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Thomas P.M. Barnett, Pt. 3

Thursday, February 19, 2009

HH: Before I go off to listen to Joan Baez at UCLA, I am taking the opportunity to bring back Dr. Thomas P.M. Barnett for our third in a series of conversations about his brand new book, Great Powers: America And The World After Bush. Thomas P.M. Barnett is the author of The Pentagon’s New Map, that rocketing New York Times bestselling book on what the Pentagon has been doing over the last decade which came out a few years ago. Great Powers is now on the Washington Post bestseller list, received a very nice review in the New York Times last week. Dr. Barnett, welcome back to the program, good week for an author.

TPMB: Not bad.

HH: Not bad at all (laughing). I’ve been following, by the way, your blog and your twittering on the book tour world. I’m going to talking next week with another friend of mine on book tour. They get old in a hurry, don’t they?

TPMB: Well, you know, the twittering, tweeting, is sort of required by a certain age of your audience. And I tell a lot of people who are reticent to move into that realm, you know, if you want to keep your younger viewers/listeners/whatever, you’re going to have to move toward that sort of accessibility. And sort of, in some ways, it sobers up the blog a little bit, because the stuff I put on twitter is a little more personal, a little more day to day kind of stuff, I saw this movie, I’m doing this interview now. And in some ways, it saddens me, because I like to keep the blog kind of personal. I’m old-fashioned in that way.

HH: But I do, I like the idea that it’s an immediate understanding of how America is reacting to Great Powers, because to me, a serious country reads serious books at least among its elites. And we have had a dearth of serious books about globalization. In fact, other than Walter Russell Mead’s book last year…

TPMB: Right.

HH: Are you aware of any other serious books about globalization?

TPMB: I guess I would say Martin Wolf’s new book, which is Fixing Globalization, which follows up, I think, pretty nicely to his Why Globalization Works. In fact, I would recommend that to people. He’s the financial columnist for the Financial Times. If you want sort of a more rigorous, serious version of Tom Friedman, you know, full-throated in favor of markets and globalization but with a much more economic bent, I would argue Martin Wolf’s probably the rest guy out there to read.

HH: Well obviously, by how I’m structuring this show, I’m arguing Great Powers is how you ought to do that, because it seems to me a lot more fun than the standard discussion of globalization with a geopolitical strategy overlay which people need. Last question before we go to the specifics of Chapter 4, Dr. Barnett. In terms of getting into young people’s heads, since we started talking about Twitter, how much of this do they intuit is simply the way it’s going to be? We’re in a chapter about globalization, this young generation, the Millennials, born in the 80s, have grown up with globalization. Are they accepting and embracing of it? Or are they resisting it in the way that perhaps the generations before them have been uncomfortable with it?

TPMB: Well, you know, it’s sort of the way that I deal with…and I guess another serious book from last year, the argument from Fareed Zakaria that says we’re heading into a post-American world. I would argue it’s a post-Caucasian world, possibly, but not a post-American world, because America is an inverted form of globalization, and that post-Caucasian world, if you want to define it as America becoming less than a majority of European descent, well that’s already here in our 0-5 demographic cohort. It’s already here in our major cities. It’s already here in the most populous state where you reside, California. So I can argue that that power sharing is already being negotiated at preschools across America right now. And if you know anything about social change in America the last twenty years, I mean, you teach recycling in kindergarten, twenty years later, it’s a done deal. You teach anti-smoking in kindergarten, I can introduce you to a couple of neo-Nazis on the subject, my 8 year old son and my 5 year old daughter, who will pull the cigarette out of your mouth and stamp it on the ground in front of you. So that kind of acceptance of a more diverse world, you know, growing up with preschools, growing up with kindergartens, grade school experiences where you have a lot more diverse community, and growing up in a totally networked world as opposed to you or I coming from the age of broadcast and adapting ourselves to it. The next billion who join the internet and so on have grown up solely within that network world, and so they’re anticipation, I mean, I could see with my children with video games just very intensely, they expect every story they have presented to them to be of a highly interactive, much more peer to peer, much more networked sort of communication relationship. And it really creates very different audiences, very different expectations, and I would argue a lot more acceptance of the notion that this is going to be a much flatter, more networked, more diverse world. And I think that’s one of our strengths as a society. We take in new ideas, and we amalgamate them. We blend the best, and we discard the rest.

