China’s Dream Team — MY COMMENT

by John Brian Shannon

While some might think that the sky is falling now that a new President of China and a new Chinese Premier will be installed in March 2013 — Stephen S. Roach with his years of professional experience working with many of the individuals involved, tells us in his latest Project Syndicate article China’s Dream Team we should feel hopeful this time around.

Not that we didn’t feel hopeful when President of China Hu Jintao and Premier Wen Jaibao came to power. In fact, I would like to take the opportunity to compliment the team of Hu Jintao and Wen Jaibao for their many successes — including the massively successful XXIX Olympiad held in Beijing.

Both men attended Harvard in younger years, both had plenty of exposure to Western ideas and neither seemed to ‘have it in’ for the West.

Historically speaking, communist leaders have generally displayed skepticism or outright hostility to the West and have been critical of Western thought and actions, even when some Western policies were of little concern to communist nations.

During the tenure of Hu Jintao and Wen Jaibao, China has advanced in many areas and has remained a peaceful partner of the West. In particular, both leaders ushered in powerful policies and regulations to help mitigate the environmental catastrophe which has resulted from such rapid industrialization.

China presently burns more than 3 billion tons of coal each year resulting in the production of 7.2 billion tons of CO2, plus other gaseous pollutants and particulates. These numbers are expected to double by 2020 based on already planned and funded (but not yet built) coal power plants adding to the output from existing coal-fired power plants there.

The successful Chinese program directed by these two great men to dramatically limit nitrous oxides at coal-fired power plants comes to mind. This is important because, according to Wikipedia; “Nitrous Oxide is a major greenhouse gas and air pollutant. Considered over a 100-year period, it has 298 times more impact ‘per unit weight’ (Global warming potential) than carbon dioxide.[2]”

For an overview of the Chinese environmental situation and their response to it (current as of May 2012), please see my UNDP article here:

Or go directly to the downloadable PDF.

Over 382 billion dollars worth of conservation and sustainable energy projects have been announced since May 2012. And, another 56 billion was announced today, December 5, 2012 read the Reuters article here.

By 2020, when China will pump 15 billion tons of CO2 into the air just from its coal plants, any positive conservation and mitigation efforts made now will have enormous consequences then.

Let us hope that the new leadership team is as enlightened about the environment as the previous team. Let’s hope the calm and reasonable approach to international affairs and the wise economic choices of former President Hu Jintao and Premier Wen Jaibao will continue.

Above all, let’s not spoil the atmosphere with fearful or angry rhetoric. Minor irritants must remain minor! China needs us, we need them. Full stop.

Only second in importance to ending the Cold War (which was successfully ended by dialogue, goodwill and cooperation between the various players) is the need for China and the West to find ways to work together everyday for the betterment of the largest number of citizens in China and the West.

If the same degree of dedication, goodwill and cooperation is employed to find ways for China and the West to work together as was done to end the Cold War, everyone on the planet will reap those benefits for decades to come!

I welcome incoming Chinese leader President Xi Jinping and Premier Li Keqiang to their new official positions and hope that Western leaders will reach out with sincere invitations to promote a grander and better vision of our world than was ever thought possible just 30-years ago.

Note: Xi Jinping became General Secretary of the Chinese Communist Party and Chairman of the CCP’s Central Military Commission, giving him supreme authority over China’s armed forces. Next March, he will become President of China as well. Read more here.

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That’s Not the Goal I’m Working For

by John Brian Shannon

It was fascinating to read the Project Syndicate article by Former US Secretary of Defense Harold Brown on America’s trouble with China discussing some of the history and modern-day challenges to Sino-American relations.

Although I have the greatest respect for former Secretary of Defense Harold Brown, I respectfully disagree with his proposed solution to the present challenges. Starting a new Cold War to secure America’s future is a step backward — not a step forward.

Rather, as both Western and Chinese interests converge at so many levels in the modern paradigm, it is in our best interests to work on solutions together.

Instead of the “Win – Lose” thinking of the past, it is incumbent upon us to find ways to “Win – Win” as so much is at stake.

