The future of politics will be decided in Asia, and the US will be right at the center of the action

America's Pacific Century. By Secretary of State Hillary R. Clinton
November Issue of Foreign Policy Magazine
http://www.state.gov/secretary/rm/2011/10/175216.htm 
The future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the center of the action.

October 11, 2011

As the war in Iraq winds down and America begins to withdraw its forces from Afghanistan, the United States stands at a pivot point. Over the last 10 years, we have allocated immense resources to those two theaters. In the next 10 years, we need to be smart and systematic about where we invest time and energy, so that we put ourselves in the best position to sustain our leadership, secure our interests, and advance our values. One of the most important tasks of American statecraft over the next decade will therefore be to lock in a substantially increased investment -- diplomatic, economic, strategic, and otherwise -- in the Asia-Pacific region.

The Asia-Pacific has become a key driver of global politics. Stretching from the Indian subcontinent to the western shores of the Americas, the region spans two oceans -- the Pacific and the Indian -- that are increasingly linked by shipping and strategy. It boasts almost half the world's population. It includes many of the key engines of the global economy, as well as the largest emitters of greenhouse gases. It is home to several of our key allies and important emerging powers like China, India, and Indonesia.

At a time when the region is building a more mature security and economic architecture to promote stability and prosperity, U.S. commitment there is essential. It will help build that architecture and pay dividends for continued American leadership well into this century, just as our post-World War II commitment to building a comprehensive and lasting transatlantic network of institutions and relationships has paid off many times over -- and continues to do so. The time has come for the United States to make similar investments as a Pacific power, a strategic course set by President Barack Obama from the outset of his administration and one that is already yielding benefits.

With Iraq and Afghanistan still in transition and serious economic challenges in our own country, there are those on the American political scene who are calling for us not to reposition, but to come home. They seek a downsizing of our foreign engagement in favor of our pressing domestic priorities. These impulses are understandable, but they are misguided. Those who say that we can no longer afford to engage with the world have it exactly backward -- we cannot afford not to. From opening new markets for American businesses to curbing nuclear proliferation to keeping the sea lanes free for commerce and navigation, our work abroad holds the key to our prosperity and security at home. For more than six decades, the United States has resisted the gravitational pull of these "come home" debates and the implicit zero-sum logic of these arguments. We must do so again.

Beyond our borders, people are also wondering about America's intentions -- our willingness to remain engaged and to lead. In Asia, they ask whether we are really there to stay, whether we are likely to be distracted again by events elsewhere, whether we can make -- and keep -- credible economic and strategic commitments, and whether we can back those commitments with action. The answer is: We can, and we will.

Harnessing Asia's growth and dynamism is central to American economic and strategic interests and a key priority for President Obama. Open markets in Asia provide the United States with unprecedented opportunities for investment, trade, and access to cutting-edge technology. Our economic recovery at home will depend on exports and the ability of American firms to tap into the vast and growing consumer base of Asia. Strategically, maintaining peace and security across the Asia-Pacific is increasingly crucial to global progress, whether through defending freedom of navigation in the South China Sea, countering the proliferation efforts of North Korea, or ensuring transparency in the military activities of the region's key players.

Just as Asia is critical to America's future, an engaged America is vital to Asia's future. The region is eager for our leadership and our business -- perhaps more so than at any time in modern history. We are the only power with a network of strong alliances in the region, no territorial ambitions, and a long record of providing for the common good. Along with our allies, we have underwritten regional security for decades -- patrolling Asia's sea lanes and preserving stability -- and that in turn has helped create the conditions for growth. We have helped integrate billions of people across the region into the global economy by spurring economic productivity, social empowerment, and greater people-to-people links. We are a major trade and investment partner, a source of innovation that benefits workers and businesses on both sides of the Pacific, a host to 350,000 Asian students every year, a champion of open markets, and an advocate for universal human rights.

President Obama has led a multifaceted and persistent effort to embrace fully our irreplaceable role in the Pacific, spanning the entire U.S. government. It has often been a quiet effort. A lot of our work has not been on the front pages, both because of its nature -- long-term investment is less exciting than immediate crises -- and because of competing headlines in other parts of the world.

As secretary of state, I broke with tradition and embarked on my first official overseas trip to Asia. In my seven trips since, I have had the privilege to see firsthand the rapid transformations taking place in the region, underscoring how much the future of the United States is intimately intertwined with the future of the Asia-Pacific. A strategic turn to the region fits logically into our overall global effort to secure and sustain America's global leadership. The success of this turn requires maintaining and advancing a bipartisan consensus on the importance of the Asia-Pacific to our national interests; we seek to build upon a strong tradition of engagement by presidents and secretaries of state of both parties across many decades. It also requires smart execution of a coherent regional strategy that accounts for the global implications of our choices.

WHAT DOES THAT regional strategy look like? For starters, it calls for a sustained commitment to what I have called "forward-deployed" diplomacy. That means continuing to dispatch the full range of our diplomatic assets -- including our highest-ranking officials, our development experts, our interagency teams, and our permanent assets -- to every country and corner of the Asia-Pacific region. Our strategy will have to keep accounting for and adapting to the rapid and dramatic shifts playing out across Asia. With this in mind, our work will proceed along six key lines of action: strengthening bilateral security alliances; deepening our working relationships with emerging powers, including with China; engaging with regional multilateral institutions; expanding trade and investment; forging a broad-based military presence; and advancing democracy and human rights.

By virtue of our unique geography, the United States is both an Atlantic and a Pacific power. We are proud of our European partnerships and all that they deliver. Our challenge now is to build a web of partnerships and institutions across the Pacific that is as durable and as consistent with American interests and values as the web we have built across the Atlantic. That is the touchstone of our efforts in all these areas.

Our treaty alliances with Japan, South Korea, Australia, the Philippines, and Thailand are the fulcrum for our strategic turn to the Asia-Pacific. They have underwritten regional peace and security for more than half a century, shaping the environment for the region's remarkable economic ascent. They leverage our regional presence and enhance our regional leadership at a time of evolving security challenges.

As successful as these alliances have been, we can't afford simply to sustain them -- we need to update them for a changing world. In this effort, the Obama administration is guided by three core principles. First, we have to maintain political consensus on the core objectives of our alliances. Second, we have to ensure that our alliances are nimble and adaptive so that they can successfully address new challenges and seize new opportunities. Third, we have to guarantee that the defense capabilities and communications infrastructure of our alliances are operationally and materially capable of deterring provocation from the full spectrum of state and nonstate actors.

The alliance with Japan, the cornerstone of peace and stability in the region, demonstrates how the Obama administration is giving these principles life. We share a common vision of a stable regional order with clear rules of the road -- from freedom of navigation to open markets and fair competition. We have agreed to a new arrangement, including a contribution from the Japanese government of more than $5 billion, to ensure the continued enduring presence of American forces in Japan, while expanding joint intelligence, surveillance, and reconnaissance activities to deter and react quickly to regional security challenges, as well as information sharing to address cyberthreats. We have concluded an Open Skies agreement that will enhance access for businesses and people-to-people ties, launched a strategic dialogue on the Asia-Pacific, and been working hand in hand as the two largest donor countries in Afghanistan.

