The Trade Deficit

Americans love stuff.  So much in fact that we import a great deal more than is produced domestically.  This is a recurring concern among economists and politicians, as the trade deficit has been an annual “problem” since 1975.  This imbalance is a symbol of American affluence, but in and of itself it is not a positive statistic.  No where in my undergraduate economics classes did professors, as they did with other topics, state that a trade imbalance is neither good or bad.  Trade surpluses are good, and trade deficits are not so good.

Broadly speaking it is known that America runs a trade deficit, but lets consider some of the underlying facts.  America is one of the top exporting nations in the world (#3 exporter as of 2007).  The US has an incredible comparative advantage in a broad range of products.  The top ten US exports in terms of total annual value represent less than 35% of total export value.  The top three items are civilian aircraft (5.7% of US exports), semiconductors (3.9%), and passenger cars (3.9%). America still has a considerable amount of natural resources, and agricultural exports are a steady source of income as well.

Included in the President’s state of the union address was the call for a “National Export Initiative” to boost trade and with the goal of doubling exports over the next five years.  Although that sounds like an incredible feat, note that over the last five years exports increased by 68%.  According to the Department of Commerce website, the key components to this initiative will be the improvement of trade advocacy and education, improving access to credit to companies that wish to export, and enforcement of fair trade policies.  Time will tell if five years is enough time to increase exports by 100%, and it is still premature to say whether the economy overall is on the rebound.

The other side of the imbalance is of course imports.  Not much is typically discussed about limiting imports.  One of the fundamental aspects of the consumer-era American Dream is that we can have whatever we want.  Discussions about limiting imports are never focused as much on consumer goods such as electronics as much as they are about oil.  The leading import that represents almost 17% of total imports is crude oil. America is the largest importer of oil, and imports more than it creates by a factor of 350.  Gadgets are one thing, but oil is an import that America needs to reevaluate and work to change.

Despite less than unanimous support for new and clean energy based on concerns over global warming or climate change, if it could help correct the trade imbalance this should be an impetus for increased support.  Oil has been a blessing and a boon to the industrial age, but it is increasingly becoming something of a millstone in the information age.  Its effects on trade are just one of several reasons to begin looking, and actively pursuing, alternative resources.

By Kyle Riddle, an MA student of History at George Mason University and a contributor to Patriot Politicos.

The Upside to a Welfare State

BBC reported that the British government has recently come out with a shatter-proof pint glass for pubs around Britain. While the glasses are still capable of breaking, the shards are held together by a layer of bio-resin. After being the last major European economy to emerge out of recession, you might ask why the British would spend precious time and resources on such a project.

The research to develop a shatter-proof beer glass emerged as a response to the almost 87,000 injuries involving broken shards of glass in British pubs each year. Dealing with the injuries and incidents results in an estimated yearly expense to the National Health Service of £2.5bn. The government’s assumed responsibility is the development of two causal factors: (1) nationalized healthcare in the welfare state and (2) the British custom of occasionally settling disputes between pub patrons by shattering a beer glass and assaulting someone. Say what you will about the inefficiencies of the welfare state, at least they have shatter-proof beer glasses.

Ed Gaier in an MA student in Political Science at George Mason University and Editor of Patriot Politicos.

Pacific CyberRivalry: Washington and Beijing Spar with Words and Bots

 By G.P. Manson

On January 21^st Secretary of State Clinton, speaking at the capitol’s Newseum, delivered a policy speech in support of global internet freedom. Despite the “unprecedented surge in connectivity” provided by the spread of the internet, the Secretary said, the web has not proven an “unmitigated blessing”. Some governments, Clinton accused, have hijacked the internet to “crush dissent and deny human rights,” exploiting technology to “undermine human progress and political freedoms.”  

The speech, coming as it did in the wake of Google, Inc.’s decision to no longer subject itself to Chinese government censors, represents a clear challenge to Beijing on an issue near and dear to the administration. The Chinese government has proven distressingly capable when it comes to policing the web in China; information regarding hot-button political issues including Taiwan, Tibetan independence, and Chinese democracy movements is carefully monitored on the mainland. Internet control is merely the most technologically savvy element of the Communist Party’s information monopoly. President Obama himself was treated to a dose of Party censorship during his November visit to Shanghai. Although the administration had hoped the town hall forum would allow the President to speak to the Chinese people directly regarding a range of issues, in the event the meeting was attended by hand-picked Party loyalists and enjoyed very limited coverage in China.  

Google’s January decision to eschew operation under the arduous controls it agreed to accept when it opened shop in China in 2006 has been greeted warmly by Chinese netizens in Beijing, many of whom have left flowers and tokens of support outside of Google’s offices in the Chinese capital.  

China’s cyber reach is not limited to the mainland. The Daily Beast’s Gerald Posner reported at the height of the Google tiff that a classified FBI report indicates that China “…has secretly developed an army of 180,000 cyberspies that ‘poses the largest single threat to the United States for cyberterrorism and has the potential to destroy vital infrastructure, interrupt banking and commerce, and compromise sensitive military and defense databases.’” The report suggests that China’s cyberwarfare capabilities are considerably more robust than the Pentagon’s.  

