Prelude: Follow the Money

Capitalism Requires Sound Money

Yalta Was About Money

1. Post WW 2 American Hegemony Led Prosparity, Stability, Populism

2. Considering Past Mistakes

3. Factors Indicating
a New International Order

Compiler W. Antoniotti  9/16/19       

Prelude:

1. Stability Ends, US Dominates
US holds all the Cards.

2. U.S Liberal Foreign Policy Failed

Need Isolationism, Offshore Balancing,
Selective Engagement

3. Responding to China: A Plan
Strategic Competition Replaced Strategic Engagement, Rules TBD

4. Trump's Trade War Becomes Geopolitical War and Foreign Policy

Return to Geopolitics 

Thanks to Geopolitical Experts
G. Friedman     P. Zeihan    K. Rudd  Y. Smith   

J. Mearsheimer  S. Wilkin  H Brands

Prelude: Follow the Dollar

Capitalism Requires Sound Money

The Gold Standard ruled geopolitics until the mid 20th century.

The steam ship had dramatically increase globalization. Gold backing put a limit on printing money. Open capital and current trade accounts were the RULE.  Goods and paper currency flowed between countries.  Wages were the adjustment mechanism of economic activity with the resulting inflation/deflation determined by a countries gold supply.

Two Country example:
A=high imports, gold flow out, less money,  contraction, lower wages and prices.
 B= high exports, gold flows in, more money, expansion, higher wages and prices. Imports fall, exports fall.
Slow adjustment accepted, but fast and often means employment/political dissatisfaction.
 Think Karl Marx

Brittan had all the gold and ruled capitalism. The US grew economically, took control of gold, and after WW 2, ruled capitalism. Economic growth created pressure on US gold reserves so, in 1970, Nixon gave up partially gold backing of the dollar. This US devaluation ended the Brenton Woods monitory order.

A Dollar Standard evolved as the US had enough foreign financed consumer/ business demand to supply the dollars needed to finance world trade. Open current accounts allowed dollars to piled up around the world. But lessons from the 1930's kept capital markets closed. This kept investment home and allow for high wages. Making a profit would require increase margins.

The goal of Brenton Woods was creating jobs and economic security. US would spend and the dollars would come back to the US as foreigners bought US assets, products, and debt. This led to wage/demand led growth rather than the earlier profit led growth.

Many currencies were pegged to the dollar and in doing so, the new dollar standard had a gold standard affect. Under both systems, a country could lose monetary/fiscal control of their domestic economy. Earlier, the Great Depression caused countries to try and increase trade by devaluing their currencies. In doing so, they reneged on their monetary commandments. Mark Blyth - A Brief History of How We Got Here and Why

 

 

Pegged countries learned from the Asian crisis that protection from dollar value fluctuations required holding high excess dollar reserves. From the late 1990's to 2014, dollar reserves piled up in developing countries.

As world trade grew, the need for dollar reserves grew. The US bought much with borrowed dollars increasing their trade deficit. Dollars flowed back from around the world as everyone made loans to US consumers, business and governmnets-especial when geopolitical trouble increased. The biggest traders was the US and China. China, like Japan before her, worked hard, built good stuff, sold it cheap to the world, and lent their receipts back into the system. Now, a trade wars might end the Dollar Standard with no replacement in sight.

Meanwhile, an 11 nation currency Euro  controlled by Germany was created in 1999. Germany kept a tight reign on inflation. Her banks lent to much, especially to the PIGS of Southern Europe. Members who did not manage budgets well soon got into trouble. This coincided with a few European bank controlling worldwide dollar trade flows using Euro's, not dollars, as collateral. But contracts required payment in dollars and the banks, wanting to maximize profit, had borrowed dollars very short term. They were in trouble when the Great Recession created a need for dollars and rolling over dollar loans became impossible. The FED, as lender of last resort, created irregular dollar obligations, first used in the in relation to the Great Depression, to supply liquidity to the world's financial community.

The problem: Unlike the US, Germany believing in austerity plus forced debt repayment of failing countries and their banks. Cyprus, a very small economy was used as an example. It was immediately devastated.

Germany was also slow to help. Illegal immigrants began arriving throughout Europe, and Populism resulted. Interestingly, Populism had developed in the US where, ironically, illegal immigration had been falling.

Note: FED owes the dollar obligations to the Treasury and may or may not repay them. Since 1776, a strong US economy has allowed her to refinance debt. Cost, Interest Payments have been low.

Born in 1944, a child of WW 2 debt, I have never repaid it. No one has. See 20th Century War Geopolitics

Yalta Was About Money

Beginning of a New Post War
 International Geopolitical Era

1648 Peace of Westphalia
 Sovereignty of participants over their lands, people, and agents abroad was established. It was Broken by European Colonialism.

1941 Atlantic Charter 
No spheres of influence allowed, territorial self-determination required.

First problem came immediately as Soviets did whatever it took to keep Communists in charge of the buffer state Poland.

The US responded with the Truman Doctrine. Eventually US/Britain sponsored covert activities would try to slow Communist advancement. One such activity was the September of 1953 when GB/US sponsored then  Iranian Coup to keep control Iranian oil/profit.  Unintended consequences followed.  First came the seizure in 1979 of the Tehran U.S. embassy by Militant Iranian students. Then, 20 years later, the 9/11 Trade Center attacks which made many American feel insecure. "Have a good day' was replaced by stay safe."

