Monday, September 29, 2003

FINAL: The Strange Case and Harmful Influence of Edward Said, the Guru of Politically Correct Cultural Studies

If the title line allowed for a longer description, it would be followed by something like this to flesh it out and more accurately describe what this commentary is about : "The Strange Case and Harmful Influence of Edward Said . . . The Guru of Politically Correct Cultural Studies, with their built-in intellectual animosities --- a mental kink, it seems, of self-loathing and outwardly projected personal identity-crises --- toward Western civilization in all its varieties, including the liberal democratic version that prevails in West Europe and the US."

A FEW MORE PREFATORY REMARKS, MAINLY TO THROW SOME PERSPECTIVE ON EDWARD SAID'S INFLUENCE

The intellectual harm wrought by Said, who died last week, wasn't confined to cultural studies alone. He also had a deplorable, long-lasting impact on Middle East studies in this country and more specifically on its failures, fatuities, and dogmas since the late 1970s on --- at any rate, down to 9/11's terrorist attacks, which were totally unpredicted, or even suspected, in Middle East Studies establishment circles . . . busy with their hobbyhorse obsessions.



Four Harmful Results Stand Out

(i) One result of this scholarly abdication and drift into politically correct ideology of a simpleminded sort has been a plethora of systematic apologetics coming out of US universities, including Middle East Studies Centers created and funded by lavish Saudi Wahhabi oil-money, for extremist Islamo-fundamentalism and at times even terrorism . . . all the generous donations, of course, made for no other reason than unqualified love of scholarship. (On Wahhbi extremism and hatreds, see Stephen Schwartz article, Schwartz himself a convert to Suffi Islam. More generally, on the root of Islamist extremism and support for terrorism, another article ) For that matter, The Center for Middle East Studies at UCSB --- created in this way, a big Saudi benefactor originally --- was purveying Jew-hating racism like blood-libel conspiratorial idiocies that came out of the Middle East as late as 2002 . . . since which time, fortunately, a backlash has ensued and the center has backed away from such hate-charged extremism. A couple of years earlier, the UCSB Center's notion of a balanced panel of specialists on Middle East and Islamic studies --- a workshop for public school teachers! --- consisted of Edward Said, Robert Fisk a British journalist so notoriously biased and full of vitriol and exaggeration that "fisking" has become a legendary term for textual analysis of dogmatic nonsense, a Pakistani novelist Arundhati Roy whose claim to be on the panel, apparently, was her hatred of the US, which she later blamed for causing the 9/11 terrorist attacks, and another Pakistani by origin, a Briton, who heads the radical Marxist-inspired journal, the New Left Review. (Even the well-known left-wing critic, Todd Gitlin, called Roy an anti-American ideologue in a review of her book in the leftist Mother Jones). On the notorious UCSB panel here, which happened to be financed by US government funds --- our tax dollars --- see the testimony before Congress this last June by Stanley Kurtz, reprinted in the National Review It's a hard-hitting survey of politically correct conformity in Middle East studies in US universities financed by our government, as well as in some other area studies.

(ii) A second result has been the systematic failure on the part of the luminaries and rank-and-file scholars in the Middle East Studies Association to anticipate anything like the Islamo-extremist terrorism of 9/11, when 3000 New Yorkers and several hundred Pentagon workers were killed. This wasn't, please note, just a matter of failing to anticipate a specific terrorist attack, by particular means, on a given date --- but any form of Islamist terrorism on the US, any time, any where, and in any form despite two decades of such attacks on Americans abroad, and repeatedly . . . not to forget the earlier 1990s' attack by a group of Islamo-extremist terrorists on the World Trade Center itself. And not just predictive failures here, mind you. Rather, total mental blockage . . . a perverse head-in-the-sands reluctance, rooted in dogmas and pressure for conformity, to confront the realities of what other, non-dogmatic observers had been warning could happen for years, including Bernard Lewis, probably the greatest scholar of Islam in the last several decades --- and one of Edward Said's prime targets in Orientalism, his famous, notoriously defective work of 1978.





