Category: Social Science

King’s Dream: Civil Rights and the History of Nonviolent Protest

King's Dream CoverOn this day in 1963, Martin Luther King Jr. gave what is widely hailed as the best political speech of the twentieth century. King famously departed from his prepared text to expound upon his dream, a vision of a nation living in racial harmony. Folk history has it that Mahalia Jackson, a singer and activist, prompted the improvisation by calling out “Tell ‘em about the dream Martin!” What followed has become so deeply ingrained in our national consciousness that we might imagine its message to be as clear and obvious as it is powerful and resonant. King’s Dream by Eric J. Sundquist shows how complex and open to interpretation King’s words were and are.

In the decades after King’s death, liberals and conservatives have both gestured towards King to support their stances on affirmative action and reparations for slavery. Apple Computer, the New Republic, and many others have advertised using imagery that evokes the “I Have a Dream” speech. It is at least partially in response to these reductive (and sometimes contradictory) political and popular appropriations that Sundquist gives a fuller and more nuanced sense of the man and his most famous speech.

Sundquist supplies useful context through his account of King’s work in the Civil Rights Movement of the 1950s and ’60s. The successes and struggles of the Montgomery Bus Boycott, sit-ins, in Nashville and elsewhere, the Freedom Rides, and the especially controversial Birmingham campaign all played into the hopes and fears surrounding the March on Washington for Jobs and Freedom, the occasion for King’s speech. King addresses himself not only to segregationists but to Alabama Governor George Wallace, and, implicitly, to those within the movement who doubted the power of nonviolent protest.

King’s Dream also emphasizes two key American texts that preceded the “I Have a Dream” speech. Sundquist shows how King positioned himself in conversation with Abraham Lincoln and Thomas Jefferson, the writers of the Emancipation Proclamation and the Declaration of Independence. The 1963 “I Have a Dream” speech calls for the promise of Lincoln’s 1863 Proclamation to be fulfilled, and for the nation to “rise up and live out the true meaning of its creed: ‘We hold these truths to be self-evident, that all men are created equal.’” Through analysis along these lines, Sundquist arrives at one of his core interpretive claims. He writes:

King’s greatness, as well as the greatness of his speech, lay in his ability to elevate the cause of civil rights and the cause of America at the same time. The nation had failed black Americans, no doubt, but it was not—contrary to the opinions of some raising the fist of Black Power—irredeemably corrupt and ripe for overthrow. Enlisting his audience in a crusade sanctioned equally by the Declaration of Independence and the Bible, King in no way rejected America’s foundational values. Rather, he purified and consolidated those values by insisting that only when the revolutionary rights they guaranteed were shared by Americans of all colors, creeds, and nationalities would they truly be America’s foundational values.

Sundquist addresses the anniversary of King’s speech most directly, but three other authors also critically consider “the cause of civil rights and the cause of America at the same time.” In We Shall Overcome, Alexander Tsesis traces the history of legal efforts to achieve civil rights for all Americans, beginning with the years leading up to the Revolution and continuing to our own times. Tsesis also argues, in opposition to other legal theorists, that the Constitution fundamentally requires the U.S. government to defend individual liberties for the benefit of general welfare.

Civil Disobedience CoverLewis Perry writes from a similarly broad perspective in his book, Civil Disobedience. He considers the history of nonviolent protest and the ways it has been and become an American institution. Perry attends to the subtleties of King’s position, noting that although he eventually abandoned the practice, King carried a pistol for a time and publicly conceded the right to defend home and family.

In Protest at Selma, David J. Garrow closely examines how the Voting Rights Act of 1965 came into being. He emphasizes how crucial it was that Martin Luther King Jr. learned to exploit the media, an influential third-party audience. By shifting focus from nonviolent persuasion, intended to win over attackers, to nonviolent provocation, intended to win over the media and its audience, King was able to make dramatic progress.

Each of these books helps us understand the magic of the “I Have a Dream” speech and the courage of the Civil Rights Movement. They consider, sometimes critically, what it meant to be an American fifty years ago and what it means to be an American today. They ask us to look carefully at our laws and culture and they assure us that we need not be satisfied with the status quo. Sundquist, Tsesis, Perry, and Garrow insist that we treat this anniversary as an opportunity to reflect on the complexity of Martin Luther King Jr.’s dream, and their books remind us to live deliberately so that the nation may honor its promises and fulfill the true meaning of its creed.

