War with China or War with Inequality?

War with China or War with Inequality?

November 14, 2014

What are the most important of the challenges facing our country and the world? Answering this question as citizens is important, because how we view the priorities determines where our government energy, time and money will be spent. Priorities have a great bearing on how the country and the world evolve. Is preparing for war with China a high priority? Or, is rising inequality right here at home more dangerous?

There are two articles in today's Foreign Policy magazine, each defending one of these polar positions. The first is forecasting an upcoming war between the US and China. 

The author is Michael Pillsbury, a former defense official under Reagan and Bush and now a Fellow at the Hudson Institute, a conservative think tank.  

The second argues that growing inequality in the US is a greater risk to us than Ebola, Isis, Russia, or a number of other geopolitical troubles brewing around the world. It is written by David Rothkopf, Editor of the FP Group and Visiting Scholar at the Carnegie Endowment for International Peace.

Pillsbury's and articles of this the kind promote fear and raise the (very remote) possibility of armed conflict with China (or with some other foreign actor, such as Isis. He claims to have a lot of input from military sources on both sides of the Pacific. But perhaps he has not spent enough time looking at economic, environmental and sociological factors, and looking the two countries on a balancing scale. 

What is not addressed in Pillsbury’s article are the more compelling elements of the Chinese situation: the trade interdependency of the US and China; the fact that China has avoided any significant conflicts for more than 50 years and today stands clear of those taking place in the world; the fact that China has at least another 30 years of hard work ahead just to assure the continued sustainable growth of its country, without the cost of conflict. This is the view of Lee Kuan Yew of Singapore and many scholars. Those challenges include the environment (water, pollution, etc.), human rights, 300 million still living in poverty, raising the PPP per capita living standards of the population, finding jobs for tens of millions of new entrants annually, etc., etc., etc. For more on the US/China comparison, please see my post “What China Needs,” August 2014, and especially, “The China Threat,” May 2014.

If military strength was the only factor, consider than we spend more than $600 billion annually on defense, while China spends about $100 billion. But in addition, our economy is far stronger. Measured in PPP$ per capita, it will take many decades at current growth rates for China to even come close to our standard of living. They have unfriendly neighbors and we have oceans, friendly neighbors, and strong alliances. The balance is overwhelmingly in our favor, and China understands that. They are not about to start a war. Pillsbury may have spent too much time listening to military officials, on both sides.

I believe Pillsbury has also taken liberties in citing Henry Kissinger, as if to imply Kissinger also expects war with China. Read Kissinger's article on the same subject cited below, written in the same year as the book Pillsbury refers to. You'll see a thoughtful explanation of interdependency, and no indication Kissinger expects China to pick a war with the US--just a call for greater cooperation between two great countries. The title of the article is "Avoiding a US-China Cold War."

What the author has correct is that Chinese leadership is smart.  They are too smart to sacrifice their potential for sharing in future world leadership by costly mistakes of war such as they have witnessed the US make across the last few decades. They know war could set Chinese growth back decades. They see the benefits of the cover the US provides on the global stage, while China is free to deal with its challenges and focus on sustaining an amazing job of building their economy. Contrary to Pillsbury’s recommendation, we should do nothing to undermine or weaken China. It is in our best interest to invite China to share world leadership with us.  It’s both a moral obligation for us as citizens of the world and citizens of the still leader of the world, and it is also a practical and economic necessity.

There are daily articles from the hawkish right, appealing to Americans to be concerned about a variety of foreign actors. But how many are balanced, put into context, and how many are attempts to distract us with nationalistic fervor—a tactic Vladimir Putin is using effectively to stoke his popularity in Russia? And, I dare say a tactic Republicans used to advantage in the recent election. Such distraction gives the Right more time to delay addressing partisan issues with real impact, like proposing the specifics of a better health care plan, immigration reform, equal education and infrastructure upgrades.

If you believe our greatest risks are military, e.g., Isis, Russia, or China, then you may want more money and energy spent on preparing for war. If you believe, as I do, that there is little threat to the US from these forces and that enhanced diplomacy and cooperation with Iran, Russia, and China is a better route to world peace, you may agree with Rothkopf, as I do—we have greater problems right here in our backyard.

Rothkopf explains, “…the top one-tenth of 1 percent of America's population is about to achieve a level of wealth equivalent to that of the bottom 90 percent. That's just over 300,000 people with holdings equal to that of some 280 million. Those wealthy few will control 22 percent of the wealth. The bottom 90 percent, everybody essentially, will also have 22 percent. This in turn means that the top 10 percent of the U.S. population will control 78 percent of America's wealth. Almost eight out of every 10 dollars of net worth.”

What are the ramifications of this continuing progression of inequality? Why is it so serious as to trump Isis, the Ukraine, Ebola, and other foreign turmoil?

First, who can argue that foreign turmoil is entirely our problem to resolve, or that our attempts to do so will not make matters worse? And, who can really argue ISIS, Russia, or China will be in your neighborhood (militarily) anytime soon? It’s entirely ridiculous to think so. On the other hand, who can deny that our lives are seriously adversely affected by rising inequality, every day?

