China, S.Korea demand Japan own up to its wars criminal past

China and South Korea on Wednesday pressed Japan to face up to its wartime past, as festering territorial disputes flared and Asia marked the anniversary of Tokyo's World War II surrender.

Both countries demanded Japan do more to atone for the brutal expansionism of the 20th century, while in Tokyo cabinet ministers paid tribute to fallen Japanese, including top war criminals, at a controversial shrine.

Beijing said the key issue was "whether Japan can really look in the mirror of history, heeding its lessons, holding hands with Asian people to face the future".

"The power is in the hands of Japan itself," it added. "We hope Japan can keep its promise to deal with and reflect on its invasion history and take concrete measures to safeguard China-Japan relations."

In Seoul, President Lee Myung-Bak, whose visit to disputed islands last week sent relations with Tokyo into virtual freefall, said Japan had to make amends for the sexual slavery it forced on women in its former colony.

"It was a breach of women's rights committed during wartime as well as a violation of universal human rights and historic justice. We urge the Japanese government to take responsible measures in this regard", Lee said.

War veterans and others wearing uniforms of the Imperial Navy march at the Yasukuni shrine to honour the dead on the 67th anniversary of Japan's surrender from World War II in Tokyo. China and South Korea have pressed Japan to face up to its wartime past, as festering territorial disputes flared and Asia marked the anniversary of Tokyo's World War II surrender.

"Chain links tangled in the history of Korea-Japan relations are hampering the common march toward a better tomorrow in the Northeast Asian region, as well as bilateral ties", Lee said.

The demands came as Japanese police arrested five pro-China activists who had landed on an island claimed by both Beijing and Tokyo.

The five were part of a group of activists from Hong Kong and Macau who had sailed to the archipelago, known as Senkaku in Japan and Diaoyu in China, with the intention of planting a Chinese flag.

Japan summoned the Chinese ambassador in response.

Their action came just days after South Korea's Lee landed on another set of disputed islands, kicking back into life a long-slumbering row with Japan, which this week morphed into a warning that Japan's emperor must apologise if he ever wanted to visit.

Tokyo rounded on Lee, who had previously been viewed as a pragmatist with whom it could deal.

Foreign Minister Koichiro Gemba said his comments on the emperor -- a respected figurehead in Japan -- were "extremely regrettable" and "difficult to comprehend".

As Seoul celebrated Liberation Day, around 500 South Koreans, including two former comfort women, rallied outside the Japanese embassy in Seoul.

It was their 1,035th weekly protest over the issue, which Tokyo insists was settled in a 1965 accord normalising relations.

The demonstration was echoed in Taiwan, which Japan occupied from 1985 until the war's end, where about 200 Taiwanese chanted slogans and tore up Japanese military flags.

Japan marked the 67th anniversary of its surrender with an official ceremony in which Emperor Akihito and Prime Minister Yoshihiko Noda led 6,000 people in prayer.

Their speeches used tried and tested formulae for regret, but avoided an explicit apology.

Two Japanese cabinet ministers visit a war shrine on the anniversary of Tokyo's World War II surrender, a move sets to inflame regional tensions amid increasingly bitter territorial disputes. Duration: 01:02

"During the war, (Japan) inflicted significant damage and pain on many countries, especially on people in Asian countries," Noda told the annual ceremony. "We deeply regret that."

Akihito said: "Recalling history, I profoundly hope that the suffering of war will never be repeated. I sincerely express mourning for those who lost their lives on the battlefields, and wish world peace and our country's further development."

Less diplomatically palatable were the pilgrimages by two of Noda's cabinet to Yasukuni Shrine in central Tokyo, which honours 2.5 million war dead -- including 14 leading war criminals from World War II.

Those enshrined at Yasukuni include General Hideki Tojo, the Japanese prime minister who ordered the attack on Pearl Harbor and was convicted of war crimes and hanged by a US-led tribunal.

