The Chinese Are Coming 06/10/2010
The route of the new pipeline to China
China’s move into Central Asia continued on Wednesday. At a bilateral summit in Tashkent, Uzbek President Karimov declared that “Uzbekistan strongly and unchangingly supports the well-balanced course of the Chinese leadership regarding...Taiwan and Tibet.” He later added that the two states would cooperate in the battle against the “three evils [of] terrorism, extremism, and separatism.”
Despite these pronouncements of unity and friendship, the subtext of the meeting was purely economic. The Chinese government has been diligently courting Uzbekistan as part of its effort secure access to resources for its energy-starved industries. In April 2007, for example, the two countries signed a deal to build a massive gas pipeline, leading from Turkmenistan to western China.
One remaining question is how Russia will react to these developments. Most of Central Asia’s oil and gas has traditionally flowed north towards Moscow. The Kremlin has also grown accustomed to exercising cultural and geopolitical dominance across the region. If China attempts to supplant Russia in its role of regional hegemon, it could trigger a dangerous competition over resources and influence.
Of course, a new Sino-Russian rivalry is not a preordained outcome. Russia is a member of the Shanghai Cooperation Organization and the two sides have signed several pipeline deals of their own. Still, the Kremlin has never been very keen on sharing its ‘backyard’ with outsiders (just ask NATO). As the Chinese expand ever westward, they should be on the lookout for a snarling bear.
-Joe
Despite these pronouncements of unity and friendship, the subtext of the meeting was purely economic. The Chinese government has been diligently courting Uzbekistan as part of its effort secure access to resources for its energy-starved industries. In April 2007, for example, the two countries signed a deal to build a massive gas pipeline, leading from Turkmenistan to western China.
One remaining question is how Russia will react to these developments. Most of Central Asia’s oil and gas has traditionally flowed north towards Moscow. The Kremlin has also grown accustomed to exercising cultural and geopolitical dominance across the region. If China attempts to supplant Russia in its role of regional hegemon, it could trigger a dangerous competition over resources and influence.
Of course, a new Sino-Russian rivalry is not a preordained outcome. Russia is a member of the Shanghai Cooperation Organization and the two sides have signed several pipeline deals of their own. Still, the Kremlin has never been very keen on sharing its ‘backyard’ with outsiders (just ask NATO). As the Chinese expand ever westward, they should be on the lookout for a snarling bear.
-Joe
Add Comment
Watch/Read This: April 27, 2010 04/27/2010
Is HRW Anti-Israel? (The New Republic)
On October 19 of last year, the op-ed page of The New York Times contained a bombshell: a piece by Robert Bernstein, the founder and former chairman of Human Rights Watch (HRW), attacking his own organization. HRW, Bernstein wrote, was “helping those who wish to turn Israel into a pariah state.” The allegation was certainly not new: HRW had been under assault for years by American Jews and other supporters of Israel, who argued that it was biased against the Jewish state. And these attacks had intensified in recent months, with a number of unflattering revelations about the organization.
Just What Sudan Needs: Chinese Election Monitors (Wealth of Nations)
Both China and the usual Western nations sent observers to monitor Sudan's recent elections, but they didn't seem to be watching the same polls. While Washington criticized the vote that returned Omar al-Bashir to power for "serious irregularities," Beijing called the affair a "smooth and orderly…success." The difference isn't entirely surprising: the West views Bashir as the mastermind of the Darfur slaughter, while China sees him as a business partner who has granted Beijing billions of dollars in oil deals over the past 15 years.
On October 19 of last year, the op-ed page of The New York Times contained a bombshell: a piece by Robert Bernstein, the founder and former chairman of Human Rights Watch (HRW), attacking his own organization. HRW, Bernstein wrote, was “helping those who wish to turn Israel into a pariah state.” The allegation was certainly not new: HRW had been under assault for years by American Jews and other supporters of Israel, who argued that it was biased against the Jewish state. And these attacks had intensified in recent months, with a number of unflattering revelations about the organization.
Just What Sudan Needs: Chinese Election Monitors (Wealth of Nations)
Both China and the usual Western nations sent observers to monitor Sudan's recent elections, but they didn't seem to be watching the same polls. While Washington criticized the vote that returned Omar al-Bashir to power for "serious irregularities," Beijing called the affair a "smooth and orderly…success." The difference isn't entirely surprising: the West views Bashir as the mastermind of the Darfur slaughter, while China sees him as a business partner who has granted Beijing billions of dollars in oil deals over the past 15 years.
