Building An American Future Means Rejecting the "Davos Culture"

AmericanEconomicAlert.org ^ | Wednesday, February 01, 2006 | William R. Hawkins

[Willie Green]

For education and discussion only. Not for commercial use.

In his State of the Union address, President Bush unveiled his "American Competitiveness Initiative" (ACI) that is meant to encourage innovation and strengthen the nation's ability to compete against foreign rivals. The strategy calls for an increase in Federal research programs and a push for students to do better in math and science. The commitment of only $136 billion to this effort over 10 years, most of it beyond his term in office, raises questions about his sincerity, especially measured against his past record of indifference to the challenges posed by overseas competitors, who have been ravishing the U.S. economy for a decade.

The trade deficit topped $750 billion in 2005, doubling since Bush took office, but there was nothing in the president's speech that directly addressed that problem. While it was good to hear the White House acknowledge that as other countries become more advanced, they could pose an economic threat, Bush's rhetoric was still much too soft and ambiguous as to the U.S. response. Indeed, his early denunciation of "protectionism" in the speech indicated that he still doesn't understand what is happening in the global economic struggle.

In terms of the timing of Bush's address to Congress, a number of high ranking U.S. officials and members of Congress had just been to the World Economic Forum in Davos, Switzerland. This forum was founded in 1971, but did not become a major force until after the Cold War ended. It then became a great social whirl based on the illusion of a harmonious world conjured up by transnational business elites under the rubric of "globalization." Its real purpose, however, is to use private wealth to corrupt national leaders into betraying the interests of their people.

Harvard University Professor Samuel Huntington in his acclaimed book The Clash of Civilizations called the resulting set of values "Davos Culture." It's a view of the world united in the pursuit of mass consumption and popular entertainment, orchestrated by a global elite of merchants, media moguls, and bankers. Huntington, drawing on wisdom solidly grounded in the study of history and human nature, is disdainful of this group for presuming that their naive liberal outlook will supercede traditional cultural values and the normal imperatives of national needs in a competitive world.

Businessmen are well aware of competition within their own sphere. Waged today on a global scale, business's cutthroat nature is more intense than ever. What many of these elites do not want to acknowledge is that these commercial battles have wider consequences for the national societies within which most people live. That the WEF meets at a luxury mountain resort in "neutral" Switzerland is symbolic of how far removed its philosophy is from the real world. The eminent sociologist Peter L. Berger has described these supposed citizens of the world as "people who move with the greatest of ease from country to country while remaining in a protective 'bubble' that shields them from any serious contact with the indigenous cultures on which they impinge. The bubble also shields them from any serious doubts about what they are doing."

Davos Culture is the creed of a self-imagined, cosmopolitan, jet-set elite. But according to UNESCO, only about three percent of people worldwide live outside the country in which they were born. The percentage is higher, about five percent, in the advanced industrialized countries, and higher still in the United States (about nine percent). This means that nearly everyone is dependent on how well their own societies fare. A prosperous, secure, and growing national economy provides more opportunities for its citizens than one that is being beaten down by foreign rivals or menaced by violence. This is common sense.

Historians have also noted that a spirit of nationalism – the very attitude that Davos Culture deplores – is very helpful in creating a successful society. Peter Turchin, in his new book War & Peace & War: The Life Cycles of Imperial Nations asks the eternal question, "Why did some – initially small and insignificant – nations go on to build mighty empires, whereas other nations failed to do so? And why do the successful empire builders invariably, given enough time, lose their empires? Can we understand how imperial powers rise and why they fall?"

Turchin, a professor at the University of Connecticut, comes to the study of history from a background in ecology and mathematics. His focus on "empires", which he defines as any large, multiethnic territorial state, is more manageable than Huntington's study of entire civilizations. Turchin grounds his theory in the Arabic concept of asabiya, meaning a society's capacity for collective action. Empires germinate, he contends, when defined groups come into conflict along "meta-ethnic frontiers" that foster the social solidarity and discipline that empire-building requires.

Though diverse in individual makeup, the members of a successful society can put their own differences aside long enough to defeat those "outside" its national community, whether it be in trade or war. When a society loses its capacity for collective action, as he believes has been the case in the United States since the 1960s, then the long cycle of decline sets in. Davos Culture is very much in tune with the rise of the egocentric "60's generation" whose vaunted "idealism" has turned out to be hedonism and decadence.

In her thought-provoking history, The Spirit of Capitalism, Boston University professor Liah Greenfield argues that "the factor responsible for the reorientation of economic activity toward growth is nationalism." This 2001 book is based on her research of a decade earlier that looked at England, France, Russia, Germany and the United States [Nationalism: Five Roads to Modernity]. "The sustained growth characteristic of a modern economy is not self-sustained; it is stimulated and sustained by nationalism," she writes. Natural resources, technology, even wealth accumulated in the past, is not enough. There must be a desire to put these factors to work to advance the common good, which happens "when economic achievement, competitiveness and prosperity are defined as positive and important national values."

Greenfield does not just look at rising states, but declining ones as well in her second book. The Netherlands was once the dominant economic power in Europe, with a world-wide empire. But its time at the top did not last long. Between the 1660s and 1740s, Dutch living standards did not just fall in relative terms as other empires and nation-states advanced, there was an absolute decline in per capita income. "There was no national consciousness among the Dutch," argues Greenfield, beyond the initial desire to win independence from the Spanish Hapsburgs. The Dutch elite were merchants, not patriots; and central authority was very weak. "They remained economically rational instead, embodying the ideal of Homo economicus so rare in modern economic reality and so dear to economic theory. In other words, they were not a nation." They could not compete against states energized by nationalist drives.

