Scapegoat others when looking at the mirror to self reflect can identify solutions

Japan Then, China Now

May 27, 2019 STEPHEN S. ROACHBack in the 1980s, Japan was portrayed as the greatest economic threat to the United States, and allegations of intellectual property theft were only part of Americans' vilification. Thirty years later, Americans have made China the villain, when, just like three decades ago, they should be looking squarely in the mirror.

NEW HAVEN – “When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade.” So said US President Ronald Reagan, commenting on Japan after the Plaza Accord was concluded in September 1985. Today resembles, in many respects, a remake of this 1980s movie, but with a reality-television star replacing a Hollywood film star in the presidential leading role – and with a new villain in place of Japan.

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Back in the 1980s, Japan was portrayed as America’s greatest economic threat – not only because of allegations of intellectual property theft, but also because of concerns about currency manipulation, state-sponsored industrial policy, a hollowing out of US manufacturing, and an outsize bilateral trade deficit. In its standoff with the US, Japan ultimately blinked, but it paid a steep price for doing so – nearly three “lost” decades of economic stagnation and deflation. Today, the same plot features China.

Notwithstanding both countries’ objectionable mercantilism, Japan and China had something else in common: They became victims of America’s unfortunate habit of making others the scapegoat for its own economic problems. Like Japan bashing in the 1980s, China bashing today is an outgrowth of America’s increasingly insidious macroeconomic imbalances. In both cases, a dramatic shortfall in US domestic saving spawned large current-account and trade deficits, setting the stage for battles, 30 years apart, with Asia’s two economic giants.

When Reagan took office in January 1981, the net domestic saving rate stood at 7.8% of national income, and the current account was basically balanced. Within two and a half years, courtesy of Reagan’s wildly popular tax cuts, the domestic saving rate had plunged to 3.7%, and the current account and the merchandise trade balances swung into perpetual deficit. In this important respect, America’s so-called trade problem was very much of its own making.

Yet the Reagan administration was in denial. There was little or no appreciation of the link between saving and trade imbalances. Instead, the blame was pinned on Japan, which accounted for 42%of US goods trade deficits in the first half of the 1980s. Japan bashing then took on a life of its own with a wide range of grievances over unfair and illegal trade practices. Leading the charge back then was a young Deputy US Trade Representative named Robert Lighthizer.

Fast-forward some 30 years and the similarities are painfully evident. Unlike Reagan, President Donald Trump did not inherit a US economy with an ample reservoir of saving. When Trump took office in January 2017, the net domestic saving rate was just 3%, well below half the rate at the onset of the Reagan era. But, like his predecessor, who waxed eloquently of a new “morning in America,” Trump also opted for large tax cuts – this time to “make America great again.”

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The result was a predictable widening of the federal budget deficit, which more than offset the cyclical surge in private saving that normally accompanies a maturing economic expansion. As a result, the net domestic saving rate actually edged down to 2.8% of national income by late 2018, keeping America’s international balances deep in the red – with the current-account deficit at 2.6% of GDP and the merchandise trade gap at 4.5% in late 2018.

And that’s where China assumes the role that Japan played in the 1980s. On the surface, the threat seems more dire. After all, China accounted for 48% of the US merchandise trade deficit in 2018, compared to Japan’s 42% share in the first half of the 1980s. But the comparison is distorted by global supply chains, which basically didn’t exist in the 1980s. Data from the OECD and the World Trade Organization suggestthat about 35-40% of the bilateral US-China trade deficit reflects inputs made outside of China but assembled and shipped to the US from China. That means the made-in-China portion of today’s US trade deficit is actually smaller than Japan’s share of the 1980s.

Like the Japan bashing of the 1980s, today’s outbreak of China bashing has been conveniently excised from America’s broader macroeconomic context. That is a serious mistake. Without raising national saving – highly unlikely under the current US budget trajectory – trade will simply be shifted away from China to America’s other trading partners. With this trade diversion likely to migrate to higher-cost platforms around the world, American consumers will be hit with the functional equivalent of a tax hike.

