Kejda Gjermani her miscellaneous musings

9Apr/130

The China Bubble

Note from the author: This article was written in early 2010. It could take some editing for which I can't spare the time, so I've decided to publish as is, because its thesis rings true, and could be received with interest today.

Thousands of students take part in a stunning display of kung fu choreography at the Tagou martial arts school in China -http://www.dailymail.co.uk/news/article-2158133/China-10-000-students-perform-incredible-display-kung-fu-choreography-celebrate-countrys-rich-history.html

Thousands of students take part in a stunning display of kung fu choreography at the Tagou martial arts school in China (via The Daily Mail)

“We will bury you!”—One popular myth has Nikita Khrushchev banging the UN delegate desk with his shoe as he blurts out this infamous threat. Another one takes its gist to have been military, rather than … economic. This second myth is harder to dispel, owing to the difficulty of imagining today, decades since the spectacular failure of the Soviet Bloc economies, just how formidable their prospects had once seemed. Yet throughout the 50s and early 60s, their swift transformation from peasant societies into industrial powerhouses was generating much awe and panic. 1 Poor and backward as they started out, these economies could boast growth rates of 6 to 8 percent—unheard of in the West—sustained like clockwork year after year and punctuated by stunning technological achievements, such as the launch of Sputnik 1 and the mission of Yuri Gagarin.

These early success stories inspired many attempts at an explanation, some of the most radical of which called into question the very soundness of liberal democracy, let alone that of the free market. Voter caprice in capitalist societies was thought to wanton without control, preventing long-term planning and derailing economic growth. Command economies, by contrast, let nothing stand in the way of progress—certainly not any scruples over the well-being or civil rights of their citizenry. Disciplined, farsighted, and unmolested by electoral upheavals, they pursued a deliberate course of industrialization that would surpass the uneven, unplanned, and disjointed performance of free enterprise. Such, at any rate, were the advantages imputed to the collectivist rising powers of the East by many puzzled intellectuals in the West. But as reliable data began to leak from the Iron Curtain, it it quickly undeceived those who could understand it.

Far from representing the inherent superiority of central planning, the performance of the Soviet Union and its satellite states turned out to be fully explicable by the large share of inputs they commanded. 2 That an economy should grow faster when it employs more resources toward future production has always been understood: more input yields more output. Bringing women and rural dwellers into the workforce, uprooting illiteracy, enforcing compulsory schooling, and amassing physical capital into infrastructural and industrial projects can all lead to what economists term extensive growth.

That is what the economies of the Soviet Bloc experienced after adopting just such measures, what they owed their brief meteoric rise to, as well as their ultimate undoing. 3 For even if the workforce could be thoroughly educated and gainfully employed, its growth must run into natural constraints. Not even the sustained accrual of physical capital, with all the sacrifices and deprivations it entails, can prevent extensive growth from drooping—for the simple reason that capital-intensive production is inevitably subject to diminishing returns. To expand forever it takes intensive growth—that is, increases in output for each unit of input—achievable through improvements in technology and ever more efficient use of resources. This is what the economies of the Soviet Bloc couldn't do. In fact, by the 1960s they started deteriorating to an extent not fully comprehended until their dismal collapse.

Today the Communist experiment is nearly extinct. Only a few sad relics still linger—in Cuba, North Korea, Laos, and Vietnam. But there is one elephant in the room—one specimen bent on gainsaying everything the world has ever learnt from the Soviet breakdown. And that is the People’s Republic of China. As of this writing, its economy ranks the world’s fastest growing and third largest, not to mention its biggest exporter.

It was a comparative advantage in the manufacturing of cheap, labor-intensive goods that has dragged China out of the muck where it was stagnating since Mao's days. That China ever harnessed it marks a monumental break with precedent for a Communist country: the Soviet Bloc could have tapped into the very same comparative advantage, but didn't,  having decided on principle against trade with developed, capitalist countries. China broke the mold in the late 1970s with its debut in the global market and has since become the “workshop of the world.”

As evidenced by this economic miracle, Vladimir Lenin must have been ahead of his time when he urged the Politburo to relax its grip on agriculture and small businesses and to tighten it over “the commanding heights” of the economy instead. In China the Communist Party dictates top-down growth through currency manipulation, infrastructural undertakings, and demographic controls, while foreign investment, private or semi-private endeavors, and natural advantages in the manufacturing sector all contribute to bottom-up growth. If there’d ever been a golden mean between central planning and free enterprise, the Chinese must have come closest to striking it.

But how much higher will China rise as a Communist mongrel? Predictions differ, though evermore over when—rather than whether—it will overtake the U.S. as the world’s economic hegemon. Jim Rogers, hailed as a commodities-investment guru, recommends “Teach your children Mandarin” as the surest recipe for surviving not only the recent financial crisis but also others yet to storm, and is practicing what he preaches when it comes to his young daughters’ education. The late Nobel-laureate economist Paul Samuelson believed China’s supremacy to be just around the corner. In his last op-ed contribution 4 to the New York Times, he wrote: “We begin now a new era in which China will increasingly make obsolete America’s 1950-2009 world leadership. Your children and my grandchildren will live in this new and challenging era. ... [T]he day will come when China’s total real GDP will exceed America’s. Boohoo.”

Leading analysts from Deutsche Bank and PricewaterhouseCoopers have divined the early 2020s as the time when the scepter shall be passed. Unnerving as the prospect of quietly falling behind the Chinese may seem, some fear an even worse outcome: active sabotage by the Chinese authorities, who control the world’s largest pool of dollar reserves and could liquidate it at any point, thus bringing the U.S. dollar—and by extension, the U.S. economy—to its knees.

So should we all resign to our fate and get busy learning Mandarin?

Before deciding the question, Americans better take into account their long history of glamorizing foreign rivals. The alarm over Soviet superiority has already been adduced to establish some perspective, and can be readily supplanted by modern equivalents, should China enthusiasts dismiss it as either dated or too “ideologically charged” to be relevant. In the 1960s and 1970s it was West Germany—that indomitable arsenal of high-quality exports, whose disciplined workforce never tired or blundered—that surely would leave the U.S. economy in the dust. Close, but no cigar.

No sooner had one threat proved unworthy of much concern than the American public fixed its feverish imagination onto the next. At some point in the 1980s, Japanese buzzwords started haunting the lexicon of business management: kaitzen, tokkin funds, baburu, keiretsu, zaitech, etc. American students—needing no prompting by Jim Rogers—were taking crash-courses in Japanese so they could speak the language of their future bosses. American businessmen, for their part, if too old to learn the language, could—and often did—at least straighten out their hair and dye it black. 5 And who could blame them?

Japanese banks had become the biggest in the world. Japanese companies were wolfing market share in every sector they had their eye on. And adding insult to injury, Japanese tycoons were conspicuously hoarding trophy properties all over the United States—among them Hollywood studios in California and the Rockefeller Center and Exxon building in New York. The Japanese were clearly the smartest race among men; their regimented variant of Capitalism, manifestly superior; and their takeover of the world, inevitable ... until 1989. That year the laws of physics broke down, leaving the stock market of Japan to crash and its economy to enter an unprecedented era of stagnation through which it is still plodding.

It looked as though Ezra Vogel’s bestselling prophecy Japan as Number One would not be fulfilled after all. Americans had scarcely heaved a sigh of relief when their anxieties rekindled, this time over the so-called Asian Tigers. That frenzy lasted well into the mid-to-late 90s, until put an end to by the Asian financial crisis. And now it’s China. But of course, this time, we are assured, it’s different.

So it is every time. The particulars are never the same. Yet all these cases of overblown alarm seem to share at least one trait. And that is the premise on the alarmists’ part that whichever up-and-coming economy is poised to take over the world will continue to enjoy nearly forever its outstanding growth rates of the moment. From this naive assumption the crudest, most unrealistic extrapolations often ensue. No predictions as to when or whether China’s economy will outdo America’s are worth taking seriously unless the growth rates they forecast for China stand a chance of reflecting reality. And for that future growth to be modeled realistically, its sources and constraints must first be understood.

The Past, Present, and Future of China’s Growth

Many forces are propelling China’s export-driven growth—the main two being a spring-back effect and a catch-up effect. The former denotes the gradual unwinding of the most debilitating policies and regulations from the Maoist past—as soon as they are rescinded, things get done less backwardly and growth bursts free. Short of removing themselves from power, the Chinese authorities cannot eliminate many more roadblocks to development than they already have. And so, the impetus of the spring-back effect is mostly exhausted. But to the more lasting benefit of China, it has precipitated a catch-up effect, which is what economists call the empirically observed tendency of poor countries to grow faster than developed ones.

For the most part, this economic convergence is a positive externality of globalization. China need not traverse the long and arduous learning curve attendant to the discovery of technologies that are now commonplace in the West. It need not devote time, capital, and manpower to the transition from the eight-bit to the 16-bit to the 32-bit to the 64-bit microprocessor. Everything the ingenuity of man has already produced, China can readily imitate, whereas technologically innovative countries must break their own records, so to speak, in order to grow. But if the Western look and feel of major Chinese cities is any indication, the country has run out of commonplace technologies to adopt.

