When I’m in China, conversations with friends and colleagues often begin with their asking about the name of my university: Why is it called “The New School?” Most are not familiar with the university, but when I mention the name of John Dewey and the intellectual spirit associated with the university’s founding in 1919, there’s an immediate connection. Dewey traveled and lectured in China beginning in 1919, just as The New School was being established, and just as Chinese intellectuals were engaging in unprecedented forms of public engagement and education.

For Chinese intellectuals and students today, 1919 invokes the stirrings of the “New Culture Movement” and the foundations of the Chinese revolution more broadly. The New Culture Movement is closely associated with what became known as the “May Fourth Movement,” so named for the student protests in Beijing on that day in 1919 to reject the humiliating outcome of the Paris Peace Conference. The protest was over the terms that allowed Japan to retain territorial concessions that had been negotiated before the war by a discredited president of the fledgling Republic of China. (The Qing dynasty had fallen in 1911-12.) But the May Fourth Movement was less about geopolitics and much more about the vibrant intellectual pursuit and experimentation with new ideas–anarchism, Marxism, socialism, and much else.

John Dewey arrived in China just a few days after May 4, 1919, and would spend the next two years teaching and lecturing at Chinese universities. Dewey had been invited by his former student at Columbia, Hu Shih, by then a prominent leader in the New Culture Movement. Hu, like others in the movement, advocated the wholesale rejection of Confucian culture and practice–first and foremost the educational precepts that stressed the close engagement with Confucian and other classical texts. In its place, Hu and those who would become the presidents and chancellors of China’s leading universities adopted many of Dewey’s ideas about education and its roles in constituting citizenship, democratic practice, among much else.

Several scholars have examined closely Dewey’s China lectures and his writings from China there in 1919-1921. What impressed Dewey perhaps most was the self-organization and mobilization under way in Chinese society at the time. As he wrote (pp. 97-8) in one of several essays during his time in China,

American children are taught the list of ‘modern’ inventions that originated in China. They are not taught, however, that China invented the boycott, the general strike and guild organization as means of controlling public affairs.

Dewey’s lectures were generally well received, in part because so many of the competing intellectual and ideological camps in China at the time could read his texts as supportive of their positions. But Dewey’s call for gradual reform over radical social change was seen as insufficient in the eyes of many among his audiences. Indeed, Dewey rightly predicted that Bertrand Russell’s arrival in China in the fall of 1920, to deliver lectures on Bolshevism, would far eclipse Dewey’s in their popularity. Mao Zedong never attended Dewey’s lectures, but would have been quite familiar with Dewey’s ideas from the intellectual circles in which he traveled the early 1920s. Many years later, Mao would proclaim that “Practice is the sole criterion of truth”– a quotation that “Maoists” in the 1960s would repress (along with Dewey’s ideas). Deng Xiaoping strategically revived Mao’s slogan in 1978, and it became one of the mantras of his developmentalist reform program that followed. Dewey’s works are widely read on Chinese campuses today.

Recent struggles in Northeast Asia between Japan and its neighbors South Korea and China illustrate well Robin Wagner-Pacifici’s notion of the “restlessness of events.” Current territorial disputes over the Senkaku/Daiyoutai and Takeshima/Dokdo islands, as well as the uproar over the collective memory of World War II tragedies, such as the recent flare up of debate regarding Korean sex slaves, suggest that the notion that the end date of the Pacific War was 1945 may not be accurate. In some ways, the event, the world war, is continuing, and, in recent months, it’s escalating.

Governments in Northeast Asia are engaged in the escalation, but also in attempting to diplomatically calm the ongoing conflicts. Non-governmental groups also are involved, with some egging on confrontation and others trying to settle it, and still more attempting to highlight larger long-term interests over present-day concerns. My specific interest is with those non-governmental efforts that are attempting to foster peaceful coexistence, to put a final end to the great event, WWII. Through this posting, I hope to initiate a dialogue here on Deliberately Considered about the role that civil society can play in reconciliation, or at least in de-escalating tensions.

At the “end” of the Pacific War, non-governmental groups played a significant role in transforming the people of the United States and Japan from enemies to friends through carefully crafted and well-funded educational and cultural exchange programs, funded by private philanthropies such as The Ford Foundation, The Rockefeller Brothers Fund, The Henry Luce Foundation, The Rockefeller Foundation, The JDR III Fund, The Asia Foundation, Carnegie Corporation of New York, and the Andrew W. Mellon Foundation. Religious organizations played a role as well. All Souls Church in Washington, DC, for example, developed a program to send art supplies to elementary school children in Hiroshima as a method for achieving reconciliation. A film titled Pictures from a Hiroshima Schoolyard has just been completed that focuses on this story. In addition, Christians in both the US and Japan raised funds to develop what today is Japan’s leading liberal arts college, International Christian University (ICU), which was developed as a place of reconciliation between Americans and Japanese. It is built on the grounds of the former Nakashima aircraft company, which was designing a long-range bomber to bomb New York City. Transforming war to peace is built into the DNA of this institution.

Due to the unique history of ICU as a place of reconciliation, as well as its ongoing work in this area, the Aspen Institute elected to hold its most recent Cultural Diplomacy Forum there. The Art of Peace-building and Reconciliation, the fifth cultural diplomacy forum (and first in Asia), hosted 100 selected individuals from around the world for three days this past October to explore ways in which the arts, culture and the media can help overcome conflict and hatred and foster more peaceful societies and international relations. Bahia Shehab, a street artist (and also an Associate Professor at the American University in Cairo where she teaches graphic design) from Egypt, told us about her work to promote freedom there; another artist, Mundano, from Brazil illustrated his goal in life to make invisible people visible and, in the process, helping to improve their lives. He does this especially with those who make a living recycling waste materials (see his website here). Charles Bailey, Director of the Aspen Institute’s Agent Orange Program gave a very moving and powerful account of how Agent Orange in Vietnam continues to cause birth defects, and how this program at Aspen is leading a very real effort to remove all of it.

