An Assessment of the International Political Economic Landscape

Asian banks generally tend to hold large amounts of Dollars. The US greenback is the international reserve currency, though the Euro is rapidly serving as its understudy. However, Asian banks hold greenbacks in extraordinary proportions. This is mainly because Asian firms, who export to the US tend to have large stacks of cash that they need to put somewhere. Last week, I started to think that Japan can use its dollar surplus to manipulate financial markets in their favor. In retaliation, though, the US could always to erect a bunch of anti-Japanese protectionist trade barriers to combat this move.

China is becoming the other nipple from which Japan nourishes itself, but the problem is that China exports to the US. So, it is an intermediary between the US and Japan. China only adds ten percent value added and it is all labor. It is the world's factory, but it also provides a means by which Japan can convert its dollar surplus into currencies that provide more options.

This only works if someone else wants to acquire dollars and basically everyone has dollar surpluses. What Japan would need to do is create a trade deficit with the US, buying stuff from the US with dollars while maintaining trade surpluses elsewhere, but frankly we manufacture junk. So, I can’t blame them for not doing this. Why would China want to put itself into Japan’s position, you ask? Japan is a mature economy and they used an export based model to grow during the post-WW2 era.

The small Tigers of Asia (i.e. Korea, Thailand, Singapore, Taiwan) are modeling their economic strategies after the Japanese export-driven model and that is the reason why they have been so successful. In the short term, this works. Over the longer term, there will be an adjustment that takes place as the economy matures, as Japan has demonstrated with its decade-long slump that began in the 90s.

The problem arises, when the economy matures. So, China has time hoping that guys like me can find a solution to this. I guess you could worry about the next punk-tiger on the block undercutting you, but I don’t think that any of these "punk-Tigers" can undercut China’s currency hug. The "sleeping dragon" pegs its currency against the dollar so that the currency is undervalued and no other country can compete against their weak currency.

They have the scalability to be able to do that. China doesn’t really want to import the dollar problem. It is quite content to let Japan finance Chinese-American trade. The bulk of the goods that we get from Asia come from China. Ergo, they have all of these dollars that they don't know what to do with, except buy useless crap from us. Ah, but dollars are useful for buying oil. The currency of the international oil market is the mighty greenback. Both the Chinese and Japanese dragons have parched throats and are thirsty for the black gold.

Hence the invasion and subsequent occupation of Iraq; to ensure that only dollars - and not Euros - are good for buying oil. For, if the component of demand for the dollar related to oil were to dry up, the value of the dollar would fall, which would drive up the price of exports, which is a key component of inflation. I have seen this movie before. What we are facing folks is stagflation.

A solution to the Asiatic Dollar Surplus problem would be to up oil consumption by Asian countries. Now, if Brazil had significant oil reserves, then Japan could cut us out of the loop, b/c the two nations have very close trade relations. The oil players in Latin America are Venezuela and Mexico. I don’t think that the US would mind transferring the dollar problem to Mexico and Venezuela. Then it would have an excuse to turn the FTAA into a dollar-currency zone.

The bottom line in all of this is that while the US is the number one net importer of stuff (we even have a mart where we buy stuff that we don't need), it is also the number one exporter of the greenback, which was by design per the Bretton Woods system. This is good for the American consumer, because he/she doesn't have to give up any of their output, yet they get to import portions of output from the rest of the world. To the victor belong the spoils, so the saying goes. Be careful Bush, this is a recipe for a downward spiral into a huge amount of debt. Ah, but when you devalue your currency you still get to keep the stuff and you get to wreak havoc on foreign banks, to boot. Fantastic you say? Well, this is bad news domestically, because the oil that we import just went up, as well.

The Austrian economist Joseph Schumpeter used the term "creative destruction" to describe the effect of innovation on the quality of life. A technology comes along through innovation and destroys the predecessor and improves the quality of life for everyone. We were all better off when the automobile replaced the horse and buggy, right? I would borrow the "creative destruction" term to characterize how the US perpetuates its imperial hegemony and keeps everyone else doing what they are told. The US creates the money and destroys in the process. Somehow, I don't think that this perversion is what Schumpeter had in mind.