In a recent Oval Office interview with The Wall Street Journal, President Bush demonstrated his "Dutch" penchant for economic theory over economic reality when he said General Motors and Ford should develop "a product that's relevant" rather than look to Washington for help with their heavy pension obligations, and hinted he would take a dim view of a government bailout of the struggling auto makers, who have been devastated by foreign rivals that do have the full backing of their governments.

Today, the United States faces challenges from a horde of trading "partners" where the embrace of nationalism by elites is far stronger than in America. The United States runs its largest trade deficit with China, clearly an imperial nation by Turchin's definition and one animated by a particularly strong nationalist fervor that seeks redress for past grievances. "The crucial national narrative of the 'Century of Humiliation' from the mid-nineteenth century to the mid-twentieth century is central to Chinese nationalism today," writes University of Colorado professor Peter Hays Gries [China's New Nationalism: Pride, Politics and Diplomacy ]. This spirit has infused Chinese society with energy and ambition on an awesome scale.

The superficial materialism seen in Beijing, Shanghai, and elsewhere in China is not proof that Davos Culture has infected the Chinese people, let alone the Communist regime. As noted by UCLA anthropology professor Yunxiang Yan (who as a child lived through the horrors of the Cultural Revolution), when Beijing students protested the 1999 NATO bombing of the Chinese embassy in Belgrade, "many young protestors were drinking Coca-Cola as they chanted 'down with American imperialism' in front of the U.S. embassy."

Some corporations understand the value of loyalty. According to the Financial Times, Roger Martin, dean of the Rotman School of Management at Toronto University, led a discussion on this topic at the WEF. He argued that "companies would have to provide compelling reasons why their most talented employees should keep coming to work. This would not just be about money; chiefly it would be about building socially valuable corporate communities. Martin is quoted as saying, "Finding community-building talent is the single most precious resource in the modern world." The problem is that corporations are not communities. They have none of the enduring qualities of a nation, and cannot engender (or give) the kind of loyalty a society needs to survive. Just ask any of the millions of Americans who have seen their jobs moved overseas. Americans salute the stars and stripes, not corporate logos.

It is the duty of national leaders to muster "community-building talent" to bolster U.S. competitiveness in world markets and to assure dominance in the home market. It is the same spirit to which President Bush appealed when calling on the country to be less "addicted" to imported oil and more aggressive in defeating Islamic terrorism. Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else. This is the only way to provide maximum opportunities for Americans to prosper and to assure that "the state of the nation is strong."

[Willie Green]

ping

[TonyRo76]

Rush was brilliant on this the other day. The Davos diplo-babblers are nothing more than globalist weenies who want to curb American success and prosperity, cutting us down to their size.

"Internationalist" efforts like the Davos confab are worthy of complete scorn and repudiation by Americans.

Maybe also an airstrike or two...  ;)

[johnny7]

The Davos diplo-babblers are nothing more than globalist weenies who want to curb American success and prosperity, cutting us down to their size.

Remora's in checkered-pants.

[A. Pole]

"Building An American Future" bump.

[ConservativeDude]

the essence of this article is giving some real underpinning to economic nationalism, or, rather, explaining how patriotism is critical to an economy.

i am not a big fan of Pat Buchanan economics (to say that is an understatement). however, I think this article is outstanding and it shows that we really need to think about these issues a bit more.

there is still a pretty big problem of how one picks winners and losers in the marketplace...indeed, that problem is probably insurmountable. GWB is right in what he says about the auto industry....Even so, the author of this piece is on to something.

thanks for posting the article.

[Alberta's Child]

The Netherlands was once the dominant economic power in Europe, with a world-wide empire. But its time at the top did not last long. Between the 1660s and 1740s, Dutch living standards did not just fall in relative terms as other empires and nation-states advanced, there was an absolute decline in per capita income. "There was no national consciousness among the Dutch," argues Greenfield, beyond the initial desire to win independence from the Spanish Hapsburgs. The Dutch elite were merchants, not patriots; and central authority was very weak. "They remained economically rational instead, embodying the ideal of Homo economicus so rare in modern economic reality and so dear to economic theory. In other words, they were not a nation." They could not compete against states energized by nationalist drives.

Good article, but I think the author makes the decline of most European empires more complicated than they really were. I believe simple geography -- and its relationship to international trade and military affairs -- played a far more important role in this decline than most people realize. The Romans were the dominant civilization for hundreds of years because their ability to extend their influence and project force throughout the Mediterranean Sea was unparalleled. They were less successful in projecting force to the east over land, since technology (i.e., maritime vessels and the associated military/trade applications of such) was far less important in land-based movement than in water-based movement.

Spain, France, the Netherlands, and Great Britain became the dominant colonial forces that grew out of the remnants of the Roman Empire because their exposure to the Atlantic Ocean made them better-suited for expansion over long distances across wide bodies of water. And Great Britain eventually dominated the North American colonial scene because as an island nation in the harsh waters of the northern Atlantic Ocean and North Sea their superiority on the high seas -- in terms of raw seamanship and maritime skills -- was unparalleled.

[meadsjn]

Excellent article. If America ever recovers from this ongoing economic treason, it will probably be after many tons of Free Traitors have been ground up for dog food and fertilizer.

[Euro-American Scum]

Globalist, one-world, multi-national corporate bump for future reference.

[TonyRo76]

LOL! Good analogy.

[ARCADIA]

Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else.

It sounds simple; yet all who disagree with this are traitors to this nation and will some day be expunged.

[Dat Mon]

Great article and post.

Its time IMO for what Richard Feynman would call...'getting back to first principles'.

And so we consider Adam Smith, a Professor of MORAL PHILOSOPHY when he wrote his noteworthy Wealth of Nations . Smiths critique of the then common practice of Mercantilism was done within a moral, philosophical, and a logical framework. Which tells me that any economic policy or practice which is ultimately derived from Wealth of Nations , including Ricardo's Comparative Advantage theory, and its applicability to todays Global Marketplace, must also be judged, ultimately, within a framework of practicality, logic, and morality.

