Interlocalism Successor to Capitalism and Globalization

Capitalism in America and China, like in Iraq, relies on railroads as one of the pillars in the development and growth of capitalism ─ and globalization. To put things in perspective on the growth of capitalism, we just have to flash back to 1848, when John Jacob Astor died as America’s richest man. He left a fortune of $20 million, mere chump change when compared to today’s wealthiest individuals. How did this transformation happen within 50 years? Big Business. It is big business that developed the Rockefellers, Carnegies and Fords. It was the new technologies of the railroad, telegraph, and the steam engine that favored the creation of massive businesses that needed ─ and, in turn, gave rise to ─ superstructures of professional managers, engineers, accountants and supervisors.

It began with railroads. In 1830, getting from New York to Chicago took three weeks. By 1857, the trip was three days. In 1850, there was 14,400km of track. By 1900, that figure increased to 320,000km. Railroads required a vast administrative apparatus to ensure the maintenance of locomotives, rolling stock and track ─ not to mention scheduling trains, billing and construction, as historian Dr. Alfred Chandler showed in his Pulitzer Prize-winning book ─ The Visible Hand: The Managerial Revolution in American Business. The lesson is an important one because no matter how efficient a factory might be, it would be hugely wasteful if raw materials did not arrive on time or if the output couldn’t be quickly distributed and sold.

The lesson for companies and countries is that old established firms, like political parties and dated ideologies ─ despite ample capital and technical know how ─ often don’t dominate new industries or geopolitics. Google, eBay and Yahoo rule the Internet, not General Motors, Sears or Disney.

Today America and China have to develop a new successor model to capitalism and globalism. Globalism is benefiting only a handful of the richest people and impoverishing the rest of the world. A “New Deal for Interlocalism.” A new interlocal economic and political system that is in tune with the new global economic world thrust upon us by the worldwide internet is necessary to get the global economy back on track.

China is re-emerging as a global economic and military power. A power America should embrace in a strategic alliance. The alternative is a futile and costly exercise of containment and encirclement that is doomed to fail. America is trying to do to China today what Britain and France tried to do to contain the rapid growth of Germany before World War I. Britain and France formed an alliance with Russia to encircle Germany. The U.S. is trying to form a similar alliance with Japan and India to contain China. But China, unlike Germany, has no desire to conquer the world. This is a historical fact. America’s thinking is outdated. It didn’t work for Britain and France and it won’t work for America. The only outcome, like in 1914, is an avoidable war.

Iraqi Railroads

Let’s take a quick look at what happened to railroads in Iraq after the U.S. invasion of 2003. Railroad employees are assassinated and major communications and signaling equipment gets looted along its 1,900 kilometers of tracks. Tons of copper wire have been stripped out of the railroad signaling system, and radio and electronic signal equipment has been stolen, rendering safety systems useless. What is the point of spending hundreds of millions of dollars on new equipment that would almost certainly be ripped off as quickly as it was put up. The solution? Develop a system so small, independent of wires, and cheap that it would not tempt thieves ─ but still work. Wabtec Railway Electronics, based in central Iowa, has come up with such a system at the low cost of $17 million, a small fraction of a similarly sized U.S.-style traffic-control system.

Basically, each locomotive is being fitted with a small computer linked by satellite and VHF radio to the dispatching office in Baghdad. There will be no color-light signals along the tracks to steal. The dispatcher will be able to give only one train clearance to travel between any two stations. Once the train is in the block between the two stations, the dispatcher cannot clear any other train onto the track until after the train arrives in the next station. Any train that tries to enter the block will automatically receive an air brake command and grind to a halt. For trains that do have clearance, the system will enforce speed limits all along the way with automatic brake commands if an engineer is going too fast.

In America, the Federal Railroad Administration will not approve such an “on the cheap” system for use there without an exhaustive and expensive analysis to prove that it is at least as safe as other systems ─ something smaller U.S. railroads cannot afford.

Fortunately, Iraq is not bound by U.S. bureaucratic regulations. Mafeks International, a U.S.-Turkish joint venture, is the prime contractor and is providing logistical support and helping train some Iraqi railroad employees in its use. Railroaders in Iraq are just like railroaders in America and China. They just want to run trains and go home at night. Isn’t this the track America should be patiently getting the rest of a partitioned country on? Patience, perseverance ─ not a premature American withdrawal with chaos left in its wake.