We survived the last Cold War, but that is no guarantee we would survive another one. It’s simply too big a risk to take — especially when there are better options available. And, there are.

The former Secretary of Defense states that; “China’s export-led economic model has reached its limits…” and I believe this is a most profound point.

IF China has reached it’s export-led model as he asserts, it has only done so because there are presently a lack of purchasers to purchase Chinese goods.

For years, China has manufactured products to sell around the world and as long as there has been plenty of disposable income in the West, there has been plenty of sales.

As the Western economies fell backwards — so did Chinese exports.

Funny how that works.

In case policy-makers haven’t yet reached the same conclusions as I, let me say the situation I describe above is easily verifiable and directly correlates with the economic events of the early 21st century.

Whether political leaders in the U.S. or China like it or not, the relationship has been, is, and must continue to be, a symbiotic one.

China NEEDS a healthy, stable and frankly, a wealthy Western world to sell it’s wares to — and the West needs a source of low priced goods to assist growth to continue at lower cost than otherwise would be the case.

The U.S. needs a large export market for its billions of tons of coal and millions of barrels of petroleum that it must sell every year to support those industries here.

By 2017 the U.S. will surpass Saudi Arabia as the world’s #1 oil exporter — according to the IEA — but in actuality, this may occur in 2015.

http://arabiangazette.com/us-top-oil-producer-2017/

Not only that, so many products are manufactured by American corporations in China at lower cost than they could be here — therefore personal happiness is enhanced on a massive scale by products Western consumers can afford. Thanks China!

And without a healthy China (and Japan) who will continue to buy all those T-Bills to float the American economy? Along with all of the other China-driven (and increasing yearly) investment and purchasing of American goods and services.

For the next few decades, the only politics that make over-arching sense will be the politics of economics. For now, more than ever, the politics of self-interest will be the politics of economics and the politics of economics will be the politics of self-interest.

The stronger the Chinese economy, the better the effect on Western economies and Western governments. The stronger the American and other Western economies, the better for Chinese exports.

Any other model will be a lesser model and will bring it’s own problems with it.

As for the long-range bomber advocated for by former Secretary Harold Brown. I too, want a strong, secure and freedom-loving North America — but let us hope the days of Mutually Assured Destruction (MAD) are over.

Instead of sabre-rattling and an ever-present nuclear threat, let us hope that our thinking as a species has moved on.

A Pentagon report laid it out in stark terms a couple of decades back, “it is not a case of if, but of when” a nuclear exchange will take place under the MAD paradigm.

If we can’t co-exist, if we can’t form and retain viable and symbiotic relationships with other nations — every one of us will be dead, eventually. And then, none of it will matter.

That’s not the goal I’m working for.

.

Read more at: http://www.project-syndicate.org/commentary/from-competition-to-confrontation-for-the-us-and-china-by-harold-brown#yD3qLMzsctZhgiyR.99

JOHN BRIAN SHANNON

To follow John Brian Shannon on social media – place a check-mark beside your choice of Facebook, Twitter or LinkedIn: FullyFollowMe/johnbrianshannon

What is up with Africa?

by John Brian Shannon

Yesterday, the UNDP opined on Twitter that “Africa is on the move.”

Today, on Project Syndicate David Fine wrote “Inside Africa’s Consumer Revolution” where he pointed out some interesting facts about that continent.

“Nowadays, Africa’s economic potential – and the business opportunities that go with it – is widely acknowledged. Poverty and unemployment are still more widespread than in other emerging markets, but accelerating growth since 2000 has made Africa the world’s second-fastest-growing region (after emerging Asia and equal to the Middle East).”

