The pause button

July 2007: A former insurgent watches a row of coalition military vehicles in the Amariyah neighborhood of Baghdad (Credit: Chris Hondros/Getty)

As far as the bulk of the American — and for that matter, world — press is concerned, the Iraq War ended sometime in early 2008. Casualty rates suffered by American troops had dropped significantly, and this happy circumstance was generally credited to the “surge” of up to 40,000 additional troops deployed to Iraq starting the previous summer. Presidential candidate Barak Obama did his part to move the spotlight away from the Persian Gulf by pointing to Afghanistan as the site of the really important war (a claim underscored by increasing levels of violence in both Afghanistan and neighbouring Pakistan), and the rapidly developing global financial crisis did its part. By January 2009 it seemed likely that the average Beltway pundit would once again have trouble finding Iraq on a map.

Banner image: Matt Schlian

A detail from Matt Schlian’s “Omnivore”. Schlian is a paper engineer and teacher; he creates kinetic sculptures (yes, out of paper) for both artistic and scientific purposes, and he has worked with biologists and engineers in visualizing and understanding such phenomena as cell division and such challenges as solar cell development. He also draws.

My drawings begin by asking indirect questions which yield no concrete answers. As with my three dimensional work, my focus is on the process rather than final product. I am fascinated with computer technology and its ability to mistranslate information. Like a game of “telephone”, multiple software programs fracture and compound text and image as they travel through different formats on the computer. Bearing little resemblance to their origin, the new information is rendered on a pen plotter creating a chaotic world rooted in happenstance. No longer legible, I see the drawings as blueprints for invisible cities, answers to questions that may unfold over time.

– Matt Schlian

"Omnivore", by Matt Schlian

An Orphan Annie Interview

Perhaps my happiest experience as a freelance writer was publishing in Lingua Franca, the late, much-lamented magazine that covered intellectual life with genuine journalistic moxie. Most journalists are baffled by ideas and alienated from the academy. The usual approach to writing about contemporary scholarship tends to be a mixture of sensationalism and scorn (for an example, see almost any issue of The New Criterion that deals with the MLA). The Lingua Franca crew weren’t like that: they didn’t shirk from the tough task of taking theory and making it into narrative without doing an injustice to intellectual integrity of the initial ideas.

Scott McLemee was the perfect Lingua Franca writer: he’s as erudite as anyone I know and has a real gift writing about complicated ideas with clarity, so that the reader ends up joining a conversation that at first brush might have been intimidating. He doesn’t talk down to readers or dazzle them with any specialized jargon but rather writes about ideas with the same faith in lucid exposition that Orwell brought to political writing or A.J. Liebling brought to sports writing, or Robert Hughes brings to art writing. Scott’s been lucky to find a great perch for his talent in the magazine Inside Higher Ed, where he as a weekly column.

George Steiner’s Phony Learning

George Steiner’s new book.

As a literary critic and essayist George Steiner is distinguished by his erudition, which is not just impressive but even intimidating. A quick glance through his books reveals that he’s a writer confident enough to sit in judgement of a vast range of cultural figures ranging from the poets of antiquity to great composers like Bach and Beethoven to the Russian novelists of the 19th century to modern philosophers like Heidegger. “Is he a man or an encyclopedia?” you ask yourself as you read his essays.

Another question worth asking is, how much of Steiner’s erudition is real, based on actual familiarity with the artists and thinkers he’s writing about, and how much is just name-dropping? Is Steiner just the high-end equivalent of a Hollywood hanger on who has tales of chance encounters with “Angelina” and “Bobby DeNiro”.

I’m a great admirer of the poet, short story writer, painter and translator Guy Davenport, who really was a polymath. I’ve always had a soft spot for Steiner because he once lavishly praised Davenport in The New Yorker, a review that did much to bolster Davenport’s reputation and visiblity. “Davenport is among the very few truly original, truly autonomous voices now audible in American letters,” Steiner wrote. (Steiner’s review was recently republished in the essay collection George Steiner at The New Yorker, published by New Directions).

