Taxation with Manipulation

Taxation with Manipulation

http://americanfederalist.blogspot.com/


Why is the United States tax code so complicated? One might think that our elected representatives could manage the chore of taxing people with a few relatively simple and easily understood words. Instead Americans are subject to thousands of pages of ever changing regulations. What possible use are all those regulations?

There have been several calls in the recent past for simplification of the tax system in America. They seem to have boiled down to two options: the fair tax and the flat tax. The fair tax (HR 25,/S 296) is a sales tax. It is paid once, at the point of purchase. The flat tax is a system whereby everyone is taxed the same percentage of their income. The rich would pay more because they make more. Both plans contain provisions by which those below the poverty level would receive a refund. There are a number of concerns with both of these plans, mostly regarding changes to the status quo and how those changes will affect the nation.

Will America see either one of these proposals come to a vote, much less enactment? It’s doubtful for a number of reasons. One of those reasons is that the tax code is being used to influence the behavior of American citizens. The tax code is used as both the carrot and the stick. It rewards “good” behavior and it is used to punish “bad” behavior. The definition of “good” and “bad” is often dependent upon whomever is in power at the time. How much would a beer or a pack of cigarettes cost you without the “sin tax”? Would you really donate as much to that charity if it wasn’t the end of a year in which you needed another tax write-off? How about installing those new, energy efficient windows-they ones approved for the tax break?

Another reason the tax system hasn’t been simplified is because the current tax system isn’t just being used as a way to collect revenue for the government and influence behavior. It is a sword of Damocles hanging over the head of every American citizen. It is one of the largest and most effective law enforcement tools the government has. How can individual Americans scrutinize the thousands of pages of tax code that are changed and amended every single year to be sure they have done everything as they should? What American does not feel the least bit of trepidation when the time comes to sign their tax returns certifying that “to the best of my knowledge and belief, they are true, correct, and complete”?

Is this really an appropriate use of the tax system? Do the words ”to promote the general welfare” grant authority to the government for this kind of social engineering, experimentation and tyrannical oversight of our personal finances? Common sense and the most cursory of readings of our founder’s writings indicate otherwise. And yet, should any of the current healthcare proposals be passed, Americans will all be making healthcare choices determined by the fact that we will all be subject to being “taxed” for not obtaining “government approved healthcare.” We may even go to jail for non-compliance. Not to promote the general welfare, but to implement the policies of a president and administration who believe that the fruits of our labor should be “redistributed” according to their values, not ours.

Belanne Pibal is a Liberty Features Syndicated writer.

Christian Rout in the Culture War

Christian Rout in the Culture War

By Patrick J. Buchanan

A Democratic Congress, discharged by the voters on Nov. 2, has as one of its last official acts, imposed its San Francisco values on the armed forces of the United States.

“Don’t ask, don’t tell” is to be repealed. Open homosexuals are to be welcomed with open arms in all branches of the armed services.

Let us hope this works out better for the Marine Corps than it did for the Catholic Church.

Remarkable. The least respected of American institutions, Congress, with an approval rating of 13 percent, is imposing its cultural and moral values on the most respected of American institutions, the U.S. military.

Why are we undertaking this social experiment with the finest military on earth? Does justice demand it? Was there a national clamor for it?

No. It is being imposed from above by people, few of whom have ever served or seen combat, but all of whom are aware of the power of the homosexual rights lobby. This is a political payoff, at the expense of our military, to a militant minority inside the Democratic Party that is demanding this as the price of that special interest’s financial and political support.

Among the soldiers most opposed to bringing open homosexuals into the ranks are combat veterans, who warn that this will create grave problems of unit cohesion and morale.

One Marine commandant after another asked Congress to consider the issue from a single standpoint:

Will the admission of gay men into barracks at Pendleton and Parris Island enhance the fighting effectiveness of the Corps?

Common sense suggests that the opposite is the almost certain result.

Can anyone believe that mixing small-town and rural 18-, 19- and 20-year-old Christian kids, aspiring Marines, in with men sexually attracted to them is not going to cause hellish problems?

The Marines have been sacrificed by the Democratic Party and Barack Obama to the homosexual lobby, with the collusion of no fewer than eight Republican senators.

This is a victory in the culture war for the new morality of the social revolution of the 1960s and a defeat for traditional Judeo-Christian values. For only in secularist ideology is it an article of faith that all sexual relations are morally equal and that to declare homosexual acts immoral is bigotry.