Continuing Problem

The US would try to maintain its sphere of influence throughout Latin America and stop Russia and China from creating there own spheres of influence.  Similar geopolitical situations often cause war.

 

 

1973-2003
Neoliberal Economics/Politics
Would Adoption Maximized Human Welfare?

A 1973 U.S. orchestrated Chilean Coup had set up a new government to follow neoliberal Chicago Boys privation with government disinvestment and except for copper, resource ownership would not change.

Unites States controlled IMF development programs followed similar guidelines in support of a US International Trade Hegemony. But more was involved as independent leaders like 1970's Margaret Thatcher and Deng_Xiaoping embraced neoliberal economics. In response to Great Recession budget and banking problems Germany required similar neoliberal economic austerity requirement. Unlike the US, they austerity, not economic growth was required to end the recession.

Iraq's Economic Restructuring Agenda was issued in September of 2003 by Paul Bremmer of the Coalition Provisional Authority. Many felt these dictums were illegal under the Hague and Geneva conventions so an interim sovereign government was created. It had many neoliberal economic requirements. Key among them were 1) Private Property for everything but oil 2) Free Markets with unlimited Foreign Direct Investment/Ownership 3) Unregulated International Trade 4) Unlimited Profit Repatriation. Entrepreneurship was fostered by guaranteed Intellectual Property Rights and a conservative Flat Tax.

US Hegemony 3?
Hegemony 1 was designed to meet Cold War needs with US by domination of global manufacturing trade. Domination resulted in large profit and extensive worker wage gains eventually began to diminish because of Tiger competition. 

 

 

 

 

 

 

 

 

Liberals did not support labor and union buyback enhanced US ability to compete at the expense of wage growth. To protect profit, conservatives expanded neoliberal political activities.

 

First goal was controlling the Supreme Court by financing conservative law
students to create a pool for choosing conservative federal judges. Then corporate America turned away from local, less profitable US manufacturing, began outsourcing, and invested in overseas production. Corporate financing activities were also expanded. Finally, Chairman Greenspan took charge of the Federal Reserve. Keynesian dominance was replaced by neoliberal free unregulated market economics. Source The Power Grab Begins

Hegemony 2 made Wall Street more important than Main Street as conservative presidents Reagan, Bush I and Bush II combined with business friendly Clinton to provide government business/financial industry support. Obama was also Wall Street friendly. Neoliberal economic dominance was complete.

The stage was set for the public to pay for inevitable market failures caused by Less Financial Regulation. A Great Recession, US Financial Crisis was followed by a European Financial Collapse. Then the FED paid the entire bill by created money.

1. Post WW 2 American Hegemony Led to Prosparity, Stability, and Populism
 Centuries Always Consist of Eating, Drinking, Loving, Hating
 Source: History Repeating: Why Populists Rise and Fall video Sam Wilkin

1-1 Great Wars Led to a U.S. Managed International Order
 1-2 Six Weeks that Changed the World
 1-3 Nationalism Was Back		 1-4 Why Populism Develops
 1-5 Future of Geopolitics
 1-6 Germany wanted high employment, low inflation, high saving
1-1 Wars Led to a U.S. Managed International Order

A. New Boarders especial in the Middle East

B. Europeans Faced a Moral Abyss caused by believing she was the world's most civilized people and then killed 100 million people.

C. Nations must be controlled before they destroy each other.

D. Multiple International Organizations were needed to create a unity not coming from the League of Nations. Munich based Political Organizations—NATO, European Union ...and Financial Organization —IMF, World Bank...were to do just that.

Success resulted as there were no major world military conflicts for 70 Years. Moral Justification was provided by this success, organizations represented no one.

 1-2 Six Weeks that Changed the World

A. Russia invaded Georgia on 8/8/08.
1. Political Organizations did nothing.
2. Russia was back and trouble was brewing.

B. Financial Organizations failed to stop Lehman Brothers
    and resulting in the Great Recession.

C. Self-Ruling Technocrats failed to understand:
1. U.S. [politicians] allowed experienced financial crisis technocrats
    to handed out pain.
2. Europe, needing approval of many national central banks,
   was very slow to make credit available.
3. Germany wouldn't forgive loans and
    Greece did not want to pay loans.

1-3 Nationalism Was Back

A. Greece Unemployment of 20% was not German pain and
 low 6% unemployment in Germany was not Greek success.
Reality had changed, unity was over, Euro members had returned to being different countries.

B. Polarization was dramatic within countries as
Technocrats who ran the government and finance did OK
except where austerity force government layoffs. i.e. Greece

C. European Union was usurping the future
of countries with very high unemployment.

D. Technocrats fail to see the problems and they
attacked politicians trying to protect the people and
 their nation, plus they limited liberal central authority solutions.

E. Hatred, anger and outrange would have to be dealt with.

C. Leader to Protect People from Failed Elites Were Popular.
Campaigned against system
Made people feel like responsible revolutionaries
Liberals and Conservative may combine to combat system

D. Elites try to impeach leader rather than fix fail systems.
Think Trump

E. Sundry
Populists Tend to Win When Turnout is Low.
Brexit was an abnormal by having high turnout.
Populist Conservatives are good at building Coalitions.
Populism, more prevalent before WW 2, has returned.
Populist are not policy dependent because success requires an
anti-system messages.