HH: Let me test a truism against you. I graduate from Harvard in ’78, I go to work as do almost every other of my friends, except for a Rhodes scholar here or a Marshall scholar there, they go abroad. Everyone else goes to work in America. Flash forward thirty five, thirty years, and all of these college kids are spending large parts of their undergraduate years and post-graduate years abroad. Now you went abroad, I remember from the first part of this book. I think that’s significant in shaping globalization as an ethic that the elites will never shed. Your reaction?

TPMB: I think it is true. I mean, you go back to, say, Bill Clinton’s time when he was a Rhodes scholar. That was an enormously rare, elite experience. But now, students do it on a regular basis. I’ve got a 17 year old daughter, plans, she’s going abroad this summer to Japan, because she’s studying Japanese in high school, a major high school in Indiana. I mean, I never got access to anything like that in my small town in Wisconsin. So she’ll go to Japan, and she’ll probably go back there to study in terms of her college years. I go to West Point to lecture a couple of times last year, and what I’m told is they’re going to make West Point students go abroad.

HH: Not surprised.

TPMB: …for a semester or a year during their time frame. So even in the military we’re seeing this tremendous outreach. And you know, all we’re doing is something that the military’s learned from way back when. I tell the story back in the first book, The Pentagon’s New Map, about giving a speech in India to chiefs of naval operations amassed from all over the world. And I would argue something like two-thirds of them knew Newport because they had all gone to the Naval War College. And so we all spoke the same language. So we’ve been doing that on a military basis, and on a tertiary college level basis for quite some time. Now we’re starting to return the favor, and I think again, I’m absolutely in agreement with you, it’s a tremendous venue for people to learn about the world. And it’s something we’re deficient on, because again, we’re kind of a universe to ourselves.

HH: Now let’s turn to Chapter 4, The Economic Realignment. And this is a very optimistic chapter which I think is wonderful given the temporary sort of tedium we are working our way through in the financial panics, et cetera, that come and go, and the market swings that come and go. You are an optimist about how the world will grow. And in a short segment that we have left, can you explain the American system, it’s a term you use, that other people understand and demand dominance, and why the world has adopted our system, and why that’s a good thing?

TPMB: Well, the American system is, and many people credit it all the way back to Alexander Hamilton, the guy who coins the phrase is Henry Clay. And it’s an argument of how you make a network spread, and how do you focus on infrastructure development, and how you protect your domestic industries and build kind of national and then global brands. So it is the catch up strategy that Hamilton crafted in his 1791 report on manufacturers, arguably the first grand strategic document in American history. And it’s the way we kind of structure globalization going forward. Now as we structured that, we had the enormous benefit, really a very unique point in history, where we dominated about half the global GDP coming out of the Second World War. And so we had this very unusual period where women didn’t work, we had this classic family structure, we had very strong ideals about a blue collar middle class, and we hold on to those ideals. But the truth is as you get other demand centers in the global economy, you get a much flatter environment, as Tom Friedman argues, much more highly competitive, and you get Americans being forced to become competitive on a global basis, much like we were across most of our history, but got a little distant from because of that really unique experience coming out of the Second World War, which we idealize, you know, the 1950s, mom in the apron, dad on a single income supports 5.6 kids or whatever, when the reality is most of our history, men and women both work in the marketplace. It’s harder to put the kind of resources against children that we got very used to in the 50s and especially the 60s. And so we find ourselves kind of resurrecting some of the mindset, some of the, what was it, the ideals of self-made men from the latter half of the 19th Century. I want to say, who’s the kid?

HH: Horatio Alger?

TPMB: Horatio Alger, that kind of stuff.

HH: Yup.