If you’re in the less wealthy segment of the population, you’ve probably seen the children of the wealthy going to private schools which are gateways to Ivy League universities, while your children are stuck with public schools which are losing funding year by year. Someone in your family has probably experienced one of the various effects of loss of job prospects or job security, and also the challenge of making ends meet when there is no wage increase year after year.  If you have a disadvantage (very poor family, a handicap, skin color, or other non-WASP attribute, medical problems, etc.), then you have probably found your career prospects and the social support system, continuously weakening. Most of us have seen the progression of the impact of money—e.g., gated communities, fancy cars, private jets, political influence, getting children of the wealthy into the best universities and the best clubs and jobs. This diminishes the advantage and opportunity for true merit which is not supported by money.

Michael Lewis (Flash Boys, etc.) has an article in the New Republic in which he reports on studies done in the Psychology and Sociology Departments of major institutions like UC Berkeley, Harvard, and at the New York Psychiatric Institute. Such studies seek to determine behavior differences between the wealthy and the poor. A variety of studies have shown strong correlation of wealth with selfish and un-generous behavior. E.g, drivers of very expensive cars repeatedly failed to stop for pedestrians in a crosswalk, while drivers of cheap cars stopped. Such studies led to tentative conclusions that there is something about acquiring wealth which causes many people to become more selfish and less sensitive to others.

These conclusions are a reminder that many of the wealthy may find the impact of wealth on their fulfillment in this life is not as they hope, and that supporting a more egalitarian outcome yields much greater satisfaction. There are other studies of an economic nature (see previous posts) which find that above a certain level of inequality, the motivational benefits of incentives are outweighed by the cost of inequality in slowing economic growth—yet another way in which inequality is bad for all, even the wealthy.

It is not a matter of turning a blind eye to risks from foreign actors.  Some of these are real and must be addressed. It is a matter of priorities. Do we want to put our greatest priority on the likes of weakening or fighting China, or would we like our officials to focus on how to reverse the growing inequality right here at home, now? An increase of a few percentage points in taxes on the wealthy would be a good start—let’s take half the proceeds and reduce the debt and half for schools and infrastructure. That benefits everyone. And it doesn’t even have to involve more taxes. We could redistribute what we waste—e.g., agricultural subsidies, military equipment waste, duplicate programs (e.g., consolidate 73 federal programs dealing with support for our poor).  There is enormous opportunity to reduce the cost of government, without taking it from our underprivileged.

There is another problem for US caused by inequality. Our changing life style and ideology negatively influences some of the developments in global turmoil. The USA once had a deserved global image of egalitarianism. Now, we find our democracy saddled with gridlock and partisan politics, with a rising level on inequality, which has reached the peak level of the early part of this century. Decades of improvement in the middle of the century have been destroyed. Wealth controls our politics.  Television and the internet make it clear to the world that we no longer have the best system.

Our image in Russia, Syria, China, and throughout the world, has been diminished by our intrusion in foreign wars, our partisan gridlock, and by our steady advance toward plutocracy. We are no longer an unquestioned example of why others should want democracy and capitalism—at least our version of it.  Enhanced technology (TV, social media) make our behavior highly visible to the world. Disdain and resentment enhance the campaigns of foreign actors seeking to punish us. A fairer USA, moving to restore an egalitarian democratic nation, will certainly weaken the denunciations and the vitriol of extremist foreign actors.

Inequality comes in a wide variety of forms. We see it everyday. It’s in the lack of affordable housing for unskilled workers. It’s in the proposals for raising the minimum wage. It’s at the crosswalk, at the cash register, at the kitchen table in the struggle over how to make ends meet. In my neighborhood, it’s the cleaning ladies observing the lavish lifestyle of those they serve, when they can’t even afford healthy food for their kids. Here in San Francisco, we see it in the homeless, dragging their belongings with winter approaching, while we zip by in our heated cars.

I do not argue that we are close to a revolution, but we are moving dangerously close to a plutocracy—where the government of a country is essentially ruled by the wealthy elite. We risk increasing social unrest, much greater than the Occupy movement. It has turned ugly in many other countries in recent years, and it could happen here. While we’re certainly not sure we can make a difference that’s sustainable in Iraq or Syria, we certainly can do so here, if we make this our priority.  With its many dimensions, inequality is the defining issue of our times.

References:

“China and the United States Are Preparing for War:”  

http://www.foreignpolicy.com/articles/2014/11/13/china_us_preparing_for_war_handshake_deal_pla_military_pentagon

“Is Inequality a Bigger Threat than the Islamic State?”

http://www.foreignpolicy.com/articles/2014/11/13/the_biggest_threat_islamic_state_inequality_age_of_fear

Henry Kissinger on US/China relations: http://www.washingtonpost.com/wp-dyn/content/article/2011/01/13/AR2011011304832.html

Billionaires: Reflections on the Upper Crust by Darrell M. West (Brookings)

Extreme Wealth is Bad for Everyone—Especially the Wealthy: http://www.newrepublic.com/article/120092/billionaires-book-review-money-cant-buy-happiness