sagenz

Will Obama be America's Gorbachev?

Will Barack Obama be America's Gorbachev?  He inherits the presidency at a time of American weakness and the rise of BRIC powers.  It seems an opportune time for the production of an insightful report into where the world wil be in 2025.  2025: the end of US dominance .

The global trends review, produced by the National Intelligence Council (NIC) every four years, represents sobering reading in Barack Obama's intray as he prepares to take office in January. The country he inherits, the report warns, will no longer be able to "call the shots" alone, as its power over an increasingly multipolar world begins to wane.

My question is whether Obama will manage in such a way as to reduce Americas unique role as hyperpower or whether he will maintain American primacy.  There is no doubt that Obama has a unique situation.  He can manage US relations so that the world like America more.  That will mean making America relatively weaker and more of a first among equals than a clear leader.

He will do that by weakening US expenditure on defence technology and by sapping the productive capacity of the US by redistributing gains from the entrepreneurs and industry to the unskilled. 

The temptation will be there to reduce the huge defence expenditure.  There is waste there but it is part of what keeps America so far ahead of the free worlds enemies. 

Gorbachev was a wonderful Soviet leader for the West.  He presided over Perestroika and the destruction of the soviet union and the almost fatal weakening of Russia.  He is respected in the West but not in his own country.

Why does this matter.  The world is unstable and requires strong guidance.  There is an opportunity now for Obama to follow up the muscular approach of Bush with a Marshall plan like focus on building wealth in the poorer parts of the world.  Obama seems an instinctive protectionist and redistributionist rather than a free trader entrepreneur.  He has the same problem as Helen Clark in that all his background is in academia and legislature and nothing in the world of commerce and industry.  That does not mean he will fail but it may mean he fails to place sufficient importance on maintaining Americas technology lead and ensuring poorer nations have the opportunity to compete on a level trade playing field.

America removing its troops from Iraq too early, avoiding use of American hard power, reducing its defence expenditure too deeply, sapping productivity through over taxation will all cause the predictions of the NIC 2025 report to come true.

This is not to say that Obama is at fault.  America has consumed excessively and has huge debts to China and the Arab world to show for that.  Europe is weak and introspective in hard power.

My alternative prescription would be to ride out the current economic crisis and accept that there is capitalist creative destruction taking place.  Maintain the technology lead and open up trade to all the world by completing Doha. 

The United Nations is flawed.  It is dominated by undemocratic nations.  A league of democracies and a muscular approach to dictatorships is required.  America should draw India & Brazil strongly into this league and into the UN security council.  They are strong and rapidly growing democracies.

Peace in the middle east can be gained by forcing the Israelis to treat Palestinians morally and eliminating the flow of rockets to Hamas and Hezbollah that cause the Israelis to be so defensive.  unfortunately the only way to achieve that is to make it clear to the Mullahs supplying them from Iran that Iran will pay the price if it continues.

It will be interesting to see whether Obama's call for more EU troops will be heeded.  If so there is a chance to use Western power to bring stability and peace to the remainder of the world.  I honestly hope world leaders take the opportunity Obama's election brings.  But I suspect that an Obama desire to be liked will bring lots of warm speeches and a slow decline in US power and the power of democracies.

A platform to challenge the conventional wisdom.

I have finally changed the tagline on the blog.  I hope it represents a slightly more positive view of things.  Helengrad is no more.  In a previous post I called it A Toxic legacy.  The point that was made to me was that in order to be taken more seriously the language needs to be toned down.

I look at the last 9 years as a wasted opportunity.  There have been marvellous economic conditions.  But New Zealand has continued to slide in relative terms.  Cullen has a left the Super fund and KiwiSaver.  Both heading in the right direction.  Michael Bassett has summarised the remainder of Clarks legacy much more eloquently than me and with a well informed perspective.  If you have not read it I commend it.

I believe Key has started to demonstrate to the New Zealand electorate why he was so successful in financial services.  Reaching out to Maori was a master stroke.  They are no longer marginalised like the Greens.  That decision will win the next election.  Key and the NAMU government have the opportunity to change the historical perspective of Maori and end 70 years of being patronised by Labour.  The example of Ngai Tahu is sufficient to explain why economic self determination is to be strongly preferred to patronising short termist welfarism.

There is an opportunity to complete treaty settlements, embed constitutional change and completely change the approach to Maori welfare and education.  To be fair Pita Sharples and his colleagues have recognised this and the opportunity is there to work with rather than impose upon.

