The Economic Impact of a War Between Japan & China

“The United States believes that the establishment of diplomatic relations with the People’s Republic will contribute to the welfare of the American people, to the stability of Asia where the United States has major security and economic interest, and to the peace of the entire world.”

President Jimmy Carter

Diplomatic Relations Between the United States and the People’s Republic of China United States Statement

The American Presidency Project. December 15, 1978

Unfortunately, this is not a conspiracy theory. 2013 is a decisive year to deter the escalation of a war between Japan & the People’s Republic of China. Who can stop it? According to this impressive video, the United States of America has a decisive role to play in this global arena.

A major conflict between the region’s two largest economies would not only impose a harsh dilemma on U.S. diplomats, but also have a significant impact on the entire global economy. It is in every nation’s best interest that the Chinese and Japanese settle their territorial dispute peacefully.

The team at One Minute MBA explains that

“The conflict between China and Japan has put the United States in a precarious position: if a full-scale war were to erupt, the U.S. would be forced to choose between a long-time ally (Japan) and its largest economic lender (China). Last year, China’s holdings in U.S. securities reached $1.73 trillion and goods exported from the U.S. to China exceeded $100 billion. The two countries also share strong economic ties due to the large number of American companies that outsource jobs to China.

However, the U.S. government may be legally obligated to defend Japan. In November, the U.S. Senate added an amendment to the National Defense Authorization Act that officially recognizes Japan’s claims to the disputed islands; the U.S. and Japan are also committed to a mutual defense treaty that requires either country to step in and defend the other when international disputes occur. Not honoring this treaty could very easily tarnish America’s diplomatic image.

The countries of the Asia-Pacific region are collectively responsible for 55 percent of the global GDP and 44 percent of the world’s trade. A major conflict between the region’s two largest economies would not only impose a harsh dilemma on U.S. diplomats, but also have a significant impact on the entire global economy. It is in every nation’s best interest that the Chinese and Japanese settle their territorial dispute peacefully.”

To read the entire video transcript please visit this link.

For All the Tea in China

22 February, 1784: The first American trade ship to China weighs anchor in New York City. The history of trade between China and the West is fraught with conflict and cultural complications, as demonstrated by the audacious 19th-century attempt by the British to steal China’s tea crop and transplant it to its own plantations in India. The caper is recounted in Sarah Rose‘s FOR ALL THE TEA IN CHINA.

In the dramatic story of one of the greatest acts of corporate espionage ever committed, Sarah Rose recounts the fascinating, unlikely circumstances surrounding a turning point in economic history. By the middle of the nineteenth century, the British East India Company faced the loss of its monopoly on the fantastically lucrative tea trade with China, forcing it to make the drastic decision of sending Scottish botanist Robert Fortune to steal the crop from deep within China and bring it back to British plantations in India. Fortune’s danger-filled odyssey, magnificently recounted here, reads like adventure fiction, revealing a long-forgotten chapter of the past and the wondrous origins of a seemingly ordinary beverage.

The legacy of George Washington’s Postal Service Act of February 20, 1792

127304 600 End of Saturday Mail Delivery cartoons

WASHINGTON — Faced with billions of dollars in losses, the Postal Service announced on Wednesday (Feb. 06 2013) that it would seek to stop Saturday delivery of letters, a sweeping change in mail delivery that immediately drew criticism from postal unions, some businesses and lawmakers.

What went wrong I wonder? Would it had been better if George Washington had never passed the Postal Service Act of 1792? How many billions would taxpayers have saved since then? Would private companies like the American Letter Mail Company of Lysander Spooner have served better the market? Or would the system have collapsed without government intervention?

In February 20, 1792 the Postal Service Act, establishing the United States Post Office Department was signed by President George Washington. An interesting date to remember in these days in which the Postal Service made it to the news with their Losses and their controversial solution by ending Saturday Letter Delivery.

We know for certain that in a free market no company would survive if they had kept losses as huge as the one USPS has had over all these years. They had losses of $15.9 billion only last year. A principle of free market transactions is that in competing there appears a beneficial rivalry among sellers trying to achieve goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion. Thus, enabling for those companies which succeed in growing larger and for those companies which fail to disappear. With the existence of monopolistic services (like the Postal Service in the US) industries and business sponsored by government disrupted market transactions (bureaucratically made) and thus enabled for failing companies to continue existing even though they were not beneficial for society in the long-term.

