On connecting the Islamic world to the global economy, the long fight is the good fight
Barnett
¦"Generals Offer Sober Outlook On Iraqi War: Slow Progress Cited in Training Local Force," by John F. Burns and Eric Schmitt, New York Times, 19 May 2005, p. A1.
¦"Blowing Up an Assumption: The weak link between religion and suicide attacks," op-ed by Robert A. Pape, New York Times, 18 May 2005, p. A29.
¦"Kuwait Grants Political Rights To Its Women," by Hassan M. Fattah, New York Times, 17 May 2005, p. A6.
¦"Bush Ties Trade Pact With Egypt to More Freedom," by Elizabeth Becker, New York Times, 19 May 2005, p. A4.
¦"Uzbek Crackdown Fuels Instability In Central Asia," by ,Wall Street Journal, 19 May 2005, p. A1.
Iraq won't be "cured" any time soon. Insurgencies aren't solved in the short run, only the long term. The average "victory" takes about 10 to 12 years, as history teaches. So there's only one sort of progress, and it's called "slow."
It's not a war of ideas, meaning our political concepts versus their religious fanaticism, so if any of you want to embrace the straw-man logic that religion drives suicide bombers, be my guest.
But, frankly, Pape's research proves nothing of importance, other than to perhaps disabuse people of the role of religion in anyone's life—much less death. Religion is never the reason, only the rationale.
On a happier note, Kuwait reverses itself rapidly on the question of letting women vote. Just a couple of weeks ago, I blog the parliament's apparent decision to put off the question of women's suffrage.
Oh me of little faith!
I should have stuck to my usual optimism.
Incentivize the good, penalize the bad. The Bush administration is wonderfully utilitarian in its approach on foreign aid, and nowhere should this new rule set be applied more ruthlessly than in the Big Banged Middle East. Give your poor and hungry? Don't bother. Give me your new and improved rule sets and I'll show you the money.
Can we go too fast in the Middle East? Ask yourself, can we go too slow there if it delays our attention to Central Asia?
China-U.S.: it ain't about Taiwan, it's about the money
¦"U.S. Warns China About Currency: Cites Impact on Trade and Hints at Retaliation," by Edmund L. Andrews, New York Times, 18 May 2005, p. A1.
¦"U.S., China Press Yuan Row: New Shanghai Trading System May Open Door to a Compromise," by Andrew Browne, Wall Street Journal, 19 May 2005, p. A2.
¦"China's Growth Ebbs, a Deterrent To Revaluation," by Keith Bradsher, New York Times, 19 May 2005, p. A1.
¦"China Rejects Calls for Currency Changes and Limits on Textile Exports: Beijing says the U.S. and Europe are using double standards," by Chris Buckley, New York Times, 19 May 2005, p. C4.
¦"China's Trade Edge: Less Than It Seems," letter to the editor by Albert Keidel, Washington Post, 19 May 2005, p. A26.
The conversation gets tougher between America and China on the yuan being artificially pegged to the dollar. Both sides will ratchet up the rhetoric while simultaneously working the short- and medium-term workarounds, like the new Shanghai electronic trading system that will provide still more bricks for the technical architecture that China needs to have in place to deal with a floating yuan. In short, China knows the days of the pegged yuan are numbered, but it's naturally going to hold onto that advantage as long as it can, especially as it economy cools.
But push will never come to shove on this issue, because that outcome serves neither side and only creates pathway dependencies that no one wants to navigate.
The business communities on both sides of the Pacific realize how our two economies are becoming mutually dependent on one another. Does this mean war between us is impossible? No, silly rabbit. Nukes take care of that. What the economies does is make clear that all the brinksmanship BS short of war is also stupid and a waste of time, that's all.
In short, such tricks are for kids . . . and geostrategic "realists" who have their heads up their asses on global economics.
Are the Chinese right to complain about double standards? Yes, in many ways they are.
