Panda Shrugger
There's something I'm missing, and whether it's a failure of Hundt as a writer or a failure of me as a reader (quite likely) I am not sure. While it's certainly beyond question that the implications for the world economy of the fast development of an economy with a billion or so people is something that planners and policymakers need to think seriously about, what I'm not entirely sure of is which of Hundt's policy recommendations would be different if China did not exist.
By putting the focus on China, Hundt encourages us to discuss that country, its place in the world economy, and likely future rather than thinking about the basic policy recommendations in their own right. We are thinking about Hundt's take on China, rather than Hundt's take on What America Should Do.
There's nothing wrong with thinking about China. It's a big country, getting richer every day. Its development punctures the dangerous conceit that economic growth is something which inevitably leads to or follows from what we think of us as modern Western democracy and its associated notions of human rights. It increasingly has the capacity become a great military power, and may have expansionist ambitions regarding Taiwan at the very least. Elite thinkers appear to be increasingly concerned about global natural resource depletion and the impact of expanding worldwide demand for resources on their cost and availability.
But despite Hundt's best efforts to do otherwise I come away from reading his book with the message "eek! China!" instead of "here are some good ideas for the US economy." It's reminiscent of the late 80s "eek! Japan!" genre.
I guess my challenge to Hundt is to explain to slow people like myself, in very simple terms, why China really needed to provide the central narrative for this book. It isn't that I think China doesn't matter, it's that I'm not convinced that his policy prescriptions are best sold as a response to China, rather than simply being good (or not) policy prescriptions in their own right.
Perhaps China's development means we have less time for complacency and that there's an urgent need to Do Something Different. Still, I think we'd all rather be debating the policies themselves instead of Hundt's take on China. But that's a bit hard when the book is called "In China's Shadow."
Is this the fifth or sixth thread that's been started for Reed's book.
Would somebody please go out and read the damned book!
In brief answer to the question:
I think that the answer is no. I believe that some previous 'thread starter', P*** something, did read the book and his view was that Reed was using China as a scarecrow to justify what he saw as necessary transformative measures which might not be otherwise salable. The comparison was the use of the Soviet Union and the Cold War to sell or justify things like a national interstate highway system.
I could stand to be wrong on the subject of course.
But really, someone should read the book. I'm just saying. I'm not volunteering.
September 28, 2006 12:54 PM | Reply | Permalink
Why China? I dunno...Reed has to answer that one.
My take on it is that China represents a "threat" to the US economy and way of life because of their economic potential..."potential" being the key word. They could just fizzle and fade like the vaunted Japanese economy of the 80's...but then again Japan didn't have both the manpower and material resources that China has at their disposal. So dimissing China as "just another Japan" might miss the mark.
I have been yelling that the problems we face are the consequences of homegrown problems...self inflicted. And the problems in our economy will limit how effectively we can compete in the global market.
Right now China is more attractive for our multinational companies because China looks like a more profitable place to do business. But China represents just one of many problems we face in the global economy...including a staggering trade deficit.
September 28, 2006 2:06 PM | Reply | Permalink
I continue to think that the big problem we, and the rest of the world, face is that with "free trade" all jobs flow to the area where people work for the lowest wages, with the least onerous workplace rules, and the environmental protections are the most trivial. Capitalism worked very well when trade was generally restricted to just the home nation. Then, wages and benefits, workplace rules and environmental rules, all could be nudged upwards without fear of competition from places where those changes were resisted. In our country we faced that same problem when the South replaced the Northeast as the manufacturing area for the same reasons, but that is leveling off now.
Hopefully, over time all nations will have virtually standardized wages, benefits, etc. and more nearly pure capitalism can work well again. But, for the foreseeable future, it won't. So, that problem has to be solved.
Hoppy in Sacramento
September 28, 2006 2:12 PM | Reply | Permalink
Duncan did read the book Valdron. These threads are all part of the TPMCafe Book Club, which is one of the Special Features of the site. My understanding is that the people posting in this section have all received copies of the book well in advance, and have been asked by Josh to comment on their reactions.
