The End of Cambodia’s Ersatz Democracy


February 8, 2018

The End of Cambodia’s Ersatz Democracy

by Author: Editorial Board, East Asia Forumwww.eastasiaforum.org 

In 2017, the world’s attention turned to Cambodia for all the wrong reasons.

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Phnom Penh City

When Cambodians went to the polls to elect municipal councils in July, the opposition Cambodia National Rescue Party (CNRP) saw a substantial boost in its support, particularly in the rural areas long considered a stronghold of Prime Minister Hun Sen’s Cambodian People’s Party (CPP). The local results were seen to put the CNRP in a competitive position in the national election scheduled for July 2018.

 

Rather than prompting the government to become more responsive to the concerns of disaffected voters, the 2017 polls became the trigger for a brazen crackdown on the opposition, the press and civil society. The CNRP has been dissolved in a controversial court ruling, and its leader Kem Sokha has been jailed on trumped-up charges of treason. Media outlets such as the respected Cambodia Daily newspaper and independent radio stations have been shut down. The government is intimidating the largest and most vocal NGOs.

As Astrid Norén-Nilsson writes in this week’s lead article (which is part of an EAF special feature series on 2017 in review and the year ahead), the ongoing crackdown marks no less than ‘the endpoint of Cambodia’s era of electoral democracy — an era in which the opposition may have faced uphill struggles but was nonetheless dependably allowed to contest elections’.

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Certainly, Hun Sen’s Cambodia was no poster child for democracy and good governance before 2017. As political scientist Lee Morgenbesser has argued, after Hun Sen’s rise to power in the 1993 election overseen by the United Nations, the country became a textbook case of ‘competitive authoritarianism’. This is a system in which parties and civil society are allowed enough freedom to maintain the appearance of competitive politics, but where political institutions are so rigged that the opposition has no real path to power. In this view, the mistake of the CNRP was to get too popular, to the extent that a national election victory seemed a possibility — a scenario that Hun Sen could not countenance.

The degeneration of a pretend democracy into outright autocracy also marks the failure of decades of investment in Cambodian democracy and good governance by Western governments and international organisations. It is perhaps a small sense of responsibility for the current predicament that gives urgency to questions about what the world can or should do in response to Hun Sen’s crackdown. At present, targeted sanctions seem ‘the only realistic possibility of a somewhat modified course of government action, though [they are] a highly uncertain one’, writes Norén-Nilsson.

 

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A peaceful and attractive county side in a rapidly developing and stable economy

The note of caution she sounds is appropriate. Cambodia is no economic pariah; rather, millions of Cambodians are beneficiaries of trade with the West. As Heidi Dahles highlights in her review of the Cambodian economy, trade unions representing garment workers have spoken out against Western economic sanctions. Western governments should take such warnings seriously. Any program of sanctions that harms Cambodian export industries would only play into the hands of Hun Sen and his narrative that the West is out to undermine Cambodia. Heavy-handed sanctions not only fail to guarantee changes in the behaviour of the target regime, but can lead to isolation and economic hardship that serves nobody’s interests (the experience of Myanmar under the old military junta is a cautionary tale).

However Western governments respond, there are ultimately larger forces at work aiding the entrenchment of authoritarianism both in Cambodia and elsewhere in the region. Hun Sen’s crackdown takes place in a world where authoritarian leaders are less dependent on the West for their aid and investment needs — and thus have fewer incentives to cultivate support among Western politicians by promising reforms and democracy. As Norén-Nilsson writes, ‘China’s full political and economic support enables Cambodia’s shift to autocracy, which occurs in the context of President Trump’s voluntary handing over of American regional and global leadership to China’.

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Hun Sen and his CPP can expect to win the July 2018 election decisively in a contest compromised by the effective exclusion of the largest opposition party. By closing off avenues for peaceful opposition, Hun Sen has thrown up hazards for Cambodia’s future. As we have learned from the fall of autocrats from Indonesia to Egypt in recent decades, when struck by crises dictatorships can prove surprisingly brittle — and efforts to unseat them typically lead to large-scale violence.

The West will make noises about the illegitimacy of the Prime Minister’s victory, and will likely continue to apply and even extend sanctions. But Hun Sen is here to stay, and the dictates of realpolitik mean that the Western powers will soon revert to pragmatic cooperation with Hun Sen’s regime when necessary.

The EAF Editorial Board is comprised of Peter Drysdale, Shiro Armstrong, Ben Ascione, Amy King, Liam Gammon, Jillian Mowbray-Tsutsumi and Ben Hillman, and is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

This article is part of an EAF special feature series on 2017 in review and the year ahead.

Also read: http://www.eastasiaforum.org/2017/11/05/cambodian-democracy-on-the-ropes/

http://www.eastasiaforum.org/2018/01/16/has-cambodias-economic-boom-imploded/

http://www.eastasiaforum.org/2015/03/18/after-thirty-years-of-hun-sen-where-is-cambodia-now/

Governing Singapore beyond Lee Kuan Yew


February 3, 2018

Governing Singapore beyond Lee Kuan Yew

by Cherian George*

http://www.newmandala.org/lky-legacy/

*Cherian George is professor of media studies at Hong Kong Baptist University. His research focuses on freedom of expression and censorship in Asia, as well as religious intolerance and hate propaganda. He is the author of “Hate Spin: The Manufacture of Religious Offense and its Threat to Democracy” (MIT Press, 2016), which is based on research on religious nationalism in India, Indonesia and the United States.

One of the late Lee Kuan Yew’s most admirable acts of foresight was to usher out Singapore’s first-generation leaders in order to hasten the rejuvenation of the People’s Action Party (PAP). Giants like Goh Keng Swee, S. Rajaratnam and E.W. Barker retired from the government in the 1980s, when they were still younger than Ronald Reagan and Donald Trump were upon entering the White House. In the short term, this represented a massive underutilisation of talent. But that’s how determined Lee was to make sure that the next generation—Goh Chok Tong, Ong Teng Cheong, Tony Tan, S. Dhanabalan and others—would emerge from the shadow of their seniors to secure the future of the ruling party.

