To:

Zcom_simple
Home » Z Blogs » Paul Street's Blog » Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

Hello,

Blogs are a familiar feature on the internet - where users post content in an accumulating manner, with comments, and search options, etc. They facilitate expression and exploration, and via attached comments, also debate and synthesis.


Reading and
Navigating Blogs

Our blogs are quite powerful. Each writer can post, as is typically the case. Sustainers who have the option can also post, however. All Blogs appear in the blog system, and sometimes also in content boxes the top page of ZNet - and always via the left menu of the top page - and can be found via searches, etc.

Commenting on blogs follows the blogs, attached at the bottom, and blog comments, like all others, are also visible in many places that show comments including in the forum system. In addition, the entire blog system gathers content for everyone - but one can look at the accumulating content in many ways.

  • For example one can look at one writer's efforts - so one is seeing what is effectively a blog system for that one writer, or Sustainer.
  • One can also look at the content by topic, seeing blogs that are tagged as being about a certain topic - or place, as well. Thus, when doing that, it is a blog system about a topic, or a place, with many contributors.
  • One can look at only writer blogs, or only sustainer blogs, as well.
  • One can look at blogs for particular Groups, too.

All this is easily done using the left menu. Searches allow even more variables and refinements.


Creating Blog Posts

If you are a Sustainer with permission, and are logged in, you will see a link in the left menu for you to post a blog - and you can use that to post one, and then tag it various ways (such as with a topic or place, or a group tag), and once you do, it is in the system with you as the author.

You can also use the console button to the left to post a blog - anytime and from anywhere in the site, as long as you are logged in.

Meanwhile, enjoy the blogs - and, by the way, if you are a Free Member or a Sustainer with a ZSpace page, of course you can put one or more content boxes on it, pulling blog links of any sort you may want to filter for, for example, by you or by your friends or by others - and by topic, about places, for groups, etc.

Blogs

Occupy_iowa_city_rally

Paul Street's Blog

Web Address: http://www.zcommunications.org/zspace/paulstreet
Bio:         Paul Street is an independent radical-democratic policy researcher, journalist, historian, and speaker based in Iowa City, Iowa, and Chicago, Illinois.&nbs... (More)

All Street Blogs

Recent Street Content

Znetarticle_icon ZNet Articles
Zmagarticle_icon ZMag Articles
Zcommentary_icon ZCommentaries
Zaudio_icon ZAudios
Zvideo_icon ZVideos
Zblogpost_icon Blog Posts
Zbook_icon Books

Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Paul Street at Jul 25, 2005

PDF Version

Printer Friendly Version
Change Text Size a- | A+
How about that wild and wacky world capitalist system? The United States (U.S.) is clearly the world's “hegemonic” military power. The U.S. government's capacity for “forward global force projection” is stupendous and its imperial “defense” budget” matches the combined military expenditures of all potential enemy states many times over. Things are a little different in the economic sphere, however, and all the money the US. is spending on militarism and empire is part of the problem for Uncle Sam. Since the United States –--- once the "managerial-capitalist" mass production ("Fordist") king of the manufacturing world –--- doesn't really make that much stuff anymore, it has now run up a yearly trade deficit of $700 billion. It has considerable trade deficits with just about everyone, including a $170 billion deficit with “Communist” China (Longworth, 2005). One way in which this is a problem is that it translates into unemployment for many American workers. Those workers lose their jobs to cheaper Chinese imports (many sold by the great “all-American” company Wal-Mart), whose prices are kept down by the low level of Chinese wages, which is enforced partly by officially “Communist” state-capitalist repression and by the fact that millions of Chinese peasants are being been pushed off the land and into urban labor markets. According to standard economic theory, the trade deficit being experienced with such painful outcomes for U.S. workers is supposed to contain an internal corrective. Over the years, the iron “laws” of economics say, an American trade deficit leads to the possession of surplus U.S. dollars in foreign banks. That surplus is supposed to drive down the price of the dollar because "when there's too much of something, its price falls." And when the dollar's value relative to other currencies falls (as everyone who ever suffered through an introductory macroeconomics class knows), then the price of U.S. exports fall and the price of imports to the U.S. rise. "We sell more and buy less" and, over time, the dreaded trade deficit fades (Longworth, 2005 and Fallows, 2005). But thanks in no part to the other American deficit, the $412 billion that the U.S. government spends over and above what it receives through taxes (a more than $600 billion departure from the federal government's $200 billion surplus in 2000), “free market” economic laws are being trumped by state-capitalist political-economic policy. On the Chinese side, the relevant government authorities refuse to permit their currency, the yuan, to fall in price relative to the dollar. Given the weakness of their domestic market and the large number of proletarianized ex-peasants they need to employ, China depends on growth through exports to foreign markets. It relies especially on selling to the world's greatest consumer market the U.S., where tens of millions of people are up to their eyeballs in consumer debt. The United States' Messianic Militarist (Ralph Nader's description) and “Elite Force Aviator” (the name of a presidential action doll released after Dubya Bush's notorious “Mission Accomplished” May 1 [2003] landing on the U.S.S Abraham Lincoln) President can plead all he wants with “Communist” China to adjust the yuan so that America can reduce its trade deficit. But the Conqueror of Iraq's entreaties are to no avail because China is helping to finance Dubya's in-hock government. Bush has thrown the U.S. government deeply into the red by combining a massive trillion dollar tax cut for the rich with stupendous imperial “defense” expenditures sold to the populace on a shifting set of false pretenses that merged the imperial occupation of Iraq (a key Bush II project from day one) with something called “a war on terrorism.” Boldly linking his twin imperatives of Empire and Inequality, Bush has used fear and deception to cover the gaping disconnect between (a) his claim that we are all united in a war for our shared survival and (b) his stupendous giveaways to the privileged few. Along the way, he has been following the Reagan playbook by using the huge government deficit that results from this curious combination as a reason to slash yet further social programs intended for the protection and advancement of the nation's considerable number and share of disadvantaged people and communities. The massive expenditures and actions of the “right hand of the state” are pretext for the further slashing of the state's “left hand,” to use the late French sociologist Pierre Bourdieu's excellent terminology. Of course, someone has to provide loans to cover the resulting deficit to keep the increasingly right-handed state going. War, empire, corporate welfare, and mass incarceration at home and abroad cost a lot of money. Since Americans have a national saving rate below zero --- their key role in the contemporary world system is to buy stuff made in lower-wage zones of the planet --- there's not much loan money to tap at home. As a result, according to Chicago Tribune correspondent R.C. Longworth, “no less than $399 billion, nearly 97 percent” of the federal deficit was financed by “foreigners” last year. This is a big part why the capitalist-road successors to Mao get away with telling the Conqueror of Baghdad to take his over-strong dollar and trade deficit and put them where the sun don't shine – along with his undergraduate economics text from Yale. Uncle Sam needs “Red” China to send surplus dollars back to the US. Treasury, to purchase government bonds to keep the increasingly regressive and militarized U.S. state