But while this new morality may be orthodoxy among our elites in the academy, media, culture and the arts, Middle America has never signed on and still regards homosexuality as an aberrant lifestyle, both socially and spiritually ruinous.

To these folks, homosexuality is associated with a high incidence of disease, HIV/AIDS, early death, cultural decadence and civilizational decline. And no sensitivity training at Camp Lejeune is going to change that.

Behind these traditionalist beliefs lie the primary sources of moral authority for traditionalist America: the Old and New Testaments, Christian doctrine, natural law. Thomas Jefferson believed homosexuality should be treated with the same severity as rape.

And 31 consecutive defeats for same-sex marriage in state referenda testifies that Middle America sees the new morality as the artificial invention of pseudo-intellectuals to put a high gloss on a low lifestyle.

Not until recent decades have many in America or the West argued that homosexuality is natural and normal. As late as 1973, the American Psychiatric Association listed homosexuality as a mental disorder.

Today, anyone who agrees with that original APA assessment is himself or herself said to be afflicted with a mental disorder: homophobia.

The world has turned upside down. What was criminal vice in the 1950s—homosexuality and abortion—is not only constitutionally protected, but a mark of social progress.

Yet, just as busing for racial balance led to violence, white flight and the ruin of urban schools, this social experiment is not going to be without consequences. And it is the military that will endure those consequences.

Yet, again, if we believe our armed forces to be the best in the world, why are we doing this, against the advice of countless senior officers and NCOs? What is the motivation other than the payoff of a campaign debt?

What happens now to Evangelical Christian and conservative Catholic chaplains who preach that homosexuality is a sinful and shameful practice? Will they be severed from the service as homophobes?

That cannot be far behind when the Family Research Council, a respected organization of religious and social conservatives that has fought the homosexual agenda from same-sex marriage to gay adoptions, has now been declared by the Southern Poverty Law Center to be a “hate group.”

The advance of what was once a radical agenda has accelerated.

In 2004, John Kerry may have lost Ohio and the presidency because same-sex marriage was on the ballot in almost a dozen states, bringing out committed social conservatives to the polls. Six years later, the gay rights agenda is imposed by Congress and Obama on the 82nd and 101st.

Let the reader decide if the direction America is headed in is toward those “sunny uplands,” or straight downhill.

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Patrick J. Buchanan needs no introduction to VDARE.COM readers; his book State of Emergency: The Third World Invasion and Conquest of America, can be ordered from Amazon.com. His latest book is Churchill, Hitler, and “The Unnecessary War”: How Britain Lost Its Empire and the West Lost the World, reviewed here by Paul Craig Roberts.

If The DREAM Act Amnesty Passes, Is This Our America Anymore?

If The DREAM Act Amnesty Passes, Is This Our America Anymore?

Locust: luckily it did not, but still we have to think about our nation, where it is going, and where our people fit in, if we fit in.

By Patrick J. Buchanan

Buried in the Oct. 30 Washington Post was a bland headline: “Report Points to Faster Recovery in Jobs for Immigrants.” [by Shankar Vedantam]

The story, however, contained social dynamite that explains the rage of Americans who are smeared as nativists and xenophobes for demanding a timeout on immigration.

In the April-May-June quarter, foreign-born workers in the U.S. gained 656,000 jobs. And native-born Americans lost 1.2 million. [VDARE.com note: See Pew Confirms VDARE.COM On American Worker Displacement, By Edwin S. Rubenstein]

From July 1, 2009, to June 30, 2010, foreign-born Hispanics gained 98,000 construction jobs. Native-born Hispanics lost 133,000. Black and white U.S. construction workers lost 511,000 jobs.

According to the Center for Immigration Studies, from Jan. 1, 2000, to Jan. 1, 2010, 13.1 million immigrants, legal and illegal, entered the United States, a decade in which America lost 1 million jobs.

From 2008 and 2009, the figures are startling. In 24 months, 2.4 million immigrants, legal and illegal, arrived, as U.S. citizens were losing 8.6 million jobs.

Query: Why are we importing a million-plus workers a year when 17 million Americans can’t find work? Whose country is this?

Why do we not declare a moratorium on all immigration, until our unemployment rate falls to 6 or 5 percent? Charity begins at home. Ought we not take care of our own jobless first before we invite in strangers to take their jobs?

According to the Pew Hispanic Center, each year between 300,000 and 400,000 “anchor babies” are born to illegal aliens. These newborns are entitled to citizenship, free health care and education, welfare and food stamps

Their parents—almost all are poor or working class—rarely pay any state or federal income tax.