I was particularly struck by the work of three individuals I met at the Forum, Rev. Katsuhiko Seino, Dr. Haiping Liu, and Ms. Yukiyo Kawano.

Reverend Seino is a pastor at a small Christian church in Ibaraki Prefecture, Japan, who directs a program there that takes Japanese people to South Korea to meet former sex slaves (formerly known as comfort women, who are generally seen to have been forced into sexual slavery by the Japanese military) in order to apologize to them and foster reconciliation with them.

Dr. Liu, a Professor at Nanjing University, runs a joint China-Japan theater project that led to a production about the Nanjing massacre with Japanese and Chinese students involved.

Ms. Kawano, a Japanese visual artist focuses her work on the history and memory of World War II. At the conference, she displayed two art pieces that were exact replicas of the bombs dropped over Hiroshima and Nagasaki, but made from kimono. She used her grandmother’s kimono, a Hiroshima hibakusha (survivor), to create the representation of Little Boy (the bomb dropped on Hiroshima), which in my mind instantly and powerfully weaved together the bomb and the human victims.

In different ways, these three individuals are working with the “restless” event of World War II. Using different forms, they are creating better futures by dealing with painful memories. They endeavor to put this “event” to rest by dealing with it in subtle, complex, and authentic ways, instead of hiding or denying it. They are doing this in direct contrast to zealous nationalists who, in effect, work to keep this event alive, using it to promote their own gain, political clout or power, money for the military, or simply to fan public emotions.

I wonder how the efforts of the Japanese pastor, Chinese professor, and Japanese visual artist can scale up their work to eventually influence the states in which they live, as well as the governments of other states, to settle the enduring conflict in a more peaceful manner.

And the plot thickens as the U.S. becomes involved: on November 29, 2012 the Senate unanimously approved an Amendment to the National Defense Authorization Act for Fiscal Year 2013 that reaffirms Japan’s administrative control of the Senkaku islands. The Amendment also articulates the U.S. commitment to defend Japan under Article V of the Treaty of Mutual Cooperation and Security, indicating clearly that the U.S. will not change its mind due to “unilateral actions of a third party,” and stipulating that the US supports a diplomatic and peaceful resolution to the disputes over this territory. Senators Jim Webb, James Inhofe, Joe Lieberman, and John McCain co-sponsored the amendment. While Americans are not likely to support going to war with China over uninhabited rocks in the East China Sea, such possibility exists.

In addition, battles over the Korean sex slaves was brought to the United States this past summer when Japanese Diet Members requested that the mayor of Palisades, New Jersey remove a monument to Korean sex slaves that was placed in that town by Korea-Americans. After request to remove the monument was refused, some Japanese people began a petition on the Whitehouse.gov website, demanding that the Obama administration force the Mayor of Palisades to remove the monument. This led to an escalation in the conflict. Soon thereafter, a second monument was erected in Long Island and more are apparently being planned. The dispute became so serious that Korea and Japan broke off a deal to share national security information.

As World War II continues to haunt Northeast Asia (due to word count limitations I have left out countless details and examples), one of the most dynamic regions of the world and a region in which the United States is intricately involved, I think that it is worth exploring the role that independent citizens and associations can play in preventing conflict and in promoting long-term reconciliation between and among the people of different states.

My invitation: I hope readers of Deliberately Considered will offer statements, suggestions, and stories about ways in which non-governmental organizations have successfully, or unsuccessfully, played a role in de-escalating conflict and promoting peaceful reconciliation, how they might contribute to putting WWII to rest. These can be very grassroots efforts such as those between civil groups, sister cities, and individual organizations, or can be more “high level” non-government efforts of Track II dialogues run by think-tanks, for example. Furthermore, it is my hope we can then better understand the ways in which some of these activities grow, spread, and in effect gain power, or fail. In Jeff’s terms, I hope we can understand the conditions and consequences of the politics of small things in an important corner of the world.

He was meant not to come and he didn’t. Barack Obama decided to make Burma, Cambodia and Thailand his first foreign destinations after his re-election, revealing U.S. foreign policy priorities in the next four years. The American president plainly doesn’t have time for Europe now. It’s not a surprise, but it does require serious European deliberation and critical self reflections.

Historic Visit

Of special significance is above all Obama’s trip to Myanmar – a country under military rule since 1960’s, which until recently invariably occupied the very far end of every possible civil liberties ranking. Myanmar’s position began to change rapidly in 2010 when the new president, Thein Sein, for reasons not entirely clear, initiated democratic reforms and freed thousands of political prisoners, including the most famous regime victim, Aung San Suu Kyi, put under house arrest in 1989 and kept in custody virtually ever since. Suu Kyi was not only allowed to go on a triumphant international tour – in Oslo she finally received the Nobel Peace Prize awarded in… 1991 – but also to run in parliamentary by-elections. In April 2012 her National Democratic League won 43 of 45 seats under contention, thus becoming the largest opposition party. Only a few months after the reforms started, non-governmental organizations and independent media began to operate in a country not so long ago deemed as an “outpost of tyranny”.

And though democratic transformation in Myanmar proceeds quickly, there are still significant problems. Millions of its citizens live in extreme poverty. Hundreds of political prisoners remain in jail. The northern part of the country is being devastated by a civil war against one of many separatist groups. A military coup is an ever-present possibility, and the authenticity of president’s commitment to democracy is still difficult to assess. For these and many other reasons democratic changes in this former British colony may collapse at any time.

That despite all these uncertainties Barack Obama decided to visit Myanmar – becoming the first U.S. president in office to do so – is clear evidence of a fundamental change in American foreign policy, all the more so, because straight from Myanmar Obama flew to Thailand and then Cambodia, taking part in the Association of Southeast Asian Nations summit. And all this at a time when American ally, Israel, was engaged in a major military operation in Gaza, when Syria has been engulfed in a civil war for almost two years, and when Afghanistan still claims American lives on a daily basis.

