Commentary Magazine


Topic: OECD

The German Example

Chris Caldwell provides one of the most important pieces of economic analysis since the financial meltdown more than two years ago. The focus is on Germany, but it tells us much about Obama and his mindset.

As for Germany, Caldwell explains they told the Obami and the Keynesians to buzz off:

“You won’t find a lot of Keynesians here,” explained one German economic policymaker in Berlin in September. That will not be news to anyone who has spoken to his counterparts in Washington. In their view, Germany is a skulker, a rotten citizen of the global economy, the macroeconomic equivalent of a juvenile delinquent, or worse. It is a smart aleck in the emergency ward that is the global economy. It is a flouter of the prescriptions of the new Doctor New Deal who sits in the White House.

And, wouldn’t you know it, Germany was right:

Germany’s growth in this year’s second quarter was 2.2 percent on a quarter-to-quarter basis. That means it is growing at almost 9 percent a year. Its unemployment rate has fallen to 7.5 percent, below what it was at the start of the global financial crisis—indeed, the lowest in 18 years. The second-biggest Western economy appears to be handling this deep recession much more effectively than the biggest—and emerging from it much earlier.

It seems the Germans’ skepticism of Keynesian alchemy — technically the “multiplier effect” (a dollar spent by the government magically transforms to more than a dollar in economic activity) – was correct. According to the Germans, the famed multiplier is actually a divider:

“Our research says the multiplier is more like .60,” says the German official. If he is correct, then a stimulus plan can actually deaden an economy rather than stimulate it. If he is correct, you might have been as well off to have taken the stimulus money and thrown it away.

Caldwell is straightforward — Germany already does a lot of “stimulating” and embodies many aspects of the social-welfare state. But his argument — and Germany’s — is compelling: anti-Obamanomics is superior to Obamanomics.

So what does this tell us about Obama? For starters, he operates in an intellectual cocoon. Remember, he told us that “all” economists believed in his Keynesian stimulus plan. Well, as he was spinning us, a body of research was building that Keynesianism is, to put it mildly, bunk:

The Harvard economist Alberto Alesina and his colleague Silvia Ardagna published an influential paper last fall in which they surveyed all the major fiscal adjustments in OECD countries between 1970 and 2007 and showed that tax cuts are more likely to increase growth than spending hikes. One of their most controversial findings—which comes from the work of two other Italian economists—is that cutting deficits can be expansionary, particularly if it is done through “large, decisive” government spending cuts, as it was in Ireland and Denmark in the 1980s. More generally, Alesina has argued that “monomaniacal” Keynesians have focused unduly on aggregate demand.

So much for the pose that Obama is a sophisticated intellectual. He is, rather, monomaniacally wedded to liberal dogma.

The German experience also tells us much about the bullying behavior of the Obama team. Domestic critics are brushed off, Israel is browbeaten, and Germany is harangued because they don’t roll over and comply with the misguided vision of the president. Caldwell explains:

Germany has been scolded, even browbeaten, by Obama administration officials, from Treasury Secretary Timothy Geithner on down, for saving too much and spending too little. It has refused to stimulate its economy as the United States has done, on the grounds that the resulting budget deficits would not be sustainable and the policies themselves would not work. Administration officials have not been the only ones to warn the Germans about the path they’re on. On the eve of last summer’s G‑20 summit in Toronto, the economist and New York Times columnist Paul Krugman gave an interview to the German business paper Handelsblatt in which he said that, while Germany might think its deficits are big, they are peanuts “from an American viewpoint.” Germany cannot say it wasn’t warned.

There is a dreary predictability about Obama. Take outmoded liberal dogma. Double down on it. Ignore empirical evidence. Deride and bully opponents. And when the dogma fails, blame those who resisted. Whether we are talking about health care, economic policy, or the Middle East, the pattern is the same. It is not simply that Obama is wrong on the merits on these issues (although surely he is). It is that Obama’s self-image as the “smartest man in the room” prevents him from learning from errors, absorbing the experience of alternative policy choices, and showing grace and magnanimity toward friends and foes. No wonder Obama has become a sour figure, and the public has soured on him.