Similarly, our alliance with South Korea has become stronger and more operationally integrated, and we continue to develop our combined capabilities to deter and respond to North Korean provocations. We have agreed on a plan to ensure successful transition of operational control during wartime and anticipate successful passage of the Korea-U.S. Free Trade Agreement. And our alliance has gone global, through our work together in the G-20 and the Nuclear Security Summit and through our common efforts in Haiti and Afghanistan.

We are also expanding our alliance with Australia from a Pacific partnership to an Indo-Pacific one, and indeed a global partnership. From cybersecurity to Afghanistan to the Arab Awakening to strengthening regional architecture in the Asia-Pacific, Australia's counsel and commitment have been indispensable. And in Southeast Asia, we are renewing and strengthening our alliances with the Philippines and Thailand, increasing, for example, the number of ship visits to the Philippines and working to ensure the successful training of Filipino counterterrorism forces through our Joint Special Operations Task Force in Mindanao. In Thailand -- our oldest treaty partner in Asia -- we are working to establish a hub of regional humanitarian and disaster relief efforts in the region.

AS WE UPDATE our alliances for new demands, we are also building new partnerships to help solve shared problems. Our outreach to China, India, Indonesia, Singapore, New Zealand, Malaysia, Mongolia, Vietnam, Brunei, and the Pacific Island countries is all part of a broader effort to ensure a more comprehensive approach to American strategy and engagement in the region. We are asking these emerging partners to join us in shaping and participating in a rules-based regional and global order.

One of the most prominent of these emerging partners is, of course, China. Like so many other countries before it, China has prospered as part of the open and rules-based system that the United States helped to build and works to sustain. And today, China represents one of the most challenging and consequential bilateral relationships the United States has ever had to manage. This calls for careful, steady, dynamic stewardship, an approach to China on our part that is grounded in reality, focused on results, and true to our principles and interests.

We all know that fears and misperceptions linger on both sides of the Pacific. Some in our country see China's progress as a threat to the United States; some in China worry that America seeks to constrain China's growth. We reject both those views. The fact is that a thriving America is good for China and a thriving China is good for America. We both have much more to gain from cooperation than from conflict. But you cannot build a relationship on aspirations alone. It is up to both of us to more consistently translate positive words into effective cooperation -- and, crucially, to meet our respective global responsibilities and obligations. These are the things that will determine whether our relationship delivers on its potential in the years to come. We also have to be honest about our differences. We will address them firmly and decisively as we pursue the urgent work we have to do together. And we have to avoid unrealistic expectations.

Over the last two-and-a-half years, one of my top priorities has been to identify and expand areas of common interest, to work with China to build mutual trust, and to encourage China's active efforts in global problem-solving. This is why Treasury Secretary Timothy Geithner and I launched the Strategic and Economic Dialogue, the most intensive and expansive talks ever between our governments, bringing together dozens of agencies from both sides to discuss our most pressing bilateral issues, from security to energy to human rights.

We are also working to increase transparency and reduce the risk of miscalculation or miscues between our militaries. The United States and the international community have watched China's efforts to modernize and expand its military, and we have sought clarity as to its intentions. Both sides would benefit from sustained and substantive military-to-military engagement that increases transparency. So we look to Beijing to overcome its reluctance at times and join us in forging a durable military-to-military dialogue. And we need to work together to strengthen the Strategic Security Dialogue, which brings together military and civilian leaders to discuss sensitive issues like maritime security and cybersecurity.

As we build trust together, we are committed to working with China to address critical regional and global security issues. This is why I have met so frequently -- often in informal settings -- with my Chinese counterparts, State Councilor Dai Bingguo and Foreign Minister Yang Jiechi, for candid discussions about important challenges like North Korea, Afghanistan, Pakistan, Iran, and developments in the South China Sea.

On the economic front, the United States and China need to work together to ensure strong, sustained, and balanced future global growth. In the aftermath of the global financial crisis, the United States and China worked effectively through the G-20 to help pull the global economy back from the brink. We have to build on that cooperation. U.S. firms want fair opportunities to export to China's growing markets, which can be important sources of jobs here in the United States, as well as assurances that the $50 billion of American capital invested in China will create a strong foundation for new market and investment opportunities that will support global competitiveness. At the same time, Chinese firms want to be able to buy more high-tech products from the United States, make more investments here, and be accorded the same terms of access that market economies enjoy. We can work together on these objectives, but China still needs to take important steps toward reform. In particular, we are working with China to end unfair discrimination against U.S. and other foreign companies or against their innovative technologies, remove preferences for domestic firms, and end measures that disadvantage or appropriate foreign intellectual property. And we look to China to take steps to allow its currency to appreciate more rapidly, both against the dollar and against the currencies of its other major trading partners. Such reforms, we believe, would not only benefit both our countries (indeed, they would support the goals of China's own five-year plan, which calls for more domestic-led growth), but also contribute to global economic balance, predictability, and broader prosperity.

Of course, we have made very clear, publicly and privately, our serious concerns about human rights. And when we see reports of public-interest lawyers, writers, artists, and others who are detained or disappeared, the United States speaks up, both publicly and privately, with our concerns about human rights. We make the case to our Chinese colleagues that a deep respect for international law and a more open political system would provide China with a foundation for far greater stability and growth -- and increase the confidence of China's partners. Without them, China is placing unnecessary limitations on its own development.

At the end of the day, there is no handbook for the evolving U.S.-China relationship. But the stakes are much too high for us to fail. As we proceed, we will continue to embed our relationship with China in a broader regional framework of security alliances, economic networks, and social connections.

Among key emerging powers with which we will work closely are India and Indonesia, two of the most dynamic and significant democratic powers of Asia, and both countries with which the Obama administration has pursued broader, deeper, and more purposeful relationships. The stretch of sea from the Indian Ocean through the Strait of Malacca to the Pacific contains the world's most vibrant trade and energy routes. Together, India and Indonesia already account for almost a quarter of the world's population. They are key drivers of the global economy, important partners for the United States, and increasingly central contributors to peace and security in the region. And their importance is likely to grow in the years ahead.

President Obama told the Indian parliament last year that the relationship between India and America will be one of the defining partnerships of the 21st century, rooted in common values and interests. There are still obstacles to overcome and questions to answer on both sides, but the United States is making a strategic bet on India's future -- that India's greater role on the world stage will enhance peace and security, that opening India's markets to the world will pave the way to greater regional and global prosperity, that Indian advances in science and technology will improve lives and advance human knowledge everywhere, and that India's vibrant, pluralistic democracy will produce measurable results and improvements for its citizens and inspire others to follow a similar path of openness and tolerance. So the Obama administration has expanded our bilateral partnership; actively supported India's Look East efforts, including through a new trilateral dialogue with India and Japan; and outlined a new vision for a more economically integrated and politically stable South and Central Asia, with India as a linchpin.

We are also forging a new partnership with Indonesia, the world's third-largest democracy, the world's most populous Muslim nation, and a member of the G-20. We have resumed joint training of Indonesian special forces units and signed a number of agreements on health, educational exchanges, science and technology, and defense. And this year, at the invitation of the Indonesian government, President Obama will inaugurate American participation in the East Asia Summit. But there is still some distance to travel -- we have to work together to overcome bureaucratic impediments, lingering historical suspicions, and some gaps in understanding each other's perspectives and interests.

