"Bottom-Up Capitalism," the "Hub and Spoke," and Industrial
Renewal: 
Re-capitalizing Yugoslavia and Getting it to Work.
By Benjamin C. Works

Today, Yugoslavia appears to be bankrupt, and its
government and major industry certainly are bled white. 
But Yugoslavia has the means to re-capitalize its
entrepreneurs, even as its government accepts necessary
international assistance to refinance its national
operations.  The true success of a renewed Yugoslavia will
come from providing means for its enterprises to gain
access to liquid capital at every level -- from the "top
down" and the "bottom-up."  Of the two, the bottom-up
approach is the more powerful, thus, more important, as I
shall demonstrate. Just remember that America's real job
growth comes from its entrepreneurs, not the Fortune 500. 
So, too, it must be with Yugoslavia, Russia and other
emerging economies.

We should contemplate Yugoslavia's re-development against
the backdrop of failures in Russia and elsewhere, and also
against the precedent of some successes like Chile and
Singapore. I also wish to observe that we are looking for
rational and objective solutions that will sell in the
subjective and emotion-driven realm of politics where
perception is more important than reality.

Globalization & Free Markets v. Regulatory-Universalist &
Mercantilist systems:

I would like to briefly clarify the very real difference
between "Globalization" and "The New World Order.1"  I
would not bother to make a distinction except that others
continue to use the term globalization in contradictory
ways and we cannot entirely walk away from their analyses.2
Globalization of the market is a simple and ineluctable
economic force of supply and demand and commercial
expansion.  Ideas centered around "the New World Order" are
propositions for political control, not for economic
expansion.

"Globalism" originated as an expression of the Japan-US
trade war. As a description of the natural and
"non-controlled" global market, "Globalization" or "Free
Markets" is an asymmetric economic opposite (or
anti-thesis) to the parallel, politically dominated
structures of mercantilist systems and politically erected
Universalist control systems.  Free
Enterprise-Globalization is the natural opposite to what we
define as the regulatory "New World Order."  Again, this is
a rivalry between economic forces and political forces.

The Global Marketplace is a fact; global capitalism is a
fact; but they are not the only facts, and in Russia's
case, proved they are insufficient without a broader
program of fundamental reform.  Global Capitalism focuses
on the top end of an economy, but the health of in an
economy is in its bottom 80-90%, not just in the
mega-economy that is the top 10-20%.

"Global Capitalism," a function of Globalization, may have
failed in many ways in the last decade of hasty
restructuring of emerging economies, but it is also a
function to be factored in to successful reform.  Global
Capitalism, as it evolved in the 1990s in Russia and other
emerging markets, rushed in with "mega-deals" to reshape
the economy, but it was, by itself, inadequate to reach
past the nomenklaturas and oligarchs and on down to the
people.  It revealed the weakness of all "top-down"
approaches that are not balanced by a parallel "bottom up"
approach that builds up from the people --entrepreneurs,
the middle classes and the working population.

Now, Globalization/Free Enterprise always triggers some
political side effects, breeds unintended consequences and
generates local reactions anyway --grist for opposition
politics. And because of this power and its profitability,
it has made itself an alluring target for "regulators" of
the new Universalist political order  --the New World
Order. We repeatedly see Universalist bureaucrats of the
UN, EU and other political structures attempting to hijack
the market in order to impose their writ and to exact
greater taxation (as with some proposals to alter the GATT,
WTO and NAFTA with "environmental" and exclusionary labor
conditions). 

But in its natural form, the free market is stronger and
more enduring than any Universalist system.  It has always
won in the long run, and will always undermine excessive
regulatory regimes and excessive taxation.  It will do
this, if necessary, through "smuggling" and "black markets"
--both definitions of "bureaucratic law"-- whenever
mercantilist regulators impose artificial costs and
constraints on trade ("disequilibriums") that present a
sufficient supply-demand disruption and create a sufficient
profit opportunity. Watch how free enterprise is grinding
away at the mercantilist system of the European Union if
you doubt my analysis. --I suspect we are watching the last
gasp of Europe's Oligarchic strength, as they choose to use
their remaining banking power to buy up certain American
companies, such as Chrysler-Daimler, etc.

