Our youthful and inexperienced president is finding that Jeffersonian diplomacy is difficult to implement in a world where terrorism is on the ascent. Furthermore, he is learning, to both his and our regret,the protection of our safety and ideals may not be mutually feasible.
World realities may finally shape Obama's thinking but by the time it does it might be too late and he could fall on his pacifistic sword as did Carter.
Obama has been fortunate enough to have bathed in warm showers all his life. Now, as president, terrorists have turned up the heat but the shower water is colder. Faulty plumbing or faulty thinking? You decide. (See 1 and 1a below.)
Malcolm Moore offers advice on how to handle China. (See 2 below.)
New lessons to be learned now compared to those of The Great Depression. (See 3 below.)
Meanwhile, Paul Krugman fears the Fed and Congress will cease stimulating too soon.
Maybe we need less economic instruction and more from Masters and Johnson. (see 3a below.)
Finally, the most dangerous war of all may be against outdated technology - BOOKS!
I served on The Board of St John's College - The Great Books School - for nine years and I invited Microsoft's Bill Gates to come and speak on the threat, if any, of his company to reading, to books, to libraries etc.. He never responded.
I am not faulting him just suggesting a missed opportunity for thoughtful discourse(See 5 below.)
Certainly it is his right to do so but Obama did institute these three 'changes:'
1st president in 110 years to miss the annual Army-Navy Football Game.
1st president to not attend any Christmas religious observance.
1st president to stay on vacation after a terrorist attack.
When the fifth largest emerging economy decides to become increasingly independent this is not a healthy sign for our Continent. Particularly is this so when its leader starts flirting with the likes of Ahmadinejad and Chavez.(See 6 and 6a below.)
There are those who argue the health care legislation is unconstitutional. That is a new twist - challenging passed laws for being unconstitutional which, no doubt, many are. (See 7 below.)
Finally, be careful what you wish for it could cost trillions. (See 8 below.)
Dick
1)The Carter Syndrome
Barack Obama might yet revolutionize America's foreign policy. But if he can't reconcile his inner Thomas Jefferson with his inner Woodrow Wilson, the 44th president could end up like No. 39.
BY WALTER RUSSELL MEAD JANUARY/FEBRUARY 2010
Neither a cold-blooded realist nor a bleeding-heart idealist, Barack Obama has a split personality when it comes to foreign policy. So do most U.S. presidents, of course, and the ideas that inspire this one have a long history at the core of the American political tradition. In the past, such ideas have served the country well. But the conflicting impulses influencing how this young leader thinks about the world threaten to tear his presidency apart -- and, in the worst scenario, turn him into a new Jimmy Carter.
Obama's long deliberation over the war in Afghanistan is a case study in presidential schizophrenia: After 94 days of internal discussion and debate, he ended up splitting the difference -- rushing in more troops as his generals wanted, while calling for their departure to begin in July 2011 as his liberal base demanded. It was a sober compromise that suggests a man struggling to reconcile his worldview with the weight of inherited problems. Like many of his predecessors, Obama is not only buffeted by strong political headwinds, but also pulled in opposing directions by two of the major schools of thought that have guided American foreign-policy debates since colonial times.
All the Presidents' Men
Politicians and public intellectuals have been influenced by former U.S. presidents, be it Jefferson, Hamilton, Wilson, or Jackson.
In general, U.S. presidents see the world through the eyes of four giants: Alexander Hamilton, Woodrow Wilson, Thomas Jefferson, and Andrew Jackson. Hamiltonians share the first Treasury secretary's belief that a strong national government and a strong military should pursue a realist global policy and that the government can and should promote economic development and the interests of American business at home and abroad. Wilsonians agree with Hamiltonians on the need for a global foreign policy, but see the promotion of democracy and human rights as the core elements of American grand strategy. Jeffersonians dissent from this globalist consensus; they want the United States to minimize its commitments and, as much as possible, dismantle the national-security state. Jacksonians are today's Fox News watchers. They are populists suspicious of Hamiltonian business links, Wilsonian do-gooding, and Jeffersonian weakness.
Moderate Republicans tend to be Hamiltonians. Move right toward the Sarah Palin range of the party and the Jacksonian influence grows. Centrist Democrats tend to be interventionist-minded Wilsonians, while on the left and the dovish side they are increasingly Jeffersonian, more interested in improving American democracy at home than exporting it abroad.
Some presidents build coalitions; others stay close to one favorite school. As the Cold War ended, George H.W. Bush's administration steered a largely Hamiltonian course, and many of those Hamiltonians later dissented from his son's war in Iraq. Bill Clinton's administration in the 1990s mixed Hamiltonian and Wilsonian tendencies. This dichotomy resulted in bitter administration infighting when those ideologies came into conflict -- over humanitarian interventions in the Balkans and Rwanda, for example, and again over the relative weight to be given to human rights and trade in U.S. relations with China.
More recently, George W. Bush's presidency was defined by an effort to bring Jacksonians and Wilsonians into a coalition; the political failure of Bush's ambitious approach created the context that made the Obama presidency possible.
Sept. 11, 2001, was one of those rare and electrifying moments that waken Jacksonian America and focus its attention on the international arena. The U.S. homeland was not only under attack, it was under attack by an international conspiracy of terrorists who engaged in what Jacksonians consider dishonorable warfare: targeting civilians. Jacksonian attitudes toward war were shaped by generations of conflict with Native American peoples across the United States and before that by centuries of border conflict in England, Scotland, and Ireland. Against "honorable" enemies who observe the laws of war, one is obliged to fight fair; those who disregard the rules must be hunted down and killed, regardless of technical niceties.
When the United States is attacked, Jacksonians demand action; they leave strategy to the national leadership. But Bush's tough-minded Jacksonian response to 9/11 -- invading Afghanistan and toppling the Taliban government that gave safe haven to the plotters -- gave way to what appeared to be Wilsonian meddling in Iraq. Originally, Bush's argument for overthrowing Saddam Hussein rested on two charges that resonated powerfully with Jacksonians: Hussein was building weapons of mass destruction, and he had close links with al Qaeda. But the war dragged on, and as Hussein's fabled hoards of WMD failed to appear and the links between Iraq and al Qaeda failed to emerge, Bush shifted to a Wilsonian rationale. This was no longer a war of defense against a pending threat or a war of retaliation; it was a war to establish democracy, first in Iraq and then throughout the region. Nation-building and democracy-spreading became the cornerstones of the administration's Middle East policy.
Bush could not have developed a strategy better calculated to dissolve his political support at home. Jacksonians historically have little sympathy for expensive and risky democracy-promoting ventures abroad. They generally opposed the humanitarian interventions in Somalia, Bosnia, and Haiti during the Clinton years; they did not and do not think American young people should die and American treasure should be scattered to spread democracy or protect human rights overseas. Paradoxically, Jacksonians also opposed "cut and run" options to end the war in Iraq even as they lost faith in both Bush and the Republican Party; they don't like wars for democracy, but they also don't want to see the United States lose once troops and the national honor have been committed. In Bush's last year in office, a standoff ensued: The Democratic congressional majorities were powerless to force change in his Iraq strategy and Bush remained free to increase U.S. troop levels, yet the war itself and Bush's rationale for it remained deeply unpopular.