 

What can the Nobelman case tell us about the next financial crisis?

Other People's Houses: How Decades of Bailouts, Captive Regulators, and Toxic Bankers Made Home Mortgages a Thrilling Business

To address the 2008 financial crisis, congress passed the Troubled Asset Relief Program (TARP) to bailout out the banks and the federal government committed trillions of dollars to save the entire system. Fed chairman Ben Bernanke defended the massive government intervention to rescue the banks.  He said, “it wasn’t to help the big firms that we intervened. . . . When the elephant falls down, all the grass gets crushed as well.” Jennifer Taub, author of Other People’s Houses, argues that the subsequent Dodd-Frank reform legislation was unsuccessful in addressing the underlying causes of the financial crisis. In drawing connections between the Savings and Loan crisis of the 1980′s, she warns that the pattern will continue and we will be faced with yet another financial crisis that will disproportionately affect lower income individuals.

“Taub’s beginning is a surprise: A 1993 Supreme Court decision about how bankruptcy law applies to mortgages.”—Pat Regnier, Money Magazine

Jennifer Taub opens Other People’s Houses with the story of Harriet and Leonard Nobelman. Taub uses their supreme court case as a starting point to understanding the current financial crisis. She makes a compelling argument for action against these “too big to fail” banks. Learn about how the story of the Nobelmans mortgage and bankruptcy still affects homeowners today in the video below.

For further reading on the subject, our online Q&A with Jennifer Taub will tell you everything you need to know about the housing market collapse.

Japan: Then and Now

Japan: The Paradox of Harmony by Keiko Hirata and Mark Warschauer

Keiko Hirata—

Sixty-nine years ago today, Hiroshima suffered the first nuclear attack in world history. Three days later, Nagasaki was similarly attacked, and within another week, what Japan calls “the Pacific War” had ended.

Japan has changed enormously in the last seven decades, transforming itself from an impoverished and defeated militaristic nation to become one of the wealthiest and best educated nations on earth, admired for its social harmony and its scientific and cultural contributions.

Yet in spite of this transformation, the legacy of World War 2 weighs heavily on Japan, as seen in current debates in the country on three critical issues: the peace constitution, the role of nationalism, and nuclear power.

One of the major reforms in the postwar era was the adoption of a US-drafted constitution that renounced the use of force to settle international disputes and that prohibited the maintenance of armed forces. With strong public support in Japan, the peace constitution has remained intact without any revisions since its inception. But the world has changed dramatically since 1945, and Japanese leaders have sought ways to cope with new security challenges within the constitutional restrictions. A first step in this direction occurred in the 1950s, when Japanese leaders—with full support and even pressure from the US (which sought a militarized ally for the developing Cold War)—decided to reinterpret the constitution to allow for the creation of military forces, as long as they were limited to self-defense. The birth of Japan’s current military, the Self-Defense Forces (SDF), came soon thereafter. In the last twenty years, Japanese government stretched the constitutional interpretation again, this time to allow overseas deployments of the SDF, but only to engage in non-military actions in non-combatant zones abroad, for example, as part of international peace-keeping or reconstruction efforts.

Today the Abe government—again supported by the US—wishes to break out of these current restraints to allow “collective” self-defense, that is, to provide military assistance to its allies when they are under attack. Abe’s preference would be to actually revise the constitution to explicitly permit this as well as broader use of force. Given the difficulty of accomplishing constitutional revision, Abe is settling for now for more “re-interpretation.” Naturally, this is opposed not only by leftists in Japan, but also by Japan’s neighbors, especially China and South Korea, which fear a return of Japanese aggression. Their mistrust of Japan is largely due to Tokyo’s amnesia about its wartime brutality. Many Japanese have come to view their country as a victim of the allies’ attacks (e.g., Hiroshima and air raids in Tokyo), rather than as a victimizer in Asia. Some Japanese nationalists have even propagated views that Japan was engaged in a war of self-defense, not aggressive war; that “comfort women” were prostitutes, not sex slaves; and that the Nanjing massacre was a fabrication. Right-wing nationalists in Japan have always promoted these views, but previously they operated on the fringes of society. Today, nationalist groups are larger and better organized and their views are even echoed in the highest levels of government, as Shinzo Abe and his advisers flirt with nationalist positions.

