On Sun, 15 Feb 1998 kjkhoo@pop.jaring.my wrote:
> Whatever in what I wrote merited this retort is beyond me. So
> I'll let it pass, with the exception of the last phrase...
My goodness, was my post that harsh? That was not the intent. I do
apologize if my text rubbed you the wrong way. American listserv culture
tends to be very conflict-oriented, unfortunately, in contrast to many of
the Pacific Rim cultures, where disagreements get smoothed over. I'm not
an economist per se, just a Ph.D. student in Comparative Literature, so
please don't regard me as an expert authority on anything!
> Is US economic
> policy made by Wall Street punters (is it ever made by 'punters'
> anywhere?), or is it made by the interaction between government,
> major multinationals and their lobbies?
Wall Street is clearly the dominant class fraction of American capitalism
right now. Sure, CEOs and industrial interests still have a say in what
goes on, but they don't set the central priorities. Just think of the
Federal Reserve's policy of tight money since the Eighties: this has been
a disaster for industry, but great for Wall Street. The US government has
most disinvested in education, research and development and whatnot, and
has continued to spend $280 billion a year on a useless, predatory
military establishment. Central Europe and Japan are vastly different:
German interest rates are 3%, rockbottom levels, while Japan's are barely
positive -- a huge boon to their industries. Both countries invest heavily
in education, R & D, and practice a modified state-led capitalism which
mobilizes resources for investment in industry, not finance.
> These figures, of course, don't tell the whole story. A healthy
> proportion of the exports to ASEAN went to Singapore and a good
> proportion of that was for re-export to onward destinations. A
> bit more below. But the table does suggest that your scenario of
> Japan becoming the major destination does not quite hold, at
> least for Malaysia.
True for now, though this may change in the future. But looking at the
broader trade picture, there was indeed a striking transformation in
East Asia from 1985 to 1997, namely the shift from an American-centered
export model to a much more diverse, polycentric set of trade flows.
According to the 1997 Direction of Trade Statistics Yearbook published by
the IMF, total trade (manufactured goods plus raw materials plus
everything else) between Malaysia and the other East Asian countries
reached a total of 55.8% of total Malaysian trade in 1996; by contrast,
Malaysia-US trade is only 16.8% of the total. The other East Asian
countries show similar results: Hong Kong does 63.1% of its trade with
Asia and only 14.2% with the US; Singapore does 54.9% with Asia and 17.4%
with the US; South Korea does 41.5% with Asia and 19.7% with the US. In
most of these countries, the Asian figures have been rising steadily for
some time; back in 1990, for example, Taiwan did 29.1% of its trade with
the US and 42.8% with Asia. In 1996, the comparable figures were 22% with
the US and 51% with Asia. Even Japan has experienced something similar:
back in 1990, it was almost as dependent on American markets as Asian
markets (Japan-US trade: 27.5%, Japan-Asia: 28.2%). But by 1996, all those
foreign direct investments and bank loans had changed this dramatically:
Japan-US trade is 25.4% of the total, while Japan's Asia business is now
39.2% of the total.
> Hey, you got to share this with me -- the way in which Singapore
> is tied in with UMNO's developmental state. I knew there was
> something going on with all this tap-dancing, but haven't been
> able to put my finger on it.
The 'ol Lee Kuan Yew foxtrot, you mean? A tango to the rhetorical Left,
the whack of a cane on some dissident's knuckles to the right -- all in
the name of efficiency, of course. Hey, Lee learned a lot from
Malaysia's emergency laws and the ISA: he figured out that, if you really
want to stay in power, you need state enemies. Of whatever kind.
Communists, Socialists, labor unions, whatever -- a state without enemies
is no fun at all. People might start demanding things like, well, human
rights and stuff, and then you wouldn't need a bunch of crabby, power-mad
bureaucrats getting their rocks off by jailing people for the heck
of it.
More seriously, Singapore is hooked up with Malaysia's economy, so there's
no question that if a bailout was needed, Singapore's $100 billion in hard
currency reserves would most likely be made available. Malaysia takes up
one seventh of Singapore's total trade, and Singapore has already provided
$5 billion in public assistance to the Indonesian bailout; presumably
much, much more would be provided to Malaysia, if need be. As to why this
hasn't happened yet -- well, maybe it already has, and we don't know about
it. Lee and Mahathir don't like each other -- every authoritarian leader
hates the thought of competition -- but they are good at keeping mutual
secrets, yes? After all, you wouldn't want to scare the hell out of
markets by actually saying that you're providing a bailout fund -- just
look at the South Korean won after the IMF announced its bailout, it fell
even *faster*. And don't forget, Singapore not only invests a great deal
in Malaysia, Singaporean tourists spend around 41% of all the tourist
income in Malaysia -- around a couple billion US dollars a year. My guess
is, Malaysia is in a better fiscal position than Thailand or Indonesia, so
Mahathir is trying to ride out the storm by delaying some of the big
infrastructure projects and using what reserves it has for the time being;
still, it's certainly in Singapore's long-run financial and political
interest to make sure its neighbor remains economically stable.
-- Dennis