Category: China

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Barack Obama China Criticism Domestic issues Economics Financial Crisis Foreign Policy Green Energy Immigration Life New York City Politics The Bush Legacy The Opinionsphere The Web and Technology

Must-Reads of the Week: American Power, Inequality, 1 Billion Heartbeats, Hacking Life, Anthora Cups, Structural Deficit, Financial Doomsedays and Crises, China, the Tea Party’s Views on Immigration, and Lady Gaga

There were a lot of good articles and posts I came across this week — so brace yourself…

1. The American Power Act. David Brooks makes the case for progressive reform — specifically the American Power Act regarding climate change:

When you read that history, you’re reminded that large efforts are generally plagued by stupidity, error and corruption. But by the sheer act of stumbling forward, it’s possible, sometimes, to achieve important things…The energy revolution is a material project that arouses moral fervor — exactly the sort of enterprise at which Americans excel.

Matt Yglesias had earlier this week critiqued Brooks (among others) for taking the exact opposite stance of the one he was adopting here:

Oftentimes in the Obama Era the difference between “reasonable” conservatives (David Brooks and Greg Mankiw often leading the charge) and reasonable liberals has been that reasonable liberals look at flawed legislation that would improve on the status quo and support it while “reasonable” conservatives look at flawed legislation that would improve on the status quo and oppose it, while claiming to support alternative flawed proposals that they don’t actually lift a finger to organize support for within their own ideological faction.

2. Inequality, social mobility, and the American Dream. The Economist had a good piece that can serve as a starting point for a post I’ll be writing soon on inequality, social mobility, and the American dream:

The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.

Parental income is a better predictor of a child’s future in America than in much of Europe, implying that social mobility is less powerful.

3. The Science of Life. Jonah Lehrer for Seed magazine has a brilliant piece on how cities are like living organisms. As a side matter, he notes this beautifully poignant data point:

[A]n animal’s lifespan can be roughly calculated by raising its mass to the 1/4 power. Heartbeats scale in the opposite direction, so that bigger animals have a slower pulse. The end result is that every living creature gets about a billion heartbeats worth of life. Small animals just consume their lives faster.

4. Fine-tuning life. Gary Wolf for the New York Times Magazine explains how the accessibility of computers is creating data about every aspect of our lives — and of the efforts of some people to begin to catalog and find insights in their own data. Surprisingly, Lifehacker was never mentioned.

5. The Anthora Cup. Margalit Fox of the New York Times writes the obituary for Leslie Buck, the designer of the Anthora cup:

It was for decades the most enduring piece of ephemera in New York City and is still among the most recognizable. Trim, blue and white, it fits neatly in the hand, sized so its contents can be downed in a New York minute. It is as vivid an emblem of the city as the Statue of Liberty, beloved of property masters who need to evoke Gotham at a glance in films and on television.

6. Unified Theory of the Financial Crisis. Ezra Klein synthesizes various narratives into a unified theory of the financial crisis.

7. The Structural Deficit. Donald B. Marron provides a coherent and reality-based conservative look at America’s structural deficit. Absolutely a Must-Read.

8. The Financial Doomsday Machine. Martin Wolf dedicated his column in the Financial Times last week to describe the “financial doomsday machine“:

[T]he financial sector has become bigger and riskier. The UK case is dramatic, with banking assets jumping from 50 per cent of GDP to more than 550 per cent over the past four decades…The combination of state insurance (which protects creditors) with limited liability (which protects shareholders) creates a financial doomsday machine. What happens is best thought of as “rational carelessness”. Its most dangerous effect comes via the extremes of the credit cycle.

9. Realism on China. Stephen Walt explains his take on China’s strategic ambitions — and its inevitable rivalry with the United States and other regional powers.

10. The Tea Party & Immigration. Radley Balko explains his take on the widespread support among the Tea Party for the massive government power grab that is Arizona’s new immigration law:

It also makes a mockery of the media narrative that these are gathering of anti-government extremists. Seems like in may parts of the country they’re as pro-government as the current administration, just pro-their kind of government.

Coincidentally, I made that exact point about the Tea Party back in September 2009 entitled: These Protests Aren’t Against Big Government, But About Liberals Running the Government.

Andrew Sullivan piles on:

Worse, on the fiscal front, they’re total frauds. They have yet to propose any serious cuts in entitlements and want far more money poured into the military-imperial complex. In rallies, the largely white members in their fifties and older seem determined to get every penny of social security and Medicare. They are a kind of boomer revolt – but on the other side of that civil conflict, and no longer a silent majority. In fact, they’re now the minority that won’t shut up.