Ironically, Trump has summoned the same Robert Lighthizer, veteran of the Japan trade battles of the 1980s, to lead the charge against China. Unfortunately, Lighthizer seems as clueless about the macro argument today as he was back then.

In both episodes, the US was in denial, bordering on delusion. Basking in the warm glow of untested supply-side economics – especially the theory that tax cuts would be self-financing – the Reagan administration failed to appreciate the links between mounting budget and trade deficits. Today, the seductive power of low interest rates, coupled with the latest strain of voodoo economics – Modern Monetary Theory – is equally alluring for the Trump administration and a bipartisan consensus of China bashers in the US Congress.

The tough macroeconomic constraints facing a saving-short US economy are ignored for good reason: there is no US political constituency for reducing trade deficits by cutting budget deficits and thereby boosting domestic saving. America wants to have its cake and eat it, with a health-care system that swallows 18% of its GDP, defense spending that exceeds the combined sum of the world’s next seven largest military budgets, and tax cuts that have reduced federal government revenue to 16.5% of GDP, well below the 17.4% average of the past 50 years.

This remake of an old movie is disconcerting, to say the least. Once again, the US has found it far easier to bash others – Japan then, China now – than to live within its means. This time, however, the movie might have a very different ending.

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STEPHEN S. ROACH

Writing for PS since 2011 
103 Commentaries

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Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm's chief economist, is a senior fellow at Yale University's Jackson Institu

far sighted visionary

Our PM is educated in science and empirical facts.He also understands human nature and the dynamics of power in politics.So because he is well read and keeps abreast with latest knowledge,he understands two things.The importance of a national currency backed by the intrinsic value of gold as it has historically been acknowledge as a valuable asset.When  money is printed and circulated and used as a foreign reserve currency by national treasury all over the world,that currency if backed by petrodollars is dangerous because nationals are switching to green energy and the value of money backed by petrodollars will eventually devalue.Secondly if some nation overproduces oil and gas output,the price of fossil fuel will drop and national banks that use it as foreign reserve currency will find that its national assets will devalue with it.So to moot for an Asian currency backed by gold reserves is a rational move. for citizens  would not want a case of hyperinflation decreasing their purchasing power and lowering standard of living.
       The Other bold move is to set up the EAEC after the EU move to integrate economic development so cooperation to lower tariffs and trade barrier to speed up faster movement of goods and services across borders.Our PM is far sighted to look at regional cooperation instead of only national development as globalization interlinks markets

It's not either or but both

There's a dichotomy in thinking that leads to a split personality.If i take care of my body but not my mind,the stress and anxiety of mental conflicts affects the health of the body eventually like sleep disruption,heart problems or digestive upsets.If I take care of my mind but neglect my body,obesity and poor health lowers immunity and causes flu,sickness.So one should take a holistic approach and take care of both.
           So the thinking of if you're not with me,you're my enemy takes a dichotomy approach in thinking that leads to forcing partisan politics and leave no room for compromise and negotiation.I would prefer leadership that has a broader vision and a long term worldview.Hey all of us are in the same boat and if any end of the boat has been destroyed,all passengers and captain will sink to the bottom.
         The issue has been sidetracked into nationalistic jingo which appeals to the emotional and irrational blind loyalty.Our concerns should be on broader issues like disruption due to technological changes,the ethics remaking humans and ageing through human-machine interface,the plastic creeping into our foodchain and the devastation of  a nuclear war.
             We are now in the Anthrocene Age and species extinction is real.The bio,cyber,environmental catastrophes changes are irreversible.

Will Durant the historian who wrote the Lessons from History and The Story of Civilization said
 "You can't fool all the people all the time,but you can fool enough of them to rule a large country."


He postulated
1.Humans are unequal by nature,fighting that would mean giving up freedom.
2.The evolution of humans was a social one,not a biological one.
3.War is a more natural state than peace.

