The Marshall Plan and “America First”


August 6, 2017

The Marshall Plan and “America First”

by Benn Steil

https://www.project-syndicate.org/onpoint/the-marshall-plan-and-america-first-by-benn-steil-2017-08

 

Image result for Harry Truman and The Marshall Plan
General George C. Marshall–Secretary of State

 

Over the years 1948-1952, the US devoted the equivalent of $800 billion in today’s dollars to the reconstruction of western Europe. But whereas the Marshall Plan is widely regarded as the largest and most effective foreign-aid program in history, it is less widely appreciated for being the most successful example of an “America First” foreign policy.

Six months into Donald Trump’s presidency, the White House website still proudly proclaims his administration’s new “America First Foreign Policy.” No longer will the United States allow its physical and economic security to be undermined by what Trump calls “bad deals.” Alliances and trade pacts will all be revisited and, where necessary, renegotiated to ensure that “American interests” are paramount.

What is striking about this policy, however, is not that it places American interests first. It is the misguided way in which those interests are being defined.

In the immediate aftermath of World War II, the US established cooperative structures designed to address the catastrophic failure of international economic and security arrangements in the inter-war years. From 1945 to 1949, the administration of President Harry S. Truman propelled the establishment of the United Nations, the International Monetary Fund, the World Bank, the General Agreement on Tariffs and Trade (GATT), and the North Atlantic Treaty Organization. And the 1947 Marshall Plan created the institutional machinery that, over the subsequent decade, paved the path to European integration and the eventual creation of the European Union.

On November 29, 1948, President Harry S Truman conferred with the top leaders of the Marshall Plan—(left to right) George C. Marshall, Paul G. Hoffman (1891–1974), and Averell Harriman (1891–1986).
On November 29, 1948, President Harry S Truman conferred with the top leaders of the Marshall Plan—(left to right) George C. Marshall, Paul G. Hoffman), and Averell Harriman

These ambitious undertakings were a conscious repudiation of George Washington’s admonition, delivered in his Farewell Address at the end of his presidency, that the US should avoid foreign entanglements, particularly with Europe. They were born not of charity or naiveté, but of a clear-eyed recognition that America’s role in the world had to change as its global connections, and therefore its vulnerabilities, expanded. As Senator Arthur Vandenberg, once a leading Republican isolationist, reflected: “My convictions regarding international cooperation and collective security for peace took firm form on the afternoon of the Pearl Harbor attack. That day ended isolationism for any realist.”

From Isolationism to Global America

Vandenberg became the Republican Party’s driving force in support of the legislation that financed the Marshall Plan, the 70th anniversary of which is being commemorated this summer. With Britain’s empire collapsing and Stalin’s ascendant, US officials under Secretary of State George C. Marshall set out to rebuild Western Europe as an integrated bulwark against communist authoritarianism. This massive, costly, and ambitious undertaking would confront Europeans and Americans alike with a vision at odds with their history and self-conceptions.

Over the years 1948-1952, the US devoted $130 billion in current dollars to the reconstruction of Western Europe. As a share of total US output over the period, this would be equivalent to $800 billion today. But whereas the Marshall Plan is widely regarded as the largest and most effective foreign-aid program in history, it is less widely appreciated as the most successful example of an “America First” foreign policy.

Of course, the humanitarian impulse underpinning the Marshall Plan remains at the heart of its enduring legacy worldwide. But the plan was, in fact, the first major component of the new Truman Doctrine, which pledged US support for “free peoples who are resisting attempted subjugation by armed minorities or by outside pressures,” and of George F. Kennan’s strategy to “contain” the Soviet Union. (Kennan’s famous “X” article in Foreign Affairs, “The Sources of Soviet Conduct,” also recently marked its 70th anniversary.)

Image result for Harry Truman and The Marshall Plan

President Harry S. Truman

Marshall’s State Department believed that unless war-torn Western Europe could be quickly rebuilt, and confidence in liberal-democratic government restored, the European public would seek salvation in populism and authoritarianism. Such a shift among America’s most important trading partners would in turn undermine America’s own physical and economic security, necessitating a massive increase in defense expenditure and government economic control. Only by ensuring that the US had strong, independent allies and stable trade and security relationships, Truman and Marshall believed, could it hope to maintain its own freedoms and way of life.

