Monday, November 24, 2008

Bush's China Legacy

While election returns were coming in on November 4th I had a telephone conversation with a good friend of mine known in the blogosphere as UpInVermont. He blogs over at Duplicitous Primates and we've been conversing/debating about public policy for over twenty years since meeting in college (when the hell did I get old anyway?). My friend noted how desperate America was for China to continue financing our debt. He sagely warned that contrary to popular belief, the Chinese are not nearly as dependent on America anymore and could decide to stop anytime.

I thought of that conversation while reading Fareed Zakaria's article today about the American-Chinese relationship. It's a sobering read and painful reminder of another pathetic George W. Bush legacy: China has America by the economic short hairs.

America needs to spend its way out of our current economic morass. Obama is right to target massive spending on neglected infrastructure needs to repair our transportation, modernize America's approach to energy and create jobs. Most agree, including me that the deficit can't be a priority with millions of Americans on the cusp of homelessness and destitution. Yet as Zakaria writes,
"But to run up these deficits -- which could total somewhere between $1 trillion and $1.5 trillion, or between 7 and 11 percent of gross domestic product -- America has to get someone to buy its debt. And the only country with the cash to do so is China."
Zakaria references the analysis of Joseph Stiglitz and Niall Ferguson in noting that China has options other than bankrolling America's consumers. Indeed, the Chinese may well decide they're not getting enough of a return on such an investment and opt to finance their own consumers instead. Beijing recently announced their own massive stimulus plan of $600 billion. At all costs the Communist Party in Beijing wants to preserve stability to stay in power. Translation: they don't want unemployment and strikes facilitating a political climate that threatens their hold on power. If $600 billion isn't enough they will spend more. If that requires sacrificing their financing of American consumers we're in trouble. Then what?

President George W. Bush and his band of neocons justified their reckless pursuit of empire in the name of freedom. Ironic that America's economic destiny may be determined by Communist dictators in Beijing because of their combined policies of predatory crony capitalism, de-regulation and imperialism on steroids. I know Democrats are talking bipartisanship but I can't forget or forgive how conservatives have imperiled my country and the world.


thepoetryman said...

Forgive...never forget.

upinVermont said...

Hey Rob!

I've been all wrapped up in my other blog - Poemshape. Now that the world is "relatively" safe from Republicans, Conservatives, and Neo-Conservatives, I've been burrowing back into the world poetry.

China seems to be getting itself into more and more trouble. While Sinophiles have been singing the praises of the Chinese for 20 years, predicting they will take over the world, they have been single-mindedly ignoring the extensive destruction of their land and resources as a result of nonexistent environmental laws. (I have been butting heads with them for 20 years.) Once one factors in the costs of their extensive environmental degradation, their GDP is actually negative. Their "cash", their "wealth", is an illusion. This is all bad news for us, especially because policy makers (seemingly conservative) remain stupidly indifferent, if not ideologically hostile, to the systematic costs of environmental degradation caused by rampant and unchecked industrial growth.

I think we might see the country split up within our lifetime. And that's not reassuring. The US Government needs to be extremely worried about a paranoid and desperate government that could single handedly destroy the dollar, downgrade the United States Government, and demolish our economy. We would survive, but only because we would take down the rest of the world with us, including the Chinese.

Fareed Zakaria is wrong when he states that the Chinese have two options. They don't. Some estimates demonstrate that fully two thirds of their arable acreage is too polluted to use - it's dead. Zakaria, and those whom he reads, are simply wrong if they think that over a billion people could survive, let alone flourish, selling products to themselves when they are rapidly losing the ability to so much as feed themselves, to drink their own water, or breath their own air.

But none of this is good news for us - it is in that respect that Zakaria is right. We need to readily and expeditiously wean ourselves from our Chinese debt dependency. We are, presently, at their mercy.

Gene G said...

I think that we need to work with our western European allies to overcome this great economic imbalance with China. I know it could get very ugly but we need to get out of this mess for the sake of our own national security. After all, it is China's Mao Tse-tung who said, "Economic power begets political power. Political power begets economic power." China is slowly but surely cutting the great big US of A into pieces.