Posted on 02/02/2006 6:40:03 AM PST by Willie Green
For education and discussion only. Not for commercial use.
In his State of the Union address, President Bush unveiled his "American Competitiveness Initiative" (ACI) that is meant to encourage innovation and strengthen the nation's ability to compete against foreign rivals. The strategy calls for an increase in Federal research programs and a push for students to do better in math and science. The commitment of only $136 billion to this effort over 10 years, most of it beyond his term in office, raises questions about his sincerity, especially measured against his past record of indifference to the challenges posed by overseas competitors, who have been ravishing the U.S. economy for a decade.
The trade deficit topped $750 billion in 2005, doubling since Bush took office, but there was nothing in the president's speech that directly addressed that problem. While it was good to hear the White House acknowledge that as other countries become more advanced, they could pose an economic threat, Bush's rhetoric was still much too soft and ambiguous as to the U.S. response. Indeed, his early denunciation of "protectionism" in the speech indicated that he still doesn't understand what is happening in the global economic struggle.
In terms of the timing of Bush's address to Congress, a number of high ranking U.S. officials and members of Congress had just been to the World Economic Forum in Davos, Switzerland. This forum was founded in 1971, but did not become a major force until after the Cold War ended. It then became a great social whirl based on the illusion of a harmonious world conjured up by transnational business elites under the rubric of "globalization." Its real purpose, however, is to use private wealth to corrupt national leaders into betraying the interests of their people.
Harvard University Professor Samuel Huntington in his acclaimed book The Clash of Civilizations called the resulting set of values "Davos Culture." It's a view of the world united in the pursuit of mass consumption and popular entertainment, orchestrated by a global elite of merchants, media moguls, and bankers. Huntington, drawing on wisdom solidly grounded in the study of history and human nature, is disdainful of this group for presuming that their naive liberal outlook will supercede traditional cultural values and the normal imperatives of national needs in a competitive world.
Businessmen are well aware of competition within their own sphere. Waged today on a global scale, business's cutthroat nature is more intense than ever. What many of these elites do not want to acknowledge is that these commercial battles have wider consequences for the national societies within which most people live. That the WEF meets at a luxury mountain resort in "neutral" Switzerland is symbolic of how far removed its philosophy is from the real world. The eminent sociologist Peter L. Berger has described these supposed citizens of the world as "people who move with the greatest of ease from country to country while remaining in a protective 'bubble' that shields them from any serious contact with the indigenous cultures on which they impinge. The bubble also shields them from any serious doubts about what they are doing."
Davos Culture is the creed of a self-imagined, cosmopolitan, jet-set elite. But according to UNESCO, only about three percent of people worldwide live outside the country in which they were born. The percentage is higher, about five percent, in the advanced industrialized countries, and higher still in the United States (about nine percent). This means that nearly everyone is dependent on how well their own societies fare. A prosperous, secure, and growing national economy provides more opportunities for its citizens than one that is being beaten down by foreign rivals or menaced by violence. This is common sense.
Historians have also noted that a spirit of nationalism – the very attitude that Davos Culture deplores – is very helpful in creating a successful society. Peter Turchin, in his new book War & Peace & War: The Life Cycles of Imperial Nations asks the eternal question, "Why did some – initially small and insignificant – nations go on to build mighty empires, whereas other nations failed to do so? And why do the successful empire builders invariably, given enough time, lose their empires? Can we understand how imperial powers rise and why they fall?"
Turchin, a professor at the University of Connecticut, comes to the study of history from a background in ecology and mathematics. His focus on "empires", which he defines as any large, multiethnic territorial state, is more manageable than Huntington's study of entire civilizations. Turchin grounds his theory in the Arabic concept of asabiya, meaning a society's capacity for collective action. Empires germinate, he contends, when defined groups come into conflict along "meta-ethnic frontiers" that foster the social solidarity and discipline that empire-building requires.
Though diverse in individual makeup, the members of a successful society can put their own differences aside long enough to defeat those "outside" its national community, whether it be in trade or war. When a society loses its capacity for collective action, as he believes has been the case in the United States since the 1960s, then the long cycle of decline sets in. Davos Culture is very much in tune with the rise of the egocentric "60's generation" whose vaunted "idealism" has turned out to be hedonism and decadence.
