Editore"s Note
Tilting at Windmills

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January 28, 2008
By: Kevin Drum

A DIFFERENT LENS....I've been meaning to recommend Parag Khanna's cover story in the New York Times Magazine this week, but I'm only now getting around to it. Here's the thesis of the piece:

At best, America's unipolar moment lasted through the 1990s, but that was also a decade adrift. The post-cold-war "peace dividend" was never converted into a global liberal order under American leadership. So now, rather than bestriding the globe, we are competing — and losing — in a geopolitical marketplace alongside the world's other superpowers: the European Union and China. This is geopolitics in the 21st century: the new Big Three. Not Russia, an increasingly depopulated expanse run by Gazprom.gov; not an incoherent Islam embroiled in internal wars; and not India, lagging decades behind China in both development and strategic appetite. The Big Three make the rules — their own rules — without any one of them dominating. And the others are left to choose their suitors in this post-American world.

The more we appreciate the differences among the American, European and Chinese worldviews, the more we will see the planetary stakes of the new global game.

I'm still digesting the whole thing and may have more to say about it later. But even though I don't necessarily agree with everything Khanna says, it's a useful article if only because it's so rare to see foreign policy pieces in the mainstream media that aren't almost completely America-centric. Whatever else he does, Khanna helps readers see geopolitics through a lens that's partly American, partly European, partly Chinese, and partly everyone else. That makes it worth a read.

And on an offbeat note, I'm amused to see that the phrase "third world" has now lost its original meaning so completely that Khanna uses "second world" to refer to any country that's poorer than France but richer than Bangladesh. I wonder if this will catch on?

Kevin Drum 8:10 PM Permalink | Trackbacks | Comments (48)

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Comments

Nothing about the Kennedy endorsement?

Posted by: Boorring on January 28, 2008 at 8:16 PM | PERMALINK

Great point. Though (not having read it) I have to think it's kind of a stretch to consider European Union a superpower. You know what happened to the last superpower with Union in its name. As for China, to me it seems extremely overreaching to use the description as well.

I have always felt and (I am surprised American business as such is willing to overlook the lack of basic freedoms in China) that freedom is prerequisite for any kind of lasting positive change. More after reading the article.

-- r

Posted by: DesiPanchi on January 28, 2008 at 8:17 PM | PERMALINK

Khanna's piece is worth reading, albeit with a grain of salt.

He comically overrates China's economic power and future prospects and vastly underrates India's. Moreover, tons of people wrote very similar pieces about the rise of Japan in the 1980's, which should at least give us pause about his central thesis.

This being said, even if his descriptions are sometimes overstated and somewhat garbled, his prescriptions are still right on the money. Moreover, the issue of a new American foreign policy in a multi-polar world is something that must be taken seriously. After World War II the United States had 80% of the world's GNP. It is a good thing that this has eroded in the sixty years, because it means that large chunks of the rest of the world are less impoverished. But we can't keep acting as if we are still in the position we were in during the 1950's. In the words of two failed presidents, we should be "kinder and gentler," as well as "humbler." Khanna's vision of how this might go in a multipolar world is very important.

Posted by: Jon Cogburn on January 28, 2008 at 8:17 PM | PERMALINK

I thought it was an intriguing article, not because I agreed with all of the assumptions and arguments, but because it dared to state the obvious - America is playing a 19th century game in a 21st century world, and their will be unpredictable and probably unpleasant consequences if we don't adapt.

I don't think either party's platform has anything in it that even remotely addresses surviving and thriving in a multipolar world. Even the Democrats are reduced to bumper sticker "truisms" because anything more nuanced offers not comfort.

Americans need to realize just how different their lives may be ten years from now. You know an empire is on its way out when fear of losing what you have dominates the discussion. Adapting and thriving when the rules changes require imagination, a willingness to learn from mistakes (which requires admitting mistakes), and a good deal of flexibility. Unfortunately, we have far too much invested in our current system to change easily.

