Walter Russell Mead has not been the biggest fan of the current president, so it's worth quoting at length what he said in a recent blog post about Obama's Pacific Rim trip: 

The cascade of statements, deployments, agreements and announcements from the United States and its regional associates in the last week has to be one of the most unpleasant shocks for China’s leadership — ever.  The US is moving forces to Australia, Australia is selling uranium to India, Japan is stepping up military actions and coordinating more closely with the Philippines and Vietnam in the South China Sea, Myanmar is slipping out of China’s column and seeking to reintegrate itself into the region, Indonesia and the Philippines are deepening military ties with the the US: and all that in just one week. If that wasn’t enough, a critical mass of the region’s countries have agreed to work out a new trade group that does not include China, while the US, to applause, has proposed that China’s territorial disputes with its neighbors be settled at a forum like the East Asia Summit — rather than in the bilateral talks with its smaller, weaker neighbors that China prefers.

Rarely has a great power been so provoked and affronted.  Rarely have so many red lines been crossed.  Rarely has so much face been lost, so fast.  It was a surprise diplomatic attack, aimed at reversing a decade of chit chat about American decline and disinterest in Asia, aimed also at nipping the myth of “China’s inexorable rise” in the bud....

[I]t was as decisive a diplomatic victory as anyone is likely to see.  Congratulations should go to President Obama and his national security team.  The State Department, the Department of Defense and the White House have clearly been working effectively together on an intensive and complex strategy.  They avoided leaks, they coordinated effectively with half a dozen countries, they deployed a range of instruments of power.  In the field of foreign policy, this was a coming of age of the Obama administration and it was conceived and executed about as flawlessly as these things ever can be.

You know it was a good foreign policy trip when Politico runs the "Obama will soon miss his foreign policy successes as he returns to the Washington mire" storyline upon his return. 

The standard line among the press and expert analysts is that the combination of speeches and actions represents a dramatic foreign policy "pivot" to East Asia.  This elides some prior speeches that suggested this was under way for some time, but still -- what does it mean? 

I'd suggest three things.  First, it's an interesting moment to highlight some macro trends that are relatively favorable to the United States.  In comparison to, say, China or Europe, the United States looks to be in decent shape.  Over the longer term, trends in both energy and manufacturing suggest that the United States will continue a time-honored tradition and emerge from a crisis of its own making in a stronger relative position than before.  If the administration is smart, it will marry its recent successes to these longer-term trends as a way of constructing a more optimistic strategic narrative. 

Second, China is likely to pursue a more accommodating posture in the short run.  As Mead notes, the official Chinese reaction has been muted.  The unofficial reaction has ranged from the hyperbolic to the inscrutable.  Still, as I've pointed out repeatedly, China's behavior in 2009 and 2010 was a giant honking invitation for the rest of the Pacific Rim to cozy up to the United States.  And that's what should worry Beijing.  It's not that the United States is interested in maintaining its presence in East Asia -- that interest has not wavered.  What has changed is the eagerness with which the countries in the region, ranging from Australia to Myanmar, have reciprocated. 

Third, while the Obama administration deserves credit for this foreign policy swing -- and for some fun, compare and contrast coverage of this trip with Obama's Pac Rim swing from two years ago -- the "pivot" language is badly misplaced.  A pivot implies that the United States will stop paying attention to Europe or the Middle East and start paying attention to East Asia.  While I'm sure that's what the Obama administration wants to do, it can't.  Europe is imploding, as are multiple countries in the Middle East.  The United States can't afford to ignore these regions, since uncertainty there eventually translates into both global and domestic problems.  A European financial meltdown or an Egyptian political meltdown will have ramifications that simply can't be ignored. 

Talking about a United States "pivot" in foreign policy is meaningless.  The US, like an overstuffed couch, is simply too big to pivot. 

What do you think? 

As I noted previously, compared to his GOP rivals, Mitt Romney has some actual foreign policy thinking going on.  On the other hand, as Dan Trombly points out, doing better than Herman Cain or Rick Perry is a really low bar.  So, looked at objectively, what's my assessment of Romney's foreign policy white paper? 

I could go through it line by line, but James Joyner already did that for The Atlantic.  As it turns out, I'm reaching a course called The Art and Science of Statecraft that will require students to write a grand strategy document.  Sooo.... if Mitt Romney was one of my students, how would I grade him?  See below:

********************************************************************************** 

Mitt,

You and your study team have clearly put a lot of work into "An American Century."  It's cogently written and organized.  Your basic statement of purpose -- "advance an international system that is congenial to the institutions of open markets, representative government, and respect for human rights (p. 7)" -- fits perfectly within the mainstream of American foreign policy thinking. You've done an excellent job of demonstrating an awareness of the complexity of threats that face the United States in the 21st century.  I liked it on p. 6 when you noted that:

In the highly dynamic realm of national security and foreign policy there are seldom easy answers. Discrete circumstances in disparate regions of the world demand different kinds of approaches. There is no silver bullet for the problem of securing the United States and protecting our interests around the world.

You've also demonstrated an appropriate awareness that American power rests on more than a strong military.  When you note that a Romney administration would "apply the full spectrum of hard and soft power to influence events before they erupt into conflict (p. 8)," I caught myself nodding along.  

Some of the details are intriguing as well.  I need to look more into these "Reagan economic zones" that you mention a lot, but applying them to Latin America and the Pacific Rim make a great deal of strategic and economic sense.  I'm not fully persuaded that your notion of creating regional envoys to organize all "soft power resources" is all that different from the foreign policy czars or special envoys of administrations past, but this kind of argument fits well with your management background. 

That said, there are some logical flaws and major gaps in this draft that will have to be corrected if you want to earn a better grade.  The first problem is the style.  I recognize that you've written this as a campaign document, so you're never going to completely eliminate the unadulterated horsheshit allegations about the current president going on an apology tour.  Maybe you could do it a bit more subtly in the future, however? 

Secondly, there's a lack of historical awareness in some parts of the document.  For example, on page 7 the paper says:

[A] Romney foreign policy will proceed with clarity and resolve. The United States will  clearly enunciate its interests and values. Our friends and allies will not have doubts about where we  stand and what we will do to safeguard our interests and theirs; neither will our rivals, competitors, and adversaries.

