Ray Kurzweil: The Singularity Is Near: When Humans Transcend Biology
A must-read about the pace of change in our world. Thrilling and utterly convincing
David Deutsch: The Beginning of Infinity: Explanations That Transform the World
With the possible exception of Ray Kurzweil's The Singularity Is Near, this is the most optimistic book I have ever read. If you choose to read the book, you will understand, among much else, what optimism really is. But, I have to warn you, the book is long and very difficult, being a combination of quantum physics and philosophy. I would not suggest it, if I didn't think it was extremely important, and, especially for younger persons, life-changing and life-affirming in the best senses of those over-used terms.
Niall Ferguson: The Ascent of Money: A Financial History of the World
A very readable history and analysis of the major financial marekts.
Hyman P. Minsky: Stabilizing an Unstable Economy
Minsky got it right. He was just 20 years ahead of his time.
Robert F. Bruner: The Panic of 1907: Lessons Learned from the Market's Perfect Storm
A brilliant case study of the 1907 crash and bank panic with lots of application to the Panic of 2007.
Tim Harford: The Undercover Economist: Exposing Why the Rich Are Rich, Why the Poor Are Poor--And Why You Can Never Buy a Decent Used Car!
An excellent common-sense guide to the value of economics in the real world.
Ted Fishman: China,Inc.
A comprehensive view of America's greatest trading partner...and rival.
Bryan A. Garner: Garner's Modern American Usage
Ideal & inexhaustable bathroom reading for anyone who loves language and aspires to write it well
Nixon Went to China
In retrospect, two things, little commented on at the time, stand out. The first is that trade and commerce between the two nations were barely discussed. The second is the question of why the United States—the world’s greatest military power and with an economy and standard of living that could barely be imagined by most Chinese—should have virtually begged its way into China. Money and power now form the most critical connections between the two nations, yet in the first dialogues of the modern era, money was not mentioned and power was turned on its head. In the decades since, none of theUnited States ’ economic interrelationships has
become more important than the one with China . But the power relationship has not changed.
Giving the centrality of the world’s most populous nation, it’s interesting how relatively few American’s are familiar with modern Chinese history.* When the Manchu Dynasty finally completed its 70-year crumble just before the First World War, it was briefly succeeded by a republic led by the charismatic revolutionary, Dr Sun Yat-sen. But,China , too large, too fragmented,
and too backward for effective central governance, quickly dissolved into a
chaotic period of regional warlordism. The
internecine fighting continued in different guises until 1949. “Warlord” seems to us an archaic term,
smacking of more of mounted Mongol warriors than modern armies. Instead, we call factional leaders like
Chiang Kai-Shek and Mao Zedong “Generalissimo” and “The Great Helmsman.” These men adopted political slogans and
ideologies to justify their attempts to seize and retain power, but in reality,
they were warlords.
Chiang was Sun’s protégé. He became leader of the Kuomintang, or Nationalist Party, following Sun’s death in 1925. Mao was a founding member of the Chinese Communist Party (CCP) in 1921. He rose to supreme power in the mid-30s during the two factions’ long struggle. The struggle would have been shorter and probably won by the Nationalists were it not for the Japanese. ImperialJapan
occupied Manchuria in northeast China
in 1931. Over the next ten years, its
armies ravaged much of eastern China ,
driving Chiang’s nominal government to Chongqing ,
700 miles west of Shanghai . The Communists, meanwhile, retreated to
Yan’an in the remote northwest where they bided their time and husbanded their
strength. Following Japan ’s defeat in 1945, the exhausted Kuomintang
was in no position to rule China
effectively or fight another war. Chiang
was forced to attempt both, failed, and was driven to the island of Taiwan
when the Communists declared victory in the fall of 1949.
It’s a mistake to think of the CCP as being composed of communists. From Mao onward, they were and are no more literally communists than the players on theChicago professional football team are
literally bears. The early Kuomintang
was a nationalist party of professional- and middle-class revolutionaries, and
the early CCP was a nationalist party of lower-class and poor
revolutionaries. They called themselves
communists because in the 1920’s communism, for a revolutionary, was hip. They were not Marxists or urban proletarians
or intellectuals—they were the just the nationalist revolutionaries who weren’t
the Kuomintang.
Until his death in 1976, Mao ruled the CCP and the country ofChina with one supreme goal: to
keep himself in power. He orchestrated a
series of zigzag policies that killed tens of millions of ordinary Chinese;
Mao, in fact, killed far more people in his country than Stalin or Hitler did
in theirs. The worst episode was the
Great Leap Forward, which began in 1958 and was an attempt to radically
increase agricultural and industrial production. It was an utter failure that directly caused
the death by famine of at least 30 million Chinese. The Cultural Revolution, which Mao instigated
in 1966, killed fewer but was, if anything, more destructive of the fabric of society,
and it lasted longer. The Chinese
economy, which had just begun to recover, crashed again. The Cultural Revolution was ongoing when
Nixon and National Security Advisor, Henry Kissinger, went to China . That’s why Kissinger advised the Chinese not
to bother putting anything about trade in the final communiqué since it would
be “infinitesimal in terms of our total economy.”
