Scott Horton Interviews John V. Walsh

Scott Horton, March 19, 2010

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John V. Walsh, frequent contributor to Counterpunch.org, discusses Paul Krugman’s “economic chauvinism” regarding China’s currency valuation, provocative US military postures in Central and East Asia, China’s eons-long history of open trade and self defense and why the US should abandon the policy of “containing” China.

MP3 here. (30:36)

John V. Walsh is a scientist who lives in Cambridge, Mass. He is a frequent contributor to CounterPunch.org and Antiwar.com.

15 Responses to “John V. Walsh”

  1. Antiwar Radio,
    I agree that making China an enemy is foolhardy, especially as they hold all those US dollar assets. However, it would have helped if Scott had called out the interviewee about his failure to balance his assessment of an historically benign free-trading China with the forcible seizure by the Red Army of most of Tibet, East Turkmenistan, parts of Inner Mongolia, and The Spratlys as well as its constant threats and unwillingness to discuss the sovereignty of Taiwan.

  2. Here is a nice complement by an economist evidently fed up by Krugman's inanity:

    http://krugman-in-wonderland.blogspot.com/2010/03

    and

    http://krugman-in-wonderland.blogspot.com/2010/03

  3. The answer to the question of China taking tibet, inner mongolia, xinjiang and spratlys is already there, just read the american or british world maps starting from 1800's to 1900's to 2000's. then you will know why. But if you are talking about human right issues like destroying minority's culture or genocide? then it is different story.

  4. But how is any of this a threat to America? That is my only concern. I find it disingenuous at best to try and argue that inner Mongolia, etc, are a vital interest to America.

  5. China was helping out when it can. The following is from Henry Paulson’s “ON THE BRINK.”

    “What I learned in Beijing, however, left me less than reassured myself: Russian officials had made a top-level approach to the Chinese suggesting that together they might sell big chunks of their GSE

    holdings to force the U.S. to use its emergency authorities to prop up these companies. The Chinese had declined to go along with the

    disruptive scheme, but the report was deeply troubling—heavy selling could create a sudden loss of confidence in the GSEs and shake the

    capital markets.”

    “On Monday, investors had flooded the company with requests for redemptions; by mid-afternoon Tuesday, $40 billion had been pulled. The fund had officially broken the buck, the first to do so since

    1994, when the Denver-based U.S. Government Money Market Fund, which had invested heavily in adjustable-rate derivatives, fell to 96 cents.

    The sense of panic was becoming more widespread. Dave McCormick and Ken Wilson came in to tell me that they had heard from their Wall Street sources that a number of Chinese banks were withdrawing large sums from the money market funds. They had also heard that the Chinese were pulling back on secured overnight lending and shortening the maturity of their holdings of Fannie and Freddie paper—all signs of

    their battening the hatches. I asked Dave to track down the Chinese rumors and report back to me as soon as possible.

    I spoke with Dave McCormick, who confirmed the reports that the Chinese had been pulling back. He said he’d spoken with central bank governor Zhou Xiaochuan, who had emphasized that the moves had not been orchestrated by the government but had been made by midlevel bureaucrats and various financial institutions doing what they thought was the smart thing. The Chinese leadership, McCormick said, would be giving some guidance to these professionals not to pull back from the money markets or from secured lending.”

  6. Well, I'm Irish, and my significant other is Chinese. I don't think either of us have anything against trade with China, but please let us inform you as to some history. "Free trade" is a dogma first invented by English aristocrats and landowners to justify shipping Irish agricultural products out of Ireland in a time of famine. This "free trade" resulted in the deaths of tens of thousands of Irish when our small plots (they were small because of the "property rights" of the economic elite) became unproductive due to potato blight. You see, potatoes were the only crop available which would provide enough calories to feed a family on the small plots of land. So when the potatoes failed systemically across the country, Irish peasants were thrown upon the "free market;" they could buy whatever food they could afford, which was hardly any, so they starved, or sold their ancestral plots to the above mentioned land owners and bought a ticket to America. You see, even with tens of thousands of Irish literally starving to death and resorting to eating grass or sometimes cannibalism, it wasn't that Ireland wasn't producing any food. Food was being produced, but exported, because it was the "property" of the land lords, and thus the land lords had a "right" to seek a "fair market price" on the "free market," which certainly didn't involved giving any food to a bunch of broke, starving peasants. So, you can thank your "free exchange of goods" on the "open market," for the St. Patricks Day parades in New York CIty and Boston recently, their the result of a genocide and diaspora caused by your "market."

