Open Left - China

Weekly Mulch: No Treaty in Copenhagen?

The Media Consortium — Fri, 20 Nov 2009 17:06:17 GMT

By Raquel Brown, Media Consortium Blogger

Last weekend in Singapore, President Barack Obama acknowledged that a comprehensive international climate deal will not be reached during the climate change summit in Copenhagen. While many might view this as a letdown, lowering expectations might actually be a good thing, as Matthew Yglesias notes for the American Prospect. According to Yglesias, the conference can now be framed as a relative success whatever happens, and that will keep the momentum for climate action going after Copenhagen.
Now that the conference is no longer a shoe-in failure, it's more important than ever that the president is on hand. Obama's attendance will signify that the his administration is committed to passing climate legislation through the Senate.

In the video below, The Real News notes that Obama is simply trying to buy more time. Secretary of State for Energy and Climate Change, Ed Miliband, is hopeful that a legally binding treaty that focuses on the clear, main points, like how much to reduce emissions and finance the bill, are still attainable. Even though the Senate has not passed a climate bill, the United States can still play a constructive role in Copenhagen.

But will the international climate summit put any pressure on the Senate to actually pass a climate bill? Steve Benen of the Washington Monthly remains skeptical. "Republican [lawmakers] seem entirely unfazed when told, 'There's a health care crisis, and the entire country is waiting for you to be responsible and do your duty,'" writes Benen. "These same lawmakers will soon be told, 'There's a climate crisis, and the entire world is waiting for you to take your obligations seriously.' Will they find this compelling? I suppose time will tell."

In Mother Jones, Bill McKibben criticizes Obama's weak leadership on climate change. Rather than applying the necessary political pressure to reach a climate deal, Obama has made climate change a second priority to health care reform. Even worse, the Obama administration conceded a sturdy treaty because it was unrealistic that Senate would pass it. McKibben notes that the "White House is starting to use the Senate in the same way that the Bush administration used China - as a scapegoat for doing too little. You don't get to blame the Senate if you haven't pushed the Senate as hard as you possibly can."

Grist's David Roberts argues that the real culprit is not Obama, but the recalcitrant Senate. Calling Obama's leadership a failure is premature because he still has a chance to push reform and make a difference. Roberts also contends that McKibben's analogy of Obama using the Senate like Bush used China is unsound:

"The analogy is apt insofar as China was out of Bush's control and the Senate is out of Obama's. But it's inapt in that there's plenty Bush could have done without China and he didn't; there's plenty Obama can do outside the Senate and he's doing it. When it comes to matters under executive branch control, the progress over the last 10 months have been amazing - new fuel-economy rules, new enforcement of efficiency standards, EPA moving forward on CO2 regulations, energy standards and goals for all federal departments, tons of green stimulus money, national retrofit programs, delay of mining and drilling permits, sustained bi- and multi- lateral international climate diplomacy... the list goes on. Obama is doing what a president can do - more than any president has ever done."

Where do the American people stand on climate action? According to a recent poll featured on Yes! Magazine, 75% of Americans "favor government regulation of greenhouse gas emissions from power plants, cars, and factories" and 59% of Americans "favor the U.S. taking action on global warming, even if other countries like China and India do less."

To channel this national consensus for urgent climate action, Peter Rothberg of The Nation compiled a guide that outlines how activists can get involved before Copenhagen. The guide recommends tactics that average citizens can use to pressure the key actors at Copenhagen.

Progress at Copenhagen is still possible, but there's no guaranteed outcome. If the U.S. wants to play a valuable role at Copenhagen, it should rise above the fray in Congress and focus on producing a viable pact with international support in the upcoming year. Copenhagen needs to serve as a wake up call that climate change is a collective global problem that needs a collective global solution.

This post features links to the best independent, progressive reporting about the environment by members of The Media Consortium. It is free to reprint. Visit the Mulch for a complete list of articles on environmental issues, or follow us on Twitter. And for the best progressive reporting on critical economy, health care and immigration issues, check out The Audit, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

The U.S. and China - The Defining Issue of Our Day

Zachary Karabell — Sat, 14 Nov 2009 17:18:49 GMT

Cross-posted at River Twice Research.

In his current Asian trip, President Obama visits Japan, then addresses a forum of leaders in Singapore, and eventually ends up in Seoul to discuss nukes and North Korea. But make no mistake, the axis of this week is the time Obama will spend in China, which has catapulted to the forefront of international affairs and is on its way to joining the United States as the alpha and omega of the global economic system.

That China has emerged is secret to no one, but the consequences haven't been fully integrated - either by the United States or by China. The level of intertwinement between the two economies has reached the point where they have effectively merged, forming what I've called an economic "superfusion." But that fusion hasn't yet altered political and cultural mindsets.

The ministers of the world still beseech the United States to "do something" about a weakening dollar, and U.S representatives on the eve of this trip announced that after the financial morass of the past 15 months, the United States "is back." Yes, the United States remains the world's largest economy - though technically the combined income of the European Union is greater. But size isn't everything - just look at Japan, which is still the world's second largest economy but whose influence and impact are substantially less. China may be poor on a per capita basis (perhaps $5000 per person relative to nearly $50,000 in the United States), but it is changing more rapidly and consuming more hungrily that any other society in the world. It is the change factor in the global system.
Chinese leaders, however, have a tendency to downplay their outsized presence and retreat to a combination of false modesty ("Who us? We're just a poor, developing nation") and baton-passing ("The Americans are the ones who messed up the system and they are the ones who have to fix it, and oh by the way, make sure that our $800 billion in Treasury bonds and $500 billion in other investments don't lose value!"). Their doctrine of non-interference in the internal affairs of other countries is a welcome relief for some who have grown tired of the American tendency to do the opposite, but it also is an increasingly ineffective dodge of the responsibilities that come with hundreds of billions of dollars of investment in Africa, Latin American and Central Asia, as well as hundreds of billions of dollars in trade with the United States, Japan, Korea, the EU and the rest of the world.

Americans, however, still don't quite get it. China represents the first time in any American's lifetime that the United States is faced with a country that it cannot coerce. Even the Soviet Union was vulnerable in its way to American military might. China doesn't even pretend to compete with the United States militarily (though it is aggressively spending on "asymmetric" warfare such as disruptive communications technologies and other methods that would impede the ability of the U.S. military to operate smoothly in the Pacific Rim). And there is no real stick for Americans to wield when it doesn't like how China behaves, whether that is in the realm of human rights or intellectual property. For America, China is a 'welcome to the real world' phenomenon, a case where the United States has to do what most other societies have learned to do for centuries: deal with things they don't like in other countries without being able to force them to behave differently.

The issue for American going forward has little to do with China and everything to do with America. Can Americans rediscover the energy and innovation that brought such power and prosperity in the first place? Can the United States respond constructively to a changed global status that sees the rise of wealth and prosperity everywhere from Brazil to India to China? And can the U.S. government remove its collective head from the sand and act with the urgency that everything from climate change to economic competitiveness demand?

The problem of China for America is that it is a large but amorphous issue, unlike Afghanistan (do we send troops NOW?) or health-care, with its endless and acrimonious battles in the beltway. There is no vote, or quick resolution or unitary policy that will "solve" China. That allows it to linger as a concern, but not to shape action.

So while Obama's visit is important in form and a start, it cannot be a one-off, full of pomp and devoid of substance. Somehow, the United States must shake of the collective grogginess of Cold War, terrorism, financial crisis and inequalities and grapple with a world that is evolving and changing around us whether we like it or not. There is still time, but that clock is ticking and midnight is approaching.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

A Manufacturing Industry To Be Proud Of

Natasha Chart — Wed, 28 Oct 2009 10:00:00 GMT

The American manufacturing industry and its employees are constantly told that they need to be better competitors in the global market, that they must increase the value they add. How are they doing on that?

