Posts Tagged ‘ South Korea ’

Can Mubarak Follow South Korea’s Path?

Thursday, February 3rd, 2011
Peter Beck


Peter M. Beck is a POSCO Fellow at the East-West Center and a Hitachi Fellow at the Council on Foreign Relations.

by Peter Beck

As the world holds its breath to learn if the Egyptian people’s amazing struggle for democracy ends with a breakthrough or a bloodbath, President Hosni Mubarak would do well to consider the South Korea option.  Ultimately, Korea’s dictators and democracy were both winners.

Like Egyptians, South Koreans endured decades of American-backed dictatorship.  In the spring of 1987, Korea’s military government held sham elections not unlike the ones held in Egypt last November. However, in both places, a combination of repression and rising expectations proved a combustible mix. If the actual trigger for Egyptians was the sudden overthrow of Tunisia’s dictatorship last month, Koreans drew inspiration from the “People Power” overthrow of Ferdinand Marcos in the Philippines the year before. Indeed, “Marcos” became a code word for Korean reporters to describe their own dictatorship.

As in Cairo today, student-led demonstrations drew hundreds of thousands into the streets of Seoul 24 years ago. Like Egypt’s Muslim Brotherhood, Korea’s Christians played a supporting role at the outset. After weeks of clashes and tear gas, on June 29 the government announced that a free and fair direct presidential election would be held within six months. Given that almost exactly seven years earlier, the military unleashed a crackdown that killed over 200 citizens, the question we must ask is, what had changed?

When facing persistent social unrest, all dictators invariably undertake a cost-benefit analysis of cracking down versus opening up. In 1980, Korea’s coup leaders correctly determined that there would be little or no cost for killing. Indeed, within months of wiping the blood off of his hands, General-turned-President Chun Doo-hwan was one of President Ronald Reagan’s first foreign guests at the White House. Later that same year, Seoul was awarded the 1988 Summer Olympics.

China reached a similar conclusion in June of 1989. After two weeks of martial law, the butchers of Beijing calculated that firing on demonstrators in Tiananmen Square would be of great political benefit and little cost. Indeed, foreign investment actually increased in 1990 and exploded thereafter.

Far from incurring any costs, China and Korea’s dictators were rewarded for their bad behavior. For the United States, the price was much higher. A generation of Koreans became virulently anti-American because of our support for a hated regime. Can the U.S. afford such blowback in Egypt?

In Korea in 1987, by contrast, not only were the demonstrations much larger than in 1980, but the Reagan Administration was now insisting that the Chun regime begin the transition to democracy. More importantly, Korean military leaders revealed later that they had considered a crackdown, but feared losing the Olympics if they had turned the streets of Seoul red.

Many pundits have declared that the United Sates is a mere bystander to the struggle for democracy in Egypt, powerless to shape the outcome. This could not be further from the truth. Not only does the U.S. provide $1.3 billion a year in foreign aid (largely to the military no less), but the U.S. is also Egypt’s leading trade partner.

Since last Friday, the Obama Administration has only hinted that future U.S. assistance could be linked to the government’s behavior. If he has not already done so behind the scenes, President Obama must not waste a moment to make it clear to Mubarak that if the Egyptian army opens fire on innocent demonstrators, U.S. aid stops and sanctions begin. Thugs will prove unequal to the task of quashing the uprising. If Mubarak still decides to clamp down, then it is time to reevaluate all U.S. overseas assistance. If we cannot shape outcomes in the country that is our second leading aid recipient, then it is time to conduct our own cost-benefit analysis.

If President Mubarak has time to read to the end of the Korean case, he might even fully embrace the decision to open up. Largely free and fair elections were held in South Korea in December 1987 as scheduled, but due to a divided opposition, the military’s candidate (and a leader of the previous coup and crackdown no less) managed to win the election. We will never know if there would have been a military coup had one of the opposition candidates won. Once a civilian was elected president five years later, Chun and his successor did briefly spend time behind bars, but they are now living out their days as elder statesmen.