Enter Obama. An early and consistent opponent of the Iraq war, Obama was able to bring together the elements of the Democratic Party's foreign-policy base who were most profoundly opposed to (and horrified by) Bush's policy. Obama made opposition to the Iraq war a centerpiece of his eloquent campaign, drawing on arguments that echoed U.S. anti-war movements all the way back to Henry David Thoreau's opposition to the Mexican-American War.
Like Carter in the 1970s, Obama comes from the old-fashioned Jeffersonian wing of the Democratic Party, and the strategic goal of his foreign policy is to reduce America's costs and risks overseas by limiting U.S. commitments wherever possible. He's a believer in the notion that the United States can best spread democracy and support peace by becoming an example of democracy at home and moderation abroad. More than this, Jeffersonians such as Obama think oversize commitments abroad undermine American democracy at home. Large military budgets divert resources from pressing domestic needs; close association with corrupt and tyrannical foreign regimes involves the United States in dirty and cynical alliances; the swelling national-security state threatens civil liberties and leads to powerful pro-war, pro-engagement lobbies among corporations nourished on grossly swollen federal defense budgets.
While Bush argued that the only possible response to the 9/11 attacks was to deepen America's military and political commitments in the Middle East, Obama initially sought to enhance America's security by reducing those commitments and toning down aspects of U.S. Middle East policy, such as support for Israel, that foment hostility and suspicion in the region. He seeks to pull U.S. power back from the borderlands of Russia, reducing the risk of conflict with Moscow. In Latin America, he has so far behaved with scrupulous caution and, clearly, is hoping to normalize relations with Cuba while avoiding collisions with the "Bolivarian" states of Venezuela, Ecuador, and Bolivia.
Obama seeks a quiet world in order to focus his efforts on domestic reform -- and to create conditions that would allow him to dismantle some of the national-security state inherited from the Cold War and given new life and vigor after 9/11. Preferring disarmament agreements to military buildups and hoping to substitute regional balance-of-power arrangements for massive unilateral U.S. force commitments all over the globe, the president wishes ultimately for an orderly world in which burdens are shared and the military power of the United States is a less prominent feature on the international scene.
While Wilsonians believe that no lasting stability is possible in a world filled with dictatorships, Jeffersonians like Obama argue that even bad regimes can be orderly international citizens if the incentives are properly aligned. Syria and Iran don't need to become democratic states for the United States to reach long-term, mutually beneficial arrangements with them. And it is North Korea's policies, not the character of its regime, that pose a threat to the Pacific region.
At this strategic level, Obama's foreign policy looks a little bit like that of Richard Nixon and Henry Kissinger. In Afghanistan and Iraq, he hopes to extract U.S. forces from costly wars by the contemporary equivalent of the "Vietnamization" policy of the Nixon years. He looks to achieve an opening with Iran comparable to Nixon's rapprochement with communist China. Just as Nixon established a constructive relationship with China despite the radical "Red Guard" domestic policies Chinese leader Mao Zedong was pursuing at the time, Obama does not see ideological conflict as necessarily leading to poor strategic relations between the United States and the Islamic Republic. Just as Nixon and Kissinger sought to divert international attention from their retreat in Indochina by razzle-dazzle global diplomacy that placed Washington at the center of world politics even as it reduced its force posture, so too the Obama administration hopes to use the president's global popularity to cover a strategic withdrawal from the exposed position in the Middle East that it inherited from the Bush administration.
This is both an ambitious and an attractive vision. Success would reduce the level of international tension even as the United States scales back its commitments. The United States would remain, by far, the dominant military power in the world, but it would sustain this role with significantly fewer demands on its resources and less danger of war.
Yet as Obama is already discovering, any president attempting such a Jeffersonian grand strategy in the 21st century faces many challenges. In the 19th-century heyday of Jeffersonian foreign policy in American politics, it was easier for U.S. presidents to limit the country's commitments. Britain played a global role similar to that of the United States today, providing a stable security environment and promoting international trade and investment. Cruising as a free rider in the British world system allowed Americans to reap the benefits of Britain's world order without paying its costs.
As British power waned in the 20th century, Americans faced starker choices. With the British Empire no longer able to provide political and economic security worldwide, the United States had to choose between replacing Britain as the linchpin of world order with all the headaches that entailed or going about its business in a disorderly world. In the 1920s and 1930s, Americans gave this latter course a try; the rapid-fire series of catastrophes -- the Great Depression, World War II, Stalin's bid for Eurasian hegemony -- convinced virtually all policymakers that the first course, risky and expensive as it proved, was the lesser of the two evils.
Indeed, during Franklin D. Roosevelt's first two terms, the United States pursued essentially Jeffersonian policies in Europe and Asia, avoiding confrontations with Germany and Japan. The result was the bloodiest war in world history, not a stable condominium of satisfied powers. Since that time, Jeffersonians have had to come to terms with the vast set of interlocking political, economic, and military commitments that bind the United States to its role in the postwar era. Jeffersonian instincts call for pruning these commitments back, but it is not always easy to know where to cut.
The other schools are generally skeptical about reducing American commitments. Wilsonians interpret Jeffersonian restraint as moral cowardice. Why, they ask, did Obama refuse to meet the sainted Dalai Lama on his way to kowtow to the dictators in Beijing? Jacksonians think it is cowardice pure and simple. And why not stand up to Iran? Hamiltonians may agree with Jeffersonian restraint in particular cases -- they don't want to occupy Darfur either -- but sooner or later they attack Jeffersonians for failing to develop and project sufficient American power in a dangerous world. Moreover, Hamiltonians generally favor free trade and a strong dollar policy; in current circumstances Hamiltonians are also pushing fiscal restraint. Obama will not willingly move far or fast enough to keep them happy.
The widespread criticism of Obama's extended Afghanistan deliberations is a case in point. To a Jeffersonian president, war is a grave matter and such an undesirable course that it should only be entered into with the greatest deliberation and caution; war is truly a last resort, and the costs of rash commitments are more troubling than the costs of debate and delay. Hamiltonians would be more concerned with executing the decision swiftly and with hiding from other powers any impression of division among American counsels. But Obama found harsh critics on all sides: Wilsonians recoiled from the evident willingness of the president to abandon human rights or political objectives to settle the war. Jacksonians did not understand what, other than cowardice or "dithering," could account for his reluctance to support the professional military recommendation. And the most purist of the Jeffersonians -- neoisolationists on both left and right -- turned on Obama as a sellout. Jeffersonian foreign policy is no bed of roses.
In recent history, Jeffersonian foreign policy has often faced attacks from all the other schools of thought. Kissinger's policy of détente was blasted on the right by conservative Republicans who wanted a stronger stand against communism and on the left by human rights Democrats who hated the cynical regional alliances the Nixon Doctrine involved (with the shah of Iran, for example). Carter faced many of the same problems, and the image of weakness and indecision that helped doom his 1980 run for re-election is a perennial problem for Jeffersonian presidents. Obama will have to leap over these hurdles now, too.
