Asia Shuts Obama Out of New Trade Bloc: What You Really Should Worry About
Asia’s response to Obama’s “Asian Pivot” was an invitation to pivot 360 degrees and go home. In today’s Asia Times Online, I report on what all of us really should worry about. Some excerpts:
It is symptomatic of America’s national condition that the worst humiliation ever suffered by America as a nation, and by an American president personally, passed almost uncommented last week. I refer to the Nov. 20 announcement at the Asian summit meeting in Phnom Penh that fifteen Asian nations comprising half the world’s population would form a Regional Comprehensive Economic Partnership excluding the United States. President Barack Obama attended the summit to sell an American-based Trans-Pacific Partnership excluding China. He didn’t. The American led-partnership became a party to which no-one came.
Instead, the Association of Southeast Asian Nations, plus China, India, Japan, South Korea, Australia and New Zealand, will form a club and leave out the United States. As 3 billion Asians become prosperous, interest fades in the prospective contribution of 300 million Americans—especially when those Americans decline to take risks on new technologies. America’s great economic strength, namely its capacity to innovate, exists mainly in memory four years after the 2008 economic crisis.
A minor issue in the election campaign, the Trans-Pacific Partnership initiative was the object of enormous hype on the policy circuit. Salon.com enthused Oct. 23, “This agreement is a core part of the “Asia pivot” that has occupied the activities of think tanks and policymakers in Washington but remained hidden by the tinsel and confetti of the election. But more than any other policy, the trends the TPP represents could restructure American foreign relations, and potentially the economy itself.”
As it happened, this grand, game-changing vision mattered only to the sad, strange people who concoct policy in the bowels of the Obama administration. America’s relative importance is fading.
To put these matters in context: the exports of Asian countries have risen more than 20% from their peak before the 2008 economic crisis, while Europe’s exports have fallen by more than 20%. American exports have risen marginally (by about 4%) from their pre-2008 peak.
China’s exports to Asia, meanwhile, jumped 50% since their pre-crisis peak, while exports to the United States have risen by about 15%. At $90 billion, Chinese exports to Asia are three times the country’s exports to the United States.
After months and dire (and entirely wrong) predictions that China’s economy faced a hard landing, it is evident that China will have no hard landing, nor indeed any landing at all. Domestic consumption as well as exports to Asia both are running nearly 20 percent ahead of last year’s levels, compensating for weakness in certain export markets and the construction sector. Exports to the moribund American economy are stagnant.
……..
Where does America have a competitive advantage? Apart from commercial aircraft, power generating equipment, and agriculture, America has few areas of real industrial pre-eminence. Cheap natural gas helps low-value-added industries like fertilizer, but America is lagging in the industrial space. Four years ago, when Francesco Sisci and I proposed a Sino-American monetary agreement as an anchor for trade integration, the US still dominated the nuclear power plant industry. With the sale of the Westinghouse nuclear power business to Toshiba, and Toshiba’s joint ventures with China to build power plants locally, that advantage has evaporated.
The problem is that Americans have stopped investing in the sort of high-tech, high-value-added industries that produce the manufactures that Asia requires. Manufacturers’ capital goods orders are 38% below the 1999 peak after taking inflation into account. And venture capital allocations for high-tech manufacturing have dried up.
It is difficult to imagine that either of the Bush presidencies, or Clinton’s, would have allowed this to happen.
Obama is a third rate president with a third rate team of advisors.
Many of the youth who voted for him have no idea of how screwed their future is.
Expensive Republican militarism doomed the party and the country. The right wing, to this day, underestimates how much the people despise war, especially and usually the young. Obama was elected as a disciplined fiscal conservative and a peace candidate, ironically, but it only took him 4 years to change enough minds with welfare addiction. It only takes a couple percentage points in the right places.
Modern democracies need to have elections every year. They’re now so infrequent that it’s always too late to stop points of no return. People thought we were going to get another Bill Clintonm but now it doesn’t matter what we think. The debt and “kinetic military actions” still continue.
Great, another glib pet theory that is supposed to explain everything. For the vast majority of Americans, the worst aspect of the Iraq war was seeing pundits hyperventilate on tv about it. That´s about the extent of their sacrifice. And given the state of the American electorate, I wager half of them didn´t follow events even that much.
As for the cost, all war costs since 2001 would about cover 18 months of our current annual deficits.
It is true that Obama occasionally ran to the right on taxes and spending (in 2008) but it´s not as if many people were fooled. His left-wing supporters never doubted he was one of them. Then as now, too many Americans long for an easy fix, a simple explanation. Single-issue bores who don´t understand large numbers are the death of this nation. Everyone knows just one little thing. And it seems you are no exception.