Korea’s transition to democracy was conservative and gradual, but democracy was the ultimate winner. Korean legislators may still favor fistfights over filibusters, but Korea is now the most vibrant democracy in Asia. It is not too late for Mubarak to start Egypt down that path.

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Discussing the Future of U.S.-China Relations

Tuesday, December 14th, 2010
Lee Drutman


Lee Drutman is a senior fellow and the managing editor for the Progressive Policy Institute.

by Lee Drutman

Watch a video of the event on C-SPAN

Next month, Chinese President Hu Jintao will be visiting Washington and Defense Secretary Gates will be visiting Beijing. Though the U.S. and China have had their disagreements of late – over North Korea, over human rights, over currency valuations – both have much more to gain from cooperation than conflict.

Such was the general consensus at a PPI Event today entitled, “China’s Choice: Regional Bully or Global Stakeholder?” The event featured: The Honorable Chris Coons, U.S. Senator (D-Del.), Member, Senate Foreign Relations Committee; The Honorable Wallace “Chip” Gregson, U.S. Assistant Secretary of Defense, Asian and Pacific Security Affairs; Joseph S. Nye, Jr., Harvard University; James Fallows, The Atlantic Magazine; Michael Chase, Naval War College.

Sen. Coons kicked off the event by relating the experiences of a newly elected Senator who had spent the last several months on the campaign trail listening to the ordinary Americans’ trepidations about China.

“I’ve seen and heard the growing frustrations of average Americans, and their perceptions, or misperceptions, about the rise of China,” Coons said. “Americans are deeply concerned we’ve lost our economic and manufacturing edge and Washington has taken its eye off the ball.”

But Coons also registered an optimistic note: “I don’t view it as a zero-sum game. China’s rise does not have to mean the decline of America.” The Senator expressed hope that the U.S. and China could overcome the short-term impasses over such issues as trade and intellectual property and could have a “long-term harmonious relationship”

Assistant Secretary Gregson followed Coons with a similar hope. “Together,” he said, “the U.S. and China can build a new century of global prosperity, and the time to begin is now…both countries have a great deal to gain from cooperation.”

Gregson highlighted the importance of the Pacific region, which is home to 15 of the world’s 20 largest ports, including nine in China. Five of the world’s seven largest standing armies (China, North Korea, South Korea, India, and Pakistan) are there as well. “China sits at a fulcrum,” said Gregson.

The Assistant Secretary outlined the three pillars of the U.S. approach to China:

  1. An effort to sustain and strengthen bilateral cooperation;
  2. An effort to strengthen relations with other Asian allies;
  3. And that a rising China should abide by global norms and international laws.

He noted that China’s military build-up, which has often been less than transparent, has raised real concerns. “This type of military build-up far exceeds China’s defensive needs,” he said. “We call upon China to become more transparent. We are not asking for an unreasonable degree of disclosure. Just enough to allow all parties to avoid miscalculation.”

Professor Nye, author of a new book entitled The Future of Power (about how power is transitioning from the West to the East, and from state to non-state actors), spent a few minutes musing on a question he posed: “Can the rise of China be peaceful?”

Referencing Thucydides’ history of the Peloponnesian War and the rise of Germany in the early 20th Century, Nye noted that the rise of a new power often provokes fear from rivals, and “if we fear too much it becomes a self-fulfilling prophecy.” Referencing FDR, Nye argued the more apt position to take with China was that “the greatest thing we should fear is fear itself.”

“There is a rise in Chinese power, but a mistake to over-estimate it,” said Nye. “The size of China’s economy and our economy may be equal in size by 2030, but they will not be equal in composition, and per capita income will only be 1/3 of our per capita income.”

Fallows, who spent four years living in China and has written about his experiences in Postcards from Tomorrow Square: Reports from China (and is writing another book about China), argued that in most respects, the fundamental arrangement and consensus between the U.S. and China has been remarkably stable for the last 30 years: It’s better to work together than as enemies; China’s prosperity need not be at the direct expense of the United States; and there are going to be real disagreements.

