China’s Rise and the Challenges it Poses to the World.

TOPIC: The explosion of export production in China has defined that country's rapid economic growth. It has also led to some serious side-effects, such as intense environmental degradation, dramatically increasing pressure on the world's supply of fossil fuels, enormous trade imbalances with the West, etc. What do you consider to be the most pressing global challenge posed by China's rapid rise, and what leverage do you feel other nations of the world could/should exercise (or not) to reduce the impact of this particular challenge?

 

Being of Chinese descent has never been such a big deal as is the case in the 21^st century. The economy of China was booming at double digit growth rates and constantly running budget surpluses of billions of dollars. "Europe, that speck on the horizon, is (being) ignored: an EU summit was cancelled and France is still blacklisted because Nicolas Sarkozy dared to meet the Dalai Lama. (Economist How)" In fact, anti-Chinese sentiments were never as strong as in February 2009 when the Chinese Premier, Wen Jiabao had a shoe thrown at him in Cambridge University, always an indicator that the "recipient" is the representative of a formidable and threatening force. In all sense, the millions of Chinese living outside China, significant in their numbers as shown by the Chinatowns across the world, feel a surge of pride when China does well, for it is where they draw their roots from.

The most significant amount of limelight has been shone upon China's economic performance. 300 million people have been snagged from the jaws of poverty and raised into the working middle class by the Communist Party led government with a capitalistic free market economy (Koppel). From 2003 to 2007, real GDP growth was 11 percent; real domestic demand growth was 9.9 percent; the inflation monster was chained down to a mere 2.6 percent and China inched its way up slowly from eleventh largest economy in 1980 when it first opened up its doors to foreign trade to become the third largest economy in 2007 (Factsheet). The world has been amazed by its steady growth but as always, negative attention is never too far away from the glitz and glamour of a success story. Much has been said about China's handling of human rights issues, its demand on the world's resources and the role it plays in the global race towards a dirtier tomorrow. However, the most pressing complication that China poses to the world is it's unsettling of the United States of America from its crown throne at number one in economy and in geo-politics.

After winning World War Two, America was in great economic standing relative to the rest of the world. Europe was in debt with America and had to rebuild itself from the war that had been fought on its land. Meanwhile, America had made a handsome sum of money from selling war machines and products to Europe, while pumping their economy with the US dollar in exchange for gold (Maloney). In fact, the world was ready for America to lead. America's economy would boom and lead it to become a superpower in the world, not only because it had effectively won the war for the "good" side, but also because America would extend its influence over the world with humanitarian aid, foreign aid, support of the United Nations and International Monetary Fund (IMF), funding of programs it deemed democratic or governments that were pro-American. Every country had a price to it and America would see to it that capitalism would work its magic in America's favor. America not only pumped money into economies, it also pushed hard for free trade and capitalism with the World Trade Organization pushing for free trade and free market reforms globally. The world economy would move on to integrate with America's such that should America sneeze, the whole world would catch a cold. The future was definitely bright. That was until China began to cause ripples big enough to consider waves in America's oversight of its global economy stronghold.

Back in 1979, China with Deng Xiaoping as its leader, pledged to reform and open its economy. This essentially reduced the role of communist ideology in economic policy and opened up the doors to a nation with the world's largest population. Added with the factor of poverty, Chinese worker wages were significantly lower than that of Western workers. In fact, there were no unions and business laws were still undeveloped, if they existed. Corporations the world over flooded China with capital to start up manufacturing lines. The logic of the day was that with less money, more goods could be produced at a lower price. There was no question as to whether a company should set up its factory in China; it was only a matter of when that was to be accomplished. The trade agreements signed by the governments of America and China, which included the US-China Labor Rights Agreement and the US – China Technology Program; the ushering of China to join and rise to the high ranks of the World Trade Organization and the trade policy initiatives, such as the US – China Joint Commission on Commerce and Trade (JCCT), were all done with the foresight of greater productivity and hence greater tax revenues by American corporations, cheaper products for American consumers and a strong American presence in the upcoming Chinese market (Country). However, the unintended consequences of this great push for assumingly free trade with China would be the loss of American jobs and the dependence on Chinese manufactured products. As companies found the prices of their products being brought down more and more by their competitors who had off-shored the manufacturing tasks to China, they had to choose between laying off American workers while setting up factories in China or declare bankruptcy. A significant player in the field of the race to the bottom for prices would be Wal-Mart, which is one of the first companies to ship the manufacturing jobs to China back when China opened its doors n 1979 (Smith). They would go on to become America's largest corporation, reporting a revenue of $378.8 billion for 2008 (Fortune), and stand tall and proud at the forefront of the corporation of corporations who have stood to gain the most from off-shoring. However, the multi-billion dollar question would be, is what's good for the corporate America good for main street? In PBS Frontline's Is Wal-Mart Good for America, correspondent Hedrick Smith interviewed a lady who had recently lost her job to off-shoring and asked her whether she shopped at Wal-Mart. She answered yes as-a-matter-of-factly, for shopping there saved her money. In this segment lies the great paradox of Chinese manufactured goods and America's reliance on these cheap products, even if the situation were not beneficial to America fiscally.