Heading East… that is West

Reorientation in American foreign policy – the “Asian pivot,” as it is referred to by the White House officials – aims to strengthen U.S. presence in the Southeast Asia, turning attention away from its current involvement in the Middle East and Afghanistan, where Americans bogged down more than a decade ago. President’s visit is also a clear signal to China. Increasingly expansive foreign policy and Beijing’s massive economic influence in the region has aggravated its relations with neighboring countries, leading to serious territorial disputes with Japan on the one hand, and the Philippines and Vietnam on the other. In response to growing pressure from China, the United States already in June conducted trilateral naval exercises with Japan and South Korea in the ocean waters south of the Korean peninsula. Now, a few months later, in a speech delivered in Myanmar, President Obama left no doubts as to where Washington will concentrate its diplomatic efforts in the nearest future:

“The United States of America is a Pacific nation. We see our future as bound to those nations and peoples to our West,” he said in Rangoon.  “As our economy recovers, this is where we believe we will find tremendous growth. As we end the wars that have dominated our foreign policy for a decade, this region will be a focus of our efforts to build a prosperous peace.”

Obviously Obama’s hands are not entirely free in this matter. He cannot bring peace to Afghanistan and Iraq by decree; he will not solve the Israeli-Palestinian conflict, nor abandon American commitment to Israel; it’s beyond his powers to singlehandedly democratize Iran or foster an overnight regime change in Syria – in short, he cannot entirely give up on American involvement in the Middle East. Even the leader of the most powerful country in the world has limited room for maneuver, as he must take into account a complex interplay of geopolitical interests and honor previously taken commitments. Still, the same leader may put different emphasis on different aspects of foreign policy and make decisions that will gradually change, if not the global balance of power, then at least the focal point of global diplomacy. For many years after the Second World War the center of the world lied in Europe, later on attention moved to the Middle East. Today it is shifting again to the South-East Asia.

Does Anybody Need London?

And what role in this new order will the Old Continent play? If domestic and foreign policies of the European Union do not change dramatically, probably a marginal one. Incurable Euro-optimists may keep on hailing the Union as the largest and one of the most competitive economies in the world, but even they admit its actual importance on the global stage is disproportionately small. Obama’s visit to Asia and the latest Israeli-Palestinian conflict have once again confirmed what everybody knows but does not dare to say aloud. Alarmed by the events in the Gaza Strip, President Obama and Secretary Clinton called the leaders of several countries with the greatest influence in the region: Egypt, Turkey, France and Qatar. The idea to dial the number “to Europe,” in this case to Catherine Ashton, was not even mentioned.

European countries are rapidly losing their status of valuable partners to the United States, though some governments, especially that in London, do all in their powers to ignore this fact. On the day of Obama’s reelection, British Prime Minister David Cameron in a short interview aired by BBC congratulated the winner and expressed his hope for a close cooperation primarily in two areas: pulling the global economy out of the crisis, and helping to end the conflict in Syria. No profound geopolitical insight is needed to notice that in neither of these projects can the United Kingdom on its own may be of much assistance to the American president. Nevertheless, the bulk of British political class still seems to believe that UK’s foreign policy should be based on an Anglo-American “special relationship,” with London acting as a mediator in the dealings between America and Europe. The problem is that today Washington not only doesn’t need a middleman in its relations with the Continent – yet another side would make them even more difficult. And in fact, it’s need for the Continent itself is diminishing.

A true Euro-American partnership is possible only if the European Union acts as a whole. Many European politicians – including, I’m glad to admit, Poland’s foreign minister – are aware of this fact. Britain, probably because of its imperial past and relatively recent loss of a global superpower status, still has difficulty coming to terms with the new reality. London’s cognitive difficulties, however, seem to render Brussels increasingly impatient. They also further marginalize Europe on the international scene. Obama’s Asian trip and the way Israeli-Palestinian conflict was dealt are proofs. Hope lies with an embolden European Community to take a firmer stance towards Britain and demand a clear statement as to its future in the European club. Should this not happen, it will be another reason for presidential trips to the Old Continent to become even less frequent.

My New School colleague Michael Cohen’s new book Argentina’s Economic Growth and Recovery: The Economy in a Time of Default provides the first detailed account in English of one of the remarkable episodes in recent economic history.  Cohen’s rendering of 21^st century Argentine political economy is detailed, nuanced, filled with summaries of political debates and standoffs and with a rich appreciation of the unequal ways in which the economic benefits are shared as the Argentine economy recovered from its macroeconomic collapse in 2001.

The book is a fast-paced (at times blow-by-blow) account, of macroeconomic extremes in terms of debt, exchange rates, government budget and trade balances and fiscal and monetary policy in Argentina.  But when I finished reading the book (and took a big exhale) what struck me — not an expert on Argentina by any stretch — were the many ways that the Argentine experience contradicts the conventional economic wisdom.  Without much explicit attention to issue of conventional economic wisdom (other than the attack on World Bank and IMF structural adjustment policies imposed on Argentina in the 1990s), Cohen’s account nonetheless forces us to think critically about some widely-held views in economics and especially development economics.  Let me describe seven different ways in which Argentina’s experience in the 21^st century should make us revisit some of the accepted aspects of economic wisdom.

To continue reading Will Milberg’s review of Argentina’s Economic Growth and Recovery by Michael Cohen, click here.

My New School colleague Michael Cohen’s new book Argentina’s Economic Growth and Recovery: The Economy in a Time of Default provides the first detailed account in English of one of the remarkable episodes in recent economic history.  Cohen’s rendering of 21^st century Argentine political economy is detailed, nuanced, filled with summaries of political debates and standoffs and with a rich appreciation of the unequal ways in which the economic benefits are shared as the Argentine economy recovered from its macroeconomic collapse in 2001.