Money quote:
For Beijing, business is not about business -- it is about politics. This is clear from the way Beijing treats both domestic and foreign businesses. China initially welcomed foreign investment because the ruling Chinese Communist Party desperately needed capital, technology and management expertise to revive China’s moribund economy in the wake of the disastrous Cultural Revolution. In their political calculations, private Western capital was preferable to private domestic capital because a strong indigenous business community might have the potential to support social and political forces that would challenge the rule of the party. As a result, Beijing has treated foreign capital much more generously than the domestic private sector. Many important sectors, such as banking, financial services, petrochemicals, energy exploration and automobile production were opened to foreign investors but not to domestic private firms.
While favouring foreign capital over private domestic capital, Beijing has also maintained its bottom-line: it will not allow foreign firms to control and establish a significant presence in what it considers strategic sectors, such as telecom services, banking (foreigners are passive minority investors at best) and energy. Above all, no private capital -- foreign or otherwise -- is to be allowed into the sector most critical to regime security: the media.
Today, flush with $2.3 trillion in hard currency, China no longer has the same need of foreign capital and its government has readjusted its economic policy accordingly. Because state-owned enterprises are both national champions and political patronage machines (the Communist Party can reward its loyalists with lucrative appointments in these state-owned firms), Beijing’s policy now clearly favours them over both domestic and foreign capital.
As for Google, it has committed a double offense. Its search technology poses a clear and present threat to the party’s regime security, while its capacity to dominate the Internet search business would deprive China of its own national champion, Baidu (which, although a private business, is easier to control).
For Beijing, business is not about business -- it is about politics. This is clear from the way Beijing treats both domestic and foreign businesses. China initially welcomed foreign investment because the ruling Chinese Communist Party desperately needed capital, technology and management expertise to revive China’s moribund economy in the wake of the disastrous Cultural Revolution. In their political calculations, private Western capital was preferable to private domestic capital because a strong indigenous business community might have the potential to support social and political forces that would challenge the rule of the party. As a result, Beijing has treated foreign capital much more generously than the domestic private sector. Many important sectors, such as banking, financial services, petrochemicals, energy exploration and automobile production were opened to foreign investors but not to domestic private firms.
While favouring foreign capital over private domestic capital, Beijing has also maintained its bottom-line: it will not allow foreign firms to control and establish a significant presence in what it considers strategic sectors, such as telecom services, banking (foreigners are passive minority investors at best) and energy. Above all, no private capital -- foreign or otherwise -- is to be allowed into the sector most critical to regime security: the media.
Today, flush with $2.3 trillion in hard currency, China no longer has the same need of foreign capital and its government has readjusted its economic policy accordingly. Because state-owned enterprises are both national champions and political patronage machines (the Communist Party can reward its loyalists with lucrative appointments in these state-owned firms), Beijing’s policy now clearly favours them over both domestic and foreign capital.
As for Google, it has committed a double offense. Its search technology poses a clear and present threat to the party’s regime security, while its capacity to dominate the Internet search business would deprive China of its own national champion, Baidu (which, although a private business, is easier to control).
Read This: March 19, 2010 03/19/2010
China Paranoia: Yesterday, Today, and Forever?
William Kirby, the historian who heads Harvard’s Fairbank Center for Chinese Studies, was wondering how China-watchers described the country a hundred years ago, so he took a spin through Widener library. What did he find? “Countless books in the first part of the twentieth century with titles such as ‘China Awake,’ ‘The Awakening of China,’ ‘The Dragon Awakes,’ ‘China Awakened,’ ‘Rising China,’ [and] ‘Sun Yat-sen and the Awakening of China.’ ” (One of the books that Kirby found even managed to merge all the buzz words into a single forbidding title: “New Forces in Old China: An Unwelcome but Inevitable Awakening.”)
Review: Fellman's “In the Name of God and Country’’
Neither an academic clarification of terms, nor an appeal to mass hysteria, Michael Fellman’s “In the Name of God and Country’’ enters obliquely into this discourse. Rather than directly examining such contemporary attacks as 9/11, the book explores five episodes from the 19th century: John Brown’s raid, the Civil War, Reconstruction, Haymarket, and the Philippines War. Fellman’s provocative thesis is that terrorism, as practiced by Americans and their government, has been essential to the nation’s political formation, providing a “counternarrative of American national development . . . a history of domination rather than the progressive unfolding of democracy and freedom.’’