It is not only Americans who will challenge the new American foreign policy. Will Russia and Iran respond to Obama's conciliatory approach with reciprocal concessions -- or, emboldened by what they interpret as American weakness and faltering willpower, will they keep pushing forward? Will the president's outreach to the moderate majority of Muslims around the world open an era of better understanding, or will the violent minority launch new attacks that undercut the president's standing at home? Will the president's inability to deliver all the Israeli concessions Arabs would like erode his credibility and contribute to even deeper levels of cynicism and alienation across the Middle East? Can the president execute an orderly reduction in the U.S. military stake in Iraq and Afghanistan without having hostile forces fill the power vacuum? Will Venezuelan leader Hugo Chávez be so impressed with American restraint under Obama that he moderates his own course and ceases to make anti Yanquismo a pillar of his domestic and international policy? Will other countries heed the president's call to assume more international responsibility as the United States reduces its commitments -- or will they fail to fulfill their obligations as stakeholders in the international system?
A Jeffersonian policy of restraint and withdrawal requires cooperation from many other countries, but the prospect of a lower American profile may make others less, rather than more, willing to help the United States.
There is an additional political problem for this president, one that he shares with Carter. In both cases, their basic Jeffersonian approach was balanced in part by a strong attraction to idealistic Wilsonian values and their position at the head of a Democratic Party with a distinct Wilsonian streak. A pure Jeffersonian wants to conserve the shining exceptionalism of the American democratic experience and believes that American values are rooted in U.S. history and culture and are therefore not easily exportable.
For this president, that is too narrow a view. Like Abraham Lincoln, Woodrow Wilson, and Martin Luther King Jr., Barack Obama doesn't just love the United States for what it is. He loves what it should -- and can -- be. Leadership is not the art of preserving a largely achieved democratic project; governing is the art of pushing the United States farther down the road toward the still-distant goal of fulfilling its mission and destiny.
Obama may well believe what he said in his inaugural speech -- "we reject as false the choice between our safety and our ideals" -- but as any president must he is already making exactly those tradeoffs. Why else refuse to meet the Dalai Lama? Why else pledge support to the corrupt regime of President Hamid Karzai in Afghanistan or aid Pakistan despite the dismal track record of both the civil and military arms of the Pakistani government when it comes to transparent use of U.S. resources? Did the administration not renew its efforts to build a relationship with the regime in Tehran even as peaceful democratic protesters were being tortured and raped in its jails? Is Obama not taking "incentives" to Khartoum, a regime that has for more than a decade pursued a policy in Darfur that the U.S. government has labeled genocidal?
It is hard to reconcile the transcendent Wilsonian vision of America's future with a foreign policy based on dirty compromises with nasty regimes. If the government should use its power and resources to help the poor and the victims of injustice at home, shouldn't it do something when people overseas face extreme injustice and extreme peril? The Obama administration cannot easily abandon a human rights agenda abroad. The contradiction between the sober and limited realism of the Jeffersonian worldview and the expansive, transformative Wilsonian agenda is likely to haunt this administration as it haunted Carter's, most fatefully when he rejected calls to let the shah of Iran launch a brutal crackdown to remain in power. Already the Wilsonians in Obama's camp are muttering darkly about his failure to swiftly close the Guantánamo prison camp, his fondness for government secrecy, his halfhearted support for investigating abuses of the past administration, and his failure to push harder for a cap-and-trade bill before the Copenhagen summit.
Over time, these rumblings of discontent will grow, and history will continue to throw curveballs at him. Can this president live with himself if he fails to prevent a new round of genocide in the Great Lakes region of Africa? Can he wage humanitarian war if all else fails? Can he make these tough decisions quickly and confidently when his closest advisors and his political base are deeply and hopelessly at odds?
The Jeffersonian concern with managing America's foreign policy at the lowest possible level of risk has in the past helped presidents develop effective grand strategies, such as George Kennan's early Cold War idea of containment and the early 19th-century Monroe Doctrine. If successful, Obama's restructuring of American foreign policy would be as influential as these classic strategic designs.
Recent decades, however, have seen diminishing Jeffersonian influence in U.S. foreign policy. Americans today perceive problems all over the world; the Jeffersonian response often strikes people as too passive. Kennan's modest form of containment quickly lost ground to Dean Acheson's more muscular and militarized approach of responding to Soviet pressure by building up U.S. and allied forces in Europe and Asia. The Nixon-Kissinger policy of détente was repudiated by both the Republican and Democratic parties. Carter came into the White House hoping to end the Cold War, but by the end of his tenure he was supporting the resistance to the Soviet occupation of Afghanistan, increasing the defense budget, and laying the groundwork for an expanded U.S. presence in the Middle East.
In the 21st century, American presidents have a new set of questions to consider. The nature of the international system and the place of the United States in it will have to be rethought as new powers rise, old ones continue to fade, and attention shifts from the Atlantic to the Pacific. The rapid technological development that is the hallmark of our era will reshape global society at a pace that challenges the ability of every country in the world to manage cascading, accelerating change.
With great dignity and courage, Obama has embarked on a difficult and uncertain journey. The odds, I fear, are not in his favor, and it is not yet clear that his intuitions and instincts amount to the kind of grand design that statesmen like John Quincy Adams and Henry Kissinger produced in the past. But there can be no doubt that American foreign policy requires major rethinking.
At their best, Jeffersonians provide a necessary element of caution and restraint in U.S. foreign policy, preventing what historian Paul Kennedy calls "imperial overstretch" by ensuring that America's ends are proportionate to its means. We need this vision today more than ever: If Obama's foreign policy collapses -- whether sunk by Afghanistan or conflicts not yet foreseen -- into the incoherence and reversals that ultimately marked Carter's well-meaning but flawed approach, it will be even more difficult for future presidents to chart a prudent and cautious course through the rough seas ahead
1a)Terrorism's triumphant techniques
By RALPH PETERS
Our terrorist enemies are out-thinking us. It's not only embarrassing, but deadly.
The Taliban's latest innovation was on display again last week, when a suicide bomber, reportedly garbed in an Afghan army uniform, killed seven Americans, including a CIA mission chief.
The terrorists are "inside the wire." Everywhere. From eastern Afghanistan to Texas. And we're stalled. For all of our wealth, technology and power, our enemies have the strategic and psychological initiative.
The low-tech nature of most reported combat in our recent conflicts obscures the advent of four powerful innovations in warfare. Unfortunately, three of those revolutionary techniques belong to our enemies.
The single breakthrough we've exploited has been Unmanned Aerial Vehicles -- UAVs, commonly known as "drones." They're a terrific stand-off targeting tool.
Our enemies, though, have mastered new forms of the tactical fight -- with strategic effects. They still lose every classic firefight, but they are pioneering the means to win without directly confronting our combat troops.
The first terrorist and insurgent innovation of this conflict era was the bulk employment of suicide bombers, dirt-cheap weapons with a high probability of success -- the poor man's precision arsenal.
Their second innovation was another cheap-but-powerful tool, the Improvised Explosive Device, the IED or roadside bomb. We still can't beat it.
