TCS Daily


Picture Perfect

By Austin Bay - March 22, 2007 12:00 AM

On the surface, the African Union's critique of Zimbabwean dictator Robert Mugabe doesn't sound particularly damning. The AU's statement calls for "respect for human rights and democratic principles in Zimbabwe."

It is rather mild for a scold, and perhaps a touch hypocritical. Africa is rife with human rights abusers, and democracy is rare.

Yet the AU's welcome jab at Mugabe may portend the end of the political "blind eye" given to black-run tyrannies in sub-Saharan Africa.

African democratic movements and reform politicians have suffered from this double standard. On March 11, Morgan Tsvangirai, head of the opposition Movement for Democratic Change (MDC), and 50 MDC supporters were attending a prayer meeting in Zimbabwe's capital, Harare, when they were arrested and beaten by Mugabe's police.

The "thousand words" of a pain-filled photo featuring Tsvangirai's pummeled, bleeding face did what years of Mugabe-led repression and 1,700 percent a year inflation could not quite do: provoke substantial and effective condemnation by Zimbabwe's neighbors.

That's important, because it denies Mugabe his favorite propaganda ploy -- blaming "imperialist" Great Britain and the United States for Africa's and the world's ills.

But over the last seven years, that tiresome tyrannical media gimmick has worn desperately thin. The 1,700 percent a year inflation isn't only unconscionable, it is incomprehensible unless it is translated from economist-speak (inflation) into its grinding, ground-level reality: mass poverty and starvation in a nation that was once a regional breadbasket. In March 2002, 55 "old" Zimbabwean dollars bought a U.S. dollar. In March 2007, it takes 259,793 "old" Zimbabwean dollars to buy a buck. "Old" crops up because last year Zimbabwe issued a "new" dollar that lopped three zeroes off the inflation-destroyed currency.

Since February 2000, when a "constitutional reform" referendum backed by Mugabe was defeated at the polls, the dictator has pummeled and beaten the entire country. Mugabe responded to that democratic defeat by dispatching his thugs (he calls them "war veterans"). The thugs took control of white-owned farms and began to "re-distribute" the land -- usually to Mugabe supporters. In the process, the thugs also brutalized the MDC, Mugabe's real target.

The "farms" gambit used legitimate historical resentment as camouflage for attacks on his democratic opponents. In May 2000, I wrote a column that argued the defeat of the referendum "clued Mugabe that his regime, in power since 1980, was at risk. The opposition, black-led Movement for Democratic Change (MDC) had strength throughout Zimbabwe, through all economic classes and in all tribes."

"Urban renewal" has been another subterfuge. In 2005, Mugabe's Operation "Murambatsvina" (a Shona phrase meaning "drive out the trash") literally erased opposition neighborhoods. An estimated 700,000 people lost their homes and their livelihoods.

Now, Mugabe intends to change Zimbabwe's constitution. His term as president runs out in 2008, but he wants to remain in charge at least until 2010. Over the years, Mugabe's ZANU-PF (Zimbabwe African National Union-Patriotic Front) Party has been a reliable prop for his regime. However, his move to keep the office until 2010 has ignited some opposition among younger party members.

Many Zimbabweans believe this nascent opposition could produce a political opportunity, if disgruntled ZANU-PF members can find common ground with the Tsvangirai's MDC. The MDC has international moral capital and international media credibility.

Mugabe, however, still controls the guns.

Forging a new internal Zimbabwean political consensus is absolutely vital, not only for Zimbabwe but for the rest of southern Africa. A civil war in Zimbabwe will have tribal overtones, with Mugabe's dominant Shona tribe likely providing the core of "pro-Mugabe" fighters. The Congo provides a bitter example: In sub-Saharan Africa, tribal wars all too easily spill over borders, which risks regional war. Wars in developing nations quickly erase decades of economic progress.

The United States and European Union are considering a package of economic sanctions that will affect Mugabe without punishing Zimbabwe's people, but that is a difficult formula that diplomats and bankers have yet to perfect.

The key actor is South Africa, the local regional power. South Africa needs to promote peaceful political change in Zimbabwe, publicly and forcefully. And that means easing, then releasing, Mugabe's grip on power.