Chris Caldwell provides one of the most important pieces of economic analysis since the financial meltdown more than two years ago. The focus is on Germany, but it tells us much about Obama and his mindset.

As for Germany, Caldwell explains they told the Obami and the Keynesians to buzz off:

“You won’t find a lot of Keynesians here,” explained one German economic policymaker in Berlin in September. That will not be news to anyone who has spoken to his counterparts in Washington. In their view, Germany is a skulker, a rotten citizen of the global economy, the macroeconomic equivalent of a juvenile delinquent, or worse. It is a smart aleck in the emergency ward that is the global economy. It is a flouter of the prescriptions of the new Doctor New Deal who sits in the White House.

And, wouldn’t you know it, Germany was right:

Germany’s growth in this year’s second quarter was 2.2 percent on a quarter-to-quarter basis. That means it is growing at almost 9 percent a year. Its unemployment rate has fallen to 7.5 percent, below what it was at the start of the global financial crisis—indeed, the lowest in 18 years. The second-biggest Western economy appears to be handling this deep recession much more effectively than the biggest—and emerging from it much earlier.

It seems the Germans’ skepticism of Keynesian alchemy — technically the “multiplier effect” (a dollar spent by the government magically transforms to more than a dollar in economic activity) – was correct. According to the Germans, the famed multiplier is actually a divider:

“Our research says the multiplier is more like .60,” says the German official. If he is correct, then a stimulus plan can actually deaden an economy rather than stimulate it. If he is correct, you might have been as well off to have taken the stimulus money and thrown it away.

Caldwell is straightforward — Germany already does a lot of “stimulating” and embodies many aspects of the social-welfare state. But his argument — and Germany’s — is compelling: anti-Obamanomics is superior to Obamanomics.

So what does this tell us about Obama? For starters, he operates in an intellectual cocoon. Remember, he told us that “all” economists believed in his Keynesian stimulus plan. Well, as he was spinning us, a body of research was building that Keynesianism is, to put it mildly, bunk:

The Harvard economist Alberto Alesina and his colleague Silvia Ardagna published an influential paper last fall in which they surveyed all the major fiscal adjustments in OECD countries between 1970 and 2007 and showed that tax cuts are more likely to increase growth than spending hikes. One of their most controversial findings—which comes from the work of two other Italian economists—is that cutting deficits can be expansionary, particularly if it is done through “large, decisive” government spending cuts, as it was in Ireland and Denmark in the 1980s. More generally, Alesina has argued that “monomaniacal” Keynesians have focused unduly on aggregate demand.

So much for the pose that Obama is a sophisticated intellectual. He is, rather, monomaniacally wedded to liberal dogma.

The German experience also tells us much about the bullying behavior of the Obama team. Domestic critics are brushed off, Israel is browbeaten, and Germany is harangued because they don’t roll over and comply with the misguided vision of the president. Caldwell explains:

Germany has been scolded, even browbeaten, by Obama administration officials, from Treasury Secretary Timothy Geithner on down, for saving too much and spending too little. It has refused to stimulate its economy as the United States has done, on the grounds that the resulting budget deficits would not be sustainable and the policies themselves would not work. Administration officials have not been the only ones to warn the Germans about the path they’re on. On the eve of last summer’s G‑20 summit in Toronto, the economist and New York Times columnist Paul Krugman gave an interview to the German business paper Handelsblatt in which he said that, while Germany might think its deficits are big, they are peanuts “from an American viewpoint.” Germany cannot say it wasn’t warned.

