Global Glimpses 2/2012

Here is my two cents on a snapshot of the global (non-US) situation. Please keep the transformative forces of a dynamic populist political awakening and fundamental international interdependence in mind when framing global perspectives.

China

          The hard liners currently rule the roost. Their new President will be unlikely to swim against this current. Expect China’s military budget to double by 2018. They have claimed sovereignty over the South China Sea, which may bring them into conflict with regional neighbors and the global cop, the US. I guess they figured since the Sea was named after them….

          The hard liners are flexing their adolescent muscles and rattling a few sabers, but direct confrontation is unlikely. China’s fate is far too interdependent on global commerce. Besides, China is effectively expanding global influence on cyber and economic fronts and they don’t need to cause overt military mischief. As military and civil influence increases domestically, the government has to use more finesse to balance demands of multiple stakeholders. 

          The hard liners are also repressing foreign political and cultural influences. Chinese youth rebel by identifying with the West and internet expression. The most popular program in China is an internet show teaching American slang terms. Repression is the last recourse for a struggling government.

          Obama initially extended a gentle hand to China, and was viewed as weak by their leaders. They took advantage of us. Positions taken by Hillary and the startling recent exchange by Joe Biden reasserts us with the transitioning Chinese government.

          China’s economy continues to falter and slow, which is an ill omen for the global economy. China serves the economic role the US served through most of the 20th Century. Now they are hemorrhaging $56 billion a month in capital flight. Their economy appears to be headed for a super spiral downward. As much as we fear a strong China, we have much more to fear from a failing, fragmented, suffering China. 

          Population shifts from the farms to the big cities continues. Increasing affluence, greater population concentration, declining job opportunities, and a popular political awakening are fueling discontent and winds of change. The hard liners repress civil expression, but rioting continues at over 300,000 a year and these are increasing both in frequency and violence. The Party admits they are losing control of the narrative and can’t talk to the people because deeply entrenched government corruption is eroding their legitimacy. I do note, however, that the Communist Party has more popularity in China than the US Congress has in the US.

          Marxism is a bankrupt philosophy in China and there is no ideological glue that keeps the government together. The thing which is sustaining the Chinese government is inertia, the most powerful force in politics. More and more average people feel that a single Party system is inadequate for a modernizing nation. Perhaps we might reflect and empathize with the Chinese people’s dissatisfaction with their dysfunctional political system and perhaps consider going beyond our dysfunctional two Party system.

          The Communist Party in China shows signs of fragmenting this month as power transitions. There are some historic differences involved in this transition.  This is the first power transition in China’s history without an “elder” riding herd on it. For the first time, the governing body will now be comprised of many people who have spent time living abroad. This changing of the generational guard is accompanied by ensuing chaos. One illustration of this is the spat between the head honcho of a Western province and his chief of police. The top cop held scandalous evidence against the official, and decided to  flee to neighboring Szechwan, the land of tasty chicken dishes. The police chief appealed to the US Embassy for asylum. So the honcho sent an army to invade Szechwan to get him back. And you thought our politics was nuts?

Iran

          Will they or won’t they? Inquiring minds want to know. Build a bomb, that is. Doesn’t look like it yet. Report this year from both US & Israeli intelligence find no evidence of a current weapons program. The IAEA stated this month that negotiations concerning monitor placement were proceeding. While it is clear that Iran is enriching plutonium, one should not confuse weapons capability with a weapons program.

          But apparently some people are indeed confused by this and a war party is beating drums for pre-emptive military strikes here and abroad. They are attempting to use fear to rouse our rabble. If you’re afraid……

I’m not sure if these guys want military action out of fear, arrogance, or just need to give their defense contractor buddies more welfare money. Suffice it to say that a pre-emptive military strike is unwise and ill-advised.

          Why should we worry about an Iranian bomb? Why don’t we particularly worry about the other bombs strewn around the planet? If they were used on anybody, the aggressor would be nuked until they glow. This is called deterrence.

          The Prez and Grand Poobah of Iran is currently bitching and rattling sabers because of sanctions, money freezes and an impending oil embargo. However, this yapping is for local consumption. They are too economically interdependent to cause military mischief. They have also shown themselves to be a quite rational player, in contrast to stereotypes. They demonstrate a willingness to  yield when it is their economic interest. There has never been one suicide bomber from Iran. Contrast this with Pakistan, who has hundreds of nikes and where families, educational, and religious institutions train children to be suicide bombers. Why no fear of these guys.