Jin Matsubara, one of the ministers, told reporters he was there "in a personal capacity" and had used his visit to "remember ancestors who established the foundations of the prosperity of present-day Japan".

Japanese Emperor Akihito and Empress Michiko offer a silent prayer during an annual memorial service to honour the dead on the 67th anniversary of Japan's surrender from World War II in Tokyo. China and South Korea have pressed Japan to face up to its wartime past, as festering territorial disputes flared and Asia marked the anniversary of Tokyo's World War II surrender.

The pilgrimages were the first on the sensitive anniversary by any government minister since the centre-left Democratic Party of Japan came to power in 2009.

All three prime ministers since then have asked their cabinets to stay away, but Noda's crumbling support seemingly left him without sufficient power to prevent the visits.

North Korean state media said the ministers' actions were an "intolerable insult and mockery of the Asian people who suffered a lot due to the atrocities of Japan".

TOKYO (AFP)

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Batang Kali massacre by the British: justice for the dead!

More than 60 years after British troops killed 24 villagers at Batang Kali, Selangor, the case against the soldiers is going to be heard in the British courts today. 

IN 1948, the Malayan Emergency was just heating up. The country may have been weary of four brutal years of Japanese occupation during World War II, but the brief post-War dominance of the Communist Party of Malaya (CPM) was clearly at odds with the desire of the British authorities to reclaim a territory whose raw materials would help rebuild Britain itself.

By 1948, this had erupted into an undeclared war that would be waged until 1960. British forces sought to subdue the Communists, who had gained a degree of popularity for their resistance towards the Japanese. It didn’t help that in China, Mao’s Communist Party was on the verge of defeating the Kuomintang nationalist party.

Uneasy lie the dead: This cemetery in Batang Kali, Selangor, is where about half of the massacred victims were buried.

 

It was against this backdrop that the 7th Platoon of G Company, of the second battalion of Scots Guards unit of the British Army, belied its centuries-long reputation for honour. On Dec 12, 1948, under the leadership of Sgt Charles Douglas, the Guards surrounded a rubber estate near Batang Kali, Selangor. Looking for Communist guerillas who habitually moved in and out of the local population, they shot and killed 24 ethnic Chinese villagers before razing the village.

The next day, The Straits Times carried a report stating “Scots Guards and Police were today reported to have shot dead 25 out of 26 bandits during a wide-scale operation in North Selangor.” It called the killings the “biggest success as yet achieved in one operation in Malaya since the Emergency began.”

It was a bold-faced lie. The troops may have been acting on false information or may have panicked but there is little doubt that many innocent people were killed. Worse still, the incident was hushed up, only surviving as whispers through time.

There were, however, some survivors. One man fainted and was presumed dead, while some women and children of the men killed lived to tell the tale. According to them the Scots Guards had separated the men to be interrogated before the situation turned into a rampage of indiscriminate shooting.

This lush green spot is where dark deeds took place 64 years ago today.

 

“At the time we didn’t hear much,” recalls Prof Emeritus Tan Sri Dr Khoo Kay Kim. “We just heard some rumours. I would not call it the norm, but no doubt there was tension. What happened at Batang Kali was part of the complexity of society which can lead to such tragic situations. It is almost unavoidable in times of conflict and when there is hatred between ethnic and territorial groups. I see it as a conflict of cultures.

“From what I understand, they were innocent men. But the Chinese may well have reacted in a peculiar way that would have seemed suspicious to the British, who were paranoid and ignorant of local ways. The British always had problems with the Chinese community.

“That is why Governor Sir Shenton Thomas tried to come up with a programme to Anglicise the Chinese, but they were not easily controlled. At that point (in 1948) the Chinese were under the influence of the leftists and the secret societies. They were themselves enemies and in some ways it mirrored the conflict in China between the Kuomintang and the Communist Party.”