Posted by: lobbygow on January 28, 2008 at 8:24 PM | PERMALINK

With energy prices the way they are, I wouldn't count out Russia as a major player.

Posted by: Jimm on January 28, 2008 at 8:28 PM | PERMALINK

Haven't read it either, but I have to say I'm always interested in non-America-centric views. India, Russia (remember them?,) China, Indonesia, Pakistan, Nigeria, Chile, Venezuela, and a host of other places are either barely understood, understood based on outdated mindsets, misunderstood based on not-as-outdated-as-we-would-like mindsets, or just places we ignore.

I like the idea of Second World countries. It's always been absent, and the post-Soviet (or is it?) era seems to need such a thing for it to make some sort of sense. But I think putting France at the bottom of First World countries is either putting France too low or putting the qualifications too high.

Posted by: jon on January 28, 2008 at 8:30 PM | PERMALINK

" The post-cold-war "peace dividend" was never converted into a global liberal order under American leadership."

It was converted into private military contracts for Dick Cheney & Co.

Posted by: Grumpy on January 28, 2008 at 8:30 PM | PERMALINK

Even the Democrats are reduced to bumper sticker "truisms" because anything more nuanced offers not comfort.

That should be "no comfort."

And that's the problem. Americans are so bought in to our consumer culture and the assumptions about why it is sustainable, that to even suggest changes creates a panic. Labor focuses on protecting jobs/wages when they should be promoting employability and adequate support structures for the inevitable periods of unemployment that result from global competition. Conservatives create enemies and believe that our comfort can be preserved if we just deal with muslims, illegal immigrants, unions, Democrats, etc. The energy industry can't imagine life without petroleum as the primary energy source. Everyone has something to lose, but no one wants to make the first move out of the nice warm pool into the cold air of the new world. It's always someone else's problem.

I've always believed that America was somehow special -- we had the ingenuity to beat the odds. I realize now that I may have been very wrong. We're just another overextended empire that lacks the courage to reprioritize.

Posted by: lobbygow on January 28, 2008 at 8:32 PM | PERMALINK

Problems with this thesis include:
-- Underrating Russia's ability to really make EU life difficult.

-- Overrating the willingness of average European to support continued enlargement of the EU.

-- Not accepting the very different strategic situation of China, with Japan, India, and Russia on its doorstep, and the US.

-- And the basic fact that the US population is growing 1% a year while the populations of the EU and China aren't. There will be 400 - 500 million Americans in 2050 and they will be younger than the populations of either the EU or china.

Posted by: Adam on January 28, 2008 at 8:35 PM | PERMALINK

"Second world" -- I first heard it in "B Movie" (1981, I think) by Gil Scott-Heron, at 1:31.

Posted by: dr2chase on January 28, 2008 at 8:57 PM | PERMALINK

Adam,

Of course America has advantages, but it has weaknesses as well. We are not turning out the scientists, engineers and related technicians in anything like the numbers needed to meet the challenges of the new century. Our kids aren't being challenged. They lack a stay at home parent and as a result they suffer. It is getting worse every day.

We are fast becoming an oligarchy of the South American variety. While our rich have become vastly richer our middle class is sinking into poverty. Kevin has written that real wages have not increased in twenty five or more years, and I believe him. At the same time prices for nearly everything from health care to education have increased. Twenty five years ago the average family could buy a new car every 3 years or so. Now car loans run 5-7 years. Once we could save to send our kids to college. Only poor people depended on sports scholarships to help their less than perfectly academically gifted children obtain an education. Having watched them up close and personal for many years I can tell you that these days many soccer moms are not just helping their kids engage in recreation, they are praying that their child wins a scholarship to play college soccer.

What all of that means is that while some of us are doing better, our collective standard of living is, and has for some time, been in decline. Our politicians and the consolidated corporate media just aren't willing to tell us the truth. They are all part of the emerging oligarchy. They hope that like the frog put in the pan that slowly heats up, we won't notice we are being cooked.