He is a first-rate president for a third-rate nation. This is an important distinction……..
It’s time to stop blaming Obama, it’s time to start blaming ourselves……..
These are the fruits of affirmatve action. A man has been promoted beyond his ability for the sake of “diversity” and now all around him have to try an compensate for his incompetence.
YES,blame both of the bush administrations, yes they did nothing to stop it and could have, they are both incompetent ex,s , the Obama administration came in to clean up their mess and our young people see it,to bad the older generation is pretty dumb for believing your script.
Not to put TOO fine a point on it …. but 180 degrees is going back the way you came….
Let’s make it 540 and call it a deal……’>………
[Pedantry alert]
“Asia’s response to Obama’s ‘Asian Pivot’ was an invitation to pivot 360 degrees and go home.”
If Obama is pivoting to Asia, it means he was previously facing away. So the Asian response is that he should continue his pivot until he does a full 360 and faces away once again. And then walk forward.
Which reminds me of the famous Sinatra story, which I’ll quote in its Mark Steyn version:
In fact, the original piece at AT makes it even clearer: “Asian leaders in effect invited Obama to pivot the full 360 degrees and go home.”
“As it happened, this grand, game-changing vision mattered only to the sad, strange people who concoct policy in the bowels of the Obama administration. America’s relative importance is fading.”
America’s relative importance is fading: that’s a feature, not a bug, of the Obama presidency. Fundamental transformation indeed.
All sealed with a kiss.
This quote of Mr Goldman’s,…”China’s exports to Asia, meanwhile, jumped 50% since their pre-crisis peak, while exports to the United States have risen by about 15%. At $90 billion, Chinese exports to Asia are three times the country’s exports to the United States.”
…..perhaps should not be taken as to be so humiliating*[more later] or surprising. After all, they’ve got a fertile population of what?..one and one half….billion…. people [give or take, no one can really be certain how many they are....] and a growing number of them moving from the countryside into those sprawling, squalid metropolises (ignore the glamorous skyline photos of Shanghai)working for, say, a tenth of American wages, and making all the stuff other millions of Asians need at prices we simply cannot compete with.
That’s what keeps Walmart functioning in our America…..Walmart’s imports from China. Asia, is of course the same. China’s Asian neighbors are hungry for goods at Chinese prices. There’s simply no way we Americans can compete.
As to us having so few commercial advantages, those mentioned by Mr Goldman, that was coming down the road along with that “I’m all right, Jack” attitude of our organized labor at their tightly unionized and skilled assembly lines since our post-war years. Hence Govt Motors. Inevitably.
There are no more pragmatic, hard working people on Earth than the long suffering Chinese. Pearl Buck knew exactly what she was writing about.
*Now, as for *’humiliation’, those naif arrivistes who should be really humiliated are mostly those centered in our White House with their hero Obama, put there by their now humiliated, vengeful voters. Trouble is, those voters haven’t the wit to know this. These folks outnumber thinking voters.
Hence, we’ve really got problems here. Perhaps we can smirk inwardly with the knowledge that those vast sums of U.S. Green Dollars the Chinese are holding are gradually losing value as this is being typed……Click……click….click, Dear Readers.
“…all the stuff other millions of Asians need at prices we simply cannot compete with.
That’s what keeps Walmart functioning in our America…..Walmart’s imports from China. Asia, is of course the same. China’s Asian neighbors are hungry for goods at Chinese prices. There’s simply no way we Americans can compete.”
No, no, no. Ever since the Japanese first put pressure on US industry have we heard this refrain. “Oh, the Asians work for less, game over, man. We cannot compete.”
Utter nonsense. Japan and Germany have thriving manufacturing sectors. I know Germany well, having lived there. High wages, lots of rules. But they do manage to build a lot of stuff. With about a quarter of the population, Germany exports more goods than the US.
Leaving culture aside, here are a few factors that determine whether an industrial sector can thrive or not:
1. Education and job training
2. A predictable and transparent legal and regulatory regime
3. Infrastructure (including energy prices)
4. Proximity to markets
Only 4. is not within our power to change, and a good thing too, because it is the only one the US government hasn´t screwed up. We have certainly failed at the first three. But that was never inevitable. We did it, often as a matter of official policy. Of course, from what I hear the Germans are now shooting themselves in the foot with regard to energy prices, but that will hardly solve our problems.
We would appear to be well placed to exploit the marvellous productivity of our agricultural sector, which is becoming more important since those billions want to eat and eat well. But of course, we are busy farming corn for ethanol, losing money in the process.
