Commentary on Political Economy

Friday, 18 December 2020


Coronavirus has exposed the weakness of the West

The year 2020 has changed history, or perhaps turbocharged its trends. The pandemic has exposed the weakness of the Western model, it has unleashed China in its permanent challenge to liberal democracy — and for Australia, it has posed anew the challenge of reconciling its identity with its geography.

Lenin said: “There are decades where nothing happens, and there are weeks where decades happen.”

A lot happened in 2020, but the humbling before COVID-19 of the great Western icons — the United States, the United Kingdom and much of the European Union — constitutes a story that was decades in the making.

Such failures don’t happen overnight. Historical trends build over many years but are realised in a dramatic event. It is tempting to see the 2020 global pandemic as such an event. By any measure, the East has weathered the challenge far more successfully than the West. Might this constitute a ­bigger turning point?

It is just over 20 years ago that a photo flashed around the world of French socialist Michel Camdessus, then head of the International Monetary Fund, arms folded and haughty, standing over Indonesian strongman President Suharto as he signed the humiliating agreement with the fund during the Asian financial crisis — vivid proof of Asia’s subjugation to the West.

Now in pandemic 2020, under the chaotic mismanagement of Donald Trump, the US is humiliated before the world with the death total just passing 300,000, more than its casualties in World War II — a devastating indictment of Trump’s leadership, the US health system, defective governance and the politicisation of the pandemic and mask-wearing.

G20 leaders discuss the pandemic online in March. Picture: AFP
G20 leaders discuss the pandemic online in March. Picture: AFP

While there are doubts about China’s figures, there are no doubts about China’s economic recovery, ironic since the coronavirus originated in Wuhan. Japan and South Korea are models of Asian achievement — Japan has recorded 2688 deaths, or 21 per million of population, while South Korea has recorded 630 deaths, or just 12 per million.

This compares with the dismal record of the West, with the United Kingdom showing 65,000 deaths, or 963 per million, close to the US figure of 948 per million.

The West prides itself on the values of life and liberty, but actual delivery depends upon government competence, public trust and efficient health administration.

The West is being beaten at its own game. In their latest book, The Wake Up Call, John Micklethwait, editor-in-chief of Bloomberg, and Adrian Wooldridge, political editor of The Economist, say: “In terms of geopolitics, the crisis has left the West weaker and Asia stronger. What made the region so successful? Is it its Confucian tradition? Or its experience of SARS? Or its technological successes? Or is it just much better at running a modern state?

“There is less global admiration for China, given its role in the virus’s origins. Yet all but the most Trumpian observers concluded that the Middle Kingdom did a much better job in terms of protecting its citizens than the other superpower, the United States. Given where the two countries stood a quarter of a century ago, that is no small achievement.

“Even if a few European countries performed well, the European Union turned in on itself — and will probably be stuck in debates that will be incomprehensible to outsiders for years to come. Shrinking (thanks to Britain’s departure), divided (thanks to profound economic strains), and compromised (thanks to Viktor Orban and co), the EU can no longer claim, as it did in the 1990s, to be advancing liberal values.

“The East’s success with coronavirus is not a lucky accident: it is the result of a change that has been several decades in the making. Asia had the technology to deal with the disease — especially in its ‘intelligent cities’ that use smart infrastructure to manage urban life better. And it had the trust of its citizens.”

In 2014 in his Parliament House speeches, Xi was a model of political seduction — he declared relations with Australia would span “mountains and oceans”, and the two nations had a “shared ­vision”. He assured Australians they had a place in China’s glorious future. He was pulling this country into China’s orbit — and with some success.

Charm works with Australians; intimidation much less so. Now it has gone sour. Does China resent its earlier misjudgment of Australia? It has decided to single this country out for special torture. And if Beijing is playing a long game, then Australia may suffer for a long time — or until a change of calculation or personnel in ­Beijing.

The 2020 pandemic has constituted a stress test of the nation state. The results are worrying for the West because the nation state has been the foundation of Western success — and, with America the prime example, the Western nation state suffers a degree of ­obvious dysfunction.

Trump is not an aberration. He did not arrive by accident. Trump is the product of failed US public policy that has demoralised the bottom 40 per cent of its community in economic, education and health terms and bedevils a polity that is now consumed in declining trust and a cultural conflict over core values.

The most devastating analysis of America this year came from the husband and wife team Anne Case, Professor of Economics and Public Affairs, and Nobel Laureate Angus Deaton, Professor of Economics and International Affairs, both at Princeton. Previewing their book Deaths of Despair and the Future of Capitalism, they wrote: “There has been a long-term, slow-moving undermining of the white working class in the United States. Falling wages and a dearth of good jobs have weakened the basic institutions of working-class life, including marriage, churchgoing and community. In the US, the median wage for men has been stagnant since the early 1970s, even though GDP has risen substantially.

“With lower wages, fewer poorly educated men are considered marriageable and this has given rise to a pattern of serial cohabitation — when individuals live with a number of partners in succession — with the majority of less educated white mothers having children out of wedlock and with many fathers in midlife separated from their children.”

Analysing drug deaths, suicides and alcoholic liver disease, the authors say Americans born more recently have a lower life expectancy than their older cohorts. It is the two-thirds of the white, non-Hispanic Americans who do not have a bachelor’s degree who are “most at risk” from “deaths of despair”.