Now, reading this, I kept thinking back to the Bush administration and its repeated assetions that that there would be no hypocrisy in foreign affairs.  Much like Bush, reality turned out to be trickier.  I suspect you know this, from the other excerpts noted earlier.  So get rid of this fluff:  I'm sure statements like this play well in a management consulting boardroom, but it's not going to cut it in the real world. 

Similarly, for someone who says that, the Obama administration is "undermining one’s allies (p. 3)" in contrast to you, who will "reassure our allies (p. 13)", you don't actually talk about America's treaty allies much at all.  True, you do talk about expanding America's alliance system to include India and Indonesia.  Mexico gets some face time.  Israel gets a lot of face time.  On the other hand, NATO is not mentioned once in this entire document.  Neither is the European Union.  Japan and South Korea get perfunctory treamtment at best.  Turkey is a major treaty ally but you treat it like a pariah state.  For someone who's claiming that the U.S. will reassure its major allies, you didn't seem to give them much attention at all.  This is a really important problem, because Japan and Europe have been crucial allies in a lot of major American initiatives -- and they're getting weaker.  Even in discussing new possible allies, I'm kind of gobsmacked that Brazil is never mentioned. 

Another big problem is that your approach to China is so shot full of contradictions that I don't know where to begin.  Do you seriously believe what you wrote on p. 3: 

The easiest way... to become embroiled in a clash with China over Taiwan, or because of China’s ambitions in the South or East China Seas, will be to leave Beijing in doubt about the depth of our commitment to longstanding allies in the region.

Really?  See, I'd say the easiest way to get embroiled in a clash with China is to write Taiwan a blank check on their defense needs.  The second easiest would be to publicly bluster on about Taiwan to a Chinese leadership that feels increasingly insecure and will be tempted to stoke the fires of Chinese nationalism by creating another Quemoy and Matsu crisis. 

Furthermore, you talk explicitly about supplying Taiwan with "adequate aircraft and other military platforms (p. 18)" in supposed contrast to the Obama administration.  You also talk about strengthening relationships with other countries that neighbor China in an effort to preserve American dominance.  Now, this might be a bit provocative, but I get the rationale.  Here's the thing, though -- you can't simultaneously do this and assert that you will "work to persuade China to commit to North Korea’s disarmament (p. 29)."  Really?  How exactly are you gonna persuade them on this point?   Do you really think that arming Taiwan to the teeth and blasting its human rights record will do the trick? 

If the section on China is contradictory, then your discussion of Pakistan is worse.  You state on p. 31-32:

It is in the interests of all three nations to see that Afghanistan and the Afghanistan/ Pakistan border region are rid of the Taliban and other insurgent groups.... Pakistan should understand that any connection between insurgent forces and Pakistan’s security and intelligence forces must be severed. The United States enjoys significant leverage over both of these nations. We should not be shy about using it. 

There are at least two assertions in the quoted section that are highly dubious -- I'll let you find them on your own.   

One final point, should you choose to revise this draft strategy -- you need to prioritize the threats you discuss in the paper.  You list a whole bunch of them -- rising authoritarian states, transnational violence, failing states, and rogue states.  If you have to prioritize, which threats merit greater attention?  This should actually be pretty easy, since you absurdly overhype the threats posed by some of these countries (Venezuela, Cuba and Russia in particular). 

I look forward to reviewing your later work. 

Grade:  B

... you have to write a very quick blog post saying "I have arrived safely in Shanghai" because that's the best way to inform friends and family of that fact, because I can't access Facebook, Twitter, and Google+ (intriguingly, LinkedIn is no problem), and Gmail is loading so slowly that I'd expect the Israel-Palestinian peace process to move faster.

That is all.

Your humble blogger is near the capital of Waterworld Pennsylvania at the moment and all conferenced out. Regular blogging will resume after some sleep.

In the meanwhile, however, please check out FP's latest Deep Dive on the future of currencies. I have a contribution on the dollar's future as the world's reserve currency. It's depressing to note that the thing I like best about it is it's title -- which, of course, someone else at FP created.

Enjoy!

[WARNING:  THE FOLLOWING IS AN OPTIMISTIC GLOBAL POLITICAL ECONOMY POST]

Note:  in my last blog post, I might have sounded juuuuust a wee bit pessimistic about the state of the global political economy.  That was my intent, but it wasn't necessarily how I actually felt.  My aim was to assemble as negative a brief as possible about the state of the global political economy.  The aim of this post is to argue that, despite all the recent bad news, the fundamentals of the global political economy are surprisingly sound.  I'm not actually as optimistic as the rest of this post suggests, either -- but I do lean more in this direction.  The fact that I'm blogging this from a zombie-proof vacation redoubt should in no way affect your evaluation of the following few paragraphs.  

So, when we last left off this debate, things were looking grim.  My concern in the last post was that the persistence of hard times would cause governments to take actions that would lead to a collapse of the open global economy, a spike in general riots and disturbances, and eerie echoes of the Great Depression.  Let's assume that the global economy persists in sputtering for a while, because that's what happens after major financial shocks.    Why won't these other bad things happen?  Why isn't it 1931? 

Let's start with the obvious -- it's not gonna be 1931 because there's some passing familiarity with how 1931 played out.  The Chairman of the Federal Reserve has devoted much of his academic career to studying the Great Depression.  I'm gonna go out on a limb therefore and assert that if the world plunges into a another severe downturn, it's not gonna be because central bank heads replay the same set of mistakes. 

The legacy of the Great Depression has also affected public attitudes and institutions that provide much stronger cement for the current system.  In terms of publuc attitudes, compare the results of this mid-2007 poll with this mid-2010 poll about which economic system is best.  I'll just reproduce the key charts below: 

The headline of the 2010 results is that there's eroding U.S. support for the global economy,  but a few other things stand out.  U.S. support has declined, but it's declined from a very high level.  In contrast, support for free markets has increased in other major powers, such as Germany and China.  On the whole, despite the worst global economic crisis since the Great Depression, public attitudes have not changed all that much.  While there might be populist demands to "do something," that something is not a return to autarky or anything so drastc. 