Establishing a stable environment within the 16 Marshall Plan countries, and thereby enabling trust and cooperation to take hold among government, business, and workers, was vital to the reestablishment of a market economy in Europe. And across the participating countries, US security guarantees and financial support were indispensable to enabling reconstruction and integration to proceed without generating unmanageable domestic or foreign conflict.

Doing Well by Doing Good

Contrary to Soviet propaganda and revisionist Western accounts, America did not aid its allies by forcing its surplus production on them. Had that been the case, Europe’s balance-of-payments deficit (known then as “the dollar gap”) would have widened, which in turn would have frustrated America’s aim to foster European integration. Such a policy would also have exacerbated the postwar shortages that still affected the US economy.

Instead, the Truman administration, supported by a striking change in the priorities of American business lobbies, orchestrated a deft policy shift. Backed by a bipartisan consensus, Truman moved the US from protectionism toward encouragement of imports.

The Marshall Plan’s lead official in Europe, Ambassador Averell Harriman, was steadfast in insisting that “the purpose of [US aid] is to stimulate countries to help themselves,” and that, consistent with the legislation authorizing it, the funds could not be used “to buy surpluses” from “American industry.” In turn, the National Association of Manufacturers (NAM), America’s premier business lobbying organization at the time, warned its members that “efforts to direct [Marshall] funds to [exporting surpluses] must be firmly resisted.”

The Chamber of Commerce, America’s other major business lobby, echoed NAM, stating that “US exports [must] be consistent with the ability of our customers abroad to pay for them by their own exports.” A State Department directive further stressed that whereas the US sought “non-discrimination in world trade, it is recognized that during the period in which Germany’s balance of payments is in substantial disequilibrium, [it] will, like other countries in the Organization for European Economic Cooperation, find it necessary to restrict imports.” The State Department insisted, therefore, that the US High Commission in Germany not interfere in German trade policy.

Germany First

American underwriting of the European Payments Union (EPU) from 1950 to 1958 deliberately redirected West European imports from the US to Germany. Western Europe’s large dollar deficits between 1945 and 1948 reflected Germany’s disappearance as its main capital goods supplier. The region’s massive reconstruction needs therefore had to be met by the US. But it was an important goal of the Marshall Plan to eliminate simultaneously Germany’s need for American aid and its neighbors’ need for dollar imports by restoring Germany to its traditional export role.

This effort was assisted by a relaxation of official US resistance to currency devaluation abroad. The US recognized, for example, that if Germany could not devalue the new Deutschmark it would simply “revert to [the] tactics of the 1930s” through which it “fostered … exports by dumping and other unethical methods.”

This represented a departure from the mindset of Harry Dexter White, the architect of the 1944 Bretton Woods conference under President Franklin D. Roosevelt. White’s approach was to support US exports by prodding indebted countries to keep their currencies overvalued and to finance trade deficits with more debt – that is, IMF loans. By contrast, under the Marshall Plan, greater US openness to imports and a stronger dollar helped smooth implementation of the GATT and spur a revival of international trade generally.

By recreating a European division of labor, with Germany importing raw materials and exporting capital goods, the Marshall Plan succeeded in cutting the transatlantic umbilical cord through which Western Europe was sucking in unaffordable dollar imports of coal and other industrial supplies. As Europe’s dollar balance strengthened under the EPU, doubling between 1950 and 1956, its governments’ incentives to discriminate against dollar imports weakened as well. The higher dollar balance thus enabled the Marshall Plan countries to begin restoring currency convertibility after the EPU wound down.

The financial assistance provided by the Marshall Plan was also organized in a way that departed from earlier, less successful American efforts. Instead of extending new loans to Europe and deepening its indebtedness, the US wiped out Germany’s debt and extended grants-in-aid to the participating countries. The grants provided a cushion with which the recipient governments alleviated the short-term hardships and insecurity that accompanied important homegrown economic initiatives. And, by severely denting popular support for Western Europe’s Communist parties, which wanted to reject the aid, the Marshall Plan helped America achieve a primary political objective.

The Aid that Ties

The Marshall Plan was, of course, only one component of America’s containment strategy in the early years of the Cold War. Yet economic rehabilitation became a primary tool of its so-called strongpoint defense of critical geostrategic regions, in Northeast Asia as well as in Europe, aimed at building up independent, self-confident, and energetic centers of power capable of resisting Soviet pressure.