I talked with some of my students today, who just happen to be all white males, age 19 to 23. All of them voted for Romney. “The youth” who voted for Obama didn’t include many white males … But for economic reasons, not racial reasons. They could see that their future is screwed in this economy. The sad thing is that Latinos are more screwed than any other ethnic group (especially those of Mexican background). And just to clarify: I am Latino and I voted for Romney. He was not the ideal candidate but was better than the incompetent, feckless incumbent we are now stuck with for four years.
I wonder why it never occurs to economists that one of the reasons why we have nothing of note to export to Asia is because their industries have undercut ours due to … free trade agreements. Ricardo’s law is empirically something more like an anecdote.
TPP is not yet dead in Japan, though the debate is intense (the public part of which is primarily centered on the Japanese perception that they always get the short end of the stick in negotiations with the U.S.).
It is possible that they will agree to participate in negotiations. On the other hand, the co-author of the Japan that can say no, Ishihara Shintaro, is participating as the leader of a new party that could do quite well (for reasons that have nothing to do with ultra-nationalism). He probably won’t be prime minister, but depending on the results, that party could have a lot influence.
The hostility towards private business evidenced by Obama and congressional democrats does not help matters.
Try this on for size:
http://news.investors.com/ibd-editorials-perspective/110812-632759-obama-to-wield-bigger-disparate-impact-club.htm?p=full&fromcampaign=1
Yes, still there are idiots who cannot understand why American business is so keen to outsourcing these days. Stuff like the above linked article will only increase outsourcing to Asian countries and accelerate America’s decline relative to East Asia.
Business has never stood against racial and sexual preferences.
“Business has never stood against racial and sexual preferences.”
Who is this “business” you speak of and why would he do our job for us? It is not in the nature of business to go on political crusades. It´s not their core competence. Managers are by nature cautious, short sighted and opportunistic. None of them wants to be a martyr for a cause. Sure, the biggest corporations lobby. They can also invest elsewhere. The small ones adapt or die. Most regulation will hit smaller businesses harder, so the big ones do not mind.
If you want to politicize business in that way, you understand it no better than the Left. Business can thrive or wither, it is in our own interest that it does the former.
Thanks for the link.
Perhaps I need to change my name to Juana.
Thanks for the link.
Those whom the Gods would destroy, they first send mad.
What about the military dimension? I can’t imagine President Predator Drone being entirely uncredible … his biggest problem would seem to be a firm policy of insulting and hurting allies and making nice with enemies.
Certainly things like the cancellation of the Eastern European and beyond ABM system (would have protected all the way to the US) reminded the Asians, as if after Vietnam in the 1960s and Indonesia in the late 1990s, they needed any reminder that we’re not a reliable ally. Still, with a steadily declining and self-limiting Japan we’re the only credible counterweight to the PRC, right?
(Those are both examples where we deliberately or not engineered the deposing of the nation’s ruler; the latter example is thought to be why the PRC started accumulating tremendous foreign currency reserves, which helped set up the Great Recession.)
The humiliation will be complete when Canada is invited to join this Asian bloc (a la redirected Keystone) and the USA is not.
No Mike as I’ve been warning the real humiliation will come when Israel announces a big arms deal selling to Russia by the end of Obama’s 2nd term. Then even the neocons will have to stick their heads out that the U.S. ally they thought the most indispensable doesn’t trust anyone in Washington anymore and with good reason.
Levada Center poll: 61% of Russians polled have a favorable view of Israel (after all that’s where some of their cousins may have gone). Try topping that anywhere in Western Europe, including the UK!
http://www.levada.ru/14-06-2012/otnoshenie-rossiyan-k-drugim-stranam
This is what some Israeli have warned about years ago: if the US government throwns Israel under the bus, they will use their advanced military technology to bargain with China and Russia.
Israel cannot afford to be picky but we know that. The choice will have been ours. Given Obama´s anti-Western obsession, he would consider it a win.
Did I not get a memo?
Wasn’t the fact that the sweaty, hierarchical, patriarchal, industrial era had been swept off the national table, to be replaced by a Correct Knowledge-and-Service economy … wasn’t that all the primary achievement of the past 40 years of ‘liberal’ political impositions?
Nixon (for whom I hold no brief) warned on July 5, 1971 that the past 25 years (1945-1970) had been a great run and a lot of fun, but it was over now and we had to get ready for a world where we would have to work well with others (as the old grade-school report cards used to put it). Instead, the elites dumped Nixon and awarded themselves 40 Biblical years of more fun – and now, apparently, they “cawn’t think why” things have gone so wrong, and they very much would rather we don’t ask any embarassing questions either.