Saturday, July 19, 2014

Like a Reagan cowboy

After the recent shooting down of passenger flight MH17 with around 300 dead by Ukrainian separatists and/or the Russian military, Sinclair Davidson posts Ronald Reagan's speech on passenger flight KAL 007 after it was shot down by the USSR military in 1983, later calling it "forceful and inspiring". This is an echo of similar posts at Hot Air, RedState and Fox News comparing Reagan's strong words with the cautious early reaction of Barack Obama, which already has the tabloids incensed.

As usual, the right is ignoring the facts in favour of a partisan narrative. As Crooks & Liars details and the Monkey Cage blog at the WaPo annotates, Reagan's reaction was rated at the time by the right wing media as inadequate and weak, gadding about on horseback on vacation in Hawaii for days while the bodies of the American victims were still warm. In fact, Reagan eventually did nothing except continue his previous policy of economic opposition to the USSR without direct military engagement, which is pretty much what Obama has been doing against Russia in the wake of Vladimir Putin's annexation of Crimea.

It is refreshing to see such a debate go on without reference to domino theory, which has been thoroughly discredited since it failed to predict the encroachment of communism in the 1980s. There has also been a lot of sighing from the American left about the preponderance of Dubbya-era reprobates in the media talking up re-engagement in Iraq and/or the Crimea. I am as sanguine about that as I am about the IPA's ubiquity on the ABC: these are free countries, they're allowed to have a voice, and we're allowed to laugh at them.

Reagan may have been a lot of things, but one thing he was right about was how to fight an empire: economically, with any military troops on the ground to be confined to smaller proxy battlegrounds. Obama learned that lesson, and he's already putting the Reagan playbook into practice by squeezing Putin with sanctions, using the tragedy to further pressure the EU to join the US in applying sanctions. As is only proper.

Wednesday, July 16, 2014

Climate change deniers, from the backline

In honour of Christine Milne's listing of climate change deniers prominent in Australia, I have taken the liberty of adding a few more to bring it up to 22 and arranging them into an Australian football team, named from the backline in traditional style a la the Coodabeens:

B: Brian Fisher, Dick Warburton, Shirley In't Veld
HB: Sam Walsh, Hugh Morgan, Mitch Hook
C: Martin Ferguson, Chris Mitchell, Cory Bernardi
HF: John Roskam, Ian Plimer, Jo Nova
F: Andrew Bolt, Gina Rinehart, Rupert Murdoch
Foll: Bob Carter, Danny Price, Ian McNamara
Int: Innes Willox, Maurice Newman, David Murray
Sub: George Pell

The backline is taken from the panel of the renewable energy target review, which is currently the last line of defence against science and facts. The halfback line is the mining lobby, for which any number of half back flankers could have been chosen since they have all been talking their own book on this issue from the start to deny extra taxes. Morgan is probably due for retirement, but he's going around one last time for another flag.

The centre line includes a left winger at left wing, albeit in name only, as I reckon Martin Ferguson is one of those Labor politicians who is going to end up being more beloved of the right as times goes on (see: Gary Johns). Cory Bernardi wins the right wing spot ahead of a gaggle of aspirants from the Senate clown show. Chris Mitchell sits in the center - not politically, of course, but in the centre of the climate denial team.

The half forward line contains a few IPA hired guns on the flanks, and I could have chucked half a dozen more from the ranks of the wingnut think tanks, but centre half forward could only be occupied by one man: pebble specialist Ian Plimer. There is no rock that Plimer couldn't pick up in Australia and wax lyrical about its geological history with great precision and knowledge... and then proceed to piff in the general direction of intelligent people, to no effect.

In one forward pocket you have Andrew Bolt who is usually fully forward in his attacks, who is in the pocket of the other forward pocket in Rupert Murdoch who is never shy of coming forward and reaching into his pocket, but arguably Bolt's also in the pocket of Gina Rinehart who is your classic roadblock full forward, and has a lot of other teammates in her pocket such as the aforementioned Plimer. Ms Rinehart has a lot of pockets in her overalls.

There are two more jacked-up credibility-free scientists at ruck and ruck rover in palaeontologist Bob Carter and economist Danny Price, but for rover it's a media personality, the host of Australia All Over on ABC Radio, the infamous "Macca". He would also make my team of Australians Furthest Up Themselves, but he makes this list due to his denialism.