The book is a fast-paced (at times blow-by-blow) account, of macroeconomic extremes in terms of debt, exchange rates, government budget and trade balances and fiscal and monetary policy in Argentina.  But when I finished reading the book (and took a big exhale) what struck me — not an expert on Argentina by any stretch — were the many ways that the Argentine experience contradicts the conventional economic wisdom.  Without much explicit attention to issue of conventional economic wisdom (other than the attack on World Bank and IMF structural adjustment policies imposed on Argentina in the 19990s), Cohen’s account nonetheless forces us to think critically about some widely-held views in economics and especially development economics.  Let me describe seven different ways in which Argentina’s experience in the 21^st century should make us revisit some of the accepted aspects of economic wisdom.

Conventional wisdom #1.  Conventional wisdom is that default on foreign debt will have disastrous consequences for economic growth, economic suicide.  The country that defaults, the thinking goes, immediately shuts itself out of international capital markets for an unpredictably long period of time, brings on a long-term collapse of the exchange rate, requires a long-term recession as the country is forced to “live within its means.”

Argentina defaulted in early 2002 and then:

*one year later was borrowing considerable  from the World Bank and Inter-American Development Bank.

*between 2002 and 2006 inward FDI rose at a rate of 26% per year  (much from Brazil)

*by 2006 was experiencing rapid economic growth rates, funding new social programs aimed at reducing poverty and was considered fiscally very sound.

Conventional wisdom #2.  Conventional wisdom runs that globalization is a process that drastically reduces the power of the nation-state, since increased capital mobility means that capital’s interests no longer coincide with those of the nation state and, anyway, the state’s influence over capital and the economy generally is diminished because capital (and labor) can simply move or shift production locations if domestic policies put it at a disadvantage.

Argentina’s example in a time of default is increased power of the national government, first over the decision to default on foreign debt, and then to run very active jobs and redistributional policy. Nestor Kirchner’s “strong state” was even criticized for being too powerful at time.

Conventional Wisdom #3. A corollary of this conventional wisdom about the diminished power of the nation state in the era of globalization is that one size – that is the neoliberal policy package – fits all.  Fiscal and monetary restraint, current and capital account liberalization, removal of subsidies are the basic requirements of any structural adjustment.  As a result of this thinking (which Cohen shows originated in the US and Europe), these policies became the basics of IMF and World Bank conditionality attached, in one form or another, to loans made throughout the later part of the 20^th century.

Cohen’s account of Argentina in the run-up to default is a case of “the (neoliberal) operation was a success but the patient died.”  Hyperinflation was cured but the debt became unsustainable.  Cohen’s account since default is a description of a complicated set of deviations from this policy prescription – and with considerable success: Higher taxes, pro-poor redistribution and spending, job creation programs, loose monetary policy with careful attention to a competitive exchange rate.  This was the political foundation for the rapid growth of the 2000s.

Conventional wisdom #4. Latin American wisdom (from  1950’s structuralist views on economic development made famous in the writings of Raul Prebisch and Hans Singer) says that developing countries should actively seek to avoid a pattern of specialization which is too reliant on commodities and primary goods – they have a low income elasticity of demand and are standardized goods for which no market power and no labor bargaining can take place.

What happened in Argentina in the 2000s was a period of rapid economic recovery strongly supported by the global commodities boom that drove an explosion of exports and which had a considerable multiplier effect across the Argentine economy – continuing to this day.  The terms of trade — driven to a great extent by high world prices for soybeans — is up over 50% in the last decade.  And this has come even in a period of depreciation of the Peso against the Brazilian Real. (Note that Cohen also questions whether the main source of economic growth was domestic demand.  When the peso was devalued in 2002, import substitution took place, raising demand for domestic goods and services.  Government spending also grew.  These, he argues, were the basis for the “demand-led recovery.”

Conventional wisdom #5: With the rise of China, consensus is growing around the view that the autocratic is most able to promote development.  Increasingly, Chinese success is connected to the autocratic nature of the political system.  It is this absence of democratic accountability in China, the conventional wisdom goes, that has allowed the Chinese government the ability and nimbleness to harness labor and capital investment in a massive industrialization effort.  Argentina’s remarkable era of democratically-elected governments belies this consensus view.

Conventional wisdom #6: Conventional economic wisdom is that a tide of economic growth will raise all boats.  The friendly World Bank amendment to this has been that one also needs good institutions, i.e. clear property rights protections.  The conventional wisdom is that economic growth per se is the central means to the improvement of well-being and the reduction of poverty.

The Argentine case shows that growth alone was not adequate and Cohen attributes progress on the poverty and employment front to Kirchner government efforts to support housing, health care, job creation, social protection and infrastructure.

Conventional wisdom #7. Conventional wisdom is that the international financial institutions are more powerful than domestic political forces – thus the old joke that the World Bank has brought down more governments than have national revolutionary movements.

Cohen’s account tells the fascinating story of a country that defaults on its foreign debt in the face of enormous IMF pressure not to do so.  Then, just a few years later, the government elected with the largest plurality in decades finds itself in an unwinnable battle about export taxes with the powerful and large domestic farmers.  These huge corporations, profiting greatly during the commodities boom of the 2000’s succeed with a lockout (keeping produce and meat off the domestic market), protests, influence peddling in the Senate, control of the media.  So what’s new?  Argentina defies the conventional wisdom.

Perhaps what is the most unconventional part of this book is the way Cohen tells the economic story of Argentina in a time of default.  Contrary to the economists, Cohen argues that all economic processes must be understood as political, that economic change comes generally with a “major realignment of political power.” Even more interesting is Cohen’s insistence that you can’t assess economic policy in some pure way, but only in the context of its institutional and political overlay.  This leads him to strongly resist the notion of the end of history or the end of politics in Latin America.  The book resounds with a very hopeful view of the possibilities of creativity and innovation in policy making and poverty reduction, management up urban development, but also with a realistic sense of the limits of politics.

