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Current Trade Deficit:    
Dangerously Shortsighted Advice from Asia
Alan Tonelson
Thursday, February 21, 2013
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Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
He must be getting dotty in his old age.  Or he was misquoted for self-serving reasons.  Those were my first two reactions upon reading that Lee Kuan Yew had told two U.S. foreign policy mandarins that America’s best hope for the 21st century was sharing global leadership with China.

Lee is the near-legendary founder and former long-time leader of Singapore, and spearheaded his country's rise from poverty to prosperity.  Although no democrat by any means, he kept citizens' day-to-day lives reasonably free, and his tiny country at peace and independent.  As this record should make clear, he’s been anything but a greenhorn when it comes to power and wielding it effectively.

But there were Robert Blackwill and Graham Allison, summarizing a new book of theirs on Lee, claiming in an article in Politico ( that their near-nonagenarian subject wants the United States to work out with China a sort of condominium.  That's what diplomats and scholars call schemes for cooperative dominion (aka “leadership” in our politically correct era)over world politics.

The problem, of course, is that power is excruciatingly difficult to share domestically, even in a democratic system like America's.  Sharing power internationally is next-to-impossible, especially with a country so different from America in historical experiences and values.  

So maybe Lee – just out of the hospital after a quasi-stroke – had slid into senility.  But then another explanation occurred:  Blackwill and Allison, two mainstays of a multinational company-financed American foreign policy establishment, had twisted Lee’s words or quoted them out of context.  Their aim:  to strengthen the case against any vigorous U.S. responses to China’s geopolitical or economic rise.  

Fighting back against Beijing’s currency manipulation and array of other predatory trade policies would of course endanger the business models of the offshoring interests that fund the Brookings Institution, the Council on Foreign Relations, and the Harvard University research centers etc. that underwrite the likes of Blackwill and Allison.  These influential scholars and retired diplomats, in return, crank out the articles, studies, and books that advance the offshorers‘ agendas and imbue them with academic and intellectual respectability.

Quoting the famously hard-nosed Lee as opposing hard-nosed U.S. China policies could only reinforce the message that what’s good for multinational manufacturers and their Wall Street creditors – continuing to coddle Beijing’s mercantilism – is good for all Americans.

But I finally realized that Lee’s reported statements were keeping completely in character.  After all, Singapore and other East Asian countries profit immensely by sending high value parts and components of countless manufactured goods to China.  They’re then assembled into final products and then exported – often to America, the world’s biggest consumer market.  Any threats to U.S.-China trade and investment flows, therefore, would threaten Singapore.  

Such logic is so powerful that as early as the late 1990s it persuaded even Taiwan – still ostensibly fearing a Chinese invasion – to endorse China’s entry into the World Trade Organization, and its promise of neutering America’s authority to retaliate unilaterally against Chinese trade predation, including subsidized exports.

Yet despite Lee’s reputation as a diplomatic grand master, his advice and outlook remain just as shortsighted as that of any Washington-based globalization cheerleader.  For the trans-Pacific trade patterns he evidently wants to preserve are directly responsible for the international economic imbalances that helped trigger the financial crisis five years ago – to East Asia’s detriment as well.  

Asia’s failure to recognize the dangers of these imbalances and agree to eliminate the mercantilism largely responsible, either unilaterally or through negotiation, has long been a major Achilles Heel for the global economy.  Lee’s comments about sharing global leadership with China, and the eagerness of Blackwill and Allison to trumpet them, strongly signal that the United States and Asia remain squarely on course to repeat disaster.

Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).