Something that jumps out from data about the share of global manufacturing had by the United States, China and five other industrialized nations, is that the US is about even with China. As of 2008 and according to UN figures, China's manufacturing accounts for 17.3 percent of world output in dollars (though this number is slightly inflated), while the US' share is 17.7 percent. All else is rarely equal, so this is about as close as you'll get in the real world.

From a Bureau of Labor Statistics report described here, "By the end of 2006, China's manufacturing employment had increased once again to 112.63 million, nearly eight times the level of manufacturing employment in the United States (14.16 million)." The numbers have surely changed since then, but probably not by an order of magnitude.

Those figures could imply many things, but what they seem immediately to suggest is that American workers are extremely productive. They can produce both a high volume and high value of goods, and they have done so without getting a real raise since 1974.

Yet US manufacturing workers face higher unemployment rates than the national average, and often have to accept lower paying work when their plants close down, which should be no surprise. At the advice of the finance industry, wages and benefits have been driven down, policy makers were encouraged not to worry about the decline of the industrial base, and the whole thing was papered over with a massive consumer credit bubble.
Though it seems to me that any 14 million people who can give any 112 million other people a run for their money are valuable and they should have good jobs. They've proven their worth. Preserving the capacity to usefully employ them is just good sense and a worthwhile hedge against supply chain interruptions.

In any war or serious national security emergency, our extended supply chain might become a bigger deal than it's comfortable to think about. For example, as John Markoff wrote this week in the New York Times, the "Pentagon now manufactures in secure facilities run by American companies only about 2 percent of the more than $3.5 billion of integrated circuits bought annually for use in military gear." (Alternate link.) He says there's concern in the military and intelligence communities about Trojan horses being placed in the circuits, raising the possibility of failures in times of crisis.

That could sound paranoid, but the US itself has used such Trojan horses against other countries, either to tamper with military hardware or steal information. In other words, it's been thought of, done and printed in the paper for everyone to read about a long time since.

There are things that a country should ideally make for itself.

Next are the pollution issues. Many of the developing nations whose lower labor casts initially attract US companies have very low pollution standards.

Links to this photograph series entitled, "Pollution in China", has been making their horrifying rounds lately. The 40 images document not only the signs on the landscape, but the damage to China's people; the adults and children with cancer, the birth defects, disabilities, festering sores, faces and bodies permanently caked with coal dust.

Pollution controls may be so poor even on newly constructed or expanded facilities that they pose blatant and immediate threats to local residents. The region of Sichuan still recovering from last year's deadly quake is now being poisoned by an expanded aluminum production facility, its permanent rain of white dust is killing crops and irritating the skin of its workers. In central China's Henan province, more lead smelters have been found releasing so much pollution that nearby children had excessive blood levels of lead, 178 of them requiring hospitalization. Steel manufacturing in China comprises a third of world steel production, but half of all steel industry CO2 pollution.

At least part of China's environmental destruction is due to poor enforcement, with multinational and Chinese firms openly flouting pollution disclosure requirements instituted in 2008.

So as China's global share of pollution increases and shipping pollution becomes a bigger issues, both the House and Senate support for border tariffs is the sensible thing to do if your concern is either cutting emissions or protecting US jobs. Even if it may irritate trading partners.

American workers are capable and productive. They're an asset to their country and to a world that's looking to the United States to take responsibility for our share of global pollution.

Congressional leaders who told us all it was an imperative to save the banking industry, which caused our current recession, should remember the US workers struggling to survive it when they craft a solution to our climate challenges.

Cross-posted from OurFuture.org. Chris and I are headed to DC today to make the Building The New Economy conference this Thursday, hosted by The Institute for America's Future and the Alliance for American Manufacturing. Free registration is available if you RSVP online, so stop by if you're in the area!

Krugman is wrong: Why China won't revalue

Zachary Karabell — Sun, 25 Oct 2009 20:24:09 GMT

Cross-posted at River Twice Research.

For years, Americans have been fulminating about China and its policy toward currency. While many of the debates are technical and laden with econo-speak, they boil down to the simple conviction that China is unfairly manipulating its currency to keep it undervalued against the dollar. The result is to give China unfair advantages in trade - flooding the US with cheap goods, hurting labor wages world-wide, and accumulating massive surpluses in the process. That view is again articulated by Paul Krugman in today's New York Times (http://www.nytimes.com/2009/10/23/opinion/23krugman.html?ref=opinion) which ends with the firm statement: "Something must be done about China's currency."
But what exactly must be done? And more to the point, what can be? Declaiming that something must be done assumes that the United States or some other world power can coerce or force the Chinese government to change their approach to currency in particular and economic policy in general. Before the crisis of the past year, Chinese authorities had actually begun a slow, quiet revaluation of the currency, but only after American politicians and officials stopped using the currency question as a cudgel against China. The recent decision of Timothy Geithner and the Obama Administration not to label China a currency manipulator marked a welcome change in tactics. Compare that choice to the much-publicized Schumer-Graham tariff of 27.5%. It never went into effect, but it hovered as a threat that if China didn't immediately revalue its currency, dire things would follow.

But with China now accounting for nearly $1 trillion of American debt, and with the two economies in a symbiotic relationship which neither loves but which neither can escape, the U.S. cant simply insist that China do something about its currency and expect action. These economies are now fused (see my new book Superfusion). Much like the United States for last half of the 20th century, China is becoming a global economic behemoth. It isn't supplanting the United States anytime soon, but it is rapidly joining the U.S. as the other most important engine of the global system. It remains much poorer and less developed, but it is generating a substantial share of global activity and its cascade can be felt from Rio to Melbourne.

Given that, why would China decide to disrupt the system simply because it causes consternation in America or Europe? Its economy is booming and its policies, however unorthodox, are working. China will again allow its currency to appreciate when it feels that doing so won't cause a crisis of disrupt growth. Its massive accumulation of reserves is an issue. As the crisis eases, it's likely that Beijing will return to its pre-2008 policy of gradual appreciation, especially now that it is focusing on generating domestic demand and wants greater purchasing power for Chinese citizens. But Secretary Geithner - contrary to the criticisms of Krugman and others - has been exactly right in not publicly calling out China. Such an act would be both arrogant and foolish. In the world today, the United States can afford to be neither. Let's hope we remember that.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

Superfusion: How China and America Became One Economy

Zachary Karabell — Sat, 17 Oct 2009 16:10:41 GMT

Cross-posted at River Twice Research.

The economic relationship between China and the United States is the defining issue of our day. While debates over health care are vital to American society, and while challenges ranging from Iran to Afghanistan to North Korea are real, nothing will determine the arc of the coming decades - or will shape domestic life and prosperity in the United States - more than the emergence of China as a global economic superpower unrivalled except by America.

The rise of China is hardly a secret, but because it is a complex economic that is constantly evolving, it gets less attention than hot-button issues. Absent a real crisis between the two, the relationship is more about the flow of capital and the nature of global business than it is about heated battles inside the Beltway or on Main Street. And while the rise of China and America's increased dependency on Chinese loans to fund its deficits certainly generates anxiety, it's mostly amorphous barring some specific issue to focus it.

How that relationship came to be is the subject of my new book, Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends On It. While this economic fusion has taken more than two decades to evolve, with the crisis of the past year, it has become both a tighter embrace and one more fraught with tension. It's to the credit of both governments - for now - that those tensions have not boiled over.
For their part, the Chinese are concerned about the viability of the American economic system and about the long-term value of their more than $1 trillion of investments in American bonds. They are also dependent on the market even a recession-mired America offers, with exports to the United States still near $300 billion a year. Americans are worried about the effect of lower-cost Chinese labor on U.S. jobs, even though most of the lost jobs were lost long ago and have as much to do with the corrosive effects of technology on labor as they do with cheap production in China. Meanwhile, China offers turbo-charged growth for American companies, as the Chinese government turns to companies like Caterpillar and GE to help with the industrial build-out and as Chinese consumers buy more goods - even a bankrupt GM sold 1.6 million cars in China this year, more than in the United States.