China has endured much flak for its trade deficit with the West, most notably with America. For 2008, America had a $266.3 billion trade deficit with China (Trade). This situation can be summed up by taking a look around the average American home environment, from sweaters to basketballs and batteries to bikes, the majority of manufactured goods that do not require high end technology bear the "Made in China" stamp. In The People's Republic of Capitalism, Ted Koppel interviews a lady who works at one of the ports in China, and the lady mentions that what is shipped to America is manufactured end products, while China imports raw materials and even waste products from America, hence leaving a déjà vu feeling of the colonization period trade model. Once again, the irony is that America is on the supplying end of raw materials which is usually associated with the colonized territories. It is even more unsettling as we look at Japan, with which America has the second largest trade deficit at a distant $72.7 billion in comparison with China's $266.3 billion in trade deficit (Top). What the numbers tell us is that should this pattern continue, America will be buying more goods from China than it sells at this total price. And in simple economic terms, this is not at all a sustainable model. One, because Americans are paying for these goods with United States (US) dollars which flow into the Chinese economy. Two, because it creates a situation where Americans consume and essentially need more Chinese manufactured goods than the Chinese need American made goods. That is exactly like the situation in which Hedrick Smith of PBS Frontline interviewed the lady who lost her job to the Chinese low wage workers; she saw no harm and even found it justifiable to buy Chinese goods.

It is indeed true that American corporations are the main players to set up shop in China to produce and export back to America. However, these corporations are very much at the mercy of the Chinese government. The Economist reported that on August 2008, the Chinese government imposed what was informally referred to as its "economic constitution", a broad anti-monopoly law for a country rife with state-imposed monopolies. On March 18^th 2009, this law came into effect with the rejection of the largest outright acquisition by a foreign firm, a $2.4 billion offer by Coca-Cola for China Huiyuan, China's largest juice company (Hard). Essentially, this is one of the many leverages that the one-party Chinese government formed by the Communist Party has over American corporations. The market is free indeed, but within the boundaries of government control. Take for example the fact that China carved up a $586 billion stimulus package with much less public sentiment or media coverage than America and the fact that much of China's energy, steel and banking sector is state owned and you get the picture of a somewhat monitored economy. Hence, it would not be too radical to argue that should the Chinese government have the will to limit and curtail the actions and plans of foreign corporations, it has the means to go on offense and the corporations could barely do anything. Too much capital has been dumped into the Chinese economy and the infrastructure; networking, wages and market also yield too high a stake to upset. Now should the American government decide to lean towards protectionism and set up high tariffs and barriers, the low prices would instantly vaporize and the American public would not be too happy with that decision. Besides, if it does become hard enough to do business in the US, corporations will not hesitate to search for a new market, with the potential of the upcoming Chinese middle class being very real. As the majority of business interests, markets and manufacturing are in foreign nations, "American" corporations such as McDonalds, Ford and Nike have shown that they are willing to label themselves as multi-national companies, and not American companies. What that translates into is a decrease in American tax revenue as business interests decline and a very real threat of multi-million job losses, all bleeding the American economy.

Now before we move into the complicated task of further evaluating how the Chinese leverage over the American economy would pose a great global challenge, there is an ultimate leverage that needs to be investigated. How does the government keep the economy growing, even in times of recession? How does the government make sure that the credit market does not squeeze up? How does the government fund the recent $700 billion and previous smaller stimulus packages? In order to keep the economy growing, even in times of recessions, the American government has to print more US currency (Maloney). And in order to do the magnificent mathematics, or perhaps magic, of balancing the account books for creating money out of thin air, the government has to sell Treasury Securities. Interestingly enough, China started buying more Securities in June 2008 and overtook Japan as the top holder of American Treasury Securities in September 2008, when the US government started the bailout and containment frenzy (Major). It's bad enough that China has leverage over the American corporations who have set up shop in China, but it's even scarier to imagine that China is also holding America's house of cards, which economists call the financial system, together. Much as Europe was indebted to America post-World War Two, America is greatly indebted to China as of September 2008.

In retrospect, holler and protest as some parties may, the America's trade deficit is here to stay. In all sense, Tim Geithner, America's Treasury Secretary made a point of accusing China of manipulating its currency exchange rate with respect to the dollar, hence making Chinese exports cheaper. Lo and behold, China would give no heed to these ramblings, for it very well knew its hand of cards. Having said that, how does China's leverage over America's economy affect the world? In June 2008, Fannie Mae and Freddie Mac, the two American mortgage giants who held or guaranteed about half of the nation's mortgage loans started to teeter. On September 7, 2008, US federal authorities put them both under federal control. A week later, however, the embattled Lehman Brothers investment bank would be allowed to fail without any federal assistance. Subsequently, two huge American banks, Merrill Lynch and Bank of America would be merged. 48 hours later, an $85 billion stimulus package was hastily cobbled together to prop up the distressed American insurance giant, AIG. This was approximately when China started buying the most amounts of Treasury Securities, as America was borrowing and printing money against its future. China knew that failure for America would mean failure for China, and that was clearly not an option. This was also when the world economy started to slow down. The Dow Jones Industrial Average suffered the largest drop in the history of the Index; the government of Iceland subsequently had to ask for help from the IMF after a series of bank failures; the Reserve Bank of Australia injected nearly $1.5 billion into the banking system, nearly three times as much as the market's estimated requirement; in Taiwan, the central bank on September 16 2008 said it would cut its required reserve ratios for the first time in eight years; the European Central Bank injected $99.8 billion in a one-day money-market auction and many more cash injections would follow; altogether, central banks throughout the world added more than $200 billion from the September 10 to September 17 (Global). The world economy was in chaos and bailout was the vocabulary of the day. All that had triggered it was the collapse of a few American banks and the global financial system felt the aftershocks significantly. Indeed, our financial systems and economy are so integrated that no one country can isolate itself and expect to prosper. With America at the helm of the economic pyramidal network, China's staggering growth, at a targeted 8% Gross Domestic Product (GDP) growth rate in 2009 despite the recession, has already started to threaten America's stronghold on the economic throne. It is not likely that China will match America's GDP in the near future, as America is at a far-away $13.8 trillion from China's $3.4 trillion (CNN.com China). However, over the period of a decade or two, China could become a serious contender. In the meantime, China has raised enough headaches and garnered substantial negative media focus for its previous double digit growth rate, all that while it is only at a distant third place. What this implies is that America feels the pressure of an increasingly stronger China, and the world is watching closely too. The very notion that America could be number two to any other nation was one that was buried with the self-destruction of the Soviet Union. No other world power came close to threatening America after them, until China came along. And the most interesting part is that because China has been building up the momentum for three decades, it does not look like it is about to take a back seat on growth currently.