Universalist systems, such as the NWO also get tripped up
by violating the fundamental principle that "All politics
is local." The world simply will not be governed by a
homogenized, orthodox, "one-size-fits-all" regime, no
matter how "enlightened" its framers assert it to be.

The EU and Yugoslavia's Current Situation:

Now, there is no "perfect" system of pure free trade, but
we have seen attempts to maintain perfected mercantilist
systems of trade that benefit the nomenklatura and
plutocracy, not the workers or consumers.  One modern
mercantilist system, the European Union, is already trying
its best to overwhelm Yugoslavia and draw it into a system
designed for over-taxation to the benefit of a universal
bureaucracy's need for power and control. But that system
is already falling apart due to its heavy taxation and
entrenched inefficiencies. Its governing mechanisms are
incompetent and raise real questions about the survival of
democratic government at the level where important
decisions are made by a consensus of members.  Then, there
is "harmonization;" does Yugoslavia want all the advantages
of a German tax system and a French labor standard?  I don't
think so.  

Still, on November 6th, President Kostunica publicly
expressed an interest in joining the EU, while rejecting
(for understandable reasons) the prospect for NATO
membership,3 which Poland and other countries held at arms
length by the EU have joined while re-developing their
economies.

Remember, there has been zero net job growth in the Europe
Union in the last ten years; such new jobs being created
are largely in American subsidiaries or as a result of
American innovations. Europe's plutocrats have not
demonstrated any facility for innovation and instead, seek
new markets to the East for their barely competitive
exports.  As early as 1967, Jean-Jacques Servan-Schreiber
alerted Europe to the challenge of American globalization: 

Fifteen years from now it is quite possible that the
world's third greatest industrial power, just after the
United States and Russia, will not be Europe, but American
Industry in Europe.  Already, in the ninth year of the
Common Market, this European market is basically American
in organization.4

His prediction of a European industrial decline was
correct, as was his estimation of US manufacturing growth
in Europe.  But Russia was replaced by Japan as the second
economic power.  Europe never rose to the American
challenge and remains bogged down in its slump as the
consequence of its utter disregard of his tocsin.

I look at the tax burdens imposed on the EU's subject
citizenries and wonder why anybody bothers to stay: high
social security taxes, high income and corporate taxes, the
value-added tax, and high gas taxes. High unemployment
rates.  Low birthrates indicate the EU's citizenries do not
view their future with optimism. Western Europe is in clear
decline, as the depreciation of the Euro-currency unit
(Euro or ECU) clearly underscores.  Do the revitalized
Yugoslavian people and economy want that tax slavery?  I
think not. Buy into the EU's politicized economic
management and the failure of reform is guaranteed.

Still, the Yugoslav government has an empty treasury and
the EU does offer some new funding in terms of loans and
credits, as well as help in rescheduling of $7 Billion in
older debt to various lenders.5 But is this enough to
justify entering a mercantilist system as a supplicant? 
Will Yugoslavia be anything more than a "maquilladora" for
Germany under these arrangements?  Agree to what is
reasonable, but free trade should be the longer-term
objective, not subordination to a trading club that has
shown an incapacity for creativity and growth.

Yugoslavia should reject Western Europe's Social
Democrat-formulated "Statist" systems, construed by
self-anointed "intelligentsia" and manned by entrenched
bureaucracies. These governments are not much different
than the East's "nomenklatura," which only pretend to
"care" about their subject populations by providing
inefficient social safety nets, but actually operate for
the benefit of their bureaucratic privilege in alliance
with the narrow plutocracy that operates their inefficient
industrial and financial conglomerates. 

Yugoslavia should re-learn to trade from the strength of
its comparative advantages, and should not join the EU,
which will only saddle its economy with fiscal and
regulatory handicaps.  Rather, we need to help Yugoslavia
and other interested states of eastern Europe, especially
Russia, to form a countervailing free trade association,
that benefits from lower tax costs and minimal, necessary
regulation, to generate prosperity as an attractive trading
partner in the larger Globalist system of "free trade."

