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The most challenging problem in economics is not in the understanding of the theory or the model of economic development which is evidenced by the fact that many nations’ GDPs have been steadily increasing as various economic development models are applied. The real challenge lies in the finding of a solution to limit the wealth gap created by the economic development. The wealth gap in a society is invariably the consequence of economic growth. All economic development models based on the principle of getting uniform return across all the society members seem to be fruitless. A few as practiced by the communist countries have proven to be a failure when compared with other economic development models based on capitalism. 

There seem to be two fundamental factors producing the above outcome. First, capital is a necessary ingredient for economic development and it must be applied strategically, selectively and timely to development projects to yield optimum return. Second, Human Resources are necessary for economic development but they must be selected based on human intelligence and talents, trained with right skills and knowledge and motivated by a driving force to devote energy and time in economic development projects. The above first condition also depends on talented humans to manage the capital under a management system ranging from a totally free capital system to a totally government controlled capital system with varying degree of man-made regulations. The second condition usually can be met by a competitive education system and a talent selection scheme.  The motivation, however, is rooted in human nature, that is human’s desire for material or asset possession and a self-defined life style, which ultimately leads to wealth accumulation. We might term this model as ‘capital-talent’ model for later reference. Under this model, wealth has become the most effective and consequential motivation factor for talented humans to engage in productive economic projects. Even in the charity organizations and religious institutions, this materialistic motivation factor cannot be ignored. That is why successful charity organizations pay their executives millions of dollars in salary and all successful churches pay their pastors with full range of amenities including housing, cars, phones, salaries above average parishioners’ income and cushy retirement benefits.

There are ample successful examples of nations as well as private corporations applying the capital-talent economic development model. Just following post WW II world economic development, the U.S., Germany, Japan, and the four little dragons in Asia all can offer solid ‘case’ examples to support the above conclusions. China, after switching from an unsuccessful socialistic economic model to a ‘capital-talent’ model, albeit knowing the wealth gap issue and willingly letting a small group of smart people to drive their economy and getting rich, has shown us an non-debatable success story of economic development. So did many other nations and global corporations succeed in building their enterprises under the above principle. China’s rapid rise in economy or her GDP growth is accomplished with the consequence of the above capital and human driven economic development model producing the wealth gap phenomenon, a small number of people possess a large portion of the national wealth.

The U. S. is the wealthiest nation on earth as far as her national GDP and total assets is concerned. The U.S. is a capitalist country and is a beacon for the world coming to pursuing capitalistic economic development. However, the wealth gap problem in the U.S. is likely the most severe case. The wealth gap of course is produced and compounded yearly by income inequality (income gap). In 2015, the bottom 90% of people in the U.S. had an average income of $34K and the top 10% had an average income of $312K, nearly ten-fold difference. What is more shocking is that the top 1% average income was $1.36M and top 0.1% was $6.75M, 200 times greater than the average income of 90% of population. It is clear that income inequality will produce a larger wealth gap, since the majority of U.S. citizens are not making enough money to save or build assets.  Based on the data from Internal Revenue Service and Congressional Budget Office, since 1979, the before-tax incomes of the top 1% of America’s households have increased four times more than the bottom 20% population’s income.  The after-tax incomes of top 1% has increased on average 192.2% since 1979 -2013 whereas the corresponding before-tax income of top 1% has increased on average 186.8%. This shows that the tax system does not cure the income inequality problem and its consequential wealth gap issue. The U.S. has used welfare program to boost the income of the bottom 0-40% of the population, but the above data indicates that so long as the economic development operates under the ‘capital-talent’ model and its principles derived from human nature, the income inequality and wealth gap will persist. Even in the top income population, the same problem exists; the highest 0.1% income earners have seen their income rise much faster than the rest of top 1%. (The top 400 earners doubled their earning from 1992 to 2002) The seriousness of the wealth gap can be illustrated by the following statistics: In 2013, the top 10% of family holdings held 76% of the national wealth whereas the bottom 50% of the families held 1%, a rapid worsening from 1989 to 2013.
 
