Waiting for China re: N Korea is like Waiting for Godot – My JoongAng Daily op-ed


I published an op-ed in the JoongAng Daily today, which this post re-prints.

Basically my argument is that China will increasingly be singled out and globally embarrassed for enabling North Korea if the post-comfort women deal cooperation between South Korea, Japan, and the US holds. If the democracies can work as a team on North Korea – finally! – and if we drop Russia from our regional analyses – as we should because Russia plays no role other than occasional spoiler regarding North Korea – then the game basically boils down to China on one side and the democracies (SK, Japan, and the US) on the other, meaning China stands out globally as North Korea’s protector.

All the Chinese obfuscation of the Six Party Talks or ‘regional solutions’ is falling away. It is now painfully obvious that China alone now is what is keeping North Korea afloat, allowing it to escape the worst pressures of all the sanctions piling up, and arguably even preventing it from collapsing by providing so much informal aid to North Korea. And by aid, I don’t just mean direct shipments of rice and fuel; I also mean the access to the outside world that allows Pyongyang to get luxury goods, use dollars, traffic its illicit production, and so on.

So let’s keep the democracies working together in a common front on NK. That is huge progress, and it shines a very clear spotlight on China now as NK’s last, only enabler. The sheer embarrassment of that is bound to impact prestige-conscious Chinese elites going forward.

On this issue of Chinese attitudes towards North Korea, Leif-Eric Easley, a friend from Ewha University in Seoul, just published a nice academic article on this. If I read Leif right, he’s even more pessimistic that China will change on North Korea than I am.

My full op-ed follows the jump.

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Admit it: South Korean President Lee Myung-Bak Was Pretty Good


So President Lee has been out of office for a bit now, and the retrospection will begin soon. And while he left with really low approval ratings, I always thought that was pretty unfair. I am pretty sure history will be kinder to him than the SK public was during his tenure. Particularly the growing critique on the South Korea left that current President Park Geun-Hye’s many staffing gaffes means she is out of her depth also suggests that LMB was at least ready and professionalized enough for the responsibilities of the office. The essay below is a longer version of an op-ed I wrote for the JoongAng Daily.

In passing, I should say that yes, I am aware that this is the sort of column that drives folks like Glenn Greenwald, whom I really admire, up the wall. If you’re convinced, like my students, that I’m a conservative pretending to be a moderate, here’s your evidence. Call it shameless right-wing hackery, sycophantic shilling for the powerful, craven attention-seeking, but it’s also true: Lee Myung Bak was a lot better than most Koreans give him credit for and is probably Korea’s best president in its democratic history.

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My ‘JoongAng Daily’ Op-Ed: Don’t Fear Abenomics, Korea


A few weeks ago in the JoongAng Daily, I co-authored the following editorial. (My co-author is one of my finest students, who can be found here on Twitter.) The temperature is rising in Korea on Abenomics. The government is coming out strongly against it, but I still think the basic arguments we present below are undamaged.

In brief, Abenomics is important because Japan is the world’s third largest economy and therefore systemically (i.e., globally) important (Korea is not; it’s too small). So Japan’s reflation is about a lot more than just Japan; it impacts the region and the globe. Also, the Korean won is ridiculously undervalued and the Bank of Korea has itself gimmicked the won exchange rate a lot in the past, so it’s not exactly fair for Korea (or China, who is even worse) to complain. Finally, in the medium-term, a functioning Japan is far more in Korea’s interest than Korea’s nationalist japanophia will allow anyone here to admit. That is a shame. I’ve argued this a lot, but no one listens.

So bring on the K-hate-mail, but please do recall that I have already rejected Abe the nationalist. Koreans are absolutely right about the comfort-women and Yasukuni. But Abenomics is not about history; it is a last-ditch, throw-everything-including-the-kitchen-sink effort to get Japan on its feet again so that it can prevent Chinese primacy in Asia. Keep your eye on the big picture of South Korea’s interest, and a few lost sales of Samsung TVs to Canadians pale in comparison.

