The Japan Times Tuesday, February 3, 2015 9 opinion What U.S. ‘upward mobility’? China fights deflation on its own

Yao Yang Berlin Elites replicate themselves In his speech at the 2015 World Eco- nomic Forum meeting in Davos, Chi- nese Premier Li Keqiang acknowledged Stephan Richter 2007. By the time the most recent reces- rich kids stay rich and the poor kids stay that China’s economy is facing strong Washington sion arrived, median income growth poor. Even the more famous (and more headwinds. Annual GDP growth in 2014 The Globalist had flattened for ordinary Americans so literal) form of U.S. mobility — moving was 7.4 percent, the lowest rate since much in the “good” times leading up to freely about the land in search of better 1990. But to stabilize economic growth, It is always intriguing to see an eminent it that they emerged on the other side in economic opportunities elsewhere — he pledged that China will “continue to conservative thinker get so hung up in 2012 making 10 percent less money has almost come to a standstill. pursue a proactive fiscal policy and a his own empire of thoughts that he can’t each year than they had made a full de- Many Americans, unable to sell their prudent monetary policy.” see how he ends up undermining his cade earlier. homes owing to the continuing vagaries China’s current economic slowdown own case. No question, for those who have of the real estate market or fearful of was policy-induced. During the last two A recent example is George F. Will’s made it, America still looks and feels like leaving their employer-tied health plans years, the government has tightened fis- article “ state rises as exception- the Promised Land. But there is a vast without another job already lined up, cal and monetary policy, in the hope of alism declines” [featured below]. At the flipside to all that glory — those who are are stuck where they are. They cannot offsetting the adverse effects of the large beginning of an all-Republican majority truly struggling. Supporting those in simply set out across the plains to start a stimulus package implemented in re- U.S. Congress, it is worth examining his need is certainly something that a new life. sponse to the 2008 global financial cri- argument, since it is designed to provide wealthy society like the U.S. can afford, To avoid any misunderstanding: None sis. Li’s Davos speech was intended to the sheet music from which all Republi- especially considering the high moral of what has been said above means that signal that the Chinese government will cans are meant to sing. self-perception the rich have of them- truly talented people, including immi- not allow the growth rate to slip further. Will starts out his reflection with the selves in this land. grants, cannot use the U.S. education China’s stimulus package was by far ominous assertion that “America’s na- Will also helpfully explains that Eu- and entrepreneurship system to strike it the world’s largest and most effectively tional character will have to be changed rope’s social democracy advanced since rich as the American Dream promised. implemented. It stabilized growth in if progressives are going to implement the late 19th century in large part be- But the existence of that birth advan- China and moderated the global eco- their agenda.” cause of rigid class structures blocking tage escalator for some individuals nomic contraction. But it left in its wake For a hyper-traditionalist and history upward social mobility. True. means that being wealthy is by no some serious problems for the Chinese buff like Will, this is a very quick way to But if even an arch-conservative mili- means just a question of talent and will economy. run counter to historical facts, in pursuit tarist such as Germany’s Otto von Bis- power. Most important, the country’s econo- of claiming conservative thought as the marck at the time saw the need to give Any highly developed society with my has become highly leveraged. Hous- one true American ideology of old. workers health care, accident vast pockets of wealth has its polar op- ing prices shot up, real estate developers vestment demand and thus delayed the nundrum facing China’s authorities is Memo to columnist: The United and , one must wonder posite — really poor people. And while borrowed recklessly, and local govern- fall in world commodity prices. Now that monetary expansion would merely States previously underwent a “Progres- about one question: Why are 21st-cen- Will and Co. don’t tire of beating the old ments became heavily indebted. As a re- that the fall has arrived, domestic defla- fuel a run-up in asset prices, rather than sive” era. It lasted roughly from the tury Republicans in the U.S. still trying dead “welfare state” horse yet again, sult, broad money (M2) increased tion has become a real