Recently while reading Guy Davenport’s letters to the publisher James Laughlin, I discovered that even Steiner’s commendable act of celebrating Davenport carried with a whiff of fraud.

The Case for Immigration Amnesty

 

A sign cautioning U.S. drivers to be aware of recent arrivals from Mexico running across the highway.

 

Joseph Carens is one of the world’s most interesting political theorists. I first became aware of him when I took a class in which we were assigned to read his famous essay , “Aliens and Citizens: The Case For Open Borders,” in which Carens makes the provocative argument that immigration controls should be abolished. Carens, who teaches at the University of Toronto, has made his career writing about immigration, and he often challenges deeply held assumptions about the subject that rarely receive critically examination. Even when you disagree with Carens, as I think I do on the subject of open borders, you often come away from his work feeling like you’ve learned something.

 This side of Carens is on display in a Boston Review symposium on amnesty for illegal immigrants. The symposium takes the form of an essay by Carens making the case for amnesty, followed by responses by 16 writers. Carens argues that whether someone should be grated citizenship of a country should be determined by more than purely legal considerations. It also matters how long the person has lived in that country, legally or not. He establishes his premise with the following example:

Posner on the Corruption of Conservatism

“By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.” So writes conservative U.S. justice Richard Posner on the blog he shares with economist Gary Becker.

Burma’s Mute Despair

The Literary Review of Canada gave me room to do a substantial review of Guy Delisle’s Burma Chronicles. Click the link in the middle of the last sentence to read the review, the opening of which is excerpted below:

 

Many travellers record their experiences with a camera. Guy Delisle relies on an older method of preserving memories. Using the digits of his hand rather than digital handheld devices, the artist keeps sketchbooks where he draws the sights he encounters in other lands. He then reworks these impressions into comic strip travelogues, currently available in three volumes each named after a foreign locale.

Could China become another Japan?

 

 

 

 

Below is an interesting article by Dan Slater of Finance Asia in response to Japan’s Open Future (the book I have written with Tomas Casas i Klett and Jean-Pierre Lehmann, as introduced in an earlier post). I am reprinting Dan’s article here with his kind permission; it has been picked up on a couple of other sites as well.

And thanks to Elissa Bogos for allowing me to reproduce one of her wonderful photos here! John 

 
By Dan Slater  |  7 April 2009 
A new book raises the grim possibility China could ‘turn inwards’ and end up like Japan.

China’s decision not to allow Coca Cola to buy local soft drinks champion Huiyuan Juice, announced on March 18, and the latest World Bank report predicting growth will slow to 6.5% from the previously forecast 7.5%, has caused some commentators to wonder whether China could turn inwards. The fear is that China could turn away from its relatively open economic model and copy Japan’s ‘mercantilist’ model, defined as manipulating the terms of trade in one’s favour through currency depreciation and non-tariff barriers to imports and investments, and thus ‘stealing’ growth from one’s neighbours.

Japan has a total trade-to-GDP ratio of just 18%, and the stock of foreign direct investment represents a truly lamentable 1%. With only 2 million registered foreigners, Japan is the least welcoming country in the Organisation of Economic Cooperation and Development (OECD), with a ratio of 1.5% foreigners to the total population. Compare that to 10% in Spain, or even Germany, which has 16 million foreign residents in a population of 85 million.

China is far more open, with FDI accounting for 4% of GDP and 10% of capital formation in 2008. Total trade accounts for 35% of GDP. Foreign firms exporting out of China account for almost 50% of total exports — probably a unique ratio in world history. China also has huge imports, meaning the net contribution of trade to GDP is much smaller. But China is clearly an important cog in the global production chain. Japan, despite its well-known brands, is not. Indeed, Toyota pretty much sums up the significance of Japanese exports. (Cars are Japan’s most important export component, and within that, Toyota is the most important company.)

