Globalization

When in Japan last week, the news was dominated by a single issue - the new government's struggle to find a path on a long planned relocation of American troops on and from Okinawa Island. It is a complex issue, and one I won't try to explain now, but the Times is reporting that Prime Minister Hatoyama has publically committed to offer a plan to the US next week:

TOKYO — Japan’s prime minister, Yukio Hatoyama, said Wednesday that he wanted to present concrete proposals to President Obama next week in hopes of ending a growing rift between his new government and Washington over an American military air base in Okinawa.

Mr. Hatoyama did not disclose the content of the proposals, which he and members of his cabinet appeared to be still working out at the prime minister’s residence. Mr. Hatoyama said he may seek a meeting with Mr. Obama during the climate change conference in Copenhagen to relay the proposals directly to him.

In particular, it remained unclear if the proposals would seek to significantly alter a 2006 deal to relocate Marine Corps Air Station Futenma from the middle of the city of Ginowan to a less populated part of Okinawa.

Mr. Hatoyama, who took office three months ago, is under political pressure in Japan to fulfill campaign pledges to move the base off Okinawa, if not out of Japan altogether. But Washington has adamantly opposed changing the current deal, which is part of a broader, laboriously negotiated agreement to move about 8,000 Marines from Okinawa to Guam.

The discord over the base’s relocation has emerged as the most contentious topic in the countries’ increasingly tense relationship. Recent comments by some Japanese cabinet members, however, seem to reflect a growing sense of urgency to prevent the Futenma issue from causing a serious rupture in the relationship with the United States, Japan’s longtime protector.

Political analysts have said the dispute highlights the lack of communication between Tokyo and Washington after an election victory in August by Mr. Hatoyama’s Democratic Party ended a half-century of leadership by the pro-American Liberal Democrats.

Fears of a rupture seemed to increase this week after Japan’s foreign minister, Katsuya Okada, announced Tuesday that talks over the Futenma issue had been suspended. A Japanese official, who spoke on condition of anonymity because he was not authorized to speak with the news media, said American negotiators had become irritated by Mr. Hatoyama’s delays in making a decision on the issue.

The handling of the Futenma issue has become an early and important test of the new government and its Prime Minister.  Whatever the final outcome, the new team has come off looking very indecisive and undisciplined.  Each morning last week we woke to news reports of different ministers offering competing and often contradictory positions on Futenma.  As a veteran of politics, I was astonished how their daily statements was keeping the story alive, and reinforcing the conflict with the US in the Japanese media.  On this issue, the new Hatoyama government has very much looked like a party new to power, struggling to find its way, caught in a political trap of their own making, and stumbling in their public management of it all.  All on arguably the single most important bilateral relationship and security matter the country has. 

So this new commitment to resolve the issue quickly is a critical early test for the new Prime Minister and his very popular government.   Solve it and they will look strong, decisive, ready to lead.  Letting this linger will likely begin to erode the DPJ's popularity, particularly as the country prepares next year to celebrate the 50 year anniversary of the very successful, extraordinary security alliance with the United States.  There will be no way to ignore this issue now, sweep it under the rug, change the subject.  A better path must be found, and this story this am is welcome news for the Alliance and the new government of Japan.

Feel free to review the blog over the past few days to find other observations from my week long trip to Tokyo and Kyoto sponosored by the Tokyo Foundation (which is still keeping me mighty jet-lagged).

At the Kansai airport outside Osaka now, heading home.  Been just about a week since I came to Japan, and it is been a rewarding, productive and inspirational trip.  I was fortunate enough to spend the last few days in Kyoto, the ancient capital of Japan, and a truly incredible place.  I toured the shrines and temples of Eastern Kyoto these last few days with great enthusiasm, perhaps finding the Buddhist Zen temple, Nanzen-Ji the most compelling.  Since studying eastern religions in my teens I have always wanted to come to Kyoto, and I was in no way disapointed.   I hope I can return, with my whole family, someday.  