Posted by Michael Gordon @ 08:09 PM PST [ continue ]

Saturday, September 27, 2003

China's Economic Future IV: Fears of Social Strife, Political Protests, and a New Tiananmen Square in Chinese CP Circles As Brakes on Reform. FINAL VERSION

From Michael Jabbra, a former UC Santa Barbara student full of talent, the brief following query was left as a comment attached to the previous article. Given the importance of the topic it deals with, it's published here along with the buggy reply.

Dr. Gordon,

It's true that the Chinese government will face a potential political upheaval because economic reforms will be painful. How effective will the memory of Tiananmen Square be in reducing mass dissent? People tend to suffer in silence if they know that protesting brings death; hence we don't see any protests in North Korea, for example.

THE BUGGY RESPONSE

Yes, Michael: You're right, from a variety of sources, the party leadership clearly remains worried about a new nation-wide protests and demonstrations of the sort that erupted in the late 1980s, on a large scale, and led a badly divided party to opt for violent repression . . . with all the international repercussions that ensued. The result: nearly a 1000 deaths at Tiananmen Square in a bloody massacre, followed by similar crackdowns around the country. The date was June 1989. For a good survey with easily read commentary and documents, go here.

For the next four years, the party remained warily vigilant; it isolated radical reformers within its own ranks, and governed with tight repressive controls, only to loosen these after about 1993 for the next four years, hopeful the crisis was behind them. Opponents of the system took heart. In particular, as political reigns loosened, there was growing confidence in these oppositional circles, some in the party, others outside it, that liberalization would continue apace for years and decades. Some even hoped the process would be irreversible.

Posted by Michael Gordon @ 12:19 PM PST [ continue ]

Thursday, September 25, 2003

Second Version: CHINA'S ECONOMIC FUTURE III: THE PIVOTAL CLASH BETWEEN CP AUTHORITARIANISM AND THE LOGIC OF ECONOMIC REFORM

In the three articles published the last four days on China's economic future --- including an exchange with a visitor posted yesterday --- essentially four conclusions were reached.

PART I: THE BUILT-IN CLASH BETWEEN COMMUNIST POLITICAL AUTHORITIANISM AND STATISM AND THE LOGIC OF MARKET DECENTRALIZATION AND FLEXIBILITY

This clash, already under way, is bound to intensify in the future. The underlying causes result from a series of converging trends and influences, pushed by the epochal economic upheavals in Chinese life since 1978, with all the political fallout and implications that follow . . . including, as we've seen, benefits to about half the population, with the remaining half either not helped by the far-reaching changes or clearly hurt. Remember, among other things, actual unemployment is probably close to 20% of the work force; income and wealth inequalities have skyrocketed; there are huge regional disparities; the environment has worsened, so too has public health for large parts of the 1.3 billion Chinese; and social tensions, outright protests, strikes, and demonstration, and political alienation have been documented even by the Chinese authorities.

Hence our main theme here: what, we ask, is forcing the question of major reforms --- economic, social, and political --- to move to the very center of the government's and CP's political agenda, and what will happen to it?

Introductory Comments

As we'll see, even though numerous, far-reaching social, economic, and political reforms may be necessary to stave off economic stagnation in the next decade or two, that doesn't mean they'll be carried out easily . . . if at all. In key quarters around the country, there exists tenacious, dug-in resistance to any vigorous reform strategy that threatens the current status quo: first within the divided CP itself --- about 60 million throughout the country, with perhaps a few hundred key CP leaders the ones to scrutinize; also the within the government and the mammouth bureaucratic machine, where millions of unproductive jobs are at stake; and not least within a divided Chinese people . . . only half of whom, remember, have benefitted from the changes since 1979, and with hundreds of millions threatened with lay-offs, shifts to other jobs, or outright unemployment during any transitional stage, driven by reforms, toward a more efficient, flexible, market-driven economy that can't implant itself without tens of thousands of state-enterprise enterprises and numerous uncompetitive private and communally owned firms going bankrupt.