operating. If U.S. exports to China were to increase significantly, the White House knows, China would possess fewer surplus dollars to help Uncle Sam cover his massive debts. Meanwhile, the Chinese investment of billions of surplus U.S. dollars back into the US. counteracts the tendency of the dollar's price to fall relative to yuan. That price can fall only if the Chinese sit on their extra dollars and the Central Bank of China isn't sitting on the greenbacks it cycles back to the U.S. It's a Hell of “an unspoken deal” (Fallows, 2005) for both state-capitalist sides. Bush gets to fight imperial wars for “freedom” and “security” and to run related deficits without having to raise taxes on his aristocratic class brethren to pay for it all. The deficit helps him more easily slash domestic social programs and bankrupt what's left of the American welfare state – a longstanding Republican objective. Meanwhile, competition from abroad keeps manufacturing wages and working-class bargaining power down in the U.S. And the “war on terrorism” provides a marvelous way to silence dissent and divert popular consciousness regarding the real nature of his harshly regressive policy agenda. For their part, the Chinese authorities get to keep the yuan weak and keep the vast American consumer market available for the realization of surplus value – also appropriated by U.S.-based multinationals with direct investments in Chinese manufacturing – wrenched from their super-exploited proletariat. They also get to avoid domestic social turbulence (ala Mao's cultural revolution) by maintaining regular employment for their dispossessed working-class. And a weak yuan helps keep Chinese wages low, which helps stimulate investment in that country's peasantry-absorbing export-manufacturing plants. China "needs [Bush's] America to industrialize. Bush's America needs China to “stave off financial collapse” (Longworth, 2005). The losers include American workers in manufacturing sectors vulnerable to Chinese competition. Some observers (of both Republican and Democratic affiliation) raise concerns about American policy sovereignty. They fear that China's ownership of a significant part of the federal debt will give it a say in the making of U.S. policy. Whatever the rationality of that fear, it still seems to matter if a national economy actually manufactures goods or not in this supposedly "post-industrial" age. Many working-class Americans especially pay a steep price for multinational corporations' decision to de-industrialize a once strong and high-wage manufacturing nation – the U.S. – and to invest in lower-wage zones of the world economy. At the same time, it is important to make the hardly original or novel observation that imperial militarism and economic power ultimately come to work at cross purposes for late-hegemonic states like the contemproary U.S. Bush is exacerbating the long decline of American global economic power and (of much less concern to American elites) the unraveling of what's left of the American social contract by blindly and expensively pursuing his militarist agenda. According to some plausible Marxian analyses, the occupation of Iraq was largely an attempt by the Bush regime to use the last and only refuge of truly unchallenged American global hegemony – its possession of a sheer preponderance of military force – precisely as a tool for shoring up its long-declining world-economic power by putting Uncle Sam's boot on that great strategic economic (and military) prize in an age of global petro-capitalism: the Middle Eastern oil spigot (see David Harvey, 2003). There is, of course, a venerable historical record of once hegemonic states losing their position because of over-investment in militarism and in foreign, overseas development, to the neglect of production base, economic vitality and social health in their own imperial homelands (see McCormick, 1990, for a useful summary of venerable "world-systems" analysis of how these and other self-defeating mechanisms tend to make single state hegemony in the world capitalist system transitory). Meanwhile, even as it deepens the decline of America's economic position, Bush's bungled imperial campaign in Iraq may go down in the history books as a more pathetic military debacle than the Vietnam War. In the earlier and (so far) much bigger bloodbath, Uncle Sam was up against a much more highly organized and formidable foe rooted in a left-nationalist revolutionary movement that received real support from existing anti-systemic states (the USSR and a then more Red China). Launched over significant protest from the rest of the advanced capitalist world, without the elementary allied-state consent and cooperation that a truly hegemonic (in the Antonio Gramscian sense of more than purely coercive “agreement”) state should have no trouble attaining, Bush's expensive and murderous occupation of Iraq has been stymied by resistance groups (so called “insurgents”) who cannot even remotely be compared to the revolutionary forces who gave Uncle Sam a black eye in an imperial Southeast Asian war (Arrighi, 2005) that also inflicted considerable damage on the health of U.S. public finances and economy at an earlier stage in the decline of US power. Selected Sources: R.C. Longworth, “Buyer's Market,” Chicago Tribune, 10 July, 2005, section 2, p.1 James Fallows, “Countdown to a Meltdown,” Atlantic Monthly (July-August, 2005) Giovanni Arrighi, “Hegemony Unraveling,” New Left Review (March-April, 2005) Thomas McCormick, America's Half Century: United States Foreign Policy in the Cold War (Baltimore, MD: Johns Hopkins, 1990) David Harvey, The New Imperialism (New York, NY: Oxford University Press, 2003