Here I simply quote the true reality well described in a thoughtful letter to the editor in today's Post
Instead of its trade surplus with the United States, economists agree, China's global surplus is a better test of its exchange-rate fairness. An unfairly cheap currency would result in a large global surplus. China's surplus with America is a quarter of the U.S. trade deficit, but the most widely accepted statistics show that China's global surplus accounts for only 8 percent of that deficit. Global surpluses from Japan, Germany and indeed the whole euro currency area account for more than 40 percent of the U.S. deficit. Including oil-exporting nations and the rest of Asia except China raises the combined global surplus to more than 75 percent of the U.S. deficit.
China can have a surplus with the United States while its global surplus is so small because of its large deficit with its neighbors. In recent years these neighbors have rerouted their exports to the United States through China for final assembly. Exports from the rest of Asia to the United States declined from 2000 to 2004 as reexports through China grew. China's much smaller global surplus indicates its exchange rate does not provide unfair advantage in trade.
A shift inn China's exchange rate also is unlikely to alter the export-led growth strategies of the rest of Asia, which reflect not competition with China but their failure to stimulate domestic demand.
Neglecting to note these global and regional dimensions contributes to misguided protectionist threats against China.
To connect to globalization is to accept change
¦"The New India," op-ed by Manmohan Singh, Wall Street Journal, 19 May 2005, p. A14.
¦"Dispute Tears at Mumbai: House the Rich, or the Poor?: Plan for Wasteland Ends Up in Court" by Somini Sengupta, New York Times, 17 May 2005, p. A3.
¦"A French Region Considers the Costs of a New Europe," by Craig S. Smith, New York Times, 18 May 2005, p. A3.
Great op-ed by India's PM, a brilliant economist in his own right. This guy understands that engaging the global economy is a complex transaction that demands more change from within than can possibly be hoped for from outside—meaning, you change more than the world does. But if you're willing to make those changes, it's win-win. Singh basically understands that globalization is a challenge but also a choice: embrace it and adjust or stand back and fall behind—inevitably. As he puts it, "we recognize that our real challenges are at home"—not abroad. What globalization does to you is always far less important than what you are willing to do to adjust to globalization. Trying to stay static or hold onto the past is certainly a choice, but one that involves a diminishment of freedom that's far more profound than that associated with the change necessary to deal with globalization's complex mix of up-sides and down-sides.
Will India be forced to make a load of difficult choices internally as it opens up? Sure. Just watch how Mumbai agonizes over the question of how to improve the city without making it hostile to ambitious people streaming in from the countryside looking for opportunity. India cannot "core" itself only in pockets; it needs to bring the poor along for the ride. Otherwise it cannot continue effectively as a democracy.
These choices are no less difficult in Old Core nations like France, where the "haves" want to keep what they've got—as is—a whole lot more than face the challenge of moving up the production chain. So when a business wants to relocate to Eastern Europe in search of cheaper factory labor, does France go down the pathway of pricing itself out of the global economy or take up the challenge of moving those displaced factory workers onto some higher rung on the development ladder? Can France only hold onto aging definitions of the good life by denying Romania such opportunity? Is that the best its government and private sector can manage?
This is a huge theme in Blueprint for Action, or the notion that America will naturally gravitate toward the New Core's way of thinking on globalization's promise and peril rather than drift back to the Old Core's tendency to want to hold onto the "golden past."
The so-so and wrong ways to let energy drive connectivity
¦"India Takes On the World: State-Owned Oil Firm Joins Global Fight for Energy Security," by John Larkin, Wall Street Journal, 19 May 2005, p. A12.
¦"Foreign Gas Companies in Bolivia Face Sharply Higher Taxes," by Juan Forero, New York Times, 18 May 2005, p. A10.
India, like so many other emerging markets, has the tendency to rely on National Oil Companies, or NOCs, to secure it's energy "security." Too bad it doesn't have any significant amounts of oil at home.
