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Younghusband
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Younghusband

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June 12th, 2005

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Barnett and Kaplan and Kissinger

Just thought I should draw everyone’s attention to praktike who is saying that Henry Kissinger is making sense about “the growing Navy-fueled hysteria over China”:

The only question I have is whether Robert D. Kaplan’s head will explode now that his admitted ideological ancestor is rejecting his view of China in its entirety.

For background, please refer to:

Comments to this entry

Kenneth
June 12, 2005
3:24 am
The logic behind Beijing's strengthening of ties with South America and of late Russia is that of ending the state of economically-induced detente with the United States. By expanding trade with S. America, Iran, and Russia, China will be able to diminish the importance of its US created export market without actually taking actions (ie, protectionism) to curb it. And yes, China does want a foothold in the USA's backyard. I read the Barnett piece and what that guy fails to realize is that states, circumstances permitting, are expansionist by force of strategy (the acquisition of new resources and markets, for instance), and the circumstances do permit: there are a few potential trading partners of importance for China. As well, Latin America is a traditional US sphere of influence, or at least it was before a spate of new left wing governments came in. This is China's golden opportunity, and why we need to act now.
Kenneth
June 12, 2005
3:27 am
By "we" of course I mean all those closely tied with the US as well as the US itself (ie, my native Canada).
Dan
June 12, 2005
3:35 am
A richer South America means a bigger market for China and the United States. Development is a positive-sum game, and almost any development in Gap countries is a positive development.
Kenneth
June 12, 2005
3:43 am
That's missing the point. China would become less dependent on the USA, with a corresponding haemorrhaging of political leverage away from Washington. While free trade is desirable in the context of economic expansion, its geostrategic implications must be examined as well. So is the case with China.
Dan
June 12, 2005
4:22 am
The geopolitical implication of free trade between the northern and southern states of the United States have made war unthinkable. Ditto France and Germany.
praktike
June 12, 2005
4:43 am
Chinese activity in South America is still very, very small. Lot of hype about it, though.
Curzon
June 12, 2005
5:01 am
I maintain my original position in the linked post above: "The best way to prevent war with China is to prepare for one."
Mike
June 12, 2005
11:04 am
I was going to just comment here, but I decided instead to make a post on my blog instead:

"The Ongoing China Debate":http://www.savethegop.com/archives/2005/06/12/the-ongoing-china-debate/
IJ
June 12, 2005
12:32 pm
Should things be left for the global economy to resolve? This question is brought out in the exchange between Kenneth and Dan.

Mike cautions us not to forget the importance of human nature, which can have an outlet in local politics. In support of this, the blogosphere mentioned recently that a warning (by Norman Angell) at the start of last century of the insanity of a world war was ignored - economic connectivity took second place to human nature.
Kenneth
June 12, 2005
3:46 pm
Dan- the fact of economic interdependence with the USA is what China is trying to negate by expanding trade with other regions. Yes it's small now but it's the first of many steps. Let's review the facts:

1) China is a rising imperial power that wants to expand its domain

2) Economic interdependence with the USA means political leverage for Washington, which places constraints on what China can do

3) Therefore, China is trading with other regions to diminish trade with the USA as a % of its GDP so that in the event of hostilities with the US, its economy would not be destroyed by a trade embargo by the US

It follows that the global economy won't solve everything. Why? Because even with free trade it is still possible for the level of economic interdependence required for detente not to arise. China is selectively using free trade to cement itself to strategic regions (ie, S. America). Finally, IJ is right to point out that economic connectivity took second place to human nature. I posit that if a nation believes that imperialism will pay for itself, that acquisition will eventually compensate for the economic chaos it creates, then it will behave in an imperialistic manner. Both sides in WW1 thought that they were going to win, for instance.
Kenneth
June 12, 2005
3:49 pm
Of course the global economy should be allowed to operate as much as possible, however like Curzon I think the whole of NATO should be armed to the teeth in the event of Chinese hostility, mainly because we're the only thing standing between them and attempted conquest.
Curzon
June 12, 2005
4:12 pm
"The Canadians weigh in!":http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050610/CHINA10/TPNational/Canada
Kenneth
June 12, 2005
4:45 pm
We must arm! We must arm!