 		1-4 Why Populism Develops
 History Repeating: Why Populists Rise and Fall video

A. Mainstream Elite Establishment Failed and Must be Punished
US Financial Crisis Unpunished, Bank Failures in Europe unpunished

B. New Communication Creates New Power Source
Those in Power Unable to Keep Control
Associated with Communication Innovations
1. Printing Press - Protestant Reformation
2. Radio - Hitler
3. Cassettes - Iranian Revolt
4. Fax-Soviet Union Dissolves
5. Social Media - Philippine Revolt. Brexit, Trump, Flash Mobs

1-5 Future of Geopolitics
Dr. George Friedman, Geopolitical Forecaster

A. The 21st century will be politically volatile,
more like the 19th century than the second half of the 20th century.
 B. World is no longer "hard wired" to a liberal international order.
C. The French Revolution and Enlightenment were correct.
The nation state is needed to bind people together.
 D. World will revolve around nations.
1. US. with 25% of the world economy, even when acting stupidly,
still must be considered.
2. Russia, dependent on oil prices, will again continue her decline.
3. China will begin more normal economic growth but must deal with
a billion poor people.
4. Germany is trade dependent in stagnating world,
continues mercantilism, will not lead, causing Euro trouble.
5. Japan has third largest GDP, a stable society, a strong Navy
and is the Asian power.
6. Russia who faces an equal Turkey, hopes for coexistence,
and hopes not to react.
7. Poland, fastest growing European economy, must be considered.

1-5 End of Two Myths
A. Multilateral Organizations Solve All of Problems.
B. Harvard Graduate Managed Organizations Solves Problems.
 Source The Creation of a New International Order 20 min video

 

 1-6 Germany wanted high employment, low inflation and high saving from the editor

To increase employment German favored industry using employee givebacks to help companies compete. The nation's savings was increased by increasing exports and her trade surplus which could not be spent by employees because of employee givebacks.

Unemployment was lowered with job sharing.

Low inflation was maintained by Germany controlling the European Central Bank. Commercial Banks, especially in Germany, made cheap loans to poorer countries where loans were used to increase consumption, employment and short-term political stability. They could have chosen capital accumulation and increased infrastructure investment. The resulting consumer debt, especially in housing, caused EU trade imbalances.

German savings increased because of her balanced budget.

Correcting imbalances was a choice between loan forgiveness
and austerity. Brussels chose austerity with no loan forgiveness.

Problem: Germany created debtor EU to absorber her surplus and balance the Euro's current trade account. Kicking the can down the road only delays loan forgiveness. Economic help for debtor Europe is required or EU evolves into a trading union with more than one currency.

Brussels is dead or the European is dead; choose one.

2. Considering Past Mistakes

West Did Not Managing Post WW 1
Social Economic Change Well

Source by Yves Smith  Summarized by Walter Antoniotti

Europe had enjoyed nearly 100 years of peace.

One reason was that after Napoleon's march through Europe, the 1815 Treaty of Vienna gave top priority to how various territories were to be ruled.

Second, the new liberal order, powered by the Industrial Revolution, was producing improved and apparent domestic prosperity which reduced the attractiveness of war.

Third, British and European states territorial ambitions and colonial land grabs offered more upside with less risk to manpower and treasure.

By Anatol Lieven. a professor in the War Studies Department of King’s College London and a senior fellow of the New America Foundation in Washington DC. See Anatomy of American Nationalism republished in September 2012. Originally published in The National Interest on December 22, 2018; cross posted from open Democracy

World War 1 caused some 16 million dead Europeans, two great European countries were destroyed, and others crippled. It engendered Communism and Nazism scourges. It led to a Second World War and the near destruction of European civilizations. Political and cultural elite were swept away for leading their countries into war which were never worth the potential loss.

Western allies portrayed the war as civilizations against German barbarism. Today one can certainly say the British and French Colonial Systems were better than that of Germany; but one must admit that Algerian subjects of the French Empire or African subjects of the British Empire, might have a different perspective. Also, the Russian Empire made for an pretty odd member of the supposed alliance for democracy.

The real 1914 barbaric threat to European civilization was the ruling establishments. It came from decades of social and economic changes which generated hatreds with tensions building within European societies.

Before 1914, the European conservative elites encouraged aggressive nationalism to divert mass support away from socialism. To preserve the old European order, they moved in a most disastrous direction.

Today, the new cold war against China and Russia represent grave threats toward the conservative western establishment. A new geopolitical direction is developing. It is comparable to one taken in during the early 20th century.

 

This new cold war is serving as a distraction from a vastly graver threats. Western political elites are unwilling to address threats which would involve radical changes to their ideological positions. Their obsession with their own righteousness and civilizational superiority is leading to moral civilizational fantasies similar to those that helped bring on the 1914-18 disaster. This is liable to engender distortion of judgment which, in the blindness of crusading frenzy, destroys nations and civilizations.

Ironies abound: The US is  leading a new “league of democracies” against an “authoritarian alliance.” It includes the anti-Chinese participation of Vietnamese communists, the murderous Filipino authoritarian populists, and above all, the Indian Hindu neo-fascists. Authoritarian and cultural nationalistic member Poland is bitterly anti-Russian. Add France in 2022 if she elects a president from the National Front. 

