Journey: Separate Ways (Worlds Apart)

Top 10 features:

10. Air guitar.
9. Drum kit made out of oil drums w/ hi-hat made out of old hubcaps.
8. Black and pink muscle-tee.
7. Excellent Steadicam tracking through pallet-storage areas.
6. Air drumming.
5. Those snug Levi 501's.
4. Bergmanian profile-n-face shots.
3. Popped collar on the tweed jacket.
2. Poignant commentary on U.S. de-industrialization during the 1980s: Disused export dock, forklifts, etc. are repurposed for new top U.S. export: culture.
1. Air keyboards.

Why Did Trade Decline in the Interwar Period?

Paul Krugman theorizes that it had to do with electricity and the internal combustion engine replacing steam as the main motive powers in industry: steam was best suited for long-haul cargo transport, by rail and by ship, while electricity and the engine were most efficient in local contexts like factories and farms.

These technology explanations sound good, but I also wonder if the transition of hegemony from Great Britain to the U.S. in the the 1918 - 1945 period also played a role in retarding world trade. With no clear economic hegemon to write and enforce the rules of trade and encourage stable currencies, centrifugal forces took over and the international trade network disintegrated.

Related to this, I think, is the suddenness with which the U.S. found itself thrust into the leading position in the post-World-War-I power vacuum. It took a while, and another world war, for domestic U.S. politics to catch up with the new reality of the U.S. as a superpower. I wrote about this aspect of the story briefly here on Cheeze Blog a couple of years ago when I was doing some reading in economic history:

After 1918, the United States rather suddenly became the world’s most powerful nation. Unlike Britain, which achieved economic leadership gradually through the 17th and 18th centuries, the U.S. found international leadership thrust upon it by the devastating effects of the First World War on Great Britain and the other European powers. Having attained world leadership not so much by design as by default, the domestic economic and political characteristics that might have supported free trade in the U.S. were weak or underdeveloped compared to the characteristics supporting closure. As a result, over the course of the 1920s the U.S. turned inward, a move that cascaded throughout the international system.

Image: Modern shipping lanes. Global Map of Human Impacts to Marine Ecosystems, National Center for Ecological Analysis and Synthesis, 2008.

A Few Thoughts on the Problem with Haiti

I just finished reading John Lee Anderson's letter from Haiti in the February 8 issue of The New Yorker, which features a Haitian woman named Nadia and her struggles to find food for her neighbors. It's a little weird that Anderson chooses to focus his piece on a Haitian who grew up in the States (and was deported back to Haiti a few times, following fairly serious run-ins with the law); it's sad that she talks so disparagingly about her neighbors and fellow Haitians (who she says are too lazy to help themselves); and it's shocking that people don't seem shocked by the depths of depravity to which the city has fallen (bodies bulldozed into mass graves, petty thieves summarily executed or left to die, shot and bleeding, as examples to other would-be looters).

When I visited Haiti several years ago for about ten days (while I was working for an international development organization with partners in Haiti) I was shocked at how smoothly things worked given the seemingly insurmountable obstacles, how humanely most people treated one another even under the most inhuman conditions, and how creative, hardworking, and hopeful people were even in the most hopeless situations. (Compare this to folks around these parts who from time to time shoot each other over disagreements in traffic jams or who riot when their favorite sports team wins.)

A friend of mine, a Haitian doctor, is in Haiti now, working for Partners in Health. In the first days after the quake, he and his colleagues were driving back and forth between their family homes in Port au Prince and the PIH hospitals where they worked. Wherever they went they saw Haitians helping one another – digging buried neighbors out of the rubble, providing makeshift medical care, finding food and water. He and his colleagues were distressed to hear that the news was focusing on stories of looters and brewing violence. Driving around in a truck with gringos at all hours of the day and night they saw very few incidents of violence here and there, but the vast majority of people they saw were helping their neighbors, not hurting one another.

It's almost like we need to distance ourselves from Haiti and from Haitians, to say they've failed because they're different from us in some crucial way, or are operating outside of the system we've set up to create prosperity and happiness and success. The reality is that they ARE a part of us and a crucial part of the system we've set up.

