The Six-Party Talks as a Game Theoretic ‘Stag-Hunt’ (2): China Likes the Rabbit Too Much


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Part one of this post is here.

In the formal language of game theory (GT), here is the pay-off matrix for the hunters (SK, PRC, Japan, Russia, US) if they capture the stag (NK’s better behavior in the region):

1. SK: SK is the most obvious winner from taking the stag because NK is an existential threat to the South – both physically and constitutionally.

2. Japan: Japan is the second big winner, because the NK nuclear and missile program increasingly represent a major physical threat to its cities, and perhaps even an existential threat if the North can put enough nukes on missiles.

3. US: The US is a weaker winner, because it is far less threatened by the North directly. The big pay-off from NK change (the stag) would be the reduction in troops and other expense from keeping USFK in Korea. Another benefit would be the reduction in the post-9/11 concern for proliferation of missile and WMD technology to terrorists and rogue states. But this is still far less critical than SK and Japan’s benefit. To the US, NK is more a troublesome, throwback-from-the-Cold-War headache when it would rather concentrate on salafism and the rise China.

4. Russia: Russia has essentially no stake in Northeast Asian security, given that it has basically retrenched from the region to focus on Central Asia and Eastern Europe. However, the Six Party talks are a prestige-generator for a country desperate to still look like a great power even as its lineaments erode. So Russia doesn’t get much from the stag.

5. China: The PRC’s portion of the stag is the smallest, while its rabbit is the biggest. A more docile NK would almost certainly fall heavily under the influence of its southern twin. The more ‘southernized’ NK becomes, the less sinified it will be. (This of course is the whole point from the Korean perspective – reunification.) And the PRC almost certainly reads greater southern influence in the North as greater American influence. So the Chinese rabbit is the long-term survival of a separate NK state to act as a buffer against the democracy, American influence, liberalism, and Korean nationalism that would all flood into NK were an inter-Korean settlement (the stag) finally struck. (A friend at the Renmin University of Beijing all but says this here, and I generally find Chinese scholars will openly tell you why the PRC props up the DRPK even though the PRC’s official policy is reunification.)

What to do then? How do the other hunters get China to stop defecting and start cooperating? The most obvious way is to equalize the pay-offs more, i.e., make it more valuable for China to coordinate by increasing China’s portion of the stag. Here is where strategic restraint on the Cheonan sinking may be useful. If SK holds its fire over the incident, it may be able to ‘sell’ this restraint to China as a hitherto unrecognized benefit. The SK claim to China would be:

See how small your rabbit really is? NK is so unpredictable, so erratic, so uncontrollable, that the stag is more beneficial than you think. Without a long-term settlement, NK’s erratic behavior could eventually generate a crisis the SK population will no longer choose to overlook. Next time this happens, SK government may be forced by popular outrage into coercive retaliation that could pull everyone in northeast Asia into the vortex.

Recall in early 1991 that Israel demonstrated similar strategic restraint as Saddam Hussein shelled it with Scuds before Desert Storm. This helped convince Saddam’s Arab neighbors that Saddam really was a danger to everyone. SK might be able to do the same here.

However, this is unlikely to be enough. China will probably as for a higher concession – a promise for the removal of USFK after unification. It is not clear to me if a unified Korea would need USFK, so this may be an option to explore.

Six-Party Talks as a Game Theoretic ‘Stag-Hunt’ (1): N Korea is the Stag


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Last week, I suggested that South Korea demonstrate ‘strategic restraint’ vis-a-vis NK if the North truly sank that SK destroyer. Not only are the South’s tactical response options terrible, but there is benefit here to be captured if the South’s restraint is marketed to China as a concession in exchange for more pressure on the North. For all of NK’s reputed autarky, it is in fact highly dependent on Chinese aid and trade, both licit and illicit. Without Chinese fuel oil, the lights in the North would go out; without the imports of booze, dollars, and pornography, the life of the Korean elite would be far less pampered. China cannot force the NK to change, but it can dramatically raise the costs of its continued intransigence.