As for America’s perceived sense of decline in the face of a rising China, “The central thing here is that the issues that matter to America’s viability have nothing to do with China,” said Fallows. “They would be identical if China did not exist. The greatest concerns are the functionality of the political system.”

Chase, who has written three memos on China’s military for PPI, noted that one of the challenging things about assessing China’s military prowess is that the military hasn’t been involved in a hot war since 1979 (Vietnam). Chase recommended a path of working with China as well as building up our military capacity to match China’s possible threats.

The event concluded with a question about climate change, which will probably be the most pressing challenge that the U.S. and China will have to solve. Nye noted that China has now surpassed the U.S. in greenhouse gas emissions. Fallows put it simply: “There is either a collaborative strategy of the U.S. and China, or no hope at all.”

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RIP Steve Solarz

Tuesday, November 30th, 2010
Will Marshall


Will Marshall is the president of the Progressive Policy Institute.

by Will Marshall

The democratic cause lost an eloquent and effective champion yesterday when former Rep. Stephen J. Solarz (D-N.Y.) succumbed to cancer at age 70.

Over nine terms in the House of Representatives, Steve distinguished himself as one of that body’s preeminent spokesman on international affairs. He understood that the foundational principle of a liberal foreign policy – what Arthur Schlesinger Jr. called its “fighting faith” – is implacable opposition to tyranny. And he applied that principle with unswerving consistency, backing Eastern Europe’s bid for freedom from its Soviet overlord, the anti-apartheid movement in South Africa, and democratic reformers challenging pro-American autocrats in the Phillipines and South Korea.

We at PPI drew inspiration from Steve and were proud to count him as a friend and sometime contributor to our work. See his chapter in our 2006 book, With All Our Might, in which he argued presciently that Pakistan is the pivotal battleground in America’s fight against al Qaeda and Islamist extremism in general.

Finally Steve was a staunch backer of the National Endowment of Democracy, serving on its Board and receiving its Democracy Service Medal in 2001.

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China’s Free Rider Syndrome

Tuesday, November 30th, 2010
Will Marshall


Will Marshall is the president of the Progressive Policy Institute.

by Will Marshall

There may be no method in North Korea’s madness, but the world’s response to its episodic outrages has settled into a familiar pattern. It’s a dangerous pattern, and one likely to recur as long as China keeps enabling Pyongyang’s belligerent behavior.

First comes an utterly unprovoked attack on South Korea. Seoul reacts angrily and threatens unspecified consequences. Washington firmly backs its ally, and solicits global censure of North Korean aggression. The Chinese, however, decline to assign blame and instead urge resumption of direct talks with Pyongyang. South Korea eventually backs away from confrontation, on the perfectly rational premise that living with the North’s occasional spasms of violence is preferable to an all-out war that would devastate both countries.

The latest crisis began last week when the North shelled a South Korean island. South Korean President Lee Myung-bak called the attack, which killed two civilians and wounded 16, a “crime against humanity” and warned that Seoul would not tolerate a direct attack on its soil. The United States dispatched an aircraft carrier, the George Washington, while China called, irrelevantly, for a resumption of the long defunct six-party talks aimed at dismantling the North’s nuclear weapons program. And yesterday, Seoul moved to dampen war fever by canceling live-fire artillery drills on the stricken island.

Essentially the same cycle played out last spring, when North Korea sunk a South Korean patrol boat, the Cheonan, killing all 46 sailors aboard. Pyongyang paid no price for this act of war, either.

Pyongyang’s behavior may look like a classic case of winning through intimidation, except that it’s not clear what it gains from such brutal tactics. The North is as isolated and poverty-stricken as ever, and, with dictator Kim Jong il preparing to hand off power to his son, no relief is in sight for its thoroughly regimented society.

