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3 New Thoughts on China’s Emergence as a Superpower

September 6th, 2012 // 2:19 pm @ Oliver DeMille

There is a lot of recent chatter about China, even though Iran is the big topic in international affairs.

Recent articles and books on China mostly center around one of two themes.

One side argues that China is a serious and growing threat, the other that China is misunderstood and Washington should do more to cooperate with Beijing.

A third, more relevant, argument is needed, and it goes something like this: China isn’t the problem, Washington is!

Three Trends

Consider the following three trends:

1-Many China experts in the West criticize China because it is becoming a superpower without showing much likelihood of getting involved in world leadership.

But this is actually a normal historical pattern. New superpowers benefit because the older superpowers are overextended around the globe trying to “exert leadership” in every part of the earth.

For example, Britain’s overreach made it simple for the U.S. to become a superpower, just as Spain’s overextension did the same for Britain. Rome did the same thing. Critics say that it was Hitler who weakened the UK, but imagine how strong London would have been if it had stopped trying to police the world for the decades before Hitler and had instead built its wealth and strength. Hitler may well have declined to spread across Europe in the face of such power.

One would think that an old superpower in a battle with a rising new threat would be smart enough to reduce its global overreach and return to the things that once made it competitive. But, historically, logic seldom reigns in superpower decline.

2-China is currently involved in aggressive currency competition. It seems to want the U.S. currency to be weakened, and for the U.S. credit rating to be downgraded again. It is also pushing for the dollar to lose its world reserve currency status (which allows Washington to print money at will without metal backing).

When this same thing occurred to Britain in the 1970s, the British economy was deeply hurt and still hasn’t fully recovered. In fact, the average net worth of most people in the UK was decreased by more than 30% overnight when this happened.

Such a circumstance in the current U.S. would be a major boost for Chinese power in the world, and the American economy is presently vulnerable. The natural consequence of such a development would likely come in two stages. First, a new reserve currency would be an IMF or other international tender backed by currencies from several top nations including the U.S., EU and China. Second, eventually China’s currency would be adopted as the world reserve.

This is not a far-fetched possibility. As mentioned above, it happened to Britain as recently as the 1970s.

Shockingly, while China is actively promoting this scenario, Washington is basically ignoring it and suggesting tax increases, increased government spending, and more regulation. This plays right into the Chinese strategy, and is worse than the old clichés of arranging chairs on the deck of the Titanic or fiddling while Rome burns. We have time to turn this around, but Washington is preoccupied with increasing taxes and regulations, both of which actually strengthen the Chinese agenda.

3-Chinese firms (government owned) are buying up many of the world’s natural, mineral and energy resources on all continents—including North America. U.S. firms can’t compete with such purchases because of the regulations and extra costs required by the federal government. Washington is literally refusing to compete with China and forbidding private American companies from doing so either.

Don’t Blame China

As I’ve written before, we shouldn’t blame Beijing for this. It’s natural to try to increase one’s power and place in the world. Good for the Chinese for expanding their influence and wealth! That’s the pursuit of happiness.

But it is amazing that Washington won’t let U.S. free enterprise compete fairly in this contest. If Americans want to compete with the emerging Chinese Century, we should give freedom a chance. Free enterprise is significantly and demonstrably more effective than the kind of centralized state economics used in China.

But a federal government in Washington that is highly bureaucratized and addicted to more regulation isn’t much better. In fact, when a Chinese company with the backing of Beijing competes with an American firm that is highly hampered by Washington, it isn’t surprising that the Chinese win.

The battle for leadership in the 21^st Century couldn’t be clearer: China vs. the U.S.

If this were as simple as authoritarian Chinese state capitalism versus American free enterprise, the battle would be short and easily won by the United States.

But the battle is actually authoritarian Chinese state capitalism versus overreaching federal U.S. regulations, higher taxes, bigger government and other policies that dampen American business endeavors.

If this reality remains, Beijing has all the advantages.

Unless something changes, and soon, we are going to lose this battle.

Category : Blog &Current Events &Economics &Foreign Affairs

The Reality Behind the 2012 Election

September 4th, 2012 // 2:18 pm @ Oliver DeMille

In 2010 I wrote the following article about the upcoming 2010 election. Today the principles are the same, but with the bigger stakes of a presidential election. Here is what I wrote:

It’s the Economy

The economy is struggling, and it is driving the election. As so many have said since the Clinton campaign made it popular in the nineties, “It’s the Economy, Stupid!”  And many Americans believe the economy will continue to decline.

