The Economic Impact of a War Between Japan & China

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“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
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.

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Drugs: A Legal Market is not a Free Market

English: Flower of a Opium Poppy
Image via Wikipedia

A couple days ago, Otto Perez Molina, recently elected as President of Guatemala; announced that he was willing to decriminalize the commercialization of drugs. According to U.S. authorities, Guatemala has became the transshipment point for more than 75 percent of the cocaine smuggled into the United States since 2005.  Along with this, the Opium poppy cultivation is already done in large parts of the countryside making the production of Guatemalan heroin a greater and the newest worry for the United States. The country’s elites are already part of this business and the paranoia of crimes that used be a remembrance from Colombia‘s 1990s history seems to be repeating in these Central American countries.

What impresses me the most now is how this news has started spreading around my Facebook contacts (mostly libertarians and liberals). Both groups seem to be happy to hear this announcement by Guatemala’s President.  However, both groups applaud the news for different reasons.  The legalization/decriminalization of drugs will not be the panacea we all are hoping for.  Specially not if started by any of the Central American governments.  The reasons are many and I will begin by listing some of them to open the discussion,

  • Corruption, lax enforcement, and judicial impunity levels in Central America are among the highest of the world.
  • Drug lords and their new and powerful money have been mentioned by many analysts to be already part of the politic and economic elites of these countries.
  • The Central American countries in which this drugs are produced and transported are inhabited by a large majority of people living in the lowest leves of Human Development.
  • If legalized, the trade, production and commercialization of drugs (cocaine and heroine mainly) will be regulated by these governments.
  • Without any doubt, this regulations will enable and create legalized monopolies ruled with the partnership of previous drug lords and government officials.
  • It has not been advocated by any of the political leaders which road would take the legalization of drugs. This is important, because under current legalization procedures it is not the same to get the approval for a new medicine in the market as to get the approval for a new liquor, a new energizing drink or of a new edible product.

The history of the legalization (production, trade and commercialization) of items considered by many as drugs and for others as commodities has shown that for as long as a government elite hold the power to legalize it; it was in their power to take the first steps into the acquisition of a monopoly of its trade and production.

If legalized, the emergence of a coercive monopoly would be inevitable. As noted by Ayn Rand, the governments and their partners in these coercive monopolies “will be able of setting the initial prices and production policies independently of the market, with immunity from competition, from the law of supply and demand. An economy dominated by such monopolies would be rigid and stagnant.”

If we support the complete and absolute free trade of all commodities it is necessary that we do not grant to government an intrinsic right to regulate it.  No compromise should ever be done with a government that requires regulation in order to give us legalization.  Legalization should result in freedom and not in regulation.  The drug trade should be opened to businessmen and entrepreneurs in the freest way possible. The freest way is that of requiring the traders to inform their buyers about all the necessary information about the products they are offering.

We may be taking part in a historical moment in which the most important thing are principles.  Let us remember that one of the most valuable principles of trade is Freedom; and that one of the most valuable principles of government is to seek that i will Protect Individual Rights and not to regulate their lives.

Note: To understand more which are the principles that really matter in this discussion, I invite you to take a look to the video titled: The Drug War in Guatemala: A Conversation with Giancarlo Ibarguen.

Dec. 7, 1941. Pearl Harbor Attack Footage

Video of original footage of the Declaration of War to Japan

This footage of the Japanese attack on Pearl Harbor was shot by CWO4 Clyde Daughtry. The attack occured at exactly 7:55 a.m. Hawaii Time. The original footage has since been lost, and the poor quality of this footage is due to the fact that it is a copy, and believed to be the best remaining version of this film in existence. Among the many valuable portions of this footage are shots of USS Nevada (BB-36) underway and firing back at Japanese aircraft, USS Oglala (CM-4) rolling over and sinking, and USS St. Louis underway (CL-4). Naval History and Heritage Command, Photographic Section, UM-10.

From One Prohibition to Another (1933-2011)

On December 05, 1933 the Prohibition on the production and commercialization of Alcohol was finally over in the United States when Utah became the 36th U.S. state to ratify the Twenty-first Amendment to the United States Constitution. Thus establishing the required 75% of states needed to enact the amendment (this overturned the 18th Amendment which had made the manufacturing, transportation, import, export, sale, and consumption of alcohol and alcoholic beverages illegal in the United States).