Cohen’s views on these issues are closest to those of Peter Evans and his notion of “embedded autonomy.” The idea is that the most effective developmental states are those most closely connected to economic and civil society actors, but which also have sufficient autonomy  (a) to be able to implement policy effectively even when the impact of a policy shift is not favorable to one or more group of actors, and (b) to implement policies with long-term developmental consequences rather than short-term ones. Embedded autonomy is a particularly useful lens with which to think about economic policy making in Argentina, with its history of Peronism, military dictatorship and now a vigorous democracy.  Embedded autonomy remains particularly relevant in the Kirchner era, which at various moments was accused of being too embedded and at times too autonomous.

Finally, I would be remiss if I didn’t speak of Cohen’s own problem of “embedded autonomy.”  Cohen has been personally friendly with the Kirchner’s over many years and  they have supported the Latin American Observatory at the New School.  So the big question as I opened the cover of the book for the first time was whether Cohen would pull his punches in his assessment of the Kirchner governments.  The answer is that he does not hide his colors – he is mostly supportive of the Kirchner governments and their efforts at redistribution and poverty alleviation.  But he does this within a distinct analytical frame and from a clear sense of principles – that economic growth alone does not alleviate problems of extreme inequality, persistent poverty and lack of access to health care.  While the rapid recovery following default is remarkable, Cohen does not let the reader lose sight of the perhaps more remarkable feat which is the recovery from a brutal military dictatorship in 1976-1983 to a strong democracy that seems to have come not just with ambitions of voting rights but also of economic rights.  And he is critical of the Kirchner’s in a number of places, mostly for ignoring important aspects of long-term social well-being related to the development of science and technology, infrastructure and the apparent collapse of energy production over the last decade that may cripple the economy going forward.

Recent economic reports indicate that Argentina is once more on the edge:  The economy may well be spiraling into another crisis — exchange rate overvalued once again, capital flight, expansionary fiscal policy, inflation taking off.  Rumor is that the government may be falsifying the published rate of price inflation.  And while Cohen covers the politics of this in much detail, he is insufficiently critical of the government in its dangerous politicization of inflation data.  The recent law regarding the accountability of the central bank makes sense in that public accountability is in general a good thing, but the political pressures this creates for monetary policy to finance public deficits are not necessarily good over the long term.

Argentina’s Economic Growth and Recovery: The Economy in a Time of Default reflects a deep appreciation for the political culture, the economic history, the geographical complexity, the class differences and the international pressures that Argentines have struggled with over the past two decades.  It is an important treatise in political economy and Cohen tells it in detail and with a lot of passion and even, at times, frustration.  My sense is that these two sentiments – passion and frustration — are conventional sentiments for most Argentines.

The weather has been absolutely spectacular this week in Paris. Clear, sunny skies, low humidity, moderate temperatures. Yesterday, Naomi and I enjoyed having lunch at the Palais-Royal and walking through the city with our friend Daniel Dayan. Each day, we have been spending time in a park with our grandson, Ludovic. Especially nice was a family excursion to the Arab Institute, where we had wonderful pastries and panoramic views of of the city from its rooftop café. Being in Paris, thinking with a European perspective about the Arab world has been my theme of the week, as I, with the help of the editorial team at Deliberately Considered, have been keeping the magazine going.

I observed in my first letter from Paris that the common action of Coptic Christians and Muslims at Tahrir Square created a new pluralistic reality in Egypt. These days, this new reality is challenged, to say the least. There are great fears that sectarian conflict will rule the day in Egypt and in the region, as was reported in Tuesday’s New York Times. According to this report, a clause in the constitution formally identifying Egypt as a Muslim country deriving its laws from Islam, passed during the era of Anwar Sadat, and laws dating back to the late colonial era that stipulate specific restrictions on and privileges for the Coptic church have inflamed tensions. There is a marked increase in sectarian violence, with wild stories about abduction of Muslims, even reported in a historically liberal newspaper. These are very serious matters.

Formal political measures to address these issues are urgently needed. An idea floating that a Bill of Rights ought to be established as a precondition of electoral politics, as advocated by Mohamed El Barade, makes considerable sense. But just as important are indications that the power of definition, what I call the politics of small things, is being marshaled to combat dangerous anti-democratic developments.

A Copt (left) and a Salafi Muslim (right) debate politics and the revolution in Tahrir Square during a break from cleanup efforts, Feb 12, 2011 © Sherif9282 | Wikimedia Commons

There was also a minor subplot in the Times story. As the new political configuration is emerging, competing political parties are acting in interesting “opportunistic” ways. The Muslim Brotherhood is proving to be the powerful political force and is working to consolidate its power. Yet, it continues to be self-limiting. (Poland’s great democratic transformation was often referred to as a self-limiting revolution). Not only is it indicating that it will not present a Presidential candidate, it is contesting only a half of the Parliamentary seats. It purposively couches its Islamic project in terms that are supportive of liberal democracy. A prominent leader of the Party, Essam el-Erian maintains: “We are calling for a civil state,” promoting elements of Islamic law that are common to other world religions, including, “freedom of worship and faith, equality between people, and human rights and human dignity.” Further, the Brotherhood named a Christian a deputy leader of its political party.

Meanwhile, Christian and secular liberal parties are not directly seeking changes to the article in the constitution that recognizes Egypt as a Muslim nation with laws based on Islam. While individuals may privately dislike the article, they recognize its popularity among Muslims and the parties minimally propose only minor changes.

“Our position is that it should stay, but a clause should be added so that in personal issues non-Muslims are subject to the rules of their own religion,’ Naguib Sawiris, a secularly oriented, wealthy, Christian businessman who has established a liberal party. He would prefer the separation between religion and state in accord with Western customs, but realizes that this is now impossible given Egyptian realities.

The Brotherhood’s gestures to liberal democratic values, and the liberal and Christian gestures recognizing Egypt as a Muslim nation, may be simply a matter of cynical political calculation, meant to convince the naïve that the Brotherhood does not pose the threat about which skeptics are most concerned, concealing the Brotherhood’s potential long term complicity in the disturbing anti-Christian actions and attitudes that are on the rise in Egypt, very much a part of the sectarian strife of the region. And the Christian and liberal acceptance of the idea of Egypt as a Muslim nation may simply be a rather desperate necessary, political calculation to maintain viability against an Islamist tide. I am sure such concerns are warranted.

