The American Conservative

Who killed the U.S. auto industry?

To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUV’s no one wanted, while the clever, far-sighted Japanese, Germans, and Koreans prepared and built for the future.

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists, and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II. Read More…

Understandably, Republicans are seething.

When Hank Paulson demanded $700 billion to haul away the trash in the dumpsters of JPMorgan Chase and Goldman Sachs — assuring us we could hold a garage sale of the junk — they rebelled. They acted as the nation, by 100 to one, demanded. They killed the Wall Street bailout.

The Dow quickly sank another 1,000 points, and, charged with criminal irresponsibility by the elites, the GOP buckled, reversed itself, rescued the bailout — and was wiped out on Nov. 4.

Now we hear from Paulson that the $700 billion Congress voted will not, after all, be used to buy up all that rotten paper on the books of the big banks. Some banks are using the cash to buy other banks.

So Republicans are right to be enraged. They are victims of the biggest bait-and-switch in political history. But they are now about to do something terminally stupid. With GM, Ford, and Chrysler teetering on the brink, they are turning a cold stone face to Detroit and are about to follow the counsel of that quintessential Bushite Dick Darman, who said of our computer chip industry, “If our guys can’t hack it, let ‘em go.” Read More…

The world food crisis is not all bad news, the Guardian reports. In Afghanistan, poppy farmers are switching to wheat crops in response to soaring food costs. Less heroin, more food: seems to be a good example of market forces at work.

America and Britain have spent a lot of money and energy trying to move Afghanistan’s agriculture away from poppy-growing–a key source of revenue for the Taliban. It looks like supply-and-demand economics might be doing the job instead. Hoorah.

But wait. I asked someone who really knows about Afghanistan, who agreed that market forces–rather than destroying crops–represent the best way to limit poppy-production. He added, however: “I find it unlikely that Afghan farmers had the foresight to plant wheat instead of poppies last season in anticipation of the food crisis, which has only really hit in the last 6 months.”

Hmm. Is it true, then? The report does, at times, read like a badly adapted Kabul government press release.

The growing season runs from November to June in Afghanistan. If wheat prices stay near their current level, supported by regional subsidies, an Afghan farmer can make up to a third more on wheat than poppy by next year’s harvest, according to figures from the Ministry of Agriculture.

And here’s the kicker…

“Not enough money has been devoted into developing a decent agriculture sector. We need millions, if not billions, more in this country,” said one non-governmental organisation executive, who preferred to remain anonymous.

It is a bit suspicious when a nameless “non-governmental official” appeals for billions to support a government’s agricultural sector.

Could the Guardian have been spun? It wouldn’t be the first time.

JENSEN
You have meddled with the primal forces of nature, Mr. Beale, and I won’t have it, is that clear? You think you have merely stopped a business deal — that is not the case! The Arabs have taken billions of dollars out of this country, and now they must put it back. It is ebb and flow, tidal gravity, it is ecological balance! You are an old man who thinks in terms of nations and peoples. There are no nations! There are no peoples! There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immense, interwoven, interacting, multi-variate, multi-national dominion of dollars;
(…)
You get up on your little twenty-one inch screen, and howl about America and democracy. There is no America. There is no democracy. There is only IBM and ITT and AT and T and Dupont, Dow, Union Carbide and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state — Karl Marx?
(…)
The world is a business, Mr. Beale! It has been since man crawled out of the slime, and our children, Mr. Beale, will live to see that perfect world in which there is no war and famine, oppression and brutality — one vast and ecumenical holding company, for whom all men will work to serve a common profit, in which all men will hold a share of stock, all necessities provided, all anxieties tranquilized, all boredom amused. And I have chosen you to preach this evangel, Mr. Beale.

HOWARD
Why me?

JENSEN
Because you’re on television, dummy.
–Network (1976)

Maybe Iran didn’t do it directly, but it is a member of OPEC.  OPEC is at fault.  The surge in gas pump prices, caused by a weak dollar due to unsustainable trade and government deficits as well as speculation on oil and gas futures, has become a political football.  Hillary the populist wants to bring the price down so that working people will be able to gas up their SUVs to go to Wal Mart to use their unemployment checks to buy things made in China.  She also wants to confront the bad guys at OPEC who are engaged in price and supply fixing, forcing them to pump more oil.  Hillary no doubt sees her hard line as an effective electoral ploy for two reasons.  First, the OPEC bad guys are mostly Muslims and a good boot up their rear ends would send the signal that she is not backing off from her pledge to obliterate Iran.  Second, blaming OPEC means not having to criticize Congress, Democrats, Republicans, George Bush, or even, GASP!, the American People for the current economic mess.  Blaming foreigners, particularly swarthy guys who wear towels on their  heads, is a much better option. 