How long can we keep granting citizenship and full social welfare benefits to the children of people who break our laws and break into our country or overstay their visas? How long can we keep bringing in workers to take jobs when our unemployment rate hovers around 10 percent?

Again, according to the Pew Center, the number of anchor babies here now is about 4 million. Add to that 3 million to 4 million born each decade, and it will not be long before Colorado, Nevada, Arizona and Texas resemble California, which is on the brink of default.

If no action is taken, the Republican Party will soon be unable, even in wave elections, to win the presidency, as it won nothing and indeed lost state legislative seats in California in 2010.

The border will disappear, and America will be a geographical expression, not a country anymore.

Legal scholar William Quirk describes a new phenomenon in the invasion of America: “maternity tourism.” Pregnant Asian women pay $15,000 to agents to ensure they are in the United States when their child is born so that they can return home secure in the knowledge he or she will be a U.S. citizen with the right to a U.S.-taxpayer subsidized education in college.  [VDARE.com note: see Turkish Birth Tourism in New York, by James Fulford, June 17, 2010)

Though the nation has awakened to the threat to social cohesion and national solvency, Harry Reid is still attempting to ram through a lame-duck Senate an amnesty for illegal aliens up to age 30 who claim they were brought here before they were 16, have a high school diploma or GED and state that they intend to go to college within six years.

An estimated 2.1 million illegal aliens would be amnestied, put on a path to citizenship, and be eligible for student loans and more.

According to Alabama’s Jeff Sessions, ranking Republican on the Senate Judiciary Committee:

“Aliens granted amnesty by the DREAM Act will have the legal right to petition for entry of their family members, including their adult brothers and sisters and the parents who illegally brought or sent them to the United States, once they become naturalized U.S. citizens. In less than a decade, this reality could easily double or triple the 2.1 million green cards that will be immediately distributed as a result of the DREAM Act.” [PDF]

Lawbreaking would be rewarded. Chain migration would continue. A permanent powerful magnet would be provided to all foreigners to sneak into the United States and be sure to bring the kids.

As Rep. Dana Rohrabacher argues, one effect of the DREAM Act will be to move illegals applying to college ahead of many Americans, as 80 percent of illegals are Hispanics and eligible for affirmative action.

U.S. soldiers coming home from Afghanistan will “sit in back,” as Obama puts it, when competing against amnestied illegals.

Several days ago, UCLA’s Kent Wong addressed a pro-amnesty rally in Los Angeles’ MacArthur Park. Wong turned the race card face up.

When Reid’s bill passes, said Wong, “the young people of the DREAM Act movement will go on to accomplish and do great things. … You will go on to become lawyers, teachers, doctors and members of the U.S. Congress to replace those old white men ….”

If the DREAM Act passes, Wong is right about whose time has come and gone. May the Tea Party take names at the call of the roll.

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Patrick J. Buchanan needs no introduction to VDARE.COM readers; his book State of Emergency: The Third World Invasion and Conquest of America, can be ordered from Amazon.com. His latest book is Churchill, Hitler, and “The Unnecessary War”: How Britain Lost Its Empire and the West Lost the World, reviewed here by Paul Craig Roberts.

Down the slippery slope to — where?

Down the slippery slope to — where?

http://vanishingamerican.blogspot.com/

Several of you have mentioned the ‘Don’t Ask Don’t Tell’ repeal. I have only a few things to say about it. First, it’s been in the works for a long time, and of course what Clinton began, this regime is completing.

We’ve seen the military come increasingly under the sway of political correctness, what with things like ‘diversity’ being a primary objective in the military, and women on submarines, to mention only two examples. One of the most shameful and shocking symptoms was when Casey at the memorial for the victims of the Fort Hood massacre said that a bigger tragedy (bigger than the deaths of soldiers) would be if ‘diversity’ was decreased as a result. That comment should have evoked way more shock and outrage than it did.

The military has been captured by the left, which is bizarre because the leftists strike an anti-military pose. But now it’s ”their” military, you see, and they will remake it in their perverse image, with ‘diversity’ and tolerance being the goals, not defending the United States of America and its citizens.

The co-ed military was really the thing that made this latest step inevitable. The same arguments that we might make against gays openly serving (sexual tensions, destruction of camaraderie and morale, sexual distractions, ‘sensitivity’ issues, etc.) were made against the proposal for a co-ed military, and were rejected.