Since then, the alcohol industry (widely hated and considered evil before 1933) started developing into one of the most successful industries of the modern world.  The access to competition ignited an immense diversification of marketing, production and commercialization strategies that improved the quality, safety, additives and capabilities of the previous distilled liquors.

By 2010 The world’s five biggest alcohol companies by market cap had their hubs in Beligum Anheuser-Busch Inbev (BUD), Brazil (Companhia de Bebidas das Américas (AMBEV) (ABV); United Kingdom (Diageo plc (DEO), The Netherlands (Heineken (HINKY.PK) and France (Pernod-Ricard (PDRDF.PK).  And the industry gives provides with jobs to millions of workers around the globe.

Today, in 2011 we face a different but at the same time similar Prohibition of a product.  I refer to the research, production, industrialization and commercialization of controlled drugs (marihuana, cocaine, etc.) that has been condemned by world government with the same irrational argument once used with alcohol.

Because of this Prohibition on Drugs; the world is facing a Trillionaire war leaded by the United States politicians who profit from it. More so, millions of jobs are lost every day and in the countries in which it is produced and stored before reaching the final markets the chaos reigns (for just one story of how this chaos come into being check: The Drug War in Guatemala: A Conversation with Giancarlo Ibarguen).

Let us learn from history and save our children and future generations from committing the same mistakes.

Republican Debate Highlights on Foreign Policy and National Security

Its been long since the last time I heard a candidate from the GOP really defending the values of fiscal conservatism, respect for individual freedom and a non-interventionist foreign policy for the US in a debate. I have heard it in some Democrat candidates from past debates but never in a Republican debate.  Luckily, I was happy to hear Ron Paul doing so and getting my support and applauses.

Last night, November 23th 2011, CNN, the American Enterprise Institute and the Heritage Foundation sponsored a debate on foreign policy. I leave you now with an interesting summary and some notes done by CBS of the most relevant candidates:

  • WINNERS:

Ron Paul

This was the Texas lawmaker’s strongest debate, getting lots of airtime and challenging many of his rivals about U.S. foreign policy. His views are not in the mainstream of Republican orthodoxy, but he is consistent in his beliefs and not afraid to tell voters what he really thinks. His fundraising numbers could go up in the short-term, based on his debate performance Tuesday night, even if long-term it may be hard for him to broaden his support.

Newt Gingrich

Success begets success. Newt has done well in past debates and it has helped him in the polls. With his polling success, moderators gave him more airtime, which allowed the one-time afterthought and current front-runner to show off his debating skills. He took a risk by going against conservative Republican orthodoxy on immigration, and that could backfire, but overall Gingrich showed that he has been thinking about these issues for decades. And since it was a debate focused on foreign policy, no one asked him about his relationship with mortgage giant Freddie Mac and the $1.6 million he earned, which also helped the former House speaker.

Jon Huntsman

As the former ambassador to both China and Singapore, Tuesday’s national security debate was Jon Huntsman’s moment to shine. And for the most part, he succeeded: Huntsman, who touted throughout the debate his experience living abroad, presented clear policy positions on Pakistan and Afghanistan – at one point getting into a heated debate with Mitt Romney over the Afghan troop drawdown ¬- and even managed to bring the conversation back around to the American economy. Perhaps for the first time in the campaign, the former Utah governor was able to set himself apart from the rest of the GOP crowd.

Michele Bachmann

Despite having largely been written off as a major player in the race for the Republican presidential nomination, Rep. Michele Bachmann delivered a strong performance in Tuesday’s debate, demonstrating her confidence discussing policy issues, and taking her competitors to task when they faltered. In a heated exchange with Rick Perry over providing aid to Pakistan, the Minnesota lawmaker blasted the Texas governor for what she described as his “highly naïve” take on the issue; later, she sparred with Newt Gingrich for his stance on immigration. Whether or not Bachmann’s performance was strong enough to get her back in the game remains to be seen – but she certainly earned more screen time than in recent debates.

Mitt Romney

Romney had one of his worst performances of the 11 debates so far, but he still managed to do fairly well. Romney is a front-runner for a reason: he has been running for president for five years and that practice has paid off for the former Massachusetts governor. Romney skillfully turned questions about foreign policy into answers about domestic issues where he was able to contrast his own positions with those of President Obama, cementing the idea that this race is going to come down to Romney and one other candidate.