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39 Comments

picture poor Zim
I recently had a friend who came from there. He is also one of the brain-drain professional guys who managed to get out in time. But he still has some relatives there, and they all admit that the country was much better off when it was run by the white Rhodesians before the dictator Mugabe screwed the whole place up. I was also there when it was still Rhodesia, and it was a pretty decent place, coming along nicely, improving all the time. I realize it's not PC to admit such things though, but I'm a free thinker unlike western liberals so I can speak the truth.

So suggest a course of action
Are we suggesting that Zimbabwe is a situation in need of a remedy? Arguably it is, with no economy at all, many thousands made homeless by government levelling of shanty towns and actual starvation occurring. But then what would be the remedy?

Propose something.

Are we saying that the other African nations are showing cowardice? Of course. They are all saying that could be me, facing the headsman's axe, and are inclined to show great mercy to the potentate, and none at all to the people in his thrall.

They needed their Rhodesians
You're not being controversial there, Mr D. I think most people know Zimbabwe was being held together by the efforts of the farm owners who stayed on after independence. It was stupid to the max to run them out and distribute their farms to political thugs with no management experience.

The large holdings provided most of the employment in the country, as well as the food they needed for domestic consumption and for foreign export. Now they have to work with what they have left-- which is no jobs, no food and no foreign exchange.

It will do no good to topple the old man. Mugabism is already well entrenched-- as are Niyazov-ism in Turkmenistan and Aliyev-ism in Azerbaijan. For that matter, Castroism in Cuba will go on well after that old man is dead too.

I don't see a good outcome, until the African Union grows up and assumes some responsibility.

so what should be done roy
You take away the historic way to change bad regimes and what is the answer?

Violate their sovereignty...
Remove their government. Put them under a United Nations protectorate. Try to keep their ancient tribal hostilites from expressing themselves...while we have them write a new constitution and hold elections.

Oh, Cripes. We just tried that. And it doesn't work.

China is engaged in Zimbabwe. China probably does not push the democracy issue very hard. China does know quite a little bit about turning a poor nation with a totalitarian government into a rapidly growing, economic powerhouse. A global player.

It would be pretty embarrassing for us if Chinese business practices were exported to Zimbabwe and started to work.

A general lack of interest
China's foreign policy is very pragmatic and nonjudgmental. China has no interest in the domestic activities of any nation. They figure what goes on in your house is your business.

If they were to offer aid to Zimbabwe there would not be any strings attached to it regarding any modifications to the existing thugocracy. But I really can't imagine why either China or anyone else would want to offer any aid. It's a pariah country, with nothing worth developing.

No good answers
I really don't see anything likely to get done that would help Zimbabwe. No one has any interest in regime change (is that what you meant by the "historic way to change bad regimes"?) and I don't see any local force able to pull off a coup. I think they're just in for some more tough sledding.

It's a real shame. I used to know some Zimbabweans, and they deserve much better.

Thank you
In almost every case of this type, or worse, there are no good answers. Thank you for admitting that.

Regime change is often the only alternative and usually takes an outside force to get it done. Then there is usually even worse conditions before there is any chance for things to get better; and still they often don't.

Diplomacy and deals don't work; peace-keeping forces don't work; aid and assistance don't work; internal uprising are often unsuccessful and, even when successful, usually don't work; outside invasion does work, for a while and to some extent, but usually they aren't a long-term solution and are costly and inefficient and, in the end, often don't really work either.

People are messy, miserable, violent and impossible to deal with. But they are the best thing going on this space rock and I generally kin of like them. So, even though nothing has a high success rate, we gotta keep trying to help. Pick a way to ease the general problems and misery and get 'er done. You will probably fail, but some will be helped and that is worth the attempt.

Now, Roy...
I will need to see some sort of documentation that the Chinese government is nonjudgemental and has no interest in the domestic activities of any nation. I find that statement astounding, but I will take your word that it seems reasonable to you.

However, the People's Daily reported:

"Zimbabwe and China will continue to strengthen the friendly bilateral relations that have existed since the birth of Zimbabwe, Deputy Foreign Affairs Minister Obert Matshalaga said on Thursday in Harare...