PAP exit management under Lee had one major omission, though. Himself. Lee felt he needed to stick around. Since his designated successor Goh Chok Tong had no objections, Lee didn’t accompany his first-generation comrades to the early retirement he had so strenuously advocated. After 1991, when Singapore got a new premier for the first time in 32 years, various terms were used to describe Lee’s new position. Senior Minister. Minister Mentor. Goalkeeper. Whatever the title, for the next 20 years, the simple political reality was that LKY was still around. At The Straits Times where I used to work, word came from way above my pay grade that we were not to say he stepped down. He stepped aside.

It could have been much worse. He could have held on to the top job like Cuba’s Fidel Castro, who also won power in 1959 but would only concede it to death, 47 years later. Or like Zimbabwe’s Robert Mugabe, who before he was ousted by the military was saying he’d run for another five-year term in 2018, at the age 94. Or he could have done a Mahathir Mohamad, who never met a potential or actual successor he didn’t eventually consider an enemy to undermine or incarcerate.

If Lee didn’t join this club, it wasn’t because he lacked self-belief or the stomach for undemocratic methods. Perhaps his autocratic tendency was tempered by his hyper-rational, unsentimental view of life. He knew time changes everything, and that people grow old, get weak, and die. So, while convinced that Singapore needed an omnipotent executive branch to run the place, he also knew its personnel would have to be rotated before they succumbed to their mortality. He also differed from the typical dictator in that his family was clean. Corrupt strongmen avoid the exit door because they fear it will lead them and their kin straight to prison. The Lees didn’t have that problem.

Whatever the reasons, Lee Kuan Yew didn’t follow the jealous despot script. Instead, he institutionalised a system of leadership renewal. Therefore, while the PAP as a party is unapologetic about its desire to dominate politics indefinitely, PAP leaders as individuals accept they have to make way for younger replacements.

Things could have been worse; but they could have also been better. Political self-renewal must mean more than replacing older leaders with younger ones. It may require systemic change as well. This is where the PAP fell short. Lee and his junior colleagues failed to adapt their governance model to the post-LKY era. They underestimated how much the system had evolved around Lee’s style and philosophy. After three decades, the state had become like a corporate computer system patched together by a brilliant IT guy who refuses to adopt off-the-shelf solutions used by other firms, and insists on installing his own custom-built software upgrades year after year. He is conscientious enough to train apprentices and write a voluminous troubleshooting guide. But only he knows how to get optimum performance out of his system. Eventually, the company will find out the hard way that it should have adopted more resilient open-source solutions that wouldn’t depend on their champion IT guy being on call 24/7.

The globally respected operating system that Lee rejected while he was in office was the democratic template of checks and balances to avoid over-concentrated power. Robust institutions insure against the mortality and fallibility of human leaders. Lee placed his bets instead on a conveyor belt of able men unfettered by onerous constraints. This had been Lee’s unique contribution to the founding generation of PAP leaders. The master political strategist opened up space for brilliant policy entrepreneurs like Goh Keng Swee and Hon Sui Sen to work their wonders. He did this partly with his persuasive skills, but also by pushing aside legal, institutional and human obstacles in the way of an increasingly dominant administration.

Lee failed to acknowledge that this formula couldn’t last indefinitely. His miscalculation produced at least two policy innovations that proved costly for the PAP, and for which the party is still paying a price. These were the elected presidency and the ministerial pay formula. Both were the products of a mind obsessed, as it always had been, with the challenge of protecting Singapore governance from the vagaries of public opinion and the popular vote. They were hatched during that period from the late 1980s to the 1990s when Lee was handing over to the second-generation leadership, and anticipating what might go wrong. And both became Frankenstein’s monsters that made his successors’ jobs harder, not easier.

The elected presidency was Lee’s insurance policy against a so-called freak election that could bring the wrong party into power. The insurgents might only last a single parliamentary term, but they could cause permanent damage in that time, Lee feared. They could raid the country’s financial reserves and replace key public sector appointment holders with incompetent cronies. Lee decided that the office of the president had to be given the power to veto such plans. This new executive role would require the president to be directly elected by the people.

Lee’s constitutional fix, meant to make Singapore more stable, ironically created one of its main sources of political uncertainty. The freak election scenario remains a whimsical notion; but in the meantime, presidential elections have opened up a new front to challenge PAP dominance. This has forced the PAP to shift more attention away from governance and towards politics—the exact opposite of what Lee spent most of his career trying to do. To address the risk that presidential elections will deviate from the government’s preferences, it has had go through various contortions, including reducing the power of the president in relation to the unelected Council of Presidential Advisers, raising the pre-qualification bar for would-be candidates (including reserving this year’s election for Malay candidates), and lecturing Singaporeans that they must not politicise the presidency. The rancour surrounding presidential elections—and the attendant cost to the unifying purpose of the head of state—had been predicted by Singaporeans who submitted thoughtful feedback during the Select Committee hearings leading up to the 1991 constitutional amendments. Lee had brushed aside their concerns.

The pay formula for ministers and senior civil servants was another radical idea born of Lee’s frustration with an obtuse Singapore public. He was justifiably concerned that skyrocketing private sector pay would weaken the public sector’s ability to recruit top talent. He was correct to conclude that the government could not let its remuneration lag too far behind. Where he went wrong was to decide that, instead of arguing it out in parliament every time it needed to revise its pay structure, the government should create an automatic formula pegging public officials’ salaries to those of top earners such as lawyers, bankers and corporate chief executives.

Singaporeans could see the fundamental flaws in the idea. A league table of top salaries in fields like banking and corporate management would show very high figures year after year, but those salaries were not going to the same people every year. Firms and individuals would enter and leave the list; they were in risky, competitive markets. Like boy bands, they might be at the pinnacle for only a few years. In contrast, the government’s stars would continue to get top dollar for a couple of decades, their pay being pegged to the private sector’s equivalent of Westlife in the 1990s, the Jonas Brothers in the 2000s, and One Direction in the 2010s. This just didn’t smell right. Many Singaporeans also had deep concerns about so explicitly marketising the relationship between leaders and led.

Lee Kuan Yew would have none of it. He was determined to do what he had always done: use his political clout to create a structural fix that, he thought, would put an end to unproductive debates and let the government get on with the job. Concluding his marathon speech during the 1994 parliamentary debate on the formula, Lee declared, “I say I am prepared to put my experience and my judgement against all the arguments that doubters can muster. In five to ten years, when it works and Singapore has a good government, this formula will be accepted as conventional wisdom.”