Comment On This Blog Post  See All Comments (19)

Person

By Rosskrekoski, Krekoski at Sep 11, 2005 00:07 AM
HHH -- the general argument here is that with a more equitable taxation system and support structures for lower income individuals (whatever the structure is-- there are efficient and inefficient ways of doing this), or perhaps a better mode of compensation for work (there are numerous articles and circles of discourse surrounding alternatives to capitalism, some are better than others) the argument you put forward would not even exist, as there would be no difficulty for a member of society to exist within the society. The inequal distribution of wealth within a society generally leads to inequality in upward mobility, and under the current structure, the example story you pose is the very small minority-- by definition of course. If you extend your logic to the logical endpoint, if everyone were to 'bust their balls' to the same extent, the distribution of wealth in society would not change as the structure would remain the same.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Gopisfirst, Hhh at Sep 10, 2005 04:53 AM
i was just wondering i hear a lot about tax cuts for the rich. I was wondering who do radicals call rich. How much do they make? And then someone please show me how the rich were the only people that got a tax cut. Because from what i know every tax bracket was reduced, including the lowest from 15% to 10%, child credit to 1,000 and don't forget the earned income credit. The next thing I would kinda liked answered is this personal story and why this is fair. My father and mother at the age of 20 had two kids, one that was 2 the other a newborn living on food stamps. My father busted his butt at college four four years with 2 children had thousands of dollars in student loans. He got a job as a mechincal engineer at the lowest level and after ten to eleven years he made it to be a manager at a big corporation. He makes six figures now so why does he get punished for busting his balls and have to pay more taxes then others. And why doesn't he deserve a tax break. Hey if he can accomplish all this in his life I believe it shows this country is great as long you put effort into trying to make something of yourself.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Organum, Baby at Aug 06, 2005 23:05 PM
"the workers have no country" as a slogan, denies the cultural disparity needed to be bridged its relevance. Yes ! we have had hierachical systems since 10 000 years ago and arguably patriachy postdates hierarchy. Your "subdivision into nattionstates" allso denies these structures their buffer-function against worse barbary. The socialist idea of people being basically good faces its other in the market-philosophy idea of people acting in their own interest. The clearest example of this would be the statements posted here: They go like this, "Come on mr chomsky, you dont believe that , nobody acts on pure benevolence" the last century showed the problems apparent in system-change between egotistical and group-focused hierarchies. I believe Marxs analysis prevented the workers revolution by example. Readable by the powers that be. Thats were i end up socdem.

Reply this comment

Occupy_iowa_city_rally

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Street, Paul at Aug 03, 2005 20:09 PM
From my perspective, according to which "the workers have no country" and the relevant "reference group" is humanity, there are no perfect nations in the world. There are significant differences of degree and savagery, to be sure, but pretty much all nations have reasonably harsh hierarchies of class and other and related distinctions. Ruling classes in Asia, Western Europe, and elsewhere seem content to play quite a bit of ball with the U.S.(to the extent of significantly funding the American imperial state)and take a lot of neoliberal and other cues from their American comrades. The institution of the nation state itself is part of a hierarchical world capitalist system that reigns partly through the subdivision of people into hundreds of 'sovereign' states. People can hate "Americans" (an Algerian Parisian once threatened to cut my American head off in his city's Metro) if they want, but the deeply fractured and divided (in class, race,. and many other terms) nation that is the USA gets trashed because it so damn powerful in doing what great capitalist nation states do, which is screw people over at home and abroad, in the interest of the privileged few. I never believed in socialism in one state and I don't believe in evil capitalism in one state.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Cacioppo, Jonas at Aug 03, 2005 05:09 AM
I must disagree with you, the-abyss. It is not arrogant to be proud of the country one lives in. And, in many respects, America (meaning the people and society as a whole) truly *is* the greatest in the world. This does not discount the possibility of, say, an Indonesian's right to say that Indonesia (meaning its people and society as a whole) is the greatest, as well. [I chose Indonesia in this example for its comparative size of population.] Because of my love for America and our collective heritage, as well as the principles upon which our government was founded, I take particular opposition to the present administration and its policies. To claim that such a thing is "against" America (whatever that is supposed to mean) is not worthy of comment. A critic of the present leadership in Indonesia is not anti-Indonesian, though the present regime could plausibly make the case, however false. ... (FOR THE REST, GO TO http://alexcacioppo.blogspot.com -- I just don't want to deal with the 15 min. wait period b/t posts, as this exceeds the word limit)