Just to avoid referencing Abe again – he’s become such a lightning rod in Korea – the picture is Hiruhiko Kuroda, the (awesome) governor of the Japanese central bank. (Someone form the Bank of Japan really ought to be put in charge of the IMF one day soon.) I’d like to think Kuroda’s hand reference in the pic means he wants to dectuple the Japanese money supply. Hah! – ‘Just wait a year, PM Abe, and I will chop down every tree in Japan and print so much cheap yen, that we’ll wallpaper our houses with it!’ Think of Kuroda as the flip side of Paul Volcker. If Japan’s economy weren’t such a mess, it’d actually be kinda funny. But honestly, let’s all – Koreans included – hope Abenomics works.

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Iraq 10 Years Later (3): Why the Neocon Theory behind the War Failed


Here are part one and two of this post.

The arguments below expand on my second recent JoongAng Daily op-ed on the Iraq war.

My first post on the Iraq War asked if academic IR had any responsibility to slow the march to war.

The second tried to formulate what the   neoconservative theory of the war was, because many of us, in retrospect of a conflict gone so badly, desperately want to un-remember that there really was a logic to the war, that it was at least somewhat intellectually defensible, and that a lot of us believed it. We may want to retroactively exculpate ourselves by suggesting it was just W the cowboy acting ridiculous, or a neocon hijacking of the policy process, or Halliburton oil imperialism, and all the other reasons so popular on the left. And some of that is true of course.

But it ducks the crucial point that the war was popular until it flew wildly off-the-rails, which in turn revealed the staggering incompetence of the Bush administration to act on the neocon logic the country had embraced by March 2003. In short, I argued that the Iraq invasion was not about WMD, preemption, or democracy, although that rationale was played up in the wake of the failure to find WMD. The real neocon goal was to scare the daylights out of the Arabs and their elites by punching one of their worst regimes in the face, thereby showing what was coming to rest of the region unless it cleaned up its act, i.e., crack down on salafism and liberalize so as to defuse the cultural extremism that lead to 9/11. (Read Ajami saying in January 2003 that the war is ‘to modernize the Arabs;’ that’s about as a good a pre-war summary of this logic as you’ll get.)

So what went wrong?

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Iraq 10 Years Later (2): What was the Neocon Theory behind the War?


This post is in three parts; here are one and three. I published a laymen version of the following arguments (part two) in my recent JoongAng Daily op-ed.

My first thoughts on the war’s ten year anniversary are here. There I asked if there was any defensible theory behind the war, anything that might explain what why we launched the war, because weapons of mass destruction were not really the reason. Paul Wolfowitz notoriously admitted they were just a pretext to rally the country behind the invasion. And it wasn’t really about pre-emption either; Iraq was hardly a looming military threat in 2003. So here’s my guess of the real neoconservative logic. I should say up front, I do not endorse this rationale. I’m just trying to lay it out what I think neocons were saying to each other in 2002:

The Iraq invasion was to serve two purposes. 1) It was to be a demonstration strike against the Arabs. Gulf anti-western pathologies lead to 9/11, so the Iraq invasion was a warning to Arabs, and Muslims generally, to never to attack the US like that again. As Cheney put it in the film W, ‘don’t ever f— with us again.’ 2) It was to be a hammer strike to break the frozen, horribly dysfunctional Arab political status quo which generated those pathologies; this would force the region toward democracy it would never attain on its own. This thinking was summarized in the widely used expression at the time, ‘drain the swamp.’

A lot of people will (and did) accuse the neocons of orientalism, racism, and US hegemonic arrogance. Nevertheless I’ve always thought this neocon argument was somewhat convincing to most Americans, especially the GOP. I’ve always thought it was the horribly botched execution of the war (‘fiasco’), not the idea itself of ‘draining the swamp,’ that cost the invasion American public opinion support. I also don’t think the neocon argument was ever properly made to the US public, probably because it sounds both orientalist and hubristic. This is not the sort of argument the Bush administration could make out loud; WMD was much easier to sell and far more direct, as Wolfowitz noted. But I think if you read neocons like Kristol, Krauthammer, Gerecht, or Podhoretz, as well as high profile area experts like Thomas Friedman, Fareed Zakaria, or Bernard Lewis, or the right-wing thinks-tanks that supported the war (AEI, Heritage, Foundation for Defense of Democracies), this is what you heard. (For example: this, this, this, this, or this). I once participated in the FDDs’ terrorism fellowship program, and this was pretty much the line we got.

