James Fallows

James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.
  • Three Google / China Follow-Ups

    Several more ripple effects of Google's decision -- obvious, and otherwise.

    Reader responses:

    From a reader in America, about some space-and-satellite related implications:

    1) China cannot be pleased about trend it confronts with "Google Earth" even archive stuff.  See for example this [missile-defense emplacements for the Beijing Olympics]:

    20100310SHAHEZHENOLYMPICSAM.jpg

    2) Does this spell the end of Team Selene, the only China-based team now participating in Google Lunar X Prize? Good chance this might happen now .

    From a Chinese reader in Shanghai:

    Saw on twitter that people were sending condolence flowers to Google's office in Beijing yesterday.... Besides the flowers, there were also cups there. Cup is now a euphemism for "tragedy", because the two words, "Bei Ju", sounds the same in Chinese.http://img.ly/HVy

    But they were cleared away quickly by the police. Pic later yesterday night: http://img.ly/I1l

    From a Western reader who has been living in China:

    Google positions its departure as a principaled stand.  Nationalist idiots like [names deleted - JF] suggest that Google is pulling out because it lost the China market and is using "human rights" as face-saving cover while it slinks away, tail tucked between its legs.  Equally nationalist US media like the NYT just cannot stop their gasping, breathless praise of the principled sacrifice that Our Lord and Savior Google is making.

    I think they are both correct - the move is both pragmatic AND principled, but spinning the story as an either/or obscures a single major fact that eclipses all other considerations on the table when Google decided to leave China, namely: Google could never possibly be allowed to win in China, and they knew it.

    Here's why:

    More »

  • If You're in England and Looking for Something Good to Read...

    If you're thinking of learning Chinese, here's the place to start.

    ... let me humbly but enthusiastically suggest:


    101-cover.jpg

    Dreaming in Chinese, by Deborah Fallows*, officially on-sale in Britain next week, available for pre-order on the UK Amazon site here; publisher's page from the London-based publishing house Short Books here

    If you are resident in the New World, you may have to wait for the US edition, from Walker & Company, in September, complete with Americanized spelling and punctuation. In either case, you'll find out what you learn about modern China through learning Chinese. The author knows this based on being trained in linguistics and having learned a lot of other languages over the years, but she writes about love, life, and language in China in a jazzy style. I can attest first-hand to the time she invested in Chinese study over these past five or six years, including before we moved there in 2006. And to how many jams she got me out of, with what she was able to say!

    I could be biased, but I think it's great. Plus, sassy, funny, and linguistically informed. See for yourself.
    ____
    * My wife.
  • An Interview with David Drummond of Google

    "It was all part of the same repressive program, from our point of view."

    Just now I spoke on the phone with David Drummond, Google's chief legal officer and author of yesterday's Official Google Blog post about the company's new policies in China.

    Highlights from the discussion below. I was typing this down in real time, so it may be 98 rather than 100 percent faithful to what he actually said. The entire discussion was on the record.

    I began by asking what was non-obvious about the development -- an aspect of the story known on the inside that had not been captured in the public reports:

    It may not be quite obvious that this is not really a "shutdown" of either our operations in China or of our mainland China-focused web site. We have moved the physical location of it [to Hong Kong], and the virtual location. The experience we are trying to offer to Chinese users is like the one on Google.cn, but done without the censorship on our part.

    [Would this make any difference to users in mainland China, whose search results are still going to be "filtered" by the Great Firewall?] There is a difference in that we are censoring nothing. The Firewall can block access to certain kinds of search results regardless of how you get to them. They are treating Google.com.hk - treating it like Google.com [that is, as a foreign source that is screened by the Firewall]....

    People tended to see this as an all or nothing kind of battle between us and the Chinese government, and that based on what we said, we were either going to pull out of China entirely, or else say, Never Mind! From the beginning our view had been, we would like to stay in China and have an operation there and serve the market there, and serve it as locally as we can. We're just not willing to censor the search results any more.

