The Monetary Economics of China
Ummm... Externalities?

Fred Bergsten Tries (Politely) to Teach the Clown Show That Is the Bush Administration

Fred Bergsten writes a very good how-to manual for the Treasury Secretary and the Under Secretary of the Treasury for International Affairs.

One of the many, many things that the Clown Show that is the current administration appears incapable of learning is that our soft power is a great deal harder and more powerful than our hard power.

If China is a partner rather than an adversary in fifty years, it will not be because of the 101st Airmobile Division, it will be because the economic, social, and cultural links between the U.S. and China are so strong that its politics will have reshaped themselves to some degree in our image and its people will see how much they have to gain from peace and how much we all have to lose from confrontation.

But the current administration cannot grasp an idea that Fred Bergsten grasps very well: that it was George Marshall's economic aid plan, and not John Pershing's or Dwight Eisenhower's armies, that made and keeps wester Europe our allies and partners. They see trade as a source of weakness: as a way of creating potentially traitorous interest groups inside the U.S. that will block attempts to "get tough."

They remind me of nothing more than Admiral Tirpitz and the German Navy League before World War I, with their insane belief that if only the German Empire built a battlefleet strong enough to cause Britain real problems, then the British would respect and like them.

Fortunately, this particular Clown Show will almost surely have much less damaging effects than von Tirpitz's did. The overall international situation is much less dangerous.