Posted by: corpu juris on January 28, 2008 at 9:13 PM | PERMALINK

For those of us who live outside of the US, i.e. the reality-based world, Khanna's comments are simply observations of what we have seen and known for a while now. In fairrness, even the smareter Americansd have long been predicting the decline of the American empire.
The key point in all this is that democrats and repugs think alike, disagreeing only about HOW american desires should be imposed, not whether american desires are relevant or necessary any more.
E.G. on CNN before SOTU, Huckabee told blitzer that america needs to "show leadership" by beefing up its mlitary and showing the world that it won't be pushed around. blitzer, of course, treated this as unremarkable, and for most of the population on both sides of the aisle would likely agree.

Posted by: billy on January 28, 2008 at 9:15 PM | PERMALINK

While our living standard is still first class compared to the rest of the world, our political order is decidedly of a third world flavor. Our electorate is as gullible as that of the so called "third world" countries. Damn I hate that phrase "third world countries."

Posted by: rational on January 28, 2008 at 9:20 PM | PERMALINK

I haven't had a chance to read that article yet (did save it to my laptop last night though), so am curious if there is anything about the Shanghai Cooperation Council in it.

***

The Great Game On a Razor's Edge

***

Shanghai Cooperation Organisation

China, Russia Welcome Iran Into The Fold

India's Vision Blurs Over China

***

Collective Security Treaty Organization

Is the Collective Security Treaty Organization the Real Anti-NATO?

Russian Phoenix: The Collective Security Treaty Organization

Posted by: Jimm on January 28, 2008 at 9:26 PM | PERMALINK

Are we not allowed to post with links anymore?

I just posted a question about the Shanghai Cooperation Council, whether the article discusses it (I haven't had a chance to read the whole article yet), as also added some links to give more context (as well as primer on SCO), but the post never showed up.

Posted by: Jimm on January 28, 2008 at 9:29 PM | PERMALINK

Oops...never mind. I guess links are moderated now.

Posted by: Jimm on January 28, 2008 at 9:31 PM | PERMALINK

Jimm, the Shanghai five treaty organization (or whatever it's called now) has some serious fundemental issues.

The most basic of these is that the countries comprising it don't really like (or trust) each other very much. They aren't alike culturally or politically, and are competitors in many other areas.

That prevents them from working together to solve issues more significant than resitive minority population and minor border disputes.

Posted by: Adam on January 28, 2008 at 10:02 PM | PERMALINK

@corpu juris

I'm not sure what you are reacting to in my post. I'm saying nothing about sports scholarships or standards of living. A sense of malaise is not the same thing as diminished strategic power.

US hard power is unparalleled, for better or worse. No state in history has obtained so dominant a military position.

US soft power is in (relative) decline. This decline is mitigated by utter ineffectualness of the EU outside the arena of economic regulations.

The US will remain Primus inter pares for the forseeable future.

Posted by: Adam on January 28, 2008 at 10:11 PM | PERMALINK

The coming loss of hyperpower status is just one of several shocks our country is likely to endure in the coming decade or so. IMO the difficulties China are undervalued. The greatest two of these are demographic, the one child policy means China will dramatically age. The second is the massive pollution their current development model has caused. The current health problems are immense, they will soon have to expend considerable effort to redo their industrial development model.

The other things hitting the US: a transition from the consuming more than we produce (via borrowing) to paying back debt. The need to drastically change our industrial/energy economy. Massive increases in oil are going to force this upon us within a few years. Political dangers, as parties try to scapegoat each other instead of facing the truth of our decline.

Posted by: bigTom on January 28, 2008 at 10:15 PM | PERMALINK

What occurs to me after reading the very thoughtful, if perhaps speculative, article is that the wealth of nations is not transferred from the rich of one country to the rich of another. There are spectacularly wealthy people in both rich and poor nations. No what seems to happen as an empire slowly wanes is that the standard of living declines for its middle classes and that wealth is transferred to middle classes elsewhere. So it was for the UK and so it appears to be for the US.