“The recovery of Western Europe is a twenty-five to fifty-year proposition,” Republican Senator Henry Cabot Lodge, Jr. wrote to Vandenberg in October 1947, “and … the aid which we extend now and in the next three or four years will in the long future result in our having strong friends abroad.” How right he was. America’s containment doctrine successfully guided US foreign policy between appeasement and war for four decades, and the Marshall Plan played a principal role in binding the West together for the struggle.

When the Berlin Wall fell in 1989, so did the communist alliances, which had been built and maintained by Soviet domination and the Kremlin’s willingness – as demonstrated in Hungary in 1956 and Czechoslovakia in 1968 – to impose its will by force. By contrast, the alliances America built, having been forged on genuine partnership and enduring American allegiance, were as strong as ever.

But for how much longer will they remain so? Trump has already walked away from the Trans-Pacific Partnership and the Paris climate agreement. He has threatened to tear up the North American Free Trade Agreement and toyed with the sanctity of America’s commitment to the security of its NATO partners. In the name of “America First,” Trump risks transforming US allies into free agents – all of whom, like Trump, will go in search of a better deal. In an age in which America’s relative economic and military power is necessarily declining, this is foolhardy.

Article 5 of the North Atlantic Treaty – NATO’s mutual defense guarantee – has been invoked only once in the Alliance’s 68-year history. It was invoked not by the US, but by its allies, after New York and Washington, DC, were attacked on September 11, 2001. Could the Trump administration count on such solidarity today? If not, it should ask whether it really wants to allow China, Russia, and others to rewrite the global norms that formed the foundation of America’s post-war prosperity and security. 

 

A New Course for Economic Liberalism


July 17, 2017

A New Course for Economic Liberalism

by Sebastian Buckup

Sebastian Buckup is Head of Programming at the World Economic Forum.

How policymakers can manage the opposing forces of economic diffusion and concentration.

Résultat de recherche d'images pour "Macron"

The New Man in France–President Emmanuel Macron

Since the Agrarian Revolution, technological progress has always fueled opposing forces of diffusion and concentration. Diffusion occurs as old powers and privileges corrode; concentration occurs as the power and reach of those who control new capabilities expands. The so-called Fourth Industrial Revolution will be no exception in this regard.

Already, the tension between diffusion and concentration is intensifying at all levels of the economy. Throughout the 1990s and early 2000s, trade grew twice as fast as GDP, lifting hundreds of millions out of poverty. Thanks to the globalization of capital and knowledge, countries were able to shift resources to more productive and higher-paying sectors. All of this contributed to the diffusion of market power.

Résultat de recherche d'images pour "Opposing forces of economic diffusion and concentration"

But this diffusion occurred in parallel with an equally stark concentration. At the sectoral level, a couple of key industries – most notably, finance and information technology – secured a growing share of profits. In the United States, for example, the financial sector generates just 4% of employment, but accounts for more than 25% of corporate profits. And half of US companies that generate profits of 25% or more are tech firms.

The same has occurred at the organizational level. The most profitable 10% of US businesses are eight times more profitable than the average firm. In the 1990s, the multiple was only three.

Such concentration effects go a long way toward explaining rising economic inequality. Research by Cesar Hidalgo and his colleagues at MIT reveals that, in countries where sectoral concentration has declined in recent decades, such as South Korea, income inequality has fallen. In those where sectoral concentration has intensified, such as Norway, inequality has risen.

A similar trend can be seen at the organizational level. A recent study by Erling Bath, Alex Bryson, James Davis, and Richard Freeman showed that the diffusion of individual pay since the 1970s is associated with pay differences between, not within, companies. The Stanford economists Nicholas Bloom and David Price confirmed this finding, and argue that virtually the entire increase in income inequality in the US is rooted in the growing gap in average wages paid by firms.

Such outcomes are the result not just of inevitable structural shifts, but also of decisions about how to handle those shifts. In the late 1970s, as neoliberalism took hold, policymakers became less concerned about big firms converting profits into political influence, and instead worried that governments were protecting uncompetitive companies.

With this in mind, policymakers began to dismantle the economic rules and regulations that had been implemented after the Great Depression, and encouraged vertical and horizontal mergers. These decisions played a major role in enabling a new wave of globalization, which increasingly diffused growth and wealth across countries, but also laid the groundwork for the concentration of income and wealth within countries.

