Pontifical Council to World Hindus - Globalization Sucks!

The Pontifical Council for Interreligious Dialogue has issued a heads up to world Hindus for Diwali, the Hindu Autumn festival of lights.

In the message, released October 20 and entitled “Christians and Hindus: Together to Foster a Culture of ‘Inclusion,’” the Pontifical Council stated that “globalization has not achieved its primary objective of integrating local peoples into the global community. Rather, globalization has contributed significantly to many peoples losing their sociocultural, economic and political identities.”

Globalization, the message continued, has contributed to relativism, syncretism, “a privatization of religion,” and “religious fundamentalism and ethnic, tribal and sectarian violence in different parts of the world.”

“Nurturing a culture of inclusion thus becomes a common call and a shared responsibility, which must be urgently undertaken,” the Pontifical Council added. “It is a project involving those who care for the health and survival of the human family here on earth and which needs to be carried out amidst, and in spite of, the forces that perpetuate the culture of exclusion.”

It Worked for Capone, Now Let's Use It on Multi-Nationals

Tax evasion is a crime.   Multi-national corporations are criminals.  In fact, the G20 is warning that advanced countries are facing "global tax chaos" as multi-nationals evade taxes by laundering their revenues through low-tax or no-tax havens.

The buggers really do think they're above the law, a clear impression they've received from our politicians for thirty years or more.

On Friday, the [British] chancellor, George Osborne, will hail a two-year action plan drawn up by the OECD thinktank to clamp down on questionable international corporate tax practices.
The long-awaited report, prepared for a meeting of the G20 finance ministers in Moscow this weekend, says a "bold move by policymakers" is necessary to prevent a worsening in the position. The OECD calls it "a turning point in the history of international co-operation on tax".

The action plan sets out 15 initiatives for arming tax authorities around the world with the tools to crack down on some of the areas international leaders agree are among the most widely exploited by multinational tax avoiders. These initiatives are to produce a range of recommendations for changes to the tax treaty rulebook, with deadlines ranging from 12 months to two and a half years.

Among the highlights are additional disclosures multinationals must make to all tax authorities, helping officials know where to look for the worst avoidance. There are proposals to require companies such as Amazon with extensive warehouse networks in a country to pay more local tax; multinationals posting high-value "intangible" assets, such as brands and intellectual property rights, to tax havens will also be targeted, as will tax breaks introduced by individual countries that are seen as predatory.

The report sets out 15 separate actions the international community needs to take to modernise a tax system established in the 1920s. It argues the tax system is outmoded and unequipped to deal with mobile multinational firms that have found innumerable ways of avoiding tax, often by shifting profits to low-tax countries.

One typical way this scheme works is to ship an important commodity or component out of a low-tax country where you've set up a distribution subsidiary.   Say, for example, that you're a global coffee shop giant.   You ship the coffee beans your shops use at several times their fair market value from your tax haven.   Your coffee shops in London, Paris or New York, buy those beans at inflated prices thus effectively exporting actual profits, tax free.

But that's wrong, that's crooked, isn't it?   Not as far as the multi-national laundering its profits is concerned.  To them, that's business.    The way to stop this is to prosecute them from the CEO on down.   Indict them, put them through a public trial where working people can see what they've been up to, convict them and then show them to a nice suite in the Greybar Hotel.

Robert Reich on Bringing MultiNationals to Heel

Robert Reich argues there's just one way remaining to wrest domination from global capitalism.   We need multinational tax policy to halt the excesses of multinational corporatism.

As global capital becomes ever more powerful, giant corporations are holding governments and citizens up for ransom — eliciting subsidies and tax breaks from countries concerned about their nation’s “competitiveness” — while sheltering their profits in the lowest-tax jurisdictions they can find. 

Major advanced countries — and their citizens — need a comprehensive tax agreement that won’t allow global corporations to get away with this.

Google, Amazon, Starbucks, every other major corporation, and every big Wall Street bank, are sheltering as much of their U.S. profits abroad as they can, while telling Washington that lower corporate taxes are necessary in order to keep the U.S. “competitive.”