    I think there has been some grumbling or people questioning whether this is some kind of "deal" with the Chinese government. That's not the case. We had conversations with the government. Would they be willing to lift the search- censorship  requirements, in terms of the substance and even more the lack of transparency? They made it clear that the self-censorship policy as it is now practiced was not going to change. 

    I then asked Drummond about something that has always puzzled me. If the original occasion for the shift of policy was (as generally reported) a hacking episode, why did it lead to a change in the censorship policy? What's the logical connection? He explained the reasoning in a way I hadn't seen before.
    The initial premise, that it all started from a hacking episode, is not quite right. We did have a hacking incident. Most hacking incidents that you see are freelancers -- maybe government sponsored, maybe not. They are out there trying to steal intellectual property, make some money. Or they might just be hackers who want to damage something for whatever reason. That's a fact of life that internet companies deal with all the time. 

    This attack, which was from China, was different. It was almost singularly focused on getting into Gmail accounts specifically of human rights activists, inside China or outside. They tried to do that through Google systems that thwarted them. On top of that, there were separate attacks, many of them, on individual Gmail users who were political activists inside and outside China. There were political aspects to these hacking attacks that were quite unusual.

    
That was distasteful to us. It seemed to us that this was all part of an overall system bent on suppressing expression, whether it was by controlling internet search results or trying to surveil activists. It is all part of the same repressive program, from our point of view. We felt that we were being part of that. 

    That was the direct connection with the hacking incident. It wasn't in isolation. Since the Beijing Olympics, our experience in China has gotten worse. Although we have gained market share, it has become more and more difficult for us to operate there. Particularly when it comes to censorship. We have had to censor more. More and more pressure has been put on us. It has gotten appreciably worse -- and not just for us, for other internet companies too. 

    So we increasingly came to feel that the original premise of our entry into China was being undermined. We thought when we went in that we could help to open the country  and things could get better by our being there. Things seemed to be getting worse.
    And what happens now?
    We don't know what to expect. We have done what we have done. We are fully complying with Chinese law. We're not operating our search engine within the Firewall any more.  We will continue to talk with them about how to operate our other services. 

    We originally went to them with a request [for a change in the filtering rules]. They made it clear that the self-censorship system was the law there and it wasn't going to change. We'll keep talking with them about everything else.
    Finally I asked why Google had not stopped censoring its results more quickly, at the time it announced its changed policy on January 12 or soon afterwards. Was it mainly concerned about legal jeopardy for its employees in China? Is it concerned about them now?
    We certainly hope they are not at risk. They had nothing to do with these decisions, and what we are doing is within Chinese law. So there should not be any reason for them to be at risk.

    We did not stop censoring immediately because we wanted to engage with the government about how and whether we could keep operating. And if self-censorship is the law, we weren't  interested in blatantly violating the Chinese law within the Firewall --much as we disagree with that law. As I said in the blog post, it was hard to sort this through. But we needed a way to continue that was consistent with our principles.
  • Going To Hell #999: Maybe We're Not

    The impact of a presidential win today on presidential power tomorrow.

    As soon as I find a video link to President Obama's comments just now on passage of the health-care reform bill, I will put it up and say a little more about his theme and performance. (Hint: I will welcome and thank anyone who can send such a link.) Listening to it in real time, I was struck by the forcefulness of the ending, which was less about the health-care issue itself than about the overall question of how the American political system can deal with largest-scale public challenges. It was as passionate as I have heard this always-"cool" character ever sound on any theme. Update: thanks to reader Jeffrey Schroeder, the link is here, and an embedded player is below. The whole thing is effective, but the part I'm referring to begins just before time 14:00 and runs for the next two minutes. Very last words of the speech are unfortunate, but otherwise...

    Visit msnbc.com for breaking news, world news, and news about the economy


    The question is of interest to me because of the fundamental "Is America going to hell" issue I raised in this article -- and have discussed in a series of reader "going to hell" responses that I was posting last month. Until our "categories" feature is repaired, I can't do a link to the whole series; after the jump, and thanks to reader Joshua Cypess, a list of specific item links.