Diverting domestic discontent into external hostility rarely works because the factors that created the discontent remain unchanged. Does anyone who has interviewed the “Yellow Vests” in France seriously think that they are acting as they do because of manipulation from Moscow? Does anyone who has seriously studied the crisis of the white working classes in the USA believe they have voted for Trump because they have been swayed by Russian propaganda?

A More important link between Russia and America is the rise of Putin and Trump. Another is the rising death rate among working class males since the 1990’s in Russia and recently in America. An additional cause is the diseases and the addictions fueled by economic, social and cultural insecurity and despair. In Central America, a far more terrible version of these pathologies is driving millions of people to seek US asylum. This is driving U.S. radicalization. Yet total US aid to Mexico in 2017 was less than that to Ukraine or Egypt, and a fraction of that to Afghanistan. Does any truly responsible national establishment neglect its own neighborhood in this way?

Climate change threatens damage greater than anything the Chinese or Russian governments could or would wish to inflict. Yet media-politically generated hysteria over a minor Russia/Ukrainian clashes in the Sea of Azov could overshadowed close US-Russian co-operation to block the latest UN report on climate change.

There are real threats from Russia and China (notably trade) where the USA needs to push back. But these are limited issues which are negotiable or containable. They do not justifies restructuring western national geopolitical strategies and institutions around a new cold war.

If a 1956 Khrushchev had not transferred Crimea from the Russian Soviet Republic to the Ukrainian of the Soviet Republic, everyone would recognize the Sea of Azov as Russian. This issue would not even exist. In the South China Sea, the USA is pushing back against China in the name of an international Law of the Sea which the USA itself does not recognize. If the Chinese were ever so mad as to use their position in the South China Sea against US trade, the US Navy could block Chinese trade to the whole of the rest of the world.

Serbian nationalist triggered WW 1. Most British soldiers who died in the First World War had never heard of Serbia or of Sarajevo. In the name of God, let us not make this mistake again.
3. Factors Indicating a New International Order

"Source The Creation of a New International Order
 Dr. George Friedman, Geopolitical Forecaster 20 min video

1. The 21st century will be politically volatile,
 more like the 19th century than the second half of the 20th century.

2. World is no longer "hard wired" to a liberal international order.
    
3. The French Revolution and Enlightenment were correct.
The nation state is needed to bind people together.

4. World will revolve around nations.
 a. US with 25% of the world economy, even when acting stupidly, still must be considered.
b. Russia, dependent on oil prices, will again continue her decline.
c. China will begin more normal economic growth but must deal with a billion poor people.
d. Germany is trade dependent in stagnating world, continues mercantilism, will not lead.
e. Japan has third largest GDP, a stable society, a strong Navy and is the Asian power.

See Trump's New Political Era?

f. Russia, who faces an equal Turkey, hopes for coexistence, and hopes not to react.
g. Poland is fastest growing European economy
and must be considered.

5. Old Assumptions/Mistakes
 1. Multilateral Organizations Solve All of Problems.
2. Harvard Graduate Manage Organizations Solves Problems. See The Next 100 Years

Related Materials

1. America First' has won, by Robert Kagan at NYT.

2. Saving Liberal Democracy from Extremes, M. Wolf

3. The Far-right Book Every-Russian General Reads
Dr. Hal Brands on American Grand Strategy in an Age of Upheaval

Post 1989 Changes
1. Erosion of Western Primacy, especially Western Europe's Military
2. Return of Great Power Competition, especially to control regional hegemonies
in Eastern Europe-Russia, in Asia-China, in Middle East-Iran
3. Ideological and Geopolitical Revisionism-Liberal Democracy vs. Authoritarianism
with each political economic system feeling the other is trying to destroy them.
4. Correctly predicted post war upheavals are intensifying as
Bosnian turmoil was solved whereas Syria's continues. 
5. Uncertainty of Western commitments to Cold War commitments.

Trump wants to win the economic competition but

has no Ideological or Geopolitical preferences.

 

Prelude: Designing a Successful US Foreign Policy

Steps to Determine What We Want

1) Fixing the Political Party System at a time when political parties are
in a reinvention process last happened in the 1930's. It took 12 years.

2) Need a Conversation on replacing the Breton Woods trading system
1. It was designed by the U.S. to win the Cold War by fostering world trades.
    a. U.S. would open her markets providing friends with export revenue from the U.S.
    b. Resulting U.S. trade deficit would provide the world with dollars, a de factor world  currency.
    c. U.S. Navy would protect trade routes for all her friends.
    d. U.S. would have complete freedom when fighting the cold war.

3. Replacing Brenton Woods began after the Cold War  by Bush 1 but
    it stopped when the American voters elected domestic President Clinton.
    Add Bush 2, who listened to the neocons and went after a few terrorists, and
    Obama, who knew a lot, but really failed to coordinate anything.

4. Set a Foreign Policy Goals

Requirements for Success

Productive geography protected from outside forces.
U.S easily leads the world. Other major powers geopolitical factors are poor, if not terrible.

Economically Favorable Demography for high growth requires
many younger members spending, mature members earning/investing and few older members.

U.S. doing well relative to almost everyone as baby boomers had Millennials.

Financial burden of the U.S. relatively small because baby boomer social needs slowly erode.

China, Japan, Canada, United Kingdom, Germany, Italy, and Spain
all have the highest tax paying work force they will ever have.

Only Spain and GB are not quite past the point of Demographic regeneration.
The others are "terminal countries."

