Friday, March 24, 2006

On North Korea, Via Social Security

Commentary by Martin Kelly
March 7, 2005

For all the rhetoric that flows from the lips of the neoconservatives, the country of North Korea poses no real risk to the physical security of the USA. Without doubt its leadership is odious, keeping a near-starving people wrapped in the type of personality cult once abhorred by the man to whom they pay homage, Joseph Stalin.

It would be a very bad thing indeed if they have developed the bomb; however, as with Iraq, it is highly improbable that they possess any practical means of delivering a weapon onto San Francisco or Seattle.

The only nations that a nuclear North Korea would threaten would be its immediate neighbours; and thus, unfortunately, the USA would be drawn into any and all such regional conflicts in the Far East.

That is entirely the fault of the Clinton and Bush Administrations’ continued, wilful and reckless pursuit of unbridled international free trade and international free markets, and the big-spending proclivities of George W. Bush.

The American economy vomits debt at the rate of nearly $2 billion every single day, the consequence of having both a fiscally reckless Congress and a President who cannot see the virtue in sometimes killing a bill. In their new found love of the entity that calls itself ‘The State’, some American citizens seem wilfully blind to the concept that having a small, low-spending government would make them personally better off, with much more stable wealth, than any scheme that forces them to invest in an uncertain stock market and that’s disguised as ‘Social Security Reform’ ever could.

Indeed, the impertinence behind the idea that a government can dictate what citizens will do with money that shouldn’t have been taken from them in the first place is quite staggering. The current proposals for reforming Social Security can be construed four ways; firstly along classically conservative lines, that citizens are able to invest their funds more efficiently and profitably for themselves than if done on their behalf by ‘The State’; secondly, that this is an attempt to shore up a stock market that’s over-exposed to a declining dollar; thirdly, it’s an attempt to help some Wall Street CEO’s get richer without the parachute of a Federal bail-out being provided for the patsies if there’s another Enron; and lastly, and this is the most extreme, George W. Bush is trying to create a large investor class of loyal Republicans – in other words, to establish political control over the stock market.

So much for free markets.

But the biggest buyers of American debt are China and Japan. Anything that compromises the ability of China and Japan to buy dollars for George Bush and Robert Byrd to spend is a graver threat than anything Osama bin Laden could dream of. That is the real threat posed by North Korea. The Far East now seems to be engaged in a cold war as cold as any ever fought in Europe, and it ill-behoves the neocons to stir up trouble on the peninsula when the economic order they have helped create in the States will be among the first casualties in any shooting war.

Part of that cold war’s realpolitik is that should China decide to implement its policy of regime change on Taiwan, all rhetoric in support of that country’s right to exist will be forgotten, just to ensure the Chinese keep buying dollars. It will be the Sudetenland all over again, but of course the neocons don’t do appeasement – do they?

Also to be factored in is the USA’s horrendous trade deficit, now standing at 6% of GDP. The Pearl River Delta has become the shop floor of the world, and China runs a net trade surplus with the USA in virtually anything with moving parts, while in 2002 the USA ran a net trade surplus with China in meat, hides and skins, scrap metal and cigarettes. In the aftermath of 9/11, George W. Bush told the American people to go shopping – the de-industrialisation of America has been so thorough that he had nothing else to work with.

But, as Larry Kudlow never fails to point out, corporate profits are an important factor in economic growth and a weak dollar makes America a great place for foreigners to invest, i.e. buy American businesses. Yeah, dude. Whatever.

At some point in the future, America’s children may be called to go to war in order to ensure that cheap imports will still undercut domestically produced goods in the shops and to pay for whatever politicians can scrape from the bottom of the pork barrel.

Opponents of the Iraq war said it was a war about oil. That was not true. However, there would be only one way of describing what any American war with North Korea would be.
It would be going to war for Wal-Mart. And one day George W. Bush will take his place in economic history as the President who made the soybean America’s most valuable export.