Haitians aren't poor because they live outside the system of international trade and international development. They're poor because they've been stuck on the wrong side of international development and international trade since the Haitian slaves had the temerity to rise up and demand their freedom 200+ years ago (with a lot of help from local elites who wanted to duplicate the worst aspects of the French slave society once the French were gone). They're poor because they've been ruled by despots and dictators and demagogues. They're poor because of a long history of U.S. and international occupations – including the ongoing occupation of Haiti by NGOs and aid organizations that have only succeeded in making matters worse for Haitians.

Are Two Poles Better than One?

Over the period from 1898 to 1945, from the U.S. victory in the Spanish-American War to the final Allied triumph in World War II, Great Britain slowly but steadily ceded its role as world hegemon to the United States. The U.K. now serves as kind of an affable "hegemon emeritus," providing the rest of the English-speaking world with pretty good pop music, great TV comedies and dramas, and absolutely awesome clothes. Of course, that five-decade cession process also featured the slaughter of two World Wars.

Will the U.S. ever cede its world hegemony to China? And if it does, how could it possibly do so peacefully? It is hard to imagine that the U.S. would give up world leadership without a fight. Yet, China continues to grow. Before long, the size of its economy will surpass our own. Once China's domestic market is wealthy enough to purchase all the flat-screen TVs, iPhones, and laptop computers that it currently exports to the United States, what use will they have for us? It seems unlikely that they'll continue to finance our consumption like they have for the last 20 years or so. Then what?

It's part of why I'm starting to muse about some sort of international authority administering a single global economy, with minimal trade barriers between countries, sort of like a European Union for the whole world. There's a lot that would be troubling about such an arrangement, especially given the outsize role that multinational corporations would likely have in such a regime. Despite their professed love of open borders, we probably can't count on them to really go to the mat for reduced barriers to labor mobility, since labor arbitrage is a key source of profit for multinationals.

Another possible path would be a return to a bi-polar world, with China and the U.S. serving as the two big powers. Such a standoff would be scary but might also simplify domestic politics to good effect; a lot of social progress was made in the U.S. during the first part of the Cold War, primarily the period from 1945 to 1965.

During those two decades, the U.S. saw reduced economic inequality and rapidly-advancing incomes for middle- and working-class families, fueled in part by a massive federal subsidy of home mortgages and college and vocational education through the G.I. Bill, along with enormous investment in public education from kindergarten right on through graduate school. These spending programs, all of which added to the nation's physical and human capital stock and paved the way for future productivity gains, were funded by a steeply progressive income tax with top marginal rates above 90%.

In addition, de jure racial equality made serious strides forward with Brown v. Board of Education in 1954, the Civil Rights Act of 1964, and the Voting Rights Acts of 1965, though the promise of racial economic parity has yet to be realized (in fact the economic gap [PDF] between whites and African-Americans and Latinos has barely budged in over 40 years).

Lastly, the arrival of Medicare and Medicaid in 1965 added a key measure of security for Americans in their later years, allowing them to live independently longer, which in turn meant that fewer working- and middle-class families had that extra mouth to feed when Grandma or Grandpa – too old to work and too poor to afford to see the doctor – had to move in with the kids.

I conjecture that one of the reasons that the 20 years following World War II was a period of unprecedented broadening of prosperity is that American elites, who otherwise might have opposed the high taxes and generous social spending of the time, were keen to demonstrate that a mixed economy — state-directed at the macroeconomic level but mostly left to the free market in the microeconomic sphere — could generate both prosperity and equal opportunity at a time when central planning was in the ascendancy in the First as well as the Third Worlds.

Compare this period with the years from 1990 to 2010, when the U.S. straddled the world like the Colossus of Rhodes. Despite what neoconservative (at the time) Francis Fukuyama called "The End of History," America saw widening economic inequality, declining middle- and working-class economic security, and soaring personal indebtedness, all culminating in the economic meltdown of 2008. Meanwhile, the lack of a unifying national purpose in foreign affairs has contributed to the creation of a polity incapable of agreeing even on a common set of facts about the world. Against that backdrop, it's starting to be true that it's not only the paleoconservatives who long for the days of the Cold War.