In the realm of embarrassing 1990s predictions, this one vies with 3Com founder Robert Metcalfe’s statement the following year:I predict the internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” For instead of depoliticising the question of public sector remuneration, Lee’s formula bequeathed to his successors possibly the era’s single most toxic policy move. Exactly as critics predicted, it infected government–people relations with cynicism and distrust.

The PAP had prided itself on its willingness to make unpopular decisions in the country’s long-term interest, but now when ministers resisted the popular will, their motivations would be questioned—of course they don’t care about the people, they only care about their high-paying jobs. The market-pegged formula also made people contemptuously unforgiving of inevitable mistakes—this is what million-dollar salaries get us? Another serious unintended but predictable consequence was to make the civil service resistant to change, by disincentivising risk-taking among officers earning salaries many know they can’t command elsewhere.

Lee Kuan Yew admitted to making mistakes, especially in pushing zero population growth too aggressively in the 1970s. But he couldn’t really be faulted for that one, since practically every government looking at similar demographic trends arrived at the same policy prescriptions. In contrast, Lee’s ideas to restructure of the presidency and public sector pay in the 1990s were idiosyncratically his own. And they were not cases of random error but systematic error, as scientists would put it. They resulted from his peculiar obsession with protecting the state from the unpredictability of democratic politics. He had more or less succeeded in doing so in earlier decades—like that special IT guy, constantly troubleshooting and tinkering. But he overestimated his ability to design plug-ins for Singapore’s operating system that would continue to function smoothly after he left.

 

He does not deserve all the blame. As he phased himself out of day-to-day government, it was up to his younger colleagues to stress-test his legacy clinically and redesign the system accordingly. If they were too in awe of his status as supreme architect of PAP software, that was their fault, not his.

That’s why my heart fell when he became the first casualty of the PAP’s 2011 general election setback. Sure, it was ill-advised of him to spout warnings during the campaign that voters in the five hot seats of Aljunied would “repent” if they elected the opposition (they ignored him and did). But the strong anti-PAP swing was due to cabinet’s collective blunders in the preceding years that had little to do with Lee.

Lee Kuan Yew’s political legacy – a matter of trust

Shamefully, he—jointly with Goh Chok Tong—was allowed to announce his resignation a week after the election, and before colleagues whose presence in cabinet Singaporeans had been querying for years. It was an undeservedly ignominious end to a government career that would be eulogised profusely four years later.

Lee and Goh said they were doing it to indicate “that the PM can and will revise and revamp his policies … to give PM and his team the room to break from the past, and … to make it clear that the PAP has never been averse to change”. When he accepted their resignations a few days later, Lee Hsien Loong allowed their rationale to stand—to “leave it to me and my team of younger ministers to take Singapore forward into the future”—thus throwing out of the window two decades of PAP assurances that Lee Kuan Yew’s presence in cabinet had never been an obstacle to progress, since ministers had minds of their own.

For more than a decade, Lee Kuan Yew had been codifying his beliefs in his memoirs and other books. This exercise was a symptom of the PAP’s understandable anxiety that its unique formula for good governance would not survive him. But it also contributed to the old pragmatism of the PAP giving way to dogmatism. After LKY’s final, emotional exit in February 2015, the depth of his influence became even more apparent. LKYism became a kind of quasi-theology, with members of the governing elite falling over one another to cite his words and acts, and thus show that they were the legitimate interpreters and inheritors of Singapore’s ultimate oracle. Being “against Mr Lee’s values” emerged as a damning label to stick on opponents within the establishment. Lee had long been called the founding father of the republic, but in 2017, Deputy Prime Minister Teo Chee Hean took the quantum leap of declaring that all of us—as individuals, not just collectively—are “sons and daughters” of Lee Kuan Yew. Of course, Teo did not actually possess the power to rewrite everyone’s birth certificate, but the remark revealed Lee’s place in the minds of the PAP’s senior leadership.

Teo’s declaration came during the parliamentary debate on the Lees’ feud over their family bungalow at 38 Oxley Road. This was a debate that engrossed the establishment and most ordinary Singaporeans. It centred on what to do with the building that was Lee Kuan Yew’s private residence during his adult life. The debate missed the point. The question we should be asking is how much room to give to the Lee Kuan Yew that will reside in the Singaporean mind long after his death.

•          •          •          •          •          •          •

This essay is extracted from Cherian George’s self-published anthology, Singapore, Incomplete: Reflections on a First World Nation’s Arrested Political Development. The book is his first for a general audience since his 2000 volume, Singapore: The Air-Conditioned Nation.

 

 

GDP Should Be Corrected


January 23, 2018

GDP Should Be Corrected

by Urs Rohner@www.project-syndicate.org

The hazards of relying solely on gross domestic product as a measure of overall economic activity have become obvious over time, especially as corporate profits have outpaced GDP growth in key economies. But none of the flaws in GDP are fatal, and policymakers should focus on fixing them, rather than seeking an entirely new framework.

 

ZURICH – Respected economists have long pointed out that gross domestic product is an inadequate measure of economic development and social well-being, and thus should not be policymakers’ sole fixation. Yet we have not gotten any closer to finding a feasible alternative to GDP.

One well-known shortcoming of GDP is that it disregards the value of housework, including care for children and elderly family members. More important, assigning a monetary value to such activities would not address a deeper flaw in GDP: its inability to reflect adequately the lived experience of individual members of society. Correcting for housework would inflate GDP, while making no real difference to living standards. And the women who make up a predominant share of people performing housework would continue to be treated as volunteers, rather than as genuine economic contributors.4

Another well-known flaw of GDP is that it does not account for value destruction, such as when countries mismanage their human capital by withholding education from certain demographic groups, or by depleting natural resources for immediate economic benefit. All told, GDP tends to measure assets imprecisely, and liabilities not at all.

Still, while no international consensus on an alternative to GDP has emerged, there has been encouraging progress toward a more considered way of thinking about economic activity. In 1972, Yale University economists William Nordhaus and James Tobin proposed a new framework, the “measure of economic welfare” (MEW), to account for sundry unpaid activities. And, more recently, China established a “green development” index, which considers economic performance alongside various environmental factors.