EVEN AS WE strengthen these bilateral relationships, we have emphasized the importance of multilateral cooperation, for we believe that addressing complex transnational challenges of the sort now faced by Asia requires a set of institutions capable of mustering collective action. And a more robust and coherent regional architecture in Asia would reinforce the system of rules and responsibilities, from protecting intellectual property to ensuring freedom of navigation, that form the basis of an effective international order. In multilateral settings, responsible behavior is rewarded with legitimacy and respect, and we can work together to hold accountable those who undermine peace, stability, and prosperity.

So the United States has moved to fully engage the region's multilateral institutions, such as the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC) forum, mindful that our work with regional institutions supplements and does not supplant our bilateral ties. There is a demand from the region that America play an active role in the agenda-setting of these institutions -- and it is in our interests as well that they be effective and responsive.

That is why President Obama will participate in the East Asia Summit for the first time in November. To pave the way, the United States has opened a new U.S. Mission to ASEAN in Jakarta and signed the Treaty of Amity and Cooperation with ASEAN. Our focus on developing a more results-oriented agenda has been instrumental in efforts to address disputes in the South China Sea. In 2010, at the ASEAN Regional Forum in Hanoi, the United States helped shape a regionwide effort to protect unfettered access to and passage through the South China Sea, and to uphold the key international rules for defining territorial claims in the South China Sea's waters. Given that half the world's merchant tonnage flows through this body of water, this was a consequential undertaking. And over the past year, we have made strides in protecting our vital interests in stability and freedom of navigation and have paved the way for sustained multilateral diplomacy among the many parties with claims in the South China Sea, seeking to ensure disputes are settled peacefully and in accordance with established principles of international law.

We have also worked to strengthen APEC as a serious leaders-level institution focused on advancing economic integration and trade linkages across the Pacific. After last year's bold call by the group for a free trade area of the Asia-Pacific, President Obama will host the 2011 APEC Leaders' Meeting in Hawaii this November. We are committed to cementing APEC as the Asia-Pacific's premier regional economic institution, setting the economic agenda in a way that brings together advanced and emerging economies to promote open trade and investment, as well as to build capacity and enhance regulatory regimes. APEC and its work help expand U.S. exports and create and support high-quality jobs in the United States, while fostering growth throughout the region. APEC also provides a key vehicle to drive a broad agenda to unlock the economic growth potential that women represent. In this regard, the United States is committed to working with our partners on ambitious steps to accelerate the arrival of the Participation Age, where every individual, regardless of gender or other characteristics, is a contributing and valued member of the global marketplace.

In addition to our commitment to these broader multilateral institutions, we have worked hard to create and launch a number of "minilateral" meetings, small groupings of interested states to tackle specific challenges, such as the Lower Mekong Initiative we launched to support education, health, and environmental programs in Cambodia, Laos, Thailand, and Vietnam, and the Pacific Islands Forum, where we are working to support its members as they confront challenges from climate change to overfishing to freedom of navigation. We are also starting to pursue new trilateral opportunities with countries as diverse as Mongolia, Indonesia, Japan, Kazakhstan, and South Korea. And we are setting our sights as well on enhancing coordination and engagement among the three giants of the Asia-Pacific: China, India, and the United States.

In all these different ways, we are seeking to shape and participate in a responsive, flexible, and effective regional architecture -- and ensure it connects to a broader global architecture that not only protects international stability and commerce but also advances our values.

OUR EMPHASIS ON the economic work of APEC is in keeping with our broader commitment to elevate economic statecraft as a pillar of American foreign policy. Increasingly, economic progress depends on strong diplomatic ties, and diplomatic progress depends on strong economic ties. And naturally, a focus on promoting American prosperity means a greater focus on trade and economic openness in the Asia-Pacific. The region already generates more than half of global output and nearly half of global trade. As we strive to meet President Obama's goal of doubling exports by 2015, we are looking for opportunities to do even more business in Asia. Last year, American exports to the Pacific Rim totaled $320 billion, supporting 850,000 American jobs. So there is much that favors us as we think through this repositioning.

When I talk to my Asian counterparts, one theme consistently stands out: They still want America to be an engaged and creative partner in the region's flourishing trade and financial interactions. And as I talk with business leaders across our own nation, I hear how important it is for the United States to expand our exports and our investment opportunities in Asia's dynamic markets.

Last March in APEC meetings in Washington, and again in Hong Kong in July, I laid out four attributes that I believe characterize healthy economic competition: open, free, transparent, and fair. Through our engagement in the Asia-Pacific, we are helping to give shape to these principles and showing the world their value.

We are pursuing new cutting-edge trade deals that raise the standards for fair competition even as they open new markets. For instance, the Korea-U.S. Free Trade Agreement will eliminate tariffs on 95 percent of U.S. consumer and industrial exports within five years and support an estimated 70,000 American jobs. Its tariff reductions alone could increase exports of American goods by more than $10 billion and help South Korea's economy grow by 6 percent. It will level the playing field for U.S. auto companies and workers. So, whether you are an American manufacturer of machinery or a South Korean chemicals exporter, this deal lowers the barriers that keep you from reaching new customers.

We are also making progress on the Trans-Pacific Partnership (TPP), which will bring together economies from across the Pacific -- developed and developing alike -- into a single trading community. Our goal is to create not just more growth, but better growth. We believe trade agreements need to include strong protections for workers, the environment, intellectual property, and innovation. They should also promote the free flow of information technology and the spread of green technology, as well as the coherence of our regulatory system and the efficiency of supply chains. Ultimately, our progress will be measured by the quality of people's lives -- whether men and women can work in dignity, earn a decent wage, raise healthy families, educate their children, and take hold of the opportunities to improve their own and the next generation's fortunes. Our hope is that a TPP agreement with high standards can serve as a benchmark for future agreements -- and grow to serve as a platform for broader regional interaction and eventually a free trade area of the Asia-Pacific.

Achieving balance in our trade relationships requires a two-way commitment. That's the nature of balance -- it can't be unilaterally imposed. So we are working through APEC, the G-20, and our bilateral relationships to advocate for more open markets, fewer restrictions on exports, more transparency, and an overall commitment to fairness. American businesses and workers need to have confidence that they are operating on a level playing field, with predictable rules on everything from intellectual property to indigenous innovation.

ASIA'S REMARKABLE ECONOMIC growth over the past decade and its potential for continued growth in the future depend on the security and stability that has long been guaranteed by the U.S. military, including more than 50,000 American servicemen and servicewomen serving in Japan and South Korea. The challenges of today's rapidly changing region -- from territorial and maritime disputes to new threats to freedom of navigation to the heightened impact of natural disasters -- require that the United States pursue a more geographically distributed, operationally resilient, and politically sustainable force posture.

We are modernizing our basing arrangements with traditional allies in Northeast Asia -- and our commitment on this is rock solid -- while enhancing our presence in Southeast Asia and into the Indian Ocean. For example, the United States will be deploying littoral combat ships to Singapore, and we are examining other ways to increase opportunities for our two militaries to train and operate together. And the United States and Australia agreed this year to explore a greater American military presence in Australia to enhance opportunities for more joint training and exercises. We are also looking at how we can increase our operational access in Southeast Asia and the Indian Ocean region and deepen our contacts with allies and partners.