In yesterday’s Washington Post, Steven Pearlstein jumped on the Hillary bandwagon, suggesting that the US Congress could pass a law declaring price fixing by foreign governments illegal.  It could then deny visas to officials of those countries, block investment by US companies in their oil and gas development, and make it illegal for investment funds from those countries to place money in the United States. 

Think about all that for a minute.  First of all, both for Hillary and Pearlstein it suggests that the United States has unique extraterritorisl rights.  It also reflects an assumption that Washington can do anything it wants anywhere and at any time, a mind set that has brought nothing but grief over the past seven years.  And there is the constitutional and legal question.  How can the US pass laws regulating other countries?  It is a neocon concept if there ever was one, and it most punishes countries that have supported US policies in the Middle East and beyond.  If the Saudis and the Emirate Sheikhs were to respond by curtailing their shopping trips to New York, Tiffany’s would undoubtedly go out of business.  But they might also question the unfairness of it all and it might make them mad.  They might think of gettin even by ending the link of their petroleum exports and currencies to the dollar, switching to the stable euro instead.  The US Treasury would no longer be able to print currency knowing that central banks must acquire dollar reserves to pay for oil, leading to the meltdown everyone fears. 

I agree with Clark Stooksbury that Bush has been a disastrous president, and I expect McCain will be a disastrous president as well.  I did not vote for Bush, and I will not vote for McCain.  But I can’t shed any tears for the Democrats.

The reason Democrats keep losing presidential contests, and may even manage to lose this one, is because they keep nominating unelectable candidates.  If John Kerry had won the Catholic vote in Ohio in 2004, he would have won the electoral vote (despite losing the popular vote) and he would now be president.  Speaking as an Ohio Catholic, I have some idea why he lost that vote.  John Kerry lost that vote because he is a pro-abortion zealot, and he likely became a pro-abortion zealot because he knew the national Democratic party would only nominate pro-abortion zealots.  Catholics used to be a major part of the New Deal coalition, but the Democratic party now insists on making faithful Catholics compromise their faith each time they vote for a Democratic presidential candidate. 

Nor do I shed any tears for Obama. Read More…

Tim argues that aid to outsourced workers is “welfare.” So it would seem. And all good conservatives know that welfare is bad. Cue Hayekian talking points. Reaffirm free-market faith. Should that fail to impart sufficient smugness, throw in a reference to “welfare queens.” QED.

Or not. Conservatives’ primary complaint about welfare is that it rewards the unproductive by confiscating producers’ gains, inhibiting the output of both. But how does this apply when the majority of Americans are benefiting from cheap imports, subsidized by those paying with the loss of their livelihoods?

I’ve been reading The Big Squeeze by NYT reporter Steven Greenhouse. He writes of his visit to Galesburg, Illinois, the town 5-year-old Ronald Reagan moved to with his family in 1916. The future president recalled finding a collection of birds’ eggs and butterflies in glass cases left in the rented white house on North Kellogg Street. “I escaped for hours at a time in into the attic, marveling at the rich colors of the eggs and the intricate and fragile wings of the butterflies,” Reagan wrote seven decades later. “The experience left me with a reverence for the handiwork of God that never left me.” His father sold shoes at O.T. Johnson’s department store on Main Street.

Greenhouse writes,

For much of the 20th century, Galesburg was a model of progress and prosperity, fueled by three powerful forces: agriculture, manufacturing and railroads. So robust was Galesburg’s economy that Main Street boasted not just O.T. Johnson’s emporium but also a Sears, A JCPenney, and a Carson Pirie Scott—quite an array of department stores, considering that Galesburg was a community of 35,000 out on the prairie between Peoria and Rock Island.” On Friday nights, farmers from miles around converged on Galesburg to shop and socialize, at times making it hard not just to park but even to walk on Main Street. While agriculture was big and so were the railroads—the town’s rail yard is one of the largest in the Midwest, with seven major lines passing through town—the most important economic engine was the Galesburg Refrigeration Products factory on the south side of town. It was more than a million square feet, the size of 20 football fields, and at peak times it employed more than 3,000 workers. … In 1950, the Admiral Corporation acquired the plant and turned it into a refrigerator factory.