Prof Datuk Dr Shamsul Amri Baharuddin laments the tragic loss of life. “At the time the British would have had their own people on the ground. But informers can make the biggest mistakes, sometimes even on purpose. It is possible that the informer didn’t like these people. In this case, it is likely that the British acted on wrong information.

This is apparently the tombstone of the first victim, Luo Wei-Nan.>

 

“It is difficult to be an informer/undercover agent because both sides will crucify you. In fact in the 1940s, the leader of the Communists, Loi Tak, was a triple agent, a Vietnamese who worked for the Japanese and the British while leading the CPM!

“The conditions of war generates different dynamics, which we can still see today in Afghanistan and Iraq where there are many vendetta killings and economic killings done under falsified circumstances.”

Leon Comber played a critical role in the formative years of the Malaysian police force’s Special Branch and spent many years countering the Communist insurgency. The author of Malaya’s Secret Police, 1945-1960: The Role Of The Special Branch In The Malayan Emergency has no light to shed on the Batang Kali incident but does concede that, at the time, there was much mistrust between the Chinese community and the British.

Comber had come over to Malaya as part of the re-occupying forces that took over as the Japanese surrendered. In 1946 he was appointed to the police force in Malaya. He served as OCPD (Officer in Charge of Police District) KL South; at that time KL was divided into north and south zones for policing.

The Emergency was a savage war in which an estimated 12,000 people died. Did Comber ever have to do anything he was ashamed of?

File photo from May last year when four claimants, (from right) Wooi Kum Thai, Loh Ah Choi, Lim Kok and Chong Nyok Keyu announced that they had been granted funds by the United Kingdom Legal Service Commission to take their case to British courts. Today, the four are in London for the beginning of their case.

 

“Personally I didn’t, nor did I order any men under my command to do so. But I certainly heard rumours about dubious interrogation techniques. Apparently the head of the Special Branch, Richard Craig, issued a pamphlet which referred to undesirable methods of obtaining information. I was taken aback when I heard that. But if my fellow colleagues knew anything, they kept it to themselves.”

Indeed, secrecy was very much the order of the day as the colonial government maintained strict control over the media to ensure that only their viewpoint got through to the people. Little was known at the time of the Malayan Emergency’s many flash points like the standoff in Bukit Kepong, Johor, on Feb 23, 1950, between police officers and Communist guerillas that ended with more than 20 fatalities on each side. Across the pond, on Dec 3, 1949, the British governor of Sarawak, Sir Duncan Stewart, was stabbed to death by teenage Malay nationalist Rosli Dhobi.

A few years after the Batang Kali massacre, the Briggs Plan was put in place to win the hearts and minds of the local population. Devised by General Sir Harold Briggs shortly after his appointment in 1950 as the Emergency’s director of operations, the plan comprised the forced resettlement of rural Chinese population into “New Villages” where education, health services and homes with water and electricity were provided. Even as the Emergency continued and news remained tightly controlled, the Batang Kali massacre reared its ugly head from time to time. Soon after the incident, in 1949, an investigation by the Attorney General, Sir Stafford Foster-Sutton, concluded that the villagers would have escaped with their lives if not for the soldiers opening fire – yet, no action was taken.

In fact, only the soldiers themselves were questioned as witnesses; no villager was asked for testimony. The cover-up echoed that of another British colonial massacre in Amritsar, India, in 1919 when Colonel Reginald Dyer ordered the shooting deaths of hundreds of unarmed Indian civilians.

Following the My Lai massacre in the late 1960s during the Vietnam War, when US troops unable to distinguish friend from foe slaughtered all the villagers in My Lai, the Batang Kali incident was revisited by British newspaper The People. Then British Secretary of State for Defence (from 1964 to 1970) Denis Healey set up a team to investigate the incident. But the case was soon dropped for “lack of evidence”, despite statements made from former members of the patrol that made it clear they had been ordered to lie about the killings during the 1949 investigation.