All this is well-known but could be helpfully formalized in our research. In fact, I am surprised how little game theory (GT) I see applied to NK at the conferences here in Asia, given how obvious its utility is to the bargaining and brinksmanship endemic in NK foreign policy.

The stag-hunt (SH) is the best GT model or ‘game’ by which to map Northeast Asia’s security dilemma. We use GT all the time in IR but usually the prisoner’s dilemma (PD). (If you have no idea what I am talking about, start here for GT in IR; the Wikipedia write-ups, linked for the SH and PD, are actually quite good too.) The PD is cooperation came – how do you get the players to cooperate when there are high incentives to cheat on each other. The stag-hunt is better understood as a coordination game – how do you get the players to coordinate a common strategy to get the big pay-off, the stag.

Here is the basic schematic: a group of hunters can probably bag a big stag if they work together. They can weave a net around the stag that is likely to catch him. However, the hunters will also see the occasional rabbit bounce by. If one of the hunters goes for a rabbit, the stag will escape through the hole created and the other hunters will lose the stag almost certainly. Formally put, the stag is a big pay-off, and there is a good probability of successfully catching it if the hunters all coordinate. Conversely, the rabbit is a sure thing, but a much smaller, payoff. So the trick is to convince all the hunters to coordinate and not take the easy rabbit by cheating or ‘defecting’ on the other hunters.

So apply this to the Six Party Talks: The Hunters (players of the game) are the 5 parties besides NK: Japan, US, SK, Russia, and China. The Stag is North Korea, or more specifically change by the NK regime. The NK stag knows that if the 5 hunters can’t cooperate, it can escape. And it is widely noted that this is exactly what NK has done for decades. NK’s foreign-policy methodology since the 50s has been twisting and turning to prevent domination. Since the end of the Cold War, this has meant a constant ‘divide-to-survive’ effort aimed at the other 5 parties to prevent their coalescence into a united front against the DPRK. (I even wrote a book chapter about this, in galleys here.)

So the trick then is to build a common front among NK’s hunters to insure that they won’t defect or cheat and go for the rabbit. The rabbit in the NK case would be NK concessions to one party, but not the others: for example, abductee returns to Japan, family reunions for SK, mineral exploration rights for China, etc. These piecemeal, now-one-but-not-the-other concessions are all designed to keep the other 5 players off-balance and disunited. To date this has worked spectacularly well, even though the 5 hunters all know they are getting shamelessly manipulated.

The big problem to date for the hunters’ coordination is that China sees a lot of gain from taking the rabbit. The Chinese rabbit is in fact so juicy, it probably outweighs the tasty stag. The Chinese rabbit is a route of influence into the Korean Peninsula through North Korea’s continued existence. The big stag – change in NK to be a better international citizen in Northeast Asia – is of much greater value to SK and Japan, followed by the US, than it is to China. So long as China perceives a utility from NK as a buffer against SK, Japan, and the US, it is likely to continue to defect on 5 party cooperation, as it did last year, and take the rabbit of propping up NK in order to influence Korean events.

Part two is here.

Ahh, the Navel-Gazing Pakistani Military: One More Reason to Be Out the Door of South Asia…


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Thomas Barnett is a good blogger and his strategy work, especially the Pentagon’s New Map, is solid, if not exactly IR theory. I think Barnett sees himself more like Halford Mackinder or Robert Kaplan than Kenneth Waltz or Robert Keohane. In any case, his books are worth your time in that ‘not-quite-IR-but-still-important’ category (which also includes books like the Lexus and the Oliver Tree, Guns, Germs, and Steel, and The Best and the Brightest).

He absolutely nails it in regard to Pakistan here. We shovel mountains of money to the Pakis so they can scare the hell out of America’s emergent ally in Asia through this month’s huge military exercise right on India’s border (pic above). I noted last year as well the Pakistani military’s propensity to read the GWoT as just another way to bilk the US into paying for it never-ending anti-Indian build-up. Why are we running with these people?…

These shenanigans just reinforce my growing sense that we need to get out of the middle of the Asian landmass.