The left always works relentlessly toward their goals by increments. Women in the military first, now gays. What will be the next target? Because trust me, there will be a next frontier; some barrier they want to demolish and some standard and tradition they just have to trash. We already have non-citizens in the military. What next?

We could trace all this back to the whole affirmative action idea, too; if we choose or prefer people based on traits like race, then next comes gender and ‘sexual orientation.’
I suppose there will be quotas for recruiting each type, with ‘diversity’ as always being the top priority.

I would think that in any case, patriotic Americans would not want to serve in this politically correct, ideologically-driven regime. However, do we want our military to be made up of various people who see the military as a place to make some kind of ‘social statement’ or to carry out some ideological war against tradition? Do we want our military to be made up of people who are joining only to get free education, training, or citizenship? That’s something to think about.

Fjordman: Why Islam Must Be Expelled From The West

Fjordman: Why Islam Must Be Expelled From The West

Fjordman’s latest essay has been published at Winds of Jihad, and also at Europe News. Some excerpts are below:

On the 11th of December 2010, the first-ever suicide bombing in Scandinavia occurred when Taimour Abdulwahab, an Iraqi-born Muslim and Swedish citizen with a wife and children in Luton, Britain, was carrying explosives and mistakenly set off an explosion near a busy Christmas shopping street in Stockholm just before he could murder dozens of people.

Foreign Minister Carl Bildt, who is a passionate promoter of having Turkey as a full member of the European Union and Islam as an established part of European culture, stated that “We were extremely lucky… I mean minutes and just a couple of hundred metres from where it would have been very catastrophic.” Sweden’s intelligence agency and a news agency received an email with audio files in which a man called on “all hidden mujahedeen [Islamic holy warriors] in Europe, and especially in Sweden, it is now the time to fight back.” He criticized Sweden for its military presence in Afghanistan and its acceptance of the artist Lars Vilks, who had made some cartoons mocking Muhammad. The message warned that “now your children, daughters and sisters die like our brothers’ and sisters’ children die.”

We’ve been told for years that suicide bombers who blow themselves up in civilian areas in Israel are “freedom fighters struggling against Israeli occupation.” Does that mean that this Muslim blew himself up to protest against the Swedish occupation of Stockholm?

Sweden has no colonial history, at least not outside of northern Europe. It is a self-appointed champion of Third World countries and has virtually surrendered its third-largest city to immigrant mobs and substantial chunks of other cities, too. Swedish authorities are using the most extreme methods imaginable to suppress any dissent among the native people, who are being ethnically cleansed from their own land. The authorities always side with immigrants against the natives in the case of conflict. Muslims in Sweden can harass the natives as much as they want to and have access to all kinds of welfare goodies and a much higher standard of living than they would have in their own countries. In short, they have no imaginable, rational reason to complain, yet they still blow themselves up.

In Sweden, all the traditional excuses employed by Multiculturalists and Leftists throughout the Western world, fail. This leaves just one possible explanation, the only one never mentioned in Western mainstream media: That Muslims and their culture are fundamentally incompatible with our values and societies.

Read the rest at Europe News.

Interbreeding and the Human Family Tree

Interbreeding and the Human Family Tree

 

Scientists may have come a step closer to uncovering the human family tree.  Interestingly, interbreeding with now-extinct human races seems to have been key components in the differentiation of Eurasians from Africans and South Asians from Eurasians.

BBC News
By Pallab Ghosh
22 December 2010

Professor Chris Stringer: “It’s nothing short of sensational – we didn’t know know how ancient people in China related to these other humans”

Scientists say an entirely separate type of human identified from bones in Siberia co-existed and interbred with our own species.

The ancient humans have been dubbed “Denisovans” after the caves in Siberia where their remains were found.

There is also evidence that this population was widespread in Eurasia.

A study in Nature journal shows that Denisovans co-existed with Neanderthals and interbred with our species – perhaps around 50,000 years ago.

An international group of researchers sequenced a complete genome from one of the ancient hominins (human-like creatures), based on nuclear DNA extracted from a finger bone.

‘Sensational’ find

According to the researchers, this provides confirmation there were at least four distinct types of human in existence when anatomically modern humans (Homo sapiens sapiens) first left their African homeland.

DNA from a tooth (pictured) and a finger bone show the Denisovans were a distinct group

Along with modern humans, scientists knew about the Neanderthals and a dwarf human species found on the Indonesian island of Flores nicknamed “The Hobbit”. To this list, experts must now add the Denisovans.