So you may not like the argument, but at least there is one. The war cannot just be dismissed as US imperialism, an oil grab, or a PNAC/neocon cabal, which I think was too often the default position on the left, especially in Europe, during the war. Opponents should rebut this and not just stick to deriding W the swaggering cowboy, fun as that may be.

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Economist 2012 Conference on Korea: Foreign Ownership in Korea


Each year in September, the Economist holds a conference on the Korea economy (a part of its Bellwether series on Asian economies). They invite me to come, and then I try to write up my thoughts on it in the JoongAng Daily as an op-ed. Each year, unfortunately, we seem to argue about the same things – a proper, untweaked float of the won, and the openness of the Korean economy to foreign products and owners. Here are my thoughts from 2010 and 2011. I was so busy in the last few months on this site with the US election and other stuff, that I didn’t get a chance to reprint the JAI op-ed. But I like it, so here is the link, and here is the text itself:

“Last week the Economist magazine held its annual conference on Korea’s economy. This series is rapidly becoming the most important regular discussion in Korea for Korea’s foreign investors. Last year in these pages, I was critical of the Korean speakers’ response to foreign concerns. This year was an improvement. The finance minister particularly fielded a tough question about foreign investors’ rights in Korea in the wake of the Lone Star debacle. To his credit, he admitted what many already know from that case – that the Korean public is deeply ambivalent about substantial foreign profit-taking and ownership of major Korean assets.

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North Korea as ‘Kim-Land’: My Op-Ed on NK in the JoongAng Daily

JoongAng Ilbo

Yesterday, the JoongAng Daily printed an column by me about my trip to NK. Here is the link and column is reprinted after the jump. This condenses my earlier thoughts on my trip and adds some political analysis.

In passing, I should say that I find the JA the best newspaper in Korea – and no, not just because they publish my stuff every couple months (although that helps) Smile.

For readers who don’t know the Korean media scene, the JA is like the Economist in Korea – centrist, neoliberal, intelligently hawkish on foreign policy, sane on social issues. This is why I send my stuff to them. The biggest newspaper in Korea by circulation is to the right, the Chosun Ilbo. The third big paper is to the left, Hankyoreh. I find the Chosun ok, but sometimes it can sound like Fox News, and I dislike its obsessive, Korea’s-status-in-the-world-is-rising!!! nationalism. But the far-too-soft-on-Pyongyang Hankyoreh I frequently find downright disturbing, as it comfortably trafficks in the worst conspiracy theories like poisoned US beef in Korea or a cover-up of the Cheonan sinking. So if you are researching Korea, stick to the JA first, and then CI.

(So yes, my politics are broadly center-right, even though I seem to criticize the US GOP relentlessly on this site. One thing I like about SK is that its conservatives are in fact conservative, not radical, as the Tea Party made the Republicans. Generally speaking, I find the SK right to be responsible and moderate most of the time. That’s so refreshing. Don’t you miss having sane conservatives back home?)

Ok, here’s the op-ed:

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More on US Allies: America’s ‘Exorbitant Privilege’ means it can borrow to Sustain Hegemony Longer than Anyone Ever Expected


This post expands ideas which were published in my recent JoongAng Daily op-ed.

Two of my posts this week (one, two) on hypothetical retrenchment under Ron Paul got a lot of traffic and comments. Hat-tips go to Andrew Sullivan and Stephen Walt for citing me; if you don’t read Walt and Sullivan already, you should. Given the large numbers of comments, both here and elsewhere, I thought I would try to capture some of the concerns generally. This post focuses on the surprisingly low likelihood of retrenchment; a second, in a few days, will look at specific countries mentioned by commenters.