Matshalaga said Zimbabwe would look forward to the consolidation of these excellent relations and the exploration of more opportunities of cooperation for the mutual benefit of both countries and peoples in areas such as trade, technology transfer and investment.

Matshalaga added that the two countries enjoy profound ties that date back to the days of liberation struggle in Zimbabwe.

He said Zimbabweans would remember the enormous sacrifices that the Chinese government made during that important period in the history of Zimbabwe.

"We remain grateful for that timely material and moral assistance as we fought for independence and liberation," said Matshalaga."

http://english.people.com.cn/200509/30/eng20050930_211683.html


Chinese in Zim
Why should we be embarassed about Chinese in Zim. They are just doing what the US founding fathers recommended, aren't they? Trade with everybody, fight with nobody" or whatever. Liberals should be praising the US for not intervening in this country. Unless they are the type of liberals who say you should intervene, but only in places and times that you approve of. But liberals are usually hypocrites anyway, so what else could you expect?

It is worth developing
Zimbabwe sits on the northern edge of the greenstone shield, which is the primary source of gold for southern Africa. The ultramafic Great **** is located in Zim and will be one of the most important sources for chromium and platinum group elements. Until 1980, Rhodesia was the "breadbasket" of Africa, with the most productive agricultural and grazing lands on the continent. The one good thing that has come from the Marxist regime of Mugabe is literacy. When I was living there, it was markedly noticeable that where-ever you saw people waiting (for buses or hitchhiking) they were reading books. The Zimbabweans are intelligent, hardworking, and dedicated people. What they lack is a constitution and representative government. They have the British mode of government still in recent memory (one generation of separation), albeit apartheid, and could re-establish democratic governance as envisioned by the revolutionaries that led the rebellion and whom Mugabe killed off. I still have hope for the nation of Zimbabwe. It is a beautiful country with magnificent people.

Whose paradigm works best in the world...
If China is able to assist Zimbabwe to overcome its economic challenges where the United States has not been able to transplant financial capitalism into such nations then the Chinese model might start looking superior to ours, in this regard.

There is nothing sacred about our current form of capitalism. If the Chinese can work their magic better than we can, then they certainly will.

We already recognize that the Japanese, for example, are better at producing automobiles than we are (with our Big Three). In fact, they are doing this better than we are right here in America!

The opportunities for rapid growth in the "rest of the world" are dramatic and immense. Our companies have done quite a poor job exploiting idle productive resources all around the globe. We know this is true because such capacity is still sitting idle, after all these years.

Someone needs to engage that cheap labor and create wealth by exporting competitive goods into global markets. Someone needs to leave behind a robust GDP when they move on to the next market with cheap labor. Someone certainly will. Will it be us?

The overseas Chinese are good at this drill. Can you say Singapore? Multiply the Singapore paradigm by 50 such nations as Malaysia all over the world. The Chinese could do this. And don't think they won't try.

Looking for the silver lining
This is again one of those moments when you and I are in agreement. I found Zimbabweans I've known to be decent and intelligent. Also the case that the country is a potential breadbasket, with proper management of agriculture.

But I think the well has been poisoned. Inflammatory rhetoric having been uttered, and history having been what it was, the clock is not going to get turned back. For one thing, I don't think the white farmers who ran the place could ever be induced to return.

Additionally, it looks as though continuing Mugabism is a problem without any nonmilitary solution. But if one were to start somewhere it would probably be through working with the African Union, to strengthen the institution and try to suggest their mission be expanded to include active political intervention, with sanctions as the club.

I was not aware of their mineral resources-- but will mention in passing that such blessings have always been the curse of African nations. From South Africa's diamonds and gold to Nigeria's oil and the Congo's col-tan ores, minerals have always attracted great thieves and scoundrels. If there are indeed riches below the ground, I fear for the people of Zimbabwe until they are all stolen and the mines depleted.

All wealth
Well, you and I were getting along so nicely until your last paragraph where you say "From South Africa's diamonds and gold to Nigeria's oil and the Congo's col-tan ores, minerals have always attracted great thieves and scoundrels. If there are indeed riches below the ground, I fear for the people of Zimbabwe until they are all stolen and the mines depleted."