The implications of the finding have been described by Professor Chris Stringer of the Natural History Museum in London as “nothing short of sensational”.

Scientists were able to analyse DNA from a tooth and from a finger bone excavated in the Denisova cave in southern Siberia. The individuals belong to a genetically distinct group of humans that were distantly related to Neanderthals but even more distantly related to us.

The finding adds weight to the theory that a different kind of human could have existed in Eurasia at the same time as our species.

Researchers have had enigmatic fossil evidence to support this view but now they have some firm evidence from the genetic study carried out by Professor Svante Paabo of the Max Planck Institute in Leipzig, Germany.

“A species of early human living in Europe evolved,” according to Professor Paabo.

“There was a western form that was the Neanderthal and an eastern form, the Denisovans.”

The study shows that Denisovans interbred with the ancestors of the present day people of the Melanesian region north and north-east of Australia. Melanesian DNA comprises between 4% and 6% Denisovan DNA.

David Reich from the Harvard Medical School, who worked with Svante Paabo on the study, says that the fact that Denisovan genes ended up so far south suggests they were widespread across Eurasia: “These populations must have been spread across thousands and thousands of miles,” he told BBC News.

One mystery is why the Denisovan genes are unique in modern Melanesians and are not found in other Eurasian groups that have so far been sampled.

‘Fleeting encounter’

Professor Stringer believes it is because there may have been only a fleeting encounter as modern humans migrated through South-East Asia and then on to Melanesia.

The remains were excavated at a cave site in southern Siberia

“It could be just 50 Denisovans interbreeding with a thousand modern humans. That would be enough to produce this 5% of those archaic genes being transferred,” he said.

“So the impact is there but the number of interbreeding events might have been quite small and quite rare.”

No one knows when or how these humans disappeared but, according to Professor Paabo, it is very likely something to do with modern people because all the “archaic” humans, like Denisovans and Neanderthals disappeared sometime after Homo sapiens sapiens appeared on the scene.

“It is fascinating to see direct evidence that these archaic species did exist (alongside us) and it’s only for the last few tens of thousands of years that is unique in our history that we are alone on this planet and we have no close relatives with us anymore,” he said.

The study follows a paper published earlier this year by by Professor Paabo and colleagues that showed there was interbreeding between modern humans and Neanderthals as they emerged from Africa 60,000 years ago.

 

Sandra Bullock: A Woman for Our Time

Sandra Bullock is People magazine’s Woman of the Year!

Having trouble remembering Bullock’s devastating and sensitive filmic performance from this past year? Or even which movie she was in?

Well, according to IMDb, Bullock appeared in a total of … ZERO roles for the entirety of 2010.

Was there some mistake?

No. According to People,

For Sandra Bullock, 2010 was the year that changed everything: She became a mother to son Louis, ended her five-year marriage to Jesse James and reached new career heights with her emotional Oscar win for The Blind Side.

So, after being embraced by her peers for portraying a Southern Christian woman who brings a 300-pound Black into her family home and neglects her biological children on his behalf, Sandra got divorced, and then became a single mother by adopting an African orphan.

This may be the first time a major magazine has given someone an award for living a politically correct private life.

Sandra's Baby

Chinese Chess and The Young Chinese Tiger and the Old Sick American Lion

Chinese Chess

December 23, 2010

by Irwin M. Seltzer

(Editor’s Note: Here is a major media right-wing Republican publication that sees China’s ascendancy as inevitable. The author observes many of the same phenomena I did in yesterday’s article. But he comes to the wrong conclusion in his last paragraph. He tries to hold that there is still time for Washington to fix its own ills. But DC has neither the political will nor the stomach for draconian spending cuts in the Federal budget coupled with real downsizing of the Federal Government. Washington will be swept into the ashbin of history, and so too the “American Experiment.”)

The Chinese are playing grandmaster chess against an amateur America that can’t see beyond the second move. In a bipartisan display of geopolitical obtuseness, America continues its historic trade policy: It’s free trade, except occasional lapses into protectionism when a whinging constituent must be placated, with a reliance on the World Trade Organization to settle disputes (and believing it has won something of significance when the WTO sides with it in a dispute over such a key product as cheap tires). Occasional public complaints about China’s persistent undervaluation of the renminbi, but refusal to declare the regime a currency manipulator. And conferences, conferences, conferences. All very 20th century.