 Baloney. The fact is, global corporations have no allegiance to any country; their only objective is to make as much money as possible — and play off one country against another to keep their taxes down and subsidies up, thereby shifting more of the tax burden to ordinary people whose wages are already shrinking because companies are playing workers off against each other. 

Reich warns, however, that rightwing nationalist movements are spreading throughout North America and Europe, thwarting the very prospect of cooperative multinational action and thereby delivering us straight into the hands of multinational, global corporatism.

It's Time that Canada Found a New/Old Economy

By the time you're in your 60s you've developed a sense of a certain cadence to life, something like a master Circadien rhythm that regulates life on our planet.   Every now and then something happens and mankind skips a quarter or half a beat.   That's what happened in the Great Depression and World War II.  But before long we get back into the beat and life goes on.  We have families, we make plans, we look to the future silently trusting in the metronome of life.

We don't do well when our civilizational beat becomes erratic, unpredictable, unreliable and yet that's what seems to be happening increasingly, certainly over the past ten years.   Those institutions of government and economy to which we gave our trust and fealty and from which we expected a measure of benevolence and well being have severed their connections with us.   They've moved off to greener pastures.   The commonality of interest that we thought bound us all together is broken.

Yesterday I read The Failure of Free Market Capitalism and Economic Dissolution of the West  by former U.S. Deputy Treasury Secretary Paul Craig Roberts, a PhD economist.  It's available only as an e-book, something that prevents me from excerpting it at any length.

There's nothing particularly new in Roberts book but it's valuable for how he ties events together.  It's not a comfortable, assuring read for anyone on the approaching retirement or just starting out on the career path.   It's worse yet for those who already face employment insecurity.

Roberts book chronicles how we have given away our economic security and the future of our grandkids under the hollow promise of globalization.  He traces how we outsourced our manufacturing base to the Third World with the promise that our great future would be assured in a new, "knowledge economy" that, in turn, is being itself outsourced.

The book explains how this outsourcing played a major role in the massive transfer of wealth from blue and white collar workers to the richest of the rich, the 1%.   He delves deeply into the U.S. Bureau of Labor Statistics to explain his theories and sweep away the myths that have been used to blind us about globalization.  Roberts also depicts how globalized capitalism is incompatible with and ultimately destructive of our democracy and institutions.  Economists, he claims, have played dutiful whores to the undermining of western societies and their economies.

Roberts' economic theories have been controversial and widely criticized.   He is the father of Reagonomics, the "supply side" theory but he presents it merely as a vehicle for reconciling Keynesian economics' overemphasis on the demand curve with the aggregate supply curve.  He makes a point of criticizing those who used his supply side theories as a means of perpetrating the "trickle down" hoax of Voodoo economics.  That's a debate I'll leave to the economists.

An interesting discussion is had of how mainstream economics focuses on man-made capital without giving due recognition to the role of nature's capital, thus encouraging the exhaustion of nature's capital in pursuit of short-term profit at the expense of future generations.   Globalized capitalism, he argues, is extracting, pillaging even, the wealth that rightly belongs to future generations.

Roberts believes that unregulated capitalism is the main and inevitable cause of the recent global economic meltdown.   Private power and privilege will, if allowed, be abused.

The author explains how a globalized economy reveals the myths and contradictions of free trade that western societies have been conditioned to accept without question.   Offshoring, he argues, is not about free trade but is mere labour arbitrage between differently developed countries.

The consequences of deindustrializing are examined at length.  Roberts speaks of "tradable jobs" - those jobs that actually make things other nations might buy.  When nations give up their tradable job base they're left with service jobs and forced to import goods produced overseas by those outsourced tradable jobs.   While this inflates the profits for the rentier class, the investment class, their gains are vastly exceeded by the loss of GDP benefits from the lost manufacturing process and labour wages.

There are telling insights gained from the Bureau of Labour Statistics.   Since deregulation and the ascent of hyper-globalization, American job growth has been greatest for bartenders and waitresses.   Worse yet, the market for jobs requiring university education is in rapid decline.

"Jobs offshoring has moved to China and India not merely American jobs, the also the consumer income, tax base, GDP, supply chains, and life careers associated with the jobs."