Moreover, public- and private-sector decision-makers now have far more tools for making sophisticated choices than they did in the past. On the investor side, demand for environmental, social, and governance data is rising steeply. And in the public sector, organizations such as the World Bank have adopted metrics other than GDP to assess quality of life, including life expectancy at birth and access to education.

At the same time, the debate around gross national income has been gaining steam. Though it shares fundamental elements with GDP, GNI is more relevant to our globalized age, because it adjusts for income generated by foreign-owned corporations and foreign residents. Accordingly, in a country where foreign corporations own a significant share of manufacturing and other assets, GDP will be inflated, whereas GNI shows only income the country actually retains (see chart).

Ireland is a prominent example of how GNI has been used to correct for distortions in GDP. In 2015, Ireland’s reported GDP increased by an eye-popping 26.3%. As an October 2016 OECD working paper noted, the episode raised serious questions about the “ability of the conceptual accounting framework used to define GDP to adequately reflect economic reality.”

The OECD paper went on to conclude that GDP is not a reliable indicator of a country’s material well-being. In Ireland’s case, its single year of astonishing GDP growth was due to multinational corporations “relocating” certain economic gains – namely, the returns on intellectual property – in their overall accounting. To address the growing disparity between actual economic development and reported GDP, the Irish Central Statistics Office introduced a modified version of GNI known as GNI*) for 2016.

The gap between GDP and GNI will likely close soon in other jurisdictions, too. In a recent working paper, Urooj Khan of Columbia Business School, Suresh Nallareddy of Duke University, and Ethan Rouen of Harvard Business School highlight a misalignment in “the growth in corporate profits and the overall US economy” between 1975 and 2013. They find that, during that period, average corporate-profit growth outpaced GDP growth whenever the domestic corporate-income-tax rate exceeded that of other OECD countries.

In late December, this disconnect was addressed with the passage of the 2017 Tax Cuts and Jobs Act. By lowering the corporate-tax rate to a globally competitive level and granting better terms for repatriating profits, the tax package is expected to shift corporate earnings back to the United States. As a result, the divergence between GDP and GNI will likely close in both the US and Ireland, where many major US corporations have been holding cash.

Looking ahead, I would suggest that policymakers focus on three points. First, as demonstrated above, the relevant stakeholders are already addressing several of the flaws in GDP, which is encouraging. Second, public- and private-sector decision-makers now have a multitude of instruments available for better assessing the social and environmental ramifications of their actions.

And, third, in business one must not let the perfect become the enemy of the good. We have not solved all of the problems associated with GDP, but we have come a long way in reducing many of its distortions. Instead of seeking a new, disruptive framework to replace current data and analytical techniques, we should focus on making thoughtful, incremental changes to the existing system.

The Psychology of Inequality


January 10, 2018

The Psychology of Inequality

Researchers find that much of the damage done by being poor comes from feeling poor.

In 2016, the highest-paid employee of the State of California was Jim Mora, the head coach of U.C.L.A.’s football team. (He has since been fired.) That year, Mora pulled in $3.58 million. Coming in second, with a salary of $2.93 million, was Cuonzo Martin, at the time the head coach of the men’s basketball team at the University of California, Berkeley. Victor Khalil, the chief dentist at the Department of State Hospitals, made six hundred and eighty-six thousand dollars; Anne Neville, the director of the California Research Bureau, earned a hundred and thirty-five thousand dollars; and John Smith, a seasonal clerk at the Franchise Tax Board, earned twelve thousand nine hundred dollars.

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I learned all this from a database maintained by the Sacramento Bee. The database, which is open to the public, is searchable by name and by department, and contains precise salary information for the more than three hundred thousand people who work for California. Today, most state employees probably know about the database. But that wasn’t the case when it was first created, in 2008. This made possible an experiment.

The experiment, conducted by four economists, was designed to test rival theories of inequity. According to one theory, the so-called rational-updating model, people assess their salaries in terms of opportunities. If they discover that they are being paid less than their co-workers, they will “update” their projections about future earnings and conclude that their prospects of a raise are good. Conversely, people who learn that they earn more than their co-workers will be discouraged by that news. They’ll update their expectations in the opposite direction.

According to a rival theory, people respond to inequity not rationally but emotionally. If they discover that they’re being paid less than their colleagues, they won’t see this as a signal to expect a raise but as evidence that they are underappreciated. (The researchers refer to this as the “relative income” model.) By this theory, people who learn that their salaries are at the low end will be pissed. Those who discover that they’re at the high end will be gratified.

The economists conducting the study sent an e-mail to thousands of employees at three University of California schools—Santa Cruz, San Diego, and Los Angeles—alerting them to the existence of the Bee’s database. This nudge produced a spike in visits to the Web site as workers, in effect, peeked at one another’s paychecks.

A few days later, the researchers sent a follow-up e-mail, this one with questions. “How satisfied are you with your job?” it asked. “How satisfied are you with your wage/salary on this job?” They also sent the survey to workers who hadn’t been nudged toward the database. Then they compared the results. What they found didn’t conform to either theory, exactly.

Note:

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By bridging the fields of anthropology, evolutionary biology, behavioral ecology, geopolitics, and social science, trailblazing scientist Jared Diamond (b. September 10, 1937) has done more than anyone since Margaret Mead to decondition the Eurocentric approach to history and debunk the biological fallacies on which the monster of racism feeds. His Pulitzer-winning 1997 book Guns, Germs, and Steel: The Fates of Human Societies (public library) is a foundational text illuminating the conditions that led to inequality in the modern world and combating the broken logic that perpetuates these toxic beliefs.

At the heart of Diamond’s work is the notion that in order to understand any one society, we must contextualize it in the larger ecosystem of humanity and therefore must understand all societies. Only by grasping the richness and diversity of the entire ecosystem can we begin to dismantle our assumptions about the value of others and realize that people from different groups fared differently in history not due to their innate abilities but due to a complex cluster of environmental and geopolitical forces.