CAR101212B-1 Steady pace of African growth 2012 and 2013

The above chart is from the IMF which is noted for it’s careful and qualified assessments of developing nations and regions. Here is a small excerpt from their authoritative October report:

Regional Economic Outlook: Sub-Saharan Africa Maintaining Growth in an Uncertain World

”Economic conditions in sub-Saharan Africa have remained generally robust despite a sluggish global economy. The near-term outlook for the region remains broadly positive, and growth is projected at 5¼ percent a year in 2012–13. Most low-income countries are projected to continue to grow strongly, supported by domestic demand, including from investment. The outlook is less favorable for many of the middle-income countries, especially South Africa, that are more closely linked to European markets and thus experience a more noticeable drag from the external environment. The main risks to the outlook are an intensification of financial stresses in the euro zone and a sharp fiscal adjustment in the US–the so called fiscal cliff.”

Mind you, not everything is trending upwards — some things are going downhill there too. Way down. Here is a nice chart to underscore that trend.

image

Figure 1: African Debt and Debt Service Source: International Monetary Fund, World Economic Outlook Database, October 2009.

The World Bank agrees with the optimistic view of things and has noted this progress in their twice-yearly report on Africa — Africa’s Pulse. Here is a short excerpt from that report:

In its wide-ranging analysis of new developments in Africa, the new report notes that after ten years of high growth, an increasing number of countries are moving into ‘middle- income’ status, defined by the World Bank as those countries achieving more than $1,000 per capita income.

Of Africa’s 48 countries, 22 states with a combined population of 400 million people have officially achieved middle-income status; while another 10 countries representing another 200 million people today would reach middle-income status by 2025 if current growth trends continue or with some modest growth and stabilization.

On October 15, 2012 Jean-Michel Severino and Emilie Debled wrote about Africa’s huge growth opportunity in their great Project Syndicate piece, “Africa’s Big Boom

“Africa is undergoing a period of unprecedented economic growth. According to The Economist, six of the ten fastest-growing countries in 2011 were in Africa. Average external debt on the continent has fallen from 63% of GDP in 2000 to 22.2% this year, while average inflation now stands at 8%, down from 15% in 2000. This positive trend is likely to persist, given that it is based on structural geographic and demographic factors, such as rising exports, improved trade conditions, and steadily increasing domestic consumption.”

The continent we call Africa, once an economic backwater is rapidly-transforming into an important partner of the world’s major economies, by providing much-needed raw resources and increasingly, agriculture is playing an important role there.

A major UN paper dated June 2011 remarked on the recent optimism felt by many world leaders, “The African Moment: On the Brink of a Development Breakthrough

In the words of UN Secretary General Ban ki-Moon (2011:1) at the Summit of the African Union in January 2011: ‘Africa is on the move. The new narrative for Africa is a story of growth.’ And as Donald Kaberuka (2010:4), President of the African Development Bank, noted at the opening of the 2010 African Economic Conference, there is now ‘broad agreement that an unusually strong momentum has built up in the African economies over the last decade’. This change in perception does not mean that the immense challenges faced by the continent  are being glossed over, but the Afro-pessimism of the 1990’s has clearly been replaced by a much more realistic and confident outlook. African people seem to share this view.

The answer to the question What’s up with Africa? Everything you want in a growing continent.

Please take the time to read the seminal articles that I have cited in this post. They will enrich your understanding of this coming-of-age continent.

JOHN BRIAN SHANNON

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King Ludd is Still Dead — MY COMMENT

by John Brian Shannon

Please read “King Ludd is Still Dead” by Kenneth Rogoff — at Project Syndicate.org.

Professor Rogoff’s excellent article has outlined the way our modern economic systems work and his statement succinctly describes the need for change to our present paradigm;

“…and the great economist Wassily Leontief worried that the pace of modern technological change is so rapid that many workers, unable to adjust, will simply become obsolete…”

Workers do become obsolete and must then train for other jobs. Which is VERY inefficient from the national economy standpoint. Not to mention lowering the quality of life for that worker and the family that worker supports.

I believe it is in our best national interest to enhance the ability of skilled workers to continue in their chosen career — rather then having their careers suddenly ended by the economic whims of a local marketplace.

Which is why economists everywhere should be proactively calling for the freedom of movement for skilled labour and semi-skilled labour to match local market demands all over the planet.

For just one telling example, take the people who work in high steel. These are the people who build skyscrapers, communications towers and bridges. These are highly skilled workers and it would be a shame for them to become unemployed, or under-employed on account of local conditions.

