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Japan’s new government has caved in to the Pentagon’s demands over a military base in Okinawa.  For background on the situation, I highly recommend reading this article by Chalmers Johnson from 2003.   As for the current conflict:

You’d think that, with so many [90] Japanese bases, the United States wouldn’t make a big fuss about closing one of them. Think again.  The current battle over the Marine Corps air base at Futenma on Okinawa — an island prefecture almost 1,000 miles south of Tokyo that hosts about three dozen U.S. bases and 75% of American forces in Japan — is just revving up.  In fact, Washington seems ready to stake its reputation and its relationship with a new Japanese government on the fate of that base alone, which reveals much about U.S. anxieties in the age of Obama.

And the reason for this insistence:

The U.S. military presence in Okinawa is a residue of the Cold War and a U.S. commitment to containing the only military power on the horizon that could threaten American military supremacy. Back in the 1990s, the Clinton administration’s solution to a rising China was to “integrate, but hedge.” The hedge — against the possibility of China developing a serious mean streak — centered around a strengthened U.S.-Japan alliance and a credible Japanese military deterrent.

What the Clinton administration and its successors didn’t anticipate was how effectively and peacefully China would disarm this hedging strategy with careful statesmanship and a vigorous trade policy. A number of Southeast Asian countries, including the Philippines and Indonesia, succumbed early to China’s version of checkbook diplomacy. Then, in the last decade, South Korea, like the Japanese today, started to talk about establishing “more equal” relations with the United States in an effort to avoid being drawn into any future military scrape between Washington and Beijing.

Now, with its arch-conservatives gone from government, Japan is visibly warming to China’s charms. In 2007, China had already surpassed the United States as the country’s leading trade partner. On becoming prime minister, Hatoyama sensibly proposed the future establishment of an East Asian community patterned on the European Union.  As he saw it, that would leverage Japan’s position between a rising China and a United States in decline. In December, while Washington and Tokyo were haggling bitterly over the Okinawa base issue, DPJ leader Ichiro Ozawa sent a signal to Washington as well as Beijing by shepherding a 143-member delegation of his party’s legislators on a four-day trip to China.

Against the background of an attempted revival of US manufacturing, this has unfolded at the same time as the scandal over Toyota cars that was dubious at the outset and has become outright embarrassing.  As if that wasn’t overdoing it enough, we now have accusations over China manipulating its currency becoming louder, including an op-ed from useful idiot Paul Krugman:

To give you a sense of the problem: Widespread complaints that China was manipulating its currency — selling renminbi and buying foreign currencies, so as to keep the renminbi weak and China’s exports artificially competitive — began around 2003. At that point China was adding about $10 billion a month to its reserves, and in 2003 it ran an overall surplus on its current account — a broad measure of the trade balance — of $46 billion.

Today, China is adding more than $30 billion a month to its $2.4 trillion hoard of reserves. The International Monetary Fund expects China to have a 2010 current surplus of more than $450 billion — 10 times the 2003 figure. This is the most distortionary exchange rate policy any major nation has ever followed.

That last sentence is the absolute money quote.  While the concerns are legitimate and there is a real problem, blaming China for it is silly when an entire world order was constructed around the dollar.  What makes this so ridiculous is that I think these arguments aren’t being put forward in bad faith so much as they are in bad memory.

I’m picking Krugman as an example because he is so stunningly inconsistent on this subject that it adds some humor to a subject that is otherwise pretty dry.  Following WWII, the Bretton Woods system was set up to prevent exactly this kind of problem, as Paul Krugman is certainly aware of considering he wrote a chapter on the subject in a textbook on international trade policy.  Following the massive war spending in Indochina during the late 60′s and early 70′s, the United States could no longer afford to guarantee this system and unilaterally dismantled it, resulting in the dollar itself becoming the global reserve currency.  As Krugman notes in his textbook:

On a single day, May 4, 1971 the Bundesbank [German central bank] had to buy $1 billion to hold its dollar exchange rate fixed in the face of great demand for its currency.  On the morning of May 5, the Bundesbank purchased $1 billion during the first hour of foreign exchange trading alone!

How is that for “the most distortionary exchange rate policy” a “major nation” has ever followed?  For a detailed explanation of the Japanese and Chinese perspective on this policy, see this interview and/or this paper.

Rather than focusing on China, perhaps it’s time to  address the elephant in the room that’s to (nearly) everyone’s detriment:

According to the 2008 official Pentagon inventory of our military bases around the world, our empire consists of 865 facilities in more than 40 countries and overseas U.S. territories. We deploy over 190,000 troops in 46 countries and territories. In just one such country, Japan, at the end of March 2008, we still had 99,295 people connected to U.S. military forces living and working there — 49,364 members of our armed services, 45,753 dependent family members, and 4,178 civilian employees. Some 13,975 of these were crowded into the small island of Okinawa, the largest concentration of foreign troops anywhere in Japan.

These massive concentrations of American military power outside the United States are not needed for our defense. They are, if anything, a prime contributor to our numerous conflicts with other countries. They are also unimaginably expensive. According to Anita Dancs, an analyst for the website Foreign Policy in Focus, the United States spends approximately $250 billion each year maintaining its global military presence. The sole purpose of this is to give us hegemony — that is, control or dominance — over as many nations on the planet as possible.

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