Hiroshima Peace Memorial

Hiroshima Peace Memorial, via Wikimedia Commons.

Nationalism in Japan also affects the country’s attitude toward immigration. With a birthrate far below replacement level and a rapidly aging population, Japan faces a harrowing demographic challenge. One likely solution to this is increased immigration. However, Japan has even faced challenges integrating its large South Korean population, which has lived in the country for generations. Though nationalists in Japan are most hostile to immigrant groups, discomfort with foreigners is widespread in the country and this popular sentiment creates a major obstacle toward government easing of immigration restrictions.

A final legacy of World War II relates to nuclear power. Not surprisingly, there have always been strong anti-nuclear feelings in Japan. Nevertheless, ever since the 1960s, the government has been able to convince the public that nuclear energy is a separate issue from nuclear weapons, and that such power can contribute to safe economic development. By 2011, nuclear power met some 30 percent of Japan’s energy needs and was a major factor in the country’s low carbon footprint. The Fukushima disaster shattered the country’s trust in nuclear power and revived the anti-nuclear movement. Following the disaster, all fifty-four nuclear power reactors in Japan were shut down, and none are currently operating. Energy expenses have soared, complicating the country’s economic recovery and making it more difficult for the prime minister to implement his “Abenomics” package of reforms. Abe is committed to a nuclear future for Japan, but opposition remains strong. Though debate within Japan focuses mostly on issues of public safety and economic development, there are global consequences for efforts to control climate change. Japan’s carbon emissions fell 9.2 percent per year from 2008 to 2011, but then rose 3.9 percent from 2011 to 2012. If Japan is able to re-open nuclear plants with much greater safety controls, it could set a model for safe use of nuclear power as part of a strategy for combating global warming. On the other hand, the abandonment of nuclear power in Japan, or any further serious nuclear accidents, could make it much more difficult to control carbon emissions both in Japan and around the world.

Thus while the bombing of Hiroshima occurred nearly seven decades ago, the legacy of that bombing, and of the war that it devastatingly helped bring to an end, still lives on in Japan and in East Asia. How Japan faces the ongoing legacies of World War II will help shape the future, not only of Japan but potentially of the world.


Keiko Hirata is an associate professor in the Department of Political Science, California State University, Northridge. Her latest book, written with Mark Warschauer, is Japan: The Paradox of Harmony.

July Theme: Where is the Money?

Everyone from Liza Minnelli to R. Kelly knows that money makes the world go round. This month, Yale University Press authors are expanding on that observation to explore the fields of economics and global finance under the banner Where is the Money? It might seem like a simple question, but to really understand where the money is, why it’s going where it’s going, and what to do about it takes a considerable amount of study and research. Or at least a good book.

In Europe’s Deadlock, David Marsh explains how the Eurozone’s crisis management has actually made things worse. Countries with weak economies come to resent creditor nations, and creditor nations fear they will have to subsidize weaker countries indefinitely. Stephen D. King, author of When the Money Runs Out, finds fault not in the structure of the European Union but in a deficient understanding of economic history. As King explains in an interview with CNBC, sustained economic growth is an anomaly, but leaders have planned for the future as though it were a given.

Jennifer Taub traces the origins of 2008′s financial meltdown in Other People’s Houses. She points to decisions in the 1980s as the underlying problem, and argues that the U.S. is not currently doing enough to prevent another crisis. Tom Clark focuses on the effects of economic crises in his book Hard TimesHe examines the social consequences of Great Recession and the Great Depression, and a great interactive infographic made by Kiln illustrates the outsize negative effects on the poor.

Where is the Money Cover Photo 2

Straits seem dire, but Yale Press authors are hard at work on creative solutions to problems big and small. In Why Nudge? Cass R. Sunstein pushes back against John Stuart Mill’s Harm Principle, and argues for a form of paternalism rooted in behavioral economics. The government, his argument runs, should create structures that encourage people to make better decisions, financial and otherwise, in their daily lives. Joseph R. Blasi, author of The Citizen’s Share, writes that the government ought to create tax incentives for companies to share profits and ownership with their employees as a way of alleviating inequality. The book is now out in paperback, and the first chapter is available as an excerpt.

