Legacies

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Asia, Bush Administration

Yesterday in the Washington Post, Bill Kristol expressed frustration that the U.S. didn’t do more to help Burma.

What about using our national power to help the Burmese people against their tyrannical rulers? Burma’s regime lost what little legitimacy it had with its bloody crackdown. Parts of the ruling elite must be nervous. Couldn’t we give at least some of Burma’s generals and soldiers reason to doubt the wisdom of slaughtering political opponents? Couldn’t we turn our intelligence-gathering capabilities on Burma to monitor, document and publicize what is happening? Couldn’t we tell the generals who are ordering and the soldiers who are carrying out this crackdown that they are being watched, that their names are being recorded — and that the day will come when there will be plenty of evidence to hold them personally accountable for their deeds?

I believe that day comes for us all, Bill, but let me address your questions anyway.

As I explained last week, a critical fact about Burma is that it shares a 2,000 kilometer border with China. Burma also supplies natural gas and other vital resources to China. Therefore, any messing around with Burma by a western power is likely to be of keen interest to China.

And there are two key facts to keep in mind about China:

1. China has the largest standing army in the world.

2. China is holding a big honking chunk of U.S. debt.

Niall Ferguson, of all people, has noticed this second fact, and it bothers him. He writes in today’s Los Angeles Times:

France, Britain, America: They each have had their era of hegemony. Now, however, they all belong to the club of developed debtors, with combined current account deficits of $970 billion last year. Other members of this club are Australia, Greece, Iceland, Ireland, Italy, New Zealand, Portugal and Spain. Apart from Iceland, it reads like a list of ex-empires, with the former members of the British Empire (energy-rich Canada excepted) in the lead.

Collectively, the developed debtors had to borrow about $1.3 trillion last year. On the other side of this great global equation is the club of emerging exporters. According to the International Monetary Fund, more than 40% of the developed debtors’ funding requirement last year was met by China, Russia and the Middle East.

The problem for the deficit countries is essentially that their people think the world owes them a living. Their politicians pander to this assumption by making a series of more or less incompatible promises: that expenditure on healthcare and education will always go up; that direct taxation will never go up; and that the assets against which voters borrow will never go down. The only way to fulfill these promises is to pump out ever more printed paper: bank notes, bills, bonds, stocks and the rest. The emerging exporters buy these. The net result must be a creeping transfer of financial ownership from West to East.

This process is about to enter a new phase as China establishes its own sovereign wealth fund to join those operated by the likes of Kuwait, Abu Dhabi and Singapore. According to Morgan Stanley, these funds manage about $2.6 trillion. In 15 years, their assets could reach $27 trillion, giving them control of nearly 10% of total global financial assets.

Bottom line, the more in debt we become to China, Russia, and the Middle East, the less power we have to influence anything they do. Ferguson thinks this is bad. Frankly, so do I. So let’s talk about why this is happening.

Furguson writes, The problem for the deficit countries is essentially that their people think the world owes them a living. Their politicians pander to this assumption by making a series of more or less incompatible promises: that expenditure on healthcare and education will always go up; that direct taxation will never go up; and that the assets against which voters borrow will never go down. Oh, those greedy people who want education and health care!

Ferguson didn’t mention the tab we’re running on the war in Iraq, currently estimated at $600 billion and climbing. The Congressional Budget Office says Bush’s long-term plans in Iraq will cost trillions. Even better, appropriations for the war in Iraq are supplemental rather than regular, which means that our military costs in Iraq are off-budget. That makes it easier for the Bush Administration to lie to the American people about the effect of the war on our national debt.

And for the most part it’s not American citizens who dissolve into twitches of apoplexy at the mention of raising taxes. It’s the Bush Administration. And why is that, you ask? Paul Krugman dropped a hint in his column today:

Here’s how Irving Kristol, then the editor of The Public Interest, explained his embrace of supply-side economics in the 1970s: He had a “rather cavalier attitude toward the budget deficit and other monetary or fiscal problems” because “the task, as I saw it, was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority — so political effectiveness was the priority, not the accounting deficiencies of government.”

So Bill Kristol’s daddy, Irving, helped to sell voodoo economics to a gullible public in order to buy power — a conservative majority; a Republican majority. And now after 30 years of right-wing propaganda it has become political suicide — conventional wisdom says — for any politician to even think about raising taxes. So, we raise debt. Meanwhile, our military and intelligence resources are being depleted in Iraq, so that we are hurting to cover our real national security needs, never mind mess around with Burma.

And now Bill Kristol — a major supporter of the Iraq War, as is Niall Ferguson — wonders why the Bush Administration has no way to apply pressure to help Burma. Maybe he should ask his daddy.

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26 Comments

24 Comments

  1. Sammy  •  Oct 8, 2007 @1:19 pm

    Brilliant. Thanks for this post!

