Friday, January 28, 2011

Confucius Analect of the Week, January 27, 2011

U pluribus unum.  Out of many, one.  That inscription appears on the Great Seal of the United States.

Lately that motto has given way to “diversity” on college campuses, the media, entertainment, government, and business.  Each of the many is more important in its own right, rather than as part of a whole.

China is different.  The Han people constitute 90% of its population, the rest a collection of small tribes and indigenous groups.  Chinese are proud, cultured people.

This sentiment, the sense of high culture, appears in the Analects, Chapter III, Verse 5.

James R. Ware:  “China without a recognized leader is preferable to foreigners with all their leaders.”

James Legge:  “The Master said, “The rude tribes of the east and north have their princes, and are not like the States of our great land which are without them.”

Confucius.org: Confucius said,  “Even with lords, the Yi and the Ti cannot be compared to the Hsia without lords.”

A. Charles Muller: Confucius said:   “The tribes of the East and North (Koreans and Mongolians), though having kings, are not equal to our people, even when lacking kings.”

Order and stability are the hallmarks of Confucianism.  Yet without a lord to impose order, Chinese civilization is superior to those of other peoples with lords, princes, or kings.

I’ve run this analect by many Chinese visitors at Stanford and almost all concur in the interpretation of the superiority of Chinese culture.

Thursday, January 27, 2011

Obama and Student Mental Health

President Obama’s State of the Union Speech stressed “winning the future (WTF).”  Citing success in China, India, and other countries, Americans, he said, need to rediscover the spirit of innovation.  College students, who supported Obama so strongly during his campaign, are evidently feeling the pressure.

The annual UCLA survey of freshmen disclosed higher levels of stress and declining mental health, the worst figures since the survey began in 1985.  Women report lower levels of emotional health than men, despite decades of feminist studies uplifting women and women constituting 57% of enrolled students.

If Obama’s proclamation to WTF puts greater stress on students in American institutions of higher learning, and if increasing female enrollment results in lower levels of emotional well-being, then the U.S. will have a hard time WTF.

Larry Summers is Back in Form

During his two years in the Obama White House, Larry Summers gave a number of interviews and took questions following speeches.  He spoke slowly, every third word an “uh” or other pause in his remarks.  He stumbled, bumbled, and mumbled in stonewalling to avoid direct answers.

David Faber of CNBC interviewed him at the late January Davos 2011 gathering.  His answers were clear, crisp, and straightforward, without any “uhs” and “ahs.”  It’s amazing how public service turns brilliant intellectuals into stumbling political spokesmen.

Wednesday, January 26, 2011

Who Are America's Arab Allies

American officials and Members of Congress often refer to America’s Arab allies.  Just who are they?  Egypt, with sixth-term President Mubarak?  Lebanon with a Hezbollah pick as new prime minister?  Tunisia with a new who-knows-what kind of government to emerge?  Saudi Arabia which underwrites the global spread of madrassas?  Pakistan which can’t make up its mind about the Taliban?  President Karzai in Afaghanistan?  Iraq with Moqtada al-Sadr squarely in the middle of Iraqi politics?  NATO member Turkey which would not let U.S. forces open a northern front in Iraq in 2003?

What is the definition and measurement of an American ally?  A country that’s with us more than 75% of the time, 50%, or even 25% or less.  Is Russia an ally because it helps with sanctions on Iran?  Is China an ally in coping with North Korea’s nuclear weapons program?  Are European countries reliable allies but which let the U.S. provide their military shield?  How many of our “allies” would remain allies if we cut off those receiving civilian and military aid?

Friday, January 21, 2011

Confucius Revived

I previously blogged on the unveiling of a statue of Confucius in Tiananmen Square and the spread of Confucius Institutes around the world.

Stanford University has recently announced the establishment of a Confucius Institute as an integral part of the Department of East Asian Languages and Culture.  The web page of the Confucian Institute notes that Chinese has become the second most popular foreign language at Stanford.  The Institute will award three graduate fellowships to those in the Chinese language program.  Stanford is one of a growing number of universities that have or will establish Confucius Institutes.