TPMB: So we’re in a big self help kind of mode. We’ve been that way for quite some time, but we need to get that kind of self-help mode more focused on self-improvement, making ourselves more competitive, because this environment that we’ve created, these three billion capitalists we’ve unleashed, I mean, they’re not going away.

HH: (laughing) It’s such a stunning number, three billion capitalists.

– – – –

HH: Dr. Barnett, a little out of order here, I, like you, a cradle Catholic. We’re used to a model where you give money to the Church, the Church sends money abroad, and you never really know what happens with it.

TPMB: Right.

HH: In this book, I never expected to find It’s among my Evangelical friends one of the most popular engines of development and also a real world is flat example of how the world is racing to develop. Tell people about Kiva and why you wrote about it.

TPMB: Well, Kiva is interesting, because it’s sort of like the old Sally Struthers thing on television where she shows you the picture of the child and says you can put money against this child. I will make it very clear that your money is going to this child, and you can maintain a relationship with this child on that basis, not give it to some impersonal organization where you don’t know where it’s going to go or what it’s going to be used for. But instead, you had this very distinct connection. And you know, my wife and I have been doing that with a variety of young Indian Catholic girls over the course of the last eight to ten years. You know, you write them letters, you make money go directly to their education.

HH: And we do that here for the Children’s International Dominican Republic projects.

TPMB: Very fulfilling.

HH: Yup, very, very good stuff.

TPMB: Very fulfilling, and it makes it very tangible. So Kiva is just a version of that, that say hey, here’s a guy or a lady, often, I mean, it’s very, microloans tend to be female-focused. Here’s a women, if she could get fifty bucks, she can buy this blender. If she can get this industrial blender, her six daughters and the daughters of all the women in the village won’t spend three months a year shucking this particular seed. Instead, they’ll get their money faster, they’ll be more confident about their income, they’ll put the girls to school. I mean, it’s really small, liberating stuff like that. And they put the fifty dollar marker right up there, and they say we’ve got two bucks toward it. Who can give me another five or six bucks? People just make little donations just like donating to a blog or something like that. And you see this little thing, almost like the way they raise money for fundraisers, a thermometer that fills up. And over time, boom, you hit the number, and then that person has their microloan, and they’re off and running. So just like what Grameen does, the bank out of Bangladesh which won the Nobel Prize a few years back, this is connecting to individuals in the advanced world a sense of their accomplishment. And you see this kind of interesting aid from farmers, you know, in Minnesota who adopt a similar kind of farming community in Africa, almost like a sister city, but it’s like a sister farm city. And you see direct aid between these farmers and their counterparts in Africa. And it’s just a wonderful way of connecting, and it fits my sort of super-empowered argument in the book which is you know, in effect, everybody should have a foreign policy in America. You shouldn’t wait on the government to do these things for you. If you have a strong feeling about making some part of the world better, there are way to directly connect to it, feel empowered by it, and put your money against very specific things that you can track. So we have it on the site.

HH: It’s also anti-globalization judo, because this, is globalization. It’s not the nasty globalization that demonstrators go to Seattle and break windows over. It’s the globalization of individuals moving through technology across the globe. And it is part of globalization, and it’s part of the reason we should celebrate it.

TPMB: And one of the great fallacies of the anti-globalization movement is that they’re seeing some sort of conspiracy of rich people, you know, twenty rich guys in New York who are making all the money off this, when the reality is globalization is not a supply issue. Like most things in life, globalization is a demand issue. You connect three billion people, they want better lives. If you can tell that story that there’s opportunity. This little bit of foreign aid coming straight from you, not through the government, straight from you, is going to make this life better. I mean, people love that sort of connection, and it educates them in a really profound way. But this is not something we can cull off. You tap into these three billion people’s desire for a better life, and they’re going to have to be accommodated. That’s the realignment I’m describing here.

HH: Let’s talk about those three billion new capitalists, and about BRIC. BRIC stands for Brazil, Russian, India, China.

TPMB: Right.

