The Post-American World: Release 2.0 (32 page)

There’s no doubt that China keeps the renminbi, its currency, undervalued so it can help its manufacturers sell their toys, sweaters, and electronics cheaply in foreign markets, especially the United States and Europe. But this is only one of a series of factors that have made China the key manufacturing base of the world. (The others include low wages, superb infrastructure, hospitality to business, compliant unions, and a hardworking labor force.) A simple appreciation of the renminbi will not magically change all this.

Chinese companies make many goods for less than 25 percent of what they would cost to manufacture in the United States. Making those goods 20 percent more expensive (because it’s reasonable to suppose that without government intervention, China’s currency would increase in value against the dollar by about 20 percent) won’t make American factories competitive. The most likely outcome is that it would help other low-wage economies like Vietnam, India, and Bangladesh, which make many of the same goods as China. So Walmart would still stock goods at the lowest possible price, only more of them would come from Vietnam and Bangladesh. Moreover, these other countries, and many more in Asia, keep their currencies undervalued as well. As Helmut Reisen, head of research for the Development Center at the Organisation for Economic Co-operation and Development, wrote recently in an essay, “There are more than two currencies in the world.”

We’ve seen this movie before. From July 2005 to July 2008, under pressure from the U.S. government, Beijing allowed its currency to rise against the dollar by 21 percent. Despite that hefty increase, China’s exports to the United States continued to grow mightily. Of course, once the recession hit, China’s exports slowed, but not as much as those of countries that had not let their currencies rise. So even with relatively pricier goods, China did better than other exporting nations.

Look elsewhere in the past, and you come to the same conclusion. In 1985 the United States browbeat Japan at the Plaza Accord meetings into letting the yen rise. But the subsequent 50 percent increase did little to make American goods more competitive. Yale University’s Stephen Roach points out that since 2002 the U.S. dollar has fallen in value by 23 percent against all our trading partners, and yet American exports are not booming. The United States imports more than it exports from ninety countries around the world. Is this because of currency manipulation by those countries, or is it more likely a result of fundamental choices we have made as a country to favor consumption over investment and manufacturing?

Our fears extend well beyond terrorism and economics. Lou Dobbs, the former CNN commentator, became the spokesman of a paranoid and angry segment of the country, railing against the sinister forces that are overwhelming us. For many on the right, illegal immigrants have become an obsession. The party of free enterprise has dedicated itself to a huge buildup of the state’s police powers
to stop people from working
. The Democrats are worried about the wages of employees in the United States, but these fears tend to focus on free trade. Though protecting American firms from competition is a sure path to lower productivity, open economic policies are fast losing support within the party. Bill Clinton’s historic realignment of his party—toward the future, markets, trade, and efficiency—is being squandered in the quest for momentary popularity. Whether on terrorism, trade, immigration, or internationalism of any kind, the political dynamic in the United States these days is to hunker down.

Some of foreign policy is what we do, but some of it is also who we are. Hubert Humphrey reputedly said that the Civil Rights Act of 1964 was one of the most important foreign policies of that decade. America
the place
has often been the great antidote to U.S. foreign policy. When American actions across the world have seemed harsh, misguided, or unfair, America itself has always been open, welcoming, and tolerant. I remember visiting the United States as a kid in the 1970s, at a time when, as a country, India was officially anti-American. The reality of the America that I experienced was a powerful refutation of the propaganda and caricatures of its enemies. But today, through inattention, fear, and bureaucratic cowardice, the caricature threatens to become reality.

At the end of the day, openness is America’s greatest strength. Many smart policy wonks have clever ideas that they believe will better American productivity, savings, and health care. More power to them all. But historically, America has succeeded not because of the ingenuity of its government programs but because of the vigor of its society. It has thrived because it has kept itself open to the world—to goods and services, to ideas and inventions, and, above all, to people and cultures. This openness has allowed us to respond quickly and flexibly to new economic times, to manage change and diversity with remarkable ease, and to push forward the boundaries of individual freedom and autonomy. It has allowed America to create the first universal nation, a place where people from all over the world can work, mingle, mix, and share in a common dream and a common destiny.

In the fall of 1982, I arrived here as an eighteen-year-old student from India, eight thousand miles away. America was in rough shape. That December, unemployment hit 10.8 percent, higher than at any point since World War II. Interest rates hovered around 15 percent. Vietnam, Watergate, the energy crisis, and the Iranian hostage crisis had all battered American confidence. Images of the helicopters on the roof of the American Embassy in Saigon, of Nixon resigning, of long lines at gas stations, and of the hostages blindfolded were all fresh in people’s minds. The Soviet Union was on a roll, expanding its influence far beyond its borders, from Afghanistan to Angola to Central America. That June, Israel invaded Lebanon, making a volatile situation in the Middle East even more tense.