The Confucius Institute is a partnership between Stanford, Peking University, and Hanban, an administrative arm of China’s Ministry of Education.

In graduate school at Washington University in St. Louis (1962-68), my first teaching assignment with undergraduate students of Chinese history was a discussion of the Analects of Confucius.  I still have the paperback book with the Analects I marked for discussion.  I have since added other translations to my library along with Internet editions.

One of the most striking features of Confucian thought is the almost complete absence of women.  There is only one Analect devoted specifically and exclusively to women, which appears in Chapter 17, marked as number 23 or 25 depending on the author’s enumeration.

James Legge’s translation:

The Master said, “Of all people, girls and servants are the most difficult to behave to.  If you are familiar with them, they lose their humility.  If you maintain a reserve toward them, they are discontented.”  (Legge interpreted girls as concubines, although he expressed shock that Confucius would utter such a statement.)

D. C. Lau:

The Master said, “In one’s household, it is the women and the small men that are difficult to deal with.  If you let them get too close, they become insolent.  If you keep them at a distance, they complain.”

James R. Ware:

The Master said, “Only women and petty man are hard to have around the house.  If you get too close to them, they become non-compliant.  If you keep them at a distance, they turn resentful.”

Lin Yutang:

Confucius said, “Women and the uneducated people are most difficult to deal with.  When you are familiar with them, they become cheeky, and when you ignore them, they resent it.”

Stanford has established the Clayman Center for Gender Research.  Hundreds of other colleges and universities have set up centers for women's studies.  One wonders what feminist scholars think about the new Confucius Institutes on their campuses?

Thank You Mara Liasson of the Fox All-Stars

Representative Steve Cohen’s equating Republicans charges on health care with Goebbels, the Nazis, and the Holocaust on the floor of the House of Representatives led to a revealing comment by Mara Liasson, one of the Fox All-Stars.

Chris Wallace, subbing for Bret Baer on January 20, 2011, remarked that Rep. Cohen had walked back from his Goebbels-Nazi remarks but still charged Republicans with lying.  He asked Mara if that would get him off the hook.

She replied: “Lying in this day and age is a pretty benign accusation...”  But, going further, she stated that “invoking the Holocaust for anything other than genocide was losing the argument.”

http://www.youtube.com/watch?v=WJiYu2lm2kQ

Amazing!  Absolutely Amazing!

Washington media consider the charge of a politician lying to be BENIGN.  It’s really okay for politicians to lie.  But they had better not transgress certain sensitivities.

We all know the infamous definition of an ambassador as an honest man sent abroad and paid to lie on behalf of his country.  I have previously defined a politician, which I’ll now label as Rabushka’s Insight No. 1, as “a man or woman, honest or not, who is paid to lie to his own country.”

Where have media pundits got the idea that lying in politics is benign?  Is it from other political pundits?  Is it from the universities in which they were presumably educated?  Is it from political correctness in that anything goes so long as it is not offensive to designated groups?

Monday, January 17, 2011

Confucius Joins Mao Zedong in Tiananmen Square

China has unveiled a 31 foot high statue of Confucius on the East side of Tiananmen Square.  He joins Chairman Mao as one of the two Chinese leaders to inhabit Tiananmen Square.

China is establishing hundreds of Confucius Institutes around the world, and is resurrecting Confucius throughout China to emphasize traditional values of respect, harmony, and other Confucian virtues.



I am delighted with the addition of Confucius to China's central square.  In fact, before I went to Hong Kong to study modern Chinese in 1963, I first studied some classical Chinese at Washington University in 1961-62.  I read some of the Analects of Confucius and the Classic of Filial Piety.  My tutor insisted that I memorize the first chapter in Filial Piety.

Some years ago I had dinner with a high-ranking Chinese official assigned to a diplomatic post in the United States.  He remarked that I had made a mistake when I invested the time and effort to study the classics in the original.  That was China's official line at the time.  I'm glad to see that my early investment in Confucius is now in the avant-garde.

Sunday, January 16, 2011

Hit the Books

More digits have been logged into essays and analyses about education than probably any other subject.  Where does America stand in relation to other countries?  Is the U.S. doomed to lose to China? Why are education standards falling?  Can K-12 schools in inner cities ever be fixed?