But tripwires abound. The Treasury Department just submitted one of its many required reports to Congress, this one on currency and the Chinese currency especially. The Treasury, Secretary Geithner and by extension the Obama administration decided not to label China a currency manipulator, though the report did express serious concerns that the value of the Chinese currency pegged to the dollar left it undervalued and hence responsible for continued global imbalances.

These reports are dry in nature and are nothing if not wonky. But make no mistake: this was a delicate decision and a consequential one. If the Obama administration had labeled China a manipulator, the next step would be automatic sanctions. That in turn might have generated a domino effect of epic proportions. And given how entwined the U.S. and Chinese economies have become, any negative ripples threaten to halt what is for now a very delicate and incomplete global economic recovery.

For now, the relationship between the two economies is symbiotic, and is providing a degree of stability to both societies. In the absence of Chinese money, the Obama administration could not be spending its way out of recession, and without American companies operating in China and without Americans purchasing Chinese goods, China wouldn't have the money to lend and spend. But no country likes to see its sovereignty eroded and its ability to be master of its own fate undermined - and that is precisely what the economic relationship between the China and the United States does to their respective governments. National sentiment in both countries is also strongly suspicious, and that is likely to intensify.

But for now and for many years to come, we are joined at the hip, China and the United States, and how that relationship is managed by both will determine whether the world ahead is one of increased prosperity or ever-more conflict between winners and losers, between haves and have-nots, and between powers on the rise and powers on the decline.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

The winds are still blowing east

Zachary Karabell — Thu, 15 Oct 2009 04:59:29 GMT

Cross-posted at River Twice Research.

While Washington is glued to the drama over health care, over the past few days, Russian Prime Minister Vladimir Putin has been in Beijing meeting with Chinese leaders including Premier Wen Jiabao and President Hu Jintao. In a series of communiqués, they celebrated the "strategic partnership" between the two countries and charted a course of future close relations.

Among others things, Putin - Russia's man behind the curtain who has also been spending considerable time in front of the curtain - signed off on six billion dollars worth of trade deals Chinese counterparts, including moving ahead with a natural gas pipeline to open up the vast Chinese market to Russia's equally vast supply of natural gas. The two sides also discussed policies to contain and manage North Korea. Trade between the two countries is approaching $60 billion a year, and while that is a faction of the more than $300 billion a year between China and the United States, it is hardly negligible.
For China, Russia is a vital supplier of raw materials and some ancillary higher-end equipment. For Russia, China is a vast market that is growing, compared to the European Union which is not. For both countries - who were once Cold War allies and then Cold War adversaries, these meetings signal a new move towards creating an economic and strategic access that bypasses the United States, and that alone is part of the appeal.

The United States wasn't at these meetings, but it presence was felt nonetheless. For both countries, America remains the great question mark - whether it will help or hinder their desires for greater power and prosperity. Russia is a shadow of what it was during the Cold War, and Putin has clearly chosen a path of autocracy that will work only if demand for raw materials - oil above all - remains elevated. China is the crucial element of that equation. China is emerging as the new power in the global economic pantheon, and it is intent on diversifying away from its dependence on the United States for capital and for markets. While it remains tightly bound to America, its leadership would like to find ways to become less so. Whether they will or not remains to be seen, but the embrace of Russia is a clear sign that they wish to become less engaged with the U.S. rather than more.

For now, the emerging Chinese-Russian friendship is hardly a threat to the United States, but the shifting sands signify that the world no longer needs to go through Washington or through Wall Street. As long as the United States remains as large as it is, it will be an unavoidable market for China and even if Putin bought a house off of Tiananmen Square, all the deals between China and Russia wouldn't change that. But the only way the U.S. will preserve its centrality to the global economy over the coming decades is to recognize that the winds are shifting east and that our attention and energy should be as well. The Taliban, Iraq and even Iran's nuclear ambitions are all vital issues, but none of those may shape the future of the United States and the world at large more than the rise of China.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

Weekly Audit: Power to the People's Republic

The Media Consortium — Tue, 04 Aug 2009 16:36:14 GMT

by Sara Luckow, TMC MediaWire Blogger

In the past few years, the economic relationship between the United States and China has changed dramatically. As Tim Fernholz writes in the American Prospect: "Chastened U.S. officials who once lectured their counterparts in [China] on financial liberalization are now humbled in front of their largest creditor, reduced to offering promises of fiscal responsibility." It's a strange state of affairs. Fernholz rightly argues that:

"The common interest of the peoples, rather than the economic elite, ought to be the driving motivation behind the two countries' interactions. There is no doubt that economic openness has brought wealth to both countries, and the Obama administration is happy to laud the Chinese for bringing millions out of poverty. But in a relationship between "capitalism with American characteristics" and "socialism with Chinese characteristics," sometimes the people-whether they be workers losing jobs in the United States or the millions of Chinese living without political freedom or prosperity-have interests other than the elites. Today, we're in an economic crisis, and pragmatism overrides all else. But as recovery continues, the U.S. will require more thought on the strategic track, and perhaps in a few years our discussions with China, as they should be with all our friends, will be more frank."

But our current economic relationship with China pre-dates President Obama's "talk first" style of diplomacy. As Robert Scheer of The Nation writes: "Don't blame any of this on peacenik liberals. The new conciliatory-nay, deferential-tone toward China precedes the Obama administration, having begun in bilateral talks during the last years of the Bush administration as the U.S. economy began its ignominious downfall. It was George W. Bush's treasury secretary, Henry Paulson, who set the course when the former Goldman Sachs chairman realized how dependent were his Wall Street buddies on Chinese goodwill."

Strange relations with China aside, things aren't going so well at home. Rick Wolff, an economist from the New School, says the stimulus package has big problems in a discussion with The Real News. Wolff also notes that we shouldn't take Wall Street chatter about an economic upswing too seriously. "I think the first thing to remember is the people who are celebrating where we are now are the same people who could not imagine, did not imagine, did not foresee the problem we had last year," Wolff says.

But what's going on with our favorite bailout recipients? Talking Points Memo takes on the case of former Federal Pension Guarantor Charles Millard, who exploited his personal ties with employees at BlackRock Capital and Goldman Sachs while choosing firms to manage the Pension Benefit Guaranty Corporation. At this point, both firms "may have run afoul of federal contracting rules in how they courted Millard."

Goldman Sachs and BlackRock are also on the lookout for the next big economic bubble. Salon reveals that both firms are diversifying their portfolios to include agriculture, in addition to government contracts. "Food is becoming the new oil," especially since the world's population is expected to crest nine billion by 2050. And a lot of land is necessary to grow enough food for nine billion people. Phillipe Heilberg, founder of American investment firm Jarch Capital, is hedging his bets on farmland in distressed countries. "Instead of buying stocks, the former banker is now speculating on the political future of South Sudan, which he insists will be an independent country in 10 years, at which point land will be far more expensive than it is today."

It's abundantly clear that we can't rely on the economic elite to represent the people's interests. Tomorrow's economic structure must be drastically different if the United States is going to thrive. Put simply, we're going to have to seriously reevaluate our economic priorities and decide who calls the shots. Here's hoping that everyday people have a say.

This post features links to the best independent, progressive reporting about the economy and is free to reprint. Visit StimulusPlan.NewsLadder.net and Economy.NewsLadder.net for complete lists of articles on the economy, or follow us on Twitter. And for the best progressive reporting on critical health and immigration issues, check out Healthcare.NewsLadder.net and Immigration.NewsLadder.net. This is a project of The Media Consortium, a network of 50 leading independent media outlets, and was created by NewsLadder.

China and the United States - a marriage of convenience

Zachary Karabell — Wed, 29 Jul 2009 01:20:00 GMT

Cross-posted at River Twice Research.

As the United States and China wrap up their two-day "Strategic and Economic Dialogue," it's more apparent than ever that the two find themselves in a marriage that neither can easily dissolve and that neither fully wants.