"...official U.S. statistics prove that the U.S. has been unable for years to produce any jobs in the tradable category, whether manufacturing or professional services. ...the U.S. economy has only been able to create jobs in non-tradable domestic services such as waitresses and bartenders, ambulatory health care, and retail trade.   Before the real estate bubble burst, house construction was a [major] source of jobs."

"The current unemployment is unlike post-World War II unemployment.   During the second half of the 20th century, the Federal Reserve would raise interest rates and put the economy into recession in order to cool down the rate of inflation.  As inflation dropped and unemployment mounted, the Federal Reserve would reverse course and supply the economy with renewed growth in the money supply.  Stimulative policy worked in those days because the jobs still existed to which workers could be called back as consumer demand rose."

Roberts examines the double-whammy of job outsourcing, foreign labour importing, something that we're seeing in Canada's fossil fuel industry.

"It has not been possible for U.S. corporations to move all manufacturing and professional service jobs, such as software engineering, offshore.  Nevertheless, corporations have found another way to reduce their labor costs.  The corporations tell Congress that there is a shortage of labor and that they require more foreign laborers to fill the "skill gap."   The skilled workers brought in on H-1B work visas have no bargaining rights and are paid one-third less than U.S. wages.   The difference goes into corporate and shareholder profits.   Modern day capitalists are loyal only to money, not to country."

The author makes the case for abandoning globalization and the introduction of tariffs and tax policy to restore America's industrial base and its tradable job base.


"Since the days of President Franklin D. Roosevelt in the 1930s, the U.S. government has sought to protect employment of its citizens.  President George H.W. Bush, William J. Clinton, George W. Bush and Barack Obama have turned their backs on this responsibility.

"'Free Trade' and 'Globalization' are the guises behind which class war is being conducted against the middle class by both political parties."

"Jobs offshoring neutralized the productivity advantages that American labor enjoyed.  Working with superior capital, technology, and business organization, U.S. workers had nothing to fear from cheap labor abroad.   Americans were far more productive than Indians and Chinese and their high productivity was reflected in high wages."

"Offshoring makes it possible for firms using First World capital and technology to produce goods and services for the U.S. market with low wage foreign labor.  The result is to separate Americans' incomes from the production of goods and services that they consume."

"[Service] jobs offshoring, which began with call centers and back office operations is rapidly moving up the value chain.  Business Week's Michael Mandel compared starting salaries in 2005 with those in 2001.  He found a 12.7% decline in computer science pay, a 12% decline in computer engineering pay, and a 10.2% decline in electrical engineering pay."

Roberts points out that not even minimum-wage service jobs are safe for Americans, referencing a McDonald's burger joint that's experimenting with their drive-through order taking.  The order is transmitted via satellite to a central location in India or China and from there back to the person preparing the order.  They've found they get the orders correct more often and perform that function at costs below U.S. minimum wage.


The gutting of America's manufacturing base continues apace.   Between 2001 and 2005 the U.S. lost 17% of its manufacturing jobs.

"The declines in some manufacturing sectors have more in common with a country undergoing saturation bombing during war than with a super-economy that is the 'envy of the world.'  Between 2001 and 2006, communications equipment lost 43% of its workforce.   Semiconductors and electronic components lost 37% of its workforce."

"Judging from its ten-year jobs projections for the years 2004-2014, the U.S. Department of Labor does not expect to see any significant high-tech job growth in the U.S.  The knowledge jobs are being outsourced even more rapidly than the manufacturing jobs.   The so-called 'new economy' was just another hoax perpetrated on the American people."

"In January 2011 there were 1,132,300 more waitresses and bartenders than in January, 2001, a gain of 14%.  ...As of January, 2011, total government employment in the U.S. was 22,226,000, almost twice the number of Americans employed in manufacturing.

"The evidence is conclusive, 'globalism' or jobs offshoring has given U.S. employment a Third World complexion with jobs available only in government and nontradable domestic services."

And here's something truly chilling.


"The BLS projects that of the thirty occupations with the largest employment growth, only seven require university degrees.   The BLS projects jobs for university graduates to total 1,434,000 over the decade of 2008-2018.   This figure is only 60% of the number of university graduates projected by the National Center for Education statistics for the academic year 2011-2012 alone."

