Chairman Mao’s Living Legacy

In China, one Nobel Peace Prize winner sits in jail while his wife endures an unofficial house arrest. Another, much more famous winner – the Dalai Lama – has been in exile from his Chinese-ruled homeland for more than 50 years.

In Russia, journalists are routinely attacked and killed with impunity. A video documenting one such attack appeared on a Russian news site just this week.

In Pakistan, journalists also regularly come under attack. One reporter recently lifted the veil of terror by bravely speaking out about his abductors’ effort to intimidate him.

These governments aren’t even the bad guys.

Russia and China are important economies and hold permanent seats on the United Nations Security Council. Their leaders are in South Korea right now with President Obama at the Group of 20 economic summit. Pakistan is supposed to be one of our leading allies in the battle against Islamist terror, though elements of its security services have been longtime sponsors and protectors of the Taliban.

We like to think we “won” the Cold War with the demise of the old Soviet Union. That is debatable, though I agree that the world is a better and safer place with Russia and China intertwined with Western economies. As I have written before, borrowing $1 trillion or so from another country is an excellent way to keep that country from trying to hurt you.

Russia, China and Pakistan can be our partners in trade, and in security when our interests overlap. But we should never, ever make the mistake of viewing these governments as our friends. The people who run these places are friends to nobody – not to their own people, and certainly not to us.

A friendly government must, at minimum, govern with the consent of its population. It must respect limits on its power that are imposed domestically by law, and internationally by treaty and convention. It must put the welfare of its society ahead of the narrow personal interests of the people who hold power at any particular moment.

We assume that China, after three decades of economic liberalization and amazingly fast development, is communist only on paper, and that it has rejected the policies that Mao Zedong and his cadres imposed after they won their civil war in 1949.

This is not true. At its core, China’s leadership still hews strictly to one of Mao’s most important early pronouncements.

“Every Communist must grasp the truth,” Mao told a party congress in 1938 during the civil war. “Political power grows out of the barrel of a gun.”

And so it does in China to this day. The country’s leaders were enraged when the Nobel committee awarded the peace prize, China’s first, to imprisoned human rights activist Liu Xiaobo. The official Xinhua news agency denounced the award as “a brazen challenge to China’s judicial authority which deeply hurts Chinese people’s feelings.” China threatened to retaliate against the government of Norway, which does not even determine the prize.

Liu was convicted on charges of “agitation aimed at subverting the government” for writing a series of essays that questioned the socialist system. Liu’s wife, Liu Xia, who has not been charged with or convicted of any crime, has nonetheless been prevented from leaving her apartment and has had her phone line cut off. Writers, lawyers and activists who signed a letter supporting the Nobel committee’s choice received threatening phone calls from the police even before the letter was published, according to Xu Youyu, a professor with the Chinese Academy of Social Sciences. Earlier this week, two activist lawyers were prevented from traveling to a conference in London, apparently due to official fears that they would detour to Norway to receive Liu’s award for him.

Russia is nominally non-communist, but there, too, leaders over the past decade have shown great regard for Mao’s teachings on the sources of power. Russian elections today are not much freer than in the Soviet era. Tax and other criminal investigations are marked by “masky shows” in which masked, heavily armed government agents ransack business offices in a display of force that aims to intimidate. And journalists are frequent targets, as in the recent case of Oleg Kashin.

Power flows from a gun barrel in Pakistan, as well. Journalist Umar Cheema put this on display when he reported that he had been pulled from his car and taken to a house on the outskirts of the capital, where he was brutally beaten and humiliated. Earlier in the year, Cheema had been warned by an agent of Pakistan’s Inter-Services Intelligence agency (ISI) that he needed to stop writing articles critical of the agency. After his attack he said, “I have suspicions and every journalist has suspicions that all fingers point to the ISI.”

The ISI is also known to exercise a great deal of control over the Taliban, and has actively worked to stop the progress of peace talks in Afghanistan. An Afghan official spoke recently with The New York Times about peace talks taking place in Kabul, warning, “The ISI will try to prevent these negotiations from happening.” He said the ISI would likely try to “eliminate” the Taliban leaders participating in the talks.

If I published this commentary in China, I would be subject to arrest. In Pakistan, I would be subject to assault. In Russia, if I had a big enough audience, I might well be killed. This serves as a good enough test for me of whether a government can really be seen as friendly.

Countries like Canada and the United Kingdom, which share our legal and political traditions, are our natural friends and allies. But our friends need not look and sound like Canadians and Brits. Our friends can include countries like Japan and South Korea, which have cultures that are quite different from ours. They can include countries like Mexico, which has many internal problems we do not share, or like Brazil, which has an economic and demographic profile very different from our own.

Like the United States itself, none of these countries is flawless. But they, and many others, exist under the rule of law, and their governments obtain their power through the consent of those they govern. Within this group of countries, interests will sometimes clash, but in the end, our shared aspirations vastly outweigh our differences.

We have to live and work with governments that do not share those aspirations, but we don’t have to like them and we don’t have to trust them. They are not run by the sort of people one ought to like or trust.

Don’t take my word. Ask Liu Xiaobo, or Umar Cheema, or Oleg Kashin.

About Larry M. Elkin 534 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

Visit: Palisades Hudson

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