The OP was intended as an emergency exercise if the US were to face a truly significant crisis that forced retrenchment. The purpose was to ask who are the most important US allies and commitments if we were forced to choose. Right now, the US is not choosing. We are all over the place; if anything, we are taking on more commitments (Iraq, Afghanistan, Pakistan, Yemen, the Asian pivot). As I tried to say in the second post, I don’t think we are about to pull out of Japan or Egypt, but if we get to the point where we really can’t afford globe-spanning hegemony anymore, it would be help to try to prioritize what is genuinely strategically necessary, from what are ‘extras.’ One doesn’t hear this much, except for Ron Paul, whose debate performances motivated the post.

On this point, I should say that the bifurcation of the OP into two parts was not to indicate the those in part 2 should get the axe; it was just a matter of convenience. The point of the OP was to try to force a ranking – who is more important to the US than who? This is why I tried to limit the listees to a conventional ‘top 10.’ To go beyond that tight focus, would get us back into the global alliance sprawl the US is in now.

The above point raises the next, obvious question about whether we are therefore getting to a point of forced US retrenchment. There is a whole declinist literature that emphasizes long-term US problems, like atrocious public finances, too many wars, bad public schools, political gridlock, rising anti-Americanism in the world, etc. Zakaria’s ‘post-American world’ captures are lot of this, and apparently the Chinese believe the US is in decline too. Probably the best I can think of at the moment is Gideon Rachman’s take.

I go back and forth on this myself. The economist in me finds it hard to imagine how the US can borrow $1-1.5T a year and stay on top. We’re borrowing around 9% (!) of GDP per annum, and the IMF calculates America’s debt-to-GDP ratio is 100% already (if you include state debts; it’s 75% now at just the federal level.) I wonder how we can fight so many wars without national exhaustion and diversion of investment from domestic priorities like infrastructure or health care. Signal markers in the decline and fall of empires are heavy borrowing and lots of wars which sounds a lot like us, no?

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Economist Magazine Conf. on Korea (2): Import Competition Needed!


Part one is here, where I argued that Korea is too mercantilist-corporatist and that Korean consumers carry the costs of that statism with their 155% household debt-to-income ratio. I published an op-ed based on these posts also, at the JoongAng Daily here.

b. When the idea of Korean banks functioning globally arose, the Korean speakers argued for a mega-bank so that Korea could ‘compete’ and support its MNCs overseas. Again the idea that Korea as entity must compete against other states and ‘their’ MNCs is a fundamentally mercantilist notion. Korea is not competing against anyone, in the liberal view. Firms compete, and consumers, as rational buyers weighing quality against cost, should not buy ‘nationalistically.’ No one said anything like this: that Korea’s banks should simply evolve as they pursue profitability and if some of them M&A into a mega-bank, then ok. Instead, the state officials (not private bankers) were saying Korea needed a ‘mega-bank.’ Sounds an awful lot like another flag-carrying national champion, like Samsung, or Air France, with lots of cheap government capital and buddies in the bureaucracy, no? One of the Economist hosts thankfully had the temerity to call this a ‘vanity project.’ Hah! That was the most insightful line of the day.

c. Next up was was the limits on foreign penetration into the Korean bond market. Preventing foreigners from buying your debt is a classic form of financial mercantilism. The Japanese have been doing this for years in order to retain the yen as an autonomous domestic policy tool. This is why Japan’s debt-to-GDP ratio is the highest in the world, but its bond rating stays high – all that debt is ‘in-house.’ The Japanese refused to internationalize the yen, because that means foreigners, especially Wall Street and the IMF, get a bigger say in how you run your economy. Witness the Greece meltdown today, and the increasing usurpation of Greek economic autonomy by Germany, the ECB, and the IMF, because so many foreigners own Greek debt. Nationalist-statist Asians would never permit that level of internationalization. They are too obsessed with sovereignty to resolve the ‘trilemma’ with Friedman’s ‘golden straightjacket.’ The Chinese also do this – selling bonds to domestic firms and banks at ridiculously low interest (so treating Chinese depositors as a slush fund for cheap capital) and preventing the RMB from off-shoring. And Korea does it too. It has repeatedly been kept off the World Government Bond Index, because of its ‘macroprudential capital controls’ – a euphemism for the ROKG’s closure of the kimchi bond market when too many foreigners started buying them because the won is undervalued.