International trade too works at bridging gaps in development. The poorer a country is, the cheaper its labor and the more attractive its exports. Yet the more China grows, the richer it gets. Workers’ wages begin to soar and so do production costs. Were it not for aggressive mercantilism, China’s comparative advantage in durable goods might soon peak—especially given fierce cost-competition from other big emerging markets such as India. Accordingly, the impetus of the catch-up effect is well on its way to teetering.

Manipulations of Labor

But Chinese authorities don’t just lubricate the export machine and leave the rest to God’s will. Rather, they do what central planners do best—that is, marshal resources on a grand scale to achieve fast industrialization.

Through sweeping educational reforms, they have slashed illiteracy and greatly improved the quality of higher learning. This ever more educated workforce has contributed a great deal to China’s growth so far. From now on, however, diminishing returns set in, as it is neither possible nor worthwhile for all Chinese youths to obtain Ph.D. degrees. Besides, the farther removed from the high-school level, the less of a commodity education becomes—and the less amenable to central planning.

Also thanks to Communist reforms, a good 45 percent of Chinese women now work—whereas almost none did before 1949. But although China can do better in this direction, it is at least halfway there. And since the 1980s, hundreds of millions of impoverished peasants have been encouraged to resettle from the countryside into the cities, where their hands can be put to industrial use. But the balance cannot be tipped much further, as today the Chinese population is split rather evenly between urban and rural.

In the 1940s, the Second Sino-Japanese War and the revolutionary turmoil that followed it had laid most of the country to waste. But as soon as China settled into Communist rule and began to enjoy some stability, a baby boom ensued, briefly interrupted only by the Great Leap famine. This population burst was at first considered a drag on economic development because it suddenly burdened families with a barrage of children—mouths to feed, too young to work. 6 To check this bothersome trend, the authorities resorted to draconian controls over people’s fertility—including but not limited to the notorious one-child policy—as a result of which, just as the baby-boomers came of working age there were fewer and fewer children to take care of. With such a surge in workers and slash in dependents, all the while the population was still growing, China’s dependency ratio fell drastically and its economy felt a staggering boost. In fact, official Chinese statistics credit this factor alone with over a quarter of the country’s economic growth between 1982 and 2000. 7

But what looms ahead now is one catastrophic reversal. In traditionally patriarchal families, the restriction to one child has often led to the death by neglect of newborn girls. Aborting female fetuses when their sex becomes known is also common. In the upshot, Chinese young men are so prevalent today that a full 17 percent of them will never find wives. This lopsidedness, together with the low fertility rates, will whittle down the Chinese population soon and fast. Worse yet, as the baby boomers reach old age, there will be fewer and fewer young workers to support them. Here it is worth noting that for all its Communist pretensions, China lacks a social safety net. Rather, adult children are charged by the Chinese constitution with providing for their parents. Starting in the 2020s, the Chinese economy will be squeezed hard between a shrinking population and a deteriorating dependency ratio.

Of these many attempts at demographic engineering, some have borne fruit already and others are about to backfire. It is obvious that the Chinese authorities like to meddle with their country’s human capital but recently they have started to play with physical capital as well.

Manipulations of Capital

Notwithstanding its market reforms, China still remains a country ruled by the five-year plan. To exalt the Communist leaders and prevent civil unrest, GDP must grow by at least 9 percent every year. This is considered an end in itself, dictated by the central committee and taken to heart by the local officials, who hold considerable sway over the sources of credit, the real-estate market, and the workings of state-owned enterprises. In turn, these enterprises control nearly half the Chinese industrial output and, being exempt from most market pressures, ground their business decisions on quotas, bribes, political favors, and propaganda value. All these entities work in concert to make the GDP numbers add up.

One ever-tempting shortcut is, of course, to make them up. Chinese statistics often contain double counting, flawed, missing, or lagging data, and sometimes fly in the face of proxy measures of GDP growth, such as electric output. All of this suggests that Chinese growth might in fact be over-reckoned—but not by much. What they cannot fake, the authorities must bring about. And they do. How?

Of all resources, physical capital lends itself to central planning the best: it can be accumulated almost at will, substituted for brute force, and put to specific use. For this reason, command economies tend to drive it hard. China is no exception: fixed-asset investment—into factories, equipment, infrastructure, commercial and residential real estate, etc.—has made up well over 33 percent of its GDP growth for every year of the last nine. Such numbers are astonishing.

Although large developing countries can be expected to amass capital apace, what we are witnessing in China is an instance of force-feeding rather than healthy appetite. That much is betrayed by the trend of the Chinese economy, which has grown at a near constant rate—however high—over the past decade, in spite of more and more capital fueling it every year. The incremental capital-to-output ratio (ICOR) has risen steeply in China since the early 90s and now measures well above that of Japan, South Korea, and Taiwan at their heyday. 8 Diminishing marginal returns on capital must already be at work.

When their returns taper off, capital-intensive projects attract fewer and fewer private investors, leaving a vacuum for the government to fill. The well-known inadequacies of commend economies with respect to allocating resources profitably and efficiently get even more accentuated when fixed capital is their medium. For underused infrastructure, empty shopping malls, vacant office buildings, and idle factories must contend with the annual costs of upkeep to counter depreciation, in addition to their upfront costs. And that it to say nothing of the unseen, though all-too-real, opportunity costs—that is, the alternative uses of that capital, which free enterprise could have directed to fruitful ends. When approving such projects, central planners often forget about these strings attached. Once the true costs hit home, they are liable to throw good money after bad if by doing so they can prevent the man in the street from noticing that his leaders make expensive mistakes—skyscrapers, factories, malls, and even entire cities eaten by rust if left to their own devices.

Consider South China Mall, by far the largest shopping center in the world, twice as big as the previous record holder, built by a “local boy” undeterred by the absence of airports or freeways or bustling cities nearby. Here workers clean the water canals every day, janitors sweep the dust, shopkeepers read and listen to music, and teletubby mascots run around with no children to entertain, for the entire complex is eerily empty. Instead of filing for bankruptcy, the mall has merely changed hands and is now owned and run by the government.

 

 

Note also the splendid Potemkin villages dotting the mainland today. Huaxi, for example, right outside of Beijing, is the world’s “tallest village.” On its amenities and housing projects the government has squandered over $360 million in fixed assets. It boasts the 15th tallest skyscraper ever built, with an even taller one under construction, and bestows on each family—courtesy of the Village Committee—a brand-new Mercedes, BMW, or Cadillac; a luxurious house worth $150,000; a generous cash allowance; free education and health insurance; as well as complimentary cooking oil. Talk about idyllic bliss! The village song blaring out of the ubiquitous loudspeakers reminds the “peasants” of Huaxi that the skies above them are the skies of the Communist Party and that their land is the land of Socialism. For the benefit of stunned Western guests, a voice interrupts the music to ejaculate, in English, “Actually, we like this kind of Socialism!”

 

Huaxi Village, Jiangyin, China -

Huaxi Village, Jiangyin, China - "A model socialist village."

In recent years, lavish experiments with steel and concrete have mushroomed all over China at a manic pace, which the stimulus program of 2008-2009 has only exacerbated. In proportion to the Chinese economy, this stimulus of $586 billion dwarfs even its American counterpart of $787 billion, a good $144 billion of which merely subsumes existing liabilities of the State and local governments. Not so in China, where far from receiving relief from the stimulus, provincial and local governments are borrowing afresh to finance it. At $150 billion, the current Chinese deficit bespeaks a rate of dissaving comparable to that of the U.S. government. This fiscal rush is exciting even more infrastructural development and construction projects—which is where Chinese capital and scarce resources seem to go to die.

Take for example the new municipal building somewhere in the remote province of Anhui—an exact replica of the U.S. Capitol. And in Inner Mongolia one can find New Ordos, a city built from scratch with government money to house over one million people, virtually none of whom have moved in yet. Anyone who has bought condos there is holding them “as an investment”—a telltale sign of real-estate speculation run amok.

In fact this trend of buying two to four condos and keeping all but one unoccupied is spreading like fire among the wealthy and upper-middle-class Chinese and evokes the same exuberant mentality common in the U.S. at the height of the recent housing bubble. Even in cities of red-hot economies such as Shanghai and Beijing, vacancy rates in new housing units and office buildings are crossing 25 percent. Yet the construction orgy continues. With prices of urban real estate inflating by as much as 80 percent and now claiming up to 20 times per capita income, major Chinese cities have become expensive places to live in, almost overnight. Innumerable families have tied up their multigenerational savings into steep down-payments for condos and apartments that will almost certainly turn out to be grossly overpriced. Out of a due consideration for them, it bears repeating that China has no social safety net. When this gigantic bubble bursts, rich and poor alike will be swept away.

Manipulations of Currency

China’s exports have long claimed a disproportionate share of its GDP—40 percent last year, doubled from a decade ago. Growing a colossal trade surplus requires excellent relations with trading partners from the First World, at which prospect the Chinese autocrats are not at all thrilled. Yet much as they begrudge this prickly dependence on the West and talk of boosting domestic consumption instead, they know that the export industry has been the main source of that wealth they love to squander on such grandiose projects as empty cities and picturesque skyscrapers.