Another big difference is that multilateral economic institutions are much more robust now than they were in 1931.  On trade matters, even if the Doha round is dead, the rest of the World Trade Organization's corpus of trade-liberalizing measures are still working quite well.  Even beyond the WTO, the complaint about trade is not the deficit of free-trade agreements but the surfeit of them.  The IMF's resources have been strengthened as a result of the 2008 financial crisis.  The Basle Committee on Banking Supervision has already promulgated a plan to strengthen capital requirements for banks.  True, it's a slow, weak-assed plan, but it would be an improvement over the status quo. 

As for the G-20, I've been pretty skeptical about that group's abilities to collectively address serious macroeconomic problems.  That is setting the bar rather high, however.  One could argue that the G-20's most useful function is reassurance.  Even if there are disagreements, communication can prevent them from growing into anything worse. 

Finally, a note about the possibility of riots and other general social unrest.  The working paper cited in my previous post noted the links between austerity measures and increases in disturbances.  However, that paper contains the following important paragraph on page 19: 

[I]n countries with better institutions, the responsiveness of unrest to budget cuts is generally lower. Where constraints on the executive are minimal, the coefficient on expenditure changes is strongly negative -- more spending buys a lot of social peace. In countries with Polity-2 scores above zero, the coefficient is about half in size, and less significant. As we limit the sample to ever more democratic countries, the size of the coefficient declines. For full democracies with a complete range of civil rights, the coefficient is still negative, but no longer significant.

This is good news!!  The world has a hell of a lot more democratic governments now than it did in 1931.  What happened in London, in other words, might prove to be the exception more than the rule. 

So yes, the recent economic news might seem grim.  Unless political institutions and public attitudes buckle, however, we're unlikely to repeat the mistakes of the 1930's.  And, based on the data we've got, that's not going to happen. 

After last night's stunningly useless set of speeches, I'd put the odds of the U.S. not raising the debt ceiling by August 2nd at 1 in 2. Like many other observers, I'm finding it increasingly difficult to envision a deal that would get through the Senate while attracting a majority of House Republicans [You meant a majority of the House of Representatives, right?--ed. No, I meant a majority of House Republicans. I'm pretty sure that Boehner and the rest of the House GOP leadership will refuse to pass any debt ceiling plan that relies too much on House Democrats.]

So, it's gonna be a fun few weeks for those of us who study the global political economy. Let's start by thinking the unthinkable -- what will happen if there is a default?

I've expressed my feelings on the matter already, and I'm hardly the only one. That said, I've also hedged my bets been flummoxed by the lack of market reaction to the DC stalemate. The lack of market reaction to date has emboldened House GOP members to stand fast. Could they be right?

Tom Oatley, who pooh-poohed my fears of the debtpocalypse last week, makes an interesting point about the composition of U.S. debt-holders:

By these figures, about 63% of US government debt is owned by central banks (foreign and domestic) and/sovereign wealth funds. Most of these entities are American friends and allies. Another 4% is owned by US state and local governments. That leaves 33%--about $4.8 trillion--in private hands. Of this, the financial institutions with the most restrictive regulations regarding asset ownership (depository institutions) own only 2% of the total ($290 billion). Mutual Funds, who may or may not have to dump downgraded debt, hold another 9% ($1.35 trillion).

What's the point? The discussion about the impact of US default revolves around the market response to default. Useful to recognize that most of the US government debt is held by public-sector agents who are much less sensitive to balance sheet pressures and regulatory constraints. These public sector agents are also substantially more sensitive to "moral suasion" and direct appeal than private financial institutions. The structure of ownership of US debt might dampen the negative impact of any default that does occur.

This is pretty interesting. Oatley focuses on "moral suasion," but there's also a national-interest motive for many U.S. debtholders. Most of the official holders of U.S. debt have a strong incentive for a) the value of their holdings not to plummet; and b) the United States economy to continue to snap up other their exports. If China, for example, is buying up U.S. debt to sustain its own growth, then neither a technical default nor a ratings downgrade should deter China or other export engines from continuing to buy U.S. debt even if there's a spot of trouble.

So it appears that complex interdependence will force America's rivals to continue to hold U.S. debt even after the debtpocalypse!! The United States in the clear, right?

Not so fast. Here are five "known unknowns" I can think of that might complicate Oatley's analysis:

1) What if the creditors form a cartel? In my 2009 paper, this was the one scenario that gave me the heebie-jeebies, because it's the one scenario under which creditors can wring geopolitical gains from debtor states. Any kind of default can act as a focal point moment in which U.S. creditors decide it's time to apply a haircut to American power and influence.

I don't think this is going to happen, because the national interests of American debtholders remain divergent. That said, if U.S. allies interpret default as a signal of U.S. unreliability in times of crisis, then all bets are off.

2) What about the economic nationalism of China? China is the largest foreign debtholder, which gives it a certain agenda-setting power in moments of crisis. There are a lot of compelling reasons why China would decide to try to minimize the economic disruptions . On the other hand, there's a lot of resentment on Chinese Internet boards already about the Chinese purchases of U.S. debt. During a period in which the CCP is already concerned about domestic instability, one could envision a scenario whereby they try to mollify nationalists at home by acting out against the United States.

3) What would be the effect of a mild market reaction on the House of Representatives? The less the markets react, the less that the House GOP will feel a need to do anything. There will come a point, therefore, when official debtholders might need to signal to the House that, in IPE lingo, "s**t needs to get done." That signal would in and of itself roil markets, not to mention the effects the current uncertainty is already having on the real economy.

4) What is the fiscal shock from a default? There are two causal mechanisms through which a default could affect the global economy. The first is through panic and uncertainty roiling financial markets. The second, however, is from a dramatic fiscal contraction due to limited government spending. Given the lackluster state of the current recovery, it wouldn't take much to tip the United States back into recession.

5) What if there's another AAA bubble? FT Alphaville's Tracy Alloway provided another interesting chart earlier this month on the distribution of AAA securities:

As Alloway warns:

[W]atch what starts happening from 2008 and 2009.

