Mexico Slaps New Tariffs Against US Truck Ban

♠ Posted by Emmanuel in , at 8/17/2010 01:08:00 AM
Like other FTAs, the North American Free Trade Agreement is supposed to cover the free movement of goods, services, and labour, is it not? Apparently, the US still has trouble coming to terms with this notion. Sometime ago, I made a detailed post early last year about how "driving while Mexican" was banned Stateside for truckers coming from south of the border due to specious safety concerns. To pacify the Teamsters union, then-President Bill Clinton passed legislation in 1995 banning Mexican long-haul trucking services from entering the US. Aside from there being no evidence that Mexican truckers had worse safety record--they actually had better ones while plying their trade in the US--these frankly discriminatory rules have made American consumers pay more for the unnecessary process of having Mexican trucks unload goods at the border to be taken onward by US ones. Not only is time wasted doing so, but the costs of this rigmarole are passed on to American consumers.

Mexico challenged and won a ruling against the US at NAFTA's dispute settlement mechanism. Still, the US has been recalcitrant in striking down the offending ruling. The source of recent Mexican discontent was the discontinuation of a pilot programme allowing Mexican truckers to traverse the US as per the ruling. Up to now, the US has not addressed this issue with any vigour, prompting Mexico to retaliate by slapping tariffs on an even wider range of goods after imposing a number of them last year. From Dow Jones:
Mexico plans to add additional goods to a list of U.S. imports that face retaliatory tariffs in a long-standing dispute over access of Mexican trucks to the U.S. highways, Economy Minister Bruno Ferrari said Monday. At a news conference, Mr. Ferrari said Mexico will add 26 products to the original list of 89 and remove 16, bringing the total from 43 states to 99 goods with an estimated annual value of $2.5 billion to $2.6 billion.

Mexico imposed the tariffs in 2009 after the U.S. Congress removed funding for an 18-month-old pilot project to allow Mexican trucks into the U.S. under the North American Free Trade Agreement. Opposition from U.S. truckers has kept Mexican vehicles out of the U.S., even though access is included under the terms of the Nafta. Mr. Ferrari said that goods in question will be published this week in the government's Official Gazette, but declined to identify them.
There have been weak suggestions that the ban would be lifted, but they have not come to pass, culminating in yet more tariffs to be announced soon. Is it sheer contempt for its trading partners that makes the US blind to their concerns, or is it simply a matter of forgetting to address trade matters given more pressing problems Stateside? Either way, it certainly doesn't look like a page taken from how to win friends and influence people.
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Protecting Asia From the West's Financial WMD

♠ Posted by Emmanuel in , at 8/17/2010 12:08:00 AM
Liberalize, privatize, and deregulate your way to almost paradise; that was the message the West propagated during the height of the Washington Consensus era. Like many other Asian countries, however, China did not heed this call, preferring to stay away from securitization in a big way. Instead, China's recent financial problems are more prosaic and involve large government-run banks being compelled to lend to state-owned enterprises with sometimes limited regard for their ability to repay these loans. This trope was prominent in the middle part of last decade, and has resurfaced during recent times as the PRC once again made state-owned banks (SOBs?) lend to spur investment. Critics often say that investment in export-geared enterprises is the last thing China needs at this point, but we have yet to see another massive wave of defaults.

Anyway, back to today's story. The LSE house journal Global Policy has an interesting feature from the chief advisor to the China Banking Regulatory Commission (CBRC), Andrew Sheng, on how China was able to avoid the worst effects of the financial crisis. Aside from prudent regulation, another important task was shielding the Chinese economy from aftershocks emanating from the subprime capital of the planet and other bastions of financial innovation. It's a different world we live in when China--now the second largest economy in the world which I'll have more about soon--gets to lecture the West on such matters. With nearly $3 trillion in foreign exchange reserves, I guess China has many reasons not to take any £$%^ from Westerners wanting to ply their market open without reflecting on how their practices have impacted the economies of their home countries. What follows are the abstract and key policy implications:
Abstract

Asia was not directly or significantly hurt through financial channels by the global financial crisis, but rather was hurt through trade channels. This article reviews the current regulatory reforms of global financial markets and how these affect Asia. The current crisis has exposed many weaknesses in the existing financial architecture, including the fragmentation of regulatory jurisdiction at the national and institutional levels. What is required is a system-wide and global view of market behaviour. The article uses a network perspective to analyse the issues and to propose solutions. The globalisation of finance and its fragmented regulatory oversight is a collective action problem that easily slips into a tragedy of the commons. Given the fact that there is no unanimity of views on how finance should be structured, there are differences in approaches to the reforms. Because Asian financial institutions and structures are less sophisticated, Asia is still struggling with how to make the financial system more efficient and responsive to real sector needs. The article suggests that Asia needs to identify its financial needs and can develop its markets through greater regional cooperation. Identifying the need to see financial markets as ecosystems through diversity, the article suggests that Asia can evolve through simpler but more robust financial systems.