          The point is that deterrence worked for 70 years and it will work for Iran. If Iran crafts one crude bomb, Israel has 250 targeting them, mostly on submarines. One thing the US could do is to formally throw a nuclear umbrella over Israel and Iran. An attack on Israel would mean total annihilation. While this is assumed informally, stating this through formal diplomacy as a policy position could carry much weight and probably ease the mind of the region.

          Iran is attempting to exploit the power vacuums and disaffections caused by the faltering governance in Syria and Iraq Their influence is diminishing on the Arab street and on their own streets for that matter. The single point of common ground for all internal constituents appears to be nuclear energy. Everybody in Iran seems to support it as a point of national pride and identity. As long as they don’t violate their non-proliferation agreement, I’m fine with clarifying their motives and using diplomacy to craft alternatives to current ambiguous practices.

         

          As their regional influence declines, Iran is hoping to build influence abroad. Their President visited sunny socialist vacation spots such as Cuba and Venezuela. They have dispatched their elite Quds force to South America. This placement sent the Monroe Doctrinaires into a tizzy. A major threat? Unlikely. The world is changing. Chavez has terminal cancer and Castro is 85. Iran is unlikely to gain long-term influence in that hemisphere.

          However, Iran may have unanticipated major influence on the US economy and elections. This influence revolves around the price of oil. The global demand for oil has declined. But the price per barrel is very high. This is due to market uncertainty and speculation concerning Iran. Obama’s policies are increasing market uncertainty and insecurity concerning Iranian oil. Ironically, high gas prices may well influence economic recovery and the next American election.

EU

           Because all developed nations are economically interdependent, the fate of the EU determines to an extent the fate of the US economy, and the US presidency. A short-term meltdown has been avoided. There is little traction for a tighter EU identity. Rather than political leadership, although there was much of that, the EU was saved in the short term by their central bank. Once playing a nominal role, the central bank has been quietly pumping money into the system, increasing liquidity and lowering the borrowing rate for struggling members. In essence they are adopting practices used by the Fed, and are trading escalating debt for internal stability.

          Medium and long term structural problems may cause the dissolution of the EU. Northern EU nations will prosper, and I predict the value of the Euro will increase.  Meanwhile, Southern nations will flounder, weighed down by onerous austerity programs. These Southern nations will probably experience a lost decade. Their position appears very similar to the lost decade of Central American nations during the 1980s, third world nations struggling under a foreign currency. Easy credit was replaced by massive debt. Of course, the lost decade winner is Japan, who hasn’t experienced growth for 25 years. The dynamic political and economic tensions between the Northern and Southern member nations may well eventually tear the EU apart.

Switzerland

          Land of watches and formerly, Mitt Romney’s money. The Swiss fanaticism for cleanliness is reaching new heights with the Swiss Space Center announcement of Clean Space One, the first space janitor robot, who will clean thousands of pieces of space junk out of  Earth’s orbit.

Egypt

          This land of Tut is still in turmoil because the military is reluctant to cede power (and it’s own enrichment) over to civil governance. Western aid workers were recently arrested and then deported. Who was behind this…the pesky Islmaists? Nope, our buddies the military. Both their tear gas canisters and the money in their bank account say “Made in USA”. To retain power, the military tried to start a national rumor that foreigners were the ones who destabilized their government and are causing all the problems the protestors were protesting about. People weren’t buying it and the aid workers were sent packing.

Syria

          Worse tragedy than Darfur. 7,000 civilians slaughtered and counting. A messy business. No easy  choices. Arm the rebels and a civil war spills over regionally and the slaughtering escalates. Don’t arm the rebels and the slow grind over months guarantees reprisals when the regime falls. What policy to adopt? What is the timing for these policies? If we support regime change, we seriously destabilize the region and create a larger power vacuum for Iranian influence. If we don’t back the people, it promotes resentment and an anti-Western narrative regionally. 

Talking about Poverty

          Americans don’t like to talk much about the poor. Our own families are barely making it. Besides, the American Dream is to get out of poverty, to create a better life for the next generation. So we don’t talk much about it. We have Government programs for that sort of thing anyway. We’re perfectly comfortable criticizing how much money Government spends on “welfare programs”. See, we’re talking about the poor already. Good job.

          Most of us don’t think there’s that many “poor” people around anyway. Most of the people we know are Middle Class, right? There might be poor areas in our town, but we don’t go there or think about them. We might think of the poor as comprised of single welfare mothers gaming the system, drug addicts, lazy bums who want a handout, or “disabled” people who don’t want to work. I also include those punk kids who need to get off my lawn. For many of us, poverty stems inherently from moral flaws.