It should be our objective as friends of Yugoslavia to
defend the sovereignty of states that derive their powers
from the consent of the People; to encourage free trade,
free enterprise and free property. We have already
committed to free speech and free elections.  I stress the
above because I have heard President Kostunica refer to the
integrity of "the State" in his inaugural address,
redefining it as synonymous with "the People." 
Yugoslavia's success must be built by the people and for
the people; and "the State" must be servant to the people,
not their monolithic "master."  President Kostunica's
choice to make this fundamental distinction in his
inaugural address is the first time in contemporary Europe
that the ancient governing concept of "The State" --the
monolith dispensing largesse from the top down-- has been
replaced with the idea of "the people" conferring authority
from the "bottom up."

Let me also observe that there is no viable "Third Way,"
and no credible means for a Belgrade government to preserve
"The State" as a monolith, or to perpetuate its Tito-ite
social safety net.  Yugoslavia's "Smokestack Socialism" was
killed off by the Global Quality Assurance Industrial War6
that raged between Japan and the United States in the
1970s-80s --precisely when Yugoslavia's economy stalled out
and the ethnic nationalists came into power. Product quality
control has become "process quality assurance" and
Yugoslavia has to re-qualify itself under "Six Sigma"
quality assurance and ISO-9000 standards.7

Fortunately, we are talking about Serbia and Yugoslavia,
the hub of the Balkans-Central European trade routes, rich
in talented people, competent in trade and manufacturing,
rich in minerals and indispensable because of its central
location atop ancient trade routes.  

The other good news is that while we have been observing
the incompetent and corrupted efforts of the Clinton
Administration and the Harvard-dominated program for
Russian reform, real reform has been implemented in Chile,
Peru, El Salvador and other laboratories.  Yugoslavia is
just of a size to benefit quickly from the application of
intelligent reform programs.

Bottom-Up Reconstruction and "Populist Capitalism"

Many people put great stock in Yugoslavia's mineral
resources as the key to its wealth, but those will prove to
be a relatively minor factor.  Russia is wealthy in
resources, yet poor.  Japan is poor in resources, yet
wealthy.  Let us remember Adam Smith's discovery about the
secret to the Wealth of Nations: Yugoslavia's wealth lies
in the industry and creativity of its people, not in the
value of ores within its mines.

Things become so implicit in our Western minds that we
often forget to practice keeping these concepts as explicit
fundamentals.  Such is the case with retirement savings and
the necessity of liquid property, both as a store of value
and a resource to raise capital for other investments and
enterprises.  It often takes an astute outsider to
rediscover, redefine and re-broadcast these principles. 

The solution for Yugoslavia's long-term re-capitalization
lies before our eyes and lies fallow in Yugoslavia,
itself.  The people have the means to refinance themselves
if the reformers will undertake sensible steps that have
already been mapped out. I think of "bottom-up capitalism,"
or "populist capitalism," if you will, something the people
can do for themselves if the economy has certain
structures, laws and institutions in place.  

Now, "Top Down" Mega-capitalism will come along anyway and
most of that will lead to positive results someday, but it
is not as responsive precisely because it is "BIG." 
Without populist capitalism for the citizenry, Yugoslavia
will face half an economic success, and worse, an ongoing
political problem as sectors of the populace are left
behind in a Corporatist modernization that works only from
the top down.

As to re-capitalizing the people of Yugoslavia, two Latin
American economists have come up with two of the most
important means of providing capital for entrepreneurs and
a vigorous market economy.  They have already pioneered and
perfected "populist capitalism."  A third element,
technological training creates human capital.