Something that we the masses have to hold leaders accountable for their actions that impact the future.We are all in the same boat eventually.We only see the 15% visible issues but the 85% of issues not visible to us make up the bigger picture.Therein lies the fate of the planet and the inhabitants

Martin Jacques

I havent had time to buy Martin Jacques book on the rise of China as a global power but I listened to his talk and seem to see a remarkable transformation in short span of half a century.When Deng Xiao Peng started on opening up China,special economic zones were opened up in the eastern coastal areas in  the 1970s when China's GDP was less than the African states.It projected by 2030,China's GDP will make up 34% of world GDP,followed by India at 18%,US at 15%,EU at 13% and so on.That remarkable leap in GDP is due to its export of electronic goods,its base as a contract manufacturer and push into heavy in dustries like ship building,drone building and intermediate manufacturing goods.Its rise is also based on the meritocracy system of competitive education system.
           A member of the audience posed the question that since it is a patriarchal system of governance,what would be the unequal status of females.Looking at it,indirectly the one child policy to control population boom had benefited the female's status in society.Whereas in the past the males would have the best of educational and career opportunities,with the one child policy,Chinese females had the chance of education and career opportunities in which previously marriage was the only means of economic advancement for a Chinese female.The number of female Chinese entrepeuneurs and billionaires in China far outweigh those from countries like Japan,Korea or India.
        It seemed a blessing in disguise when the reproductive rights of females was limited to one  child because mothers could have more time and energy to devote to small businesses and contribute to the household income ,thus giving them a bigger chance to be decision makers in the family as they had a louder voice unlike the past.I feel that statistically the college admissions of females could have outnumbered the males as trends in education show the female applicants are more focused and less distracted.In many ways even in the US,females reproductive rights are curtailed by the religious right's  control over planned parenthood which doesn't give females as much freedom as in China which is basically agnostic.
       It's only in the field of politics that women haven't reached the representation that  they should hold or in the legislative arena.But so too ,that was the low representation of women in the US until recently.
      The 21st century might see the emergence of female participation in the political and legislative arena and it would impact on how global policies would change to a more inclusive priority on education,healthcare,food policies,access to basics of sewage,water and electricity and etc.

Quiet as a mouse

In Asian society,females are expected to be submissive,docile,passive and quiet as a mouse.So Western men who can't handle the dominant Western female counterpart has a fetish forAsian females cause they can "lord" over them and  be flattered and served hand and foot.
            Unfortunately,our sisters in the West gave us a wake up call to fight for gender equal rights and not to take harrassment sitting down.So Korean women would expect to have a say over their own reproductive rightsand lobbying for laws to change.They are at forefront marching for laws to ban upskirting and punishment for perverts  who make spycam porn and publish them on the net.
     Time that japanese women stand up when laws  say if you don't fight aggressively against the rapist,it's a sign of consent.So children raped by parent should be more severely pun ished than that by a stranger because the victim has been psychologically emotionally abused by the very person who gave her life.Disgusting animal parents.
  Indian women are going down to the streets condemning the brutal gang rapists that rape and kill the victims to silence them forever.
         When the Western women are assertive in pushing for laws to personal safety and privacy,they start a ripple that grows into a bigger and bigger circle all over the world.They raise awareness that to remain silent allows perpetrators to act with impugnity that they can get away with their perverse actions and act above the law.
     No wonder mail order brides areassociated with Philippino women or Child sex actors with Cambodian females.Time that gender rights be taught in primary schools so that females won't be exploited.