Still later, in 1992, In Cold Blood, a BBC documentary was aired about the killings, making it obvious that a travesty had occurred, not just with the killings but with the cover-up that followed. Journalists Ian Ward and Norma Miraflor also painstakingly put together Slaughter And Deception At Batang Kali (Media Masters, 2009), another work that endorses this viewpoint.

MCA Public Services and Complaints Department head Datuk Seri Michael Chong became involved with the case during the filming of In Cold Blood.

“It is not only me who is fighting this case,” he says. “Over the years many fought it. Even (Malaysia’s first Prime Minister) Tunku Abdul Rahman fought it before independence. But when I came to it in 1992 it had been forgotten. All the time there had been a ding-dong and finally after a change of government in the UK, the case was closed.

“In late 1992, a group of BBC journalists came down with a few ex-Scot Guards who were all in their 70s or 80s. They were not involved in the massacre but had been asked by their Commanding Officer to help with the post-massacre clean-up. They came and asked the villagers to remove the bodies. After so many years they felt bad.”

Chong was outraged by the injustice and decided to act. “Along with the lawyers Vincent Lim and Datuk Lim Choon Kin, I took an interest. We went to see the place and met the survivors. In 1993 we called a press conference and, with the victims’ descendants, we lodged a police report in Batang Kali.

“After that, we drafted a letter to Her Majesty the Queen to investigate this old case and seek for justice. We went to see the then High Commissioner, H.C. White, and were given assurances that the letter would be passed to her. Meanwhile, we also worked with the police. I was cautioned by the Malaysian police not to stir up this sentiment.

“To be very frank, some leaders also asked me why I wanted to bring up this old matter. They neither supported me or were against me at first. But later on they gave me their moral support.

“For me, this has never been about the publicity. I just want justice for the victims. I want the British Government to recognise and admit that such an incident happened. They were all shot in the back of the head from a close distance. This is cold-blooded murder. They were never Communists, but simple rubber-tappers. They were not even sympathisers.”

Eventually, through the perseverance of people like Chong, the British Government relented and agreed to hear the case.

Lawyer Quek Ngee Meng is part of a new generation of Malaysians who feel that there is no statute of limitations on justice.

“Back in 2004 my father, the late Quek Cheng Taik, used to visit the hot springs in Ulu Yam near Batang Kali to treat an illness. He used to go from Serdang to that area and eventually bought a house in Ulu Yam. He listened to the stories of villagers.

“It is still a talked-about topic there more than 60 years on. Those killed were from Ulu Yam. If you go there you won’t miss the cemetery. Every Qing Ming (a day to pay respect to one’s ancestors) they go back.

“They still feel it. It is still a stigma. The official account says they were suspected of being bandits. When we followed the case, we found a lot of cover-ups.”

But what can be accomplished after so many years?

“I think the first thing is an admission and an apology” says Quek. “The victim’s families also lost their bread-winners so we are also seeking compensation.

“Over here there are still about five witnesses to what happened. In Britain some soldiers are still alive. I think there are more than 10 on the British side. There are many who have passed away in Malaysia, most recently Tham Yong in 2010. But we documented their testimony.

“When pursuing this case, the famous human rights law firm Bindmans backed us and were willing to procure legal aid. Before they (the United Kingdom Legal Service Commission) granted us that aid, though, they checked that we needed the funds. They also checked if there was any merit in the case. Their estimate is a 50% to 60% chance,” says Quek.

Today and tomorrow, the team in London will be applying for a judicial review to quash the earlier decision by the British Government not to investigate the tragedy.

Quek says incidents like Batang Kali were not necessarily unique at the time. “There are many other cases of injustice during the Emergency. You must understand, this was at a time when the British thought all Chinese were Communists. The Chinese had to prove they were not Communists.

“But even in such circumstances you must follow the rule of law. If they are identified by informers they should have been detained and questioned. But they were not.”

Quek makes a final point about the upcoming trial. “We made a lot of progress with the (British) Labour Government, but since the Conservative-led coalition took power, they have not been so straightforward with us.