"Moderate" appointed head of Al Azhar
Tayeb was Egypt's grand mufti for a short period between 2002 and 2003. He is considered to be one of the more enlightened Egyptian Sunni clerics, as he speaks fluent English and French and has a PhD in Islamic philosophy from France's Sorbonne University. He is known for his moderate and progressive opinions and was previously criticized by some Azhar sheiks and professors for preferring modern suits to the traditional cloaks worn by nearly all Azhar leaders. His views are seen as coinciding with the Mubarak government's efforts at strengthening mainstream Islam against radical voices.
William Kirby, the historian who heads Harvard’s Fairbank Center for Chinese Studies, was wondering how China-watchers described the country a hundred years ago, so he took a spin through Widener library. What did he find? “Countless books in the first part of the twentieth century with titles such as ‘China Awake,’ ‘The Awakening of China,’ ‘The Dragon Awakes,’ ‘China Awakened,’ ‘Rising China,’ [and] ‘Sun Yat-sen and the Awakening of China.’ ” (One of the books that Kirby found even managed to merge all the buzz words into a single forbidding title: “New Forces in Old China: An Unwelcome but Inevitable Awakening.”)
Review: Fellman's “In the Name of God and Country’’
Neither an academic clarification of terms, nor an appeal to mass hysteria, Michael Fellman’s “In the Name of God and Country’’ enters obliquely into this discourse. Rather than directly examining such contemporary attacks as 9/11, the book explores five episodes from the 19th century: John Brown’s raid, the Civil War, Reconstruction, Haymarket, and the Philippines War. Fellman’s provocative thesis is that terrorism, as practiced by Americans and their government, has been essential to the nation’s political formation, providing a “counternarrative of American national development . . . a history of domination rather than the progressive unfolding of democracy and freedom.’’
"Moderate" appointed head of Al Azhar
Tayeb was Egypt's grand mufti for a short period between 2002 and 2003. He is considered to be one of the more enlightened Egyptian Sunni clerics, as he speaks fluent English and French and has a PhD in Islamic philosophy from France's Sorbonne University. He is known for his moderate and progressive opinions and was previously criticized by some Azhar sheiks and professors for preferring modern suits to the traditional cloaks worn by nearly all Azhar leaders. His views are seen as coinciding with the Mubarak government's efforts at strengthening mainstream Islam against radical voices.
Not That Anyone Is Counting 03/18/2010
Why does China only have 180 strategic nukes? According to Jeffery Lewis's book on the subject, The Minimum Means of Reprisal, the Chinese believe that deterrence isn't found in numbers:
"Among the five nations authorized under the Nuclear Nonproliferation Treaty to possess nuclear weapons, China has the smallest nuclear force and maintains the most restrained nuclear posture. In The Minimum Means of Reprisal, Jeffrey Lewis examines patterns in Chinese defense investments, strategic force deployments, and arms control behavior to develop an alternative assessment of China's nuclear forces.
The Minimum Means of Reprisal finds that China's nuclear deployment and arms control patterns stem from the belief that deterrence is relatively unaffected by changes in the size, configuration, and readiness of nuclear forces. As a result, Lewis argues, Chinese policy has tended to sacrifice offensive capability in favor of greater political control and lower economic costs."
For those too cheap to buy the book- I'll loan you my copy if you send me BBQ sauce. My address is:
Evan Tachovsky
Open Society Institute-Assistance Foundation
Hasan Aliyev str. 117 a
Genclik, Baku, AZ1110
"Among the five nations authorized under the Nuclear Nonproliferation Treaty to possess nuclear weapons, China has the smallest nuclear force and maintains the most restrained nuclear posture. In The Minimum Means of Reprisal, Jeffrey Lewis examines patterns in Chinese defense investments, strategic force deployments, and arms control behavior to develop an alternative assessment of China's nuclear forces.
The Minimum Means of Reprisal finds that China's nuclear deployment and arms control patterns stem from the belief that deterrence is relatively unaffected by changes in the size, configuration, and readiness of nuclear forces. As a result, Lewis argues, Chinese policy has tended to sacrifice offensive capability in favor of greater political control and lower economic costs."
For those too cheap to buy the book- I'll loan you my copy if you send me BBQ sauce. My address is:
Evan Tachovsky
Open Society Institute-Assistance Foundation
Hasan Aliyev str. 117 a
Genclik, Baku, AZ1110
Time for Action Against China? 03/17/2010
In my last post, I cited Fallows's argument that the U.S. has benefitted from Chinese currency intervention: More consumption (i.e. higher living standards), cheaper rates of borrowing, and lower taxes (due to cheap borrowing). The flip side is lower exports, but that only really hurts a relatively narrow section of society. A minority of people are exporters, while all of us are consumers.