The AAA bubble re-inflates and suddenly sovereign debt becomes the major force driving the world’s triple-A supply. The turmoil of 2008 shunted some investors from ABS into safer sovereign debt, it’s true. But you also had a plethora of incoming bank regulation to purposefully herd investors towards holding more government bonds, plus a glut of central bank liquidity facilities accepting government IOUs as collateral. Where ABS dissipated, sovereign debt stood in to fill the gap. And more.

It’s one reason why the sovereign crisis is well and truly painful.

It’s a global repricing of risk, again, but one that has the potential for a much largerpop, so to speak.

We know that a downgrade of U.S. Treasuries would likely lead to a downgrade of state and municipal bond ratings as well. We also know that the ripple effects from the collapse of asset-backed securities were much larger than anticipated before the 2008 crisis. This is why the possible knock-on effects of downgrade so many AAA asserts makes me itchy. Even if banks and other financial institutions have minimal exposure to U.S. Treasuries, I don't think it's possible for them to have minimal exposure to all U.S.-based AAA sovereign debt.

These are just the five known unknowns that I could think of in the past hour -- there are probably many, many more. Readers are strongly encouraged to add them in the comments.

My conference in Beijing closed with Le Yucheng -- the Chinese equivalent of the State Department's director of policy planning -- giving a talk and then taking questions from the academics and policy wonks around the table. 

Based on what I heard and the consensus reaction of the old China hands around the table, Le's talk was pretty much boilerplate.  That's a term of art for policy mandarins --  it translates into "nothing new was said, just a recycling of old talking points and approved language."  However, for those of us who are not old China hands, even boilerplate can be somewhat revealing.  Here were the talking points that stood out for me: 

1)  "To be frank, people don't understand China."  Le provided a long litany of development problems and challenges facing China.  He found it hypocritical that the rest of the world complained about China not buying enough cars or airplanes from the rest of the world, but also about buying too much oil.  He provided a long spiel about how hard China is working to promote its economic development and overcome massive poverty.  This is code for, "do not expect us to be chipping in all that much for global public goods anytime soon." 

2)  "China is always a humble, modest nation."  This was, easily, the most jarring part of his talk.  Le claimed that since the founding of the People's Republic, China had not attacked any of her foreign neighbors.  I suspect that diplomats from India, Russia, South Korea, and Vietnam would have some strenuous disagreements with that assertion, but I was told that this is a standard talking point for Chinese diplomats (If you ask me, they'd be better off stating than China has had peaceful relations with the rest of the world in the post-Maoist era and -- unlike some other great powers that will go unmentioned -- has not averaged a military intervention every 18 months or so). 

This section was also jarring because it primarily consisted of backdoor brags.  Le claimed that China learned much from everyone else, and that he personally works so hard that he never goes on vacation and doesn't leave the office until 10 PM.  He then talked about how China had solved the Hong Kong problem, the rural development problem, and so forth. 

This sectiion ended with a small rant on how China was very, very different from, just to pick a country out of a hat, Norway.  Because Norway has less than 1% of China's population while having 100 times China's resources, Norway should apparently not offer advice to China on, well, anything.  Or, as Le put it, Norway is like a mini-car to China's bullet train.  Note to Norway:  I think China is still touchy about this. 

3)  "There is no Beijing Consensus."  This was a point that Le hammered home repeatedly.  He insisted that China had no original development model, and that Beijing certainly wasn't trying to recommend its model to nany other country.  As Le put it, "There is no best model in the world."  This part of Le's talk was also the most convincing, as the rest of the assembled Chinese academics made a similar point.  As one academic pithily noted, "both the Washington Consensus and the Beijing Consensus were invented in Washington!"

4)  China will not challenge the global order -- in other words, "we are not the USSR."  In a mild contradiction of his first point, Le listed the myriad ways in which China contributed to global order -- promoting domestic economic growth to stabilize the regional economy, contributions to UN peacekeeping, anti-terrorism cooperation, anti-piracy, purchasing European and American debt instruments, and -- an oldie but a goodie -- not devaluing the yuan during the Asian financial crisis.  Le stressed how much China benefitted from the existing order, and that while reforms might be needed, a wholesale change was not needed. 

5)  If you think the PRC government is bad, read our Internet chat boards.  This was interesting, as Le tried to stress that China's population was far more nationalist and hawkish on the foreign policy front than the PRC government.  He's not eactly wrong on this point, but it should be pointed out that given the various restrictions on what can be said on the Chinese internet, assertive nationalism is the only approved way of venting for the Chinese public. 

[Note to readers: Because Dan was upgraded to business class on his trip to Beijing, he was exposed to a serious viral infection in the food called metaphoricus overloadus, known more commonly as Friedman's Disease. Rest assured, it is far from fatal -- it usually passes after 24 hours of no travel. As near as we can determine, all the facts in the blog post below are accurate. While suffering from Friedman's Disease, however, side effects do include rapid-fire, over-the-top metaphors. Remember: You've been warned!! --ed.]

To truly understand the phenomenon that is China, you need to fly into Beijing's airport and then try to get into the city. That's it; that's all you need. Just that adventure alone will tell you all you need to know about the contradictions of the Middle Kingdom.

First you enter a glittering, modern airport, with helpful signs in Mandarin and English. It's sheer scale and modernity telegraphs the ways in which China has already entered modernity. The monorail from my terminal to baggage claim was a pointed reminder of how much the United States lags behind in infrastructure investment in recent years.

And yet, there's the traffic. Summer in Beijing is a confusing miasma of traffic and smog and traffic. As my compatriot and I clambered into our taxi at Beijing's immaculately clean and modern airport, we knew that the ride to the hotel could take anywhere from 30 to 90 minutes depending on the traffic. Just as we Americans don't know when exactly China will catch up, the Chinese are not sure how long it will take to get there.

We might like to think that driving in a New York City taxi is as exciting as a carnival ride, but that's nothing compared with a taxi ride on a Beijing superhighway. In New York, there's always that sense that, in the end, the taxi driver won't risk an actual collision. On the road to Beijing, however, I witnessed at least two last-minute swerves and road rage that would have made Los Angelenos blush. Using an accent that an old-style New York cabbie would have admired in its sheer swarthiness, my cabbie kept honking for at least two minutes after a car viciously cut him off.