          Surely, the good old US of A, the golden land of opportunity, doesn’t have too many poor people when compared with other countries. A report a few months ago by the OECD comparing the US with other countries reported that 17.3% of the US population is in poverty. This rate places the US 31 out of 34 developed nations. Only Mexico (21%), Chile (18.4%) & Israel  (19.9%) had higher percentages of poverty in their populations. Lower rates of poverty are noted in such luminary places as South America and Eastern Europe. The world landscape is changing. In addition, social mobility (the American Dream) is much higher in Europe than in America. What’s wrong with that picture?

          Comparing the poverty rate of European countries with our own, the UK (11.1%), and those damn socialists France (9.9%) and Germany (7.1%) had a much lower rate than our own. The average for all developed countries was 11%, much lower than our own.

          If we compare childhood poverty across developed nations, the United States led the pack (we’re number one..whoo) with a rate of 20.6%. Contrast this with Germany (16.3% Note they have a MUCH higher child poverty rate than their adult poverty rate), )Japan (13.7%), Australia (11.8%), the UK (10.1%), and those damn socialists in France (7.1%). Yep, wouldn’t wanna be France.

          We might need to fix the social safety net if it’s broken. Well, it seems to be broken in the area of child poverty. Studies indicate that when children grow up in harsh poverty, they are more likely to drop out of high school, use drugs, commit crimes, be unemployed, have children out of wedlock, and get sick. In other words, poverty leads to unproductive and economically costly outcomes. This perpetuates the cycle of poverty.

          Well, all these kids need is a good education, right? Longitudinal studies of smart middle school kids show those in poverty are less likely to finish college and make much lower income over their lifetime, thus perpetuating the cycle of poverty. Can we please talk about poverty now?

          When infant mortality (deaths during the first year) rates are compared, the US is again number one (whoo, number one) compared to other industrialized countries. For persons remembering a different ranking for our country, the world is changing. Our infant mortality rate is 6.6% (6 deaths per thousand). Europe is around 4% and Japan is lowest with 3.2%. Many mothers in America don’t have access to prenatal care. Malnutrition and poor childhood health care lay the foundation for poor lifelong health and huge costs for taxpayers. Our health facilities and opportunities for those in poverty were worse than for other developed nations, perpetuating the cycle of poverty.

          As previously mentioned, social mobility, the ability to get ahead economically, has stalled in the United States for persons in the lower socioeconomic 50%. I point out that includes much of the Middle Class population. It also means that children born into poverty are likely to stay in poverty. 42% of kids born to fathers whose income was in the bottom 1/5 of the country stayed in poverty. Compare this with the percentages of other nations such as the UK (30%) and those damn socialists in Northern Europe (27%). The socialists in Northern Europe have twice the social mobility as the United States. The world is changing.

          Child poverty is reversible. Tony Blair’s Labor government made child poverty (which was much higher than ours in the mid-90s) a priority and halved the rate in ten years. Comparatively, our rates have increased since the 1990s. It might be wise if we make poverty a priority here. In order to make poverty a priority, we have to view it as important enough to include in the national dialogue, along with the merit of Whitney Houston tributes. Can we all please talk about poverty now?

Marking Ears

          ‘I want that one.” “I claim that other one.” The term earmark might bring to mind the selection and marking of prized hogs. When Congress dives into the fiscal trough, such local/ personal appropriations are part of the feast.

          What is an earmark? It is an appropriation of Federal (centralized taxpayer) money brought home to benefit the Congressperson’s constituent region. There is much brouhaha in some quarters against the use and abuse of earmarks. Earmarks are tucked away in the folds of bijillion page appropriation bills which have nothing to do with the expenditures. They may be introduced into the bill the day of the vote at 4am. To say that earmarks lack transparency rates a Duh!.

          Defenders of earmarks point out that they have been a big part of Congressional politics since the early 19th Century. At best, they are political concessions, the commodity of deal cutting (i.e. compromise). Many in Congress feel that bringing money home is the reason they were sent to Congress. We need a piece of that pie. Many voters feel the same. So one man’s pork is another man’s livelihood.

          A few months ago, Congress decided not to ban earmarks by a 60 to 40 vote. So there is still plenty of pushback against the anti-earmarkites. How pervasive is earmark abuse? One man’s abuse…never mind. An investigative report a few months ago found that 33 lawmakers spent more than $300 million within 2 miles of their home. Sixteen steered millions to groups connected to family members. People on appropriation committees would spend millions on a “project” and hire their son or brother to run the project. Many of these “competitive” bids turns out not to be. Over 100 lawmakers spent millions within 5 miles of their homes and holdings.