Over the past couple of years, however, the global slump in demand has put the brakes on Chinese exports. To ease the twinge, the authorities have taken some ill-thought-out steps, such as building more factories even as existing ones either lay idle or cut production by at least half. This manufacturing boom is, of course, yet another outcropping of the stimulus program, as a result of which overcapacity now plagues many sectors of the export industry—in metalwork, textiles, chemicals, etc.—and commits China to more production and more exports in the future in order to keep these new costly workshops open.

This renewed need to promote exports breathes fresh vigor into the already thriving mercenary practices of Beijing. Currency manipulation, perhaps the favorite, is growing vehement. The Chinese resort to it to fatten the goose that lays the golden eggs. Formerly de jure and presently de facto, the yuan has been pegged to the dollar at an exchange rate that makes Chinese exports irresistibly cheap to Americans.

To keep the currency undervalued, the Chinese central bank must—and constantly does—buy dollars in exchange for yuan, so that the demand for the former can grow with the supply of the latter. As a result of such transactions carried out over many years, a mountain of dollars has accrued in the coffers of the People’s Bank of China, which, until recently, it could not but sit on or invest into U.S. government debt so as to earn a modest return. Thus it is crucial to understand that the largest pool of foreign exchange reserves the world has ever seen—$2.45 trillion and counting—belongs to the Chinese not because they deliberately set out to accumulate it for strategic purposes. Rather, it is the inevitable and increasingly unwelcome byproduct of their mercantilist policies.

One frightful fantasy which the American foreign-policy intelligentsia are prone to indulge is that, thanks to these reserves, the Chinese can wield all-powerful leverage over the U.S. economy—that they can dump all the dollars in their possession and thus debase the value of the American currency. In short, that they can wage economic warfare against the U.S. and win. These apprehensions spring from a fundamental misunderstanding of the subtle interdependence between China and America. True—the Chinese are our creditors and we are their debtors, but they hold no collateral: Over the years, they have sold us an endless stream of goods for less than those goods were worth. In return, they have accumulated inherently worthless paper currency—most held as Treasuries—whose only backing is the health of the U.S. economy.

These growing forex reserves cannot serve China as a “war chest” because its currency is, if anything, vastly undervalued, and its ability to repay international debts, unquestioned. They carry immense “potential energy,” as it were, while they sit idle, but are worth very little if used. For one thing, their sheer bulk is so tremendous that the liquidation of even a small portion would precipitate such a fast and sharp depreciation of the dollar as to decimate the value of the rest. The corresponding steep appreciation of the yuan would grind the Chinese export industry to a halt and put nearly half of China out of work—yet another reason why extreme dependence on exports is dangerous.

China's Currency Bubble

Source: "What the Renminbi Means for American Inflation" (url)

As for the repercussions in the U.S. economy, they wouldn’t be entirely dreadful. The dollar as a vehicle currency might be dealt a crippling blow, though that is far from certain, given the many past indignities, such as the collapse of the Bretton Woods system, from which it has rebounded more or less unscathed. The export and hospitality industries would flourish, and after the bad blood cleared with the bad loans, confidence in future American investments would soar, for the dollar can only appreciate from its lowest low. The rocky experience might even chasten the U.S. government into confining its spending to its means and forswearing runaway debt. On the whole, the Chinese can hurt no one but themselves by liquidating their dollar reserves. Though Americans may not believe this, the Chinese themselves do, and, resigned to the prospect of holding their dollar-denominated assets indefinitely, have taken measures unprecedented in the history of finance to protect their value against inflation.

Until recently, nearly all of these assets were held in the form of Treasury and agency debt, whose meager yield could not keep up with inflation and the other transactional costs to holding a foreign-exchange peg. But in May of 2007, in a move that garnered surprisingly little publicity abroad, China invested $3 billion of its dollar reserves into a 9.9 percent equity stake at Blackstone Group LP, a major American private-equity financier. This investment marks a breakthrough in the management of China’s forex reserves: the start of a shift away from U.S. government debt, which until recently was considered a safe however low-yielding investment, and into private equities and corporate debt, always risky but of potentially high return.

The trend continued, and by the end of 2007, the State Administration of Foreign Reserves (SAFE) of China had invested an estimated $100 billion into U.S. mortgage-backed securities. By 2008, its holdings included minor stakes at Rio Tinto, Royal Dutch Shell, BP, Barclays, Tesco, and RBS. According to Brad Setser, a member of the National Economic Council, “SAFE has built up one of the largest U.S. equity portfolios of any foreign government entity investing abroad, including the major sovereign wealth funds.... It appears [as though] SAFE began diversifying into equities early in 2007 and, rather than being deterred by the subprime crisis, it continued to buy.” Such ill-timed speculative dabbling into equities and corporate debt ended sourly, with losses to SAFE estimated at $80 billion as of March 2009.

But this is not all, for in September 2007 a new sovereign wealth fund was established—China Investment Corporation (CIC)—specializing in the investment of over $200 billion of China’s forex reserves into the equity and credit markets. Its holdings include a 9.9 percent stake at Morgan Stanley and a minor percentage of VISA. The governance and operations of both CIC and SAFE, though shrouded in bureaucratic fog, seem firmly entrenched in the political establishment. Their forays into equities mark the latest stage in the evolution of central banks and their subsidiary institutions from lenders of last resort to monetary authorities to, now, portfolio managers.

If China’s experiments with its forex reserves end up subsidizing American businesses as opposed to the U.S. government, so much the better. But when Chinese bureaucrats playing venture capitalists, unconstrained by any accountability to their taxpayers, throw billions of dollars not their own at speculative ventures, dislocations and inefficiencies might develop across any markets in which they invest. Moreover, the trustworthiness of firms in contractual business with the U.S. government may be compromised if investors backed by the Chinese government have any say over their operations. But these are tepid concerns overall. Of far greater importance is the harm China is inflicting on itself with its policies.

A country committed to a fixed exchange-rate regime must sacrifice its independent monetary policy and submit to that of the country to whose currency it pegs its own. So too China has little to no control over its money supply, especially now that it seems to have given up on sterilized intervention, and must import whatever inflation the U.S. economy produces in order to keep the yuan pegged to the dollar. As measured by M1, the money supply of China has ballooned by 35 percent between the end of ‘08 and that of ‘09. As measured by M2, it has expanded by 25 percent since March of ‘09. Inflation too is creeping up.

All this liquidity has flushed the pockets of ordinary citizens with cheap credit, which ends up into speculative ventures in real estate, construction, and manufacturing. Bank lending in China all but doubled in 2009 from the year before. By comparison, U.S. banks swelled up their loan book by only 10 to 15 percent each year between 2005 and 2007—at the height of the frenzy. Such overflow of easy credit provides rich and abundant nourishment to asset bubbles. And though China has known its share of market bubbles throughout the 1990s, all fueled by the government and ultimately traceable to the side effects of currency manipulation, the magnitude of the one now ballooning is unprecedented, as is the recent growth of Chinese forex reserves, which graphed, mimic an exponential function. Unprecedented fiscal abandon is also fanning the flames of speculative folly nationwide.

Not if, but when...and then what?

There is no saying when this bubble will burst or how much destruction it will leave in its wake but the outlook is grim. Civil unrest and political disturbances are not out of the question, but how Chinese foreign policy will reflect the upcoming tumult is not to be guessed at. China could lean heavily on its military might to compensate for its eroding economic power. Or it could sober up and renounce or postpone its global ambitions. Economically, the fallout could signify the death of mercantilism—the root of most evil in China’s economy. Though it is just as likely that an autopsy performed by Keynesian scholars will implicate the high saving rate as the cause of the crash.

But one thing is certain: The “Chinese miracle” does not give the lie to the economic lessons of the 20th century after all. Without question, China is undergoing its own industrial revolution. The world’s fourth biggest and most populous country has lifted itself from abject poverty. Monumental changes must unravel. The momentum of transition may last for decades. The turbulent particulars can bewilder observers. Nevertheless, the overarching path of economic development happens to be schematically simple. If we look past its bells and whistles, the Chinese economy shows a core made of extensive growth, just like the Soviet Union in its heyday.

Sales people introduce properties to potential buyers at the 2010 Beijing Spring Real Estate Trade Fair on April 10, 2010 in Beijing, China.

Sales people introduce properties to potential buyers at the 2010 Beijing Spring Real Estate Trade Fair on April 10, 2010 in Beijing, China.

Slowly, steadily, and diligently, the country’s labor pool and capital base have been expanded as far as their natural limits allow. Friction is now getting uncomfortable: the demographic resources are depleted; inasmuch as education is a commodity, the workforce is already educated; and if the accumulation of capital accelerates, the economy will scarcely receive benefit but the environment will suffer such a strain as to make not only radical ecologists, but any men of common sensibility squirm.

Innovation—the Philosopher’s stone of economic growth—cannot be planned. Chinese authorities can choreograph rural migrations and erect skyscrapers to prettify city skylines. But that won’t do. It takes something very different to create a lively, self-sustaining modern economy capable of intensive growth: steady property rights, unrestricted labor mobility, developed credit markets, provisions for intellectual property, and limits on bureaucratic interference—all missing in China. Only under such conditions can Hayek’s economic calculation problem be solved, entrepreneurship thrive, and decentralized knowledge direct economic activity. But when all you have is a hammer, everything looks like a nail. So instead of setting the economy free, Chinese central planners continue to experiment with mercantilist schemes and boondoggles of fiscal largess because these are the only tools at their disposal.