Orly Lobel writes about a different way to shake up companies in her book, Talent Wants to be Free. Lobel says that corporations that aggressively restrict their talent and secrets do more to stifle innovation than to protect revenue. In Austerity, Florian Schui presents another counter-intuitive idea: arguments for austerity are not rooted in economics. Schui explains that austerity—the notion that abstinence from consumption brings benefits to states, societies, or individuals—lingers on in today’s debates because of the moral and political sentiments that have long been associated with it.

Two Yale University Press authors address the economic position of the United States by considering its alliances. Richard Rosecrance writes in The Resurgence of the West that the U.S. should join forces with the European Union in order to unblock arteries of trade and investment. The alliance could also help both parties face East Asian challengers. In a partial echo of Rosecrance’s concerns, Stephen Roach highlights the dangerous ways in which the U.S. and China depend on one another. A pair of interviews about Unbalanced make the situation frighteningly clear.

While analysts like Roach predict that China will be the world’s next superpower, Timothy Beardson expresses his reservations in Stumbling Giant. Beardson makes the case that problems with stability, prosperity, identity, and honor may thwart the country’s ambition. Michael Reid discusses the trajectory of another potential global power in Brazil. The world’s fourth most populous democracy has enjoyed some effective reformist leadership but still has a raft of social problems to address going forward.

Anupam Chander and Edward Castronova focus less on who the major economic powers will be and more on how they will wield economic power in a digital age. In The Electronic Silk Road, Chander reveals the legal complications that have arisen alongside global Internet commerce. Cases like Facebook and the Pirate Bay demonstrate the need for countries to dismantle some barriers while still protecting consumer interests. Castronova’s book, Wildcat Currency, discusses everything from medieval banking to Bitcoin while making a case for the legitimacy of virtual money. He argues that leaders must seriously consider the legal, political, and economic effects of private currencies.

We hope you enjoy these economic titles, and if you want to save money and still read great books you can enter our Goodreads Giveaways for Brazil and Wildcat Currency. Make sure to enter by July 31st!

Austerity: Reading between the lines of the economic debate

In his sweeping new book, Austerity: the Great Failure, historian Florian Schui tackles the central economic debate sprung from the Great Recession: whether decreasing government spending will renew economic growth. To this debate, Schui brings vital historical perspective – a look at the dismal track record of austerity policies over the course of their long history. Examining the arguments of key theorists of consumption, ranging from Aristotle to Margaret Thatcher, Schui demonstrates that no argument against spending has ever successfully refuted the Keynesian logic of anti-cyclical government stimulus.

What Schui reveals instead is that austerity’s long life is thanks to its moral and political underpinnings – not any economic justification. The moral authority of abstinence over greed, coupled with political maneuverings against labor and the Left, has kept austerity alive in public discourse despite its empirical shortcomings. This confusion of arguments, which Shui ably parses, is as alive in the media today as it has ever been.

Now in their fourth year, the austerity measures placed on debtor nations of the Eurozone by the International Monetary Fund and creditor-state Germany continue to return mixed results. Unemployment in Europe still hangs above 10%, and the situation in the hardest pressed nations remains bleak. In Greece, households burn furniture for heat, and the health care system is a shambles.

Yet Europe’s economic leaders continue to insist on austerity before aid. Their reasoning? Lately, the supporters of austerity have been eager to point to the apparent successes of the policy in the Baltics, particularly Latvia and Estonia.

With Schui’s argument in mind, consider some of the reports on the state of these Baltic nations from local political leaders and major media outlets. Are their arguments purely economic, or might there be moral or political traces in their statements?

  • On Estonia’s adherence to austerity, despite a GDP drop of 14% in 2009: “[Estonian president Toomas Hendrik] Ilves divides Europe into countries that follow the rules and countries that don’t… Estonians, in their own eyes, have always followed the rules, and in 2009 took their lumps to do so.”
  • Swedish economist Anders Aslund responds to Nobel laureate Paul Krugman’s critique of the Baltic ‘triumph’: “[Krugman] praises the fiscally irresponsible and scolds the virtuous, denigrating the Baltic achievements while trying to explain away miserable failures, such as Greece.”
  • On Latvia’s ‘high pain threshold’: “In Greece and Spain, cuts in salaries, jobs and state services have pushed tempers beyond the boiling point, with angry citizens staging frequent protests and strikes… But in Latvia, where the government laid off a third of its civil servants, slashed wages for the rest and sharply reduced support for hospitals, people mostly accepted the bitter medicine.”
  • And anecdotally: “When a credit-fueled economic boom turned to bust in this tiny Baltic nation in 2008, Didzis Krumins, who ran a small architectural company, fired his staff one by one and then shut down the business… But instead of taking to the streets to protest the cuts, Mr. Krumins, whose newborn child, in the meantime, needed major surgery, bought a tractor and began hauling wood to heating plants that needed fuel.”