This isn't good. Economic integration of Canada with China would effectively make us a proxy. Better the US than China I say.
Kenneth
June 12, 2005
4:46 pm
India, too, would make a good bulwark against China (they apparently just need to be more market-oriented).
IJ
June 12, 2005
5:36 pm
Canada appears to be ambivalent about who, in the global economy, it sells its assets to.

The end of the Globe & Mail report from Curzon is: "U.S. military analyst Robert D. Kaplan writes: "When power relationships are correctly calibrated, wars tend to be avoided. Only a similarly pragmatic approach will allow us to accommodate China's inevitable -- and legitimate re-emergence as a great power."

But most countries will surely agree with Canada - the posse to oppose globalisation may be very small. On the other hand, globalisation is said to be "broken":http://www.boston.com/news/globe/editorial_opinion/oped/articles/2005/05/31/globalization_game?mode=PF; not everyone agrees though.
Kenneth
June 12, 2005
5:48 pm
I agree. Globalization in its current form is largely dependent on the economic bleeding of the USA, and so I predict a major economic collapse once the bills are due. Trade deficits per se are not a bad thing as any economics undergraduate knows (the US had an ongoing trade deficit from 1820 to 1870 created by a growing economy) but correcting a distortion of this magnitude is likely to screw things up badly. That $7.8 trillion the US has in debt will create a monstrous blowout if there is ever a loss of confidence on the dollar. If the US wants to rebuild some kind of real economic base it shouldn't indulge in protectionism but rather focus on reducing entry barriers into domestic markets (ie, deregulation). The government should also stop behaving in a fiscally irresponsible manner. Greenspan seems to have worked the country into a "liquidity trap" scenario: the economic recovery was modest and so raising the current (very low) interest rate is likely to do all sorts of bad things. I can only hope we survive the bottleneck......
IJ
June 12, 2005
8:00 pm
A major economic collapse in the global economy once the bills to the US are due? You're suggesting that the States will default on their international debts. This seems unlikely, especially when the nation has a unique advantage in the global economy - its debts are often denominated in its own currency; therefore as a last resort, the US can always pay off debts by cranking up the machinery that prints dollars.

The printing press ploy might of course cause a collapse in confidence in the dollar. More seriously, however, it could ruin the global economy. Didn't the IMF call the US administration a threat to the global economy? "Link":http://www.lewrockwell.com/orig3/haynes2.html

Fiscal responsibility, as you say, is one way out of the problem. But it's surely a vote loser. The same obstacle preventing public sector reform in many countries.
Kenneth
June 12, 2005
9:03 pm
No, not because of a default. The effort of paying off the debt, coupled with a loss of confidence on the USD, will render the US unable to buy exports from other nations. The US, as was pointed out in the article from the Boston Globe, has pretty much been fueling global growth with its spending. A sharp depreciation of the USD would lead to a drastric reduction in trade, ravaging countries like China and Canada and dominoeing throughout the world economy. A sharp price spike in commodities traded with USDs (most notably, oil) would seriously tool the mechanics of the modern economy. I thought for a time that the Euro might become the reserve currency, however that is now unlikely given recent events.

As for public sector reform, that's needed badly, especially here in Canada with our Soviet style healthcare system. The absence of market mechanism has resulted in long waiting lists and sub-par service in some cases. The Conservatives I think tried to reform it recently by expanding the role of the market in healthcare. The resulting public backlash was a powerful one. What Canadian citizens desperately need, aside from a more market-oriented economy, is a basic economic education.
Kenneth
June 12, 2005
9:26 pm
Infuriatingly, there is no economics course at my high school. They had EVERYTHING but ECONOMICS. Makes me want to pop a blood vessel.
Mutantfrog
June 13, 2005
1:36 am
Kenneth: When you say Canada needs to expand the role if the market in healthcare, do you have any examples of countries with an effective private healthcare system? I can say that in the US at least it's been an utter disaster, and Japan (the only other country I've lived for long) has a system closer to the Canadian than US one.
Younghusband
June 13, 2005
1:44 am
From yesterday's CTV.ca news:

bq. "*Doctors want Ottawa to consider private care*":http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/1118537641082_95/?hub=Health
... Dr. Chantal Ducasse, a doctor in private practice said: "In the public system, I had to see 50 patients in six hours. It's not human. We don't do that with animals. We shouldn't be doing that with human beings."