This is partly true, but changing rapidly in those nations that have reformed as constitutional democracies. South Africa's mines and technical universities are some of the finest in the world and their general workforce is highly trained and compensated (highest wages earned in any workforce). Anymore, the "great thieves and scoundrels" are anomalies and more generally found amongst the 1,000s of NGOs that have descended upon the most vulnerable of the continent. The riches under the surface in Zimbabwe can be its saving grace, attracting tremendous levels of foreign investment. It used to be that way, but has reverted to tribalism and opportunism. Your image of the international mining industry is sadly, colored by Hollywood and anti-mining hyperbole. This is most common amongst those that are furthest removed from where all wealth springs from.

The pragmatic approach to foreign policy
Omigod! Two heads of state are standing together at a photo op, on a dais, shaking hands. And one is saying to the cameras "We will stand with our good friends forever and usher into being a new era of peace and partnership and understanding..."

What's not to take literally about that?

My observation-- China's disinterest in the internal affairs of other nations-- stems from the fact that China has good working relationships with all the world's worst regimes, including Myanmar, Sudan and anyone considered to be a pariah by the other civilized nations. That's their opening. When others fear to tread, China steps right in. And they never, ever have been heard to utter a discouraging word to their trading partners about little matters of domestic politics-- like genocide.

Add to that how bent out of shape China gets when any other nation presumes to criticise their lack of human rights-- the persecution of Christians and ethnic minorities, the world's highest execution rate (even higher than in the US), the wholesale trampling of rights of the individual. They make it apparent that they consider such criticisms of one nation by another to be in extremely bad taste.

You disagree?

A little touchy about mining interests
We don't have many examples in history of mineral wealth ennobling a nation's political dialog. Normally they turn it into a monologue, with the most ruthless thief and his cronies collecting to dismantle and distribute the pie.

Sao Tome provides an excellent recent example of the process. Tiny nation, unknown but to a handful of Africa hands, finds there is a potful of oil in its territorial waters. Naturally, the adjacent giant Nigeria attempts to grab the oil and keep it. Sao Tome, with an enlightened ruler who could use the money for the development of his people, seeks help in fighting the threat.

Next thing you know, there is a small paragraph on page A-12 of the newspaper: Coup in obscure African nation.

In short, a nation only recently a liberal democracy, is now ruled by thugs. Forget holding fresh elections-- oil undid the process.

But I'm sure you can find many examples of the opposite-- where a thoroughly corrupted place like Zimbabwe found it was sitting on great wealth, and suddenly transformed itself into a liberal democracy.

My observations are that in a democracy with strong institutions, mining interests find they must play the game to stay in it. And with plenty of ready cash, they find they can generally play the game very well.

In places where those institutions are weak or absent, on the other hand-- places like Indonesia, Myanmar or Congo-Zaire-- they keep strong institutions, other than the army, from arising. This arises naturally from their mandate to maximize returns to the investors. They do it because they can-- and because, in a sense, they must.

Chinese
OK, and some would also say that while red china is getting more capitalistic, the US is getting less so, thereby losing out because of: their puritanical restrictions on briding foreigners although it is normal in their countries; Sorbens oxley, which has the predictable result of many IPOs now going to places like London, Frankfurt, HOng Kong, etc. Too many restrictions in the States, too high of taxes. (singapore just lowered business tax from 20% to 18. Many such things, so US is getting to be viewed more as a loser all the time; too bad.

mining
But aren't you the guy that said that such resources like mines, petro etc. should be nationalised and run by the likes of the Post Office, the DEA, and the VA system? I thought your role model was Venezueal where they nationlized big oil, with the result that production went down by half, their dictator uses about 20billion so far to buy friends and pay for subversion, and has about 20% inflation. On the other hand, some countries run their resources like Norway, Canada, Australia.(how could tiny Canada prevent the Americans from stealing all their oil and gas? it's amazing).