"A country whose work force is concentrated in domestic, nontradable services has no need for scientists and engineers and no need for universities."

"No one seems to understand that research, development, design and innovation take place in countries were things are made. 
the loss of manufacturing means ultimately the loss of engineering and science.  The newest plants embody the latest technology.  If these plants are abroad that is where the cutting edge resides."

"The U.S. economy did not develop on the basis of free trade.  If the costs that free traders attribute to trade protection are real, the costs did not prevent America's economic rise.   Indeed much historical research concludes that trade protection was the reason for America's rises as an industrial and manufacturing power."

As noted at the outset, Robert's The Failure of Free Market Capitalism is a wake-up call not just for the States but for all of us in the West.   There's so much more in his book that I can't deal with in this modest post.   As mentioned earlier, there's really nothing new in this book, just the way everything is tied together.

The global economy has to be jettisoned.   One of the reasons we're so dependent on resources, particularly bitumen, is because we have surrendered sovereignty over our domestic markets the very thing that empowers offshoring of our own manufacturing base.  It hasn't worked.  It's been based on myths and outright lies.

It's time to shift into steady-state economics, even Roberts gets that.  Let's take our markets back, restore our manufacturing base and our middle class and let's do it while there's still time.

The Real Enemy Isn't Debt, It's Globalization

Globalization has always been a scam.   It has always been a trade of something very valuable for a vague and quite unenforceable promise of enormous benefits for all.   What we traded away was sovereignty, our sovereign right to control access to our markets, our right to employ tariffs as an instrument of state policy.   And we surrendered that to just whom exactly?  Well to corporations, multi-national corporations that have such a terrific track record of honouring vague, unenforceable promises.  Now power has shifted, irretrievably, from nation state to corporation.  Nowhere is this more evident than in the United States with its "bought and paid for" Congress implementing corporatism at the expense of democracy.

An analysis published in The Guardian reveals that our leaders not only surrendered our sovereignty but abrogated their ongoing but unmentioned responsibility to maintain control of globalization.

After relying on it to deliver years of growth, lift millions from poverty, keep living standards rising and citizens happy, nation states look to have lost control of globalization.

In the short term, that leaves policymakers looking impotent in the face of fast-moving markets and other uncontrolled and perhaps uncontrollable systems -- undermining their authority and potentially helping fuel a wider backlash and social unrest.
..."In times of economic recession, countries tend to become isolationist and retrench from globalization," says Celina Realuyo, assistant professor of National Security affairs at the US National Defense University in Washington DC.

"Given the increased number of stakeholders on any issue -- climate change, the global financial system, cyber security -- it is unclear how traditional nation states can lead on any issue, let alone build consensus globally," she said.

The financial system, the Internet and even the supply chains for natural resources have quietly slipped beyond effective forms of state control.

These instruments of globalization have delivered huge wealth and kept economies moving with arguably greater efficiency, but can also swiftly turn on those in authority.
...It's unlikely that nations can genuinely pull back from globalised systems on which they have become reliant.


"The Net sees censorship as damage and routes around it," computer science guru John Gilmore said in 1993. In the modern, high-speed globalised system, one could say the same of attempts at financial and economic restrictions.


Many areas of the global economy have also become effectively "ungoverned space" into which a host of actors -- from criminals to international firms such as Google and Goldman Sachs to countless other individuals and groups -- have enthusiastically jumped.


International companies and rich individuals move money -- and even entire manufacturing operations -- from jurisdiction to jurisdiction to seek low wages, avoid tax, regulation and sometimes even detection. In many states, that helped fuel a growing wealth gap that is self producing new tensions.

..."For most of the last decade, growth and economic activity in many places has been driven by forces that were inherently unsustainable," says Simon Derrick, head of foreign exchange at Bank of New York Mellon.

"What's happening now is these... are coming under pressure and it's getting to the stage where that can no longer be ignored. But none of these issues are going to be politically easy to do anything about."