Then, over the last year or so, we've seen the ever more frequent use of their most insidious psychological weapon: the suicide assassin disguised as "one of ours."
This is an anti-morale nuke. Our linchpin effort in Afghanistan is the development of Afghan security forces. (The Obama Doctrine: "When they stand up, we'll run like hell.") And building up the Afghan army and police relies on trust between our trainers and advisers and "their" Afghans -- as well as between Afghans themselves.
Last year, we saw incident after incident in which a Taliban cadre within the Afghan security forces gunned down our officers at meetings (the Brits took a really bad hit), turned their weapons on our combat troops or, most devastatingly, blew themselves up when we embraced them as comrades.
Don't let this weapon's low-tech nature fool you. This is the big one. President Obama's desperate "strategy" for Afghanistan relies on building trust -- between Afghans and their government, but above all on the security front.
Our enemies have done what we refuse to do. They've analyzed the problem objectively and engineered ruthless solutions.
And we won't even block their Internet sites.
We make up fairy tales about the power of development projects to deter religious fanatics. We impose rules of engagement on our troops that protect our enemies. We ground our air power. We grant terrorists "legal" rights with no basis in existing law.
And our enemies do whatever it takes to win.
I want to see every one of those enemies dead. But I have to acknowledge their commitment, their maddened courage and their genius at waging war for peanuts.
Our troops in the field know all too well what a self-imposed mess we're in. But the gulf between our grunts and their generals is immense and growing wider.
It's a (literally) bloody disgrace that our ragtag enemies innovate faster and more effectively than our armed forces and the legion of overpaid contractors behind them. They ask themselves, "What works?" We ask ourselves what the lawyers will say.
The crucial difference? Our enemies believe in victory, even if we don't.
Ralph Peters' latest book is "The War After Armageddon."
2)China - handle with care: The emotional condemnation that followed the execution of Akmal Shaikh is exactly the wrong way to deal with the world's next superpower, says Malcolm Moore in Shanghai.
By Malcolm Moore
The reaction to Akmal Shaikh’s execution by the British government has been a fiasco that must have made diplomats in Beijing and Shanghai wince. From a British perspective, the outrage over Mr Shaikh’s execution may have seemed justified. China must improve its human-rights record if it wants to be a responsible player on the world stage. Executing a 53-year-old man of questionable sanity and burying him in an unmarked grave in a remote and icy cemetery in Urumqi appears unjust in our eyes. Bluntly ignoring Gordon Brown’s entreaties makes China seem cold and defiant.
But from a Chinese point of view, there was little to be done. A personality disorder or paranoia do not qualify as mental illness in the eyes of the court. And Britons in China must be subject to Chinese law.
The fact that Mr Shaikh was the first European to be executed in China for half a century shows that, until now, China has often allowed foreigners to remain outside the law as it sought to curry favour with more powerful nations. But no longer.
“Today, when the British drug dealer violated the law on our land, we can openly and rightfully punish him without any mercy. We don’t need to follow the orders of others any more,” remarked one commenter on a Chinese web forum.
It may be 170 years since Britain subjected China to colonial humiliation during the Opium wars, but the memory of red-faced foreigners banging their fists on tables and telling the Chinese what to do is still keenly felt. Despite its apparent strength, the country remains incredibly sensitive to the way it is treated by foreign governments.
As it takes the rotating presidency of the United Nations Security Council this month, it is easy to forget that the country was a global pariah just two decades ago. After the massacre at Tiananmen Square, foreign governments cut off diplomatic ties with Beijing, imposed sanctions and snuffed out the early flickerings of the attempt to rejoin the world after decades of Maoist isolation.
Under Deng Xiaoping’s leadership, China had been opening up. The country’s unspoken support for the US had spurred the collapse of the Soviet Union. “China and the US had been sharing both geopolitical and military secrets,” recalls Gao Zhikai, Deng’s former translator. “Because of that co-operation, China was following a US line.” The US had even been selling China weapons, both Sikorsky helicopters and guidance systems for jet aircraft.
The events of 1989, however, turned China into a new target for the US as it searched for an ideological enemy in the post Cold War era, even if, in practice, Chinese communism was a world away from Soviet Marxism.
“Until the September 11 attacks in 2001, it was a very sensitive, difficult and uncertain time for China,” said Mr Gao. “There was no eagerness to rebuild a relationship or treat China as a partner, and there were no summit meetings until Jiang Zemin met Bill Clinton in Seattle in 1993.” After 2001, of course, the US found a new ideological enemy in Islamic terrorism, and China was a willing partner in the fight.
The Chinese public, for its part, hardened against the West after the Chinese embassy in Belgrade was bombed by Nato planes in 1999. A skilful propaganda campaign convinced the population that the West was up to its old tricks and seeking to contain the rise of a potential new superpower.
The Chinese leadership genuinely believes this. Hu Jintao, the Chinese president, has warned that the US has strengthened its relationships with Vietnam, India and Taiwan in order to “put pressure points on us from the east, south and west”. More Chinese outrage followed at the protests against the Olympic torch in Paris. The sabotage was seen as a deliberate attempt to ruin China’s big moment, the Beijing Olympics.
Regular bouts of hectoring from the US and the UK over human-rights abuses, the irresponsibility of China’s position at Copenhagen, or the execution of Akmal Shaikh have merely confirmed the suspicion that the West believes it can boss China around.
China is now well placed to be the world’s next superpower. Its admission to the World Trade Organisation in 2000 launched a decade of frantic trading that has seen its gross domestic product rise from below that of Spain and Italy to overtake Japan’s, making it the world’s second-largest economy. By 2027, according to Goldman Sachs, it will overtake the US and become the largest.
More than 250 million people have been lifted out of poverty in just three decades and a sprawling middle class has emerged. China is the world’s largest car market, and rich Chinese bought £6 billion of luxury goods this year, a 12 per cent rise as the rest of the world slumped. One of last year’s biggest catchphrases was: “Money is not a problem,” mocking the country’s vulgar nouveau riche for flaunting their wealth.
The financial crisis revealed that the US is in hock to the Chinese government to the tune of $1.7 trillion dollars. The new global order was cast in clear relief when Barack Obama visited Beijing in November to ask if China, as one of America’s largest trading partners, would revalue its currency to make the terms of trade more equitable. He got nothing in response.
While the West has been crippled by the financial crisis, China has hardly been touched. Its banks were already nationalised, and were quickly ordered to lend money. The resulting wave of cash boosted confidence in the economy and helped to generate growth of around nine per cent in 2009. By contrast, living standards in the UK retreated to pre-2005 levels.
China has grown so rapidly that its leaders have been pushed to the front of the world stage without much experience of international diplomacy. “Within the four corners of its country, China is a world in itself,” said Mr Gao. “It has a history of being introverted. Just look at the position of the foreign minister. He is not a member of the [ruling] politburo. There are two or three dozen officials more senior than him,” he added. Among the top leaders, only Li Keqiang and Li Yuanchao can speak English.
For the past 30 years, Chinese leaders have been following Deng Xiaoping’s strategy of tao guang yang hui, a cautiousness that is best translated as the opposite of chutzpah. They have not sought the limelight, listening more than speaking and to trying to be humble.