Policy Implications

• As a matter of priority, Asia needs to strengthen domestic capital markets according to international standards.
• The Asian approach will tend to be more pragmatic, focusing on simpler rules more effectively enforced. Financial innovation should be encouraged with an emphasis on functionality for the real sector, rather than leverage for the financial system.
• Using the network approach means that Asians should build financial markets on a modular basis, ensuring that failure of one module will not destroy the whole system.
• Since it is recognised that global problems cannot be solved at national levels alone, Asia can increase its voice in the international arena through regional subsets of the Financial Stability Board, central bank grouping within the Bank for International Settlements (BIS), and the International Organisation of Securities Commissions (IOSCO) to help push implementation and enforcement according to global standards and to have regional input into global policy decisions.
Its a common theme that should resonate with reasonable-minded folks: financial practice should map closely to the real economy instead of being used to create virtual economies whose basis of and reason for existence is hard to determine.
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Hillary C, Here's the Score on the South China Sea

♠ Posted by Emmanuel in ,, at 8/16/2010 12:11:00 AM
I honestly wish this story would have gone away by now but it hasn't. It's rather annoying that those with few qualifications to comment on the matter keep blabbing away without shedding new light on the matter. To me, the worst offender is the Economist. Currently ranked first and fourth among the most read features are slanted pieces about "Strategic Jousting Between China and America: Testing the Waters" and "They [The Americans] Have Returned." As you will read below, however, there is much that has been left out by this often-belligerent publication that, among other things, cheered on that stunningly successful exercise in freedom-and-growth promotion, the invasion of Iraq.

So, the IPE Zone is now compelled to, ah, wade into these troubled waters to set the record straight on important points of discussion. During the last ASEAN Regional Forum (ARF) meeting in Hanoi, Vietnam, US Secretary of State Hillary Clinton raised a ruckus by declaring "The United States has a national interest in freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea," and it seeks "a collaborative diplomatic process by all claimants for resolving the various territorial disputes without coercion."

The US sees raising the matter as safeguarding its interests in keeping these important trade routes open, while China believes it to be interference in its internal affairs since these longstanding territorial disputes are between it and Brunei, Malaysia, the Philippines, Taiwan--with regard to the Paracels--and Vietnam. (Note that Taiwan is not a member of ARF which discusses security matters in the Asia-Pacific.) Since Vietnam is currently the rotating chair of ASEAN, the now-famous gathering where Missus Clinton raised her voice occurred in Hanoi and ended on 23 July. By doing so, the US is supposedly checking Chinese aggression against comparatively small Southeast Asian states. And so it is that assorted blowhards started applauding Clinton's action. Gordon "The Coming Collapse of China" Chang (we're still waiting, bub) weighed in. Always looking for a China menace-style angle, American media similarly paints a fairly sensationalist picture of what's going on. A geographically challenged hack even considers Australia as part of Southeast Asia while depicting a regional arms race.

Coming from a country contesting claims with China and having looked at this issue in some detail as part of my research into regional economic integration, let me offer salient points for consideration Western media and the Americanized blogosphere often miss:

1. Military exercises between the US Navy and ASEAN states have been boringly common--even so during the Bush 43 era. I refer to the annual Cooperation Afloat Readiness and Training (CARAT) annual naval exercises conducted between the US and Brunei, Cambodia, Indonesia, Malaysia, the Philippines, Singapore and Thailand--7 out of 10 ASEAN members. Additionally, the Philippines and US have conducted more of these exercises in the wake of the global war on terror. (Some obscure publication called the China Daily has even dutifully reported on these exercises all these years unlike much of Western media who've suddenly discovered that, gee, military exercises are happening in Southeast Asia...with the US Navy!)

What of the other ASEAN members? Laos is landlocked, while Myanmar and the US are famously at loggerheads. Regarding the emergence of US-Vietnam naval exercises, perhaps this little-known incident called the Vietnam War may have put off the latter's participation for some time? Give me a break.