Protectionism

The reevaluation of the Chinese currency will not help reduce America’s trade deficit. It will merely shift the source of imports to other low-cost countries. American consumers will be the victims of the trans-Pacific crossfire.

Americans have to boost national savings, promote U.S. exports and invest in responsible education and healthcare policies if we are to curb the trade deficit with China. It hit a record $233 billion in 2006, estimated to reach $250-300 billion in 2007, and continues to rise. It is important to keep in mind that after China joined the World Trade Organization in 2001, many companies from low-cost manufacturing countries in Asia moved their operations to China and brought with them their long-standing trade surpluses with the U.S. to the mainland.

About 60 percent of China’s exports by value are produced or assembled by foreign firms. American, European and Latino. But most are from Hong Kong, Taiwan, South Korea, Japan and Southeast Asia. The actual added value of mainland inputs is no more than 30 percent of the total value of mainland exports. That is why passage of the legislation will penalize mainly foreign firms, including American. Protectionism will have global and interlocal repercussions that will paralyze the international trading system. Protectionism is just so not American. It is totalitarian.

Protectionism flies in the face of international agreements that reduced or eliminated trade tariffs and capital controls, legalized subsidies and lowered transport costs.

Myanmar Is Another U.N. Failure

Human rights are being violated every day in U.N. member countries by the leaders of those countries who enjoy mingling with the advocates of human rights in New York at every one of the hollow global get-togethers of leaders to celebrate something or other just as meaningless and hollow as the previous soiree. This was again on display in New York last week. This is nothing new. The Myanmar oppression and killing fields was not stopped by the U.N. notwithstanding the speeches by world leaders condemning the crackdown and killing of peaceful protestors. No different than the genocide in Darfur.

The military junta in Myanmar took power in 1988 after crushing the democracy movement. In 1990, it refused to hand over power when Aung San Suu Kyi’s political party won a landslide election victory and has kept her in detention for nearly 11 years, despite worldwide condemnation and calls for her freedom along with that of hundreds of other political prisoners. It’s a dictatorship I had the great displeasure in meeting on several occasions in the mid-1990s to explore business opportunities. My favorite generals to converse with while trying to keep a straight face were the heads of the various “brainwashing” departments masquerading as television executives. Another example of U.N. sanctions not working. Their house arrest of Suu Kyi, Nobel Peace laureate and democratically elected leader, human rights abuses against the country’s 55 million people, and persecution and ongoing war with the Karen, Shan and other ethnic minorities with impunity is another mind- boggling example of how useless the U.N. is. Myanmar, like Sudan, uses rape as a weapon against its own people. Gender-based sexual violence obstructs peace and development.

Systematic sexual violence became visible in Myanmar when the Shan Women’s Action Network and the Shan Human Rights Foundation (SHRF) published License to Rape, a report that documents 625 cases of rape committed by the military in eastern Myanmar between 1996 and 2001. It noted that no one had been prosecuted for those crimes.

A nation that oppresses women, neglects children, exploits its people and abuses its minorities does not deserve recognition. The U.N. Charter was the first international agreement to proclaim gender equality a fundamental human right. Nearly all nations have signed this charter and thus committed themselves to accept these standards.

The U.N. Security Council is unable to pass a resolution condemning the regime because of China and Russia’s veto powers.

Myanmar is China’s most important ally in Asia. Myanmar has become the cornerstone of China’s revised Southeast Asia strategy in the face of what Beijing regards as the growing and unwanted influence of America in the region. More than a million Chinese ─ farmers, workers and businessmen ─ have crossed into Myanmar in the last 10 years and are working and living there. Chinese leaders worry that any upheaval would cause these people to flee back across the border, creating increased industrial and social unrest in the border regions.

Sanctions are not the solution for Myanmar, notwithstanding president Bush’s and Suu Kyi’s insistence and endorsement. Her personality-driven style isn’t working either. Her unbending, uncompromising leadership mindset must be replaced by the emerging, more moderate monks and younger pro-democracy groups.