How we translate the growing connection between the Indian and Pacific oceans into an operational concept is a question that we need to answer if we are to adapt to new challenges in the region. Against this backdrop, a more broadly distributed military presence across the region will provide vital advantages. The United States will be better positioned to support humanitarian missions; equally important, working with more allies and partners will provide a more robust bulwark against threats or efforts to undermine regional peace and stability.

But even more than our military might or the size of our economy, our most potent asset as a nation is the power of our values -- in particular, our steadfast support for democracy and human rights. This speaks to our deepest national character and is at the heart of our foreign policy, including our strategic turn to the Asia-Pacific region.

As we deepen our engagement with partners with whom we disagree on these issues, we will continue to urge them to embrace reforms that would improve governance, protect human rights, and advance political freedoms. We have made it clear, for example, to Vietnam that our ambition to develop a strategic partnership requires that it take steps to further protect human rights and advance political freedoms. Or consider Burma, where we are determined to seek accountability for human rights violations. We are closely following developments in Nay Pyi Taw and the increasing interactions between Aung San Suu Kyi and the government leadership. We have underscored to the government that it must release political prisoners, advance political freedoms and human rights, and break from the policies of the past. As for North Korea, the regime in Pyongyang has shown persistent disregard for the rights of its people, and we continue to speak out forcefully against the threats it poses to the region and beyond.

We cannot and do not aspire to impose our system on other countries, but we do believe that certain values are universal -- that people in every nation in the world, including in Asia, cherish them -- and that they are intrinsic to stable, peaceful, and prosperous countries. Ultimately, it is up to the people of Asia to pursue their own rights and aspirations, just as we have seen people do all over the world.

IN THE LAST decade, our foreign policy has transitioned from dealing with the post-Cold War peace dividend to demanding commitments in Iraq and Afghanistan. As those wars wind down, we will need to accelerate efforts to pivot to new global realities.

We know that these new realities require us to innovate, to compete, and to lead in new ways. Rather than pull back from the world, we need to press forward and renew our leadership. In a time of scarce resources, there's no question that we need to invest them wisely where they will yield the biggest returns, which is why the Asia-Pacific represents such a real 21st-century opportunity for us.

Other regions remain vitally important, of course. Europe, home to most of our traditional allies, is still a partner of first resort, working alongside the United States on nearly every urgent global challenge, and we are investing in updating the structures of our alliance. The people of the Middle East and North Africa are charting a new path that is already having profound global consequences, and the United States is committed to active and sustained partnerships as the region transforms. Africa holds enormous untapped potential for economic and political development in the years ahead. And our neighbors in the Western Hemisphere are not just our biggest export partners; they are also playing a growing role in global political and economic affairs. Each of these regions demands American engagement and leadership.

And we are prepared to lead. Now, I'm well aware that there are those who question our staying power around the world. We've heard this talk before. At the end of the Vietnam War, there was a thriving industry of global commentators promoting the idea that America was in retreat, and it is a theme that repeats itself every few decades. But whenever the United States has experienced setbacks, we've overcome them through reinvention and innovation. Our capacity to come back stronger is unmatched in modern history. It flows from our model of free democracy and free enterprise, a model that remains the most powerful source of prosperity and progress known to humankind. I hear everywhere I go that the world still looks to the United States for leadership. Our military is by far the strongest, and our economy is by far the largest in the world. Our workers are the most productive. Our universities are renowned the world over. So there should be no doubt that America has the capacity to secure and sustain our global leadership in this century as we did in the last.

As we move forward to set the stage for engagement in the Asia-Pacific over the next 60 years, we are mindful of the bipartisan legacy that has shaped our engagement for the past 60. And we are focused on the steps we have to take at home -- increasing our savings, reforming our financial systems, relying less on borrowing, overcoming partisan division -- to secure and sustain our leadership abroad.

This kind of pivot is not easy, but we have paved the way for it over the past two-and-a-half years, and we are committed to seeing it through as among the most important diplomatic efforts of our time.

White House: Now is Not the Time to Wave the White Flag on Clean Energy Jobs

Now is Not the Time to Wave the White Flag on Clean Energy Jobs. Blog post from Dan Pfeiffer, White House Communications Director
http://www.whitehouse.gov/blog/2011/10/04/now-not-time-wave-white-flag-clean-energy-jobs
October 04, 2011

This morning, Chairman Cliff Stearns, who leads the House Energy and Commerce Subcommittee on Oversight and Investigations, told NPR that "We can't compete with China to make solar panels and wind turbines."

This comment reflects exactly the sort of counterproductive defeatism that Energy Secretary Steven Chu warned against this weekend when he spoke to a group of America’s most promising young solar innovators:

“The United States faces a choice today: Will we sit on the sidelines and fall behind or will we play to win the clean energy race? Some say this is a race America can’t win. They’re ready to wave the white flag and declare defeat… Others say this is a race America shouldn’t even be in. They say we can’t afford to invest in clean energy. I say we can’t afford not to.

“It’s not enough for our country to invent clean energy technologies – we have to make them and use them too. Invented in America, made in America, and sold around the world – that’s how we’ll create good jobs and lead in the 21st century.”

The race for clean energy jobs and industries is on – and it is a race well worth winning. The International Energy Agency projects that in the coming decades, solar power could grow to more than 20 percent of the world’s electricity.
Conservatively, this means that there is an economic opportunity worth trillions of dollars for whichever countries claim the lead. The global market for wind turbines is also growing exponentially.

But it’s not just the vast potential of jobs tomorrow – these industries employ a growing number of Americans today. In fact, business groups estimate that America’s solar industry accounts for about 100,000 jobs and the wind industry employs 75,000. Should we simply tell those workers that we’ve given up on them?

A study released last month showed that, in spite of the intense global competition, the U.S. remains a net global exporter of solar technology – with $5.6 billion in exports and an overall positive trade balance of $1.8 billion.

It is certainly true that China is playing to win. Last year alone, China offered its solar manufacturers $30 billion in government financing, vastly exceeding the U.S. investment. And China has overtaken the United States market share in solar power – a technology we invented.

Chairman Stearns and other members of his party in Congress believe that America cannot, or should not, try to compete for jobs in a cutting edge and rapidly growing industry. We simply disagree: the answer to this challenge is not to wave the white flag and give up on American workers. America has never declared defeat after a single setback – and we shouldn’t start now.

America’s entrepreneurs and innovators are still the very best in the world. Our workers are second to none – and we have never been afraid of a challenge. It’s time to do what we’ve always done in the face of a tough competitor: roll up our sleeves and recapture the lead.