And yet we will struggle back against globalization and we will win if only because the result is essentially pre-ordained.  Global corporatism, let's call it what it truly is, functions on a construct of assumptions that are increasingly at odds with reality.  It is based on economic models well suited to the 19th and 20th centuries that are losing credence in the 21st.


During the 20th century mankind tripled in population but consumption increased six fold.  And in the first decade of the 21st century, the consumption footprint of the emerging economic superpowers has added enormously to this burden.   For globalization that would be great if only there was plenty to go around, more than enough resources to exploit.  But that's not the case.  We've run into a wall, actually a succession of walls.  In the process we will inevitably shift from growth-based economies into allocation-based societies.  Growth has been a powerful salve to soothe the less-desirable impacts of globalization but once we reach the growth limits of our inescapably finite planet, the balance shifts and globalization takes on the visage of a predatory scourge.


The way ahead for global corporations probably lies in global corporatism, the rise of the corporate state.  There are eerie signs that the lines are already being drawn with corporatism forging alliances with the political far right, the religious radical right and the emerging political militarism.  This has been well chronicled by the likes of Andrew Bacevich, Chalmers Johnson, Chomsky and others.  That presents the prospect of an intense struggle to preserve democracy that may be faced by our children and grandchildren even as they're being powerfully conditioned to embrace indifference, apathy and submissiveness.

The growth of state corporatism is rarely recognized for the actual threat to democracy it poses.  State corporatism, as in the case of America's "bought and paid for" Congress, seeks to implement, domestically, what globalization has achieved abroad such as low wages, tax exemptions, and gutted labour and environmental regulation.  That is precisely what organizations such as ALEC, the American Legislative Exchange Council, exist to achieve.  It is the vehicle by which corporatism obtains direct, political power.   The corporatist cabal is now actually writing bills for compliant legislators to enact.   Public interest is tossed out the window when corporate interest prevails.

Will Canada's Future Be Sold on the Auction Block?

With a major freshwater crisis setting in throughout South Asia, India and East Asia and warnings that already record prices for food staples may double by 2030, this is what you can expect for the future.    China is making a major land grab, this time not in Africa but in Argentina, and it's got people in the South American state nervous.

...the [Chinese] state-owned agribusiness company Beidahuang has joined the global scramble for land and water that has accelerated since food prices spiked in 2008.At the end of last year it was confirmed that the company had signed an agreement with the government of Patagonia's Rio Negro province that will provide the framework for it to acquire up to 320,000 hectares of privately owned farmland – along with irrigation rights and a concession on the big San Antonio port in the region.

Details of the deal, which are alleged to have been kept quiet until it had been completed, have been emerging in recent weeks as Chinese technicians started work. Beidahuang also reported a deal for 200,000 hectares of land in the Philippines in 2008, and has said it plans to buy substantial palm oil plantations and grain terminals this year as it pursues the Chinese government's policy of securing its food supply lines from abroad.

Argentinian environmental groups and constitutional experts are outraged. Eduardo Barcesat is a top constitutional lawyer who has been helping the federal government of the Argentinian president, Cristina Kirchner, draft legislation that would restrict foreign ownership of Argentinian land. The laws would also provide, for the first time, a full register of all landholding so that authorities can keep track of who owns what.

"Chinese and Indian people have been coming to Argentina over the last five years and would be happy to buy all our land, whatever the price. American businesses have been buying access to our water ," Barcesat said.   "We need our own people to eat well first, and after that we can feed the rest of the world. We want more small and middle-sized owners, we don't like the excessive concentration, and we want farmers who will be careful with the land, not exploit it ."

It's a smart move for the Chinese who don't need to be told about what's coming in the next decade or two.  They understand that global warming will radically transform 20th century notions of globalization.  They realize they can exploit their current liquidity in ways that will cushion the impacts they foresee coming.  Why compete on global grain markets at brutal prices forecast for our now permanent global food crisis when you can still pick up farmland abroad today for reasonable prices?

What's going on in Argentina should serve as an urgent wake up call for Canada's leaders.  Will we too allow foreign wealth to conquer by sale our own agricultural resources?  Up til now Canadians have been reasonably aware of the threats to our water resources.   But water is just one item on today's shopping lists of the emerging economic superpowers and the temporarily buoyant petro-states. 