How to Respond if North Korea really Sank that SK Destroyer: ‘Sell’ Southern Strategic Restraint to China for Pressure on the North


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The sinking of a South Korean vessel, the Cheonan, has dominated the news here for weeks. Increasingly it looks like an external explosion caused the ship to break in two and sink rapidly. Suspicion is high that the only external force strong enough to sink a modern reinforced warship would have to a be a (presumably NK) mine or torpedo.

Predictably the conservative SK press has started the drumbeat for an aggressive response, including possible military action. President Lee of course is painted into a corner. A wholly unprovoked attack like this screams for blood, and the South Korean right is virulently anti-communist. If Lee does nothing, he’ll be hammered in the media and by his rivals within the governing party.

I sense a decisive moment building, akin to Austro-Hungary’s 1914 debate on how to respond to Archduke Ferdinand’s assassination, or Bush’s post-9/11 reckoning. Here is a moment rich and justified in the aggressive rhetoric so beloved by conservatives the world over; try to imagine how Fox News would respond if the ship had been American. This could easily slide into nationalist hysteria and escalation. 9/11 too raised America’s temperature and pushed the US government to aggressive action in the Middle East. Only a few years later did it become apparent how much the US overreacted. I fear the same here. As Andrei Lankov (one of the best NK experts – read him if you don’t) notes, Lee doesn’t really have much room to do anything against the North that is significantly punishing, yet won’t cause a NK escalatory response, and then a dangerous tit-for tat downward spiral. I think the Korean Foreign Ministry sees this too.

In brief, the problems with any military response are:

1. North Koreans will suffer the costs of any retaliation, not the KPA/KWP elite likely responsible for the attack.

2. NK is heavily ‘bunkered’ and hardened. Any military response would likely be from the air and would require multiple sorties. This means more chances for accidents, shootdowns, and other ‘kinetic’ interactions that could lead to a spiral of violence.

3. Realistically, the US would have to political approve of SK action; this is unlikely.

4. The North is already so deprived and impoverished, it is hard to find a juicy target that would both hurt but not lead the KPA to call for war. (This is what would happen if the nuclear sites were bombed, so scratch that idea.)

5. My friend Brian Myers has convinced me that NK is such a paranoid, ‘national-defense state,’ that any attack is likely to provoke an escalated armed response. The KPA derives it prestige and legitimacy from its ability to defend the country – indeed this built into the constitution now as as the “military-first” policy – so it would be existentially important for it to hit back.

Hence it is extremely likely that any SK strike would be immediately countered and escalated. This is not like Israeli airstrikes in Lebanon or Syria. The North will almost certainly pursue escalation dominance into a quickening and widening cycle of hits and counter-hits. This is not a game the South really wants to play, especially given Seoul’s extreme exposure to North Korean artillery. So swallowing its anger out of sheer fear of escalation is my prediction of SK’s response.

So what to do? How about going to China and telling them, ‘we will hold off on a response in the interest of stability, but you really need to get serious with the pressure. No more bail-outs and trips to Beijing for the Northern elite.’ China doesn’t want a tit-for-tat, degenerative North-South spiral anymore than anyone else. Perhaps the South can use this to really push the Chinese hard on finally cutting off NK.

To be sure, the road to Pyongyang doesn’t go through Beijing. North Korea coldly plays China for gain as much as it does the US, Japan, and South Korea. But I have always thought that if NK ever faced a truly united front of the other 5 parties of the Six Party Talks (China, US, SK, Japan and Russia), the DPRK might finally be cornered. In this way, the relevant Six Party game theory is the stag-hunt. If only the 5 can coordinate and not defect on each other (NK’s constant goal), the can catch the big stag – change in NK. Strategic restraint on the Cheonan sinking might be a way to convince China to finally stop defecting over North Korea.

Is It Moral to Find Humor in North Korea’s Bizarreness?


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I never really know how to answer this question. Among IR and foreign policy types, the DPRK is just as easily a punch-line over drinks after a long conference as it is a topic of that same conference. Andrew Sullivan equivocates on the question here.

