Has the West lost the plot?
Photo by Mark Makela/Getty Images
“A cycle of Western domination of the world is coming to a natural end. Their populations, on the other hand, can feel these large changes in their bones, and in the job markets. This, in part, explains supposedly politically aberrant – to the elites at least – events like Trump and Brexit”. So writes Kishore Mahbubani, a distinguished Singaporean diplomat, in the slimmest of slim volumes entitled Has the West Lost It?
Getting a view of the West’s trajectory, as others see us, is a salutary experience. For Mahbubani the last two hundred years of overwhelming Western hard and soft power is a temporary aberration in two millennia of history. We are, he argues, returning to a world in which China and India are the largest economies and global power centres. But returning to a changed world. After the entry of a vast Asian labour force and growing Asian economies into the global market, taking advantage of Western experience and technology, the West’s share of global GDP inevitably began to shrink, with the consequence that incomes in the West, except for those of elites, stagnated.
China, by entering the World Trade Organisation (WTO) at the end of 2001, injected almost a billion low-paid workers into the global economy; this led to declining real wages and growing inequality in the West. Eastern European labour, visible and often blamed was by comparison only a minor depressant. Globalisation between 1973 and 2015 saw productivity rise by 73.4%, while wages rose by only 11.1%. An incredible 63% of Americans do not have enough savings to deal with a family emergency costing over $500. The significance of these economic events and the growing inequality they created was ignored as the USA, responding to 9/11 by embarking on neo-con wars in the Middle East, had its government’s attention diverted to military interventions.
Mahbubani argues strongly that a hubristic West has yet to come to terms with the policy implications of this transformed geo-economics and geo-politics. Our British perceptions of the world are skewed towards pessimism and, I would say, victimhood. Max Roser, an Austrian researcher into long term evaluation of living standards, based in Oxford University’s Martin School for Global Development, has tracked the numbers in extreme poverty globally: 75% in 1950, 44% in 1981, below 10% in 2016. According to the OECD, the size of the middle class around the world doubled from 1.8 billion in 2009 and will hit 3.2 million next year. The West still has a picture of a backward, underfed world instead of large pockets of dire poverty in war zones and, notably, in parts of Africa.
Mahbubani is highly critical of US military interventionism around the world, particularly in the Middle East. President Trump’s approach has been to raise military expenditure to unparalleled levels, to insist that other countries comply with the US’ own regime of extreme sanctions against perceived enemies, and to start a trade war with China. “The setbacks to America’s ability to shape the international environment to its advantage are not the result of declining capacity on its part”, former Ambassador Charles Freeman said in a lecture at Brown University, Rhode Island. After decades of experience in State and Defense Departments and in the US Foreign Service, Freeman concluded: “They are the consequences of a failure to adapt to new realities and shifting power balances”.
Has the West Lost It? deliberately provokes with a sweeping critique of the West. But I do not think the people of Kosovo and Sierra Leone would decry Western military interventionism. I doubt if, as Mahbuhani suggests, the EU’s 1962 Common Agricultural Policy had been different, and not a beggar-your-neighbour-across-the-Mediterranean policy, that we would now have fewer migrants from Africa. And I would like the BBC’s excellent More or Less programme to test his often shocking statistics, several of which are reproduced here. What worries me most is the unexamined assumption that democracy and individual human rights seem irrelevant to his analysis. Mahbubani surely does not believe that autocratic government and a police/surveillance State are needed before nations change from “basket case” to economic titan.
Finally, Mahbubani underplays the importance of international financial crises. While he does briefly mention the West’s reaction to the Asian financial crisis of 1997-8, the impact of the global banking crash of 2008 is missing from his analysis. This is surprising because it was China’s financial reserves on top of the US and European tax-payers billions which bailed out the banks, and China’s 30-40% contribution to global growth after the initial shock that helped avoid another Great Depression.
Mabhubani is right to conclude that Western governments did not do enough to prepare for and protect their citizens from the Asian ascendancy. And that this had political consequences. He attributes the Trump and Brexit phenomenon to changes in the distribution of economic power and the resulting visible inequality in the West. The average income of a CEO in the USA in 1965 was twenty times that of their workers. By 2013 it was on average 296 times greater with “fat cats” much resented in the UK.
What should be done? Financial Times economics journalist, Martin Wolf, gave a pertinent answer: “The elites – policy-making, business and financial elites – are increasingly disliked. You need to make policy which brings people to think again that their societies are run in a decent and civilised way”. There seems little chance of this happening until we put Brexit and Trump behind us, and accept that we must think in more realistic terms about the consequences of inequality and our role in the world around us.