Now they have been thrust into the spotlight, China’s leaders are going about the job in a workmanlike fashion. Unlike their predecessors, the current generation does not make grand geopolitical gestures. When they travel abroad, it is strictly business.
Africa, South America and the developing world have discovered that China is a dependable, predictable and responsible partner, as long as its “hot buttons” of Tibet, Taiwan and human rights are not pushed. China is unlikely ever to cement a “Group of Two” arrangement with the US, as some have speculated. There will be no G2 because China fears alienating its smaller partners.
The lack of understanding on both sides is immense. This year, for example, only seven Chinese novels were published in English in the US, a sign of how little appetite there is to learn about China and its culture. As a result, patronising stereotypes still hold sway.
In turn, few Chinese, know anything about Britain beyond its colonial history and its industrial revolution. To seize the opportunity of becoming a trusted partner of China, Britain must not be seen as a bullying or ignorant power. What is needed is a genuine understanding of how Beijing works, a desire to do business, and a tone that emphasises that, while we may not agree with all its policies, we still respect the country.
3)Unlearnt lessons of the Great Depression
By Harold James
We are puzzled by the length and severity of the financial crisis and its effects on the real economy. We are also mesmerised by the possibility of parallels to the Great Depression. But at the same time we are sure that we have learnt the lessons of the Great Depression. We assume that we can avoid a repetition of the disasters of the deglobalisation that occurred in the 1930s.
The problem is that there are several different lessons from the Great Depression. They are confusing when we conflate them. Especially in the US, the Great Depression is usually identified with the stock market crash of 1929. Economists have two simple macro-economic policy answers to that kind of collapse. The first is the lesson that John Maynard Keynes already taught in the 1930s – in the face of a collapse in private demand, there is a need for new public sector demand or for fiscal activism.
The second is the lesson above all drawn by Milton Friedman and Anna Schwartz in the 1960s. In their view, the Depression was the result of the Fed’s policy failure in the aftermath of 1929. There was a massive monetary contraction, which was responsible for the severity of the downturn. In the future, central banks should commit themselves to providing extra liquidity in such cases.
Both lessons have been applied, consistently and quite successfully, not just to deal with the turmoil of 2007-08. Stock market panics in 1987, or 1998, or 2000-01, were treated with the infusion of liquidity. The fact that these anti-crisis measures were applied in many countries after 2007 also explains why the fallout is milder than it might have been. The years 2007-08, and especially the dramatic aftermath of the Lehman collapse, brought a new challenge, in that it repeated one aspect of the Great Depression story that is different from 1929. That type of crisis demands a different set of policy debates.
In the summer of 1931, a series of bank panics emanated from central Europe and spread financial contagion to Great Britain and then to the US, France and the whole world. This turmoil was decisive in turning a bad recession (from which the US was already recovering in the spring of 1931) into the Great Depression.
But finding a way out of the damage was very tough in the 1930s and is just as hard now. Unlike in the case of a 1929-type challenge, there are no obvious macro-economic answers to financial distress. The answers lie in the slow, painful cleaning up of balance sheets; and in designing an incentive system that compels banks to operate less dangerously.
A 1931-type event requires micro-economic restructuring, not macro-economic stimulus and liquidity provision. It cannot be imposed from above by an all-wise planner but requires many businesses and individuals to change behaviour. The improvement of regulation, while a good idea, is better suited to avoiding future crises than dealing with a catastrophe that has already occurred.
There is another reason that the aftermath of Lehman looks reminiscent of the world of depression economics. The international economy spreads problems fast. Austrian and German bank collapses would not have knocked the world from recession into depression had they occurred in isolated or self-contained economies. But these economies were built on borrowed money in the second half of the 1920s, with the chief sources of the funds lying in America. The analogy of that dependence is the way money from emerging economies, mostly in Asia, flowed to the US in the 2000s, and an apparent economic miracle was based on China’s willingness to lend. The bank collapses in 1931 and in 2008 shook the confidence of the international creditor: then the US, now China.
As in the Great Depression, the attention focuses on the big states and their policy responses. This is true of the by now classic answers to a “1929” problem. Smaller countries find it harder to apply Keynesian fiscal policies, or pursue autonomous monetary policies. Some countries, such as Greece or Ireland, have reached or exceeded the limits for fiscal activism; and there is – as in the 1930s – a threat of countries going bankrupt.
From the perspective of the US, debate has been distorted by fears that something like this could hit America. That is unrealistic. But even the default of an agglomeration of smaller countries would end any hope of an open international economy and inaugurate an age of financial nationalism.
In the recently ended era of financial globalisation, in the 20-year period since the collapse of Soviet communism, the most dynamic and richest states were generally small open economies: Singapore, Taiwan, Chile, New Zealand and in Europe the former communist states of central Europe, Ireland, Austria and Switzerland. In the world after the crisis, the centre of economic gravity has shifted to really large agglomerations of power. There has been an obsession with the Brics (Brazil, Russia, India, China) as new giants. The continuation of the crisis will turn them into Big Really Imperial Countries.
The writer is professor of history and international affairs at Princeton University. This article is based on ‘The Creation and Destruction of Value’, Harvard University Press, 2009
3a)That 1937 Feeling
By PAUL KRUGMAN
Here’s what’s coming in economic news: The next employment report could show the economy adding jobs for the first time in two years. The next G.D.P. report is likely to show solid growth in late 2009. There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.
But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.
This shouldn’t be happening. Both Ben Bernanke, the Fed chairman, and Christina Romer, who heads President Obama’s Council of Economic Advisers, are scholars of the Great Depression. Ms. Romer has warned explicitly against re-enacting the events of 1937. But those who remember the past sometimes repeat it anyway.
As you read the economic news, it will be important to remember, first of all, that blips — occasional good numbers, signifying nothing — are common even when the economy is, in fact, mired in a prolonged slump. In early 2002, for example, initial reports showed the economy growing at a 5.8 percent annual rate. But the unemployment rate kept rising for another year.
And in early 1996 preliminary reports showed the Japanese economy growing at an annual rate of more than 12 percent, leading to triumphant proclamations that “the economy has finally entered a phase of self-propelled recovery.” In fact, Japan was only halfway through its lost decade.
Such blips are often, in part, statistical illusions. But even more important, they’re usually caused by an “inventory bounce.” When the economy slumps, companies typically find themselves with large stocks of unsold goods. To work off their excess inventories, they slash production; once the excess has been disposed of, they raise production again, which shows up as a burst of growth in G.D.P. Unfortunately, growth caused by an inventory bounce is a one-shot affair unless underlying sources of demand, such as consumer spending and long-term investment, pick up.
Which brings us to the still grim fundamentals of the economic situation.
During the good years of the last decade, such as they were, growth was driven by a housing boom and a consumer spending surge. Neither is coming back. There can’t be a new housing boom while the nation is still strewn with vacant houses and apartments left behind by the previous boom, and consumers — who are $11 trillion poorer than they were before the housing bust — are in no position to return to the buy-now-save-never habits of yore.