However, that was in the past. The recent economic crisis has made it clear to Americans that we need to save more and consume less in order to restore fiscal health. However, the only way to reduce both consumption and unemployment is to increase exports. That is why Obama is trumpeted exports in his State of the Union speech. But to increase savings and exports in America, somebody else has to increase consumption and decrease savings— because worldwide consumption is equal to worldwide savings. This is precisely the argument that Paul Krugman makes:
In normal times, you could argue that this policy [China's policy] provides benefits to the rest of the world, by reducing borrowing costs (although given what we did with those capital inflows, maybe not). But these aren’t normal times. We’re currently living in a world in which both central banks and governments are unable or unwilling to pursue sufficiently expansionary policies to eliminate mass unemployment; so it’s a paradox of thrift world, in which anyone who tries to save more reduces demand, reduces employment, and – because investment responds to excess capacity – ends up actually reducing investment. By exporting savings to the rest of the world, via an artificial current account surplus, China is making all of us poorer.
Krugman is basically saying that China, by soaking up dollars, is depressing liquidity at a time when a liquidity trap has been pushing rich countries into the worst recession in 80 years. Krugman fears deflation, which is what he is implying by saying that governments aren't pursuing sufficiently expansionary policies. His prescriptions—a countervailing duty on Chinese exports, make me a bit unsettled.
I worry about sparking a trade war with tariffs and I worry about inflation in America caused by a rise in the renminbi. But I do believe that much of Krugman's diagnosis is correct, and that the current path is unsustainable. If you're feeling wonkish and want more on this topic, watch a discussion between Krugman, Fred Bergsten, and Robert Scott here.
However, that was in the past. The recent economic crisis has made it clear to Americans that we need to save more and consume less in order to restore fiscal health. However, the only way to reduce both consumption and unemployment is to increase exports. That is why Obama is trumpeted exports in his State of the Union speech. But to increase savings and exports in America, somebody else has to increase consumption and decrease savings— because worldwide consumption is equal to worldwide savings. This is precisely the argument that Paul Krugman makes:
In normal times, you could argue that this policy [China's policy] provides benefits to the rest of the world, by reducing borrowing costs (although given what we did with those capital inflows, maybe not). But these aren’t normal times. We’re currently living in a world in which both central banks and governments are unable or unwilling to pursue sufficiently expansionary policies to eliminate mass unemployment; so it’s a paradox of thrift world, in which anyone who tries to save more reduces demand, reduces employment, and – because investment responds to excess capacity – ends up actually reducing investment. By exporting savings to the rest of the world, via an artificial current account surplus, China is making all of us poorer.
Krugman is basically saying that China, by soaking up dollars, is depressing liquidity at a time when a liquidity trap has been pushing rich countries into the worst recession in 80 years. Krugman fears deflation, which is what he is implying by saying that governments aren't pursuing sufficiently expansionary policies. His prescriptions—a countervailing duty on Chinese exports, make me a bit unsettled.
I worry about sparking a trade war with tariffs and I worry about inflation in America caused by a rise in the renminbi. But I do believe that much of Krugman's diagnosis is correct, and that the current path is unsustainable. If you're feeling wonkish and want more on this topic, watch a discussion between Krugman, Fred Bergsten, and Robert Scott here.
I’ve been reading up on Chinese currency manipulation recently, and I came across an excellent James Fallows piece from 2008. Money quote:
Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China.
…Any economist will say that Americans have been living better than they should—which is by definition the case when a nation’s total consumption is greater than its total production, as America’s now is. Economists will also point out that, despite the glitter of China’s big cities and the rise of its billionaire class, China’s people have been living far worse than they could. That’s what it means when a nation consumes only half of what it produces, as China does.
Neither government likes to draw attention to this arrangement, because it has been so convenient on both sides. For China, it has helped the regime guide development in the way it would like—and keep the domestic economy’s growth rate from crossing the thin line that separates “unbelievably fast” from “uncontrollably inflationary.” For America, it has meant cheaper iPods, lower interest rates, reduced mortgage payments, a lighter tax burden. But because of political tensions in both countries, and because of the huge and growing size of the imbalance, the arrangement now shows signs of cracking apart.
Click “read more” to find out how China controls its dollar inflows
Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China.