In her thought-provoking history, The Spirit of Capitalism, Boston University professor Liah Greenfield argues that "the factor responsible for the reorientation of economic activity toward growth is nationalism." This 2001 book is based on her research of a decade earlier that looked at England, France, Russia, Germany and the United States [Nationalism: Five Roads to Modernity]. "The sustained growth characteristic of a modern economy is not self-sustained; it is stimulated and sustained by nationalism," she writes. Natural resources, technology, even wealth accumulated in the past, is not enough. There must be a desire to put these factors to work to advance the common good, which happens "when economic achievement, competitiveness and prosperity are defined as positive and important national values."
Greenfield does not just look at rising states, but declining ones as well in her second book. The Netherlands was once the dominant economic power in Europe, with a world-wide empire. But its time at the top did not last long. Between the 1660s and 1740s, Dutch living standards did not just fall in relative terms as other empires and nation-states advanced, there was an absolute decline in per capita income. "There was no national consciousness among the Dutch," argues Greenfield, beyond the initial desire to win independence from the Spanish Hapsburgs. The Dutch elite were merchants, not patriots; and central authority was very weak. "They remained economically rational instead, embodying the ideal of Homo economicus so rare in modern economic reality and so dear to economic theory. In other words, they were not a nation." They could not compete against states energized by nationalist drives.
In a recent Oval Office interview with The Wall Street Journal, President Bush demonstrated his "Dutch" penchant for economic theory over economic reality when he said General Motors and Ford should develop "a product that's relevant" rather than look to Washington for help with their heavy pension obligations, and hinted he would take a dim view of a government bailout of the struggling auto makers, who have been devastated by foreign rivals that do have the full backing of their governments.
Today, the United States faces challenges from a horde of trading "partners" where the embrace of nationalism by elites is far stronger than in America. The United States runs its largest trade deficit with China, clearly an imperial nation by Turchin's definition and one animated by a particularly strong nationalist fervor that seeks redress for past grievances. "The crucial national narrative of the 'Century of Humiliation' from the mid-nineteenth century to the mid-twentieth century is central to Chinese nationalism today," writes University of Colorado professor Peter Hays Gries [China's New Nationalism: Pride, Politics and Diplomacy ]. This spirit has infused Chinese society with energy and ambition on an awesome scale.
The superficial materialism seen in Beijing, Shanghai, and elsewhere in China is not proof that Davos Culture has infected the Chinese people, let alone the Communist regime. As noted by UCLA anthropology professor Yunxiang Yan (who as a child lived through the horrors of the Cultural Revolution), when Beijing students protested the 1999 NATO bombing of the Chinese embassy in Belgrade, "many young protestors were drinking Coca-Cola as they chanted 'down with American imperialism' in front of the U.S. embassy."
Some corporations understand the value of loyalty. According to the Financial Times, Roger Martin, dean of the Rotman School of Management at Toronto University, led a discussion on this topic at the WEF. He argued that "companies would have to provide compelling reasons why their most talented employees should keep coming to work. This would not just be about money; chiefly it would be about building socially valuable corporate communities. Martin is quoted as saying, "Finding community-building talent is the single most precious resource in the modern world." The problem is that corporations are not communities. They have none of the enduring qualities of a nation, and cannot engender (or give) the kind of loyalty a society needs to survive. Just ask any of the millions of Americans who have seen their jobs moved overseas. Americans salute the stars and stripes, not corporate logos.
It is the duty of national leaders to muster "community-building talent" to bolster U.S. competitiveness in world markets and to assure dominance in the home market. It is the same spirit to which President Bush appealed when calling on the country to be less "addicted" to imported oil and more aggressive in defeating Islamic terrorism. Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else. This is the only way to provide maximum opportunities for Americans to prosper and to assure that "the state of the nation is strong."
The author is a professional and an expert.
But I nevertheless ask about "our" transnational corporations kowtowing to the WTO. I wonder about those "national leaders" cornering CEO's and getting commitments to pour investments, etc. into this country or that country.
I wonder about the attendees; i.e., our New Democrat Third Way progressives and their internationalist comrades and their hatred of laissez faire capitalism. They have a commitment to "rules-based" trade, their rules. They accept the free market as the only way to wealth but once we arrive there then what?