China has adopted the ‘capital-talent’ model thus naturally we expect the same consequence - creation of wealth gap in the nation, although no detailed statistics on household income and household holdings over the past five decades are available. China currently is applying a harsh anti-corruption measure to breakdown illegally created wealth but that is not the same wealth accumulated through the ‘capital-talent’ model. China has seen an amazing progress of economic development. The speed of economic development is naturally correlated with the amount of capital and talented Human Resources available. China’s GDP was less than $100 billion in 1971 to $12.8 trillion in 2017, an increase of 129X signifying a rapid rise. From available data (1952-2017 six and half decades), China’s GDP was $30.55B to $113.69B(1952-1972), an increase of 3.72X for two decades, $113.69B to $493.14B(1972-1992), an increase of 4.34X, and $493.14B to $12840.39B(1992-2017), an increase of 26X. These data support the ‘capital-talent’ model; from 1992 to 2017, China has the fastest growth of capital, educated talents and the impetus of Internet revolution making China the manufacturer of the world. Unfortunately, the higher the speed of economic growth is, the bigger the wealth gap will occur. Big wealth gap will produce social instability in any governance system. Something must be done to reduce the wealth gap, otherwise social unrest will take place. The tax system and welfare program (including minimum wage) practiced in the U.S. can not cure the income inequality and wealth gap problem without destroying people’s incentive to take on productive work. Perhaps, one suggestion to redistribute wealth is to encourage wealthy people to make large tax deductible donations to (1) Public infrastructure funds, funds for constructing roads from city to rural regions, airports, train stations, ports, bridges, museums, parks, and public transportation and utilities allowing donors names to be put on them and (2) Innovation funds, funds for supporting science and technology research benefitting the public and the nation. Government can establish these funds with low yields to let wealthy people to invest their wealth but benefit the less wealthy more.


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Pivot to Asia has been a key component of the U.S. foreign policy since Obama Administration. With Asian countries rapidly rising economically, such a policy is logical. However, the interpretation and implementation of the policy is subject to question on its true purpose and ultimate objectives. The current tension in the South China Sea, Korea Peninsula and Iran and over all intense relationship with and among China, India, Japan and Russia begs answers on what does the U.S. really hope to accomplish with her Asia Pacific foreign policy. The actions and their consequences up till now have left Asia in stress against Asian countries’ desire which is to achieve prosperity through economic development. The U.S. seems to have made a wrong assumption or taken the wrong actions leading to unexpected outcome.
 
The ‘Pivot’ or ‘Rebalancing’ term was introduced in the Fall of 2011 during the Obama Administration, but the core of its strategy of shifting emphasis to Asia was a continuation from the G. W. Bush government and the early stage of Obama’s first term, such as strengthening ties with existing allies in Asia, redeploying or balancing troops and increasing naval presence in Asia, signing free trade agreement with South Korea and engaging with TPP development as well as cultivating partnership with India and Vietnam. Obama’s formal announcement on ‘Pivot’ and taking actions in military sphere such as new deployment of troops and equipments to Australia and Singapore certainly had alerted China worrying what is the real purpose of the ‘Pivot’.
 
As a Congress Research Report, authored by seven social scientists (Mark Manyin et. al.) on March 28, 2012, stated, the “pivot” is a conviction (benefit) that the center of gravity for U.S. foreign policy, national security, and economic interests is being realigned and shifted towards Asia, and that the U.S. strategy and priorities will be adjusted accordingly. However, the report noted the risk of ‘pivot’ being its ‘cost‘ which may cause a significant reduction of U.S. defense spending elsewhere, a reduction in U.S. military capacity in other parts of the world, and may jeopardize the Congressional plan to cut Navy spending. Additionally, the perception among many that the “rebalancing” is targeted against China could strengthen the hand of Chinese hard-liners thus deteriorating US-China Relation and making it more difficult for the United States to gain China’s cooperation on a range of issues. Moreover, the report warned that the pivot’s prominence would have raised the ’costs‘ to the United States if it (Obama) or successor administrations (Trump) failed to follow through on the ‘pivot’ plan. One key assumption, that for years ‘many’ countries in Asia have encouraged the U.S. to step up its activities to provide a counter balance to China’s rising influence, is later proven not exactly correct. The Asian nations, seemingly changing more so lately（with Japan as an exception perhaps）, want a peaceful environment for economic development rather than a stressful confrontational atmosphere brought on by ‘pivot’.
 
There are many essays written about ‘Pivot’. From a nice early assessment made by Kenneth Lieberthal, The American Pivot to Asia - Why President Obama’s turn to the East is easier said than done, Foreign Policy 12/21/20111, to a latest PhD research work, The Case of the Pivot to Asia - System Effects and the Origin of Strategy, by Nicholas D. Anderson and Victor D. Cha, Professor at George Washington University and former Ambassador to South Korea (SK), Political Science Quarterly, Vol. 132, no. 4, 2017-18, one can see that there is a lot of issues concerning how the ‘Pivot’ was executed and what was accomplished. After researching these ‘pivot’ studies, I have found one article by Emanuel Pastreich, an American academic, very revealing about the intriguing intention of the ‘Pivot’ program and how the US military establishment is really in control of it. Pastreich was born in Nashville, TN, (10/16/1964), attended Lowell High School in San Francisco and began studies in Yale University and obtained a B.A. degree in Chinese (1987, during college he also studied abroad at Taiwan University), then obtained a M.A. degree in comparative literature from Tokyo University (1991, dissertation in Japanese language) and completed his PhD in East Asian Studies from Harvard University (1998). So Pastreich is an American scholar with a deep understanding of Asia.
 