More and more, this feels to me like an essentially cultural revolt against what America is becoming: a multi-racial, multi-faith, gay-inclusive, women-friendly, majority-minority country.

11. Sovereign Debt Crisis. Felix Salmon and Paul Krugman are both very pessimistic about how Greece will get out of this crisis — and what it means for the global economy.

12. Lady Gaga’s Ambition. Brendan Sullivan for Esquire chronicles the life and ambitions of Lady Gaga:

“There is a musical government, who decides what we all get to hear and listen to. And I want to be one of those people.” The girl who said that didn’t yet have the number-one hits (although she had already written most of them).

She was not yet the creative director of the Haus of Gaga, which is what she calls the machine of more than a hundred creative people who work for her. She didn’t make that statement in an interview or from the stage. She made it in 2007, when she was a go-go dancer sewing her own outfits and I was her DJ. She wrote it in one of my notebooks…

Lady Gaga is a student of fame, and the fame she studies most is her own — being famous seems to both amuse and fascinate her.

[1st image by me; 2nd image by LarindaME licensed under Creative Commons.]

Categories
China Economics Foreign Policy

The Beijing Consensus

Gordon G. Chang, for World Affairs, explains his argument for why the Beijing consensus cannot last and its power will soon begin to wane. He acknowledges that many do not share this view:

Some scholars and China watchers nonetheless believe that Chinese authoritarianism, in the words of Andrew J. Nathan, may be “a viable regime form even under conditions of advanced modernization and integration with the global economy.” Recent Beijing leaders, Nathan tells us, have institutionalized themselves. “Regime theory holds that authoritarian systems are inherently fragile because of weak legitimacy, over-reliance on coercion, over-centralization of decision making, and the predominance of personal power over institutional norms. This particular authoritarian system, however, has proven resilient.”

As many have pointed out, the projections of China’s growth into the world’s largest economy presume it’s current pace of growth continues despite serious environmental, demographic, and other challenges. But, Chang argues, even the regime’s success at creating prosperity undermines it:

Senior Beijing officials now face the dilemma of all reform-minded authoritarians: the economic progress that legitimates their leadership endangers their continued control. As Samuel Huntington taught us, sustained modernization is the enemy of one-party systems. Revolutions occur under many conditions, but especially when political institutions do not keep up with the social forces unleashed by economic change.

Beijing’s policies are widening the gap between the people, who are making a “kinetic dash into the future,” and their government, thereby ensuring greater instability. So it should come as no surprise that as China has grown more prosperous in recent years, it has also become less stable. As a people, the Chinese are not particularly obedient these days; they incite as many as 127,000 disturbances a year—perhaps more. Whatever the exact number, the political system is obviously having increasing difficulty channeling discontent as the Chinese people, believing in their rights and fearing their leaders less and less, wrestle for control of their future. As a prominent businessman told me last spring—smiling broadly as he sat in his spacious office in a Shanghai skyscraper—“No one fears the government anymore.”

If prosperity undermines one-party rule, then the only thing that undermines it more is when rising expectations of more prosperity can no longer be met. And in Chang’s view, China’s leadership made a major miscalculation in basing their economy so heavily on exports:

China’s economic model, which allowed the Chinese to take maximum advantage of boom times, is particularly ill suited to current global conditions [of declining exports].

Chang concludes:

We may…soon witness in China revolution by spontaneous combustion. Despite his belief that revolutions must be minutely organized, Lenin’s own state was eventually brought down not by a network of plotters but by an impromptu crowd. What we witnessed in Moscow—the disintegration of a state in a matter of days—later replayed itself in Manila, Lima, Belgrade, Kiev, and Tbilisi. Chinese people today may not have revolutionary intentions, yet their acts of protest at this unsettling time have revolutionary implications nonetheless.

This is a similar argument to the one made by Yang Yao several weeks ago.

[Image by Stuck in Customs licensed under Creative Commons.]

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Barack Obama China Criticism Domestic issues Economics Financial Crisis Foreign Policy Health care Iran National Security Politics The Bush Legacy The Media The Opinionsphere The War on Terrorism The Web and Technology War on Drugs

Must-Reads of the Week: Google/China, Liberal American Exceptionalism, The Failed War on Drugs, Defending the Individual Mandate, Counter Counter-Insurgency, Idiocrats, and Men Did It!

