Fwd: The Jolly Libertarian

[Trevor Watkins]

A fascinating and insightful article. This is a good time to learn to speak Chinese.

Trevor Watkins

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From: The Jolly Libertarian <noreply+...@google.com>
Date: Fri, 15 Jan 2021 at 10:24
Subject: The Jolly Libertarian
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The Jolly Libertarian

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The End of American Hegemony Posted: 14 Jan 2021 11:41 AM PST Follow us on Facebook Hegemony: noun /hɪˈɡem.ə.ni/ /hɪˈdʒem.ə.ni/ /ˈheɡ.ɪ.mə.ni/ /ˈhedʒ.ɪ.mə.ni/ (especially of countries) the position of being the strongest and most powerful and therefore able to control others (Cambridge Dictionary) Undoubtedly the United States has had economic, cultural and military hegemony over the entire world since the fall of the Berlin Wall if not longer. This dominance began with the Monroe Doctrine but was not implemented until Teddy Roosevelt put it into practice. As Graham Allison puts it in his monumental book, Destined for War: Can China and America Escape Thucydides's Trap?, "Roosevelt knew in his bones that the hundred years ahead should be an American era, and he was committed to do everything in his power to make it so." Under Roosevelt, America  declared itself to be the policeman of the Western Hemisphere, asserting the right to intervene whenever and wherever it judged it necessary to do so - a right it exercised nine times in the seven year's of TR's presidency alone. (90) National greatness, he insisted, rested on two imperatives: the mission to advance civilization at home and abroad, and the muscle to achieve it - in particular a superior military composed of men who embodied strength, courage and the will to fight. (91) Not only did Roosevelt want to "drive the Spaniards out of Cuba," he was even hungrier for "an immediate war with Great Britain for the conquest of Canada."  (95) Fortunately for we Canadians, he never got beyond rhetoric on that one. But he did lead the Spanish-American War effort, going so far as to resign as Assistant Secretary of the Navy under McKinley to become a Lieutenant Colonel in the US Army, organize the volunteer regiment known as the Rough Riders, and personally lead the Battle of San Juan Hill, which "Roosevelt later recalled... as the greatest day of his life." (96) Not only did the Spanish-American War result in Cuban independence, it gave America the Spanish colonies of Puerto Rico, Guam and the Philippines, further securing a presence in the Asia-Pacific region. It had annexed Hawaii several months earlier.  This role as policeman of the world was furthered by Woodrow Wilson who reversed his earlier position of neutrality to have the United States join the allies in World War I to "make the world safe for democracy."  After World War II, the United States led the group of Western nations that developed the international institutions through the Bretton Woods Agreement. These included the International Monetary Fund, the World Bank, and the GATT which evolved into the World Trade Organization. As Allison notes, "In both the IMF and the World Bank, one - and only one - country has a veto over any changes in governance of the institutions: the United States." (22) Capital flows were tightly regulated until they were relaxed after the 1973 oil crisis. International capital movements accelerated in the early 1980s under Ronald Reagan and Margaret Thatcher and financial markets became truly global in the early 1990s after the collapse of the Soviet empire. (George Soros, On Globalization, page 2)  This resulted in a new form of economic imperialism that  maverick writers Bill Bonner and Addison Wiggin call the pax dolarium in their 2006 book Empire of Debt. It is an empire financed by debt, a debt largely held by the poor of the third world. As I wrote in a review of the book: American saving has dropped to negligible levels, just 1.2% of income (borrowed since they’re spending more than they make.) Meanwhile the Chinese, newly exposed to the wonders of capitalism and wealth creation, are saving at a rate of 25.5%. In India the savings rate is 24.3%. The great irony is that the poor nations of China and India are saving and investing while the United States stagnates. They are financing American spending through the purchase of American T-bills and stocks. It is through the good grace of thrifty poor people that Americans can spend like gluttons. (Book Review: Empire of Debt) But these third world countries have been steadily moving into the first world. And as Graham Allison points out, China has moved into a position where it is not just challenging, but surpassing the United States economically. In the first chapter, The Biggest Player in the History of the World, he gives a detailed account of China's economic transformation. It is nothing short of mind-boggling. When he wrote the book, published in 2017, China was challenging U.S. economic hegemony. Based on projections, China achieved economic parity in 2014 and by 2024 will dominate the world economically.  There is a mythology that China is a collectivist country. This was undoubtedly true during the Maoist era. But the Communist Party in China today is communist in name only. Following the death of Mao, China took a radical turn towards the free market.  