These courses towards rebuilding Yugoslavia, work on a
cumulative basis over time, not overnight, but they are
powerful forces that build a broad-based middle class to
support economic recovery, then expansion.  If we can get
2%, then 5% of Yugoslavia's population --the entrepreneurs
and leaders-- to embark on this course, in time others will
follow, while the risk-takers will create employment for the
rest of the working population. The activity of that leading
5% will help to unfreeze the socialist mindset that is a
societal hangover from the Tito years.

First, from 1978, Jose Maria Piņera developed Chile's
modern system of individual retirement accounts to replace
a bankrupted "pay as you go" social security system, such
as ours. That system included a smooth transition of
benefits for older workers and retirees, and it worked
brilliantly. Retired workers now have real capital of their
own, and an estate to hand down to their heirs when they
die.  This is much better than a monthly check that stops
when you die.  

In the first 18 years of the Chilean system, the average
annual real rate of return (after inflation) was 11
percent.82 Eleven percent vs. less than 2% inputted rate of
return on the US Social Security Retirement system.  In The
Wall Street Journal of April 10, 1998, Piņera wrote in "An
Open Letter to President Clinton:"  

If empowering the common man -turning every worker into a
shareholder- were the only benefit of such reform, that
would be reason enough to convert to individual retirement
accounts. But the Chilean example gives many more reasons.
In the 17 years since Chile embarked on this course,
complemented by other important market reforms, a flood of
investment has benefited both individuals and the economy
as a whole. As unemployment has fallen to its lowest in
history, productivity has increased sharply the savings
rate has soared to around 25% of gross domestic product and
economic growth has more than doubled to a 7% average during
the last 13 years. If we keep up the present rhythm for
another seven years, the size of the economy will have
quadrupled in only 20 years.9

This is the sort of growth we want for Yugoslavia, isn't
it?  Belgrade can look to other successful economic
development models such as Hong Kong, Singapore and Taiwan,
and to the pitfalls along the road experienced by Korea,
Japan, Russia and others that embraced the "conglomerate"
model of development. As a caveat I should observe that
these models all had more authoritarian governments in
power during the early years, an option Yugoslavia has
moved away from.

Now privatization is not a politically easy thing to sell,
but it can be done. As we know, George W. Bush finally put
a modified version of the Piņera system into play in the
current US election.  But in fact, we have been moving
towards such a system since the advent of IRA and 401K
accounts.  The rules have already been designed and tested
to protect these systems from fraud and collapse. A
graduated transition can be accomplished, without deceit. I
admit, though, that managing the "subjectives" and the
politics of perception will be more difficult though, than
comprehending the objective facts of the financially sound
and rational program.

The second, even more vital tool for rapid
re-capitalization has been defined and tested more
recently, again in South America.  Peru's Hernando De Soto
wondered how come America's property system was so liquid,
then he explored the relationship between liquid real
property and capital.  In his recently published book, "The
Mystery of Capital: Why Capitalism Triumphs in The West and
Fails Everywhere Else."10  

Briefly, De Soto's team found in Peru, Egypt, the
Philippines, Haiti, Brazil and elsewhere, that the fair
market value of illiquid assets ("Dead capital;" those
assets not formally registered in the property system) held
by "the poor" may total $9.5 Trillion worldwide. 
Specifically, it can constitute 4 or more times the amount
of the market value of all corporations listed on the local
stock exchange, as in the Philippines, with $133 Billion in
assets held by the poor.  In Egypt, he found $240 Billion
of "dead capital"--equal to the value of all foreign
investment over 200 years, including the Suez Canal and
Aswan Dam.11 To formally register this property under
un-reformed systems can take as long as 30 years, depending
on the country.  

De Soto also investigated the levels of bureaucratic
obstacles to opening a small business.  In his native Peru,
he set a team to open a small business --a one person
garment shop.  His team of experts found that it took an
average 6 hours a day for 289 days to get registered,
clearing all the bureaucratic hurdles. The cost was
$1,231.00, 31 times the minimum monthly wage.12  

Now we know Yugoslavia's systems are more liquid than in
the developing world or in the former Soviet Union.  The
trick is to unlock the capital and motivate some people
into using that to finance new economic activity, where the
process of business registration is also streamlined in the
Commercial Code.  Yugoslavia will find that if it pursues
the course of unleashing this moribund capital, the
activity of revaluing real property will help to restore
the value of the economy, the Dinar and GDP, accelerating
the restoration of a decent standard of living.