We have to start paying attention to this.   We need a dialogue on our own future food security and our security of all other strategic resources.   Globalization will be changing over the next two decades, power and interests will be shifting.  This is no longer a matter of manufacturing Volkswagens in China.  It is about a redistribution of the very assets nations will most need to weather the rest of this century.  It is about reassessing sovereignty and how it can be bolstered to ensure that national assets, even those we may foolishly take for granted, can be preserved for the benefit of our own people.

Globalization is about to undergo seismic shifts.   We can either prepare ourselves for them or sit by and be overtaken by them.

This Is What Happens When You Surrender to "Free Trade"

My stomach churned as I read this paragraph in The Guardian:

"More and more, we hear that nothing can be done to tax major corporations because of the threat of how they would respond. Likewise, we cannot stop their price-gouging or even the government subsidies and tax loopholes they enjoy. "


It's a fair statement.  It might even be an understatement.  The question becomes how did major corporations gain the power to threaten our governments, our societies - the power to write our legislation?   The answer is simple.   We gave it to them.

Free trade, first regional and later global, was pitched on the notion of free movement of capital.   That was a lie.   With a few exceptions, capital has always been relatively free to be moved around the planet.   What Free Trade initiatives were all about wasn't capital but markets or, rather, unfettered access to lucrative markets for companies that took their capital elsewhere in search of lower taxes, laxer environmental regulation and weaker labour laws.

Why would Nike pay an American $25 an hour when it could get a guy in Vietnam to do the same job for $2 a day?   Why indeed when its target market nations had yielded their sovereignty over their marketplaces?  It's great to get labour at $2 a day provided there are still enough people making $25 an hour elsewhere to buy your damned shoes.  It's win/win for the corporations and lose/lose for the affluent nations that allow those companies free access to their markets.   Oh the richest of the rich, the rentiers, win of course.   Their dividends skyrocket on the spread.   But it's tough titty for the guy who loses his factory job and winds up in the "service" industry at half salary, propping up his lifestyle on cheap and easy credit.

Yes, corporations threaten us when we want to do something they don't like but that's only because we've loaned them the knife.   Why don't we take that knife back?   Why aren't we the ones able to threaten corporations?   Why don't we reclaim our sovereignty so foolishly surrendered by people of the ilk of Reagan and Mulroney?   All we have to do is call their bluff.   There will be "repercussions" initially but, then again, haven't we been living with the horrible repercussions of Free Trade for decades?

Bear in mind that globalization stands to become a far greater drag on world economies in coming decades.   World oil prices are going nowhere but up which is why we're so eager to exploit toxic, polluting, even deadly sources of unconventional petroleum.   We can't get the good stuff any more so we'll smoke the Burley Scrap right off the floor of the barn.   Globalization is founded on cheap, long distance transportation to move materials and products around the world.  That's going to become increasingly less viable.

Likewise as we enter upon an era of depleted or even exhausted resources, globalization again becomes less viable.   And, in case you haven't noticed, social and political upheaval which has already coined the term "Century of Revolution" is well and truly upon us.   Again that doesn't bode well for the future of globalization.

It's quite foreseeable that, overall, globalization may be poised to collapse under its own weight.   Shouldn't we be considering the possibility?   If globalization isn't the Holy Grail of global prosperity for the 21st Century, why in hell should we be allowing corporations to hold us hostage to their demands?   We should be launching a deglobalization initiative - something that would stop corporatism exploiting the poor and vulnerable in the Third World in order to exploit the rest of us in the developed world.  Enough is enough.   Time to take back our knives.

Another Lesson from Japan. Globalization Leaves Every Country Very, Very Vulnerable

Who would have thought that a massive wave washing ashore in northeastern Japan would shut down auto assembly lines in North America?   That's what happens in today's world of lean and fragile globalized manufacturing.

All the big Japanese auto manufacturers build cars in North America and almost everything in those cars is also made here.   Almost.   But there remains some 7-8%  of the components that come from Japan and you can't build, much less sell a car that's only 92% complete.

