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Quotations

  • Simon Blackburn: An Unbeautiful Mind
    Polkinghorne holds the belief that unless some things last forever, everything is futile, a "meaningless empire of accident." This would wipe the smile off the face of many scientists. For science is not good about "forever." It paints a different picture of the world in which we find ourselves. Science teaches that the cosmos is some fifteen billion years old, almost unimaginably huge, and governed by natural laws that will compel its extinction in some billions more years, although long before that the Earth and the solar system will have been destroyed by the heat death of the sun. Human beings occupy an infinitesimally small fraction of space and time, on the edge of one galaxy among a hundred thousand million or so galaxies. We evolved only because of a number of cosmic accidents, including the extinction of the dinosaurs some sixty-five million years ago. Nature shows us no particular favors: we get parasites and diseases and we die, and we are not all that nice to each other. True, we are moderately clever, but our efforts to use our intelligence to make things better for ourselves quite often backfire, and they may do so spectacularly in the near future, from some combination of manmade military, environmental, or genetic disasters.
  • Roger Scruton: The West and the Rest
    "It is thanks to Western prosperity, Western legal systems, Western forms of banking, and Western communications that human initiatives now reach so easily across frontiers to affect the lives and aspirations of people all over the globe. However, Western civilization depends on an idea of citizenship that is not global at all, but rooted in territorial jurisdiction and national loyalty. By contrast, Islam, which has been until recently remote from the Western world and without the ability to project its message, is founded on an ideal of godliness which is entirely global in its significance, and which regards territorial jurisdiction and national loyalty as compromises with no intrinsic legitimacy of their own. Although there have been attempts to manufacture nationalisms both appropriate to the Islamic temperament and conducive to a legitimate political order, they have fragmented under the impact of sectarian or tribal allegiances, usually giving way to military dictatorship or one-man, one-family, or one-party tyranny. Islam itself remains, in the hearts of those who live under these tyrannies, a permanent call to a higher life, and a reminder that power and corruption will rule in this world until the reign established by the Prophet is restored."
  • Adam Smith: Wealth of Nations 1776
    The difference of natural talents in different men is, in reality, much less than we are aware of; and the very different genius which appears to distinguish men of different professions, when grown up to maturity, is not upon many occasions so much the cause as the effect of the division of labour. The difference between the most dissimilar characters, between a philosopher and a common street porter, for example, seems to arise not so much from nature as from habit, custom, and education. When they came into the world, and for the first six or eight years of their existence, they were perhaps very much alike, and neither their parents nor playfellows could perceive any remarkable difference. About that age, or soon after, they come to be employed in very different occupations. The difference of talents comes then to be taken notice of, and widens by degrees, till at last the vanity of the philosopher is willing to acknowledge scarce any resemblance. But without the disposition to truck, barter, and exchange, every man must have procured to himself every necessary and conveniency of life which he wanted. All must have had the same duties to perform, and the same work to do, and there could have been no such difference of employment as could alone give occasion to any great difference of talents.
  • Kishore Mahbubani: Freedom
    But freedom does not only solve problems; it can also cause them. The United States has undertaken a massive social experiment, tearing down social institution after social institution that restrained the individual. The results have been disastrous. Since 1960 the U.S. population has increased 41 percent while violent crime has risen by 560 percent, single-mother births by 419 percent, divorce rates by 300 percent and the percentage of children living in single-parent homes by 300 percent. This is massive social decay. Many a society shudders at the prospects of this happening on its shores. But instead of traveling overseas with humility, Americans confidently preach the virtues of unfettered individual freedom, blithely ignoring the visible social consequences.
  • Harold Pinter: Nobel Lecture
    There are no hard distinctions between what is real and what is unreal, nor between what is true and what is false. A thing is not necessarily either true or false; it can be both true and false.
  • Charles Darwin: The Descent of Man
    As man advances in civilization, and small tribes are united into larger communities, the simplest reason would tell each individual that he ought to extend his social instincts and sympathies to all the members of the same nation, though personally unknown to him. This point being once reached, there is only an artificial barrier to prevent his sympathies extending to the men of all nations and races.
  • Earnest Becker: The Denial of Death
    We have to go the way of the grasshopper even though it takes longer.
  • Johnson, Samuel: Rambler # 121 May 14, 1751
    "To learn is the proper business of youth; and whether we increase our knowledge by books or by conversation, we are equally indebted to foreign assistance."
  • Murray Rothbard: Education Free and Compulsory