Any fears that China can remain what it is and still continue to grow at a breathtaking pace are, to put it mildly, unfounded. In order to compete with America, China would have to become like America; but if it did, it would no longer be a country to fear—prone to aggression or supportive of rogue regimes the world over. Instead, it would join the ranks of peaceful capitalist democracies and cease to pose a threat to the West. Such a metamorphosis should be welcomed and encouraged, not dreaded and undermined. To this end, nothing is more important than one often overlooked sector of the American export industry—that of culture and ideas. So far, the U.S. has exported to China its recklessly loose monetary policy and its penchant for wasteful fiscal “stimulus”—neither thing worth sharing. By contrast, the spirit of laissez-faire and the appreciation of liberal institutions—these most quintessentially American concepts—lie dormant today. With the U.S. sliding toward statism itself, their supply is too scarce even for domestic consumption, let alone for export abroad. If only America could become more like itself, and China more like America, the world would be a much safer and more prosperous place.

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Notes:

  1. Paul Krugman, “The Myth of Asia’s Miracle,” (Foreign Affairs: 1994)
  2. Ibid.
  3. William Easterly and Stanley Fischer, “The Soviet Economic Decline,” (International Bank for Reconstruction and Development / The World Bank: 1995)
  4. Paul Samuelson, “Heed the Hopeful Science,” (New York Times: 2009)
  5. 2003, William Bonner and Addison Wiggin, “Financial Reckoning Day,” page 118
  6. For a discussion of China’s demographics and policies, see H. Yuan Tien, et al. (1992). “China's demographic dilemmas.” Population Bulletin 47; June.
  7. “Demographic Dimensions of China’s Development,” Eduard B. Vermeer, Population and Development Review, Vol. 32, The Political Economy of Global Population Change, 1950-2050 (2006), pp. 116.
  8. John Wong, China’s Surging Economy, 2007, page 260
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12Jan/111

Are Chinese Mothers Superior?

Amy Chua and her daughter

Amy Chua and her daughter

A certain essay appeared in the Wall Street Journal last Saturday, titled "Why Chinese Mothers Are Superior," to which one excerpted reaction from the Journal community itself was "I am in disbelief after reading this article." What I am in disbelief about, after reading the article, is that the Journal published it. The author is a Chinese mother, Amy Chua—a professor of law at Yale perhaps best known for writing the New York Times bestseller World on Fire.

The essay affirms that stereotypical Chinese parenting produces stereotypical cases of success for the children raised in that fashion—impeccable grade reports, precocious competence in the violin and piano (but mind you, those instruments and no other!), and fortitude of mind in the child to boot—and it explains how all this can be achieved by drawing on representative episodes from the author's own experience as a Chinese mother. The most instructive and blood-chilling of these is the story of how little Lulu, Chua's youngest daughter, was compelled to learn, just in time for her piano recital, how to play "The Little White Donkey"—a most difficult piece, apparently requiring uncommon ambidexterity and, one would think, rapid and fluent communication between the hemispheres of a seven-year-old's brain, across its not fully developed corpus callosum:

Lulu couldn't do it. We worked on it nonstop for a week, drilling each of her hands separately, over and over. But whenever we tried putting the hands together, one always morphed into the other, and everything fell apart. Finally, the day before her lesson, Lulu announced in exasperation that she was giving up and stomped off. "Get back to the piano now," I ordered.... She punched, thrashed and kicked. She grabbed the music score and tore it to shreds. I taped the score back together and encased it in a plastic shield so that it could never be destroyed again. Then I hauled Lulu's dollhouse to the car and told her I'd donate it to the Salvation Army piece by piece if she didn't have "The Little White Donkey" perfect by the next day. When Lulu said, "I thought you were going to the Salvation Army, why are you still here?" I threatened her with no lunch, no dinner, no Christmas or Hanukkah presents, no birthday parties for two, three, four years. When she still kept playing it wrong, I told her she was purposely working herself into a frenzy because she was secretly afraid she couldn't do it. I told her to stop being lazy, cowardly, self-indulgent and pathetic.... I used every weapon and tactic I could think of. We worked right through dinner into the night, and I wouldn't let Lulu get up, not for water, not even to go to the bathroom. The house became a war zone, and I lost my voice yelling, but still there seemed to be only negative progress.... Then, out of the blue, Lulu did it. Her hands suddenly came together—her right and left hands each doing their own imperturbable thing—just like that.

The author beams with pride over this "success story" and seems to consider it a vindication of her school of parenting against all naysayers. And throughout the article, starting from its title, she does little to disguise her scorn for Western parents, their tolerance for underachievement in their own children, and their squeamishness at the sight or report of the treatment other (luckier) children undergo everyday in the hands of their Chinese mothers.

Having been long convinced that nothing harms stereotypical Western children more than their parents' stereotypical laxness, I nevertheless find appalling much of what Chua states and even more of what she implies. Perhaps the foibles of modern Western parenting have grown so obvious and so ridiculous that any criticism of them is allowed to stick and any proposed alternative is welcomed; the more diametrically opposed to the status quo, the better even. But what Chua is prescribing in her article should not be rashly applauded by even the most frustrated critics of modern parenting mores.

Read the rest in Commentary.

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19Oct/101

Oops!…They Did It Again

Nine minutes of pure sportsmanship gold:

The flower of Serbian youth proved its valor yet again by striking fear in the hordes of Moslem barbarians and Italian pansies. The double-headed eagle went down in flames for all to see. And if any doubts still lingered in your bosom as to whether it be Serbia that one day will rise again to save doomed old Eurabia from itself, well, now you had better believe it. Without a doubt, these fine sons of Serbia are the only hope left to our sickly Western Civilization.

A charming highlight: "At one point during the delay, Italy asked the Serbia team to walk over and try to calm their fans down. The Serbia players did so by applauding in an apparent ironic manner and held three fingers aloft in the traditional Serb victory sign."

Go Srbije!

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25Aug/1011

Mad Men Bores Me

If you’ve never watched the show, then never mind this review. To the rest of you I submit that Mad Men is one fraud of a series—pretentious and empty.

The first season fascinated me. Behind everything I saw and heard there seemed to be coming together the pieces of some very clever machinery of narration—tension pooling toward certain potentialities of the plot; the drama advancing and retracting unevenly, two steps forward, one step backward; some characters taking their first swipes at one another, others merely taking aim, all the while foreshadowing what makes them tick, Don Draper in particular, with his mysterious past. The preparations were exquisite. They’re carefully setting up every detail for something spectacular, I thought. And yet for three and a half seasons now the plot has done nothing but spin its wheels. In retrospect, I realize that I had mistaken superficial charm for substance all along. Mad Men is shot beautifully. Accented with quaint touches of imagery from the 60s, the set vividly recreates the feel of that decade—at least to dupes like me, born in 1986. But in terms of drama, I am afraid there is no there there.

Nearly everything interesting has long been flattened down to insignificance or hackneyed by overuse. If there is any point of composition in which Mad Men may now be said to resemble True Blood, that would be the mandatory inclusion into every episode of at least one scene of vigorous intercourse featuring the main character, as if it were Don Draper’s manifest destiny to overspread and to possess every woman crossing his path. Oh, please! I don’t care just how free love was back then. In all likelihood at least one woman would have refused this man’s advances. Even if not, the creators of Mad Men should have invented her.

Anyone remembers the first mistress of the series, the daughter of the Jewish client? How fresh she seemed, how nuanced her conversations with Draper, and how compelling their affair—her hesitation, the endearing attempts at self-restraint, the archness of her pride.... Had I known then what is so obvious now, that is, that Don Draper invariably gets to lift every piece of skirt he cares to, I wouldn't have followed with bated breath that brief romance or felt disappointed at its banal conclusion. But Mad Men should rather disappoint its viewers than lose their interest. Ever since this Rachel Menken left the series, Draper's flings have consisted of only flat characters with no inner life of their own and nothing of interest about their existence outside of Draper's hotel rooms or wherever they chance to copulate. Not only are they all flat, in E. M. Forster's sense of the word, but almost all alike—from coast to coast—as if cheaply mass-produced by the same factory. None of this would even bother me so much if I hadn't been getting the distinct impression, lately, that these dull manikins are trying very hard to evoke something—perhaps a sense of nostalgia, the spirit of their times, some cultural turning point.... Which is why every once in a while they will attempt a gesture or phrase so far outside the narrow range of mental life they're endowed with that we can't help cringing. A recent example is “Nobody knows what’s wrong with themselves, but everybody else can see it right away,” a perspicacious insight into theory of mind from one harebrained college girl, Stephanie, to whom Don Draper would most certainly have given a go-around like she'd never had before—as Duck Phillips puts it—had the revelation that her aunt Anna Draper was dying of cancer not got in the way.