I leave with many impressions.  First the fun stuff.  The automatic taxi doors, the outdoor vending machines everywhere serving so much, the running of the gauntlet of "good mornings" in the hotel lobby, the excellence of the food, coffee, beer and even single malt scotch, the ambitious toilets, the almost comical complexity of the Tokyo subway system map, the modernity of Tokyo, the beauty and grace of old Kyoto, the intensity of the two handed business card delivery.  

More seriously, Japan, like so many other places I've traveled of late (and of the US too), seems to be struggling to chart a new course for itself.  It has achieved so much since the American occupation ended in 1952, becoming a thoroughly modern state, the world's 2nd largest economy, a regular World Cup participant, and home of the most successful automobile company, Toyota  Its cuisine is known all over the world, as are its global brands of Sony, Panasonic, Honda and more.  The Yankees' World Series MVP this year was Japanese.  And finally, by giving a 2nd political party power this year after more than 50 years of LDP rule, Japan has also become an even more complete democracy.  All of this from a medium-sized nation of several islands, living not far, and increasingly in the shadow of, rising China. 

America needs to listen carefully to the clumsy debate happening in Japan today over its bases on Okinawa island. While much can be made of the Democratic Party of Japan's struggle to manage this complex issue, something deeper I think is really going on here.  There is a restlessness with the old order in Japan today, one that has produced too much debt, not enough broad-based growth, and way too much government arrogance.  With much higher education and income levels, much higher level of access to basic information, the Japanese people are doing what many others in the world are doing today - demanding a better, more modern, more open and accountable government, one more focused on the struggles and concerns of every day people than on back-room deals or the decisions of an opaque bureaucratic elite. America must be very careful not to become an inhibitor of this process, particularly as it is very much in alignment with the global vision of President Obama.  

Need to go catch my plane.  More soon.  Want to share more on this sense of "restlessness" I am feeling with many countries I've visited of late. 

Had a productive first full day in Tokyo yesterday. Met with two leading members of the Japanese Diet, one from each of the two main parties (DPJ and LDP), and covered a great many issues.   The photo to the left is of me and Shoichi Katayama of the Tokyo Foundation, who along with Dr. Fumiaki Kubo, has put my trip together.  Afterwards I was able to tour the beautiful campus of the University of Tokyo and led a seminar for students of American politics there.  Ended the night with a wonderful dinner with Dr. Kubo and several members of the influential think tank here, Asian Forum Japan. I am, needless to say, learning a great deal at a time of siginifcant political foment and change here in Japan.

Some initial observations:

- Absent some significant blunder, the newly in power Democratic Party of Japan appears to be in a very strong position for the short and medium term, and is likely to take over the Upper House in next year's elections.  They are aggressively attacking some of the LDP's sacred political cows, shaking up politics here more than it has been shaken up in perhaps half a century.  It feels like a transitional moment, from one political era to the next, with the DPJ in control but not quite yet on an even keel.

- As Rob Shapiro and other analysts have noted, it is important for America to be following what is happening in this economy, the 2nd largest in the world.  While not directly analogous to what is happening in the United States, the lack of income growth, overall slugishness of this mature, developed economy and a newly elected political party not yet exactly sure what to do next to revive broad-based prosperity reminds me a bit of the debate at home.   The Times/Herald Tribune has this piece today looking at the latest move by the Bank of Japan to increase lending and investment.  Our two large, technologically advanced, global, mature economies may have more in common than either country would like to admit, suggesting greater collaboration opportunities in the future.

- Finally, the Hatoyama Administration's review of the US-Japan relationship.  I will have more to say about this in coming days, but there can be no doubt that the DPJ is raising fundamental questions about this long and successful alliance that have perhaps not been raised in the last 50 years.  This is a complex issue, and feels like in the end, if handled well by all involved, could result in a strong affirmation of our powerful alliance with our old and good friend here on this remarkable island nation.  Of course it could end up otherwise too.  But it is clear the new Party is putting some important issues on the table here and intend to have a substantive conversation about whether Japan needs to recalibrate its foreign policy in a changing world.  It will be important for American policy makers, led by our able Ambassador here, John Roos, to be significantly engaged in this important debate in the months and perhaps years ahead. 

