No rest for the weary, no relief for the hungry

ARTICLE: "Where's the Breadbasket Bailout? As international markets reel in the credit crunch, the food crisis worsens," by Ariana Eunjung Cha and Stephanie McCrummen, Washington Post National Weekly Edition, 3-9 November 2008.

Vast majority of new hunger found in Asia and Africa--as in, virtually all of it. The percentage increase in the cost of imported food from 06 to 07 was 29% worldwide, with Core countries experiencing 33% rises to the Gap's 23%, but since food costs can be 80% of household spending inside Gap and only 1/5th in Core, there's simply no comparison.

So yeah, oil prices drop, but not food prices.

That's why I argue in Great Powers that, in the 21st century, the global food nets eclipse the global energy nets as the most important flow. Think also bio terror and climate change.

In short, we go from a world in which energy is harvested in one place and consumed in another to one in which it's food that experiences such great movement--a reversal of roles. In this century, energy will increasingly be harvested and consumed locally, while it's food that's harvested in one place and moved great distances to consumers.

Lawyers: First outsourced, now imported by the body

SUNDAY BUSINESS: "Lawyers Wanted: Abroad, That Is," by John Bringardner, New York Times, 23 November 2008.

I know this Western (Brit) lawyer who moved to Baghdad after the invasion and set up a solitary shop, figuring a market would eventually emerge for his services. He's still there and thriving--real frontier economy lawyering. Stunningly cool story. Would make a great TV show, frankly.

Used to be that London was always the big choice for any time abroad by American lawyers looking to strike out on a foreign career, but now "lawyers and analysts say that the most promising places for legal careers are such far-flung locales as Dubai, Abu Dhabi and Hong Kong."

Other big growth spots shown on the jump-page map:

Warsaw

Moscow

Istanbul

Cairo

Riyadh

Almaty

Beijing

Tokyo

Shanghai

Taipei

Bangkok

Singapore

Jakarta

No clearer sign of our frontier-integrating age. A clear case of insourcing counterparty capacity to facilitate growing economic connectivity--both inward from advance countries and outward toward targets of future integration.

What the world needs now is trade--lots more trade

THE ELECTION: "Trade: Renew The Drive To Open Markets," by Pete Engardio and Steve LeVine, BusinessWeek, 17 November 2008.

What does business want from Obama?

Business would like to see trade restored to the top of the U.S. agenda--whether the aim is to gain better access to foreign markets or to ensure that existing rules are enforced.

Simple logic from Boeing's CEO: "The vast majority of the world's consumers live outside the U.S." Thus, "It is essential to our future growth and prosperity that we stay engaged globally."

So no, Mr. Know-Nothing, there will be no retrenchment from the world in order to get our house in order.

That argument died a logical death several decades ago.

The East-East gets big-big

ARTICLE: "The New Silk Road: Historic bonds between the Middle East and Asia are being revitalized in a torrent of trade and investment in energy, infrastructure, and manufacturing," by Stanley Reed, BusinessWeek, 17 November 2008.

You're tempted to say, "So much for the clash of civilizations," but Huntington always allowed himself this out, describing an Arab-Sinic bond over energy.

But even that bit of ass-covering, substantial a hedge as it was, underestimates the bond-building going on here.

Frankly, the East-East link-up here simply reflects the natural expansion of globalization: Europe does to North America what the latter thereupon does to Asia, which now is the natural integrator of the Gap, meaning the Islamic and African chunks, and--to a lesser extent--the Latin chunk in the Western hemisphere.

Trade expands at a 30% clip in recent years. The ambition of network builders is just beginning to come into view. So far, the article says, investment hasn't kept up with trade, but that's clearly changing, as the Middle East's investment flows get progressively redirected from the west to the east. Then there's the natural push--just like American states have in the past pushed Japanese corps--of Middle East economies to force their Asian partners to build factories and create jobs locally, like Egypt now pushes China.

[Ed's note: Steve wrote about this same story: The New Silk Road]

Another glorious example of stupidity in our drug war

NATION: "N.D. farmers appeal to grow hemp: Legal in Canada, plant can be used in manufacturing," by Donna Leinwand, USA Today, 7 November 2008.