This inferior quality of craftsmanship to the bimbos, once detected, somewhat impaired my ability to take Mad Men seriously. Nevertheless, I probably would have overlooked it if the main characters, at least, could keep me glued to the screen. But they can't. Betty Draper is the only believable creature among them: internally consistent, driven by circumstances and passions we can understand, her words and actions in perfect concordance with her personality; the only thing inexplicable about her being the creepy relationship with Glen Bishop, the young son of her neighbor. But the pace at which her emotions distill over and come to a head—comparable to the drip-drop of a barely leaking faucet—perfectly matches the show's overall pace of progression. It's worth noting, however, that we wouldn't know her so well had she not delivered convincing monologues from the psychiatrist's couch. Matthew Weiner must have learned that trick from the Sopranos: Though spilling his guts to Dr. Jennifer Melfi never seemed to do Tony much good, she earned her keep throughout the series by rendering him intelligible to us through his own words—and when she bailed out, I knew the end had to be near.

The other characters in Mad Men cannot afford this luxury of catharsis reserved for the likes of Betty and Tony. So in order to come off compelling they must be well stitched together in the first place and supplied with reasonable opportunities for behaving according to their nature. To that end, the creators should entertain clear intentions toward each character's role in the story and see to it that that role be fulfilled. When they don't, they end up with freaks such as Dr. Greg Harris, the husband of the lovely Joan Holloway, introduced as a frightening rapist but now mellowed into a pathetic sweetheart. Or Roger Sterling, distinguished for his pedestrian wit, who subjects himself to the indignity of dressing up as Santa for his office Christmas party in order to humor a client—a sadistic one—but goes out of his way to mortally offend and lose the business of another—a Japanese one—because...he fought them Japs in World War II. Or Peggy Olson, who never acts against her interests and seems to hold herself in high esteem—except that in the first season, Pete Campbell's humiliating insults to both her person and intelligence proved irresistible so she had to throw herself at him. About that whole affair, even Peggy's ignorance of being pregnant right up to the moment of delivery seemed more believable than the way these two people who secretly have a child together consequently treat each other.

In sum, too many characters too often behave out of character. Far from adding depth, these arbitrary slips undermine any perceived coherence to them. And even as the series progresses, we never get to know them any better than at the beginning. Take Don Draper. The glimpses into his brutal childhood, rendered as flashbacks, were intended as revelatory clues. But diminishing returns set in very quickly. In the end, Draper's past explains nothing of his present in concrete terms other than his unwillingness to physically chastise his son. More generally, it justifies his bleak outlook of life—but to that end, a far less dark and complicated past could have sufficed. This is a case of the end not justifying the means. And notwithstanding the elaborate anticlimax that went into his making, Don Draper still remains opaque. What drives him to promiscuity? Abused and unloved as a child, from where does he derive his enviable self-confidence as an adult? And what's with the wistful imagery in his creative campaigns—the Don Draper signature? What's the source of all this sentimentality? Can he, so unhappy in his early days and unsatisfied with married life, have such ready, first-hand access, as it were, to the tenderest recesses of America's collective unconscious? And there's much more to Draper that doesn't quite add up.

The same goes for the other main characters. Absent sounder development, perhaps an all-binding plot could have anchored them firmly in place. But Weiner doesn't seem all that intent on a plot, so the characters are left to float freely in their fictional universe, or rather blunder their way about it. The two-fold failure in composition—concerning both character development and plot structure—seems to bother no one, probably because it has no bearing on the ultimate purpose of Mad Men, which is to present a larger than life documentary about how the 60s were experienced by the specimens of an extinct class of New Yorkers. If this is what Weiner has set out to do, and he shows every indication of being interested in just that, then narrative, drama, characters—all fundamental elements of fiction—recede into the background. He does not hold their integrity sacred. On the contrary, if by their sacrifice the show could somehow increase its faithfulness to the time in which it is set, Weiner makes that sacrifice. Yet this very reconstruction of the past, whether done for its own sake or for extracting whatever lessons it is thought to contain, does not qualify as a legitimate artistic premise on which to base a work of fiction.

If the story the artist is interested in telling could have happened only in the past, then he has a valid reason for not setting it in the present. That's because plot takes precedence. The historical setting belongs in the background and must subserve the story—not the other way around. Herein lies the fundamental flaw of Mad Men: in this reversal of artistic priorities. It is why the show feels so anemic throughout. Even the most complex characters can be reduced to embodiments of the Zeitgeist—marionettes whose strings show, animated rather whimsically at every turn by whatever emotions the writers deem most representative of the 60s.

And what were those mythical 60s even supposed to feel like? A collage of second-hand impressions; most of them admittedly derived from the short stories of John Cheever—that literary master of everything insignificant in life. He is the quarry from which Weiner dug up most of the raw material that went into the making of Mad Men's background: the alcohol fumes and cigarette smoke that saturate the atmosphere, adultery as a common fact of life, dissatisfaction with a middle-class existence, detachment from one's spouse and family, and, on the whole, the pervasive suggestion that worms writhe under every rock happily baking in the sun. Style in this case being inseparable from substance, heavy borrowing from the short stories of Cheever also manifests itself in the episodic, self-contained, almost cameo-like nature of Mad Men—the plot's penchant for degenerating into dead ends presented as delectable vignettes.

Fiction that does not even aspire at Aristotelian unity can only redeem itself, if at all, by coming off wonderfully naturalistic. Rendering the facts of life faithfully entails some measure of vulgar realism, which might spoil the concentration of the narrative but which we might forgive nonetheless, as the price to be paid for crude sincerity. Mad Men, however, cannot claim this effect as an excuse for its disjointedness and want of focus. It is too studied, too sophisticated, too artful, and resorts to Cheeveresque flourishes too often to feel authentic. Even the 60s it affects to relive are a fictitious construct—bits of literature that wasn't even true at heart, misunderstood stereotypes from the world of our parents, echoes of a past too recent to be properly cast into fiction, fake nostalgia and fake cultural criticism.

I expect better from novels than even the most polished series of TV drama—and not because of any prejudice against the merits of film, as a medium, compared to literature, but because of the common practices in each industry. Publishers consider the entirety of a manuscript for appraisal whereas network executives approve a pilot without knowing how the rest of the show will come together. Sometimes not even the creators know—they just make it up on the fly. And when that is the case, we get treated to episodes or even entire seasons which, had the work been a novel instead of a television show, would have never made it past the stage of preparatory notes or rough draft.... In a word, we get Mad Men.

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20Aug/100

Greece and Serbia FRIENDLY

This must be seen to be believed:

Errr:

Some "friendly," eh?

For his part in the brawl—you know, the chair-tossing and head-punching—Krstic was detained by police overnight, and has since been released. According to the Associated Press, Greece's "sports violence squad" is examining the footage and deciding whether or not to press charges. I'm no expert in international sporting events, but I'd surmise that having to have a "sports violence squad" means things are a bit nutty.

Naturally, the Serbian coach is playing the old "half-naked Greek" card in Krstic's defense. [Insert hilarious quote by Serbian coach here—ed.]

Classic legal defense, really. Blaming half-naked Greeks has been going on for centuries, dating back to, at least, the Battle of Thermopylae. I like Nenad's chances, despite clear video evidence of him picking up a chair and throwing it at a crowd of people.

Well, one can only hope that this unfortunate diplomatic mishap between the great nations of Greece and Serbia does not upset their lofty plans of ruling the world together:

... One day ...

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17Aug/1012

A Lower Manhattanite’s Take on the Cordoba House

As a three-year resident of Lower Manhattan whose apartment is situated no farther from Ground Zero than the future Cordoba House—that is, a couple of blocks away—I might be expected to entertain no very tepid feelings toward this Islamic complex and the controversy it has provoked. As it happens, my take on the whole enterprise has undergone quite a bit of reassessment since I first heard of plans by Muslim developers of suspect financing to build a mega-mosque on Ground Zero. The phrasing of the last sentence alone should give some inkling as to the first corrections in order.

If built at all, the Cordoba House, or Park51, as it’s now being called, will be an Islamic cultural center hosting a library, auditorium, gym, swimming pool, day-care center, and culinary school—out of which some space for an indoor mosque shall be carved, true. But what a far cry from a mega-mosque of towering minarets, blaring out the calls of muezzins five times a day, summoning the faithful to prayer! And it wouldn’t stand on Ground Zero or even overlook it. As to the sources of the funds, the developers have so far raised only enough money to buy the old building on Park Place, which they intend to demolish. The rest, an estimated $100 million needed to actually build, furnish, and staff the 13-story Islamic complex, remains to be vouched for. No terror-tainted sources have been tied to the developers’ financing, nor any irregularities found with their assets. At this point, none are likely to surface either, at least not before more funds can be raised and their sources scrutinized.

And yet, even after the smoke cloud of misleading rhetoric is dispersed, a sour taste still lingers about this Cordoba initiative, which no profusion of goodwill can clear away. For one thing, there is the questionable symbolism of Cordoba, where Muslims, Catholics, and Jews admittedly lived in relative peace for a few centuries, but only as far as the former subjugated the latter two, at least nominally. However enlightened this Caliphate of the Middle Ages was, and whatever the merits of the arrangements that prevailed between its religious communities, none of them could be held up as a model for emulation in the 21st century.

Then there’s Imam Feisal Abdul-Rauf, the public face of the project. Though professing himself a moderate dedicated to improving relations between the West and the Muslim World—and taken as such at his word by the State Department, in whose employ he is currently journeying to the Middle East on a mission of “interfaith outreach”—he can supposedly reconcile said religious tolerance and liberality with the implications of the following statements (emphases mine):

I wouldn’t say that the United States deserved what happened [September 11, 2001]. But the United States’ policies were an accessory to the crime that happened. … Because we have been accessory to a lot of innocent lives dying in the world. In fact, in the most direct sense, Osama bin Laden is made in the U.S.A.