Its high time also, IMO, for Economics to acknowledge, that if it claims to have any pretensions of being a 'science', its theorems and models must be continually examined, critiqued, and then modified if necessary, to insure that mathematical models fit in with new, emerging empirical (experimental in the case of science) data.

I don't sense a healthy skepticism in economists (particularly those dealing with Macro or Global economics issues) that is present in contemporary scientists. Perhaps economists should stop and read some History of Science, particularly the history of the New Physics in the early 20th century, to gain an appreciation for how established 'classical theory' gets modified or replaced when new data comes in which cant be explained.

There seems to be a certain aloofness or perhaps smugness in some contemporary economists, which may mask either an inherent underlying uncertainty (in denial), or, an 'answer in search of a question' mindset.

A perfect example is Paul Krugman , a principle architect of the contemporary 'Davos mindset', and a man who literally wrote the book (several key college textbooks on economic theory) on International or Global / Macroeconomics theory. Read one of his essays which I have linked to here. (note also with amusement his stated admiration for then President Clinton).

Paul Krugman Essay on Ricardo's Theory

I intend to study this article very carefully, and read Ricardo and Smith over time (dont have time now for exhaustive study), with the hope of understanding the underlying logical assumptions or premises to their work. I also intend to read essays and discussion on their works. I note here, for example, one key passage from Krugmans essay on Ricardos theory...

"The basic Ricardian model envisages a single factor, labor, which can move freely between industries. When one tries to talk about trade with laymen, however, one at least sometimes realizes that they do not think about things that way at all. They think about steelworkers, textile workers, and so on; there is no such thing as a national labor market. It does not occur to them that the wages earned in one industry are largely determined by the wages similar workers are earning in other industries. This has several consequences. First, unless it is carefully explained, the standard demonstration of the gains from trade in a Ricardian model -- workers can earn more by moving into the industries in which you have a comparative advantage -- simply fails to register with lay intellectuals."

I question this somewhat elitist principle of considering labor merely as a Commodity. Its better, IMO, to consider labor as a Resource...most contemporary management theory would agree with me.

After all, to become productive at what you do requires a certain underlying talent or aptitude, coupled with interest, coupled with years of learning how to do what you do with knowledge, best practices, and efficiency.

Applying a cookie cutter mindset to labor leads to a downward migration of levels of aptitude, worker motivation , and ultimately, loss of productivity....factors which Krugman deosnt consider in his simplified model. Krugman and his contemporaries have, IMO, no idea what makes up a trained, motivated, skilled, and ultimately...productive worker...they seem to know only what makes up a trained and skilled ZEN like Economist.

A commodity labor practice, wherein labor migrates to the nations with the lowest infrastructure levels, which also happen to be those with the lowest production costs (particularly if they are also totalitarian slave states, another factor Krugman and co ignore), leads IMO, to instability in societies. This problem will then call out for a Big Government type solution...one in which the Feds provide for basic subsistence needs, and constant job training and retraining for all these displaced workers.

Another result of this labor migration policy, (which is what optimistic macro economists would call Vertical Specialization) is Societal Stratification...IMO the prototypical 'Unintended Consequence' of a Capitalistic system which is intended to provide the most benefits for the greatest number of people, in accord with the goals of Smith.

Krugman epitomizes, IMO, the elitist Third Way Progressive .

[Paul Ross]

Bump.

Impressive analysis. He is really pulling it together.

[Paul Ross]

You may also want to dig into the primary sources relied upon by the author. Another source that should be also considered, paints an even larger group than the political 'leadership' but an entire set of "enablers" categories amidst our body politic. See, the late Christopher Lasch's Revolt of the Elites: And the Betrayal of Democracy."

Here is a useful review:

	THE REVOLT OF THE ELITES AND THE BETRAYAL OF DEMOCRACY By Christopher Lasch W.W. Norton & Co., 1995, 276 pages Christopher Lasch was one of those rare figures in American public life who was respected by people on both the left and the right, among scholars as well as ordinary folks, in intellectual circles as well as among those who have no patience for abstract ideas. As a historican and cultural critic, he was perhaps best known for The Culture of Narcissism, which became a bestseller in the late 1970s. The Revolt of the Elites and the Betrayal of Democracy, a collection of essays that was published after his recent death, represents Lasch at his best -- timely, perceptive, and intellectually uncompromising. The book brings together thirteen essays (ten of which have been adapted from previously published articles) on what Lasch describes as America's "democratic malaise." The book is divided into three parts: the first looks at the "intensification of social divisions" in the nation; the second surveys the degradation of contemporary public discourse; and the third offers Lasch's reflections on the spiritual predicament at the heart of America's social and political crisis. The book's title is a take-off on Jose Ortega y Gasset's The Revolt of the Masses, a reactionary work published in 1930 that ascribed the crisis of Western culture to the "political domination of the masses." Ortega believed that the rise of the masses threatened democracy by undermining the ideals of civic virtue that characterized the old ruling elites. But in late twentieth-century America it is not the masses so much as an emerging elite of professional and managerial types who constitute the greatest threat to democracy, according to Lasch. The new cognitive elite is made up of what Robert Reich called "symbolic analysts" -- lawyers, academics, journalists, systems analysts, brokers, bankers, etc. These professionals traffic in information and manipulate words and numbers for a living. They live in an abstract world in which information and expertise are the most valuable commodities. Since the market for these assets is international, the privileged class is more concerned with the global system than with regional, national, or local communities. In fact, members of the new elite tend to be estranged from their communities and their fellow citizens. "They send their children to private schools, insure themselves against medical emergencies ... and hire private security guards to protect themselves against the mounting violence against them," Lasch writes. "In effect, they have removed themselves from the common life." The privileged classes, which, according to Lasch's "expansive" definition, now make up roughly a fifth of the population, are heavily invested in the notion of social mobility. The new meritocracy has made professional advancement and the freedom to make money "the overriding goal of social policy." Lasch charges that the fixation on opportunity and the "democratization of competence" betrays rather than exemplifies the American dream. "The reign of specialized expertise," he writes, "is the antithesis of democracy as it was understood by those who saw this country as the 'last, best hope of earth'". Citizenship is grounded not in equal access to economic competition but in shared participation in a common life and a common political dialogue. The aim is not to hold out the promise of escape from the "laboring classes," Lasch contends, but to ground the values and institutions of democracy in the inventiveness, industry, self-reliance, and self-respect of working people. The decline of democratic discourse has come about largely at the hands of the elites, or "talking classes," as Lasch refers to them. Intelligent debate about common concerns has been almost entirely supplanted by ideological quarrels, sour dogma, and name-calling. The growing insularity of what passes for public discourse today has been exacerbated, he says, by the loss of "third places" -- beyond the home and workplace -- which foster the sort of free-wheeling and spontaneous conversation among citizens on which democracy thrives. Without the civic institutions -- ranging from political parties to public parks and informal meeting places -- that "promote general conversation across class lines," social classes increasingly "speak to themselves in a dialect of their own, inaccessible to outsiders." In "The Lost Art of Argument," Lasch laments the degradation of public discourse at the hands of a media establishment more committed to a "misguided ideal of objectivity" than to providing context and continuity -- the foundation for a meaningful public debate. In a final section titled "The Dark Night of the Soul," Lasch examines what he considers a spiritual crisis at the heart of Western culture. This crisis is the product of an over-attachment to the secular worldview, he maintains, which has left the knowledge elite with little room for doubt and insecurity. Traditionally, institutional religion provided a home for spiritual uncertainties as well as a source of higher meaning and a repository of practical moral wisdom. The new elites, however, in their embrace of science and secularism, look upon religion with a disdain bordering on hostility. "The culture of criticism is understood to rule out religious commitments," Lasch observes. Today, religion is "something useful for weddings and funerals but otherwise dispensable." Bereft of a higher ethic, the knowledge classes have taken refuge in a culture of cynicism, inoculating themselves with irreverence. "The collapse of religion," he writes, "its replacement by the remorselessly critical sensibility exemplified by psychoanalysis, and the degeneration of the 'analytic attitude' into an all-out assault on ideals of every kind have left our culture in a sorry state." Copyright by Scott London | www.scottlondon.com

[GOP_1900AD]

RE: "Huntington, drawing on wisdom solidly grounded in the study of history and human nature, is disdainful of this group for presuming that their naive liberal outlook will supercede traditional cultural values and the normal imperatives of national needs in a competitive world."

Words to live by.

What happens when you allow naive, utopian intellectuals to hold the levers of power, simultaneously, in both the public and private sectors? We are on the verge of finding out, and that picture ain't very pretty. Huntington knows this, since he is not an historical illiterate, unlike said utopians.

You know, there was a better time in the business world, previous to the ranks of management being flooded by overeducated painty waist globalony spewing theoreticians. As much as folks may critique them, the old so called "Robber Barrons" were, in contrast, real men. They were brash, bold and grounded in reality. They were colorful characters, with the spirit of the American frontier holding strong sway. And of course, today, no such real man would survive one week as even a first level manager in most of today's corporations. He'd be fired for being too non PC. I miss that archetype and meanwhile am nauseated by the Davos Culture.

[VoodooEconomics]

Effective trade policy is not about being "free" or "fair." It is about creating advantages for those who invest and produce in America, against those who work anywhere else. This is the only way to provide maximum opportunities for Americans to prosper and to assure that "the state of the nation is strong."

... Hmmmm just wondering who decides what, which and how these 'advantages' will be chosen ... and then to whom/how should these objectives then be offered and to (which) investors? And who decides which current domestic producers get nationalistic protection?

Oh! And nationalism in general is such a great thing! The Dutch get mentioned - perfect! I think the low lands have been Europe's battle field for centuries...and mostly between nation states!

Free trade is more antidote to war than economic nationalism.

[ConservativeDude]

thank you.

outstanding post.

[Paul Ross]

Free trade is more antidote to war than economic nationalism.

So when is this purported 'healing balm' going to be enforced against the PRC and its manifestly unfree-trade ways which the free traders cast blind eyes upon?

The fact is, fire needs to be fought with fire.

[WilliamofCarmichael]

The Davos World is the New Democrat Third Way progressives' world of "rules-based free trade." See ndol.org.

It is the "free trade" herein defended by some by hurling invective and insults at "protectionists," by demanding that we "protectionists" take a course in Econ 101.

Well, I went back and re-read the entire chapter on "comparative advantage" and at the end Professor Paul Samuelson says "all Ricardian bets are off" if wage differentials are too great and if one country's currency ends up at the wrong level. Comparative advantage retains its "vital social relevance" only when exchange rates, prices, and wages are appropriate.

The Davos World's "rules-based free trade" is not about economics, it's about redistribution of wealth. IMO it is a Marxist revolution from the top down and our corporations are the useful idiots who will be stripped of all their investments in Red China and elsewhere and placed on a slow boat back to America. It's what commies and com-symps do.

[indthkr]

An excellent article, and analysis by you as well.

Thanks for the ping!

There are good reasons why Economics is called the "dismal science". Perhaps more rigorous approaches by folks such as the Econophysicists (see link) will overcome some of the claptrap shoveled-out by the so-called "Political Economists".

www.unifr.ch/econophysics

[WilliamofCarmichael]

[transnational business elites'] purpose, however, is to use private wealth to corrupt national leaders into betraying the interests of their people.

The author is a professional and an expert.