In a positive scenario I see the following.  National savings in the super fund and elsewhere will be invested in improving the infrastructure of the country.  Building energy production, broadband, roads and bridges.  That spending will increase the wealth of the country by providing jobs and increasing the productivity of other export generating parts of the economy.

I see Maori participating in that as owners and not just as unskilled labour.  Rome and was not built in a day and Maori self determination will not be resolved in 3 years but there will be important steps in the right direction.

National spent broadly the same if not more of GDP on Health and Education.  Despite what the wilder accusations of the left might have you believe National is not about to chop spending to pieces.  What they will do is to involve the private sector and through that competition improve productivity both in the speed and cost of what the private sector does but also by forcing the state sector to examine its practices.

Electoral Finance, the Constitution, Police governance will be addressed.  They are important but not game changing.

There are some important missing parts of the jigsaw which I have only seen references.  I want to make it part of a separate posts because they are so important.  I hope they will remain themes of this blog and I hope to argue from a new philosophical perspective that encompasses the willingness to accept state intervention of the left and the libertarian aspects of the right.  These are the issues of

à         educating and skilling the underclass and

à         motivating and incentivising  productivity increases from  the export sector

à         Increasing the wealth of New Zealand through refining the brand

à         New Zealand’s contribution to global peace and prosperity

 

The state and John Key’s government have a role to play in all of these.  Leaving them to the market will simply not work.  New Zealand has been trickling slowly down the GDP per capita league tables.  That might seem a meaningless statistic but it has a hard reality in the amount of leisure time, the length and quality of life and in the natural urge of humankind to progress.

 

Letter to a greenie

I wrote this as an email to a relative who is also a Green.

 

Even though it came at the cost of a national mp i am pleased that ken graham has made it into parliament.  i think he wil be a valuable addition and as i sadi to you on the phone perhaps he can do for mainstream environmentalism in new zealand as his brother doug did for treaty settlements.

 

I think you will find the next 3 years will be preoccupied with using cullens newly created national savings to build infrastructure.  that is what will bring prosperity to new zealand rather than a further slide to second class world citizenship.

 

Key has shown he is going to engage with Maori and I think you will see that in 3 years time Maori have delievered for their constituents by advancing treaty settlements, ensuring welfare is reformed so it is a hand up and not a hammock for maori and sensibly boosting maori participation in education and commerce.  That will be a truly wonderful thing for Maori and for New Zealand if Maori are able to move on from 70 years of being patronised by Labour.

 

the challenge for the greens is to grow up and understand that shrill protest wil achieve nothing but parliamentary opposition and newspaper headlines.  working constructively might actually achieve something.

 

The ETS is going to be reformed.  Clark and New Zealand do not have the luxury of being able to afford to be on the bleeding edge of climate changes to economy.

 

Key is open to state investment in infrastructure.  If you want his attention and you want to reduce nz CO2 production then get your people to work on carbon reducing approaches to energy production.  dont waste time advocating reductions in consumer consumption.  it is at the supply end that genuine change will come.  you will get some success by supporting investment into energy production research.

 

Dont approach pastoral lease reform from the perspective of saving more snails.  work on the basis of the true economic value of those leases and the need for farmers to pay a fair value to new zealand taxpayers for that.

 

Dont sabotage new zealands economy by attacking the true green ness of production.  do the research to prove that environmental damage does more to damage the new zealand brand and reduce the value of our exports in the long run.  Brands have value for consumers because they provide something people can trust.  that is why people pay a premium for them.

 

The opportunity for New Zealand is to be the Waitrose of global food production.  We need to get past the commoditisation of our exports.  Our free range grass fed meat should not be exported as 75% chemical lean to be mixed in with factory grown beef from asia and the us.  It should be on processed and branded and command a premium because of the purity of its origins.

 

The part the Greens can play is to be the economic and environmental custodians of the brand.  Historically there have been many greens who are simply anti capitalist.  This simply gets in the way of understanding the best way to protect our environment is to value it properly.  as people get wealthier around the world they value a clean environment more.  And they value unadulterated lands even more.  The way Timberlands was finally discredited was because of the realisation there was a greater value to the virgin trees than to ripping down the forest to get at the timber.  That lesson does not appear to have been learned and applied elsewhere.