“They have made a lot of representations using technical points trying to claim that it was the Selangor Government who had jurisdiction and we should take action against the Sultan instead of them!

He adds that, “This is a landmark case with an individual suing the British Government, and I am looking forward to the trial.”

It remains to be seen if justice will indeed finally be served.

By MARTIN VENGADESAN and LIM CHIA YING
star2@thestar.com.my

Related articles/Posts:

• Revealed: how Britain tried to legitimise Batang Kali massacre (guardian.co.uk)
• Revealed: How Britain tried to legitimize Batang Kali massacre (rawstory.com)
• Batang Kali massacre hearing due to start at high court (guardian.co.uk)
• Batang Kali British Massacre Victims have a legal respite
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Who leads Asia? Can Asia step up to 21st century leadership?

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Can Asia step up to 21st century leadership?

ANALYSIS by Amitay Acharya

IF one had any doubts about the world being in the midst of a huge power shift, recent events should have dispelled those.

From Europeans appealing to China to save the euro to President Barack Obama arriving in Bali to lobby for Asian support, the transformation is evident. Less clear is who will lead the world in the 21st century and how.

There is plenty of talk about the 21st century being an Asian century, featuring China, Japan and India.

These countries certainly seek an enhanced role in world affairs, including a greater share of decision-making authority in the governance of global bodies. But are they doing enough to deserve it?

The intervention in Libya, led by Britain and France, and carried out by Nato, says it all. There is no Nato in Asia, and there’s unlikely to be one.

China and Japan are the world’s second and third largest economies. India is sixth in purchasing-power parity terms. China’s defence spending has experienced double-digit annual growth during the past two decades. India was the world’s largest buyer of conventional weapons in 2010.

A study by the US Congressional Research Service lists Saudi Arabia, India and China as the three biggest arms buyers from 2003 to 2010. India bought nearly US$17bil (RM54.17bil) worth of conventional arms, compared with US$13.2bil (RM42.06bil) for China and some US$29bil (RM92.4bil) for Saudi Arabia.

Chinese, Indian and Japanese foreign policy ideas have evolved. India has abandoned non-alignment. China has moved well past Maoist socialist internationalism. Japan pursues the idea of a “normal state” that can say yes to using force in multilateral operations.

Unfortunately, these shifts have not led to greater leadership in global governance. National power ambitions and regional rivalries have restricted their contributions to global governance.



President Hu Jintao has defined the objective of China’s foreign policy as to “jointly construct a harmonious world”. Chinese leaders and academics invoke the cultural idea of “all under heaven”, or Tianxia. The concept stresses harmony – as opposed to “sameness” – thus signalling that China can be politically non-democratic, but still pursue friendship with other nations.

China has increased its participation in multilateralism and global governance, but not offered leadership. This is sometimes explained as a lingering legacy of Deng Xiaoping’s caution about Chinese leadership on behalf of the developing world. More telling is China’s desire not to sacrifice its sovereignty and independence for the sake of multilateralism and global governance.

Japan’s policy conception of a “normal state”, initially presented as a way of reclaiming Japan’s right to use force, but only in support of UN-sanctioned operations, may sound conducive to greater global leadership.

But it also reflects strategic motivations: to hedge against any drawdown of US forces in the region, to counter the rise of China and the growing threat from North Korea, and to increase Japan’s participation in collective military operations in the Indian Ocean and Persian Gulf regions.

Beset by chronic uncertainty in domestic leadership and a declining economy, Japan has not been a proactive global leader when it comes to crisis management.

Its response to the 2008 global financial crisis was a far cry from that to the 1997 crisis, when it took centre-stage and proposed the creation of a regional monetary fund, a limited version of which materialised eventually within the Chiang Mai Initiative.

In 2005, Indian Prime Minister Manmohan Singh asserted that “the 21st century will be an Indian century”.