For more close readings of the austerity debate – from the Commercial Revolution to the modern day – be sure to check out Austerity, in stores now.

Beyond the University Makes a Splash

Wesleyan University recently sat down to talk to Michael S. Roth, president of the university and author of Beyond the University: Why Liberal Education Matters. The video and post originally appeared in Wesleyan University’s blog, which you can read here.


Beyond the University: Why Liberal Education Matters by Michael S. RothA June 10 note to the President’s Office at Wesleyan grabbed attention—Harvard’s Office of Undergraduate Education wanted help in quickly obtaining 125 copies of Michael Roth’s new book to distribute to Harvard faculty members.

The email was indicative of the excitement that Roth’s latest book, Beyond the University: Why Liberal Education Matters (Yale University Press), has generated since it was published in May. The sixth book that Roth has authored, it has received substantial coverage in the national media and has helped put into historical context today’s debates over the value of a broad, liberal education. Roth reminds readers that accusations about the impracticality of liberal education date back to the days of the Founding Fathers, and are never less convincing than now. He draws on the writings of prominent thinkers such as John Dewey, Jane Addams, W.E.B. Dubois and Thomas Jefferson to make the case for a pragmatic liberal education.

Reviews of the book have appeared in The Washington Post and Inside Higher Ed, while a number of related op-eds and essays by Roth have been published in outlets such as The New York Times, The Chronicle of Higher Education, The Boston Globe and The Daily Beast. President Roth has discussed his book with The Atlantic magazine, and on public radio stations around the country.

“We’ve been delighted with the amount of attention the book is getting, both on the local and national levels. It’s engaging precisely with the big and urgent questions out there about higher education, just as we hoped. President Roth has been a great spokesperson for defending the humanities, which have been under scrutiny of late,” said John Donatich, director of Yale University Press. “We are currently selling into a second printing of the book, and it’s very possible we could go into a third printing. We expect it to sell even more in paperback down the road.”

In addition, Chinese and Korean translations of the book are in the works.

Reviews of the book have been positive. Writing in The Washington Post, Christopher B. Nelson, president of St. John’s College in Annapolis, praises it as a “lucid, helpful and accessible account of the current challenges to higher education.”

“By presenting his argument historically, Roth, president of Wesleyan University, maintains a judicious distance from his subject and avoids the trap—all too enticing for a zealous advocate—of delivering a passionate apologia for a broad generalization. Instead, he gives us a substantial and lively discussion that allows the reader to maintain an open mind while examining the strengths and weaknesses of the several threads, each in its own turn,” writes Nelson.

And Kirkus Reviews writes: “While underscoring the democratic spirit of a liberal arts education, one designed to produce ‘active citizens rather than passive subjects,’ Roth traces how even the Founding Fathers of the republic restricted the education to patrician white males, excluding women, slaves and others—and that the question of whether farmers need to be able to read Shakespeare has long sparked debate. Between pragmatism and idealism, the author strikes a moderate, balanced approach. The result is more like a primer on the history of higher education than a manifesto.”

See all media coverage of Beyond the University here.

Read more about Beyond the University in this Wesleyan Connection article.


Should You Invest in Bitcoin? Here’s a Flowchart to Help You Decide.

Wildcat Currency CoverBitcoin is on the rise. The completely digital currency has been covered by Forbes, The Wall Street Journal, and The New York Times, among others. Bitcoins have the power to buy anything from a hot dog at a Sacramento Kings NBA game to a hotel room at a Holiday Inn in Brooklyn. It’s a brave new financial world, or at least it might seem that way. According to Edward Castronova, author of Wildcat Currency: How the Virtual Money Revolution is Transforming the Economy, forms of monetary exchange not created by the federal government have existed for a long time. He cites airline miles and S&H Green Stamps as examples, but his underlying argument for Bitcoin’s legitimacy has less to do with 20th century precedents than with the nature of money itself.