What’s left? A boom in business investment would be really helpful right now. But it’s hard to see where such a boom would come from: industry is awash in excess capacity, and commercial rents are plunging in the face of a huge oversupply of office space.
Can exports come to the rescue? For a while, a falling U.S. trade deficit helped cushion the economic slump. But the deficit is widening again, in part because China and other surplus countries are refusing to let their currencies adjust.
So the odds are that any good economic news you hear in the near future will be a blip, not an indication that we’re on our way to sustained recovery. But will policy makers misinterpret the news and repeat the mistakes of 1937? Actually, they already are.
The Obama fiscal stimulus plan is expected to have its peak effect on G.D.P. and jobs around the middle of this year, then start fading out. That’s far too early: why withdraw support in the face of continuing mass unemployment? Congress should have enacted a second round of stimulus months ago, when it became clear that the slump was going to be deeper and longer than originally expected. But nothing was done — and the illusory good numbers we’re about to see will probably head off any further possibility of action.
Meanwhile, all the talk at the Fed is about the need for an “exit strategy” from its efforts to support the economy. One of those efforts, purchases of long-term U.S. government debt, has already come to an end. It’s widely expected that another, purchases of mortgage-backed securities, will end in a few months. This amounts to a monetary tightening, even if the Fed doesn’t raise interest rates directly — and there’s a lot of pressure on Mr. Bernanke to do that too.
Will the Fed realize, before it’s too late, that the job of fighting the slump isn’t finished? Will Congress do the same? If they don’t, 2010 will be a year that began in false economic hope and ended in grief.
5)The War on the Book
By Paul Greenberg
"Monday burn Millay, Wednesday Whitman, Friday Faulkner, burn 'em to ashes, then burn the ashes. That's our official slogan."
--Ray Bradbury, "Fahrenheit 451"
"When I look at books, I see an outdated technology, like scrolls before books."
--James Tracy, headmaster, Cushing Academy
Without a Gibbon to record the decline and fall of a civilization in proper detail and literary fashion, a few scattered notes on the continuing collapse may have to do. Perhaps these will be of use to some future archaeologist digging through the electronic junkyard that will prove our civilization's equivalent of Roman ruins. Buried somewhere in the vast pile of old Fax machines, laptops and iPhones, this little news item may help explain how we came a-cropper:
In Ashburnham, Mass., in once proud New England, land of the Pilgrims and Puritans, of iron-hard Adamses and dreamy Emersons, a prep school has just given up on books. The headmaster of Cushing Academy, one James Tracy, doesn't see any need for them. Not any more. Anybody who's anybody or wants to be now has an iPhone with apps, a Kindle or whatever the Next Big Thing turns out to transiently be. Who needs books?
To quote this very model of the modern headmaster: "When I look at books, I see an outdated technology, like scrolls before books."
There you have another sign of the shiny, color-coded cultural Apocalypse, one of the many such signs all around if we weren't too busy googling to notice them. The barbarians are not just at the gates but deep within the citadel -- at the head of the very schools entrusted with passing on the heritage of the past. How the mighty have fallen.
There are still those of us who see something other than an outdated technology when we look at books -- like a great store of value, the very currency of knowledge, of wisdom and of whatever of virtue may be taught by the written word.
"There are only a few of us left," as an old lawyer out of Mississippi named Billy Moore Clark, pronounced Billy Mo' Cla'k in these latitudes, used to confide when in his cups and sighing for the days of a lost grace.
We happy few can only respond to Headmaster Tracy's view with a slow, sad shake of the head. For what other response would be more fitting when confronted by someone so blind to the use and beauty of books, so immune to their charm, so impervious to the spell they cast, so cut off from the delight of not just reading but experiencing a great book?
The headmaster would prefer to be stared down by some electronic simulacrum that wearies the eyes, mind and patience. Sad doesn't begin to describe his handicap. Which he seems determined to pass on to his poor students.
The headmaster's low opinion of books may be only the first wave of a bleak future. How long before booklovers will have to gather secretly in whatever passes for catacombs nowadays to pore over their favorite volumes, savor the scent of printer's ink on freshly printed pages, know the assurance of sturdy bindings and sense the promise a real book holds for each successive reader?
How long before the world is divided between book people and those who, like the contemptuous headmaster, dismiss books as holdovers from an earlier, primitive time? Now we have a new god: Deus ex Machina. How long before, as in Ray Bradbury's "Fahrenheit 451," those who still treasure books will be treated as suspect, outcasts, rejects?
The headmaster is nothing if not sincere, more's the pity. For his comments are matched by actions that would credit a vandal: He's getting rid of his academy's library of some 20,000 volumes, which are to be replaced by a $500,000 "learning center" full of flat-screen telemonitors, laptop-friendly carrels, and various other electronic gotta-haves that will soon enough be outdated in technology's rush to obsolescence.
It was not enough for Headmaster Tracy to dismiss the book with a heedless comment; he had to insult the scroll, too: "When I look at books, I see an outdated technology, like scrolls before books." Hard as it is to believe in this oh-so-advanced age, there is still an obscure religious sect that gathers on each of its sabbaths to read from such a scroll. The prophet of another faith even referred to its adherents as the People of the Book.
The scroll they read is handwritten with fear and reverence, blessings and recitations, each word recorded on parchment by a learned scribe who has spent years in preparation for his task. Written in an ancient tongue called Hebrew, the scroll is said to open a whole universe of thought and revelation. To those who hold fast to it, they say, it is a tree of life. Its teachings, they claim, are inexhaustible. But the headmaster would seem to have even less use for scrolls than he does books. Man's ignorance, and his pride in it, appears to be inexhaustible, too.
I learned of this latest attack in the ongoing war on books via my favorite little magazine, The New Criterion, whose department of Notes and Comments regularly reports on these brittle post-cultural times. It watches for such inauspicious signs with the sharp eye of a lookout on the bridge of the Titanic. I tend to save my copies, lest I miss a single report on the continuing collapse of Western civilization. So I can remember what it was.
6)Brazil Steers an Independent Course: Washington needs to rethink its assumptions on South America
By SUSAN KAUFMAN PURCELL
Until recently, the Obama administration assumed that Brazil and the United States were natural allies who shared many foreign policy interests, particularly in Latin America. Brazil, after all, is a friendly democracy with a growing market economy and Western cultural values.
It will soon be the fifth largest economy in the world. It recently discovered billions of barrels of petroleum in the deep waters off its coast and is an agricultural powerhouse. It has also made significant progress in eradicating poverty. It therefore seemed only natural to expect that as Brazil became "more like us," it would seek to play a more active and constructive role in this hemisphere, and that U.S. and Brazilian political and security interests would largely coincide.
This now seems like wishful thinking. On a number of important political and security issues, Washington and Brasilia recently have not seen eye to eye. Nor has Brazil shown much leadership in tackling the important political and security challenges facing the region.
One example is Brazil's role in UNASUR (Union of South American Nations). At a September meeting in Quito focused on regional security issues, topics not discussed included the multibillion-dollar arms race in the region, the granting of sanctuary and other forms of aid by Venezuela to the Revolutionary Armed Forces of Colombia (FARC), a Colombian narco-guerrilla group, and the growing nuclear cooperation between Iran and Venezuela. Instead, Brazil joined UNASUR in criticizing Colombia for having agreed to allow the U.S. to use seven of its military bases for counterterrorist and counter narcotics activities inside Colombia.