The problem before De Soto's discovery was that as there
was (and is) a surplus of investment capital looking for
welcoming markets and worthy projects, Wall Street moved in
to finance "mega-state enterprise's" transformation into
"Mega-Conglomerate Corp" --"Top Down Capitalism." This was
half the battle, packaged for traders, but not enough to
precipitate a long-term success.  That is because the
People were left behind.  Like Piņera's retirement system,
De Soto's methodology puts the people back in the forefront
of reform; and his system has already proven that it
works.  If you wonder why the Maoist "Shining Path"
revolution collapsed, it is because they could not contest
De Soto's populist capitalism of making the real property
base liquid through formalization and simplification of the
property title process.  His system, developed at "The
Institute for Liberty and Democracy," also worked to wipe
out the impossible bureaucratic hurdles to opening a small
business.  He formalized the "informal economy."

Fortunately, Yugoslavia is well ahead of most countries in
terms of having a liquid, formal property system and
widespread property ownership.  I expect the system needs
some attention, but not the ground-up construction Peru
needed.  It also needs the banking system to recognize that
the property holder is a profitable customer for mortgage
loans, secured business loans, consumer credit and
retirement savings programs.  Then the average Yugoslav
will have ready access to liquid capital.  Add a "Small
Business Administration" type support program and education
tailored to skills needed by entrepreneurs and the results
should be dramatic.

At the same time, given a Piņera-style retirement savings
program among the younger generations, large pools of
capital become available within the economy to finance
operations large and small.  Retirement savings should
finance new investment and growth, not re-finance old debt
that represents old failures. Chile has piled up an
impressive $31 Billion in investment capital in its
retirement system in its first 18 years.13  In the United
States, pension and retirement account assets of workers
and investors total more than $7 Trillion, and have
surpassed the accumulated wealth of the "rich."

I have long argued that Capitalism is only a byproduct of
the philosophy of "free enterprise" and that the argument
over "Capitalism" instead of "Enterprise" has largely been
a socialist-communist game of words to generate fear and
envy of the unknown.  But De Soto has gone one step
further; he has made Capitalism the friend of the people,
while Piņera has converted social security to an equity
account with residual benefits to a deceased worker's
estate and heirs. Piņera and De Soto, taken together, have
provided the death blows to state socialism through the
substitution of equity and wealth for benefits and
patronage.  These are two legs of populist capitalism, the
third is the creation of human capital through technical
education.

The third vital leg to "bottom up capitalism" requires the
rapid development of widespread access to "requirements
driven" technical training and education programs for the
old and new economies. Human capital must be developed, and
further developed to make useful careers in the "new
economy" and the "old economy" both.  There is unfilled
demand for 800,000 "new economy" Information Technology
("IT") workers in the US, and 2 million such workers in
Europe over the next two years.14  But there is also a
demand for trained technicians and skilled workers across
the board.  In the US, much of this training is now
conducted in our Community College system and in technical
training institutes. 

Yugoslavia has substantial technical training capabilities
and should look to expanding those programs and
institutions to fill the evolving needs of the country and
region. One means of facilitating the rapid expansion of
the training system while recycling the unemployed and
launching its young workers is a training voucher system so
that high school graduates, new entrants to the job market
and the unemployed can gain immediately useful skills. 
Programs will evolve that add advanced skills for these
workers as their careers develop. Advances in "distance
learning" methods for the distribution of technical
curricula over the Internet through "information
technology," will allow Yugoslavia to leverage scarce
resources in capital and trained teachers.