Things look pretty for the time being, until the mess in the Middle East boils over and we have a regional war on our hands. I guess life in the “oral” office is too boring for old Duh-bya. He had to go and cause mayhem, nuclear attacks, and Armageddon to bring about the rapture for which he has a woody. I believe the Christian right calls it the "second coming" and they are excited about it. Heck, they even have duh-bya there to orchestrate it. You can't help God out enough. He needs all of it that he can get. I have heard that he is a feeble old man, who smokes cigars.

The right-wing Israelis think that part of Syria would make a great Palestinian homeland. Heck, it might make a good Lebanese homeland as well. The Lebanese and Jews still do business deals, but just offshore (Cyprus), though. I find that interesting. They may be screaming bloody hell to each other while in their own region, but whence they are off shore, they have no problem with each other. Dollars drive will.

A Political Economy of the Corporation

Religion is a tool of the elites leveraged to keep the masses ignorant. It is a social construct. It enables the uninformed to lead lives sans reflection. This allows them to leave the big questions unanswered, for they lack the cognition to know which questions to ask. Instead, they base everything on mere faith and rely on the rhetoric they are fed from the pulpit.

I believe that religion is mental slavery. I always thought of church as a waste of time and I tended to ask questions, which tended to irritate the church leadership, who didn’t have satisfactory answers for the questions. How dare I question what they say?

The vast majority of youths are socially conditioned by means of the public indoctrination system (i.e. public education) through which they are kept just as ignorant as a 12 year old. Teachers and television become their babysitters, while their parents are enslaved through subsistence wages such that both parents must work to support the family, if they haven’t divorced yet due to the stresses of economic problems on the marriage.

The corporations, who control the government with their campaign contributions, have orchestrated this scenario. The government has become an instrument of corporations. When the children arise from this muck, they are mere troglodytes, unable to think for themselves; perfect victims, or cogs in the machine known as American-style Capitalism. As part of this problem, we have an oligopolistic media comprised of 9 mega-conglomerates, which broadcast propaganda.

These cave men (and women) are kept from thinking on their own by the "puppet masters", who control their thought through an idiot box (a.k.a. the television). This propaganda machine also robs them of their attention spans, which they would need to take steps toward truth and out of the Platonic Cave in which they are mentally enslaved. This is how you keep the masses ignorant; thought control. So, they turn to religion, because “truth” is served to them on a silver platter – they don’t have to think. Further, it offers them hope and explanation for their circumstances. They were bad and sinned. This is why they live in misery. They must work harder so that they can get to heaven.

Capitalization on the ignorance of the masses does not stop there. Our nebulous “War on Terror” is yet another manifestation of this dynamic at work. The masses are malleable. They are kept in a state of fear of the latest "-ism". This way, the powers that be in the executive branch can launch their foreign policy agenda and military-industrial complex continues on greasing the wheels of the economy.

GWB is not interested in diplomacy, only expansion of the military-industrial complex to serve the interests of his winning coalition. His thinking seems to be, “We have bigger guns.” Therefore, we will quash you and force you to submit to our Western edicts. It is imperialism. His theoretical framework, good and evil, is so discrete. It is a reiteration of the old “divide and conquer” mentality. His statement, “you are either with us, or against us” can serve as an assessment of his cognitive ability; limited critical thinking skills, if any at all.

Either, he is very astute and is using this rhetoric deliberately to rally support for his agenda, or he is a bona-fide lunatic. His categorical “Axis of Evil” is used to isolate those rogue states, which are really states for which we lack effective diplomatic strategies. Within this framework, there is no gray area.

It is widely perceived that corporations operate under the mantra "profits before social responsibility," better yet "profits before people." This is evidenced by their actions and not their rhetoric, which is quite the contrary.

People are painfully undereducated in matters of Civics in our country. I believe that this is by design that about half of the voting age population even knows the function of the Electoral College, let alone its existence. It was just another way of keeping the peons (and originally it was just the peons with land that could vote) in line so that the elite could control the government.

Senators, our only real aristocracy, were originally appointed by the states to keep the peons from interfering. We directly elect them now. At the end of his life, Thomas Jefferson warned that a "government of an aristocracy founded on banking institutions and moneyed corporations" would be "riding and ruling over the plundered ploughman and beggared yeomanry." He shared the belief with James Madison that economic power would one day try to seize political power. The courts made corporations into persons and due to their economic power they have been been able to seize political power in the nation-states in which they operate. They represent the global elite.