It's a fantastical engineering problem, getting so many cars and motorcycles and trucks and buses to merge and move in the same direction. And that's when it hit me like a thunderbolt -- China itself is like this superhighway. It's massive in size, 10 lanes easy. It's filled with an array of vehicles determined to get ahead. The problem is that when you combine all the vehicles together, the real possibility of a two-week-long traffic jam in which everyone wants to go somewhere but nobody gets anywhere is clearly a possibility. Predicting China's future is like predicting the traffic:  You know there will be some stop-and-go, but you just don't know how much of it there will be.

When we got to the hotel, I paid my cabbie and he signaled that I owed him four more yuan. I was suffering from ATM disease, so I took out a single U.S. dollar bill and a 100-yuan note, looked at him, and said, "You choose." He paused, and then took the yuan note and made the necessary change. Clearly, all of us participating in this hyperaccelerated, globalized economy are going to have to make the necessary change soon enough.

I'm going to go out on a limb and state unequivocally that I think civil liberties and gender equality are Very Good Things.  All else equal, I'd much rather live in a society in which freedom of speech is protected and women have all of the rights and opportunities afforded to men. 

I bring this up because a common assumption that guides much of global economic policy is that as developing countries get richer, they will start valuing these qualities as well.  There's a belief that regardless of the sequencing, political modernization will not trail too far behind economic modernization.  Even in anomalous countries like Singapore, for example, there are trends suggesting that richer societies start demanding all those political and personal freedoms that many in the West take for granted.  Crudely and simply put, a guiding assumption behind much Western policymaking (as well as many foes of the West writ large) is that modernization = Westernization.

I bring this up because China and India are, at the present moment, trying to prove this assumption is wrong.   China has been getting very rich very fast, and yet the Chinese government seems more repressive than ever.  So much for political liberties.

In some ways, India is even more troubling, as the New York Times'  Jim Yardley report:  

India's increasing wealth and improving literacy are apparently contributing to a national crisis of “missing girls,” with the number of sex-selective abortions up sharply among more affluent, educated families during the past two decades, according to a new study.

The study found the problem of sex-selective abortions of girls has spread steadily across India after once being confined largely to a handful of conservative northern states. Researchers also found that women from higher-income, better-educated families were far more likely than poorer women to abort a girl, especially during a second pregnancy if the firstborn was a girl....

The study, being published in the British medical journal The Lancet, is the latest evidence of India’s worsening imbalance in the ratio of boys to girls. The 2011 Indian census found 914 girls for every 1,000 boys among children 6 six or younger, the lowest ratio of girls since the country gained independence in 1947. The new study estimated that 4 million to 12 million selective abortions of girls have occurred in India in the past three decades....

Dr. Prabhat Jha, a lead author of the study, noted that the use of sex-selective abortions expanded throughout the country as the use of ultrasound equipment became more widespread. Typically, women from wealthier, better-educated families are more likely to undergo an ultrasound, Mr. Jha said, and researchers found that these families are far more likely to abort a girl if the firstborn is a daughter.

“This is really a phenomenon of the educated and the wealthy that we are seeing in India,” said Mr. Jha, director of the Center for Global Health Research at the University of Toronto.

Census data has already confirmed that the problem has accelerated since 2001. The 2011 census found about 7.1 million fewer girls than boys under the age of 6, compared with a gap of roughly 6 million girls a decade earlier (emphasis added).  

The study can be accessed at The Lancet's website (registration required).  In an accompanying commentary, S.V. Subramanian and Daniel Corsi explain exactly why this is so friggin' depressing:

The steady decline in the ratio is surprising, and counterintuitive, in view of India's progress in recent decades in improving the levels of female literacy and increases in income per person....

the value of the analysis by Jha and colleagues is mainly independent confirmation of two important aspects of the sex ratio in India that have been reported previously with different data. The first is that sex imbalance at birth seems to be particularly concentrated in households with high education and wealth. This pattern suggests that dominance of the son-preference norm is unlikely to be offset, at least in the short term, by socioeconomic development. Second is that the overall problem of sex imbalance seems to arise throughout India, including in Kerala, which has often been characterised as a model state for social development and gender equality. The problem of sex imbalance seems to be a function of socioeconomic status, not geography.

As India gets richer, this problem will only get worse. 

Now, this might be one of those "it's always darhest before the dawn" kind of trends, in which after a certain wealth threshhold, trends will shift back towards a more classical liberal direction.  Maybe.  I don't know, and anyone else who tells you that they know is bulls**tting you.  Based on this study, however, the question of whether China and India will ever embrace liberal political and cultural norms is not going to go away anytime soon.

What do you think? 

In response to my critical post from last week, I see that Ted Galen Carpenter has doubled down on his thesis that, "China benefits from U.S. policy blunders."  Let's go through his main points, shall we?  

In his initial post, Carpenter argued that the American brand was damaged.  I argued that there had been a rebound.  Carpenter's response:  

America’s global popularity is still at anemic levels—and the initial euphoria about Barack Obama has faded noticeably. And as shown in the Pew Research Center’s 2010 survey of global attitudes, America’s reputation in the Muslim world is not just anemic, it is hideous. That’s 2010, Dan, not 2006.

Two responses.  First, the poll data Carpenter cites reflects attitudes about Barack Obama in particular and not the United States in general.  Since what we're both concerned with is America's soft power rather than Obama's, let's take a look at the BBC's latest World Service Country Rating Poll, since that asks the more appropriate survey question: 

Views of the US continued their overall improvement in 2011, according to the annual BBC World Service Country Rating Poll of 27 countries around the world.

Of the countries surveyed, 18 hold predominantly positive views of the US, seven hold negative views and two are divided. On average , 49 per cent of people have positive views of US influence in the world--up four points from 2010--and 31 per cent hold negative views. The poll, conducted by GlobeScan/PIPA, asked a total of 28,619 people to rate the influence in the world of 16 major nations, plus the European Union.