China is doing a very different thing. The Communist regime sees trade policy as merely one weapon in a war aimed at overtaking the United States as the world’s preeminent economic and, by extension, military power. The undervaluation of the renminbi is a necessary means of keeping China’s export machine running at full tilt so as to create jobs for the millions who are moving from the country to the nation’s cities. Lacking democratic legitimacy, the regime’s principal claim to the loyalty, or at least the submission of its people, is its ability to provide jobs and a rising standard of living, doubly important in this period of transition to a new generation of leaders in 2012. Americans chortle: that mercantilist program of subsidizing exports cannot be sustained forever, as the inflow of dollars will sooner or later trigger inflation. Right: indeed, that is already happening, and forcing the regime to adopt a variety of measures to curb credit and inflation.

But largely irrelevant in the longer term on which the Chinese are focused. By the time the Chinese decide they will have to allow the renminbi to appreciate, they will have accomplished two long-standing objectives. First, their vaults will be stuffed with an even larger hoard of American IOUs, enough to give them an important influence over U.S. foreign policy. “How do you deal toughly with your banker?” asked Hillary Clinton of the then-prime minister of Australia, Kevin Rudd, at a luncheon last year. His answer is not recorded.

It is true that if the Chinese start to dump U.S. Treasuries and dollars, the value of their own piles of dollar-denominated assets would decline. But if the broader geopolitical objective were served, that would merely be a cost to consider as part of the military budget.

Second, by then the Chinese will have copied enough American and Western technology to be in less need of an undervalued renminbi—they will have made-in-China products that can dominate world markets even if their currency approximates its market value. The camels that trod the old Silk Road laden with spices and porcelain will have been replaced with air and sea freighters hauling solar panels and all sorts of goods based on copied technologies and purloined intellectual property. To cite just one example, the high-speed trains that China is now selling worldwide are based on technology brought to China by French, German and Japanese companies.

Every deal to tap the vast Chinese market comes with a requirement that they turn over their technology to the Chinese: nuclear plants, green energy products, autos will be made by American companies in China –until the Chinese complete construction of their copycat plants. The initial orders satisfy the American executives, their eyes focused on the next quarterly report. The Chinese, their eyes focused on 2020 and beyond, know that the technology in hand, they can duplicate the factories and techniques needed to dispense with the American capitalists. Westinghouse Electric recently turned over 75,000 documents to its Chinese customers as the initial part of the technology transfer to which it agreed as part of a deal to sell four nuclear plants to China. Nothing seems to have changed since Lenin observed, “The capitalists will sell us the rope with which we will hang them.”

Consider, also, solar panels, a product that demonstrates the difference between Chinese and American attitudes. The Chinese agree with President Obama about one thing: solar panels are an increasingly important product and source of jobs. The main raw material is polysilicon, and when its price soared the Chinese made it a national priority to replace foreign supply sources. Government money was marshaled and, more important, the permitting process was short-circuited so that plants could go from ground-breaking to full production in a bit over a year; in the West that is a multi-year process. Result: China controls half the world market for solar-power equipment. In a demonstration of what many now take to be the superiority of state over market capitalism, the Chinese created this and other industries from scratch—and quickly.

There is worse. While Barack Obama and American supporters of free trade are congratulating themselves on negotiating a trade deal that will enable American carmakers to sell a few more cars to South Korea, the Chinese are establishing themselves in Africa, South America and the Middle East so as to lock up supplies of minerals, oil and food. The regime has already demonstrated that these moves on the world’s chess board are about more than money and trade balances. Offend them with some move on the world chessboard that does not suit them, and they ban the export of rare-earth minerals crucial to the manufacture of myriad products. Their control over the world’s supply—reports are that they control 95 percent of available supplies and are buying up undeveloped resources in Africa—is in part due to their willingness to bear the high environmental cost associated with the processing of these minerals in order to reap the benefits of control over the manufacturing output of Japanese and Western countries. American liberals and greens prefer a more pristine environment.

Still another problem is the difference in attitudes towards foreign investment. American policy discourages foreign investment by attempting to raise taxes on foreign earnings. Meanwhile China, having already invested massively in resource rich African countries such as Sudan, is turning its attention to Latin America. In Argentina alone China’s state-owned and subsidized companies have invested in oil and gas properties: copper, gold, silver and lithium mines; lands for soya production; and in port development to facilitate the large-scale shipment of these resources to China.