  2. Ian  •  Oct 8, 2007 @1:48 pm

    Supply-siders have always puzzled me … central to their theory is the concept of the Laffer Curve, which of course says there is a tax rate between 0% and 100% that maximizes government revenue, and if your current tax rate is greater than that maximum, lowering taxes will actually raise revenue.

    So far so good, I suppose, but why is it that every supply-sider ever born takes that to mean we should immediately lower taxes? Why do they all, each and every one, assume that the current tax rate IS on the right side of the curve? Why isn’t there a single supply-sider out there that believes our current tax rate is on the LEFT side of the curve, and therefore taxes should be RAISED immediately?

    It’s almost as if they’ve embraced this economic theory not as the thing itself, but rather merely as an excuse to cut taxes on themselves … almost…

    -me

  3. c u n d gulag  •  Oct 8, 2007 @2:35 pm

    I hate to ask this, but has any Kristol ever been right?
    About ANYthing?
    ANY ONE thing…
    EVER???

    STF up!!!
    If I want to listen to someone wrong all of the itme, I would
    listen to myself…

    It’s Kristol clear -
    You have been Kristatlly Clearly wrong all along…

    Wrong…
    Wrong”
    WRONG!!!

  4. Swami  •  Oct 8, 2007 @2:45 pm

    Why doesn’t the 101st Fighting Keyboarders throw a couple of Cyber divisions into the fight for Burma? Maybe Jonah Goldberg can earn a field commission as a Ubercyber Truppenführer.

  5. moonbat  •  Oct 8, 2007 @4:21 pm

    I’ve often heard from wingnuts how the left creates social programs to “buy votes” (one of them even characterized the New Deal in this way), and so this clearly lays out the right’s version of the same thing. At least the left’s programs actually delivered and made the country a better place.

    I would add that Bush’s refusal to consider a draft and his willingness to pay exhorbitant rates to mercenaries is part of the same phenomenon. Anything to keep the true cost of their activities from the public. Plus, they get a private army, loyal to their paymasters alone.

    The problem is that putting all this stuff on the national charge card works to their advantage when the bills finally come due and the government has to cut back. Bankrupting the USA works to their advantage when the starving citizens must turn to the rich for work or a handout, because the government is too crippled to function.

    I fear that no politician will have the courage to explain this to the citizenry, that the game will then go on for so long until it is too late. Bill Clinton had to deal with a mini-version of this in ’92, and his secretary of the treasury Robert Rubin managed to pull the country out of the red and even create a bloom of prosperity in the 90s. I don’t think the next president is going to be so lucky.

  6. Pat  •  Oct 8, 2007 @4:48 pm

    The Bush administration can’t build or nutrure anything. They can only wreck and dismantle, leaving nothing better in its place. They do this under the guise of the thing that they are destroying being bad (in axis of evil, fedderalized healthcare, income re-distribution). That’s just the excuse, the real reason is that they cannot govern.

    So Burma is a place where they are unable to apply their skill-sets as has been done in the middle east. Funny how they simply stop talking about it, isn’t it? You’d think it worthy of some resolute diplomacy since their hands are tied, but nothing.

    They will invent reasons to hide their inadequacies rather than leveling to the American people when cornered on the question about civil rights in Burma. Where did their ideals disappear to?

    I think the Bush administration is weak and disgusting. They never miss an opportunity to remond me of this.

  7. breakspear  •  Oct 8, 2007 @5:15 pm

    How ironic, conservatives/Republicans/whatever sometimes point fingers to try an cover up their own mistakes and say it’s ‘Clinton’s fault’. Well, even with Hillary potentially succeeding W as Prez almost any sort of problems that she’ll face, large or small, can probably be correctly stated as ‘Bush’s fault’. Iraq is his fault, and we can guess how much more there will be that is too. Bush is that much of a failure. Bush’s fault, has a correct ring to it. What a shame for all of us.

  8. 99  •  Oct 8, 2007 @5:21 pm

    Nope. I can’t hang with this because it assumes America even WANTS to help Burma. Maybe the people do, but that hasn’t counted for anything in a long time. Chevron’s and Halliburton’s interests are at stake, and that means the United States supports the junta.

  9. Brady Bonk  •  Oct 8, 2007 @5:24 pm

    Very nice. I wrote to the Post Sunday morning asking them why the hell they give that guy any column inches anymore. How long before they all see that this particular emporer is wearing a big red rubber nose and big floppity shoes?

  10. Mpc  •  Oct 8, 2007 @5:27 pm

    What? Is the man utterly mad? (well, I guess we know the answer to that one). Why WOULD Mr. Kristol’s Administration do anything about Burma when they know that the chinese government has been doing exactly the same thing as the Burmese government since China invaded Tibet in 1959! Monks and nuns are still being shot, tortured, held in prison and maltreated in Tibet as they are in Burma. Could it all be about the oil and noone pays any attention to human rights and the dignity of holy people?

  11. theExile  •  Oct 8, 2007 @5:30 pm

    I think another reason the Bu$h Crime Family isn’t likely to interfere with the generals is named CHEVRON!

