Washington Needs A Geo-economic Strategy For Asia, Now

The United States needs to develop a more comprehensive geo-economic strategy to counter China’s hegemonic ambitions in the Asia-Pacific region. If unchecked, this threatens to weaken the U.S. U.S.-led open and rules-based order that has brought relative stability and astounding prosperity to Asia since the end of the Second World War. To be sure, when it comes to Asia policy, the Donald Trump White House has had a surprisingly good run after an uncertain and disruptive start. If recent developments are any sign of the future, then the Trump administration may be expected to take a more risk-tolerant yet measured approach toward challenging China’s hegemonic ambitions in Asia. However, there is no indication that the White House currently has, or even contemplates, a geo-economic strategy — that is, deliberately leveraging trade and financial tools to advance specific geopolitical and security goals. Economic nationalism is not a geo-economic strategy. President Trump’s decision to withdraw from the Trans-Pacific Partnership (TPP), a 12-nation multilateral trade agreement, is a major setback for reasons discussed below.

To be fair, the Obama administration’s support for the TPP stalled once it became the target of populist domestic politics. And, while the TPP was promoted as a component of the so-called “Asia Rebalance” it was not part of a larger geo-economic strategy. The Trump administration has a stated preference for bilateral free trade agreements (FTA). Yet, regardless of how many FTAs the White House successfully negotiates over the next four years, it will not have the same network effects of the multilateral TPP. This bilateral approach will not give the U.S. Asia-Pacific. Most member countries, especially Japan, invested considerable political capital in overcoming domestic opposition to move the TPP forward. As a result, the decision to withdraw from TPP further undermines regional perceptions of U.S. It is uncertain whether the White House will renegotiate and repackage the TPP or if other member countries will proceed with a so-called “TPP-minus-one” option. Without the TPP or some variation, the nations concerned are more likely to move forward with the Regional Comprehensive Economic Partnership (RCEP).

This proposed multilateral trade agreement includes the 10 Association of Southeast Asian Nations (ASEAN) member states along with Australia, China, India, Japan, South Korea and New Zealand. Notably, RCEP does not include the U.S. China a role in writing regional trade rules — which are certain to have less stringent standards than the TPP and also less favorable to U.S. In a best case scenario, FTAs with Japan, Malaysia and Vietnam as well securing more favorable and reciprocal trade relations with China will do little to enable the U.S. China’s geo-economic march across the Indo-Asia-Pacific region and Eurasian heartland. This is because trade agreements alone are an inadequate and mismatched response to the transformational potential of China’s One Belt, One Road (OBOR) initiative, also known as the Silk Road Economic Belt and 21st-century Maritime Silk Road. Through an extensive network of energy, transportation, and communication infrastructure projects, OBOR seeks to integrate large swaths of Asia, Africa, and the Middle East into a Sino-centric economic order that advances China’s larger geopolitical and strategic interests. OBOR is partly funded by the China-led Asian Infrastructure Investment Bank (AIIB), China’s Silk Road Fund and China’s state policy banks.

The peasant proprietor system is helpful to efficient cultivation. The magic of ownership has helped in raising production. The excessive pressure of population on land has led to the fragmentation of holdings. The peasant proprietors living in citues have now given land on rent to tenants who pay rent either in cash or kind. As the tenants enjoy no security, so they have no incentive for investing capital. As the mechanized cultivation is not adopted on small units of holdings, the required agricultural progress is not being achieved. The British Rule created a loyal class by giving them vast areas of land on permanent basis. In the beginning these persons were made responsible for the payment of land revenue. Later on these collectors of land revenue were conferred proprietary rights. The zamindari system has not proved beneficial for the society. The feudal lords exploited the rural masses for over a long period of time.

The ejectments of tenants both. Their poor belongings, utensils, cattle etc were set on fire or auctioned to realize arrears of rent. The zamindari system destroyed the very basis of agricultural prosperity. The system has given rise to feudalism at the top and slavery at the bottom. The landlords have become the absentee parasites. The frequent enhancement of rents and constant fear ejectment stands in the way of agricultural progress. In orders to eliminate inequalities in land holdings and al elements of exploitation, the Government of Pakistan introduced agrarian reforms from time to time. First Land Reforms were introduced in 1985, then in 1972, 1977. These reforms to some extent have decreased the land holdings of zamindars. The illegal ejecments of the tenants at will have been protected by law. The occupancy tenant, though small in number got the ownership of land. Sign in or sign up and post using a HubPages Network account. 0 of 8192 characters usedPost CommentNo HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites. This is well researched, very insightful and educating but a more comparative analysis maybe with any other african nation would have helped in understanding what was and/or is obtainable else where.

