By PLS
We used to be scared of the bear. Now it’s the dragon.
To say nothing of mullahs.
A Chinese company, owned in large part by the Chinese government, is bidding to buy the American energy conglomerate Unocal, most likely because China is energy short and Unocal has tied up a lot of oil and gas rights in Asia. Pressure is building to force Unocal to look for another partner, a local, if you will, even if its shareholders will gain less from the so-called patriotic choice. The US is energy short, too.
The Chinese offer scares a lot of people because China holds, if not the lion’s then the tiger’s share of US debt, exports hugely to the US while buying little, has nukes, is enlarging its blue water navy and is looking more and more like a international economic giant even though its per capita income is not impressive.
Before we go into a total panic, it might be well to recall that we were whipped up into a froth of fear over Japan’s economic power not so long ago. Best seller lists were full of books touting Japanese managerial and manufacturing secrets, and cash-happy Japanese investors were snapping up the best real estate in New York, prompting thoughts about limiting foreign investment in landmarks, etc.
These days, although Japanese popular culture is increasingly visible globally, the Japanese economy remains in a funk that has lasted now for well over a decade. Sony, one of the godzilla corporations that were going to trample the American economy to dust, has fallen on hard times and is looking to Korean competitors for inspiration and technical guidance. The scarey Land of the eye-blinding Rising Sun has entered the Twilight Zone, it seems.
Fear makes people do foolish things, and those who trade on fear know this. Post 9/11 fears led the American people to acquiesce in an invasion of Iraq without examining the very flimsy grounds for action, for instance, so let's take a closer look at this fire-breathing economic dragon.
When you disaggregate Chinese economic figures, you discover how much Chinese wealth comes from intellectual piracy and the Chinese equivalent of free trade zones, not brilliant innovation by millions of Chinese geeks fresh from MIT. When you note how weak the internal economy is, you discover there’s no need for panic. The need, as always, is to avoid the temptations of short term ideological satisfaction and ad hocism, both which badly afflict the current administration, and craft an economic policy we can live with, a policy that includes more money for better education for all in the United States and more attention to a tax policy that eliminates incentives for shifting more and more jobs to China and elsewhere.
It may be that what we have most to fear are leaders who urge us to act, in a flash, without thinking, out of fear. Such ploys play into the zeitgeist, unfortunately. We live in a time when deliberation is over-denigrated and spontaneity is over-admired.
“There is nothing to fear but fear itself.” FDR said this in the middle of World War II. It is of course a hyperbole–an exaggeration for effect.
White knuckle-fliers understand what it means, so they fly, in spite of an otherwise debilitating fear.
Of course, we worry about maintaining a strong economy, and it’s sensible to take rational steps to avert terrorism. But much of the legislation in the Patriot Act got through Congress only because too many of our representatives and those who elected them succumbed to a state of carefully induced, irrational, excessive terror.
That and mindless patriotism. Talk about worshipping false gods!