Few countries, other than maybe the French and New Zeeland, have a favorable demographic

Most require imported energy and have reliance on export growth.

This analysis was reported in Accidental Superpower.

 

1. Stability Ends, US Dominates

US Goals

Earn agreement of countries that are cultural and politically similar
Canada, New Zeeland, United Kingdom and probably Mexico.

Earn agreements from a next group countries needing little maintenance.
France, Japan, India, Thailand and some other southeast Asian countries 

U.S. strong and growing Hegemony allows a Take It or Leave It attitude toward
Germany, China, Russia, and Korea 

U.S. Geopolitical Position is First

1. Largest strip of high-quality arable land in the world
2. Most Navigable Waterways in the world
3. Control best parts of a continent with moats on either side and open spaces to the North and South
4. If U.S. trading system breaks down, US suffers the least because it exports a small portion of GDP.
5. Trade is how we subsidized the Global system so getting NAFTA correct is important.
6. People thinking China is the next super power are "delusional"  as she has none of the above advantages
    and she has only managed to hold together for 300 years. As her position continues to weaken,
    she will enhance her totalitarian controls.

See What Will Matter Are Water, Energy, Soil and Food--and a Shared National Purpose

Expected Global Conflicts

1. Nuclear armed Russia, a seriously terminal country, is our biggest fear.
We e should keep relations reasonable positive.
She is an economic and demographic disaster waiting to happen.
Within 40 years will probably not exist as a country.
Bush 2 and Obama's Russian relations were criminally mishandled.

2. Korean nukes are a worry for South Korean/Japanese
because bombs are only a delivery problem away.

3. China is Japans concern
U.S. need to contain China will diminish as US withdraws as world's protector.

4. Iran is the concern of Turkey and the Saudis.  Editor's Note: add Israel
 

5. Nukes will be used, but not against the U.S. as no one is close
to our military power except Russia, which should be a concern.
 

Potential Conflicts
2. Persian Gulf between Iran and Saudis

3. Eurasian Fringe War with Russia vs. Germans, Poles, Scandinavians and the Brits

4. Naval conflict between China, Japan, S. Korea and Taiwan as they try to
    keep themselves fueled as middle east and Russian supplies dwindle.

See Are We Repeating Post WW 2 Mistakes video

Recent Changes

1. Events unfolding fast because Obama did less than expected.
He appeared to not want to have conversations with people.
Near the end he knew how important factors were interconnected.
How China's economy works, why Russia interfered with the election system,
the need for a solar energy backup and the design for a good tax policy.

But, Obama did not care enough to have related policies.
He had understanding but no policy.
Trump has no understanding, but a commitment to some policy.
Which is worse?

2. U.S. disengagement, which began before Trump, has forced a acceleration of world player adjustments.
a. Brexit and the European Union disintegration.
b. China's need for continued world growth is dependent upon U.S. managing World security.
c. If possible, Xi will cooperate with U.S. as without free trade,
    China will fall apart or hunker down to protect the Communist Party.
d. What could trigger a disastrous Chinese credit adjustment. P. Zeihan - 2019
    It is too late for slowing the expanding credit bubble. Editor's Note: In 9/19 they eased again.
    Helpful demographics have peaked and will be negative in 5 years.
    One Belt is a place to dump excess productive capability as was exporting cheap consumer goods.
   
    Internal Causes:
    Demographics over the next 5 years will cause current economic disinflation to
    morph into Japanese style deflation which will affect asset prices and political stability.

  External Causes:
   Russian's expands local controls faster causing a world energy crisis.
   Saudis, Turkey or Israel and Iranians go at it causing an energy crisis.
   Japan, given the recent trade deal with US is signed, tries to reinsert local controls during an axis crisis.
   If US changes the rules, you can pick your crisis Think Trump

Predictions
    China can not replace US hegemony because, as a mass importer of raw materials
    and exporter of finished goods, she is too dependent on others.

    Expansion would require taking on Japan's modern navy with almost no chance of success.

    Current lock down against corruption was to eliminate possible political opposition.
    If necessary, China's Communists will leave global community to maintain power.

 
 

2. U.S. Liberal Foreign Policy Failed

from The Great Delusion by John J. Mearsheimer video

Definitions
Liberalism: Focus on individualism and makes allowance for social contracts.
All have inalienable rights, it is universalism.
Nationalism: Focus on social groups, tribalism, and make allowances for individualism.
Realism: Focus on the top of the geopolitical food chain, the state. Balance of Power is
a realist's only concern, political systems are irrelevant, takes a black box approach.
Spreading liberal democracy using a liberal foreign policy has not been possible.
Defensive Realists seek geopolitical balance by limiting aggression and perpetuating the status quo.
They were against force in Vietnam because balance of power was not at stake.
Nationalism, "the" most powerful geopolitical doctrine, made US Vietnam success problematic.
Unipolar World after collapse of Soviet Union

Goals of U.S. Liberal Middle East Foreign Policy
 1) Spread Liberal Democracy by toppling dictatorships
2) Build Open International System
3) Expand International Institutions
4) Human Rights protection

Analysis of U.S. Liberal Foreign Policies
 Middle East had few successes because of Arab Nationalism
Zone of Liberal Democracies created by expanding NATO eastward
soured important positive relations with nuclear superpower Russia, who
will be needed to balance the power of China.
Western assistance Georgia and Ukraine resulted in Russia reentering geopolitics.
Drove both Russia and Iran toward China
US Ignored balance of power concern by creating a Goliath.
National Security State requirements needed to expand Democracy around the world has
led to the bypassing of Congress and the degradation of individual liberties.
 A Foreign Policy aimed at creating a Liberal Hegemony has failed.