threat, particu- resulting in higher credit flows to the 1890s to the 1920s and is associated with to prevent all Americans from having they never mention that the abuses that rapidly, and now stands at more than larly given slower domestic fiscal real economy. venerable Presidents such as Teddy similar coverage? once existed — and which they may well two times China’s GDP — one of the expansion. The blockages used to be local gov- Roosevelt, Woodrow Wilson and How- That’s a thought worth pondering at have been right to castigate a quarter highest levels in the world. That is why China’s government ernments and zombie real-estate devel- ard Taft. some length, especially since German century ago — were addressed. This flood of money rang alarm bells would do well to recall the Asian finan- opers. But that is likely to change this Given that prior episode of a clearly health care delivery, as it happens, is That rightsizing of the welfare state, for Li and President Xi Jinping when cial crisis of 1997. In response to Deng year. Borrowing by local governments delineated historical period, America’s quite cost-efficient to this day — in after all, was done by none other than they took office in early 2013. The gov- Xiaoping’s famous tour to the south, will be strictly monitored, and their new national character won’t have to be sharp contrast to the U.S. case (wholly , a Democrat, from a humble ernment has since reined in money- which provided a needed boost to the debt financing will come mainly from changed, just revert to where it once independent of Obamacare). background. supply growth and started to impose reform process, investment increased government bonds. went before. The U.S., as Will continues to believe, If there is a resurgence of the level of limits on local governments’ borrowing. rapidly in the first half of the 1990s. As a And though most observers believe Is the U.S. experiencing a rising tide of relies completely on “upward mobility transfer payments to welfare recipients Monetary expansion has decelerated. result, China’s annual rate that China’s first-tier cities (Beijing, welfare? based on merit.” But that is exactly the now, that is not due to any relaxation of The budget law has been revised to soared to an all-time high of 24 percent Shanghai, Guangzhou and Shenzhen) Echoing a recent analysis by Nicolas factor that has changed; there has been the standards under which people qual- allow local governments to issue gov- in 1994. The government’s subsequent will still struggle in 2015 to digest the Eberstadt, “American Exceptionalism a loss of economic mobility. ify for welfare. ernment bonds, and their borrowing measures to curb inflation might have huge housing stock they built up in re- and the Entitlement State,” Will also la- Americans might be confused hearing Indeed, the bar to obtain and keep from commercial banks is being closely engineered a soft landing; but the finan- cent years, some second- and third-tier ments that “America today does not look this. But according to all relevant socio- benefits remains quite high. It is not a monitored. cial crisis hit China severely, leading to cities have already reached the bottom, exceptional at all.” economic indicators developed by the welfare state fantasyland. These policies have raised capital six years of deflation. and have started to recover. The proof he sees in the data pudding OECD — where the U.S. government has Nor is it the result of some sweeping costs, with monetary tightening, in par- The main lesson of the Asian financial China is the largest trading country in is the rise in needs-based transfer pay- always played a strong hand in econom- cultural degradation foisted upon the ticular, taking a large toll on local gov- crisis — or, for that matter, of any finan- the world, prompting calls for Chinese ments throughout the land. ic data management — there cannot be good and hardworking American people ernments and real estate developers. cial crisis — is that deflation is the ulti- leaders to assume greater responsibility Will’s lament brings to mind an old any doubt that U.S. excellence in terms by “progressives,” as Will ultimately in- Because slower growth forces them to mate threat to recovery. Because the for the overall health of the global econ- adage of John Maynard Keynes: “When of social mobility is a thing of the past. sists. There is little to suggest struggling borrow new money to pay their matur- 1997 crisis was confined to East Asia, omy. China’s post-crisis stimulus pack- my information changes, I alter my con- If anything, the U.S. now excels on Americans have become newly enthusi- ing debts, interest rates are bid up, and China was able to escape deflation after age demonstrated the authorities’ clusions. What do you do, sir?” such 19th-century, rigid European