Since that's the case, India takes the logical (but hardly mature) next step of having that NOC make direct investments in oil fields around the world. I say hardly mature because this emphasis on direct investment is driven by an old-fashioned belief that the country's NOC must own the "barrel in the ground" to feel truly secure about its access, something that made more sense decades ago when oil wasn't much of a global market but makes far less sense today because such efforts typically mean the NOC in search of oil is paying too damn much for this access. Why? They inevitably end up looking for oil in countries that—for a variety of reasons—haven't received the same level of attention from Western multinationals. Those reasons usually include such things as poor investment climates, too much corruption, or marginal returns because the oil is hard to access or is of a less valued quality.
So where is India's NOC investing these days? Russia (tough investment climate), Sudan (nuff said), Vietnam (You remember the argument that American fought the war over oil there? Complete BS.), and Myanmar (oh so nice).
Still, at least it's driving FDI abroad and that's some connectivity and some connectivity is better than none. So we commend India for opening outwardly, even if its choice of vehicle is less than ideal.
Bolivia is tacking the opposite track in the opposite situation: it has Latin America's second-largest natural gas deposits, but apparently is intent on scaring away foreign investors from Brazil (Petrobras), France (Total) and Spain (Repsol). The antiglobalizers there believe the foreign companies have and will continue to rip off the nation, so their answer is nationalization.
Brilliant huh? If the government they have in Bolivia isn't up to creating the right legal rule set to gain a fair return from allowing such outside investment to access the gas deposits in the first place, then why would anyone believe it's capable of running those gas fields in such a way as to garner a better yield? Unfortunately, this is the mental trap that Gap countries fall into time and time again across history, begetting the slowest paths to development possible: a governmental or rich, private-sector elite controlling all the benefits from natural resources and the public assuming that somehow, if those fixed sums of wealth were better distributed, the country would experience broadband economic development. This is zero-sum thinking at its worst, and it's what keeps the Gap the Gap.
Kim Jong Il is no shrinking violet, meanwhile his people simply shrink
¦"What to Do About a Country That Has a Nuclear Threat and No Use for Rules," book review by William Grimes, New York Times, 18 May 2005, p. B8.
Yet another book out about Kim Jong Il's amazingly cruel rule, but one that's sloppily written according to this reviewer, who twice gave the "late 1980s" as the timeframe of the massive famine that killed so many in North Korea (actually, it was the late 1990s, so it's a case of the reviewer [kettle] calling the author [pot] black!). Book is called "Rogue Regime" and it's by journalist Jasper Becker.
Two interesting things from the review: First, the factoid that North Koreans are, on average, 8 inches shorter than their South Korean twins and roughly one-half their weight. Amazing huh? Considering they were simply separated "at birth" a mere half century or so ago.
Second point is the bit that ends the review: "Mr. Becker also argues for giving up on the United Nations as a means of bringing North Korea back within the international fold and instead creating, along lines proposed by Tony Blair, "a new framework in international law" to deal with rogue states and "a method to enforce these laws through the legitimate use of military force."
That's basically what I have called the "A to Z rule set for processing politically bankrupt states" in past writings, including the conclusion to PNM. This concept is a cornerstone of my second book, Blueprint for Action, constituting a big piece of the first chapter. I guess I should not be surprised to read that someone who worries about Kim and our inability to do anything about him with the current rule set describing something similar, nor that Tony Blair has argued for the same basic concept. I have long considered Blair to be, in many ways, the perfect political expression of leadership for the current age—the great debater and storyteller who can describe both the rationales for action in the short term and the happy ending that defines the long haul's positive outcome.
Yes, yes, I know. Blair is now "discredited" in the UK over the lack of WMD in Iraq, but that alleged ignominy only highlights the very need for what he describes. With the A-to-Z rule set, the Core's political leaders aren't forced into overselling the "imminent threat."
Science and math as the fastest personal pathways toward connectivity
¦"For Immigrants, Math Is a Way to Success: The high school population is 22% Asia; the math club is 94.4% Asian," by Michael Winerip, New York Times, 18 May 2005, p. A19.
