Phnom Penh. I hate it there in the daytime. Problem is, I love being out at night in the capitol; I thrive on it.

I haven’t taught in two years and part of me would dread going back, but it isn’t that hard a job and I would manage. There are parts of it that I like. (I am however getting a little spacey lately; doing a crossword recently I spelled humid with a t and raging without the second g …)

The alternative would be to stay full-time in my green little heaven but be poor and only visit the big city on occasion. Also a painful prospect. I feel totally at ease there but would get bored silly, not to mention a little despondent, without my night-life friends.

Editing work is a possibility; I like it and I can do it from anywhere. However, I’ve tried several times to get steady work but haven’t had a lot of luck. Alternatively, Y3K may suddenly start to sell: small miracles do happen. It’s up in the air: I’ll keep you posted.

On a related note, I’ve got to mention two recent surveys done by the Economist Intelligence Unit, an arm of the Economist magazine. I’ve read the magazine occasionally and have a lot of respect for it. I also have some respect for these types of assessments in general, but their recent ratings of Cambodia are on the level of absurd.

Last March they published a survey of all the world’s countries for being at-risk for political instability in the wake of the financial crisis. I’m not sure how the dynamic would change if the qualifier of the financial crisis weren’t added. At any rate, a cursory few days on the ground in Cambodia would make them so embarrassed they might be afraid to do any more surveys. Which points up the problem with these things; they’re based totally on crunched impersonal numbers.

On that March assessment Cambodia was placed fourth from the bottom of all countries. It was level with Sudan; only Congo, Chad and Zimbabwe lower. Not even dealing with the many other basket cases of Africa and the violent unstable countries of the Caribbean and Latin America (Haiti, Guatemala, for instance) just look at Cambodia’s neighborhood.

The Philippines has an ongoing Muslim insurgency in its south, Indonesia has an insurgency in its Irian Jaya province and communal fighting between Christians and Muslims in Sulawesi. Thailand has an ongoing Muslim insurgency that’s killed thousands of people in the last few years and recently saw an elected government, that still had popular support, overthrown by elitist-backed demonstrations and control of the courts. Malaysia has angry ethnic minorities who’ve been discriminated against by law for 40 years. Burma’s military rulers killed thousands of protesters recently to maintain their grip on the country. India has several insurgencies happening at any one time. Sri Lanka has hundreds of thousands of people displaced by the recent fighting. Afghanistan, Pakistan, Iraq, all more stable than Cambodia?

Contrast that with Cambodia which hasn’t seen factional fighting in 12 years. It has a sizable Muslim minority but not the slightest hint of dissatisfaction from them. A recent poll showed 80% of the citizenry approve of the country’s direction. The last three elections have all been declared free and fair by the international community. It’s enjoyed economic growth rates of 10% or more for several years now, though of course that’s going to slow significantly. Tourism has increased tenfold since I came here in 2001. In spite of the downturn a dozen new internationally financed banks have opened in the past year alone.

Cambodia does have its violent side. A motorbike thief unfortunate enough to get caught in the act may well be beaten to death by an angry mob before the police have time to intervene. The elite often act with impunity. Recently a big-timer’s vehicle hit another from behind, prompting his bodyguards to jump out and pull a gun on the guy who was hit. It got in the news because he was a foreigner. No action was taken because no one was hurt. On the other hand, I’ve been out walking the midnight streets of the capitol for seven years without a single incident; not that it doesn’t happen occasionally, but could you do that in Detroit or Mexico City for even a few months without being robbed at gunpoint?

More recently they came up with another survey, this time ranking cities for livability which put Phnom Penh at 128th out of 140 cities. Compared to Vancouver or Vienna which had the first and second spots, Phnom Penh would necessarily be far down the list, but compared to Bangkok (100), Manila (108), Cairo (114) or Mumbai (120)? Ridiculous: believe me, I’ve been to those cities.

Phnom Penh has no public transportation, but you can hop on a motorbike taxi and get just about anywhere in town in 15 minutes; just a little more in peak hour. Contrast that with Bangkok, which has about 6 times the population: If you need to go anywhere in peak hours that is not convenient to light rail it could take hours to go a few miles. Phnom Penh is said to have some of the worst air pollution around, but look closer and you see it’s nearly all dust. I’ve never seen hazy, chemically polluted air here: give me dust any day.

In spite of rising rents you can still get a comfortable apartment in the center of town for less than $200 per month, and ceilings are nearly always at least 10 feet – 3 meters – high which gives a spacious feeling and is ideal for the tropics. It’s a low rise, human scale city that feels comfortable to be in with a population that’s generally friendly and easy to get along with. It doesn’t have the cultural offerings of those bigger cities, but it’s definitely improving.