Asked whether Hamas meets the definition of terrorist group:

I'm not a politician. I try to avoid the issues. The issue of terrorism is a very complex question. … I am a peace builder. I will not allow anybody to put me in a position where I am seen by any party in the world as an adversary or as an enemy.

Is Feisal Abdul-Rauf a woolly cleric, well meaning but naïve, and perhaps somewhat scornful of consistency—moral and intellectual—that alleged hobgoblin of small minds? Or is he rather a subversive, astute fanatic, well versed in those formulaic platitudes that make a leftist’s heart melt but wholly unmoved by the charms of such things as Coexist bumper stickers? Of course, he might even be a mere career fundraiser, secretly indifferent to questions of theology or conscience, jealous of his professional reputation as bridge-builder extraordinaire, and too mindful of wealthy donors and patrons in the Middle East to risk stepping on their toes by damning their pet terrorist groups. In any case, Mr. Abdul-Rauf does not seem the kind of man anyone in his right mind would want to welcome into his neighborhood, especially as the head of his local Islamic community center.

Last and most important, although the most incensed critics of Park51 have shamelessly overstated the actual proximity of the complex to Ground Zero, I cannot but judge it in very poor taste to insist that this Islamic cultural center should be built nearly two blocks away from where the World Trade Center once stood. Even if the most honorable intentions could be imputed to the developers, demolishing a building damaged on September 11, 2001, by fragments of the hijacked planes, in order to erect in its place an Islamic center, is so obviously crass that they shouldn’t wonder why the majority of Americans—68 percent, by the latest count—oppose the undertaking.

That’s as far as I can sympathize with the opponents of the Cordoba House. And the American Center for Law and Justice could have obtained both my signature and my support had it organized a private petition for New Yorkers to civilly register their disapproval of Park51 instead of trying to block its construction through the courts. But, I should hope, the distinction between finding something distasteful and justifying coercive action against it cannot be so subtle as to elude most Americans. It is a hallmark of civilization—conspicuously wanting, by the way, in those Islamic societies whose young men seethed with rage and destroyed everything they could get their hands on because the portrayal of their prophet in certain Danish cartoons had mortally offended them.

It might have been possible to shame the developers of Park51 into reconsidering where to build their Islamic center, had their right to build it wherever they pleased not been called into question. But because most opponents started to conflate that matter with whether the mosque and Islamic center in Lower Manhattan were generally desirable or publicly acceptable, so, in turn, did some champions of the other side of the debate. In the process, the shady imam and his fellow developers have acquired the aura of noble “martyrs” to the cause of the First Amendment, bold visionaries molested by a growing mob of bigots—which is unfortunate and counterproductive. Of course, they must build near Ground Zero now, to prove that they can, their plight carrying such a high symbolic weight and what have you.

So we must contend with a thorny First Amendment case—and no, zoning laws cannot treat a mosque near Ground Zero as they might treat liquor stores near schools or strip malls in places where they offend local sensibilities, because neither liquor stores nor strip malls are expressly protected by the Constitution, whereas the free exercise of religion is. Therefore, no government interference with the developers’ property rights could be warranted. And this marks the first topic of public interest on which I fully agree with President Obama, who said:

Now, we must all recognize and respect the sensitivities surrounding the development of lower Manhattan. The 9/11 attacks were a deeply traumatic event for our country. The pain and suffering experienced by those who lost loved ones is unimaginable. So I understand the emotions that this issue engenders. Ground Zero is, indeed, hallowed ground.

But let me be clear: as a citizen, and as President, I believe that Muslims have the same right to practice their religion as anyone else in this country. That includes the right to build a place of worship and a community center on private property in lower Manhattan, in accordance with local laws and ordinances. This is America, and our commitment to religious freedom must be unshakable.

Neither did I find his subsequent clarification the least bit disingenuous; quite the contrary:

I was not commenting and I will not comment on the wisdom of making the decision to put a mosque there. I was commenting very specifically on the right people have that dates back to our founding. That’s what our country is about.

So there is no arguing on whose side the law is. As for decency, well, I wish I could say that decency, at least, were squarely on the side of Cordoba’s opponents, but their cause has been hijacked by the likes of Pamela Geller and Robert Spencer, bottom-feeding activists who, collectively, allege that Barack Obama is the love child of Malcolm X and extol Serbian war criminals indicted by the Hague Tribunal as valiant paladins of our civilization (for having slaughtered thousands of Muslims in the Balkans). Another leader of the opposition to Cordoba, John Joseph Jay, considers every single Muslim a legitimate target for murder. These three have founded the American Freedom Defense Initiative, which sponsors the anti-Cordoba ads now plastered over New York buses, and work closely with the aforementioned American Center for Law and Justice. Suffice it to say, such people do not represent me and should not represent anyone who understands what they are up to.

But leaving these anti-Muslim fanatics aside, the sane opponents of Cordoba—most of them staunch conservatives and champions of individual liberties—must still account for the unprincipled ease with which they propose to infringe the property rights of private developers. Hypocrisy, however, is a plague on both houses, conservative and liberal. For it is the latter, the usual proponents of Eminent Domain, most of whom have never heard of a Walmart or casino in their remotest vicinity whose construction they didn't want to stop, but whose lips are now curling up in self-righteous indignation at the gross encroachment upon these Muslim developers' property rights. Of the many counterfactual scenarios and thought experiments so popular with those pundits fond of reasoning by analogy, my favorite is by , from her excellent piece in RealClearPolitics:

Let us consider a hypothetical, leaving aside for a moment the usual examples involving Germans and Auschwitz or the Japanese and Pearl Harbor. Suppose a group of Christian anti-abortion fanatics bombed the offices of Planned Parenthood in New York, killing hundreds. Suppose that, 10 years later, a conservative Christian group, strongly pro-life though repudiating violence, wanted to build a 13-story community center and church next to the site of this tragedy.

Most likely, the roles in this debate would be reversed. Quite a few liberals would denounce the planned construction of the center as a slap in the face to the victims and their families; the likes of Sean Hannity and Sarah Palin would decry anti-Christian bias and voice outrage that the actions of a handful of extremists would be used to denigrate all Christians or all abortion opponents.

Indeed. Apparently, no ground is as hallowed as to deter some from exploiting the sentiments it commonly excites. But of the 68 percent of Americans opposed to the Cordoba House, I wonder what percentage concede that the developers have every right to build their mosque and Islamic complex near Ground Zero. And whatever our numbers be, I also wonder, who represents us in this debate?

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5Aug/100

Why We Went into Iraq, According to William F. Buckley, Jr.

Having failed in all my attempts to trim down this video into the interval of interest, that is, between its 9th and 14th minute, I'll embed the whole thing and trust that you can make it through the boring claptrap until the conversation starts to get interesting. This is one of the last interviews William F. Buckley, Jr. ever gave—hence of some interest in that regard alone. In it, Charlie Rose comes across annoying and obtuse, interrupting the elderly Buckley with specious remarks and irrelevant questions. But, then again, that's something he does to all his guests. Buckley sounds gloomy and exasperated, yet candid. This late in his life, there must have been little point to keeping on a mask. So the truth slips out. The war in Iraq, the politics around it, the nation building that goes on there—all of it is a Crusade to him. And he laments the failure of the Americans to match their jihadist antagonists in fervor and conviction toward this holy war. The transcript, as far as I can make out, goes something like this:

William F. Buckley, Jr.: "There are distinguished people of that faith [Muslim] who are ... very reluctantly engaged in the Iraq-type offensive. However, in order to counteract that offensive, satisfactorily, it is required that we be enthusiastic about what it is that we are defending."

Charlie Rose: "... that we are defending, and what values we represent.

William F. Buckley, Jr.: "And I don't think we're doing that."

Charlie Rose: "I don't either."

William F. Buckley, Jr.: "The whole notion that Christian civilization is challenged, and therefore, 'we regret it,' ..."

Charlie Rose: "But do you just say Christian or do you say Judeo-Christian civilization?"

William F. Buckley, Jr.: "Well,.. uh, I am sensitive to the point that you're are making. I think it's exaggerated, since there are only 5 or 6 million Jews in the area that we're talking about. The civilization that we want to defend is, of course, Judeo-Christian, but in terms of enthusiasm for the enterprise, it's the Christian alternative that we need to get enthusiastic about."

Charlie Rose: "Since the campaign is run by George [W.] Bush and others, there's been much criticism of religion in politics, and too much religion in too many political campaigns. Do you think that's true? ... [irrelevant gibberish cropped for brevity's sake—ed.] What is absent is tolerance?"

William F. Buckley, Jr.: "I think it's true that there are tendencies, as there always are, to cooptation. A lot of people who are against the movie Deep Throat will convert that into a crusade involving Christianity. But in answer to the specific question, I don't think there is too much of it at all. I think there's much too little of it."

Charlie Rose: [interjects some more nonsense—ed.]