Jared Diamond

https://www.brainpickings.org/2015/09/10/jared-diamond-guns-germs-and-steel-risk/

As the relative-income model predicted, those who’d learned that they were earning less than their peers were ticked off. Compared with the control group, they reported being less satisfied with their jobs and more interested in finding new ones. But the relative-income model broke down when it came to those at the top. Workers who discovered that they were doing better than their colleagues evinced no pleasure. They were merely indifferent. As the economists put it in a paper that they eventually wrote about the study, access to the database had a “negative effect on workers paid below the median for their unit and occupation” but “no effect on workers paid above median.”

The message the economists took from their research was that employers “have a strong incentive” to keep salaries secret. Assuming that California workers are representative of the broader population, the experiment also suggests a larger, more disturbing conclusion. In a society where economic gains are concentrated at the top—a society, in other words, like our own—there are no real winners and a multitude of losers.

Keith Payne, a psychologist, remembers the exact moment when he learned he was poor. He was in fourth grade, standing in line in the cafeteria of his elementary school, in western Kentucky. Payne didn’t pay for meals—his family’s income was low enough that he qualified for free school lunch—and normally the cashier just waved him through. But on this particular day there was someone new at the register, and she asked Payne for a dollar twenty-five, which he didn’t have. He was mortified. Suddenly, he realized that he was different from the other kids, who were walking around with cash in their pockets.

“That moment changed everything for me,” Payne writes, in “The Broken Ladder: How Inequality Affects the Way We Think, Live, and Die.” Although in strictly economic terms nothing had happened—Payne’s family had just as much (or as little) money as it had the day before—that afternoon in the cafeteria he became aware of which rung on the ladder he occupied. He grew embarrassed about his clothes, his way of talking, even his hair, which was cut at home with a bowl. “Always a shy kid, I became almost completely silent at school,” he recalls.

Payne is now a professor at the University of North Carolina, Chapel Hill. He has come to believe that what’s really damaging about being poor, at least in a country like the United States—where, as he notes, even most people living below the poverty line possess TVs, microwaves, and cell phones—is the subjective experience of feeling poor. This feeling is not limited to those in the bottom quintile; in a world where people measure themselves against their neighbors, it’s possible to earn good money and still feel deprived. “Unlike the rigid columns of numbers that make up a bank ledger, status is always a moving target, because it is defined by ongoing comparisons to others,” Payne writes.

Feeling poor, meanwhile, has consequences that go well beyond feeling. People who see themselves as poor make different decisions, and, generally, worse ones. Consider gambling. Spending two bucks on a Powerball ticket, which has roughly a one-in-three-hundred-million chance of paying out, is never a good bet. It’s especially ill-advised for those struggling to make ends meet. Yet low-income Americans buy a disproportionate share of lottery tickets, so much so that the whole enterprise is sometimes referred to as a “tax on the poor.”

One explanation for this is that poor people engage in riskier behavior, which is why they are poor in the first place. By Payne’s account, this way of thinking gets things backward. He cites a study on gambling performed by Canadian psychologists. After asking participants a series of probing questions about their finances, the researchers asked them to rank themselves along something called the Normative Discretionary Income Index. In fact, the scale was fictitious and the scores were manipulated. It didn’t matter what their finances actually looked like: some of the participants were led to believe that they had more discretionary income than their peers and some were led to believe the opposite. Finally, participants were given twenty dollars and the choice to either pocket it or gamble it on a computer card game. Those who believed they ranked low on the scale were much more likely to risk the money on the card game. Or, as Payne puts it, “feeling poor made people more willing to roll the dice.”

In another study, this one conducted by Payne and some colleagues, participants were divided into two groups and asked to make a series of bets. For each bet, they were offered a low-risk / low-reward option (say, a hundred-per-cent chance of winning fifteen cents) and a high-risk / high-reward option (a ten-per-cent chance of winning a dollar-fifty). Before the exercise began, the two groups were told different stories (once again, fictitious) about how previous participants had fared. The first group was informed that the spread in winnings between the most and the least successful players was only a few cents, the second that the gap was a lot wider. Those in the second group went on to place much chancier bets than those in the first. The experiment, Payne contends, “provided the first evidence that inequality itself can cause risky behavior.”

People’s attitude toward race, too, he argues, is linked to the experience of deprivation. Here Payne cites work done by psychologists at N.Y.U., who offered subjects ten dollars with which to play an online game. Some of the subjects were told that, had they been more fortunate, they would have received a hundred dollars. The subjects, all white, were then shown pairs of faces and asked which looked “most black.” All the images were composites that had been manipulated in various ways. Subjects in the “unfortunate” group, on average, chose images that were darker than those the control group picked. “Feeling disadvantaged magnified their perception of racial differences,” Payne writes.

“Every year he regifts himself to me.”

“The Broken Ladder” is full of studies like this. Some are more convincing than others, and, not infrequently, Payne’s inferences seem to run ahead of the data. But the wealth of evidence that he amasses is compelling. People who are made to feel deprived see themselves as less competent. They are more susceptible to conspiracy theories. And they are more likely to have medical problems. A study of British civil servants showed that where people ranked themselves in terms of status was a better predictor of their health than their education level or their actual income was.

All of which leads Payne to worry about where we’re headed. In terms of per-capita income, the U.S. ranks near the top among nations. But, thanks to the growing gap between the one per cent and everyone else, the subjective effect is of widespread impoverishment. “Inequality so mimics poverty in our minds that the United States of America . . . has a lot of features that better resemble a developing nation than a superpower,” he writes.

Rachel Sherman is a professor of sociology at the New School, and, like Payne, she studies inequality. But Sherman’s focus is much narrower. “Although images of the wealthy proliferate in the media, we know very little about what it is like to be wealthy in the current historical moment,” she writes in the introduction to “Uneasy Street: The Anxieties of Affluence.”

Sherman’s first discovery about the wealthy is that they don’t want to talk to her. Subjects who agree to be interviewed suddenly stop responding to her e-mails. One woman begs off, saying she’s “swamped” with her children; Sherman subsequently learns that the kids are at camp. After a lot of legwork, she manages to sit down with fifty members of the haut monde in and around Manhattan. Most have family incomes of more than five hundred thousand dollars a year, and about half have incomes of more than a million dollars a year or assets of more than eight million dollars, or both. (At least, this is what they tell Sherman; after a while, she comes to believe that they are underreporting their earnings.) Her subjects are so concerned about confidentiality that Sherman omits any details that might make them identifiable to those who have visited their brownstones or their summer places.