In 1979, Magic Chef bought Admiral. Seven years later, Maytag bought Magic Chef, and with it the thriving Galesburg facility. Greenhouse goes on: “Each year the factory pumped tens of millions of dollars of wages into Galesburg’s economy, and in that way, it helped build and sustain the town’s—and the country’s—middle class.”

He tells the story of Aaron Kemp, Read More…

Democrats are holding up the Colombia Free Trade Agreement, and both sides are tying the CFTA to trade adjustment assistance, which is welfare, purportedly for those who lose their jobs thanks to offshoring of jobs. But Democrats in the House are pushing for an expansion of TAA, as they did with the State Children’s Health Insurance Program (S-CHIP): turning a narrow welfare program into a broad welfare program. Putting more Americans on the government teat is a priority for some.

So, my question is: How much is free trade with Colombia worth? Bush and congressional Republicans were willing to endure Democratic and media abuse to block the expanded SCHIP, will they be willing to let a free trade agreement sink to block expanded TAA? Or are some things just too important?

Nineteenth century British statesmen believed that the national interest should drive all government policy.  Twenty-first century America has no sense of a national interest and therefore has no energy policy, no industrial policy, no immigration policy, and no foreign policy.  Maladroit Bush Administration global meddling has empowered the Taliban in Afghanistan and Pakistan, created a terrorist threat in Iraq where none existed before, and alienated nearly all of America’s traditional allies.  Latin America has been somewhat off the screen but even the somnolent might have noticed that leaders who are highly critical of the United States have emerged in six countries over the past three years.  Much of this derives from the impression that the US only desires partners in the hemisphere who are willing to accept Washington’s dominance, a proposition that no one outside of Colombia is buying. 

The most irritating South American leader continues to be the thuglike Hugo Chavez of Venezuela, but Chavez, who lost a referendum to perpetuate his power last December, has many political opponents within his own country.  Like Mahmoud Ahmadinejad in Iran, he relies on threats and other blunders by the United States to legitimize and empower himself.  Case in point, the US Congress is now considering a motion by Florida Republican congressmen Ileana Ros-Lehtinen and Connie Mack to declare Venezuela a state sponsor of terrorism.  Ros-Lehtinen and Mack are closely linked to the Cuban exile community in Florida.  Cuban exiles hate Venezuela because it supports the communist regime in Cuba, which makes punishing Venezuela a priority for congress even though the American public can only lose if Chavez retaliates and blocks all oil sales to the US, driving the price of gasoline up by at least ten per cent.  Venezuela is rallying behind Chavez because the terrorist label is an affront to national dignity that also bears serious legal and economic consequences.  The Venezuelan state oil company Citgo will be hurt initially because its major refineries are in Texas, but it will eventually find new markets for its oil, probably in China. 

The State Department is reported to be dragging its feet on the terrorism supporter designation because of the potential damage to the US economy and also because there is no real case against Chavez.  The Venezuelan president has played fast and loose with the Colombian terrorist group FARC but there is no actual evidence that he has given them any money or other tangible support.  His dabbling with terrorism has also made him somewhat unpopular in Venezuela, but as soon as the gringos began to make threats his popularity rating markedly improved. 

Ros-Lehtinen and Mack are willing to sacrifice the US national interest, which is to keep the oil flowing, to appease their own political supporters, many of whom are so fixated on Cuba that they forget where they currently reside.  Where have we heard this sort of thing before?  The Armenian and Israeli lobbies come immediately to mind.  Hyphenated Americans who have dual citizenship or are otherwise passionately attached to another country should opt to live in that other country or leave their transnational baggage back in their former home where it belongs.  Our politicians should be intelligent and patriotic enough to ignore those who want the United States to fight their wars for them.  Alas, intelligence and patriotism are not in great supply these days.

Historian Paul Kennedy’s The Rise and Fall of Great Powers: Economic Change and Military Conflicts from 1500 to 2000 which was published during the twilight years of the Cold War, succeeded in doing to geo-politics, what Mao’s Little Red Book had done to the deep, deep thoughts of the beloved communist Chinese butcher and child molester. It helped popularize a somewhat esoteric topic of discussion in stuffy gentlemen’s clubs in Victorian London or in Bismarck’s Berlin, turning it into a trendy piece of conversation among the more diverse American and international audiences.