The Hub and Spokes Model:

I have referred to the "Hub and spokes" system of economic
order.  Yugoslavia has been an important hub of trade since
before the time of Alexander, thanks to its natural wealth
and its position on the key trade routes; the Danube and
land corridor routes that run north-south, and east-west. 
Consider a re-capitalized, entrepreneurial Yugoslavia as a
hub.  Even today, all those black marketeers and smugglers
are the minions of Adam Smith's "Invisible Hand."  Reduce
the obstacles to the more legitimate forms of this trade
and you have the cadres for free enterprise.  What makes a
black market any way?  Two things: demand for the products
and a bureaucrat who either wants to tax too heavily, or to
prohibit.  Take away the tariffs, tax by license and income,
and much of this trade will come to the surface.  

Another element in accelerating Yugoslavia's renewal is the
willingness of most multinational enterprises to co-invest
through joint ventures and "strategic alliances."  Most
companies no longer feel the need to own 100%.  They find
it best to hire nearly 100% native employees and do their
best to create partnerships that through generating
activity and wealth, they create more consumers as they
hire more employees  --Henry Ford's Five Dollar Day
recognized this effect.  There is another pragmatic benefit
to partial globalization of ownership: The greater the level
of joint-venture investment, the more difficult it will be
for ethnic interests to trick another war.

Again due to its central location, Yugoslavia becomes a
natural hub for Internet and associated e-commerce
activities, including shipping and fulfillment to the
region.  It can qualify itself as the best place for Cisco
and Sun and IBM to open operations, thanks to the language
and technical skills of its educated work force.  Since I
have defined Yugoslavia by its People and by its natural
function as a major hub, and since e-commerce requires a
lot of electricity, let me also suggest that the country is
a natural hub for more traditional products and services
from the "old economy," especially the generation and
distribution of electricity for the region.

What about the Old Economy and the Government, Itself?  

Let me give three quick examples.  In these days of "Green
Hysteria" about environmentalism in Western Europe,
Yugoslavia can make itself a hub for electrical supply and
will find foreign partners to execute that
capital-intensive strategy.  Western Europe's Greens are
busy shutting down power plants, particularly Germany's
nuclear reactors, even as the Internet economy accelerates
the rise of electrical consumption.  Currently its own
power system is partially disabled, but Yugoslavia --the
land of Nikola Tesla-- should drive rapidly to making
itself the indispensable provider of electrical power to
the region, just as it drives to dominate internet traffic
and physical traffic in the region. American utilities are
eager for such ventures abroad. 

And there is a glaring need for power in Europe and America
as Information Technology proliferates. Amsterdam has
already experienced acute power shortages this summer and a
wider crisis is forecast from London to Germany, by
2003.15  To give a concrete example of electrical
consumption by high-tech firms, consider Oracle, and Sun
Microsystems in Silicon Valley. Oracle draws 13 Megawatts
(13MW) and Sun draws 26 MW, with their requirements
increasing by 7% per year.16  After a generation battle by
environmentalists to stop all construction of power plants,
America, itself, is on the brink of its own disabling
shortages.

Most of the other elements of the Old economy can be
revived in joint-ventures or strategic alliances with
interested corporations.  Many sectors have already been
picked off, particularly Telekom Srbija, owned by the
Serbian government, Telecom Italia SpA and Greece's
Hellenic Telecommunication Organization SA.  They need
trained employees and, therefore, technical training must
be developed fast.

The third example goes in the other direction: something
must be retained to help sustain the old social safety net,
but on a rationalized basis.  The national tobacco industry
could be retained to provide cash flow for pensions, health
care and other most-vital benefits programs.

Reformation also offers opportunities to streamline
government and add to transparency of the government, as
well as the economy. Under a simplified tax system and by
taking advantage of its central position within its region,
Yugoslavia can become a vibrant hub of legitimate commerce.
The Internet and "Information Technology" provide
opportunities not available even five years ago; and
Russia, too, has recognized the potential benefits to its
re-started reconstruction. 

Simple taxes and e-commerce can provide the transparency
the government will need to streamline its operations by
implementing the rapidly exploding methods and means of
"E-Government." Business-to-Government and
Citizen-to-Government methods have developed here with
breathtaking speed and offer both rapid response to all
manner of interactions, rapid collection of legitimate
fees, and a dramatic reduction in bureaucratic
corruption.  E-Government is a win-win proposition all
around. 