Historically, the sword has determined the order of the world. "But there has never been a nation in the history of the world that saw its economy decline and maintained its military superiority (,)" Senator Barack Obama declared to the world in his second presidential debate with Senator John McCain. Indeed, the strength of a nation's economy determines how strong its influence will be in the world. That's why America, with its biggest economy, has been playing the role of global police all along. However, in this age and time, military strength does not play the only role in a nation's foreign policy, as multilateral initiatives, non-governmental organizations, strong sentiments of global policy and the push for a common political system is every bit as influential, if not more. Hence, as China inches closer towards America's economic standards, its geo-political clout in its region and globally tends to increase proportionately.

Come the G20 summit in April 2009, the focus will once again be on China and America. The head of the World Bank, Robert Zoellick and its chief economist, Justin Yifu Lin wrote in an article in The
Washington Post, "For the world's economy to recover, these two economic powerhouses must cooperate and become the engine for the Group of 20. Without a strong G-2, the G-20 will disappoint." Indeed, in the face of the current financial meltdown, China is called upon to shoulder greater responsibility to prop up the world economy. In all sense, China stole the limelight at the last G20 summit by announcing a $565 billion stimulus package just before it. Should China come up with another stimulus package, it would delight everyone (Time). One, because China is known to save roughly 50% of its GDP, with household savings accounting for 20 percent of the GDP (Recovery). Hence, China has a deep reservoir of cash to pull out from. Two, as China spend more money, it would potentially set the pace of the world economy again, allowing it to start up once again. Now the paradox here is that America too is spending a lot of money, but it's spending money on a budget deficit of over $1 trillion; while China spends from its cash reservoir. The global perception would then be that as China has more "real" cash to spend, it should be in a better position to spend more to pull everyone out of the current mess. And that, once again, is cash being used as a very important leverage, for whoever has the money shall call the shots. In other words, in the face of current issues, China could potentially take over the global leadership, with more nations paying heed to its political rhetoric.

However, history serves its purpose by pointing at Mr. Deng Xiaoping's advice on avoiding taking the lead (Time). In early February, Chinese prime minister, Wen Jiabao, stressed that China's development was no threat to anyone. It would be a peaceful and co-operative great power (Economist How). So while China is indeed basking in the glory of its new economic growth that propelled it towards being a significant global power, it seems that China is quite reluctant at making the big decisions and taking the lead for the world. Hence, there is nothing to worry about China with regards to geo-politics, or is there? The Chinese are a versatile lot, they are keen to observe and slow to act. However, when they take action, it will be with the conviction of sound observations and a well-thought argument. Take for example the North Korean dictatorship, or the Iran nuclear ambitions or even the genocide in Darfur, Sudan. The United Nations Security Council has, under the steering of America, been trying to slap tighter sanctions and embargos with teeth on these regimes, but China has craftily used its veto power in each case."As an authoritarian regime that reformed, they understand what Kim Jong-Il, North Korea's dictator, is most concerned with—survival," Adam Segal, a Council on Foreign Relations senior fellow for China studies says. China's support runs back to the Korean war, when it lent financial and troop support to the North Koreans. Economically, China supplies them with food, fuel and arms. Politically, China does not want to deal with the uncontrolled influx of refugees should the regime fail. Besides, North Korea serves as a buffer zone with South Korea, home to 29,000 US troops. (Bajoria) As for Iran, even with their volatile combination of exportable Islamist political view and nuclear ambitions, China is reluctant to bit the bullet and slap sanctions on it. The main reason behind it is that Iran supplies China with approximately 13 percent of its oil. Besides, China is working towards asserting its presence and goodwill in the Middle East, hence the dragging of its feet (Segal). Sudan, too exports 64% of its oil to China, in accordance with China's growing demand for energy (Hanson). All three examples point toward China understanding the situation thoroughly and well-thought out strategies, and they are clearly in contradiction with the West's views. In the past, China has chosen to abstain or take a secondary seat in issues that are not directly affecting it. However, as its confidence and self-assertiveness grows, China is more willing to use international organizations like the United Nations to achieve its goals (Segal). When North Korea tested a nuclear weapon in October 2006, China had a change of course and agreed to UN Security Council Resolution 1718, which imposed sanctions on Pyongyang, North Korea. However, it is still the staunchest supporter of the regime and its views on the other two regimes remain unchanged. So, the question is, when the West, specifically America, disagrees with China on international issues with direct dire consequences like genocide and nuclear weapons, who will have the final say on policies?