But I nevertheless ask about "our" transnational corporations kowtowing to the WTO. I wonder about those "national leaders" cornering CEO's and getting commitments to pour investments, etc. into this country or that country.

I wonder about the attendees; i.e., our New Democrat Third Way progressives and their internationalist comrades and their hatred of laissez faire capitalism. They have a commitment to "rules-based" trade, their rules. They accept the free market as the only way to wealth but once we arrive there then what?

See ndol.org. They want to replace our social contract with a new one for the world. The new one will no doubt include "human rights" and not inalienable rights. Human rights are government granted rights.

The author, et al. are experts and maybe transnational corporations funded the economic forum to create a "world united in the pursuit of mass consumption and popular entertainment" but I swear I don't think they control it any longer.

I bet that there is not one attendee other than businessmen who does not feeeeeeeel that communism can be made to work this time -- it just takes rules and useful idiots just like Lenin said.

One day they'll knock on the businessmen's protective bubble and ask, "Hey, you guys got any rope for sale?"

[A. Pole]

Between the 1660s and 1740s, Dutch living standards did not just fall in relative terms as other empires and nation-states advanced, there was an absolute decline in per capita income.

One of the most impressive things I have seen in my life was the TV footage showing VERY long line of Koreans: after request of their government (at the time of "Asian crisis" a few years ago) they were donating their personal assets to help national treasury. I will never forget the image of women taking off their wedding bands and dropping them into the container. Koreans are truly a great nation!

I heard from some Koreans that the most respected people in Korea are scholars, after them the next group are aristocracy/military, then craftsmen and peasants. The least respected are the merchants.

[A. Pole]

Applying a cookie cutter mindset to labor leads to a downward migration of levels of aptitude, worker motivation , and ultimately, loss of productivity....factors which Krugman deosnt consider in his simplified model. Krugman and his contemporaries have, IMO, no idea what makes up a trained, motivated, skilled, and ultimately...productive worker...they seem to know only what makes up a trained and skilled ZEN like Economist.

It is because they never did real, high quality and productive work in their lives.

[ARCADIA]

Free trade is more antidote to war than economic nationalism.

So is surrender and cowardice; but, I don't want an antidote to war, I want victory.

[aMorePerfectUnion]

AC,
thanks for your thoughts. I enjoyed reading them.
ampu

[Alberta's Child]

Thank you! I think it's a fascinating topic.

[VoodooEconomics]

Mercantilism always ends badly. I believe 'Fire with fire' is what triggered two world wars in Europe. I suspect (maybe hope is better?) that China is not as mercantilist as so many believe. I see them trying to actually DOLLARIZE their economy.

[VoodooEconomics]

Embracing free trade is cowardice and surrender? I don't think so. And I am wondering what is victory? Insulation from competition? Liberal used to mean 'free to act' - it now means 'freedom from having to act'.

[hedgetrimmer]

Embracing free trade is cowardice and surrender?

Boy howdy it sure is. "free traders" are cowards because they are afraid to let the Republic run in the way it was designed, with an educated citizenry deteremined to defend the rights of the individual. They surrender to the socialist glolbal institutions, who promise everyone who is negatively affected by their policies, who have to be bribed to give up their sovereignty, subsidies and free money to sustain them.

[cinives]

No government, particularly in this country, should pick anything. Our government should not subsidize anything.

What's required ? Laissez-faire. Low, low taxes, few regulatory hurdles for businesses.

Do those two things then stand back and watch the tide of economic prosperity roll in.

And, for those who don't know it already, Paul Samuelson was another apologist for liberalism and economic statism. He was a loud proponent of Keynesian economics.

[VoodooEconomics]

'the way it was designed, with an educated citizenry deteremined to defend the rights of the individual.'

Wondering who frames both the 'design' as well as the 'rights' you describe? (not to mention what sort of process you imagine would produce an 'educated citzen'!)

As complexity grows do we need more 'design'? I see your chinese byline ... maybe you suggest a 'great leap forward' for the United States? This little economic policy managed to kill 38 million people.

'socialist global instititions ... who promise everyone who is negatively affected by their policies'.

Free trade can not be a policy - it is free. Policy implies policing implies 'design' etc. I am unsure how the 'socialist global instititions' can formulate a policy that is by nature free.

'who have to be bribed to give up their sovereignty, subsidies and free money to sustain them.' - Geez, these global socialist guys really have a lot of money and to make sure they keep all their loot they do what ....GIVE it away to sustain others? Perhaps you can give us all a contact and wire instructions to get a little free money as well?

Socialism and in particular global socialism, is the enemy of inalienable rights - not free trade!?

[Paul Ross]

I believe 'Fire with fire' is what triggered two world wars in Europe.

Nope, that is way too simplistic.

And you misunderstand what China is doing with their currency peg.

They are not 'dollarizing' their economy...they are just maintaining their economic vortex that swallows whole U.S. industries that fall into its event horizon...a Communist-dictated low-wage advantage that is well below every other impoverished third world nation.

And they AREN'T an impoverished third world nation. Haven't been for 12 years. China spends US$195 billion annually just to maintain yuan peg.

[Paul Ross]

Embracing free trade is cowardice and surrender?

Frankly you need to define your terms. You may not excuse appeasement as free trade. Did you see this column Col. Pappas today? This is a good reminder to us all...

The Marketplace, the Price of Crude and Barbara Streisand
by Col. Bob Pappas, USMC, Ret.

When one speaks of the marketplace and the price of oil in the same sentence, they evidently mean "marketplace" within a very narrow definition. The so-called "marketplace" is the commodities market where traders bid on quantities of oil. Price is in proportion to the availability of oil, in this case crude oil in a variety of qualities. So far, so good.