Posted by: Martin on January 28, 2008 at 10:22 PM | PERMALINK

While our living standard is still first class compared to the rest of the world

Well, if you were to look at any other animal and wanted to compare how well different populations were doing you'd look to see how large they were on average, how disease-ridden they were, how long they lived not how many bits of tinsel they'd gathered to their nests. By any of these counts American living standard while still in the first tier, is markedly below that of most other first tier countries.

Posted by: snicker-snack on January 28, 2008 at 10:37 PM | PERMALINK

Thirty years ago I was teaching in a small town in a remote part of our state, cut off from more populous areas by a range of mountains and poor roads. The foreign exchange students we got from Europe, mostly middle to upper-middle class, were always in kind of a state of shock that they had landed in such a rural area.

But, a shock hit our students when all the foreign-exchange students in the county came together at our school for an assembly at the end of the year and described their lives in their home countries and answered questions about their future plans. What really stunned our students was the fact that none of them planned to move to the U.S.

The U.S. kids just assumed that they had the better lifestyle and that everyone else in the world envied them.


Posted by: emmarose on January 28, 2008 at 11:00 PM | PERMALINK

I've studied the European Union for years. Any attempt to call the EU a "rival" to the United States is either jingoist or ignorant. The differences between the two -- we are more willing to invade nations, they're more willing to let the state get involved in the economy -- but basically, we're the same culture. We both have the same basic vision of what an ideal world looks like. A war between the US and the EU is inconceivable.

Posted by: tom veil on January 28, 2008 at 11:12 PM | PERMALINK

Not all rivalries musts of lead to war; otherwise there'd be a heck of a lot more fraticide/soricide in the world!... It's a rival model. Or a rival variant of a model if you will. Europe would tug the blanket in a different direction - as would my country Canada if we were something more than a country clinging to middle power status with only a slightly more central location than say, New Zealand. But glad to hear of your study!

Posted by: snicker-snack on January 28, 2008 at 11:24 PM | PERMALINK

Slightly OT: Putin is learning from the Republicans. He is launching a think tank or two. Who would have thunk thinking is a growth industry?

http://www.msnbc.msn.com/id/22885961/

Posted by: rational on January 28, 2008 at 11:56 PM | PERMALINK

From the article:
"Its (Russia's) population decline is a staggering half million citizens per year or more, meaning it will be not much larger than Turkey by 2025 or so..."

OK fact check

Turkey
- 2008 estimate 70,586,256[1] (17th³)
- 2000 census 67,803,927

So assuming the same growth rate puts Turkey around approx. 77m by 2025 (it's only 17 years away)

Russia
- 2007 estimate 142,200,000 (9th)
- 2002 census 145,274,019

So assuming the same decline puts Russia around approx. 130m by 2025 (at worst)

Not sure how 130m is "not much larger than" 77m when it is more than 2/3's larger.

Halfway through the article, but it needed a good edit on actual facts. The assumptions leave a bit to be desired too.


Posted by: harry s/mdana on January 29, 2008 at 12:21 AM | PERMALINK

Whatever the value of the thesis, labeling any group of countries the "second world" is a terrible decision in terms of communication.

The whole idea of the "third world" is already confused by the way in which the original Bandung definition evolved so that it came to be essentially synonymous with "underdeveloped", and it's further muddled by the fact that the original formulation never identified a "first world" or "second world", leaving everyone to assume the first world must be themselves.

By adopting the phrase "second world", Khanna has managed to find a phrase which has no actual definition but at the same time has confusing and conflicting connotations.

Posted by: markdlew on January 29, 2008 at 1:55 AM | PERMALINK

Desi, you may have read the article, but certainly didn't comprehend it; Khanna's base assertion about China (with which I agree) says your claim is untrue.

Jon Cogburn: India has basically zero infrastructure. Khanna may overrate China, but you overrate India.

Adam: Didn't you read about how the EU seeking out alternative energy sources is at least an attempt to get the upper hand with Russia? Re your comments to Corpus Juris, when "soft power" declines enough, the decayed underpinnings causing its design affect hard power too.

I've known a fair amount of this for years, myself.