In 2007 a slight majority (54%) had a negative view of the United States and only close to three in ten (28%) had a positive view; America was among the countries with the lowest ratings. Views began to rise in 2008, with positive views rising to 32% on average, and now the USA is in a middle tier position, ranking substantially higher than China (emphases added)

 Oh, and that's 2011 data, Ted.   

Carpernter emphasizes the Middle East, and it's certainly true that U.S. favorability there remains quite low.  Even in that region, however, the latest data suggests things aren't getting worse, except in the country where the data is OBE: 

As views of the USA continue to improve globally, the upwards trend is also apparent in Muslim countries. For the first time, a majority of Indonesians are now positive about the USA's role in the world (58%, a rise of 22 points over the last year). Negative views of the USA in Turkey have dropped sharply from 70 per cent to 49 per cent, while negative views in Pakistan of the USA have also fallen slightly, from 52 per cent to 46 per cent. Conversely, Egypt, after a lift in 2009 and 2010, has reverted to a predominantly negative view of the USA, with 50 per cent of Egyptians considering that the USA's role in the world is mostly negative.

As for China's ability to exploit the current situation, here's Carpenter's response: 

China has shown recent signs of dialing back some of the more objectionable features of its policy. That stands in marked contrast to the U.S. military escalation in Afghanistan, Washington’s transparent efforts to maintain an outsized presence in Iraq after the scheduled withdrawal of its military forces, and the new intervention in Libya. In terms of intrusive policies, China doesn’t begin to compete with the United States....

[China's] weaknesses do not include running $1.5 trillion annual budget deficits (much less having much of that debt funded by one’s principal geopolitical competitor). Nor do China’s weaknesses include overstretching its military forces in Middle Eastern and South-Central Asian snake pits. Those are actions that the United States has taken, and it is naïve in the extreme to assume that China does not benefit strategically and financially from such folly. Yet, oddly, Drezner addresses none of those points contained in my TNI piece. 

Carpenter's point about U.S. military overextension is a good one, and is a concern I share.  Our disagreement is on the magnitude of the policy externalities that flow from this overextension.  Carpenter thinks it's disastrous; I think it's regrettable but not at the root of imminent U.S. decline to China.

First, it's worth noting that while defense spending plays a supporting role in the worsening U.S. fiscal situation, tax cuts and domestic expenditures are far more culpable.  Second, I have looked at whether China's holdings of U.S. debt lead to geopolitical weakness -- and concluded that this concern has been vastly exaggerated. 

Third, again, looking at global public opinion, there's evidence that China's economic rise has provoked far more anxiety than Carpenter realizes.  As Chinese power continues to grow (and that's going to happen regardless of U.S. strategy), more and more countries will be willing to balance with the United States regardless of past military errors.  Indeed, the "nationalistic swagger" that Carpenter references among Chinese policy circles is going to exacerbate and not retard this trend. 

I agree with Carpenter that it would be better for the U.S. to reduce its overseas military posture, particularly in Iraq and Afghanistan.  That said, China has profited surprisingly little from these missteps, and will experience greater geopolitical pushhback over time.   I'm also disappointed that Carpenter failed to address the question of how democratizing nations in the Middle East will view a China that continues to act in an authoritarian manner -- particularly towards its own Muslim population in Xinjiang.  It's not a coincidence that Iranian protestors started chanting "Death to China!" back in 2009. 

The bottom line is that Carpenter's analysis exhibits far too much of the doomsaying and pessimistic thinking that plagues American realists and their cheerleaders. 

I held out as long as I could on the Charlie Sheen fiasco -- but damn Will Winecoff and the IR-relevant horse he rode in on!!

From yesterday's Global Times, Hao Leifeng provides a peculiarly... Chinese take on the whole brouhaha:

Actor Charlie Sheen is a classic example of the difference in Western and Eastern values and norms.

Ignoring public pleas from his father, Sheen has continued a weeklong media blitz, exhibiting obvious signs of mania. With no firm hand to guide them, Western media has deliberately goaded him into making increasingly delusional statements, more concerned about "winning" higher ratings than Sheen's own sense of pride, or the negative example his brash public admissions about his private sex life and unverifiable international conspiracies could be setting for society.

How many young people have been led astray by Sheen's boasts about his substance abuse and freewheeling sex life? And that was when he was in character on national television, as a randy bachelor in Two and a Half Men.

Sheen attracted 1 million Twitter followers in just 24 hours, yet more evidence that microblogs spread the most unhealthy contagions in society like a disease. Chinese family, coworkers, or the authorities would have taken firm steps to make sure someone like Sheen did not make a public spectacle of himself.

It's true:  the Obama administration has been ridiculously slow on getting a handle on the Charlie Sheen issue.  I mean, you know that if Hillary Clinton got Sheen in a room for an hour, this whole problem would go away.  This just reinforces the administration's slowness on handling matters of serious popular culture.   

OK, seriously, as I understand it, Global Times is not the same kind of official mouthpiece as, say, China Daily or People's Daily, so I wouldn't take this as the official Chinese Communist Party position.  Hell, it might be a parody.  Still, a few revealing things from this.  There's the swipe against Twitter, and the emphasis on familial loyalties. 

I see two other interesting reveals, however.  The first is the proposed "Chinese" solution to this problem:

His employers are unhappy that he was distracted with prostitutes and drugs, and didn't show up to work on time. Why not take a tip from the Chinese business community, and make visits to a KTV parlor part of Sheen's workday?

And instead of epic parties at his home with porn stars, why not keep Sheen occupied with business banquets?

Sheen goes on television and boasts that he has two girlfriends, who both sleep in the same bedroom. Is he too poor to set up his wives and mistresses in different houses?

In Chinese society, these problems are dealt with delicately and privately. Sheen is like a typical Westerner throwing fuel on the fire with each interview and tweet. It is almost as if he feels no shame and is loving the attention.

Racism, spousal abuse, addiction, politics, mental illness, boasting about mistresses, - these are all subjects best dealt with behind closed doors.