(As a sidebar observation, think --- If it helps --- of the wrenching changes the American Mid-West and South went through in the 1980s and early 1990s as about 8 or 9 million jobs were lost when giant firms in steel, auto, chemical, textile, and coal industries found themselves uncompetitive and had to restructure, pare-down, and reorganize. Eventually, within a dozen years, the Mid-West and South emerged with new, more technologically up-to-date industries of a high-tech sort, to say nothing of far more competitive old-line ones. A dozen years of dislocation and flux and lay-offs and bankrupty galore, and then a spanking new economic basis. And all this, mind you, occurred in a highly flexible economy, where worker mobility is taken for granted and a social security safety net is in place, and political legitimacy is anchored solidly. Then multiply the dislocations and rippling changes that China will have to go through several-fold in the future, and you get a good working idea of what lies in store and why a systematic reform program is so divisive.





Posted by Michael Gordon @ 05:38 PM PST [ continue ]

Wednesday, September 24, 2003

WILL CHINA'S ECONOMY CATCH UP TO AMERICA'S OR THE THE EU'S? II: Further Reflections

This article is part two of a mini-series on the Chinese economy's long-term economic prospects, and in particular whether China will catch-up to the West --- the US or the EU --- in per capita income, levels of productivity, and technological prowess. The previous article was dubious on this pivotal matter, full of implications for China's relative power potential in the next few decades . . . and whether or not, in particular, China could emerge (as many claim or fear) as a serious peer-rival to the US in overall power and influence. The current article should be read after that earlier article, published on September 23rd hereZ: Will Pacific Asia Overtake the West in Wealth? Will China Become a Super-Power?. Like it, this article began its life as a long commentary at Brad DeLong

THEORETICAL REASONS --- SPECIFICALLY, CONVERGENCE THEORY AND CATCH-UP GROWTH --- WHY THE GROWTH RATE OF CHINA'S ECONOMY IS BOUND TO SLOW DOWN IN THE FUTURE

The current article began as a response to a question left in another post at the DeLong site and the forum on the economic destiny of China and the rest of Pacific Asia. Specifically, a Mark Bahner asked apropos of China's future growth prospects:"Isn't it a stylized fact by now that when a country crosses into first world status (whatever that maybe) growth slows down to match other first world countries?" Updated, the lengthy buggy response --- which draws on some key propositions in economic growth theory, applicable to both developing and highly developed countries --- follows.



I. CONVERGENCE THEORY AND CATCH-UP GROWTH: LEAD AND FOLLOWER COUNTRIES

1) The first answer: yes, sooner or later what in convergence catch-up theory are called follower countries --- which will initially grow much faster than the lead country or countries with their more advanced levels of technology, productivity, and per capita income, and often for decades ---- tend to slow down in growth as they close the gaps in productivity and per capita income and approach the technological frontier.

Posted by Michael Gordon @ 09:31 PM PST [ continue ]

How Backward is China Today? An Exchange with a Visitor

A visitor, Gordon Silliker, has left us the following comment, all the more interesting because it's based on first-hand observations in China. The buggy response follows.

Having been to China as recently as last year, I think anyone who predicts China meeting or surpassing the wealth of the United States or Europe anytime in the next 50-100 years needs to get their head out of the books and go take a look. China is like a million square-mile Tijuana. It is poverty-stricken, dirty, shoddy, and crowded. If you go into the countryside there are scores of people who live the same as they did 300 years ago, except for a counterfeit Nike shirt and a baseball cap perhaps. The only way for China to become a wealthy nation will be for the billion or so Chinese people to do it for themselves, because there are just so many Chinese people, and they are so poor, that any concentrated government-led effort would never address the magnitude of the task that is making China rich.


THE BUGGY RESPONSE:

Thanks for the first-hand comments, Mr Silliker. They are matched by what others encounter, provided they travel in places other than Hong Kong, the coastal booming cities of the southern coast, and Beijing.

More generally, for all the big epochal changes under way since 1978, they add up, it seems, to a very lopsided growth record. A few regions have flourished, most haven't; the countryside where over a third of the population still finds a livelihood has been badly neglected since the early 1980s; huge inequalities in income across social classes have occurred; unemployment is probably around 20%; the state-dominated enterprises in the northern rust-belt continue to gobble up Chinese savings, funneled by bad-debt ridden state banks, to stave off bankruptcy; the environment has suffered badly; and no social security safety net looks like emerging soon. Probably about half the Chinese population has gained, on balance, from the changes since 1978; and the other half either hasn't and been hurt. In the process, as the buggy article tries to show, the CP has transformed itself into a self-serving engine of corruption and wealth-grabbing on a vast scale, all the while clinging to its power and prestige as social tensions mount and political alienation proceeds apace.

