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."
And Mr. Ross - sorry to so verbose but I thought you might want to know that public debt in Saudi Arabia was 75% of GDP in 2004.
http://en.wikipedia.org/wiki/Economy_of_Saudi_Arabia
for other interesting facts about the kingdom
You are more right than you know.
I went to school with some of those people. They left for a year to go home and work to improve the country. Some never had a chance to go back.
As an aside, funny that an Asian country has become so Christian in the last few decades.
They tried. And the Administration was issuing all the signals that they were prepared to roll over one more time. So they almost did.
As for Magnaquench ...
China owns it lock, stock and barrel. And relocated the whole works. If they had successfully acquired UNOCAL, then they would have acquired, coincidentally (? I think not) the entire proven U.S. reserves of the minerals needed for the super magnet industry...(not just the oil wells, oil drilling platforms and deep drilling technology...and the oil patch rights in the far east).
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.
You are mislaying blame for this confusion. This 'deduction' would not be happening if those schilling for China were not so successful at mischaracterizing their unilateralist/mercantilist predatory trade advocacy as 'free trade.'
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.
This same "point" has been reiterated every year for 15 years.
It gets old.
I recommend you read the late Dr. Constantine Menges, who helped advise President Reagan, in his last great work, China The Gathering Threat. He rejects the automatic collapse fable. In fact, he believes we need to be proactive, and exert the same kind of push to topple the Communist tyranny in China as we did in the Soviet Union.
They never fell of their own accord. They were 'helped.' We are currently not only failing to 'help' the communists in China be ousted...we are abetting the securing of their position. It is as if the CCP runs our own State Dept. and Commerce Dept.
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.
Depends on how they are structured. But this is not a matter of free actors in an normal market. This is their government deciding.
I try to read carefully - I did not see the 'pretend' to be a third world nation.
Fair enough. But the explicit contention that they ceased being third world 12 years ago was the overtly stated context of my view.
'It looks like you are arguing that the founders designed our republic incorrectly.' - If I did it was never my intention!
As a free trader I do advocate - as you say ... a kind of anarchy (also known as a kind of freedom??!)
The founders advocated free trade. They also advocated the rule of Law. Because you embrace free trade you must also invoke the rule of law. (And these laws must be passed by a representative body - not fiat). I do not advocate a kind of anarchy as in the law of the jungle.
It is interesting to me your thought process regards multinationals. These multis protect themselves with the laws of a government they wish to destroy? Would that not lead to their own loss of these protections and hence their assets?
Free trade has nothing to do with Global Socialism - and it is not - as this article suggests - a reason for more economic nationalism.
The sugestion that the dutch experience was caused by free trade has little merit. Their demise was caused by the economic nationalism of their autocratic neighbors.
The more things that you can freely purchase - the less need to raise a militia to go out and take those items you can't find on ebay.
You are mislaying blame for this confusion. This 'deduction' would not be happening if those schilling for China were not so successful at mischaracterizing their unilateralist/mercantilist predatory trade advocacy as 'free trade.'
And you think I am shilling for China?
Agree with the 'push' theory. I see free trade and a free economy as the winner of the cold war and as ultimate winner vs China. To stop advocating free trade will slow down a free china and a better world. Does not mean we do not defend our interests - but national economics is code for failed nation state's policy during the last century that was mostly spent at war.
No. I haven't had reason yet to suppose that, albeit there are others here who are rather unsavory in that regard.
Agree with the 'push' theory. I see free trade and a free economy as the winner of the cold war and as ultimate winner vs China. To stop advocating free trade will slow down a free china and a better world.
A'hem. Remember the 'confusion' situation.
Does not mean we do not defend our interests - but national economics is code for failed nation state's policy during the last century that was mostly spent at war.
That is a supposed "code" that is not only debatable, it is also virtually irrelevant since we aren't being given the choice how nationalist in economics our adversary is.
And precisely when do we START 'defending our interests'? Before or after its too late?
Well, I went back and re-read the entire chapter on "comparative advantage" and at the end Professor Paul Samuelson says "all Ricardian bets are off" if wage differentials are too great and if one country's currency ends up at the wrong level. Comparative advantage retains its "vital social relevance" only when exchange rates, prices, and wages are appropriate.
I believe this is now echoed by Lester C. Thurow of MIT's economics dept.
