Global Economy - Power and the new world order
By Henry C K Liu Thomas L Friedman, three-time Pulitzer-winning columnist for the New York Times, is the ordained voice of US neo-liberalism. In his February 17 column, Friedman reported that China was described privately by an aide of US President George W Bush as "not having a dog in this fight" at the UN Security Council debate over Iraq. Friedman offered a tutorial to China on the new international order of World War III, which he saw as having been set off by the events of September 11, 2001. Friedman wrote: "The new world system is also bipolar, but instead of being divided between East and West (as in the Cold War) it is divided between the World of Order and the World of Disorder. The World of Order is built on four pillars: the United States, European Union-Russia, India and China, along with all the smaller powers around them. The World of Disorder comprises failed states (such as Liberia), rogue states (Iraq and North Korea), messy states - states that are too big to fail but too messy to work (Pakistan, Colombia, Indonesia, many Arab and African states) - and finally the terrorist and mafia networks that feed off the World of Disorder." Friedman asserts that the World of Disorder has been made more dangerous today by globalization, a trend that he has enthusiastically promoted for a decade since the end of the Cold War. "In a networked universe, with widely diffused technologies, open borders and a highly integrated global financial and Internet system, very small groups of people can amass huge amounts of power to disrupt the World of Order. Individuals can become super-empowered. In many ways, September 11 marked the first full-scale battle between a superpower and a small band of super-empowered angry men from the World of Disorder." Yet Friedman leaves his Aristotelian syllogism incomplete, failing to explain how regime changes in Afghanistan and Iraq and war against defenseless nation-states fit into "a battle between a superpower and super-empowered individuals". Friedman asserts that "the job of the four pillars of the World of Order is to work together to help stabilize and lift up the World of Disorder". He observes that some Chinese intellectuals, not to mention French and Russian, "wrongly believe" that they "all have more to fear from US power than from Osama, Kim or Saddam". He warns, "If America has to manage the World of Disorder alone, the American people will quickly tire." And he quotes Michael Mandelbaum, the Johns Hopkins foreign-policy expert: "'The real threat to world stability is not too much American power. It is too little American power.' Too little American power will only lead to the World of Disorder expanding." Friedman cannot be referring to military or financial power, of which the United States has ample supply. He would be right if he were referring to moral power. The US military is by far the most powerful in the world, with more advanced technology and greater force-projection capability than all other nations combined. And dollar hegemony dominates the global economy. The last Gulf War was largely paid for by Saudi Arabia and other oil-producing Arabic states, with substantial benefit for the defense sector of the US economy. The real threat to world stability is too much military and financial power coupled with too little moral power on the part of any nation, and such a combination is particularly dangerous on the part of a sole superpower. Increasingly, US values, expressed in high-minded terms such as "democracy" and "freedom", are sounding more like empty slogans of tiresome propaganda. "Freedom" rings hollow to people around the world who find themselves unable to pay for privatized water, the basic necessity of life that used to flow clean and free, or to those forced to buy imported packaged food they used to grow free on their own land for themselves. "Democracy" cannot buy medicine for children exposed to new contagious diseases brought in by visitors arriving on jetliners, nor can it keep drug prices from wholesale gouging in the name of intellectual property rights. These are the real freedoms that have been taken away from much of the world by US-imposed globalization. The so-called World of Disorder has been constructed in large measure by half a century of US foreign and economic policies. Much of this World of Disorder lay in the US sphere of influence all through the Cold War. The memory of US support for Osama bin Laden against the Soviets in Afghanistan and for Saddam Hussein's war against Iran is still fresh in the minds of the people of the world. And US policies of sanctions and embargoes have caused millions of deaths and starvation. Now the world is asked to join a new US crusade against this year's list of latest evils in the name of order and stability. A stable world order cannot be constructed out of fear of precision bombs or tactical nuclear weapons, or with economic sanctions. It can only be constructed out of equality, equity and non-exploitative development - elements in short supply in globalization. The world is not just a marketplace; it is an organism in which disease and poverty in any of its parts adversely affect the health of the whole organism. It I hard to visualize how another war can put things right. The Bush administration's policy toward China had been aggressively antagonistic prior to September 11, fanning public paranoia against the world's most populous nation in the early phases of legitimate self-renewal as a potential competitor against US global hegemony. Friedman now beseeches China to help keep alive "the open society in America" and to help save globalization, "because we Americans will tighten our borders, triple-check every ship that comes into port and restrict civil liberties as never before, and this will slow the whole global economy". He argues: "One more September 11 and your [China's] growth strategy will be in real trouble [unless you plan on only exporting duct tape], which means that the Chinese leadership will be in real trouble." He maintains that China cannot be a "free rider on an Iraq war" or "leave America to carry the burden of North Korea". Yet up until September 11, the United States actively supported separatist terrorism against China. The nuclearization of the Korean Peninsula is mostly a result of US policy. Friedman allows that it is quite legitimate for China to oppose the US waging war on Iraq or North Korea. But he asks in exasperation: "Why isn't China's foreign