Rising to the top of the New York Times best-seller list, the heavy Rise and Fall (close to 700 pages) became a book that members of the cool chattering class were required to read (or at least, to buy). Moreover, forecasting the political and economic decline (relatively speaking) of the U.S. (got it wrong in 1987) and the then Soviet Union (got it right) and the rise (again, relatively speaking) of Japan (wrong), the then European Economic Community (about right) and China (right), Rise and Fall seemed to set the standard for the new popular genre of books on the Next Big Foreign Policy Idea for the post-Cold War/globalization era.

From Francis Fukuyama’s The End of History and the Last Man, through Samuel Huntington’s The Clash of Civilizations and the Remaking of World Order and Thomas L. Friedman’s The Lexus and the Olive Tree to the Coming Anarchy and Future Perfect, scholars and pundits have been bombarding us with dire or bright predictions about global prosperity or mass starvation, international peace or world wars, unipolarity or multipolarity, and the rise or fall of nationalism, religion, ethnicity, racism and tribalism.

Enter Parag Khanna, the director of the Global Governnance Initiative in the American Strategy Forum in the New America Foundation, with his Next Big Foreign Policy Idea. Erase unipolarity and the third world and add tripolarity and the second world to your foreign policy vocabulary. In The Second World: Empires and Influence in the New Global Order, Khanna proposes that we are heading toward a tripolar global system dominated by three great geostraetgic and geoeconomic powers or empires — the United States, the European Union and China — that will be competing for the hearts and minds (and pocketbooks) of the emerging nation-states and markets in Central Asia, Latin America, the Pacific Rim and the Middle East that compose what Khanna describes as the second world. It is this mostly peaceful competition over markets and investments — not a cold or a hot war — in the second world between the big three — Brazil, Argentina, Indonesia, Malaysia, Azerbaijan are some of the countries in transition that will be the focus on this tripolar contest — that will shape the global political, economic and military balance of power in the twenty-first century, according to Khanna.

The U.S., EU and China represent three distinct diploamtic styles — coalition, consensus, and conusltation respectively that could appeal to the second world. America has its “coalitions of the willing” style of conducting foreign policy that negotiates diploamtic alignments based on issue-by-issue basis, and offers military protection and aid. The EU aggregates countries in a manner more resembling a corporate merger than a political conquest, providing them with economic association and political reforms, with net gains in both trade and territory from North Africa to the Caucasus. And China, which draws on ancient Confucian customs, promotes a consultative pattern of behavior that emphasizes areas of great agreement while tabling issues lacking accord for other occasions. It offers to potential partners in the second world “full-service, condition-free relationship.”

Against the backdrop of the Iraq War and the ensuing anti-American sentiments in many parts of the second world, the U.S. finds itself now in a weakened position in the tripolar competition, suggesting to Khanna that its post-Cold War unipolar moment is coming to an end, and that America will have to share this century with China and the EU. According to the futuristic scenarios drawn-up by Khanna, China’s search for energy resources and markets for its products will be driving its growing presence in America’s strategic backyard in Latin America, while the EU is getting ready to replace the U.S. as the leading power in the Broader Middle East.

In fact, Khanna warns that the continuing military overstretch and declining economic power and quality of life threaten to transform the U.S. from a global power into a member of the less prestigious club of the second world. The war on terrorism will end, and China and the EU — and not the U.S. — could emerge as the global winners.

There are many holes in Khanna’s grand strategic theory. He seems to exhibit too much pessimism about the ability of India to evolve into a global power and that of Russia to regain its former status. And he fails to highlight the many obstacles facing China and especially the EU on the road to global leadership. While he provides timely reports and sophisticated analyses about the growing geo-economic competition between the U.S. China and the EU in the emerging regions of the world, his vision of a tripolar international system remains a creative speculation at this stage.

While the U.S. is probably going to lose its global economic position, it will take a long time before we’ll find out whether its decline leads to a rise of a new bipolarity or multipolarity, to stability or anarchy, to clash between nations, religions or civilizations. In short, we are probably going to search for quite a while for the Next Big Foreign Policy Idea.