UN protectorate?
Do you mean to suggest they would do just as good a job as they did administering the OIl for Food programme? Or didn you mean as good a job as they do in the Congo, with their food for sex scandals? Or do you mean like East Timor with their over paid beaurocrats sitting in the outdoor cafes while they boss around the natives? No, I've got it; just as successful as the UN sitting in lebanon for decades prevented the hizbollah from starting another war with israel. It's amazing that anyone could possible thing that dysfunctional, totally corrupt UN to run anything; not even their own parking lot in NY; they can't even get their members to pay their parking fines. But who was running Rhodesia when it was the bread basket, and one of the richest places around, and getting better all the time? Everybody knows, but nobody would ever consider proven administrators run it again, right? Not PC, and liberals only want PC solutions even if they do't work.

Inane questions, answered
You seem to be trying very hard to appear ignorant. No, I'm not the guy who says natural resources should be nationalised. That's one thing that private industry is generally better at. When governments own a resource they nearly always get private industry to develop it in partnership.

Skipping over your rant on Venezuela, you ask why the US doesn't steal Canada's oil and gas. Well, civilized nations don't act like that. Consumers in both nations buy oil and gas that has been developed by private firms. To some degree, the governments regulate and tax the activities of those firms.

Did he just say that?
RB -- I believe this is the first time that I have seen you infer that the U.S. is a civilized nation. The world has suddenly shifted, just a little bit. I think that Dietmar is right in essence that, until recently you did extol Chavez and his "miracle" economy and that you have defended nationalized extractive industries. What changed you?

Come on, Roy...
I appreciate your rigorous philosophical posture and that you, indeed, mean well. However, your understanding of human social bevavior, financial capitalism and global politics can sometimes seem shallow. Perhaps you are moving too fast and relying too much on your intuition.

This exchange is a great example, Roy. China, just like the United States, seeks to export its political philosophy. In the end governments will rise and fall within the competitive global arena as a reflection of their ability to engage their income producing resources to create wealth. And then to tax that wealth.

This is the game we played during the Cold War to overpower the Soviets (and the Chinese) with GDP performance and sustainable, growing, tax revenues. (We have spoken elsewhere regarding the magic of financial capitalism. Wealth accumulated on balance sheets and private portfolios, while not counted as a component of the GDP, nevertheless, supports taxation. But that discussion is beyond the scope of this note.)

The Chinese domestic market is expanding so rapidly you might think that they would have plenty to do at home already. They should not need to expand their business model into other underdeveloped nations. Financial capitalism in venues without democracy and, prehaps, without a strong central government. As I have said elsewhere, again, overseas Chinese businessmen have been able to immigrate and create wealth almost everywhere on Earth without interacting very much with the governments of the host nations. Whether there has been a strong central government in place or almost no government there at all.

This would be very difficult for American style businesses. Our paradigm requires the rule of law with enforcement by the judiciary and by regulatory agencies of the central government. If the Chinese can export their methods and take over entire economies beyond Asia (Chinese businesses control as much as 85% of the economy of the Philippines, for example, and, of course, there is Singapore) then their interests will continue to grow far faster than ours.

We have structural problems here in America with our defense spending and our entitlement programs (especially) that cannot be easily corrected without betraying the reasonable expectations of our citizens. Our people believe that they live in a democracy, can vote for change and that we are guaranteed a certain lifestyle. However, to pull this off the government needs to continue collecting taxes at rates that seem to be growing faster than our economy. We are competing with the rest of the world for such rapid growth opportunities.

If, as it turns out, the Chinese business model is superior to ours, especially in the developing markets, then we could get into some trouble in the next 20-30 years. What the Japanese, for example, did to us in the business of manufacturing automobiles during the past 30 years could happen to us across many of our basic industries at the hands of the Chinese and (coming soon to a business near you) the Indians.

Chinese interests abroad
It's an unanswerable criticism to say someone's "understanding of human social bevavior, financial capitalism and global politics" is too shallow, without indicating in which direction lie the depths.

I would offer that this is not a particularly deep thought: "China, just like the United States, seeks to export its political philosophy."

It seems apparent that China's political philosophy is simply to profit from its neighbors and not to moralize about them. Were it to export that philosophy it would just make more competition for itself. Surely you mean something else.

2. "In the end governments will rise and fall within the competitive global arena as a reflection of their ability to engage their income producing resources to create wealth. And then to tax that wealth."