Here's the kicker, the Organization of Petroleum Exporting Countries (OPEC) with the tacit approval of non-OPEC counties controls the price of crude by the amount of oil it makes available to the marketplace. Although non-OPEC countries in the aggregate produce more crude that OPEC, OPEC is far and away the largest single factor in determining the market price of crude.

By withholding production, OPEC decreases supplies and prices go up; by increasing production, OPEC increases supplies and the price moves downward accordingly. Therefore, it is apparent that OPEC fixes, repeat, fixes the price, and non-OPEC countries and companies that drill for, pump, refine and distribute their own oil products benefit from such price fixing.

How else did oil companies reap obscene profits in the last quarter of 2005? Do they have a right to a profit? Of course. But let's not play the silly game that the price is "market driven," when it is absolutely manipulated.

In a 27 January 06 article posted on CNN's website, Soros, the billionaire investor forecasts that the price of a barrel of crude will likely reach $262.00 per barrel in the relatively near future. That would drive prices at the pump to the five dollar or higher per gallon. But consider this, most of the rest of the world already pays prices that high. Would it come as a surprise to learn that it probably would not substantially change most American's driving habits? That would only come were prices to reach 10-12 dollars a gallon, and for most "liberals" that wouldn't matter.

Changing gears for a moment. Has anyone heard whether or not Michael Moore, yes, Michael Moore of Fahrenheit 911, has given his wealth to the poor, that he has lowered his standard of living to the level of those he supposedly champions? How about Soros, the billionaire investor? Or insignificant players, like "B.S." (that's Barbara Streisand), or name any other personage on the political left. Of the so-called, "liberals" whose hearts are supposedly big, how many have distributed their wealth to the poor? One does not need government taxation to do that; there are hundreds of well-managed and deserving charities that depend on the good will of donors to minister to the needs of the financially less endowed. How many so-called, "liberals" have given it all away?

Back to oil. This writer, for one has about had it with the price at the pump, especially when he realizes that much of his hard earned "dough" goes to support opulent lifestyles of mid-east despots whose people live in squalor. Isn't the giving of alms one of the five pillars of Islam? The answer is, "yes," for "liberals" who haven't taken the time to learn. So, how much do they share with their underlings? Pathetic little, yet to the "liberal" way of thinking, squalor is the reason the Arab street is angry with the U.S.; "B.arbara S.treisand!"

If mid-east rulers where half as interested in helping their own people with the oil profits they reap, as they are in keeping things stirred up against the U.S. for liberating the people of Iraq, and for supporting the right of Israel to exist where it is, their people could have a good to excellent standard of living. But they are so selfish, so corrupt, so hypocritical that it stinks; and "liberals" have the temerity to blame Israel and the US for the problems? Again, "B.arbara S.treisand!"

However, the President is wrong when he talks about oil and the market place, and damn it he knows how it works! As noted in earlier essays on the subject of oil, the United States cannot abide other countries controlling its foreign policy, economy, and domestic affairs through the use of oil. Especially when there are significant resources that could be exploited; or is the political will to drive the price of gasoline up in some wrongheaded notion that it would reduce green house gas emissions through lowered consumption?

Hello, "liberals," who hurts most when the price of gasoline climbs? Then why the hell don't you loosen the noose around their necks and allow exploitation of domestic resources? Why not approve the President's recommendations for Energy Independence instead of mocking them?

Is it time to regulate oil companies like the public utilities that they really are? Let's see if the panderers in Congress have the interests of the country, or their own careerist objectives at heart?

Semper Fidelis

[ COMMENT: Just like OPEC controls the price of oil...the Chinese Communist Party is controlling the price of labor in their country. And by sheer weight of the force that represents, also their part of the Third World. They all have currency pegs...predominantly influenced by the Chinese Yuan's rate. If the Yuan went up against the dollar, they would also. ]

[hedgetrimmer]

It looks like you are arguing that the founders designed our republic incorrectly.

What "free traders" advocate is a kind of anarchy not freedom. Our founders knew perfectly well that freedom requires responsible citizenship. "free trade" promotes the law of the jungle and irresponsible citizenship. By that I mean the multinational corporations taking advantages of the protections that the US constitution offers them and their property, while at the same time undermining our system of government with their supranational institutions and lack of loyalty to the citizens who have granted them their corporate status.

The Chinese you see in my byline is a totalitarian monster enriched by you "free traders".

Its true that Socialism and in particular global socialism, is the enemy of inalienable rights and I'll take you one further "free trade" IS global socialism

[VoodooEconomics]

'Nope, that is way too simplistic.' This is also a bit simplistic as well - right? Point taken - but I bet after tomes of debate and minutia we will find that wars are generally about getting resources.

'...their economic vortex that swallows whole U.S. industries '

Will this vortex also come and ship every rock and tree in the US to China?

'a Communist-dictated low-wage advantage that is well below every other impoverished third world nation.'

Do you truly believe that communism is a better system for higher standards of life? You say yourself above that the Chinese are indeed an'other impoverished third world nation'.

But then you contradict yourself? The Chinese just spent 195bln maintaining their peg. When you spend money is it enriching or impoverishing? Wish I had that kind of money to blow on a peg.

[Dat Mon]

YOU SAID..."Free trade can not be a policy - it is free."

This is how some people such as yourself like to shift the focus of this debate on these threads...it becomes freedom versus non freedom, trade vs non trade....these are straw man arguments.

Why not talk about Free Love...like those dudes back in the sixties, why it means whatever you want it to mean you see...it is the CONTEXT that is important, not the words FREE or LOVE thrown about.

We all understand the concept of freedom, and we thought we understood the notion of trade, but the 'devil in the details' is always how you define trade, and its CONTEXT.

So lets emphasize what is TRADE, and not what is FREE in our discussions and definitions from here on out.

Are we talking trade in goods...trade in services...wholesale labor migration...how do you define trade, but more importantly, how do you think Smith and Ricardo, within the context of THEIR environment, culture, and times, defined it?