Posted by Michael Gordon @ 07:47 PM PST [ continue ]

Reply to a Visitor: Muslims in France and the Rest of the EU vs. the US

From Steve Shea, who has left us some stimulating comments before --- most recently on China and US trade problems --- the following comment has arrived. It's followed by the buggy response.

From Steve Shea, who has left us some stimulating comments before --- most recently on China and US trade problems --- the following comment has arrived. It's followed by the buggy response.

Great piece. Enlightening. Next time around would you comment on what effect if any the changing population demographics i.e. increasing percent of Muslims , plays in French policy .


THE BUGGY RESPONSE

Thanks for the comment, Steve --- and your earlier ones.

As you'll see in a few moments,, some previous buggy prof articles have dealt with the rapidly growing Muslim community in the EU --- about 15-20 million in all, very young, increasingly fundamentalist and alienated, lots of violent crime alas. By contrast, the US's far Muslim population is smaller --- about 2-3 million according to two expert surveys published in the fall of 2001 --- and it's far better educated, employed, and assimilated; specifically, American Muslims have higher levels of education and income than average Americans. For that matter, there are scarcely any signs of alienation here. Most American Muslims are from Asia, though immigration from the Middle East was rising in the 1980s and most of the 1990s. Note too: overwhelmingly, Arab-Americans are Christian and have been here for generations.

France has the largest Muslim population. Of the 57 million or so Frenchmen, about 5 million are officially counted as Muslims, though the figure if probably closer to 7 million if you consider illegal immigrants and, more important, wider the criteria of counting who is a Muslim. Does he or she have to belong officially to a Mosque . . . that sort of thing.?

Posted by Michael Gordon @ 07:23 PM PST [ continue ]

Tuesday, September 23, 2003

WILL PACIFIC ASIA OVERTAKE THE WEST IN WEALTH? WILL CHINA BECOME AN ECONOMIC SUPER-POWER? Final Version

On Brad DeLong's web site , DeLong --- a talented UC Berkeley economic historian who uses his historical work to illuminate contemporary economic trends, problems, and policies --- posted the following brief paragraph about Pacific Asia, China, and the West and their comparative economic futures, then invited responses. Always happy to offer his two-cents' worth on any topic --- well, almost any --- the buggy prof unfurled two lengthy sets of comments by way of reply . . . both generally critical of the claims in that DeLong paragraph. You'll find the first buggy set here: essentially, a lengthy critical answer in the negative to the two questions enshrined in the title of this article here.

First, The DeLong Post:

"The Asian Century" Martin Wolf looks forward to the Asian Century:

FT.com Home US (the Financial Times of London): "Asia's rise is the economic event of our age. Should it proceed as it has over the last few decades, it will bring the two centuries of global domination by Europe and, subsequently, its giant North American offshoot to an end. Japan was but the harbinger of an Asian future. The country has proved too small and inward-looking to transform the world. What follows it - China, above all - will prove neither... "






INTRODUCTORY COMMENT

There seem to be two issues raised by the Martin Wolf argument . . . to the extent anyway that Brad DeLong's brief summary of it can be grasped. (Note the qualifier here: The Financial Times itself, alas, won't allow those who aren't paid subscribers to see it without payment.) One issue is what will happen to Pacific Asia --- presumably the region Wolf is referring to, rather than Central Asia or the Indian Sub-Continent or the Near East as it used to be called: Iran and the Levant. The other is whether China itself will become an economic giant --- dynamic, technologically advanced, and rich like the European Union and North America.

I. ASIA'S INEXORABLE MARCH TO OVERTAKEN THE WEST?

Posted by Michael Gordon @ 05:05 PM PST [ continue ]

Some Interesting First-Hand Comments From France About The Recent Death-Wave, and the Buggy Response

From Francis Turner, an Englishman living on the French Riviera, the following comment has arrived that helps to illuminate a seamy side of the astonishing wave of deaths --- 12,000 (the equivalent of 60,000 here) --- that overcame defenseless French elderly who languished in 110 degree weather in stifling apartments or in understaffed hospitals without air-conditioning as the French elite and others bounced and bounded about on the Riviera or in tony mountain retreats or, in the case of President Jacques Chirac, for weeks in Canada . . . where, according to French reports of late, he probably had a facial uplift.