The growing “platform economy” is a case in point. In China, the e-commerce giant Alibaba is leading a massive effort to connect rural areas to national and global markets, including through its consumer-to-consumer platform Taobao. That effort entails substantial diffusion: in more than 1,000 rural Chinese communities – so-called “Taobao Villages” – over 10% of the population now makes a living by selling products on Taobao. But, as Alibaba helps to build an inclusive economy comprising millions of mini-multinationals, it is also expanding its own market power.

Policymakers now need a new approach that resists excessive concentration, which may create efficiency gains, but also allows firms to hoard profits and invest less. Of course, Joseph Schumpeter famously argued that one need not worry too much about monopoly rents, because competition would quickly erase the advantage. But corporate performance in recent decades paints a different picture: 80% of the firms that made a return of 25% or more in 2003 were still doing so ten years later. (In the 1990s, that share stood at about 50%.)

To counter such concentration, policymakers should, first, implement smarter competition laws that focus not only on market share or pricing power, but also on the many forms of rent extraction, from copyright and patent rules that allow incumbents to cash in on old discoveries to the misuse of network centrality. The question is not “how big is too big,” but how to differentiate between “good” and “bad” bigness. The answer hinges on the balance businesses strike between value capture and creation.

Moreover, policymakers need to make it easier for startups to scale up. A vibrant entrepreneurial ecosystem remains the most effective antidote to rent extraction. Digital ledger technologies, for instance, have the potential to curb the power of large oligopolies more effectively than heavy-handed policy interventions. Yet economies must not rely on markets alone to bring about the “churn” that capitalism so badly needs. Indeed, even as policymakers pay lip service to entrepreneurship, the number of startups has declined in many advanced economies.

Finally, policymakers must move beyond the neoliberal conceit that those who work hard and play by the rules are those who will rise. After all, the flipside of that perspective, which rests on a fundamental belief in the equalizing effect of the market, is what Michael Sandel calls our “meritocratic hubris”: the misguided idea that success (and failure) is up to us alone.

This implies that investments in education and skills training, while necessary, will not be sufficient to reduce inequality. Policies that tackle structural biases head-on – from minimum wages to, potentially, universal basic income schemes – are also needed.

Neoliberal economics has reached a breaking point, causing the traditional left-right political divide to be replaced by a different split: between those seeking forms of growth that are less inclined toward extreme concentration and those who want to end concentration by closing open markets and societies. Both sides challenge the old orthodoxies; but while one seeks to remove the “neo” from neoliberalism, the other seeks to dismantle liberalism altogether.

The neoliberal age had its day. It is time to define what comes next.

 

Why South Korea eyes ASEAN


June 9, 2017

Speaking Of Asia

Why South Korea eyes ASEAN

 

Having vaulted itself in quick time into the ranks of advanced nations, South Korea is undeniably something of a modern miracle. Its success in riding on East Asia’s growth, combined with massive investments in education and innovation, has led to raised living standards and longevity, as well as given it a leading edge in a variety of fields from steel to consumer electronics and shipbuilding. A firm defence yoke to the United States lent it strategic cover as it focused its energies on growth.

That model has run its course in more ways than one. China is steadily lengthening its supply chain, buying less from its southern neighbour. Its strategic space has been crimped too by an assertive Beijing, despite a series of overtures to China from Seoul.

And the future is uncertain. There is no saying where US foreign and military policy might go. Economic growth has more than halved from the 1965-2005 period, requiring the manufacturing- and export- dependent nation to grow more of its domestic and services economy. As demographics go, at their current rates of reproduction, some fear that the South Korean, as a subspecies, may be significantly extinct by 2070. On top of it all, a generation of spoilt young Koreans has emerged, with outsize expectations for themselves but little of the work ethic of their forebears. Youth unemployment is rising, partly because the educated young are too picky to go where the jobs are. There are only so many prestigious openings at the headquarters of the giant chaebols, where they think they deserve to be. It is not unknown for a mother to call up managers to question why they gave her 23-year-old a bad time in the office, or factory.

In other words, Seoul is in a bit of a cabbage pickle.It’s time for creative thinking and fortunately for the nation of 51 million, there are some active minds at work. One train of thought that has been gaining momentum is a foreign and economic policy that eschews its reflexive North-east Asian orientation and looks southward towards the 10 nations of ASEAN, especially as they edge towards building an economic community that accounts for a market of more than 600 million people and an economy of US$2.5 trillion (S$3.5 trillion).