1. Google v. China. I’ve refrained from posting on the Google v. China battle going on until now. So much of the praise for Google’s decision seemed overblown and I wasn’t sure what insight I had to offer, even as I read everything on the matter I could. But now, the wave of criticism of the company is pissing me off. I get the source of the criticism – that Google is so quickly criticizing other companies for staying in China after it left, and that Google’s partial exit may have made business as well as moral sense.  But motives are new pure – we’re human. Those who the critics accuse the company of merely using as a pretext for a business decision see the matter in other terms – according to Emily Parker of the Wall Street Journal, “Chinese twitterverse is alight with words like ‘justice’ and ‘courageous’ and ‘milestone’ “ and condolence flowers and cups being sent to Google’s offices in China.

What the Google/China conflict highlights though is the strategic incompatibility of a tech company like Google and an authoritarian state like China. One of James Fallows’ readers explains why Google and China could never get along:

Internet search and analytics companies today have more access to high quality, real-time information about people, places and events, and more ability to filter, aggregate, and analyze it than any government agency, anywhere ever.  Maybe the NSA can encrypt it better and process it faster but it lacks ability to collect the high value data – the stuff that satellites can’t see.  The things people think but don’t say.  The things people do but don’t say.  All documented in excruciating detail, each event tagged with location, precise time.  Every word you type, every click you make (how many sites do you visit have google ads, or analytics?), Google is watching you – and learning.  It’s their business to.  This fact has yet to sink in on the general public in the US, but it has not gone un-noticed by the Chinese government.

The Chinese government wants unfettered access to all of that information.  Google, defending its long-term brand equity, cannot give its data to the Chinese government.  Baidu, on the other hand, would and does…

The reader goes on to explain how China would slow down and otherwise disrupt Google services in China enough to ensure that Baidu would keep it’s dominant position. This, he explains is:

…just another example of the PRC’s brilliant take on authoritarian government: you don’t need total control, you just need effective control. [my emphasis]

Which is why it is so important that a country like China have constant access to search engine data. In a passage deleted at some point in the editing process from a New York Times story (which an internal Times search reveals to be this one), it was reported that:

One Western official who spoke on condition of anonymity said that China now speaks of Internet freedom in the context of one of its “core interests” — issues of sovereignty on which Beijing will brook no intervention. The most commonly cited core issues are Taiwan and Tibet. The addition of Internet freedom is an indication that the issue has taken on nationalistic overtones.

2. Liberal American Exceptionalism. Damon Linker of The New Republic responds to critics:

[T]he most distinctive and admirable of all [America’s] qualities is our liberalism. Now let me be clear: unlike Lowry and Ponnuru, who identify American exceptionalism with the laissez-faire capitalism favored by the libertarian wing of the Republican Party, I do not mean to equate the ideology that dominates one of our country’s political parties with the nation’s exemplary essence. On the contrary, the liberalism I have singled out is embraced by nearly every member of both of our political parties—and indeed by nearly every American citizen. Liberalism in this sense is a form of government—one in which political rule is mediated by a series of institutions that seek to limit the powers of the state and maximize individual freedom: constitutional government, an independent judiciary, multiparty elections, universal suffrage, a free press, civilian control of the military and police, a large middle class, a developed consumer economy, and rights to free assembly and worship. To be a liberal in this primary sense is to favor a political order with these institutions and to abide by the political rules they establish.

3. The War on Drugs Is Doomed. Mary Anastacia O’Grady of the Wall Street Journal echoes me saying: The War on Drugs is Doomed. (My previous posts on this topic here, here, here, here, here, here, here, here, here, here, here, here, and here.)

4. Defending the Individual Mandate. Ezra Klein explains why the individual mandate is actually a really good deal for American citizens:

The irony of the mandate is that it’s been presented as a terribly onerous tax on decent, hardworking people who don’t want to purchase insurance. In reality, it’s the best deal in the bill: A cynical consumer would be smart to pay the modest penalty rather than pay thousands of dollars a year for insurance. In the current system, that’s a bad idea because insurers won’t let them buy insurance if they get sick later. In the reformed system, there’s no consequence for that behavior. You could pay the penalty for five years and then buy insurance the day you felt a lump.

Klein also had this near-perfect post on our unhinged debate on health care reform and added his take to the projections of Matt Yglesias, Ross Douthat, Tyler Cowen on how health care law will evolve in the aftermath of this legislation.

5. Counter-Counter-Insurgency. Marc Lynch describes a document he recently unearthed which he calls AQ-Iraq’s Counter Counter-insurgency plan. Lynch describes the document as “pragmatic and analytical rather than bombastic, surprisingly frank about what went wrong, and alarmingly creative about the Iraqi jihad’s way forward.”