I've also seen how little both "major" political parties address it, and it's another reason why I'm not a two-party monopolist in my voting.

Call me a hardened/skeptical left-liberal instead.

Posted by: SocraticGadfly on January 29, 2008 at 2:16 AM | PERMALINK

markdlew:
I'm fairly sure the original formulation of the term "third world" was in the cold war context of the "first world" being the democratic West (Europe/North America/Australia/etc), the "second world" being the Soviet bloc, and the "third world" being the "developing" countries in Asia,Africa, etc.

Posted by: kurtosis on January 29, 2008 at 4:49 AM | PERMALINK

SocraticGadfly:

I hadn't read the article, but now I have. I still don't see what you are talking about - no mention of freedoms in the article.

Anyway, the author clearly has done his homework. But, clearly he overreaches. In spite of the historical accident that befell the US in Nov/Dec 2000 and the tragedy that followed in Sep 2001, I don't think anybody in the world is writing off America as easily as the author does.

The following quote serves to highlight (as in caricature) the facile conclusions the author reaches: "The self-deluding universalism of the American imperium -- that the world inherently needs a single leader and that American liberal ideology must be accepted as the basis of global order -- has paradoxically resulted in America quickly becoming an ever-lonelier superpower."
But, it certainly is in keeping with the current fashion to bash America. So be it.

Khanna overrates China and the European Union while underrating anybody else not fitting in with the "21st century world." Again, I am often amazed at the number of times this crops up, no monumental change automatically results from a change in centuries on the calendar and to state that somehow we transitioned to 21st century instantly and a world turned inside out is another facile simplification often used.

Overall, an extremely thought-provoking article with probably enough material to write a book - maybe one is forthcoming. Lots of meaningful advice regarding what America should strive for in the Less can be more section. No arguments with that.

Hopefully, (falling into the new century trap) having started the 21st century with an infantile zero, US can grow into a mature 21st century adult. Of course, its going to take quite a bit of doing to get back to 1999, let alone move forward.

--r

I have somehow lost my cursor, so I am hoping all that I typed above is not lost as I tab my way over to the Post button.

Posted by: DesiPanchi on January 29, 2008 at 5:04 AM | PERMALINK

The piece has a zero sum framework in the background, one that makes rising affluence elsewhere somehow a negative for the U.S. That the world would forever dance to the U.S.'s tune was always an illusion; that we should try to make it so always a mistake. The great totaliarianisms of the 20th century that forced us to serve as global hegemon were an historical abberation. We're back to a traditional Great Power world, in which none should have global pretensions. A republic, not an empire.

Posted by: Matt on January 29, 2008 at 9:32 AM | PERMALINK

It's a boring article, wrong in many aspects or at least arguable. Too many assumptions. You can make any future you want by making the appropriate assumptions. The trick is to make them realistic or highly creative, depending on the purpose of the article.

Straight-line projections are easy and usually wrong. The fun is to posit something different and how it might come about.

But all that is personal preference. There are many who enjoy their own personal future.

On the "second world" thing. It's been around ever since people were talking about the first and third worlds. It was mainly used for the Soviet Union and related states, and it's still useful for the inbetweens, which, as it happens, includes many of those earlier inhabitants.

Nothing new here.

Posted by: CKR on January 29, 2008 at 9:39 AM | PERMALINK

One of the "assumptions" with which I would argue:
"...the 1990s...was also a decade adrift. The post-cold-war 'peace dividend' was never converted into a global liberal order under American leadership. So now, rather than bestriding the globe, we are competing — and losing — in a geopolitical marketplace..."

Those weren't the 90s I lived through. I remember commenting many times during that time that what Bill Clinton was doing was positioning the USA to effectively compete in the coming world of regional trade alliances. It wasn't the 1990s or Clinton that ruined us; it was and is most certainly the effect of the stupid, belligerent, and ruinous policies of the Bush administration. They purposely set out to dismantle anything Bill Clinton had set up, ann have succeeded in eroding our political and economic position in the world.

