The text should be readable but here's the link:
http://www.latimes.com/HOME/NEWS/COMMENT/t000057030.html
Friday, June 25, 1999
Let's Revisit Asia's 'Crony Capitalism'
Economy: America's free-trade proselytizing is the true root of what is now a
global crisis.
By CHALMERS JOHNSON
fter all the endless mouthing off in the pages of the
English-language business press about East Asia's "crony
capitalism," the lack of "transparency" in Asian stock
exchanges, the "no pain, no gain" logic of the International Monetary
Fund and how the Asian economic challenge to Anglo American
capitalism had fizzled, we now know that none of these things had
anything to do with the Asian--now global--economic crisis.
Addressing what did cause the crisis is the main business of the
leaders of the countries of East Asia as they reflect on what has
happened to them over the past two years. If they ignore this
question and pretend that the road is still open to "globalization" in the
Pacific, they risk being repudiated by their own people.
Here's the new explanation as it is developing in seminar rooms
from Seoul to Kuala Lumpur to Beijing.
With the end of the Cold War, the United States decided it had to
launch a rollback operation in East Asia if it was to maintain its global
hegemony. The high-growth economies of East Asia had become the
main challengers to American power in the region, and it was time
they were brought to heel.
The campaign worked in two phases. First, a major ideological
barrage was launched to soften up the Asians. The Americans
mobilized famous professors of economics from their universities,
who never once faced a "market force" in their own lives, to preach
the beauties of globalization; in this case meaning American
economic institutions. These include total laissez faire, destruction of
unions and social safety nets, staffing of regulatory agencies with
retired financiers, indifference to the pay differentials between CEOs
and the ordinary labor force, moving manufacturing to low-wage
areas regardless of the social costs and totally unregulated flows of
capital in and out of any and all economies. Ever since the Asia
Pacific Economic Cooperation summit in 1993, the Americans
hammered home to the Asians that they needed to "open up" their
economies in these ways.
Then came phase two. Once the Asian economies had begun to
"deregulate" and were standing in the world marketplace more or less
naked, the "hedge funds" were let loose on them. These funds are
actually huge concentrations of capital owned by very wealthy
Western white men, who manipulate bewilderingly complex financial
instruments called "derivatives." They usually locate their offices in
offshore tax havens like the Cayman Islands and do everything in
their power to avoid regulators or tax collectors in the so-called free
market democracies. The funds easily raped Thailand, Indonesia and
South Korea and then turned the shivering survivors over to the IMF,
not to help the victims but to ensure that no Western bank was stuck
with "nonperforming" loans in the devastated countries. The IMF is
also the U.S. government's chosen instrument for "reforming" these
countries to make them look more like New York.
The Americans suspected that all this might cause some trouble.
On March 4, 1998, Adm. Joseph Prueher, then commander in chief
of American military forces located in East Asia and today the U.S.
ambassador-designate to China, testified before Congress that the
U.S. military was on alert for "early signs of instability" in East Asia,
including "labor disputes." The Indonesian armed forces, whom
Prueher's special forces had been training for years, got rid of
Suharto when it seemed necessary. The Indonesian troops killed
about 1,200 shopkeepers and raped more than 150 Chinese women
doing so.
But then it all got a bit out of hand. One of the biggest hedge
funds proved to be so greedy that the U.S. government had to
organize a bailout for it, which brought the scheme out into the open.
David Mullins, a former deputy to Federal Reserve Chairman Alan
Greenspan, had gone straight to work for the Long-Term Capital
Management fund after he left the Fed in 1994. Had this not been the
case, it's unlikely that the Federal Reserve Bank of New York would
have arranged a $3.5-billion rescue package for the hedge fund. The
incestuous relationship between Washington and Wall Street--what
Columbia University economist Jagdish Bhagwati calls the Wall
Street-Treasury complex--made East Asia's crony capitalism look
tame.
The weakened economies of East Asia also could not continue to
buy the weapons the Pentagon wanted to sell them, and some began
to have second thoughts about paying to keep U.S. Marines (a.k.a.
the Hedge Fund Protective Corps) in their countries. Globalization
was discredited as a crooked financier's scam. The Chinese never
looked so clever as they did in keeping out of the World Trade
Organization as did the Japanese when they more or less ignored the
pleas for "reform" from Washington.
These issues came to a head in Kuala Lumpur in November 1998.
The U.S. trade representative, Charlene Barshefsky, accused the
Japanese of offering $30 billion in aid to the stricken countries of East
Asia as a way of buying their votes against further market-opening
measures. The Japanese foreign ministry responded that the U.S.
government was possessed by "an evil spirit," a phrase painfully close
to the evil empire epithet that former President Reagan used against
the Soviet Union. Vice President Al Gore then gave a speech in the
Malaysian capital, denouncing its head of state for trying to protect
his country from international speculators and calling on the people of
Malaysia to overthrow him. After that, APEC no longer had a future
worth speaking of.
The Americans do not seem to understand that their message of
free trade and market economics is in serious disrepute. Wall Street
itself now looks like the ancestral home of crony capitalism.
- - -
Chalmers Johnson Is President of the Japan Policy Research Institute
in San Diego. His Forthcoming Book Is "Blowback: the Costs of the
American Empire" (Henry Holt)
-- Gregory P. Nowell Associate Professor Department of Political Science, Milne 100 State University of New York 135 Western Ave. Albany, New York 12222
Fax 518-442-5298