Then, of course there is India, a giant democratic country growing at a pace equal to or faster than China’s, and now the prize in the 21st century version of the Great Game. Barack Obama and an enormous trade delegation visited India and returned to trumpet success in working out trade deals worth an estimated $10 billion. This week Wen Jiabao, China’s premier, played one-upmanship and booked $16 billion in deals, financed by China’s banks, and announced he would open China’s markets to Indian goods as part of a plan to double trade between the countries to $100 billion annually by 2015.

Even more important are two additional factors, one economic, the other military. Beijing has its eye on the dollar. Not the jiggles in its value, although it complains about the threat QE2 poses to the value of the dollar and therefore to its dollar-denominated holdings. But on replacing the dollar as the world’s currency of choice. Countries can now invoice and settle trade deals in renminbi, which more and more will do as China gradually makes the currency more easily convertible. Economists at HSBC are guessing that within three to five years half of China’s trade with developing countries—that trade accounts for 55 percent of all of China’s trade—will be in renminbi, compared with 3 percent at present. No need for dollars.

Then there is the military consequence of all of this. China is becoming increasingly aggressive in asserting its territorial claims to the Senkaku Islands, now controlled by Japan, and to territories claimed by Vietnam and others in the South China Sea. It is building submarines and aircraft carriers and modernizing its navy, cyber-warfare capability, missiles, and anti-satellite weaponry. No surprise that Australia and other nations in the Asia-Pacific region are reviewing their policy of relying on America as a force capable of imposing stability on their region.

But there is good news, news that trumps all of these problems. Lawrence of Arabia, at least according to the David Lean film, countered Arab belief in inevitability with the retort, “Nothing is written.” So it is in the Sino-U.S. jockeying for supremacy. America remains the source of most of the world’s innovations and the home of most of its great entrepreneurs; unlike China, America is blessed with a relatively young population; bright Chinese still prefer to be educated at great American universities, and the American Dream remains a magnet for risk-takers looking for an opportunity to move up in the world; the American military is still the most potent in the world; and this nation is blessed with an abundance of natural resources. There is time to fix things: “The Chinese currency is still a long way from replacing the U.S. dollar as the world’s reserve currency,” writes Chi Lo, CEO of HFT Investment Management in Hong Kong. All that is missing are sensible policies. And it truly is not written that we will continue to pursue the self-destructive policies of recent years.

© Copyright 2010 The Weekly Standard LLC


The Young Chinese Tiger and the Old Sick American Lion

December 22, 2010

Watch any PBS program about how lions live on the African savannah. The dominant male lion rules over a pride of females and their young. As the young males mature and the ruling male ages, eventually one young lion will supplant the old lion as the leader of the pride…and life will go on.

In this article, we see that the males in the American lion’s pride…the nations of Europe and most of the West…are as sick as he is. So none of the other males will be wresting control from the old lion. But there is a young tiger quietly and cunningly rising to world leadership. That tiger is China.

The futures of China and the United States of America are inextricably linked over the next decade or two. But China is on the ascendancy as a world power, while the USA is hurtling toward the abyss of self-inflicted financial ruin and historical obscurity.

I referred to the “young” Chinese Tiger in the title for a reason. China is certainly a nation that has been a nation for thousands of years. And its political leadership has been under the Communist banner since Mao Zedong helped found the People’s Republic of China in 1949. But China’s recent embrace of capitalism began in 1978 under Deng Xiaoping. So, the economic reforms that have transformed China into the world’s leading economy are scarcely 32 years old. So the tiger that is beginning to strut the world is a young China. And America is the old, sickly, tired lion, still trying to assert his leadership with his hoarse, weak roaring.

And why is China ascending?

• The Chinese economy is growing at a rate of 8% annually. At that rate, it will double every 9 years.
• 330 million people speak English, more every day.
• The US has 300 million people, China has 1.2 billion.
• The US personal savings rate is zero. China’s savings rate is 34%.
• Beijing is encouraging Chinese people to buy gold. Washington is encouraging Americans to spend, spend, spend.

Look what has occurred in the United States over the last 32 years. In 1978, the Federal Government had a surplus of $55.4 Billion. Today, the Federal budget cannot really even be calculated. The part of the budget Washington will admit to is north of $3.834 TRILLION for the 2011 fiscal year. And don’t forget that there are untold billions of dollars being spent “off-budget” that Washington never tells us about. Washington now only makes a pretense of appearing to care about its future solvency and viability. And while DC pretends to care, it runs the printing presses over at Treasury and “monetizes” its budgets with counterfeit currency.

