Tuesday, November 24, 2009

The Global Guru: Lessons from the Cradle of Civilization

Nicholas Vardy's The Global Guru
November 24 , 2009
Vol. 4, No.43

Fellow Investor,

Lessons from the Cradle of Civilization

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As I write this, I am on board the Royal Princess, steaming toward the Egyptian port city of Alexandria, having completed whistle-stop tours in Greece, Turkey and Israel this week as part of Mark Skousen's "FreedomFest" Mediterranean cruise.

To travel in the Eastern Mediterranean, the "Cradle of Western Civilization," is to feel the vague discomfort of a wayward student who hasn't done his homework. You are bombarded constantly with names, dates and places that sound vaguely familiar -- Aries to Apollo, Jesus to Job, Hercules to Hera, Plato to Poseidon -- all lodged somewhere in the back of your memory. The Eastern Med encompasses everything from the culture of the ancient Greeks, the mysteries of the ancient Pharaohs, and the battleground of Judaism, Christianity and Islam. But the endless tales of philosophers, mythologies and empires come and gone in this culturally rich region rapidly becomes overwhelming. I've spent much of this past week feeling like an under-qualified contestant on a game of Jeopardy!

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The Eastern Mediterranean: Nothing Lasts Forever

When you travel the Eastern Med, you come to appreciate the ephemeral nature of human achievement. The region boasts a long history of dozens of empires, big and small, almost all of which have lasted longer than the mere 233 years that comprise U.S. history. And each empire had its own heroes -- its George Washingtons, Thomas Jeffersons and Ben Franklins -- and even its own versions of the Declaration of Independence. As I walked across the ruins of a great library (complete with a hidden tunnel to a brothel) in Ephesus, Turkey, I couldn't help but wonder whether 1,000 years from now, tourists of the future would be walking through the ruins of what was once the Harvard campus, tour guides regaling visitors with stories of how this ancient, wealthy academy of learning once educated the elite of the then-great American empire. Consider that the library of Alexandria, Egypt, where I am headed today, once boasted the ancient world's biggest library, and when destroyed by Muslim invaders in 642 A.D., its collection of the record of human achievement to that date was substantial enough to provide six months' worth of fuel for the baths. Yet today, for most Americans, the library at Alexandria is no more than an answer to a Trivial Pursuit question.

Bill Clinton once noted that he'd consider himself lucky if 500 years from now, history would even remember his name. If you think that's fanciful, try naming the political leader of your home country, any country, in 1509 -- exactly 500 years ago. A mere 44 years after his death, 60% of British teenagers associate the name "Churchill" not with "the greatest Britton of the 20th century," but with the logo of a cartoon bulldog advertising car insurance on the London underground.

Of course, the Eastern Med is very much rooted in the conflicts of the past. Virtually every holy locale we visited in Jerusalem was the third or fourth one on the site, the previous ones having been destroyed by rival religions and conquerors over the course of the last 2,000 years. Jesus' birthplace in Bethlehem today is barricaded behind the equivalent of a Berlin Wall in a Palestinian settlement. What's worse, the grievances associated with these places are as alive today as if they happened yesterday.

For a culture like the United States, where newspapers speak of "back in the 1990s," the relentless focus in the past that is the fabric of everyday life in today's Jerusalem is unthinkable. While an American orthopedic-surgeon tourist from Louisiana can only shake his head at the locals’ seemingly misplaced obsession with the past, to an AK-47 toting Palestinian teenager, the doctor represents everything that is wrong with the world. But for the grace of God, or the initiative of his adventurous great grandfather, it could have been our surgeon who was hawking cheap, chrome trinkets at a Jerusalem bazaar.

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The Eastern Mediterranean: The Advantages of Short-Term Memory Loss

The British love to dismiss the United States as "what Rome was to Greece" -- a derivative culture that, although more successful in building an empire than Britain itself, is more crass, militaristic, superficial and therefore, unworthy. A British fund-manager colleague of mine once joked: "The problem with you Yanks is that you don't have a past." My instinctive retort was: "The problem with you Brits is that you don't have a future." We were both right.

Touring the Eastern Mediterranean allows you to appreciate the "blank slate" that was the United States (or its territories) and the remarkable advantages that the absence of deep-rooted historical rivalries afforded it. Whatever was built in the United States was built for the first time, and not on the ruins of rival civilizations that could reassert themselves as the wheel of history turned. And although as students, my Harvard Law classmates engaged in childish pranks like putting Christopher Columbus on trial for his "crime of discovering America," U.S. culture has a thankfully short memory. The injustices of the Civil War in 1864 do not serve as an excuse for a Southerner to blow himself up in a Manhattan deli in 2009. In the financial world, how many people remember the name of Jay Cooke, which before the Great Depression of 1873, was both the Goldman Sachs of its day and the world's largest bank before it went belly up? Although contemporary accounts compared California governor Leland Stanford to Julius Caesar and Alexander the Great during his lifetime for his role in building the transcontinental railroad, his name is only familiar today for the university that bears his son's name.

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The Eastern Mediterranean: Bigger Than You Think

That said, today's denizen of the Eastern Mediterranean would be rightfully indignant that its focus on its rich past necessarily implies that the region is an economic black hole. Here's a statistic you'll see here first: the combined economies of three countries, Greece, Turkey and Israel (population 90 million), are substantially larger than that of India (population 1.1 billion). Thanks to the Olympics, Athens, Greece, today boasts an airport and a metro, not unlike San Francisco's BART. The Turkish economy has been the world's fastest-growing OCED economy over the past decade. Its capital, Istanbul, boasts more billionaires than Tokyo, Los Angeles, Hong Kong or Shanghai. Israel's world-class tech sector is all the more remarkable given the millstone of its Palestinian problem. And more Israeli companies are listed on U.S. stock exchanges than any other country in the world.

But if it's one thing I've learned this past week, none of it will last...


Nicholas A. Vardy
Editor, The Global Guru

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