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The Expansionist
Sunday, January 18, 2009
Trans-Atlantic Conversation on Political Philosophy. Over the past week a colleague in northern England and I have exchanged emails about a number of topics, sparked by his remembering something I said here months ago. Here is the exchange, slitely edited (but still lengthy; be warned). He initially wrote:

I remember when you posited the question "What is an economy for?"

Isn't the real political divide on economics between those who want to be average people in a rich country, and those who want to be super-rich people in a poor country? Is the problem with the United States that the rich have converted it from a wealth-creation machine to a wealth-concentration machine?

I found a 2006 article by an author who normally supports free trade, which claims that dirty tricks rather than cheap labor is the real factor behind how China steals First World jobs.
The federal budget deficit and imported oil contribute importantly to the trade deficit. However, the $250 billion federal deficit could not possibly cause an $810 billion trade deficit, and the $275 billion trade gap with China now exceeds net petroleum imports.

Imports outnumber exports with China six to one. That is remarkable, because China is the fastest growing market on the planet for what Americans make best—capital goods, technology products, financial services, and the like.

Many U.S. firms cannot export to China or compete with Chinese products in the United States, because China maintains an artificially undervalued currency, imposes high tariffs on imports, offers subsidies to locate production in China, limits what foreign investors may buy outside China, and enforces other industrial policies to suppress imports and boost exports.

Less than half of China’s price advantage is created by inexpensive labor. The rest, quite plainly, comes from chiseling and cheating on the rules.

Each year, China dumps enough yuan into foreign exchange markets to purchase more than $200 billion U.S. dollars, other hard currencies and securities. That keeps the yuan cheap, Chinese goods artificially inexpensive at Wal-Mart, and U.S. products very expensive in China.

Other Asian governments must follow variants of China’s strategy lest their industries lose markets to Chinese exports. Not counting oil-rich Indonesia, Asia accounts for more than $435 billion of the $810 billion U.S. trade deficit.

New taxes, budget cuts and hybrid cars cannot plug that hole. Without patching it, there is no hope for sustaining American public support for free trade.

International economists have long known a dirty little secret about free trade. A large country like China can manipulate international prices to its advantage and harm its trading partners, much like an abusive monopolist, if those actions go unanswered by other large countries.

By rigging currency markets and other bully tactics, China is doing just that: increasing employment in high productivity activities that compete in trade, and stealing those jobs from the United States and other western economies.

Like the United States, China’s labor force grows at about 1 percent a year but its GDP advances at better than 10 percent; meanwhile President Bush suggests Americans should be content growing at 3 percent or less.

World Trade Organization rules recognize the harm that currency manipulation, subsidies and other industrial policies can cause, and empower members to take compensating actions if harmed.

Seen in this light, proposals like those offered by Congressmen Duncan Hunter and Tim Ryan, which would permit U.S. industries injured by an undervalued yuan to petition for countervailing duties, are not protectionist. Rather, those are sensible responses to Chinese abuses of free trade. Those would either motivate China and others to quit cheating on the rules of global commerce, or undo some of the harm to the U.S. economy by partially rebalancing trade and recouping some lost GDP.
I replied:
The more fundamental question, the answer to which you imply but which is not given in that excerpt, is why the U.S. would tolerate such abuses, from Japan for decades and now from China? Plainly, ruin for many equates with vast riches for the few, here. If there weren't somebody in the U.S. making big money from Chinese misconduct, the industrial ownership class would shut the border down post-haste. As to why there are so many traitorous, greedy people in the top income tiers in the United States, I haven't a clue. Perhaps it's the whole post-Christian thing, where the bulk of people reducing their own countrymen to ruin don't believe there is any price to be paid, not by their body or property on Earth, not by their eternal soul on Judgment Day. No one has found a way to talk people into decent behavior. The Golden Rule is all very nice, but as a practical matter, why should selfish people give a damn about anybody who cannot actually hurt them? Moralists have always had to scare people into behaving morally. And there is not presently any credible threat of punishment of any kind to the super-rich for their crimes against their fellow man. What, pray, do we do about that?
It's a little hard to complain about Chinese self-aggrandizement, given China's hideous history of poverty and famine. It is thus another case of trying to talk people into treating other people fairly. The Golden Rule doesn't sell well in a country that has had millions die of starvation in the collective memory, especially in one that has no significant Christian tradition, where the Golden Rule has the magic of a deity behind it, implicitly to scare people. I don't know that the Chinese believe in a Last Judgment of any kind, altho many do practice a type of ancestor worship. What would be the point of lavishing attentions on dead ancestors if those ancestors cannot know of such devotions? Nor does the common decency of the common people — if any — control in most countries, which are ruled by people who do not share in any common decency but are personally ambitious and don't care whom they crush in their climb to the top. There's another thing you might recall my having said: The human race is slime.