If it does, the Obama Administration has very few tools to respond.

The White House has based its entire economic policy on an ideological belief in government spending and intervention, but further economic downturn will require it to take serious action.

What can it do that it hasn’t already tried? How much more can it spend? And at what point will it accept that such spending isn’t delivering fixes to unemployment and the economy as promised?

If the government increases spending, promotes more stimulus, raises taxes or increases regulations (or all of the above, which is what it has done so far), it will run into major difficulty. So far none of these have fixed the economy… And the major issues fueling dislike of the Obama agenda are unemployment… the health care law and other increased government regulation, and  massive government spending.

Some economists, like Paul Krugman, say the problem is that the stimulus should have been much bigger in the first place—since now there is very little support for more government spending. The White House seems to agree, and it is preparing to raise taxes on big business.

The problem with this strategy is that very few small businesses have a lot of extra cash right now. Big business, in contrast, has a lot more extra cash than the whole of government stimulus.

Unfortunately, with the Obama Administration promising to end tax cuts to big business, these companies are unlikely to hire or spend their extra money. And if President Obama does raise taxes on big business, they are likely to simply hold their cash or spend it in other countries.

A lot of corporations are seriously considering moving more of their operations abroad to find more favorable environments for profit. Many have already made this move, taking jobs and money with them.

Some countries are aggressively advertising their low tax rates to lure international investors. For example, a full-page ad in The Economist reads: “Fact: the Gulf’s lowest taxes are in Bahrain. As are the region’s lowest living and operation costs. Which leaves more of the cake for you and your business.”[i]

A lot of nations are using similar campaigns to lure investment, while the U.S. is actively adopting policies which drive capital away.

Why would businesses which can afford to move stay in the U.S. to face more White House attacks and increasing taxes and regulations?

This not only won’t help our economy, it will increase unemployment, make credit harder to obtain for small businesses, and convince consumers to buy less.

In short, it will significantly hurt the economy. The Obama plan claims to help small business, but in fact its proposed policies will do the opposite.

One Harvard economist points out that our debt load is now even worse than that of Greece,[ii] which has just experienced major economic collapse and is being bailed out by international banks.

It’s the Economy

The impact on the elections is obvious. If a lot of Republicans win, they will have more influence to argue for more business-friendly policies.

But there is no guarantee they will do so. After all, the Bush Administration significantly outspent the Clinton Administration.

No matter what happens in the election, the Obama team needs to take a different route if they want to reboot the economy.

Two years into Ronald Reagan’s presidency, the economy was struggling and unemployment was above 10%.

Reagan pushed to cut taxes, reduce government spending, and, perhaps most importantly, sent out the message—over and over—that government needed to be reduced and that private business was the hope of the economy.

In retrospect, spending actually increased under Reagan, but his consistent message of promoting business, love for business growth and free enterprise, and the need to cut government and spending made business feel safe.

He spoke optimistically of business on all levels, and lauded the opportunities provided by free enterprise and free markets.

The result? Businesses hired and entrepreneurs went to work. Business boomed. Growth quickly soared to 8% (the Obama recovery was around 1%) and unemployment rates came down.

The 1980s became an era of economic boom, which grew into the roaring 1990s.

Too often the opposite message is coming from Washington.

The White House repeats its “unfriendly to business” message over and over, calling businessmen “fat cats” and telling young people to work for non-profits and not go into business.

It constantly promotes increased government spending and ever-expanded regulations which drastically increase the cost to start and build businesses.

It has publicly attacked the Chamber of Commerce, the ultimate small-business advocate, and in general it has sounded angry and dangerous to business.

Now, in the name of “helping small business,” it is increasing taxes on big business and people who succeed in small business—many of those above the $200,000-$250,000 threshold are small entrepreneurs.

And, as I said above, many big businesses which hold a lot of cash are making plans to take it abroad.

These realities are a serious problem…

It’s the Economy

Of course a lot of Republicans support Republican politicians and a lot of Democrats support Democrats. But President Obama was swept into office by independents, and now most of them no longer support his policies.

Independents are mostly for fiscal responsibility, lower taxes and lower levels than the current government intervention in the economy. Indeed, many of them supported Candidate Obama because they disliked the Bush Administration’s high-spending, over-regulating policies.