Such workers add to the knowledge base of a nation and for them to enter training programs to become bus drivers, painters, or insurance salesmen, is deplorable.

But this is what is happening all over America and other Western nations — and not just to the workers in high steel!

Rather than list all of the skilled occupations which face such calamities worldwide, (that would be most occupations which require skilled workers AND also suffer from the boom and bust economic cycle) suffice to say that many skilled workers can be laid off as a national economy tanks. What then?

Economists should be leading the charge in calling for an international treaty to guarantee and enhance the ability of skilled and semi-skilled labourers to go to where the work is, to live in that country with their immediate family until the project is completed, and then move on unhindered to the next project — wherever it may be in the world.

Most often, these workers will return to their home country when their own nations’ economy rebounds and they are again in demand at home.

Instead of staying in the U.S.A. and becoming bus drivers or shopping mall security guards, they will still be in top form — having kept their skills sharp in the interim and will have learned new techniques and practices from working in different jurisdictions around the planet. They will return with a sharp skill-set, positive experiences, they will be more rounded-out and their quality of life will have been enhanced.

This contributes more to the national knowledge base than allowing these people to drift into other employment, unemployment or under-employment during local economic slowdowns.

Economists should not be leading from behind on this, but should research and arrive at a common position which they should present to politicians and separately to the UN, in order to facilitate economic change for the better — change that will benefit all nations. If economists don’t impart this knowledge to political leaders, then who will?

Freedom of skilled labour to swiftly and easily move to where the work is — equals a more efficient world economy, better quality of life for those workers and their families and additional knowledge for the national skilled labour knowledge base.

John Brian Shannon

ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada

Let’s Just Blame the 47 Percent For Everything!

by John Brian Shannon

I was pleased to find Simon Johnson’s brilliant article in today’s edition of Project Syndicate, entitled; “Mitt and the Moochers” — the best summary of America’s economic situation that I have yet seen.

The psychology of the present paradigm is very odd indeed.

It approximates the following statement; Blame 47% of the population, the mostly blue-collar working people and taxpayers for the combined failures of the banksters, a few corporations and some inept government regulations — and then at length, when some of the 47% complain about getting blamed for a situation not of their creation, just default to calling them ‘victims’ in the pejorative sense of the word.

Oh, and let’s make the 47% pay to fix the damage they didn’t cause.

Those who were the first to benefit from the $12.8 trillion dollars of corporate welfare — are among the first ones to criticize 47% of Americans, most of whom;

“pay a great deal of tax on their earnings, property, and goods purchased. They also work hard to make a living in a country where median household income has declined to a level last seen in the mid-1990’s.” — Simon Johnson

In a general way, I take these developments as a sign that the formerly deep roots of American egalitarianism are getting shallower and we are now seeing the beginnings of a class-based society.

“the emergence of global megabanks was not a market outcome; these banks are government-sponsored and subsidized enterprises, propped up by taxpayers. (This is as true in Europe today as it is in the US.)” — Simon Johnson

All of the above are egregious enough in their own right. But what I take greatest offense at are those corporations which having made poor decisions, then line-up to receive billions of corporate welfare — whereby the government effectively rewards those organizations with heavy doses of cash for their poor performance — while corporations and companies which made good decisions all along are comparatively weakened.

It is a sure sign of the apocalypse, when corporations which invested in better decisions do not receive federal ‘reward’ money, but lesser performers do. No lasting good can come of this state of affairs… in fact, it is to weep.

John Brian Shannon

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ABOUT JOHN BRIAN SHANNON

I write about green energy, sustainable development and economics. My blogs appear in the Arabian Gazette, EcoPoint, EnergyBoom, Huffington Post, United Nations Development Programme, WACSI — and other quality publications.

“It is important to assist all levels of government and the business community to find sustainable ways forward for industry and consumers.”

Green Energy blog: http://johnbrianshannon.com
Economics blog: https://jbsnews.wordpress.com
Twitter: @JBSCanada