I found these pictures, with the appended humorous dialogue, here. Remember that Kim declared long hair bad for socialism. The NK media also claims Kim Jong Il can manipulate time. So when it gets this wacky, it’s fairly hysterical. It’s hard not to laugh, right?

On the other hand, you can in fact imagine that the captions above to the third picture are accurate. The regime is that arbitrary and brutal.

My sense is that it is within the bounds of ethics to laugh at communist kitsch after the regimes have collapsed or at loopy Chavez-types who aren’t too destructive  – yet. But North Korea is probably too far. Comments would be appreciated.

If you want even more North Korean surreality to tempt your ethics with humor, try here for the genuinely bizarre subculture fetishizing the pretty but robotic North Korea traffic cops. Yes, it’s that weird. See if you can avoid laughing…

For my other writing on how opaque and bizarre NK is, try here, here and here.

Communist Kitsch Update: North Korean Traffic Cops Gone Wild!


 

There is something genuinely surreal about communist kitsch. In the midst of the grey, dingy, low-growth, high-corruption, fearful yet boozy commie sub-cultures stretching from East Berlin to Pyongyang, weird, irrelevant, yet distinctly socialist-bloc cultural images tied people together. Stephen Kotkin nailed it by calling this ‘trashcanistan.’ Think of commie-kitsch as the Red version of MTV’s ‘I Love the 80s’: we all know its god-awful and that it embodies the fall of Western civilization; yet we love the trashy, wannabe celebrity commentary and the references to long-lost 80s junk we nonetheless remember, like jerry-curl or Whitesnake; we can all use it as a reference point with each other, if only for inanity; and we could easily pass a hangover afternoon watching it as a guilty pleasure.

So transpose that moronic intellectual frame onto the grinding, burned-out, alcohol-sodden, polluted, ‘they-pretend-to-pay-us-and-we-pretend-to-work’ world of 20th century communism. [You didn’t know there were Soviet proverbs? You’re not even sure you know what an ‘east-bloc proverb’ is? 🙂 Try here.] What would be the trashy mediocrity, nonetheless widely shared and still socially tying post-communist populations together?

The  best known treatment of communist kitcsh is the movie Goodbye Lenin. In East Germany, former GDR citizens fought to retain their pedestrian streetlights, because the red and green lights were shaped as cute little people (Ampelmaenner), not just the colored blob most of see. Don’t believe me? There is an internet campaign to save the Ampelmaenner, as ridiculous as that sounds. (Don’t these people have to go to work?) You can even learn why the Ampelmann is a “cult figure.” Hah!

In the ‘red-kitsch-yet-to-be’ category has to be the scary as hell, yet… disturbingly sexy female traffic police of North Korea. Again, you think I am lying? Try this website set-up by westerners (men presumably) just to celebrate these stalinist sex symbols (yes, in trashcanistan, ‘stalinist sex symbol’ is a meaningful concept). Among other surreal commie kitsch wonders is the monthly,“Pyongyang Traffic Girl Of The Month” Contest (on the homepage), the forum moderated by “Jong-Il’s Hair Apparent,” and a picture gallery in which you can admire the umbrellas the cops use when its very sunny. Hah! You can’t make this stuff up its so loopy…

Watch the video at the top of this post, and consider of ALL of the following contradictions in just 80 seconds (h/t to Tom for catching this genuinely surreal vid):

1. How can two dumb American guys pull off wandering around Pyongyang alone?

2. Where is their minder, and how did they possibly get a video-camera in?

3. Why are they so stupid as to film a cop, without permission, in the world’s worst police state?

4. Wth is that other dude in Mini-Cooper?

5. How did HE get in alone, with a video camera, to film a cop also? Hey, wait a minute! I thought NK was the world’s worst police state? How do these guys pull this off?!

6. How do you get a Mini in North Korea?

7. How do you ‘pimp-out’ a Mini in North Korea? ‘Fast and Furious 5: Pyongyang Milk Run’? Haha!

8. Isn’t that car exactly the kind of thing the predatory DPRK elite would confiscate?

9. Is the guy in the Mini filming the cop or the dumb Americans? I am not sure which is scarier…

10. Why doesn’t the guy in the Mini freak out when the cop gets angry? Good lord, who has the b—- to provoke the North Korean police?!

