A cure for Japan's fear of Democrats

While Asia has been largely absent from debates among Republican and Democratic candidates for their respective parties' presidential nominations — much to my chagrin — the Washington Post reports that John Hamre of CSIS organized a dinner for Chinese Vice Foreign Minister Dai Bingguo to meet with the foreign policy advisers of a number of leading presidential candidates, in response to Chinese interest in such a discussion.

This is a remarkably sound idea. Rather than waiting for the next administration to roll into the White House — and with it the inevitable "new course" in Sino-US relations — China has insinuated itself into the discussion, ensuring that its concerns have been laid on the table before candidates are even nominated. Hopefully this will forestall the appearance of a straw-man China (or a scapegoat China) in campaign debates.

One wonders why Japan hasn't tried to do this, instead of sitting in Tokyo shaking in fear that — gasp! — a Democrat might win the election and immediately begin bashing and/or passing Japan. What an idea, actually talking to candidates...

Bland, blander, blandest

CFR has compiled a brief rundown of where the presidential candidates from both parties stand on North Korea.

There are few positions that stand out: for the most part Democrats repeat the charge from 2004 that President Bush is to blame for refusing to engage directly with North Korea in bilateral talks, Republicans generally holding back from criticizing the six-party forum even while criticizing the agreement it produced. (And yet it seems that Chris Hill has chucked the "no direct talks" policy out the window, so why even bother discussing the merits of one forum versus the other? The US is doing both, now.) Overall, there seems to be little sense of how North Korea fits in the East Asian puzzle, Joseph Biden aside.

One can conclude two things from this: either the crop of presidential candidates is extraordinarily weak as far as Asia is concerned or the ability of the US to induce or coerce North Korea to surrender its nukes is at low ebb (or both). Thankfully there is a good crop of Asia hands — who will hopefully make up for the glaring deficiencies of the candidates — waiting to move into office once this administration finally whimpers to a close.

Second time farce...

An embattled George Bush in the White House, a Democratic Congress riled up about Japanese practices to give itself an unfair advantage in international economic competition...is it 2007 or 1992?

But seriously, as this FT article reports, Congress is pushing hard for Secretary Paulson to join with European governments to pressure Japan to raise interest rates and push up the yen.

What exactly do these esteemed members of Congress hope to achieve? Do they expect that if Japan changes its supposedly errant ways that America's economic concerns will vanish and its economy will continue to lead the world? (I say supposed because it's not exactly clear how Japan is manipulating its exchange rate, aside from having extremely low interest rates.)

As I've posited here before, America's problems are rooted in the long-term challenges associated with the move to a post-industrial economy, and no amount of badgering of foreign governments will solve the long-term question of how to re-envision American institutions for the new era. Not surprisingly, John Dingell (D-MI), is leading the charge on this issue; it seems that Dingell, whose district includes the suburbs of automobile industry-dependent Detroit. It seems Dingell would rather freeze American industry than advance measures that will strengthen American dynamism and ensure that the engines of growth continue to purr -- including Detroit. There's no going back to 1950. And frankly, since a world with many major liberal economies means that millions, if not billions, of people are being lifted out of poverty, we shouldn't want to go back to 1950 even if we could.

Dingell and his fellow Democrats should be using their majority to ask how to provide some degree of assistance in the short term to those affected by the post-industrial transition, and to consider long-term solutions to ensure that rising generations have the skills to compete in new global economy that has many major nodes, with which competing fiercely for an edge on the rest. Undermining the global economy by hectoring foreign governments is a solution to neither the short-term nor the long-term problem.

So to re-enact the early 1990s efforts to pressure Japan to do America's bidding economically, given what we know now about how the global economy is changing, is indeed a laughable farce.

An end to openness?

Obviously the biggest stories of the day -- pretty much all around the world -- are the Democratic majorities in the House and the Senate and Secretary of Defense Donald Rumsfeld's resignation.

I gave my take on the former yesterday, in this post, but I want to call attention to comments on the election over at Maderblog, and a column by Jacob Weisberg appearing simultaneously in Slate and the FT. I think Weisberg nails it on the head. I am not going to be shedding tears for the departed Republican majority, but at the same time I think there are real worries that the incoming crop of Democrats could mean a significant turn away from the US commitment to free trade and other policies that undergird that spread of globalization. If the Democrats think they can fix structural problems in the American economy related to the transition from an industrial to a post-industrial society by scapegoating foreigners, whether in the form of Mexican illegal immigration or those scheming cadres in Beijing, they are in for a shock.

The US and other developed economies are in the midst of a major shift to an economic model that for the most part is not rooted in the production of tangible items. For people in developed countries still engaged in these activities, the shift is proving painful, as developing countries have out-competed them. But US economic policy must not be "Ohioized"; the only way is forward, with the federal government acting to limit the destructive impact of the reordering on citizens employed in sunset industries and easing the transition to the new economic order. Meanwhile, the US needs to maintain its liberal trade policy, using access to its market as a carrot to induce developing countries along the path to capitalism, and ultimately liberal democracy. (Daniel Drezner has more on this meme here.)

Congress alone may be unable to implement an agenda detrimental to economic openness, but it can stymie the administration's effort to promote openness, most notably by withholding trade promotion authority from the president, as noted by Weisberg. This means that the White House must redouble its efforts to secure a multilateral trade agreement (with regional and bilateral trade agreements second-best options). And it means, as I've said before, that Henry Paulson will be the most important cabinet official during the final two years of Bush's presidency, especially now that Rumsfeld has resigned.

Pre-election doubt

I said that I would try to limit my discussion of American politics, but I read a few pieces today upon which I couldn't resist commenting.

First, in the FT Alan Beattie writes about American attitudes towards globalization, noting that despite the common perception that Americans are much more tolerant than Europeans of the "negative" consequences of globalization for the American economy, Americans have many of the same fears and doubts as Europeans when it comes to dealing with the dislocation caused by economic openness.

Why is this important?

Well, as this analytical essay by Edward Luce and Krishna Guha, also in the FT, suggests, the Democratic party appears to have turned away from the commitment to economic liberalization that characterized the Clinton administration's international economic policy (also discussed in this New Republic essay [free registration required] by Peter Beinhart on the liberal flirtation with populist CNN broadcaster Lou Dobbs). Should the Democrats abandon a commitment to globalization, the US will see a partisan divide reminiscent of the 1890s, as the central political issue becomes the degree to which the US partakes in the global economy.

If the stakes were high in the 1890s, they are innumerably higher now, with the US now a leading engine of growth for the entire global economy. The danger is that should the perception that large numbers of middle-class Americans are being devastated by globalization take hold, the beleaguered defenders of an open economy and open global economic system may be able to do little to stop the US from undertaking a populist rampage, turning on other economic powers for their "cheating" and scaling back the US commitment to globalization, with untold consequences for the US and the global economy.

At the same time, however, even as this issue looms over the political landscape, America's political class seems to have no interest in actually discussing how to ensure that the US remains committed to furthering globalization. As Christopher Hitchens writes in an op-ed in the Times (of London) -- a piece that expresses my thoughts exactly -- the election campaign this fall has been fought over trivial questions, not the great national questions that must be answered.

The behavior of America's political class and its various hangers-on on K Street and in the media this year show them all to be incapable of leading the country properly, but sadly I don't expect them to be replaced anytime soon (and no, a Democratic pickup of one or both houses will not qualify). America needs real, fundamental change in how it thinks and talks about politics, and, in particular, how it talks about America's place in the world. The dividing wall between domestic and foreign policy in the US has broken down, and America's leaders need to start talking and acting as if they recognize that fact.