Because the industry’s global supply chain is so integrated, analysts predict that short-term disruptions of both vehicle parts and some popular models are imminent.

Not only is Japan’s ravaged northeastern region a major hub for auto parts suppliers and critical infrastructure that traditionally ensured the flow of goods to overseas markets, but persistent power outages have not let up.

For those reasons, Nissan Inc. said some Infiniti models, as well as the GTR and 370Z, could face delayed shipment to Canada and the United States. The North American supply of fuel-efficient cars such as the Toyota Yaris, Toyota Prius hybrid and Honda Fit is at risk because those cars are only made in Japan.

Shutdowns could affect Toyota Canada Inc. and Honda Canada Inc., which each have two assembly plants in Canada. Toyota employs about 6,200 workers and Honda employs around 4,600.

China & India Returning to Their Rightful Place at Top of the Heap?

Dr Kishore Mahbuani sees nothing surprising at the notion of India and China dominating the world economy. In fact, he says it's merely a return to normal.

The National University of Singapore professor says that for all but the last two centuries of the last two thousand years, China and India have been the world's dominant economies.

"In the 19th and 20th Century, first Europe took off and then North America," he says. "But the last 200 years were historical aberrations."

Just as Genghis Khan once established an empire that covered more than one fifth of the Earth's surface, stretching from Japan to Eastern Europe, many people feel that China and India are creating Asian world powers once again.

"This crisis has had an enormous impact on Asian minds," he says. "The West was telling us they knew how to run the world, telling us how to create the best economies in the world. How can you believe that any more?"

The US model of capitalism has delivered substantial benefits, however, not least in Asian economies. When China and South Korea copied Western ways of thinking and marketing, their economies took off.

Dr Mahbuani believes that one of the fundamental things Asians have learnt from the West, is the virtues of free market economics.

"It is a question of pragmatism," he says. "Asian states are rising because they have finally understood, absorbed, and implemented the best practices."

There are two serious questions about the predicted ascendancy of China and India. First, is the Western model of globalization really going to survive if we become subordinate economies? The whole idea was premised on the West remaining economically (as well as politically and militarily) dominant.

The second question is environmental. China and India are poised to be the nations hardest hit by climate change. The loss of the Himalayan glaciers will leave both countries unable to feed hundreds of millions of their people and beset by destabilizing social unrest. Sea level rise, severe weather events, general warming - both are particularly vulnerable to these also.

The ascendancy of China and India isn't going to be some smooth, seamless transition. I don't see the West agreeing to go gently into the night.

America's Fiscal Tsunami

It wasn't that long ago that our own Stephen Harper mocked Canada as a backward nation where taxes were higher and yet the standard of living was decidedly lower than in our next door neighbour, the United States.

Yes, our taxes were higher - back then. What we didn't realize was that much of the discrepancy was due to where our respective governments secured their revenues. We taxed our population, our businesses. Americans, by contrast, kept taxes artificially low by making up the difference in enormous sums of money borrowed from foreign lenders.

American governments - municipal, state and federal - kept taxes low by pledging the good credit of generations of wage-earners not yet born. Why? How could they do something so dastardly? Easy. To cite Clinton, they did it because they could. They did it because foreign lenders were willing to throw cash their way.

The other trick they pulled to keep taxes artificially low was to curb infrastructure spending. The superhighways and turnpikes, the overpasses and bridges of which Americans were so proud in the 50's were no longer recognized as keys to their country's economic prowess and were allowed to fall into decay. America's very future was discarded and left to rot - but, my goodness, taxes were really low.

The key to this low-tax, high-debt fiscal madness has always been to keep the focus short. Feel good today, forget about who will pay for it later. Enjoy. For those of you who still believe that Ronald Reagan and the Reaganites who followed were the best thing that ever happened to America, I'll reproduce my favourite chart below. The red lines are the feel good today, forget about the future presidencies.



This sort of malpractice resembles an unnoticed tsunami. It spends most of its time crossing the sea where it's a barely noticeable swell. It's only at the last minute as it approaches the coast that the shallow waters transform it into an enormous wave of astonishing destruction.