2. Consider the implications of the China-ASEAN FTA. The economic subtext is of China rapidly leaving the US behind (together with its mighty exports) in trade volume terms with ASEAN. Having surpassed the US as ASEAN's third largest trading partner, the China-ASEAN Free Trade Agreement (CAFTA) is providing ever-closer trade ties in a manner of speaking. Running interference in the security realm to distract from closer Sino-ASEAN economic cooperation may be part of America's ploy, but it certainly doesn't seem to be deterring it. I am far from alone in saying the US is being left behind.

While the Western media was whipping itself into a frenzy of its own making these past few days, Vietnamese state media dutifully reported with no histrionics that Vietnamese officials representing ASEAN were in bordering Guangxi province working on further enhancing the so far successful trade pact. It's a strange world we're in, but state media often paints a more honest picture insofar as their portrayals will almost never clash with sanctioned views.

3. In 2002, China and ASEAN countries making claims on islands in the area concluded the Declaration on the Conduct of Parties in the South China Sea. There is nothing to suggest that China is keen on using force to seize these islands, or that even more far-fetched, ASEAN countries will do so. They have stuck to the text and are in talks to make these arrangements more concrete.

4. It's pretty rich for the US to butt into this dispute citing "international law" as a justification when it's not even a signatory to the UN Convention on the Law of the Sea (UNCLOS) that governs these matters. It's a long story why the US hasn't ratified the convention, but let's just say it's even less keen on abiding by "international law" than China is as evidenced by its refusal to sign UNCLOS. Like in many other fields of international interest, America is hypocritical and two-faced when it redounds to its benefit. By citing "international law" that it hasn't even signed on to as a basis for sorting out this dispute, it's characteristic American bluster--all mouth, no trousers.

5. The ideal outcome would be to refer the matter to the International Court of Justice (ICJ) for arbitration. Again, this part is tricky. The countries involved have differing interpretations of their Exclusive Economic Zones (EEZs) under UNCLOS which they all have signed on to unlike the US. China's claim is, to put in mildly, fairly expansive as it covers both the entirety of the Paracels and the Spratlys. Our Indonesian colleagues have tried to act as arbiters to settle these matters once and for all as (genuinely) disinterested observers, but to no avail.

Hence, the best way to adjudicate this dispute would be to refer it to the ICJ in the Hague, the UN court that deals with territorial disputes, over the interpretation of UNCLOS. For understandable reasons, China will probably be the most reluctant party to submit to third-party proceedings given past precedents. But hey, I guess it's better than the US which can't even refer such matters to the ICJ.

6. PRC Foreign Minister Yang Jiechi and his staff are no slouches when it comes to training in diplomacy. In contrast to negative portrayals by Western media, Chinese officials are quite cosmopolitan and well-schooled. Again, Yang Jiechi is an LSE alum and an honorary fellow at our institution. Meanwhile, we at LSE IDEAS regularly interact with foreign ministry officials since we run a collaborative programme with them in conjunction with the Foreign and Commonwealth Office (FCO).

7. Vietnam did not spring a surprise on China at the ARF with US help but has long since signalled its intention to bring this matter up as current ASEAN chair. This obscure news outlet, a certain BBC, had a pretty detailed discussion of Vietnam's intentions to do so in, er, April 2010. It's certainly Vietnam's right to bring the matter up, and the US calculated that its interests were better served by backing Vietnam. At any rate, ASEAN members are not quite happy with US military vessels traversing what they believe are their waters willy-nilly.

8. China is loathe to contest US naval dominance directly as it is a waste of money. While it may be spending more on military hardware, it pales in comparison to that spent by the US. Instead, it is drawing up plans for extensive land routes that cannot be as easily disrupted. Revisit my recent post on how China is keen on establishing rail links to South and West Asia via a new Silk Road. The point is, there are no mammoth George Washington-sized vessels that will be patrolling overland routes (or disrupting them if push comes to shove). Unlike aircraft carriers, destroyers, or frigates, this kind of expenditure is directly conducive to building infrastructure and trade ties.

9. At the gathering, participants including China concluded by resolving to continue discussions on the matter. This is perhaps the most galling bit: China did not object to participating in further dialogue over the matter which was already underway to begin with. From the statement at the end of the meeting:
The Ministers stressed the importance of maintaining peace and stability in the South China Sea. The Ministers reaffirmed the continuing importance of the Declaration on the Conduct of Parties in the South China Sea (DOC) of 2002 as a milestone document between ASEAN Member States and China, embodying their collective commitment to ensuring the peaceful resolution of disputes in the area. They stressed that the Declaration has been effective in building mutual trust and confidence that will help maintain peace and stability in the region. The Ministers encouraged efforts towards the full implementation of the Declaration and the eventual conclusion of a Regional Code of Conduct in the South China Sea (COC).