North Dakota farmers want to grow hemp with THC levels so low you'd have to toke an entire acre to get a buzz, but the DEA says no way in a truly imbecilic decision that reflects the slippery slope thinking we've become attached to in this lengthy and rather useless drug war.

Gotta love America, where a drop of blood makes you a black man and a fraction of THC makes you an illegal crop. This is a nation of mutts, as Obama describes himself. We should get over such nonsense.

Climate change in the news

ASIA: "Kashmir's environment: How green was my valley? Climate change will only intensify problems in Kashmir," The Economist, 25 October 2008.

ASIA: "Water in Australia: The dry last ditch; A controversial plan to save Australia's largest river system," The Economist, 25 October 2008.

There is a big glacier whose melting defines Kashmir's greenery, a prime reason why India and Pakistan have long fought over the place.

But so long as both sides prefer to fight over the land versus deal with this emerging reality, the place is somewhat doomed.

Speaking of another apparently doomed place, Queensland in SE Australia continues to suffer its mega-drought, leading the gov there to buy up water entitlement rights from local farmers and ranchers--in effect, de-agriculturizing the river basin.

Yet another reason why Russia matters to our collective global future.

A new take on the coastal megacities

ARTICLE: "The 2008 Global Cities Index," by Foreign Policy, A.T. Kearney and The Chicago Council on Global Affairs, Foreign Policy, December 2008.

Of the 60 great cities in the world, the vast majority are coastal or big ports thanks to river connections.

The shift to coastal city dominance is especially true among the New Core and emerging Gap economies. Once you get east of Berlin, there's only Moscow in the interior until you hit New Dehli/Bangalore and Chongqing. Everybody else is coastal.

International cooperation among coastal cities is a big deal in this century. Get it down right in terms of resiliency and you're talking upwards of half the world's population.

The latest on Tom's gig in Mankato

Minnesota State University - Mankato campus auditorium will have an event sponsored by the local farming community on 1/16/09 at 4pm. For more details please contact:

Adam Knewtson
President,
Advantage Seed Inc
adv@myclearwave.net

UAW prez today on CNN

Says automakers in America are suffering "a race to the bottom" globally.

Partially true.

But larger reality is that it's a race to the bottom of the pyramid market in terms of an emerging global middle--big theme of economic realignment in Great Powers.

Saying Detroit understands only half of the problem is the core of its problem.

Don't hate Mumbai because it's beautiful

OP-ED: "What They Hate About Mumbai," by Suketu Mehta, New York Times, 29 November 2008.

Good piece.

Just as cinema is a mass dream of the audience, Mumbai is a mass dream of the peoples of South Asia. Bollywood movies are the most popular form of entertainment across the subcontinent. Through them, every Pakistani and Bangladeshi is familiar with the wedding-cake architecture of the Taj and the arc of the Gateway of India.

Besides staying at the Taj in 2001, when I was there for the International Fleet Review, I attended a concert at the Gateway (military bands).

The truer gist:

Why do they go after Mumbai? There's something about this island-state that appalls religious extremists, Hindus and Muslims alike. Perhaps because Mumbai stands for lucre, profane dreams and an indiscriminate openness.

We think of globalization = Westernization = Americanizaton, but in South Asia, it equals Mumbaization.

Same essential difference. The decadent city is hated opposite of the pristine, romanticized past dream of the countryside. This is where Occidentalism originates, oddly enough, in the West: when the cities take off thanks to industrialization.

Does the Iraq timetable start the clock on Afghanistan?

ARTICLE: "Iraq Approves Deal Charting End of U.S. Role: Lawmakers Cast Vote; Despite Fierce Disputes, Wide Majority Backs Security Accord," by Alissa J. Rubin and Campbell Robertson, New York Times, 28 November 2008.

ARTICLE: "Afghan Leader, Showing Impatience With War, Demands Timetable From NATO," by Kirk Semple, New York Times, 27 November 2008.

ARTICLE: "Vote on U.S. Troop Departure Bares Ethnic Tensions in Iraq," by Gina Chon, Wall Street Journal, 26 November 2008.

So the reality ends up being predictable enough: we leave--quote unquote--Iraq on Iraq's timetable, not ours. In the end, the local politicians decide, not our generals.