One explanation is that the regime from time to time must manufacture external threats to justify the extreme sacrifices it demands of its people. Another is that its assaults are part of an elaborate shake-down racket meant to get the world’s attention – along with bribes for good behavior.  Except that it seems to be having the opposite effect. Last week’s shelling, along with the Cheonan incident, have driven the final nail in the coffin of the South’s “sunshine policy” of economic and humanitarian aid to the North. Nor is Washington eager to reward Pyongyang’s bellicose conduct by rushing back into the six-party talks.

This latest outrage throws a spotlight on China’s role as North Korea’s enabler. Not only does Beijing shield Pyongyang from the consequences of its disruptive behavior, it also helps to keep the regime afloat by supplying fuel and other economic assistance. Perhaps it’s too facile to assume – as Republicans like John McCain and Lindsay Graham do – that China can bring the mercurial Kim regime to heal just by threatening to shut down oil shipments or cross-border trade. But is it really too much to ask of China that it at least not cover up the North’s crimes and collude in its ludicrous lies?

Beijing wants very badly to be accorded the respect that its growing wealth and power implies. It wants a seat at the table where global decisions are made. Yet on issue after issue, China is proving to be a free rider. Beijing takes maximum advantage of an open world economy while contributing little to strengthening the system that has made it rich. Instead, it pursues a mercantilist policy that creates enormous imbalances in world trade and investment flows, while keeping its currency artificially high to make discourage imports from the U.S. and elsewhere. Instead of trying to tamp down tensions on the Korea peninsula, it feeds them by shielding its delinquent ward in Pyongyang from accountability. Instead of throwing its weight behind international efforts to restrain rogue regimes from Khartoum to Tehran, it seeks commercial advantage while hiding behind the supposedly sacrosanct principle of non-interference in other nation’s internal affairs.

China’s amoral and selfish behavior increasingly engenders doubt and fear, not respect. Its failure to accept the responsibilities that accompany its growing power undermines global cooperation and stability. It’s time for the Obama administration to move China’s free-riding to the center of its engagement with Beijing.

Photo credit: Kok Leng Yeo

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Obama’s Chance to Lead on Trade

Wednesday, November 10th, 2010
Will Marshall


Will Marshall is the president of the Progressive Policy Institute.

by Will Marshall

President Obama is in Seoul today for what promises to be a contentious meeting of the world’s leading economic powers. He probably won’t mollify China, Germany and other critics of the Federal Reserve’s plan to pump more money into the U.S. economy. But the President does have a chance to further his goal of doubling U.S. exports by bringing home an improved trade agreement with South Korea.

In addition to attending the G-20 summit, Obama is slated to meet with South Korean officials to finalize a bilateral free trade pact negotiated by President Bush. Congress has not ratified the treaty, which is snagged by concerns about U.S. auto exports to South Korea, as well as lawmakers’ eroding faith in the benefits of free trade.  The president said in June that he had instructed the U.S. Trade Representative to have all the outstanding issues “lined up properly” before he arrived for this week’s visit, so he could close the deal with Korea and present the agreement to Congress again in the coming months.

South Korea isn’t just a major trade partner, it’s also a key strategic ally and a counterweight to China’s growing heft in the Asia-Pacific. Since its tariffs traditionally have been much higher than ours, there’s little doubt that the agreement would spur U.S. exports and help offset weak economic demand at home. It requires South Korea to lower its high taxes on U.S. farm goods and open markets for insurance and other services to American firms.  As the treaty has languished in Congress, however, Seoul has been busy on other fronts, deepening economic ties with China and finalizing an important trade pact with the EU last month.

Although President Obama sounded an ambivalent note at best on trade during the 2008 presidential campaign, he understands that expanding U.S. exports is crucial both to creating jobs and shrinking America’s outsized trade deficits.  Now that he’s made the Korean deal a top priority, we’ll find out if the newly Tea Party-infused GOP will be more amenable to passing the treaty than Congressional Democrats were.

The agreement would lower tariffs on auto imports on both sides. South Korea’s are higher — 8 percent compared to 2.5 percent here. (The United States also would gradually lower a 25 percent tariff on imported pickup trucks.) Nonetheless, U.S. auto makers, especially Ford, have argued that the treaty would not bring down cultural and non-tariff barriers that have confined their sales to a sliver of South Korea’s lucrative auto market.