Castronova discusses the ways economies spring up everywhere: in online games with internal currencies and in prisons where cigarettes become a medium of exchange.These economies tend to behave the same way “real” economies do, and as Castronova goes into the specifics of each financial community he sheds light on the general principles they confirm. The definition of money, the core idea behind banking, the way inflation works, and debates surrounding these and other issues all become clearer through the book’s telling case studies. These gestures allow the later sections of Wildcat Currency to delve into the implications of virtual currencies, and to seriously consider both the benefits and the drawbacks surrounding Bitcoin as economic, legal, and political entities begin to create policy to address it.

If you are interested in learning more, you can enter our Goodreads Giveaway for a chance to win a copy of Wildcat Currency! In addition, Edward Castronova has been answering questions in a Reddit AMA. And if you are thinking about trying Bitcoin yourself, take a look at this handy flowchart to find out whether you should invest.

op-ed-chart-graphic-revision2


Goodreads Book Giveaway

Wildcat Currency by Edward Castronova

Wildcat Currency

by Edward Castronova

Giveaway ends July 31, 2014. See the giveaway details at Goodreads.

Enter to win

 

Brazil: An Introduction to a Rising Global Power

Brazil CoverBrazil may have lost badly to Germany in the 2014 FIFA World Cup Semifinals on Tuesday, but they are still competing on the world stage and may soon contend with Germany and other more established countries in the global economy. Indeed, a new book by Michael Reid argues that Brazil deserves consistent international recognition and attention, as it may well be one of the world’s most influential nations by 2030. In Brazil: The Troubled Rise of a Global PowerThe Economist‘s Latin American columnist describes the country’s tumultuous history, notes its achievements, and assesses the challenges that face Brazil if it is to live up to its potential.

Tom Jobim, the composer of “The Girl from Ipanema,” once said that “Brazil is not for beginners,” and Reid‘s book is both a guide for the perplexed and an insightful meditation for the already informed. To initiate the wholly uninitiated—and to whet your appetite—here are a few key pieces of information about Brazil’s economy and culture.

  • The nation is the world’s fifth largest country by area. It is in equal in size to the United States, and all twenty-eight countries of the European Union would fit comfortably inside Brazil’s territory.
  • Brazil is a deeply religious country, with a mix of Christian and African religions. Many Brazilians pray to both a Catholic saint and an African orixá (deity).
  • The country’s population of 200 million makes it the world’s fourth most populous democracy.
  • Brazilians love football so much that on days when the national team is playing in the World Cup, the country completely shuts down, and the streets of major cities effectively fall silent.
  • Brazil has the seventh-largest economy, but it is the third-largest exporter of food and the six-biggest manufacturing power.
  • In Brazil, loyalty to the family is key, and the family is in some ways the central institution of Brazilian society.
  • Brazilians devote more of their disposable income to beauty and personal care products than anyone else in the world.
  • The nation is both self-sufficient in oil and the world leader in plant-based fuels.

If you are interested in learning more about Brazil’s past, present, and possible future, don’t miss your chance to win a copy of Brazil: The Troubled Rise of a Global Power through our Goodreads giveaway. Make sure to enter by the end of the month!


Goodreads Book Giveaway

Brazil by Michael Reid

Brazil

by Michael Reid

Giveaway ends July 31, 2014.

See the giveaway details
at Goodreads.

Enter to win

 

Recommended Reading for the U.S.-China Strategic and Economic Dialogue

Unbalanced: The Codependency of America and China by Stephen RoachThe U.S.-China Strategic and Economic Dialogue (S&ED) is taking place in Beijing, China on July 9–10. In his new book, Unbalanced: The Codependency of America and China, Stephen Roach addresses the current and prospective state-of-play in the economic relationship between China and the United States. As the S&ED approaches, we’ve asked him to weigh in on several key aspects of this important exchange between the world’s two largest and leading economies.

Yale University Press: What is the S&ED and why is it so important?

Stephen Roach: In an effort to formalize and coordinate high level exchanges on economic and financial issues between the U.S. and Chinese governments, a Strategic Economic Dialogue (SED) was launched in December 2006 by Former Treasury Secretary Henry Paulson. In 2009, the Obama Administration broadened the focus of the dialogue to include foreign policy and security discussions—hence, inserting an ampersand into the acronym (S&ED)—and reduced the frequency of engagement from twice a year to an annual meeting. The summit continues to rotate back and forth between Washington and Beijing. It brings together on a regular basis the largest delegation of senior government officials of both nations. Its core mission is to generate a “dialogue that will focus on addressing the challenges and opportunities that both countries face on a wide range of bilateral, regional, and global areas of immediate and long-term economic and strategic interest.” Bottom line: The S&ED is now the main event in the U.S.-China debate.

