Wednesday, January 19, 2011

The Beginning of History


Francis Fukuyama has a very concise summation(behind a registration wall) of the interplay between China and the U.S., both the places they hold in the world, the parts to envy about each system, and a warning of adjustments both need to make  Matthew Steinglass remarks that Dr. Fukuyama’s op-ed “puts it all together in a fashion that's close to perfect.”  Certainly it’s a fantastic summation, but it does raise some questions.

Without a doubt, the Chinese model is hard to classify but it allows Chinato make large, complex decisions quickly, and to make them relatively well, at least in economic policy.”  Fukuyama contrasts this with India, where all manner of interests can derail a project, particularly infrastructure projects.  But the big question, one we don’t really have the answer to yet and one that Fukuyama foreshadows is how this system responds in an economic downturn.  

This authoritarian system, which has co-opted the business elite and essentially created a middle class, has been able to use sustained and extraordinary economic growth to dis-incentivize the desire for a more democratic government.  However, there is still a large portion of the population that has not seen any success from this economic expansion.  Perhaps given the sheer size of the country and the control the regime has institutionalized, they have been able to ignore this group.  It should also be noted the government has responded to many of the concerns of all their constituencies, but I have doubts about how long they can stay ahead of the eight ball.  The true test will come when GDP growth comes down to earth, which is not to say I hope it happens, only that it will happen.  (Yes, I understand the irony of saying this will happen like so many people said China would be more democratic as its economy grew.  Sometimes you gotta go out on a limb and think economic principles will hold.)

Fukuyama also takes aim at the American system and points out some of its weaknesses.  He writes, “Americans pride themselves on constitutional checks and balances, based on a political culture that distrusts centralised government. This system has ensured individual liberty and a vibrant private sector, but it has now become polarised and ideologically rigid.”  Quite right.  Balancing our democratic traditions with the demands of a globally inter-connected economy where countries, more so then companies, remain the dominant players presents a tough needle to thread.  I think we find ourselves at a crossroads in America with essentially two competing visions: we can move to weaken the federal government, lower taxes, continue to deregulate, and move back to something akin to the U.S. in the late 1700s or we will have to empower the federal government to make ever bigger decisions about the priorities and direction of the country, which could necessitate higher taxes and will necessitate greater bureaucratic autonomy (and maybe control). The former vision would likely guarantee an inability to compete with China, while the latter vision would compromise aspects of the American psyche that places a heavy premium on individual liberty.

Let me say clearly, I’m not a big fan of either scenario.  While I see the social value of a stronger federal government, I remain suspicious of empowering that government to have even half the power the Chinese government now wields over its populace.  This of course, presents a quandary since the middling-road hasn’t done much for us in the past 20 years or so to address our long-term fiscal challenges or allow our foreign policy to capitalize on that brief moment at the end of the Cold War to reinforce the benevolent hegemony of the United States.  To bring it back to Steinglass, he ends his laudatory post on Fukuyama’s op-ed by noting, “It's not clear where we're heading, and we should keep our wits about us and adapt; we can be left behind, just as others were before us.”  Alternatively, we’re not at the end of history, instead we are at the beginning of a new chapter in our history where the conventions of the last chapter will be challenged in new way.  How the U.S. responds today might tell us in the future if we are watching the sun set on American global dominance
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