    It is evident that the common enthusiasm for equality is, in the fundamental sense, anti-human. It tends to repress the flowering of individual personality and diversity, and civilization itself; it is a drive toward savage uniformity. Since abilities and interests are naturally diverse, a drive toward making people equal in all or most respects is necessarily a leveling downward. It is a drive against development of talent, genius, variety, and reasoning power. Since it negates the very principles of human life and human growth, the creed of equality and uniformity is a creed of death and destruction.
  • J. M. Cameron: Review of Becker's Denial of Death
    Life, for Becker, is a desperate business, in which a steady heroism before the terrors of existence is in general the only thing to be commended.
  • Mark Lilla: The Politics of God
    In the end, though, what happens on the opposite shore will not be up to us. We have little reason to expect societies in the grip of a powerful political theology to follow our unusual path, which was opened up by a unique crisis within Christian civilization. This does not mean that those societies necessarily lack the wherewithal to create a decent and workable political order; it does mean that they will have to find the theological resources within their own traditions to make it happen. "Our challenge is different. We have made a choice that is at once simpler and harder: we have chosen to limit our politics to protecting individuals from the worst harms they can inflict on one another, to securing fundamental liberties and providing for their basic welfare, while leaving their spiritual destinies in their own hands. We have wagered that it is wiser to beware the forces unleashed by the Bible’s messianic promise than to try exploiting them for the public good. We have chosen to keep our politics unilluminated by divine revelation. All we have is our own lucidity, which we must train on a world where faith still inflames the minds of men. NYTimes Magaziine, 8/19/2007
  • Richard Fields: The Land of Opportunity
    Immigration to the United States is not a problem. It is a phenomenon. The only way the United States can stop this phenomenon is by destroying the capitalist economy that draws immigrants here. We need to move in the direction of more open immigration, not in the direction of militarized borders fit only for a police state. Though it's been obscured by layers of cynical campaign rhetoric, the issue of immigration comes down to whether we want to restrict individual liberty to native-born Americans or offer it to everyone. If freedom works for us — and it does — what possible moral reason do we have to offer it to those born in San Diego, and deny it to those born inches away in Tijuana?
  • Edward O. Wilson: Consilience: The Unity of Knowledge, 1998
    On the surface it would seem, and was so reported by the media, that the Rwandan catastrophe was ethnic rivalry run amok. That is true only in part. There was a deeper cause, rooted in environment and demography. Between 1950 and 1994 the population of Rwanda, favored by better health care and temporarily improved food supply, more than tripled, from 2.5 million to 8.5 million. In 1992 the country had the highest growth rate in the world, an average of 8 children per woman. Parturition began early, and generation times were short. But although total food production increased dramatically during this period, it was soon overbalanced by population growth. The average farm size dwindled as plots were divided from one generation to the next. Per capita grain production fell by half from 1960 to the early 1990s. Water was so overdrawn that hydrologists declared Rwanda one of the world's twenty-seven water-scarce countries. The teenage soldiers of the Hutu and Tutsi then set out to solve the population problem in the most direct possible way. Rwanda is a microcosm of the world. War and civil strife have many causes, most not related directly to environmental stress. But in general, overpopulation and the consequent dwindling of available resources are tinder that people pile up around themselves. The mounting anxiety and hardship are translated into enmity, and enmity into moral aggression. Scapegoats are identified, sometimes other political or ethic groups, sometimes neighboring tribes. The tinder continues to grow, awaiting the odd assassination, territorial incursion, atrocity, or other provocative incident to set it off. Rwanda is the most populated country in Africa. Burundi, its war torn neighbor, is second. Haiti and El Salvador, two of the chronically most troubled nations of the Western Hemisphere, are also among the most densely populated, exceeded only by five tiny island countries of the Caribbean. They are also arguable the most environmentally degraded.
  • Murray Rothbard: Rights of Animals
    There is, in fact, rough justice in the common quip that "we will recognize the rights of animals whenever they petition for them." The fact that animals can obviously not petition for their "rights" is part of their nature, and part of the reason why they are clearly not equivalent to, and do not possess the rights of, human beings. And if it be protested that babies can't petition either, the reply of course is that babies are future human adults, whereas animals obviously are not.
  • Dr. Kenneth R. Miller:
    When asked, “What do you say as a scientist about the soul?” Dr. Miller's answer is always the same: “As a scientist, I have nothing to say about the soul. It’s not a scientific idea.” Dr. Mller, a Roman Catholic and biologist at Brown University is the author of, “Finding Darwin’s God” (Harper, 1999)
  • Richard Rorty:
    "...if we can work together, we can make ourselves into whatever we are clever and courageous enough to imagine ourselves becoming.”
  • Richard J. Herrnstein:
    "It is easy to lie with statistics, but it's a lot easier to lie without them."
  • Michael Slackman: Quiet Revolution in Algeria
    In Algiers there is a whole class of young men referred to as hittistes — the word is a combination of French and Arabic for people who hold up walls.
  • Albert Einstein:
    Common sense is nothing more than a deposit of prejudices laid down by the mind before you reach age 18.
  • Neil Postman:
    "Children are the living messages we send to a time we will not see."