As free as the Chinese market and as fast-growing as its economy is, subsequently acting as a counter-balance to Western economic progress pride bordering on in-your-face arrogance, China is a communist country. It is special in the sense that it's the first communist country to successfully implement a capitalist free market economy. Economic growth sits at top priority and everything else after that can, and do, take a backseat. In all fairness, China has made some progress in human rights as of today, as compared to the heydays of the Tiananmen Square Massacre. However, by international standards, they are nowhere near stellar. Its recent crackdown on the pro-Tibetan protests was a cause for concern. In a report published in March 24, Amnesty International reports that China carried out 1718 executions in 2008, a grand total of 72% of the world's execution (Executing). Whether these people were given a fair trial and how many more executions go unreported are unknown. Press freedom and freedom of speech are also issues that raise red flags. Most of the press is state-owned and reports news as the government sees fit. The internet, on the other hand, has posed the greatest catalyst for change in this area as China has the world's largest internet population at 298 million (China Internet). Even though the Chinese government sets up filters and censorship firewalls, there has been a surge in Chinese blogs and alternative media which are not affiliated with the government. Come touchy anniversaries, such as the Tiananmen massacre, and topics regarding banned organizations, for example the Fa Lun Gong, a religious body turned anti-government political movement that was declared illegal, the Chinese government does not waiver one bit in its stance of filtering the internet for relevant contents, for it regards the dissemination of information as "privileges" and cites social hegemony as a very important factor in governance. On another note, China is not a keen supporter of going green, as it subscribes to the old school of thoughts that going green takes more effort and money. In fact, the pollution scene is so dire that it is said that in major cities like Shenzhen and Shanghai, there are days when you cannot see the sun directly as the sky is constantly covered by smog and haze. For the Beijing Olympics 2008, China had to limit cars with license plates ending with even and odd numbers to being driven on alternate days as the air quality raised huge concerns among the sporting community about the suitability of the competition venue.

These are only the most pressing issues, and the list goes on and on. What raises concern here though is that as China raises among the ranks of global powers due to its economic prowess, it will yield a substantial influence over the less developed and developing nations. While the West, more pointedly America, pushes for human rights, liberty and green energy, China will play the role of the bad boy among the elite nations. It will play the devil's advocate that has not conformed to too many of the West's standards, yet has trumped almost all Western and Westernized nations in the most important index of all, economy. The message, be it explicit or implicit, will be an anti-Western-values message, one of state rights at the cost of personal liberty, propaganda above free flow of information and the suppression of basic human dignity. While China may argue that it does not promote communism, at least not yet, it does not oppose authoritarianism or dictatorships either. While China may proclaim that it will be a leader that respects national sovereignty, that probably implies that if the nation at stake has a terrible track record of human rights, China will take a step back and act as a nonchalant observer. In all sense, we are not even sure if China will take an active leadership role which requires it to participate in all issues, and not only issues that cut into its bread and butter directly. For if China acts indifferent to the poverty and diseases of the people in Africa while staunchly opposing United Nations sanctions on Sudan, its oil supplier, it will be leadership of the worst kind. Although America is not the perfect role model in global leadership, especially in its hypocrisy of supporting some dictators while overthrowing others in the name of democracy and liberty, or its failure to ratify the Kyoto Protocol, America is the lesser of two evils. At the very least, it takes up an active leadership role and tries its best to contain evil. Edmund Burke says it well, "All that is necessary for the triumph of evil is that good men do nothing."

Having said all that, what are my suggestions for nations? I believe that as bad as China may seem on paper, it should be given a fair shot at success. After all, if we use all kind of unorthodox ways to block China's rise, how much different are our views regarding respect, humility, liberty and justice as opposed to the Chinese government's? The bottom line, I believe, is that China did not get to where it is today by self-inflation and lying to oneself. China's leaders must have taken a long hard look at themselves in the mirror and tried to figure out what exactly had gone wrong with Chairman Mao Ze Dong's economic policy. That's when they looked poverty in the eye and decided that capitalism was the only way to slay the beast, hence the open door policy in 1979. Before blame should be mounted on others, a nation will have to scrutinize itself and ask the question, "What's wrong with our economy?" In fact, often times it is so easy to overlook the fact that, above all, China is getting all sorts of media attention because its economy works! So, it is time that we take a long and hard look at ourselves, and our economy specifically, especially in the aftermath of the American financial system failure. In America's case, it will have to start addressing its trade deficit, budget deficit and the free printing of currency which leads to inflation and devaluation of the US dollar. Deficits are acceptable over the short term, but if the deficits are constantly run for a longer period of time and remain unaddressed, they will be unsustainable. It is about tightening our belts, from the individual to the federal level. If the check book doesn't balance, one may be homeless some day; if a company runs losses too often, it's going to go bankrupt; if a country runs deficits long enough, it won't be long before it runs itself too far into the ground to be rescued. Borrowing generously against the future is, without a doubt, gambling on the next generation's fortunes and should only be done sparingly, if at all. Fiscal discipline is the word of the day. More accountability and transparency must be seen at the marketplace and rules and regulations must exist, even in a free market environment. Definitely, taking a little cue from our Chinese counterparts with regards to saving and frugality will go a long way. The greatness of a nation is , first and foremost, measured by its economy, so if the economic problems and woes are not addressed and dealt with, a decline in power and influence is almost certain.

In the age of globalization, America stands to lose too much if it were to pull away from free trade and freer markets. Yes, the previous free trade agreements with China could have been flawed, but that is not a legitimate reason to pull back from what has created wealth beyond measure in the entire history of mankind. Never before have there been so many millionaires, billionaires and even trillionaires. Yet again, never before has the gap between the poor and the rich been so huge. What that tells us if that as corporations are made rich by shipping jobs to China with cheap labor, we have to build a social net to cushion the fall of the workers who will lose their jobs over the years. It is inevitable, but it is solvable. Re-educating the jobless to break into new industries which require different or higher technical skills will be one way to go. Encouraging more entrepreneurship will create more jobs. Putting people back into newer and more exciting would be the ultimate goal of this social network. For countries that have yet to sign any significant free trade agreements, it would be wise to learn from the mistakes of others and not repeat them. Building a social net to catch those who fall off the greater locomotive of progress and striving hard to relocate them should be a priority s well. While survival of the fittest is prevalent in free markets, protection of the poor and needy is the number one priority for any government. No matter how free a market is set up to be, there must be oversight, rules and a social cushion.