William F. Buckley, Jr.: "The animating thought of our love of country and our love of freedom is religious. By which I mean that it is scriptures which are religious in origin that impel us to believe, for instance, that all man are equal. That impel us to feel a responsibility for our brothers. And a weakening of our understanding of that mandate is translated into unconvincing activity. I don't think that a lot of these people who are committing suicide in Iraq have any deep sense of the notion that America ... that,.. the American offensive, is based on deeply religious principles, on deep conviction. That..."

Charlie Rose: "As you know, the most extreme opponents of the war would say that it wasn't based on deeply religious principles. It was based on two things: one, whatever ideals of Wilsonian democracy. And if you can nation-build in the center of the Middle East, we'll have some geo-political effect. And in addition to that, it was based on the principle of,.. er,.. on economic concern, about oil."

William F. Buckley, Jr.: "Well, they certainly figure. ..."

Charlie Rose: "It had nothing to do with religion."

William F. Buckley, Jr., smiling: "Well, it does in a sense. By which I mean: we want oil because oil is a very useful natural substance. But we also want it because it permits us to live the kind of life we choose to lead. ... I think our attachment to our freedom to live as we choose to live has very very deep roots in Christianity. And that to the extent that these roots are ignored, we tend to be less convincing as contenders than we have a right to be."

I know not where to begin. But commentary would be superfluous here anyway. What can I say? William F. Buckley, Jr., good riddance. If among those of your political persuasion you were worthy of the highest esteem, one can only shudder at what notions your less enlightened fellow travelers might hold.

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27Jul/105

The Kindle Is Back!

After barely a year of faithful and honorable service, our Kindle died a sudden death last Friday. We were devastated. The screen just went blank for no apparent reason, irregularly streaked by horizontal bars of e-ink. No attempts at rebooting the device produced any change other than to the pattern of the hideous streaks. The timing couldn't have been worse, because, it having lapsed over a year since we'd purchased this Kindle, its Limited Warranty must have certainly expired. At this realization, all hope gave way. Nevertheless, I thought I'd call Amazon and let them know how their device had failed us.

That I could even get in touch with their Customer Service personnel at 21:30 EST amazed me. In fact, it was they, not I, who even did the actual calling. I simply entered my mobile number on their website form, and they got on the phone with me a few seconds after. The representative I spoke to confirmed that the warranty had indeed expired. He then suggested a few troubleshooting measures, and when they all failed, began asking me a series of questions about how we had been using the device recently, whether we had exposed it to heat or humidity, subjected it to physical pressure, etc. And as soon as he was satisfied that we had indeed not abused the departed, he told me he would send a replacement via overnight shipping. Despite the fact that the warranty had expired and Amazon was under no obligation to console us for our bitter loss. Of course, on my end, I was required to send the defective device back to Amazon. But they would even include a pre-paid coupon and a box for its return shipping. This was customer service like you wouldn't believe. I had been on the phone for less than 15 minutes when I received the splendid news.

Our new Kindle arrived on Sunday. It was so clean, white, and spotless that I got as excited unwrapping it as when we received our first one over a year ago. And Amazon even included a new charger. Quite a nice touch, since we had long lost our original one, and had been resorting to a makeshift Blackberry charger instead. The Kindle is an amazing e-reader—handy, light, handsome, chockfull of useful features, and now more affordable than ever. It offers great selection of reading material, and, with customer service such as Amazon's, you really can't go wrong. Hands down, the greatest gadget of the year. That's right. Screw the iPad!

Update: A new Kindle just came out! Lighter, cheaper, with smaller casing, longer battery life, higher screen contrast, better PDF support, and double the memory of the old device. I am just buying one, in graphite, so that my husband and I can each enjoy our own. And thanks to the awesomeness of Amazon, both devices will be brand new. Happy reading!

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21Jul/101

New Best Friends in the Balkans

Some news you might have missed last week: Serbia and Turkey have inaugurated a series of unprecedented initiatives of military and diplomatic intimacy, including joint aviation exercises and a mutual abolition of visas. The timing of these gallantries is rather ironic, as it coincides with the 15th anniversary of the Srebrenica massacre, which marks the extermination of more than 8,000 Bosnians, mostly boys and men, as well as the ethnic cleansing of some 25,000 to 30,000 more—which extermination and concomitant ethnic cleansing the Serb perpetrators justified in the name of “driving out the Turks” (i.e., the Bosnian Muslims).

This was the first year the Serbian government ever condemned the massacre—a humbling gesture aimed at smoothing its path toward EU membership. Some may consider this an occasion of which Serbia has availed itself in order to also mend fences with Turkey—a party its war slogans of 15 years ago had indirectly offended. But it is far more likely that the two developments bear no more relation to each other than did the Serbs’ genocide against the Bosnians and their animosity toward the Turks—which is to say, none at all.

What this newly forged friendship between Serbia and Turkey actually represents is a miniature replica of the trend in the relationship between their respective patrons, Russia and Iran, who have recently grown very close. For, of late, Turkey has become a firm node of the Iran-Syria-Venezuela axis, and as for Serbia, well—as an independent state, Serbia has not exercised any political free will of its own since the Middle Ages without first consulting Russia’s interests. And while under that whipped fluff of much-talked-about UN sanctions the ties between Iran and Russia continue to flourish, so do those of their proxies in the Balkans.

Read the rest at Commentary.

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19Jul/100

RE: The Problem of Economic Calculation

In this entry, I argued that the census is of little value to central planners. The cost of over $11 billion is one fact I cited against it, but on second thought, no critique on that front holds water, because the Constitution itself mandates the taking of the census—and for a purpose wholly unrelated to the gathering of economic intelligence. So if the government must take the census, the cost of doing so does not signify.

It seems to me, however, as though the government already possesses all the information the census is meant to collect and more—neatly tucked away in the IRS Individual Master File: name, income, spouse, dependents, residence, whether you own or rent the place where you dwell, what you ate for breakfast, etc. The only question on the census to which the IRS doesn't already demand an answer—that I know of, at least—is that of race. "But ... but ... that's not what the Constitution says. The founders meant for the census to..." Yeah, sure. ... Indeed, that such an institution as the IRS should even exist in these united states would scandalize the founders if the poor devils were around to take note. No matter. The IRS is here to stay. So why not make the most of it? The government could query its database every year, instead of ten, by means of an electronic process, which would practically cost nothing. That's over $1 billion of savings a year, which could, in turn, be wasted far more imaginatively over trifles less mundane.

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19Jul/100

Mr. Updike, Meet Miss Austen

If you are a student of literature, I recommend reading back to back John Updike’s Rabbit Tetralogy and Jane Austen’s novels, as I have by chance, because the contrast between them yielded interesting insights.

Updike’s Rabbit series is the ripe product of the past century—spanning its entire second half. Much has been said of Updike’s style that renders it justice, albeit in too many words—which is why I am not quoting any of it here. For the uninitiated, suffice it to say that Updike is the unsurpassed master of effaced narration, whose ample resources he exploits fully and to whose strict limits he keeps to the end. The effect on his prose is that of gritty but marvelously eloquent realism. His style is like a counterfeit note indistinguishable from the genuine in that it fabricates a structure as complex and as palpable as that of reality.

It is by a curious twist that in the 20th century, all the while visual art severed its links to physical reality and became more and more abstract, the Western novel reached a degree of naturalism and explicitness unparalleled in the past. Reality began to be captured with increasing, almost manic, precision. Shapes, colors, smells, sounds, textures, moods, minute physical characteristics, even bodily functions—every blade of grass, as it were—would now get cherished in their own right and exposed to the reader.

This recent course taken by Western literature, so much at variance with that on which the rest of Western art has embarked, perhaps owes something to the dawn of cinema: indeed, the camerawork that meticulously shines light on every detail of a staged scene and the characters that inhabit it bears a parallel to the modern literary style, which elucidates accidental details and treats inconsequential actions. But this cannot be the origin of the trend, for even, say, The Age of Innocence, written before the influence of film, already features too much detail and too little plot.

The interest modern intellectual writers take in the middle class, their partiality for ordinary people caught in ordinary moments, and the existentialist currents in which most of them are steeped, they all prejudice against plot and toward excessive detail. Yet none of these sensibilities had taken root in the intellectual and literary circles of Europe and America before World War II.

Perhaps, then, the new style dates as far back as Henry James, who might be called its first prophet, because the effaced narration he so ardently championed cannot lead but to extreme naturalism. And all those other factors—film, culture, philosophy—played auxiliary roles. What does narration, when so thoroughly effaced, do to prose in the long run?

Well, it relieves the narrator of his main responsibility, that of being judicious and selective. The author fears that jumping a few steps in the story for the sake of the plot or exercising his discretion in what to include, what to condense, or what to omit would draw attention to himself as narrator, which is taboo. He thus suppresses his activity within his narration and merely serves as a neutral camera filming the cluttered inner world of his characters and the immense reality outside them, exactly as they would perceive it in real time if they were real people.

Every activity, no matter how trifling, deserves attention now, because to cut out anything from the story would be to assert oneself as narrator. That’s one important reason, besides the extinction of prudishness from modern society, why love-making scenes are now sport in literature and not even the most explicit detail is blinked at. If it happens, then it can and probably should be told. This extreme neutrality is also the enemy of plot, for purposeful action and the clash of opposing wills—the traditional heart and soul of literature—end up diluted among those many tangential actions, hesitations, and observations, to which, because they are commonplace in life, effaced narration feels it must do justice.