fac- astic about being compelled to seek businesses in the real economy are it joined the World Trade Organization. willingness to do so. The after-effects of the recent reces- tors such as the self-replication of eco- help — including from the government crowded out, creating a further drag on But today is different. The entire world Likewise, the government’s anti-de- sion are certainly not felt in Will’s socio- nomic elites. — to make ends meet. growth. is in the grip of deflationary forces. If flation effort will help not only China, economic circles, not least thanks to the Of the OECD economies with income Rather, a regrowth of transfer pay- Meanwhile, producer prices have China enters the vortex, its trade part- but the rest of the world as well. Federal Reserve’s QE program, which data similar to that of the U.S., American ments is a pure function of some obvi- been falling, while consumer prices are ners will not be able to pull it out this boosted the stock market wealth of social mobility ranks near the bottom. ous and adverse economic flat. So, like much of the rest of the time. So the key question for China’s Yao Yang is dean of the National School of those happy few Americans with such There is a relatively high correlation developments. world, China is facing the risk of defla- government is whether the country can Development and director of the China assets in bulk. (0.47) between the earnings of U.S. par- It takes real will and determination tion. Indeed, global deflationary pres- do so on its own. Center for Economic Research at Peking But even as the 2008 recession hit, the ents now and the subsequent earnings not to see the facts for what they are. sure would have emerged much sooner The proactive fiscal policy that Li University. © 2015 Project Syndicate top 1 percent of Americans had already of their children as adults. Sadly, like Will, the new Republican had China not launched its two-year pledged at Davos will help, but mone- (www.project-syndicate.org) captured 23 percent of the national in- Neighboring Canada, for example, Congressional majorities are more likely stimulus plan in 2008, which boosted in- tary policy also needs to change. The co- come, up from just 9 percent in 1976. has a much lower correlation (0.19), in- to operate on poverty theories grounded Meanwhile, the average household’s an- dicating that poorer children are much in such avoidances than to confront the nual income growth has been slowing more likely to become wealthy adults challenges with real solutions. with each recovery. there than in the U.S. ‘Selma’ and the biopic perversion of history For much of the 1980s, it was 1.7 per- It is as if the “American Dream” has Stephan Richter is the publisher and cent a year, then 1.4 percent a year in the migrated up north, to become a “Cana- editor-in-chief of The Globalist. 1990s and then 0.2 percent from 2002 to dian Dream.” In the U.S., in contrast, the as reluctant to support civil rights would Alyssa Rosenberg of The Washington TED have been accurate — that he had the Post repeatedly calls “Selma” “fiction.” RALL chance to push through both the Civil To her, apparently, film is always fiction. Rights Act of 1964 and the Voting Rights But it’s not. Like books, film is a medi- Welfare state rises as exceptionalism declines Act of 1965, which he did aggressively um. Film can be nonfiction. Film can be and quickly, despite what he famously fiction. ed payments. Food stamp recipients in- more than $1 out of every $6. New York predicted would be the loss of the South “Califano’s approach,” she writes, “be- george creased from 19 million to 51 million, Causation works both ways between to the Democratic Party for a generation sides setting a odd standard for how fic- will more than the combined populations of the rapid increase in family disintegra- Movies are the historical record. Ameri- or more. tion ought to work … suggests that we 24 states. tion (from 1964 to 2012, the percentage cans experience the by Johnson gave J. Edgar Hoover’s FBI should check fiction for inaccuracies.” What has changed? of children born to unmarried women watching “Apocalypse Now,” slavery in too much latitude, which Hoover used As usual, the crux of the debate boils Not the portion of the estimated pop- increased from 7 to 41) and the fact that, “12 Years a Slave,” and D-Day through to harass King, but there’s no evidence down to an inability to agree on defini- Washington ulation below the poverty line (15.2 per- Eberstadt says, for many women, chil- “Saving Private Ryan.” A lot more Ameri- that, as the movie depicts, it was LBJ tions of terms. For those like Rosenberg cent in 1983; 15 percent in 2012). Rather, dren and even working-age men, “the cans watch historical movies than read who ordered Hoover to send audiotapes who believe