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January 30, 2008

China trade with the United States

Do you remember MAD, or mutually assured destruction, that feared, possible, but successfully avoided hot outcome to the Cold War waged during some 40 years between the US and the Soviet Union? In this month's Atlantic James Fallows writing about the present somewhat "warmer" cold war between the new super powers, China and the US, describes the existence of what might be another kind of mutually assured destruction, this time not nuclear but economic.

According to Fallows and others no longer do the atomic bomb holdings of the new rivals, although no less present, place them, and the world, at great risk of nuclear holocaust, but in this new rivalry the unstable trade relationships between the two place not only them but the entire world at great risk of a devastating  economic downturn if that "stable" instability were to come to a sudden end. To Fallows such seems not unlikely and he raises what he calls the 1.4 trillion dollar question.

What is the unstable and possibly precarious trade relationship between the two trading partners? On the one side the dollar holdings of China are growing at the rate of $1 billion a day, now totaling $1.4 trillion. That's $1 billion that are not needed for meeting current obligations and can be set aside for any purpose that the government wishes.

On on the other side is the burgeoning trade imbalance of the US, currently growing at the rate of more than $2 billion a day (about a third of that representing the trade imbalance with China) and betraying an economy that continues to consume more that it produces, a situation according to Fallows that is not tenable over the long run.

Why is the trade imbalance with China a threat to the US? Because China may use its surplus dollars, no longer to support the US consumer by purchasing US Treasuries, but begin to "unload" them, and thereby weaken the dollar even further in the world currency exchange markets.

China may, for example, buy Euros or gold instead of Treasuries and US stocks. Or surprising everyone and probably most of all itself, it may even invest its surplus billions in its own people, providing its imprisoned citizens, for the first time in the Communist era, some of the basics elsewhere taken for granted, such as heated classrooms, adequate housing, clean air and water, and by doing so significantly lessening the demand for the dollar.

Fallows points to a recent paper by Eswar Prasad of Cornell in which the economist writes: "The important question to ask about the U.S.–China relationship is whether it has enough flexibility to withstand and recover from large shocks, either internal or external.”

In response to Prasad I would say that the US, not the relationship, does have enough flexibility to withstand a large shock to the value of the dollar. The trade imbalance with China is not the whole of that imbalance. It represents about one third of the total, and in any case does not possess the destructive force, if it were set free, of a flight of nuclear armed intercontinental missiles.

But China may not be flexible enough to withstand the loss of trade with the US. China is probably much more at risk than we are, and this inequality of risk is probably what most of all protects us. We are a golden goose for China and China won't do anything to lose us.  Furthermore from our side of the relationship there is even less risk that we abandon our spendthrift habits and begin to save, reducing our need for China imports.

My general response to the questions that Fallows raise is that the two economies are not comparable, they are apples and oranges, that which Fallows doesn't sufficiently take into account. Furthermore, he doesn't recognize that our economic trajectories are at widely different points in their histories, and to talk about them intelligently one needs to separate them.

Fallows makes the same mistake that we made throughout the Cold War. He is assuming a kind of economic parity between the US and China. There is no such parity.

That the Soviet Union was no less a superpower than the US, as was often repeated during the Cold War, was in fact never the case. We only realized this, and to our great chagrin, at the moment of the collapse of the Soviet Union and the Fall of the Berlin Wall in 1989. Only then did we understand that in respect to the size and reach of its economy the Soviet Union was never a superpower at all. Only their stocks of nuclear armed intercontinental missiles made them a threat to our nation.

The economies of the US and China, described in respect to PPP or puchasing power parity, or in any other manner, are vastly different in size and reach. China's per capita GNP in PPP (2005) of $1,740 makes it number 108 in the world, the USA's $43,740 per capita GNP makes it number 6. And what is appropriate for the one in respect to economic strategies is probably not appropriate to the other. China's 50% savings rate and our 0 or negative rate may be just fine, given our differences and where we are in our respective trajectories.

Also the US with less than 5% of the world population accounts for some 33% of the global GDP, and China with 21% of the world population accounts for just 4% of global GDP. This alone ought to push us to think differently in regard to what is good for each of the two nations.

So what is the answer to Fallows' 1.4 trillion dollar question? The value of the dollar may not even depend on what China does, whether it buys Euros with its dollars, nor on our spending and saving habits, no matter how deplorable they may seem to the descendants of Ben Franklin.

The value of the dollar stems from the value of our economy, still the most valuable economy in the world. Our golden goose is the creation of new wealth, and those responsible for that new wealth, the innovators and entrepreneurs. We might worry when our entrepreneurs begin to leave us for China. So far that is not happening, rather the reverse is still happening, with China entrepreneurs coming and being made here.

It is true as Fallows makes clear that the Chinese are subsidizing rich Americans by investing their excess dollars in our economy, and it does stand to reason that this won't continue indefinitely.  But Fallows doesn't introduce a realistic time frame, doesn't point to anything out there on a near horizon that might be coming along. And in time, which he doesn't imply we don't have, much can change to resolve the situation, and most likely without a major dollar collapse and/or economic downturn.

One tries to envision what would happen if the Chinese begin to unload their dollar assets. One easily sees that this would be disastrous for their economy, highly dependent upon our purchase of their goods. But for us, probably nothing much would happen.

With China's exit other countries would probably step in and take up the slack.  The emerging economies of Africa and South America would like nothing better than to have the same access to our markets that China has now. The principal result would be that we would see fewer of the Made in China labels on our consumer goods.

The answer to Fallows' further question, "are we playing them for suckers—or are they playing us," is, neither the one or the other. We are profiting, both of us, from the existing relationship as unequal as it is, and only when either one of us decides that the relationship is no longer profitable will it come to an end, most likely bringing greater after shocks to China than to us...

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