They have a point.  Seoul exports more than 400,000 vehicles (mostly Hyundais and Kias) to the United States each year, while manufacturing an additional 200,000 cars at U.S. plants. According the U.S. Commerce Department, U.S. auto makers sent a paltry 5,878 vehicles to South Korea in 2009. Ford’s Stephen Biegun notes that more than 70 percent of the cars made in South Korea are exported, while imports account for less than 10 percent of sales, well below the average of 40 percent in other economically advanced countries.

As an auto industry representative explained in testimony before Congress, Korea has an extensive web of non-tariff barriers that make it harder for foreign car makers to penetrate the Korean market.  Some of these are technical regulations like emissions standards and even license plate size. Establishing a clear link between such policies and the small U.S. market share in Korea isn’t always easy. But there’s no doubt that some of Korea’s policies reflect a well-entrenched hostility toward imports. For example, until recently anyone in Korea who bought a foreign car would automatically have their income taxes audited—a policy that chilled demand even after it was officially ended.

Ford, America’s healthiest car maker, sees itself as the chief victim of South Korea’s import-unfriendly policies. That’s because General Motors, through its Daewoo subsidy, makes cars in South Korea, selling more than 100,000 locally and exporting hundreds of thousands more elsewhere (including to the United States).

What can President Obama do to resolve the impasse over autos and get the U.S.-South Korea agreement through the Senate? He can’t reopen negotiations, but he can use the presidential jawbone to win binding side agreements with Seoul to remove non-tariff barriers to U.S. auto exports.  He could, in short, bring pressure on South Korea to fully liberalize its auto markets and embrace the reciprocal obligations that come with free trade.  Much like his powerful message in New Delhi that “India has emerged,” the president needs to make the case that South Korea has also fully emerged as a mature economy, and it can no longer justify the kind of protectionist and mercantilist trade policies that are more typical of poorer developing countries.

A more aggressive stance would show that the President is serious about doubling U.S. exports. But there’s a complicating factor: the global spread of auto production, design and supply chains. That makes it hard to say just how “American” any given car really is, or how many U.S. jobs are engaged in making cars.

Nonetheless, as long as the answer is “greater than zero,” the President has an obligation to ensure that major U.S. trade partners offer as much access to their domestic markets as we do to ours. And the Korean pact presents him with an opportunity both to restore U.S. global leadership on trade liberalization and to integrate America more deeply into the world’s fastest-growing markets in East Asia.

Photo credit: South Korea

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Is America Really #1 in Innovation?

Wednesday, September 22nd, 2010
Scott Andes


Scott M. Andes is a research analyst at the Information Technology and Innovation Foundation.

by Scott Andes

Last month the World Economic Forum released its 2010-2011 Global Competitiveness Report.  Among the 131 countries analyzed, the United States ranks fourth overall for global competitiveness (down from ranking second in 2009 and first in 2008) but ranks number one for innovation. Such a finding should comfort policy analysts and policy makers who have long augured America is losing its innovation edge. It seems, while we could do better in overall global competiveness, when it comes to innovation the United States is the gold standard.  All is well.

But what are studies like the Global Competitiveness Report actually measuring?  According the methodology section of the report, over two-thirds of the indicators are derived from what the WEF calls the “Executive Opinion Study.”  The survey asks business leaders throughout the world questions such as, “How would you rate the protection of property rights, including financial assets, in your country? [1 = very weak; 7 = very strong].”  For the report’s innovation subsection only one of the indicators—utility patents per million population—is based on hard data.

The WEF argues surveys help form qualitative data for metrics that hard data are otherwise unavailable.  But because of limited knowledge, and likely respondent biases, surveys such as the WEF’s risk being a better reflection of a nation’s reputation than its actual position.  Fareed Zakaria summed up this issue well when he said in a 2009 Newsweek column:

I’d always viewed the rankings that routinely show America on top as authoritative. But they may be misleading. Most traditional competitiveness studies use polls—of CEOs, scientists, investors—as a key part of their measurements. The World Economic Forum report, for example, relies upon surveys for almost two thirds of its data.  Like a star that still looks bright in the farthest reaches of the universe but has burned out at the core, America’s reputation is stronger than the hard data warrant.