It is necessary to go into Dr. Pastreich’s background to appreciate his views on the U.S. foreign policy on Asia. Academically, he served as assistant professor at the University of Illinois at Urbana–Champaign, George Washington University, and Solbridge International School of Business. He is currently an associate professor at the College of International Studies, Kyung Hee University. Previously he served as an international relations and foreign investment adviser to the governor of Chungnam Province (2007-2008), SK, as an external relations adviser at the Daedeok Innopolis research cluster, and was appointed to serve on the committee for city administration (2010-2011) and for foreign investment (2009-2010) for the city of Daejeon. Pastreich also served previously as the Director of the KORUS House (2005-2007), a think tank for international relations housed in the Korean Embassy in Washington D.C., and as the editor-in-chief of Dynamic Korea, a journal of the Korean Foreign Ministry that introduces Korean culture and society. Prof. Pastreich is no doubt an expert on Asian affairs well versed in Asian languages and having working experience in SK, Japan and Taiwan, Asian allies of the U.S.
 
Recently, Professor Pastreich published a lengthy opinion in the Korea Times (5/12/2018), entitled, From the Prison Cells of Guantanamo Bay to Embassy in Seoul - Harry Harris, the rise of an American warlord. His opinion is certainly very explicit in criticizing the inappropriateness of appointing General Harris as the ambassador to SK, while NK and SK are attempting to make peace and the U.S. is trying to negotiate with NK for denuclearization. But more importantly, his arguments for against Harris’s appointment touch upon the strategy of ‘Pivot’ and who is guiding it into a wrong path. In my analysis, Pastreich had made an astute observation and his opinion deserves US mainstream media coverage and clarification as well as our serious reflection. Thus, after presenting a brief history of ‘Pivot’ and Professor Pastreich’s scholarly background above, I am ready to use the next column to discuss Prof. Pastreich’s essay in detail. The arguments against and the inappropriateness of General Harry Harris’s appointment as ambassador to SK (after Australians expressed displeasure to his appointment as Ambassador to Australia), a detailed account of General Harris’s Navy career rising like a warlord (including his role as the Commander of Quantanamo Prison Camp and rapid promotions to become the Commander of Pacific Command) and what factional groups existing in the U.S. military will be discussed, analyzed and interpreted in relation to the U.S. ‘Pivot to Asia’ policy as part II.

The North Korea (NK) nuclear threat has a long history with NK being on and off and off and on in signing the Nuclear Non Proliferation Treaty (NPT). The recent years accelerated pace of nuclear testing and missile launching by NK invited strong reaction from the U.S. Japan and South Korea, harsh exchanges of words, increased military exercises and heightened economic sanctions placed on NK approved by the U.N. However, the North Korea nuclear threat has already reached a dilemma: North Korea has demonstrated possible capability of launching and delivering a nuclear armed continental ballistic missile, showing off by flying one over Japan (4475km, capable of reaching the U.S. if calculated with a shallow launching angle). The U.S. has installed The Terminal High Altitude Area Defense (THAAD) system despite of the objections by China and Russia as a counter measure. This mutually claimed touché obviously did not dissolve the real nuclear threat. 

The confrontation and exchange of harsh words and threats between the NK and the U.S. are exemplified by the speech the Minister of Foreign Affairs of NK, Ri Yong Ho, delivered at the U.N. on September 23rd, 2017. Ri attacked President Trump for his tweets calling the North Korea leader Kim Jong Un a rocket man. Ri accounted historical events and labeled the U.S. as the aggressor, being First used nuclear weapon, First brought nuclear weapon to Korea Peninsula and First possessed the largest amount of nuclear arsenal. Ri regarded Trump’s actions as on a suicide mission which will invite the inevitable arrival of nuclear missile to the U.S. homeland. According to The Times report, the Chinese Foreign Minister, Wang Yi, brokered a meeting between Rex Tillerson and Ri Yong Ho with an implicit agreement that the U.S. will cease military exercises with South Korea (SK) and Japan in exchange for NK’s suspension of nuclear tests. This meeting did not realize a real hope for opening a dialogue until the Winter Olympic events involving two Koreas took place.

The president of SK, Moon Jae-In (born 1-24-1953), has taken an initiative since taking office (5-10-2017) to engage NK despite of the hesitation of the U.S. and the serious opposition from Japan. Moon dispatched an envoy to NK eventually leading to the outcome that NK embraced the Winter Olympics (held in Pyeong Chang, South Korea) by sending a high-level envoy led by Kim Yong Nam, head of parliament, accompanied by Kim Yo Jong, younger sister of Kim Jong Un and a sizable Olympic team with cheer leaders to the Winter Olympics games. North and South Korea hockey teams played together in the Winter Olympics which wrote a special chapter for the Olympic history. 