It seemed to independents that Candidate Obama promised new leadership and a new direction for Washington. Many independents have been shocked and dismayed by the Obama Administration’s move to the left. But they could have supported this surprise if there wasn’t such a lack of new-era leadership.

For example, as an independent, I expected President Obama to be liberal. I closely read The Audacity of Hope before the election and I was clear that he would govern from the left.

But I also thought he would bring a new brand of leadership—a fresh, charismatic, Generation-X-style emphasis on American growth and vibrancy rather than old-line Washington politics.

Unfortunately for all Americans (left, right and independent), that did not occur.

Many independents feel abandoned by President Obama less for his liberalism than for his return to “Washington politics as usual.” This shift occurred within days of inauguration, and his popularity among independents has consistently fallen ever since.

We live in an era where the key to winning elections is to combine support from your base (liberal or conservative) with the support of independents. This is true nationally and in most locales as well.

For Democrats, who will get the bulk of Democratic votes no matter what, the goal right now should be to bring in independents by pushing through many tax breaks and finding ways to de-regulate business requirements…

It’s the Economy, Really!

The Democratic narrative seems to be that without the stimulus the recession would have been much worse.  But many independents don’t buy it. They didn’t like many of President Bush’s policies, but they are just as frustrated with the current administration’s strategies.

They believe the stimulus was a flop and health care and other massive regulations have seriously hurt the economy. They blame both Obama and Bush for the current economic mess. But since Bush is out of the discussion, their frustration is pointed at President Obama.

American independents aren’t the only ones who feel that the Obama Administration’s stimulus and massive spending/regulating strategy has worsened the economy.

Some international analysts, for example, say: “[The stimulus] has not worked. The whole thing has failed. And that is why America, of the big economies, is the one that is now teetering on the brink”; and “I think in Europe it’s very clear the direction the Europeans are going down, which is to basically start bringing public debts and deficits under control.

Obama is still worried about the polls….Personally, I think the best thing they could do is probably just sit on their hands in the U.S….”[iii]

If the plan is to spend more, tax more and increase regulations, then I agree—let the politicians sit on their hands and do nothing!

But what if, instead, they cut taxes, deregulated small business, changed the healthcare law to incentivize business investment, and extended an olive branch of friendship and thanks (yes, genuine gratitude) to entrepreneurs and business for their vital contributions to our prosperity?

Washington needs to reverse the bad-for-business policies accumulated since 1987—or at least during the Bush/Obama growth of anti-business policy since 2001. If this sounds impossible, we may be in for a very long period of economic struggles.

Conclusion: It’s the Economy!

The future of the economy depends on the willingness of small business to take risks and the willingness of big business to hire, spend and invest.

Until our national leaders are willing to cut government spending, lower taxes, reduce government interventions in almost every sector of business, and show more genuine friendliness to business, our economic problems will continue.

Whatever the results of the 2010 election, Washington has got to make friends with business. We simply must make those who spend their lives in business feel safe and excited about building, hiring, investing, growing and spending. Otherwise, more economic troubles are ahead.

We desperately need real leadership in Washington, leadership which will actually incentivize, promote and reboot the economy. The best case scenario would be for the Obama Administration to lead out in this direction…

This pro-business outline (cut taxes, significantly reduce regulation on business, get government spending under control, and make friends with business) should be the guiding principle to every voter in every election across the nation this year.

We need to pay little or no attention to political party and instead elect leaders who will help kick-start, encourage, and stimulate the economy. This is a true mandate, and our national future depends on it.

This is just as true in the 2012 election as it was when I wrote it before the 2010 election.

Category : Blog &Current Events &Economics &Government &Politics

We Have a Problem; We Have a Huge Problem!

September 4th, 2012 // 12:53 pm @ Oliver DeMille

The recent energy and posts about my article on why it is important to vote once again reinforced that we have a seriously, lasting, structural problem in America. Almost everything about the election is promoting this same message, though few have recognized it.

We get all up in arms about this candidate or that, we emotionally buy in to one candidate and then label everyone else by which candidate they support, and we spend a lot of time actively engaged in politics. We blog, we argue, we discuss, we read, we talk politics to friends, family, co-workers and anyone else who will engage.