EPA Inspector General Statement on Greenhouse Gases Endangerment Finding Report - Data Quality Processes

EPA Inspector General Statement on Greenhouse Gases Endangerment Finding Report - Data Quality Processes


Press Statement - U.S. Environmental Protection Agency
For Immediate Release
Office of Inspector General
Washington, D.C., September 28, 2011Contact: John Manibusan. Phone: (202) 566-2391
http://www.epa.gov/oig/reports/2011/IG_Statement_Greenhouse_Gases_Endangerment_Report.pdf

WASHINGTON, D.C. – Statement of Inspector General Arthur A. Elkins, Jr., on the Office of Inspector General (OIG) report Procedural Review of EPA’s Greenhouse Gases Endangerment Finding Data Quality Processes:

“The OIG evaluated EPA’s compliance with established policy and procedures in the development of the endangerment finding, including processes for ensuring information quality. We concluded that the technical support document that accompanied EPA’s endangerment finding is a highly influential scientific assessment and thus required a more rigorous EPA peer review than occurred. EPA did not certify whether it complied with OMB’s or its own peer review policies in either the proposed or final endangerment findings as required. While it may be debatable what impact, if any, this had on EPA’s finding, it is clear that EPA did not follow all required steps for a highly influential scientific assessment. We also noted that documentation of events and analyses could be improved.

We made no determination regarding the impact that EPA’s information quality control systems may have had on the scientific information used to support the finding. We did not test the validity of the scientific or technical information used to support the endangerment finding, nor did we evaluate the merit of EPA’s conclusions or analyses.

We make recommendations that we think will strengthen EPA’s control over data quality processes. EPA disagreed with our conclusions and did not agree to take any corrective actions in response to this report. All the report’s recommendations are unresolved.”

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Publication Bubble Threatens China's Scientific Advance

Publication Bubble Threatens China's Scientific Advance
Chinese Academy of Sciences
Sep 26, 2011
http://english.cas.ac.cn/Ne/CN/201109/t20110926_75603.shtml

As China's economy has soared to the second place in the world, the country's scientific strength has also surged -- if only measured by the numbers.

Chinese researchers published more than 1.2 million papers from 2006 to 2010 -- second only to the United States but well ahead of Britain, Germany and Japan, according to data recently published by Elsevier, a leading international scientific publisher and data provider. This figure represents a 14 percent increase over the period from 2005 to 2009.

The number of published academic papers in science and technology is often seen as a gauge of national scientific prowess.

But these impressive numbers mask an uncomfortable fact: most of these papers are of low quality or have little impact. Citation per article (CPA) measures the quality and impact of papers. China's CPA is 1.47, the lowest figure among the top 20 publishing countries, according to Elsevier's Scopus citation database.

China's CPA dropped from 1.72 for the period from 2005 to 2009, and is now below emerging countries such as India and Brazil. Among papers lead-authored by Chinese researchers, most citations were by domestic peers and, in many cases, were self-citations.

"While quantity is an important indicator because it gives a sense of scientific capacity and the overall level of scientific activity in any particular field, citations are the primary indicator of overall scientific impact," said Daniel Calto, Director of SciVal Solutions at Elsevier North America.

Calto attributed China's low CPA to a "dilution effect."

"When the rise in the number of publications is so rapid, as it has been in China -- increasing quantity does not necessarily imply an overall increase in quality," said Calto.

He noted the same pattern in a variety of rapidly emerging research countries such as India, Brazil, and earlier in places like the Republic of Korea.

"Chinese researchers are too obsessed with SCI (Science Citation Index), churning out too many articles of low quality," said Mu Rongping, Director-General of the Institute of Policy and Management at the Chinese Academy of Sciences, China's major think tank.

SCI is one of the databases used by Chinese researchers to look-up their citation performance. The alternative, Scopus, provides a wider coverage worldwide.

"Chinese researchers from a wide range of areas and institutions are vying for publication, as it is a key criterion for academic appraisal in China, if not the only one. As a result, the growth of quality pales in comparison to that of quantity," said Mu, an expert on China's national science policy and competitiveness.

On the other hand, China also falls behind the United States in multidisciplinary research, which is a core engine for scientific advance and research excellence.

From 2006 to 2010, China published 1,229,706 papers while the United States churned out 2,082,733. According to a new metric introduced by Elsevier's Spotlight research assessment solution, China generated 885 competencies while the United States had 1,817.

In other words, China's total research output is more than half that of the United States, while the number of competencies showing China's strength in multidisciplinary research is less than half that of the United States.

Cong Cao, an expert on China's science and technology, put it more bluntly in an article he wrote: "When the paper bubble bursts, which will happen sooner or later, one may find that the real situation of scientific research in China probably is not that rosy."

China has been investing heavily in scientific research and technological development in recent years to strengthen its innovative capacity, The proportion of GDP spent on R&D grew from 0.9 percent in 2000 to 1.4 percent in 2007, according to the World Bank.

An IMF forecast in 2010 says China now ranks second globally in R&D spending. The IMF calculates China's R&D expenditure at 150 billion U.S. dollars when based on Purchasing Power Parity, a widely used economic concept that attempts to equalize differences in standard of living among countries.

By this measure, China surpassed Japan in R&D spending in 2010.

Many see China's huge investment in R&D as the momentum behind the country's explosive increase in research papers.

"Getting published is, in some ways, an improvement over being unable to get published," Mu said. "But the problem is, if the papers continue to be of low quality for a long time, it will be a waste of resources."

In China, academic papers play a central role in the academic appraisal system, which is closely related to degrees and job promotions.

While acknowledging the importance of academic papers in research, Mu believes a more balanced appraisal system should be adopted. "This is a problem with science management. If we put too much focus on the quantity of research papers, we leave the job of appraisal to journal editors."

In China, the avid pursuit of publishing sometimes gives rise to scientific fraud. In the most high-profile case in recent years, two lecturers from central China's Jinggangshan University were sacked in 2010 after a journal that published their work admitted 70 papers they wrote over two years had been falsified.

"This is one of the worst cases. These unethical people not only deceived people to further their academic reputations, they also led academic research on the wrong path, which is a waste of resources," Mu said.

A study done by researchers at Wuhan University in 2010 says more than 100 million U.S. dollars changes hands in China every year for ghost-written academic papers. The market in buying and selling scientific papers has grown five-fold in the past three years.

The study says Chinese academics and students often buy and sell scientific papers to swell publication lists and many of the purported authors never write the papers they sign. Some master's or doctoral students are making a living by churning out papers for others. Others mass-produce scientific papers in order to get monetary rewards from their institutions.

A 2009 survey by the China Association for Science and Technology (CAST) of 30,078 people doing science-related work shows that nearly one-third of respondents attributed fraud to the current system that evaluates researchers' academic performance largely on the basis of how many papers they write and publish.

Despite rampant fraud, China will continue to inject huge money into science. According to the latest national science guideline, which was issued in 2006 by the State Council, the investment in R&D will account for 2.5 percent of GDP in 2020.

"If China achieves its stated goal of investing 2.5 percent of its GDP in R&D in 2020, and sustains its very fast economic growth over the next decade, it would quite likely pass the U.S. in terms of total R&D investment sometime in the late 2010s," said Calto, adding that it is also quite likely that at some point China will churn out more papers than the United States.

According to Calto, China does mostly applied research, which helps drive manufacturing and economic growth, while basic research only accounts for 6 percent, compared with about 35 percent in Germany, Britain, and the United States, and 16 percent in Japan.