…Any economist will say that Americans have been living better than they should—which is by definition the case when a nation’s total consumption is greater than its total production, as America’s now is. Economists will also point out that, despite the glitter of China’s big cities and the rise of its billionaire class, China’s people have been living far worse than they could. That’s what it means when a nation consumes only half of what it produces, as China does.
Neither government likes to draw attention to this arrangement, because it has been so convenient on both sides. For China, it has helped the regime guide development in the way it would like—and keep the domestic economy’s growth rate from crossing the thin line that separates “unbelievably fast” from “uncontrollably inflationary.” For America, it has meant cheaper iPods, lower interest rates, reduced mortgage payments, a lighter tax burden. But because of political tensions in both countries, and because of the huge and growing size of the imbalance, the arrangement now shows signs of cracking apart.
Click “read more” to find out how China controls its dollar inflows
Are the U.S. and China on a Crash Course? 03/16/2010
Ambrose Evans-Pritchard of the Telegraph, a right-leaning UK newspaper, sees U.S. Chinese relations as spiraling towards confrontation, and puts the blame on China:
Clearly, Beijing is in denial about is own part in the global imbalances behind the credit crisis, specifically by running structural trade surpluses, and driving down long rates through dollar and euro bond purchases. No doubt the West has made a hash of things, but the Chinese view of events is twisted to the point of delusional.
What interests me is Beijing's willingness to up the ante. It has vowed sanctions against any US firm that takes part in a $6.4bn weapons contract for Taiwan, a threat to ban Boeing from China and a new level of escalation in the Taiwan dispute.
In Copenhagen, Wen Jiabao sent an underling to negotiate with Mr Obama in what was intended to be - and taken to be - a humiliation. The US President put his foot down, saying: "I don't want to mess around with this anymore." That sums up White House feelings towards China today.
We have talked ourselves into believing that China is already a hyper-power. It may become one: it is not one yet. China is ringed by states - Japan, Korea, Vietnam, India - that are American allies when push comes to shove. It faces a prickly Russia on its 4,000km border, where Chinese migrants are itching for Lebensraum across the Amur. Emerging Asia, Brazil, Egypt and Europe are all irked by China's yuan-rigged export dumping.
The last point is the most poignant. Universal recognition that China will be a superpower in the future has made people view it as one already, and helped China’s leadership to tend towards hubris. It will be interesting to see how the U.S.-China relationship evolves- this interaction could change the future of world politics. In the meantime, some advice to China: The rise to the top is always better than actually being on top, for what it’s worth.
Hat tip: Cameron Nelson
Clearly, Beijing is in denial about is own part in the global imbalances behind the credit crisis, specifically by running structural trade surpluses, and driving down long rates through dollar and euro bond purchases. No doubt the West has made a hash of things, but the Chinese view of events is twisted to the point of delusional.
What interests me is Beijing's willingness to up the ante. It has vowed sanctions against any US firm that takes part in a $6.4bn weapons contract for Taiwan, a threat to ban Boeing from China and a new level of escalation in the Taiwan dispute.
In Copenhagen, Wen Jiabao sent an underling to negotiate with Mr Obama in what was intended to be - and taken to be - a humiliation. The US President put his foot down, saying: "I don't want to mess around with this anymore." That sums up White House feelings towards China today.
We have talked ourselves into believing that China is already a hyper-power. It may become one: it is not one yet. China is ringed by states - Japan, Korea, Vietnam, India - that are American allies when push comes to shove. It faces a prickly Russia on its 4,000km border, where Chinese migrants are itching for Lebensraum across the Amur. Emerging Asia, Brazil, Egypt and Europe are all irked by China's yuan-rigged export dumping.
The last point is the most poignant. Universal recognition that China will be a superpower in the future has made people view it as one already, and helped China’s leadership to tend towards hubris. It will be interesting to see how the U.S.-China relationship evolves- this interaction could change the future of world politics. In the meantime, some advice to China: The rise to the top is always better than actually being on top, for what it’s worth.
Hat tip: Cameron Nelson
End of Influence cont. 02/03/2010
The actual numbers involved in US debt are staggering. And, of course, for all the end-of-America triumphalists out there, big debt is everyone's problem, not just America's. Here is an excerpt from the book:
China...is the biggest holder of U.S. obligations, with some $2.5 trillion in "reserves," the lion's share of it in U.S. debt obligations. America owes unimaginably large amounts of money to lenders (such as China), about $20,000 per American household, three-fourths of China's GDP, a fact worth repeating, a fact that makes rapid repayment impossible.
