Ruminations, June 20, 2010, Chinese exchequers and the G20
Ruminations, June 20, 2010
Incestuous politics
When inbreeding occurs within a family, it results in what we call “incest.” When it occurs in politics, it results in what we call “group think.”
That was obliquely addressed last Wednesday in an article in The New York Times. Instead of addressing the political process that brings us to uniform approach to the issues, political writer Matt Bai addressed a related item: the changing definition of populism (http://www.nytimes.com/2010/06/17/us/politics/17bai.html?hp).
In the early 20th century, populism was based on distrust of big corporations, which, according to Bai, made sense because of the power that big business had vis-à-vis a much smaller almost impotent power of government. Today, given the big size of government, populism distrusts big business and big government — and other big institutions as well, including unions and elite universities.
The “elite universities,” Bai mentions, seem to be a little more insidious than the other institutions, since the leaders of each of these institutions tend to be graduates of the elite universities – and that’s how we get to uniformity of approaches. Look at it this way: If President Obama’s nominee for the Supreme Court, Elena Kagan, is approved by the Senate, all members of the Court will have been trained at Harvard and Yale.
And the uniformity of the Court is not the only area of concern. Let’s take a look at the American presidency. For the past 60 years, with two exceptions, all presidents have had degrees from elite universities: the Ivy League, U.S. military academies and Duke University. This is hardly the egalitarianism we tend to associate with Americanism.
And yet, when we look at the presidents who represent the two exceptions, we find, arguably, the two most consequential presidents of the past sixty years: Ronald Reagan and Lyndon Johnson. Reagan was instrumental in bringing down the Soviet Union and moving the United States to a more market-oriented approach that resulted in the longest sustained period of growth in this nation. Lyndon Johnson is frequently criticized for his handling of the Vietnam War and of his War on Poverty but he was the greatest civil rights president since Lincoln; John Kennedy and Martin Luther King, Junior, may have galvanized the public, but it was Johnson who coerced a reluctant Democratic Congress to join with Republicans to pass significant civil rights legislation. One hesitates to imagine America today if it hadn’t been for these graduates of Eureka College and Southwest Texas Teachers’ College.
This is not to cast aspersions on elite institutions or their graduates. But because they are acknowledged as elite institutions, they tend to recruit their faculties from other elite institutions and from their own alumni. Because this leads to an in-breeding of sorts, the elites tend to think, if not the same way, then along parallel paths.
Consider that in 1981, the year that Ronald Reagan became president, the smart thinking at the elite universities was that the Soviet Union would go on for the foreseeable future and any suggestions to the contrary were considered, well let’s just say, uneducated dreams. It is counterfactual to speculate as to what would have happened had a graduate of an elite university been in office during Reagan’s term, but a reasonable guess would be that détente would have been emphasized and the Soviet Union might still be a going operation.
In 1963, when Johnson became President, the elites were strongly on the side of civil rights as a moral right, which it was and is. Yet the prospect of legislation passing through the bloc of the solid South was considered to be a frustrating impossibility. But Johnson got it done.
But there is some break with the uniformity genre represented by Kagan’s nomination to the Supreme Court. In spite of her tenure and education at Harvard, she does represent a break with the accepted wisdom of Court appointees in that she will be the only associate justice on the current Court to have never served as a judge. Maybe it’s a good thing to have one or two justices who have not been on the bench and, indeed the only Chief Justice in recent times to have never served as a judge or associate justice prior to being selected as Chief Justice was Earl Warren; and Warren was one of the most consequential Chief Justices.
It’s good to have elite universities that bring together some of our best scholars and pedagogues. And it’s a good thing to have graduates of elite institutions desiring to serve in the government. On the other hand, to rely almost exclusively on a cadre of the elitely educated, forms, if you will, a cookie cutter mentality. And, just as in-breeding in families can produce undesirable results, it can do so in politics as well.
Chinese exchequers and the G20
The G20 (Twenty of the biggest economies in the world but not, strictly speaking, the biggest twenty) began meeting in 1999 with the goal of expanding the global wealth and growth in an organized and cooperative manner. Today, it has become an organization whose constituent members have competing goals and divergent strategies for restoring global economic well-being.
Well, that’s the mark of a good organization isn’t it? Adapt to conditions or become irrelevant.
The G20 will meet in Toronto next weekend and attempt to reach consensus on some issues but probably produce nothing more than a number of prolix statements.
