I recently had a discussion with some Chinese economists and political scientists about when the economic crisis would end and what the relationship between China and the United States would be after the crisis.
In terms of the when the economic crisis will end, after reviewing all the data, I computed a number out 26 decimal places and then added 20-percent for safety. My answer was 18 months after the credit card companies come clean about their losses and there have been enough jobs created to reverse the downward economic spiral. My Chinese hosts thought three years. Of course, we were all just guessing.
In terms of the post-crisis relationship of the United States and China, I gave them an answer using the same rigorous methodology mentioned above. In the ensuing discussion, we talked about the recent G-20 meeting, where the pundits referred to the U.S. and the P.R.C. as the “G2.” It was generally agreed that after the crisis, it will be a multi-polar, not bi-polar world. It will also be a world where the economic, political and social landscape will have changed dramatically.
This new multi-polar world will include new economic and political consortiums, including not only the members of the G-20, but groups like the East African Union, resource-rich areas which want to pool their clout. The table will be much larger and more complex and include entities that control resources, new markets and technology.
In this world, resources, markets and technology will be the base of a three-corned economic and political game. China and the US will have prominent places, but not all the cards. Bilateral relations activity will increase as nations try to find the best partners to create economic and political gains. Managing these complex diplomatic and trade relations will be the new “investment banking,” but it will require a different knowledge base and skill set.
Getting back to a world where the economic, political and social landscape will have changed dramatically, we are already seeing the effects of this paradigm shift. For many outside the United States, the actions we took to protect our economy and security crossed the ideological lines we preached. To them, the U.S. has lost the moral and logical high ground, putting us on the defensive.
The resulting vacuum has, and will, invite comments and doubts, rational and otherwise, about the systems and ideologies we advocated. While we may not agree with them, we need to be careful to concentrate on the underlying sentiments, not the comments themselves, if we want to defend the value of our systems.
As an example, recently Jackie Chan, funny Kung Fu actor, Hong Kong resident and previous pro-democracy activist, while participating on a panel at the Boao Forum for Asia – a regional conference modeled on the World Economic Forum in Davos – was quoted as saying: “I’m not sure if it’s good to have freedom or not. I’m really confused now. If you’re too free, you’re like the way Hong Kong is now. It’s very chaotic. Taiwan is also chaotic. I’m gradually beginning to feel that we Chinese need to be controlled. If we’re not being controlled, we’ll just do what we want.”
It is hard to tell what happened exactly, as no transcripts are available, but the attributed quotes set off a firestorm of name-calling and criticism from newspapers, bloggers and pro-democracy advocates from Hong Kong to the U.S. Unfortunately, few addressed the elephant in the room, whether his attributed comments reflect a widespread long-term shift in attitudes against the economic and political models advanced by Washington in favor of those being used by Beijing.
Our one-size-fits-all approach to economic and political success has been discredited by recent events and we now face a backlash. How long and how deep it goes will depend in part on how well we help with the economic recovery and in part on how we handle the debates. It would be unfortunate if popular negative reaction threw the baby out with the bath water.
In the scheme of history, the development of the nation state and the ideologies of modern democracy, capitalism, socialism and communism are recent developments. In a world with more than 6.7 billion people separated by ethnicity, language, culture and beliefs, the idea that there is one correct path for all, while possible, does not seem probable. To compete in the post-crisis world, we may have to rethink the idea that the world revolves around us and that the solutions that work for us will work for everyone.
Perhaps we can regain our ideological credibility by advertising the value of our system, not as a shoebox solution, but its ability, most of the time, to balance the needs and aspirations of individual Americans with the requirements of an American nation.
Post-crisis, in a multi-polar world where the competition for resources, markets and technology will define the players and the relationships, we will have to be more informed about other nations, careful about how we treat them and aware of how they see us. Lectures on how they should run their governments or their economies will probably not go over very well when we are trying to secure resources or access to markets.
As to the specifics of how this could affect you, my scientific guess is that it will be a time of great opportunity for small and medium-sized businesses. As the economic sands become less stable, creativity and nimbleness will be the Darwinian difference. On the downside, it could be a time of difficulty for large enterprises that maintain their dominance through economies of scale, marketing and political clout. In the future, how interested will any government be in coming to the aid of a multinational that uses taxpayer funds to pay bonuses for their overseas employees?