Manmohan expressed hope that “the world will once again look at us with regard and respect, not just for the economic progress we make but for the democratic values we cherish and uphold and the principles of pluralism and inclusiveness we have come to represent which is India’s heritage as a centuries old culture and civilisation”.

Yet, the Indian foreign-policy worldview has shifted in the direction of greater realpolitik. Some Indian analysts such as C. Raja Mohan have pointed out that India might be reverting from Gandhi and Nehru to George Curzon, the British governor-general of India in the early 20th century.

Indian power projection in both western and eastern Indian Ocean waters is growing, thereby pursuing a Mahanian approach for dominance of the maritime sphere – named after US Admiral Alfred Thayer Mahan – rather than a Nehruvian approach. It is partly driven by a desire, encouraged by the US and South-East Asian countries, to assume the role of a regional balancer vis-à-vis China.

Asia’s role in global governance cannot be delinked from the question: Who leads Asia?

After World War II, India was seen as an Asian leader by many of its neighbours and was more than willing to lead, but unable to do so due to a lack of resources.

Japan’s case was exactly the opposite; it had the resources from the mid-1960s onwards, but not the legitimacy – thanks to memories of imperialism for which it was deemed insufficiently apologetic by its neighbours.

China has had neither the resources nor the legitimacy, since the communist takeover, nor the political will, at the onset of the reform era to be Asia’s leader.

In Asia today, although Japan, China and India now have the resources, they still suffer from a deficit of regional legitimacy. This might be partly a legacy of the past – Japanese wartime role, Chinese subversion and Indian diplomatic high-handedness. But their mutual rivalry also prevents the Asian powers from assuming regional leadership singly or collectively.

Hence, regional leadership rests with a group of the region’s weaker states: Asean. While Asean is a useful and influential voice in regional affairs, its ability to manage Asia is by no means assured.

Greater engagement with regional forums is useful for the Asian powers to prepare for a more robust role in global governance. So many of the global problems – climate change, energy, pandemics, illegal migration and more – have Asian roots.

By jointly managing them at the regional level, Asian powers can limit their rivalries, secure neighbours’ support, and gain expertise that could facilitate a substantive contribution to global governance from a position of leadership and strength. — The Daily Star/Asia News Network

> The author is the UNESCO chair in Transnational Challenges and Governance at American University and a senior fellow of the Asia Pacific Foundation of Canada. This is based on his article, “Can Asia Lead: Power Ambitions and Global Governance in the 21st Century”, International Affairs, vol. 87, no. 4, 2011.

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‘Occupy Wall Street’ goes global !

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What Are We To Do By TAN SRI LIN SEE-YAN

Movements against bailouts, cutbacks and inequality picking up stream

SINCE its obscure beginnings, the “Occupy Wall Street” (OWS) movement has spread its wings, joining the “Indignant” of Spain (a movement born on May 15 when a Madrid rally sparked a worldwide campaign focussed on outrage over high unemployment and opposition to the financial elite).



The OWS group which has camped out in lower Manhattan's Zuccotti Park (nearby Wall Street) now in its 5th week, has a valid complaint: its young social-media connected generation is losing faith in traditional structures of government and business, arguing it has been betrayed and denied opportunity. “We got sold out; banks got bailed out” was their chant as thousands marched from Wall Street to Times Square.

Inspired by these movements, rallies rippled across the globe last weekend targeting 951 cities in Europe, Africa, Asia, Australia, and North and South America to take part in the demonstration. It's unclear how long protestors plan to stay. Some fear this could only be the beginning, as the world faces a systemic rise in anger, protest and political volatility that could last for years. With Middle-east unrest stirring again, a winter of discontent looks likely. It's not easy to pinpoint the underlying cause of their woes. Checkout their websites: they seem to demonstrate against corporate greed (bank bailouts and bonuses) and income inequality (government cutbacks). Worldwide they demand for a more fair and equal society.