d. Another missed opportunity was inflation. Korean inflation is now over 5%! That is twice the Bank of Korea’s (BoK) target. There is strong suspicion that this is coming from ROKG F/X ‘fine-tuning’ – pardon me – ‘smoothing.’ Among other things, Korean consumer spending is not exploding and so pushing up prices. In fact, it is the opposite, because Korea’s consumer debt (155% of income) is one of the highest in the world. Nor is the BoK monetizing Korea’s debt, another fairly typical inflation-accelerator. Korea’s debt and deficit are low and under control. This suggests that F/X fine-tuning/smoothing/whatever you want to call competitive devaluation (ie, buying dollars and selling won) is what is driving up the money supply. Yet the speakers told us that inflation had to be balanced against growth, i.e., don’t expect an big interest rate hike. This sentiment makes sense in the low-growth US or euro-zone, but not 4%-growth-a-year Korea. So Korean consumers once again get the shaft with a depreciating currency coupled with crushing personal debt. Tell me again that Korea is not a corporate oligarchy punishing consumer and SMEs to reward mega-exporters?

In the end, the back-and-forth was too congenial, allowing too many of the speakers to spin and duck hard issues. Last year I thought the questioners pushed Korean officials a lot harder. It was disappointing this time, maybe because the officialdom level was higher this time. Who wants to publicly challenge the finance minister? Last year was indirectly revealing for the way Korean officials bobbed-and-weaved to avoid answering hard questions about capital controls. This signaled pretty clearly that they were in fact competitively devaluing the won.

This year, no one really tried much. I pushed a bit. I asked a troublesome question – does the Korean government sterilize the won’s appreciation at the behest of Korea’s big exporters? (The right answer is yes.) I have written about this before (here and here), and variants of this question were asked last year too. But my official didn’t try hard. It was spin; he didn’t even make reference to the chaebol in his answer, even though lots of people in the room were convinced (because variants of my questions popped up all day) that they they are the ones pulling the F/X strings to keep export prices low. But no one answered it really. In fact, not one Korean speaker even used the word chaebol the whole day, which left me bemused and disappointed.

The most courageous question came from a Korean who asked a panel point-blank if Korea had the creativity and openness to foreigners necessary to really grasp globalization. This is a major issue; I argued last year that cultural hesitation, not technical or ideological barriers, is the real hurdle to the internationalization of the won. Yet none of the Korean panelists even blinked. A fog of silly disconfirmations about the creation of Hanguel or the (supposed) global popularity of K-pop and Korean food were thrown out to suggest Korean is a creative open economy. Yawn. At that point I overheard the Economist guys talking about how the same issues come up year and again regarding international finance and Korea, but nothing seems to happen. Exactly.

Economist Magazine Conference on Korea 1: Not Quite an Open Economy


The ideas in this post and the next expand on the arguments made in my recent JoongAng Daily op-ed.

Every year the Economist runs a series of conferences on the political economy of Asia. If you are in this part of the world, you should probably go if you can. Here is the link for this year’s on Korea, and here is my review of last year’s. I thank the Economist‘s East Asia staff for inviting me. They are generous enough to realize that academics could never find the $1000 door fee. Sigh. It’s fairly embarrassing to the profession that we have to be comp’d in order to get into these sorts of things. And it is a good reminder that when it comes to the real world and stuff that matters (ie, money), professors scarcely matter. 😦 As with last year, I found it ‘maturing’ to sit in a room with very wealthy people, in very nice suits, focused on the very serious business of making lots of money. ‘Plutonomy’ is pretty imposing.