Health care is not so great; for anything serious you need to go to Bangkok. Here is an experience a friend had. He drunkenly crashed his motorbike causing multiple fractures in his leg. You can’t take a chance on getting that properly done in Phnom Penh so he flew to Bangkok (with the help of a friend, of course) spent four nights in the hospital at a total cost, everything included, of $5000.

There are many things the city lacks but it’s still one of the most livable cities in this part of the world and the Economist’s surveyors would have seen that very easily if they’d bothered to come. Problem is, how would they rate subjective responses?

Reservoir Going Dry

Regarding the ‘reservoir of wealth’ statement I made in my last article a reader asked a question via email which I will respond to.

There is a positive aspect to the immense reservoir of wealth I referred to in the sense of their being a large tranche of money in the hands of many Americans to help keep the economy afloat (even if just barely). However, on the negative side it will merely prolong the day of reckoning.

Another point that maybe wasn’t clear was that the mother of all bubbles refers to inflation and the crash of the dollar.

The US has been living way beyond its means because the dollar’s status as the world’s reserve currency exempts it from the hard choices that every other country has to make under the same spendthrift conditions. Every other country has to raise taxes, cut expenditures and generally tighten its belt. The US only has to print more dollars.

That exemption is soon to be sorely tested since the other countries who’ve been financing America’s debt are beginning to balk. China in particular has begun to fear for the safety of its trillion and a half dollars worth of US investments and rightly so since America’s debt binge is only intensifying in the desperate attempt to restore the old economy.

What a travesty, an embarrassment to see Obama and Geithner obsequiously reassuring China that it’s investments were safe, that America was interested in a strong dollar.

A lot of countries are talking of switching their assets, or parts of them, to more stable and possibly more universal currencies, once again presenting a great challenge to the dollar and the American economy.

A big part of the run up of oil prices last summer was the corresponding fall in the dollar, it hit a low of $1.60 to the Euro. The dollar then, almost counterintuitively, rose in value last winter. With economies crashing everywhere, the dollar seemed a relatively safe bet to many people and it went up to 1.25 to the Euro. That also corresponded to a fall in oil prices down to a low of about $35 per barrel.

Now the dollar is back down to $1.40 against the Euro and still falling and oil prices have surged back to near $70 per barrel. Oil’s rise is based on two other basic reasons besides the fall in the dollar.

One is the inexorable decline in reserves. The fact that oil is currently being used up at a slower pace than during the boom doesn’t change the reality that it’s being used up. China is still growing at 8%, India at 6%. Added together they have about 40% of world population. Since transitioning to a sustainable energy world is today 99% words and 1% deeds, they are doing their best to take up the slack in consumption (and resource depletion) created by the fall in demand in the developed world.

Finally the matter of speculation rears its ugly head. As long as the wealthy are flush they have to find somewhere to play with their money. As long as those types of transactions aren’t taxed, they can play to their heart’s content: to no one’s benefit but their own. If taxed, they would be more cautious and circumspect.

The stage is set for a steep rise in oil prices in the next two or three years.

First a very short description of monetarism; the guiding principal of American economic governance for decades now. Simply put: Inflation means the economy is growing too fast so you raise interest rates to slow it down and thus dampen inflation. High unemployment, which means the economy is in the doldrums, is countered by lowering rates.

The fact that the theory has failed miserably to describe actual events has not deterred its proponents one iota. The Clinton years were characterized by low inflation and low unemployment – wasn’t supposed to happen that way.

Before that during the Carter years there was high inflation and high unemployment, but that 1970’s inflation was caused by a spike in oil prices, not a roaring economy. One way the theory falls down is not recognizing that scarcity completely changes the price paradigm. If a time of inflation is not based in any way on an overheated economy, then raising interest rates can only make it worse.

Interest rates under Carter went up to 17% to counter soaring inflation, but the high rates were themselves fueling same. Maybe interest rates fluctuating between 2 and 6% would not have an effect on underlying inflation, but 17%, for sure.

So here’s the scenario: oil prices spike, triggering inflation, which in turn calls for high interest rates to counter it, which in turn batters the economy further. Meanwhile, the US government will need to raise fantastic amounts of money on the bond market to pay for monster deficits, as well as raise large amounts for bonds that have to be redeemed and refinanced.

To do that it will have to raise the rates it pays in order to entice buyers. They are already wary, so the rates may have to go relatively high. Higher rates also mean a lot more of the budget will need to be devoted to servicing debt. The only other alternative is to print money; either way a surefire recipe for inflation.

To begin to right the budget and the nation’s priorities, the first step has to be higher taxes, including heavy taxes on the wealthy and corporations. This will curb speculation and get the debt onto a manageable level.