minister going to Baghdad and Pyongyang, slamming his fist on tables and demanding that their leaders start complying with the United Nations to avoid war?" Notwithstanding that most households in the United States are now looking to return the oversupply of duct tape they bought a few days ago, it would really be a page out of a Wag the Dog screenplay for the Chinese foreign minister to suggest, let alone demand, that Iraq or North Korea, both longtime targets of US sanction and other warlike hostile actions, is morally obligated to save the US from unilaterally dismantling its domestic civil liberty or to save US-imposed globalization that has impoverished much of the world. It would be a more credible scenario if the US secretary of state would go to Taipei to slam his fist on tables to demand that its leaders stop flirting with Taiwan independence to avoid war. Friedman warns: "One more September 11, one bad Iraq war that ties America down alone in the Middle East and saps its strength, well, that may go over well with the Cold Warriors in the People's Liberation Army, but in the real world - in the world where the real threat you face is not American troops crossing your borders but American dollars fleeing from them - you will be out of business." Friedman is right to be concerned about the adverse effects of terrorism and the uncertainty of another Iraqi war on the slowing US economy. And it is likely that one outcome of current US foreign policy of preemptive military attacks on less than clearly imminent threats will be further reversal of globalization trends. Globalization had already stalled since the Asian financial crises of 1997, long before the war on terrorism was launched, because the globalized game of transferring wealth from the poor to the rich is not sustainable. But Friedman must be astute enough to realize that China is at best a reluctant participant in the globalization game and not a zealous advocate. He is well enough informed not to be oblivious to the fact that serious debate is openly being held among Chinese planners about the proper policy response to stalled globalization. Many in China are openly questioning the wisdom of relying on export, within the context of dollar hegemony, as the sole engine of growth, or on market fundamentalism as a development principle, with visible effects of failed markets all over the world. The argument for a shift from export for dollars toward national domestic development is fast gaining acceptance among Chinese policymakers. Earlier, on January 6, Friedman wrote: "I have no problem with a war for oil - provided that it is to fuel the first progressive Arab regime, and not just our SUVs [sport-utility vehicles], and provided we behave in a way that makes clear to the world we are protecting everyone's access to oil at reasonable prices - not simply our right to binge on it." While the path to hell may be paved with good intentions, the path to nirvana is never paved with devious justification. Friedman's idea of a postwar "progressive" Iraq is definitely not a Venezuela of the Middle East, with a democratically elected president that the Bush White House tried to topple with a coup. Or is Kuwait or Saudi Arabia Friedman's idea of a "progressive" regime? He must realize that his "open door" policy on access to Mideast oil is incompatible with a truly progressive Iraqi regime, and that "reasonable" oil prices are incompatible with conservation. In his book The Lexus and the Olive Tree, Friedman wrote that "the globalization system, unlike the Cold War system, is not static, but a dynamic ongoing process: globalization involves the inexorable integration of markets, nation-states, and technologies to a degree never witnessed before - in a way that is enabling individuals, corporations, and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before, and in a way that is also producing a powerful backlash from those brutalized or left behind by this new system. "The driving idea behind globalization is free-market capitalism - the more you let market forces rule and the more you open your economy to free trade and competition, the more efficient and flourishing your economy will be. Globalization means the spread of free-market capitalism to virtually every country in the world. Globalization also has its own set of economic rules - rules that revolve around opening, deregulating and privatizing your economy. "Unlike the Cold War system, globalization has its own dominant culture, which is why it tends to be homogenizing. Culturally speaking, globalization is largely, though not entirely, the spread of Americanization - from Big Macs to iMacs to Mickey Mouse - on a global scale. "If the defining anxiety of the Cold War was fear of annihilation from an enemy you knew all too well in a world struggle that was fixed and stable, the defining anxiety in globalization is fear of rapid change from an enemy you can't see, touch or feel - a sense that your job, community or workplace can be changed at any moment by anonymous economic and technological forces that are anything but stable. "Last, and most important, globalization has its own defining structure of power, which is much more complex than the Cold War structure. The Cold War system was built exclusively around nation-states, and it was balanced at the center by two superpowers: the United States and the Soviet Union. The globalization system, by contrast, is built around three balances, which overlap and affect one another. The first is the traditional balance between nation-states. In the globalization system, the United States is now the sole and dominant superpower and all other nations are subordinate to it to one degree or another. The balance of power between the United States and the other states still matters for the stability of this system. And it can still explain a lot of the news you read on the front page of the papers, whether it is the containment of Iraq in the Middle East or the expansion of NATO against Russia in Central Europe. "The second balance in the globalization system is between nation-states and global markets. These global markets are made up of millions of investors moving money around the world with the click of a mouse. The United States can destroy you by dropping bombs and the Supermarkets can destroy you by downgrading your bonds. The United States is the dominant player in maintaining the globalization gameboard, but it is not alone in influencing the moves on that gameboard. This globalization