“I poked into bathrooms with soaking tubs or steam showers” is as far as she goes. “I conducted interviews in open kitchens, often outfitted with white Carrara marble or handmade tiles.”

A second finding Sherman makes, which perhaps follows from the first, is that the privileged prefer not to think of themselves that way. One woman, who has an apartment overlooking the Hudson, a second home in the Hamptons, and a household income of at least two million dollars a year, tells Sherman that she considers herself middle class. “I feel like, no matter what you have, somebody has about a hundred times that,” she explains. Another woman with a similar household income, mostly earned by her corporate-lawyer husband, describes her family’s situation as “fine.”

“I mean, there are all the bankers that are heads and heels, you know, way above us,” she says. A third woman, with an even higher household income—two and a half million dollars a year—objects to Sherman’s use of the word “affluent.”

“ ‘Affluent’ is relative,” the woman observes. Some friends of hers have recently flown off on vacation on a private plane. “That’s affluence,” she says.

This sort of talk dovetails neatly with Payne’s work. If affluence is in the eye of the beholder, then even the super-rich, when they compare their situation with that of the ultra-rich, can feel sorry for themselves. The woman who takes exception to the word “affluent” makes a point of placing herself at the “very, very bottom” of the one per cent. “The disparity between the bottom of the 1 percent and the top of the 1 percent is huge,” she observes.

Sherman construes things differently. Her subjects, she believes, are reluctant to categorize themselves as affluent because of what the label implies. “These New Yorkers are trying to see themselves as ‘good people,’ ” she writes. “Good people work hard. They live prudently, within their means. . . . They don’t brag or show off.” At another point, she observes that she was “surprised” at how often her subjects expressed conflicted emotions about spending. “Over time, I came to see that these were often moral conflicts about having privilege in general.”

Whatever its source—envy or ethics—the discomfort that Sherman documents matches the results of the University of California study. Inequity is, apparently, asymmetrical. For all the distress it causes those on the bottom, it brings relatively little joy to those at the top.

As any parent knows, children watch carefully when goodies are divvied up. A few years ago, a team of psychologists set out to study how kids too young to wield the word “unfair” would respond to unfairness. They recruited a bunch of preschoolers and grouped them in pairs. The children were offered some blocks to play with and then, after a while, were asked to put them away. As a reward for tidying up, the kids were given stickers. No matter how much each child had contributed to the cleanup effort, one received four stickers and the other two. According to the Centers for Disease Control and Prevention, children shouldn’t be expected to grasp the idea of counting before the age of four. But even three-year-olds seemed to understand when they’d been screwed. Most of the two-sticker recipients looked enviously at the holdings of their partners. Some said they wanted more. A number of the four-sticker recipients also seemed dismayed by the distribution, or perhaps by their partners’ protests, and handed over some of their winnings. “We can . . . be confident that these actions were guided by an understanding of equality, because in all cases they offered one and only one sticker, which made the outcomes equal,” the researchers reported. The results, they concluded, show that “the emotional response to unfairness emerges very early.”

If this emotional response is experienced by toddlers, it suggests that it may be hardwired—a product of evolution rather than of culture. Scientists at the Yerkes National Primate Research Center, outside Atlanta, work with brown capuchin monkeys, which are native to South America. The scientists trained the monkeys to exchange a token for a slice of cucumber. Then they paired the monkeys up, and offered one a better reward—a grape. The monkeys that continued to get cucumbers, which earlier they’d munched on cheerfully, were incensed. Some stopped handing over their tokens. Others refused to take the cucumbers or, in a few cases, threw the slices back at the researchers. Like humans, capuchin monkeys, the researchers wrote, “seem to measure reward in relative terms.”

Preschoolers, brown capuchin monkeys, California state workers, college students recruited for psychological experiments—everyone, it seems, resents inequity. This is true even though what counts as being disadvantaged varies from place to place and from year to year. As Payne points out, Thomas Jefferson, living at Monticello without hot water or overhead lighting, would, by the standards of contemporary America, be considered “poorer than the poor.” No doubt inequity, which, by many accounts, is a precondition for civilization, has been a driving force behind the kinds of innovations that have made indoor plumbing and electricity, not to mention refrigeration, central heating, and Wi-Fi, come, in the intervening centuries, to seem necessities in the U.S.

Still, there are choices to be made. The tax bill recently approved by Congress directs, in ways both big and small, even more gains to the country’s plutocrats. Supporters insist that the measure will generate so much prosperity that the poor and the middle class will also end up benefitting. But even if this proves true—and all evidence suggests that it will not—the measure doesn’t address the real problem. It’s not greater wealth but greater equity that will make us all feel richer. ♦

This article appears in the print edition of the January 15, 2018, issue, with the headline “Feeling Low.”

Kant Goes to Berlin


January 7, 2018

Kant Goes to Berlin

https://www.project-syndicate.org/blog/kant-goes-to-berlin

by Michael G. Heller

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I can slip into this unique meeting of a group of European policymakers with Immanuel Kant only because I am an intern with training in stenography who is discreet and presentable and good at making tea and arranging chairs.

My boss at the Ministry (who is not allowed entry and will be so jealous of me!!) was asked at short notice to organize the reunion which will explore in the broadest possible terms an outline of the country’s philosophical stance on Fiscal Union. Someone at the European Commission is insisting we find a historical defence of the institutions and procedures of the new macro surveillance mechanism to deploy against “cheap criticism” of the democratic legitimacy of EU institutions.

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Mario Draghi is here. So is Jens Weidmann. Guido Westerwelle has at the last minute invited Radoslaw Sikorsky who happens to be visiting Berlin today.

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Chancellor of Germany–Angela Merkel–An Intellectual in her own right

Schäuble is in a hurry. He whispered to Chancellor Merkel that time is short, they should push on. Merkel would have liked to wait for an agreeable atmosphere to settle upon the room. She changed her mind, however, when she overheard Immanuel Kant muttering that “progress in time determines everything and is not itself determined, and every transition in perception to something that follows in time is a determination of time”. Kant arrived punctually, and has finished his tea. It would be advisable to begin discussion while the caffeine still circulates through whatever remains of his veins.

