Stuart S. Brown

Export uncertainty in centrally planned economies and administered protection

Abstract The paper examines the price decision making process of a state foreign trade organization under threat of antidumping tariffs. Given the peculiar application of the antidumping law to centrally planned economy exporters, the paper formally outlines the parameters guiding the state exporters price decision and attempts to estimate the degree of uncertainty it faces. The exporters optimal price is shown to depend on its subjective probability distributions of numerous foreign prices and alternative methodologies for calculating a centrally planned economy exporters “fair price.”

China’s Challenge

“The direction that China and US-China relations take will define the strategic future of the world for years to come. No relationship matters more — for better or for worse — in resolving the enduring challenges of our time.” So begins a thoughtful overview of China’s economic and political evolution (Bergsten et al., 2006, p. 1). If it looms so large within the 21st century power equation, how can a study of global power justify devoting merely one chapter to China’s rise? That no other (non-US) actor has merited a separate chapter seems an unsatisfactory explanation. In fact, China’s impact is evident in each theme and chapter of this book.

Microeconomic Foundations: Innovation, Productivity and Competitiveness

How do US firms and workers stack up against their foreign counterparts? Is US prosperity under siege from ever cheaper imports and production off-shoring? Does the US retain its edge in innovation? Or, if no longer Japan, is China, India or Korea poised “to eat our lunch?” In recent decades, the accelerated pace of globalization and technological change has transformed the US workplace. Concern over how to cope has focused the political dialogue on enhancing international “competitiveness.” But what does it mean for a country, as opposed to a particular firm or individual worker, to grow more or less competitive? And what are the implications for US hegemony?

Conclusion: Maintaining Hegemony

For the foreseeable future the US looks likely to remain the one and only truly global power. In extrapolating recent setbacks into a forecast of generalized, systemic decay, today’s case for decline ultimately fails to persuade. Within the global power hierarchy ascendant actors still find themselves situated well below the top rung singularly occupied by the US. Reinforcing this perception is the dustbin of successively invalidated “declinist” hypotheses (Kagan, 2012).

Global Public Goods and East Asia

Exemplifying a broad category of global public goods concerned with safeguarding human security, Chapter 5 focused on one such activity — the campaign to curb nuclear proliferation. The chapter concluded that although hardly devoid of setbacks and formidable ongoing challenges, US leadership in counter-proliferation had broadly succeeded in rendering a veritable tinderbox somewhat less explosive. Continuing with the broader theme of hegemonic stability, this chapter adopts a regional perspective on global public goods provision. Owing to its growing weight in the world economy, East Asia receives the spotlight here as a lead example of the more generalized regional impact of US power.

US Power: Past and Prologue

Evidence for US primacy used to be less contestable. Financial and strategic support from the US notwithstanding, Europe and Japan required decades to rebound from the devastation of World War II. Their later economic “challenge” eventually would succumb to the US revolution in information and communication technology (ICT), in the one case, and a protracted economic stagnation in the other. While sleeping giants India and China had self-selected out of global capitalism, US-headquartered transnational corporations roamed the world uncontested even as US manufacturing exports boomed. Systemic defects spelled, first, implosion, then dissolution, for the US’s main strategic rival, the former Soviet Union. As long as a looming threat from Islamist extremism remained beneath the radar, the Western state-centered international system appeared unassailable. The US seemed to straddle this world like a colossus — militarily, economically, politically and culturally. Yet the world, and the US’s position within it, looks rather different today compared to 1950, 1991 and 2001. Do recent shifts in the global system’s tectonic plates augur secular decline for the world’s preeminent power?

Dimensions of US Power, Decline and Overstretch

Conventional wisdom holds that the US’s global stature and impact have decisively, and irreversibly, declined. In much of the world, preoccupation has shifted from an overpowering US “empire” to incapacitating “imperial overstretch.” This chapter argues that no such qualitative degradation in aggregate US influence seems so obviously discernible. Rather, the evidence presented here corroborates Paul Kennedy’s subsequent recanting of his original thesis: “Nothing has ever existed like this disparity of power; nothing ... no other nation comes close” (2002).1

Delusions of Decline: US Global Power in a Turbulent Era

Consider the following country in the year 2030: Its overstretched military occupies several populous countries. Innovation and productivity at home have stagnated. Prohibitive trade barriers insulate its beleaguered firms from global competition while few still demand its once formidable currency. The former steady flow of immigrants has dwindled to a trickle; and students migrate elsewhere to train. Unmitigated health care inflation has overwhelmed the national finances while reliance on unfriendly creditors reaches alarming proportions. A proliferation of menacing state and non-state actors underscores the country’s diminished influence and stature.

Human Security: US Leadership on Counter-Proliferation

Among myriad transnational challenges, the threat of weapons of mass destruction (WMD) proliferation surely ranks among the more perilous. At a March 2012 summit in Seoul, President Obama laid out his longer-term vision for a nuclear free world, stating that “Nuclear terrorism is one of the most urgent and serious threats to global security” and “this is one of those challenges in our interconnected world that can only be met when we work as an international community.” Seven years earlier, Senator Richard Lugar had conducted a survey assessing the chances of a nuclear attack somewhere in the world within the next ten years. Some 60 per cent of experts placed the risk between 10 and 50 per cent (Lugar, 2005). Indeed, “it’s hard to find an analyst or commentator on nuclear proliferation who is not pessimistic about the future” (Potter and Mukhatzhanova, 2008).

Macroeconomic Foundations: Global Imbalances and the Dollar

A leading historian once equated the US economy with the dinosaur (Ferguson, 2006). Like the diplodocus or brontosaurus, it roams the earth but must “consume almost incessantly to sustain its great heft.” What caused the dinosaur’s extinction? Presumably, a sudden meteor or global climate change provided “too little time to evolve and provided smaller and more dynamic life forms with an opportunity to take over.” Analogously, excessive foreign indebtedness has rendered the US — a veritable debtlodocus — vulnerable to one or another shock and on the verge of surrendering its global status.