The speeches struck all the rights notes - "the United States and China share mutual interests," President Obama announced. "If we advance those interests through cooperation, our people will benefit, and the world will be better off - because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges" Those sentiments were echoed by both Hillary Clinton and Timothy Geithner in an op-ed published in the Wall Street Journal. The Chinese delegation spoke of the two nations as traveling in the same ship, a ship which was wracked by the global financial storm of the past year. In general, the rhetoric could not have demonstrated more clearly that both see themselves as locked in a relationship of mutual dependence.
Yet the words of officials belie the more ambivalent feelings of both governments and especially of domestic public opinion in both countries. The best-selling book in China over the past months has been a nationalist screed entitled "China is not happy," which argues for detachment from the United States as well as divestment from the U.S. dollar and which warns darkly that the ultimate goal of America is to keep China down. In the United States, there remains a strong current of distrust that sees Chinese policy around its currency as purposely aimed at conferring illegitimate advantages for Chinese goods and which views the authoritarian nature of the Chinese government as an absolute obstacles to future concord. And many U.S. economists do not believe that China - reliant as it is on state-spending rather than domestic consumer consumption - has a viable model for long-term growth.

While there are positive signs in the discussions around alternative energy, climate change, and the long-term security of the dollar, what's striking is how little has changed between the two as a result of the economic crisis. In fact, the events of the past months have propelled the two closer together, contrary to the arguments of those such as Niall Ferguson who are now predicting an impending divorce. The U.S.-China trade deficit is still immense, running at an annualized rate of nearly $250 billion a year in U.S. imports and $60 billion in exports, down from almost $340 in imports in 2008 and nearly $70 billion in exports ( http://www.census.gov/foreign-... ), but still considerable given the sharp contraction in overall economic activity globally. And China has been adding to its dollar reserves every month and has been a steady buyer of U.S. debt, which means it had become an even more significant creditor of the U.S. and a facilitator of U.S. government spending.

For now, elites in both countries speak the mantra of closer integration, but it's fair to say that their views do not accord with popular sentiment. It's also fair to say that neither government is prepared to face the real consequences of their economic relationship, which is a loss of control. China wants to diversify away from the dollar, but it has no alternative; the United States wants to be less dependent on China, but there is no other ready source of loans.

So this phase of the dialogue ends on promising notes. But reality will be harder to live, and its ramifications difficult for both sides to accept. For a 21st century relationship, this looks increasingly like a 19th century marriage, one of convenience and necessity rather than love and affection and one that is nearly impossible to end even if both parties desire it.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

We Need a Jobs Package, Not a Stimulus Package

Mike Lux — Wed, 08 Jul 2009 20:00:00 GMT

This seems like Framing and Political Strategy 101 to me, but since few other people are talking in this way, let me just lay out a basic idea: all this talk about doing a stimulus package versus not doing a stimulus package is fundamentally besides the point. What we need is a comprehensive policy package that is very simply focused on one thing and one thing only: jobs.

I know the policy wonks on Capitol Hill may be confused by that paragraph because, they would say, well, a stimulus program would create jobs. Well, yeah, that is the idea of stimulus. But my point is this: the politics of a second stimulus package are a dead end. The politics of having a debate about a policy package that will create jobs is a helpful thing. Announcing a second stimulus package gets Democrats into a defensive crouch about why the first one failed, and gets us into that same "can we get to 60" dance with Ben Nelson, Arlen Specter, Olympia Snowe, and Susan Collins that caused the first stimulus bill to be pared back and rendered less effective.

Voters don't know what it means to say you are going to stimulate the economy, but they do know what a job is. And right now, what we need is jobs sooner rather than later. My point here is not to just rename the stimulus bill the jobs bill. In fact, there are quite a few things the White House and Congress can do to focus on jobs that don't involve just spending more, although more money will certainly need to be spent. Here is what I would include in a comprehensive package:
1. Take on, far more aggressively than now, the currency manipulation going on in China. Our balance of trade problem and big losses in our manufacturing sector will not be solved without aggressively dealing with the country that we have by far and away our biggest trade deficit with, and China's policy of currency manipulation is a huge part of the problem.

2. A serious industrial policy that helps emerging industries grow. Every other industrialized country in the world has an industrial policy that helps emerging industries quickly grow and create new jobs. Yes, it does mean picking winners and losers, but we need to get over our reticence about doing that so that we can help the industries with the most potential for producing big numbers of good jobs.

3. Force every big bank that was propped up during the financial collapse- which is pretty much all of them when you include the Federal Reserve dollars sloshing around the system- to actually make loans to businesses so that they can create jobs. This "money for nothing and your kicks for free" philosophy has to end. The big banks need to understand very clearly that we expect something more from them, after all they have been given, than merging with other banks and giving record bonuses to their executives.

4. Direct the Justice Department to actually use existing antitrust law (and then beef it up where necessary) to break up the big banks and other mega-corporations stifling small business and competition. Promoting real competition in these industries will produce real jobs.

5. Fundamentally restructure the corporate tax system to incentivize American job creation and dis-incentivize the outsourcing of jobs.

6. Consistent with what every other industrialized country in the world, and consistent with existing WTO rules, have our federal purchases (20% plus of the economy right now) buy from companies producing goods in America. Big business and media elites will scream protectionism, but it would just be doing what every other economic power does.

7. And yes, spend some more money- on infrastructure, on green jobs, on state revenue sharing. On all those things that were foolishly cut in the last stimulus package by the Nelson/Specter/Collins/Snowe cabal. But this time, just add the money into the federal budget so the job-killing Senators can't screw things up with a filibuster.

I've said it before and will likely say it again): this economy will not recover, and Barack Obama will not have a successful presidency, without a laser beam focus on creating good jobs. Resuscitating the big banks, whether you believe that needed to be done or not, did not create any new jobs (although it did save a few bank executives' jobs, and I'm sure their record bonuses will someday trickle down to the rest of us. Or maybe not). What we need is not another short-term stimulus package, what we need is a real plan, a comprehensive plan, to create good jobs ASAP over the short and long term.

You can be great at soccer, or globally dominant - you can't be both

Zachary Karabell — Wed, 01 Jul 2009 15:25:02 GMT

Cross-posted at River Twice Research.

So the United States lost to Brazil in the final of the FIFA Confederations cup, in that thrilling but painful tale of two halves, with the U.S. up 2-0 only to see Brazil roar back (or rather dance and prance and glide with balletic ferocity) and win 3-2. All I can say is, thank god.

For the past sixty years, the powerhouses of international soccer (a.k.a. football) either have been empires past their prime and on the decline or countries that dream fruitlessly of empire - England, France, Italy, Germany, Argentina, Brazil, and Spain. To bestride the world as a soccer power is to not bestride it as an economic or military power. In its period of global hegemony, the United States was manifestly not a global powerhouse in soccer. It was mighty in everything but the sport that is played by more people in every corner of the world than any other. And so if the United States had magically defied the odds and the gods and beaten Brazil, it would have been the final sign that American is indeed in decline.
Of course, the United States may already be in irreversible relative decline, its near miss against Brazil notwithstanding. But for a moment at least, order was maintained. The other rising global power, namely China, shares with the United States an historical ineptitude for the game. In fact, making fun of the Chinese national team is one of the few outlets for uncensored political expression in China, and indeed the team has been inept. It may be no coincidence that it was once coached by the same coach who struggled valiantly but in vain to remake Americans soccer, Bora Milutinovic (now the coach of the Iraq national team). China even failed to qualify for the 2010 World Cup, which is a feat that will probably elude the United States.

Argentina - with its rich tradition of World Cup prowess, its intellectual sophistication and its astonishing natural resources - was once thought of a hemispheric challenger to the United States, before Juan Peron and Evita cemented the country's fate as a montage for an Andrew Lloyd Webber musical. Its victories in soccer are in almost inverse proportion to its political and economic stability.