          These facts exemplify the disconnect between power, personal enrichment and accountability. Earmarks are perhaps defensible if they contribute to a greater public good. Not so much if they just add property value to your house.

          These facts also point out the disconnect between reported finances and appropriated money. The stock disclosure forms are worthless in informing accountability.

          All these mentioned practices are quite legal. Congressional ethical standards concerning earmarks are ludicrous. One Senator remarked that you would have to appropriate money to remodel your kitchen before it’s  considered an ethic violation. So if we are mindful to follow the money, we see that the hog at the trough is sustained by big money, and are reminded that power promotes gaming the system in the grand career path called Congress. The American People can blithely submit to the System in place, or we can raise our voices, stand firm, and change that System.

Global Perspectives

          It may be interesting to note that the concept of global power is Western in origin. It began with the great explorations and then was expressed in competition, colonization and hegemony by various Western countries. There was a rise of “isms”,  such as Nazism and Stalinism, as nations fought for domination of Eurasia. No such “isms” will be able to rise within the foreseeable future as the global landscape shifts. Traditional concepts of global dominance are fast becoming obsolete. “Hard” power is being replaced by “soft” power. Recently, foreign policy in the West, in particular, in the United States has been framed as a projection of military, or hard power. It is our God appointed right to impose our will on others. I noted the booing of the Golden Rule during a recent debate.

           Upon a review of overt and covert hard power projection for the last half century, we subsequently conclude that employing military force produces unpredictable consequences and is very, very expensive. A single nation imposing it’s will on the world is now economically and politically unsustainable.

          Some US political candidates frame the world through a traditional lens. Persons framing the world in terms of global dominance and “isms” are out of touch with reality. The reality is that the West is an increasingly fragmented collection of debtor nations, while many Asian nations are solvent, aggressive, dynamic, and competitive. The strategic landscape is shifting from West to East, as well as from Northern to Southern hemispheres. This shift reflects trending of economic dynamism and vitality.

          To increase its dynamism, the West might economically incorporate Russia and Turkey. Both are dynamic and regionally influential nations who associate themselves more with the West than with the East.   

          I also note that some US politicians continue to see the United States in terms of being the global cop, perpetuating our post-WWII role. However, we live in a constantly changing world. However, our planet is interconnected in terms of knowledge, communication and economics. No single nation will be able to dominate a connected planet. Pursuing the traditional role of a global policeman will drive any single nation into bankruptcy, social resentment, and loss of legitimacy internationally.

          These massive strategic shifts are complicated by two factors: (1) a global political awakening of the person on the street, and (2) the deep and profound economic interdependence between nations. These two factors are unprecedented in human history. Keep these global forces in mind when framing international perspectives.

          In every nation, populations are taking to the streets, challenging the political status quo and demanding more dignity and self-determinism. Populations are restless and resentful and increasingly framing their discontent in an Anti-Western narrative.

          In addition, a single real time economic system connects the fate of all major nations with all others. Forces of both change and interconnectedness are making our world much more risky and unpredictable. When a fire in my house can burn the whole city, and everyone has matches, times get “interesting”. While we have national central banks and economic policies, we have a single global real time financial system and economy. Policy makers still can’t wrap their minds around the reality of this unprecedented interdependence.

          In a world in transition, there is still a key global role for the United States, one of leadership rather than cop on the block. Emerging realities require new thinking, new perspectives, and new relationships. There is currently no central organizing narrative to enable nations to jointly address global problems. The United States could be a determinant leader in crafting such a narrative, one based on partnership and global equilibrium. The 21st Century will be characterized by distributed and interconnected economies, communications, and relationships. For the most part, that world is yet to come. This is a world where energy and capitalism is as decentralized and distributed as Facebook and the Internet it reflects.  

          The United States can foster hope by providing moral and strategic clarity, helping make sense of an increasingly unpredictable landscape. When the situation is fluid, thinking must be fluid, and we should lead fluidly as well.

          However, a major challenge faced by the United States is also a core strength, our democratic form of government. Policy makers are accountable to the populace. Policy makers are only as capable as the populace they represent. Sadly, the American population is the most ignorant and introspective of any major industrialized nation. The United States could be a shining light, the crucial leader in shaping the emerging strategic global landscape. The United States could renew its greatness on the world stage, or it could stay mired in obsolete and ill-fitting models of previous centuries. The future is ours to create....or not.