See ndol.org. They want to replace our social contract with a new one for the world. The new one will no doubt include "human rights" and not inalienable rights. Human rights are government granted rights.
The author, et al. are experts and maybe transnational corporations funded the economic forum to create a "world united in the pursuit of mass consumption and popular entertainment" but I swear I don't think they control it any longer.
I bet that there is not one attendee other than businessmen who does not feeeeeeeel that communism can be made to work this time -- it just takes rules and useful idiots just like Lenin said.
One day they'll knock on the businessmen's protective bubble and ask, "Hey, you guys got any rope for sale?"
One of the most impressive things I have seen in my life was the TV footage showing VERY long line of Koreans: after request of their government (at the time of "Asian crisis" a few years ago) they were donating their personal assets to help national treasury. I will never forget the image of women taking off their wedding bands and dropping them into the container. Koreans are truly a great nation!
I heard from some Koreans that the most respected people in Korea are scholars, after them the next group are aristocracy/military, then craftsmen and peasants. The least respected are the merchants.
It is because they never did real, high quality and productive work in their lives.
AC,
thanks for your thoughts. I enjoyed reading them.
ampu
Thank you! I think it's a fascinating topic.
Mercantilism always ends badly. I believe 'Fire with fire' is what triggered two world wars in Europe. I suspect (maybe hope is better?) that China is not as mercantilist as so many believe. I see them trying to actually DOLLARIZE their economy.
Embracing free trade is cowardice and surrender? I don't think so. And I am wondering what is victory? Insulation from competition? Liberal used to mean 'free to act' - it now means 'freedom from having to act'.
No government, particularly in this country, should pick anything. Our government should not subsidize anything.
What's required ? Laissez-faire. Low, low taxes, few regulatory hurdles for businesses.
Do those two things then stand back and watch the tide of economic prosperity roll in.
And, for those who don't know it already, Paul Samuelson was another apologist for liberalism and economic statism. He was a loud proponent of Keynesian economics.
'the way it was designed, with an educated citizenry deteremined to defend the rights of the individual.'
Wondering who frames both the 'design' as well as the 'rights' you describe? (not to mention what sort of process you imagine would produce an 'educated citzen'!)
As complexity grows do we need more 'design'? I see your chinese byline ... maybe you suggest a 'great leap forward' for the United States? This little economic policy managed to kill 38 million people.
'socialist global instititions ... who promise everyone who is negatively affected by their policies'.
Free trade can not be a policy - it is free. Policy implies policing implies 'design' etc. I am unsure how the 'socialist global instititions' can formulate a policy that is by nature free.
'who have to be bribed to give up their sovereignty, subsidies and free money to sustain them.' - Geez, these global socialist guys really have a lot of money and to make sure they keep all their loot they do what ....GIVE it away to sustain others? Perhaps you can give us all a contact and wire instructions to get a little free money as well?
Socialism and in particular global socialism, is the enemy of inalienable rights - not free trade!?
Nope, that is way too simplistic.
And you misunderstand what China is doing with their currency peg.
They are not 'dollarizing' their economy...they are just maintaining their economic vortex that swallows whole U.S. industries that fall into its event horizon...a Communist-dictated low-wage advantage that is well below every other impoverished third world nation.
And they AREN'T an impoverished third world nation. Haven't been for 12 years. China spends US$195 billion annually just to maintain yuan peg.
Frankly you need to define your terms. You may not excuse appeasement as free trade. Did you see this column Col. Pappas today? This is a good reminder to us all...
The Marketplace, the Price of Crude and Barbara Streisand
by Col. Bob Pappas, USMC, Ret.
When one speaks of the marketplace and the price of oil in the same sentence, they evidently mean "marketplace" within a very narrow definition. The so-called "marketplace" is the commodities market where traders bid on quantities of oil. Price is in proportion to the availability of oil, in this case crude oil in a variety of qualities. So far, so good.
Here's the kicker, the Organization of Petroleum Exporting Countries (OPEC) with the tacit approval of non-OPEC counties controls the price of crude by the amount of oil it makes available to the marketplace. Although non-OPEC countries in the aggregate produce more crude that OPEC, OPEC is far and away the largest single factor in determining the market price of crude.