Rick Santorum

Rick Santorum is still widely considered a long-shot candidate, but he earned his fair share of airtime in Tuesday’s debate. And while the former Pennsylvania senator may not have said much to change how America feels about him – he endorsed racial profiling Muslims and mistakenly referred to Africa as a country – he made his best effort to make his way back onto the public’s radar.

  • LOSERS

Herman Cain

Herman Cain did not have the standout moment he needed to prove to voters he has a command of foreign policy. After surging in the polls, Cain’s campaign has lost momentum in recent days, most notably after stumbling over a question regarding Libya. The only memorable moment from Cain in this debate came when he flubbed debate moderator Wolf Blitzer’s name, calling the CNN anchor “Blitz.”

Rick Perry

The Texas governor took some bold positions during this debate, but his policy stances were vigorously challenged by his colleagues. Perry almost seemed to immediately backtrack on the tough stance he took against foreign aid to Pakistan after Michele Bachmann called his position “naive.” Perry was also on the defense when other candidates — Mitt Romney, Herman Cain and Ron Paul — said they disagreed with Perry’s assertion that the U.S. should consider a no-fly zone over Syria.

The Lord’s Resistance Army: End Game?

Ugandan districts affected by Lords Resistance...
Image via Wikipedia

Nairobi/Brussels, 17 November 2011 (via International Crisis Group): Insufficient political will has thwarted regional efforts to stop the murderous Lord’s Resistance Army (LRA) but vigorous diplomacy led by the African Union (AU), an immediate military push and complementary civilian initiatives could end the misery of thousands.

The Lord’s Resistance Army: End Game?, the latest report from the International Crisis Group, explains why Uganda’s half-hearted three-year offensive has failed to eliminate Joseph Kony‘s guerrilla band and why there is now a new window of opportunity. Since peace talks with the erstwhile northern Ugandan insurgency collapsed and a first assault on Kony’s camps was botched in late 2008, the Ugandan army has been trying to catch scattered groups of fighters along the borders of DR Congo (DRC), the Central African Republic (CAR) and South Sudan. In that period, the LRA, now only a small but deadly criminal and terror band, has killed some 2,400 civilians, abducted some 3,400 and caused 440,000 to flee homes.

“The reasons for the military failure are at root political; Ugandan President Museveni scaled down the anti-LRA mission to pursue other ventures that would win him greater political capital at home and abroad”, says Ned Dalby, Crisis Group’s Central Africa Analyst. “Since the LRA no longer poses a threat to northern Uganda, few opposition politicians or community leaders there demand Museveni finish it off”.

Uganda’s efforts to pursue combatants in DRC have been dogged by the host army’s refusal to cooperate and grant access to LRA-affected areas. Uganda invaded DRC in the late 1990s, plundered its natural resources and earned President Joseph Kabila‘s lasting mistrust. CAR President François Bozizé, equally suspicious, has insisted the Ugandans leave diamond mining areas in his country.

At the request of some members, the AU stepped forward and said it would authorise a counter-LRA mission. It plans to appoint a special envoy to smooth relations between Kinshasa and Kampala and create new military structures to improve coordination between the armies. However, planning has foundered due to political constraints and the African body’s limited capacity.

The Ugandan army, with its record of abuse and failure to protect civilians is an imperfect vehicle, distrusted in the area. Kampala’s commitment now that the LRA no longer directly endangers its interests is reason for scepticism it has the will to see the job through. But a military operation combined with civilian efforts to entice surrenders remains the most feasible solution, and the Ugandans are the only troops at hand for this. The U.S. is strengthening its political and military engagement, including by sending several score advisers to help them in the field on a short-term basis. Kony is believed to be in the CAR. Before he crosses back into DRC and while U.S. support is strong, the Ugandan army should make an urgent military push, prioritising civilian protection, humanitarian access, better coordination and strict accountability.

To ensure dividends, the AU must live up to its responsibilities as guarantor of continental security and oversee a multi-dimensional regional initiative, continuing after Kony’s death or capture. It should appoint quickly a special envoy to rally the political commitment of Uganda and the three affected states and introduce a common operational and legal framework for the military operation, keyed to civilian protection, thus giving continent-wide legitimacy. Uganda and the U.S. should fold their efforts into the initiative.

“The LRA issue illustrates the desperate need for African and international actors to fulfil their responsibility to protect”, says Thierry Vircoulon, Crisis Group’s Central Africa Project Director. “Ensuring complementarity between the political and military actions of all stakeholders is key to their success and to ending a 24-year-long history of violence”.

Executive Summary | Full PDF report |