It’d be perfectly ok to increase debt if it were going for alternative energies, electric vehicles and fast trains because those types of investments would shield the nation somewhat from higher fossil fuel prices to come.

Raising taxes as high as necessary to insure food, shelter and health care for all should also be a no-brainer. In real life the bankers get their trillions while homeowners facing bankruptcy get almost nothing.

So sorry, but America is addicted to the cheap fix of devil-may-care debt. There’s literally no chance the political establishment would even understand the imperative of raising taxes to tackle the budget deficit, let alone actually make it happen.

So what’s the prognosis? The US will muddle along doing its best to avoid reality until the next crisis, which will be of mega proportions. It will haughtily, arrogantly depend on belief in its own exceptionalism to imagine that it has a cosmic dispensation to be irresponsible without the burden of consequences. Bumpy ride ahead, folks.

Bad Sports

The title refers to how professional sports are organized in the US, not necessarily the sports themselves or how they are played. The condition of sports is not today’s most pressing problem, but nonetheless serves as a metaphor for how much of America is dominated, for ill effect, by the corporations and the related mindset.

Back in the 1920’s professional sports in America were exempted from anti-trust laws. Normal rules against collusion, price-fixing, limits to competition and extortion do not apply.

In American sports, small cabals of owners make all relevant decisions. If they so choose, those decisions can be totally oriented towards their own personal benefit. They are not required to give any consideration whatever to the public good.

That is how the process of awarding cities with major league franchises becomes how much a city is willing to subsidize the owner. At a time when support of all manner of public services and infrastructure are suffering, owners demand and receive brand new stadiums. While Average Joe is called on to subsidize wealthy owners and spectacularly paid stars, his children go to substandard schools for lack of tax revenue. And if the people don’t cough up? They move the team to a city where they will.

A most disgusting example was the money extorted from the people of Washington State back in the 90’s by Paul Allen, owner of one of the Seattle franchises (don’t remember which one). He couldn’t get the city to meet his demand for a new $500 million stadium, so he financed a statewide ballot issue asking the people of the state to pay for it. He spent $5 million of his own money in the process of getting his subsidy enacted (it passed by a small margin).

As co-founder of Microsoft, he is one of the world’s richest men. At the time he was worth around $20 billion. So do the math: 500 million is 2.5% of 20 billion. For an amount of money that he wouldn’t even notice missing from his stash he could’ve gifted the stadium to the people: he could’ve been magnanimous, a local hero. For him it was peanuts, loose change. I don’t put him down so much for gaming the system (actually I do since I think almost everyone at his level of wealth is prima facie an asshole) it’s really the system that needs to be reinvented.

This is very similar to ‘race to the bottom’ economics. If Cambodia, which is still a very poor country by world standards, wants a factory to locate here, they have to provide infrastructure subsidies and tax breaks. So then they have a new factory, but little money to pay for the extra costs a new plant engenders nor the services needed by the workers. And here workers earn so little - $60 to $90 month – they pay no income tax, so there’s no pay back, outside of the employment itself, for the city.

Poor countries compete with subsidies for the rich so the latter can save a few pennies on their next pair of panties or cheap plastic doodads. In world trade lingo: A level playing field for all… corporations, that is. And a system totally skewed in their favor.

It works the same in America. When Boeing, not a struggling corporation by any accounting, wanted to move its headquarters, it didn’t just look around and pick the city it liked the best, it set up a bidding war between cities to see who would fork over the most cash. The Poor feeding the Rich again.

That could not happen in Europe since they have strict rules against those kinds of subsidies. Locations are chosen wholly upon their intrinsic merits. Europe also has a lesson in organizing sports that the US would well heed. In the UK, for instance, instead of having several co-equal football leagues, there is a premier league and lesser leagues. Each year the two worst performing teams in the top league get relegated down one rung to a lower group, while the two best teams in the secondary league move up.

With this type of system, there’d be no need or logic in limiting the number of teams, any city that wanted to could have one. There’d be no need to bribe wealthy owners with tax money. New teams would start at the bottom and work their way up.

The US is so big it would have to be organized differently than the UK, probably taking regions into account, but the principle would be the same.

Another negative facet of the anti-trust exemption that owners enjoy is their ability to determine what types of entities are allowed to join the club, so to speak. For instance, except for the Green Bay Packers football team which was grandfathered in; municipal, community or foundation owned teams are not allowed.

The team may be called the Chicago this or that, but the minute the owner thinks he can make more money elsewhere he won’t hesitate to move the team. His loyalty is to his bottom line, the city involved is ultimately irrelevant.

I enjoy sports and think it’s a worthy endeavor for society, but the way it’s organized in America today almost totally turns me off.