To illustrate the point, ITIF released a report gauging international competitiveness and innovation that only used hard data.  In that report the United States ranks fifth for venture capital, while in the WEF’s 2009 study the United States ranked first.  The difference is our study takes total venture capital as a percent of GDP while WEF asks survey respondents “where is the best place to look for venture funds?”  The most likely reason for the discrepancy within the hard and survey data is that while the United States was clearly the best place for venture funds in the early 2000s, in the last decade that position has declined.  But, the opinions of executives seem to lag the empirical shift.

One may argue that in certain areas the only way to get data is to use survey data; in which case the question becomes: does the bias within these surveys cause more harm than simply leaving the indicator out?  But within the WEF’s study there are clearer cut examples of using survey data when hard data is readily available.  For example, the report asks respondents, “To what extent do companies in your country spend on R&D?”  Yet governments collect data on such spending, what purpose could there possibly be for using survey data instead of hard data?  (And for what it’s worth the United States ranks sixth amongst survey respondents, behind South Korea, Denmark, Luxembourg, Sweden, and Singapore—all of which have higher corporate R&D as a percent of GDP than the United States.)

Yes, the United States fares better then all countries for items such as “business impact of malaria” and “available airline seats per kilometer.”  However, as countries in Asia invest magnitudes more in clean energy than us, or as the majority of European nations offer a far more generous R&D tax credit, celebrations over our top ranking in innovation might be premature.

The bottom line is that it is nice to have a sterling reputation but it is even better for that reputation to survive rigorous inquiry.

photo credit:  Wolfie Fox

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Posted in A New Framework for Growth and Equity, Daily Fix, Issues | 2 Comments »

How to Handle North Korea

Wednesday, June 16th, 2010
Will Marshall


Will Marshall is the president of the Progressive Policy Institute.

by Will Marshall

Loss of the CheonanThe following is an excerpt from Will Marshall’s column in today’s U.S. News & World Report:

Engagement with North Korea has been a bust—at least in South Korea’s eyes. In sinking the South Korean warship Cheonan, the regime in Pyongyang also torpedoed the South’s “sunshine policy” of humanitarian aid and economic investment in the North. Let’s hope the incident also shatters some illusions in Washington.

South Korean President Lee Myung Bak said the attack, which killed 46 sailors, has awakened South Koreans to “the reality that the nation faces the most belligerent regime in the world.” Seoul moved swiftly to seal the border, freeze trade, ban North Korean ships from its territorial waters, and designate the North as its archenemy. Bak’s militant response, however, seems to have rattled many South Koreans. Instead of rallying around the government, voters last week handed his Grand National Party a stinging defeat in local and regional elections. The prosperous South may no longer believe that Pyongyang can be tamed by economic blandishments, but young Koreans especially want to defuse the crisis.

The Obama administration is standing in solidarity with South Korea and pressing China to support new United Nations sanctions against North Korea. Secretary of State Hillary Clinton was recently in Seoul, where she reaffirmed the U.S. policy of “strategic patience.” Officials traveling with her said there will be no push to restart nuclear disarmament talks. “What we’re focused on is changing North Korean behavior,” the Washington Post quoted one official as saying.

Patience, no doubt, is a virtue in dealing with North Korea’s volatile dictator, Kim Jong Il. But it is not a policy. The United States has been trying to change the regime’s behavior since the Cold War ended, with little to show for it. Despite periodic bouts of U.S. engagement, multilateral diplomacy, and economic assistance, things have gotten worse. North Korea has developed and tested nuclear bombs, aided Syria’s clandestine nuclear program, sold missiles to Iran, and run a counterfeit-dollar racket, all while starving millions of its own people.