Er... as near as I can determine, Sheen's bosses have been using this playbook for the entire run of Two and a Half Men.  It's only when Sheen thoroughly rejected all outaside intervention that everything blew up.  In other words, the Chinese solution to this was exactly the same as the American solution to this -- well, minus the massage parlors.  This continued right up until the moment when Sheen decided that the "Charlie Sheen" drug could defeat all comers.  And then he was suspended and subsequently fired.  Perhaps the fact that the government decided not to send him to the countryside and instead just got his children out of his orbit is peculiarly "western." 

Second -- and this is a genuine question to readers -- is Charlie Sheen actually a folk hero to anyone other than substance abusers at this point?  I see the attention he's getting now as in the category of, "Wow, look at that massive 12-car pileup on the other side of the road!!!  It's horrific, but I can't look away!"   Granted, he's now a prime candidate for his own reality show -- but I'm not really sure that's winning the future. 

This is the only time I will ask this about Charlie Sheen:  what do you think? 

UPDATE:  A commenter suggests that this must be a parody, albeit one that the editors of Global Times can't detect.  But the commenter provides an excellent additional takeaway point: 

[I]t's way easier to slip a humour piece disguised as a bizarre anti-US rant past the Chinese censor than it is to get a serious piece that is even vaguely critical of CCP policy published.

LAST UPDATE:  According to the Shanghaiist, the editors at Global Times were  in on the joke -- in which case your humble blogger will join Al Jazeera and admit to being punk'd.

Last week Reuters' Emily Flitter filed quite the story, entitled "China flexed its muscles using U.S. Treasuries ," about China's financial power over the United States.  Here's the opening: 

Confidential diplomatic cables from the U.S. embassies in Beijing and Hong Kong lay bare China's growing influence as America's largest creditor.

As the U.S. Federal Reserve grappled with the aftershocks of financial crisis, the Chinese, like many others, suffered huge losses from their investments in American financial firms -- from Lehman Brothers to the Primary Reserve Fund, the money market fund that broke the buck.

The cables, obtained by WikiLeaks, show that escalating Chinese pressure prompted a procession of soothing visits from the U.S.Treasury Department. In one striking instance, a top Chinese money manager directly asked U.S. Treasury Secretary Timothy Geithner for a favor.

This story generated a lot of interest across the mediasphere.  FT Alphaville called it "Diplomacy by US Treasuries."  AFP reports that the "sensitive cables show just how much influence Beijing has and how keen Washington is to address its rival's concerns." 

As someone who's published on this question, you'd think I'd be very happy at the attention this issue is receiving.  And Flitter deserves kudos for going through the cables to find clear efforts by Chinese officials to use its financial muscle to get what it wanted from the United States. 

The thing is, the reportage is framed to suggest that China not only asked for concessions, but the United States granted them.  And Flitter's own story suggests that very little in the way of concessions actually happened. 

Here are the portions of Flitter's story that discusses U.S. responses to Chinese pressure: 

On Chinese requests to halt/restrict arms sales to Taiwan:  Flitter records no response.  These concerns were voiced in late 2008 and the arms sales went ahead in early 2010, so there doesn't appear to be much influence here.  AFP suggests that this pressure led the U.S. to not sell F-16's to Taiwan, but I don't think that option was ever in the cards. 

On Chinese demands that they be provided guarantees for Chinese re-entry into the U.S. repo market:

The U.S. government does not appear to have offered the Chinese a special setup guaranteeing U.S. banks. Instead, the cables show, American diplomats reassured the Chinese by pointing out that Washington had infused banks' balance sheets with $700 billion in fresh capital, effectively propping up the banking system.

On Chinese demands for providing explicit U.S. government guarantees of Fannie Mae and Freddie Mac debt: 

To defuse the situation, the Treasury Department sent Undersecretary for International Affairs David McCormick to Beijing for two days in October 2008. The gesture went over well.

"All of Undersecretary McCormick's counterparts appeared to appreciate his willingness to come to Beijing in the midst of a financial crisis," Piccuta wrote in a cable dated October 29, 2008. "Interlocutors stressed that unless leaders' concerns about the viability of banks and U.S. government-sponsored enterprises (GSEs) are assuaged, lower-level officials will be constrained from taking on greater counter-party risks."

The cables show McCormick trying to reassure the Chinese. "In each meeting, Undersecretary McCormick emphasized that even though the U.S. government did not explicitly guarantee GSE debt, it effectively did so by committing to inject up to $100 billion of equity in each institution to avoid insolvency and that this contractual commitment would remain for the life of these institutions," [Deputy Chief of Mission at the U.S. Embassy in Beijing Dan] Piccuta wrote.

On Chinese protests regarding Federal Reserve purchases of Treasuries and agencies in March 2009:  Flitter has no response, though the fact that the Fed went ahead with QE2 suggersts that Chinese pressure didn't deter the Federal Reserve.

On responses to Chinese requests that CIC be allowed to participate in bidding on Morgan Stanley's new equity issuance:

There's no record in the cable of how Geithner responded, but it was only a day later, on June 3, that CIC announced plans to purchase $1.2 billion in Morgan Stanley shares.

A spokesperson for the Fed said in the instance of the June 3 CIC investment, no application for an exemption was made to the Federal Reserve Board.

On the general dynamic of Chinese financial pressure:

The cables also indicate a high level of confidence among the Americans that China can't entirely stop buying U.S. debt, a sentiment shared by most economists who describe the dynamic as a form of mutually assured financial destruction. 

So, to sum up, the Chinese maybe got a small break on being able to particupate in the Morgan Stanley auction.  Beyond that, all of these efforts led to the dilomatiic equivalent of hand-holding and not much else.  And, hey, what do you know, that's pretty much consistent with what I wrote about this back in late 2009.  So, contrary to some deep-seated fears of mine, the Wikiliaks cables appears to buttress rather than contradict prior scholarship. 

Flitter deserves credit for making explicit what had only been inferred, but I'm worried that commentators are drawing the wrong lessons from her article.  The big reveal here is not that China tried to exercise its financial muscle.  The big reveal is that these efforts generated next to nothing in the way of U.S. concessions.  China's financial might does give it the ability to deter U.S. pressure -- but to China's growing frustration, it doesn't yield much else. 