The United States is itself engaged in widespread cyberwarfare pursuits, and is looking to increase its capabilities vis-à-vis China. As the Pentagon’s recently published Quadrennial Defense Review states, “cyberspace is now as relevant a domain for DoD activities as the naturally occurring domains of land, sea, air, and space.” The Department of Defense cites the need for improved cyberspace capabilities as stemming from “assessments of conflict scenarios involving state adversaries.”  

Washington and Beijing are thus competing in cyberspace not only in the “soft” war of ideas; Western liberalism vs. Chinese autocracy, but also in the struggle for information and network dominance which has the potential to greatly influence or even predetermine the outcome of any hard conflict which is to come.

G.P. Manson is an alumnus of George Mason University’s Department of Public and International Affairs and a regular contributor to Patriot Politicos.

A Hopeful President for a Hopeful Country

Once again, President Barak Obama stood up to the rhetoric and political games that Republicans are trying to impose on the public.  After his first encouraging and hopeful State of the Union address, it became clear that the president is on the right path to change Washington and continue reforming the politics of this country.  After all, he took the oath of office under detrimental economic and political climates that are going to take more than one year to undo.  Recently, the president had to stand up for about 66 minutes in front of a Republican crowd to answer their fierce questions and concerns.  His answers were a blow to the GOP party that seemed shabby with his direct, honest, and confident answers that unraveled the ambiguity of the GOP party, which have been on the lookout to contradict the president’s agenda and policies from the get go of his first days in office.

Seemingly, the economy has been recovering at a slow pace, despite the high unemployment rate.  The GOP party has accused the stimulus package of not working, but instead, it has increased the deficit and did not lower the unemployment rate.  However, the stimulus package has already proven to have created hundreds of thousands of jobs and saved some million others, in addition to saving the country from a terrifying economic collapse.

In regards to the health care bill, it is clear that the Democratic Party in addition to the white house have been drafting a health care bill that embraces both Republican and Democratic policies.  However, the GOP party has made the bill seem a plotted scheme that is architected to harm the public.   The president was clear today, that he is still open to include any Republican policies that will improve the bill and advance it forward no matter what the differences are.

The United States is going through difficult economic times and most people are appreciative of the effort spent by the president to resolve and maintain the American standards of living.  The politics of Washington can harm this country on the long run as the president stated, nonetheless, democracy evolves from honest and thoughtful negotiations and transparent decisions made for the good of the public.  This president has been reforming the ways of Washington with caution and consideration of both parties; therefore, negative and obsolete rants are but obstacles and averse to the future and hopes of this renowned country.

AJ Faraj is an MA student in Global Affairs at George Mason University.

Conan O’Brien: Talk Show Host, Comedian, Populist?

The Conan-NBC debacle has received a lot of attention during the last two weeks. In fact, it has probably received too much attention given the minimal consequences the feud will have on our daily lives. Both Facebook and Twitter have been alive with “Team Coco” activity. This can be explained by the popularity of O’Brien with young adults and their heavy usage of social networking sites. However, why have newspapers and the news been covering the story so much? Why has the Tonight Show’s rating increased by 50% this past week? The writers, jokes, host, and time slot are all the same.

Conan’s feud with NBC resembles the political situation many Americans find themselves with regard to bank bailouts, golden parachutes, and a recovery on Wall Street and not on Main Street. People are frustrated and angry with corporation  executives who created a recession and seem to be the only ones who are coming out of it. So people can relate when Conan O’Brien was essentially fired from the show by NBC after receiving his promotion and after decades of employment.

More importantly, O’Brien framed the feud to his advantage and to the entertainment of disenchanted American audience.He tapped into their collective feelings about the economy and politics that make him a populist. Not convinced?Consider these three reasons why Conan is a populist.

1. Conan O’Brien took care of his cast and crew without being forced by legal obligation. His litigation against NBC resulted in his receiving $45 million, which is what he would have been paid to the end of his contract. O’Brien is taking a portion of that sum and giving it to the cast and crew as compensation for relocating their lives from New York to California. Who wouldn’t want a boss like this?
2. O’Brien is hitting the network hard with financial burdens. Americans have lost their financial security while executive of banks have not experienced such a devastating economic blow. So that is why we get a kick when Conan creates new skits and characters that cost the network millions of dollars. Whether it be the Tonight Show band playing Led Zeppelin songs or having the skeleton of the extinct Giant Sloth spraying an original Picasso with caviar to the amount of $63 million (a fake stunt, but entertaining nonetheless), the audience loves thinking that NBC was paying for their hasty decisions.
3. Lastly, O’Brien fans and followers mobilized. They protested in the cold and rain outside of the studio, demonstrating their intense dedication.

For these reasons, had the Tonight Show ended under any other circumstances, there would not have been such enthusiasm and support behind Conan O’Brien.

Ed Gaier is an MA student in Political Science at George Mason University and Editor of Patriot Politicos.