    I have many more responses in the queue, which I'll rev up again soon.  For the moment, one more reader response. This is part of a note sent by a political veteran, now in private business, to his Democratic Congressmen, who has decided not to run for re-election and was one of the "undecideds" until the very end. The note was written just a day before the vote; a day after the vote, it's worth reflecting on this passage. It alludes to the late professor Richard Neustadt, the great theorist of presidential power. From the letter urging the Representative to vote for the bill:

    What are the consequences for the country if the President and Congressional Democrats fail on tomorrow's vote? Professor Richard Neustadt did a good job teaching generations of students (including me) that the president's power to accomplish things in the future is always driven by his success or failure in getting things done today. It's terribly unfortunate that we find ourselves in the awful and presumably once-avoidable situation that we do today. It's terrible that the mess in Congress has driven out or otherwise cost us thoughtful Members such as you. But, having said all that, I can't see any good for the country coming from losing the vote tomorrow. I can see a whole lot of harm.  I'm sure you can, too.

    It may be galling for you to "reward" the Leadership, the White House, the bill's proponents with your vote. But I hope you'd find it abhorrent to reward the other side.

    This Representative finally voted "Aye."
    ________

    More »

  • A Clarification on Earlier Searching-in-China Note

    What is limiting Google's new search results in China? Perhaps just the same old "Great Firewall."

    Last night US time, as Tuesday morning was breaking in China, I posted a detailed report from a reader there about what he was finding, after Google had redirected its Google.cn Chinese-language service to a site in Hong Kong. (Hong Kong, again, has been a "Special Administrative Region" of the People's Republic since the British handover in 1997, but it operates under many different rules from the mainland, notably those covering press freedom and individual expression.)

    The reader, who is in the tech industry suggested that the new reality indicated an expansion of mainland China's censorship regime. That is, the results on Google's Hong Kong site were not being censored by Google -- but they still were interrupted before a web user inside China could see them.

    If I had parsed this more carefully before posting it (a lesson for the future), I would have inserted a note saying that this is not necessarily so -- as many other readers have pointed out to me overnight. As explained two years ago here, the Chinese "Great Firewall" system has for a long time been sophisticated about limiting how many outside-China results can make their way into mainland. So this could be nothing more than the automatic operation of the previous system, treating the Hong Kong servers as a "foreign" source. It's possible that something more has changed, but that initial report doesn't prove that it has. I wanted to note this clarification and to thank all in China for their reports.

  • What It's Like to Search the Web in China Right Now

    An early report on how Chinese censors have responded to Google's move to Hong Kong.

    A reader in China sends this report on web-search in the immediate aftermath of Google's decision to stop filtering results. The Witopia mentioned below is a VPN service, which makes a computer inside China seem to be "outside" the country and therefore allows a user there to reach sites that would ordinarily be blocked by the "Great Firewall." Details here. Everything that follows in this post is the reader's report.

    _____

    "Google's most recent step regarding its presence in China was interesting but the current quick reply from China appears to be even more so.  At last check, this is what I have observed with some quick testing of Google's sites from within China and "outside" of China (through a Witopia connection).  Some findings (as of very early Tuesday morning in China):

    From "outside" of China
    From inside of China things are not so clean cut
    • As before, go to www.google.cn and you are redirected to www.google.com.hk
    • Innocuous searches in Chinese seem fine as before
    • However, do a more "interesting" search, such as 天安门广场事件 (Tiananmen Square Incident), and no page is able to load. A standard error message is displayed instead (in this case "The connection was reset...")
    • The same results are also found at www.google.com.tw (the site for Taiwan), www.google.de (the site for Germany), etc. 
    So...
    • Who knows if these same results will hold tomorrow but...  this sure isn't an accident.  China was clearly prepared in advance for Google's recent actions.
    • China's response is not limited to Google's sites in "Greater China" and appears to be an actual extension of its censorship.
    • The World Expo opens in Shanghai in just over 40 days. Will be interesting to see if the Google events and those related complicate China's desire to use the World Expo to present a positive image of China to the world (although projections seem to be that the vast majority of visitors will be Chinese).
    Some additional points 
    • The results from inside of China for Google's Hong Kong site also hold true for Google's sites in Spain & Israel (which should be noted have different domain name structures: www.google.es andwww.google.co.il).  China is being rather thorough.  When it comes to Google, China is breaking the mold of letting more eager Chinese internet users find holes in the wall.
    • While 天安门广场事件 (Tiananmen Square Incident) is "blocked", 天安门广场 (Tiananmen Square) is not.
    • 天安门广场事件 is not a blocked search on Microsoft Bing in China nor Baidu.  However, the search results do appear to be mostly missing any links, images, etc. that one would expect to be censored."
    ____

    JF again: More as this evolves.