There is a dreary predictability about Obama. Take outmoded liberal dogma. Double down on it. Ignore empirical evidence. Deride and bully opponents. And when the dogma fails, blame those who resisted. Whether we are talking about health care, economic policy, or the Middle East, the pattern is the same. It is not simply that Obama is wrong on the merits on these issues (although surely he is). It is that Obama’s self-image as the “smartest man in the room” prevents him from learning from errors, absorbing the experience of alternative policy choices, and showing grace and magnanimity toward friends and foes. No wonder Obama has become a sour figure, and the public has soured on him.

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Delegitimizing the Delegitimizers

In the Knesset, Bibi went after international efforts to delegitimize Israel:

“They want to strip us of the natural right to defend ourselves. When we defend ourselves against rocket attack, we are accused of war crimes. We cannot board sea vessels when our soldiers are being attacked and fired upon, because that is a war crime.”

“They are essentially saying that the Jewish nation does not have the right to defend itself against the most brutal attacks and it doesn’t have the right to prevent additional weapons from entering territories from which it is attacked,” he said.

Netanyahu stressed that Israel has taken steps to push forward a resolution with the Palestinians though they have not reciprocated the gesture.

“The Palestinian side promoted the Goldstone report, organized boycotts, and tried to prevent our entrance into the OECD. The Palestinian Authority has no intentions of engaging in direct talks with us,” Netanyahu exclaimed.

Israel’s enemies have been at this for some time. But the efforts to use international organizations to delegitimize and constrain Israel have accelerated under Obama for at least three reasons.

First, he’s raised the profile of international organizations, conferred on them new prestige, elevated gangs of thugs like the UN Human Rights Council, and made clear that international consensus is near and dear to him, a priority above many other foreign policy goals. This has emboldened Israel’s foes, who now enjoy more respect and more visibility. Because Obama has put such a high price on consensus in these bodies and on internationalizing decisions, he is handing a veto to the more aggressively anti-Israel members.

Second, the U.S. has done nothing to discourage or rebut the delegitimizing. We’ve sat mutely when the UN Human Rights Council has condemned Israel. We haven’t denounced or even chastised the Israel-bashers. When Jeane Kirkpatrick or John Bolton held their posts, you would at least see the Israel-haters’ arguments demolished and their representatives put in their place. No such defense is offered these days by Susan Rice.

And finally, Obama  outside the confines of these bodies, has signaled that it’s fine to slap Israel around. When the American government condemns Israel, others are sure to follow. He’s announced his intention to put daylight between the U.S. and the Jewish state, which tells the Israel-haters they have a green light to take their own swings.

So if the goal were to delegitimize the delegitimizers, then we should do the opposite of what the Obama team has been doing. We should try to reduce the importance and prestige of these bodies while elevating that of democratic alliances. We should forcefully refute the arguments and resolutions and wield our veto. We should not participate in, fund, nor countenance assaults on Israel’s legitimacy and right to defend and manage its own affairs. And finally, we should in word and deed stand shoulder to shoulder with Israel, making clear that those who take on Israel will pay a price — financial, diplomatic, or otherwise. None of this will end the attempts at delegitimizing, but it may give those on the fence second thoughts about joining in the efforts and discourage those who now believe they can act with impunity. Right now the incentives are all going in the wrong direction.

In the Knesset, Bibi went after international efforts to delegitimize Israel:

“They want to strip us of the natural right to defend ourselves. When we defend ourselves against rocket attack, we are accused of war crimes. We cannot board sea vessels when our soldiers are being attacked and fired upon, because that is a war crime.”

“They are essentially saying that the Jewish nation does not have the right to defend itself against the most brutal attacks and it doesn’t have the right to prevent additional weapons from entering territories from which it is attacked,” he said.

Netanyahu stressed that Israel has taken steps to push forward a resolution with the Palestinians though they have not reciprocated the gesture.

“The Palestinian side promoted the Goldstone report, organized boycotts, and tried to prevent our entrance into the OECD. The Palestinian Authority has no intentions of engaging in direct talks with us,” Netanyahu exclaimed.