Conclusion:

I think that the economic advisers of the G-17-Plus group
and the key leaders in the DOS government understand most
of this already, if not all. Their problem is that they are
undertaking fundamental reform from a position of political
and financial weakness --Machiavelli's classic trap for the
"unarmed reformer."17 What President Kostunica's government
will need is the power of our ideas, institutions, insights
and solid support, to help sell what must be done, to the
people. The younger they are, the more ready the people are
for fundamental change that makes sense and is equitable. 
But there is a mindset that fears change and fears reform
with unknown implications. And it is the older generations
who generally own the property, not the young.  Mastering
that frozen mindset it a major political consideration.

I have outlined three parallel lines of action for
reconstruction: developing the ability of the people to
create liquid capital for themselves and for general
economic investment; the "Hub and Spokes" model for
macro-economic development of the economy within the region
and Europe; and some ideas for targeted repositioning of the
country's largest state enterprises and its "old economy"
industries.  As to E-government, we can help Yugoslavia
implement that very rapidly and develop the first cadres of
trained "Information Technology" professionals, who can then
use their valuable skills to assist other governments and
enterprises in their moves onto the Internet.

*  *  *  *


End Notes:
1  While George Bush did use this term during the Kuwait
crisis, he meant something more discrete and stopped using
the phrase altogether even before Operation Desert Storm
ended in early 1991. Its origins are in Virgil's "Novus
Ordo Seclorum" as adopted in the motto on the Great Seal of
the United States.

2 See, for instance: Business Week; November 6, 2000;
"Global Capitalism: Can it be made to work better?"

3  VIP #1895; Belgrade, Nov. 7, 2000, pp. 2-3; "Kostunica:
FRY's Place is in Europe But not in NATO."

"FRY President Vojislav Kostunica said that he thinks that
Yugoslavia's place is in the European Union (EU), but that
his personal opinion is against the membership of the FRY
in NATO, Blic daily reports on Tuesday.

"Kostunica said this in an interview to Japanese Daily
Yomiuri, saying that he also hopes FRY will become a member
of the EU."

4  Jean-Jacques Servan-Schreiber, The American Challenge,
1967; transl. by Ronald Steel, 1968; p 3
5 See Reuters, "G7 meet on Balkans to discuss ex-Yugo debt,
EU says;" 11:44 11-10-00 (Nov. 10, 2000) 

"The EU has already offered 200 million euros ($173
million) in humanitarian assistance to Serbia for the
winter, mainly to buy oil... Germany this week offered a
further 50 million marks ($22 million). 

"EU officials said, however, it was too soon to talk about
reconstruction aid because detailed needs assessments had
not yet been completed and, in any case, the legal issues
of former Yugoslavia's membership and arrears to the
International Monetary Fund and other bodies had yet to be
addressed. 

"Officials said the former Yugoslavia was in arrears on
$1.7 billion out of $1.8 billion in World Bank loans, as
well as owing some 200 million euros to the EIB and roughly
$125 million to the IMF. 

"Total arrears to official creditors amounted to around $4
billion, they said."

6 This war was fought on the lines laid down by the famous
guru of statistical quality assurance, W. Edwards Deming,
who taught the Japanese to manufacture, then, from 1979 on,
coached Ford and other key American manufacturers. 
Concurrent with this trade war, we saw the rise of Apple,
Microsoft and the Personal Computer revolution in the US. 
This was followed by the ongoing revolution in "Information
Technology" triggered by the breakup of the AT&T monopoly on
telecommunications in the US. The ISO-9000 series of
standards is an outgrowth of Deming's work.

7 The current, operative standards for statistical quality
assurance.  Sigma is a standard deviation away from the
median in the Normal Distribution, or "Bell Curve." 