Last week, the South Korean scholar Shin Yoon Hwan of Sogang University, who is President of the Korean Association of South-east Asian Studies, even suggested at the annual Jeju Forum that ASEAN ought to widen its membership to include South Korea. After all, he argued, at its birth the grouping had offered Sri Lanka, a South Asian nation, a chair at the high table.

As Professor Shin sees it, the benefits of closer integration with ASEAN are mutual. For instance, the Japan-ASEAN technology gap may be too wide but the Korea-ASEAN gap is just enough for both to enjoy complementarity for their goods in world markets. The region is also now the top destination for South Korean tourists and ranks fifth in the South Korean foreign direct investment list. Besides, there is a shared colonial heritage from the days of the Japanese Occupation.

Undoubtedly, there is merit in some of what he says. At a time when globalisation and open markets are under deep scrutiny, any joint effort to lift the game is welcome. Two-way trade between South Korea and ASEAN has been stagnating, and there simply is no chance of attaining the US$200 billion targeted by 2020.

And South Koreans do seem comfortable in ASEAN; one in nine travels to an ASEAN country every year, chiefly to Thailand and the Philippines. About 330,000 people from ASEAN states live and work in South Korea. And exclusionist and isocultural as they tend to be, a small but growing number of Koreans are marrying people from the region. South-east Asia is also in the thrall of hallyu, or Korean Wave, thanks to the popularity of its songs, drama and cuisine.

ST ILLUSTRATION : MANNY FRANCISCO

Still, good intentions aside, the question is how to get results. Hallyu’s soft power can prove fleeting if tastes change, as they are known to. For a more lasting glue, Seoul will need to work harder.

Time to open up

Eight years ago, President Lee Myung Bak announced his New Asia Initiative, which sought to widen his country’s focus from North-east Asia. It was a theme he reiterated at the following year’s Shangri La Dialogue. Seoul did appoint its first ambassador to ASEAN in 2012 but, beyond that, movement has been fitful, especially on security cooperation. South Korea did join ReCAAP, the Singapore-based body that fights piracy and armed robbery on the high seas, but has seemed hesitant about doing more. Certainly, compared with China and Japan, which actively woo the region with aid and defence equipment, its profile does not show up quite enough.

Granted this is not entirely its fault; every time Seoul looks to widen its aperture, its North Korean sibling has pulled its focus back into the neighbourhood either by an act of aggression, such as the sinking of a navy ship, or by conducting ballistic missile or nuclear weapon tests.

But those irritants will not go away. What then should South Korea do to maintain and build momentum?

First, it can contribute to globalisation by keeping its markets open and contributing to wider market opening. South Korea is a part of the RCEP process, the ASEAN-led initiative for a Regional Comprehensive Economic Partnership between ASEAN and the six states ( Australia, China, India, Japan, Korea, and New Zealand) with which it has free trade agreements. But it could go further perhaps by dropping its wariness of the Trans-Pacific Partnership (TPP) agreement, especially as the 11 parties to that arrangement desperately try to salvage the accord despite America’s withdrawal from it.

South Korean participation would be a boost for TPP in more ways than one, including widening its strategic options. Likewise, an early conclusion of an Open Skies Agreement with ASEAN would benefit its own tourism sector. Amazingly, there are virtually no direct flights linking ASEAN capitals to Jeju, South Korea’s beautiful resort island.

Image result for 4th industrial revolution icon

 

South Korea also must seek to fully partner with ASEAN as the Fourth Industrial Revolution gathers momentum. The country has led the Bloomberg Innovation Index in recent years and has much to offer the region as it copes with change. The new landscape of automation and additive manufacturing offers Korean companies opportunities to look beyond traditional investment destinations based on market size and wage-competitiveness to a new climate where efficient logistics and expertise in high-tech manufacturing will be key.

A Korea technological university in an ASEAN country, backed by its engineering companies, that draws students from ASEAN as well as Korea would not only boost technical skills in the region but also build a slate of engineers familiar with Korean technology who would carry this knowledge and goodwill into their occupations. This will eventually help boost Korean companies’ chances of winning business in the region.

On the strategic side of the equation, Seoul has to show more than a transactional interest in defence arrangements with ASEAN. It should signal clearly that it, as much as any other nation, places value in keeping the sealanes of communication open, and will act to do so. One lesson it could draw from ASEAN is on how this region seeks to balance all major powers, and particularly how it deals with Japan.