 

Key is going to win the next election because he occupies the centre.  The Greens can wait hopelessly for the next Labour government to ignore them again or they can move on from being watermelons opposed to all economic activity.  There is obviously a core element of green voters who will not understand as long as they breathe that market democracy is the best combination to bring prosperity and freedom.  They need to be handled in the same way National is a broad church of statist authoritarians and libertarians.

 

I would be interested to hear your views on where you think the Greens will go over the next 6 years.

The arrival of irrational pessimism

Havving long been a believer in irrational exuberance this was an interesting factoid.FT Alphaville » Blog Archive » The demise of irrational exuberance. I now believe the market to be irrationally pessimistic.  I just do not accept that no wealth has been created over the last 12 years.  The world is a much better place than it was 12 years ago.  The value of the 500 American largest companies and their capacity to create new wealth cannot have dimished that much.  Now is the time to buy banking stocks

Crisis factoid du jour, via Bloomberg: Alan Greenspan can stop worrying about “irrational exuberance” in the U.S. stock market, 12 years after he warned investors that share prices were rising too fast. The S&P 500 fell below 744.38 today, its closing level on Dec. 5, 1996, the day then-Federal Reserve Chairman Greenspan used the phrase in a speech on “The Challenge of Central Banking in a Democratic Society.”

Now we have competent leadership.

A great result tonight.  Waiting for the Clark concession call but the news is excellent. Election Results -- Overall Status.

Polling Places Counted:	6,232 of 6,304 ( 98.9%)
Total Votes Counted:	2,083,288
Special Votes:	205,386
Less than 6 votes taken in Polling Places:	1,251
Party	Party	%	Electorate	List	Total	right	left unaligned
	Votes	Votes	Seats	Seats	Seats
National Party	941,762	45.44	41	18	59	59
Labour Party	699,680	33.76	21	22	43		43
Green Party	133,548	6.44	0	8	8		8
ACT New Zealand	76,874	3.71	1	4	5	5
Mäori Party	46,654	2.25	5	0	5
Jim Anderton's Progressive	19,396	0.94	1	0	1		1
United Future	18,473	0.89	1	0	1	1
New Zealand First Party	87,361	4.22	0	0	0
			70	52	122	65	52

I have big ups for election organisation for overseas voters.  I simply downloaded a form, printed, signed in front of a witness and faxed it off.  Quicker even than going to a polling station.

The Clark legacy is toxic waste

Russel at Hard News posts

I doubt that history will assess the Clark-Cullen Labour governments as dismissively as their critics do now. Labour's real achievements -- net government debt reduced from 20 billion to two billion before the current crisis; unemployment down to levels many people didn't think possible; a huge drop in the number of welfare beneficiaries, especially per capita; real wage growth; GDP growth that outstripped the OECD for years; a historic turnaround of trends in poverty; the repair of a public sector that was in dire straits by the end of the 90s; a serious attempt to address our savings problem via KiwiSaver and the Superannuation Fund; and a degree of stability that we now all take for granted -- outweigh any counterfactual.

I posted the following as a comment there.  Time again to throw in a few thoughts. I completely disagree with your rosy assessment of Clark legacy. She is the most poisonous politician since Muldoon and arguably rivals him.
You dont see a ringing endorsement of state assistance when the state house bred kid made good beats the boarding schooled child of a rich landowner?
National & Winnie introduced a super scheme in the nineties and Labour opposed it for political reasons. It kept the money in individual accounts rather than the states. So they win now brownie points from history.
Gould identifies productivity growth as being the most important thing to aim for. It trumps working longer as it raises per capita income. And this government has broken the positive trend in productivity growth that started in 1993 after the National government solved the last financial crisis they were left with by a Clark government.

Gould is right that the high interest rates and over valued exchange rates have held NZ back. Both major parties bear responsibility for that poor strategy. They should fear inflation less now and reduce interest rates to US/UK levels.

Key is a pragmatist. Ideology does not win in currency markets. decisiveness and practicality does. he is not going to be blinded by any ideological model but is going to do what works. Which is why you see investment in New Zealand and a willingness to spend money on infrastructure.

Nothing Cullen did broke New Zealand. It was just the slow decline brought about by the owner stripping too much cash out of a business over the long term.

The failure to rein in LAQC was part of the cause of the real estate boom. National will deal with the bust and cretins will be accusing them in future of hard right policies rather than dealing with the mess Clark and ilk created. Just like the last time National took over from Labour.