The American delegation, committed to Keynesian solutions, will forcefully make a case for all nations to continue stimulus (i.e., deficit) spending. The Europe delegations, committed to saving the euro from oblivion, will forcefully make the case for austere (much reduced deficits) budgets. Russia, trying to run a hybrid state-capitalism model, is targeting eliminating its deficit by 2015. India and China see their economies beginning to expand strongly and the biggest threat, in their opinion, is reining in excessive demand and holding the line on inflation by curbing stimulus spending.
Then there is the exchange rate conundrum – particularly with China. While most currency values fluctuate according to the fiscal policies of nations, China has pegged their yuan (formally the renminbi) to the dollar. Given that the yuan has strengthened while the dollar has weakened, the effect of pegging the yuan to the dollar has effectively devalued the yuan. Devaluation when running counter to market trends as in this case is a form of trade protectionism. This makes exports from China cheaper and imports to China more expensive. (Of ironic note, China says that U.S. entreaties to float the yuan are nothing but a form of “trade protectionism.”) But China has big internal problems that it has no other solutions for than the status quo. (With its burgeoning population, China must create 11 million jobs each year just to stay even. Add to that the fact that labor unrest in China has resulted in recent strikes – and wage concessions and the concomitant higher costs of production make China a less attractive source for foreign investment – and could result in a reduction of jobs. And labor and economic unrest can threaten a government’s existence.)
And to top it off, several countries don’t like the fact that the United States constantly outpaces them in gross domestic product (GDP) growth. So rather than apply approaches that would ensure greater creation of wealth, they want to change the definition of GDP: from the total market value of all goods and services produced in a year to the total market value of all goods and services produced in a year – plus time off. Because these countries bestow long vacations and short work weeks on their populace, adding time off will not only give them a statistical advantage over the United States but, at the same time, will reduce their deficit-to-GDP ratio by inflating their GDP. The rationale of these nations is that if you fail to measure up, change your unit of measure.
What are the odds that solutions to the aforementioned problems will be resolved over the weekend? Not good but at least the issues are being aired in a public forum.
Quote without comment
Geoff Crothall of the Hong Kong-based China Labor Bulletin as quoted in the China Post, June 10, 2010: "I think labor activism in China comes in waves, but over the last few years there's been an increase in the intensity and frequency of these waves."
Incestuous politics
When inbreeding occurs within a family, it results in what we call “incest.” When it occurs in politics, it results in what we call “group think.”
That was obliquely addressed last Wednesday in an article in The New York Times. Instead of addressing the political process that brings us to uniform approach to the issues, political writer Matt Bai addressed a related item: the changing definition of populism (http://www.nytimes.com/2010/06/17/us/politics/17bai.html?hp).
In the early 20th century, populism was based on distrust of big corporations, which, according to Bai, made sense because of the power that big business had vis-à-vis a much smaller almost impotent power of government. Today, given the big size of government, populism distrusts big business and big government — and other big institutions as well, including unions and elite universities.
The “elite universities,” Bai mentions, seem to be a little more insidious than the other institutions, since the leaders of each of these institutions tend to be graduates of the elite universities – and that’s how we get to uniformity of approaches. Look at it this way: If President Obama’s nominee for the Supreme Court, Elena Kagan, is approved by the Senate, all members of the Court will have been trained at Harvard and Yale.
And the uniformity of the Court is not the only area of concern. Let’s take a look at the American presidency. For the past 60 years, with two exceptions, all presidents have had degrees from elite universities: the Ivy League, U.S. military academies and Duke University. This is hardly the egalitarianism we tend to associate with Americanism.
And yet, when we look at the presidents who represent the two exceptions, we find, arguably, the two most consequential presidents of the past sixty years: Ronald Reagan and Lyndon Johnson. Reagan was instrumental in bringing down the Soviet Union and moving the United States to a more market-oriented approach that resulted in the longest sustained period of growth in this nation. Lyndon Johnson is frequently criticized for his handling of the Vietnam War and of his War on Poverty but he was the greatest civil rights president since Lincoln; John Kennedy and Martin Luther King, Junior, may have galvanized the public, but it was Johnson who coerced a reluctant Democratic Congress to join with Republicans to pass significant civil rights legislation. One hesitates to imagine America today if it hadn’t been for these graduates of Eureka College and Southwest Texas Teachers’ College.
This is not to cast aspersions on elite institutions or their graduates. But because they are acknowledged as elite institutions, they tend to recruit their faculties from other elite institutions and from their own alumni. Because this leads to an in-breeding of sorts, the elites tend to think, if not the same way, then along parallel paths.