The Korean line this year from the officials present, including the finance minister, was that Korea is a “small and open economy.” This is manifestly untrue, by OECD standards of openness, and it was disheartening to see so little honesty about how deeply intertwined the Korean government is in the economy. The people from Moody’s in the lobby were even handing out a report about Korea’s ‘public policy banks.’ There is a lengthy political economy literature on Korean statism, and for those who like the idea of state intervention in the economy, Korea is a widely used example. Korea is better defined as small and corporatist, with latter deployed to overcome the former. Korea is sharply divided economy with tight but large conglomerate bloc at the top (the chaebol) overawing the rest of the economy. These firms get such generous access to the state, and its budget and moral approval, that Korea, Inc. is more liberal corporatism than liberalism. And Korean consumers, with debt at 155% of household income (one of the highest ratios in the world), pay out the nose to prop of this oligarchy.

Industrial policy is a reflex here; I see it all the time. Every time I ask my students about some change in the Korean economy, their first response is to say the government should do this or that about it. I get paper after paper about how the government should spend on this or that critical or strategic industry, or how Korea must outcompete Japan, or how the Korean government should ‘lead/guide/administer/direct/run’ the economy. I almost never get liberals in my classes, although to be fair, when I get Japanese and Chinese students, they talk the same way. Korean academics at conferences here are similar. I almost never hear the run-of-the-mill liberal notion that the economy should simply evolve as it will, without direction from the state. When I tell my students that the American car industry deserves to take a beating for making poor vehicles, they look bewildered. When I tell them that Apple should have pounded Samsung in the smart phone wars, except that the ROKG kept the iPhone out with NTBs for 2 years, they tell me that was a good thing. When I tell my students that the jeonse security deposit system doesn’t exist in the US, and that even lower middle class Americans can afford to move out during college, they are amazed. (The jeonse system is one of the most regressive, upwardly redistributive, oligarchy-reinforcing,  middle class-crushing elements of the Korean economy.) And indeed you could see the mercantilist reflex all over the conference, even though no one wanted to say it.

a. When the issue of exchange rates came up, the same division as last year of foreigners vs. Koreans arose. The Korean speakers all defended the interventionist notion that Korea had to ‘compete’ with yen and the dollar, and should value the won against them. That pegging like this is in fact exchange rate manipulation (as the Japanese FinMin said last week) was simply not admitted. That is it unnatural for Korea’s economy to grow faster than the US and Japan while the won does not appreciate meaningfully against their currencies was unanswered. I saw Bernie Lo on MSNBC a few weeks ago note that Korea has grown 4x faster than the US in the last 2 years, but the currency has appreciate by just 10% or so. Wow; that’s so unnatural, it can’t possibly be explained without targeted intervention. Not one speaker defended the liberal notion that Korea’s currency should simply float; in fact, I am not sure I even heard the word ‘liberal’ or ‘float’ the whole day. Last year, the euphemism for such competitive devaluation was ‘fine-tuning;’ this year it was ‘smoothing.’

b. When the idea of Korean banks functioning globally arose, the Korean speakers argued for a mega-bank so that Korea could ‘compete’ and support its MNCs overseas. Again the idea that Korea as entity must compete against other states and ‘their’ MNCs is a fundamentally mercantilist notion. Korea is not competing against anyone, in the liberal view. Firms compete, and consumers, as rational buyers weighing quality against cost, should not buy ‘nationalistically.’ No one said anything like this: that Korea’s banks should simply evolve as they pursue profitability, and if some of them M&A into a mega-bank, then ok. Instead, the state officials (not private bankers) were saying Korea needed a ‘mega-bank.’ Sounds an awful lot like another flag-carrying national champion, like Samsung, or Air France, with lots of cheap government capital and buddies in the bureaucracy, no? One of the Economist hosts thankfully had the temerity to call this a ‘vanity project.’ Hah! That was the most insightful line of the day.

Part two of this post is here.