What follows is Mr. Turner's comments, then the buggy response.


The Washington Post article by Gene Weingarten on US and French stereotypes of one another is indeed hilarious, and your refresh of recent French history most excellent. As an Englishman living on the Côte d'Azur I am frequently amused by the "sound and fury signifying nothing" that makes up most of French politics. On all this, your article was right on the money.

However I think I should point out that a large part of the reason why so many people died in the heat wave was due to the lack of filial attention by the French general public themselves. It is true that the government could (and should) have issued more warnings about the forecast heatwave and could have forced more doctors and nurses to take their vacation at a different time of the year, but that is by no means the whole story. Many French families buggered off on their congées (vacs) leaving their aged and infirm relatives behind and utterly failed to take any responsibility for their well-being. Indeed there were numerous stories of families being unreachable by hospital who wished to report the death of relatives as well as those cheerful stories of the dead being discovered by the family on its return home and/or the smell of decomposition annoying the neighbours. Very few of the casualties suffered from much more than heatstroke and dehydration, both of which are easy to cure by lying in bed and drinking water. Doctors and nurses are not exactly necessary nor, though it would shock the French pharmacists that there are pills they can dispense that are more advanced that some vitamins and mineral salts. However what they do need is a bit of care and attention such as having someone go shopping for them and remind them to drink etc. Admitting this would unfortunately require the French to admit that the government cannot solve all problems and that individuals should take some personal responsibility for their nearest and dearest

Posted by Michael Gordon @ 04:31 PM PST [ continue ]

Monday, September 22, 2003

Why The Buggy Prof Frequently Lists Different Versions of the Articles Here

Originally published here in early May this year, this article --- prompted by a suggestion from a visitor --- subsequently climbed a golden ladder to cyberspace heaven, along with its sisters and brothers, several dozen of them all mercilessly scythed out of time by a nasty hacker attack on July 1st. The demon! Not to worry though. Little by little, as with the current metamorphosis, the ghostly originals have sprouted angel-wings and descenden graciously back to earth where, for good or bad, they agree to start a reincarnated life on the buggy site again. It explains why, a good half of the time --- maybe more often than that, come to think of it --- you'll find various versions of the articles listed in the title.

After some bugged-out bantamweight reflection --- nothing more: about all a droning, on-the-fritz brain is capable of these days --- prof bug has decided to start listing the latest version-number of an article. The reason for the change? Nothing cosmic, just something worth while . . . or so it seems. How so?

Well, as regular visitors here are likely to know, these are fairly long articles --- sometimes 25 to 35 pages in Word: at times even longer --- and the urge to get out something every day or two means that you can't leisurely do what we chalky pedagogues prefer to do with our incandescent stuff: write up with calm patience a full first draft; then hang loose another few days and get some distance from your initial thoughts while letting the murky unconscious parts of your mind buzz away in their dark and dismal subterranean chambers; then maybe --- just maybe if you're in luck, no need trying --- eventually find that some idea or two has been sent sneaking upwards to center-stage consciousness. After that, the rest's a cakewalk. Nothing more to do than glide back slowly Fred-Astaire style to the pc and revise with those giddy brainwave serendipities as new guides. No hurry, old boy. Take your time; take your time. Next grant application not even due until next month.

Oh, and be sure to pad your footnotes, demonstrate your up-to-date savvy with advanced statistical methods/game theory modeling/conceptual analysis and other wizard-like techniques, and drone on excessively about the follies of fellow scholars who have dealt with the subject in the past. And of course, all the while you're revising in a gliding elegant manner, glance wonderingly at your original style; maybe even giggle or moan as is your wont at all the swarming howlers and logical idiocies and bewildering lack of evidence for general points; and not least, depending on your staying power, suck in a slow long breath or two and iron out all the awful remaining wrinkles with determined grit: sentences running on too long, lack of clarity, a windy section, an even windier one a few moments later, and typos galore.