[VoodooEconomics]

My terms are free and unfettered trade. As to cowardice and surrender - well your post about our mideast despots sums up cowardice.

Regarding OPEC and their 'control' of oil - last I checked they have a price target of around 30 bucks.

http://www.nacsonline.com/NR/exeres/0000711alpfizawytsgoyzgd/NewsPosting.asp?NRMODE=Published&NRORIGINALURL=%2fNACS%2fNews%2fDaily_News_Archives%2fSeptember2004%2fnd0910041%2ehtm&NRNODEGUID=%7bCB931418-066C-48DB-A605-6B6813597974%7d&NRQUERYTERMINATOR=1&cookie%5Ftest=1

Price is the best signal for alternatives to oil. OPEC controls less than it thinks - and also last I looked - the Saudi government is deeply indebted and runs massive social programs - are they as rich as supposed!?

[Paul Ross]

Will this vortex also come and ship every rock and tree in the US to China?

It will be used to abet their national objectives...which aren't ending poverty...but dominating all industry and technology. They already absconded with the vital national security supply of super-magnets by snapping up and relocating Magnequench. And recall last year they tried to snap up our oil compnay, UNOCAL...and were prepared to spend big bucks to lobby for it in our Congress. Bribing away our own representatives. Thwarted only temporarily. (The admnistration was all set to cave in, only some stalwarts in Congress blocked it!) Meanwhile, they are taking a less resistance path... cornering the market on Iran's oil exports. Locking it in with a $70 billion contract. [Niftily funding the jihadists and the Shiite Bomb] You have heard that they have over $800 billion in financial reserves now too...this reported just last week in the Financial Times.

And then you reiterate...in apparent amazement my straightforward observation:

'a Communist-dictated low-wage advantage that is well below every other impoverished third world nation.'

Still valid.

Do you truly believe that communism is a better system for higher standards of life?

How in BLAZES do you come to THAT conclusion? The answer is NO. No! Of course not. Precisely the opposite. But hence their brute economic power of central control that is willfully NEVER acknowledged by Free Betrayders who practice China Apologetics 101.

You say yourself above that the Chinese are indeed an'other impoverished third world nation'.

No, I didn't. I said they haven't been for 12 years. They pretend to be third world. And they keep their wages BELOW all the other real third world countries.

But then you contradict yourself?

Nope. Read more carefully.

The Chinese just spent 195bln maintaining their peg. When you spend money is it enriching or impoverishing?

It is keeping their wage earners impoverished. Deliberately. For National...read Chinese Communist Party...Gain.

Wish I had that kind of money to blow on a peg.

Yup. Don't we all. Dwell on the sheer scale of that number for a while...and the only possible real intentions of it.

[VoodooEconomics]

And, we all know where free love led!?

'People such as yourself like to shift the focus of this debate on these threads' - I' m sorry! I will try to get back on topic.

Context is indeed the problem. I claim you or any one group advocating any policy regarding trade can NOT know, understand and anticipate every context.

I believe Smith and Ricardo would have said that while disclocations are unpleasant - a free economy and free trade are the best and only ways in which to repair dislocations over the longer term.

The context to me is the dislocation that more and more global trade might bring. Unfortunately, these problems have usually been caused by (probably well intended) industrial policy itself. Where dislocations are large the government and/or local institutions should attempt to find a solution(s). But, the longer you ignore our increasingly globalized world and or attempt to 'redesign' your industrial policy in such a way as to 'save' threatened groups or industries - you have only deferred things that are inevitable.

This does not mean that we do not observe trade policy of other nations vs a vis ourselves. China is predatory in many aspects with trade. We can defend ourselves - but if there is truly a comparative advantage then ultimately you need to adapt.

[VoodooEconomics]

The Chinese do not own UNOCAL. As for Magnaquench ...

I do not defend China. I defend free trade. I think too many people point to an indefensible government like China and then deduct that free trade is bad. I think this is foolish.

My point about Communist-dictated low-wage advantage that is well below every other impoverished third world nation.' is that such a policy will lead to continued impoverishment. I believe that China will be forced - much like Japan - to stop it's mercantilist policies. My point is that such chinese policy can not continue forever.

As to 'National Gain' the money was still SPENT - was it not? And while Chinese dollar reserves are astronomical they are not wealth producing assets.

I try to read carefully - I did not see the 'pretend' to be a third world nation. Rereading with this in mind and knowing how sinister we all are about China I guess it was implied. I think China and her policies are generally misguided. I do not think free trade is so misguided.

[VoodooEconomics]

And Mr. Ross - sorry to so verbose but I thought you might want to know that public debt in Saudi Arabia was 75% of GDP in 2004.

http://en.wikipedia.org/wiki/Economy_of_Saudi_Arabia

for other interesting facts about the kingdom

[redgolum]

You are more right than you know.

[redgolum]

I went to school with some of those people. They left for a year to go home and work to improve the country. Some never had a chance to go back.

As an aside, funny that an Asian country has become so Christian in the last few decades.

[Paul Ross]

The Chinese do not own UNOCAL.

They tried. And the Administration was issuing all the signals that they were prepared to roll over one more time. So they almost did.

As for Magnaquench ...

China owns it lock, stock and barrel. And relocated the whole works. If they had successfully acquired UNOCAL, then they would have acquired, coincidentally (? I think not) the entire proven U.S. reserves of the minerals needed for the super magnet industry...(not just the oil wells, oil drilling platforms and deep drilling technology...and the oil patch rights in the far east).

I do not defend China. I defend free trade. I think too many people point to an indefensible government like China and then deduct that free trade is bad. I think this is foolish.

You are mislaying blame for this confusion. This 'deduction' would not be happening if those schilling for China were not so successful at mischaracterizing their unilateralist/mercantilist predatory trade advocacy as 'free trade.'