Honestly, someone needs to write a master’s thesis on red kitsch. It is clearly a shared social context the provides meaning in its own way, and the laugh potential is awesome, especially for regular, all-too-drab social science.

If you need more vids of North Korean terminatrixes gone wild, try here.

Jason Bourne Goes to Iraq: Iraq War Film Debate, part 3 – “Green Zone”


 

I have written on Iraq war film before. Here are parts 1 and 2 on the The Hurt Locker.

The Green Zone (GZ) got 54% on rottentomatoes. I would give it an 80%.

This is an awkward film to review because its political content is serious, yet it wraps that in action-movie panache. It’s a war film (serious) that awkwardly treats violence like an action film (fun, exciting), so you’re morally not quite sure what to think. The message, that there was a fair amount of Bush administration shadiness in the 2003 run-up, is accurate. Anyone who has followed the war will absolutely relish the sequence at the swimming pool of the private military contractor in a bikini carrying a machine gun. Hah! I laughed out loud at that one, while the Koreans looked bewildered at me. Unfortunately, there’s too much ‘Jason Bourne goes to Iraq’ excitement to take the message all that seriously.

1. Usually war film reaches for a ‘message’ by portraying violence as tragic and dehumanizing to all involved. I can’t think of a serious war film that portrays war as fun; only idiot portraits of war, like 300, do that. No viewer wants to think he is ‘enjoying’ morally meaningful violence (as opposed to video game/300 violence). It is morally necessary for the viewer to not enjoy the on-screen violence, because that would trivialize the political message and generate huge internal conflict in the viewer. If the viewer gets a rush from the on-screen action, the moral effect is more like a cool video-game sequence from your favorite shooter. So in Apocalypse Now or Platoon, the action sequences are never a video game-style rush to watch. Instead they are framed, with somber music frequently, to make the viewer reflect seriously, and presumably agree with the directors that the Vietnam war was an error.

2. By contrast, action movies that want you to enjoy the frenzy and violence must make the bad guys ridiculous. It is too challenging to show morally realistic (i.e., mixed, not all bad) bad guys suffering from extreme violence. The only way the viewer is morally permitted to enjoy extreme on-screen violence is with cartoonishly evil guys. Good guys dishing out brutal just desserts need really bad Bad Guys. Think about Lord of the Rings or Starship Troopers. Aragorn is astonishingly brutal (beheadings and such), but he is still the hero, because those orc-things are clownishly over-the-top bad guys. (This, btw, is why the LotR films are so empty of real meaning and hence wildly overrated.)

3. This tension is one of the reasons why Black Hawk Down (BHD) is so controversial and so morally flawed. It reaches for seriousness, but then provides an exhilarating action thrill ride for two relentless hours. The film’s replay value is not as a portrait of the BHD event, but as a gripping, visceral action film. So it’s a real war film that people like because for its action movie content. Ugh. Because of course all those Somalis are real people whom our military killed in large numbers. We shouldn’t enjoy watching them get mowed down, but we do. (Student after student has asked me about that films for more than a decade now.) This is a growing problem in the video game industry too.

4. GZ suffers from the same problem. It tries to have it both ways. The movie reaches for depth with a serious political message, but then gives you action sequences that are so exciting and exhilarating to watch, that you aren’t quite sure what to make of it. How can you oppose the Iraq War if Jason Bourne Matt Damon is so gripping to watch?

5. GZ is morally superior to BHD though, because BHD director Ridley Scott clearly took a perverse joy in showing the extreme violence of the story. He was obviously making an action movie, which morally reduces the awfulness of the actual BHD event. My sense of Greengrass (GZ director) is that he included the ‘Jason Bourne goes to Iraq’ sequences to ensure that viewers would come to his film. I.e., the action sequences are the hook to get the viewers to hear the Damon-Greengrass message that the Bush administration rooked us into Iraq.