Israel’s enemies have been at this for some time. But the efforts to use international organizations to delegitimize and constrain Israel have accelerated under Obama for at least three reasons.

First, he’s raised the profile of international organizations, conferred on them new prestige, elevated gangs of thugs like the UN Human Rights Council, and made clear that international consensus is near and dear to him, a priority above many other foreign policy goals. This has emboldened Israel’s foes, who now enjoy more respect and more visibility. Because Obama has put such a high price on consensus in these bodies and on internationalizing decisions, he is handing a veto to the more aggressively anti-Israel members.

Second, the U.S. has done nothing to discourage or rebut the delegitimizing. We’ve sat mutely when the UN Human Rights Council has condemned Israel. We haven’t denounced or even chastised the Israel-bashers. When Jeane Kirkpatrick or John Bolton held their posts, you would at least see the Israel-haters’ arguments demolished and their representatives put in their place. No such defense is offered these days by Susan Rice.

And finally, Obama  outside the confines of these bodies, has signaled that it’s fine to slap Israel around. When the American government condemns Israel, others are sure to follow. He’s announced his intention to put daylight between the U.S. and the Jewish state, which tells the Israel-haters they have a green light to take their own swings.

So if the goal were to delegitimize the delegitimizers, then we should do the opposite of what the Obama team has been doing. We should try to reduce the importance and prestige of these bodies while elevating that of democratic alliances. We should forcefully refute the arguments and resolutions and wield our veto. We should not participate in, fund, nor countenance assaults on Israel’s legitimacy and right to defend and manage its own affairs. And finally, we should in word and deed stand shoulder to shoulder with Israel, making clear that those who take on Israel will pay a price — financial, diplomatic, or otherwise. None of this will end the attempts at delegitimizing, but it may give those on the fence second thoughts about joining in the efforts and discourage those who now believe they can act with impunity. Right now the incentives are all going in the wrong direction.

Read Less

Israel Can Win Every Battle but Still Lose the War

In the Wall Street Journal today, I write about the disastrous consequences of Israel’s boarding operation off Gaza. Although the Israelis were perfectly justified in trying to stop Hamas from receiving outside aid, the way they went about it resulted in a public-relations catastrophe. A friend asks me in essence, So what? Is growing international approval really a problem for Israel? I believe it is.

Israel cannot afford to become another South Africa, Burma, or North Korea. Come to think of it, even South Africa couldn’t afford to become South Africa: an international pariah regime. It was too democratic and too Western to bear such isolation indefinitely in the way that absolute dictatorships like Burma or North Korea can. The international embargo ultimately led to a crisis of confidence within Afrikaner leadership circles and to the negotiated end to the racist regime. Israel, I stress, is no South Africa: it is not an apartheid regime. It is in fact the most liberal and democratic regime in the region, offering Arabs more rights than they are offered in any of its immediate neighbors. And Israel is, mercifully, not yet subject to the kind of international opprobrium that South Africa (rightly) received. Unfortunately, it is heading in that direction.

Other CONTENTIONS bloggers have noted that liberal Gentiles long ago turned on Israel; now it’s the turn of liberal Jews. Israel already faces the most hostile administration in Washington in decades — perhaps ever. This is an ominous trend. Israel depends on trade and interaction with the rest of the world; its people are liberal and Western in their outlook — they need to feel a part of the “West.” That image is furthered when Israel joins the OECD, the club of advanced industrial countries, as it just did. But incidents such as the Gaza flotilla fight set Israel back and further the propaganda war being waged against it by its enemies. Israel cannot afford to provide its foes further ammunition.