South-east Asians, who have endured much pain at the hands of the Japanese in an earlier era, have learnt to forgive and move on, even as they will never forget Japanese excesses. South Korea, on this score, far too often shows up as a boat that, to borrow F. Scott Fitzgerald’s words, beats back against the current, ceaselessly borne into the past.

A version of this article appeared in the print edition of The Straits Times on June 09, 2017, with the headline ‘Why South Korea eyes ASEAN’. Print Edition | Subscribe
 

 

When Giants Fail


May 8, 2017

When Giants Fail

What business has learned from Clayton Christensen.

The Coming Technology Policy Debate


May 7, 2017

What is really needed are new and improved institutions, policies, and cooperation between law enforcement and private firms, as well as among governments. Such efforts must not just react to developments, but also anticipate them. Only then can we mitigate future risks, while continuing to tap new technologies’ potential to improve people’s lives.–Michael J. Boskin

The Coming Technology Policy Debate

by Michael J. Boskin@www.project-syndicate.com

*Professor of Economics at Stanford University and Senior Fellow at the Hoover Institution. He was Chairman of George H. W. Bush’s Council of Economic Advisers from 1989 to 1993, and headed the so-called Boskin Commission, a congressional advisory body that highlighted errors in official US inflation estimates.

Image result for Michael J. Boskin

What do the leaks of unflattering email from the Democratic National Committee’s hacked servers during the 2016 US presidential election campaign and the deafening hour-long emergency-warning siren in Dallas, Texas, have in common? It’s the same thing that links the North Korean nuclear threat and terrorist attacks in Europe and the United States: all represent the downsides of tremendously beneficial technologies – risks that increasingly demand a robust policy response.

 

Image result for fourth industrial revolution

It is the Fourth Revolution–The Only Certainty is Change

The growing contentiousness of technology is exemplified in debates over so-called net neutrality and disputes between Apple and the FBI over unlocking suspected terrorists’ iPhones. This is hardly surprising: as technology has become increasingly consequential – affecting everything from our security (nuclear weapons and cyberwar) to our jobs (labor-market disruptions from advanced software and robotics) – its impact has been good, bad, and potentially ugly.

First, the good. Technology has eliminated diseases like smallpox and has all but eradicated other, like polio; enabled space exploration; sped up transportation; and opened new vistas of opportunity for finance, entertainment, and much else. Cellular telephony alone has freed the vast majority of the world’s population from communication constraints.

Technical advances have also increased economic productivity. The invention of crop rotation and mechanized equipment dramatically increased agricultural productivity and enabled human civilization to shift from farms to cities. As recently as 1900, one-third of Americans lived on farms; today, that figure is just 2%.

Similarly, electrification, automation, software, and, most recently, robotics have all brought major gains in manufacturing productivity. My colleague Larry Lau and I estimate that technical change is responsible for roughly half the economic growth of the G7 economies in recent decades.

Pessimists worry that the productivity-enhancing benefits of technology are waning and unlikely to rebound. They claim that technologies like Internet search and social networking cannot improve productivity to the same extent that electrification and the rise of the automobile did.

Optimists, by contrast, believe that advances like Big Data, nanotechnology, and artificial intelligence herald a new era of technology-driven improvements. While it is impossible to predict the next “killer app” arising from these technologies, that is no reason, they argue, to assume there isn’t one. After all, important technologies sometimes derive their main commercial value from uses quite different from those the inventor had in mind.

Optimists, by contrast, believe that advances like Big Data, nanotechnology, and artificial intelligence herald a new era of technology-driven improvements. While it is impossible to predict the next “killer app” arising from these technologies, that is no reason, they argue, to assume there isn’t one. After all, important technologies sometimes derive their main commercial value from uses quite different from those the inventor had in mind.

For example, James Watt’s steam engine was created to pump water out of coal mines, not to power railroads or ships. Likewise, Guglielmo Marconi’s work on long-distance radio transmission was intended simply to create competition for the telegraph; Marconi never envisioned broadcast radio stations or modern wireless communication.

But technological change has also spurred considerable dislocation, harming many along the way. In the early nineteenth century, fear of such dislocation drove textile workers in Yorkshire and Lancashire – the “Luddites” – to smash new machines like automated looms and knitting frames.