China may be using a different model. That one works for the US. But in China the government already owns damn near everything-- even the bank. Instead of taxing money in the workers' pockets, they might find it easier just to decide how much of the money they want to put into the workers' pockets.

As for wealth, if you consider an accumulation of American dollars to fit that description I think they're already there.

3. "The Chinese domestic market is expanding so rapidly you might think that they would have plenty to do at home already. They should not need to expand their business model into other underdeveloped nations."

Who said anything about expanding their business model and exporting it? I can't think of any action they've taken like this. They're not in the foreign aid business.

Did you misunderstand me when I talked about Chinese interests around the world? Those are merely extractive interests. They're not hawking religion door to door out there.

4. "As I have said elsewhere, again, overseas Chinese businessmen have been able to immigrate and create wealth almost everywhere on Earth without interacting very much with the governments of the host nations."

The activities of individual overseas Chinese and those of the current Chinese government are, I believe, two vastly different enterprises. Chinese businessmen may control things in Singapore and the Phillipines. But do you think they are but stalking horses for the dreaded Chicoms? If so, then why did they flee overseas, way back when?

5. Finally, I do not think the Chinese business model is superior to ours. Nor is it inferior. They are mirror images. We have a reciprocal arrangement, whereby they give us cheap baubles to distract our lower classes with, while we give them attractively printed portraits of our past presidents.

Does none of this ignite in you some spark of recognition? Are we both talking about the same China and the same US?

Scattered thoughts
You're just very, very turned around, that's all. The US is certainly a civilized nation, and a developed nation. Such entities have an agreement among themselves now, not to steal one another's stuff. And they have pretty much held to it.

And you are very correct that prior to this January's inaugural speech I approved of Venezuela's obvious successes under Chavez, just as I denounced Chavez the morning after that speech for jeopardising the nation's gains by going too far. But what does any of that have to do with Dietmar's baseless contention to this effect:

"But aren't you the guy that said that such resources like mines, petro etc. should be nationalised and run by the likes of the Post Office, the DEA, and the VA system?"

To confuse the two would be to engage in muddy thinking at its muddiest. You should get into the habit of discriminating much more precisely between ideas. You're trying to clobber a fly with a fork lift.

People get the government they deserve.
When people believe they don't have to work hard to earn a living, they will succumb to the siren call of politicians who will promise them something for nothing.

Reminds me of Pinocchio at Pleasure Island.

pardon me
I guess I was mistaken and it was the other Roy Bean who was ranting about nationalizations, admiring Chavez, said he thought Russsians were freer when everything was nationalized there. And it could be you're not the one who said the Venez economy was really great, so you're their 20% inflation doesn't concern you at all. Re stealing oil in Canada etc. I guess it was also somebody else who keeps saying that the Americans are just doing their usual, stealing oil all over the world.

No Subject
Wrong on all counts. You are a total idiot.

Bribery-- it's as American as apple pie
Has Sarbanes-Oxley been worth it? Section 404 accounting costs have gone through the roof, and have driven a couple of small companies out of business. But on the other hand, without the requirement to transparently audit books untold billions of investor wealth were being squandered in frauds like Tyco, Global Crossing, Northern Telecom and Enron.

Which is worse for America? The fact that accounting requirements are onerous for the little guy now? Or the fact that without this legislation investors would have no basis for believing the numbers being put into prospectuses?

Re bribery: is it true that the Americans allow contributors to bribe candidates so openly that each party is now taking in a billion dollars in the presidential election cycle?

And is it true that a candidate who refuses to accept such money has absolutely no chance to win a major office? It seems to me that our presidential primaries are just pissing contests, where the one with the most money wins every time. Or am I mistaken?

Roy...good...lots of substance here...
China should seek to export its working philosophy in the same way that the United States does. In the sense that our own business players are able to operate in an offshore market and create wealth. Such financial imperialism is the current mechanism replacing military colonization to capture productive resources and to carry earnings home in the form of exports to the mother country or to be sold into third party markets. (Repatriating profits captured inside the host nation can be a bit more tricky.)

Chinese businessmen have traditionally been able to do this wherever they went without waiting for democracy or the rule of law enforced by a strong central government. This is key, because our companies in the United States are not really effective operating in markets without legal protections and where "normal business practices" are often considered "corrupt".