More meetings today.  Will report in later on.

Have landed in Japan on my Tokyo Foundation sponsored trip, and already held an informative dinner with several professors of American politics here, led by my host and good friend, Dr. Fumiaki Kubo. 

It certainly is an interesting time to be here, home of the world's second largest economy, as a political observer.  The Japanese economy is deflating, the Yen is rising, the Democratic Party of Japan is in its first few months in power after decades of LDP rule, the rise of China is on everyone's mind, and the DPJ is attempting to recalibrate Japan's old and deep relationship with the United States.  Like in the US, and perhaps all across the world, the winds of change are blowing forcefully here in Japan.  

In the next several days I will be giving several talks on American politics and meeting with leaders of both political parties.   Just finished up breakfast at Hotel Okura and am off to my first set of meetings of the day aided by my Japanese sherpa here, Shoichi Katayama.  More soon.

The NYTimes has a pretty remarkable piece in tomorrow's edition which makes clear that the Obama Administration strategy to keep people in their homes, funded with less than half the funds of what AIG alone received, is, let us say, not working.

A pointed passage:

Capitol Hill aides in regular contact with senior Treasury officials say a consensus has emerged inside the department that the program has proved inadequate, necessitating a new approach. But discussions have yet to reach the point of mapping out new options, the aides say.

“People who work on this on a day-to-day basis are vested enough in it that they think there’s a need to do a course correction rather than a wholesale rethink,” said a Senate Democratic aide, who spoke on the condition he not be named for fear of angering the administration. “But at senior levels, where people are looking at this and thinking ‘Good God,’ there’s a sense that we need to think about doing something more.”

Back in July, I wrote:

There have been calls from some quarters for a 2nd stimulus plan, an acknowledgement that what the first stimulus has not done enough to stop the current economic deterioration.  This may be necessary, but I think what will need to be done is much more comprehensive than just a new stimulus plan.  Future action could include a much more aggressive action against foreclosures, a more honest assessment of the health of our financial sector, an immediate capping of credit card rates and a rollback of actions taken by credit card issuers in the last few months, a speeding up of the 2010 stimulus spending, a completion of the Doha trade round and a much more aggressive G20 effort to produce a more successful global approach to the global recession, the quick passage of the President's community college proposal, enacting comprehensive immigration reform which will bring new revenues into the federal and state governments while removing some of the downward pressure on wages at the low end of the workforce, and recasting both the President's climate and health care initiatives as efforts which will help stop our downward slide and create future growth.

The new attention to this faltering program is a welcome step by the Adminstration and its Treasury Department.

Tomorrow I head off to Japan for a week of speeches, meeting, interviews and some sightseeing all courtesy of The Tokyo Foundation, which describes its mission this way (in English): 

The Tokyo Foundation is an independent, not-for-profit think tank that presents concrete policy proposals based on a lucid analysis of the issues combined with a solid grasp of everyday life and the reality on the ground. We also cultivate socially engaged future leaders with a broad perspective and deep insight, both in Japan and overseas. We fervently hope that our unique combination of policy research and human resource development will change society for the better.

On Friday I will be giving a public talk at the Foundation, and the following Monday will be offering one in Kyoto.  Jessie will be posting the info on each of those talks in case you know anyone who might be interested in attending.  Both talks will be called "The Dawn of a New Politics: America's Changing Politics in the Age of Obama."

I appeciate the information and suggestions about what to look for, things to read which several readers have offered these past few weeks.  Any more please send them along.  I will be a little busy over there but will try to blog and tweet my way from Tokyo and Kyoto, and between on the bullet train. 

And a special thanks to my friend of many years, Dr. Fumiaki Kubo, who made this entire trip possible.  I am looking forward to it all - except the long flight over.....

