Why the WSJ is the world's best tool for getting smart on grand strategy

To me, grand strategy is seeing the big picture, not just pushing the security angle in some weird attemtpt to shape everything else like it's playdough or something. It's about contextualizing the use of military power, not rationalizing it.

And there is no single pub that provides you more material for that "everything else" perspective than the Wall Street Journal, which my wife, past editor of a major U of Wisconsin student newspaper (Badger Herald) and a journalism B.A., always describes as the best example of strongly structured newswriting in the business (that perfect upsidedown triangle of tight-wider-widest retelling of the story's main point from front to back in the article).

I was asked by the new boss of the Sylvan Learning Center where son attends what would be the three pubs I would take with me to the desert island (this guy did finance work abroad in Japan for years), and I said WSJ, Economist and Variety (damn, reminds me to renew). The Wall Street Journal and The Economist are simply neck and neck, in this regard, and I'd vote for Variety in third to break the tedium a bit (although the more I come to appreciate Esquire as I get older and more "male," the more I think it would eventually supplant it).

Here is just a great, simple article from the WSJ today that proves what I'm talking about. Seemingly esoteric subject (foreign direct investment), but so well delivered that if you read it through, you are really a whole lot smarter about the world, how it works, and where it's going.

ARTICLE: "China Drew Over $60 Billion In Foreign Investment in 2005," by Andrew Browne, Wall Street Journal, 14 January 2006, p. A2.

Key points and bits:

-->FDI in China in 05 was just a hair under what it was in 04, despite the small appreciation in the Chinese currency, the rising wages, power shortages and overcapacity in key industries like steel, aluminium, cement and autos.

-->This number doesn't include all the "billions of dollars pumped into Chinese banks, insurance companies and brokerages by overseas financial giants"

-->Hong Kong remains leading conduit. EU investments jumped over 20% higher from previous year, while U.S. investments dropped by same amount.

-->Strongest I in comms, electronics and transport, to deal with all the bottlenecking (China is connecting up its interior now more than its "exterior").

-->This FDI drives about 60% of China's trade with the world, meaning almost two-thirds of China's trade is due to foreign companies coming there and "exploiting" its cheap labor. What does that tell you about integration and shrinking the Gap? You need access to foreign capital to do it, and they will come if you give companies access to your cheaper labor. The result? Your economy grows and you create a stable urban middle class, which now counts at least 50m in China today, according to this article, whereas other estimates are more generous, suggesting a pool of 300 million middle-class purchasers in all, both urban and rural).

-->This FDI flow will slow in manufacturing, as China can only suck up so much manufacturing before wages rise, so it begins to outsource such stuff and turn more and more to services sector, where outside firms eager to tap that growing domestic market (and all those savings, which in turn will fuel even more aggressive emerging markets investments inside the Gap over time).

-->"As China becomes the world's biggest market for a growing number of products, many of the world's largest companies believe they have to invest in China or risk losing global leadership." This is why the long-term view of war with China gets awfully weak, as do the painfully simplistic comparisons to Kaiser Germany and still-feudal Japan at the beginning of the 20th century. We're just talking about an entirely different level and form of connectivity with the outside world.

-->One fly in ointment? China plans to soon make foreign companies pay same corporate tax rates as those paid by domestic companies (remember, the synching up of the domestic rule set with the global one), a practice of favoritisim to outsiders that dates back to 1978 and Deng's first moves to trigger foreign investment.

Simple article, well delivered. Read it through and you are so much smarter--but only if you connect it to the "everything else," including war and peace.