Your humble blogger likes to occasionally check the interwebs to make sure that no one is abusing Thucydides in making an argument about modern-day international relations. In descending order of offensiveness, examples of Thucydides Abuse include:

1) Blatantly making up what Thucydides actually said in History of the Peloponnesian War;

2) Exaggerating how Thucydides can contribute to understanding world politics today;

3) Writing the truth, but not the whole truth, about Thucydides' history.

Yesterday David Sanger invoked Thucydides in his New York Times Week in Review essay on a rising China and a fading United States. Let's see how he did:

For a superpower, dealing with the fast rise of a rich, brash competitor has always been an iffy thing....

[A]sk Thucydides, the Athenian historian whose tome on the Peloponnesian War has ruined many a college freshman's weekend. The line they had to remember for the test was his conclusion: "What made war inevitable was the growth of Athenian power and the fear which this caused in Sparta."

So while no official would dare say so publicly as President Hu Jintao bounced from the White House to meetings with business leaders to factories in Chicago last week, his visit, from both sides' points of view, was all about managing China's rise and defusing the fears that it triggers. Both Mr. Hu and President Obama seemed desperate to avoid what Graham Allison of Harvard University has labeled "the Thucydides Trap" - that deadly combination of calculation and emotion that, over the years, can turn healthy rivalry into antagonism or worse....

[I]n both capitals, fear makes for good business: It's a proven way to sell weapons systems.

Meanwhile, Thucydides might be appalled at the nationalistic talk that resounds in both countries. In Chinese newspapers these days, it's hard to avoid accounts of "American decline." Meanwhile, some new members of Congress talk lightly of cutting off Chinese access to the American market - as if that could happen in today's global economy.

In both languages, that's fear talking.

You know what? Given the space constraints, Sanger does pretty well. He manages to nail the subtle point about how fear leads to the worst sort of policy decisions. It is telling that, as the war progresses, Athenian decision-making devolves. Initially, the country's leaders understand that "fear, honor and interest" guide foreign policy. By the time the invasion of Sicily comes around, however, the Athenian leadership has reduced this to fear. Sanger actually quotes Thucydides rather than paraphrasing him. By modern journalistic standards, that's pretty extraordinary.

Nonetheless, Sanger commits the misdemeanor of omitting the whole truth of Thucydides. This is important, because the omission gets at how the historical analogy doesn't really hold up.

First, Sparta was never the hegemonic power prior to the war -- at best, they were a co-equal of Athens. That's not the current situation.

Second, Sparta was scolded by its allies -- and implicitly, by Thucydides himself -- for excessive caution when confronted with a rising power. Throughout the History of the Peloponnesian War, Thucydides contrasts Athenian energy and dynamism with Spartan conservatism and risk-aversion. Spartan fear was triggered by past Spartan inaction and caution.

Now, say what you will about American foreign policy, but conservatism and risk-aversion have not been nouns associated with it for quite some time. Similarly, until about mid-2009, China was not thought of as a source of foreign policy dynamism. Furthermore, when China's foreign policy changed, so did the United States'. Comparing the Obama administration's response to Spartan inaction doesn't hold up.

In the sparest structural sense, there are a few parallels that can be drawn between Greece in the fifth century B.C.E. and the present day. On the whole, however, I think the Athens-Sparta historical analogy obfuscates more than it enlightens.

Readers are warmly encouraged to alert the hard-working staff here at the blog for any further abuses of Thucydides. I mean, you know this is going to crop up on the next Jersey Shore episode.

I'm at the point in my life when there are only three occasions that prompt the watching of cable news:

1) An election night;

2) A real-time breaking news event in which video has a comparative advantage over the web;

3) Being on the treadmill on a slow sports day with nothing good on basic cable.

So yesterday was no. 3, and I caught a report on Fox News about "pre-summit brinkmanship" on the part Hu Jintao. The headline was accurate: "China's President Hu Jintao: Dollar-Based System 'Thing of the Past.'" And I should stress that Fox News was hardly the only news outlet to jump on this turn of phrase.

That said, some perspective might be in order. The statement came from a series of answers that a committee of propaganda writers with the stylistic panache of Andrei Gromyko Hu provided to the Wall Street Journal and Washington Post.

Let's reprint the question and answer in full, shall we?

Q: What do you think will be the US dollar's future role in the world? How do you see the issue of making the RMB an international currency? Some think that RMB appreciation may curb China's inflation, what's your view on that?

HU: The current international currency system is the product of the past. As a major reserve currency, the US dollar is used in considerable amount of global trade in commodities as well as in most of the investment and financial transactions. The monetary policy of the United States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable and stable level.

It takes a long time for a country's currency to be widely accepted in the world. China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development. But making the RMB an international currency will be a fairly long process. The on-going pilot programs for RMB settlement of cross-border trade and investment transactions are a concrete step that China has taken to respond to the international financial crisis, with the purpose of promoting trade and investment facilitation. They fit in well with market demand as evidenced by the rapidly expanding scale of these transactions.

China has adopted a package plan to curb inflation, including interest rate adjustment. We have adopted a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Changes in exchange rate are a result of multiple factors, including the balance of international payment and market supply and demand. In this sense, inflation can hardly be the main factor in determining the exchange rate policy (emphases added).

Meh. First of all, Hu isn't saying anything here that hasn't been said by other Chinese officials since early 2009.

Second of all, Hu didn't say that the RMB was going to be supplanting the dollar anytime soon. In fact, he pretty much said the opposite of that. China wants a multiple-reserve currency regime, and they're moving veeeerrrrrry slowly to bring their currency into the conversation. And minus the RMB, as I've said before, there ain't much in the way of viable alternatives right now.

If you read the rest of the answers, there's a lot of CCP boilerplate "stiffly worded answers" mixed in with "a positive note on bilateral ties," as Richard MacGregor of the Financial Times notes. What I don't see is any brinkmanship.

Substantively, however, what about the future? Will a multiple currency reserve system work? It's a vision shared by Barry Eichengreen, Nicolas Sarkozy, and.... well, I'm not sure who else. I have my doubts, but I can't quite convey them in a single blog post.

What do you think?