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By The-abyss, The-abyss at Aug 02, 2005 23:55 PM
America is drowning, and the world is waving it goodbye - with a smile! :) That's according to an article in the London Financial Times: http://news.ft.com/cms/s/77868922-0228-11da-9481-00000e2511c8.html Excerpt: "The US is increasingly viewed as a [country] inhabited by arrogant and unfriendly people" Hear that, Mr Chomsky? No, of course you don't, because you're too arrogant to visit your own blog. Anyway, someone tell Mr Chomsky to stop saying America is "the greatest country in the world" It's best he doesn't add fuel to the fire. A couple more excerpts: "...the US...ranked last in cultural heritage, a measure of a country's 'wisdom, intelligence, and integrity' "...the world takes a dim view of the US people" I second that. Although, Graham (I think that's the poster who told me not to write anything unrelated to Chomsky's "Topic du Jour") is Canadian. People always get the Canadians and Americans mixed up - now I know why!! The survey seems to be spot on, though. I have a choice at my local supermarket to buy orange juice made with Florida oranges or orange juice made with Spanish oranges. No need to guess which one I buy.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Cacioppo, Jonas at Aug 01, 2005 02:19 AM
I would be careful to quickly link our conquest of Iraq to a need to shore up our fading global economic might. We still have the largest economy on the planet, though our manufacturing and R&D sectors have been particularly hard-hit. It is obvious to many that the next half-century's major challenge to Pax Americana will come from China, whose economy is now the world's fastest growing (something like an annual GDP growth rate of 10%, according to figures reported in the Economist). And, as well, its vast supply of cheap labor and highly undervalued yuan continue to exacerbate the trade deficit. It's clear to me that we seriously need to take another look at the priorities we are setting now, not only for ourselves but generations unborn.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Organum, Baby at Jul 31, 2005 21:11 PM
AntiChum s assumption of benevolent US politics in the centralamericas are FUN ! Soo! Ill answer like this. The theory that most of the cruelty committed there was by local opperatives is refuted by the diversity of methods used in the different theatres. Guates schorched earth as opposed to Elsaladorean rapesquads or negropontes nicaragua-ops with its ties all the way to iran. these nations look as an experiment in guerilla/terror/counter-methods. This implies a central planning structure. I think USA still has many financial options available. ( Captains of industry an all ) but i totally understand how people like AntiChum will mess it up by being basically ignorant , having to rely more on instinct and flock-mentality than the higher virtues and in the end creating enemies in an unending spiral. Not all have this vulgarpolitical propagandatalk though and the young smart heads analyzing for the cia have warned against this development.

Reply this comment

Occupy_iowa_city_rally

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Street, Paul at Jul 31, 2005 00:02 AM
The American Friends Service Committee (among many, many others) does not agree. See http://www.commondreams.org/news2005/0729-01.htm How odd to post basically unsubstantiated Republican commercials in the comments section of a left blog.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By The, Roger at Jul 29, 2005 11:26 AM
Some good news for the USA: House approves CAFTA (Central American Free Trade Agreement) This is good news for democracy and good news for the world. Spreading free-trade and democratic values is a very good thing in that often tumultous part of the world. Remember that in the 80s, nearly all of the Central American governments, particularly Nicaragua, were under a totilitarian regime. Now they are all democracies. The US deserves much of the credit for that. CAFTA is a pro-capitalist, pro American venture. The vote was very close but President Bush appeared personally in Capitol Hill to convince a few members of Congress. He was successful in doing so This is a big win for the President and a big win for America.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Organum, Baby at Jul 27, 2005 16:57 PM
China already has a high percentage of recyceling. ( comes with being a billion , i guess ). however. there is a reason that that dpt minister was folding his hands on the floor of the house of senate. 4/5 months ago. new economy, rymes with autonomy but that might not be the case. it is imperative to controll oil. as per now all other sources are as nil compared and the current western expenditure keeps wannabees at bay. china has some oil of its own but not compared to its need if acting as industrialized barbarians do. killing and maiming our earth for the right to shop in an airconditioned shoppingmall or at least controll the merchandize. ( they are better at the former than the latter )