By withholding production, OPEC decreases supplies and prices go up; by increasing production, OPEC increases supplies and the price moves downward accordingly. Therefore, it is apparent that OPEC fixes, repeat, fixes the price, and non-OPEC countries and companies that drill for, pump, refine and distribute their own oil products benefit from such price fixing.
How else did oil companies reap obscene profits in the last quarter of 2005? Do they have a right to a profit? Of course. But let's not play the silly game that the price is "market driven," when it is absolutely manipulated.
In a 27 January 06 article posted on CNN's website, Soros, the billionaire investor forecasts that the price of a barrel of crude will likely reach $262.00 per barrel in the relatively near future. That would drive prices at the pump to the five dollar or higher per gallon. But consider this, most of the rest of the world already pays prices that high. Would it come as a surprise to learn that it probably would not substantially change most American's driving habits? That would only come were prices to reach 10-12 dollars a gallon, and for most "liberals" that wouldn't matter.
Changing gears for a moment. Has anyone heard whether or not Michael Moore, yes, Michael Moore of Fahrenheit 911, has given his wealth to the poor, that he has lowered his standard of living to the level of those he supposedly champions? How about Soros, the billionaire investor? Or insignificant players, like "B.S." (that's Barbara Streisand), or name any other personage on the political left. Of the so-called, "liberals" whose hearts are supposedly big, how many have distributed their wealth to the poor? One does not need government taxation to do that; there are hundreds of well-managed and deserving charities that depend on the good will of donors to minister to the needs of the financially less endowed. How many so-called, "liberals" have given it all away?
Back to oil. This writer, for one has about had it with the price at the pump, especially when he realizes that much of his hard earned "dough" goes to support opulent lifestyles of mid-east despots whose people live in squalor. Isn't the giving of alms one of the five pillars of Islam? The answer is, "yes," for "liberals" who haven't taken the time to learn. So, how much do they share with their underlings? Pathetic little, yet to the "liberal" way of thinking, squalor is the reason the Arab street is angry with the U.S.; "B.arbara S.treisand!"
If mid-east rulers where half as interested in helping their own people with the oil profits they reap, as they are in keeping things stirred up against the U.S. for liberating the people of Iraq, and for supporting the right of Israel to exist where it is, their people could have a good to excellent standard of living. But they are so selfish, so corrupt, so hypocritical that it stinks; and "liberals" have the temerity to blame Israel and the US for the problems? Again, "B.arbara S.treisand!"
However, the President is wrong when he talks about oil and the market place, and damn it he knows how it works! As noted in earlier essays on the subject of oil, the United States cannot abide other countries controlling its foreign policy, economy, and domestic affairs through the use of oil. Especially when there are significant resources that could be exploited; or is the political will to drive the price of gasoline up in some wrongheaded notion that it would reduce green house gas emissions through lowered consumption?
Hello, "liberals," who hurts most when the price of gasoline climbs? Then why the hell don't you loosen the noose around their necks and allow exploitation of domestic resources? Why not approve the President's recommendations for Energy Independence instead of mocking them?
Is it time to regulate oil companies like the public utilities that they really are? Let's see if the panderers in Congress have the interests of the country, or their own careerist objectives at heart?
Semper Fidelis
[ COMMENT: Just like OPEC controls the price of oil...the Chinese Communist Party is controlling the price of labor in their country. And by sheer weight of the force that represents, also their part of the Third World. They all have currency pegs...predominantly influenced by the Chinese Yuan's rate. If the Yuan went up against the dollar, they would also. ]
'Nope, that is way too simplistic.' This is also a bit simplistic as well - right? Point taken - but I bet after tomes of debate and minutia we will find that wars are generally about getting resources.
'...their economic vortex that swallows whole U.S. industries '
Will this vortex also come and ship every rock and tree in the US to China?
'a Communist-dictated low-wage advantage that is well below every other impoverished third world nation.'
Do you truly believe that communism is a better system for higher standards of life? You say yourself above that the Chinese are indeed an'other impoverished third world nation'.
But then you contradict yourself? The Chinese just spent 195bln maintaining their peg. When you spend money is it enriching or impoverishing? Wish I had that kind of money to blow on a peg.
My terms are free and unfettered trade. As to cowardice and surrender - well your post about our mideast despots sums up cowardice.