The dislocation of workers continues today, with robotics displacing some manufacturing jobs in the more advanced economies. Many fear that artificial intelligence will bring further dislocation, though the situation may not be as dire as some expect. In the 1960s and early 1970s, many believed that computers and automation would lead to widespread structural unemployment. That never happened, because new kinds of jobs emerged to offset what dislocation occurred.

In any case, job displacement is not the only negative side effect of new technology. The automobile has greatly advanced mobility, but at the cost of unhealthy air pollution. Cable TV, the Internet, and social media have given people unprecedented power over the information they share and receive; but they have also contributed to the balkanization of information and social interaction, with people choosing sources and networks that reinforce their own biases.

Modern information technology, moreover, tends to be dominated by just a few firms: Google, for example, is literally synonymous with Internet search. Historically, such a concentration of economic power has been met with pushback, rooted in fears of monopoly. And, indeed, such firms are beginning to face scrutiny from antitrust officials, especially in Europe. Whether consumers’ generally tolerant attitudes toward these companies will be sufficient to offset historic concerns over size and abuse of market power remains to be seen.

But the downsides of technology have become far darker, with the enemies of a free society able to communicate, plan, and conduct destructive acts more easily. The Islamic State and al-Qaeda recruit online and provide virtual guidance on wreaking havoc; often, such groups do not even have to communicate directly with individuals to “inspire” them to perpetrate a terrorist attack. And, of course, nuclear technology provides not only emissions-free electricity, but also massively destructive weapons.

All of these threats and consequences demand clear policy responses that look not just to the past and present, but also to the future. Too often, governments become entangled in narrow and immediate disputes, like that between the FBI and Apple, and lose sight of future risks and challenges. That can create space for something really ugly to occur, such as, say, a cyber attack that knocks out an electrical grid. Beyond the immediate consequences, such an incident could spur citizens to demand excessively stringent curbs on technology, risking freedom and prosperity in the quest for security.

What is really needed are new and improved institutions, policies, and cooperation between law enforcement and private firms, as well as among governments. Such efforts must not just react to developments, but also anticipate them. Only then can we mitigate future risks, while continuing to tap new technologies’ potential to improve people’s lives.

Hong Kong: Coming soon, One Country, One System


May 6, 2017

Hong Kong: Coming soon, One Country, One System

by Asiasentinel.com

http://www.asiasentinel.com/politics/china-hong-kong-one-country-one-system/

Image result for Carrie Lum

Carrie Lam (pic center),Hong Kong’s future Chief Executive

Despite strong official backing by Beijing, Hong Kong’s future Chief Executive, Carrie Lam Yuet-ngor, promised to heal the divisions in society. Yet in the run up to her installation on July 1, it appears increasingly that the healing of divisions is going to be accomplished by silencing one half of that divide. Actions and words in recent days have shown the current Chief Executive CY Leung bent on vengeance, and a central government bent on squeezing the life out of the Two Systems concept.

Quite what Lam feels about these moves is unclear, but they have raised concerns in many traditional pro-government circles as well as among the direct target, the advocates of more democracy and the autonomy promised in the Basic Law and Joint Declaration.

Not content with using legal procedures to have two young elected pro-democracy legislators disbarred from office, the authorities had them arrested for “unlawful assembly”  and “attempted forced entry” for trying to attend a Legislative Council meeting. The government then followed this up with the arrest of nine other activists from the pro-democracy faction who took part in a Nov. 6 demonstration against the court decision to ban the two elected legislators. The nine are charged with “unlawful assembly” for taking an unauthorized route during a march to the Liaison Office, Beijing’s power center in Hong Kong.

These charges come in the wake of 18 previous ones against activists, some dating back to the 2014 Umbrella movement, and it is widely believed that more such charges are in the works to cripple the pro-democracy movement and further reduce its numbers in the Legislative Council, thus using loosely framed laws to counter its stunning success in elections last September.

Four other lawmakers face disbarment on the basis of being in conflict with a November 2016 decision by Beijing’s National People’s Congress. If these cases succeed, the ranks of elected legislators would be again thinned, giving the government complete control of a Legislative Council half of whose members are chosen mostly by small, pro-government electorates. Hong Kong’s political system would have no more credibility than that of the military junta in Thailand.