"In the long term, in order to really achieve dominance in any scientific area, I think it will be necessary to put significant financial resources into fundamental basic research -- these are the theoretical areas that can drive the highest level of innovation," Calto said. (Xinhua)

Global growth and sovereign debt concerns drive markets

In a "Special Feature" in the last Bank of International Settlements' Quarterly Review, Sep. 2011, [1]  two of BIS staff publish "Global growth and sovereign debt concerns drive markets," where they confirm the already known BIS view of several trends and facts:

1  Without credible plans to restore long-term fiscal sustainability, sovereign debt in several euro area and other advanced countries may no longer be regarded as having zero credit risk.

2  [I]n many advanced economies, government debt levels are expected to continue to rise over coming years, due to high fiscal deficits and rising pension and health care costs.

3  Moreover, the level of economic output, which underpins debt servicing capacity, is unlikely to return to its pre-crisis trend any time soon.

4  Sovereign risk premia could thus be persistently higher and more volatile in the future.

There is much dispute regarding the first point, of course. The US Executive is trying to get Congress to approve a further stimulus package, and IMF's Christine Lagarde said last week that "In many corners" of the world austerity was pushed "in too harsh a way," without letting economic growth take root, according to the WSJ. [2]



References

[1]  Michael Davies and Tim Ng: Global growth and sovereign debt concerns drive markets. BIS Quarterly Review, Sep. 2011. http://www.bis.org/publ/qtrpdf/r_qt1109.htm

[2]  Sudeep Reddy: Three Buttons the IMF Could Push. Wall Street Journal, Monday, Sep 19, 2011, page 12.

Assessing Systemic Trade Interconnectedness - An Empirical Approach

Assessing Systemic Trade Interconnectedness - An Empirical Approach. By Luca Errico & Alexander Massara

Summary: The paper focuses on systemically important jurisdictions in the global trade network, complementing recent IMF work on systemically important financial sectors. Using the IMF’s Direction of Trade Statistics (DOTS) database and network analysis, the paper develops a framework for ranking jurisdictions based on trade size and trade interconnectedness indicators using data for 2000 and 2010. The results show a near perfect overlap between the top 25 systemically important trade and financial jurisdictions, suggesting that these ought to be the focus of risk-based surveillance on cross-border spillovers and contagion. In addition, a number of extensions to the approach are developed that can provide a better understanding of trade dynamics at the bilateral, regional, and global levels.


Conclusions

The paper has laid out our approach for assessing systemic trade interconnectedness using network analysis and the IMF’s DOTS database. Our results uncover several stylized facts offering additional insights into the changing patterns of global trade over the decade 2000-2010.  We also have shown possible applications of our approach to gain a better understanding of trade dynamics across world regions and the overlapping of trade and financial sectors of systemic importance in the top 25 jurisdictions. Our approach lends itself easily to a wide range of analytical exercises addressing specific global trade issues, as well as global (trade and financial) interconnectedness issues.

The use of DOTS has lent robustness to our analysis by providing uniform data for 169 jurisdictions representing almost 100 percent of total world trade in both the year 2000 and the year 2010. Additionally, the quarterly updating of DOTS makes it possible to recalibrate our findings to track global trade developments on a timely basis.

From a policy perspective, jurisdictions hosting both systemic trade and financial sectors would seem to be the natural focus of risk-based surveillance on cross-border spillovers and contagion.  The analysis underscores that these jurisdictions display the strongest inter-sectoral interconnectedness to the global economy. As such, they have the highest potential for transmitting disturbances to other jurisdictions or to systemic stability via either the trade or financial channel or indeed both channels simultaneously. These jurisdictions would thus seem to warrant particular attention and further analysis on the risks associated with their activities, especially when carried out through systemically important financial institutions and nonfinancial corporations.

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Higher capital's unintended effect: enabling banks to take more tail risk without the fear of breaching the minimal capital ratio

In Capital Regulation and Tail Risk (IMF Working Paper WP/11/188), authors Enrico Perotti, Lev Ratnovski, and Razvan Vlahu, study banking risk mitigation linked to capital regulation, in a realist context where banks "may choose tail risk asserts." The authors believe that this "undermines the traditional result that high capital reduces excess risk-taking driven by limited liability."

Besides, higher capital requirements "may have an unintended effect of enabling banks to take more tail risk without the fear of breaching the minimal capital ratio in non-tail risky project realizations."

Excerpts of the paper's introduction:

Regulatory reform in the wake of the recent financial crisis has focused on an increase in capital cushions of financial intermediaries. Basel III rules have doubled the minimal capital ratio, and directed banks to hold excess capital as conservation and countercyclical buffers above the minimum (BIS, 2010). These arrangements complement traditional moral suasion and individual targets used by regulators to ensure adequate capital cushions.

There are two key arguments in favor of higher capital. The first is an ex post argument: capital can be seen as a buffer that absorbs losses and hence reduces the risk of insolvency. This risk absorption role also mitigates systemic risk factors, such as collective uncertainty over counterparty risk, which had a devastating propagation effect during the recent crisis. The second considers the ex ante effects of buffers: capital reduces limited liability-driven incentives of bank shareholders to take excessive risk, by increasing their “skin in the game” (potential loss in case of bank failure; Jensen and Meckling 1976, Holmstrom and Tirole 1997).

Yet some recent experience calls for caution. First, banks are increasingly exposed to tail risk, which causes losses only rarely, but when those materialize they often exceed any plausible initial capital. Such risks can result from a number of strategies. A first example are carry trades reliant on short term wholesale funding, which in 2007-2008 produced highly correlated distressed sales (Gorton, 2010). A second example is the reckless underwriting of contingent liabilities on systemic risk, callable at times of collective distress (Acharya and Richardson, 2009). Finally, the combination of higher profits in normal times and massive losses occasionally arises in undiversified industry exposures to infl ated housing markets (Shin, 2009). A useful review of such strategies is provided in Acharya et al. (2009); IMF (2010) highlights the importance of recognizing tail risk in financial stability analysis. Since under tail risk banks do not internalize losses independently of the level of initial capital, the buffer and incentive effects of capital diminish. Higher capital may become a less effective way of controlling bank risk.

Second, a number of major banks, particularly in the United States, appeared highly capitalized just a couple of years prior to the crisis. Yet these very intermediaries took excessive risks (often tail risk, or highly negatively skewed gambles). In fact, anecdotal evidence suggests that highly capitalized banks were looking for ways to put at risk their capital in order to produce returns for shareholders (Berger et al. 2008, Huang and Ratnovski 2009). Therefore, higher capital may create incentives for risk-taking instead of mitigating them.

This paper seeks to study these concerns by reviewing the effectiveness of capital regulation, and in particular of excess capital buffers (that is, above minimum ratios), in dealing with tail risk events. We reach two key results.

First, we show that the traditional buffer and incentives effects of capital become less powerful when banks have access to tail risk projects. The reason is that tail risk realizations can wipe out almost any level of capital. Left tails limit the effectiveness of capital as the absorbing buffer and restrict “skin in the game” because a part of the losses is never borne by shareholders. Hence, under tail risk, excess risk-shifting incentives of bank shareholders may exist almost independently of the level of initial or required capital.