Yet America was a strikingly open and expansive country. Reagan embodied it. Despite record-low approval ratings at the time, he exuded optimism from the center of the storm. In the face of Moscow’s rising power, he confidently spoke of a mortal crisis in the Soviet system and predicted that it would end up on “the ash heap of history.” Across the political aisle stood Thomas (Tip) O’Neill, the hearty Irish-American Speaker of the House, who personified the generosity and tolerance of old-school liberalism. Everywhere I went, the atmosphere was warm and welcoming. It was a feeling I had never had before, a country wide open to the world, to the future, and to anyone who loved it. To a young visitor, it seemed to offer unlimited generosity and promise.

For America to thrive in this new and challenging era, for it to succeed amid the rise of the rest, it need fulfill only one test. It should be a place that is as inviting and exciting to the young student who enters the country today as it was for this awkward eighteen-year-old a generation ago.

Notes

2. The Cup Runneth Over

1
. Ted Robert Gurr and Monty G. Marshall, Peace and Conflict 2005: A Global Survey of Armed Conflicts, Self-Determination Movements, and Democracy, Center for International Development and Conflict Management, University of Maryland, College Park (June 2005).

2
. Steven Pinker, “A Brief History of Violence” (talk at Technology, Entertainment, Design Conference, Monterey, Calif., March 2007).

3
. Kevin H. O’Rourke, “The European Grain Invasion, 1870–1913,” Journal of Economic History 57, no. 4 (Dec. 1997): 775–801.

4
. For a good, accessible discussion of the late nineteenth-century “positive supply shock,” see Gary Saxonhouse, “The Integration of Giants into the Global Economy,” AEI: Asian outlook, no. 1 (Jan. 31, 2006).

5
. Michael Specter, “The Last Drop,” New Yorker, Oct. 23, 2006.

6
. Larry O’Hanlon, “Arctic Ice Melt Gets Stark Reassessment,” Discovery News, Sept. 6, 2007, available at http://dsc.discovery.com/news/2007/09/06/arcticice_pla.html?category=earth.

7
. Zbigniew Brzezinski, “The Dilemma of the Last Sovereign,” American Interest 1, no. 1 (Autumn 2005).

8
. Benjamin Schwarz, review of Stephen E. Ambrose, The Good Fight, in Atlantic Monthly, June 2001, p. 103.

9
. Naazneen Barma et al., “The World without the West,” National Interest, no. 90 (July/Aug. 2007): 23–30.

10
. See a survey from the Economist on “The New Titans” in the Sept. 14, 2006, issue.

11
. Jim O’Neill and Anna Stupnytska, The Long-term Outlook for the BRICs and N-11 Post Crisis (Goldman Sachs, Global Eonomics Paper no. 192, Dec. 4, 2009).

12
. Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-first Century (New York: Farrar, Straus and Giroux, 2006), 226. Andy Grove’s statement is quoted in Clyde Prestowitz, Three Billion New Capitalists: The Great Shift of Wealth and Power to the East (New York: Basic Books, 2005), 8.

13
. Gabor Steingart, The War for Wealth: Why Globalization Is Bleeding the West of Its Prosperity (New York: McGraw-Hill, 2008).

3. A Non-Western World?

1
. The facts of Zheng He’s voyages come from a variety of sources, including Gavin Menzies, 1421: The Year China Discovered America (New York: Harper Perennial, 2004); David Landes, The Wealth and Poverty of Nations (New York: W. W. Norton, 1999); and Kuei-Sheng Chang, “The Maritime Scene in China at the Dawn of Great European Discoveries,” Journal of the American Oriental Society 94, no. 3 (July–Sept. 1974): 347–59.

2
. Kenneth Pomeranz, The Great Divergence: China, Europe, and the Making of the Modern World Economy (Princeton: Princeton University Press, 2000). Pomeranz dissents from the view that China was as backward as I describe. But Angus Maddison, William McNeil, and David Landes are better guides on this general topic, and Philip Huang (see below) effectively rebuts Pomeranz in great detail.

3
. Quoted in Bernard Lewis, “The West and the Middle East,” Foreign Affairs 76, no. 1 (Jan./Feb. 1997): 114.