Last night I joined Richard Trumka, President of the AFL-CIO, and Robert Kuttner, the co-editor of the American Prospect, on a panel in front of the House Democratic Caucus.  Each of us offered our thoughts about what a new economic strategy for America could look like.  After our presentations, a passionate and intense discssion broke out about the struggle of every day people in America today.  Several members spoke eloquently, and with great feeling, about the pain and suffering they are seeing in the eyes of their constituents, and the simple desire Americans have for their government to act definitively on their behalf in a time of national struggle.

You can feel the sensibility of Washington transitioning now from the many issues discussed this year to a single central focus - doing something about the increasingly difficult struggle of every day people in this more competitive global economy and in the midst of the Great Recession.  As readers of this blog know, developing a new economic strategy for America in this new economic era has been the central obsession of NDN these past few years, and we have offered more than a few essays, events and posts addressing it all.  We welcome this turn and stand ready to work with policymakers here in Washington to develop this new strategy, and then see it through in the years to come.

Over the weekend I wrote this essay about the rise of China and other developing nations and what it means for the US.  Jake Berliner, deputy policy director for our Globalization Initiative, just put together this comprehensive summary of our major work over the past few years.

And, as always, interested in hearing from you with your thoughts about the economy and what just might go into this new economic strategy for America.  It is long past time we had this debate about economic future in the face of fast changing domestic and global economies in earnest.

Thanks to Rep. John Larson and his very able team for putting together the excellent conversation.  A debate began last night that I think will be echoing through the halls of Congress for months to come.

Update - The briefing book the Members of Congress received last night included this recent NDN essay, "The Key to the Fall Debate: Staying Focused on the Economy."

Update 2 - The Hill reports on the meeting last night, and the new "jobs" strategy emerging from the House.

David Barboza of the New York Times has one of those pieces today which just catches your eye, and makes you think.  He writes:

China has begun transforming itself from a global font of low-priced goods fueled by cheap labor into a much more diverse and complex economic power.

But it is the incredible chart the Times has produced tracking China's growth that I strong urge you to review.  You can find it here.

Two stats really stuck out for me:

- In 2000, the US had 180 of the Fortune 500 largest companies by revenue.  China had 8.  This year the US had 140 of the 500 largest global companies.  China had 37, an almost five fold increase. 

- In 2000 the US had 29 of the top 50 companies of the world by market capitalization.  China had 1.  This year the US had 21 of these top 50 market cap companies.  China had 9. 

These charts, and this trip by the President to Asia this week, reminds us how fundamentally the global economy is changing.  We really are entering a completely different economic era, one characterized by the "rise of the rest" as Fareed Zakaria calls it.   A significant part of the rise of the rest is not just the growing geo-political and economic power of these rising powers, but the emergence of globally competitive corporations from these countries which are challenging the hegemony of American and European global brands, making it much harder for our corporations to make money.  The global corporate playing field is getting much more crowded, global competition is getting much more virulent, reducing the pricing leverage of our companies, which Rob Shapiro and I have been arguing is at the core of why it is has been so hard to get wages and incomes up here in the US this last decade.

This new dynamic of this new era of globalization is one we simply have to talk about much more - global competition has grown permanently more competitive.  As these rising power economies mature we will see global competition get ever more intense, as they produce not just low-wage low-quality companies, but the unimagined and yet unbuilt Microsofts, Intels and Nokias of the new century, and new much more global economy.

"Recovery," or returning to the old American economy, is not just impossible, but it is a dangerous illusion, preventing us from recognizing and addressing the underlying structural changes happening in the American economy today.  There is no going back now, there is only the fashioning of a new economic strategy for America, one which takes into account these historic and game-changing developments and begins to strategically transition America and its people successfully into this new era.  

Of the many things President Obama is taking from his trip this week I hope a deeper understanding of this dynamic - and a commitment to address it forthrightly when he returns - is at the core of his takeaways.  For preparing America, our workers and our students for this new much more competitive global economy may just be the most important domestic responsibility of our leaders today.

As national attention pivots toward the economy and employment, I'd like to present some some key analysis and narrative from NDN on the breakdown in job and wage creation in America:

• Health Care's Raw Deal for Middle-Class Families by Dr. Robert J. Shapiro, 11/11/2009 - Shapiro argues that if the American middle class knew how adversely incomes were being impacted by health care costs, a political upheaval on the level of the 1970’s tax revolt might take place in America. This dynamic makes containing health care costs one of the great political and economic challenges of the day. 