All of that is great. None of that is the problem. The more energy we give to politics in election years, the better (within the bounds of decency, of course).

No, the problem is that on November 7 most of this passion and behavior will stop. Oh, the most zealous participants in the 2012 election will still be griping or celebrating well into January, but within a about 100 days after the 2013 inauguration, no matter who wins, nearly all Americans will give little thought to politics for the next four years. A few will get involved again during the 2014 midterm election, but the large majority won’t. It won’t be polite anymore to discuss politics at dinner, and most people won’t.

So yes, Houston, we have a problem. As a nation of citizens we mostly ignore our government, a respectable few get excited during elections, and a lot get involved briefly in presidential elections. But we turn off our citizen-passion when elections are over and its time to govern.

And that is precisely the worst time to do it. During elections, candidates are much more likely to listen to the people, to care what the citizenry thinks. So if you’re going to take a break from politics, do it right now. Stay with me and let me tell you why.

The election will come and go, and the leaders of both parties and at all levels (national, state, county, and local) will listen to the people. Here’s the kicker: Then, when the people get back to ignoring politics, the dangerous time will begin. Politicians will focus on governing, and terrible policies that reduce our freedoms will be passed–month after month.

This is how freedom is lost.

The best-case scenario is for the citizens, at the least the vocal ones who care (and you can tell who they are right now during the election season), to be passionate, vocal and deeply involved during elections and also every day between elections.

That’s called citizenship. And it is the basis of all lasting freedom.

No elite group (politicians or a wealthy class or any other) is going to protect the freedom of the people as well as the people. And it doesn’t take 90-100% of the regular people, just about 10-20% who are passionate and vocal. Again, if you are one of those people right now in this election season, you are one of those we need between elections.

In fact, we need you even more between elections, and we need you to be even more vocal, passionate and daily involved than we do now.

“But right now, the politicians will listen, so isn’t this the most important time?” someone will ask.

Answer: Yes, this is a vital, an essential time to use influence while the leaders listen. But when the elections are over and the leaders stop listening, your influence and voice and focused participation will be even more, way more, necessary–because most people like you won’t be doing anything.

WE HAVE A HUGE PROBLEM, and it will begin in earnest on November 7, 2012. We need you to be part of the solution.

I’m not suggesting you do less during the election. I’m suggesting, in fact, that you give it your very best.

Then, starting November 7 and running for the next four years, America needs you to do even more–a lot more.

***********************************

Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.

He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Citizenship &Culture &Current Events &Government &Independents &Leadership &Liberty &Mission &Politics &Statesmanship

What About Paul?

September 4th, 2012 // 12:19 pm @ Oliver DeMille

I got a lot of responses to my article on why everyone should vote. Most were in agreement, and readily shared it on social media. Of those who took exception, the concerns they expressed boiled down to two main thoughts:

1. What about Ron Paul?

2. But Romney’s not really for limited government!

Both have real merit.

1. What About Paul?

First, I think Ron Paul is a great man, and I have been a fan of nearly all his suggestions and policies since I first read a book by him clear back in, I think, the 80’s. He is right about so many things. I have a few disagreements with him too, but less than with the two major candidates.

As you will note from my article, my main point was that everyone should vote, and if you don’t like the main candidates then write in a name. If this is your plan, I think Ron Paul is an even better write-in than those I suggested in the article (mostly tongue-in-cheek, as I did not want to promote a particular candidate per se). My point was to vote, but to be aware that a write-in vote is more for being able to argue your case for good government over the next four years than for actually swaying the election. A vote for Ron Paul does just that.

If you want to sway the election, do two things: first, already be a voter in a swing state, and second, vote for one of the main candidates. If you don’t meet these requirements or don’t want to vote for either major candidate, by all means, write someone in.

2. But Romney’s not for Limited Government!

Second, presidential politics always come down to imperfect votes. If you want a perfect candidate, look to your House of Representative election and get a candidate that is truly ideal to your wants. If there isn’t such a candidate, you’ve got two years to help find one and help him/her get elected.

That said, for those who don’t think Romney is much of a limited government candidate, I have two words for you: Barack Obama.

President Obama has shown that he is a committed big-government president, and the next four years under an Obama Administration will be a massive move to bigger government, more regulation, etc. If you want the bigger government choice, vote for Obama. If you want a possibly limited, but definitely more limited than Obama, government, I have two words for you: Paul Ryan. We need major fiscal responsibility, and soon. If that’s what you want, you have two choices: Romney/Ryan, or a write in candidate to make a statement, but not actually derail the Obama candidacy. That said, there is a great American tradition of protest voting.