YUP: What is the mood heading into the upcoming S&ED?

SR: Not good. Tensions have intensified recently on three key fronts—trade and currency (again), cyberhacking, and maritime and territorial disputes in the East and South China Seas. Unsurprisingly, both nations are blaming the other for causing these problems. These are classic symptoms of the blame-game of codependency that I stress in Unbalanced—a penchant for partners to hold the other accountable for problems of ones own making. For its part, U.S. complaints are undoubtedly exaggerated by the domestic political cycle—a fairly typical outbreak of China bashing that has broad bipartisan appeal heading into national elections. China is also shaped by its own political agenda—ironic for a one-party system but in keeping with President Xi Jinping’s grass roots appeal for restoration of the so-called China Dream.

YUP: What do you see as the key issues in the U.S.-China economic relationship that you would like to see addressed at this year’s S&ED?

SR: The main problem with the economic relationship is that it has moved into the danger zone of a destructive codependency, where, as I wrote in a recent op-ed on Project Syndicate, both the U.S. and China are focused more on frictions than on synergies. The challenge is to embrace the opportunities of a more constructive interdependency. In that vein, I would like to see progress on two fronts—moving ahead on a U.S.-China bilateral investment treaty (BIT) and reestablishing military-to-military exchanges on the increasingly contentious cybersecurity issue.

YUP: How can the U.S. benefit from a bilateral investment treaty with China?

SR: China is at the early stage of a powerful transformation—moving from a manufacturing-led investment and export growth strategy to a services-led consumer society. In Unbalanced, I estimate that the growth in Chinese services will amount to some $12 trillion between now and 2025. In an environment of ever increasing IT-enabled global connectivity, many services have been transformed from nontradables to tradables. In the book, I calculate that the tradable portion of China’s coming bonanza in services growth could amount to between $4 and $6 trillion by 2025. No one is better positioned than the United States—the world’s largest and most competitive services economy—to garner a significant share of China’s coming wave of services development. The key will be having access to the growth in China’s domestic services market—a critical objective of a bilateral investment treaty.

YUP: Will China enjoy equal benefits from a bilateral investment treaty with the United States?

SR: Yes, that’s precisely the point. What we get on access to Chinese markets they will rightfully want and demand from us. That’s not to say that each nation replicates precisely the same industry and product-specific access of the other. There will be differences in what each would consider “out-of bounds”—the so-called negative list characteristic of all trade negotiations. But there can be no mistaking that China is now moving aggressively to invest in foreign markets, including those in the United States. According to a tabulation by the consultancy Rhodium Group, China’s outward-bound foreign direct investment into U.S. markets has just surpassed American fixed investment into China for the first time ever. Just as U.S. companies have sought to capture share in Chinese markets, it is only logical that China’s increasingly globalized multinationals seek to do the same in the United States. Both nations benefit from this aspect of economic integration—consistent with the familiar “win-win” mantra of globalization. Furthermore, if China and the United States reach accord on a rules-based framework of market access, that could well set the stage for broader trade liberalization, including China’s participation in the Trans Pacific Partnership (TPP) that the U.S. is currently negotiating with eleven other countries in the Asia-Pacific region. Excluding China from TPP would be a mistake. Progress on a BIT could well avoid such a blunder. That would be icing on the cake.

YUP: But any treaty between nations would need to be approved by the U.S. Senate. What are the chances that a dysfunctional Congress would agree to such an action?

SR: Given the political polarization in Washington, there is little possibility of Senate approval of a BIT with China in the foreseeable future. Realistically, however, U.S. and Chinese negotiators still have considerable ground to cover before presenting any such accord to their respective governments for ratification. The soonest I could envision that occurring would be late 2015 or early 2016—hopefully squeezing through a narrow window in the U.S. political cycle between the upcoming off-year elections and the next Presidential campaign. While this may seem unrealistically optimistic—especially in light of the long and arduous negotiations that preceded China’s accession to the WTO in 2001—there is growing support for such action by trade experts in both countries. An especially strong appeal for a BIT was recently made on the op-ed pages of The Wall Street Journal by none other than Ambassadors Charlene Barshefsky and Long Yongtu, the two principal negotiators of the China-U.S. WTO accord. Notwithstanding the compelling arguments and growing support outside the Washington Beltway for a U.S.-China BIT, it would be naïve to presume that Congress will suddenly put aside its long-standing anti-China biases. That remains a major fly in the ointment.