The fact that Colombia has been under attack by an armed guerrilla group supported by some members of the Union was not considered relevant to the organization's decision to criticize Colombia for seeking help from Washington. Furthermore, none of the democratic countries in South America, including Brazil, has offered military or even rhetorical support to besieged Colombia.
Another example is Brazil's changing position concerning the importance of democratic governance. Both Brazil and the U.S. initially opposed the Honduran military's removal from office of the democratically elected president, Manuel Zelaya, despite the fact that Mr. Zelaya had violated Honduras's constitution.
Brazil's interest in democracy in Honduras does not, however, extend to Cuba. Only weeks earlier, Brazil voted in the Organization of American States to lift the membership ban on Cuba—a country that has not held a democratic election in 50 years. This decision contradicted the organization's democratic charter.
Brazil also has never tried to mobilize support against Venezuelan President Hugo Chávez's use of democratic institutions to systematically destroy that country's democracy. On the contrary, Brazil's President Lula da Silva is supporting Venezuela's efforts to join Mercosur (a South American customs union), despite rules that limit membership to democratic countries.
Finally, there is the issue of Brazil's apparent lack of concern regarding Iran's increasing penetration into Latin America through Venezuela. There are now weekly flights between Caracas and Tehran that bring passengers and cargo into Venezuela without any customs or immigration controls. Venezuela has also signed agreements with Iran for transferring nuclear technology, and there is speculation it is giving Iran access to Venezuelan uranium deposits.
Instead of expressing concern over Iran's activities in Latin America, Brazil is drawing closer to Tehran and hopes to expand its $2 billion bilateral trade to $10 billion in the near future. President Lula recently hosted President Mahmoud Ahmadinejad in Brazil. He reiterated his support for Iran's right to develop nuclear technology for peaceful uses, while insisting that there is no evidence that Iran is developing nuclear weapons.
Several conclusions can be drawn from Brazil's behavior. First, Brazil wants to prevent the U.S. from expanding its military involvement in South America, which Brazil regards as its sphere of influence. Second, Brazil much prefers working within multilateral institutions, rather than acting unilaterally.
Within these institutions, Brazil seeks to integrate all regional players, achieve consensus and avoid conflict and fragmentation—all worthy goals. But these are procedural, rather than substantive, goals.
Stated differently, Brazil's multilateral efforts in the region seem to value the appearance of leadership over finding real solutions to the growing political and security threats facing Latin America. These conclusions do not imply that the U.S. and Brazil have no overlapping interests, or that they cannot work together to solve particular regional or even global issues. They do mean Washington may need to rethink its assumptions regarding the extent to which Brazil can be relied on to deal with political and security problems in Latin America in ways that are also compatible with U.S. interests.
Ms. Purcell is the director of the Center for Hemispheric Policy at the University of Miami.
6a)Iran Expands Its Target List: I was the Marine commander in Beirut in 1983. I've seen these tactics before
By TIMOTHY J. GERAGHTY
The nagging question of the nuclear age has been what if a madman gets hold of an atomic bomb? That question is about to be answered as Iran's defiance puts it on a collision course with the West.
On Nov. 4, 2009, Israeli commandos intercepted an Antiguan-flagged ship 100 miles off the Israeli coast. It was carrying hundreds of tons of weapons from Iran and bound for Hezbollah in Lebanon. Since the 2006 Israeli-Hezbollah war, Iran has rearmed Hezbollah with 40,000 rockets and missiles that will likely rain on Israeli cities—and even European cities and U.S. military bases in the Middle East—if Iran is attacked. Our 200,000 troops in 33 bases are vulnerable. Shortly before this weapons seizure, Hamas test-fired a missile capable of striking Israel's largest city, Tel Aviv.
Iran is capable of disrupting Persian Gulf shipping lanes, which could cause the price of oil to surge above $300 a barrel. Iran could also create mayhem in oil markets by attacking Saudi oil refineries. Moreover, Iran possesses Soviet made SS-N-22 "Sunburn" supersonic antiship missiles that it could use to contest a naval blockade.
Iran could unleash suicide bombers in Iraq and Afghanistan or, more ominously, activate Hezbollah sleeper cells in the U.S. to carry out coordinated attacks nationwide. FBI, CIA and other U.S. officials have acknowledged in congressional testimony that Hezbollah has a working partnership with Mexican drug cartels and has been using cartel smuggling routes to get personnel and contraband into the U.S.
While Iranian centrifuges continue to produce low-enriched uranium, the mullahs and their henchmen have been carrying out a campaign of deception. In October 2009, Iran rejected a plan to ship its low-enriched uranium out of country, primarily to Russia and France, to be highly enriched and then sent back to Iran for "peaceful medical purposes."
On Nov. 28, 2009, reacting to increased pressure from the International Atomic Energy Agency, Iran warned it may pull out of the Nuclear Non-Proliferation Treaty. This would seriously undermine international attempts to stop Iran's nuclear weapons program. Two days later, Iran announced plans to build 10 new nuclear plants within six years.
In another sphere, Iranian President Mahmoud Ahmadinejad and Venezuelan President Hugo Chávez are openly cooperating to "oppose world hegemony," as Mr. Ahmadinejan has said, while weekly flights between Iran and Venezuela are not monitored for personnel and cargo. Meanwhile, Russia is building an arms plant in Venezuela to produce AK-103 automatic rifles and finalizing contracts to send 53 military helicopters to the country.
I have seen this play before. In 1983, I was the Marine commander of the U.S. Multinational Peacekeeping Force in Beirut, Lebanon. Iran's Islamic Revolutionary Guard Corps' (IRGC) Lebanon contingent trained and equipped Hezbollah to execute attacks that killed 241 of my men and 58 French Peacekeepers on Oct. 23, 1983.
Today, Hezbollah directly threatens Israel, destabilizes Lebanon, and undercuts the Israeli-Palestinian peace accords. Something similar is underway in Venezuela. Remember Hezbollah used the Beirut truck-bomb model for the attack on the Israeli Embassy in Buenos Aires on March 17, 1992 and the July 18, 1994 attack on the Argentine Israeli Mutual Association that killed 85 and wounded 200.
The man directly responsible for those bombings was the commander of the IRGC's Quds Force, Gen. Ahmad Vahidi. He is listed on Interpol's most wanted list and was a key operative in the 1983 attacks on peacekeepers in Lebanon. In August 2009, he was named Iran's minister of defense. He succeeded Gen. Mostafa Mohammad Najjar, who was the commander of the IRGC Lebanon contingent and the chief organizer of the 1983 Beirut bombings. Both have Beirut peacekeepers' blood on their hands and are the same key leaders who today are orchestrating Iranian deception and defiance as they march lock-step toward their ultimate goal—nuclear weapons.
Col. Geraghty, USMC (Ret.), is the author of "Peacekeepers at War; Beirut 1983—The Marine Commander Tells His Story" (Potomac Books, 2009).