As stock markets become volatile, corporations become nationalized and cash flow is tight, the threat of protectionism sounds like a good idea. After all, if we don't take care of ourselves, who will take care of us? Slapping tariffs and barriers on foreign goods might earn a nation higher import tax revenues, but that will hurt it even more over the long run. One, the domino effect will be felt throughout the world, whereby everyone plays the game of slapping quotas and duties on products, which will in turn make things more expensive and consumers less likely to buy them. If cash is not flowing into the economy because people are not spending, demand is low and supply is high, and prices of products go up due to significant taxes, it is only a matter of time before inflation goes up and the recession turns worse. Every nation's economy today is integrated into the greater network of the global economy today. Hurting thy neighbor is equivalent to hurting thyself. That is why protectionism cannot stand, even against the formidable China which built its economy on exports. Should the Congress of America slap high taxes on Chinese goods, prices will go up and customers will not be pleased with the price hike. Tax revenues will be slightly higher, but China will be likely to slap its own tariffs on American made products, the only difference being that the tariffs will be higher. China will also pinch its federal loans and purchases of Treasury Securities, which would further tighten up credit markets and lock both countries into a longer global recession. Clearly, protectionism has not worked, does not work, and will not work. So on policy making sessions, protectionism should be striked off the list of probable actions and protection in the form of social cushioning should be added in instead.

"The rise of China over the past three decades have been astonishing. But it has lacked the one feature it needed fully to satisfy the ultranationalist fringe : an accompanying decline of the West. Now capitalism is in a funk in its heartlands. … Although in public, China's leaders eschew triumphalism, there is a sense in Beijing that the reassertion of the Middle Kingdom's global ascendancy is at hand. (Economist How)" There is nowhere China is going but up, up and away. It has been a stable growth for three decades, riding on the shoulders of the growing middle class and supported by the pride of a people with 5000 years worth of history and tradition. And much as Americans love to win, the Chinese do not like to lose, especially fueled by the bitter history of foreign intrusion in China by the West and Japan. The Chinese government will see to it that under its oversight, the Chinese people will be propelled to newer and greater heights; and the best way to handle an incoming wave is to ride it, not go against it.

    

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http://www.washingtonpost.com/wp-dyn/content/article/2009/03/05/AR2009030502887.html>

Do you like her?

How do you know if you like her?

If you got her pic as your laptop wallpaper, do you like her?

If you have her pic as yiour phone wallpaper, do you like her?

If you check her blog three times everyday, do you like her?

If you like those short little messages, short as they are, do you like her?

If you like to just see her smile, even if it ain't at you, do you like her?

If you just want her to be happy no matter what she does, do you like her?

If you barely know her, can you like her?

If you are worlds apart, can you like her?

If you have met before, but never again, not yet at least, can you like her?

So, do you like her?

Wow.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness…”

These were the basis on which we debated for the past week, more particularly, Floyd M. Ridick Model Senate in Stetson University, Deland, Florida. It was an eye-opening experience as we had Florida senator, Bill Nelson, former soldier and astronaut, give a talk; as well as a congressional historian analyze the Congress as well as Obama's Administration Policy. I enjoyed myself thoroughly, I have to admit. Among them, there were a few reasons.

One, I realized that I don't want to do political science. Stetson University is a premier private liberal arts school (Google the definition up), and they specialize in Law as well as Political Science. So all the kids around us actually studied poli-sci as their major, and we (Embry-Riddle KIDS) were a bunch of engineers and pilots tagging along to screw things around a little. But anyways, I realized how poli-sci is about systems and policy and almost absoluteness in the sense of political systems. It kind of reviewed law and legislation and also policies, which was not exactly what I wanted to do – academic research of what had been done and what could be done in the future by politicians. I also realized that the US poli-sci kind of segregates politics and policy from economics, which is not how the real world work.

Typically, modern poli-sci does not look at economic and social impacts of policy and systems, as economics deal with the economic models and their impact while social sciences deal with the social aspects of a policy. As to why I said poli-sci is not exactly what I want is because my ultimate goal is to govern with servant leadership and public service, or in more straightforward terms, run for office in Malaysian politics. See, the real world does not give you the luxury of putting economics aside and only focus on policy. The thing is, people are pretty impatient. If you run for politics with a failed economics plan, you can bet your time will be up really soon. That's why Mahathir could stay in absolute power for so long, because he knew how to build up the Malaysian economy, both by heavy industry (automobile, something to be really proud of as we are the only nation in South East Asia with a national carmaker(!!!) and oil refining) as well as light manufacturing (computer components etc). The other reason is that politicians stand out when they do not do what other politicians do. See the thing about politics is that you can stay in office as long as you want provided your constituents still vote you in (only exception being the Presidency), but it will be a long long period (and some even serve till death) which could make things mundane. In fact, when you stay in office too long, you lack new ideas and even lose touch with reality (unless you strive hard not to, like Kit Siang), and since standing out needs new ideas, go in, rise tall and come out should be the game plan.

The other thing I realized was that America, much like Malaysia has its own set of problems too which are of the same intensity if not greater. In fact, one thing prevalent here in America is the fact that life is so much more complicated than back home, starting from credit card debt, mortgage options for house purchase, health care and insurance as well as the media, just to name a few. Hence, the problems too, are more complicated than ours. For example, health care here is very advanced, as in if one doctor says "That's it, you only have six months to live", there should be no despair. Should one choose to fight to the end, there will be legitimate doctors (not spinmasters who wanna make a quick buck conning you!) who are testing new drugs or new methods and you could possibly be their white lab mouse! The point here is that should one opinion be something that you do not agree or are not satisfied with, there are so many other doctors out there who will give you a second and even third opinion and possibly treatment.