Yet, there is the case of Brazil, which has been defying the odds and has started to demonstrate real leadership and success in today's globalized economy. It has a confident and thriving middle class, energy independence and cutting edge use of biofuels, as well as decreasing corruption. That may explain why the national team has struggled of late, as Brazil attempts the rare feat of having both an ascendant national economy and a dominant football team.

For now, the world order is not yet dramatically upended, but as the game demonstrated and as the last year has proven, that order is in flux and the old hierarchies are unlikely to remain in place for long.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

You Can't Build a New Foundation With Dirty Energy

Billy Parish — Tue, 19 May 2009 16:44:29 GMT

Building a new foundation requires a lot of heavy machinery. Bulldozers to clear the land, extractors to dig the foundation, concrete-mixers to pour the cement and trucks to haul the raw materials. So perhaps it's appropriate that Jim Owens, the CEO of Caterpillar will be at the White House tomorrow for the first meeting of the President’s Economic Recovery Advisory Board (PERAB). The group includes some of America’s leading thinkers, business executives, and academics, including the CEOs of GE, UBS, and Google. (full list here)

The Board was created by President Obama in February to provide an outside-the-Beltway perspective on how we can recover from the financial crisis and build a new foundation for the American economy. "New Foundation" is emerging as the catch-all phrase to describe Obama's domestic policy agenda, similar to FDR's "New Deal" or Johnson's "Great Society" as a recent New York Times article points out. It's a good term, capturing both the shaky and unsustainable foundation of our past economic growth and framing out the kind of economy we need to build for the long-term. We are well past the time for patchwork solutions. We must rebuild and we must rebuild the right way.

Obama said as much in his "New Foundation Speech" at Georgetown University on April 14th, when he named renewable energy the third of five pillars necessary to rebuild the American economy. A clean energy economy "can create millions of new jobs and new industries. We all know that the country that harnesses this energy will lead the 21st century." However, as the President acknowledged, "we have allowed other countries to outpace us on this race to the future.”

It is no secret that the United States has fallen behind in the most importation economic competition of the 21st century. A lack of national standards, an absence of strong climate and energy policy, and never-ending subsidies to the fossil fuel industry, have hindered America's ability to compete with other countries for top talent and investment capital. It's gotten to the point, that "if you list today’s top 30 companies in solar, wind and advanced batteries, American companies hold only 6 spots.” As John Doerr, a venture capitalist at Kleiner Perkins Caufield & Byers and member of PERAB, testified before Congress earlier this year, “That fact should worry us all.”

We face serious competition from a number of nations, including Spain, Israel, Germany, and Japan, but China is and will be our primary competitor for clean tech supremacy. China is already the leading alternative energy producer in the world, investing $12.6 million every day in alternative energy. According to a recent report by The Center for American Progress, the US plans to invest half as much stimulus money as China in “renewable energy, low-carbon vehicles, high-speed rail, an advanced electric grid, efficiency improvements, and other water-treatment and pollution controls." We are far behind and only falling further. While China's government and businesses are seizing a historic economic opportunity to expand their market share and move into high value businesses, we are fighting amongst ourselves in Congress and worrying about how to keep the fossil fuel industry happy.

The Waxman-Markey Act recently introduced in the House could be the right start, but it currently falls far short of what we need. An analysis by the Breakthrough Institute found that of the $1 trillion in cap and trade revenue between 2012-2025, only $9 billion a year will be invested in clean technology. "This $9 billion is far less than what Obama promised ($15 billion) and far less than the $30 billion that three dozen energy scientists and experts, including several Nobel laureates, called for in a sign-on letter during the fall of 2007." In addition, 57.3% of allowances would be freely distributed to polluting industries, which "stands in contrast to Obama's previous calls for a 100% auction, which was included in his final budget proposal." So while the fossil fuel industry is doing everything it can to water down legislation, what it is really doing is weakening our economic future.

The good news is that many in the business community, including some high profile members of PERAB, realize this and are fighting to build a new foundation with clean energy. The CEOs of large corporations are speaking out in favor of climate and energy legislation (Check out the 9 principles of BICEP: Business for Innovative Climate and Energy Policy). Smart business leaders like Google CEO Eric Schmidt know that "if you invest in the right way you can make money by doing this.” They know that it is in America's best interest to pass strong climate and energy legislation. As Jeff Immelt, the CEO of GE says, "businesses expect a price on carbon, and investors want clarity and certainty." Let's be happy that both Schmidt and Immelt are on Obama's Recovery Board.

But perhaps more importantly, small businesses across the country are already hard at work building the the new economy. And they're not sitting by quietly as the US Chamber of Commerce undermines America's long-term competitiveness. Just last week, 10,000 small-business leaders petitioned the Chamber of Commerce to "stop lobbying against the clean energy jobs bill."

All of this is important, but nothing will help more than presidential leadership. We are blessed with the greatest communicator in the White House since at least Ronald Reagan. A man who understands and values science. When it comes to energy and climate change, we need a President who will lead the movement and not just wait for the movement to come to him.

A clean energy economy can be more than a pillar to our economic recovery. It can be the cornerstone of our New Foundation.

This entry is cross-posted at The Huffington Post.

The Scope of The Republican Deficit

Chris Bowers — Fri, 06 Mar 2009 19:12:36 GMT

Amidst all of the discussion about how the Republican Party is searching for a way out of the wilderness, the sheer scope of the Republican deficit is often missed. Currently, Republicans face a far more severe electoral problem than Democrats faced four years ago. Consider the following:

Republicans equally popular as Republican boogeymen: With a favorable rating hovering just on the south side of 40%, Republicans are currently about as favorable as most of their favorite boogeymen used to scare voters. Republicans are currently viewed about as favorably as legalizing marijuana, gay marriage, Communist China, and increasing the current level of immigration. All of these right-wing scare tactics--increasing immigration, legal drugs, gay marriage, Communist superpowers--hover around the same 40% favorable rating as Republicans themselves. Among voters under 45, Republicans lose pretty solidly to most, if not all, of these boogeyman. If you are only as popular as the ideas you try to scare voters with, and if long-term trends suggest that it won't be long before the boogeymen you use will actually be more popular than you are, then it is really, really hard to see a way back for your party.
Demographic trends point in the wrong direction for Republicans. This has been a favorite subject of mine for a while, as I wrote in Maybe It Is A Battle Of Civilizations, Towards a Pluralist Strategy, and The End of Bubba Dominance. The simple fact is that Democratic voting groups, mainly non-whites and non-Christians, but also union voters and the LGBT community--are actually growing in size. For example, when projected ethnic population growth (PDF), and is applied to current ethnic voting patterns, if the 2008 election had been held in 2020, Obama would have defeated McCain by 9.8%, a 2.5% increase from the 2008 margin of 7.3%. That doesn't even factor in what will inevitably be a large non-Christian and LGBT vote, two groups that vote for Democrats at nearly the same rate as non-whites. The point is that if Republican popularity stagnates among current demographic groups, overall Republican popularity will actually decline. They have to improve just to maintain their current level of unpopularity.

(more great anti-Republican numbers in the extended entry)

Democratic advantage two to three times as large as any held by Republicans: Even in the darkest hours for Democrats, the period from 2001-2005, they never faced a popularity deficit like the one Republicans current face. Using long-term trends from Polling Report, you can see that Republicans currently trail Democrats in net favorability rating by two to three times the amount Democrats faced at their lowest point:

NBC poll, Democratic Party net favorability edge on Republican Party, 1998-2009

Gallup poll, Democratic Party net favorability edge on Republican Party, 1997-2008

During this entire stretch, which runs back into the days of Monica Lewinsky, the Democratic Party never reached a double-digit net negative unfavorable rating. By contrast, Republicans have been in that territory almost continually for three and a half years. The same can be said for facing a twenty-point net favorable gap to the other party. While Democrats never fell behind by that much, Republicans have trailed by that amount almost continually for three and a half years.