They encouraged the continued exercise of self-restraint by all the parties concerned and the promotion of confidence-building measures in this area and welcomed their commitment to resolving disputes in the South China Sea by peaceful means in conformity with the spirit of the DOC and recognised principles of international law, including the United Nations Convention on the Law of the Sea (UNCLOS 1982). In this regard, they welcomed the reconvening of the ASEAN - China Joint Working Group on the Implementation of the DOC in Viet Nam in April 2010 and the schedule to hold the next Joint Working Group Meeting in China before the end of 2010.
If you're further interesting in the history of this ongoing story, particularly between China and Vietnam (the most contentious Sino-ASEAN relationship) and between China and the Philippines, Japan Focus has an informative article that details most of the surrounding controversies.

Bottom line: the media frenzy over Clinton's visit is largely manufactured. Not only is America not a party to the dispute, but its offer to act as a mediator on various claims based on "international law" is also disingenuous given that it is not a signatory to UNCLOS. Other than perhaps acting as a convenient spoiler--a certain conflict leads me to believe the Vietnamese know how to handle proto-crusaders--the US has little to offer in resolving these territorial disputes. Whether in cyberspace or the South China Sea, American protestations are usually of the nudge-nudge, wink-wink sort.

For the reasons given above, I'll leave the warmongering to the Economist.
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Again: No Link Between Democracy and Growth

♠ Posted by Emmanuel in , at 8/13/2010 12:01:00 AM
Dani Rodrik is legendary in development studies and political science in general. While perusing the handiwork of our fellow IPE bloggers at North Carolina, I was surprised to come across his new Project Syndicate article which seemed to contradict much of what he's written before. If you are a close follower of development studies, you are undoubtedly familiar with his book One Economics, Many Recipes. In that compilation, Professor Rodrik makes the case that there is no single solution alike capitalist liberal democracy as per the likes of Francis Fukuyama and neoconservatives past, present, and future. Imagine my shock when he appeared to claim that democracies outperformed authoritarian regimes in terms of generating economic growth:
Democracies not only out-perform dictatorships when it comes to long-term economic growth, but also outdo them in several other important respects.
I almost fell out of my chair. Puzzled as to why one of the most formidable econometricians in development studies would write something rather questionable, I sent an e-mail to an old sparring partner in the blogosphere. (It seems he doesn't blog that much anymore, and I can certainly vouch that blogging is not exactly the most remunerative activity.) Anyway, he has since issued a correction which goes...
Due to an oversight on my part during the editing process, the sentence that started with “Democracies not only do not underperform dictatorships when it comes to long-term economic growth..” in my original version eventually became “Democracies not only out-perform dictatorships when it comes to long-term economic growth..” in the published piece. The change imparted a superiority to democracy in terms of growth which the evidence does not find and which I did not intend to express. Thanks to Dr. Emmanuel Yujuico for taking me to task over this change, which I had not noticed until he pointed it out.
It honestly bothers me that I was the first to notice this factual error. On the aforementioned webpage, there are supposedly 134 Facebook shares and 41 retweets, yet nobody bothered to flag this up. What worries me is that few folks are really that familiar with the literature or do not read closely enough.

This subject matter--the relationship between democracy and economic growth--has been researched to the point of becoming a cliche, but overall, econometric analysis yields a null result. There is, statistically speaking, no evidence that democracy has a direct impact on economic growth. None. Nada. Zip. Zilch. A paper that I can suggest for those unfamiliar with this area is Doucouliagos and Olubasoglu's meta-analysis--or an econometric study of studies--that provides a similar conclusion. (There's also a non-gated earlier version.) At best, democracy only has positive "indirect" effects, but it alone doesn't make it significantly more likely that economic growth will occur.