Posted by: Daddy Love on January 29, 2008 at 10:13 AM | PERMALINK

Something we've always had an advantage for in the US was our higher education system. EU has taken the lesson from that very, very seriously.

The common market means European students can move from college to college and there's more competition for students. Europe (and Australia) are eagerly recruiting the students we're turning away with our hepped-up security. Our higher ed system used to attract the best and brightest from all the world. Now those best and brightest are starting to go to other countries -- or return home.

And anyone who thinks the US is still the most technologically advanced country in the world really needs to renew their passport and travel more. It's frightening how far behind we're falling.

As an aside, a friend recently visited Germany and was struck by the number of solar panels on houses and the wind turbos everywhere.

Posted by: lou on January 29, 2008 at 10:21 AM | PERMALINK

Desi, commenting on an article without even reading it? Well, you admitted the problem right there now, didn't you? Hello? Earth to Desi? I just told you the article, if you'd bother to read it, undercuts your statement, which may not have empirical support anyway. Faith-based foreign policies don't cut it.

Other ppl who claim "nothing new here": I agree that it may overrate China, does overrate India and that straight-line projections are iffy at best at times. Nonetheless, there's plenty new there for the two-party monopolists who won't tell American citizens what's really up in the world.

Posted by: SocraticGadfly on January 29, 2008 at 10:28 AM | PERMALINK

If Geo. W were to remain president for the next 30 years, I think that it is possible for the outcomes predicted in this piece to become fact. If our leadership is better than the standard set by W, I think that this is unlikely.

Posted by: steve on January 29, 2008 at 10:48 AM | PERMALINK

as i comic book fan i have to put in a world for jack kirby's "fourth world."

Posted by: dj spellchecka on January 29, 2008 at 10:53 AM | PERMALINK

lobbygow,

You know an empire is on its way out when fear of losing what you have dominates the discussion.

That is certainly part of it. Another part is when its economy shifts from producing raw materials to manufacturing and finally to financing.

This has happened before, of course - Spain, the UK. All superpowers in their time. But ignorance of history is a virtue in the US.

What is good for Wall Street is not what is good for Main Street, but Wall Street calls the shots. Corporations have no concern for what is good for America. Neither do the ultra-rich. Their concerns are for what is good for them.

Posted by: Tripp on January 29, 2008 at 11:05 AM | PERMALINK

steve,

If Geo. W were to remain president for the next 30 years, I think that it is possible for the outcomes predicted in this piece to become fact. If our leadership is better than the standard set by W, I think that this is unlikely.

I wish I could share your optimism. As long as money = free speech I think there is very little chance for the revolution it would take to change things.

The techniques for pacifying the serfs are well known by now. Divide them because individually they are powerless. Use proven marketing techniques for propaganda. Set them against each other. Provide them a scapegoat. Pick those who agree with you and seduce them with money and prestige. Make the changes gradually so they are not noticed.

Posted by: Tripp on January 29, 2008 at 11:13 AM | PERMALINK

corpu juris: We are not turning out the scientists, engineers and related technicians in anything like the numbers needed to meet the challenges of the new century.

And the reason for that is there aren't enough jobs for them. The problem is that, contrary to popular belief, high school students aren't stupid. They know that there aren't many jobs in those fields, the salaries have stagnated or declined, and they're being offshored.

For those who think the problem is our educational system or lazy students, try this article from Business Week (a publication of the ComIntern):The Science Education Myth.

Posted by: alex on January 29, 2008 at 11:50 AM | PERMALINK

Tripp: Excellent comments. For historical background and parallels, I strongly recommend Paul Kennedy's "The Rise and Fall of the Great Powers." He says exactly the same, in the case of both the UK and Holland, about the shift to financial services manipulation being made into the mainstay of an economy.

Posted by: SocraticGadfly on January 29, 2008 at 12:21 PM | PERMALINK

Per the science/engineering "brain drain" Alex exposes as a myth:

English-speaking Indians, Pakistanis and Chinese wil work for less in corporate American engineering and applied science jobs. It's called "internal outsourcing" for work too technical or otherwise undesirable to send overseas.