8 Piņera disclosed this 11% growth rate in testimony before
U.S. House Committee on Ways and Means, given on February
11, 1999. See:
http://www.socialsecurity.org/pubs/testimony/ct-jp021199.
html

9 Piņera, Jose M.; The Wall Street Journal, April 10, 1998;
"Time to Privatize Social Security" 
(http://www.socialsecurity.org/pubs/articles/jp-04-10-98.
html).
See, also: Cato Institute: Website; www.Cato.org; "Project
on Social Security Privatization"
For recent papers see:
http://www.cato.org/pubs/ssps/sspstudies.html
Also, project overview: http://www.socialsecurity.org/
10 De Soto, Hernando; The Mystery of Capital: Why
Capitalism Triumphs in The West and Fails Everywhere Else;
(New York City: Basic Books, 2000)
See also: Website; The Institute for Liberty and Democracy:
www.ILD.ORG.PE

11 DeSoto; The Mystery of Capital; see particularly pp.
32-35.

12 De Soto; The Mystery of Capital; pp. 19-20.

13 In testimony before U.S. House Committee on Ways and
Means given on February 11, 1999, Piņera noted that the
Pension system had accumulated $31 Bil in assets over its
first 18 years in a "developing" economy of 15 million
people and $70 Bil GNP.  
See:
http://www.socialsecurity.org/pubs/testimony/ct-jp021199.
html

14 These estimates come from Microsoft and other IT
industry growth forecasts.

15 See: www.thisislondon.co.uk  Oct. 10, 2000; Energy gap
threat to new economy, by ALLAN HALL, in Berlin

"THE new economy across Europe may soon suffer a meltdown
due to the lack of an essential tool to keep it running -
energy. 

"In Holland the first signs of an energy gap for internet
companies is beginning to show. Electricity demand in
Amsterdam, the most hi-tech of cities, has been pushed to
the limits, forcing energy suppliers to warn of the
possibility of the old economy bringing the new one to its
electronic knees. 

"Booming data centres in Europe's biggest cyber-hub, where
thousands of businesses demand large amounts of electricity
for computers working round the clock, have been warned of a
lack of electricity infrastructure that could hinder future
growth as well as damage established businesses. 

"The problem in Holland is one that experts predict could
hit Britain, France and Germany within three years...

"This rush for energy has led Nuon in Amsterdam to go into
overdrive to fund ways of increasing energy output -
especially as Cisco Systems is currently building one
million square feet of offices in the city that will
require fantastic amounts of power for the computers it
will house."

16 Huber, Peter and Mills, Mark; The Wall Street Journal;
September 7, 2000; Commentary: Got a Computer? More Power
to You.

"It takes electrons to move bits. The digital economy,
which most everyone loves, is completely dependent on the
big central power plant, which most everyone hates. This
is, or ought to be, an inconvenient fact for many
politicians. Especially for those who would take credit for
our digital prosperity, while opposing, on save-the-earth
grounds, just about every fuel and technology that can
deliver affordable power in the quantities that the digital
economy requires.

"Oracle's campus, in the heart of Silicon Valley, is a
13-megawatt electric load. Sun, spread across six campuses
in the Valley, uses about 26 megawatts. These companies now
consume as much power as small steel mills. And their
requirements are growing over 7% per building, per year.
Power consumption in the Valley has been growing at three
times the rest of California's. Last Friday [Sept. 1,
2000], after a summer that brought the Golden State to the
brink of electric-power collapse, the California
legislature adopted a bill to speed up the licensing and
review of new power plants."

17  "...There is nothing more difficult to carry out, nor
more doubtful of success, nor more dangerous to handle,
than to initiate a new order of things.  For the reformer
has enemies in all those who profit by the old order, and
only lukewarm defenders in all those who would profit by
the new order... who do not truly believe in anything new
until they have had actual experience of it... Thus it
comes about that all armed prophets have conquered and
unarmed ones failed."
- Niccolo Machiavelli, The Prince, Ch. 6; on the reformer
priest Savonarola.
1


2
"Populist Capitalism:" Re-capitalizing Yugoslavia and
Getting it to Work.