Laughter is the best medicine

A kid wrote in his farewell note to me that he would miss the fun he had in my class and my louder than life laughter.Yeah ,there will be days when it's so dark and you are so down and we shouldn't take life and ourselves too seriously.The lighthearted moments remind us to enjoy the simple things like jokes,food,dance,nature and music.If I can make 30 kids laugh until their bellies ache,then I would have done my job better than to drill 1,000byte of facts into their zombie dazed brain.
      If they become more compassionate to the less fortunate like refugees or donate to help the homeless and put aside stereotypical views to listen to a poet with Rafstafarian locks or the guy who dressed as Juliet or a gangsta in a student video,then I have done my job.I'm mighty proud of the guy who changed course from a career in accountancy to follow his passion in music and Spanish guitar,or the student whom I attended his performance in a choir and sings opera songs for hobby  or the Indian students studying engineering who published a book of poems and wrote a novel or the archiectect who became a celebrity youtube star and a celebrity comedian host on national TV,the students who directed and put up a dancevideo and do other creative passions.
                 Does a Finger Fing?
                        by Nedra Newkirk Lamar


Everybody knows that a tongue twister is something that twists the tongue,and a skyscraper is something that scrapes the sky,but is an evesdropper someone who drops eaves?A thinker is someone who thinks but is a tinker someone who tinks?Is a clabber someone who goes around clabbing?
       Somewhere along the way we all must have had an English teacher who gave us the fascinating information that words that end in ER mean something or somebody who does something,like trapper,designer,or stopper.
      A  stinger is something that stings,but is a finger something that fings/Fing fang fung.Today I fing.Yesterday I Fang.day before yesterday I had Already fung.
       You'd expect eyes,then,to be called seers and ears to be hearers.We'd wear our shoes on our walkers and our sleeves on our reachers.But we don't.The only parts of the body that sound as if they might indicate what they're supposed to do are our fingers,which we've already counted out,our livers,and our shoulders.And they don't do what they sound as if they might.At least,I've never seen anyone use his shoulders for shoulding.You shoulder your way through a crowd,but you don't should your way.It's only in slang that we follow the pattern,when we smell with our smellers and kiss with our kissers.
     Sometimes occupational names do reveal what the worker does,though.Manufacturers manufacture,miners mine,adjusters adjust-or at least try to.But does a grocer groce?Does a fruiterer fruiter?Does a butler buttle?
          No,you can't just trust the English language.You can love it because it's your mother tongue.You can take pride in it because it's the language Shakespeare was dramatic in.You can thrill to it becaise it's the language Browning and Tennyson were poetic in.You can have fun with it because it's the language Dickens and Mark Twain and Lewis Carroll were funny in. You can revere it because it's the language Milton was majestic in.You can be grateful to it because it's the language the Magna Carta and the Declaration of Independence were expressed in.
         But you just can't trust it!

imagine the future

I've been showing the kids some documentaries about lifestyles of the future.
One would be smart clthing that can monitor heat,body temperature,heart rate,sweat or caps that monitor brain waves so with that a user could receive timely updates on his health condition,if he has potential heat cramps,a stroke coming or imminent cardiac arrest,it would notify emergency unit of hospitals.Even smart toilet bowls can do urine analysis or detect piles.
      I think fridge doors should act as interactive display screens of recipes by looking at the contents of veg and meat in our fridge and advising the best recipes and cooking methods to us to achieve optimum health.
    Floor tiles that have vibrators embedded could do foot reflexology or sofas with rollers embedded at the back for back rub.A smart installation at the balcony could have hydroponic vegetables like lettuce and herbs growing with an automatic greenhouse glass enclosure to shield from strong light and regulate UV light, with automatic sprinklers that deliver liquid fertilisers at designated times.
        Robots that have dual function as a refrigerator and oven and slow cooker means that if I'm at the office,I can activate remote control devices that would switch from fridge mode to defrost mode the marinated chicken or meat and roast or grill or stew ingredients I've put into its central holder.Best would be if i pour in detergent,it would clean itself.Yipee,Then the robot can transfer food to s serving dish and put it on the table when I want hot,piping meal.Now that robot is called MOM.She can be moody and so the recipes turn out with different taste everytime according to her whims and fancies.When all measurements are digitised and so on we just put the ingredients on a serving dish and the robot selects and weighs exact amount of spices and sauces.
     Appliance makers like Haier are moving offshore productions to be nearer to source of raw materials,cheaper labour and mass markets in Africa.There is  synergy
as R and D could be done to suit local needs of consumers.