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Tax Cut Myths

WSJ: More political turmoil is coming to Japan. Asia Times: Germany reaches out to China. Foreign Policy: Obama's global disappointments will help the Republicans.

Japan will see more political turmoil as party proves ineffective

Tobias Harris, a former aide to a Democratic Party of Japan lawmaker and a doctoral student in political science at the Massachusetts Institute of Technology, writes in the Wall Street Journal that less than a year after the DPJ swept into power, it looks as if the party will fail to help turn the country’s economy around or provide true leadership. Japan will soon see more political turmoil.

QUOTE: Japan's demographic situation will worsen, its social safety net will fray, its deficits will grow (or at any rate not shrink), and its position in the global economy will slip. Whatever option the DPJ chooses, it appears that the party will be remembered as just one more missed opportunity for Japan to reverse its decline.

The US must raise taxes to help the budget

An editorial in the New York Times argues that the United States should not cut spending on relief and recovery efforts because it would slow down the economy. The government must stimulate the economy and increase taxes.

QUOTE: When it comes to controlling the near-term problem — trillion-dollar deficits every year for the next 10 years — the biggest help will be a return to solid economic growth and, with that, increasing tax revenues.

China and Germany forge closer ties

Jian Junbo, assistant professor of the Institute of International Studies at Fudan University in Shanghai, writes in the Asia Times that China and Germany are building closer ties. The piece argues that China hopes the ties will be not only economic but also political as China needs more allies in Europe. For Germany, the priority now appears to be an economic relationship.

QUOTE: China's relations with the EU and its member states could and should be strengthened to become more stable and constructive. In this regard, Germany could prove an important ally.

Myths surround the Bush tax cuts

William G. Gale, a Brookings Institution senior fellow, writes in the Washington Post that there is fierce debate over whether or not the Bush tax cuts, which expire in December, should be extended. He argues that there are many misconceptions about the tax cuts. Contrary to popular opinion, extending the tax cuts would not be a good way to stimulate the economy and allowing them to expire would not hurt small businesses.

QUOTE: If the objective is to help small businesses, continuing the Bush tax cuts on high-income taxpayers isn't the way to go -- it would miss more than 98 percent of small-business owners and would primarily help people who don't make most of their money off those businesses.

A look behind BP’s new chief

Ed Crooks and Catherine Belton write in the Financial Times that BP’s new chief executive, Bob Dudley, is likely to be an effective leader and a suitable replacement for Tony Hayward after the oil spill. Dudley has shown to be a respectful man but also exhibits strong resilience during difficult times.

QUOTE: One former TNK-BP colleague says: “He might be mild- mannered, soft-spoken and quite charming but, at the same time, there is a lot of steel behind that.” BP’s board and staff have put their faith in the reassuring presence of Mr Dudley. To earn that trust, in the face of BP’s huge challenges, he will need all of those reserves of steel.

India puts its self-interest over ethical foreign policy

Sumit Ganguly, who holds the Rabindranath Tagore Chair in Indian Cultures and Civilizations at Indiana University at Bloomington, writes in the Wall Street Journal that India’s growing relationship with Myanmar shows that India has largely abandoned its efforts to have a just and ethical foreign policy. India now pursues its self-interest at any cost.

QUOTE: Is there any guarantee that India's courtship of this deeply unpopular and profoundly cruel regime will genuinely yield all that it seeks in commercial, security and diplomatic realms? Can a regime that treats its own population with such disdain and callousness really be counted upon to deliver on solemn international commitments?

China tries to extend its jurisdiction as far as possible

Michael Richardson, a visiting senior research fellow at the Institute of South East Asian Studies in Singapore, writes in the Japan Times that a major problem for China and the United States is that the two nations have different views of the rights of foreign ships and aircraft around China’s waters and airspace. China believes that anyone must get permission to enter its space, whereas the United States views the movement as an international right.

QUOTE: It's China that's trying to extend its jurisdiction as far as possible out to sea. The aim is to create a security buffer, limit the operating areas of U.S. naval and air forces, erode ties between America and its regional allies and friends, and put China in a stronger position to enforce claims to control islands, seas and resources far beyond its internationally recognized borders.

Worker immobility hurts America’s economy

An editorial in the Christian Science Monitor argues that one reason for the high joblessness in the United States is Americans’ new reluctance to move to different states for a job. Many unemployed cannot afford to move, do not want to sell their home in this market or hope their old job will come back.

QUOTE: Congress needs to support worker mobility through better funding of job retraining, especially in community colleges. Also, because renters are five times more likely to move than homeowners, the coming revamp of federal housing policy by lawmakers should look at the cost to mobility in encouraging Americans to take on high-debt home loans.

Obama’s foreign policy failures likely to help the Republicans

Stephan M. Walt writes in Foreign Policy that Republicans are likely to pick up a number of seats in the upcoming November elections in the United States because President Obama and the Democrats have failed to convince voters they can manage the economy well. However, Walt argues that in addition to the economy, the Obama administration has failed to deliver on its four major foreign policy objectives, notably Iran, Iraq, Afghanistan and Israel-Palestine.

QUOTE: Obama's fundamental error was to run try to run a very conventional foreign policy -- one that turned out to be not very different from the second Bush term -- in a situation that called for far more creative thinking and a willingness to try new approaches and stick with them even if it alienated some domestic constituencies.

Binary thinking distorts economic reality

Thierry Mallere, head of research and networks at Geneva-based IJ Partners, and Olivier Oullier, a professor of neuroscience at the University of Provence, write in the International Herald Tribune that people’s brains tend to favor binary thinking, and this affects how economic situations are viewed. It is easier for people to think in terms of success or failure, rational or irrational.

QUOTE: We tend not to paint a nuanced picture of a complex reality, but to stick to the version constituting extreme outcomes. This leaves very little room for analyzing the nuts and bolts of the reform process, with its inevitable successes and failures.