4
. Daniel J. Boorstin, The Discoverers (New York: Vintage Books, 1985), 64. The work of David S. Landes, especially Revolution in Time: Clocks and the Making of the Modern World (Cambridge: Harvard University Press, 1983), also uses the development of the clock to contrast the attitudes toward innovation and technological change in Eastern and Western societies.

5
. David S. Landes, “Why Europe and the West? Why Not China?” Journal of Economic Perspectives 20, no. 2 (Spring 2006): 18.

6
. Philip C. C. Huang, “Development or Involution in Eighteenth-Century Britain and China?: A Review of Kenneth Pomeranz’s The Great Divergence: China, Europe, and the Making of the Modern World Economy,” Journal of Asian Studies 61, no. 2 (May 2002): 501–38.

7
. Landes, “Why Europe and the West?,” 18.

8
. Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (New York: Random House, 1987), 13.

9
. J. M. Roberts, History of the World (Oxford: Oxford University Press, 1993).

10
. This line of reasoning will be familiar to any reader of Jared Diamond’s Guns, Germs, and Steel: The Fates of Human Societies (New York: W. W. Norton, 2005). David Landes, The Wealth and Poverty of Nations, and Eric Jones, The European Miracle: Environments, Economies, and Geopolitics in the History of Europe and Asia, 3d ed. (Cambridge: Cambridge University Press, 2003), also consider geography a crucial determinant of societal development.

11
. Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (New York: Basic Books, 2004).

12
. Quoted in Braj B. Kachru, The Indianization of English: The English Language in India (Oxford: Oxford University Press, 1983), 59–60.

13
. Max Boot, War Made New: Technology, Warfare, and the Course of History, 1500 to Today (New York: Gotham Books, 2006). In “The West and the Middle East,” Bernard Lewis describes how the effects of military modernization rippled across Ottoman society. Building a more intelligent officer corps meant reforming the educational system, and creating a mobile military meant investing heavily in roads and modern infrastructure. Thus the urge to win battles led to cultural and economic change, too.

14
. Samuel P. Huntington, “The West: Unique, Not Universal,” Foreign Affairs 75, no. 6 (Nov./Dec. 1996): 28–46.

15
. Kishore Mahbubani, “Will India Emerge as an Eastern or Western Power?” (Center for the Advanced Study of India, Penn Club, New York, Nov. 9, 2006); Indrajit Basu, “Western Wear Rivals the Indian Sari,” Asia Times Online, May 10, 2007.

16
. Fabrizio Gilardi, Jacint Jordana, and David Levi-Faur, “Regulation in the Age of Globalization: The Diffusion of Regulatory Agencies across Europe and Latin America,” IBEI Working Paper, 2006:1.

17
. Jason Overdorf, “Bigger Than Bollywood,” Newsweek International, Sept. 10, 2007.

18
. Christian Caryl, “Turning Un-Japanese,” Newsweek International, Feb. 13, 2006.

19
. Diana Crane, “Culture and Globalization: Theoretical Models and Emerging Trends,” in Global Culture: Media, Arts, Policy, and Globalization, ed. Diana Crane, Nobuko Kawashima, and Kenichi Kawasaki (London: Routledge, 2002).

4. The Challenger

1
. Robyn Meredith, The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us (New York: W. W. Norton, 2007), 16.

2
. Melinda Liu, “Beijing Reborn,” Newsweek International, Aug. 13, 2007.

3
. Jun Ma and John Norregaard, China’s Fiscal Decentralization (International Monetary Fund, Oct. 1998).

4
. Minxin Pei, China’s Trapped Transition: The Limits of Developmental Autocracy (Cambridge: Harvard University Press, 2006).

5
. Ibid.

6
. Pan Yue, deputy head of China’s State Environmental Protection Agency, quoted in Jamil Aderlini and Mure Dickie, “Taking the Waters,” Financial Times, July 24, 2007.

7
. Joseph Kahn and Jim Yardley, “As China Roars, Pollution Reaches Deadly Extremes,” New York Times, Aug. 26, 2007.

8
. John Thornton, “Long Time Coming: The Prospects for Democracy in China,” Foreign Affairs 87, no. 1 (Jan./Feb. 2008): 2–22.

9
. I am grateful to Mr. Lee Kuan Yew for telling me about this series and then arranging for it to be sent to me. One of Singapore’s television stations aired the entire series with English subtitles, so I was able to watch the whole show.

10
. Joseph Needham, Within the Four Seas: The Dialogue of East and West (London: Allen & Unwin, 1969), 63.

11
. Ibid., 90.