  • Official Word from Google, on China....

    Google stops filtering Chinese search results.

    ... is here, on the Official Google Blog. They have stopped the filtering. Links to Google.Cn have now been redirected to Google's Chinese-language Hong Kong site, Google.com.hk. (As part of the "one country, many systems" approach, Hong Kong is part of the People's Republic but operates under separate rules in many ways. Inside-baseball: on the Hong Kong site, Google will offer uncensored results both in the simplified Chinese characters typically used in the mainland and the traditional Chinese characters typically used in Hong Kong and Taiwan.) An hour ago I was able to reach and search on Google.cn. Now that's gone. Thanks to reader ML for an early heads-up about the redirection to Hong Kong, my first indication that things had really changed.


    More later on the implications, including Google's announced hope to continue a range of other activities in China while discontinuing its mainland-based search activities. This is just confirmation that, as mentioned a little while ago, the other shoe has now dropped.
  • Google and China: The Next Step

    The two big powers near a showdown.

    I expect that the next step in this drama will happen sooner rather than later. It is Google's step, which will happen within these publicly-known constraints:

              1. Google has announced that is no longer willing to "filter" / censor the search results on its Chinese-based search engine, Google.cn

              2. It is illegal to operate a search engine in China without filtering the results.

    The interactionof these forces has some obvious and dark implications for the future of Google.cn -- which today has its opening-screen homage to the Japanese director Akira Kurosawa on the 100th anniversary of his birth today (March 23 = "today" in China). What it means for Google's many other operations in China, and its employees there, we'll have to see -- based on what the company says and the Chinese government does in response.

    My before-the-fact speculation about what might happen, and why, from a discussion this morning with Kerri Miller of Minnesota Public Radio here. Stay tuned for what comes next, soon. UPDATE: What came next came soon, here.
  • Health-Care Reform, the Morning After

    More on what the health-care vote means for America, and for the two parties, and for the creation of "Obama Democrats."

    Two brief updates, on the substance and the politics. On the substance, I mentioned yesterday what I thought was the significance of the vote. A reader from Minnesota puts the point in more specific and personal terms:

    When I was 15 I developed a chronic condition, and received excellent care under my mother's insurance plan. When I turned 23 and graduated from college, I lost eligibility. Tagged with a pre-existing condition, I was black balled from the private insurance market for life. Since then when my condition's gotten bad enough that I couldn't put off treatment, I've made myself unemployed to qualify for Minnesota's General Assistance Medical Care [GAMC] program, which has taken good care of me . . . because I live in a prosperous, progressive county and I know how to use the system.
     
    Now Gov Pawlenty is trying to unilaterally kill GAMC. Until tonight, I have been a Democrat because of people like Gingrich and Bush, Palin and Pawlenty. After tonight, I am an Obama Democrat in the sense that my grandparents were Roosevelt Democrats. For all the problems with HCR, for all the compromises and deals and disappointments and inefficiencies, tonight the Democrats stood up and took a political risk to say that I deserve medical coverage, that it's no longer okay to treat my health as sad but acceptable collateral damage in a Social Darwinist system. That's why this moment matters to me.*

    On the politics, I mentioned last month this exchange on the House floor during "negotiations" over last year's stimulus bill, sent in by someone who was there:

    "GOP member: 'I'd like this in the bill.'

    "Dem member response: 'If we put it in, will you vote for the bill?'

    "GOP member:  'You know I can't vote for the bill.'

    "Dem member:  'Then why should we put it in the bill?'

    "I witnessed this myself."