Of course, the Cold War also imposed serious costs on the American people in the form of an overly conformist politics, not to mention the excesses of McCarthyism and COINTELPRO. And the U.S. and U.S.S.R also sponsored countless proxy wars around the globe, not to mention the first-person wars and invasions in places like Korea, Hungary, Vietnam, Czechoslovakia, Cambodia, Afghanistan, and Grenada, all of which need to go in the minus column when assessing the benefits and costs of a dual-power equilibrium.

The Little Matter of the Monroe Doctrine

In his latest New York Times column, currently the most e-mailed article on nytimes.com, Nick Kristof "asks,"

Hmmm. You think it’s a coincidence? Costa Rica is one of the very few countries to have abolished its army, and it’s also arguably the happiest nation on earth...Costa Rica’s national decision to invest in education rather than arms has paid rich dividends. Maybe the lesson for the United States is that we should devote fewer resources to shoring up foreign armies and more to bolstering schools both at home and abroad.

Costa Rica really does sound like a great place, and the U.S. does spend way too much on military hardware and so forth, as Dwight Eisenhower predicted we would. But couldn't Kristof at least throw in a little sentence or two on the fact that perhaps one reason Costa Rica doesn't need an army is because of security externalities provided by the United States?

Hegemons do a couple of things, among others:

1. Tell other countries what to do.
2. Keep things relatively stable.

The U.S. has meddled and invaded and killed all over Latin America and its conduct in the hemisphere has often been deplorable. But deplorable compared to what? Compared to the Spanish and the Portuguese and the British and the French and the Dutch? Or compared to a hemisphere with no hegemon at all — a counterfactual about which we can only speculate?

It's just more of the shallow tsk-tsking that passes for liberal internationalism these days. I don't blame Kristof so much as I shudder at the thought of the legions of jackasses in coffee shops who will read this column and say,"Wow, Costa Rica really has it all figured out, why can't Obama make us more like them?" And meanwhile the Dick Cheneys of the world are still out there, plotting their return to power.

Choose Your Own Apocalypse

Slate is asking readers to Choose Their Own Apocalypse: How will the United States meet its end?

Out of 144 possibilities, my top 5:

Robot Overlords
Unitary Executive
China Unloads U.S. Treasuries
Isolation of Elites
Pax Sinica (Chinese hegemony)

According to my choices, I am a "humanitarian internationalist. You're convinced mankind will terminate America—but at least we won't off ourselves in the process. You'll know you're right when: Everyone on Earth pledges allegiance to a world government; the feds default on the national debt."

Heckscher-Ohlin Model: Interpersonal Edition

The Heckscher-Ohlin Model is one of the foundations of International Political Economy. It holds that a country tends to export goods that match its factor endowment. For example, a capital-abundant country, like the United States, exports capital-intensive goods, like Boeing 7E7s. While a labor-abundant country, like China, exports labor-intensive goods, like lead-frosted baby teething rings.

But what if we applied the HO Model to Interpersonal Political Economy? I find that my personal factor endowment is that I am cynicism-abundant. Were I not so devoted to autarky, I would export more of this cynicism. I would rain on others' parades whenever possible. However, given the fact that I am a relatively closed economy, I do the bulk of my parade-raining on my own self.

So: what are your personal "abundant factors?" And do you export them?

International Political Economy Thesis Statement

After 1918, the United States rather suddenly became the world’s most powerful nation. Unlike Britain, which achieved economic leadership gradually through the 17th and 18th centuries, the U.S. found international leadership thrust upon it by the devastating effects of the First World War on Great Britain and the other European powers. Having attained world leadership not so much by design as by default, the domestic economic and political characteristics that might have supported free trade in the U.S. were weak or underdeveloped compared to the characteristics supporting closure. As a result, over the course of the 1920s the U.S. turned inward, a move that cascaded throughout the international system.

This Just In: American Hegemony Doomed

American hegemony is doomed, one way or the other:

1) We keep on keepin' on until we get into a nuclear war with China or India and blow the whole world up.

2) China or India pass us by technologically and leave America in the dustbin of history. I'm pretty sure they aren't teaching "intelligent design" to the billions of school kids in India and China. They're teaching them a little thing I like to call...science.

Attention, Children of America: Get ready to spend your life assembling motherboards for $2.50 an hour for Great Wall Semiconductor, because that's how it's going to be.