Tomas Casas i Klett, co-author of the excellent new book Japan’s Open Future warns: “The world can digest one mercantilist super economy, but not two.” This comment refers to what Casas i Klett believes is the defining characteristic of Japanese economic history, namely the accumulation of trade surpluses with the rest of the world. His concern is that in a time of crisis, China could follow Japan’s lead in turning away from mutually enhancing growth, as Japan did in the 1930s and surprisingly, even today, as reflected in the figures above. The effect would be a series of ‘beggar thy neighbour’ policies through currency depreciations and protectionist methods which could plunge the world into depression, according to one widely held theory.

China already looks somewhat like Japan in its pomp. Just as Japan went through a manically energetic episode after the Second World War, during which people united behind the goal of ‘catching up with the West’, China in the 1980s turned its back on the ideological rigidities of Maoism. Just as Japan did earlier, China has flourished by creating an enormous amount of manufacturing capacity in order to export to the West. But the pupil has surpassed the master: China’s ratio of trade to GDP is 35%, two times that in Japan. Japan seems to be going in the other direction, with its share of the world export market falling from 8.25% in the 1990s, to 5.5% today.

Is Japan still mercantilist if its trade activity is diminishing? Yes, but perhaps an increasingly bad example (which is precisely why Casas i Klett urges opening up the economy). Japan still has huge trade surpluses (but the first current account deficit in 13 years came in January 2009), and exports provide what growth the economy manages to eke out. “Fifty-five percent of GDP comes from private consumption, 15% from exports, but when you look at the growth rate of GDP, which is very marginal, that marginal change can be largely explained by a rise in exports. So it’s the change in GDP, not the absolute value of GDP, which is changing,” Kenichiro Kawasaki, a former Japan economist at Lehman Brothers, explained to FinanceAsia last year.

Another similarity is excessively depreciated currencies. Japan has achieved that by extraordinarily low interest rates, while China has achieved it through a target level against the dollar.

The end of the bubble in 1989 brought about conflicting responses in Japan. Under Prime Minister Koizumi, the country made some attempts to switch from the state-directed, mercantilist model of economic growth to a more classically liberal one. But Casas i Klett and his co-authors argue (despite cosmetics reform like the privatisation of certain agencies, especially the Post Office) that this has made little real difference: “Japan (today) is closed by any objective criterion one cares to use: level of imports, inward foreign investment, immigration, foreign managers and professionals, foreign brand recognition, penetration of international media, foreign language capability, international standards, contribution to development, extent of political contests inside Japan etcetera.”

Actually, during the internet bubble of 2000, a crop of ‘new economy’ companies did emerge. What is different to the post-War era, which stimulated entrepreneurial giants like Honda and Sony, is that these companies did not become great world-beaters. On the contrary, the internet sector, as reflected by the mother board of the Tokyo Stock Exchange, has never recovered from Takefumi Horie’s Livedoor scandal.

The question now is whether China will react in the same way as Japan to an economic catastrophe — and let us be clear that this does not necessarily imply evil or stupidity. The lesson of the 1930s (as could be repeated today) seemed to be that liberal economies simply did not work, especially when only the Soviet Union and Nazi Germany seemed to have found an economic solution. Recall that pre-war Japan was run in the orthodox liberal manner — at least until 1931 when the country was forced off the gold standard along with Britain. After 1931, in a bid to solve the banking crises and wealth inequalities that had followed World War I, Japan adopted very illiberal policies. The results were initially good: Japan saw trade growing at a faster rate than GDP in the 1930s. The big difference versus Japan in the post-war era was that these policies did not result in yearly trade surpluses, because of the military’s import needs. The state took on even more power in 1938 with a series of laws controlling trade and capital. By then, the country was run on purely ideological (Fascist) lines, rather than purely economic (mercantilist) lines.

Experience teaches us that realistically speaking, it’s impossible to maintain a ‘business as usual’ approach in times of economic crisis, however desirable in principle. Brokerage CLSA has published figures which predict a huge shrinkage in world trade. Unless GDP shrinks to the same extent (a disaster in itself) it’s impossible to see China, or any trading country, maintaining its openness in terms of trade-to-GDP ratios. 