    But it gets better, I haven't even gotten to China yet! Your "free trade" dogma was then adopted by the same economic elite as justification for "trade with China." Of course, China in those days didn't really want too much of what the West produced; they were largely self-sufficient. The only thing the West had which the Chinese would buy was, well, opium, but they didn't want to import it. For some reason the Chinese thought that sometimes imports were bad and self sufficiency was good. This didn't fly in London or Washington, so we had the "opium wars" against China to restore a "free and open market." Cheap opium helped break down the Chinese Empire and Chinese society, helping to make it a a corrupt, fractured pseudo-colony of Europe, a condition which persisted until after World War II.

    So we're hope you'll understand if sometimes people tell you to take your "market" and shove it, it's nothing personal. America would be better off with tarrifs, at least if they replaced other taxes like the income or sales taxes. There's more to economics than getting the best quality goods at the lowest possible prices,and personally I'd be willing to be poorer if it meant having democratic control over the economy. After all, if the U.S. government wasn't getting loans from the Chinese, we wouldn't be at war anymore, now would we guys?

  7. >>The result of a genocide and diaspora caused by your "market."

    Nope. It's a result of English exploitation (http://mises.org/freemarket_detail.aspx?control=8… . There was no free market in the first place as you say yourself. So this does not count as an argument against a free market approach at all.

    >>I'd be willing to be poorer if it meant having democratic control over the economy.

    Do you want any more "democratic control" than you have now? Are Greenspan bubbles and the warfare state not enough? In case you want to know how "controlled economies" look like, domeocratic or not, you can take a good look at Germany in the 1930's for example. High tariffs and taxes, red tape everywhere, no unemployment, but no-one is sure whether there will be anything in the shop tomorrow. Your Ireland example is also a nice case of a controlled economy, come to think of it.

  8. Maybe you could just answer my question Frank. How is Inner Mongolia any concern of ours? Xinjiang? The Spratly islands? And yes, Taiwan too. None of these places are worth America fighting over. Even putting aside the hypocrisy of America lecturing anyone on human rights, it still does not justify any American action against China. And where would such action lead to? The Kaiser never thought his 'blank check' would lead to WW1.

  9. Really? Greenspan bubbles and the warfare state? Alan Greenspan is appointed, not elected, and war hasn't even been voted upon by our so-called 'representatives,' much less held up for any popular referendum. I can't think of a single group of ordinary American citizens who were lobbying for or wanted a war with Iraq, and clearly majorities support ending it yesterday, and yet you attribute the warfare state to an excess of democracy?

    Democracy is when the popular will is expressed through government action. We, the American People never get to vote on *anything* of significance, all we get to vote for is pre-selected so-called representatives who run on a handful of issues and then are free to entirely reverse themselves and do as they please. We The People do not set interest rate policy and We The People do not set foreign policy or the Pentagon budget. So please look elsewhere for failures of democracy.

    "There was no free market in the first place as you say yourself"

    Well that's the problem, there never is a first place, now is there? The British landlords were eager to have a 'free market' in Ireland, *after* they had stolen the land. All of the land here in America is stolen too, and the justification (for a genocide) yet again was the 'property rights' of the settlers.

    If we do get a 'free market' system here in the U.S., it will probably be in the aftermath of the bank bailouts and Federal policies which consolidated most wealth into a very few hands. I wouldn't be surprised if we get it either, a 'market' in which the oligopolies and monopolies don't have their 'property rights' interfered with in the least by the government. Ron Paul can get his gold standard, I'm sure, once the public Treasury is totally drained and nearly all the gold is held in a few private pools. Won't that be fun!