I am not pointing this out to argue that there is no conceivable way for Republicans to close this gap. However, I do think it is safe to venture that there is no way Republicans can close the gap entirely either over the short term (say, by the end of 2010), or without a change in core message.

Can Republicans still win national elections by scaremongering on topics such as immigration, drugs, Communism, or gay marriage? Every day, the odds appear less and less likely. Can they win without a noticeably improved performance among non-whites and non-Christians? Again, the odds of pulling that off decline every day. Can they use the same strategy as Democrats-aka, don't be the governing party when the country is in the crapper--to find a path back to power? Perhaps, but Democrats were never as unpopular and discredited in the eyes of the American public as Republicans are now. If Democrats can't turn things around, voters won't think "OK, time to give the other guys a chance." Instead, it will be more like "wow, they both frakked it up."

Unless Republicans can find scarier boogeyman, unless Democrats really screw things up beyond even Bush administration levels, and unless Republicans find a way to start appealing to growing demographic groups, then they aren't going to find a way back to power. Eventually they will pull it off, as Democrats will not govern forever. However, I think the smart money is that they won't be able to succeed until 2016, or possibly even later.

Communist China More Popular Than Congressional Republicans

Chris Bowers — Thu, 05 Mar 2009 02:57:00 GMT

According to February Gallup polls, it turns out that Communist, melamine exporting, beating-us-in-the-Olympics China is now more popular than Congressional Republicans:

USA Today/Gallup Poll. Feb. 20-22, 2009. N=1,013 adults nationwide. MoE ± 3.

"Do you approve or disapprove of the way the Republicans in Congress are handling their job?"

Approve 36%--56% Disapprove

Gallup Poll. Feb. 9-12, 2009. N=1,022 adults nationwide. MoE ± 3.

"Next, I'd like your overall opinion of some foreign countries. Is your overall opinion of [see below] very favorable, mostly favorable, mostly unfavorable, or very unfavorable?"

China: Favorable 41%--51% Unfavorable

This is another edition of stuff that is more popular than Republicans.

Clinton Telling China How It's Done

Natasha Chart — Sat, 21 Feb 2009 17:02:07 GMT

Secretary of State Clinton is focusing on climate change during her visit to China. Admirable, though I'm glad I didn't have a mouthful of coffee when I read the start of this New York Times article:

BEIJING - Declaring "we hope you won't make the same mistakes we made," Secretary of State Hillary Rodham Clinton invited China to join the United States in an ambitious effort to curb greenhouse gases, as she toured an energy-efficient power plant in Beijing on Saturday.
"When we were industrializing and growing, we didn't know any better; neither did Europe," Mrs. Clinton said. "Now we're smart enough to figure out how to have the right kind of growth." ...

One wonders which "we" she had in mind.
For example, I doubt it was the federal government that ignored one of the nation's most successful energy efficiency policies in the stimulus bill. As Mary describes at the link, California has achieved enviable increases in energy efficiency through aligning the power companies' bottom lines with reductions in energy use by their customers.

A provision that mandated copying this policy in order to receive federal funds was stripped from the stimulus bill.

It's almost like the people making policy in the US didn't understand the seriousness of the situation. As if, perhaps, they didn't know any better and weren't really interested in promoting the right kind of growth.

Admittedly, the Democrats are saying the right things and there have been some good, if halting, steps in the stimulus. But that hardly seems to give the country the standing to suggest that our mistakes are in the past.

Considering that Senate Republicans and state utility regulators are still holding the country's emission reductions hostage, perhaps we could attempt a touch more humility when alluding to our accomplishments.

The rise of the rest

Zachary Karabell — Wed, 03 Dec 2008 01:02:56 GMT

Cross-posted at River Twice Research.

The current economic crisis has claimed many victims, but what has changed most is the way that the United States is viewed, perhaps permanently. That isn't ideology; it isn't declinism; it's a fact. For all the talk in past year about the shifting balance of power globally, until now it has been just that, talk. Saying that the emerging world of China, India, Brazil and the rest have assumed a new place is like saying that a new army is well-equipped with sharp uniforms and cutting-edge weapons. That doesn't mean it can fight. Until tested in battle, it's just a guess. The economic crisis of the past two months has been such a test, and the results are clear: talk of the emerging world as the wave of the future isn't just speculation; it's a permanent reality.
The United States is still the world's largest economy ($14 trillion) but is also the biggest debtor. Its ability to keep spending is due largely to the largess of China, the world's largest creditor, with $2 trillion in reserves and a continued willingness to hold T-bills in order to prop up its biggest customer.

While the financial crisis has affected almost all countries, lines can now be drawn between those who have cash and reserves, and those that don't. The ones that do - China, Russia, Brazil, Saudi Arabia, Japan, Norway - are in the catbird's seat. Those that don't - ranging from tiny Iceland to the United States - are facing the constraints of being debtor nations.

But while the structural reality of the world has changed dramatically, the cognitive reality hadn't - until now.

If you had followed the coverage of the summit of the world's leading economies (the so-called "G20?) held in Washington on November 15, you could be excused for thinking that the meeting was a flop. Other than vague promises on the part of the collected leaders to do something about the world financial system, there was no bold plan announced, no specific solutions to the world's problems. The coverage in the United States treated the summit as a non-event that amounted to a photo-op for world leaders and a lame-duck American president.

In fact, however, the G20 summit revealed a developing world brimming with confidence about its ability to solve current problems and a developed world lost in the mist. That was reinforced at the meeting of Asian-Pacific nations last week in Peru, which led to the declaration: "We are convinced that we can overcome this crisis in a period of 18 months," the leaders said in the statement. "We have taken urgent and extraordinary steps to stabilize our financial sectors and strengthen economic growth." Sometimes rhetoric matters, and the fact that most affirmative statement of confidence in the ability to solve the current credit crisis came not from New York, Washington, or London speaks volumes to the world as it now is.

Today, the rest of the world is forging new links with one another in recognition of the fact that they will have a central role in shaping the future. That is why outside of the United States, images of President Hu of China speaking candidly with President Lula of Brazil, or both huddling in serious discussion with Singh of India and Medvedev of Russia matter. For years, these countries looked to the United States as either an adversary or a bulwark, and assumed that in the end, action by the United States would determine outcomes for better or worse. No longer. The contrast between the Washington summit, where the U.S. leader was mute and ineffectual, and the summit a week later in Peru where the tenor was "yes we can!" rather than "how can we?" was stark.

For sure, banks in many parts of the developing world have taken hits, as they were exposed to the same toxic assets that have brought the credit system to its knees. Yet banks in many of the emerging countries are not as vital to the system, especially in places like China or parts of the Persian Gulf, where government spending and state-capitalism are the major source of economic activity. 50% of China economic activity is spending by the state.

The developing world is now helping bail out the financial system of the developed world, with cash injection (Abu Dhabi into Barclays; Prince Alwaleed of Saudi Arabia in Citigroup, and soon perhaps China into AIG) and developed world governments are abandoning the model of bank-led capitalism and taking a much larger role in the economy. "Their" model of strong state intervention in the economy is now the one becoming universal, not "ours."

The crisis has radically shifted the way that the emerging world views its role. To borrow from psychology, the implosion of the western financial system has created that cognitive break, and rather than finding themselves brought low, emerging nations have been able to weather the storms. They have faced no strong outcry domestically and if anything have gained in stature by swift and strong action to address root causes and fix what's broken. China's vast $600 billion dollar stimulus package is one example; Abu Dhabi guaranteeing the debts of Dubai is another; and President Lula of Brazil declaring an end to the developing world's dependency on finance from the developed world yet another.

Having been forced to abandon the psychological dependency on the United States, they are taking responsibility for shaping the world around them. In the past week, there have been major meetings between Russia and Brazil, between China and Brazil, between China and multiple countries. Many say that the lesson is no longer to treat the United States as wiser and stronger economically, and not to look to Washington for lasting solutions. The crisis is their wake-up call about their own importance, and they are seizing the moment.