Yes, that's a fluid dialogue, but we're no longer in control of it. But "victory" was always going to feel like this: getting the boot. Failure will be the inverse: the begging to stay that can still emerge if ethnic tensions internally get out of control.

Not surprisingly, Afghan's Karzai takes some cues from this dynamic, for now imitating his Baghdad counterparts in starting the dialogue on a timetable for withdraw. It may strike us as fantastic, but there is a logic to the request: now that his country is the "central front" by most definitions, he's looking for Petraeus to "tell me how this ends," to borrow the general's famous question going into Iraq years ago. Plus, the guy's trying to bolster his internal standing in anticipation of a re-election campaign next year, when the violence is likely to be worse than it is today and already he's taking a ton of flack over civilian casualties from airstrikes that strike locals as too indiscriminate.

Karzai admits his powerlessness here, but doesn't conceal his populist anger: "I wish I could intercept the planes that are going to bomb Afghan villages, but that's not in my hands."

Hmmm, the local small-state leader begging the intervening great powers to stop bombing his villages. Where else have I heard that in the last several months? But here's where the NATO cover counts: the UN won't criticize--much.

Of course, we have our fears about what happens to Afghanistan if our troops no longer buffer the weak central government from the Taliban, but "in" for that penny increasingly puts us "in" for the far larger pound that is Pakistan. So no, for all of you who never wanted to shift the fight to Iraq, we begin to see how much harder it may become to make our serious stance here.

In some ways, we can thank our lucky stars that we burned off the unilateralist impulses of the Bush-Cheney team in Iraq, leaving us much more sensibly configured--both politically and strategy-wise--for the inevitable redirect back here. It's scary to think what a full-bore unilateralist push on Afghani-Pakistan by that crew would have looked like, because here the nukes are real.

Still, as the drawdown in Iraq unfolds, we will begin to see whether or not the surge really ended the internal violence or just delayed it inevitable final spasms. There is no regional agreement, much less forum for any such agreement to be pursued, regarding Iraq's future. So little's been decided even as much has effectively been postponed.

In short, the question of Iraq coming apart still remains, with me still thinking the soft partition (already here on the Kurds) is inevitable, the only question being the nature of the weak federalism. The Sunnis may have given up the dream of a unitary Iraq, but I'm not sure the Shia have--much less Iran.

So yeah, Iran still wields the most important veto, and Iraq still presents the region with the opportunity for serious proxy conflict.

And history says that's not a great combination.

Japan is changing, bit by bit

ARTICLE: "Enclave of Brazilians Tests Insular Japan: Nation Tiptoes Into a Multiethnic Era," by Norimitsu Onishi, New York Times, 2 November 2008.

Cool story about Brazilian-born Japanese lured back to the island for demographic reasons and to-this-day still remaining oddly enclaved.

One big neighborhood where such an enclave exists elicits this weirdly revealing comment from an aged (69) community leader:

To be honest, I never imagined in my wildest dreams that this would ever become a multi-ethnic neighborhood.

Doesn't that line just kill in irony? I mean, the butter-side-up crowd confronted by the alien nature of the butter-side-down bunch!

Oh, to have a star upon thars!

But yeah, demographic realities do that to you.

The Hong Kong-after-next

TRADE: "Taiwan and China Dance Ever Closer: To further economic integration, Beijing and Taipei may table the issue of the island's sovereignty," by Patrick Smith, BusinessWeek, 10 November 2008.

WORLD NEWS: "Taiwan's Ex-President Is Imprisoned," by Ting-I Tsai, Wall Street Journal, 12 November 2008.

The basic gist in first article: "Taiwan's Ma seeks a deal with China similar to Hong Kong's":

The Nationalists [actually the Kuomintang, as the labels are mismatched here, much like with our spendthrift Republicans and budget-balancing Dems of recent decades] want a 30- to 50-year agreement that says simply: Taiwan's political sovereignty is off the docket for now. Let's do business and revisit that question at an agreed-on moment later."

So very Chinese.

As for Beijing, Chen's visit signals that the mainland wants at least 20 years to focus on its economy without worrying about Taiwan.

Bad news for the big-war crowd here.