    As we have now seen, this was in essence how all "negotiations" over the health bill worked too. There simply was nothing that the Democrats could have put in the bill that would have made voting for it more attractive to Republicans than voting against it, with the implied promise of stopping Obama himself, his Administration's other objectives, and the general momentum of the Democratic party. In 1994, William Kristol's advice that Republicans should vote against the Clinton health care bill -- no matter what was in it, just to ensure a defeat -- was seen as shocking enough that Kristol put it in the form of a confidential memo. (More here, here, here.) This time, simply "going for the kill" was the quite open Republican strategy -- as advocated by Kristol here and by Republican legislators passim.

    Fine: that's their strategy, they had every right to choose it, although as David Frum very eloquently argues, this time it didn't work.** I raise it now in response to a new wave of interpretive hogwash: namely, the idea that although Obama may have "won," he did so in a fashion that was polarizing, hyper-partisan, and extreme. Please. The quite open GOP strategy was that they were not going to vote for this bill. They had every right to that as a strategic choice. But they can't now claim that their bloc opposition to the bill is proof that the Democrats were too partisan. Rather, they can and will claim it, but they shouldn't be believed.

    "You know I can't vote for the bill" -- the phrase by which this era in politics may be known. We witnessed it ourselves.
    ___
    * A reader from Texas writes just now: "Because I have an individual policy following cobra/divorce and having breast cancer, my health insurance costs almost $30,000 a year.  They deny me dental coverage after cobra. Feel free to use this factoid."

    ** As Frum says, "At the beginning of this process we made a strategic decision: unlike, say, Democrats in 2001 when President Bush proposed his first tax cut, we would make no deal with the administration. No negotiations, no compromise, nothing. We were going for all the marbles. This would be Obama's Waterloo - just as healthcare was Clinton's in 1994.... This time, when we went for all the marbles, we ended with none."

  • Why This Moment Matters

    Despite the mess that is this health-care reform bill, it represents an important -- and positive -- step.

    We'll talk some other time about the political consequences, in 2010 and 2012 and beyond, of the health-care reform vote. (My guess: this will not seem anywhere near as poisonous seven months from now as it does today. Jobs jobs jobs is what will matter most then. But we'll see.)

    We'll talk about the many things that will prove to be wrong with the bill, and the many more steps that will need to be taken as far into the future as anyone can see, so as to balance and rebalance the potentially-limitless cost of new medical procedures with the inevitably-limited resources that individuals, families, companies, and governments can spend.

    For now, the significance of the vote is moving the United States FROM a system in which people can assume they will have health coverage IF they are old enough (Medicare), poor enough (Medicaid), fortunate enough (working for an employer that offers coverage, or able themselves to bear expenses), or in some other way specially positioned (veterans; elected officials)... TOWARD a system in which people can assume they will have health-care coverage. Period.

    That is how the entire rest of the developed world operates, as noted yesterday. It is the way the United States operates in most realms other than health coverage. Of course all older people are eligible for Medicare. Of course all drivers must have auto insurance. Of course all children must have a public school they can attend. Etc. Such "of course" rules offer protection for individuals but even more important, they reduce the overall costs to society, compared with one in which extreme risks are uncontained. The simplest proof is, again, Medicare: Does anyone think American life would be better now, on an individual or a collective level, if we were in an environment in which older people might have to beg for treatment as charity cases when they ran out of cash? And in which everyone had to spend the preceding years worried about that fate?

    There are countless areas in which America does it one way and everyone else does it another, and I say: I prefer the American way. Our practice on medical coverage is not one of these. Despite everything that is wrong with this bill and the thousand adjustments that will be necessary in the years to come, this is a very important step.

  • If There Is Any Further Question About Whether Fox Is a "News" Operation

    Fox News goes into national-cataclysm mode covering the big day. A proposal: let's just drop the word "news"

    I will recommend to historians and semioticians very close study of the footage being produced right at this moment, on the Fox "News" Channel, as it covers the vote in the House on the health care reform bill. 