    As for tariffs, tariffs have two great benefits. The first is that tariffs are how nations become sovereign economically. Nations which specialize only in their "comparative advantage" are as helpless as a person who only develops one specialized skill applicable only in specialized industry or workplace. Maybe that's what they're best at and what will return the most money today, but one change in the market and they can be in real trouble. The other benefit of tariffs is that unlike the income tax, they are indirect taxation, which can be avoided by supporting domestic products or services.

    The "free market" advocates are ultimately claiming that we should all be "free" to compete with slaves in dictatorships and to buy their products without restriction. That's not too far a cry from demanding "the freedom to own slaves." Around here, they say that that's how the Texas Republic got started, any insight Scott?

  10. Hack, I would like you to read your von Mises article again. At the beginning, Mark Thornton states:

    "The English conquered Ireland, several times, and took ownership of vast agricultural territory. Large chunks of land were given to Englishmen… squeezing the Irish to subsistence"

    The he writes that the solution to the crisis of the famine was to;

    "Archbishop Whately–attacked today for his free-market stand–argued that the solution to poverty is investment and charity."

    Excuse me. Investment and charity? A nation robbed of its sovereignty and land and what it needed was *investment* and *charity*? Actually, what the Irish needed was *their own sovereign, democratic government,* which would have surely taken steps such as the outright seizure and redistribution of any Irish crops destined for export, followed by the destruction of property titles of any large or foreign land holders and the redistribution of 'their' land to landless Irish willing to work it. And rightfully so.

    "These price shocks made a population decline inevitable."

    And there you have it, a 'free market' apologia for genocide, as per usual.

  11. On 8 December 1845, Daniel O'Connell, in the Repeal Association, proposed the following remedies to the pending disaster. One of the first things he suggested was the introduction of "Tenant-Right" as practised in Ulster, giving the landlord a fair rent for his land, but giving the tenant compensation for any money he might have laid out on the land in permanent improvements.[44]

    O'Connell then pointed out the means used by the Belgian legislature during the same season: shutting their ports against the export of provisions, but opening them to imports. He suggested that if Ireland had a domestic Parliament the ports would be thrown open and the abundant crops raised in Ireland would be kept for the people of Ireland. O'Connell maintained that only an Irish parliament would provide for the people both food and employment, saying that a repeal of the Act of Union was a necessity and Ireland's only hope.[44]

  12. You can see that Belgium's population never decreased despite the famine:

    http://en.wikipedia.org/wiki/European_Potato_Fami

  13. I would say you have an axe to grind with imperialism, not the Free Market, and you confuse the two. It says right there:

    "Ireland was swept away by the economic forces that emanated from the most powerful and aggressive state the world had ever known. It suffered not from a fungus (which English scientists insisted was just excessive dampness) but from conquest, theft, bondage, protectionism, government welfare, public works, and inflation."

    If you say:

    "What the Irish needed was their own sovereign, democratic government, which would have surely taken steps such as the outright seizure and redistribution of any Irish crops destined for export"

    Well, if they had had their own "sovereign, democratic government" all of this would not have been a problem in the first place, right? What kind of "seizure and redistribution", which is only needed in a control economy and useful if you actually want to wreck the place, would have been needed?

    As for Belgium, I have no idea what policies they implemented or whether their policies were successful or harebrained or whether they just had a nicely functioning economy in the first place, allowing them to muddle through. Too many variables. But you cannot "shut your ports against exports and open them to imports". What are you traders going to pay with? Imports of important goods will decline, causing even worse confusion. Goods scheduled for exports will rot in the ports or have to be sold below price in the country, causing bankruptcies. Instant FDR land.

  14. If I didn't know better, I'd think Walsh talked about Ireland, not China!

  15. The key is "Balanced Trade"…. if the trade is balanced then there is no need for tarrifs.

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