  12. War4Sale  •  Oct 8, 2007 @5:37 pm

    Great article, but I’d like to make a couple of additional points. In addition to being our largest creditor, China is also our largest trading partner. A huge reason for this is because U.S. corporations decimated our domestic manufacturing sector by offshoring everything they possibly could to China to cut their costs and maximize profits. The result, China has become an export juggernaut. Look at the shelves of your local shops and you will find little today that was not manufactured in China.

    Also, let’s not forget Poppy Bush’s reaction when Beijing crushed the pro-democracy movement in Tiananmen Square! Remember that, H.W. reacted by doing what? ZIP. ZERO. NOTHING. Why? Because he knew that U.S. corporations wanted access to China’s labor and consumer markets. So Kristol can thank conservatives and corporate America for putting America and the rest of the world at the mercy of a brutal totalitarian regime.

  13. Lisa in Chicago  •  Oct 8, 2007 @6:56 pm

    The problem for the deficit countries is essentially that their people think the world owes them a living

    No, the problem is that the deficit countries have leaders who think that the world owes them an empire. The fact that we are being propagandized not to understand this is literally killing us.

  14. erinyes  •  Oct 8, 2007 @7:14 pm

    O.K. everyone, repeat after me “Gung Hai Fat Choi”
    Happy stinkin’ new year!
    If you think the righties are rabid over the hispanito immagrunts, just wait ’till the Chinese buy Pebble Beach, Trump Tower, Candlestick Park, and we’re all driving funny little cars called “the wonton”.
    Look out Linda Blair!

  15. libarbarian  •  Oct 8, 2007 @8:19 pm

    1. China has the largest standing army in the world.

    Maha,
    Actually, by itself that is largely irrelevant. Chinas army is incredibly constrained by logistics and can’ fight much beyond Chinas borders …. which brings me to:

    1a. They actually ARE logistically capable of fighting in Burma.

    1b.Burma happens to be largely covered in the kind of super-rough terrain that limits our advantage in high tech and maximizes the relative advantage of having large numbers of infantry.

    Like this country is going to get involved in another war in southeast asia….

    Kristol is either just blowing hot air or he is losing his grip on reality.

  16. maha  •  Oct 8, 2007 @8:28 pm

    1a. They actually ARE logistically capable of fighting in Burma.

    Which makes the size of China’s army relevant if we’re talking about Burma, n’est-ce pas?

  17. Ahrahbeeh  •  Oct 8, 2007 @9:40 pm

    I don’t think that the Ferguson man was being deliberately dishonest. The current politician’s belief that we can increase gov’t spending on health care and education and decrease taxes without creating any new sources of revenue doesn’t make any sense. The only way it could possibly work is if we decreased spending elsewhere (maybe we could stop getting into endless wars with 3rd world countries — I know we had to do that to prove to the Soviets that our genitals were larger than theirs but now that the Cold War is over the invasion of Iraq is somewhat redundant.) Just a thought.

  18. maha  •  Oct 8, 2007 @9:50 pm

    I don’t think that the Ferguson man was being deliberately dishonest.

    Oh, they rarely are. Ferguson is too oblivious to be deliberately dishonest. He is un-self-consciously dishonest.

  19. David Chadick  •  Oct 9, 2007 @1:55 am

    Excellent. Featured your comments with Krystal’s article today on my Zen website, cuke.com, as part of an ongoing following of the Burma situation.
    Thanks. – DC

  20. altara  •  Oct 9, 2007 @8:35 am

    How long would this Iraq war have lasted if we, instead of our grandchildren, were paying for it? A $1 per gallon on gasoline plus a progressive 5-15% surtax on incomes over $50,000. could have made a huge difference. At least many of us would have done some sacrificing instead of just the troops and their families.

    homer http://www.altara.blogspot.com

  21. Gus  •  Oct 9, 2007 @12:10 pm

    I’ll give Kristol this: at least he’s consistent.

  22. LD83  •  Oct 9, 2007 @12:22 pm

    “There’s been a certain amount of pop sociology in America … that the Shia can’t get along with the Sunni and the Shia in Iraq just want to establish some kind of Islamic fundamentalist regime. There’s almost no evidence of that at all. Iraq’s always been very secular.”

    -Bill Kristol

  23. LD83  •  Oct 9, 2007 @12:23 pm

    “There’s been a certain amount of pop sociology in America … that the Shia can’t get along with the Sunni and the Shia in Iraq just want to establish some kind of Islamic fundamentalist regime. There’s almost no evidence of that at all. Iraq’s always been very secular.”

    -Bill Kristol

  24. GRomansky  •  Oct 9, 2007 @5:01 pm

    moonbat wrote: “Bill Clinton had to deal with a mini-version of this in ‘92, and his secretary of the treasury Robert Rubin managed to pull the country out of the red and even create a bloom of prosperity in the 90s.”

    Would that be another reason to vote for Hillary? Maybe she can get Rubin back and break this stupid cycle of financial/political impotence.

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