Regarding OPEC and their 'control' of oil - last I checked they have a price target of around 30 bucks.
http://www.nacsonline.com/NR/exeres/0000711alpfizawytsgoyzgd/NewsPosting.asp?NRMODE=Published&NRORIGINALURL=%2fNACS%2fNews%2fDaily_News_Archives%2fSeptember2004%2fnd0910041%2ehtm&NRNODEGUID=%7bCB931418-066C-48DB-A605-6B6813597974%7d&NRQUERYTERMINATOR=1&cookie%5Ftest=1
Price is the best signal for alternatives to oil. OPEC controls less than it thinks - and also last I looked - the Saudi government is deeply indebted and runs massive social programs - are they as rich as supposed!?
It will be used to abet their national objectives...which aren't ending poverty...but dominating all industry and technology. They already absconded with the vital national security supply of super-magnets by snapping up and relocating Magnequench. And recall last year they tried to snap up our oil compnay, UNOCAL...and were prepared to spend big bucks to lobby for it in our Congress. Bribing away our own representatives. Thwarted only temporarily. (The admnistration was all set to cave in, only some stalwarts in Congress blocked it!) Meanwhile, they are taking a less resistance path... cornering the market on Iran's oil exports. Locking it in with a $70 billion contract. [Niftily funding the jihadists and the Shiite Bomb] You have heard that they have over $800 billion in financial reserves now too...this reported just last week in the Financial Times.
And then you reiterate...in apparent amazement my straightforward observation:
'a Communist-dictated low-wage advantage that is well below every other impoverished third world nation.'
Still valid.
Do you truly believe that communism is a better system for higher standards of life?
How in BLAZES do you come to THAT conclusion? The answer is NO. No! Of course not. Precisely the opposite. But hence their brute economic power of central control that is willfully NEVER acknowledged by Free Betrayders who practice China Apologetics 101.
You say yourself above that the Chinese are indeed an'other impoverished third world nation'.
No, I didn't. I said they haven't been for 12 years. They pretend to be third world. And they keep their wages BELOW all the other real third world countries.
But then you contradict yourself?
Nope. Read more carefully.
The Chinese just spent 195bln maintaining their peg. When you spend money is it enriching or impoverishing?
It is keeping their wage earners impoverished. Deliberately. For National...read Chinese Communist Party...Gain.
Wish I had that kind of money to blow on a peg.
Yup. Don't we all. Dwell on the sheer scale of that number for a while...and the only possible real intentions of it.
And, we all know where free love led!?
'People such as yourself like to shift the focus of this debate on these threads' - I' m sorry! I will try to get back on topic.
Context is indeed the problem. I claim you or any one group advocating any policy regarding trade can NOT know, understand and anticipate every context.
I believe Smith and Ricardo would have said that while disclocations are unpleasant - a free economy and free trade are the best and only ways in which to repair dislocations over the longer term.
The context to me is the dislocation that more and more global trade might bring. Unfortunately, these problems have usually been caused by (probably well intended) industrial policy itself. Where dislocations are large the government and/or local institutions should attempt to find a solution(s). But, the longer you ignore our increasingly globalized world and or attempt to 'redesign' your industrial policy in such a way as to 'save' threatened groups or industries - you have only deferred things that are inevitable.
This does not mean that we do not observe trade policy of other nations vs a vis ourselves. China is predatory in many aspects with trade. We can defend ourselves - but if there is truly a comparative advantage then ultimately you need to adapt.
The Chinese do not own UNOCAL. As for Magnaquench ...
I do not defend China. I defend free trade. I think too many people point to an indefensible government like China and then deduct that free trade is bad. I think this is foolish.
My point about Communist-dictated low-wage advantage that is well below every other impoverished third world nation.' is that such a policy will lead to continued impoverishment. I believe that China will be forced - much like Japan - to stop it's mercantilist policies. My point is that such chinese policy can not continue forever.
As to 'National Gain' the money was still SPENT - was it not? And while Chinese dollar reserves are astronomical they are not wealth producing assets.
I try to read carefully - I did not see the 'pretend' to be a third world nation. Rereading with this in mind and knowing how sinister we all are about China I guess it was implied. I think China and her policies are generally misguided. I do not think free trade is so misguided.
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