    The background footage virtually the entire time is of "Kill the bill!" crowds chanting at the Capitol. "Anchor" woman Megyn Kelly is at this moment breaking the news that Obama's popularity ratings are the lowest of his administration and interviewing an expert on whether this reveals America's recoil at the fundamental "statism" of his world view. Then an on-the-scene interview to confirm that the people who yesterday yelled "nigger" at Rep. John Lewis and "faggot" at Rep. Barney Frank were "an unrepresentative minority" of the protest crowds, and that in fact the typical crowd members would have been "the first to condemn" such harsh terms. Just now going to break, with pan of a huge shouting "kill the bill!" crowd at the Capitol. Seriously, you would think martial law was about to be imposed in DC.

    You can agree or disagree about this legislation. But really, you cannot look at this "news" coverage and consider it other than outright political activism. There is nothing wrong with outright political activism. Megyn Kelly is arguably no more partisan on her show than Rachel Maddow is on hers. But not a single person on Earth thinks that Rachel Maddow is a "news" anchor. For the sake of sanity, precision in language, self-respect, and any other desirable quality we can think of, let's drop the pretense about what's coming across on Fox. This surprises even me. Back to C-SPAN. Or, maybe out into the nice sunshine.

    (Update: On the other hand, Kelly has Rep. Anthony Weiner on now to challenge part of what she's saying. But her stance - which he nicely skewers -- is as his opponent in debate, rather than as a "news" person. Weiner's performance, from approximately 2:25-2:30pm EDT, is a clinic in how to handle the Fox approach.)

    Update #2: At 5:00pm, Fox's Greta van Susteren tells us that the vote is still "too close to call." I'm expecting next to hear from Baghdad Bob

    Thumbnail image credit: Chip Somodevilla/Getty Images
  • In Case You Missed Obama's Health Speech Saturday Afternoon

    Ho-hum: yet another virtuoso speech performance by Obama.

    His address to the Democratic House members at the Capitol yesterday was another one very much worth watching. Of the 45-minute C-Span clip available here, the first portion is warmup and prelude by Nancy Pelosi, Harry Reid, and Stenny Hoyer. Obama takes the stage at time 15:00. At about time 20:00 he is mordant about the way the press has covered the issue, and at 23:20 we have an acid little line about "death panels." At roughly 30:00, he starts making the case about why the bill is still important, despite the things that aren't in it. At 31:50, a direct appeal to Democrats tempted to vote against it because of this or that shortfall. ("If you think that the system is working for ordinary Americans rather than for insurance companies, you should vote No on this bill.")

    Real payoff is the "I know this is a tough vote" peroration, starting around time 35:00 (or, distilled version starting just before 38:00). The real point here is Obama's argument that even if the vote proves politically costly, the ultimate purpose of politics is to win office so as to do important things, rather than to avoid doing anything controversial or important so as to cling endlessly to office. Nice that it's done in a "we all understand the problem" way rather than with a "you are falling short" tone.  ("Every single one of you had that same kind of moment at the beginning of your careers.... Maybe that thing we started with has been lost. ")

    ObamaMarch20.png

    What he says is also in keeping with the argument made by my Atlantic colleagues Ron Brownstein and Marc Ambinder, and which I discussed yesterday with Guy Raz of NPR: that Obama is doing what we always say we want but which politicians rarely can bring themselves to produce. He is spending political capital, trading popularity for a cause he believes in. And he is telling his party's House members that this is the duty to which they are called. Yes, it's easy for him to say that: he doesn't run for reelection for another few years, while the House members all face the voters this fall. But he says that whenever the voter-reckoning comes, the calculus should be the same. On this theme, it's also worth reading the recent WaPo essay by former Rep. Marjorie Margolies, who cast a "hard" vote for Bill Clinton's budget-balancing legislation in 1993 -- and was promptly turned out of office. "I voted my conscience, and it cost me," she wrote. "I am your worst-case scenario. And I'd do it all again."

    Agree or disagree on the bill - and for the record, I support it, because it is a step toward the principle that for society's benefit and for individual protection, everyone should be insured -- Obama's presentation is a powerful piece of plainspoken rhetoric. Plus empathizing with an audience without condescending to it. And in case you're keeping track, not a damned teleprompter in sight.