The only cost is cost, literally. Healthcare here is so damn expensive! I went to a general practitioner for general issues, and I was recommended to a dermatologist and then lab work had to be done! To date, I am not convinced that I am totally cured, but the bill has already sprawled to $ 550! Two visits and a lab report, half a thousand dollars gone! Add this personal experience to articles and news reports you see on legitimate sources like Time magazine and CNN about how lack of or insufficient insurance could seriously dent a patient's finance and possibly retirement funds or even lead to bankruptcy, and you have a very good picture of how screwed up healthcare is. In fact, just FYI, a huge amount of people in America do not have insurance coverage, I do not know the exact figure but I know it's significant enough a number that it was one of the topics of the presidential debates!

Now if the whole system is so inefficient and expensive, why didn't anyone do anyone to reform it? People did, and this was BIG names, and people failed. Hillary Clinton tried to reform healthcare as Senator back when Bill Clinton, her hubby, was president, but it failed and it almost killed her political career! Now what are the opposing forces, and how do they gain legitimacy for doing resisting change that seems so necessary and a no-brainer? Healthcare in America is privatized, which means that drug, medical equipment and insurance corporations stand to benefit from the complicated and expensive system, so if the cow is such a fat one which not only produces milk but also cash, why change it to be leaner? Hence, when Congress( parliamentary concept) or Senate (the next rung in the chain of command ladder before the legislation goes to the President for approval or veto) tries to introduce change to the system, these big and rich corporations hire lobbyists to speak out for them in these Houses and resist reform. So far the lobbyists have been doing a great job with tools such as gifts (big one mind you!) and monetary donations for election campaigns (every four years), seeing how screwed up this system is! And then again these lobbyists and their antics are not really legislated by strict law or tight rules (at least not last time I checked) so there leaves a lot of space for corruption, another problem that is prevalent here.

The other issue is a politician's political career, which is not so different from any other politician's in the world. Politicians here are very much into ideological warfare, their stand on topics like abortion, gun rights, the two wars, health care etc are very well defined, and they also have various ideological categorization, like liberal, ultra-liberal and conservative and populist etc. However, a few things could be potentially complicating towards one's career, labels like fascist, communist and socialist. And one thing that the opposition is very likely to call you is socialist should you attempt to change the system too aggressively. Now how that kind of makes sense is that this not only land of the free, but also land of the rich – capitalism. So people believe that the people are the government and have an inherent distrust towards politicians and believe that the dollar should speak out louder than anything else. But when you do not have the dollars, what happens? The government should take care of you, duh! So how this works out is that when you expect the government to take care of you and not you take care of yourself, that becomes kind of socialism. Now the slippery slope is that if governments aren't here for the people's good, what the hell are they here for? Then again, the people are the government so if they can't take care of themselves, how can the government take care of them? And the argument goes on and on. So basically, I realized that being number one (even in the world) does not take away your problems, if anything, that status increases your problems and the complexity of them!

What is worth rejoicing is also the fact that I found out about a coveted internship position with, whom else but, Senator Bill Nelson from Florida! Well, once again the interesting thing here is who you know, not what you know! Dorn, my professor, happens to have his students working there so getting an intern is not too hard! Now the key was his observation of my talent for political topics and my knowledge too. On the first day, there was a curious wondering of how well I would fare in American politics debate, but by the second day, that curiosity was taken care of by assurance; assurance that I knew my stuff and even if I did not I could make up a fair amount of believable shit! Hence, in came the personal coaching on topics like the Cuban-American "affair" and the "Mexican Question". And then, there was the offer that should I like to, he could assist in my applying for an internship with Senator Nelson. And for these two reasons, I have to express my gratitude, THANK YOU! (He does a lot of research you know, so this article could possibly be read by him, hence must proceed with caution! : ) )

The other significant discoveries that I made over the weekend was also ideological warfare. One very touchy issue is abortion, either pro-choice(pro-abortion or baby killer, your pick of names) or pro-life(anti-abortion or fantasy lander). Even this issue is not so clear cut, as we have partial birth abortion, in which trimester abortion should be allowed, abortion for rape and incest and the likes. But one thing that's for sure is that it sure is easier to work with someone if their ideology is similar to yours. For example, I had a bill that was for resuming funding for NGOs that supported programs using contraception and even abortion, mainly for population control and STD control(got AIDS), like the UN and Red Cross. Their funding by the US Federal Government was cut by the Bush administration (he was notorious for his abortion ideals too, cutting funding for embryonic stem cell research). This bill was passed strictly on abortion grounds, even though we mentioned what great jobs these NGOs were doing, and that contraception and abortion was only one small part of their programs! It was like people were isolating the NGO's flaws and playing down or even missing the great good that they do, like debt cancellation, humanitarian aid, and saving lives literally! Mind you, it was very very easy to just slip into that ideological warfare and focus on what we have in difference as politicians and forget what we had in similarity as Americans (I was playing an American Senator) and as humans! So even if the intention of an action was good, people could just easily disagree on "fundamental" principals and forget about going into the details of these actions! Magnify these types of petty but fundamental arguments and you have strict division based on differences and filibusters but not bipartisanship to get shit done! Truly it was disagreeing by being disagreeable! But then again, if you don't fight for what you think is right, what do you fight for?