More bad news: Taiwan's cumulative $100B of FDI in the mainland is estimated to be 2X higher than it was just five years ago.

G.D. Kuomintang are gonna ruin our military!

Bill Emmott slumming in the Post, talking about a not-so-post-American world

ARTICLE: "Hold Onto Your Hat: Power's shifting, but not in the way you might expect," by Bill Emmott, Washington Post National Weekly Edition, 27 October-2 November 2008.

Emmott starts with four potential myths:

1) shift away from markets

2) US leadership role thus suffers

3) Shift to Asian global leadership accelerated

4) Authoritarian capitalism is the new model.

And then he dismantles all.

Cool factoid: cost to USG to bail out banks is about %5 GDP (so far), whereas Japan's cost across 1990s was more like 25%.

Yes, Old Core govs now taking on more private-sector responsibilities through such bailouts, but will that signal a desire to own more or create the subsequent desire of these govs to get out as quickly as possible?

Yes, more regulation coming, but "that is quite a technical matter of capital-adequacy rules and the treatment of derivative securities, not the stuff of new eras and paradigm shifts."

Thank you, Mr. Emmott (oops, shouldn't have added that period after Mr if I am to bow in the stylistic direction of the Economist).

As for post-American?

The dollar's role in global forex reserves today is about 63%, compared to 50% when we ruled the world in 1990, so even a big decline would just take us back to that time period--not exactly a post-American world.

As for alternatives? None yet really in Asia, and the Euro zone went into a recession even faster than we did. Guess which is more likely to pull out faster?

Hmm. Probably accounts for the dollar's recent rise.

China could surprise us by making the yuan suddenly convertible, but I'm not holding my breath on that one, not with 750m rural poor hanging in the balance.

Could we go protectionist and reduce the brand that way? Sure, and that's my main target in Great Powers, but membership in the WTO, Emmott argues, makes that a lot harder.

Meanwhile, China's domestic demand remains about the size of Germany's, or nowhere near the U.S.'s (about $3T compared to $14T), so our demand profile will keep this a most American world, reducing our influence only to the extent that China and India replicate our standards of living and consumption, with obvious tension in that evolution.

Emmott is right: "China needs to move upmarket, clean itself up, deal with declining industries and try to keep creating enough jobs to prevent social unrest."

Hmm, sounds familiar to readers of this blog over the years.

So, says Emmott, go slow on expecting Chinese global leadership until the 20s and 30s.

Hmmm, also familiar argument.

As for authoritarian capitalism ruling the roost?

China's government is cause of change through the extensive stuff but the obstacle to change once the intensive growth needs to kick in--as in, right about now.

Hmm, I feel a kindred soul here.

As for the axis of diesel types, what the market giveth it also taketh away.

Upshot?

American leadership ain't going anywhere--THE theme of Great Powers.

This remains a world of our creation.

Oh, how far the mighty ANC have fallen!

ARTICLE: "Looking Beyond the ANC: Some in South Africa are disillusioned with the ruling party," by Karin Bruilliard, Washington Post National Weekly Edition, 27 October-2 November 2008.

The ANC was, as I like to remind people, a "bad actor" in my PhD dissertation, meaning one of the NLMs (national liberation movements) that the Soviet bloc supported vis-à-vis the West. Basically, we pushed Nelson and Co. into the arms of the Sovs just like we did Ho Chi Minh ("Sorry bud, we're sticking with our white Euro friends on this one.").

Of course, once apartheid falls, Mandela and the ANC are recast in our official history as good guys (indeed, they were always such good guys in the public's imagination, because the Soviet-bloc support was kept out of their view)--even saints in the case of the great man himself.

Not surprisingly, this revolutionary party has maintained a monopolistic grip on power since its ascendancy, with only top party officials allowed to rule (no Andrew Jacksons in sight). Also not surprisingly, the ANC has grown corrupt and inefficient and visionless in its time in power.

And so now, at the generational mark of two decades past the revolution, popular dissatisfaction grows. Often, the ruling leftist party will attempt to revive the revolutionary spirit at this point, with Mao's cultural revolution being the most obvious example. You've just got to re-indoctrinate the--in this instance called the--born-free generation about why your party's rule should remained unchallenged. The ones who give you trouble are inevitably the educated, urban ones (that's why it's always good to kill anyone wearing glasses, as Pol Pot once argued), and your base inevitably remains the rural poor. Call it engine-versus-caboose, workers-versus-exploiters or red state-versus-blue--whatever.

