Dominoes - Russia? Korea? Japan? And China?

[Wendell W. Solomons]

 '\_
 {"o_  Greetings folks ! Pls post this text on if
,(_)   you recollect someone following the theme.
 -"-

Jerry Hough made this comment on 14th April:

"Yeltsin has got himself in a box ...'

"One wonders if he will make the astonishing judgment that his
safest course is actually to institute a policy that the Duma
and population could support. Larry Summers is once more saying
that the US opposes such a policy, this time on an official VOA
editorial of US government position. Even God is not smart
enough to know why."

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Here's an excerpt from a recent VOA editorial
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VOICE OF AMERICA DATE=APRIL 9, 1998 TITLE=EDITORIAL: RUSSIA
SHOULD AVOID ASIAN MODEL

U.S. DEPUTY SECRETARY OF THE TREASURY LAWRENCE SUMMERS RECENTLY
CAUTIONED RUSSIA AGAINST THE MODEL SOME ASIAN STATES HAVE
FOLLOWED. THAT MODEL FAVORS THE CENTRALIZED COORDINATION OF
ECONOMIC ACTIVITY OVER DECENTRALIZED MARKET INCENTIVES. IT ALSO
INVOLVES GOVERNMENT TARGETING OF PARTICULAR INDUSTRIES. THE
RESULT HAS BEEN WHAT SOME CALL "CRONY CAPITALISM.

RUSSIA'S NASCENT CAPITALISM HAS EXHIBITED SOME OF THESE
TENDENCIES."

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Could we have some accountability here? Six years is too long
to come home and complain of tendencies; I personally sent Lawrence
Summers a 3000 word text in July 1992 plus several faxes to warn
him of the consequences of divesting public property in Russia in
an unprepared market. Then Chief Economist of the IBRD, two letters
of Summers' subordinates are in my desk drawers.

Summers exposes himself more to inquiry for act of commission or
ommision. We have reached the stage of studying the results and
there is testimony from Janine Wedel (George Washington University.)
see Anne Williamson's text at <www.bookagency.com/oligarchy.html.>
on Lawrence Summers catalytical and convening role in the reforms
for decentralization.

  The moving finger writes; and, having writ,
  Moves on: nor all thy piety nor wit
  Shall lure it back to cancel half a line,
  Nor all thy tears wash out a word of it.

 (Edward Fitzgerald:Rubiyat of Omar Khayyam)

Thieves Fence Out Business
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The plateau of year 1998 brings in still more to see of the
horizon ahead for Lawrence Summers's inappropriate economics.

It is common knowledge that the fraternity of thieves shies
away from legitimate business so as not to be exposed.
Professionals in international business, for their part,
gravitate away from the fraternity because dallying with the
mob may bring in legal or mortal embarrassment. Consequently,
mutual repulsion between the former and the latter happens as a
matter of course.

The more Summers persists with fabricating anarchist economic
models that do not set off legitimate business development in
the former USSR, the louder his message to the underworld that
the community window is open for bandits to cash in. Through
inviting a thieves' world into the house, Lawrence Summers
shoos away legitimate American business. We see business
threatened by the hazard of inclement domicile and
contamination by crime.

Why should he be dawdling with his utopian social experiment?
It spells more cost to Europe, Eurasia and the world.

Dominoes and the River Danube
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If tried-and-tested economic models -- for instance, the recent
post-War French, German or Japanese models -- are not
considered and modified for use in Russia, then there will be a
heavy price to pay. If economic methods, for instance, such as
those used in the former GDR are not tried, Russia will proceed
a little further down the road. One-sixth of the land in the
world will become an El Dorado for organized crime.

The European Union and China have been keen on using the
petroleum and natural gas resources on this territory. Would
they like to end up paying tribute to organized crime?

Here are milestones along the road that Summers keeps
traveling:

1. The Richard Pipes imagery of fencing-out of the former USSR
(as of the Aboriginal or Red Indian-reservation) will continue
to be thwarted by everyday transport and communications.
Interpol is among agencies with statistics of transits but that
important agency will come to be benumbed if events proceed as
in the Summers' plan.

2. As the number of unpaid workers increases in the former USSR
and community health suffers, the territory will gradually
become an incubator for epidemics of disease. Today we know
that includes virus mutations that cross the animal/human
barrier such as Mad Cow Disease, in the West, or Asian Chicken
Virus, in the East.

3. The human and industrial resources of the former USSR will
increasingly be used by black money for industry, elsewhere
illicit or illegal. Such activity includes, for instance,
heroin processing. Already British newspapers report a record
increase in drug-supply with the street price for a dose of
heroin dropping to less than the cost of a pint of beer (i.e.,
two Pounds Sterling.) As population destabilization proceeds in
the 15 former republics of the USSR -- and labor becomes
increasingly destitute -- the British price can be expected to
drop further (Turkmen and Ukraine statistics are now posting
contraction in their economies.)

4. China has an extensive border with the former USSR. As China
experiences more destabilization at this border, that will
constitute an Eurasian environmental challenge to which China
will be forced to respond. China would therefore extract the
last bad teeth in the Lawrence Summers formula by being forced
to extend its physical zone of influence across the Eurasian
continent, more towards the river Danube in Central Europe. In
a matter of social survival, any civil government successor of
Yeltsin's will welcome China's cooperation - for the world's
largest country territory will be protected from banditry by
the largest standing army in the world.

Therefore Lawrence Summers' backup task now in 1998 will be to
explain how he will block and destabilize China, to tip that
country over like a domino in the gambit of his protectionist
rationale.

Big Daddy Blast
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The game-like, anarchist approach to economics may one day be
rewarded like Timothy McVeigh was at Oklahoma City. At home in
the United States, editors may already be following that the
undue influence on international events of today's Deputy
Treasury Secretary Summers and his aides has become a
disproportionate liability to Bretton Woods institutions and
the U.S. finance ministry, headed by former businessman,
Treasury Secretary Rubin.

TIME's April 6th issue, for instance, devotes two pages to
ticking Summers and Treasury top brass off about their advice
to Japan to encourage $80 billion worth of consumer spending in
Japan. This fits in the record of Summers' protectionist plea
pandering to hypothetical U.S. business which cannot compete on
merit for sales overseas. In the real world outside, Hewlett-
Packard, Intel, Motorola, are famous U.S.-- based transnational
corporations which enjoy international success and prestige.
Why not let them continue to excel in Russia too? Intel has
just demonstrated the productive way forward by going beyond
its 200 MHz MMX Pentium chip to win more acclaim in the global
marketplace with its 400 MHz BX Pentium II chip which speeds an
ordinary PC onwards to large tasks requiring 1000 MB of RAM and
16 GB hard disks.

It is in these circumstances that Lawrence Summers persists
with his self-confession about the new thieves' world in Russia
to which his own neglect or faulty economics contributed during
these six years.

The IMF and the FED were only recently involved in bailing out
Korea.  While Summers tries to point to Asian economies, he
overlooks complaining about Wall Street acquaintances whose
whispers in the market might have put big money on the recent
Asian currency destabilization trail.

Are the destabilization of the Japanese and the Chinese
economies just other milestones in his way? And does he also
intend passing out the new baildout bills to the IMF and FED?

This game of dominoes has reached the elevation of 'folie de
grandeur.' The stakes have reached so high that they would tend
to disturb the U.S. President.

:-------------------:
wendell w. solomons
management research
:-------------------:

solomons @ slt.lk