This Olympic encounter with NK delivering a personal invitation from Kim Jong Un to President Moon of SK appears to be the diplomatic act thawing the ice between the two Koreas. Actually behind the scene, Kim’s rude manner and not meeting the special Chinese envoy in November, 2017, led by Soon Tao, intending to brief Kim a traditional update after the 19th Chinese Communist Party (CCP) Congress, angered President Xi to the point that China cut off all avenues of supplies of oil and gas to NK knowing the arrival of a bitter Winter. In this column, we have always held the position that the NK problem can only be solved by a synchronized joint plan endorsed by the U.S. and China. China’s move to support the sanction as a message to Kim and Xi’s vivid anger over Kim’s irrational behavior turned messages to punishments. This punishment apparently triggered the softening of NK, delivering an Olympic Oliver branch to SK, and seeking a direct dialogue with the U.S., hence the possibility of a Trump-Kim meeting.

With what happened between NK and SK, The U.S. has little choice but goes along with the wishes of the two Koreas of meeting and talking, whether the North is sincere or not. On March 9, President Trump agreed to meet with Kim Jong Un to discuss how to realize the denuclearization of Korea Peninsula. This was a big news and considered a big win for Kim since the U.S. had never agreed to have direct talks with NK before. Soon, Kim was invited to make a State Visit to China which happened on March 28. Then on April 27, Kim Jong Un and Moon Jae In held a summit meeting at the two-Korea border creating an historical event with embrace, kind words and planting a ‘peace tree’. The U.S. is putting the preparation of Trump-Kim summit in high gear focusing on setting a date and location for the meeting. On May 4, President Trump announced that he had a date and place in mind for his meeting with Kim. Then on May 8th, Kim made a secret visit to Dalian, China with a purpose of having a personal dialogue with President Xi and thanking him for his years of support in resolving the Korea Peninsula issue through dialogue. Then on May 10th, Trump tweeted that the Trump-Kim Summit will take place at Singapore on June 12th. Seemingly, the summit event was sure to take place.
Following the above announcement, a series of dramatic development, which ultimately led to President Trump’s cancellation of the summit meeting, was so bizarre and intriguing that might be made into a movie someday. At this time, we can only string together a few things happened and reported in the media connecting to the cancellation of the Summit: (1)NK not entirely happy about Singapore being the meeting place unilaterally decided by the U.S. (2)NK threatened to pull out of the meeting because the U.S., Korea and Japan were still to hold military exercises. (3) National Security Advisor John Bolton suggested that Libya (Gaddafi was killed) could serve as a model for persuading NK to give up its nuclear weapon program. (4) Kim’s top aide Choe Son-hui regarded VP Mike Pence’s remark, “NK may end like Libya” stupid and call him a political dummy. (5)Pompeo’s meetings with NK did not go well resulting in NK not communicating with the US officials.

All the above indicate the possibility that NK will call off the summit, thus Trump decided to call it off first and sent Kim a letter. President Trump had agreed to meet with Kim Jong Un for talks in May 2018 then postponed to June 12; in between Kim made a second visit to China obviously seeking some diplomatic consultation. The U.S. got into the summit agreement without a solid plan. Trump’s staff should have focused on preparing a game plan than uttering rhetoric destroying instead of building trust. At this point, though the June 12th meeting is called off, all sides, the U.S., NK, China and SK all left doors open for reopening for a Trump-Kim meeting.  We sincerely hope that Trump and Kim will not focus on scoring personal credit and glory but concentrate on getting a peace treaty and making the Korean Peninsula free of nuclear weapons. China has been consistent and sincere in her position and effort to solve the Korea Peninsula issue through dialogue. We believe that a Trump-Kim meeting will be fruitful if Trump-Kim can build trust through China, reaching a mutual understanding. We will emphasize a view we have expressed before, that is the nuclear threat in the Korean Peninsula may be completely resolved if the North and South Korea can be united. If the Korean War in the 1950’s was ended with a peace treaty allowing the two Koreas to unite like East and West Germany did at the end of the Cold War, there would be no nuclear threat in Korean Peninsula. The unification of West and East Germany should be used as a history lesson for negotiating a peace treaty between the U.S. and the two Koreas. Trump and Xi should work out a mutual understanding on the pre-conditions for exercising the reunification of two Koreas thus achieving denuclearization.

From the historical perspective of the U.S., the Korean War, the defense treaty with SK and the problem of NK nuclear threat are all rooted in the legacy strategy of deterring the spread of communism. China’s own socialistic ideologytoday is not communism and is more leaning towards the socialism practiced in the U.S. A united Korea Peninsula co-existing with China will stop the spread of communism and contribute to world peace. 
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Ifay Chang. Ph.D. Producer/Host, Community Education - Scrammble Game Show, Weekly TV Columnist, www.us-chinaforum.org . Trustee, Somers Central School District.