That doesn’t mean it should refrain from legitimate acts of self-defense (such as killing Hamas big shots or retaliating for Hamas rocket strikes), but it should be ultra careful to manage public perceptions of its actions. Unfortunately, the Israeli Defense Forces have always shown more competence at tactical kinetic operations than at information operations. That deficiency was revealed during the 2006 war with Hezbollah and now more recently in the botched raid on the Gaza ships. Granted, Israel is getting better about managing the consequences of its actions; the IDF gets kudos for posting video of the raid online quickly and making some naval commandos available for interviews. But if Israel were strategically smarter, it would have avoided the raid altogether, with all the possibilities of something going wrong, and used more stealthy means to prevent the Hamas activists from reaching their objective. The IDF should be mindful of the French experience in Algeria and the American experience in Vietnam: it is possible to win every battle and still lose the war.

In the Wall Street Journal today, I write about the disastrous consequences of Israel’s boarding operation off Gaza. Although the Israelis were perfectly justified in trying to stop Hamas from receiving outside aid, the way they went about it resulted in a public-relations catastrophe. A friend asks me in essence, So what? Is growing international approval really a problem for Israel? I believe it is.

Israel cannot afford to become another South Africa, Burma, or North Korea. Come to think of it, even South Africa couldn’t afford to become South Africa: an international pariah regime. It was too democratic and too Western to bear such isolation indefinitely in the way that absolute dictatorships like Burma or North Korea can. The international embargo ultimately led to a crisis of confidence within Afrikaner leadership circles and to the negotiated end to the racist regime. Israel, I stress, is no South Africa: it is not an apartheid regime. It is in fact the most liberal and democratic regime in the region, offering Arabs more rights than they are offered in any of its immediate neighbors. And Israel is, mercifully, not yet subject to the kind of international opprobrium that South Africa (rightly) received. Unfortunately, it is heading in that direction.

Other CONTENTIONS bloggers have noted that liberal Gentiles long ago turned on Israel; now it’s the turn of liberal Jews. Israel already faces the most hostile administration in Washington in decades — perhaps ever. This is an ominous trend. Israel depends on trade and interaction with the rest of the world; its people are liberal and Western in their outlook — they need to feel a part of the “West.” That image is furthered when Israel joins the OECD, the club of advanced industrial countries, as it just did. But incidents such as the Gaza flotilla fight set Israel back and further the propaganda war being waged against it by its enemies. Israel cannot afford to provide its foes further ammunition.

That doesn’t mean it should refrain from legitimate acts of self-defense (such as killing Hamas big shots or retaliating for Hamas rocket strikes), but it should be ultra careful to manage public perceptions of its actions. Unfortunately, the Israeli Defense Forces have always shown more competence at tactical kinetic operations than at information operations. That deficiency was revealed during the 2006 war with Hezbollah and now more recently in the botched raid on the Gaza ships. Granted, Israel is getting better about managing the consequences of its actions; the IDF gets kudos for posting video of the raid online quickly and making some naval commandos available for interviews. But if Israel were strategically smarter, it would have avoided the raid altogether, with all the possibilities of something going wrong, and used more stealthy means to prevent the Hamas activists from reaching their objective. The IDF should be mindful of the French experience in Algeria and the American experience in Vietnam: it is possible to win every battle and still lose the war.

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The Dangers of the Peace-Prosperity Fallacy

Israel’s left-wing daily Haaretz isn’t one to cry uncle. “There will be no economic prosperity without peace,” it defiantly titled today’s editorial — published two days after Israel was admitted, by unanimous vote, to the club of the world’s wealthiest nations: the OECD.

“The link between the economic and political is clear,” the editorial asserted, serenely untroubled by the facts. “There can be no sustained economic growth without a substantive compromise with the Palestinians and Syria.”

The facts, of course, are that if sustained economic growth required peace, Israel could never have earned OECD entree: the country has been at war since its establishment in 1948, when it was attacked by five Arab armies. It fought conventional wars again in 1956, 1967, 1973, and 1982. It was bombarded by Iraqi missiles during the 1991 Gulf War. It fought asymmetric wars against terrorist organizations in the West Bank in 2002, Lebanon in 2006, and Gaza in 2009. And in between all the wars, it suffered nonstop terror attacks.