So what should be the strategic aim of U.S. policy toward North Korea?

Some foreign policy “realists” seem to believe that, if only the United States and its international partners can cobble together the right mix of economic incentives and diplomatic pressure, Pyongyang will eventually come to its senses. But North Korea offers a perfect illustration of realism’s blind spot—its inability to grasp the connection between the nature of regimes and their external conduct.

Read the full column at U.S. News & World Report.

Photo credit: US Army Korea – IMCOM

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South Korea’s Response

Thursday, May 20th, 2010
Jim Arkedis


Jim Arkedis is the director of PPI's National Security Project.

by Jim Arkedis

An international investigation has just definitively concluded that North Korea deliberately sunk a South Korean ship with a torpedo. In short, this is bad. Really bad.

I have a theory — only a theory — that this whole kerfuffle might be a tragic case of misinterpretation and over-reaction. Initial reports suggest that South Korean troops fired from their ship at what may have been a flock of birds that had produced an “image” in the ship’s radar.  But if the flock was actually a North Korean sub, it might explain why a nervous Northern skipper — not a coordinated attack directed from Pyongyang — might have returned fire before thinking through the consequences.

In a way, that’s beside the point — the government in Seoul is in a tough spot.  North Korea claims the South has fabricated evidence of the torpedo and is threatening “all out war” if the South deploys “any” retaliation.

That still doesn’t change the fact that we’re left with a very guilty-looking North Korea and a South Korean government treading a very fine line in response.  We know that South Korea has suffered a military attack and doesn’t want to rekindle an all-out war with the North, but is still determined to show South Koreans that their government takes North Korean aggression seriously.

If handled correctly, this event might provide a teachable moment that could begin to rebalance the North-South relationship.

From my perspective, here’s how to thread that needle:

  1. Despite North Korea’s blustery — and empty — rhetoric about retaliation, the South should provide it with the opportunity to admit the error, accept responsibility and explain its side of the story.
  2. The South should make clear that an official apology and offer of remuneration to the sailors’ families would significantly decrease tensions.  Furthermore, if North Korea admits guilt and takes responsibility, the South should offer to not only work with the U.S. to block any U.N. Security Council condemnation, but offer to actually repeal a sanction or two.  No major sanction would be repealed, but the Security Council should find something significant enough to repeal that shows Pyongyang a cooperative, mutually-beneficial relationship with the international community is desirable.
  3. If, however, the North rejects the opportunity to accept responsibility, the South should adopt an aggressive posture by:
–Imposing further unilateral sanctions
–Taking the case to the U.N. Security Council for international condemnation
–Commencing war-games off the North Korean coast

This is basic carrot and stick diplomacy.  Reward the North Koreans for cooperation, and punish them for further obstruction.  There’s a chance — perhaps a very small one — that North Korea will calculate that it’s better to cooperate with the international community, and if so, then some good will come of this tragedy.

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Champion Enterprise, Not Paternalism

Thursday, February 18th, 2010
Will Marshall


Will Marshall is the president of the Progressive Policy Institute.

by Will Marshall

The following piece was written for a conference on progressive governance being held this week in London by the Policy Network, an international think tank dedicated to promoting progressive policies:

For many on the left, the near-collapse of America’s financial system during the winter of 2008-2009 was irrefutable proof of the failure of free market ideas. The new consensus — let’s call it the anti-Washington consensus — was solemnized by business and political elites in Davos last month. Fittingly enough, French President Nicolas Sarkozy delivered the eulogy for neoliberalism.

The Anglo-American model is dead. Long live state capitalism!

Not so fast. In America at least, popular attitudes have not lurched in a more interventionist or social democratic direction. If anything, there’s been a backlash against the emergency measures the Obama administration has undertaken to unlock credit, bail out big banks holding worthless securities, reduce home foreclosures, and keep big U.S. auto companies afloat.

That has perplexed and frustrated Democrats, who believe the government should get more credit for again saving capitalism from the capitalists, just as it did in Franklin Roosevelt’s day. But Wall Street’s fall from grace doesn’t automatically translate into rising public receptivity to a more active state. Anti-business and anti-government attitudes can and do co-exist easily in the American mind.