Reply this comment

Occupy_iowa_city_rally

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Street, Paul at Jul 27, 2005 01:56 AM
terence yes I think one reason to temper excitement over the long decline of US hegemony is the danger it poses: predominant military power including no small and re-expanding thermonuclear capacity is their main remaining ace in the hegemonic hole and (by some analyses)what they now view as the geo-military (territorial logic) way to restore their long lost market (capital logic) power. Some on the left actually seemed to want the "Messianic Militarist" (Nader's description) Bush II to win in 2004 because he would accelerate the decline of American power but this struck me as too reckless (I agreed with Chomsky and Albert on this and with them also on related domestic policy issues) for reasons you suggest. But it does seem that Bush is accelerating the decline, for better and/or worse. Yakov, you sound like a Republican commercial. I think its wrong to think that that 20th/21st century social spending would have to be morally or legally approved (it is certainly not prohibited in any way) by the U.S. Constitution of 1789. The Founders lived in a world that did not yet envision Medicaid or the federal education budget or TANF/formerly AFDC (to mention some items from the left hand of the state) or the Pentagon System and other forms of corporate welfare (from the right hand). Federalism and states' rights have an ugly, often racist and classist history that turned 20th century social movements with very good reasons to the federal level. On China and declining US hegemony and "war on terrorism," perhaps good to see (I've yet to read...will try tomorrow) Arrighi, "Hegemony Unravelling - 2," New Left Review 33 (May June 05), which argues that "Washington's attempts to secure its world role through the invasion of Iraq instead hastened the rise of China" and concludes with some basis for optimism on the human species' chance to survive Uncle Sam's decline and with approving quotation of Michael Lind's conclusion that Madeline Albright was wrong and the U.S. in fact a "dispensable nation." Can get it online at http://www.newleftreview.net/Issue33.asp?Article=07

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Bok, Yakov at Jul 27, 2005 01:06 AM
Paul, you hit it right on the head when you said "the $412 billion that the U.S. government spends over and above what it receives through taxes." This is the #1 problem with all governments. Bureacracies like to spend, spend, spend. Unfortunately, you fell off mark a few paragraphs later when you criticized Bush's tax cuts, which resulted economic growth, and then called for an increase in spending on social programs. The federal government's role-which includes military spending-is very limited as laid out in our Constitution. The Constitution does not include anything about social spending which you advocate. If you are serious about limiting the size of our federal government, which your post implies, you should be writing about federal intrusion into areas of state interest, such as education and health care. Let the states raise taxes to pay for those issues, not the Feds. We have state and local governments for a reason. Unfortunately, most people fail to recognize those reasons.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Organum, Baby at Jul 26, 2005 20:42 PM
1 The chinese economy is impeded in its growth by the global shortage of energy. ( Remeber the last chinese attempt to buy a oilcompany with interests in the chinese sea. The chinese bid was higher but it was sold to us/international interest due to u.s national interests 2 The tax-cuts extend the gap between corporate resources and tech and the public mirror image. Thus, even if the u.s has a roaring deficit and owes money to all the rest the private u.s power as well as the private lockhead/boeng/carlyle etc military tech and its potential application both benevolent and malevolent keeps u.s interests quite equal to international interests aka: ( all the production of the world ) U.S power is not reliant on the wellfare / wellbeng of the average american and the us could threaten ( like 3.world countries in the 70, louis 13 w the medicis ) to refuse paying the loans. But basically, chinas growth is dependent on energy. Markets are important but secondary. They are p.t investing heavily in general ( rural ) education . Love and kisses from baby :-)

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Poverty, 2010: at Jul 26, 2005 18:02 PM
In 1800 chinese economy was growning and growning and growning.... and they were becoming rich, very rich. English introduced heroine in China and they quickly collected all the money and the economy felt down. Do you remember? Domenico Schietti 2010 Eliminazione Povertà http://www.liberaassociazioneilpopolo.it/