Proverbs 22:7 instructs us: "The borrower is servant to the lender." But the lesson requires some exegesis to fit smoothly into context. The burden of the U.S. foreign debt may be better explained by the oft-repeated Wall Street wisecrack, which we repeat: When you owe the bank $1 million, the bank has got you; when you owe the bank $1 billion, you've got the bank.
Neither side can walk away; we're locked. The debt binds China especially and other governments that have the money. Selling the debt would send the dollar way down and thereby destroy the value of their dollar holdings and severely damage their economies' massive export-based sectors. Worse yet, sell it for what? Their "reserves" are so huge that there is nothing else they can hold them in, not at that scale. From a Chinese viewpoint, it's exasperating.
I do want to caution that China will not grow at 10% forever. Those predicting a $123 trillion Chinese economy in 30 years are the same geniuses who thought that CDOs could turned lead into gold. But the global economy has rearranged over the past 20 years, and the implications are huge.
China...is the biggest holder of U.S. obligations, with some $2.5 trillion in "reserves," the lion's share of it in U.S. debt obligations. America owes unimaginably large amounts of money to lenders (such as China), about $20,000 per American household, three-fourths of China's GDP, a fact worth repeating, a fact that makes rapid repayment impossible.
Proverbs 22:7 instructs us: "The borrower is servant to the lender." But the lesson requires some exegesis to fit smoothly into context. The burden of the U.S. foreign debt may be better explained by the oft-repeated Wall Street wisecrack, which we repeat: When you owe the bank $1 million, the bank has got you; when you owe the bank $1 billion, you've got the bank.
Neither side can walk away; we're locked. The debt binds China especially and other governments that have the money. Selling the debt would send the dollar way down and thereby destroy the value of their dollar holdings and severely damage their economies' massive export-based sectors. Worse yet, sell it for what? Their "reserves" are so huge that there is nothing else they can hold them in, not at that scale. From a Chinese viewpoint, it's exasperating.
I do want to caution that China will not grow at 10% forever. Those predicting a $123 trillion Chinese economy in 30 years are the same geniuses who thought that CDOs could turned lead into gold. But the global economy has rearranged over the past 20 years, and the implications are huge.
The End of Influence 02/03/2010
FP.com
The End of Influence is a short book by Stephen Cohen and Brad DeLong that has been been making news in foreign policy circles. It talks about the fall of neo-liberalism and the rise of neo-mercantilism. I'm not going to blog about a book that I haven't read yet, so here are the thoughts of Matthew Yglesias, who has read the book:
What you really get here is a brilliant short tour of the rise and fall of the neoliberal project on an international basis. They offer what will strike some as an almost laughably uncynical account of the motives behind this project, but that makes the documentation of its ultimate failure all the more compelling. As they lay out, it proved to actually be the case that the only route to sustainable economic development anyone could find involved substantial state-directed export-oriented growth. This, in turn, required the United States to play the role of global importer of last resort.
The up shot of this is that more and more America doesn’t have “the money” in the world system. And not only is the money in the hands of Asian exporters and oil producers, a very large portion of it is in the hands of sovereign wealth funds. In addition, the Panic of 2008 has left governments in the developed world with large ownership stakes in a variety of firms. As a result, we’re going to have to transition to a very different-looking world economic order—one in which self-conscious government planning is going to play a bigger role, one in which US living standards will decline relative to our major trading partners, and in which American cultural and ideological influence is likely to wane.
An excerpt of the book is available here at FP.com.
What you really get here is a brilliant short tour of the rise and fall of the neoliberal project on an international basis. They offer what will strike some as an almost laughably uncynical account of the motives behind this project, but that makes the documentation of its ultimate failure all the more compelling. As they lay out, it proved to actually be the case that the only route to sustainable economic development anyone could find involved substantial state-directed export-oriented growth. This, in turn, required the United States to play the role of global importer of last resort.
The up shot of this is that more and more America doesn’t have “the money” in the world system. And not only is the money in the hands of Asian exporters and oil producers, a very large portion of it is in the hands of sovereign wealth funds. In addition, the Panic of 2008 has left governments in the developed world with large ownership stakes in a variety of firms. As a result, we’re going to have to transition to a very different-looking world economic order—one in which self-conscious government planning is going to play a bigger role, one in which US living standards will decline relative to our major trading partners, and in which American cultural and ideological influence is likely to wane.
An excerpt of the book is available here at FP.com.
Loading