6. Conservatives have predictably panned the film as Hollywood ideology, and Damon has now made two left-critical takes on the GWoT (the other being Syriana). To which I would only say that such a take on the war is way overdue. The war is still on, so Hollywood probably terrified of being seen as ‘not supporting the troops’ if it were to make films questioning our presence. Hence, most Iraq films have been unwilling to address the central political issues. The overrated Hurt Locker ducked politics altogether, and other Iraq films like Stop-Loss or Lions for Lambs don’t actually get into the central political question: how did we get there on such false premises? The only film yet to dig somewhat is Oliver Stone’s W – where Bush is shown telling Blair that the war is on regardless what the UN does. But Stone’s reputation today is too far gone, especially with conservatives, for his work to establish real credibility. So I welcome GZ, even if it isn’t really close to the best US war film.

7. I can’t imagine that anyone today, knowing what they know now, would still counsel the war. (This is not to say that that the 2003 decision was wrong given 2003 information; only that with 2010 information, it is hard to endorse the 2003 decision.) So it is important that our film – which is a far more widely shared social media than books or journalism – begin to investigate the war’s origins. In the same way that our best war film has looked back at Vietnam and told us difficult things we don’t like to think about US power, the GZ will hopefully start the process on Iraq. To all those conservatives who love to hate Hollywood on the Iraq war, remember that self-criticism is a central American political value too.

Just How Hard Will Afghanistan Be?: ‘We Issue Pens to Afghan Soldiers’


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Robert Kaplan has a nice new piece on Afghanistan over at the Atlantic. As usual, it is worth your time. Kaplan travels to places most of us in IR could only dream of visiting, so his work’s got a verite feel that our modeling and endless quotations of one another never do. (This is why people read him, not us.) Unfortunately Kaplan repeats the same motifs again and again, so its not clear if we are reading about Afghanistan, or just Kaplan’s expansive Americanist ideology again. In this way, he is becoming like the Kagans. You already know his answer: geography is a huge constraint on international action; America’s NCOs and infantrymen are kick-a—; we should win the GWoT at even huge expense; and US empire is probably good for the world, even if others resent it.

This time around, Kaplan lays the groundwork for Stanley McChrystal’s presidential bid. What is it with conservatives and the lionization of generals? Just read Kaplan’s purple prose. No one doubts Petraeus or McChrystal’s military talents, but I am pretty sure the US right’s cult of personality tendency for military machismo is unhealthy for the democratic process. Also, is it really admirable that McChrystal only sleeps four hours a day? How many of us could make good decisions living that way regularly? That told me less that McChrystal is super-committed, and more that he is overworked, under-resourced, and under-staffed. That sounds like the Bush-era GWoT all right…

But the money quote from Kaplan’s piece has go to be this from a NATO International Security Assistance Force (ISAF) interviewee:

The recruits may not know how to read, but they are incredibly street-smart. They’re survivalists. Basic soldiering here does not require literacy. We give them a course in how to read and issue them pens afterwards. They take tremendous pride in that. In Afghanistan, a pen in a shirt pocket is a sign of literacy.

Note the use of the military verb ‘issue.’ Yes, the $.50 plastic pen you forgot in the coffee room yesterday is a formally issued piece of military hardware that signals prestige in the wider Afghan society. WOW.

Consider all the information that short anecdote conveys to you about education, poverty, and governance in Afghanistan:

1. Afghans are so poor, they can’t afford pens. ISAF has to issue them, and only qualified soldiers get them.

2. Afghans are so illiterate, no one really needs them.

3. Widespread illiteracy and poverty means the Afghan state, even down into the local level, cannot meaningfully connect to the citizenry.

If illiteracy is so widespread that pens are a mark of social prestige, then Afghanistan can hardly be expected to have complex institutions or national centralization. If you can’t write bills or receipts, what kind of markets will you have? If you can’t read laws from Kabul, much less correspond with state organs, how do you know what the rules are, where to pay taxes, etc? If education is that non-existent, how can you build an army, infrastructure, courts, etc?