Some of these wars indeed produced temporary recessions. Yet the overall pattern has been one of, yes, sustained growth. Had it not, Israel would not today be the only one, out of dozens of countries established in the post-colonial upheavals that followed World War II, invited to join the OECD. It certainly wasn’t because its fellow OECD members love it so much: many routinely vote against it in other international forums.

But if Haaretz were merely spouting harmless nonsense, nobody would care. The problem is that this particular nonsense is deadly dangerous, because the editorial is right about one thing: “Israel’s economic status is conditional.” Wise choices by Israel’s leaders can facilitate continued growth; bad choices can reduce or even destroy it: look at Greece.

Yet for much of the past two decades, Israel’s leadership has been consumed with either pursuing an unobtainable peace or trying to contain the terrorist onslaughts that every such effort has spawned. The crucial domestic issues on which economic success in fact depends have consequently been neglected. Israel’s schools and universities are in free fall, which bodes ill for a country whose only natural resource is brainpower. And bureaucratic obstacles to doing business remain a fact of life.

Prime Minister Benjamin Netanyahu actually does care about domestic issues. As finance minister in 2003, he implemented economic reforms that produced five straight years of rapid growth, and his campaign for prime minister included detailed proposals for additional domestic reforms. But since taking office, he, too, has been consumed by the “peace process” — or rather, the crisis with Washington it has generated. Domestic reforms have fallen by the wayside.

And that is why the Haaretz fallacy is so dangerous. Roughly every other Israeli prime minister has, like Haaretz, viewed peace as essential to Israel’s survival and therefore devoted himself to fruitlessly pursuing it. Each of their successors has then had to devote himself to containing the fallout. And as long as this pattern continues, vital domestic issues will continue to be neglected.

Peace would certainly benefit Israel’s economy. But continued pursuit of a peace that is unobtainable could destroy it.

Israel’s left-wing daily Haaretz isn’t one to cry uncle. “There will be no economic prosperity without peace,” it defiantly titled today’s editorial — published two days after Israel was admitted, by unanimous vote, to the club of the world’s wealthiest nations: the OECD.

“The link between the economic and political is clear,” the editorial asserted, serenely untroubled by the facts. “There can be no sustained economic growth without a substantive compromise with the Palestinians and Syria.”

The facts, of course, are that if sustained economic growth required peace, Israel could never have earned OECD entree: the country has been at war since its establishment in 1948, when it was attacked by five Arab armies. It fought conventional wars again in 1956, 1967, 1973, and 1982. It was bombarded by Iraqi missiles during the 1991 Gulf War. It fought asymmetric wars against terrorist organizations in the West Bank in 2002, Lebanon in 2006, and Gaza in 2009. And in between all the wars, it suffered nonstop terror attacks.

Some of these wars indeed produced temporary recessions. Yet the overall pattern has been one of, yes, sustained growth. Had it not, Israel would not today be the only one, out of dozens of countries established in the post-colonial upheavals that followed World War II, invited to join the OECD. It certainly wasn’t because its fellow OECD members love it so much: many routinely vote against it in other international forums.

But if Haaretz were merely spouting harmless nonsense, nobody would care. The problem is that this particular nonsense is deadly dangerous, because the editorial is right about one thing: “Israel’s economic status is conditional.” Wise choices by Israel’s leaders can facilitate continued growth; bad choices can reduce or even destroy it: look at Greece.

Yet for much of the past two decades, Israel’s leadership has been consumed with either pursuing an unobtainable peace or trying to contain the terrorist onslaughts that every such effort has spawned. The crucial domestic issues on which economic success in fact depends have consequently been neglected. Israel’s schools and universities are in free fall, which bodes ill for a country whose only natural resource is brainpower. And bureaucratic obstacles to doing business remain a fact of life.

Prime Minister Benjamin Netanyahu actually does care about domestic issues. As finance minister in 2003, he implemented economic reforms that produced five straight years of rapid growth, and his campaign for prime minister included detailed proposals for additional domestic reforms. But since taking office, he, too, has been consumed by the “peace process” — or rather, the crisis with Washington it has generated. Domestic reforms have fallen by the wayside.