Let me call your attention to an interesting article by Hunter Richards titled “Technology, Employment, and Our Children’s Future.”  Richards presents a series of graphs that document the growth of IT spending, its beneficial impact on productivity, the growth of high-tech industry, rising corporate profits, higher unemployment of the poorly educated, and the growing importance of higher education.  In other words, hit the books and keep hitting the books.

A digression, but on point.  I spent 1963 in Hong Kong studying Chinese.  The first Chinese film I saw was a story about a sad neglected woman because her husband, an official of the empire, spent all his time studying.  Du shu, du shu, changchang du shu (studying, studying, always studying).  The tradition continues to this day, except that Chinese women also du shu along with men.

Richards argues that we must align education growth with productivity growth to cope with a labor market that finds fewer opportunities for the uneducated.  I believe the solution requires major overhaul of “soft” tertiary education, but most important, fixing K-12 so its dropouts and graduates can acquire some measure of “productivity-raising” education and hopefully continue to the next level.

I’d like to see Richards spell out a list of measures to resolve the problem he has elegantly graphed. That is the hard part, isn’t it, as it requires dealing with an often incorrigible political and educational reality.

Thursday, January 13, 2011

One Picture About China is Worth a Thousand Words

The following cartoon puts the importance of China in perspective.


Credit:  Economicrot, December 31, 2010.

Wednesday, January 12, 2011

China Brings Renminbi Banking to the United States

China has announced that residents of New York and Los Angeles will be able to open deposit and business accounts in renminbi (China’s currency).  Individuals will be able to purchase CDs of six months or one-year duration, or make cash deposits of up to $4,000 a day and $20,000 a year at Bank of China branches in the U.S., which will be covered by FDIC guarantees.

Some critics say that this new policy is a trivial change, and fails to liberalize the exchange rate of the renminbi to permit greater appreciation to the satisfaction of the U.S. government.  But this perspective misses the point.

The amount of renminbi deposits that can accumulate over the course of the next year, if every resident of New York and Los Angeles makes the maximum deposit, is on the order of $200 billion, one year's worth of new foreign exchange reserves.  But that is exactly the point.  China will establish renminbi banking in the U.S. in a completely non-threatening manner.  Other banks and cities will push for similar privileges, which China will grant (although claiming it does so reluctantly).  As the renminbi slowly appreciates against the dollar, ordinary American households will become comfortable holding part of their cash and CDs in renminbi.  Business firms will remit money to and from China in renminbi.

In five years, Americans will routinely transact business in renminbi and use the currency for travel as more and more countries use renminbi.

U.S. Assists Referendum for Southern Sudan Independence

The U.S. government has actively supported a referendum in Southern Sudan to determine if qualified voters wish to separate from Sudan and establish their own country.  The referendum was part of a comprehensive peace accord in 2004-05 that ended several decades of civil war between the Arabic, Muslim north and the Christian, African south.  Although the final result won’t be available for a few more days, reporters and monitors predict an overwhelming “yes.”  Some difficult details require resolution, e.g., division of public debt, currency, oil revenue, and others.   Nonetheless. Southern Sudan will shortly raise its own flag.  Kudos to the U.S. government for assisting the establishment of a new, independent, democratic country.

Would somebody please explain why the U.S. strongly opposes similar self-determination for Iraqi Kurds?

Friday, January 7, 2011

Bernanke is (Indirectly) Printing Money

The Department of the Treasury is a treasure-trove of fascinating information.

Compare the ratio of the number of $1 and $100 bills produced in selected years. In FY 1980, the ratio was 19:1.  In FY 1999, just prior to the dot.com bust, the ratio fell to 2.3:1.  Two years later, FY 2001, it rose to 26:1, but fell sharply the next year to 4.8:1.

The most dramatic trend is the financial crisis years of 2007-09, with the ratio of $1 to $100 bills produced in FY 2007, FY 2008, and FY 2009 respectively at 3.8:1, 2.6:1, and 1.5:1.  Hundred dollar bills were produced like hotcakes in FY 2009.

