Cold War II

We were asked if we’re slipping into a new cold war. Our answer is you haven’t been paying attention, it’s already started. It probably started even longer ago, but when Xi was named President for life, it was inevitable. Anytime you have a president for life or anything close to it, the situation already is off the rails. You just don’t get liberalization with the rule of law when you can’t change the people at the top. What you get increasing repression. As we’ve pointed out in our “More” series, top-down one-party states are inherently inefficient as the elite substitute their judgment for that of free markets and the choices of free people. As they fall further behind, the people become restive, and the rulers have to make a choice between ceding power or crushing dissent. Too often, the latter wins out. So it appears with China. 

Given the actual state of things, what should we be doing? Decouple as soon and as thoroughly as we can without upending our and the world’s economy. That was the beauty of the Trans-Pacific Partnership (TPP). While increasing free trade among the members and protecting intellectual property rights, it makes it more expensive to make or buy in China. Unless China changed its ways, it would become increasingly isolated. This would’ve given everyone time to adjust without sudden dislocation. Unfortunately, the Trump administration dumped TPP and instead levied stiff tariffs. This is causing pain on both sides without isolating China. Evidently, the Trump administration thinks we can continue to have linked economies with just some adjustments. That wouldn’t have worked with the old Soviet Union, and it won’t work with China.

You only have to look at two of the recent happenings to two of our prominent business institutions, the NBA and Disney. Each fearing a loss of Chinese profits has bent their American Principles into a pretzel. Given our ideals, is there any reason not to know where Americans should come down on freedom. Houston Rockets general manager knew Daryl Morey and twitted his support for the people of Hong Kong. China had an immediate meltdown and used full force to bend the NBA to its will. Disney under similar pressure made changes to content to please China. In both cases, these entities initially chose profits over integrity. In doing so, they have lost any moral authority to speak out on anything at home or abroad. Unless you’re willing to pay the price of speaking up against injustice everywhere, you can’t really speak out anywhere. Nobody needs to listen to hypocrites.

Even though there has been some backtracking such as NBA head Adam Silver tepidly speaking up on Morey’s behalf, many in the business world feel caught in the middle. This is understandable. Our government is busy sending mixed messages when it should be clear bending to China’s will send you for a loss a home. Our government can make it clear to everyone you’ll have to pick a side by extending the TPP principles Worldwide. It has to make it crystal clear China’s thieving, aggressive, and repressive ways are incompatible with the world’s trading system. An excellent place to start would be expelling China from the World Trade Organization (WTO). Of course, this would require strong, clear-headed US leadership.

Something on par with Bush 41 putting together the 1st gulf war coalition. Unfortunately, we are lead by Donald Trump. Building coalitions depend on excellent personal diplomatic skills and trust. George Bush the Elder had developed worldwide personal relationships over many years. He was liked and trusted. Trump, on the other hand, is neither. Trump has angered most of our friends. These are the very ones we need to present a united front against China. Our President has given other leaders scant reason to like him personally. While he boasts of his friendships with other leaders, mostly with the despots of the world, there is no evidence anyone has warm feelings toward him. More importantly, no one has a reason to trust him. If this wasn’t an apparent before, his backstabbing of our Kurdish allies, it surely is now. The sudden nonsensical withdrawal from Northeast Syria showed Trump has no allegiance to people or common sense. The needed grand alliance on the scale of NATO or even greater will never be put together by the mercurial untrustworthy Trump. He seems even unaware of the need.

Usually, we could look to the opposition party for needed changes, but the Democrats are equally unaware we are in a new cold war. Hilary Clinton and the Democrats in the 2016 campaign also turned their backs on TPP even though Clinton actually negotiated it. No Democrat running since has picked up this fallen treaty or spoke in favor of its principles. Presidential contenders on both sides seem to align with Trump’s desire not to be involved in distant troubles. Most would echo Trump’s remark on Syria, “We’re 7,000 miles away.” Unfortunately, this sounds eerily similar to British Prime Minister Chamberlain’s statement about involvement before World War II, “…a quarrel in a faraway country between people of whom we know nothing,” was about a much closer Czechoslovakia. Britain waffled, and the rest is history. You may want to ignore what China is, but as the NBA found out, China won’t ignore you.

It may take the actual crushing and ultimate destruction of Hong Kong to bring home to our leaders whether or not they want to believe it, we are in Cold War II. Let’s hope not. Still, China might be deterred from its present oppressive course with proper policies. Cutting China off from a big part of world trade would, of course, be a start. In today’s world, appealing to the Communist Party members and the Chinese people at large as growth slows, and maybe even reverses could result in a change of direction. Xi may see himself as a new Chinese Emperor, but there isn’t much in his aggrandizement for most of the rest. Living in fear for everyone, not at the very top, isn’t much fun. Before the age of “More,” people had little choice but to follow a leader to get “More.” or even survive. Hoping to be on the right side of the continuous games of thrones came with the territory. Today, a capable educated populous whether party members or not could have fulfilling lives in a free country without fear. Losing a job and finding another one isn’t the same as being sent for re-education to some gulag or worse. 

How could we contribute to this outcome? One thing that undermined the Soviet Overlords was the illicit exposure of its people to alternative culture. For instance, Voice of /America and others used music to entice people with tunes to get across the idea of a better way of life. We know China and others will try to use tech against us, so why not use our tech prowess to deliver whatever China bans. Here’s where businesses such as the NBA and Disney could really play a part. For instance, dumping the NBA may hurt the league, but millions upon millions of Chinese fans love the NBA, so find a way to stream games along with a little discontent with the rulers. Subtly, ask the people what exactly they are getting from their government? For a big part of the population, the answer is not much. They’re not even getting the NBA. The same for crowd-pleasing Disney Content. There are fans at every level of the party and the military. Realizing there is a better way to live may just have more appeal than a life of fear. Why go backward? It just might work, but not without everybody realizing we are in a new Cold War.

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