If this is the case then the barriers to entry for our companies will keep us on the sidelines while the Chinese players are in there making money. And perhaps reinforcing the weak central government institutions that should keep us out indefinitely. They might effectively shut us out of many cheap labor markets.

2. The Chinese tax base paradigm is very close to ours, now. In the past, and when the government owned all the wealth creation operations, the most their government could take out of the economy was the profit margin generated by their GDP. And they could not consume all their earnings or they would have had nothing to invest as working capital to keep growing. Further, their economy was not producing the sort of products that made a lot of money. Too much of it was agricultural.

In the United States we sustainably harvest 30% of our GDP as tax revenues while our GDP itself only generates a 10% profit. How is this possible? The assets building up on the balance sheets of our private companies and in the portfolios of our private citizens combine with the magic of banking to create both the liquidity to pay more taxes and the actual wealth (over and above the GDP) into a far larger tax base.

It does not matter who owns the banks in China, just now. It is very important that their banking indusrty is underwriting their industrial development as needed. Further, private balance sheets and portfolios over there are expanding rapidly. Growth, in general, throws cash ahead of profits.

Actually, China's taxes, though lower than ours, are not fundamentally different. Good for them. Because our IRS works really well.

The Chinese are, indeed, accumulating wealth. Whether or not these funds are denominated as dollars is an issue for their FOREX account. Of course, they are holding lots of interest bearing, US Treasurey debt instruments. Because our bonds are simply the best.

3. Overseas Chinese business entities never lose access to their associates on the Mainland. Even after hundreds of years, in Manila for example, those Fujian families that control 85% of the economy of the Philippines still speak Fujian, typically marry Chinese and do business all over Asia. Including back home on the Mainland.

The paradigm is for these players to expand deeper into developing markets, investing Chinese funds (at higher interest rates in such venues) dominating entire industries, hiring local workers, owning local banks and making all the money there is to make thereby.

Roy, the Chinese are not going to teach the locals how to run a business. Or set anyone up but another Chinese to work with as the local market expands. The Chinese dig into rapidly growing business opportunites, break them wide open, bring in their partners to grab the entire industry and to hold onto all the money.

Of course, the Americans would also like to exploit the cheap labor, extract the raw material wealth and dance with the native girls. But the Chinese are far better at this than we are. They have been doing it for thousands of years. Culture.

4. Now that the Communist Chinese are in the global game, their traditional business diaspora will remain the method of choice for expansion into foreign markets. What is astounding: they seem to be starting already. At the highest diplomatic levels.

5. You know that "cheap baubles to distract our lower classes" comment is precisely the arrogance that caused us to underestimate the capabilities of the Japanese industrialists. Sadly, you are not the only American to see it this way and to mistakenly dismiss the Asians.

These guys are not playing around, Roy. They are beating us at our own game and they are now changing the rules. They send us cute books like the Art of War and The Book of Five Rings so we will believe we understand how they think. Financial capitalism in the global Post Industrial Society is lots more complex that a haiku.

We need to start really paying attention or hope enough of them immigrate here to keep us competitive. America has 5% of the population of the globe. If we let ourselves fade away over the next 100 years, no one will even notice.

The Celestial Kingdom
"China should seek to export its working philosophy in the same way that the United States does."

You know, I don't think China really wants to give any free tennis lessons to the competition. It might make them harder to beat. So if they have a working philosophy, they'll very likely be keeping it to themselves.

For that matter, I don't think the United States intends giving anything away either. If you'll remember, the whole neoliberal experiment began with our giving everyone development loans, without telling them how to make money from the seed. Then they all ended up in our pocket, with the IMF only agreeing to roll over the bad loans into new bad loans if the subject countries did our bidding.

That's why we're persona non grata now in Latin America. Everybody remembers what it was like when they were under America's thumb. Now they're following guys like Chavez-- anyone who's the opposite of who we are.

Same thing in places like Thailand. People got screwed over so badly in the Asian meltdown they'll have long memories. If the revolution ever reaches the Philippines and Indonesia it'll be the same there. America will never be welcome again.