Second, having established that under tail risk the benefits of higher capital are limited, we consider its possible unintended effects. We note that capital regulation also affects bank risk choices through the threat of capital adjustment costs when banks have to raise equity to comply with minimum capital ratios. (These costs are most commonly associated with equity dilution under asymmetric information on the value of illiquid bank assets,Myers and Majluf, 1984, or reduced managerial incentives for efficiency, Jensen, 1986).2 Similar to "skin in the game", capital adjustment costs make banks averse to risk, and may discourage risky bank strategies. However, unlike "skin in the game", the incentive effects of capital adjustment costs fall with higher bank capital because the probability of breaching the minimal capital ratio decreases.

Of course, if highly capitalized banks internalized all losses, they would have taken risk only if that was socially optimal (would have offered a higher NPV). Yet this result changes dramatically once we introduce tail risk. Then, even banks with high capital never internalize all losses, and may take excess risk. Moreover, the relationship between capital and risk can become non-monotonic. The reason is interesting. In the first place, tail risk leads to insolvency whatever the initial bank capital, so higher capital does not sufficiently discourage risk-taking for well capitalized banks through "skin in the game". At the same time, higher excess capital allows banks to take the riskier projects without breaching the minimal capital ratio (and incurring large capital adjustment costs) in the case of low (non tail) returns. So under tail risk, higher capital may create conditions where highly capitalized banks take more excess risk. Further, we show that the negative effect of extra capital on risk-taking becomes stronger when banks get access to projects with even higher tail risk.

To close the model, we derive the bank’s choice of initial capital in the presence of tail risk, and the implications for optimal capital regulation. We show that a bank may choose to hold higher capital in order to create a cushion over the minimal capital requirement so as to be able to take tail risk without the fear of a corrective action in case of marginally negative project realizations.  Then, capital regulation has to implement two bounds on the values of bank capital: a bound from below (a minimal capital ratio) to prevent ordinary risk-shifting and a bound from above (realistically, in the form of special attention devoted to banks with particularly high capital) in order to assure that they are not taking tail risk.

These results are interesting to consider in historic context. Most sources of tail risk that we described are related to recent financial innovations. In the past, tail risk in traditional loan-oriented depository banking was low (both project returns and withdrawals largely satisfied the law of large numbers), hence “skin in the game” effects dominated, and extra capital led to lower risk-taking. Yet now, when banks have access to tail risk projects, the buffer and "skin in the game" effects that are the cornerstone of the traditional approach to capital regulation became weak, while effects where higher capital enables risk-taking became stronger. Therefore, due to financial innovation, the beneficial effects of higher capital were reduced, while the scope for undesirable effects increased.

The paper has policy implications relevant for the current debate on strengthening capital regulation. The simpler conclusion is that it is impossible to control all aspects of risk-taking using a single instrument. The problem of capital buffers is that they are effective as long as they can minimize not just the chance of default, but also the loss given default. Contractual innovation in finance has enabled intermediaries to manufacture risk profiles which allow them to take maximum advantage of limited liability even with high levels of capital. The key to contain gambles with skewed returns is to either prohibit extreme bets, or to increase their ex ante cost.  Leading policy proposals now emerging are to charge prudential levies on strategies exposed to systemic risk (Acharya et al., 2010), such as extremely mismatched strategies (Perotti and Suarez, 2009, 2010), or derivative positions written on highly correlated risks.

A more intricate conclusion relates to implications for capital regulation. The results do not imply that less capital is better: this was not the case in recent years. However, they suggest the following. First, regulators should acknowledge that traditional capital regulation has limitations in dealing with tail risk. This is similar, for example, to an already-accepted understanding that it has limitations in dealing with correlation risk (Acharya, 2009). Second, banks with significant excess capital may be induced to take excess risk (in order to use or put at risk their capital), as amply demonstrated by the crisis experience. Hence, simply relying on higher and "excess" capital of banks as a means of crisis prevention may have ruinous effects if it produces a false sense of comfort. Finally, authorities should introduce complementary measures to target tail risk next to the policy on pro-cyclical and conservation buffers. In this context, enhanced supervision with a focus on capturing tail risk may be essential.

We see our paper as related to two key strands of the banking literature. First are the papers on the unintended effects of bank capital regulation. Early papers (Kahane 1977, Kim and Santomero 1988, Koehn and Santomero 1980) took a portfolio optimization approach to banking and caution that higher capital requirements can lead to an increase in risk of the risky part of the bank’s portfolio. Later studies focus on incentive effects. Boot and Greenbaum (1993) show that capital requirements can negatively affect asset quality due to a reduction in monitoring incentives. Blum (1999), Caminal and Matutes (2002), Flannery (1989) and Hellman et al. (2000) argue that higher capital can make banks take more risk as they attempt to compensate for the cost of capital. Our paper follows this literature, with a distinct and contemporary focus on tail risk.3 On the empirical front, Angora et al. (2009) and Bichsel and Blum (2004) find a positive correlation between levels of capital and bank risk-taking.

The second strand are the recent papers on the regulatory implications of increased sophistication of financial intermediaries and the recent crisis. These papers generally argue that dealing with new risks (including systemic and tail risk) requires new regulatory tools (Acharya and Yorulmazer 2007, Acharya et al. 2010, Brunnermeier and Pedersen 2008, Huang and Ratnovski 2011, Perotti and Suarez 2009, 2010).

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What Killed American Lit.

What Killed American Lit. By JOSEPH EPSTEIN
http://online.wsj.com/article/SB10001424053111903999904576468011530847064.html
Today's collegians don't want to study it—who can blame them?WSJ, Aug 27, 2011

The Cambridge History of the American Novel
Edited by Leonard Cassuto, Clare Virginia Eby and Benjamin Reiss
Cambridge, 1,244 pages, $185

The Editors of "The Cambridge History of the American Novel" decided to consider their subject—as history is considered increasingly in universities these days—from the bottom up. In 71 chapters, the book's contributors consider the traditional novel in its many sub-forms, among them: science fiction, eco-fiction, crime and mystery novels, Jewish novels, Asian-American novels, African-American novels, war novels, postmodern novels, feminist novels, suburban novels, children's novels, non-fiction novels, graphic novels and novels of disability ("We cannot truly know a culture until we ask its disabled citizens to describe, analyze, and interpret it," write the authors of a chapter titled "Disability and the American Novel"). Other chapters are about subjects played out in novels—for instance, ethnic and immigrant themes—and still others about publishers, book clubs, discussion groups and a good deal else. "The Cambridge History of the Novel," in short, provides full-court-press coverage.

"In short," though, is perhaps the least apt phase for a tome that runs to 1,244 pages and requires a forklift to hoist onto one's lap. All that the book's editors left out is why it is important or even pleasurable to read novels and how it is that some novels turn out to be vastly better than others. But, then, this is a work of literary history, not of literary criticism. Randall Jarrell's working definition of the novel as "a prose narrative of some length that has something wrong with it" has, in this voluminous work, been ruled out of bounds.

Most readers are unlikely to have heard of the contributors to "The Cambridge History of the American Novel," the majority teachers in English departments in American universities. I myself, who taught in a such a department for three decades, recognized the names of only four among them. Only 40 or 50 years ago, English departments attracted men and women who wrote books of general intellectual interest and had names known outside the academy—Perry Miller, Aileen Ward, Walter Jackson Bate, Marjorie Hope Nicolson, Joseph Wood Krutch, Lionel Trilling, one could name a dozen or so others—but no longer. Literature, as taught in the current-day university, is strictly an intramural game.