But, I believe something more important is going on, as well, that is supporting the prospects for democracy in Egypt, with clear parallels to the development of democracy in Poland. Real pro-democratic Christians, liberals and Muslims together are muddling through a common definition of their society as one with pluralism and with majority and minority rights. There is a struggle against powerful currents of hatred, fears and suspicions, and major political actors are presenting themselves as moving in this direction. They may not succeed, but it is important to notice that this movement is happening. Given the nature of belief in Egypt, there could be no democracy without the inclusion of Islam in its politics (think of the Turkish experience). Given the richness of the Islamic tradition, there is reason to think that this move is possible, even if not likely.

Democrats of all sorts have skin in this game, as Michael Corey would put it. He suggests, in his latest post, that when I put it this way we should ask: What is being asked by whom, and for what purposes? I think the purposes are pretty clear. A liberal democratic peaceful North Africa and the Middle East would be safer, more prosperous and more just place, and this would contribute to greater safety, prosperity and justice beyond the region. The people asking are those who are most clearly dedicated to human rights, liberal democracy and an open society. And what is being asked is generally minimal, perhaps some economic aid, but mostly a commitment to discontinue the support of repressive force. Minimal support, getting out of the way, engaging in serious dialogue on the basis of shared principles.

One final note about his week on Chris Eberhardt’s post on China: It also reminded me of Poland past. His notion of China as a kind of “Truman Show” resembles the “Poland Show” in which I used to live and visit, although I think the “China Show” is a much more subtle game. Key to the unreality aspect of these real reality shows, i.e. Communist Party directed and controlled societies, is the distance between the official language, which was necessary to get on with public responsibilities, and the language of everyday experience.  More about this when I get back home.

A friend of mine was asking for help in downloading The Party: The Secret World of China’s Communist Rulers for free. In December, I thought about downloading the book for ten dollars to my iPod, but didn’t think it was worth it. I think I was afraid it would burst me from my bubble.

This morning while watching the movie “The Truman Show” with my students, I realized that like Jim Carrey’s character, Truman Burbank, I am living in a similar scenario, “The China Show.” When someone wants to know about the history of the Communist Party, or tries to tell the difference between President Hu Jintao and Premier Wen Jiabao, (even the NY Times can’t), it feels like they want to know about the executive producers behind the scenes who are responsible for making sure that the show doesn’t stop.

Here on the set of “The China Show” we worry about the incredibly expensive price of apartments, and students play the Three Kingdoms game. As my Chinese teacher pointed out, the movies and the television shows in China are harmonious, befitting a harmonious society, a path set by President Hu Jintao. I tell people that the Chinese movies I watch in the United States, outside the television studio, are what might be called “art house films,” often intentionally banned within China to get more viewers in the U.S. and Europe. These movies are about people stealing police uniforms and using them to extort pedestrians on the street, or the woman who is sent to the fields and becomes a one-person brothel in an attempt to regain her old city life. Back within “The China Show,” the movies are about people from an ancient period, quite often with the ability to fly.

Last week, I had a brief moment where I felt like I was teaching, using clips of movies like “Forrest Gump” to talk about school integration and the Vietnam War draft. I asked one of my students what she would do if her friend was drafted and sent to the Vietnam War, “Would you want to watch the news, or just ignore the whole thing?” She replied, “I wouldn’t watch the news.”

This week, many of my students returned from their attempts to leave “The China Show” through obtaining visas to study in the U.S. Some were successful and some were not. Like my student who would not want to watch news about the Vietnam War, these students did not want to do anything in class that required critical thought or analysis. Talk about the economy and other finance-related discussions, such as finding an internship when no hope of a job exists, quickly dissolved into movie-watching and playing computer games. As a dutiful cast member of “The China Show,” I put on movies, TV shows and cartoons, full of people flying and bending water. All of this entertainment and more is free here in China.

As I walked along a street with a former co-worker, I told her that this was supposed to be the site of some protests planned via the Internet. She couldn’t understand why, since she believed there was nothing wrong in China. Like the traffic that magically appeared to keep Truman from leaving the show, street sweeper trucks appeared out of nowhere and did a dutiful job of making sure that every inch of the pedestrian street was cleaned regularly, both of dirt and potential trouble makers. When I mentioned to my Chinese teacher that a friend’s husband had been in jail for two months for trying to protect citizens’ rights, there was a look of confusion on my teacher’s face. These stories didn’t correspond with a harmonious plotline.

Lately, I have been trying to get a job teaching about environmentalism here in China. The Deans of different study abroad programs regularly tell me that students from the U.S. are not interested – the interest is in the politics of producing “The China Show.” Students want to know about what’s going on behind the scenes, but for me this is too tiring. I want to be able to better understand those I meet everyday on the streets. The Communist Party members preparing to celebrate their founding 90 years ago are untouchable and rarely seen, living behind red brick walls, perhaps in some ways like studio walls.

A friend of mine who teaches international relations has not let the Communist Party dissuade him. He can rattle off cast members of “The China Show” like it’s his family tree as I stare in befuddlement. However, the problem for me is that I’m still not sure if I should try and do the same, or if I should just join the conversations with the common cast members, I mean citizens, talking about the expensive apartments like we did last week, last month and last year, and putting on more cartoons about air-benders to keep the students entertained.

Thousands, hundreds of thousands, of ecstatic Egyptians have been seen celebrating in the streets and squares of Cairo. They are delighted that they are to be ruled by the Egyptian military who have dissolved the parliament and abrogated the constitution. This once was the well-worn tradition of banana republics. Surely the idea of the military as an institution of popular rule has changed dramatically. The duly, if not fairly, elected government has been overturned through the continuing demonstrations of the people. Hosni Mubarak is no longer President Mubarak. What is next?