Also see this:

bq. "*Supreme Court strikes down Que. medicare law*":http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/1118315110253_28?s_name
"A parallel private system functions very good in most European countries and there's no collapse of the public system," Trudel added.
Curzon
June 13, 2005
2:23 am
Mutant Frog: If you think Japan's health care system can hold a matchstick to the US health care system, I think you need your head checked -- by a doctor in a private health service. This was reconfirmed for me numerous times in Japan, and again this last weekend. The quality of care in this country is abominable.
Kenneth
June 13, 2005
2:34 am
Many of America's healthcare woes can be attributed to "government bungling":http://www.independent.org/issues/search.asp?subID=64 on the part of the regulators. As well, there are very high entry barriers into the drug market, see "here":http://www.independent.org/newsroom/article.asp?id=1433. The problem with socialized medicine is the absence of any pricing mechanism that normally directs markets towards a Pareto optimality. The results are spectacular: long waiting lines, chronic shortages, and wastage: the collective lament of the old "Soviet Union":http://en.wikipedia.org/wiki/Economy_of_the_Soviet_Union.
Kenneth
June 13, 2005
2:36 am
Trust me, Mutantfrog: I live in Canada, and the waiting lines for health services are just atrocious.
IJ
June 13, 2005
9:08 am
Other contributions in the blogosphere. This blog on books, headed "Tagged":http://freedomandwhisky.blogspot.com/, contains the suggestion that political integration/harmony should no longer be the aim of the European Union. Instead, economic liberalisation should be the aim.

On the other side of the Atlantic, Canada seems to agree that the priority should be economic liberalisation - much to the annoyance of US policy-makers. The US and the EU have a similar problem - how far to restrict economic liberalisation.
IJ
June 13, 2005
11:30 am
"Fiscal responsibility. . . is one way out of the problem [of correcting imbalances that threaten the global economy]. But it's surely a vote loser."

The Governor of California is about to test this proposition at State level in the US, per the "FT":http://news.ft.com/cms/s/dd445088-db80-11d9-913a-00000e2511c8.html.

"Arnold Schwarzenegger is due on Monday to call Californians to the polls in November for a special election that will test voters' desire for change. . .The ballot sheet will list several initiatives promoted by Mr Schwarzenegger, including a proposal for automatic spending cuts when revenues fall. . . Advertisements promoting his spending cap initiative, known as the "Live Within Our Means Act", have hammered home the claim that Democrats are responsible for disbursing $1.10 for every dollar the state takes in."
Curzon
June 13, 2005
4:56 pm
"MutantFrog weighs in on the side of all that is just and right in the universe!!":http://www.mutantfrog.com/2005/06/13/henry-kissinger-is-a-nitwit/
Mutantfrog
June 13, 2005
5:01 pm
Kenneth: I certainly believe that there are problems, but how do you compare having to wait in line in Canada with tens of millions of people having no coverage whatsoever and being too scared of costs to even see a doctor in the the US? I'm not necessarily saying the US should adopt a system like Canada, but really, are there any countries without national health care in which all or nearly all of the population can actually afford to see a doctor?
Kenneth
June 13, 2005
5:23 pm
The US healthcare system, as I've already noted, is very heavily regulated. Again, it's a folly to blame things on a free market that isn't even "allowed to work":http://www.independent.org/publications/tir/article.asp?issueID=38&articleID=213. Last time I checked the US government spent 13.5% of its revenue on health services, so it obviously must be involved to some significant degree. As well, if the US would tear down barriers to economic growth, such as regulations and tax burdens, then people might be wealthy enough to afford it.
ComingAnarchy.com » Blog Archive » Healthcare trials and tribulations
June 13, 2005
6:37 pm
[...] hcare trials and tribulations We currently have a lively discussion in the Barnett and Kaplan and Kissinger post about medicare [...]
IJ
June 14, 2005
10:11 am
The latest newsletter from Thomas Barnett is "here":http://www.newrulesets.com/journals/barnett_13jun2005.pdf.

In the question and answers section he is asked about the disruptive tensions internationally over the demand for finite resources. This is really a subject on its own. The response from TB was essentially: "Why fight over what you can simply buy?"

However, the increasing nationalisation of resources means that not everyone will be able to buy what they need. There's much opposition to enforcement in the global economy. Is the inevitable result war?