CLSA’s China economist, Andy Rothman, is more bullish than most on China, but apparently only if assuming China becomes less open. Rothman claims that China is far more of a continental economy than generally appreciated, given its low net exports (under 10% of GDP). Thanks to its control of the state banks, the government can force spending to rise on real estate and construction, a sector which is greater than 10% of GDP, and can therefore balance out a collapse in net exports. So problem solved? Kawasaki, quoted above, would not agree. But it would show that China has the ability to crush the vested interest in the export sector for the good of the overall economy. Crushing vested interests in its domestic economy is exactly what Japan has failed to do.

Theoretically, even a successful domestic re-orientation would not prevent an international reduction in living standards, since countries would depart from the theory of comparative advantage. In practice, that theory has been partly discredited, since industrialised countries trade mostly with each other (for example Renault has 10% of the German car market). But new compensating domestic demand must be found — and here Japan and China are both challenged: Japan by terrible demographics, and in China, by a lack of widespread wealth. In this crisis, there are no easy answers.

© Haymarket Media Limited. All rights reserved.

Listen to Reason

FDR with an Orphan Annie look-alike.

 

I’ve been writing the introductions for a series series of volumes reprinting Harold Gray’s Little Orphan Annie, a comic strip which in the 1930s pioneered a form of right-wing populism which later (in the era of Nixon, Reagan and Bush) became politically pervasive in the United States. Brian Doherty of Reason magazine has just written a very gratifying review of the series. I was particularly happy with this passage on the politics of Annie:

Heer once characterized Gray’s philosophy as a sort of “two-fisted conservatism.” These first two volumes of the series, both of them pre–New Deal, are individualistic, but the anti-government mood is generally quietly suggestive, not obtrusive. The subtle politics are highly individualistic, promoting the virtues of the hard-working common man. The strip was suffused with Midwestern values (hard work and cheerfulness) and prejudices (pro-fisherman, anti-beard) and a very populist sense that it was who you were inside, not money or station, that mattered, and that “just plain folk—and plenty of ’em” were best.

In the 1930s, as the New Deal proceeded and Gray became increasingly appalled, his opposition became more apparent. He never named the president, but it was obvious where he stood. One stunning 1935 sequence told the tragedy of a man who invented Eonite, a wonder substance that could provide a cheap eternal building material, “ten times stronger than steel,” that had the potential to “replace all known woods or metals.” He is, alas, murdered by an angry mob whipped up by a union demagogue, and Eonite dies with him. Ayn Rand fans will hear echoes of that tale in both The Fountainhead’s Ellsworth Toohey and Atlas Shrugged’s Rearden Metal.

Banner image

A detail from William Degouve de Nuncques‘s “The Mysterious Forest” (1900). De Nuncques (1867-1935) was a French-born Belgian painter who became strongly influenced by Symbolism after being introduced to the circle of Symbolist poets by his new wife, Juliette Massin (the sister-in-law of lyric poet Emile Verhaeren). For a time, he was associated with the avant garde group of Belgian painters, designers, and sculptors known as Les XX (“the twenty”), and certain of his works are thought to have had a significant influence on Surrealism through the paintings of Rene Magritte.

Le beau jardin fleuri de flammes
Qui nous semblait le double ou le miroir
Du jardin clair que nous portions dans l’âme,
S’immobilise en un gel d’or, ce soir.

Un grand silence blanc est descendu s’asseoir
Là-bas, aux horizons de marbre,
Vers où s’en vont, par défilés, les arbres
Avec leur ombre immense et bleue
Et régulière, à côté d’eux.

The beautiful garden flowering with flames
Which seemed to us the double, or the mirror
Of the luminous garden that we carried in our souls,
Becomes still in a golden frost this evening.

A great white silence has come down to settle
There, on the marble horizons,
Towards them the trees stretch away in ranks
With their vast, blue, precise shadow beside them.

– Excerpt from Emile Verhaeren’s Les Heures claires
(translated by William Rees)

"The Mysterious Forest", by William Degouve de Nuncques (1900)