September 28, 2006 3:00 PM | Reply | Permalink
Ahhh, all is clear. Good for Duncan. He has my commendations... and sympathy. Lots of both.
It certainly makes the whole series of threads clear. Kind of an 'anti-book' campaign. Aimed at dissuading readers in the politest possible way. Gotcha. I've obviously misunderstood.
September 28, 2006 3:28 PM | Reply | Permalink
Exaggerating an outside threat in order to motivate people to do what you want them to do anyway is a common rhetorical technique.
There is an article by Naazneen Barma and Ely Ratner in the Fall issue of Democracy: A Jounal of Ideas titled: China's Illiberal Challenge, which argues that "the real threat posed by China isn't economic or military–it's ideological."
The culmination of the article is a list of foreign and domestic policy suggestions that are common fare among centrist Democrats. They include such things as: better public diplomacy; dealing with the political and socioeconomic inequalities at home; cultural and educational exchanges with other countries; ending the abuses in Guantánamo Bay, Baghdad and elsewhere; closing the Doha trade round; promoting free market reforms; increasing foreign assistance; ecouraging home-grown democratization efforts overseas, "color revolutions" etc.; leading in multilateral efforts to deal with war crimes, climate change, genocide, weapons proliferation, etc.
Nothing unusual here, except for the fact that the justification for these policies is now supposed to be fending off the "ideological threat" posed by China to the global extension of the American way of life. We are supposed to battle this dread threat by "improving the liberal democratic product."
September 28, 2006 4:28 PM | Reply | Permalink
Eeek! China! That's kind of fun to say.
Duncan makes a great point. I think the only thing that separates "Eek! China!" from "Eek! Japan!" is that the fear of Japan was really a fear of Japanese buying American assets (especially in real estate) whereas the fear of China is really a fear of having a global competitor on the purchasing side in the commodities markets. Japan, industrialized as it became, was just never big enough, population wise, to be able to buy resources in bulk the way we do. China is. So is India. China's power as the same kind of purchaser that we are really weakens us on the global stage. It means, for example, that it might be someday possible for OPEC to embargo the US without bankrupting itself
thosethingswesay.blogspot.com
September 28, 2006 5:14 PM | Reply | Permalink
Weird thing is that grand pronouncements work. "Eek Japan" made a carer for James Fallows, and he's even more of an "expert" today. So for all I know Reed should already be counting his royalties, book contracts, and magazine assignments 15 years hence!
Or Fukuyama. No one posted on it here, but at a conference this month he even backed off the whole "Western democracy" thesis. It's true, he said, that the Middle East isn't going that way, but he really, really, and truly only meant "modernization." But the world will bow to his scholarship and wisdom forevermore.
John
http://www.haberarts.com/
September 28, 2006 5:22 PM | Reply | Permalink
I've never seen anyone express a fear about China's resource usage. Rather the concern is with China undercutting US producers, leading to the loss of US jobs, and whole sectors of our economy-- coupled with concern about China "owning" a large piece of the federal government via its purchase of US securities. Pretty much the same fears people had about Japan in the 80s.
As for OPEC embargoing the US, that would not work since non-OPEC oil sources (Canada, Mexico, Norway etc.) would simply make up the difference (oil is fungible once it is sold on the world market). And it's very doubful that all of OPEC would ever go along-- even in 1973 only the Saudis and a handful of other Arab nations signed on to the embargo. I can't see any reason it would be different today, esscially since the Saudis and the Gulf states are now client states of the US.
September 28, 2006 6:19 PM | Reply | Permalink
Okay. Here's how it works. The United States gets perhaps a third of its oil domestically. Maybe its half. Something like that.
The rest of America's oil nees are imported from abroad. Abroad being, in order of priority, Canada, Mexico and Venezuala. These three countries are producing more or less at capacity, and they're selling the vast majority of their production, perhaps all of it in the case of Canada and Mexico, to the United States.
The rest of America's oil comes from other sources. Among these are the Persian Gulf which supplies about 15% of America's oil needs, making it the largest supplier outside of America's immediate neighborhood.