that everyone knows mov- America’s national character will have to poverty programs have become unte- entitlement state is now the breadwin- history books. Which, when done well, of King having sex with other women to ies are just for fun, it doesn’t matter that be changed if progressives are going to thered from the official designation of ner of the household.” is not a bad thing. his wife. And let’s be clear: every impor- “Schindler’s List” depicts showers at implement their agenda. poverty: In 2012, more than half the re- In the past 50 years, the fraction of ci- I’ve read countless books about the tant conversation in the Oval Office was Auschwitz spraying water rather than So, changing social norms is the pro- cipients were not classified as poor but vilian men ages 25 to 34 who were nei- collapse of Nazi Germany, but the bril- being taped. We have the transcripts. We Zyklon B — even though that never hap- gressive agenda. To understand how far accepted being treated as needy. ther working nor looking for work liantly acted and directed reenactment would know if that had happened. pened, and thus serves to understate this has advanced, and how difficult it Expanding dependency requires eras- approximately quadrupled. of Hitler’s last days in his Berlin bunker Califano takes his defense of his for- one of the horrors of the Holocaust. will be to reverse the inculcation of de- ing Americans’ traditional distinction Eberstadt believes that the entitle- depicted in the masterful 2004 German mer boss too far when he says “[the To the all-movies-are-fiction crowd, pendency, consider the data Nicholas between the deserving and the unde- ment state poses “character challenges” film “Downfall” can’t be beat. march on] Selma was LBJ’s idea.” Other- “Zero Dark Thirty” is cool despite its Eberstadt deploys in National Affairs serving poor. because it powerfully promotes certain When a film purports to depict a his- wise, the facts are on his side: The LBJ in completely false claim that torture led to quarterly: This distinction was rooted in this na- habits, including habits of mind. These torical event, it becomes the only ver- “Selma” is not the LBJ whom King knew. the assassination of Osama bin Laden. America’s welfare state transfers more tion’s exceptional sense that poverty is include corruption. sion of what most people believe really Fans of the film argue it doesn’t matter. “This is art, this is a film,” director Du- than 14 percent of gross domestic prod- not the unalterable accident of birth and Since 1970, Americans have become happened. “Did ‘Selma’ cut some corners and Vernay told PBS. “I’m not a historian. uct to recipients, with more than a third is related to traditions of generosity aris- healthier, work has become less physi- So, as we move further into a post-lit- perhaps tilt characters to suit the needs I’m not a documentarian.” of Americans taking “need-based” pay- ing from immigrant and settler experi- cally stressful, the workplace has be- erate society, misleading historical film- of the story? Why yes — just like almost That’s sleazy. Truth is, her film is ments. In our wealthy society, the gov- ences. come safer — and claims from Social making isn’t just a waste of 2½ hours. every other Hollywood biopic and his- being marketed as fact, as she knew it ernment treats an unprecedented Eberstadt’s essay, “American Excep- Security Insurance have in- It’s a crime against the truth. torical film that has been made,” the would be, and doing better because of it. portion of the population as “needy.” tionalism and the Entitlement State,” ar- creased almost sixfold. The Ava DuVernay-directed film media writer David Carr writes in The Audiences need a ratings system to Transfers of benefits to individuals gues that this state is extinguishing the Such claims (including fraudulent “Selma” is at the center of controversy New York Times. separate films that purport to recount through social welfare programs have former. ones) are gateways to a plethora of other due to its semi-snubbing by the Oscars Yes, in a movie the story is the thing. actual historical events from those like increased from less than 1 federal dollar America “arrived late to the 20th-cen- payments. — viewed as backtracking from last It’s hard to imagine “The Queen” — “Selma,” which are fictional tales using in 4 (24 percent) in 1963 to almost 3 out tury’s entitlement party,” although the Daniel Patrick Moynihan, a lifelong year’s relatively racially diverse choice of about the inner workings of the British historical figures as hand puppets. I sug- of 5 (59 percent) in 2013. welfare state’s European pedigree traces New Deal liberal and accomplished so- nominees — and accusations that it monarchy and its relationship to then- gest that the MPAA institute the follow- In that