As for the freedom-and-growth shtick, save it for Wolfowitz, Perle, and Feith. To state things correctly, authoritarianism may not necessarily be conducive to economic growth, but neither is democracy. There are many political recipes for economic growth, period.
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IMF Effectively Pronounces the US Bankrupt (Duh)

♠ Posted by Emmanuel in , at 8/12/2010 12:06:00 AM
Now here is one of the increasingly rare breed of American who can unflinchingly and convincingly explain why the US is in a world of trouble. In 2006, Laurence Kotlikoff asked in an FRB St. Louis Review article, "Is the United States Bankrupt?" What follows is the conclusion he came up with in those innocent times when America had yet to breach the trillion-dollar annual deficit mark. It only made it past, oh, the $400 billion mark. Such incredible thrift, eh? It almost makes you want to have Bush back as an exemplar of economic stewardship compared to what passes for it nowadays. I can hear the Yanquis sighing with fondness as their country sinks further into its debt morass:
Countries can and do go bankrupt. The United States, with its $65.9 trillion fiscal gap, seems clearly headed down that path. The country needs to stop shooting itself in the foot. It needs to adopt generational accounting as its standard method of budgeting and fiscal analysis, and it needs to adopt fundamental tax, Social Security, and healthcare reforms that will redeem our children’s future.
To make a long story short, the United States has done none of those things. Instead of placing a priority on restoring a semblance of fiscal sanity, it has since embarked on a course of megadeficit spending.

And so we have Kotlikoff's new opinion piece in Bloomberg. Instead of beating around the bush like he did earlier, he cuts to the chase by relaying the opinion of the IMF that, yes, America is effectively bankrupt. Although this fact should be plenty obvious to all except the most jaded and mathlexic contenders for the Carl Spackler Award, it is good to hear coming from Kotlikoff. Also, despite IMF honcho Dominque Strauss-Kahn being more on the side of stimulus than consolidation, it's good to know his underlings essentially agree with criticisms of this brand of free lunch economics.

You've heard all the excuses for vapid "deficits don't matter"-style reasoning. Now, however, let's hear the lowdown from Kotlikoff:
Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.
This time, he ends by saying the US is in worse shape than Greece. I definitely agree that the solutions on the horizon do not look promising for Deficitlandia:
And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.

Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it’s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.

Some doctrinaire Keynesian economists would say any stimulus over the next few years won’t affect our ability to deal with deficits in the long run. This is wrong as a simple matter of arithmetic. The fiscal gap is the government’s credit-card bill and each year’s 14 percent of GDP is the interest on that bill. If it doesn’t pay this year’s interest, it will be added to the balance.

Demand-siders say forgoing this year’s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue. My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain “solutions.”
By the way, the IMF report Kotlikoff cites is a fine if sobering read. Thankfully, it doesn't tell you fanciful stories about how deficits don't matter since interest rates are so low and other balderdash so beloved by certain Amerocentric parts of the blogosphere. Here is the part on p. 54 he mentions in the op-ed:
7. The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates. Using the same discount rate (3 percent) used by the Trustees of the Social Security Administration (2009) in their own Social Security-specific fiscal gap analysis and by CBO (2010e), and the infinite horizon definition, the U.S. fiscal gap is about 14 percent of the present discounted value of U.S. GDP under the Staff’s Scenario. This implies that closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP, that is to say that fiscal revenues and spending would need to change so that the primary balance predicted under that scenario improves by this amount every year into the indefinite future starting next year.Using the Alternative Scenario the fiscal gap increases to about 14½ percent of the present discounted value of GDP (owing to the assumption that tax cuts are made permanent).
And here is the conclusion. Needless to say, immediate corrective action is necessary:
14. Sizeable fiscal actions would be needed to close the U.S. fiscal and generational imbalances. Under current policies, the United States federal debt is projected to grow rapidly due to a combination of large budget deficits before and during the crisis, as well as, over the medium term, demographic factors and healthcare inflation. As part of the medium term adjustment, the authorities would need to raise taxes and/or cut transfers substantially to avoid an undesirable escalation of the debt-to-GDP ratio. The longer the wait, the larger the necessary adjustment will be and the greater the burden on future generations.
America is broke and there ain't nobody fixing it.
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Jobless America: Yanquis Should Work Abroad

♠ Posted by Emmanuel in ,, at 8/11/2010 02:44:00 PM
It's time America faced the honest truth as its sunset years roll on and its megadeficits mount: like with the rest of its tarnished brand, it doesn't produce a whole lot of stuff the rest of the world wants. This fact is evidenced by the latest monthly figures showing an unexpectedly huge rise in the trade deficit. Despite the US "economy" being little improved since the height of the subprime crisis, the borrow-and-spend nation managed to pile up a nearly $50 billion deficit in June. Exports are contracting, not expanding; so much for Obamanite delusions about doubling exports in five years. Expect a massive downgrade to the (scarcely believable) advance estimate GDP figure of 2.4% annualized in Q2 2010 due to an again ballooning trade deficit.Instead, the wheels are truly coming off this directionless wagon. Truly, the sun has set on Pax Americana as very few will disagree when I say that its best years are well past it.