The interchange bench is staffed by yet more business rentseekers, of which there are a cast of thousands. In the green substitutes vest is Cardinal George Pell, who doesn't quite fit in with the rest of this list but I suppose will be subbed in once the game is won to rack up some garbage time stats telling us all how right all his teammates were.

Thursday, July 3, 2014

China is too big to fail

I was retweeted by Brad Delong today for linking to Stephen Koukoulas' latest missive on the results of the current Liberal federal government's campaign of talking down the domestic economy: it looks like it has worked as retail sales have tanked and we're about to enjoy the same sort of quarterly handbrake effect that the US has just endured. This lead to a short (of course) Twitter conversation with Patrick Chovanec about China, which lead to this observation which interested me.

Chovanec is a Chinese expert of some renown, a former employee under Bill Kristol and a former colleague of Paul Ryan. His blog is interesting reading, in that it is an ongoing attempt by a conservative theorist to understand why this is the Asian Century, and how this is going to lead to China belting the bejeesus out of America in both economic and political power games (if not actual war). He is a bear (despite his protestations), as a conservative academic looking at China must almost inevitably be to jive his beliefs with the ongoing economic and social experiment happening before his eyes based on what he must see as an unworkable melding of private and public control from above. China is still a command economy for the most part, only using those elements of capitalism which are useful for its centrally-determined agendas. As Chovanec notes on his blog, control is actually getting more concentrated among power elites not less. Despite all this, China continues to grow like topsy and it's winning a lot of the contests it enters - like currency wars and its increasingly dominant position in Africa.

Chovanec has issued dire predictions of calamitous domestic Chinese bubbles, as have many watchers over the years, but if the Chinese miracle is merely a mirage then it hasn't dissipated yet. For instance, after he spent a lot of energy talking about how the local real estate "bubble" was ready to pop, it surged again early in 2012, leading to a series of posts floating up reasons as to why stentorian bears like him were so wrong. From the Australian perspective, where it seems apparent that China's restrictions on multiple home purchases are probably why Chinese investors have invaded the Australian real estate market in such numbers to treat empty dwellings like gold deposits, there doesn't appear to be much of an end in sight to the Sino-Australian real estate boom.

Chovanec has also been quoted on recent movements in the heavily subsidised Chinese solar cell industry, as in this NPR interview, and here I think is where his own insights illustrate what is going on.
INSKEEP: So what do the Chinese do now?
CHOVANEC: Well, what they probably do is they dig deep dig into their pockets – the pockets of the central government – and bail out these companies. Because what they’re really afraid of is, you know, we've seen this over the past couple of months, that even relatively small companies, when they fail in China they're so intertwined in terms of their credit relationships and the local economy that essentially everything's too big to fail.
Just as the TARP bank bailout and the auto bailouts worked perfectly in America, so it appears that China has avoided a series of pitfalls from inefficiencies in its system by temporarily socialising the losses and keeping long-term-viable businesses out of bankruptcy. This is the positive side of too-big-to-fail. Keynesianism is all about smoothing out the peaks and troughs of economic happenstance to prevent long-term damage to the livelihoods of the relatively powerless workers who would otherwise have their careers thrown on the scrapheap of history, for the benefit of the economy as a whole.

No doubt there is an argument that China's socialisation of losses from Suntech et al is a different situation to TARP and the auto bailouts, since the latter actually made a profit in the end and there might not be such an easy denouement to the Chinese solar cell industry's woes. Similarly to the National Broadband Network in Australia - I'm talking about the original Labor vision, not the emaciated joke it has become under the Liberals - governments are in an unique position to invest in such projects and secure a solid rate of return, because they can accumulate many more benefits from positive externalities than do private corporations. Even if the NBN or Suntech were to represent paper losses on their own balance sheets, the indirect public goods from universal broadband in Australia or the popularisation of solar cells on roofs across China could very well translate into higher taxes from increased general production, or a decrease in spending on policing or environmental cleanups.

Under certain circumstances, where it is done for solid Keynesian reasons, TBTF works. Chovanec and those of his ilk like to say that Chinese leaders don't really know what they're doing and lack a coherent direction for the future, but so far in the 21st century they have been kicking ass and taking names in both economic and political realms. Australia may be inside a rapidly shrinking bubble as the bears say... or the lucky country may have just been lucky one more time.