12
. Thomas Fuchs, “The European China: Receptions from Leibniz to Kant,” Journal of Chinese Philosophy 33, no. 1 (2006): 43.

13
. Email to the author.

14
. Robert Gilpin, War and Change in World Politics (Cambridge: Cambridge University Press, 1981), 94–95.

15
. Ernest Harsch, “Big Leap in China-Africa Ties,” Africa Renewal 20, no. 4 (Jan. 2007): 3.

16
. Carlos H. Conde, “Asean and China Sign Trade and Services Accord,” International Herald Tribune, Jan. 14, 2007.

17
. “Out of Their Silos; China and America,” Economist, June 10, 2006.

18
. Joshua Cooper Ramo, “The Beijing Consensus” (Foreign Policy Centre, London, 2004).

5. The Ally

1
. Jim O’Neill and Anna Stupnytska, The Long-term Outlook for the BRICs and N-11 Post Crisis (Goldman Sachs, Global Eonomics Paper no. 192, Dec. 4, 2009).

2
. “GM to triple parts sourcing from India,” Times of India, Nov. 20, 2007.

3
. Jahangir Aziz and Steven Dunaway, “China’s Rebalancing Act,” Finance & Development 44, no. 3 (Sept. 2007).

4
. Yasheng Huang, “Will India Overtake China?” Foreign Policy, July/Aug. 2003, pp. 71–81.

5
. Manjeet Kripalani, “Read All About It: India’s Media Wars,” BusinessWeek, May 16, 2005.

6
. From the World Health Organization, available at http://www.who.int/countries/ind/en/.

7
. See, e.g., his article, “India and the Balance of Power,” Foreign Affairs 85, no. 4 (July/Aug. 2006): 17–32.

8
. Chaudhuri explains these ideas further in his Hinduism: A Religion to Live By (Oxford: Oxford University Press, 1979).

9
. Mohamed ElBaradei, “Rethinking Nuclear Safeguards,” Washington Post, June 14, 2006.

10
. Robert D. Blackwill, “Journalist Roundtable on India” (transcript), hosted by David B. Ensor, Feb. 23, 2006.

6. American Power

1
. James Morris, Pax Britannica: Climax of an Empire (New York: Harcourt Brace, 1980).

2
. Quoted in Karl Meyer, “An Edwardian Warning: The Unraveling of a Colossus,” World Policy Journal 17, no. 4 (Winter 2000/2001): 47–57.

3
. Niall Ferguson, Empire: The Rise and Demise of the British World Order and the Lessons for Global Power (New York: Basic Books, 2002), 268.

4
. Lawrence James, The Rise and Fall of the British Empire (New York: St. Martin’s Press, 1996), 212.

5
. Paul Kennedy, “Why Did the British Empire Last So Long?,” in Strategy and Diplomacy, 1870–1945: Eight Studies (London: Allen & Unwin, 1984), 197–218.

6
. The facts on Britain’s economic situation come largely from Paul Kennedy, The Rise and Fall of Great Powers (New York: Random House, 1987), 151–200. Maddison and Barnett (see below) are also useful sources.

7
. This theory on the British decline is fleshed out in Correlli Barnett, The Collapse of British Power (Gloucestershire: Sutton Publishing, 1997).

8
. Niall Ferguson, The Pity of War (New York: Penguin Books, 1998).

9
. Kennedy, Rise and Fall of Great Powers, 317.

10
. James, Rise and Fall of the British Empire, 464.

11
. Michael W. Holman, Profiting from International Nanotechnology (Lux Research, Dec. 2006).

12
. James Fallows, “China Makes, the World Takes,” Atlantic Monthly, July/Aug. 2007.

13
. The Immelt quotation originally appeared in an interview with the Globalist magazine, “A CEO’s Responsibilities in the Age of Globalization,” March 17, 2006.

14
. Bialik wrote two columns on the topic in the Wall Street Journal: “Outsourcing Fears Help Inflate Some Numbers,” Aug. 26, 2005, and “Sounding the Alarm with a Fuzzy Stat,” Oct. 27, 2005. The Duke study, called “Framing the Engineering Outsourcing Debate: Placing the United States on a Level Playing Field with China and India,” was led by Dr. Gary Gereffi and Vivek Wadhwa.

15
. The Emerging Global Labor Market: Part II—The Supply of Offshore Talent in Services (McKinsey Global Institute, June 2005).

16
. Alan S. Brown and Linda LaVine Brown, “What Are Science & Math Test Scores Really Telling U.S.?” Bent of Tau Beta Pi, Winter 2007, pp. 13–17.