In "Mean Girls" (great movie), Lindsey Lohan's character Cady explains that she loves math because numbers are the ultimate universal language. Perhaps not a very scholarly citation, but what can I say? I like redheads.
Tom Friedman raises a lot of legitimate concerns about education in the U.S. in his "World is Flat" book, but you have to wonder is that simple reason—it's the universal language (math and science)—is what accounts for both the high concentration of immigrant and foreign students in these fields in the U.S. and the rising tide of such human capital in countries like India and China. In effect, it's the quickest and simplest route to success on an individual level in the global economy.
I mean, that's the sort of bias that Americans long held (professional industrial and research) but don't seem to display to the same degree anymore. Does that mean we're falling behind or just moving beyond? As others swamp the technical jobs where memorization is the key initial skill set, does it make sense for America to seek to hold that line or move on to the next thing—you know, that argument about switching to the other side of the brain that emphasizes creativity and what not? When IBM sells its PC production to Lenovo, is it "falling behind" or moving ahead? And if that's the case (moving ahead), then why would it be so different with human capital?
You know, there is always that tendency to fight the last war and—by doing so—assuming you're protecting your future when you're really just trying to hold onto your past. That's not to say that all those Indian and Chinese engineers are going to be working existing or dated technology, because they're sure as hell not going to be doing just that. I'm just wondering—in the manner of that Feb Wired article by Pinker, was it?—whether or not the rather ritualistic cries of America is "falling dangerously behind" that we seem to get every time our economy slows down relative to the up-and-coming high-fliers are any more profound or correct than they were last time, or the time before that, or the one before even that one.
Or do we trust in the marketplace and individual ambition to sort things out absent the "crash programs," the "man-to-the-moon" efforts, and the "Manhattan projects"?
Not saying I know. Just saying I'm skeptical of the usual doomsaying.
Durham NC after tobacco? Fat chance!
¦"Penny-Wise, Not Pound-Foolish: City Cashes In as Mecca for the Hefty (With Wallets to Match)," by Stephanie Saul, New York Times, 19 May 2005, p. B1.
Interesting story about how former tobacco-is-king Durham is becoming the "Lourdes for the obese," or the self-professed "Diet Capital of the World." Why go there? It's the combination of self-selection and determination (deciding to commit yourself to living there for a stretch of time) and the concentration of specialized docs, businesses that cater to their needs, and—of course—fellow dieters.
Durham apparently has been known for its dieting prowess going back to the 1930s, as the famous Rice Diet had its origins here.
What intrigued me about the piece is that there is always "life after . . . " whatever. People move on. Businesses adapt. Entrepreneurs spot a regional advantage or simply invent one.
It's a science called . . . the free market.
Staring at America's future in L.A.
¦"Villaraigosa Wins Easily in L.A. Mayoral Runoff" by Amy Argetsinger and Kimberly Edds, Washington Post, 19 May 2005, p. A1.
¦"In L.A., a Pol for a Polyglot City," op-ed by Harold Meyerson, Washington Post, 19 May 2005, p. A1.
Meyerson's op-ed on L.A.' s first Hispanic mayor in modern times is interesting, comparing Villaraigosa's rise to that of Fiorello La Guardia in 1933. In his reasoning, La Guardia's victory wasn't just some generalized New Deal push, nor simply a rejection of Tammany Hall-style politics of corruption, but rather a triumph of Italians and Jews against a political system they saw too heavily weighted in favor of the Irish.
Fast forward to this era's version of an immigration boom, and it's Hispanics increasingly realize their growing voting power to step up to the gavel in cities seemingly fractured by an ever increasingly diverse mix of cultures.
Here's the rising tide: in the 2000 census, Hispanics accounted for 47 percent of L.A. residents but only 15% of the voters, because so many were noncitizens. By 2005, that percentage of voters rises to 25%! Still not enough to win on its own but enough to get their own up on the stump and fighting with a reasonable chance of stitching together a coalition.
Get used to this phenomenon. As usual, California shows the way."
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