My point about Communist-dictated low-wage advantage that is well below every other impoverished third world nation.' is that such a policy will lead to continued impoverishment. I believe that China will be forced - much like Japan - to stop it's mercantilist policies. My point is that such chinese policy can not continue forever.

This same "point" has been reiterated every year for 15 years.

It gets old.

I recommend you read the late Dr. Constantine Menges, who helped advise President Reagan, in his last great work, China The Gathering Threat. He rejects the automatic collapse fable. In fact, he believes we need to be proactive, and exert the same kind of push to topple the Communist tyranny in China as we did in the Soviet Union.

They never fell of their own accord. They were 'helped.' We are currently not only failing to 'help' the communists in China be ousted...we are abetting the securing of their position. It is as if the CCP runs our own State Dept. and Commerce Dept.

As to 'National Gain' the money was still SPENT - was it not? And while Chinese dollar reserves are astronomical they are not wealth producing assets.

Depends on how they are structured. But this is not a matter of free actors in an normal market. This is their government deciding.

I try to read carefully - I did not see the 'pretend' to be a third world nation.

Fair enough. But the explicit contention that they ceased being third world 12 years ago was the overtly stated context of my view.

[VoodooEconomics]

'It looks like you are arguing that the founders designed our republic incorrectly.' - If I did it was never my intention!

As a free trader I do advocate - as you say ... a kind of anarchy (also known as a kind of freedom??!)

The founders advocated free trade. They also advocated the rule of Law. Because you embrace free trade you must also invoke the rule of law. (And these laws must be passed by a representative body - not fiat). I do not advocate a kind of anarchy as in the law of the jungle.

It is interesting to me your thought process regards multinationals. These multis protect themselves with the laws of a government they wish to destroy? Would that not lead to their own loss of these protections and hence their assets?

Free trade has nothing to do with Global Socialism - and it is not - as this article suggests - a reason for more economic nationalism.

The sugestion that the dutch experience was caused by free trade has little merit. Their demise was caused by the economic nationalism of their autocratic neighbors.

The more things that you can freely purchase - the less need to raise a militia to go out and take those items you can't find on ebay.

[VoodooEconomics]

You are mislaying blame for this confusion. This 'deduction' would not be happening if those schilling for China were not so successful at mischaracterizing their unilateralist/mercantilist predatory trade advocacy as 'free trade.'

And you think I am shilling for China?

Agree with the 'push' theory. I see free trade and a free economy as the winner of the cold war and as ultimate winner vs China. To stop advocating free trade will slow down a free china and a better world. Does not mean we do not defend our interests - but national economics is code for failed nation state's policy during the last century that was mostly spent at war.

[Paul Ross]

And you think I am shilling for China?

No. I haven't had reason yet to suppose that, albeit there are others here who are rather unsavory in that regard.

Agree with the 'push' theory. I see free trade and a free economy as the winner of the cold war and as ultimate winner vs China. To stop advocating free trade will slow down a free china and a better world.

A'hem. Remember the 'confusion' situation.

Does not mean we do not defend our interests - but national economics is code for failed nation state's policy during the last century that was mostly spent at war.

That is a supposed "code" that is not only debatable, it is also virtually irrelevant since we aren't being given the choice how nationalist in economics our adversary is.

And precisely when do we START 'defending our interests'? Before or after its too late?

[ARCADIA]

And I am wondering what is victory? Insulation from competition?

Anyone who says doing business in a lawfully regulated market free market of 300,000,000 people means being "isolated from competition" is either a liar or a scoundrel.

[Paul Ross]

Bump!

Well, I went back and re-read the entire chapter on "comparative advantage" and at the end Professor Paul Samuelson says "all Ricardian bets are off" if wage differentials are too great and if one country's currency ends up at the wrong level. Comparative advantage retains its "vital social relevance" only when exchange rates, prices, and wages are appropriate.

I believe this is now echoed by Lester C. Thurow of MIT's economics dept.

The Davos World's "rules-based free trade" is not about economics, it's about redistribution of wealth. IMO it is a Marxist revolution from the top down and our corporations are the useful idiots who will be stripped of all their investments in Red China and elsewhere and placed on a slow boat back to America. It's what commies and com-symps do.

Excellent analysis!

[hedgetrimmer]

The founders advocated free trade

Really? I wonder why they decided that the federal government should be funded by tariffs? And why President Washington instituted tariffs while in office?

Because you embrace free trade you must also invoke the rule of law

Really? Then why is "free trade" system run by a supranational institution that has been granted unconstitutional authority over our ability to trade, in opposition to the US rule of law? Why is the US "free" to trade with known slave nations, when slavery is illegal in this country? Why can the WTO supersede our laws and require us to trade with communists as part of their multilateral trading system, when left to our own moral predilections, we as a nation wouldn't do it?

These multis protect themselves with the laws of a government they wish to destroy?

Yes. They use the US to protect their assets in many ways, including OPIC and the INF. They also expect our military to protect their assets and their cargoes at sea. They want the taxpayer to fund infrastructure development in foreign countries so they can outsource and offshore, but they do not reimburse the taxpayer for those costs. They also pursue an agenda through the US congress of treaty making that usurps the authority of the American people and gives authority over them to supranational institutions. This will destroy our government ultimately and since they will have the institutions in place, like the WTO the International Criminal Court etc etc, they won't need the poor duped American people any more.

Free trade has nothing to do with Global Socialism

Really? Pascal Lamy Director General of the WTO is a socialist, as are many members. Their programs of "trade capacity building" and advantaging "least developed countries" to "fight poverty" are completely and utterly socialist.

The more things that you can freely purchase - the less need to raise a militia to go out and take those items you can't find on ebay.

Are you saying this is how you would behave? I haven't seen anyone advocating this.