Here's a hint though. If you want to find out what they're thinking in China-- or anyplace else east of Suez-- you might read Asia Times. They keep their ear pretty close to the ground.

http://atimes.com/

A stray thought. If we don't want to give them all our marbles, maybe we shouldn't be buying all our stuff from them.

Venezuela's Chavez announces plans for 'collective property'
"CARACAS, Venezuela: President Hugo Chavez announced Sunday that his government's sweeping reforms toward socialism will include the creation of "collective property."

Vowing to undermine capitalism's continued influence in Venezuela during his television and radio program "Hello President," Chavez said state-financed cooperatives would operate under a new concept in which workers would share profits."

http://www.iht.com/articles/ap/2007/03/25/america/LA-GEN-Venezuela-Chavez.php

Why did you ever believe Chavez was anything but a socialist?

I would urge you to rethink all of your political choices so you won't chose a Chavez equivalent in the USA.

RB?
Perhaps it was another RB who rhapsadized about how happy Mexicans were back when they were allowed to do subsitence farming.

Messing up big time
Chavez ran as a socialist when he first came to office, in 1999. No one should be surprised there. But he's turning into a big disappointment with this latest round of excesses. He's undoing all the gains he's made in the past seven years. Worst, it was unnecessary. When he was attracting investment capital he had the means to solve all his country's problems. Now, he's driving that capital away. He'll learn... but too late.

Re choosing a Chavez in this country-- don't you think a socialist candidate would be even less likely here than a viable libertarian candidate?

You thought he was better than sliced bread.
If you knew he was a socialist, why are you disappointed?

You are suprised a socialist would actually implement socialism?

I agree
with most of the body of your post, but your header was a bit harsh. People often think they are getting something quite different than what it turns out they end up with. American politics is riff with this, but we, at least, have the opportunity to vote the bums out. We don't have to try and secretly raise an army to create a coup.

Life is hard. It's even harder when you are stupid.
Most moral systems try to teach that selfishness does not lead to prosperity.

But, people never seem to learn that TANSTAAFL. (no free lunch).

And a government that can take property from someone else and give it to you, can certainly turn around and take it back.

agreed

Global Post Industrial Society...
How about we look at the global financial economy as a single system? Operations, marketing and finance fully integrated so that sovereign governments and even the color of our money is simply not very important any more.

Yes, we might work in New York or we might live in California. I live and work in both the United States and in the Philippines. The commute is a little longer than most of us suffer. But a ride on an airplane is pretty much a ride on an airplane.

In 1950 almost all the immigration in America was south to north and east to west. In 2000 almost all of the Pacific Rim immigration was from Asia to America. By 2050 we will probably see a lot more immigration going in the other direction and a balance achieved as opportunities in the states over there are too attractive for our young people to stay away from.

The companies in Asia will have matured to the point that their continued rapid growth will force them to headhunt management talent over here. Especially our marketing and finance types.

We already buy stuff from those bad people down in Texas...They have way too much of our money. Oil and beef. What were we thinking? Why shouldn't we just relax, now. Can the people in Kuala Lumpur be any worse than the people in Dallas?

Roy, it's already one world. Financial capitalism gave us this gift of working together rather than trying to enslave each other. We just think that Americans are special. And we are wrong about that. We are all the same. Really.

Preaching to the converted
You're right, there is certainly just a single global economy, and all the players are competing in the same arena. Those who got there first, and have built up a greater number of points in the game (the US) enjoy a natural advantage. But the game goes on forever, so that advantage, over time, can erode (even evaporate) if the players don't continue to be able to plan for the future.

And I think the guys in charge of our federal government at the moment aren't playing a very good hand. Due to political considerations, they are placing all our chips on the table for a horizon of only eight years. And of those, we only have 20 months left to go until elections.

Runaway deficits are seen as being no problem. And no one wants to talk about the $350 billion we are spending just on federal debt service every year-- a figure that will only grow as interest rates rise in tandem with our budget deficits.

But for the moment, let's party. We have an endless supply of poker chips, lent back to us by our smiling opponent, who wins every hand. Let's pretend it's only a matter of time until we win, and that he does not already own us.

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