After some inevitable infighting, Deng Xiaoping succeeded Mao asChina ’s supreme
leader. It was Deng who ordered the
Peoples Liberation Army (PLA) to fire on pro-democracy demonstrators in Beijing in June 1989. The demonstrations had been going on for more
than a month. Contrary to what is
generally recalled today, they were not limited to Tiananmen Square in Beijing or to students. At their height, demonstrations occurred in 181
cities and involved millions of people from all levels of urban society. When the PLA struck on the night of June 3,
they killed more ordinary citizens than students. While numbers are uncertain, the general
consensus is that a few thousand were killed and few thousand more were
injured. At a time when communist
governments across Eastern Europe were tottering and about to fall, the CCP
held on because it was willing to indiscriminately murder its own people,
while—when push came to shove—Russians, Poles, Czechs, and Romanians were not. It did so because the maintenance of power is
the government’s only principle and goal.
This same single-mindedness had prompted Deng to initiate the turn to a capitalist economy in 1979. His successors continued his formula of Special Economic Zones and the gradual elimination of state-owned industries untilChina ’s
economy today produces the third highest Gross Domestic Product in the
world. But the human cost is
staggering. China ’s
version of capitalism is the laissez-faire variety that stoked Karl Marx’s
ferocious anger in 19th century London ,
not the regulated capitalism of the US , let alone the welfare-state of
the Eurozone.
A good example is the privatized coal-mining industry.* InChina ,
“privatized” means “owned by entrepreneurs working hand-in-glove with local CCP
officials.” Thus, a protest against
anything having to do with coal mining is viewed as an attack on the State and
severely punished. Besides, labor unions
are prohibited in China ,
so workers in the privatized coal mines have no effective way to protest
anyway. Unfortunately for them, they
have a lot to protest: falling pay, lack of health care and retirement benefits
are just the beginning. Worse are their
appalling working conditions including long hours, high heat, perfunctory
training, and rudimentary safety precautions.
Official government figures claim that 5,000 to 7,000 coalminers die in
mining accidents annually. The real
numbers are 10,000 to 40,000 annually. To
put these fatalities in context, the Federal Mine Safety and Health
Administration recently reported that exactly 18 US coal miners died in work-related
accidents in 2009. In China , miners’
families receive compensation ranging from $1,200 to $6,400, which operators
find much cheaper than improving safety conditions.
Here’s how it works.China
is the United States ’ second-largest
trading partner (after Canada ),
but most of the trade is one way. They
make it; we buy it. The numbers in the tables
below speak for themselves. The first shows
our top five trading partners in 2009 through October
Canada 40.31 351.31
China 36.38 296.24
Mexico 30.03 247.54
Japan 13.72 118.76
Federal Republic of Germany 11.00 93.15
The next table shows the top five countries with which we have a trade deficit, again through October:
Mexico -4,554.27 -37,171.69
Japan -4,423.34 -34,727.64
Federal Republic of Germany -2,787.06 -21,814.76
Canada -2,002.03 -15,759.95
Here’s how the financing works. Total US Treasury debt outstanding is $7.2 trillion, and exactly half is held by foreign accounts.China holds 35% of longer-term US
Treasury Notes and Bonds, and 24% of short-term Bills. In dollar terms, China holds $820 billion of US
Treasuries plus another $420 billion of US Agency and mortgage-backed
securities that are explicitly or implicitly guaranteed by the Treasury. Japan , our next largest creditor,
holds $1.032 trillion of similar debt.*
Politicians and economists often worry thatChina
will stop buying or even start selling US
securities. This would be self-defeating
for China ,
both financially and economically.
Financially, because US interest rates would immediately spike up
causing serious depreciation in China’s remaining US Treasury holdings; economically,
because China would lose its best customer.
For the foreseeable future, the US
and China
are joined at the hip.
Our partner,China , is a
one-party state whose citizens do not enjoy freedom of speech, freedom of
assembly, freedom of religion, or a free press.
They cannot vote, as there are no elections. The judiciary is not independent, but rather
most bow to the dictates of the CCP whether or not those dictates are in
accordance with the law. There is no
trial by jury. On Christmas Day, Liu
Xiaobo, a literature professor who has publicly campaigned for political and
human rights, was sentenced to 11 years in prison for “incitement to subvert
state power.” Mr Liu’s trial lasted two
hours and his lawyers were given less than 20 minutes to state their case.
In 1972 Richard Nixon went toChina
because he wanted to. In 2010 we go to China because
we have to.
* See Pan, Phillip P. Out of Mao’s Shadow: The Struggle for the Soul of a NewChina New
York NY Simon & Schuster. 2008. pp. 113-17.
± Initially developed inEngland
by J.A. Hobson and refined by J.M. Keynes in the 1930s.
* Source: FTN Financial
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