  • Health Reform Notes From All Over

    The vote on Sunday may bring America closer to Australia (and the rest of the world) -- in a good way.

    In my copious spare time, I'm filling out forms for a non-tourist ("class 457") visa to Australia, for regular visits I'll be making as part of the new U.S. Studies Centre at the University of Sydney. That's a whole promising story for another time.  Here's the relevance now, during Health Care Reform Showdown weekend:

    In all the piles of documentation to provide the Australian authorities, two required items got my attention. One was a copy of my marriage certificate, so that my wife and I can travel together. (Hmmm, ours was written in cuneiform. Where would that be now?) And the other is: certificated proof that we both are covered by an "adequate" health insurance policy. Otherwise, they won't let you in. It's part of the principle that, of course, for shared social risk and as a bulwark against bankrupting individual surprises, everyone must be insured.

    Every so often there is a reminder of how unusual, in world terms, the lack of such an assumption and system has been in the United States. In the nearly two generations since the passage of Medicare, Americans have come to take for granted that of course there will be some safety net for older people with the inevitable maladies of age. Exceptions to that are seen as scandals. On the highway, everyone understands that it's irresponsible and anti-social, along with illegal, for people to drive without insurance. What if they cripple someone? What if they plow through someone's front yard and damage their house?

    Whatever happens tomorrow, and it seems as if the Democrats may finally have 216 votes, I bet that a generation from now Americans will have the same "of course everyone needs it!" attitude about health insurance that we now have about car insurance and Medicare. Few people who weren't around in 1965 can imagine how bitter, emotional, and divisive the debate about passing Medicare was at the time. If anything the fears of impending socialism were greater than they are now -- because back then, there was no Medicare in existence about which people could say: "Well, that program's OK, but anything more would be socialist." I think the incredible fury of this year's debate will have the same hard-to-recreate quality once health insurance becomes as matter-of-fact as -- yes -- car insurance is now. As I mentioned when the Senate pulled together 60 votes last summer, this is a moment to notice and remember. And, I'll be watching the vote.

  • Finally, a Flying Device Too Wacky Even for Me

    Try the JetLev! Or, if you're not that brave, at least watch the video.

    Out of Germany now comes.... the JetLev!

    JetLev1.png

    Just as I was surprised to discover last month that there was such a thing as a beer with too strong a hops taste, I now realize (courtesy of Sanjay Saigal) that there is such a thing as personal aviation that is a little too personal. You will not regret spending 67 seconds watching the JetLev promotional video, below. And perhaps like me you'll find yourself wondering as you watch, What would happen if my legs got in the way of the high-speed jets of water that are keeping the thing up? (The JetLev sucks in water through the trailing yellow hose, then blasts it out to shoot the rider into the sky.)



    Main company site here; flight training instructions, plus list of "banned maneuvers," here. As the video shows, it's for men and women, young and old.  That's a young lady flyer below.  And when you're ready, buying instructions here. Let me know how it goes. This is Health Care Reform weekend, and I figure this has its own medical-care related theme.

    JetLev2.png

  • How to Think About the RMB, "Currency Manipulation," and Trade War

    The problem with the Chinese currency isn't "manipulation." It's something worse.

    Where to begin on this topic? Let me start with several "to be sure" statements and then the clearest formulation of the issue I can manage.


     "To be sure":
    - In general, I am skeptical of free-trade absolutism, and am a believer in the ability of nations to engineer their way to better trade and economic outcomes than pure laissez-faire would deliver. As explained in a serious way here and a sarcastic way here;

    - In general, I am in the "Oh calm down!" camp when it comes to the "Chinese menace," whether that menace takes the form of "stealing all our jobs" or of "controlling our financial destiny." On why not to worry about job-stealing, here; on finances, here; on general US-Chinese competition here.  

    - In specific, what I have seen in Chinese factories makes me doubt that changing the value of the Chinese RMB would make any noticeable difference in "bringing jobs back to America." The wage differences between the country are so enormous, and the productive and exporting infrastructure in China is so well advanced, that you could double the RMB's value against the dollar and still make it more attractive to produce somewhere in China than in the Midwest. That is why I think typical American complaints about "currency manipulation" are ill-founded. They imagine that a cheap currency is what has built China's industrial empire. That's a factor, but a secondary one.