The worse social crime in America is that it spends an absurd 18 per cent of GDP on health, compared with Britain and Australia at 10 per cent, but has no universal health insurance.

The malaise long predates Trump. But the global pandemic of 2020 has exposed a dual US failure — it was unable to contain the virus at home and unable to show global leadership abroad, the role expected of America since World War II.

Here on dismal display was the real consequence of Trump’s ­“putting America first” doctrine. It is no surprise that president-elect Joe Biden pledges to restore America’s leadership role in the world. It is desperately needed but the task won’t be easy. The American project, of course, is not sunk, but its flaws are deep-seated.

At the same time, the 2020 year terminated the Xi-Trump encounter with the geostrategic advantage firmly with Beijing. Trump is vanquished but Xi remains, supposedly as president for life. Yet Trump’s conclusion about China will endure — that Beijing is pledged to a strategic rivalry with America that renders China near friendless in the US political ­system.

In his June 2020 essay titled The Death of Engagement, the US scholar of 45 years standing in dealing with China, Orville Schell, director of the Centre on US-China Relations at the Asia Society, wrote: “With Xi’s aban­donment of the notion of a ‘peaceful rise’, his accelerated military modernisation, eschewal of market reforms and his increasingly unyielding posture in the South and East China Seas, the Taiwan Straits and Hong Kong, the Trump administration finally acknowledged that engagement was no longer working in US interests and instead declared China ‘a strategic competitor’ and a ‘rival power’.”

Trump adviser Steve Bannon had declared at the outset: “These are two systems that are incompatible. One side is going to win, one side is going to lose.”

But after re-tracing the history in his essay for The Wire China, Schell argues that Xi could not ­tolerate engagement with the US because it had an inexorable consequence — it threatened one-party rule in China. That became the impossible threshold. If engagement with America meant more trade, more national income and higher living standards in China, then Xi was a “willing player”. But if engagement “meant putting itself out of business”, then the Chinese Communist Party must draw the line.

Schell said there was always a “darker side to Xi’s grand ambitions” that grew out of his “paranoid fixation on the idea of ‘hostile foreign forces’ perennially and covertly arrayed against China”. Xi predicted “the eventual demise of capitalism and the ultimate victory of socialism would be a long historical process, a struggle between our two social systems”.

Assessing the recent history, climaxing in 2020, Schell wrote: “In the end, engagement’s end could not be blamed on any lack of American commitment or effort. It seems to me that the US has shown unprecedented creativity, first by entertaining a vision of peaceful transformation of a once militant Marxist-Leninist state and then by showing remarkable diplomatic leadership — and patience — in shepherding that vision through so many presidential administrations. As Kissinger recently put it, ‘our hope was that the values of the two sides would come closer together’.”

The engagement phase of history was launched with the audacious Nixon/Kissinger 1972 opening to China. At the time, Richard Nixon said: “The world cannot be safe until China changes. Thus, our aim — to the extent we can influence events — should be to induce change.” The assumption in the initial encounter between Nixon and China’s premier Zhou Enlai was that common interests might outweigh US-China differences.

But common interests have got lost in the sand. Schell asks: “What possessed Chinese party leaders, and then Trump, to so recklessly kill a policy that had not only kept the peace for five decades, but allowed China to undergo just the kind of economic development and national rejuvenation that its people have dreamed of for decades? Was this really in China’s ­future interests?”

He concludes: “Beijing’s inability to reform, evolve, and make the bilateral relationship more ­reciprocal, open and level finally rendered the policy inoperable. Because Xi Jinping viewed just such changes threatening his one-party rule, there came to be an irreconcilable contradiction at the heart of engagement that killed it.”

Trump began by calling out Xi’s masterful tactics against a compliant America. But Trump, as President, lacked the nous and judgment to re-engineer a new US policy to face a different, more ­assertive China. That job falls to Biden.

Scott Morrison talks to Xi Jinping in Japan in 2019. Picture: Adam Taylor/PMO
Scott Morrison talks to Xi Jinping in Japan in 2019. Picture: Adam Taylor/PMO

China and America are incomplete powers for different reasons. China is defined by economic success and technological sophistication yet tainted by compulsive nationalism, political authoritarianism and the hubristic belief that its chief rival — the US — is undergoing relentless decline. America, on the other hand, is trapped in a domestic crisis of varying dimensions involving equity, economic, racial and cultural dimensions, with a post-Trump legacy of introspection, compromised global leadership and uncertain relations with alliance partners.

Trump is an authentic product of US democracy. He won’t fade away and he cannot be forgotten. In his brilliant little book Commander in Cheat, Rick Reilly documents how Trump cheats at golf and keeps cheating. He can’t help it — it’s what he does. But if you can’t trust Trump at golf, why should you trust him with your ­nation’s security?

Reilly says that Ben Crenshaw used to say “Golf is a game with a conscience” — but Trump is a golfer without conscience. You can’t trust him on the fairway and you can’t trust him on the green. But you can trust him to defend ­Taiwan?

Biden also plays golf and perhaps Biden doesn’t cheat. But being honest doesn’t make an effective president either, just refer Jimmy Carter. So, can you rely on Biden to defend Taiwan? And what does Xi think?

The year 2020 unleashed a stack of troubling omens — but omens don’t have to become the reality.

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