A Realist Grand Strategy
Isolationism to avoid foreign entanglements
Offshore Balancing uses regional powers to check potential hostile power.
Selective Engagement limits US engagement to events affecting security and Prosparity.
 
 

3. Responding to China: A Strategic Plan

Continued from Understanding China
 Source

Preface
U.S. Government Not Designed for Governmental Grand Strategies
a. Separation of powers requires compromise
b. Many want limited government
c. Private Sector Renewals solve problems
d. Exception After WW 2
1. The Long Telegram described a very aggressive Soviet Union.
2. Result was a 40-year multi-administration coordinated policy of containment.
 3. Containment worked-The Cold War ended peacefully.
    Fragility of both Soviet Economy and Society caused implosion from within.
    China requires a very different strategy.

Trump Would Say We Have a Strategic Policy
National Security Strategy issued in 12/2017
National Defense Strategy issued in 1/2018
Future of US Defense Manufacturing Industry issued mid 2018

US Strategic Plan: Strategic Engagement Replaced by Strategic Competition
 a. Engagement-you engage and one side backs down.
b. Competition is more adversarial but no guidelines given.
c. Rules to be determined

Analysis
 Washington's Latest Attitude Toward China makes any kind of convergence of societies difficult.
A move toward McCarthyism in U.S. and Australia is not good Foreign Policy.

Geopolitical Factors for Next Four Years
 a. China under Xi Jinping "will resist any forces: economic, social, political, or foreign
    which in any way challenge the long-term survival of the Communist Party.
b. Strong-man, long-time party member, and assistant Vice Premier Li Keqiang
    has moved toward markets which rankled conservative politburo bureau members./p>
c. Decoupling
    Signs
     Trade: Phase 1 of  agreement moving forward
    Foreign Direct Investment:
    US in China stable at $15 billion/year and stock of $250 billion.
    China in US down substantially to about $2.5 billion/year.
    Technology: US leads in semi conductors and China leads in 5G.
    Capital Markets
    $5 Trillion interconnection important to both.
    China's recent negative trade balance means more market liberalization because of increased dependency
    Geopolitics: China Under Xi Jinping
d. Managed Strategic Competition  source at 20 min mark 1/2020 a response to Destined For War

    1. Strategic Engagement is possible
        Decoupling is not happening as forty years of trade and student engagement,
        though slowing, continues.

    2. US-China relations different than US-USSR Cold War relationship
        US Fundamental Ideological Chasm with Russia non existent with China.
        US had no economic engagement with Russia while US/China are substantial trading partners.
        US vs. Russia proxy wars were fought through third countries in Latin America, Africa...
        Terms like Cold War 2 can lead to contingency plans, operational plans, the creation of reality.

    3. Requirements
        Balance of Power perspective is required to keep US anchored to reality.
        China sees the world through a lens of power.
        Red lines must be determined and privately communicated by Two Leaders
        Mutual Beneficial issues that are difficult but plausible should be define and negotiated.
        Example: Denuclearizing North Korea
        Global Cooperation on Public Goods should be advance regardless of internal politics.
        Example: Climate Change
        Ideological issues should be resolved by success.
        If Liberal Democracy can not win the global battle for supremacy
        with state managed authoritarian capitalism, so be it.  


 TCrump's Trade War Becomes a Geopolitical War
Editor W. Antoniotti 9/21/19

Part 1 Summary

Steve Bannon and Kyle Bass on China Trade Deal
      Both agree that the move to confrontational capitalism is warranted.
 Tom Friedman agrees with Bannon on the seriousness of issues.

Parag Khanna: Google’s pulling Huawei's Android license is 'intimately connected' to US-China trade war.
 

Editor's Prelude:
Trump wants sacrifice to possibly protect against a possible Chinese Hegemony replacing US Hegemony.
Democrats want sacrifice to possibly protect against a possible climate change.
Historically, the US has delayed sacrifice until the last possible moment.
 

Part 1 Trump's Will Not Blink!

His objective is to enhance political awareness of China's Geopolitical Potentials which was neglected by Clinton, Bush 2, Obama/Bidden. They all neglected workers and blinked to China's business model because they wanted to Avoiding Thucydides Trap.

Kevin Rudd feels Xi Jinping ability to consolidate more power is partially based on fulfilling a “China Dream.”
He can’t back down.

Trump's China Trade Strategy according to Bannon:
Forced an Armistice in a long existing China instituted Trade War.

Trump will use, for the first time, a Whole-of-Government strategy uniting Democrats and Republicans
to create the structural changes necessary to integrate China into the Democratic Free Market economy.

Bannon feels Corporate America, the Communist Party's lobbying firm, and
Wall Street-China's PR firm, will use pressure to limit Trump's Geopolitical agenda.
Pressure will also comes from Republican free traders.

Kyle Bass agrees and points out that  corporate America tried to limit the activities
of the US Committee on Foreign Investment. (CFIYS)

The Other Side of the Story

In the 2016 Democratic Party nomination battle, Sanders did well in this area while Hillary flip-flopped.

Is this a Geopolitical War?