In contemporary times, globalization and American hegemony has caused these “persons” to be unaccountable to political power. They have become courtesans in the global empire, ruled by the US. All they must do is appease and control their master (i.e. the American Emperor) and they are free to do as they wish throughout the globe.

Corporations have made the gestalt leap from operating in single nation-states to having multi-national operations. They now rule the world by means of leveraging their economic power to control policymaking in the world. This is a particularly effective tactic, when dealing with vulnerable Third World governments. The bottom line is that they lack social responsibility and leverage their economic power to orchestrate politics to their advantage.

I often compare the power partnership between corporations and government to the mafia. The mafia’s Commission represents the District’s old boys club, kingpins who quietly mastermind policy to serve their interests. The Caporegimas, or mafiaspeak for Captains, in America, are captains of industry such as Warren Buffett, George Soros, and Bill Gates. The enforcers, soldiers, or Wise Guys, are lawyers (ever heard the expression, “I have a good hired gun” in reference to a lawyer?), who enforce policy and discipline those who get out of line through intimidation. The associates include corrupt police, who only patrol low-income neighborhoods or geographic zones over which they exercise control.

It makes sense for the corporations to organize government to their own liking. When things are organized, profits increase. Gotti once commented that the only difference between him and the government was that the government makes the rules. He meant that they use the same tactics. The government is an organized mechanism by which corporations orchestrate policy to their favor. This is the nature of the beast and the concept behind organized crime.

The original corporations were chartered by the Crown of England to fulfill a specifically delineated social function. Those involved in the corporation were allowed to make a reasonable profit to achieve those social goals. The Crown always reserved the right to dissolve corporations that weren't fulfilling their social obligations. Today, corporations are entities autonomous of the state. The state cannot dissolve them unless they commit some sort of horrid crime that pisses too many of the peasants off.

There is no reason why corporations couldn't operate as they did once upon a time as semi-private extensions of the state. In a democracy, that would mean popular oversight of every chartered corporation. I'm tired of a society that views the only measure of human quality of life in terms of consumption. A corporation that doesn't meet the requirements that the majority of the population desires it to meet should be dissolved. If the requirements mean the corporation cannot exist, then so be it, we just don’t have that function in society, because corporations have used their economic power to amass political power and will not allow such a function to exist.

The Economic Cost of Disease

It has been argued that a long term challenge to sustained economic development in the US is the ability to continually supply skilled workers to meet the expected demands. This is one reason why jobs are leaving US shores. The companies can find plenty of skilled labor in other countries, who can provide more productive labor, productivity being defined as output per worker at a given cost.

The US is Capital rich, meaning that we have a lot of it, but Labor poor, meaning that we lack sufficient skilled labor to compete in the global economy. Long term threats to our competitiveness include inadequate investment in economic infrastructure, rapidly rising medical and pension costs associated with an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups. However, there is at least one opportunity to help us compete in the increasingly globalized economy.

An area where we can gain ground, in the short term, given this challenge is health care. Focusing on this issue will help to retain key labor inputs as productive members of our labor force. There are costs associated with disease other than just the nominal cost of medical treatment. The total cost of a disease includes the loss of productivity, loss of purchasing power, and a loss of tax revenues. In other words, when one worker is sick, the entire economy suffers.

As health care costs continue to rise, many younger people cannot afford to buy health insurance and thus opt out of doing so. As these economically productive workers begin to become sick due to lack of affordable health insurance, all of society will feel the economic pressure from the dramatic loss of these people, which is substantial. Simply stated, when you are ill, you are directing your economic resources to medical care—not for non-essential goods or services.

From research that has been done, according to the Financial Times, for every dollar that is spent in medical cost - there is a loss of 7.50 dollars to the economy. If we nationalized healthcare, though I don’t see this happening in the foreseeable future, we would become more competitive, as it would force us to take a more preventative approach to healthcare, which would yield a more productive workforce. It would also relieve US corporations from the burden of rising health care costs, thus reducing their costs and raising worker productivity, allowing us to compete more effectively with the rest of the world