The Davos World's "rules-based free trade" is not about economics, it's about redistribution of wealth. IMO it is a Marxist revolution from the top down and our corporations are the useful idiots who will be stripped of all their investments in Red China and elsewhere and placed on a slow boat back to America. It's what commies and com-symps do.
Excellent analysis!
You start defending your interests by defending the concept of free trade and a free economy. You demanding that your trading partners do not subsidize - either in the form of pegs or otherwise.
The problem is that the US has ignored (willfully?) the problem of the Chinese PEG for too long already - so to answer your question - we are starting after it is too late.
We need to have a freer China that consumes goods. Their own and our own.
Alternatives are a trade war. A trade war caused by the economic nationalism at hold in China today. And not a trade war caused by free trade!
Too many American politicians and even business leaders have adopted the Davos agenda.
Maybe also an air strike or two... ;)
You're joking of course.
But seriously, the ballet box alone isn't going to save us from this menace.
Alexander Hamilton wasn't one of them.
Indeed, the founding experience of the Republic cured it of the siren song of free trade for a long time. Both America and France were plunged into depression by the free trade policies which the British tricked them into adopting, as part of the 1783 treaty which ended the Revolutionary War.
Patriots in America succeeded in solving the crisis by creating a strong central government with the Constitution, and George Washington's and Alexander Hamilton's fiscal policies, funding the government with tariffs, and promoting the manufactures of diverse goods domestically...and hence strengthening the economic basis for UNION.
The founders advocated free trade? Really? Really! Simply because you institute a tarff does not mean you are anti free trade - It can mean that you support it! If I put a tariff on something it is either to subsidize that which is inefficient of national interest - OR it is to protect from predatory trading practices.
All the 'why' the supranational stuff - the mission statement at the WTO might clarify.
'The WTO aims to encourage smooth and free trade by promoting lower trade barriers and providing a platform for the negotiation of trade and to resolve disputes between member nations, when they arise. The goal is to help producers of goods and services, exporters, and importers conduct their business.'
The WTO mission is NOT to change or assault the sovereignity of member states. You prove this assertion yourself with the observation that the WTO would allow trading with nations whose laws are an abomination to our own.
Pascal Lamy Director General of the WTO is a socialist - good for him! Pascal also controls the world? Pascal is a socialist so free trade is bad???
ebay is a GLOBAL trading platform.
That demand has been issued. So far, the U.S. is regarded still, as always, by Mao's descendants, as a Paper Tiger.
The problem is that the US has ignored (willfully?) the problem of the Chinese PEG for too long already - so to answer your question - we are starting after it is too late.
All the more reason to be more hardline than anyone in the Administration.
We need to have a freer China that consumes goods. Their own and our own.
Agreed. And is free to have real free enterprise. Real free wages. Real freedom of movement. And real freedom of conscience and faith. From whence flows the founts of liberty.
Alternatives are a trade war. A trade war caused by the economic nationalism at hold in China today. And not a trade war caused by free trade!
That is not an alternative, it is today's reality which is willfully not acknowledged. The U.S. needs a twelve-step program.
*
The siren song here again!! My guess is the depression after the revolutionary war was maybe more a function of the US losing it's largest trading partner?? This dislocation led to a bunch of isolationist tariffs. This does not mean free trade is culprit - it was Brit economic nationalism more than free trade that started the fight.
The Trade Deficit with China indicates that we are already LOSING a trade war that's facilitated by the Bush Administration's inane quest for zero tariffs. We should immediately enact a uniform, flat-rate tariff of 10~15% on ALL imported goods, regardless of country of origin.
The First Federal Revenue Law
On April 8, James Madison, once again a congressman from Virginia, addressed the House. He went right to the point. Congress, he said, must "remedy the evil" of "the deficiency in our Treasury." He argued that "[a] national revenue must be obtained," but not in a way "oppressive to our constituents." He then proposed that the House adopt legislation, virtually identical to the unimplemented Confederation tariff, imposing a five-percent tariff on all imports....
...A single, uniform tariff, he insisted, had two advantages. First, it could be imposed quickly, which was important because "the prospect of our harvest from the Spring importations is daily vanishing." Second, it was consistent with the principles of free trade ("commercial shackles," he said, "are generally unjust, oppressive, and impolitic")
Not precisely. We were still the largest overseas customers of the British.
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