Posted by Michael Gordon @ 03:56 PM PST [ continue ]

Sunday, September 21, 2003

Some Technical Points in the Last Couple of Articles Clarified: Doubts about 1) Crowding Out Theories, 2) Alleged Low US Savings, and 3) Alleged Panic Sell-off by Foreigners of Their US Financial Assets

Those who've read the previous two articles on US trade deficits and whether they're something to worry and fret about might have encountered some theoretical materials that are worth clarifying here. In particular, what follows tries to throw light on two theoretical claims: 1) Government fiscal deficits crowd out either private investment or US exports (or both), resulting in rising interest rates in the first case or rising US current account deficits in the second. 2) The US economy reflects a problem of low national savings compared to other industrial countries.



NATIONAL SAVINGS: A COMMON CONFUSION

At the outset of the last article, it was noted that there's a frequent confusion made --- you'll find it repeatedly, for instance, in the forum discussions at Brad DeLong's site --- between two different things: the level of US national savings on a net basis (hence minus the cost of replacement capital deducted from gross investment), on one side, and on the other the fact that our national savings aren't sufficient to cover our national investment each year. The latter is true. By definition, the gap is equivalent to the amount of net foreign investment that flows yearly into the US economy on capital account in the balance of payments; in turn, by definition, the net inflow of foreign investment here is equivalent to the size of the current account deficit in the trade of goods and services (plus unilateral transfers, such things as foreign aid or Mexican workers in the US sending money back home to Mexico).

Posted by Michael Gordon @ 01:14 PM PST [ continue ]

Friday, September 19, 2003

Worries About the US Trade Deficit and a Falling Dollar: A Reply to A Visitor's Comment

A visitor, Steve Shea, left a thoughtful comment at the end of the previous article that looked at the worries being expressed about the growing size of the US current account deficit . . . and the likelihood, consequently, that there will soon be a rapid sell-off of US financial assets by foreigners, fearful that the US couldn't sustain such high levels of debt to them. In the upshot, it's argued, the exchange rate of the dollar would fall sharply, and all sorts of harm would ensue to the health of the US economy and the manufacturing sectors of foreign countries dependent on exports to the US. That's one scenario, the doomsday one. The other, a soft-landing for the US economy, still seemed to the buggy prof to exaggerate harm: either to us or to others. The evidence? The buggy prof looked at a comparable period in recent US economic history --- 1985 - 1995 --- when, like now, there were record US federal deficits, alleged low-levels of savings a dependence therefore on imported foreign capital to invest in our financial assets, and then a sharp fall in the value of the dollar against major currencies at the time, especially the Yen and the German Mark.

A brief sidebar clarification about "alleged low savings" in the US. There's frequently confusion here. By definition, savings and investment have to equal one another over the year. By definition, too, the current account deficit each year is equal to the gap between net savings and net investment by Americans ---including, observe, American investments abroad --- generated out of US savings, with the gap then closed by importing the capital from abroad. (The imported capital from abroad --- foreigners investing in American financial assets like bonds and equity --- then raises the exchange rate of the dollar and leads to an equivalent size deficit in current account: the trade in goods and services.) But wait! To note a gap between net American savings and net American investment isn't the same as saying we're low savers as a country. As it happens, some fairly recent studies find that we are just behind Japan in our savings (and hence investment) levels if we look at gross investment and expand the meaning of the term in entirely persuasive ways. For a particularly good readable article of high quality on this count, see See Milka S. Kirova and Robert E. Lipsey, Measuring Real Investment: Trends in the United States and International Comparisons (National Bureau of Economic Research: Cambridge, Ma. February 1998), Working Paper 6404.



Steve's Comment

What about the time period 1970-75 when it was more the strong DM than the weak US dollar that caused economic discomfort here in the USA? Most of the member countries of the European Community --- 9 in those days --- tied their currencies to the DM after 1971; and --- it was alleged --- liquidity [in the US? Prof Bug] was tight. The result showed up poor accumulation of capital stock and real estate growth.