126863 600 going postal cartoons

This reminds me to the company founded Lysander Spooner whom “being an advocate of self-employment and opponent of government regulation of business, Spooner started his own business called American Letter Mail Company which competed with the U.S. Post Office. Postal rates were notoriously high in the 1840s,^[7] and in 1844, Spooner founded the American Letter Mail Company, which had offices in various cities, including Baltimore, Philadelphia, and New York.^[8] Stamps could be purchased and then attached to letters which could be sent to any of its offices. From here agents were dispatched who traveled on railroads and steamboats, and carried the letters in hand bags. Letters were transferred to messengers in the cities along the routes who then delivered the letters to the addressees. This was a challenge to the United States Post Office’s monopoly.^[7]^[9] As he had done when challenging the rules of the Massachusetts bar, he published a pamphlet titled “The Unconstitutionality of the Laws of Congress Prohibiting Private Mails.” Although Spooner had finally found commercial success with his mail company, legal challenges by the government eventually exhausted his financial resources. He closed up shop without ever having had the opportunity to fully litigate his constitutional claims. The lasting legacy of Spooner’s challenge to the postal service was the 3-cent stamp, adopted in response to the competition his company provided.^[10]“

Lets have this as food for thought…

Article recommendation: Twentieth Century Flick: Business History in the Age of Extremes

I apologize for posting much these last weeks. I have been quite busy reading journals on Global Value Chains, Deviant Capitalism, Black Market Trade and theories on Global Political Economy. While this has driven me nuts… it has also made me pay attention to the field of Business History.

Business history is not the history of Capitalism and it is also not the history of entrepreneurship. The research in this field is mostly controlled by an European institutionalist approach. And in the latest decades, it has gained more insights from economic and business studies that are highly afflicted by neo-marxist approaches of the 20th Century. So, if you are interested in learning about this particular area of research here is the info for a good article on the topic that may get you also interested, and provide you with further bibliography.

Twentieth Century Flick: Business History in the Age of Extremes
Priemel, Kim Christian (2012)
Journal of Contemporary History vol. 47 (4) p. 754-772

.Full Text (PDF)

Conference: Global History of Agrarian Labor Regimes, 1750 to 2000 (Harvard University)

My interest in Agrarian Labor Regimes was first awaken in my research on Opium trade in India. Since then, more readings have made me realize the complex structures behind the history of agrarian labor in a global context.

If you are also interested in the topic, the *Weatherhead Initiative on Global History (WIGH)* at Harvard University is planning a conference for *April 2013* that is focusing on changing labor regimes within global agriculture.

As posted by Blog de la AMHE by Manuel Bautista, they are interested in exploring the diversity of labor regimes, the paths along which they changed, and—most especially—the connections between these changes in different parts of the world. We are interested in work that explores the connected histories of propertied farming, sharecropping, wage labor, slavery, *cultures obligatoires*, and other such forms of labor, and how they have been connected to the spatial and social spread of capitalism.We are seeking proposals from historians, political scientists, economists, sociologists, and anthropologists at all stages of their academic career, including graduate students. We encourage proposals from those in relevant career paths or institutions outside the university. We are particularly interested in forging a global discussion of these topics, and therefore welcome especially contributions from outside North America and Europe.

The conference will try to balance broad comparative papers and revealing case studies. The Weatherhead Initiative on Global History is a newly created center that responds to the growing interest at Harvard in the encompassing study of global history. The Initiative is committed to the systematic scrutiny of developments that have unfolded across national, regional, and continental boundaries as well as to analysis of the interconnections—cultural, economic, ecological and demographic—among world societies. For further information about WIGH as well as the conference, please consult our website at http://wigh.wcfia.harvard.edu.

Proposals should include an abstract of no more than two pages and a brief curriculum vita. Please email your submissions to Jessica Barnard ( jbarnard @ wcfia.harvard.edu ) before *November 30, 2012*. Travel expenses as well as accommodation will be covered.

Holger Droessler hdroessl @ fas.harvard.edu