Given the despair and confusion in the developed world, this is a good thing. The global system is too big for any one country to sustain it, and while it'ss a painful time, it might just lead to greater balance and stability going forward. The new leaders recognize that no one of them can create that world alone. With the new Obama administration in Washington, and Hillary Clinton at the State Department, they might find a partner who understands that as well.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

China Will Be a Winner in the New Economy

Zachary Karabell — Tue, 02 Dec 2008 02:27:21 GMT

The following is an excerpt from a recent opinion piece of mine in the Wall Street Journal. For links to this and other writings, please feel free to visit River Twice Research.

The incoming Obama administration will face formidable challenges, but global economic collapse is no longer imminent. That may be small short-term comfort to the markets and Main Street. But having stared down the abyss, governments around the world appear determined to address root issues. The G-20 gathering of the world's major powers in Washington on Nov. 15 was only the beginning of a long and constructive process of revising the global system.

In the new system the United States will still be the largest economy but no longer the sole determinant of global economic health. The new winners will be cash and China.
Those without cash are in a precarious position. Tens of millions of homeowners and property owners in the U.S., Europe, the Gulf region and Asia have seen the value of their assets decrease sharply. They either have negative equity or insufficient income to make payments. Pension plans and 401(k) accounts have been devastated by a 50% plunge in global equities. Millions of workers have lost or are about to lose their jobs. The U.S. government balance sheet will become even more debt-laden.
But every crisis creates opportunities -- or at least so goes the old Chinese saying. This time is no exception, and China will emerge victorious. As its recently announced $600 billion stimulus package makes clear, those who have cash can spend their way through this global crisis, and China has lots.

The new world economy

Zachary Karabell — Tue, 18 Nov 2008 23:23:39 GMT

Cross-posted at River Twice Research.

So the G20 met over the weekend, and if there was any doubt before, there should be none now: the financial balance of power is shifting. China, Brazil, even Japan can all claim more sound economies than the United States, and they collectively let it be known that they would no longer take marching orders from the Washington consensus. They expect a voice, and they are not asking permission
Yet, the leaders of those countries are not blind to the interdependence of the world. However much they may secretly take some pleasure from seeing the United States humbled, they know that the global system demands a stable and strong America for the foreseeable future. They recognize that we are all in this together, that recriminations may provide some satisfaction but do nothing to solve problems.

Yes, it was startling to hear Henry Paulson admit on CNBC that "We have in many ways humiliated ourselves as a nation with some of the problems that have taken place here." One could take that as a positive step, in that acceptance is part of the road towards recovery, or so they say. It was also a symbol that the United States can no longer snap its fingers and expect that the rest of the world will jump and ask how high - not with China holding trillions in U.S. debt, not with Brazil holding reserves in excess of $200 bill, or Saudi Arabia with its billions and Russia to boot. For the first time since the end of World War II, the United States is confronting a world that it needs more than a world that it commands.

In truth, we have always needed the global system, but with overarching power came the temptations of that power, and hubris. We lost sight of the mutual dependence that was the source of so much of our strength, and instead succumbed to the comforting illusion that we could command the heights and lead alone. Now, the rest of the world arrived in Washington to sit next to a lame duck and lamed president and remind him and us with some dignity that the system has gone off the rails and only joint effort will put humpty dumpty back together again.

We will soon have a president who recognizes that leadership is not dictating; it is not being the decider. It is instead a recognition of who we are and what the world now is, a willingness to take responsibility, and to sit down and allow others the voice they have rather than fleeing into cultural narcissism where the only sound heard is the comforting delusions of one's own perspective. It's only a shame that we must wait until January.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

Elizabeth Dole - does she really represent North Carolina?

NoThirdBushTerm — Thu, 09 Oct 2008 16:32:12 GMT

North Carolina should be an exporter of many things, but should it be exporting jobs to China? Elizabeth Dole thinks so. She voted to give tax breaks to companies that move jobs overseas. Meanwhile, her own state suffers the loss of 100,000 jobs disappearing.

That's the equivalent of an entire medium size city just up and evaporating.

North Carolina needs representation in the Senate that looks out for its interests, not the interests of China. Let China take care of China, and at the same time, lets have someone representing the interest of North Carolina in the Senate.

PA-05: McCracken for Congress -- Jobs and the Economy in the 5th District -- August 31, 2008

vmo1701 — Mon, 01 Sep 2008 19:05:47 GMT

This week, I had the opportunity to participate with my fellow 5th district candidates in a forum sponsored by WPSU TV to discuss job creation and economic conditions in the 5th Congressional District. As we fielded questions on the various issues, I paid close attention to how my views on job creation and retention along with overall economic development strategy differed from my opponents. What I heard from my Republican opponent was numerous statements about "incentives" and "tax credits" to entice businesses to locate or expand in the 5th district.

When government provides "incentives" they give funding to a business through grants / loans, while "tax credits" grant certain exemptions that allow a business to omit paying some taxes by writing off eligible expenses. Regardless of what form they take, "incentives" spend federal government funds and "tax credits" decrease revenue coming to the federal government. While this may be a reasonable plan when the federal government is fiscally strong with a surplus, it is impractical to suggest at a time when the federal budget has a $482 billion deficit and $9.6 trillion in debt is owed to foreign countries including the likes of China and Saudi Arabia.

Throughout this campaign, I have made the case to the voters in the 5th district the federal government cannot help revive our failing economy, much less deal with other important domestic issues, until the federal budget is balanced, a surplus is growing and the debt to foreign nations is paid down. It is irresponsible when a candidate for federal office proposes creating new "incentives" or offering "tax credits" to corporate America while we have record deficits and debt at the federal level. Sadly, this is more of the same failed fiscal policies we've seen during the last 8 years.

The same day as the WPSU forum, the Centre Daily Times printed a story about the recent unemployment rates released by the PA Department of Labor and Industry. Throughout the 5th Congressional District, unemployment and economic conditions are some of the worst in the Commonwealth of Pennsylvania. In fact, the 2 counties with the highest unemployment rates in the state were here in the 5th district with Cameron County at 7.6% and Forest County at 8.4%. Perhaps even more troubling was the fact that 15 of the 17 counties in the 5th district are above 5% unemployment with the only exceptions being Warren County just slightly under at 4.8% and Centre County at 4.2%.

Not only do we have the highest unemployment rates, but the US Census Bureau reports that median family incomes in the 5th district are, on average, almost $12,000 less than the rest of the nation. The US Census Bureau -- 2006 American Community Survey lists the Median Family Income for the 5th Congressional District of Pennsylvania at $46,863 versus the U.S. average of $58,526. Worse yet, while we are averaging significantly less in income than other areas of the country, we are paying the same rising costs for food, gas, energy, automobiles, clothes and other necessities that we need in daily life. During the WPSU forum the issue of young people leaving the 5th district after graduating from high school and college was discussed. It is obvious the difference in income levels plays a huge role in the departure of our young people from rural central Pennsylvania.

Of course, the question still remains, how do we create jobs, lower record unemployment rates and increase income levels in the 5th Congressional District and spur the economy at the national level? The federal government isn't going to fix this for us because they don't have the financial resources to do so. The time has come for certain sacrifices to be made by those who have profited in recent years.

We need our business leaders to realize there are no more handouts for them if they are running a profitable business. Too often, businesses on solid financial ground want the government to provide incentives and tax credits before they will expand and create new jobs. We need corporate America to voluntarily reinvest their profits to rebuild our nation's economy without the expectation of incentives and tax credits.

And to the wealthiest citizens, the time has come to stop complaining if you have to pay a little more in taxes to get us out of the fiscal mess from the last 8 years. To accomplish this, the Bush tax cuts for the wealthiest Americans must expire as scheduled in 2011. Once we get the fiscal mess straightened out, then a new set of tax cuts for poor and middle class, roughly 90% of the working population, can be put in place.