At the same time, there is an interesting article in the Wall Street Journal about how many vacancies there are in America despite such high unemployment rates. Apparently, there is a sizeable mismatch between skills needed to fill high-skilled manufacturing jobs in industries that may actually raise American export competitiveness and what is available in the job market. So, what you have left is a lot of middle-of-the-roaders whose training and preferences lie in useless fields like that I'm in where punters are a dime a dozen. (Ouch, the truth sure hurts!)

Facing this situation of jobless America, the obvious response would be to send more people to work abroad. Migration is a fact of life in many other countries, and even in the US itself people move to different states all the time. Still, the Yanquis are famously incurious about the rest of the world. In comparison to here in the UK where 71% of folks have a passport, only 22% of Americans do. Even in the fairly esoteric part of the blogosphere I ply my trade in, you will notice that a lot of concerns are domestic ones of interest mainly to whitebread audiences. Indeed, it may be a fair characterization to say that much US scholarship in international politics is often Just a Bunch of White People Talking to Each Other at US Universities and Calling It International.

In general, we have two stubborn facts: there are few jobs available in America, and the few that exist Americans either aren't trained for or do not have the skills to fill. I was thus struck by how these parochial preferences play out via the example of the Dubai-based carrier Emirates trying to hold job fairs in the US. Likely unknown to the vast majority of Americans only familiar with their crappy domestic carriers featuring antiquated planes, poor service, and massive government support since they can't hack it in the real world, Emirates is growing by leaps and bounds and even helps the US economy by ordering a whole lot of Boeing 777s.

Now, you don't have to be a rocket scientist to ply orange juice and crackers at 30000 feet, but still, amazingly few Americans tried to fill these jobs:
At Emirates, four cabin-crew job fairs the airline held in Miami, Houston, San Francisco and Seattle attracted an average of about 50 people each, compared to a global average of about 150 and as many as 1,000 at some events in Europe and Asia. "I would have liked to have seen more and would have expected to see more," says Rick Helliwell, vice president of recruitment.

The jobs require little more than a high-school diploma and fluency in English. They include free accommodation and medical care, and starting pay of about $30,000 a year. Mr. Helliwell speculates that Americans might be hesitant to move to Dubai, where the jobs are based. "Maybe they have less of an adventurous spirit" given the uncertainties they face at home, he said.
I can think of any number of reasons Yanquis aren't filling these posts: Palin-style Islamophobia, reluctance to leave the homeland, and snootiness about working as a flight attendant among other things. Sooner or later, though, reality will hit these folks--many of whom are perpetually on the dole: the American dream is a hopeless fraud. Some make it big in America, but for the vast majority, it is currently a land of next to no opportunity.

Something the whitebread commentariat routinely misses is that America's population is still growing with a replacement rate slightly north of 2.1 births per woman. By comparison, most of that in Europe (and Japan) isn't growing at a similar clip. Less population to support = less pressure to create new jobs. While this fact may augur well during normal times, at the present it simply means more to care for by more of those who can't find jobs. Short of an American one-child policy--something the US should seriously consider given its pathetic state of affairs--the solution lies abroad. Go East, young Yanqui, go East--and get a passport fer cryin' out loud.

UPDATE: As an example of limited American perspectives, this otherwise readable piece from the Atlantic on jobless America doesn't talk about work opportunities abroad.
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Looking Back Fondly on North Korea's World Cup

♠ Posted by Emmanuel in , at 8/11/2010 12:09:00 AM
The people's flag is deepest red
It shrouded oft our martyred dead
And ere their limbs grew stiff and cold
Their hearts' blood dyed its every fold

Then raise the scarlet standard high
Within its shade we live and die
Though cowards flinch and traitors sneer
We'll keep the red flag flying here

So North Korea's World Cup campaign wasn't really all that great aside from making it to South Africa. After providing the world with the machinations of weird training exercises and hired gun Chinese fans lending them support, the real-life thrashing the team suffered did not go down well at home. Worst of all was the 7-0 whipping at the hands of Portugal. Coming home, there was allegedly a spectacle of the team being given a lengthy tongue-lashing from all comers for failing in the "ideological struggle" against decadent capitalist interlopers (presumably not steeped in the ways of juche). The poor coach was said to have to endure his players denouncing his efforts.