None of this means the US and other wealthy states should not help Afghanistan. Indeed, your heart should break when you read that Afghans are issued pens. Nor is this a verdict on the utility of ISAF; maybe we should still go, despite the huge hurdles this very revealing anecdote makes clear.

But this anecdote told me more about how hard the Afghan operation really will be, than Obama’s surge speech last year, or any of the other fearless, ‘we-can-do-it’ prose of Kaplan’s piece. This is way beyond Iraq. Afghanistan doesn’t just need counter-terrorism/insurgency, it needs nation-building on an order that took the US two centuries to achieve.

Obama didn’t include anecdotes this revealing in his Afghan surge address last year. Did he white lie by not showing us just how high the slope is? It kinda seems like it…

Does US Health Care Reform Have Any Diplomatic Impact?


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It’s well known that domestic political failures/successes impact foreign policy-making ‘capital.’ This is especially so for the US president, because the US foreign policy-making process includes the legislative branch far more than in other democracies (much less in dictatorships). In other words, the US Congress intervenes a lot more in US foreign policy-making than the parliaments of other countries do, so presidents need more than the usual amount of congressional support to act overseas. You see this in lots of ways: Congress routinely derails trade deals, intervenes in US aid planning (to avoid abortion funding, or to support Israel, eg), pushes unsought weapons-systems on the Pentagon, demands recognition for preferred foreign constituencies (Armenians, Cuban exiles, Christians in China and the Middle East), etc. So the connection between ObamaCare’s passage and the general ability of Obama to push Congress to follow him later on foreign policy is real.

(Addendum: In European and Asian democracies, the legislature is rather deeply excluded; the executive branch runs the whole show. The logic is that when the country acts abroad, it should speak with one voice, and only the executive branch – the president or prime minister –can actually aggregate all the diverse interests in the country into that one voice.  Parliaments cannot do this realistically, as they are so fragmented among competing parties and egos.)

Mead argues that ObamaCare’s failure would have ‘crippled his presidency.’

1. Not really. Health care is such an overwhelmingly internal, domestic issue, I don’t think the specific foreign policy benefits are that high. States pursue all sorts of different health care strategies, and their linkage with specific foreign policy issues is minimal. ObamaCare won’t provide any dividends abroad on the burning immediate issues of US foreign policy, like Israeli settlements, Afghan or Mexican corruption, China’s currency, Iraqi elections, etc.

But it does send some oblique signals:

2. It does bring the US into line with the OECD norm that when countries get rich enough, they are supposed to provide near-universal health care as a basic gesture of ‘social justice.’ One in six Americans didn’t have health insurance, and any American travelling abroad has probably tried, awkwardly, to explain that one away to skeptical interlocutors from other OECD states.

So in this way ObamaCare pulls the US toward the global normative consensus of what a good society looks like; it helps make the US look ‘civilized.’ It aids Obama’s stated goal to return the US to moral authority after W and restock its soft power. It therefore helps the US shame and criticize illiberal states more effectively, because it is less vulnerable to hypocrisy charges. (The US embrace of gun ownership and the death penalty, e.g., make the US a less compelling advocate of the rule of law and state restraint. The US move toward torture similarly undermines the US as an opponent of it.)

3. It does signal that the US will have a harder and harder time maintaining a huge defense posture. The more the welfare state grows, however noble the cause, the more its spending will eat into defense and diplomacy spending

4. It does improve Obama’s domestic political capital and general standing as a powerful POTUS who can get things done. This will increase his leverage in Congress, and perhaps with democratic leaders overseas too. He should be able to more successfully push controversial foreign policy initiatives through Congress, like the Korean-US trade deal or a tougher line on Israel. Reputation and prestige matter in IR, and looking like a winner helps bluff others.