One last food for thought was thrown out by Senator Nelson, one of servanthood leadership; one of running for office being one of the many public services one can do for one's country. I could be an active critic of the state, or I could be a volunteer or I could just be a good citizen and these would be equally good public service too! Think of what one drug addict could do to his family and friends and potential victims when he runs out of money or when he goes into another seizure and you see why being a good citizen is good public service. And what evolved in my thoughts along the way was that yes, you have to keep contributing to society at all levels, which means start contributing today, and not contribute only when you have the time and power. This is because you will have even less time in office and you won't have the strong ethic of serving the public if this hasn't been what you have been doing all along!

This was a very powerful weekend, not to mention a fun one (think 70% female population, as opposed to Riddle's 20%)! I learnt a lot, had a lot of thoughts to process and also had the golden opportunity to see democracy in action. Indeed, voicing my opinion and not having to worry about being penalized by forces that I voted in is indeed liberating! Now that kind of reminds me why I'm here to begin with! : ) To learn from the best and bring it back to my motherland! MALAYSIA BOLEEEEEEEEEEEEEEEEEEEE!

Globalization and its virtues.

WARNING! Yet another academic paper!

 

Select one specific issue/argument offered by critics of globalization, and then respond to the criticism with information from Jagdish Bhagwati and/or other proponents of globalization. Make your own position on the issue clear, as you marshal evidence.

 

 

Globalization is probably the most hotly debated and controversial topic in modern history. It traces its roots back to trade by merchants in just about any civilization. However much goods and currency have changed hands with the increasing volume of trade since the booming era of capitalism and free market democracy; sharp criticisms, and violent protests at times, have also been aimed at agents of globalization in a proportionate amount too. In fact, one particular criticism of globalization states that generally, freer markets and trade-propelled economic growth have done nothing to alleviate, and might even have enhanced poverty in some parts of the world.

It would only be appropriate to begin the globalization debate in India. India in the 1950s was neither the "call center hub" of the world nor the Asian Silicon Valley that it is today. In stark contrast, India had an economic emphasis on autarky and capital-intensive projects (Bhagwati 55). In fact, India was not making much progress in economic terms, in spite of the euphoric post-independence mood. Bluntly speaking, India was free, but it was poor. In formulating a poverty reduction policy, the Indian Economic Commission (IEC) assigned a young economist from Oxford, Jagdish Bhagwati with the project of analyzing the Indian economy and offering a plan to move forward. What he found out was that "if there was no way to significantly affect the share of the (economic) pie going to the bottom 30 percent, the most important thing was to grow the pie." (Bhagwati 54) In fact, this idea could best be summarized by Michael Lechter's words in Other People's Money, "Remember, a small percentage of a large number can be much greater than a large percentage of a small number."(Lechter 67) In this case, it was increasing the economic pie and leveraging a small percentage of it to the poor as opposed to trying hard to trickle down the benefits of a small economic pie that we're looking at. India's previous emphasis on self-sufficiency and high-skilled work would not benefit the masses, and hence, poverty would still remain high. Bhagwati moved on to argue, both during his tenure with the IEC as well as in his book, that an outward-oriented economy was the most suitable model for India if she were serious about lifting the poor up.

At this point, the popular and populist propositions of the (then) current policies were harping on two points. "…first, growth was regarded as an end in itself and poverty removal was forgotten until a new, socially conscious generation of economists who worried about poverty arrived on the scene, and second, that the strategy of growth in order to reduce poverty was a laissez-faire, hands-off, passive strategy."(Bhagwati 54) The first point was taken up head-on by Bhagwati by bringing up the policy suggestion that India should manufacture and export labor-intensive goods so as to hire the poor in bulk and reduce poverty rapidly (Bhagwati 54, 55). Policy number two would be to export light manufactures in greater quantities as opposed to heavy industry which required highly-skilled workers. This was hypothesized as such so that there would be an increase in demand for unskilled workers in far greater quantities which would help the poor more directly. Coupled with these two policies, he foresaw a market geared towards freer trade that would promote growth that was "even more effective in reducing poverty through the salutary effects of the increased demand for unskilled labor." (Bhagwati 56, 57)

Fast forwarded three decades, Deng Xiaoping was the leader of the People's Republic of China in the 1980s. It was with his "actions speak louder than words" mentality that he opened China's doors towards foreign trade and started the long process of healing the Chinese economy that had been stifled since the Cultural Revolution. Mr. Deng ushered China towards an economy based on exporting light manufactures. United States companies and corporations flocked China with their factories as labor was abundant and wages were cheap. Bhagwati's policies were being implemented, albeit in China. And true to form, Bhagwati's prescription was correct. Today, "Made in China" is a household "brand" the world over. To stay in business, major corporations have to set up factories in China in order to maintain the competitive edge or even to survive. From China's perspective, poverty declined from an estimated 28 percent in 1978 to 8 percent in 2008. Its gross domestic product (GDP) has leapfrogged from approximately 188 billion dollars in 1980, then trailing Mexico and Spain's GDP, to a 2,645 billion dollars in 2006, trailing Germany, Japan and the United States only. In its entirety, the People's Republic of China has demonstrated that coupled with the right policies, free trade and growth can be an "active pull-up strategy" to accelerate the reduction of poverty (Bhagwati 54).