6. Idiocrats Won’t Change. Brendan Nyhan counters a point I (along with many other supporters of the health care bill) have been making (here and here for example) – that once the bill passes, the misperceptions about it will be corrected by reality. I fear he may be right, but I believe it will change opinions on the margins soon and more so over time.

7. Theories of the Financial Crisis: Men Did It. Sheelah Kolhatkar looks at one theory of the financial crisis some experts have been pushing: testosterone and men.

Another study Dreber has in the works will look at the effects of the hormones in the birth-control pill on women, because women having their periods have been shown to act more like men in terms of risk-taking behavior. “When I present that in seminars, I say men are like women menstruating,” she says, laughing…

Positioning himself as a sort of endocrine whisperer of the financial system, Coates argues that if women made up 50 percent of the financial world, “I don’t think you’d see the volatile swings that we’re seeing.” Bubbles, he believes, may be “a male phenomenon.”

His colleague, neuroscientist Joe Herbert, agrees. “The banking crisis was caused by doing what no society ever allows, permitting young males to behave in an unregulated way,” he says. “Anyone who studied neurobiology would have predicted disaster.”

A very interesting thesis. And one that strikes me as broadly true. I previously explored other theories of what caused the financial crisis:

[Image by me.]

Categories
Barack Obama China Criticism Economics Financial Crisis Foreign Policy Health care National Security Politics The Opinionsphere The War on Terrorism

Must-Reads of the Week: China’s distortionary exchange rate policy, Mario Savio, David Brooks, Ezra Klein, & Dana Priest’s The Mission

Apologies for the very, very light posting. There are quite a number of personal issues I’ve been dealing with – aside from the uprooted tree in my yard and miscellaneous damage.

But let me still give you some must-reads for the week.

1. China’s distortionary exchange rate policy. On Sunday, Keith Bradsher in the New York Times gave a good primer on how China is using currency manipulation and the global trade organizations to gain economic advantages as part of a global strategy to increase China’s power. China has also been using the global financial crisis to further their economic aims:

China is starting to describe its currency interventions as stimulus. But unlike extra government spending in the United States and other countries, currency intervention does not expand global demand, but shifts it from other countries to China.

Paul Krugman followed this up with a column urging action regarding China:

Today, China is adding more than $30 billion a month to its $2.4 trillion hoard of reserves. The International Monetary Fund expects China to have a 2010 current surplus of more than $450 billion — 10 times the 2003 figure. This is the most distortionary exchange rate policy any major nation has ever followed.

And it’s a policy that seriously damages the rest of the world. Most of the world’s large economies are stuck in a liquidity trap — deeply depressed, but unable to generate a recovery by cutting interest rates because the relevant rates are already near zero. China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies, which they can’t offset. [My emphases.]

My first attempt to make sense of this issue here.

2. Mario Savio. Scott Saul of The Nation follows up with an excellent profile of Mario Savio who at one point seemed poised to lead the 1960s radical New Left, but who then dropped out of public view:

Savio was a revolutionary and civil libertarian, logician and poet, scientific observer and self-aware partisan–and in his heyday a virtuosic extemporizer who seemed not so much to perform all these identities as to incarnate them. He was, in short, an icon of possibility for his generation of student activists; and so it’s a great historical riddle, tinged with pathos, why he was, in Berkeley in 1964, the lightning rod of his time and, almost immediately afterward, a man who couldn’t conduct the energy he’d summoned.

3. David Brooks on Obama. David Brooks wrote an excellent column last Friday arguing that both the right and left have Obama wrong, as they accuse excessive fealty to an extreme left wing ideology and of being a weak, passive, unprincipled traitor respectively. Brooks describes Obama as I have always understood and described him – and in fact, as he has described himself:

Obama is as he always has been, a center-left pragmatic reformer. Every time he tries to articulate a grand philosophy — from his book ”The Audacity of Hope” to his joint-session health care speech last September — he always describes a moderately activist government restrained by a sense of trade-offs.

4. Ezra Klein. Ezra Klein best summarized the CBO score released yesterday and how it gave the Democrats exactly what they needed:

According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.

This was a hard bill to write. Pairing the largest coverage increase since the Great Society with the most aggressive cost-control effort isn’t easy. And since the cost controls are complicated, while the coverage increase is straightforward, many people don’t believe that the Democrats have done it. But to a degree unmatched in recent legislative history, they have.

