Very bright people, like fireflies, have always flocked in history to great centers of intellectual ferment. The United States is no exception, in particular, within it, specific regions such as the Boston-New York-Washington corridor. The United States has been a magnet since 1776. It is this human capital that has made the country great.
But there is also a downside to the demographics of far too many bright minds densely populating small tracts of land, especially when it has to do with money as in Manhattan or power as in Washington. It becomes the equivalent of masterchefs on Iron Chef America, all joining together to cook in one restaurant. When too many cooks stir their ladles in a broth, there may only be broth to eat at the end of the day. Such is the state of policy in Washington today.
The late Milton Friedman, before he passed on, had written an article for the Council on Foreign Relations (CFR). He was worried that the world could become polarized again, acknowledging the truth in a similar argument that I had made earlier, between the authoritarian economies of the transition countries led by Russia and China and the rest of the world. Milton Friedman, a hero to the Chinese communist party because he gave the Chinese the time to keep their politics without the economics with the hope that the politics will change was not so hopeful before he died. Perhaps he had hoped that him saying so can change China. In geopolitics, where intellectualism only matters if it is aligned with interests, this is wishful thinking.
Washington’s impotence with China since the last couple of Bush years under Hank Paulson which is being continued by Tim Geithner’s Treasury along with a policy of divide-and-rule on defense between Mainland China and Taiwan, besides recent Wall Street ruminations to short China all point to a rising desperation on the part of the United States. But carrot-and-stick desperation is not policy.
The policy of the United States toward China need not be as complicated and confused. It remains one-China policy, both with respect to Tibet and Taiwan. The goal is a democratically integrated China between its mainland, Hong Kong, Tibet and Taiwan. China has a lot of work to do domestically to make that integration happen smoothly, similar to the challenges being faced by the European Union (EU), both in its own interest and that of the rest of the world and this is where it must stay focused. And we must project American values without mincing words without ourselves trying to become China, beguiled by its rapid growth and the glitzy newness of its big cities, especially when we have our own to rebuild with our money.
Meeting the Dalai Lama is necessary, but with the purpose of keeping China together, while insisting on the rights of Tibetans to live the way wish with their yaks, religion and all. The same principle applies to the recent Google attacks, by inviting China to collaborate on better global internet governance, because the downward spiral of government-sponsored mutual cyberattacks is in the best interest of neither side. Selling arms to Taiwan is poor policy even if it raises U.S exports in a down economy. It is a recipe for the new polarization. Prospective weapons removed from Central Europe that gave Obama his Nobel need not be transplanted in the strait between Mainland China and Taiwan.
Instead of conflict with China over Iran and the Middle East over energy supplies for economic growth, the United States must lead to change the way we live from living high on the hog on foreign oil to become more efficient. Fundamentally changing how the United States uses energy with existing technologies can reduce the U.S energy footprint by half, and perhaps the Chinese and Indians can also learn something from that, giving a longer lifeline to the oil exporting countries rather than indulging in conflict over energy gluttony.
Given China’s permanent vote on the U.N Security Council, what is needed is a reform of the Security Council to end World War II by admitting Japan and a united Europe, not coercing China into backing out of Iran. What is needed is an American rapprochement with Iran after 1979, conditioning it on civilian nuclear power in exchange for global denuclearization, including in the United States and the rest of the permanent members of the UN Security Council ― the gratuitously self-anointed perm-5. What is needed is ending North Korea as a separate state and unifying the two Koreas to finally end the Korean war.
The same must apply to ending the Cold War by admitting a united Europe into the G20 to restructure the G20 to promote the European model of economic regionalism in other parts of the world. It is a signal to Europe that it must behave better within its union in how it responds to the predicament of its PIGS (Portugal, Ireland, Greece and Spain) if it is to be held up as a model to the rest of the world for better global economic integration to move the world’s currencies to eventually become sustainable and stable floating currencies, because without currency unions and common economic areas, small economies (including those in Europe), by nature, cannot sustain stable floating currencies.
The G20 changes must then be accordingly reflected in how the International Monetary Fund (IMF) and the World Bank are governed and organized internally: the organization of the boards and bureaucracies of the IMF and World Bank must reflect the world order as represented by the spirit of global integration of such a restructured G20. The purpose of the stable global currencies is to help the rest transition to stability in interdependence (Davos is not global economic governance).
Within the context of such a global framework of reform, accusing China of currency manipulation is pharisaical. Floating currencies are manipulated as a matter of macroeconomic policy by all countries which have them, including the United States. China will continue to even when it eventually floats the yuan. China must comply with all of its World Trade Organization (WTO) admission requirements. And Russia must be admitted into the WTO to balance economic power in Eurasia. The United States should not expect to have it both ways: piling up all its eggs in the Chinese basket and insist that China listen to what we say.
The United States can do what it can do for itself, within its own borders, which could have ramifications for China, but just as we should not tell the Chinese how to make policy for their country, they should not tell us how to make policy for ourselves. We should not make policy for China, nor should we try to. Chinese exports to the United States must comply with American values of better labor and environmental laws or else they should face border taxes to render their goods uncompetitive on price.
American companies are welcome to produce in China for Chinese consumers if the Chinese want them there and if U.S multinational corporations (MNCs) are voluntarily willing to abide by Chinese terms on Chinese soil, but not for importing into the United States until China changes politically to become democratic. U.S MNC decisions vis-à-vis China must be delinked from U.S imports. The Great Moderation can continue elsewhere, such as in Africa and Latin America, where the United States can compete directly with China on more favorable terms for the Africans through both Wall Street and the Department of State, rather than relying on the circuitous lose(US)-win(China) deal of China’s globalization using American dollars.
Hope must be accompanied by action to execute.