7).Why the Health-Care Bills Are Unconstitutional: If the government can mandate the purchase of insurance, it can do anything
By ORRIN G. HATCH, J. KENNETH BLACKWELL AND KENNETH A. KLUKOWSKI
President Obama's health-care bill is now moving toward final passage. The policy issues may be coming to an end, but the legal issues are certain to continue because key provisions of this dangerous legislation are unconstitutional. Legally speaking, this legislation creates a target-rich environment. We will focus on three of its more glaring constitutional defects.
First, the Constitution does not give Congress the power to require that Americans purchase health insurance. Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate. Congress's powers to tax and spend do not apply because the mandate neither taxes nor spends. The only other option is Congress's power to regulate interstate commerce.
Congress has many times stretched this power to the breaking point, exceeding even the expanded version of the commerce power established by the Supreme Court since the Great Depression. It is one thing, however, for Congress to regulate economic activity in which individuals choose to engage; it is another to require that individuals engage in such activity. That is not a difference in degree, but instead a difference in kind. It is a line that Congress has never crossed and the courts have never sanctioned.
In fact, the Supreme Court in United States v. Lopez (1995) rejected a version of the commerce power so expansive that it would leave virtually no activities by individuals that Congress could not regulate. By requiring Americans to use their own money to purchase a particular good or service, Congress would be doing exactly what the court said it could not do.
Some have argued that Congress may pass any legislation that it believes will serve the "general welfare." Those words appear in Article I of the Constitution, but they do not create a free-floating power for Congress simply to go forth and legislate well. Rather, the general welfare clause identifies the purpose for which Congress may spend money. The individual mandate tells Americans how they must spend the money Congress has not taken from them and has nothing to do with congressional spending.
A second constitutional defect of the Reid bill passed in the Senate involves the deals he cut to secure the votes of individual senators. Some of those deals do involve spending programs because they waive certain states' obligation to contribute to the Medicaid program. This selective spending targeted at certain states runs afoul of the general welfare clause. The welfare it serves is instead very specific and has been dubbed "cash for cloture" because it secured the 60 votes the majority needed to end debate and pass this legislation.
A third constitutional defect in this ObamaCare legislation is its command that states establish such things as benefit exchanges, which will require state legislation and regulations. This is not a condition for receiving federal funds, which would still leave some kind of choice to the states. No, this legislation requires states to establish these exchanges or says that the Secretary of Health and Human Services will step in and do it for them. It renders states little more than subdivisions of the federal government.
This violates the letter, the spirit, and the interpretation of our federal-state form of government. Some may have come to consider federalism an archaic annoyance, perhaps an amusing topic for law-school seminars but certainly not a substantive rule for structuring government. But in New York v. United States (1992) and Printz v. United States (1997), the Supreme Court struck down two laws on the grounds that the Constitution forbids the federal government from commandeering any branch of state government to administer a federal program. That is, by drafting and by deliberate design, exactly what this legislation would do.
The federal government may exercise only the powers granted to it or denied to the states. The states may do everything else. This is why, for example, states may have authority to require individuals to purchase health insurance but the federal government does not. It is also the reason states may require that individuals purchase car insurance before choosing to drive a car, but the federal government may not require all individuals to purchase health insurance.
This hardly exhausts the list of constitutional problems with this legislation, which would take the federal government into uncharted political and legal territory. Analysts, scholars and litigators are just beginning to examine the issues we have raised and other issues that may well lead to future litigation.
America's founders intended the federal government to have limited powers and that the states have an independent sovereign place in our system of government. The Obama/Reid/Pelosi legislation to take control of the American health-care system is the most sweeping and intrusive federal program ever devised. If the federal government can do this, then it can do anything, and the limits on government power that our liberty requires will be more myth than reality.
Mr. Hatch, a Republican senator from Utah, is a former chairman of the Senate Judiciary Committee. Mr. Blackwell is a senior fellow with the Family Research Council and a professor at Liberty University School of Law. Mr. Klukowski is a fellow and senior legal analyst with the American Civil Rights Union.
8)Contemplating Korean Reunification: The North could collapse more quickly than we think.
By PETER M. BECK
North Korea's nuclear program has preoccupied foreign policy makers for years, but it's not the only problem on the Korean Peninsula. Kim Jong Il's regime looks increasingly unstable and could collapse. That could lead to North Korea's reunification with the South and could present foreign leaders with the expensive task of modernizing the North's economy.
There are three plausible scenarios for a Korean reunification. One would be sudden and bloodless like what Germany experienced. The worst would be a reunification marked by the kind of violence Vietnam suffered. The third is somewhere between the first two and akin to the chaotic post-Communist transitions of Romania and Albania.
Any one of these outcomes would be expensive. The North's economy is in shambles. It collapsed in the 1990s amid a famine that likely killed hundreds of thousands of people. Fixing the economy will require new infrastructure, starting with the power grid, railway lines and ports. This alone will cost tens of billions of dollars. Few of the North's factories meet modern standards and it will take years to rehabilitate agricultural lands. The biggest expense of all will be equalizing North Koreans' incomes with their richer cousins in the South, whether through aid transfers or investments in education and health care.
Even the best-case German model will cause South Koreans heartburn. Despite the $2 trillion West Germany has paid over two decades, Bonn had it relatively easy in the beginning. East Germany's population was only one-quarter of West Germany's, and in 1989 East German per capita income was one-third of the West's. The two Germanies also had extensive trade ties.
North Korea's per capita income is less than 5% of the South's. Each year the dollar value of South Korea's GDP expansion equals the entire North Korean economy. The North's population is half the South's and rising thanks to a high birth rate. North and South also barely trade with each other. To catch up to the South, North Korea will need more resources than East Germany required if living standards on both sides of the peninsula are to be close to each other.
More than a dozen reports by governments, academics and investment banks in recent years have attempted to estimate the cost of Korean unification. At the low end, the Rand Corporation estimates $50 billion. But that assumes only a doubling of Northern incomes from current levels, which would leave incomes in the North at less than 10% of the South.
At the high end, Credit Suisse estimated last year that unification would cost $1.5 trillion, but with North Korean incomes rising to only 60% of those in the South. I estimate that raising Northern incomes to 80% of Southern levels—which would likely be a political necessity—would cost anywhere from $2 trillion to $5 trillion, spread out over 30 years. That would work out to at least $40,000 per capita if distributed solely among South Koreans.
Who would foot such a bill? China is the greatest supporter of the current regime in Pyongyang, with trade, investment and economic assistance worth $3 billion a year. Even if that flow continues, it's only a fraction of the $67 billion a year needed to equal $2 trillion over 30 years. Japan is willing to pay $10 billion in reparations for having colonized the North in the 20th century, but that too would barely make a dent.
That leaves international institutions like the World Bank as well as South Korea and the United States. Building a modern economy in North Korea would be a wise investment in peace and prosperity in North Asia. Policy makers need to think about where that money will come from and how it should be spent to minimize the risk of wasting it in post-reunification confusion.
Mr. Beck is the Pantech Research Fellow at Stanford University and teaches at American University and Ewha Womans University.