Revaluation Downside: Low-Cost Chinese Goods Help America’s Poorest


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My big concern is that all the focus is on the negative side of China’s undervalued currency. Krugman (above) and others, correctly, complain that it artificially reduces US competitiveness. If the yuan floated, the price of US goods in China would slide dramatically. Rationalist Chinese consumers would move toward suddenly cheaper US goods, and that gets you the export boom Obama talked up in the State of the Union. (Although Asian buyers are stubbornly nationalistic. The home country bias here is extreme, so don’t get your hopes up for some big US export surge to Asia. You’ve never seen as many Korean cars as you will in Korea…)

The downside of course is that the poorest Americans benefit most from the undervalued yuan, and their unorganized, underprivileged, and non-corporate voice is completely unheard in this debate. The poorer you are, the more it matters to you that Chinese imports at Walmart are super-cheap. By definition, the tighter your family budget constraint, the proportionally more valuable low consumer prices are. The undervalued Chinese currency ensures that all that consumer stuff imported from China and sold at the big box stores like Walmart and Target helps the poor stretch the dollars. The purchasing power of their fewer dollars goes farther when Chinese imports cost so little.

1. So the poorest benefit the most proportionally from the undervaluation. Why doesn’t that make the news? Because the poorest are also the least political organized, and consumer interests are generally far less well-organized than business interests. So US exporters, who would benefit from a weak dollar, scream, and Congress listens. US consumers benefit enormously from a strong, especially overvalued, dollar. But their voice is disaggregated and diffused across the country, compared to the concentrated corporate power of exporters. Consumer gains from a cheaper Chinese-Walmart stuff is far smaller and diffused than the steep and concentrated pain of exporters suffering from a strong dollar. This is a classic protectionist response: gains are diffused, hard to see, and enjoyed by the weakest, while pain is concentrated, easy to indentify, and felt by the politically privileged.

None of this means that the yuan isn’t overvalued. It is, and the world’s largest economies clearly have a systemic responsibility to let their currencies float. The distortions coming from China’s currency are downright bizarre, with China’s foreign exchange reserves at levels never seen in the history of finance before. But if you wonder why DVD players that used to cost $20 at Walmart suddenly cost $30, now you’ll know. And while you, the middle class reader, might not care because that is within your disposable income range, recall that the poorer you are, the more that extra $10 means. The more overvalued the US dollar, the more America’s poorest are helped.

2. The temperature is rising on China’s currency. The US Congress is starting to seriously pressure the US Treasury to formally label China a ‘currency speculator.’ DoT must once again decide in mid-April. Krugman (above) got the ball rolling on the argument that the US should finally come out and openly accuse China of manipulation for its nationalist/mercantilist trade purposes. And just about everybody seems to agree that the yuan is overvalued. Just how undervalued is the yuan? 49% (!!) according to the Economist and 40% according to the Peterson IIE. For what it’s worth, I certainly agree with these estimates. I don’t think anyone really believes the dollar currently reflects its real purchasing power in Asia. US goods are ridiculously expensive in Korea; a fifth of Jack Daniels costs about $40!

3. All these Asian countries want their currencies undervalued because of the nasty lesson they learned in the Asian financial crisis. Most Americans don’t know this at all, it seems. 15 years ago, Asians did not have the dollar reserves to defend their currencies and when capital flight hit, these economies were turned upside down. Indonesia’s government collapsed into anarchy, Thailand lost something like 1/3 of its GDP, and South Korean couples were donating their wedding rings for gold to the government to pay its foreign debts! In short, the region got turned upside down/inside out, and everybody out here remembers this, while Americans just missed it altogether. So afterwards, the Asians did exactly what the DoT and the IMF told them to – they balanced their books and stocked up dollars in case there would be another crisis.

4. Here is good background on the conflict; try this too. To place the China currency evaluation in the global context, read this excellent introduction to the current problems of the global economy, specifically the problem of ‘imbalances.’ In brief, the US and Mediterranean countries are spendthrifts now carrying huge piles of debt, while Germany, China, and other Asians are overthrifty supersavers. So the broke Americans have no more money to spend to prime the global economy, and the supersaver Asians should fill in the gap by buying a lot. The more stuff they buy, the more people will be hired to make all that stuff they are buying. This will reduce unemployment. So the supersavers are the key to getting global unemployment down, because they have the cash to go on a spending spree.