Connect to share and comment

Looming trade imbalances

WSJ: Showy diplomacy will not help the dispute over the South China Sea. Asia Times: Obama has let Asia down. India Times: India faces a crisis of credibility.

‘Showy diplomacy’ will not help the dispute over the South China Sea

Mark Helprin, a senior fellow at the Claremont Institute, writes in the Wall Street Journal that US Secretary of State Hillary Clinton should not make such strong statements regarding US interests in the South China Sea without the ability or will to back them up. He calls her initiative “showy diplomacy” that will only lead to clashes with China or cement China’s aims.

QUOTE:  Clinton's recent comments are commendable but insufficiently backed. China above all is sensitive to "paper-tigerism" and ready to challenge it, especially in regard to its essential interests and where the balance of applicable power is swinging in its favor.

The growing global trade imbalance is unsustainable

An editorial in the New York Times argues that global trade imbalances are getting larger as Americans import more and Germany and China rely even more on exports. It argues that this is unsustainable and other countries must do more to drive up their domestic demand.

QUOTE: After the risk of recession has receded, the United States must work to correct its longstanding trade deficit with the world by slowing national spending and increasing savings. But there will be no recovery — here or around the world — unless all of the major economic players do more to bolster demand right now.

Don’t reject Chinese investment

John D. Watkins, Jr., chairman of the American Chamber of Commerce in China, writes in the Wall Street Journal that American politicians should not reject a bid by a Chinese company, Anshan, for a stake in a Mississippi-based steel company. Doing so would feed into protectionist sentiments and could ignite a cycle of antitrade moves across the Pacific.

QUOTE: Imagine a second scenario in which, after being rebuffed on the Anshan investment, Chinese investors conclude they are unwelcome. They take billions of dollars of capital and innovative new technology to other regions.

An American regulatory bubble challenges the economy

Robert M. Hardaway, University of Denver Sturm College of Law professor of law, writes in the Christian Science Monitor that government interference and over-regulation have caused greater problems to the US economy than they have fixed.

QUOTE: Uncle Sam is right to take action to prevent another housing bubble. To do that, it’s going to have to pop its own inflated sphere: the regulatory bubble.

A new world of cities will define our future

Parag Khanna, senior research fellow at the New America Foundation, writes in Foreign Policy that the new world order will be a network of cities. Large so-called Global Cities like London and New York will continue to be “engines of globalization.” New megacities will also grow and provide both the problems and solutions to our future challenges.

QUOTE: This new world of cities won't obey the same rules as the old compact of nations; they will write their own opportunistic codes of conduct, animated by the need for efficiency, connectivity, and security above all else. 

Not all trade imbalances are created equal

Heleen Mees, a Dutch economist and lawyer, writes in Project Syndicate that pundits are wrong to argue that Germany plays the same role regarding trade imbalances in Europe as China does with the United States. She argues that Germany did not accumulate foreign reserves in the same way, its surplus is less dangerous and it has more justifiable reasons to save.

QUOTE: The differences between China and Germany are far more substantial than the similarities – not least in terms of how they put their surpluses to use. Lumping all surplus countries together – or all deficit countries, for that matter, will not help us find a way to rebalance the world economy.

Obama has let Asia down

Chan Akya writes in the Asia Times that President Obama has missed many opportunities to redefine the United States’ relationship with Asia. Obama should spend the next two years re-engaging with Asia. This would make a strong impact on the economies of South Korea, India, China, Japan and Indonesia.

QUOTE: No nation in Asia has been let down as much as South Korea in the past 10 years. Reduced American engagement in the region has basically allowed the Korean situation to descend into a matter that is dominated by China, with the active connivance of Russia. Without direct participation of its former sponsor, the United States, South Korea has become increasingly desperate in its dealings with the North.

Cutting Social Security won’t save America’s economy

Columnist Paul Krugman writes in the New York Times that the attacks in the United States on the Social Security system are unwarranted, because the system will not cause a fiscal crisis. He argues that critics hate Social Security for ideological reasons because it shows that government programs can be successful.

QUOTE: Let’s beat back this unnecessary, unfair and — let’s not mince words — cruel attack on working Americans. Big cuts in Social Security should not be on the table.

India faces a crisis of credibility

Harsh V Pant, who teaches at Kings College, London, writes in the Times of India that this summer’s clashes in Kashmir reflect a larger problem across India. He argues that the nation is facing a “crisis of credibility” as the government also struggles to address concerns related to the Maoists and upcoming Commonwealth Games.

QUOTE: India definitely needs to resolve Kashmir crisis but there are multiple mutinies that also need attention. It's not entirely clear if New Delhi's present political dispensation is capable of doing that. That's not a promising thought for a country that has just marked its 64th Independence Day.

Pentagon needs reforms

Fareed Zakaria, editor of Newsweek International, writes in the Washington Post that US Defense Secretary Robert Gates’ efforts to reform the Pentagon are modest and rational. Gates has wrongly come under attack, as he merely wants to make the Pentagon less bureaucratic and more efficient.

QUOTE: The savings he is trying to achieve are perfectly reasonable: $100 billion over five years, during which period the Pentagon would spend approximately $3.5 trillion. And yet he has aroused intense opposition from the usual suspects -- defense contractors, lobbyists, the military bureaucracy and hawkish commentators.