What Is Economic Growth?

Economic growth is the increase in the goods and services produced by an economy, typically a nation, over a long period of time. It is measured as percentage increase in real gross domestic product (GDP) which is gross domestic product (GDP) adjusted for inflation. GDP is the market value of all final goods and services produced in an economy or nation. So how does a nation or economy continually increase the GDP such that the economic growth trends upward? There are three main types of economic growth theories over time that have all attempted to answer that exact question. The Classical, Neo-Classical, and Modern Day theories will each be described. The classical theory of economic growth was a combination of economic work done by Adam Smith, David Ricardo, and Robert Malthus in the eighteenth and nineteenth centuries. The theory states that every economy has a steady state GDP and any deviation off of that steady state is temporary and will eventually return. This is based on the concept that when there is a growth in GDP, population will increase.

The increase in population thus has an adverse effect on GDP due to the higher demand on limited resources from a larger population. The GDP will eventually lower back to the steady state. When GDP deviates below the steady state, population will decrease and thus lower demand on the resources. In turn, the GDP will rise back to its steady state. Next, we have Neo-Classical theory. Two economists, T.W. Swan and Robert Solow, made important contributions to economic growth theory in developing what is now known as the Solow-Swan growth model. The theory focuses on three factors that impact economic growth: labor, capital, and technology, or more specifically, technological advances. The output per worker (growth per unit of labor) increases with the output per capita (growth per unit of capital) but at a decreasing rate. This is referred to as diminishing marginal returns. Therefore, there will become a point at which labor and capital can be set to reach an equilibrium state. Since a nation can theoretically determine the amount of labor and capital necessary to remain at that steady point, it is technological advances that really impact the economic growth. The theory states that economic growth will not take place unless there are technological advances, and those advances happen by chance. Once an advance has been made, then labor and capital should be adjusted accordingly. It also suggests that if all nations have access to the same technology, then the standard of living will all become equal. There were two major concerns with this era of theories. One is the conclusion that continuous economic growth can only occur with technological advances, which happen by chance and therefore cannot be modeled. Secondly, it relies on diminishing marginal returns of capital and labor. However, there is no empirical or real-life evidence to support this claim. Therefore the model is known for identifying technology as a factor in growth but fails to ever substantially explain how.

The rate of growth of population is faster than the rate of economic development. The state revenue received through taxes, fees, etc., is not sufficient to provide full employment to the labor force. The per capita income is extremely low and so is the capacity to save. Foreign loans for development purposes are not without strings and are also not available in desired quantity. There is a dearth of stock of capital in the country. People lack initiative and entrepreneurial ability. People are mostly extravagant and there is less voluntary savings. A greater portion of the population lives in villages and are contended with their lot. The government cannot incur the displeasure of the people by enhancing the tax rates beyond a certain limit. It cannot also impose additional taxes for the same reason. Thus there is too much evasion of taxes. Under the conditions stated above, the reader can easily visualize the state of affairs with which a government of the backward country is confronted. Still no government would like to be a silent spectator and would desire that the standard of living of the people should go up in the shortest possible period of time. It will try to find money from the blue if necessary for spreading economic development of the country. Here deficit financing comes to its rescue. The state uses this instrument for lifting the economy out of depression and for accelerating economic development in the country. If, however, the state can increase the volume of resources by increasing the tax rates, imposing additional taxes or mobilizing enlarged saving, then it is not desirous to adopt deficit financing as it is a very delicate instrument.

Economic development is a normative concept i.e. it applies in the context of people’s sense of morality (right and wrong, good and bad). The definition of economic development given by Michael Todaro is an increase in living standards, improvement in self-esteem needs and freedom from oppression as well as a greater choice. The most accurate method of measuring development is the Human Development Index which takes into account the literacy rates & life expectancy which affect productivity and could lead to Economic Growth. Economic Growth does not take into account the size of the informal economy. The informal economy is also known as the black economy which is unrecorded economic activity. Development alleviates people from low standards of living into proper employment with suitable shelter. Economic Growth does not take into account the depletion of natural resources which might lead to pollution, congestion & disease. Development however is concerned with sustainability which means meeting the needs of the present without compromising future needs. These environmental effects are becoming more of a problem for Governments now that the pressure has increased on them due to Global warming.