YUP: How do the charges and counter-charges over cyberhacking affect the relationship and can the upcoming S&ED do anything to calm the waters on this key issue?

Stephen Roach

Stephen Roach: Photo by Tony Rinaldo

SR: Painfully, cyber-espionage has become a way of life in the Internet Era. In terms of the U.S.-China relationship it has become an increasingly contentious issue in the past eighteen months following the January 2013 release of a report by a leading cyber security firm Mandiant that documents alleged hacking of U.S. companies by a cyber intelligence unit embedded in the Chinese army. That report served as the basis of a recent U.S. Department of Justice indictment of five officers in the People’s Liberation Army on charges of espionage, theft of trade secrets, identity theft, and fraud. Following that indictment, China has withdrawn from the military-to-military exchanges that were established at last year’s S&ED in July 2013, denying the validity of U.S. allegations and arguing that the evidence of U.S. cyber hacking provided by former NSA contractor, Edward Snowden, portrays equally egregious violations by the United States. This is a classic example of how the finger pointing of codependency can get partners into serious trouble. A resumption of military-to-military exchanges on cyber issues offers the only viable avenue of resolution. The S&ED is the best platform to accomplish that objective.

YUP: How do China’s economic leaders currently view the U.S. economy?

SR: They still view the U.S. economy with great admiration—as the largest and strongest economy in the world and as an economy that sets the bar very high in terms of innovation, technological change, and entrepreneurial start-ups. In the same sense, they recognize that the U.S. was seriously wounded by the Great Financial Crisis of 2008-09 and will take a long time to return to its former pre-crisis health and vigor. China continues to worry about macroeconomic imbalances—its own as well as those of the United States. It is attempting to address its imbalances by shifting to more of a consumer-led growth strategy. It is disappointed that America does not seem to be addressing its imbalances after the turmoil of such a wrenching crisis—preferring, instead, to sustain an historic shortfall of domestic saving and thereby still rely on others, such as China, to fill that void. China views this as an inherent source of macro-instability in the U.S. that leads to trade and currency tensions that always seem to be debated at S&EDs. The current Dialogue is hardly an exception in this regard—epically in light of the U.S. Treasury’s recent expression of concern (PDF) over a supposed shift in Chinese currency policy.

YUP: What do you advise as the steps needed to correct the “imbalance” in our two economies?

SR: The solution is conceptually quite simple—China needs to save less and consume more. America needs to do the opposite—consume less and save more and deploy that saving toward rebuilding competitiveness by investing in human capital, infrastructure, and manufacturing capacity. But talk is cheap—the heavy lifting of implementation is where the rubber meets the road. China. I believe, is on that road to rebalancing. The United States, I fear, is not. Instead, we remain fixated on the excesses of debt- and asset-driven consumer-led growth as the crux of the American Dream. In a codependent relationship, this asymmetrical response is troubling. America is likely to feel pressure as China shifts from surplus saving to saving absorption and thereby provides support for the safety net of its own citizens rather than offering such support for American citizens. In response, the United States will find itself lacking the external source of saving it has long relied on as the sustenance of its unbalanced growth. This is the subtext of what is likely to be an equally asymmetrical engagement at the upcoming S&ED in July 2014. It’s the “S” that remains the big problem for Washington—a failure to comprehend the strategic imperatives of America’s rebalancing agenda.


Stephen Roach is senior fellow, Jackson Institute for Global Affairs and School of Management, Yale University. Prior to that he was Chairman of Morgan Stanley Asia, and for the bulk of his career on Wall Street was Chief Economist of Morgan Stanley. Prior to joining Morgan Stanley in 1982, Mr. Roach served on the research staff of the Federal Reserve Board and was also a research fellow at the Brookings Institution. He holds a Ph.D. in economics from New York University. Roach has written extensively for the international media and appears regularly on television around the world.