Washington has been able to spend profligately and mismanage its economy through the recent decades by also selling US Treasury bonds to China (and other nations). And because the American political system is entirely driven by the desire for re-election, no long-term strategies appear to have been DC’s lodestar. Not so with China. As their holdings of US bonds have increased, so has their hidden control of Washington. Yet, true to the Oriental culture, China patiently puts up with American bluff and bluster in regard to important issues between the nations.

One question for the future is this: How long will China stand by while Washington makes China the scapegoat for many of DC’s own ills? Anyone who observed the congressional hearings about how Google was being censored in China saw Chinaphobia on parade, as congress critters railed against the very censorship that Washington now pursues for itself. Washington’s rhetoric against China will likely escalate as politicians seek to blame all but themselves for America’s economic woes. Chinese forbearance will be sorely tested by DC’s war of words and at some point Beijing will move to end it.

A big media story last week was about the Nobel Committee ceremony, where Chinese dissident Liu Xiaobo was awarded the 2010 Nobel Peace Prize in absentia. The holier-than-thou media tried its best to embarrass Beijing for its refusal to allow Xiaobo to accept the award. But it occurred to me that in 1980, President Carter issued a boycott of the Summer Olympic Games because the Soviet Union was engaged in a war in….guess where? Afghanistan. I guess selective outrage has no memory.

The US Dollar has been the world reserve currency since the end of World War II. You would think that any nation whose currency had attained reserve status would be jealous of that status, and would do all it could to maintain the solvency and reputation of that very currency. But not DC. Through its use of inflation and fractional reserve banking, it has defrauded the entire world…while recently accusing the Chinese of being a “currency manipulator” nation. That Beijing refuses to inflate its money under DC pressure should bring embarrassment to DC, not Beijing. Like your mom said: If all your friends decided to jump off a cliff, does that mean that you should, too?

Washington is so myopic about the DC-Beijing connection that it scarcely notices that Beijing is consolidating its position around the world. Examples are:

• Establishment of BRIC, consisting of Brazil, Russia, India and China, representing 40% of the world’s population
• Deals with Canada for the Athabasca shale oil
• Deals with Russia on a basket of raw materials
• Oil and natural gas pipeline deals with Middle East producers
• Reducing exports on rare earth metals, crucial for technology applications (China produces 97% of world rare earths)
• Deals with South Africa and Brazil on iron ore and steel production
• Deals with African nations on oil production
• Recent announcement that China would begin producing airliners in China to rival Boeing and Airbus and serve its own needs
• And many many other deals

Both countries engage in mercantilism, the promotion of national interests by protectionism through subsidies and tariffs. The easiest way for American politicians to act is through protectionism and scapegoating. But because Washington is broke it cannot subsidize much more than it already has…not that it should. China’s pockets are deeper and they have proven willing to “play chicken” with DC on subsidies.

And recently, the Obama Administration announced big tariffs against Chinese tires. This is tantamount to pissing on the shoes of your banker. Seems to me that the banker might take exception to that gesture and respond how bankers retaliate…with financial sanctions of their own.

Make no mistake about this. Both Beijing and Washington know that Beijing holds the DC cojones firmly in its hands. When your banker holds almost $1 trillion in your notes, he controls you. China is slowly and carefully divesting itself of some US Treasuries in an effort to minimize their losses. They know how tenuous Washington’s financial situation is, and that some other nation could cause the collapse of the American economy. But Beijing also knows how strategic their US bond holdings are. They know that they control economic, political and military policy between America and China now, and that is a position that they will not relinquish while it serves their interests.

Washington should be grateful that China was its banker over the last 30 years. But like the old saying goes, “Nothing ages faster than gratitude.” Gratitude can quickly turn into resentment, and resentment to hostility.

The relationship between Washington and Beijing is only going to worsen and continue to sour. Just like the old lion is hostile to the upstart cub who challenges him for supremacy, so too will Washington increase its hostility to Beijing, even though Beijing already owns Washington. Sooner or later, Washington will either collapse under its own weight or outside forces will cause its collapse.

On the savannah, the young lions all know when the strength of the old lion is passed. When the old lion dies, the jackals and vultures come to pick his carcass clean. Sometimes, even the young lions feed on the carcass. Much the same is in store for the USA.

Then the Chinese Tiger will begin its long reign as king of beasts.

Have you called Rosetta Stone and ordered your set of Mandarin Chinese language tapes yet? Better get moving! I already have mine.

DumpDC. Six Letters That Can Change History.

© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.