Since the 2008 financial crisis, US bank profits were up 136%, but bank lending, down 9%. Indeed, bank lending has fallen in 10 of the past 12 quarters. To the OWS demonstrators, banks haven't fulfilled their part of the social bargain: bailouts for Wall Street in exchange for lending on Main Street. While banks now have more capital, they still aren't lending. Lending will continue to shrink. Banks say the demand isn't there. But 73% of small businesses say they are still being affected by the credit crunch. As I see it, banks remain very much risk adverse. Unlike in medicine, banks don't have the ability to quarantine financial contagion. There is a dangerous world out there.

What also irks protestors are Wall Street bonuses which have returned while ordinary workers suffered retrenchment and job insecurity with little help from Washington. A recent New York State report predicted that the financial industry will likely lose another 10,000 jobs by end 2012. That's on top of the 4,100 jobs lost since April and 22,000 since early 2008. Overall, New York area employment in finance and insurance had declined by 8.9% since late 2006.



The OWS movement has gained widespread support and encouragement, including from economics Nobel Laureates Stiglitz: “We have too many regulations stopping democracy and not enough regulations stopping Wall Street from misbehaving. We are bearing the cost of their misdeeds. There's a system where we have socialised losses and privatised gains”; and Kurgman: “Wall Street pay has rebounded even as ordinary workers continue to suffer from high unemployment and falling real wagesAnd their outrage has found resonance with millions of Americans. No wonder Wall Street is whining.”

Harvard's historian Niall Ferguson regarded the movement “still worth taking seriously” even though he concluded: “So occupying Wall Street is not the answer to this generation's problems. The answer is to occupy the Tea Party Call it the Iced Tea Party. Way cool.” Even the in-coming president of the European Central Bank has expressed support. However, the Times of London labelled the protests “Passionate but Pointless.”



US inequality

By far, the cause of OWS's frustration and outrage is best articulated in my friend Jeffrey Sachs' (Columbia University) latest book: “The Price of Civilisation.” In the US, the top 1% of households accounted for almost 25% of all households' income. The last time this happened was in 1929. In the first 3 decades of the 20th century, rapid industrial development raised income and wealth at the top, while mass immigration set the low bar. Then came the 1929 Great Depression and the New Deal four years later which railed against “a small group (who) had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labour and other people's lives.”

But, prosperity wasn't always accompanied by large-scale inequality. The 1950s and 1960s brought about rapid economic growth and a narrowing of inequality as a result of a more robust social safety net, fresh New Deal measures, World War II (WWII), and the vigorous post-war recovery which reversed the 1920s inequalities.

Since the 1970s, the United States tasted the fury of globalised competition but failed to grapple effectively with it. The deterioration in Main Street's earning prospects was papered over for the next 20 years by debt mortgage debt and consumer credit. Bear in mind median earnings of male workers peaked way back in 1973. The United States collects less tax as a percentage of national income (25% in 2009) than most advanced European nations (40-50%).

This reflected partly the Republican's one-idea approach: cut taxes permanently and impose fiscal austerity, often at the expense of lost competitiveness (reflecting insufficient public investment in education, infrastructure and human capital). OWS young demonstrators have a valid argument to make: they are frustrated trying to find a place in an economy where there is one job for every five jobseekers, and where youth unemployment is 18%. So much for the clich of Wall Street vs Main Street; “the greedy 1% uses the hard-done-by 99%.” The wider middle-class fears its prosperity has evaporated, demanding for a way to deliver growth once more. It's about time Americans get wise to the source of their economic woes it's a few hundred miles south of Wall Street.

US poverty 

According to the US Census Bureau, there are now more poor persons in America than at any other time in the 52 years records were kept. More than 15% of US families live below the poverty line in 2010. The line is set at US$22,000 a year for a family of four. This reflected the high unemployment of 9.1% 6.5 million jobs were lost in the recent recession. An additional 3 million Americans would fall below the poverty line if not for “doubling-up”, that is, adult children who can't afford life on their own return to live with their parents.