Merkel:  Ladies and Gentleman…

Wow! She is talking directly to *me*. I am the only other lady in the room! Wow!

Merkel:  The German government has always made it clear that the European debt crisis is not to be solved with a single blow. There is no such single blow…

Schäuble:  All quick solutions, like printing money or collectivizing our liabilities without a common finance policy, are the wrong solution…

Merkel:  Thank you Wolfgang. As I was saying, I hope our partners understand we are not willing to trade concessions such as bond-buying, joint debt-issuance and sovereign bail outs. This is not about give and take. The precondition of continuation with the single currency is that sovereignty in fiscal policy be delegated to European institutions. So, where today we have only loose agreements we need in future to have legally binding regulations.

Schäuble:  It does not make any economic sense to start endlessly pumping money into stability funds, nor starting up the ECB printing press. This would create disincentives for countries to carry on consolidating and reforming. Piling on more debt now will stunt rather than stimulate growth. We need to take big steps to get Fiscal Union done. It was not possible politically in the 1990s but the crisis shows we need it now. That is why crises are also opportunities. We can get things done that we could not do without the crisis. Do you agree Prof Kant?

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Immanuel Kant

Kant:  The only way for the philosopher, since he cannot assume that mankind follows a rational purpose of its own in its collective actions, is for him to attempt to discover a purpose in nature behind this senseless course of human events. An organ which is not meant for use or an arrangement which does not fulfill its purpose is a contradiction in the teleological theory of nature. This purpose of nature can be fulfilled only in a society which has not only the greatest freedom, and therefore a continual *antagonism* among its members, but also the most precise specification and preservation of the limits of this freedom. The highest task which nature has set for mankind must therefore be that of establishing a society in which freedom under external laws would be combined to the greatest possible extent with irresistible force. It requires a perfectly just civil constitution. Man is forced to enter this state of restriction by sheer necessity.

Draghi:  Yes. And the sequencing matters… For example, it is first and foremost important to get a commonly shared fiscal compact right. Confidence works backwards. If there is an anchor in the long term, it is easier to maintain trust in the short term… It is time to adapt the euro area design with a set of institutions, rules and processes that is commensurate with the requirements of monetary union.

Kant:  Europe’s citizens should be informed, so that they may comprehend the flow of history, that the fiscal union is but the most immediate feasible step in the direction of a federation of peoples in which every state, even the smallest, could expect to derive its security and rights not from its own power or its own legal judgement, but solely from this Great Federation. However wild and fanciful this idea may appear, it has been ridiculed as such only because they thought that its realization was presented as imminent. It is the crisis, not the Germans, that have made it imminent and feasible. This crisis is the signal that nature sends to man about the current dysfunction of his institutional organs.

Sikorski:  But it is a crisis of apocalyptic proportions!!! I demand of Germany that, for your own sake and for ours, you help the eurozone survive and prosper. You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europe’s indispensable nation.

Merkel:  Radoslaw, let me assure you that is exactly why we are meeting today. I fear we are not winning the philosophical argument. It is bizarre that some people think we wish to dominate Europe. In order to win back trust, we need to do more. What is the fundamental historical argument we must make for Fiscal Union?

Westerwelle:  Sound budgeting is not a German idée fixe based on our historical experience of hyperinflation. It is in the interest of Europe as a whole. There is no time to lose. It is vital to send a clear message to markets that the eurozone is determined to end the policies of debt-making.

Schäuble:  When things get really difficult, suddenly solutions which seemed impossible become possible. The crisis represents an opportunity. I’m not saying that I enjoy being in a crisis, but I’m not worried. Europe always moved forward in times of crisis. Sometimes you need a little pressure for certain decisions to be taken. We can only achieve a political union if we have a crisis.

Kant:  This crisis opportunity is not a lucky accident arrived at by random collisions but rather reveals that nature is purposive in its parts. As in war or any systemic catastrophe, the aftermath is felt by the state in the shape of a constantly increasing *national debt* whose repayment becomes interminable. And in addition, the effects which an upheaval in any state produces upon all the others in our continent, where all are so closely linked by trade, are so perceptible that these other states — Germany and France — are forced by their own insecurity to offer themselves as arbiters, albeit without legal authority, so that they indirectly prepare the way for a great political body of the future, without precedent in the past.

Schäuble:  This is true. We achieved monetary union, in the short term we want fiscal union, and in a larger context naturally we need a political union… Yet the Mediterranean countries will not become German, and Europe will not be speaking German.

Kant:  Although this political body exists for the present only in the roughest of outlines, it nonetheless seems as if a feeling is beginning to stir in all its members, each of which has an interest in maintaining the whole. And this encourages the hope that the highest purpose of nature, a universal *cosmopolitan* existence, will at last be realized. If we trace the influence of the Greeks upon the shaping and mis-shaping of the body politic… we shall discover a regular process of improvement in the political constitutions of our continent. We must always concentrate our attention on civil constitutions, their laws, and the mutual relations among states, and will then notice that a germ of enlightenment always survived, developing further with each revolution.

Weidmann:  I’m with you Prof Kant. Right now we’re talking about the EU treaty and I don’t see how you can build trust in a system that violates laws. I am president of an institution which is bound by a legal framework. We should respect the division of labour in a democracy. This has nothing to do with pragmatism or dogmatism. You won’t solve the crisis by reducing incentives for the debtor governments to act. It’s really an absurd debate in which we are telling institutions: ‘don’t care about the law’. In any model you must penalize rule violations. In the Maastricht model, the rules would be the stability and growth pact, with automatic sanctions for violations and the no bail-out clause. In the fiscal union model you also need strict rules for deficit and debt. If you breached those rules you would need to delegate your national sovereignty on fiscal policy to a supranational level. I think the true question at the heart of this is: are governments, parliaments, and *people* ready to accept a supranational level, a European level that assumes the ultimate responsibility for fiscal policy, at least in case of a breach of the rules?

Kant:  If the law is such that a *whole people* could not possibly agree to it (for example if it stated that a certain class of subjects must be privileged as a ruling class) it is unjust; but if it is at least possible that a people could agree to it, it is our duty to consider the law as just, even if the people is at present in such a position or attitude of mind that it would probably refuse its consent if it were consulted… in a referendum, for example.