After WW 2, US strategy to contain communism was followed by every administration until RR decided to negotiate and he also closed the deal.

Does Kyle have a vested interest in protecting U.S. investors?

 

2. China's Main Political Economy Goal

Keep Communist party in power

Control Asia's Political Economy with One Belt, One Road expansion using
Chinese financed credit followed by user country default and dependency.

5G superiority will complete a made in China 2025 policy.

Trade will be used to force US companies out of Asia.

China's control program names have been changed to counter
Western apprehension concerning Chinese dominance.
 

Give a Point to Bannon, but

US Capitalistic Oligarchs
have always had control of power.

U.S. Control America's political economy using a Managed Constitution.

Is Inability of Democracy to equitably apportion income finally inspiring change?

3. Political Economy China vs. U.S.

China has a suppressive, controlling, totalitarian dictatorship that uses new technology like facial recognition to accomplish their geopolitical aims. To maintain status quo communist party oligarchs implement reforms to subdue opposition, and to protected the party from repudiation/retaliation.

US differs: rule of law, a constitution, free Speech, free religion, free Enterprise, and Markets Capitalism.
Fareed Zakaria thinks tying America's principle to Trump's attacking Huawei is important.
 Parag Khanna feels Google’s move to pull Huawei's Android license is 'intimately connected' to US-China trade war.  It will just forces Khanna to develop her own operating system. Apple, a big player in China, will must diversify in Asia or continue to lose ground. The trade war and export controls will slow and maybe reverse the progress of some US tech companies while encouraging China's 2025 efforts. Rearranging supply chains will be easy for China.

Steve Lavine "Etched into Chinese policy is the unforgettable humiliation of the Opium Wars of the 19th century, when the U.S. and Britain forced China into far-reaching concessions." axios.com 1/16/19

Founding fathers Feared Direct Democracy so their control began early, required  compromise with a watchful eye on continuing the Power Grabs.

 
China is using free trade with a dash of Predatory Capitalism combined with mercantilism to gain control of Asia.  England used ruthless East India Company profits to finance her colonial America empire.

 

 

US managed the Carrabin under the guise of the Monroe Doctrine. Business Oligarchs, helped by a succession of Presidents, took economic control while showing little consideration for individual wellbeing.
Trumps wants structural changes to negate China's Six Control Tools.
Forced Industrial Transfer
Nontrade barriers
Currency manipulation
Cyber intrusions
Exporting deflation
State Owned Enterprises, accepted their ascension.
See Where Tom Friedman Agrees With Trump's China Trade Approach		 U.S. Controlled using a Post WW 2 Dollar Standard because she had enough consumer and business demand, financed by debt, to supply dollars for world trade. Dollars came back to the US as foreigners bought US assets and debt. US military defense mad the system possible.

Bannon: China must be forced to make changes.

Tom Friedman agrees with the severity of the problem.
He worries about the politics, and corporation from Europe
Fareed Zakaria worries that a bipolar world slows globalization.

Tom preferred
1) a signed TPP because it was 40% of Worlds GDP and designed to protect IP
2) getting Europeans on our side and not to have bothered with steel and aluminum tariffs, Fareed agrees.
3) Negotiating in secrecy as we had the most leverage and our success would embarrassing Xi.
Fareed worries developing countries might choose Huawei veer the US because it is cheaper and they have a fear that China and US both have a snooping advantage.

Kevin Rudd As US China trade negotiations seemingly enter an end game, there's one problem with Trump's "art of the deal". He prefers face to face brinkmanship. But there's no way Xi would go to Mar-a-Lago unless the deal was already done.  twitter 3/19/19

All of Asia exports, not just China's, are deflationary.

Steve, a member of the committee on  peril, thinks controlling China requires an effort equal to that of controlling Russia. An equal playing feels for Globalization is his goal.

 

Conclusion: Status quo in three stages
 
 Under Mayo politics ruled.
Under Ping, economic reform ruled but was modified when resulting stress
led to less harmony, slower growth and sluggish government.
Under Xi politics is back in command.

Sources
Steve Bannon and Kyle Bass on China Trade Deal

Additional contributions from Tom Friedman agrees on the seriousness of issues
Where Tom Friedman Agrees With Trump's China Trade Approach

Steve Bann

Trump's Geopolitical Trade War

Trump is Doing the Right Thing in Challenging China
 

  
Following the dollar to see how US oligarchs, lead by business, have maintained command of Geopolitics.

 
 

Editor: US-China Trade War

Hopefully, unlike most observers, Bannon understands that the
military industrial complex, not just Wall Street and Corporate America,
control the World's Political Economy.

20th Century US Gilded Age Oligarch exploited
 immigrant, females/children/blacks, and immigrant labor.
Progressive movements populism was battled politically and physically

21st Century US Globalization Oligarchs  exploited rival economic participants.
Current day populism battles are political using propaganda to maximize
 their share of factor income.

Stress Management Techniques of the Supreme Court Controlled Society by

1) Assigning the Federal Government sovereignty over Sates Governments

2) Protected individual and business rights from arbitrary government actions.

3) For 250 years our constitution, presidents, congress, and citizens
     have been somewhat harmonious, excepting for Civil War anarchy.

See Constitutional History of the United States.

 Between the lines.

Is Bannon still an anarchist or has he just added a new audience to the ultra conservative oligarch who finance his beliefs.

