Tuesday August 19, 2008 - 20:13:59 GMT
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Forex Blog - Who is Kidding Whom?
Who is Kidding Whom?
If the US is anything in its history it is naive.
Sometimes being naive helps and sometimes it hurts. It helps when
problems that it confronts would never even be attempted to be solved by a more
cynical society â€“ Britain comes to mind. On the other hand it hurts when one views growth
in say China as not a threat to the US in as much as this line of thinking leads to
complacency. In other words as China grows there are only winners, here and there.
Well one look at what China has done in the Olympics this year should leave most
observers nervous about the potential for this society to apply the same
determination to science and technology. Is it any wonder that China wants to have people on the moon by 2020? How
long before the next Bill Gates is from China and lives there too?
I am not making an argument
against globalization nor am I making a case for isolationist policies.
What I am saying is that Chinaâ€™s economic expansion (will double the size of the US economy in 20 years using conservative growth
modeling) is indeed a threat to the US. With economic growth will come political
(economic, social and military) clout, even if
not one-for-one with economic might. In 20 years it is safe to assume, I
think, that Chinaâ€™s political influence globally will be a third more than it is
todayâ€¦and this means a loss of political influence elsewhere like in the USâ€¦it is a zero sum game. in as much as our
political leadership thinks and states (see US Treasury Secretary Paulson today)
that Chinaâ€™s growth is not a threat to the US and this is one of the highest
forms of naivete and breeds complacency.
This is not a call to arms
against China, but a call to arms against US complacency. We are too comfortable, too naive
and too much of everything for our own good. We are giving away the
future. Instead of telling the world and US public we have nothing to
fear from Chinaâ€™s rise to an economic and political heavyweight, Paulson
and just about everyone else in Washington would be doing us a greater Ă‚ service by addressing the very issues
that will take the US down the road of all former world powers and
China is going to do what China is going to do. That is a reality. What
then is the US going to do about its future with a decrepit infrastructure (try
driving around New
York City and
see if your car survives the potholesâ€¦this is the nationâ€™s premier city
too). Or see what is going on in public schoolsâ€¦it is a baby sitting
service for all but the gifted and talented,
and special needs kidsâ€¦we have an educational system catering to the tails of
the distribution. China and India eat our lunch when it comes to public schools
(surely many in rural China and India never get to a public schoolâ€¦weâ€™ve got that going
If the Olympics are not
opening your eyes to how much at risk the US is of falling into insignificance,
then have a look at the last two weeks in the Caucasus where Russia put down an
effort by Georgia, a US ally, to squash independence movement in the breakaway
Georgian republic of South Ossetia. Saakashvili, the President of Georgia, thought his back was covered by his buddy in the
White House. What a gross miscalculation. What Putin and Medvedev
correctly banked on was the US is in no position to prevent Russia from storming right into Tbilisi if it so desired and leaving Secretary Rice
threatening the expulsion of Russia from G8. It is laughable.
And if still not convinced
look at US influence in Iranâ€¦who is kidding whom? What influence?
North Koreaâ€™s demolishing of its two-decade old decommissioned
reactor was worthy of a scene from South Park. And North Korea gets removed from the Axis of Evil list which Kim is
surely happy with as his pipeline for Hollywood movies and
designer sunglasses is reopened.
If you think this is a
polemic against Republicans in power well it is not. Pelosi and Reid bear
responsibility as well. Leadership is leadership. Congress is
The good news is that the US economy is heading down the toilet and we will be in
a new New Deal world in 2009. A decade of government spending on
infrastructure to make jobs and strengthen the economyâ€™s backbone, and avoiding
bridges to nowhere, could in time reduce the future gap between the US and
China and allow for more if somewhat reduced global political influence in
another 20 years.
China is right to invest in its future while the US is wrong to spend on its past. If nothing
changes in US policies to address the infrastructure gap, Chinaâ€™s success at the 2008 Olympics is the tip of the
iceberg. Sorry Hank but I find your complacency very troublesome.
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