Weidmann:  And, furthermore, it’s not about being more German or not being German. Fiscal solidity is not only a German issue, and the crisis has clearly revealed its importance as the basis of financial stability and political stability.

Draghi:  I agree. On my appointment as ECB president a British newspaper worried “the euro could be felled by an Italian trying too hard to be a German.” I mean it’s just absurd…

Kant:  Take no notice, Mario. They probably meant another country whose name begins with ‘G’. Germany is a successful country. All this fuss about budget sovereignty! In times past we lost our cities not just our deficits. Because I’m forced to live in Russia I can see things as an outsider. I see that, after wisely moving away from corporatism, Germany and like-minded northern European countries have consolidated as the world’s sustainably strongest and most competitive economies. The BRICS will at some stage inevitably crash against or only slowly clamber over internal institutional roadblocks. Germany already has good institutions *and* the right economy. If the Great Federation is modeled on impersonal non-discriminatory legal-procedural process then it can also be sold to the German people as their victory to be proud of. The voters are bound to like it.

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Max Weber

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Jurgen Habermas

Merkel:  Since we’ve drifted to the question of democracy I would like to mention that we are planning another meeting, this time with Max Weber and Jurgen Habermas, who have opposing views on the present democracy debate in Europe.

Weidmann:  I think Habermas disagrees with our idea for taking away the budgetary privileges of national parliaments.

Kant:  It sounds like the makings of a first-rate quarrel. Can I come too?

The meeting finishes. As intern, I busy myself helping everyone to find their way out of the room without mishap. I give them each my card — discreetly — and tell them what a pleasure it has been. Angela says to me “see you at the next meeting then”, which means I can truthfully tell my boss I will be expected to attend. The Chancellor expects it.

Italic Credits:  Kant: Political Writings, The Guardian, New York Times, Der Spiegel, Financial Times, The Economist, Reuters, Google

Cambodia: Democracy Update


December 9, 2017

Cambodia: Democracy Update

by Sorpong Peou

http://www.eastasiaforum.org

In recent months, the Cambodian government led by Prime Minister Hun Sen has taken stronger steps to guarantee a win in the national election scheduled for July 2018. Hun Sen’s objective is simple — to prevent his Cambodian People’s Party (CPP) from losing power by whatever means necessary.

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Prime Minister HE Samdech Techo Hun Sen– sustaining economic economic growth and maintaining national security. World Bank October 2017 Update is positive

Hun Sen has relied on a combination of three tactics — coercion, co-option and control — to maintain his domination over Cambodia’s politics in the name of protecting national security. Those who cannot be co-opted into the CPP’s sphere through material rewards can be coerced into submission, and those who do submit are still kept under tight control.

The CPP is also resource-rich, well equipped with coercive means and in control of state institutions, especially the armed forces and the judiciary. Those who have refused to defect to the CPP or who resist it face acts of intimidation and threats of punishment.

Disarming the CPP’s political opposition involves taking pre-emptive action to make it difficult for opposition leaders to mobilise effective political support far ahead of the 2018 election. Hun Sen has been successful in suppressing the political opposition and shutting out any help offered to his opponents. The opposition Cambodia National Rescue Party (CNRP) has been the primary target. The recent jailing of its president, Kem Sokha, is a good example of Hun Sen’s tactics. The recent decision by the Supreme Court to dissolve the CNRP ensures the CPP will not face any credible challenges in 2018.

Any organisations, domestic or foreign, perceived as politically supportive of or sympathetic to opposition parties are also viewed as potential targets by the CPP. Media outlets have come under pressure, especially those that broadcast news produced by foreign media agencies such as Radio Free Asia and Voice of America. The government recently shut down The Cambodia Daily, a major English language newspaper in the country, and sent its owner a bill of several million dollars for its failure to pay taxes. In August 2017, the government closed the US-funded National Democratic Institute and expelled its staff from Cambodia.

Hun Sen claims these ‘legal’ actions against the CPP’s political opponents and its critics are about protecting national security. Is this true?

The answer is no. Since the end of the Cold War, Cambodia has not encountered any serious external threat. In fact, the country has been blessed with goodwill from countries around the world. Cambodia did the right thing when it joined ASEAN in 1999. In spite of some unresolved territorial disputes and minor border clashes between Cambodia and two of its fellow ASEAN members, Thailand and Vietnam, Cambodian relations with its neighbours have been relatively peaceful. Western democracies may want to see regime change, but evidently have not done anything credible to undermine the CPP.

The unarmed opposition to the CPP does not pose any threat to Cambodian national security either, but it has threatened to undermine the ruling party’s political dominance. Although the CPP won in the 2013 national election, it lost 22 seats to the CNRP, giving the opposition more leverage over the ruling elite. In spite of good economic growth, ratings of Hun Sen’s performance among urban populations remain low. If elections were free and fair, the CPP would end up losing.

While they have done a lot of good for the country, including taking part in the war against the murderous Pol Pot regime and helping many Cambodians to enjoy the fruits of economic growth, the CPP elite have reason to worry about their political future.

Hun Sen and other top CPP leaders have been accused of human rights violations and rampant corruption and thus can never be sure of what might happen to them if they were to lose power. Hun Sen has already been threatened with legal action — another reason why the CPP has tightened control over the security forces and the judicial system, using the courts to prosecute any serious opponents threatening its survival.

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Cambodia remains an attractive tourist destination

Cambodia’s politics of survival is likely to continue unless or until members of the CPP elite and those in the opposition see their common problem: the inherent weakness of Cambodia’s state institutions, which perpetuates the toxic dynamics of threat and counter-threat. Both sides tend to demonise each other. They keep engaging in the nasty politics of character assassination, killing any possibility of advancing a common interest or any hopes for solidifying the culture of dialogue.

Cambodian leaders have a big choice to make. Either they continue along this current trend with no end in sight, or they band together to build the country’s democratic state institutions for the benefit of their own nation. Working together is certainly the only way out and the best option, but this is likely to fall on deaf ears. This is the tragedy of survival politics in Cambodia — a real threat to democracy and its national security.

Sorpong Peou is President of Science for Peace, based at the University of Toronto, and Professor in the Department of Politics and Public Administration, Ryerson University.