Just possibly, harsh measures by the outgoing and highly unpopular Leung are a deliberate ploy to enable Lam to start her rule with some concessions, such as a general amnesty for those – including policemen – involved in legal actions related to Umbrella and related demonstrations. But that is probably over-optimistic. An autocratic Xi Jinping appears in no mood for compromises with insubordinate Hong Kong residents, of whom there are many.

Image result for Hongkong Skyline

Hong Kong Skyline Digital Art – Hong Kong Skyline Fine Art Print

Adding further to Hong Kong concerns was a speech by a legal advisor to Beijing’s Liaison Office, Wang Zhenmin, which threatened the end of  the domestic autonomy promised under Two Systems if it was perceived to undermine the interests of One Country. Wang suggested that separatist sentiment in Hong Kong has damaged national security and that the territory “needs to actively defend the sovereignty, national security and development interests of the country in accordance with law.”

Wang seems deliberately to exaggerate the extent of separatist sentiment in the territory, confusing demands for genuine autonomy with ones for independence, an entirely impractical proposition supported only by a few naïve youngsters. The “independence” canard and the priority to One Country have thus become sticks to beat those wanting the sustain genuine autonomy and the freedoms of speech and publication which Hong Kong enjoys. Soon it may be impossible to have open debate on issues such as the status of Taiwan, Xinjiang, Tibet or the South China Sea.

What Beijing consistently declines to recognize is that the Umbrella movement itself, and the anti-government vote in the 2016 elections, was a direct response to Beijing’s earlier interference quashing efforts to extend representative government.

The implication that Hong Kong may be a threat to national security has to be seen in the context of China’s National Security law. This is so broadly drafted that it can be used against almost any criticism of the Communist party and its leadership and policies.  For instance, Article 15 reads:

“The State persists in the leadership of the Chinese Communist Party, maintaining the socialist system with Chinese characteristics, developing socialist democratic politics, completing socialist rule of law, strengthening mechanisms for restraint and oversight of the operation of power, and ensuring all rights of the people as the masters of the nation, and strengthening restraint and oversight mechanisms on the operation of power.

“The State guards against, stops, and lawfully punishes acts of treason, division of the nation, incitement of rebellion, subversion or instigation of subversion of the people’s democratic dictatorship regime; guards against, stops, and lawfully punishes the theft or leaking of state secrets and other conduct endangering national security; and guards against, stops, and lawfully punishes acts of infiltration, destruction, subversion or separatism by foreign influences and other conduct endangering national security; and guards against, stops, and lawfully punishes acts of infiltration, destruction, subversion or separatism by foreign influences.

“The State persists in the leadership of the Chinese Communist Party, maintaining the socialist system with Chinese characteristics, developing socialist democratic politics, completing socialist rule of law, strengthening mechanisms for restraint and oversight of the operation of power, and ensuring all rights of the people as the masters of the nation, and strengthening restraint and oversight mechanisms on the operation of power.”

Wang’s speech elicited a quick rebuke from a former leader of the pro-business and generally pro-government Liberal party Allen Lee Peng-fei. “What authority does he have to speak to Hong Kong people?” and to lay down his view about constitutional reform, a matter for the territory itself. Lee is long retired so has little to lose from speaking up, but his views reflected those of many fearful of expressing views for fear of retribution in one form or another.

In particular, Hong Kongers increasingly resent the overt interference of the Liaison Office which is supposed to keep Beijing informed of Hongkong peoples’ views, not act as the hand guiding a puppet regime.

Such levels of interference and the constant talk of “national security” are worrying traditionally conservative groups such as lawyers and accountants, and those want to see Hong Kong remain attractive to open minds and free expression, essential if its future is to be more than just one of several large cities on the south China coast.

As it is, the territory is spending large sums to celebrate the 20th anniversary of return to Chinese sovereignty. President Xi will be on hand as Lam takes over. But for many in Hong Kong there is a diminishing cause for celebration as the demand for One Country, as ruled by the party, dominates discourse, and the related concept of “Hong Kong People Ruling Hong Kong” is constantly undermined by Beijing’s spokesmen and their army of parrots in the local media. Doubly worrying, it comes at a time when President Xi is bent on reducing or eliminating foreign influence in social, political and cultural domains. Hong Kong is by this measure a gateway for undesirable ideas. For sure, closing the windows will keep out foreign flies, but so are fresh air and fresh ideas. Deng Xiaoping must be turning in his grave.