Klein then succinctly explained what was missing from the Republican approach to the deficit that this health care bill – to its great credit – attempted to address:

Our long-term deficit is not a function of our current spending, which is manageable. It is a function of our expected spending growth, particularly in health care. With the system growing at 8 percent a year and GDP growing at 2 percent or 3 percent a year, there’s a real long-term problem there. But you can’t cut, or even tax, your way out of it. If you cut 5 percent from the system in one year, that cut disappears by the next year.

5. The Mission. I’m currently reading this 2003 book by Dana Priest who writes for the Washington Post on the military’s mission and how it evolved after the Cold War through the 1990s and into the War on Terror. Absolutely excellent. I highly recommend it.

[Image by me, this morning.]

Categories
Barack Obama Brazil China Criticism Economics Foreign Policy Health care National Security Politics The Bush Legacy The Opinionsphere

Must-Reads of the Week: A history lesson, Reconciling Chart, Theism, Starbucks, the New Global Middle Class, the Beijing Consensus, and the Traitorous Supreme Court

A history lesson in ramming through one piece of legislation. Ezra Klein gives a short history lesson describing the tactics used by Republicans to “ram through” the Medicare Prescription Drug Benefit.

Reconciling chart. The New York Times provides a chart of all the times reconciliation has been used.

Theism. Andrew Sullivan provides a beautiful quote from David Foster Wallace making what may be the best case for theism generally that I’ve seen.

Starbucks. Greg Beato for Reason has an interesting if annoying skewed take on Starbucks and its attempts to stay hip. His history and overall point is interesting, but the point of view he injects, his contempt for his less capitalist brethren, is irritating.

The New Global Middle Class. Rana Foroohar and Marc Margolis in Newsweek describe the new “global middle class” which “is more unstable and less liberal than we thought.” The examples they give are rather frustrating though. Brazil’s middle class is described as “more unstable and less liberal” because they applaud “more state control of the oil industry to keep out greedy foreign firms” and that “they don’t need outside advice on how to structure their societies, thank you.” The Russian middle class’s support for Putin and the Chinese support of the Beijing consensus are also cited and are much better examples proving their point. An interesting article, that touches on some gradually evolving issues in a way that most articles do not – but it seems to harness facts to reach their end rather than allow the facts to dictate the result.

The Beijing Consensus. Yang Yao in Foreign Affairs speculates that the Beijing Consensus – “a combination of mixed ownership, basic property rights, and heavy government intervention” – may be eroding. And as “the Chinese Communist Party (CCP) lacks legitimacy in the classic democratic sense,” and “has been forced to seek performance-based legitimacy instead, by continuously improving the living standards of Chinese citizens,” the end of this consensus would lead to “greater democratization.”

The Traitorous Supreme Court. Orin Kerr at the Volokh Conspiracy takes on the Andrew McCarthy/Liz Cheney line of attack calling those attorneys currently in the Justice Department who represented some of those branded terrorists by the Bush administration asking this question:

Does McCarthy think the Justices of the Supreme Court are guilty of aiding the enemy, and that (if we treat them like everybody else) they should be “indicted for coming to the enemy’s aid during wartime”?

[Image by me.]

Categories
China The Opinionsphere The Web and Technology

The Limits of China’s Economic Model

Daniel Gross in Slate sees Google’s decision to stop acquiescing to the Chinese government as a portent of troubles for the nation – as a sign of a problem that will undermine China’s global economic position going forward, pointing out that the political decision to censor and even alter history as it was, has consequences:

Yes, Shanghai feels a lot like New York. But don’t presume that just because Americans and Chinese share a consuming culture that they also share a political one. As I stood in Tiananmen Square on a chilly November day, I turned to my guide. “That was really something, what happened here 20 years ago,” I said. “Yes,” he responded in his near-fluent English. “Those terrorists really killed a lot of soldiers.”

Gross sees the strength of China’s model:

For the last 30 years, China has been testing a new, inverted model: breakneck economic development while retaining strict limits on personal liberty. The Communist Party has wrenched the nation into the 21st century. The hardware is certainly impressive—the maglev trains, shiny new airports, and modern skyscrapers.

But he believes that manufacturing can only go so far – agreeing to some degree with David Brooks who describes the economic innovations of the future as being the result of a “protocol economy.” Gross explains:

And that’s the rub. Any type of political system can produce excellent hardware. The Soviet Union, which ruled Russia when Google co-founder Sergey Brin was born there in 1973, managed to produce nuclear weapons and satellites. Likewise, China has built truly impressive hardware: some 67 bridges now spanning the Yangtze River, a superfast supercomputer assembled entirely from parts made in China, high-speed trains. But in the 21st century, a country needs great software in order to thrive. It has to have a culture that facilitates the flow of information, not just goods.