And that is why the Haaretz fallacy is so dangerous. Roughly every other Israeli prime minister has, like Haaretz, viewed peace as essential to Israel’s survival and therefore devoted himself to fruitlessly pursuing it. Each of their successors has then had to devote himself to containing the fallout. And as long as this pattern continues, vital domestic issues will continue to be neglected.

Peace would certainly benefit Israel’s economy. But continued pursuit of a peace that is unobtainable could destroy it.

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The Business of Copenhagen

The Washington Post gave away the game regarding Copenhagen. Sure, the science underlying the climate-change hysteria is facing new skepticism. And sure, Obama can’t really bind the U.S. to much of anything, given that cap-and-trade legislation is stalled at home. But there’s real work to do nevertheless: a massive transfer of wealth from rich to poor countries. The Post‘s editors explain:

Now, however, negotiations center on how to transfer hundreds of billions in cash and technology from rich countries to developing ones. Developing nations insist that they need the aid to adapt to the worst effects of climate change, to curb deforestation and to get off carbon-intensive development paths. Though the amounts that developing countries demand are impossibly high, the International Energy Agency estimates that non-OECD countries will, in fact, require $197 billion of additional investment annually for carbon reduction by 2020.

One marvels at the use of the word require. Yes, they’re making demands on wealthy nations and won’t be denied, it seems. The president loves this sort of thing. At the UN in September, Obama gave voice to the “doubters are heretics” mentality and fanned the climate-crisis flames:

The danger posed by climate change cannot be denied. Our responsibility to meet it must not be deferred. If we continue down our current course, every member of this Assembly will see irreversible changes within their borders. Our efforts to end conflicts will be eclipsed by wars over refugees and resources. Development will be devastated by drought and famine. Land that human beings have lived on for millennia will disappear. Future generations will look back and wonder why we refused to act; why we failed to pass on — why we failed to pass on an environment that was worthy of our inheritance. [emphasis added]

And when it comes to transferring the wealth, Obama has the patter down. Not only must we set an example by hobbling our own economies (“those wealthy nations that did so much damage to the environment in the 20th century must accept our obligation to lead”) but we also need “to extend a hand to those with less, while reforming international institutions to give more nations a greater voice.” (Because, I suppose, those multilateral institutions like the UN do such a bang-up job we need to give the nondemocratic, non-capitalist, anti-American and anti-Israel nations even more leverage.)

So let’s not delude ourselves. The Obami’s share-the-wealth vision and indulgence of the “international community” (and the latter’s sense of entitlement) are far too important to let a little scientific fraud and some constitutional niceties get in the way. There’s real business to be done at Copenhagen.

The Washington Post gave away the game regarding Copenhagen. Sure, the science underlying the climate-change hysteria is facing new skepticism. And sure, Obama can’t really bind the U.S. to much of anything, given that cap-and-trade legislation is stalled at home. But there’s real work to do nevertheless: a massive transfer of wealth from rich to poor countries. The Post‘s editors explain:

Now, however, negotiations center on how to transfer hundreds of billions in cash and technology from rich countries to developing ones. Developing nations insist that they need the aid to adapt to the worst effects of climate change, to curb deforestation and to get off carbon-intensive development paths. Though the amounts that developing countries demand are impossibly high, the International Energy Agency estimates that non-OECD countries will, in fact, require $197 billion of additional investment annually for carbon reduction by 2020.