half-century, entitlement pay- from post-1945 Britain, back through cial scientist, warned that “the issue of plays loose with history. Prime Minister Tony Blair in the after- ing ratings: ments were, Eberstadt says, America’s Sweden’s interwar “social democracy,” welfare is not what it costs those who Former Lyndon B. Johnson aide and math of the death of Princess Diana • Rated H for Historical: a film that “fastest growing source of personal in- to Bismarck’s late-19th-century social provide it but what it costs those who re- Democratic Party stalwart Joe Califano — working without a lot of made-up di- makes a good faith effort to recount his- come,” growing twice as fast as all other insurance. ceive it.” fired the first shot with a Washington alogue between the principals. Howev- tory accurately. real per capita personal income. European welfare states reflected Eu- As a growing portion of the popula- Post op-ed. “Selma,” wrote Califano, er, the great detail of these obviously • Rated S-H for Semi-Historical: a film It is probable that this year a majority ropean beliefs about poverty: Rigid class tion succumbs to the entitlement state’s “falsely portrays President Lyndon B. private conversations signals to the au- that relies on devices like made-up dia- of Americans will seek and receive pay- structures rooted in a feudal past meant ever-expanding menu of temptations, Johnson as being at odds with Martin dience that they don’t come out of a logue and encounters, but whose basic ments. meager opportunities for upward mobil- the costs, Eberstadt concludes, include a Luther King Jr. and even using the FBI to transcript, and that we must be witness- plot line reflects history to the best of This is not primarily because of Social ity based on merit. transformation of the nation’s “political discredit him, as only reluctantly behind ing a fictionalized account. our knowledge. Security and transfers to an People were thought to be stuck in culture, sensibilities and tradition,” the the Voting Rights Act of 1965 and as op- There comes a point, on the other • Rated H-F for Historical Fiction: a film aging population. Rather, the growth is neediness through no fault of their own, weakening of America’s distinctive “con- posed to the Selma march itself.” hand, where so many corners get cut in which anything, including the basic overwhelmingly in means-tested enti- and welfare states would reconcile peo- ceptions of self-reliance, personal re- He’s right. and so many characters get tilted that a plot, can be made up out of whole cloth. tlements. ple to intractable social structures. sponsibility and self-advancement,” and Robert Caro’s magisterial four-volume film ceases to resemble history and en- If the movies are going to lie to me, I More than twice as many households Eberstadt notes that the structure of perhaps a “rending of the national fab- biography of Johnson portrays him as a ters the territory of complete fabulism deserve to know before shelling out my receive “anti-poverty” benefits than re- U.S. government spending “has been ric.” As a result, “America today does not deeply flawed man, but one whose pas- and, in the case of “Selma” and LBJ, ret- $12.50. ceive Social Security or Medicare. Be- completely overturned within living look exceptional at all.” sion to push for desegregation and an roactive character assassination. tween 1983 and 2012, the population memory,” resulting in the “remolding of end to discrimination against blacks in- The clash between MLK and LBJ — Ted Rall, syndicated writer and cartoonist, increased by almost 83 million — and daily life for ordinary Americans under George F. Will writes a column on politics formed his political career throughout King pushing, Johnson resisting — isn’t is the author of the new critically people accepting means-tested benefits the shadow of the entitlement state.” and domestic and foreign affairs. He his life, though it wasn’t always obvious merely some extraneous detail of the acclaimed book “After We Kill You, We increased by 67 million. In two generations, the American received the Pulitzer Prize for commentary to his detractors. script in “Selma.” It’s the main plot of the Will Welcome You Back As Honored So, for every 100-person increase in family budget has been recast: In 1963, in 1977. © 2015 It was only after John F. Kennedy’s as- film. It didn’t go down like that, yet Guests: Unembedded in Afghanistan.” the population there was an 80-person entitlement transfers were less than $1 Writers Group sassination brought Johnson to power thanks to this film, a generation of © 2015 Ted Rall increase in the recipients of means-test- out of every $15; by 2012, they were — actually, a movie portraying Kennedy Americans will grow up thinking it did.

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