Or was it really that bad? I have long tried to find a clip I could embed of the spoof clip above from the BBC. While the socialist anthem "The Red Flag" (recognizable as "O Tannenbaum" or "O Christmas Tree" to decadent bourgeoisie) plays in the background, the scoreline of the Brazil v North Korea is spoofed to show a victory for the latter. Enjoy, I guess. Don't these guys get it that market socialism's all the rage nowadays?
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PRC Regional Hegemony and the New Silk Road

♠ Posted by Emmanuel in , at 8/10/2010 12:12:00 AM
As if we needed more proof that China has a real "mind behind" what is doing compared to certain relatively clueless imperialists descending into fiscal decay, here comes another piece in the puzzle. Something I've learned from our Chinese colleagues is the importance they place on infrastructure development. From Africa to the Middle East, they are building things that last, not empires of subprime junk (securities). It's something that Americans have never really furnished to others out of the goodness of their hearts. Heck, you can argue America's transportation infrastructure is becoming increasingly decrepit along with the rest of its lot as its budgetary woes enter the stratosphere. If the United States--increasingly paranoid after 9/11--jams entry points from NAFTA "partners" Canada and Mexico, what more to Latin America?

In contrast, China is acting like a good neighbour to many of its surrounding countries, albeit with geostrategic imperatives always in mind. Hearkening back to the Silk Road of yore, plans are afoot to link up the region terrestrially (and, in the process, limit a certain navally dominant imperator from jamming sea lanes if push ever comes to shove). Let us begin with an article which appeared some months ago in the Independent:
High-speed rail is the only way to travel in China these days, with bullet trains zipping along thousands of miles of track at speeds of up to 220 miles an hour. Now China is planning a new Iron Silk Road to link it with 17 countries in central and southeast Asia, using the same state-of-the-art technology.

Imagine the spectacular train ride from Shanghai to Singapore via Rangoon [Yangon]; or from Kunming in south-western Yunnan province to New Delhi, Lahore and on to Tehran. You could board at Harbin at China's border with Russia in Heilongjiang province, and embark on an epic voyage to eastern and southern Europe via Russia...

Nations along the three planned routes are being offered all kinds of lures to agree to the high-speed lines. Cash-poor Burma's high-speed rail network is being built in exchange for raw materials for export to China, such as lithium. Central Asian economies that pump gas and oil to China are also being given financial assistance.

Eventually the plan is to board the train in London and arrive in Beijing two days later, having passed through Germany, Kazakhstan and Xinjiang province. Wang Mengshu, a rail consultant and member of the prestigious Chinese Academy of Engineering, predicts the London route will be ready by 2025...

The technology has been developed with plenty of input from foreign rail companies, and Chinese engineers readily admit that its bullet trains and rail lines have "absorbed" many ideas from the West. But China has been speedy in getting the technology to work, and this success is what they hope will translate well abroad. Chinese companies are building high-speed lines in Turkey and Venezuela, and are soon to bid for contracts in the US. Like China's burgeoning influence, the Silk Road could soon extend around the globe.
Indeed, TIME has a more recent article suggesting that America is already well behind China in terms of railway infrastructure. As China plies its newfound rail engineering expertise for commercial gain abroad, one of its potential clients is (surprise) the land of Amcrap, I mean, Amtrak:
There is, however, the possibility that China could cushion the risk by exporting its rail expertise. State media report that Beijing wants to expand high-speed rail to more than a dozen Asian nations, eventually building a high-speed grid that would link China to Europe. Already, Chinese firms have begun to win key rail projects overseas. Last year, Saudi Arabia awarded the $1.8 billion first phase of a high-speed rail link between Mecca and Medina to a consortium that includes the state-owned China Railway Construction Corporation. Chinese companies are building high-speed-rail projects in Venezuela and Turkey, and the Ministry of Railways is even organizing a Chinese bid for California's proposed $45 billion project to build a high-speed-rail network linking the southern and northern parts of the state.

