Appeasers or Cold Warriors: Must America Confront China?

Let’s begin by remembering that America’s past political mistakes don’t, on their own, prove anything about the present. For example, there is no doubt that the U.S. was at one time seriously prejudiced against Asian peoples.  But dismissing American fears of China today as mere racial prejudice is silly: we’re not imagining China’s nuclear warheads, its dictatorial government, or its predatory mercantilism. Even if racism is a part of the motivation of some of China’s critics—it may be; I can’t read people’s minds—this doesn’t make their criticisms false, just dishonorably motivated.

Similarly, have a care with the Cold War analogy and the ghost of McCarthy.  Granted, there are people in the U.S. who are spoiling for an enemy. I recall attending a conference in Washington—it was in 1997 or  1998—in which there was literally a panel discussion entitled “Should We Make China the New Soviet Union?”  Hmm… I recall thinking at the time that China either is or isn’t whatever it is, and Americans don’t have much option to “make” it anything otherwise.  I still think so.  Even if vested interests in the U.S. want to ramp up defense spending and some people just can’t face the day without an enemy to crusade against, again this doesn’t make them wrong, just dishonorably motivated.

I also can’t resist noting at this juncture that, perverse though it sounds, having an enemy is not always entirely a bad thing. It’s painfully obvious, in retrospect, that the vast surge of broadly-shared middle class prosperity, not just here in the U.S. but in Western Europe, at mid-century was in large part a riposte to Communism engineered by America’s ruling elite. Minus the competition with Stalin, I’m not entirely sure they would have built Levittown. You think it’s an accident that inequality surged as the credibility of the Soviet threat receded?  And that’s not to mention the fact that the Pentagon created most of the effective industrial policy the U.S. had during this era.

Might a drawn-out competition with China similarly force America to get its act together and deliver decent economic performance for its own citizens and the foreign peoples in its sphere of influence?  It just possibly might, especially as the success of the East Asian model of planned-economy capitalism is intellectually killing the mythology of laissez faire that is strangling this country right now.  Sometimes it takes rivalry to bring out the best in people—even the USA.

Another theme that often came up about China was that “authoritarianism, no matter how strong it looks at the moment, can’t last.  Freedom is on the march, and there is a mile-long list of dead tyrants to testify to that.”  Sounds inspiring, and it’s an easy idea to drape in red, white, and blue. But this analysis is misleading in the case of China, barring some extremely unexpected events. The authoritarian societies of the past have tended to fail for specific reasons—problems which the regime in Beijing is very carefully avoiding:

1)   They were personalist dictatorships that depended upon the vigor of a single despot whose luck eventually ran out.

2)   They were stuck in the past, and did not adapt to modern technology.  In this category go traditional societies from Spain to Zululand.

3)   They went broke because they didn’t understand economics and thought they could create wealth by political fiat.  In this category goes the USSR and all its imitators.
 
4)   They got arrogant and blundered into wars they couldn’t win.  In this category go Hitler, Mussolini, and Saddam Hussein.

In China’s case, we can rule out #1 and #2 above with ease.  Problem #4, of course, refers, from our present vantage point, to the future, as we cannot be absolutely sure they won’t do something stupid militarily.  But the evidence appears to weigh against it.  Beijing for now appears to be a disciplined player of the game which, while certainly willing to use force (ask Tibet!), isn’t going to romp into strategic catastrophe from sheer excess testosterone.

War? Personally, my suspicion is that a corrupt deal will be struck by the rulers (I mean the real rulers, not necessarily the elected government in our case) of China and the U.S., and there will no violent clash between the two nations.  Too unprofitable.  I can certainly gin up scenarios for the opposite, but these get tendentious. Much easier for two elites to unite on their true common ground: aggrandize their own money and power, and the populations they rule take the hindmost.  Behind closed doors, I think they already realize how much they have in common.

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank founded in 1933 and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.