In the coming days and months and years citizens and power brokers in Egypt will shape the answer to this question. And Americans will be watching nervously. There is a joke among Jews, all social change is to be evaluated through the prism of a simple question, “But is it good for the Jews?” Jews are not the only ones who ask the question. All peoples worry how massive change will affect their own lives. American policy makers and pundits are asking the equivalent question. If we determine that change has distressing consequences, a search begins for explanations and for those responsible. Typical of the narcissism of nations, the question of blame will arise. “Who is the scapegoat?” “Who is the traitor?” We read history backwards to discover culprits. Should the outcome in Cairo not be to our liking it will be hard for Americans to avoid asking: “Who Lost Egypt?”

Sixty years ago a powerful version of that question was being asked by journalists and in the halls of Congress: Who Lost China? The Nationalist government of Chiang Kai-Shek had recently fallen to the communist troops of Mao. Americans believed that China was within our sphere of influence.  We had been propping up the corrupt Nationalist regime, but suddenly these leaders fled to Taiwan. We found Chinese troops fighting against American soldiers on the Korean peninsula. Perhaps most of the blame could be given to Chiang’s corrupt regime, but were there American traitors who shaped State Department policy? This was the hue and cry first of the fiercely anti-communist Henry Luce, editor-in-chief of Time magazine, and his friends in the China Lobby. Later, Senators Joseph McCarthy and Patrick McCarran took up cudgels, as they pounded villains, such as Johns Hopkins Sinologist Owen Lattimore, using his prominence and connections to blame Truman’s State Department.

Of course, the thoughtful examination of foreign policy disasters is to be expected and to be encouraged. Even liberal Walter Lippmann remarked, “The heart of the Republican attack is the belief, in itself quite legitimate, that after such a humiliating and costly disaster there must be an accounting.” But who are the accountants? In part, because of the drumbeat of negative attacks on counter-subversives, Republicans triumphed in the 1952 elections, reshaping postwar America.

Historical events do not come in neat packages. No two are alike. While conservatives, including Rush Limbaugh, Dick Morris, and Sean Hannity, have raised the charge today, it is by no means clear that Egypt is lost and, despite the Obama Administration’s miscues, we do not yet have an expert or policymaker who might be targeted as responsible for the outcome in Cairo. While Islamists in the form of a newly radicalized and legitimated Muslim Brotherhood may assume power, it is also quite possible that Egypt will become a robust democracy with continuing ties to Israel and strong connections to the United States. With such an outcome Egypt will be far from lost.

But if Egypt changes in ways we find disconcerting, someone will be identified as a plausible villain to target.  Whether National Intelligence Director James Clapper who claimed, somewhat implausibly, that the Muslim Brotherhood is a secular organization, would serve in a pinch remains to be seen. In Congress today there seems no backbencher salivating to wear the McCarthy/McCarran mantle. The most enthusiastic detractors of administration policy are to be found on talk radio and Fox News. At this point the sharks are circling the Administration’s boat sensing weakness, but there is no blood in the water. Critics cannot even agree if the administration was too quick to distance itself from the Egyptian government or too slow. Should revolts continue throughout the Middle East, promoting governments hostile to American interests a more intense search for villains will occur. Yet, if democracy flowers in Algeria, Libya, Yemen, and Iran, the Obama administration will receive – and will deserve – some of the credit.

Still, the underlying point is that when bad and surprising things affect the national interest, an accounting will occur: a blame game. This is the role of opinionated fighters and reputational entrepreneurs, both of the left and of the right. It is part of how nations with contentious and democratic parties operate. These rivals construct narratives of malfeasance and of mischief, hoping that the stories gain listeners. Today, opponents of the Obama administration are ready for storm clouds to brew in Egypt. They wish to ask, not Mubarak, but Barack, “who lost Egypt?” “Why in your omniscience and omnipotence did you betray us so?”

I’ve been on the road this week, giving a public talk in Santa Barbara at Fielding Graduate University, and taking a break from a very hectic writing and teaching schedule.  Returning to frigid New York, I feel cut off from my usual news sources and news gathering customs.  As it happens I couldn’t read the paper version of The New York Times first thing, as is my morning custom, didn’t listen to Morning Edition and All Things Considered on NPR, and didn’t go from there to search the web for interesting under reported news and commentary.  Instead I took a look at cable news, and found, to my dismay, that I really didn’t understand what had happened this week. This underscored Laura Pacifici’s point.  Audiences consume “news products” that confirm their beliefs; news reporting and commentary are not informing.   It struck me that this is the way that many people keep up with public affairs.  I felt like I was in a fog.  No wonder fictoids work!  I was warmed by the Santa Barbara sun, chilled by “the lame stream media.”

Although I was on vacation, I managed to keep DC going, thanks to interesting posts by DC contributors.  Will Milberg presented a very different account of the China – America relationship.  I am convinced.  The issue is less about currency valuations, more about economic practices of them and us.  As Milberg succinctly put it:

“The key to the problem of global imbalances is to resolve them in an expansionary way rather than a contractionary way.  In the wake of the crisis and a deep and widespread recession, we should be thinking about a reform of the international payments system that shifts the burden of adjustment from deficit countries (who are forced to contract their economies in order to reduce imports) to surplus countries (whose extra spending raises their imports).”

Gary Alan Fine, following up on his brilliant Jared Lee Loughner post, considered a fundamental problem in representative democracy, should we vote for representatives because of their personal qualities or principled positions.  He makes a strong and convincing case for the latter, but I wonder how far he would wish to go.  At some points character, specifically as it is related to judgment, is crucial.  I am an opponent of ideology, magical thinking that provides easy answers to complex problems.  The magic of the market and market demonization, both, it seems to me, should be adamantly opposed.  The way a candidate thinks through problems sometimes is more important to me than his or her starting positions. I concede, given the present circumstances, I cannot imagine voting for a Republican, but this is as much because the Republicans are the party of true belief, of absolute certainty and dogma.  A non dogmatic Republican would interest me.  I might even vote for such a candidate, given a mediocre opponent.