If you are in a swing state, your vote could decide the election. Do you want bigger government? Vote Obama. Do you want a growing government in the Bush/Bush style, possibly better but maybe not, but not massive growth Obama government: vote Romney/Ryan. Do you want real limited government: get seriously involved in getting the right House of Representatives in, now or in 2014, and decide whether Romney/Ryan is a good start in your mind or if a protest vote that says “Reagan or Bust” is better.

***********************************

Oliver DeMille is the chairman of the Center for Social Leadership and co-creator of Thomas Jefferson Education.

He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Citizenship &Current Events &Government &Independents &Politics &Statesmanship

Why Bother? A Diatribe on Voting

September 1st, 2012 // 10:19 am @ Oliver DeMille

A friend emailed me with concerns about friends and acquaintances from her community who say they find both candidates, um….lacking.

I’ve heard this now from several people, and I think it deserves consideration. Specifically, I have four thoughts:

1. It’s not about the president. Much.

First, even if you don’t vote for president, the Congressional, state and local elections are going to drastically impact the future of our economy during the next ten years.

Nobody will escape the consequences of this election, nor the coming decades’ economic ups and downs. No matter who wins the White House, the Congress is going to decide if we go into massive decline or real recovery.

This is not hyperbole, and I truly mean it in a literal sense.

This is because Congress will determine the tax policy, borrowing, budget and business opportunity policies that will make or break our economy in the short term. Many have referred to a coming figurative train wreck in Washington; it doesn’t seem too far-fetched anymore to suggest that the headlights are appearing on the horizon and the ground is starting to rumble.

This election may be the most important one in our lifetime, given what’s at stake for the economy.

So VOTE!

2. Ain’t No Such Thing

There is no such thing as a “no” vote in a presidential election.

Why? Because not voting is a vote for the incumbent. That’s why the incumbent in any election has a slight edge – by already being in office.

More people vote when they want change, while those who are happy or complacent with the status quo are less likely to go vote. If you are happy and complacent, by all means: don’t vote (i.e. vote for the incumbent).

Now, if you live in Wyoming (where the vote will certainly be for Romney) or New York (where Obama will definitely win) this is mitigated somewhat; but in the swing states, a “no” vote in 2012 is a vote for Obama.

If that’s fine with you, then fine. As long as you understand that when you boycott an opportunity to vote, it’s not a repudiation of both candidates; it’s an Obama vote.

By the way, the swing and possible swing states in 2012 include:

• Florida
• Michigan
• Ohio
• West Virginia
• Colorado
• Nevada
• New Mexico
• Wisconsin
• Illinois
• Indiana
• Iowa
• Minnesota
• Missouri
• North Carolina
• Pennsylvania
• Virginia

And a dozen others could swing.

3. Show Some Spunk.

If you’re one who strongly dislikes both candidates and really can’t swallow the taste in your mouth to vote for one of them, at the very least be a Rascal or a maverick and write someone in. Write in someone who you think could do better than either of the big-party candidates, and you’ll be able to tell people for the next four years how your candidate would have solved every crisis that arises. Of course, there will be no way to verify this, but it will open the door for a lot of stimulating conversations.

Besides, it’s fun — and educational — to tell your friends (and especially your kids and grandkids) why you voted for some non-candidate who you consider a great and promising leader. Don’t embarrass the leader by actually launching an unofficial campaign in his name. Just vote for him/her. Then, when you tell your kids you voted for Will Smith or Elizabeth Hasselbeck or Tim Tebow, they’ll listen as you explain why. Take the opportunity to teach them something important about freedom and leadership.

Or, when they ask who you voted for, you can say, “Uh…well, nobody.” You might as well tattoo the word “LOSER” on your forehead.

4. But Seriously…

Finally, in all seriousness, the two candidates (warts and all) stand for two different things. One stands for Big Government Helping People and the other for Limited Government and Free Enterprise Helping People.

The future of these two visions goes in very different directions.

Take a stand and pick one!

Oh, and Jackie: Thanks for a really great question; I hope this helps you address the issue in your community…

Category : Blog &Citizenship &Current Events &Government &Politics