The answer to professor DeLong's question may be the result of how quickly China matures as a developed country.If and when and how China allows its currency to float, will they become an alternative to the US as a finacial trading vehicle ? Will money be diverted from the US to Asia slowing growth and prosperity here. The US dollar would not devalue; the New Chinese Dollar would appreciate resulting in lower stock and real estate values in the US. SWS

Posted by Michael Gordon @ 05:05 PM PST [ continue ]

Thursday, September 18, 2003

Should We Worry About the US Trade Deficit?

The follow buggy commentary was prompted by some observations made by Professor Brad DeLong, a UC Berkeley economist whose writings on contemporary economic trends and problems are always illuminating, even when you don't agree with them --- and not least, thanks to an unusual grounding in economic history that helps inform his insights into contemporary matters. Specifically, on his web-site, Brad DeLong, he commented at length on the growing size of the US trade deficit in goods and services --- the current account in the US balance of payments (offset by a similar size surplus yearly on capital account, as foreigners invest more and more in US financial assets, both long- and short-term) --- then argued the trend is unsustainable: that at some point, foreign investors will grow nervous about the ability of the US economy to handle such a large and rapidly growing level of debt owed to foreigners, and that consequently at some point their nervousness will translate into a large sell-off of their US investments. The result? A rapid fall in the exchange rate of the dollar in terms of other currencies, especially the euro, the yen, and the Chinese yuan.

The further results for the health of the US economy?

Here there are two contrasting scenarios that DeLong sets out: one gloomy doomster stuff, the other a softer-landing for the US economy. Both, even the softer one DeLong hews to, predict that the value of the US$ will fall by about 25- 50% in currency markets. Both, note, have to do explictly or implicitly with the level of current US savings, private and public --- the latter, the federal deficit, now running on the order of about 4 - 5% of US GDP this year and probably next. (Not, by the way, the higher % reached by federal deficits. That honor goes to the Bush-Sr. one of 1992, something close to 6.0% of GDP that year.)

As you'll see, on the buggy view even the soft-landing that DeLong predicts seems too fraught with worry. The chief reason? The US has already had a recent experience with a sharply declining dollar --- and on the order of 50%. That was in the late 1980s and early 1990s; and far from creating harmful fall-out for the US economy --- in rising inflation, rising interest rates, soaring prices of imported oil, and the like --- there were scarcely any bad ripple effects visible at all. Oppositely, in the space of 5 to 6 years, US exports to the rest of the world doubled, and by 1991 and 1992, the large current accounts of the early 1980s had disappeared.

Posted by Michael Gordon @ 04:24 PM PST [ continue ]

Tuesday, September 16, 2003

Updated Final Version: A Remarkably Humorous Essay on French and American Stereotypes of One Another, Full of Agile Insights Too

Written with crackling, tongue-in-cheek humor and unusual insight into silly national stereotypes --- French and American, of one another --- this lengthy essay by Gene Weingarten, an editor of the Washington Post Sunday magazine, is a delight from start to finish, a product of an uncommonly talented mind. Probably only a few dozen writers in the entire world could produce an essay of its zest and intelligence, none of them academics . . . generally a solemn crowd, especially in this era of hotfooting careerists off to one conference or another, in between their frantic bouts of applying for this or that grant (all the while praying fervently --- please, please, Heavenly Father! --- that the next grant will be generous enough to allow them to move forward from the cattle-carrying section of their conference-jaunting airplanes to tonier business-class).

Read and enjoy the essay, anything but solemn. And see whether it doesn't, even as you laugh out loud, hit a bull's eye every paragraph . . . sometimes, when you get down to it, several times every paragraph.

The Problem With the French . . . is that they have no word for rapprochement.

A Difference in National Stereotypes

There is a difference though, an important one overlooked by Weingarten. Despite American stereotypes of the French --- which go back hundreds of years, influenced by English views of France --- there isn't any semi-official, ongoing national ideology of anti-French nature in American life that parallels French anti-Americanism, something the buggy prof site has repeatedly shown . . . not least in its summary of two recent books by French writers (the links will be given later here). The chief reason? The huge power gap, and increasingly divergent cultural impact. It's lopsided, with the American impact and intrusions into French daily life, for good or bad, without parallel and scarcely any echo of opposite influence in this country.

Posted by Michael Gordon @ 12:36 AM PST [ continue ]