gameboard today is a lot like a Ouija board - sometimes pieces are moved around by the obvious hand of the superpower, and sometimes they are moved around by hidden hands of the Supermarkets. "The third balance that you have to pay attention to in the globalization system - the one that is really the newest of all - is the balance between individuals and nation-states. Because globalization has brought down many of the walls that limited the movement and reach of people, and because it has simultaneously wired the world into networks, it gives more power to individuals to influence both markets and nation-states than at any time in history. So you have today not only a superpower, not only Supermarkets, but, as I will also demonstrate later in the book, you have Super-empowered individuals. Some of these Super-empowered individuals are quite angry, some of them quite wonderful - but all of them are now able to act directly on the world stage without the traditional mediation of governments, corporations or any other public or private institutions." Friedman went on: "Osama bin Laden, a Saudi millionaire with his own global network, declared war on the United States in the late 1990s, and the US Air Force had to launch a cruise-missile attack on him as though he were another nation-state. We fired cruise missiles at an individual!" So, assuming the September 11 attacks were indeed masterminded by Osama bin Laden, the attacks were, by Friedman's account, merely retaliatory strikes. But Friedman's mentality transcends his personal insights. It is a mentality of arrogance of power for which the United States has been criticized by many. US moral imperialism demands not only quiet submissiveness from its victims, but vocal loyal support. Not only is globalization a game of heads I win for the US, and tails you lose for other participants, Friedman has the audacity to dangle globalized trade as a political favor from the United States to be granted only to sycophant partners. If China wants to continue to export goods manufactured by low-paid labor in exchange for dollars that the US can print at will, and in the process keeping US inflation unnaturally low even in the face of fiscal irresponsibility, to earn a trade surplus unspendable in the Chinese domestic economy as it must be held as foreign-exchange reserves in dollar-denominated instruments to finance the US trade deficit, then China had better fall in line to unquestioningly support US political hegemony. It is easy to act humbly when you are rich; the trick offered by Friedman is for the United States is to be arrogant when it is in debt up to its ears. The fact is that the US can no more dispense with low-cost Chinese imports than it can do without Mideast oil, both of which it pays for with paper money it can print without restriction. US Trade Representative Robert Zoellick said on the same day as Friedman's article: "China's ballooning trade surplus with the US is a boon to global growth and therefore desirable at a time when the economies of Japan and Europe are pretty stagnant." So who's kidding whom? US-China trade faces stagnant growth anyway unless the United States abandons its sanction on high-technology export to China. With the US relocating all manufacturing offshore under globalization, high tech and military systems are the main US exports outside of agriculture and financial services. Thus high-tech sanctions put a damper on US-China trade growth and contribute to the growth of the US trade deficit. Last year, China overtook the United States as the leading exporter to Japan (US$61.7 billion, up 6.1 percent from 2001), accounting for 18.3 percent of Japanese imports, while US export to Japan dropped 9.5 percent to $57.5 billion. The US exported $22 billion to China, imported $125 billion (against import of $121 billion from Japan), chalking up a deficit to China of $103 billion in 2002. In 1985, the US incurred a trade deficit of $6 million with China. Friedman is not just another columnist. He is the celebrated spokesman for US neo-liberalism and, as such, his views are highly influential on, if not in concert with, US policy. In fact, US officials have been making similar noises in recent days about US dissatisfaction on China's posture on Iraq and North Korea. Yet the war on Iraq is not simply about oil. The United States already controls the global oil market and it does not need a war to consolidate its hold further. Despite recent surges, oil prices are still low by historical standards and as long as oil is denominated in dollars, the rise and fall of oil prices do not present insurmountable problems for the US economy. Petro-dollars are in essence captured US assets. If Friedman is really concerned about open access to oil at reasonable prices for everybody, he should support a progressive pricing regime for oil with higher prices for high per-capita consumption markets. The more you waste, the more you pay - the conservation formula of market fundamentalism. The average consumption in the inclusive period of 1983-2001 was 4.47 barrels per person per year for the world. A barrel of oil contains 5.8 million British thermal units (BTU). In 1995, US per capita usage was 327 million BTU per year, which is equivalent to 56.38 barrels of oil, 12.6 times of world average. On a deeper level, the real threat on long-term economic growth for the global economy is not the price of commodities but the tyranny of mostly Western intellectual property rights. The war on Iraq is part of a US grand strategy to reposition the entire post-Cold War global geopolitical landscape to reflect a new world order with a single superpower. The split in the European Union into Old and New Europe over the Iraq war is part of a US objective of establishing a new US satellite system in Eastern European client states to fill the vacuum left by the collapse of the Soviet satellite system. The North Atlantic Treaty Organization (NATO) is being transformed from a defensive alliance for Europe against the Soviet bloc to an offensive proxy war machine for US policy of moral imperialism. France, Germany, Russia and China are working not as allies, but as nations with common interest in preventing the US in again turning the UN Security Council into a lap dog of US foreign policy, as the International Monetary Fund has been for US financial hegemony in the past two decades. Henry C K Liu is chairman of the New York-based Liu Investment Group. (©2003 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)