This may come as news to the contributors to "The Cambridge History of the American Novel," who pride themselves on possessing much wider, much more relevant, interests and a deeper engagement with the world than their predecessors among literary academics. Biographical notes on contributors speak of their concern with "forms of moral personhood in the US novels," "the poetics of foreign policy," and "ecocriticism and theories of modernization, postmodernization, and globalization."

Yet, through the magic of dull and faulty prose, the contributors to "The Cambridge History of the American Novel" have been able to make these presumably worldly subjects seem parochial in the extreme—of concern only to one another, which is certainly one derogatory definition of the academic. These scholars may teach English, but they do not always write it, at least not quite. A novelist, we are told, "tasks himself" with this or that; things tend to get "problematized"; the adjectives "global" and "post"-this-or-that receive a good workout; "alterity" and "intertexuality" pop up their homely heads; the "poetics of ineffability" come into play; and "agency" is used in ways one hadn't hitherto noticed, so that "readers in groups demonstrate agency." About the term "non-heteronormativity" let us not speak.

These dopey words and others like them are inserted into stiffly mechanical sentences of dubious meaning. "Attention to the performativity of straight sex characterizes . . . 'The Great Gatsby' (1925), where Nick Carraway's homoerotic obsession with the theatrical Gatsby offers a more authentic passion precisely through flamboyant display." Betcha didn't know that Nick Carraway was hot for Jay Gatsby? We sleep tonight; contemporary literary scholarship stands guard.

"The Cambridge History of the American Novel" is perhaps best read as a sign of what has happened to English studies in recent decades. Along with American Studies programs, which are often their subsidiaries, English departments have tended to become intellectual nursing homes where old ideas go to die. If one is still looking for that living relic, the fully subscribed Marxist, one is today less likely to find him in an Economics or History Department than in an English Department, where he will still be taken seriously. He finds a home there because English departments are less concerned with the consideration of literature per se than with what novels, poems, plays and essays—after being properly X-rayed, frisked, padded down, like so many suspicious-looking air travelers—might yield on the subjects of race, class and gender. "How would [this volume] be organized," one of its contributors asks, "if race, gender, disability, and sexuality were not available?"

In his introduction to "The Cambridge History of the American Novel," Leonard Cassuto, a professor of English at Fordham and most recently the author of "Hard-Boiled Sentimentality: The Secret History of American Crime Stories" (2009), writes that the present volume "synthesizes the divisions between the author-centered literary history of yesterday and the context-centered efforts of recent years." Yet context is where the emphasis preponderantly falls.

One of the better essays in the book, Tom Lutz's "Cather and the Regional Imagination," is only secondarily about Willa Cather. It is primarily about what constitutes the cosmopolitan ideal in fiction, which Miss Cather embodied and which turns out to be an imaginative mixture of wide culture and deep psychological penetration, lending a richness to any subject, no matter how ostensibly provincial. This is what lifts such novels of Cather's as "My Antonia" and "Death Comes for the Archbishop" above regional fiction and gives them their standing as world literature.

"The Cambridge History of the American Novel" could only have come into the world after the death of the once-crucial distinction between high and low culture, a distinction that, until 40 or so years ago, dominated the criticism of literature and all the other arts. Under the rule of this distinction, critics felt it their job to close the gates on inferior artistic products. The distinction started to break down once the works of contemporary authors began to be taught in universities.

The study of popular culture—courses in movies, science fiction, detective fiction, works at first thought less worthy of study in themselves than for what they said about the life of their times—made the next incursion against the exclusivity of high culture. Multiculturalism, which assigned an equivalence of value to the works of all cultures, irrespective of the quality of those works, finished off the distinction between high and low culture, a distinction whose linchpin was seriousness.

In today's university, no one is any longer in a position to say which books are or aren't fit to teach; no one any longer has the authority to decide what is the best in American writing. Too bad, for even now there is no consensus about who are the best American novelists of the past century. (My own candidates are Cather and Theodore Dreiser.) Nor will you read a word, in the pages of "The Cambridge History of the American Novel," about how short-lived are likely to be the sex-obsessed works of the much-vaunted novelists Norman Mailer, John Updike and Philip Roth or about the deleterious effect that creative-writing programs have had on the writing of fiction.

With the gates once carefully guarded by the centurions of high culture now flung open, the barbarians flooded in, and it is they who are running the joint today. The most lauded novelists in "The Cambridge History of the American Novel" tend to be those, in the words of another of its contributors, who are "staging a critique of 'America' and its imperial project." Thus such secondary writers as Allen Ginsberg, Kurt Vonnegut and E.L. Doctorow are in these pages vaunted well beyond their literary worth.

A stranger, freshly arrived from another planet, if offered as his introduction to the United States only this book, would come away with a picture of a country founded on violence and expropriation, stoked through its history by every kind of prejudice and class domination, and populated chiefly by one or another kind of victim, with time out only for the mental sloth and apathy brought on by life lived in the suburbs and the characterless glut of American late capitalism. The automatic leftism behind this picture is also part of the reigning ethos of the current-day English Department.

As a former English major—"Indeed! What regiment?" asks a character in a Lionel Trilling story—I cannot help wondering what it must be like to be taught by the vast majority of the people who have contributed to "The Cambridge History of the American Novel." Two or three times a week one would sit in a room and be told that nothing that one has read is as it appears but is instead informed by authors hiding their true motives even from themselves or, in the best "context-centered" manner, that the books under study are the product of a country built on fundamental dishonesty about the sacred subjects of race, gender and class.

Some indication of what it must be like is indicated by the steep decline of American undergraduates who choose to concentrate in English. English majors once comprised 7.6% of undergraduates, but today the number has been nearly halved, down to 3.9%. Part of this decline is doubtless owing to the worry inspired in the young by a fragile economy. (The greatest rise is in business and economics majors.) Yet that is far from the whole story. William Chace, a former professor of English who was subsequently president of Wesleyan University and then Emory University, in a 2009 article titled "The Decline of the English Department," wrote:

What are the causes for this decline? There are several, but at the root is the failure of departments of English across the country to champion, with passion, the books they teach and to make a strong case to undergraduates that the knowledge of those books and the tradition in which they exist is a human good in and of itself. What departments have done instead is dismember the curriculum, drift away from the notion that historical chronology is important, and substitute for the books themselves a scattered array of secondary considerations (identity studies, abstruse theory, sexuality, film and popular culture). In so doing, they have distanced themselves from the young people interested in good books.

Undergraduates who decided to concentrate their education on literature were always a slightly odd, happily nonconformist group. No learning was less vocational; to announce a major in English was to proclaim that one wasn't being educated with the expectation of a financial payoff. One was an English major because one was intoxicated by literature—its beauty, its force, above all its high truth quotient.

In the final chapter of "The Cambridge History of the American Novel," titled "A History of the Future of Narrative," the novelist Robert Coover argues that, though the technologies of reading and writing may be changing and will continue to change, the love of stories—reading them and writing them—will always be with us. Let's hope he is right. Just don't expect that love to be encouraged and cultivated, at least in the near future, in American universities.