Today marks the first time in 20 years when US employment (as a percentage of population) has fallen below the rate in advanced European nations like UK, Germany and the Netherlands. The average weekly earnings (adjusted for inflation) of a typical US blue-collar worker is lower today than in 1964. Indeed, median inflation adjusted family income rose only about a fifth as much between 1980 and 2007 as it did in the generation following WWII. The US poverty profile is unlikely to change soon. That is why people are protesting. Many believe the current anger against autocrat politicians, bankers and elites is symptomatic of fundamental shifts in the structure of US (and indeed, global) population. Already, there are strains caused by aging populations driving up budget costs, reducing growth and blocking jobs from younger people.

Coincidentally, both the Boomerang generation and the Babyboomers generation are demonstrating together in OWS as they could very well end up in a political battle for dwindling government benefits. That is, the elderly fights to keep their entitlements (social security and medicare) to ward off poverty, and the younger population pushes for spending on education and training to avoid falling into it. Demographic issues are driving much of what we see today. A win-win is to continue pressuring the richest Americans to carry a larger share of the load. Despite congressional resistance, many of the wealthy in the United States do see it's in their interest to foster a less divisive society.

Smart government

While the benefits of globalisation are clear and I think, well appreciated (especially the rapid spread of technology embodied in the Internet and mobile telephony, and reduced poverty in emerging nations), the real problems associated with it are less well understood but nevertheless need to be urgently addressed.

Globalisation has (i) raised the scope for tax evasion; (ii) led to a loss of competitiveness among the less educated in advanced nations, particularly in the United States; and (iii) fuelled contagion, especially in finance.

In his latest book, Jeff Sachs pushed hard for a highly effective government to deal with these problems. Smart public policies are needed to (a) promote high quality education; (b) raise productivity by building modern infrastructure and inculcate science and technology; and (c) co-operate globally to regulate cross-border issues (e.g. finance and environment). His proposal is controversial at this time since it calls for more government not less, especially in the United States where economic inequality has reached a high not seen since the Great Depression.

Sachs also points to growing signs world-wide that people are fed-up with governments that cater for the rich and the powerful, and ignore everyone else. They call for greater social justice (not confined to the Arab Spring; also serious protests from Tel Aviv to London to Santiago to Sydney, and all over Europe, and now, in New York); and also more inclusive politics, rather than corrupt politics.

There are even calls for higher taxes on the very rich across nations (the United States has proposed the rich to pay more taxes; several European governments have talked of a new wealth tax; the European Commission has suggested a new financial transactions tax to raise US$75bil a year). Sachs refers to the most successful well-balanced economies today being in Scandinavia using high taxes to support smart public services, balancing economic prosperity with social justice and environmental sustainability. Sachs bemoaned that for 30 years, the United States has been going “in the wrong direction, cutting the role of government in the domestic economy rather than promoting the investments needed to modernise the economy and workforce.” It all started when President Reagan declared in 1980 that “government is not the solution to our problems it is the problem.”

Today, the solution lies in how the United States is going to fund its future competitiveness through building skills and raising productivity to fight for markets in the 21st century. This is also the way to go for the euro-zone.

Historically, Americans haven't been inclined to be aggressive enough to riot, as the Europeans, over inequality (contrast the protests in Rome, Athens, Madrid and London with those in New York). But the United States is in a new situation now where protestors are getting desperate in the face of intransigency, especially the uncompromising Tea Party. It is hard to rule that out when the American Dream is very much at stake.

At worst, I think the present situation can result in an economic malaise that lasts for decades. It makes politics most unpredictable. There is already political paralysis. But dramatic shifts in policy are possible. The rise of ideologues in a modern guise is also probable as we saw in the 1930s. I am afraid this is the new reality. We have to deal with it.

> Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time writing, teaching & promoting the public interest. Feedback is most welcome; email: starbizweek@thestar.com.my 

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