Categories
Barack Obama Brazil China Foreign Policy Green Energy India Politics The Opinionsphere

Obama’s Dramatic Showdown Leads to Climate Deal

[digg-reddit-me]The dust is still settling from Copenhagen, and the reactions that I’ve seen so far have been muted. But the consensus is that it was something between a disaster and a face-saving attempt to achieve the smallest measure of progress possible. One item that has begun to be reported, but not gotten much attention is how in a dramatic gesture, President Obama himself salvaged what of the agreement there is by breaking into a secret meeting organized by China with a few emerging countries to develop their own local non-binding goals instead of working with the world community.

Some environmental activists havetried to spread out the blame around – as Rick Patel of Avaaz wrote in an email:

Big polluters like China and the US wanted a weak deal, and potential champions like Europe, Brazil and South Africa didn’t fight hard enough to stop them.

Interestingly, this breakdown conforms almost exactly to what critics of the Copenhagen summit such as Charles Krauthammer would predict – as they see these efforts to combat global warming as a giant socialist conspiracy to “raid […] the Western treasuries” by imposing “taxes on hardworking citizens of the democracies to fill the treasuries of Third World kleptocracies” with “a dose of post-colonial reparations thrown in.”

But the opposing sides weren’t the simplistic ones outlined by either Krauthammer or Patel. The principles at stake weren’t simply big polluters versus small polluters or the proponents of global socialism versus its opponents. Instead, Copenhagen was about whether or not there could be collective action and global governance in the face of a global crisis – or whether each nation would act on its own. When Obama along with most other world leaders arrived at the end of the conference, the final details were supposed to come together quickly as the principals gathered in the same rooms and made the deals they needed to. Which is why despite grumbling before the conference about America’s inability to pass legislation to combat climate change* and the concerns of poorer countries about being restrained from development, the blame has settled on China for scuttling the talks. As the Guardian reported:

The Chinese prime minister, Wen Jiabao, walked out of the conference at one point, and sent a lowly protocol officer to negotiate with Barack Obama.

After the snub and with China refusing to back down from any attempts to bind itself to meeting targets, Obama spoke to the conference. David Corn, writing in the Atlantic explained the impact:

Not hiding his anger and frustration, [Obama] said, “I think our ability to take collective action is in doubt.”

…Obama played it simple and hard. He maintained the United States was calling for three basic principles: mitigation, transparency, and financing. But he noted that it was absolutely necessary to verify the reductions commitments of the major emitters.

Obama’s speech left the gathered leaders and activists stunned as he seemed to be signalling the collapse of any possible agreement – of even some small measure of progress. Following this speech, Obama, Secretary of State Hillary Clinton, and America’s negotiators attempted to salvage some agreement meeting with various world leaders (pressing China to come as a key player). But China’s negotiation team refused, secretly meeting with leaders from India, Brazil, and South Africa to negotiate on a non-binding agreement they could announce independent of the global community. The situation grew tense as world leaders realized no agreement could be reached without China’s participation. But in a dramatic moment, Obama salvaged some small measure of a deal, as John M. Broder reported the drama in the New York Times:

The deal eventually came together after a dramatic moment in which Mr. Obama and Secretary of State Hillary Rodham Clinton burst into a meeting of the Chinese, Indian and Brazilian leaders, according to senior administration officials. Mr. Obama said he did not want them negotiating in secret.

The intrusion led to new talks that cemented central terms of the deal, American officials said.

The deal was less than was expected going in, but it signified some small measure of progress:

Expected to be included in this agreement is a commitment by developed nations to reduce greenhouse-gas emissions by 80 percent by 2050, to create a finance mechanism to handle any agreement, to set a climate “mitigation target” of 2 degrees Celsius, to create a high-level panel to monitor carbon emissions, and to push for increased transparency in how they are being dealt with.

Like much of Obama’s presidency thus far, this deal is both a disappointment and the most significant effort to date to deal with an intractable policy and political problem.

*John M. Broder of the Times had a good piece on the obstacles the Senate was posing to climate change legislation as well as the measures the Democrats and Obama administration were taking to get around their sluggishness – including Pelosi pushing the legislation through the House and Obama’s EPA complying with the Supreme Court order and taking steps to regulate carbon.

[Image not subject to copyright.]