Consider that in 1981, the year that Ronald Reagan became president, the smart thinking at the elite universities was that the Soviet Union would go on for the foreseeable future and any suggestions to the contrary were considered, well let’s just say, uneducated dreams. It is counterfactual to speculate as to what would have happened had a graduate of an elite university been in office during Reagan’s term, but a reasonable guess would be that détente would have been emphasized and the Soviet Union might still be a going operation.
In 1963, when Johnson became President, the elites were strongly on the side of civil rights as a moral right, which it was and is. Yet the prospect of legislation passing through the bloc of the solid South was considered to be a frustrating impossibility. But Johnson got it done.
But there is some break with the uniformity genre represented by Kagan’s nomination to the Supreme Court. In spite of her tenure and education at Harvard, she does represent a break with the accepted wisdom of Court appointees in that she will be the only associate justice on the current Court to have never served as a judge. Maybe it’s a good thing to have one or two justices who have not been on the bench and, indeed the only Chief Justice in recent times to have never served as a judge or associate justice prior to being selected as Chief Justice was Earl Warren; and Warren was one of the most consequential Chief Justices.
It’s good to have elite universities that bring together some of our best scholars and pedagogues. And it’s a good thing to have graduates of elite institutions desiring to serve in the government. On the other hand, to rely almost exclusively on a cadre of the elitely educated, forms, if you will, a cookie cutter mentality. And, just as in-breeding in families can produce undesirable results, it can do so in politics as well.
Chinese exchequers and the G20
The G20 (Twenty of the biggest economies in the world but not, strictly speaking, the biggest twenty) began meeting in 1999 with the goal of expanding the global wealth and growth in an organized and cooperative manner. Today, it has become an organization whose constituent members have competing goals and divergent strategies for restoring global economic well-being.
Well, that’s the mark of a good organization isn’t it? Adapt to conditions or become irrelevant.
The G20 will meet in Toronto next weekend and attempt to reach consensus on some issues but probably produce nothing more than a number of prolix statements.
The American delegation, committed to Keynesian solutions, will forcefully make a case for all nations to continue stimulus (i.e., deficit) spending. The Europe delegations, committed to saving the euro from oblivion, will forcefully make the case for austere (much reduced deficits) budgets. Russia, trying to run a hybrid state-capitalism model, is targeting eliminating its deficit by 2015. India and China see their economies beginning to expand strongly and the biggest threat, in their opinion, is reining in excessive demand and holding the line on inflation by curbing stimulus spending.
Then there is the exchange rate conundrum – particularly with China. While most currency values fluctuate according to the fiscal policies of nations, China has pegged their yuan (formally the renminbi) to the dollar. Given that the yuan has strengthened while the dollar has weakened, the effect of pegging the yuan to the dollar has effectively devalued the yuan. Devaluation when running counter to market trends as in this case is a form of trade protectionism. This makes exports from China cheaper and imports to China more expensive. (Of ironic note, China says that U.S. entreaties to float the yuan are nothing but a form of “trade protectionism.”) But China has big internal problems that it has no other solutions for than the status quo. (With its burgeoning population, China must create 11 million jobs each year just to stay even. Add to that the fact that labor unrest in China has resulted in recent strikes – and wage concessions and the concomitant higher costs of production make China a less attractive source for foreign investment – and could result in a reduction of jobs. And labor and economic unrest can threaten a government’s existence.)
And to top it off, several countries don’t like the fact that the United States constantly outpaces them in gross domestic product (GDP) growth. So rather than apply approaches that would ensure greater creation of wealth, they want to change the definition of GDP: from the total market value of all goods and services produced in a year to the total market value of all goods and services produced in a year – plus time off. Because these countries bestow long vacations and short work weeks on their populace, adding time off will not only give them a statistical advantage over the United States but, at the same time, will reduce their deficit-to-GDP ratio by inflating their GDP. The rationale of these nations is that if you fail to measure up, change your unit of measure.
What are the odds that solutions to the aforementioned problems will be resolved over the weekend? Not good but at least the issues are being aired in a public forum.
Quote without comment
Geoff Crothall of the Hong Kong-based China Labor Bulletin as quoted in the China Post, June 10, 2010: "I think labor activism in China comes in waves, but over the last few years there's been an increase in the intensity and frequency of these waves."
Posted by Robert J. Kulak at Monday, June 21, 2010 6:54 AM 
Categories: Robert J. Kulak, Politics, Ruminations, China
Tags: Robert J. Kulak Ruminations Politics China
Categories: Robert J. Kulak, Politics, Ruminations, China
Tags: Robert J. Kulak Ruminations Politics China
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