It is estimated that over half of the value of U.S. currency is held overseas, a ratio that has been relatively constant for some time.  The huge volume of money pumped into the U.S. economy by the federal government's stimulus and the Federal Reserve Board's quantitative easing likely resulted in a massive increase in demand for cash.  The total amount of cash in circulation rose from about $625 billion at the end of 2008 to $829 billion at the end of 2010.

Technically speaking, Bernanke is not pressing the button that runs the high-speed intaglio printing machines at the Bureau of Printing and Engraving. But the growth in the fed’s balance sheet from $930 billion on August 8, 2007, to $1.53 trillion on October 1, 2008, to $2.43 trillion at the end of 2009 surely helped fuel the demand for high-denomination notes.  The demand was accommodated by churning out a huge increase in  $100 bills, from 688,800,000 in FY 2005 to 1,785,600,000 in FY 2009, a nearly threefold increase.  It should be noted that the $100 bill has an average life expectancy of 88 months, four times longer than the $1 bill, which lasts 21 months.

Wednesday, January 5, 2011

Harbaugh, Luck, and Stanford

Stanford was Luck(y) to have Harbaugh.  Indeed!

Congratulations to Stanford football for its great victory in the Orange Bowl and the best season since 1940.

Let’s face it.  Football really is more important than academics.  Jim Harbaugh has 352,000 followers on twitter; Stanford University only has 22,000.

During the past few months, I’ve blogged on Stanford football three times.  The three posts were my most widely viewed in 2010, by a factor of five-to-one, compared with my comments on politics and economics.

Tuesday, January 4, 2011

End the Fed?

With Republicans in control of the House of Representatives, Ron Paul plans to conduct oversight hearings of the Federal Reserve Board.  His views on the fed are well know given his book titled “End the Fed.”  Paul and other Members of Congress blame the fed for the financial crisis of 2007-09 and the steady depreciation of the dollar since its fixed-price link to gold was broken during the Nixon administration.

Paul’s interrogation of fed chairman Bernanke will make for interesting theater but likely have little practical effect on the fed’s conduct of monetary policy.  A more important trend that is slowly developing could render the fed a second-team player over the next few decades.

I previously blogged that China has offered to buy Greek, Irish, and Portuguese debt.  On Monday, January 3, 2011, it restated its commitment to buy Spanish debt.

It’s only a matter of time until China makes a similar offer to Italy.  At that point, China will have picked off the “Club Med” countries on the periphery of the eurozone.  All five countries will increasingly conduct trade and financial swaps with China in renminbi.

China is rapidly expanding its business and political ties with Africa, Central America, Latin America, Southeast Asia, and Central Asia.  Over time, the renminbi will become the dominant currency in their trade with China, but also serve as a reserve currency for trade among themselves, especially as it is likely to steadily appreciate against the U.S. dollar in the coming years.

China’s currency will become a rival to the dollar much faster than most economists suppose.  Many economist believe the eurozone will break up in the next five years, reducing the use of euros as a reserve and transaction currency.  The pound, yen, Aussie dollar, and other national currencies will become relatively smaller in global affairs relative to the renminbi.

Who knows?  Maybe someday China will complain about the undervalued dollar?

Monday, January 3, 2011

Internationalizing China’s Currency

China is pursuing a strategy of gradually internationalizing its currency, the renminbi (people’s money) denominated in yuan (dollar), jiao (ten cents), and fen (cents).   It has established bilateral use of its currency in trade with Russia, Malaysia, Hong Kong, Macao, and other Southeast Asian countries.

More recently, China has offered to buy the public debt of Greece, Portugal, and Hungary.  Once these purchases have taken place, China will make an offer the three countries won’t be able to refuse, namely, conduct bilateral trade in renminbi and give consideration to Chinese exports over other countries’ goods and services.  If the offers are accepted by the three countries, it is possible that China will find willing sellers of public debt in Spain and Ireland, and perhaps Italy down the road. 

The step-by-step increased use of China’s currency in public debt markets and international trade will slowly reduce the status of the U.S. dollar as a reserve and transaction currency.