Note also to Corpus Juris on car costs: OTOH, cars last longer, and, on the consumer side, people buy more cars with the biggest engine available, more add-ons, etc. As with subprime loans, consumers are partially responsible themselves.

Posted by: SocraticGadfly on January 29, 2008 at 12:25 PM | PERMALINK

Doesn't anyone remember Bush saying (or some Bushite) that we create our own reality.

Rule still in force no matter who is President!

What is our own reality?: US rules the world;screw everyone else.

This is bound to cause some grief. Keep your heads down, puppies.

Posted by: Dr WU-the last of the big time thinkers on January 29, 2008 at 1:00 PM | PERMALINK

@lou:

actually, the US is far more technically advanced than most of the EU. First, most of the EU is now places like Romania and Poland. Second, yeah, wind/solar is more visibible in Germany, but the US is actually still a bigger producer. Third, ok, they have nicer phones. But we have bigger TVs and laptops. The difference is they haven't sold their sold to cheap chinese electronics. Living standards are MUCH better in the US. Quality of life is another issue.

Posted by: charlie on January 29, 2008 at 1:12 PM | PERMALINK

alex,

And the reason for that is there aren't enough jobs for them. The problem is that, contrary to popular belief, high school students aren't stupid. They know that there aren't many jobs in those fields, the salaries have stagnated or declined, and they're being offshored.

Put another way, why would a high school braniac want to study engineering and make thousands when he can become a Wall street broker and make millions? I mean come on, we are after all a CAPITALISTIC society that glorifies GREED.

And charlie, you'd be surprised where the big software companies are finding their programmers.

I know for a fact that there is a group in Romania doing programming for a major software vendor. Not just testing, either.

Posted by: Tripp on January 29, 2008 at 2:53 PM | PERMALINK

Speaking of the fact that picking the right assumption leads to certain conclusions here is an assumption that we ALL have bought into.

There is (or will be) a global economy and we need to learn how to compete in it.

Think about that. There wasn't a global economy before World War II. So who set it up? Who made it happen? Who benefits from it?

Posted by: Tripp on January 29, 2008 at 2:57 PM | PERMALINK

And yeah, I know I'm being a forum hog and I am probably beating a dead horse but do people know that there is a computer maker who is offshoring technical jobs but is then offering to pay some of the cost for their ex-employees to train to teach science and math?

Think about that for a minute. This company takes away the job of someone trained in science and math and then wants that same person to spend his time and money to train youngsters in the same field? How stupid do they think people are? You can say all that you want but it is your actions that define you.

Posted by: Tripp on January 29, 2008 at 3:08 PM | PERMALINK

Tripp: There wasn't a global economy before World War II. So who set it up? Who made it happen? Who benefits from it?

Interesting question. There was in fact a "first great era of free trade" that lasted from about the mid-19th century until the start of WWI. The endpoint is ironic because one of the claims for "free trade" is that economic interdependence deters war. Yet another good theory that didn't survive contact with reality.

US involvement was limited because we had high tariffs (and higher standards of living than Europe), but we did import a lot of British capital and whatnot.

Even in the 1920's we had average tariffs of around 40%, and Smoot-Hawley raised that to 60%.

After WWII Bretton Woods, GATT, etc. facilitated world trade. As far as they went, they were fine at the time. I'm not anti-trade, but I do think the devil is in the details. With the major exception of the EU, the US promoted a lot of the trade deals.

What's interesting is that before WWII US business was generally pro-tariff, and afterwards became (with some key exceptions) stalwart "free traders". Why? Easy. The rise of MNC's meant that "American" companies that would have lost out due to trade, in say the pre-MNC days of the 1920's, could now benefit from it. Half of the stuff we import from China is actually intra-company transfers. The "American" companies still sell to Americans, but now they build it using Chinese labor.

Posted by: alex on January 29, 2008 at 3:14 PM | PERMALINK




 

 

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