And then there was the provocative Robin Pacifici.  Just about everyone is celebrating Obama’s Tucson Speech.  Even the authority Pacifici cites, Garry Wills, went so far as to favorably compare the Tucson Speech to the Gettysburg Address in the New York Review of Books, but Robin finds good reasons to be critical.  Her key critical point:

“The main issues involve choices of genre and structure. For me, Obama’s speech oscillated without adequate accounting or warning between the genres of private lamentation, religious homily, and political oration. Without an overarching structure that linked these genres together, their coming and going unsettled me as a listener. Was so much reference to scripture appropriate in a civil ceremony? Was so much detail about individual personalities befitting a national oration by a head of state?”

I think that this is an interesting observation, and though I disagree with her judgment, standing by my original appraisal, I think I see something very insightful and significant in this.  Perhaps the reason why Obama can move so quickly between genres is that we in fact live in a world where there is little, if not , No Sense of Place, as  Joshua Meyrowitz explored this condition in his classic book by that name.

I have been thinking in recent years that one of the distinctions of Obama as a public figure and speaker is that he is reviving the power of classical rhetoric in the age of virtual communications, that he is a post sound bite political leader, classically eloquent.  But Pacifici demonstrates that only half of this is true.  While he clearly is a post sound bite speaker, a speaker of the long form, an orator, his eloquence is not really classical, as Lincoln’s was.  Obama depended on a blurring of public and private, so that we came to identify the victims as family and then their tragedy as ours.  We identify with “Gabby” and with 9 year old Christina Taylor Green, and when the President calls upon Americans to do what would honor them, we are not only honoring our fellow citizens but people with whom we now have a personal relationship.   Obama connected with the public in a way that he hasn’t previously during his Presidency, because as a nation he was very much part of our family, as he led our nation.  His eloquent response to a national tragedy may very well change the course of the nation.  Pacifici’s critique suggests to me how such eloquence is now achieved, because it is not classical in its form, because we live in a different media environment.

As Hu Jintao and President Obama gather in Washington for their summit meeting, it is a good time to take another look at U.S.-Chinese economic relations. China has become the lightning rod for Americans on the left and right who find an obstacle to the U.S. recovery from its economic woes.  From Niall Ferguson on the right to Bernie Sanders on the left and to many the politicians and economists in the middle, the problem with China is that its high rate of saving and its undervalued exchange rate have resulted in high unemployment in the US and brought about an unsustainable American trade deficit.  Some economists have even argued that this deficit was a major cause of the economic crisis in the first place.

There are at least three problems with the prevailing view.

The first problem is that renminbi revaluation is not likely to help much in reducing the U.S. trade deficit.  For one thing, U.S. importers in the major deficit industries (apparel, electronics, toys) will simply shift to other low-cost countries, and Chinese imports from the U.S. are not particularly price sensitive.  Second, appreciation of the Chinese currency will lead U.S. corporate profits to suffer due to higher costs for imported inputs.

These limits of the policy effectiveness of renminbi revaluation are well known but largely ignored in the popular debate.  Presidents Bush and Obama both spoke out loudly on the need for currency adjustment, but neither of them ever pushed hard in negotiations with the Chinese.  It should be no surprise that the Obama administration revealed that this week it is going to back off on the currency question and focus instead on intellectual property rights infringement.  There is simply too much disagreement within the U.S. business community on the issue.

The second problem is that excessive Chinese saving is not the entire story behind the U.S.- China imbalance.  Low levels of U.S. household saving, and U.S. business strategies have also contributed.  Household borrowing is clearly going through an adjustment, as home foreclosures continue at record levels and credit card debt burdens are reduced.  The continued stagnation of incomes for most American households, however, puts pressure on households to borrow to maintain consumption standards.

On the business side, U.S. non-financial companies have transformed themselves over the past 15 years to what Bill Lazonick calls the “new economy business model,” in which companies focus on their core competence and seek to outsource other parts of the business, in which cost savings are found in the purchase of inputs from abroad, long-term employment is less and less the norm, and in which short-run shareholder value is emphasized over investment in innovation and new technology.

The rise in offshoring that is the direct cause of the trade imbalance has come along with a wave of “financialization” by non-financial corporations, specifically the purchase of share buybacks, dividend payments, mergers and acquisitions.  Firms with extensive global supply chains undertook massive share buybacks in the 2000s. Information technology hardware and software manufacturers (Cisco, Microsoft, Hewlett Packard, Dell and Intel), retailers (Wal-Mart and Home Depot), and consumer non-durables firms (Procter & Gamble), all of whom rely heavily on sophisticated global supply chains, were among those returning the highest levels of dividends and share buybacks. These financial activities constitute a “leakage” from the stream of potential gains from offshoring for the American economy. 

The third problem is that China’s exports to the U.S. rely very heavily on imported inputs from other countries:  A recent study of the Apple 30GB video ipod shows that of the $199 export from China to Apple in the US, there is just $5 of value added in China.  The rest goes to suppliers in East Asia, including Japan, Taiwan, and the Philippines.  Targeting China burdens also those non-Chinese firms and countries whose supply chains run through China.

The key to the problem of global imbalances is to resolve them in an expansionary way rather than a contractionary way.  In the wake of the crisis and a deep and widespread recession, we should be thinking about a reform of the international payments system that shifts the burden of adjustment from deficit countries (who are forced to contract their economies in order to reduce imports) to surplus countries (whose extra spending raises their imports). Under current rules, the deficit country must act unilaterally when foreign deficits become unsustainable.  Typically they must cut spending and reduce economic growth in order to improve their foreign payments condition.  Having surplus countries recycle a portion of their surpluses would reduce this contractionary tendency in the system.

But U.S. policy makers seeking to address the “global imbalances” rather than score political points should not just be looking at China’s saving behavior and exchange rate policy.  They should also address the structural changes at home that have led to the stagnation of Americans’ incomes.   American corporations should be encouraged to reinvest profits domestically so that new technologies, new jobs and higher productivity can serve as the basis for export expansion.