Does Bannon wants a managed wage to move from West to East? This seems much less revolutionary than two years age

Bannon is not a big advocate of capitalism, not sure if he is a libertarian or a utopian, but he does choose his words carefully.

 

Part 2 Trump’s Foreign Policy

Brookings Institute: Thomas Wright

Trump visceral foreign policy instincts date back three decades.
He has long rejected:

1. US security alliances as unfair to the taxpayer,
with allies conning Washington into defending them for free.

2. Trade deficits are a threat to U.S. interests. He rejects virtually
all trade deals the United States has negotiated since World War II.

3. Admires strongmen around the world: in 1990, for example,
he lamented Soviet leader Mikhail Gorbachev had not cracked down
on demonstrators as Beijing had in Tiananmen Square one year before.

Phase 1 was constraint.  It guided him from inauguration until he grew
frustrated at [things like] McMaster’s arguing to keep troops in place.

Phase 2 was unilateral actions. It began in 9/17 when he bypassed the formal deliberative interagency decision making process and decided to move the U.S. Israel embassy to Jerusalem. Soon he ended the Iran nuclear deal, imposed tariffs on friends and rivals alike, renewed his criticism of NATO and was keeping  troops in Syria. Most famously, he decided to meet with Kim in Singapore without consulting his national security cabinet and made the unilateral decision to meet with Russian President Vladimir Putin.

A new empowering team began 2018 with the removal of Tillerson,
McMaster, and Cohn over three-weeks, with their replacements—
Mike Pompeo, John Bolton, and Larry Kudlow—all having personal
loyalty to Trump. Then UN Ambassador Nikki Haley’s departed
and Mattis’ resignation on December 21. 

A recent positive development from the administration was welcomed
by many foreign policy experts. Hr recognized that Russia and China
posed to the U.S.-led international order and affirmed the importance
of related alliances.

Aal Security Strategy and National Defense Strategy
1) Moved focus from terrorism to great-power competition.
But Trump seems uninterested and his remarks introducing
the strategy had only a single sentence about rival powers
with a plea for the importance of cooperation with Russia.

2) His transactional approach places little value in historical ties.
It has no permanent friends and no permanent enemies.
It favors authoritarian governments that offer swift concessions
and are easier to deal with than with our democratic allies.
For example, Saudi Arabia was able to reduce the price of oil
to appease the president after the president sided with it
following the murder of the journalist Jamal Khashoggi.

3) Leverage is used to gain an economic advantage.
a) Trump’s team entertained Poland’s bid to pay for a
U.S. military base in its country
b) Trump pressured the United Kingdom to pursue a hard
Brexit so that the United States could pocket concessions
in talks on a bilateral U.S.-British free trade agreement.

" Paradoxically, the advent of a more unified and predictable
 U.S. foreign policy is likely to weaken American influence and
 destabilize the international order. A deeply divided Trump
administration was the best case for those who believe in
the United States’ postwar strategy, defined by strong alliances,
an open global economy, and broad support for democracy,
 the rule of law, and human rights. Because Trump was
never going to change his world view, his administration had been marked
by either division or agreement on his terms. We now have the latter."

Phase 3 would be a unified Trump administration on the world geopolitics..

Source: Brookings Institute: Thomas Wright

 

Editor's Note:

1) Because Trump's methods put much of the foreign establishment out of business, trusting these and similar Trump articles is difficult. As a result, I report opinions while trying to make my opinions obvious.
of course, as with everything, what I choose to include and not include which makes me, like everyone else, bias.

2) 10/9/19Trumps allows Turkey to go after Syrian Kurds.

Trump has been saying since he was a candidate he wants to withdraw from Syria, he wanted to withdraw from what he called these “unending wars”–the last time I think he used the word “stupid wars”–where the U.S. has paid a heavy price and it was the U.S. that has carried the burden.

He had to begin somewhere. This is step 2.
Step 1 was when Obama allowed Syria to cross his "Red Line."

Trump’s Withdrawal From Syria: Betrayal of Kurds or End to Endless War?

This entry was posted in Doomsday scenarios, Economic fundamentals, Europe, Guest Post, Income disparity, Politics, Russia on January 17, 2019 by Yves Smith.

 

 

 

 

Responding to China: Strategic
US and Chinese Grand Strategy and the Remaking of the Rules Based Global Order video Source Admiral Scott H. Swift

Preface: Admiral Swift left the Navy shortly after remarking he would
follow an order from the U.S. President to use nuclear weapons. source

The National Defense Strategy is not a Grand Strategy.

Need an increased effort on developing a broad grand strategy.

Too dependent on military in decision making process.
Include all 15 federal agencies and use principles laid out in
the Constitution, Declaration of Independence and Bill if Rights as a guide.

International rules have worked well but
China divorced itself from the global rules based order and only follows rules when it is a benefit.
 

Editor's Note:
Bill Clinton's 1994 National Security Strategy for Engagement and Enlargement centered on Democratic Peace Theory designed to expand US efforts using force to increase stability and spread Democracy around the world.  Small Scale Contingency Military Operations increased dramatically.

Bush 2 campaigned to end such operations against an enemy
that was willing to kill themselves to obtain nuclear weapons.
9/11 ended this idea. Some Bush neoconservative members felt the way to control nuclear weapons was  the use of power and create an "island of democracy ."

See Great Decisions 2018 - The Waning of Pax Americana - Dr. Conrad Crane

See 21st Century Foreign Policy