The American train system could certainly use a boost. It now has just one high-speed line in operation, Amtrak's Acela Express between Boston and Washington, D.C., which averages a measly 116 km/h. That laggardness isn't lost on ordinary Chinese. "Chinese trains have gotten so much better," says Xu Wenhong, a 55-year-old schoolteacher traveling on the train from Hangzhou to Beijing to see his newborn granddaughter. "Now even the U.S. is thinking of buying them." He smiles with satisfaction as we speed into the future at 200 km/h.
In infrastructure terms, think of America as a big pothole on the world map; it's pretty much shot (as if that weren't obvious). Let China show us the way as it reincarnates the Silk Road.
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IMF On the Road to Seoul G-20 (11-12 November)

♠ Posted by Emmanuel in at 8/09/2010 12:10:00 AM
IMF First Deputy Managing Director John Lipsky recently gave a speech in Seoul, South Korea, anticipating the upcoming G-20 summit to be held there towards the end of the year. (By tradition, the IMF managing director is European, while the second in command is American--something that needs reviewing if the IMF is to become a more participatory international financial institutions.) Anyway, what Lipsky said is very much in the US line of argument that it could have emanated from the lips of Tim Geithner or Larry Summers: short-term spending to spur growth, medium-term fiscal consolidation when recovery is underway, and rebalancing via greater demand in surplus countries:
Despite recent signs of slowing momentum, the global recovery is expected to continue. Nevertheless, the most likely prospect is for a moderate, multi-speed recovery, with significant downside risks. While financial markets have improved somewhat in recent weeks, ongoing financial market strains have heightened uncertainty. Against this backdrop, the overarching policy challenge is to sustain the recovery while restoring confidence.

Several key policy challenges are evident, some more immediate than others: These include:

* The need for an ambitious and vigorous program of financial system repair and reform. In many advanced economies, progress is underway on bank recapitalization; on bank consolidation, resolution and restructuring; and on regulatory reform. Greater transparency regarding bank liabilities and their exposures to sovereign debt, is a key goal. The recently completed European bank stress tests are receiving particular focus at present, and in general they have made a positive contribution to market sentiment. There is also a pressing need to reduce uncertainty about the broader regulatory environment.

* The need for credible, medium-term fiscal consolidation plans to bolster confidence, while not choking off the recovery. G-20 members have agreed to follow credible and “growth-friendly” medium-term fiscal adjustment plans that could include legislation creating multi-year targets. Reforms to pension entitlements and public health care systems, controlling non-entitlement spending, and strengthening fiscal institutions are critical tasks. Better strategies for public debt management also will be helpful. While most G-20 economies’ current fiscal plans appear to be appropriate, countries facing sovereign funding pressures still will require upfront measures to underpin confidence.

* The need for global demand rebalancing and key structural reforms to support future growth. In economies with excessive external surpluses, the transition toward domestic sources of demand should continue, helped by structural policies to reform social safety nets and improve productivity in the service sector as well as—in a variety of cases—more flexible exchange rates. In economies with excessive external deficits, fiscal consolidation and financial sector reform should help rebalance demand. But successful fiscal adjustment is difficult without strong growth. Structural reforms, particularly in product and labor markets, are needed to raise potential growth.
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Obama & Jobs: Can US Have Bush Back Now?

♠ Posted by Emmanuel in at 8/06/2010 02:51:00 PM
I'll be brief and to the point: You know things are getting worse in America when the bad old days have become the good old days. I've been strongly opposed to runaway deficit spending--far exceeding that from the Bush years, it should be added--from the very start. With each passing month, critics like me are being vindicated that the US has taken the wrong turn. Consider:
  1. Geithner should not dump on Bush so much for the massive deficits since he and his boss have already had the chance to introduce a budget of their own. Eventually, you must own up for what you've done. Or, in this case, not managed to do. Basically, growth has not been sufficient to generate additional employment at the margin;
  2. What's that saying about sinking ships? Christina Romer (now formerly head of the Council of Economic Advisers), who cheerfully adopted the line that things were getting better for so long, has now resigned for understandable reasons. This follows Peter Orszag of the Office of Management and Budget heading for the door.
  3. So we've had American zero-interest rate policy for quite some time now. Results are nowhere to be found. They're already giving money away for practically for free, and yet nothing much is happening, especially in the employment arena. All I can say is, they're better of listening to a man who makes sense like Jean-Claude Trichet.
  4. Speaking of whom, the Euro is poised to slam past the £1.33 handle. Betting on America instead of Europe is a fool's game, and I sure hope those fools who did lost a lot of money. It serves them right.
Hooray! America #1! Since the US cannot have Bush back even if he may actually be looked kindly upon given the current economic state of America, perhaps it's time we cast our eyes to "President Palin." It doesn't sound promising, surely, but hey, can things get any worse than they are now Stateside?
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