LET'S REVISIT ASIA'S 'CRONY CAPITALISM (fwd)

[Robert Weissman <rob@essential.org>]

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, 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)  

      After 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.