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Michael, Bobbo at Jul 26, 2005 16:34 PM
Thanks for the posts Krekoski - they were very helpful. I certainly agree that the weakest pillar of the two-sided global economy is the failing imperial American state. But China's money, as with most of world's, is speculative. A failure of the U.S. or China means the sudden evaporation of a tremendous amount of investment capital. With a global economy as integrated as ours, the effects could be worse than the 30s. As for Keir's, "out of the frying pan into the fire" comment - the notion that Chinese global hegemony would be worse, or at least no better, than American power... Well, having a global superpower is bad, no two ways about it. I don't care whether it's China, Russia, the U.S. or Norway or Vanuatu for that matter. In order to project power over the globe militarily, economically, perhaps even culturally as a hierarchical nation state, you simply can't be the tooth fairy. Most of the buzz about China's rise as a superpower centres around the notion of an emerging "tripolar" world order, with spheres of influence projected from the U.S., China, and a unified Europe. A lot like Orwell's "Oceana, Eurasia and Eastasia." Can't say I believe it much, but it's more likely than a solely Chinese world order.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Rosskrekoski, Krekoski at Jul 26, 2005 09:55 AM
Unrest is a factor, but not necessarily one that upsets the underlying economic structure. Certain massive revolts and an overturning of the government will have that effect, but I havent seen any but the most extreme of analyses predicting that, and intuitively it doesnt seem to have much behind it. The wealth divide is a growing problem, Ill admit, but the lack of information flow within China, makes anything but extreme and far-reaching famine an unlikely trigger for such unrest. As well, while many of the welfare structures are slowly being eliminated in China,?I think that in the face of serious unrest the government would not be unwilling -- especially in light of the fact that it has huge foreign currency reserves and an export surplus -- to inject money into disaffected portions of the society. The worst case scenario for China I see is a slump if the American dollar plunges too sharply (i.e. point 2) ) though I dont see this as having severe long term consequences for the Chinese economy. While manufacturing is by far the largest industry, others are growing as well, and with huge investments in infrastructure. Corruption is a problem that the govt is attempting to tackle (albeit in a superficial, PR-oriented way), though how successful that is will of course affect any analysis.

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Rosskrekoski, Krekoski at Jul 26, 2005 09:16 AM
1) is a fairly common analysis, and I dont think anyone really doubts seriously that there will be a bubble effect to the Chinese economy. The recent switchover of the Yuan to a "basket of currencies" is IMO a smart move, esp. if they stop buying USD in the same volume. This will of course have the effect of depressing the value of the dollar relative to the Yuan, (in turn shrinking the value of the USD reserves held by China) but if they continue their strategy of buying foreign currencies, holding a diversified reserve will have a stabilizing effect, which is good for the long term if they move to a free-floating currency. The currency situation makes China a different case than one like Japan of course, so its dificult to draw direct comparisons here I think. A rise in the Yuan will of course cause a slump in exports, but it doesnt look like that will happen in a sudden way at all due to the transition from the peg to the USD to a peg to their "basket of currencies" .

Reply this comment

Person

Re: Bush, China, Two Deficits, and the Ongoing Decline of U.S. Hegemony

By Michael, Bobbo at Jul 26, 2005 03:20 AM
An interesting analysis, which dovetails nicely with longstanding concerns I've had with the U.S.-based global economy. Two issues: 1) The roaring Chinese economy could very well end up a paper tiger. It's nomenklatura capitalist development model relies heavily on bank loans to cadres based more on their bureaucratic credentials and political connections than the viability of their enterprises. I've heard concern that Chinese banks may be over-leveraged. In other words, this boom could turn out to be a very large bubble. There are plenty of things that could make it pop, and urban distress brought on by the soon to be defunct state-owned sector could be secondary to the widespread unemployment in the trade-liberalised agricultural sector. The vast majority of Chinese are still rural after all, and their lot is not improving. 2) A collapse of the U.S. domestic market. Even a small collapse, brought on by one too many oil shocks, one too many military adventures, another large terrorist strike, or some other calamity, could trigger a run on the dollar. This in turn would trigger a collapse of the Chinese economy. In fact, 1) and 2) are co-catalytic - one will trigger the other. And that means the world economy is very fragile. I must stress, I am not an economist. I'm sure there are problems with this scenario - any comments?

Reply this comment

Comment On This Blog Post  See All Comments (19)

Loading_border