In the end, the enterprise of fabricating the most realistic life, world, and set of characters possible is so seductive, so rewarding, and so much in agreement with effaced narration that it becomes an end in itself. Verisimilitude of human existence is the new goal of literature. And the more exhibitionistic a literary style, the better equipped it is to achieve it. When the author conjures up, with uncanny exactitude, specific images in the mind’s eye of the reader—the particular hues mixed in a sunset, the smell of evergreen around a cabin, the texture of a lover’s skin—he is flexing his muscles. Reality gets distilled through the five senses, in surgically precise prose.

Updike does this superbly. He makes you live under Harry Armstrong’s skin. This vicarious experience is the essence of Rabbit. It’s what makes it work. Not surprisingly, it only lasts while you are reading it. When you are done, the aftertaste is mild and fades fast. You remember how good it was, how true to life, how skillful at making you see, hear, and feel, what you should. But in the end, none of what you saw or heard or felt made any lasting impression. The vicarious experience, though uncannily rendered, does not enrich our inner life. In the end, this Harry Angstrom, whom we’ve got to know so intimately, is not worth our acquaintance. Neither is anyone around him. Perfectly as they might be cast, these characters and their interactions signify but very little. And our imagination feels manhandled, used, with nothing to show for the trouble.

After Rabbit, Jane Austen’s Pride and Prejudice or Persuasion will feel like a breath of fresh air. All her novels are written in third-person omniscient. Indeed, no narrator as effaced as the modern novelist could muster that most famous opening sentence in English literature: “It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.” What first struck me in reading Austen after Updike was the sparseness of her descriptions, both of characters and of scenes. It’s the economy of conviction. Masterful at dialogue, Austen nonetheless collapses it into indirect speech when it doesn’t advance the plot or when it is not dramatic. She never indulges in descriptive detail for its own sake. Of Eliza Bennet, we only know that she is of middling height and has dark eyes. Of Mr. Darcy, that he is a tall gentleman, handsome, with a noble air. About the scenes where the plot unfolds we are given very little detail. Permberly is a magnificent estate—a large, stone-built house, furnished tastefully—situated opposite a valley, in the middle of the woods, by a running stream. That’s almost all we are told. But it sticks.

Austen narrates. She is interested in telling a story. Not in providing a voyeuristic peep into the inner life of her characters. Most interesting, I “see” her scenes and characters no less vividly than Updike’s. She sketches the outline and my imagination fills in the rest. In the upshot, the prose is light and nimble. And the reader finds in it room to breathe. His emotional resources are not wasted in attending to minute specifications as to the hair color of Charlotte Lucas or the crookedness of Mr. Collins’s teeth. Austen reminds us that the purpose of a novel is not being John Malkovich, or Rabbit Angstrom. It’s to tell a good story. When authors forget that, they get lost in the weeds. To quote from Elizabeth Bowen’s brilliant essay, “Notes on Writing a Novel”:

Plot is story. It is also “a story” in the nursery sense = lie. The novel lies, in saying that something happened that did not. It must, therefore, contain uncontradictable truth, to warrant the original lie.
The modern novel has little to redeem its lies but the skill with which it tells them. These lies are not told for the sake of establishing a higher poetic truth. Rather, they want to pass themselves for truth. I cannot but think of Mariah Carey’s over-singing—her voice, with its challenging and melodious twists and turns, as it calls attention to its own beauty while executing a mundane, unmoving song. And that’s why the modern novel is bankrupt, and why no book like The Three Musketeers will ever be written again. Or any epic, for that matter. Tolkien was the last of the storytellers. The language of narration has been lost. Sympathy for heroes and fascination by villains no longer stir the imagination of modern writers. Evoking existential angst is all they aspire at. I don’t know whether the narrative heritage can ever live again. But any efforts to revive it must be grounded in the reading of pre-20th-century Western literature not in childhood or adolescence, or at least not only then, but well into adulthood, so as to combat our acquired taste for beautiful garbage.

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12Jul/100

The Problem of Economic Calculation

Census 2010This morning, while riding the express train to work, I stood facing one of those ubiquitous census ads and, for the first time, began considering its wording in earnest. I am sure you’ve seen it too: “If we don’t know how many schoolchildren we have, how can we know how many schools to build? … If we don’t know how many people we have, how can we know how many hospitals to build?” And so on and so forth.

That the government should still pose such questions—innocent as they are—suggests that the so-called problem of economic calculation afflicts the endeavors of central planners today no less than it did in the 1920s, when Ludwig Von Mises first set it forth. Not only that, but the government has also failed to find tools more efficacious in tackling this problem than the nationwide survey—that is, the census. And what a crude device that is!

For one thing, any information collected through it soon becomes outdated, since the census is taken at intervals of no less than 10 years, during which time a lot can happen in terms of economic development and population shifts. For another, delivering the surveys to every doorstep in the country, entreating the citizens to fill them out, and ensuring that a tolerable number of them actually do so amounts to an onerous affair not cheap to orchestrate—as is plainly evinced by the handsome budget of $11.3 billion allocated to the accomplishment thereof. And for all the pains that go into collecting it, this information winds up reaching the government incomplete and only approximately accurate—the proportion of falsified surveys that alloy the census results being a matter of contentious and largely partisan debate.

Read the rest at Commentary.

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22Jun/1010

Letters from Peter Brimelow’s VDARE Readers

Peter BrimelowPeter Brimelow flatters me with so much kind attention at VDARE, his White Nationalist website:

Gjermani (contact her), who describes herself as “an Albanian expatriate of Jewish descent living in Manhattan”, recently posted a very conventional blog in Commentary Magazine, full of the usual paranoid nonsense about Arizona’s SB1070. …

He even links to my blog and encourages his readers to write to me. And they do! Here are a couple of e-letters I recently had the pleasure to receive:

From: William <woleary717@aol.com>

Subject: your globalist, Marxist, anti-Western Civilization

Get out of my country and any other White-Christian countries, you Christophobe ingrate ! No other civilization does 1/1000th of the charitible works of the Western Countries when contrasted with any other non-Western country/culture, why? They are not White or non-Christian or both! Write to the Turkish government about Israeli hospitality to humanitarian aid care givers or any other non-Jewish people since it's inception in 1949 A.D. with the help of all the White-Christian countries, then, through the present. you hypocritical critic !

Wait. It gets better.

From: Jim <notapawn4u@yahoo.com>

Subject: LOL

"....though, on second thought, I’d have little to fear"

You have a lot to fear, a whole lot to fear. When this country goes up in flames of civil war it will be very easy to pick jew traitors out from a crowd--don't come running to us "redneck" Americans for help, you will be forced to go die in the chaos you helped to create.

You are a jew and you absolutely do not look European, don't take false comfort in believing this farce, it may fool some; it still doesn't fool many of us.

Take your jew babble and go back to your slime pit in Isrealhell you self chosen pile of shit.

Currently residing in Jew Langeles, Jim is also the sole proprietor of such lovely and informative websites as the Jew List and Real Hard Core Anti-Jewish Activism, as well as a prolific contributor to the now defunct Gentile Alliance, whose noble motto was “Anti-Semitism Is Obedience to God; USA and West.”

Thanks, Pete, for sending me such quality traffic. Your readers got your point across better than you yourself ever could have.

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15Jun/101

Republicans and Immigration—The Elephant in the Room

Jennifer Rubin draws attention to the elephant in the room—that is, the GOP’s unfortunate posturing toward immigration, of which John McCain has lately become the embodiment.

It should be of some consolation that before he could find someone to cast in the nativist role he sought, McCain had to do quite a bit of fruitless searching and, in the end, resort to “synthesizing” his ad from the scenery of a border town and the commentary of a sheriff from a different county. Indeed, the sheriff who enthusiastically confirms McCain’s bona fides as “one of us”—whatever that means—hails from Pinal county, not even on the border, while the ad is shot in Nogales, a border town in the county of Santa Cruz, whose sheriff, Antonio Estrada, has blasted the Arizona immigration bill in no uncertain terms:

“Local law enforcement has a great relationship with the Hispanic community, and something like this is really going to scare these people,” said [Sheriff] Estrada. “They’re going to look at us as immigration officers every time they see us.”

Clarence Dupnik, the sheriff of Pima—another county in Southern Arizona, which shares with Mexico the longest border in the state—has called the bill “disgusting,” “racist,” and “unnecessary.”

The ad merely reveals McCain to be a politician, evidently less principled than his supporters took him for in 2008. His presidential ambitions now thwarted, in order to at least not lose his Senate seat, he has gone to great lengths—as far as to endorse the anti-immigration bill of Arizona after having supported the pro-immigration bill of President Bush. But no matter that a politician should flip-flop. Most troubling is the fact that McCain judged this ad expedient because it can find a sympathetic audience among the GOP base.

Read the rest at Commentary.

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8Jun/100

Ass-Kicker in Chief

In an interview with NBC, President Obama sets the record straight with respect to his administration’s much-criticized handling of the oil-spill crisis. Far from flailing in his response to the environmental disaster, Obama has been way ahead of the curve all along. As early as a month ago, he assures us, he was facing the elements down in the Gulf, gaining first-hand intelligence from local fishermen on “whose a** to kick.”

Read the rest at Commentary.

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