The remainder come from places like Nigeria, Indonesia, the North Sea, etc., and their percentages of contribution to America's oil intake is much less. Partly this is because they're simply not that great a set of producers, and partly because much of their production goes elsewhere.
Thus Indonesia is a major contributor to Australia, China, Japan, the Phillipines, India... its local market. Britain and Norway in the North Sea, Libya and Algeria supply Europe. Part of Venezuala's production goes to other Latin American countries.
Now, the reality is that most of the production on the planet is locked up. There isn't one big huge spot market where all the oil is bought and sold. Rather, producer countries have formal economic relationships, trade agreements, treaties, contracts, etc. with consumer countries. After all, stability of supply, and stability of markets is key.
And the reality is that demand is very closely matched with supply. That is, the world is producing just enough oil to meet the demand. Not much more.
Most countries have very flat production capacity. That is, most oil producers can't just rev up the pumps and double their capacity. For the most part, there isn't any excess capacity in the system.
The only place in the world which does have excess capacity is the Persian Gulf. Even that may be questionable. But the Persian Gulf is basically the source of most of the oil on the spot market, and therefore, it finds it easy to manipulate the overall price.
What this means is that if the Persian Gulf decides to cut its supply to the US off and sell it to China...
Well then, America really is screwed. Because it can't go to Canada and Mexico and order up more oil. It can't go to Venezuala and tell it to break its contracts to Brazil and Columbia. It can't go to Britain and just order up the North Sea oil that by treaty and contract goes to Germany.
And even if it could do these things... and to some extent, perhaps it might be able to do so, it can't find *enough*.
15% of US consumption may not sound like much. But that's a shitload to try and replace.
Canada, Mexico, Venezuala each account for another 15% apiece, roughly. Which means that you'd be asking any one of these countries to double its production... flatly impossible. Or in some combination, increase production overnight by 50% or 30%?
Only a little less impossible.
Now, maybe the United States could fill that hole, finding ways to increase internal production, getting as much extra as Canada, Mexico, Venezuala could spare, begging and borrowing from Niger, Sierra Leone, Indonesia, etc. etc.
Well, maybe that would work. But (1) it would hurt like a m*th*rf*ck*r, believe it. You'd be looking at major supply instability and potential interruptions. And (2) Price of Oil on the Spot Market would go through the roof. $200 a barrel? $300 a barrel? No telling. Because there is very very very little buyable oil on the market outside the Persian Gulf, most of it is locked up.
Now, point of fact, OPEC could pull this right now, and you'd feel like that fat guy in Deliverance, practicing up your pig calls. But the downside for OPEC is that if they pulled that on you, they might crash the whole international house of cards. They don't want that. They want the goose to keep on laying its golden eggs.
Now the danger of China in this context is not just that they'd be a ready market to swallow up all the oil that was going to be sold to you... But worse, they're big enough as a market and as an economic power that you might not be indispensible.
Think about that. The Good Ship USA is not allowed to sink, because it would take everyone else down with it. So what happens from OPEC's point of view, if they could sink you, and their lives would just go on? What happens when you go from being indispensible to disposeable? When the consensus is that no matter what happens to you, China and India and Europe together will keep the world economy toddling along.
Trust me, you don't want to be thinking those thought. They ain't pleasant.
I hope this was helpful.
September 28, 2006 7:26 PM | Reply | Permalink
But China can afford the oil largely due to their enormous trade surplus with the United States.
If the U.S. were to find itself unable to meet demand with regard to oil and was forced to grossly increase prices at the pump, China would be affected by this.
Less money buying Chinese goods is very, very bad for China. Most experts agree that a monumental economic collapse is far likelier in China than the United States.
Part of this, of course, is because American corporations can sidestep the higher cost of paying American workers by simply outsourcing its menial tasks to poor Asian nations where cheap labor is the norm.
Also, the impending mass retirement of the Baby Boom generation will greatly strain government programs like Social Security, but will ultimately ease the burden on the part of the employer. With a smaller pool of workers comprised of Generation X and Y, skilled labor will become more and more required; a goal which the U.S. has been striving for for decades.
September 29, 2006 12:02 AM | Reply | Permalink