That brought this response:

In fact China is significantly anti-Christian — for example the Roman Catholic Church is banned in favor of a "Chinese Catholic Church".

One reason why China is so paranoid about religious movements (not just Christianity, but also Falun Gong) is because many rebellions in Chinese history had a religious aspect to them. The worst was the Taiping Rebellion, led a man who claimed to be Jesus's brother. It happened about the same time as the American Civil War, but killed more than 30 million people!

As for who gains — pretty much the entire industrial ownership class is profiting. Traditional protectionism would come into play if American firms were being outcompeted by Chinese firms, but what's really happening is that American workers are being outcompeted by Chinese workers working for the same American firms.

My comment:
I had never heard of the Taiping Rebellion but just checked the Wikipedia article about it. That says that part of the massive death toll was due to starvation, a constant theme in too much of Chinese history. I'm with Mao in seeing the Taiping Rebellion as a war against feudalism. It is shocking that Britain and France helped the Qing government. I'm glad the U.S. shares none of that guilt.
My colleague then added some info from a somewhat different angle:

One example of how the Chinese respect ruthlessness is that they revere Genghis Khan (as he founded the Yuan Dynasty) while Westerners (and even more so Muslims) revile him as a mass murderer.

In fact I've often wondered why Muslims don't view the Mongols as the epitome of absolute evil — just as Westerners view the Nazis. Perhaps it's because they're still devoutly religious and feel no need for a secular Satan-substitute. Then again, the Hamas Charter does liken Zionism to a "Nazi-Tatar invasion", which suggests there is some anti-Mongol (Tatar) sentiment out there.


For many of the super-rich, capitalism is a sport and their wealth is a score. There was the case of a successful stock trader going on a tour of the mansion of some early 20th century zillionaire, where the guide describes in detail what he bought with his zillions. The stock trader asked "Who cares about what he spent his money on? I want to know how he made it!"

There's no reason for anyone to have money in enormous amounts, because the more money you have, the less useful it is. If someone living on $20,000 per year had their income double, they would have a significantly higher standard of living in many different ways. If someone living on $200,000 per year had their income double, they'd probably buy a bigger house and fly first class. But what difference would it make for someone living on $20m per year if their income doubled? Perhaps they'd own a corporate jet instead of renting one* when they wanted to fly somewhere, but that's about it.

Perhaps that's why so many super-rich people are scum — once they have enough money to live in ostentatious luxury (which isn't that much), what is left to motivate them but the pursuit of power itself?

* Speaking of rented corporate jets, they're one half of why 9/11 put Concorde out of business. The time required to pass the strengthened security measures meant that flying on a rented private jet (which was comparable in price to a Concorde flight) became faster — the lack of security checks for private-jet flights more than made up for the aircraft's slower flying speed.

The other half is that many of Concorde's regular customers were killed in the attacks themselves.
My reply, which closed this particular conversation, was:

I knew that the Mongols regard Genghis Khan as a national hero, which is appalling enuf. When I was a late child or early teenager, I saw some film about the Mongol massacres and was horrified. But that the victims of Genghis's monstrousness should admire him is astonishing. Are you sure about that?
I hadn't heard about the "Tatar" thing in regard to Hamas. I suppose they mean by that to harken back to Hulegu's attack down thru the Fertile Crescent until stopped by the Mamelukes (and what a strange word that is. I thought to check the pronunciation of that monster's name, spelled Hulegu or Hulagu, and find I misread it, which is easy enuf to do given our crappy spelling "system". I had read it húe.la.gù, whereas it's apparently to be pronounced hue.láe.gu. I'd have known that if it were spelled Hulaygu. This is another case that explains why I am a spelling reformer. I took my grandniece, from California, to the American Museum of Natural History and was amazed at the host of words on plaques that you have to GUESS at because there's no way in the world to know how to pronounce them. Only once in a blue moon is there a folk-phonetic pronunciation guide. In my Fanetik, and especially Augméntad Fanétik, spelling (true-)system, you know how to pronounce every single word.
Anyway, my brother, who has been a millionaire twice, tho I don't know if he still is, especially in that he lost a lot of money from his retirement accounts recently, has said plainly that beyond a certain point, money is just a way of keeping score. Since that is true, you'd think we'd be able to motivate people to keep score of how much money they give away, or pay in taxes; or how smart they are in how they use their money for public good -- "I built 17 library media centers in depressed neighborhoods for $X, when everybody said it couldn't be done for less than $(X+y)." You would especially think this in that it is not the acquisitiveness but the philanthropy of Carnegie and Rockefeller that people most admire. I find it odd that people would crave zeros on a statement of net worth more than the admiration of the world.
As for the pursuit of power thru money, again we must ask a basic question: What is power FOR? The well-adjusted person says that power is the chance to do good and useful things. The tyrant doesn't see it that way.
People just don't ask the right questions. Scott Baio was on late-nite cable talkshow Chelsea Lately last nite talking about the quest for fame, which motivates so many people in Hollywood, even after they learn the hard way about the costs of fame (paparazzi invading their privacy, all their less-than-admirable secrets exposed, etc.). Well-adjusted people don't crave empty fame or meaningless fortune. Perhaps that's why nice guys finish last, because they have nothing to prove, no deep psychological need to achieve outsize accomplishments in any realm. The (late) co-founder with me of the Expansionist Party told me I was too smart to succeed in politics, which really meant that I am too rational to pursue power for power's sake, or sacrifice privacy for fame, etc. So we get only twisted personalities at the top of everything, because their irrational, deep, inexplicable NEEDS impel them to strive beyond all reason, as for instance campaigning for the Presidency for two years, for a job that might last only four -- if you're not assassinated in office -- and spending 3/4 of a billion dollars for a job that pays only $400,000 a year. Monomania is rewarded; mental health is punished. And how many principles does anyone have to compromise, even to the point of compromising them away entirely, in order to achieve the highest positions in politics, business, entertainment, whatever? The Faustian bargain is more psychological parable than literal account, but all too many people think that just because they haven't actually pledged their soul to the devil, the compromises and sacrifices they make for an irrational goal don't matter.
So now Obama will have four years (absent assassination, an all-too-real possibility) to accomplish, to accomplish -- what? How much can anyone accomplish in four or even eight years (we will assume that Congressman Serrano's attempt to repeal the 22nd Amendment and allow unlimited terms will be rejected overwhelmingly -- we wouldn't want George Bush in office for 32 years), on a planet of 6.7B people, and counting? Bill Clinton left the White House having reversed 12 years of Republican profligacy and then having produced the greatest budget surplus in the history of the world. Within 8 months, it was gone, thrown away on the rich by the Bush Administration, which then plunged us into the greatest DEFICITS in the history of the world within another two scant years or so. Plainly a black Presidency will achieve a lot that no other use for $600M or $750M (by the Obama campaign) would achieve, even if that President were assassinated by other than racists (e.g., Islamists) even within the first year. Of course, if he IS assassinated by KKK types, we can expect unprecedented racial strife in the United States, and that would actually set us BACK rather than move us forward racially.
But in an ordinary year, is $5.3B for an election for President and Congress a reasonable use for so much money? And while we may get the best President and Congress money can buy, is it a good President and Congress?
I had my golden moment, the "Camelot" of the JFK years, in my youth. I would be very happy for present younger generations to have their own "Camelot", and hope it doesn't end the way mine did.
(The current U.S. military death toll in Iraq, according to the website "Iraq Coalition Casualties", is 4,228 — for Israel.)

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