During Mao's time, economic profiteers were rewarded with a bullet to the head. Today China leads the world in the creation of new billionaires. When my wife and I took a Southeast Asian cruise in 2016, the cruise director (the entertainment director) was a Chinese national who called himself Fang. He gave some stats on the passengers aboard. People hailed from 53 different countries. The largest contingent were Aussies - over a thousand of them. The second largest contingent came from mainland China - around 500.  While it is true that China is no democracy as we in the West know it, it is not collectivist as we generally understand the term. The Chinese political ethos is one of order and hierarchy. It is a traditional order based on Confucianism.  China's current leader, Xi Jinping, grew up as a privileged child, the son of one of Mao's right-hand men, Vice-premier Xi Zhongxun, who had fought alongside Mao in the Chinese Civil War. Shortly after he turned nine in 1962, the young Xi found out his father had been arrested by a paranoid Mao.  His father was imprisoned and "Red Guards repeatedly forced him (young Xi) to denounce his own father. When his school closed, Xi spent his days defending himself in street fights and stealing books from shuttered libraries to try to educate himself." (113) He was sent to the countryside to be "reeducated" and ended up "living in a cave in a rural village in Yan'an, shoveling dung and snapping to the demands of his peasant foreman." (113-114) His half-sister hanged herself.  Instead of yielding to despair, young Xi decided to fight back by becoming "redder than red" doing whatever it took to "claw his way back." It took him ten attempts to rejoin the Communist Party. And he managed to get a university education. Finally in 1997, he just barely managed to be elected to the party's Central Committee.  Mao died in 1976 and his hardcore doctrinaire Marxism died with him. Mao's successor, Deng Xiaoping undertook a series of market reforms. Wikipedia describes it thus: The first stage, in the late 1970s and early 1980s, involved the de-collectivization of agriculture, the opening up of the country to foreign investment, and permission for entrepreneurs to start businesses. However, a large percentage of industries remained state-owned. The second stage of reform, in the late 1980s and 1990s, involved the privatization and contracting out of much state-owned industry. The 1985 lifting of price controls was a major reform, and protectionist policies and regulations soon followed, although state monopolies in sectors such as banking and petroleum remained. In 2001, China joined the World Trade Organization (WTO). The private sector grew remarkably, accounting for as much as 70 percent of China's gross domestic product by 2005. (Wikipedia)  Where did Deng and Xi and every other Chinese leader in-between get their schooling in market economics? Lee Kuan Yew. Who? Yew! Yew is the man who almost single-handedly turned Singapore from a rural backwater to a thriving capitalist super-state. Yew "was educated at Cambridge University and embodied a fusion of Confucian and upper-class English values." (Allison 5) Allison writes "Every Chinese leader from Deng Xiaoping to Xi Jinping has called him 'mentor,' a term of ultimate respect in Chinese culture."  When he was sent to be the Party chief in the province of Zhejiang in 2002, Xi oversaw spectacular economic growth: exports increased 33 percent annually for his four years in office. He also proved adept at identifying and supporting promising local entrepreneurs, including Jack Ma, whose Alibababa is now a global titan that rivals Amazon. (114)  The Forbes list of Global Billionaires for 2020 (finalized on March 18) lists Ma as the 17th wealthiest man on the planet with a net worth of $38.8 billion. There are 456 Chinese billionaires on the list (including Hong Kong and Macao), second only to the United States which has 614.  China's phenomenal success can only truly be understood by some statistics, of which Allison includes a great many. And remember, the book was published in2017 so many of the numbers have been superseded now.  annual economic growth since 1980 - 10% a year; US in its heyday (1860-1913) - 4% a year China is "the largest producer of ships, steel, aluminum, furniture, clothing, textiles, cell phones, and computers" in the world largest auto maker in the world as well as largest auto market (20 million cars bought in 2015) "since 2008 China continued to serve as the primary engine of global economic growth" "between 2011 and 2013 China both produced and used more cement than the US did in the entire twentieth century." "Over the past decade, China has constructed the world's longest high-speed rail network: 12,000 miles of rail line that carry passengers between cities at speeds up to 180 miles per hour."  "China now has more high-speed rail tracks than the rest of the world combined." life expectancy in 1949: 36 - life expectancy in 2014: 76 literacy in 1949: 20% - in 2014 - 95% "Chinese shoppers bought half of the world's luxury goods sold in 2015."  