At the federal government level, a strong, stable fiscal policy that balances budgets, builds surpluses, pays down the debt and stops borrowing from foreign governments will eventually allow the federal government to get back to supporting economic development and job creation. This can only be accomplished if voters send fiscally responsible people to represent them in Washington. Contrast my message of fiscal responsibility to that of my opponent who continues to voice support for failed fiscal policies that will continue to threaten our national security through higher deficits and more debt to foreign sources.

2008 Continues to be Historic

When I decided to enter the race for the US Congress, I did so with a slight thought in the back of my mind that, in some small way, I might be involved in an election that was historic. Now, with September upon us and just over 2 months until Election Day, it is obvious that history will be made in 2008. We could see the first African American elected President of the United States in Barack Obama, whom I support, or we could see the first woman elected Vice President in Sarah Palin (as part of the McCain ticket, I'm not so excited about that prospect). At the DNC Convention in Denver, the speech by Barack Obama on Thursday was one of the greatest presentations I've ever watched. He was flawless in his presentation and he showed the country and the world that he is the strong, articulate leader we need to solve the problems facing our country.

And the announcement on Friday by Senator John McCain that his choice for a running mate was the first term Governor of Alaska Sarah Palin was a gutsy call to say the least. It will be interesting to watch the rest of the campaign and learn more about Governor Palin.

Happy Labor Day and Prayers for the Gulf Coast.

On behalf of the McCracken for Congress campaign, I want to offer a Happy Labor Day to the working people in the 5th district. People in rural Pennsylvania are known for their strong work ethic. All they ask for in return is a fair wage and benefits that will allow them to care for their families and put food on the table.

Finally, we all need to be sending our prayers to the people and communities on the Gulf Coast as Hurricane Gustav moves across the Gulf of Mexico. We never want to see a replay of the destruction and despair that we saw during Hurricane Katrina.

Please help in any way you can to help the residents of the Gulf. You can donate to the Red Cross at this link:

http://american.redcross.org/s...

Mark B. McCracken
Your Candidate For Congress

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This diary is cross-posted at McCracken's campaign blog, PA's Blue Fifth
Mark McCracken for Congress
ActBlue page

China and the March of Nations

Chris Bowers — Sat, 09 Aug 2008 17:15:00 GMT

Yesterday's opening ceremonies of the Olympics seem to be receiving nothing but rave reviews today. Personally, I enjoyed them, too, even if most of the artistic portion struck me as pretty much the same thing as Broadway, Disney or Bollywood musicals that I don't like very much, only on a scale 50 times larger. A bit cloying for my tastes. Then again, the older I get, the more I seem to like those musicals, but I digress...

What I did like, and what I usually like about the Olympic opening ceremonies, is the march of nations. Yesterday's was just as spectacular and enjoyable as any I can remember:

Before the ceremonies, I was generally of the view that, because of its environmental degradation, internal human right's and worker's right's abuses, it should not have been awarded the Olympics games. However, watching the march of nations, it became clear to me why hosting the Olympics was so important to China, and why there really isn't a good argument to deny them these games. Concerning the former, it is pretty obvious that having the world's greatest athletes, along with many of the world's leaders, make a pilgrimage to your country is a remarkable honor--and certification of recent progress--for a once preeminent nation that has struggling mightily over most of the last 170 years. Concerning the latter, considering our extensive economic ties with them, considering our own recent international record, and considering our own environmental abuses, the more I thought about it, who are we to criticize China? Until we put our own house in order, China absolutely deserves to host this pilgrimage every once and a while.

More in the extended entry.
China has become the world's leading polluter, and also continues to be one of the worst, if not the worst, human and worker's rights offender on the planet. However, considering that we imported 200 billion dollars in goods from China in 2004 (the most recent year for which I could find a figure), or about 10% of the entire Chinese economy in 2004, we are hardly in a position to criticize. Whenever you consume 10% of another nation's economy, you are giving more than tacit approval to the means by which that produces its economy. The environmental degradation, the lack of worker's rights, the media clampdowns, the human right's abuses, and the anti-democratic meddling in foreign governments are all just as much on our hands as they are on the government of China.

This isn't even to count the equivalencies:

Our lead in per capita carbon output and China's total lead in carbon output.
The coup we initially supported in Venezuela and what China recently did in Zimbabwe.
China's support for Sudan serving as the equivalent of what we are doing in Iraq.
The worker's right's abuses carried out by American corporations overseas versus the worker's right's abuses carried out by the Chinese government against its own citizen's.

While we are not as bad as China across the board, we also are in no position to deny them their place on the world stage. Until we lead by example, by producing and purchasing our goods in ways that are both environmentally sustainable, by making our companies uphold worker's and human rights both at home and around the world, by not supporting coups against democratically elected governments and even participating in the destruction of entire other nations, at least at an official government level we should not be criticizing other nations for their environmental, human and worker's rights abuses. Until that time comes, we should grant China its place on the world stage, rather than potentially turning them into a belligerent nation, resentful of the hypocritical nations who shun them. You know, kind of like we did to Russia, who as I type this is now in a state of war with Georgia.

(Note: I'm not saying that by pounding the U.S.S.R. into the dust during the Cold War, that the U.S.A. is somehow responsible for what is happening in Russia and Georgia. Both the Cold War and the current military situation in that region are very complicated, and I'm not going into that right now. What I am saying is that the situation between Russia and Georgia is something that we would like to avoid in the future, and shunning China is probably not the best way to avoid such situations. These things are not our fault, but there are still things we can probably do to help avoid them.)

There are going to be three great world powers in the 21st century: China, the European Union, and the United States of America. If we are going to have events such as the Olympics, then all three are entitled to the occasional pilgrimage of the world's leaders and greatest athletes, not just the latter two. That is, all three are entitled until the other two can clearly distance themselves from the worst crimes committed by one. Right now, given the extensive economic ties the US and the EU have with China, given their own massive pollution, and given that all three still regularly intervene in the affairs of other nations, it isn't clear to me at all that such a case can be made. Because of our own actions and because of our own economic ties with China, we are giving more than tacit approval to everything that the Chinese government does.

Long-term, I don't see China as the main threat to U.S. preeminence around the world. If I were a betting man, I would guess that in fifty or one hundred years, the European Union will actually be the dominant global power. The advantages currently held by the EU seem almost overwhelming:

Already, it boasts the world's largest economy, and is in fact about the size of the U.S. and Chinese economies combined.
While all three powers feature growing populations, only the EU can also add territory and natural resources. In fact, it can do so without any military action, as country after country lines up to join.
Further, its growth tends to be a progressivizing force that does not breed resentment, as counties actually improve their human rights, worker rights, and environmental standards in order to take part.
The EU's investment in alternative energy and sustainable development far outstrip that of either China or the U.S., which will put it in an extremely strong position following peak oil, peak coal, and peak whatever else.
It's lower military spending and greater social investment will probably allow it to maintain a higher standard of living, eventually making it a more attractive destination for immigrants in future decades.
The rising Euro may eventually replace the dollar as the standard currency for global trading markets, thus causing even more wealth to flow to the EU.

I felt an occasional twinge of sadness thinking about all this last night. We should be in a better moral and economic position to criticize the Chinese, but we are not. We should be the leading force for progressivism in the world, but now that torch is being carried to the European Union. Finally, while these Olympics will probably feature a competitive medal count between China and the U.S. that will allow them to appear to be the world's two preeminent powers, the truth is that both are operating according to unsustainable systems that will eventually--if it hasn't already--allowed both to be surpassed by a third force.

None of this is set in stone, and we can put our country back on the right track. Also, while last night may have been seen by many as the "coming out party" for China, the haze of pollution in the air the next morning should also be a coming out party for the consequences of our actions in other nations. That haze in the air is one of the reasons why so many of things that we buy are cheap. We own it just as much as the Chinese do, and it could be the downfall of us both.