There is a constant plethora of accusation that globalization leaves a volatile and deeply unsettling effect, be it by allowing and even encouraging the sublime working environment of sweatshops or by suppressing the poor to work for low wages and long hours. In contrast, I strongly believe that the most pacifying aspect of globalization is the middle class that it creates. Simple economics is sufficient to prove that as more of the poor work long hours for low wages, as opposed to being unemployed – for absolutely no wages, they would accumulate a certain amount of wealth that would propel them upwards in the income bracket. As is the case with China, more and more people would be alleviated from poverty to a slightly better state – the middle class. However, as is the case with the middle class of many developing countries, the people who make up such a class may not be too well off either. By bare technical standards, it means that they are living on more than a dollar per day. This could very well mean that they are living on ten dollars per day, or that they are living on two dollars per day; not too much above the poverty line, but not quite poor enough either. Hence what is there to stop them from falling back into the division of the poor? Employment is one big factor in keeping their hopes to move up the social ladder alive, for employment bears wages and hard-earned wages yields dignity and self-respect. The employment, however mundane or routine it may seem to protestors in the developed world, serves as a beacon of hope. And such is the case of hope that "those at the bottom of the scale feel that they can also make it: inequality is accepted because it excites not envy but aspiration and hope. Capitalism's inequalities then become tolerable, … because they make the poor fancy that these prizes may come to them someday too."(Bhagwati 66)

The other significant problem solved by the creation and retention of a middle class is the breaking of a vicious cycle of a life of crime and drugs and delivering them into the virtuous cycle of moving upward in the social class ladder. As described by Bhagwati, when trade and growth bring employment to the doors of the poor, they might not be qualified to take it. This lack of qualifications could be as general as structural problems, which address the allure of drugs and the lack of a role model in single-parented or broken families (Bhagwati 57). What I'm suggesting here is that should the middle class have a brighter future and better employment opportunities to look forward to, they could potentially cast their hopes and dreams upon the future and temporarily forget about their current dilemma. For example, in The World is Flat, Thomas Friedman brings up the case of Indian students sipping sweet coffee after hours of evening math class, on a regular basis, just so they can continue to work on their homework problems late into the night (Friedman 213). I can personally relate to this point by Friedman as I, too hail from a developing Asian country with aspiring dreams similar to those of the Indian students who envision their bright future in the Indian Silicon Valley and their role models being the engineers or even call center agents. My grandmother, who was uneducated formally, told my mum that no matter how poor monetarily she was, she was not to allow me to be poor educationally. Such is the case of a middle class student in a country whose GDP ranks as the 39^th largest in the world. So too is the case of Indian students who have a fair shot at working for IBM, Motorola or even the call centers which have offices located in India, thanks to the laying of thousands of miles of fiber optics linking the United States and India which was enabled by the boom of globalization.

Of course, there will still be cynical voices that argue that India was able to grab the chance because they already had a fairly acceptable system of higher education, as is the case with the Indian Institute of Technologys(IITs), which are acclaimed to have tougher tests than the United States based Massachusetts Institute of Technology (MIT)! Here, Bhagwati elegantly captures reality in the frame of his words, "Education by itself, especially higher education, is unlike to help. Unemployed educated youth will likely burn tram cars rather than lead to greater growth." (Bhagwati 64) Educational opportunity in its entirety is not sufficient to solve the problems laid down by poverty, as education without prospects of employment means nothing for the educated and unemployed graduate. Jobs that could not otherwise have been created are created by companies that venture abroad to set up company in India, and this is made possible only by trade and growth, two integral parts of globalization.

My final argument here is against the claims that globalization, which brings with it new technology and more efficient ways, favors the rich and innovative. Such is the case with the green revolution, which describes the arrival and usage of new and vastly more productive varieties of wheat and rice in India. When the new seeds arrive the cynics claimed, the farmers who would benefit were those who had access to credit or had a cushion of wealth to fall back on should their innovative move bite back. In fact, they went even further by arguing that with greater production of wheat and rice by more sophisticated technology, demand for labor, along with wages would decline; and prices of food would also go down as supply exceeded demand. It was not to be. Agricultural prices did not fall because of increasing demand, which resulted from the investments that added new jobs and incomes. Besides, irrigation and new seeds led to multiple cropping, which increased the demand for more labor and as such, higher wages. The underlying issue on this was that the Indian government had implemented policies that put a floor to agricultural prices as a social safety net and also the establishment of a substantial scientific support system that contained the possibilities of the emergence of new pests and diseases harmful to farming and yields (Bhagwati 55,56). In all sense, if globalization were handled with foresight and fore planning, along with the implementation of substantive policies to cushion the fall should there be any hiccups in the process, poverty could be dealt with explicitly.

    Having seen overwhelming evidence that globalization does indeed reduce poverty by increasing jobs and subsequently increasing wages and the standard of living, in the context of good government policy, I am not of two minds as to where the world economy should be headed towards. In all fairness, globalization does have its discontents and legitimate space for improvement, but its virtues outweigh its shortcomings. As such, it would be interesting to compare the feasibility and the rolling out of globalization against its few shortcomings with Mr. Deng's famous quote, "Be it a white or black cat, the cat capable of catching mice is a good cat."

 

Bhagwati, Jagdish. In Defense of Globalization. Oxford University Press, 2004, 2007.

 

"Deng Xiaoping." Wikipedia. 25 February 2009.

< http://en.wikipedia.org/wiki/Deng_Xiaoping >

 

"Deng Xiaoping's White Cat Black Cat Quote: Ushering 30 Years of Accelerated Growth." Sina.com.cn.

< http://www.sina.com.cn/ >

 

Friedman, Thomas. The World is Flat. Penguin Books, 2005, 2006.

 

"GDP(1980) by Country." NationMaster.com

< http://www.nationmaster.com/graph/eco_gdp-economy-gdp&date=1980 >

 

Lechter, Michael A. OPM: Other People's Money – How to attract Other People's Money for your investments – the

ultimate leverage. Warner Books, CASHFLOW Technologies, Inc., and BI Capital Inc., 2005.

 

Pocket World in Figures: 2009 Edition. The Economist, and Profile Books Ltd, 2008.