Categories
Barack Obama Catholicism China Criticism Economics Financial Crisis Gay Rights Politics The Bush Legacy The Media The Opinionsphere

Chinese Racism, Andrew Ross Sorkin’s Power, Andrew Sullivan’s Catholicism, America’s Decline (?), and Megan Fox’s Savvy Self-Creation

Chinese Racism. Reiham Salam posits that China’s ethnocentrism will retard it’s development into a superpower – especially given the demographic obstacles it is facing thanks to it’s One Child Policy.

Andrew Ross Sorkin’s Power. Gabriel Sherman describes the world of Andrew Ross Sorkin, star financial reporter for the New York Times, in New York magazine. He describes the unique amount of power Sorkin has accumulated in financial circles, all from the paper that was traditionally lagging behind the others in financial journalism. Attending a book party, Sherman observes the way Sorkin is treated by the many powerful titans of Wall Street:

“What you noticed when you went was how many powerful Wall Street people were there to kiss his ring,” adds The New Yorker‘s Ken Auletta, a party guest. “He’s a 32-yeard old guy, and there were all these titans of Wall Street crowding around to say hello and make nice to Andrew.”

That type of praise only makes your job harder of course.

Andrew Sullivan’s Catholicism. Andrew periodically writes these moving pieces about his Catholicism, and why he is still a Catholic. Yesterday, in an emotional response to a number of recent events, he writes:

Maybe I am too weak to leave and be done with it. But in my prayer life, I detect no vocation to do so. In fact, in so far as I can glean a vocation, it is to stay and bear witness, to be a thorn in the side, even if the thorn turns inward so often, and hurts and wounds me too.

I stay because I believe. And I stay because I hope. What I find hard is the third essential part: to love. So I stay away when the anger eclipses that. But the love for this church remains through the anger and despair: the goodness of so many in it, the truth of its sacraments, the knowledge that nothing is perfect and nothing is improved if you are not there to help it.

America’s Decline (?). John Plender writing in the Financial Times pokes several more holes in the growing consensus that China’s power will soon eclipse America’s. Rather, he sees China as returning to it’s historic position of economic power – increasing relative to America, but not eclipsing it given the various problems they are facing.


Megan Fox’s Savvy Self-Creation. When I saw the New York Times Magazine was writing a major article about Megan Fox I was intrigued. What about her might be interesting enough to hold up a feature? It turns out that there was quite enough. Lynn Hirschberg writes about a starlet whose main focus is her own image, the character she plays in the media. Fox deliberately holds herself apart from this character:

I’ve learned that being a celebrity is like being a sacrificial lamb. At some point, no matter how high the pedestal that they put you on, they’re going to tear you down. And I created a character as an offering for the sacrifice. I’m not willing to give my true self up. It’s a testament to my real personality that I would go so far as to make up another personality to give to the world. The reality is, I’m hidden amongst all the insanity. Nobody can find me.

As she studies Marilyn Monroe, Ava Gardner, Elizabeth Taylor, and other Hollywood icons, almost all of whom were overwhelmed by their characters, Fox seems to be searching for lessons she can take herself:

Monroe was her own brand before branding existed. “She lived her whole life as a character playing other characters,” Fox said. “And that was her defense mechanism. But Marilyn stumbled and lost her way. She became overwhelmed by the character she created. Hollywood is filled with women who have tried to cope. I like to study them. I like to see how they’ve succeeded. And how they’ve failed.”

Hirschberg didn’t seem to know whether Fox’s obsession with Monroe and other starlets would foreshadow Fox’s own decline, or whether it could be managed. The last lines Hirschberg leaves her readers with are plaintive:

In a few short weeks, she had gone from happily outrageous to virginal and controlled. It was, perhaps, a healthier attitude, but pale by comparison. “I have to pull back a little bit now,” Fox said. “I do live in a glass box. And I am on display for men to pay to look at me. And that bothers me. I don’t want to live that character.”

Categories
Brazil China Foreign Policy India Russia

A Counterbalancing Bloc

David Rothkopf makes a good point, reflecting on BRIC (Brazil, Russia, India, and China):

I don’t think we should see the rise of a counterbalancing bloc  as a terrible thing either for the world or even for America. While having enemies is to be avoided wherever possible, having rivals is essential. It promotes reevaluation and growth. Imagine what computing would be like if we lived in an all Microsoft, Apple-less world. They make each other better. (Which in that case means Microsoft forces the smaller Apple to be innovative and Apple forces the Microsoft behemoth to be less awful.)