• Sifting Through the Economic Messages From the Elections Last Night by Simon Rosenberg, 11/4/2009 - Exit polls show that the most important factor to voters is the economy, as the old, 20th century economy is not working for everyday Americans anymore. To have electoral and governing success, policymakers must make a the creation of a new, 21st century economy their central focus. 

• What Washington Should Understand and Do to Create Jobs by Dr. Robert J. Shapiro, 10/8/2009 - Even the term "jobless recovery" understates how dire America's economic situation is, as the economy now faces structural problems to create jobs and wage growth. With no silver bullet in sight, policymakers must set their sites on creating an agenda and conversation around long-term, broad based prosperity. 

• The Key to the Fall Debate: Staying Focused on the Economy by Simon Rosenberg, 9/3/2009 - The summer months were not good ones for Democrats, but Rosenberg argues that there is a roadmap for how they can get back on track: staying relentlessly focused on the economy and the struggle of every day people.  

• Noticing and Solving the Problem with Jobs and Wages by Dr. Robert Shapiro, 7/23/2009 - The ability of the American economy to create jobs and wage growth, even in times of productivity and GDP growth, has broken down. Policymakers must adjust to this new economic reality.

• Not Taking the Presidential Eye Off the Economic Ball by Simon Rosenberg, 7/2/2009 - The economy is the singular dominant issue in American politics today, and the administration must craft a response to that, understanding that few want a recovery that takes America back to the Bush economy.

• Time to Face the Facts: The Economy Probably Won’t Get Better For Quite a While by Dr. Robert Shapiro, 4/9/2009 – Shapiro's most recent economic analysis says that the economy could be stuck in the Great Recession for long period of time, and that a v-shaped recovery is unlikely.

• A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.

• Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.

• Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay on the economic need to stabilize the housing market.

• Making the Struggle of Every Day People the Central Focus of the National Debate by Simon Rosenberg, 8/17/2008 - As the 2008 presidential campaign entered a crucial phase, Rosenberg argued that political leaders must focus on raising the wages and incomes of Americans.

• Poll: Economic Strategies and Globalization conducted by Pete Brodnitz, Benenson Strategy Group, 11/8/2007 - This poll of attitudes toward the economy and globalization found that Americans understand the modern nature of globalization, want government to give them the opportunity to succeed through investment, and believe innovation is a key strength of the American economy. Americans also saw the economy getting much worse, and they were right, as the recession officially began just a month later.

• The New Landscape of Globalization: The Real Foundations of American Prosperity in the 21st Century by Dr. Robert Shapiro, 6/20/2007 – Shapiro offers this forward-looking paper on the state of globalization, the structural problems facing the American economy, and a road map to prosperity in this new economic era.

• Voters Deliver a Mandate for a New Economic Strategy by Simon Rosenberg, 11/10/2006 - In analysis of exit polls from the 2006 elections, which chased Republicans from power, NDN argued that the most important factor, even in an election most thought was decided on the war in Iraq, was the economy. 

• Meeting the Challenges of the 21st Century: Crafting a Better CAFTA by Simon Rosenberg, Dr. Robert Shapiro, and Joe Garcia, 6/9/2005 - NDN calls on policymakers to face squarely a vision of how globalization can and should work, and how rapid economic liberalization, generally a positive for America and the world, must be accompanied by a commensurate investment in the economic well-being of everyday Americans, who have not seen the expected wage gains despite strong productivity and GDP growth. 

Drop by or watch on-line noon today for the first in a series of new events we will be holding this fall on the global and American economies.  We launch today with Rob Shapiro and the reknown Dr. Jagdish Bhagwati.  Hope you will join us in person or over the web. 

In an essay I released last Thursday, The Key to the Fall Debate: Staying Focused on the Economy, I make the case that the most pressing domestic challenge facing the nation today is to get people working again, and incomes and wages rising.