Indian Strategic Studies

Central Asia has been a strategic concern to India ever since the colonial era. The region rose to an immense significance in the 19th Century due to the Great Game when it was feared that the Russians would invade British India through Central Asia. On the top of this, the unmapped territory of the region added to British fears regarding the extent of Russian inroads into Central Asia. Thus, began the scramble for the Central Asian landmass. By late 19th Century, the Russians had occupied vast swathes of the region and the southern reaches of their conquered territories reached to southern Tajikistan, touching the Wakhan corridor (which borders the present northern borders of Pakistan Occupied Kashmir). However, the looming threat of World War I united these hitherto archenemies and the tense situation was defused. Post-World War I, the Central Asian region was well absorbed into the Soviet Union. Nevertheless, the collapse of the Soviet Union in 1991 did not only mark an end to the Cold War, but it was also a defining moment for Central Asia, whose constituent regions obtained new identities as independent republics. These were namely, Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan. Their frontiers touching the northern areas of Iran and Afghanistan also make their borders very much a part of Central Asia.

For them to have equilibrium, more than a million must die. That’s the equilibrium of the neoliberals today. I mean, I’ve read Ricardo’s principles, obviously. And where did you find – because what I see in Ricardo, when I read Ricardo is the arguments about reducing the money going to the landlords. You must have read much more to get the background on the banker history and so on than I’ve managed to read. Where would they have been in Ricardo? Collected works, you read the collected works? Yes. Ricardo – there were two schools of monetary theory in England. After the Napoleonic Wars, what happened, they had a post-war deflation. They tried to return the price of gold to the original price. This is the same idea of deflation that wrecked the American economy from the Civil War through about 1890, crucifying the price of gold. There were two schools of thought. There was the banking school that Ricardo headed, the lobbyist for the banks.

And there was the currency school with Thornton and all sorts of other great people. The currency school said debt matters. Ricardo said debt doesn’t matter. So the arguments you’re having today all found their predecessor in the 1830s in the bank arguments. Now this is not taught in any of the history of economic thought. The history of economic thought isn’t taught anymore either. That’s the problem. They take mathematics. And mathematics it’s all about taking the existing status quo for granted. But now when you have the Austrian School and Hayek’s talk about the free market, they mean free for the parasite. Free for the predatory. They don’t they mean that half the time. They’re so caught up in their own ideology. But that is a huge part of it. And to them, it’s – in that classic sense, people think Smith is a free market person as they define free market today. But when looking at Smith’s writing, he was in favor of limits on the rate of interest.

His logic was that if you have – people who are willing to pay well above the rate set by the King are likely to be profligates. Projectors and profligates he called them, and if you give money to them, they’re almost certain to have wasted it. If they want to pay that much for it, they must want it for nefarious purposes. Having the legal rate set slightly below a maximum rate set by the King, means that banks would have to give their money to people who would make productive investment of it. So he was in favor of control of interest. Jeremy Bentham. Bentham coming out saying, he sees – you probably remember how he expressed it about the crying shame of – he was trying to show – to save people from being accused of the crying shame of usury. It’s all free market. And the rate of interest I noticed on British credit cards of where I’m staying is 19%. In America, it’s 29% penalty rate. And banks make more money in penalties than they do in interest.

After the interest rates hit 20% in 1980, all the usury laws were abolished in the United States. Adam Smith also said something else about money. He said that wars should not be financed by borrowing from bonds. That was called Dutch finance, because the Dutch investors were the main bond buyers. And every war that England went in – and Book V of Adam Smith’s Wealth of Nations lists every single tax on every single – that was added with every new bond issue, pricing England out of the market. And Adam Smith said, look, interest is a cost of doing business. And if you’re going to have all of these taxes and all of these interests, you’re not going to be able to be a competitive industrial market. Which is the situation that we’re in again today. By falling for – the financial sector. One thing that I’ve just written in – wrote my new book is called Can We Avoid Another Financial Crisis? So my little promo here. And as part of that I focus on the level of private debt to GDP as I know you do too.