The better way out is to allow the natural move toward a splinter party, but few countries can manage that as quickly as Zuma's opponents seek to today. They are naturally derided as a "Mickey Mouse" organization; the Globetrotters like their Washington Generals persistently and pervasively inept.

Don't expect this to get any better. Most likely route is further decay leading to explosion.

Only hope would be Mandela coming out against his own party, but that's unlikely, since he remains a good soldier.

AMEMB to PRC: the crucial diplomatic link

WORLD VIEW: "A Path Out of the Woods," by Fareed Zakaria, Newsweek, 1 December 2008.

Saying that China is America's "banker" is a bit misleading, but the logic of this piece is solid.

The key point here is that, not only must China help us out by stimulating its own economy, it needs to continue buying a certain amount of U.S. bonds so that our stimulus can unfold: "In effect, we're asking China to finance simultaneously the two largest fiscal expansions in human history--theirs and ours."

Fareed then quotes Stiglitz as saying China has two routes out of the current crisis: stimulate their own economy and help the West stimulate itself, stating those are "options," whereas we don't have an option.

Then Ferguson is channeled with his "Chimerica" argument that says, China can chose to save itself only or try to save that symbiotic relationship too, warning darkly that if China takes the former path, then it's "say goodbye to globalization."

I would also add, say goodbye to China's stability, because I know America has the social stability to survive globalization's demise, while China does not.

But again, no matter how you couch it, the larger logic is undeniable: China and the U.S. either sink or swim together. China simply cannot survive on a mini-me globalization of its own making. If it could, then we wouldn't be in the current crisis, because we'd have a second powerful pole of consumer consumption in the global economy to balance our own, and China is simply nowhere close enough to that evolutionary point. My God, it's currency isn't even truly convertible yet!

Zakaria's end point is also right on: Obama's most important choice is probably U.S. ambassador to China. If he signals any give in the direction of populist protectionism, China may feel the need to make the unpalatable call to try and save itself alone, which, given any such signal, would make the most sense in the short term.

And then the comparisons to the Great Depression get a lot more real.

But that requires some intense strategic stupidity on Obama's part, and I just don't see that happening with Summers at his side.

This is why I voted for Obama--in a scary nutshell. I wanted the guy smart enough to realize how not to f--k up globalization at this crucial junction point.

Brooks starting to get it

OP-ED: Continuity We Can Believe In, By DAVID BROOKS, New York Times, December 1, 2008

Ah yes, the tide really turned with Condi's 2006 speech that indicated she finally got a clue on development vice democracy . . .

My favorite straw-man line:

Grand strategists may imagine a new global architecture built at high-level summits, but the real global architecture of the future will emerge organically from these day-to-day nation-building operations.

Bravo!

Just be aware that some of us grand strategists have been arguing for a "real global architecture" being "organically" built from the ground-up through nation-building for quite some time. The first time I offered such a vision was with Hank Gaffney in 1992. We called that force/function, "The Transitioneers" and cited places like the Balkans, Somalia and the Caucasus as examples. Now I call it the System Administrators, the Department of Everything Else, and Shrink the Gap.

And while I welcome the high-level speeches, I've moved on to proving things on the ground through Steve DeAngelis' and Enterra's precedent-setting work in northern Iraq.

But we welcome Mr. Brooks to the club of believers.

(Thanks: Jeff Hasselberger)

I like Richardson at Commerce

I know it's not what he wanted, but having someone so big in that role is really welcome right now. Somebody with his ambition could truly make it a big post at this point in history.

Defense News interview

With Wendell Minnick, Asia Bureau Chief.

Based in Taipei, he's home for holidays and meets for 90 mins at local coffee shop near my home.

Good practice.

Will probably do special op-ed timed for release of Great Powers.

Obama on India

'India has the right to go after terrorists'By Aziz Haniffa, RediffDecember 02, 2008

Prefectly fine response by Obama. You can't defuse-by-deny.

(Thanks: Ram Narayanan)