A McGill University colleague has drawn my attention to a chapter titled “East and West: Trust or Distrust?” in a book titled The Asian 21st Century authored by Kishore Mahbubani of the National University of Singapore.
Many serious people, especially those in the academic world (for example, my colleague opined that “building trust between the East and West [is] imperative”) and in the diplomatic community (as is Mahbubani, formerly Singapore’s representative at the United Nations) speak up to be counterweights to some members of the political class who advocate that a more adversarial atmosphere should characterize East-West relations.
(When US President Joe Biden was asked by a CBS reporter, “Are you willing to get involved militarily to defend Taiwan, if it comes to that,” he said “Yes.”)
The word “trust” is hazy, as is the implied method of “building” it. The late US president Ronald Reagan used an English translation from a rhyming Russian proverb to say, in respect of disarmament talks with the Soviet Union: “Trust but verify.” But the word “verify” lacks precision, at least when applied to the historical necessity of managing events to bring about a cooperative, prosperous, peaceful “East/West 21st century.”
Although few if any individual economists have the capacity to make simultaneous contributions to scholarship, diplomacy, politics and military affairs, the ideas that constitute the theoretical core of the economics profession (or “art,” as I would label it) can guide us when we consider the ways to build a community of interests between East and West.
I am going to talk about trade theory. Not the ordinary sort of discussion, about goods, services, tariffs, subsidies and balance of payments, but about a practical series of policy innovations that may bring about a kind of mutual empathy of feeling and sharing of interest, with the goal of creating a sense of common destiny, East linked to West and vice versa.
Since it is politics and politicians whose actions are responsible for so large a part of East-West tensions, I suggest they stay out of the process I suggest here, except insofar as they reverse the destructive actions they have so far undertaken.
In the US and Europe, tariffs against Chinese products and barriers to Chinese investments have multiplied. Most important, immigration of top people from the East going West has been impeded.
In China, inward migration of economically skillful and ambitious Western people has been frustrated, along with many impediments to importation of entire firms and economic organizations, along with counterproductive intrusions into their internal governance, especially their management and upper-echelon management, have denied to China the lessons to be learned from folks who “do things differently.”
Immanuel Kant’s essay “Perpetual Peace,” in which he claimed that nations closely linked by trade are unlikely to go to war, has long been criticized for its failure to appreciate the reality and frequency of civil wars, where intimate economic partners so often find reason to seize one another’s key assets rather than pay for the dividends thrown off by those assets by means of sending out home goods in exchange for them.
But it is notoriously true that the theory of trade upon which Kantian arguments rest typically fails to include free movement of inputs (classically land, labor and capital, to which I add ideas, culture and ideology).
I am suggesting a much freer East-West movement of people: top people, brainy people, skillful people who do things their own way. And it is not just the people of whom I speak, but their forms of organization, their means and mores, their habits, their ideas and the institutions by which they bring about their innovations.
Each occupant of the opposed Pacific shores should welcome the entire firms, unions, interest groups, social and political practices that such top people use to interact with one another.
Mutual trust is often discussed as if it arrives as a matter of gift, or a sort of goodwill that is established by politicians who gather from time to time at grand conferences where documents proclaiming various forms of goodwill-inducing political discussions that arise from such senior talks among political bigwigs.
I prefer to see trust being built as a matter of mutual self-interest as it is gradually seen to be potentially available to those on-the-ground players whose day-to-day interactions, contracts, promises and common projects naturally give rise to mutually profitable trust.
This sort of trust does not arise just because an American consumer’s auto brake parts were imported from China. It does come into existence when two fellow code writers, one Chinese young woman who studied at Keio University in Japan and the other a young American graduate from University of Chicago, trade ideas.
Immigrants going both ways take with them entire institutions. The part-human part-institutional export from the Western side and absorbed by China is composed of the inner social and political structure culture of economic firms, trade unions, trade associations and other economic “ways of doing things.” Such mainly private social entities are already a mix of power at the top and power at the bottom.
When ideas found in the US constitution, but as it is observed in the private sphere, are mixed with ancient habits advised by Confucius, there will emerge a complex and balanced distribution of rights and duties. Power will be diffused and made less burdensome, because all players will have a hand in making the rules.
If these organizational patterns were imitated in the East, their societies would become even more productive, and the day when old-way rigidities and inefficiencies dry up and evolve into something better is advanced.
The existing political system is not necessarily extinguished but it will face a sort of competition that is more effective and more easily accepted by current leaders than if such competition arose in a purely political way.
Imports to the West from the East should be accepted as a rebalancing of work habits. The West should consider it to be a potent and highly valued source of evolutionary pressure to take on a large inflow of top Asian people who will bring their family-based culture with its values and strength with its persistence and resilience and with the capacity to learn from as well as contribute to the rules. habits, mores and traditions of their new home.
Is this a practical idea? Maybe not holus-bolus in the short run. But there is the rest of the century to make it happen.
China in particular is able to think long-term. The West does not think long-term, but when observed by hindsight after the expiration of the long run, the Americans in particular are able to evolve and change their exterior economic, social and political “style” to an extraordinary degree, while remaining in essence American.
That magic is what every reader of Tocqueville learns about.
Between 1776 and 1876 the United States transformed itself, with the help of vast numbers of imported people, ideas, cultures and “ways of doing things” from a shaky confederation of 13 colonies that occupied a thin strip of coastline, liming a “desolate wilderness” (Nathaniel Morton, 1620) to become a world power with an economy, an army and a set of ideas that were affecting the destinies of all the rest of the world: all the while remaining, at its heart of heart, the same essential exceptional nation that Nathaniel Morton lived in, to say nothing of president Rutherford B Hayes (and even President Joe Biden).
Moreover, the needed changes are already going on, despite politically motivated attempts to interfere with them. America’s universities are full of Asian students who graduate at the top of their classes and are able to live on either side of the Pacific, all the while contributing to the evolutions of both societies.
Americans who push their way into China are figuring out clever ways to put their money, their economic style and their power to adopt their ethos to their new environment while remaining true to their historic internal operational style.
Young Americans who not only admire the Asian students who may have bested them in the classroom are willing and able to go super-West to learn how to learn. It is like continental drift that mere politics cannot, in the long run, stop.
And it is better than making war.
Tom Velk is a libertarian-leaning American economist who writes and lives in Montreal, Canada. He has served as visiting professor at the Board of Governors of the US Federal Reserve system, at the US Congress and as the chairman of the North American Studies program at McGill University and a professor in that university’s Economics Department.