Categories
China Economics Financial Crisis

Theories of the Financial Crisis: The Chinese-American economic imbalance

[digg-reddit-me]John P. Judis summarized this theory of the crisis in The New Republic, “Economists know the fatal flaw in our system – but they can’t agree how to fix it.” Judis described how America has relied for decades on a “tortuous financial arrangement that knits together its economy with those of China and Japan”:

This informal system has allowed Asian countries to run huge export surpluses with the United States, while allowing the United States to run huge budget deficits without having to raise interest rates or taxes, and to run huge trade deficits without abruptly depreciating its currency. I couldn’t find a single instance of Obama discussing this issue, but it has been an obsession of bankers, international economists, and high officials like Federal Reserve Chairman Ben Bernanke. They think this informal system contributed to today’s financial crisis. Worse, they fear that its breakdown could turn the looming downturn into something resembling the global depression of the 1930s…

China depends on exports to the United States, and the United States depends on capital from China. If that special economic relationship breaks down, as it seems to be doing, it could lead to a global recession that could morph into the first depression since the 1930s.

Judis’s article seems to rely heavily on the analysis of Nouriel Roubini wrote most prolifically on this subject and predicted this system was approaching a crisis point in 2006. In a paper written with another prescient economist Brad Setser, Roubini pointed out the instability inherent in a system in which:

The US absorbs at least 80% of the savings that the rest of the world does not invest at home….[And] Social peace in China comes at the expense of political peace in the US.

Historian Niall Ferguson pointed the historical anomaly this represents as:

Usually it’s the rich country lending to the poor. This time, it’s the poor country lending to the rich.

Mark Landler explained the dynamic at work – and how it led to the current crisis – in a New York Times piece that was part of that newspaper’s “The Reckoning” series looking in depth at issues that led to the crisis:

In the past decade, China has invested upward of $1 trillion, mostly earnings from manufacturing exports, into American government bonds and government-backed mortgage debt. That has lowered interest rates and helped fuel a historic consumption binge and housing bubble in the United States…

By itself, money from China is not a bad thing. As American officials like to note, it speaks to the attractiveness of the United States as a destination for foreign investment. In the 19th century, the United States built its railroads with capital borrowed from the British.

In the past decade, China arguably enabled an American boom. Low-cost Chinese goods helped keep a lid on inflation, while the flood of Chinese investment helped the government finance mortgages and a public debt of close to $11 trillion.

But Americans did not use the lower-cost money afforded by Chinese investment to build a 21st-century equivalent of the railroads. Instead, the government engaged in a costly war in Iraq, and consumers used loose credit to buy sport utility vehicles and larger homes. Banks and investors, eagerly seeking higher interest rates in this easy-money environment, created risky new securities like collateralized debt obligations.

“Nobody wanted to get off this drug,” said Senator Lindsey Graham…

As Chinese money flooded into the American market, it created bubbles in which prices were inflated.

The primary beneficiaries of these bubbles were the economic elite whose jobs were not being outsourced or undercut by Chinese manufacturing and who owned stock, housing, or other assets which increased in value due to the added funds sloshing around in the financial system.

The American government similarly benefited from this Bretton Woods II as they were able to engage in wars, increase domestic spending, and lower taxes all at the same time – all without paying a higher interest rate on their deficit spending.

Financial firms made huge amounts of money as the inflow of the world’s savings bid up the prices of the assets they were buying and selling – and of course, they took the first cut of any profits from the sales – and assessed numerous fees for whatever it was they were doing. With an excess of capital, borrowing is cheap – which allows firms to make massive leveraged bets – also increasing their profits as well as their risk of being wiped out.

Lower wage workers benefited to a lesser extent as cheap Chinese goods – especially as sold by Wal-Mart – increased their buying power even as their wages stagnated over the past decade. Coupled with the easy credit resulting from the excess of money in the financial markets, the majority of workers were able to approximate a rising standard of living even as their wages stagnated – undercut by competition from abroad.

Until now – as this whole house of cards is falling apart. 

China is hoping the solution is to jump start it’s own domestic consumption – which might be difficult due to a wariness on the part of many Chinese about their future prospects: 

China kicked off its own campaign to encourage domestic consumption, which it hoped would provide a new source. But Chinese save with the same zeal that, until recently, Americans spent. Shorn of the social safety net of the old Communist state, they squirrel away money to pay for hospital visits, housing or retirement.

This accounts for the savings glut identified by Mr. Bernanke.

The way things are going now – it seems we’re screwed unless the Chinese people stop being so responsible thrifty and start spending like drunken American sailors. A paradox of thrift indeed.

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It should be noted that while I – and most of the authors I cite – specifically talk about the Chinese-American relationship, the points being made apply to East Asia in general – especially Japan which has contributed to the imbalance nearly as much as China.

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