Sunday, August 17, 2008

Not ‘The Asian Century’, After All

Every so often, it is fashionable for some political or economic magazine to pronounce the doom of American dominance. Numbers are presented to show the ‘inevitable’ decline of U.S. influence and power, which is to be replaced by either one dominant Asian nation, or a coalition of Asian nations. For several decades now, we have been assured that the future belongs to Asia, not the United States. This theme has been quite popular, but it is quite simply wrong.

History is not taught with the prominence it deserves, and students are seldom very happy to take a history course (which says something about most history teachers, more than it does about History, I would say), but the lessons of History are vital to anyone who wants to understand the nature of Mankind, the character of nations, and the course of civilization. Those who understand History, understand the unique character of the differing players of note, but also the truly unique place and role of the United States. This can be illustrated, perhaps, through examination of three Asian nations presumed to be rising, unstoppably it seemed, to dominance.

Japan: Following World War 2, the Japanese people had to effectively rebuild everything from the ground up. This caused them to be focused on efficiency and savings, two virtues which helped create a very strong economy within a generation. Companies like Sony, Honda, and Toyota became known first for low prices, then exceptional value. Japan gained great influence on the strength of its industry, which was (and is) directed by MITI, a government agency which directs large-scale business as a strategic asset. The Japanese strategy of keiretsu associations of separate businesses which helped each other without an obvious head of control, created advantages that companies from other nations could not match. By the late 1970s, the strength of Japanese business plus the focused direction by MITI made Japan appear unstoppable, and there were genuine fears that Japan would own the majority of influence in Asia in a matter of a few years. That, however, never happened. The first cause was that macro-economics can only be influenced by macro-level forces – by definition, the internal policies of Japan failed to establish control over the policies and operations of other nations. The keiretsu strategy was only effective when one Japanese company faced another individual company in competition. On the global scale, nations learned their lessons and adapted to the changing conditions. But Japan also failed to understand the one-dimensional nature of its power. A strong Yen and efficient business operations would not placate regional enemies, people with a long list of grievances. Both North and South Korea remain bitter about their treatment at the hands of Japanese invaders during World War 2, as does China. Few people outside the Asian sphere understand how greatly Japan’s intentions are mistrusted. Even before Japan’s invasion of Manchuria in 1931, the Land of the Rising Sun was seen by its neighbors as aggressive and voracious, on a scale not seen in the United States in memory. Worse, Japanese officials have been slow to apologize, and where apologies were made, they lacked specificity and a genuine sense of contrition. For example, when China demanded apologies for the medical experimentation of Chinese prisoners of war, the Japanese government agreed, but said the apology would have to wait until the last surviving member of the Japanese units concerned passed away, in order to avoid offending the honor of Japanese families of the men who had committed these crimes. This action outraged the families of the victims, naturally, but Japan has not budged from that position. Consequently, there is a sense in Asian circles that some Japanese companies are worth doing business with, but that Japan is not suited for a leadership role in the region.

India: Calling itself the world’s largest democracy, India has also enjoyed strong growth in economic terms, and India also enjoys a military power which is effectively unchallenged in the Indian Ocean. The Rupee is also rising against the US dollar, and the strong growth of technology in India has impressed many observers. Yet this growth began decades ago, and while impressive never seems to accomplish everything it promises. Like Japan, India has long controlled business through a central economy, relaxing a bit only after 1991, but even then not allowing companies to succeed or fail solely on their merits. In many respects, the Indian government acts in a manner reminiscent of the old Italian patronages by city-states controlled by ruling families, a peculiar mix of feudalism and socialism intended to achieve certain limited specific goals, which often come at the cost of the economic health overall. This would explain why, even here in the 21st Century, India retains a rigid caste system which effectively denies opportunity to many of its people simply on the basis of their race and family.

China: For more than a half century, it has been fashionable to call the Chinese ’unstoppable’. A nation of more than a billion people, with a growing industry and a largely literate people, is indeed an imposing force. However, just as an athlete on steroids may seem invulnerable at first but who dooms himself to the consequences of its poison, so Communism corrupts, and often destroys, the effectiveness of business within its control. Even though China has discarded the more draconian aspects of its practices, it still faces the consequences of their implementation. For example, the horror of the Sichuan earthquake was made much worse by the clear lack of building codes for residential housing and schools. Put plainly, many of the buildings which collapsed in the earthquake did so because there was no functional concern for the safety of such buildings – the Chinese tended to put together towns and cities where the government felt they were needed to support “crash” projects. No genuine infrastructure was ever planned, let alone built and maintained. There is no Chinese equivalent to the U.S. Coast Guard, no rehearsal of disaster drills and rescue operations with an equivalent of the U.S. Red Cross, no communications network to coordinate first responders to natural disasters. More than seventy thousand people died, and literally millions more lost everything they had, because their government wasted the resources which could have been prepared for the crisis. This catastrophe is relevant to the discussion of the nation’s course of influence, because a nation which does not consider the needs and welfare of its population, will destroy its own strength from within.

The same short-sighted set of values can be seen in China’s administration of the Olympic games. Several members of China’s female gymnastics are now known to be under the minimum age allowed by the IOC for Olympic competition, but China continues to pretend they are legitimate. Because the verification of age falls to the home nation of Olympic athletes, there is no way to disprove the claim but it clearly fails the smell test, not least because when the scandal broke, the Chinese government immediately refused to look seriously into the question, falling back on the predictable but unethical line that the government could not be challenged on such points. The men in Beijing who rule the nation fail to understand the message that this sends out – that China is quite willing to lie about essential points, if it means getting what they want in the short term. This behavior has already cost legitimate Chinese companies (like Lenovo or Tsing Tao) a chance at a serious world reputation, because it has become common knowledge that defects in workmanship and dangers in design may be covered up by the Chinese government, protecting short-term advantages at the cost of long-term confidence. Similar problems, however less publicized, are troubling the Chinese military. Rumors of accidents, failed projects, and defection continue to plague the PLA. It may well be that the Chinese military is capable of accomplishing objectives in the short term, but not in the long, as continued difficulty stabilizing Tibet is showing.

It seems counter-intuitive to say so, but many Asian countries are finding the United States the optimal choice, not so much as the leader in alliances and associations, but as an impartial referee. The reasons, however, are strong once they are considered. To begin with, for all its chaotic rises and falls, the US dollar remains the currency of choice for most currency exchanges, because of an inherent trust in its (long-term) stability and acceptance in transactions. Most effective trade practices, including governance codes, began in the United States, so much so that despite promises they would never embrace it, many European and Asian nations are considering implementing at least part of the once-vilified Sarbanes-Oxley Act of 2002. Moreover, the United States military enjoys the unique reputation as the only peacekeeper force which honors its promises. Even the Indonesian government, no friend of America these days, admitted that the US Navy was invaluable in saving lives and delivering relief immediately after the tsunami disaster of 2004. Despite the controversial nature of the invasions in 2002 and 2003, the governments of Afghanistan and Iraq are freer now than they have been in memory. When asked to leave by the Philippine government, the US left Clark AFB without complaint, just as when asked by the Japanese government to stay in Okinawa, the US made arrangements which considered not only its needs, but the priorities of the host country. Scandals in American conduct make the news precisely because they are rare, the exception rather than the rule. Consequently, because American companies generally honor their contracts better than major companies from Asian countries, and because the US military acts in a manner consistent with state policy, the American agents are considered honest brokers more often than many Asian competitors. For the foreseeable future, then, this century remains an American century, not an Asian one.

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