The United States is about to be visited with the tsunami of its own making, the self-devastation people like Stephen Harper so openly admired. One sign of this apocalypse is found in America's skyrocketing costs for higher education. The New York Times reports that a study by the National Center for Public Policy and Higher Education shows that rising costs are putting higher education out of reach for most Americans:

Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007, adjusted for inflation, while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.

“When we come out of the recession,” [Center President Patrick M.] Callan added, “we’re really going to be in jeopardy, because the educational gap between our work force and the rest of the world will make it very hard to be competitive. Already, we’re one of the few countries where 25- to 34-year-olds are less educated than older workers.”

Of course the easy answer is to start throwing tax dollars at the problem, right? Perhaps, except that the cupboard is bare thanks to borrowings, tax cuts for the rich and military adventurism abroad. Everyone, from big business, to state and municipal governments are scrambling for federal bailouts. To make those bailouts, the feds are going to have to borrow the funds from foreign lenders.

While college is becoming unaffordable for an increasing number of
Americans, India is opening 29-new technical universities every year while China turns out high-quality engineers on a scale that utterly dwarfs America's performance. This is a critical problem for a self-described, "knowledge based" economy.

Reagan and Mulroney probably didn't understand the Pandora's Box they were opening when they championed free trade and globalization. Yes, it did generate real, tangible benefits in the short term but at a real cost that would have to be paid just a few decades later. Their vision failed to recognize the tsunami effect of using a powerful, affluent nation's wealth to grow the economies of its rivals.

To condemn globalization is to be branded apostate, even today. And yet its devastation has arrived on our shores in an unstoppable wave in less than three decades.

During the late 40's, America's economic dominance was complete. North America held something in the order of 70% of the world's manufacturing capacity - all those spanking new plants and equipment established to build tanks and guns and airplanes for the war - while everyone else's plants were either antiquated or reduced to rubble. If you were in a distant country and you needed a truck, chances were you would be getting something built by Ford or Chevrolet or Dodge.

It's bad enough that the shoe's now on the other foot but did we have to put it there?

Outsourcing Your Very Life

What's this woman doing? Whatever it is, she's doing it in a really nasty, ill-lit and unhygenic looking spot.

You can thank the New York Times for that photo. It shows a Chinese woman processing pig intestines, the mucus membranes from which are used to make the blood thinner Heparin. Hmmm, is squalor what you think of when pharmaceuticals come to mind?

"After many near misses and warning signs, the heparin scare has eliminated any doubt that, here and abroad, regulatory agencies overseeing the safety of medicine are overwhelmed in a global economy where supply chains are long and opaque, and often involve many manufacturers.

“In the 1990s governments were all about trying to maximize the volume of international trade,” said Moisés Naím, editor in chief of Foreign Policy magazine and author of “Illicit: How Smugglers, Traffickers and Copycats Are Hijacking the Global Economy.” “I’m all for that, but I believe this decade is going to be about maximizing the quality of that trade, not quantity.”

Mr. Naím said the heparin scare is already having a “huge” impact, fueling worldwide anxiety over imported medicine and a growing demand for consumer protection.

The way heparin is made and distributed illustrates the challenges. The drug’s raw material comes from mucous membranes in the intestines of slaughtered pigs. Those membranes are mixed together and cooked, a process that in China often takes place in unregulated family workshops.
It is then transported to middlemen, called consolidators, who direct the product to plants in China that manufacture heparin’s active ingredient for shipment to either another trader or the finished dose manufacturer. In the United States, the tainted ingredients ended up at Baxter International, which later had to recall the blood thinner.

Since the outbreak in the United States, Japan and several countries in Europe have recalled certain heparin products made with Chinese ingredients. In some instances, European traders buy and sell the heparin to companies in other countries, extending the supply chain even more.

Anti-counterfeiting experts say that the longer the chain, the greater the opportunity for counterfeiters to adulterate the product. In fact, F.D.A. investigators have yet to figure out where in the multistage manufacturing process the chemical that mimics heparin was added."

First it was lethal pet food, then toxic toothpaste, lead painted toys, now it's blood thinners. C'mon people, something has to give. We either deal with this properly - now - or, I swear, we will lose control of this problem.