There are other stats as well. Consider education. According to the Program for International Student Assessment, in 2015 "China ranked sixth in mathematics while the United States ranked thirty-ninth." (16) Allison reports that at Stanford, China high school graduates arrive with a three-year advantage over their American counterparts in critical-thinking skills." And "in 2015, Tsinghua University passed MIT in the U.S. News and World Report rankings to become the number-one university in the world for engineering." While critics often allege that China's success is based to some extent on stealing American patents, that is no longer the case. China has become an innovative powerhouse in its own right.  In 2015, China filed almost twice as many total patent applications as the second-place Americans and became the first country to generate more than one million applications in a single year. On its current path, China will surpass the US to become the world leader in research-and-development spending by 2019. (17)  The list goes on and on, and those curious to know more should pick up a copy of Allison's book and read Chapter 1 if nothing else. It is truly mind-boggling.  Allison goes on to discuss military muscle and how the Chinese are using innovation to gain an edge in military strength. "Just as technology startups like Facebook and Uber have used the concept of disruptive technology to upend previously dominant firms, the Chinese military is developing new technologies that can counter ships, planes, and satellites that the U.S. has developed over decades - and for a fraction of the cost." (19) A 2015 RAND Corporation report predicted that by 2017 China would have superiority or achieved parity with the United States in "six of the nine areas of conventional capability." (20) Allison concludes the chapter with a short section on "the balance of power." A balance of power means that the United States is no longer the world's hegemon in many areas. It is being challenged by a growing China in every area. Lee Kuan Yew suggests that while "in the old concept, balance of power meant largely military power, in today's terms it is a combination of economic and military, and I think the economic outweighs the military." (20) This is not surprising. American dominance in the world was based on its economic muscle as much as its military muscle. The end of the cold war and the fall of communism in the Soviet Union arose from Reagan pushing the envelope in an arms race that the Soviets just did not have the capability of competing in. It was bankrupting the Soviets.  The new method of power-broking in the world has been dubbed geo-economics "which is the use of economic instruments (from trade and investment policy to sanctions, cyberattacks, and foreign aid) to achieve geopolitical goals."  China primarily conducts foreign policy through economics because, to put it bluntly, it can. It is currently the largest trading partner for over 130 countries - including all the major Asian economies. (21) Allison notes that China is employing Sun Tzu's maxim: "Ultimate excellence lies not in winning every battle, but in defeating the enemy without ever fighting." Allison gives several examples of China flexing its economic muscle for political ends - such as "the abrupt cessation of all exports of rare metals to Japan in 2010 to persuade Japan to return several Chinese fishermen it had detained." (21) Earlier I noted how the United States designed several international institutions through the Bretton Woods agreement in order to control international economics. China has now "begun to forge new ones." For example, it created the Asian Infrastructure Investment Bank (AIIB) in 2013 to compete with the World Bank. 57 nations signed up with the AIIB including staunch American ally, the United Kingdom.  Earlier, after the 2008 global recession, it "organized the BRICS - Brazil, Russia, India, China and South Africa - as a group of rapidly expanding economies capable of making decisions and taking actions without supervision from the United States or the G7." (23)  Largesse, economic imperialism - call it what you will. The fact is that China's economic network is spreading across the globe, altering the international balance of power in a way that causes even longtime US allies in Asia to tilt from the US toward China. (23-24) American hegemony has not only been challenged, it has been dismantled. The United States no longer bestrides the world like a Colossus. China has become a master of its own fate and is no longer an underling.  The case of China poses an interesting philosophical question. Notables from Ayn Rand to Milton Friedman have noted a connection between capitalism and freedom. But in China we have a one party undemocratic government that has embraced market economics. It has market freedom, but still maintains a tight control over things like free speech. It is an enigma. What is freedom? Are capitalism and freedom interconnected? How? Can you have capitalism without freedom? Is China free because it has capitalism? I may explore these questions in a later blog post. Other Links of Interest Wikipedia: Chinese Economic Reform Can Semi-Capitalist China Supplant Semi-Socialist America? - an essay at Savvy Street by Walter Donway that got me to read Allison's book.  Follow us on Facebook

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