    "Nonetheless": 
    We've reached a stage where the Chinese government's insistence on holding the RMB's value steady against the dollar -- rather than letting it rise, as it naturally would because of China's huge trade surpluses -- has become pernicious and destructive for the world economy. Why? The reason is the one laid out here* nearly a year ago:

    During a worldwide economic slowdown like the one of the past two years, the immediate problem is a failure of demand. There is too much productive capacity, relative to private and public purchases. Thus factories -- and, more important, workers -- stand idle. The point is elementary, and is the reason governments around the world, from China to Britain to the US, have been pumping new "stimulus" (demand) into their economies. But it also means that anything one government does to depress demand -- or to shift some other nation's demand to its own factories -- has a beggar-thy-neighbor effect and slows down recovery world wide. 

    That is what China is doing by controlling the value of the RMB. For reasons laid out here,** the only way the Chinese government can control the currency's value is to enforce savings on the Chinese public. When a Chinese-made computer or motorcycle is sold for dollars in the United States, the Chinese central bank (to oversimplify) seizes part of the dollar proceeds and sends it back for investment in the United States or elsewhere, before anyone in China has a chance to spend it. It goes into Treasury notes, the US stock market, or some other dollar security. That means that it is not used to buy some foreign product (which would increase demand elsewhere), nor is it traded for RMB on a foreign currency exchange (which would raise the RMB's value, decrease the dollar's, and overall increase the purchasing power in a Chinese person's hands.) Again the details are complicated, but the point is plain:

    If the Chinese government were not controlling the value of the RMB, China would be producing more "net demand" for the world economy now -- buying more of other nations' products, or exporting less of its own surplus. This is a simple arithmetic truth, and one whose significance was described a year ago by the stalwart Michael Pettis of the Guanghua School of Management in Beijing. I quoted him as saying: 
    The real counterpart to Smoot-Hawley [after this crash] would be Chinese protectionism --or rather, any effort by China to defend its huge trade surpluses, as the U.S. once did. China's government is unlikely to rely on outright Smoot-Hawley-style tariffs. Instead it could increase subsidies to exporters; it could try to push the RMB's value back down, after three years of letting the currency rise; it could encourage manufacturers to restrain wages; it could impose indirect barriers to imports, as with its recent pressure on China's airlines to cancel outstanding orders for Boeing and Airbus airplanes. By early this year [2009], China's government was in fact doing every one of these things... This is an economic problem for other countries. But it could be an even more serious political provocation, if China is seen as forcing its share of unemployment problems onto everyone else.

    That's where we are now. China's government has helped its own economy recover by holding the RMB's value steady against the dollar rather than letting it rise. But in doing so it has made recovery harder in the United States and -- more dramatically -- Europe and Japan, since the RMB has joined the dollar in falling in value against those currencies. This is not a matter of "manipulating" a currency, and I wish American politicians would stop using that term. But it is destructive to overall world prospects for recovery, because it is hurting everyone else. You don't need any advanced trade theory or specific industrial analysis to know this. It is necessarily true as a matter of basic math: a depressed world economy needs more demand, and an artificially low national currency means artificially restricted demand from that country.


    The best way to change the Chinese government's policy is a separate matter, for another installment. For the moment the point is: don't think about "currency manipulation" as being a tricky way to have a wind-turbine built in Shanghai rather than Sheboygan. Instead think of artificially suppressed Chinese purchasing power as putting a drag on the whole world's economy. That's what has to change.
    ___
    * Unfortunately this part of our archives is messed up, and the links to subsequent pages don't work. Here are the right links for pages 1, 2, and 3

    ** These links are also messed up. Here are the right ones for pages 1, 2, 3, and 4

    Also, links for "How the World Works" article are messed up. Correct ones here for pages 1 and 2. Hmm, maybe a new item for the post-website-redesign To Do list. UPDATE: Archive links are now fixed; links in main text should work fine. Thanks to web team for quick repair.

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