One marvels at the use of the word require. Yes, they’re making demands on wealthy nations and won’t be denied, it seems. The president loves this sort of thing. At the UN in September, Obama gave voice to the “doubters are heretics” mentality and fanned the climate-crisis flames:

The danger posed by climate change cannot be denied. Our responsibility to meet it must not be deferred. If we continue down our current course, every member of this Assembly will see irreversible changes within their borders. Our efforts to end conflicts will be eclipsed by wars over refugees and resources. Development will be devastated by drought and famine. Land that human beings have lived on for millennia will disappear. Future generations will look back and wonder why we refused to act; why we failed to pass on — why we failed to pass on an environment that was worthy of our inheritance. [emphasis added]

And when it comes to transferring the wealth, Obama has the patter down. Not only must we set an example by hobbling our own economies (“those wealthy nations that did so much damage to the environment in the 20th century must accept our obligation to lead”) but we also need “to extend a hand to those with less, while reforming international institutions to give more nations a greater voice.” (Because, I suppose, those multilateral institutions like the UN do such a bang-up job we need to give the nondemocratic, non-capitalist, anti-American and anti-Israel nations even more leverage.)

So let’s not delude ourselves. The Obami’s share-the-wealth vision and indulgence of the “international community” (and the latter’s sense of entitlement) are far too important to let a little scientific fraud and some constitutional niceties get in the way. There’s real business to be done at Copenhagen.

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Time to Short China?

In China in Revolt in the December COMMENTARY, Gordon Chang took note of the turbulent nature of Chinese society. Three decades of reform have transformed a regimented totalitarian society into a dynamic hybrid: free and unfree, assertive and repressed, at once.

As these antimonies suggest, China is not a society in a stable equilibrium. What is more, its social, political, and economic system is under sustained pressure from many directions. One of the least noted but most significant sources of future trouble is the changing composition of the Chinese population.

Read More

In China in Revolt in the December COMMENTARY, Gordon Chang took note of the turbulent nature of Chinese society. Three decades of reform have transformed a regimented totalitarian society into a dynamic hybrid: free and unfree, assertive and repressed, at once.

As these antimonies suggest, China is not a society in a stable equilibrium. What is more, its social, political, and economic system is under sustained pressure from many directions. One of the least noted but most significant sources of future trouble is the changing composition of the Chinese population.

As of this month, China is estimated by the CIA to be inhabited by 1,321,851,888 people. The CIA’s precision here can certainly be questioned—indeed, it is preposterous—but what is not at all in doubt is that these 1,321,851,888 people, like the rest of us, are getting older every day. But unlike the rest of us—or at least those of us here in the United States—they are not being replenished.

Thanks in large measure to China’s one-child policy, the Chinese population growth rate has fallen to a low of .606 percent annually. (The U.S. rate, by contrast, is .95 percent). While the total Chinese population will continue to expand, in about fifteen years, unless some unforeseen factor intervenes, it will begin to contract. And as it contracts, it will also begin to age. In fact, according to the CIA, China will come to have ”one of the most rapidly aging populations in the world.”

What are the implications of that? Testifying before the House Armed Services Committee on July 11, Thomas Fingar of the Office of the Director of National Intelligence, notes that with “a couple of generations of one-child families, no social-security safety net, a shrinking pool to support an ever-larger group without the normal family—[the] one-child family [policy] means there aren’t aunts and uncles and cousins and others that will be part of the support system.” All this will serve to inject “at least the potential for fragility to the social system.”

That may well be an understatement. Writing in Policy Review, the demographer Nicholas Eberstadt calls the problem a “triple bind”:

Without a broad-coverage national pension system, and with only limited filial resources to fall back on, paid work will of necessity loom large as an option for economic security for many older Chinese. But employment in China, today and tomorrow, will be more physically punishing than in OECD countries, and China’s older cohorts are simply less likely to be up to the task. The aggregation of hundreds of millions of individual experiences with this triple bind over the coming generation will be a set of economic, social, and political constraints on Chinese development—and power augmentation—that have not as yet been fully appreciated in Beijing, much less overseas.

Is this good news for the rest of the world, or bad? The composite index of the Shanghai stock exchange was up 130 percent last year and is rising still. One question is: should one sell Chinese stocks short now, or wait until the population implosion begins in about fifteen years?

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