President Obama maintains, quite plausibly, that Washington’s decisive intervention kept the economy from tumbling into the abyss. But unprecedented public deficits, the government’s effective takeover of large finance and auto companies, and, yes, Obama’s push for comprehensive health care reform, also seem to have resurrected old fears about “big government.”

One likely reason is the sheer, pharaonic scale of government spending to rescue the economy: nearly $4 trillion when you add the Federal Reserve’s efforts to pump liquidity into financial markets, aid for failing banks, last year’s $787 billion “stimulus” plan, and another $100 billion jobs bill for this year. And many in middle America are barking mad that political elites have used tax dollars to shield economic elites from the consequences of their own greed and ineptitude. This is especially true of the independent voters who helped Obama to win a solid majority in 2008, but whose defection over the past year has fueled Republican victories in elections in Virginia, New Jersey, and, most shockingly, the liberal bastion of Massachusetts.

Meanwhile, the U.S. economy is growing again, by a gaudy 5.7 percent of GDP in the last quarter of 2009. There’s been little crowing at the White House, however, not when many small businesses still can’t get credit, people continue to lose their homes, and unemployment remains stuck in double digits.

For Obama and the Democrats, the central economic challenge is not to sell some new model of state-managed capitalism to a public already worried about government spending and overreach. It’s to rebuild the American economy’s capacities for brisk innovation and job creation. That will require striking a careful balance between new regulation and entrepreneurial risk-taking.

With Wall Street again reaping huge profits (and dishing out fat bonuses), some sort of financial regulation likely will pass soon. The key tasks here are reducing moral hazard by ensuring that no financial institution becomes too big or interconnected to fail, raising capital requirements to curb excessively leveraged speculation, and creating transparency in the trading of exotic financial products like derivatives.

But what the country needs even more is a progressive opportunity agenda that emphasizes technological innovation, small business creation, American competitiveness, fiscal discipline, better schools, and middle-class jobs. Such an agenda would include the following elements:

An aggressive infrastructure initiative. Washington must reverse decades of neglect and double or triple spending aimed at modernizing America’s aging and inadequate public infrastructure. Even that, however, won’t be nearly enough, which is why progressives are calling for a National Infrastructure Bank to leverage private investment in high-speed rail, intelligent transportation systems, a smart electricity grid, and next-generation broadband.

A big boost for clean and efficient energy. The United States needs to put a price on carbon, which would raise billions to invest in developing clean fuels and technologies. Unfortunately, Obama’s “cap and trade” proposal is languishing in Congress, a victim of Republican obscurantism on climate change.

More exports. Obama wants to double U.S. exports, but the White House has not pushed Congress hard to pass the U.S.-Korea trade pact. Nor has it confronted China and other Asian nations whose currency manipulations keep U.S. (and European) goods at a competitive disadvantaged.

Fiscal restraint. America’s heavy borrowing from abroad weakens the dollar and deepens our reliance on foreign creditors. To maintain the nation’s fiscal integrity and independence, Obama must walk a fine line between winding down our enormous public deficits and debts and continuing to pump up domestic demand. The key is to reduce the unsustainable growth of public health care costs, which is why Obama is right not to give up on health care reform this year.

An entrepreneurial climate. Over the last three decades, firms less than five years old have accounted for nearly all net job creation in the United States. U.S. progressives should embrace policies that foster innovation and entrepreneurship: more public spending on research, a light-handed approach to regulating and taxing new enterprises, fiscal discipline to keep capital costs low, dramatic improvements in education and preferences for skilled immigrants.

In the ideological hothouse of Washington, it’s natural for Democrats to argue that the financial crisis has discredited market fundamentalism. But the antidote isn’t more government, it’s a progressive model for innovation-led growth that champions individual enterprise and middle class aspiration.

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Posted in Daily Fix, Fiscal Responsibility, Priority 2 | 1 Comment »