HH: How rapid is their rise? How rapid is their demand domination going to be?

TPMB: Well, if you look at where the middle class consumption in terms of new bodies on the marketplace has appeared for the last ten years, and those four countries account for the vast majority of it. So you’ve got a resurgent or a recovering Russia, you’ve got major populations in Brazil, and of course China and India are the two biggest countries in the world. You’re putting together what some people describe, and it was described in the current issue of the Economist, kind of a lower middle class that by some measures is equal to half the world’s population. And to me, that’s the huge opportunity here, and the huge challenge. I mean, people want to make this all about super-empowered bad actors trying to do harm to us. I say the real challenge and the real opportunity here, whether you realize it or not, is the super-empowered many whose only desire is to do us one better in terms of a lifestyle that’s sustainable in the environment they find themselves in. so it’s a middle class that you’re not familiar with in the sense of kind of a very affluent American middle class. It’s more like the middle class you would have found, say, in Oklahoma in 1910, okay? This person is very brand-conscious, they don’t a ton of extra money, but they do have disposable income, so they want very robust things that are going to last. And you think back to where American companies were at that time frame, all our big corporations, were back then just start ups.

HH: Yup. Sears, yeah.

TPMB: So a Singer tries to sell you a sewing machine. Why? Well, they’re not going to sell it to a rich person, because a rich person’s going to go have his suit tailored, or his clothes and dresses tailored, okay? He’s going to sell that to a middle class person, a DIY – do it yourself, you know, kind of person. And that person can’t afford this wonderful piece of machinery. So what does Singer do way back when? In a groundbreaking and Earth-shattering move, they invent microloans, okay?

HH: Yup.

TPMB: They give you the machine, and they say you pay it off bit by bit. I trust you. I think you’re a good risk, so I’m going to give you this machine and we trust you’re going to pay it off, and on that basis, they access markets that are hard to access. They make demand met. And if you think about it, a lot of people’s identity in globalization is their demands being met. I mean, if you really want to get at the root of this resistance and this fundamentalist backlash, and the friction that comes with globalization’s expansion, you’ve got to give people a sense that their dreams are achievable. And when I’m in Egypt last year, every guy I ask has the same problem, young men, every young man I come up to, I ask the same question. What’s the biggest problem you’ve got going on? And he says I can’t get a job. If I can’t get a job, I’m 18 years old, I want to marry my girlfriend, I can’t put together the package for the dowry. I can’t get married.

HH: Right.

TPMB: And I thought to myself, well goodness, if you can’t get married, if you’re denying that sort of access to a large number of young males in Egypt, of course they’re going to get angry.

HH: Yup.

TPMB: I mean, who wouldn’t?

HH: That’s Robert Kaplan’s argument about Jordan, and why the demographic time bomb is so terrible, is that it’s ticking away and they stand around on corners and they cannot get married, and thus socialized.

TPMB: Right.

HH: And…

TPMB: And we know what the numbers are, in effect. The low end numbers, I went to an investment conference in the Dead Sea last year and gave a speech. The low end number’s about 50 million over the next twenty years. Fifty million new jobs to deal with the youth bulge that’s sitting now between about 15 and 30, and definitely is going to shift from 30-45 over the next fifteen years.

– – – –

HH: Now Dr. Barnett, let’s get to where I am more of a skeptic than you. I’m a China skeptic. Even though I worked for Nixon a long time, and I know all the China hands, and I know this is a song of hope about China in many respects, this chapter, but they’re still communists, and they’re still fascists, and they still put people in prison and you never see them again. Your argument, though, on Page 168, “We often end up scolding younger versions of ourselves, instructing them to do as we say and not as we do.” It’s a rebuke, but the response to that is yeah, but what we did in the 19th Century was understood to be the norm. What they’re doing in the 21st Century, as you point out, is dealing with any rogue state that will sell them anything that they need. Are you confidence they’re going to change?

TPMB: Well, I think you’ve got to understand the liability they have, which is profound. I say this all the time. You want to imagine America as China, invite everybody from Central America, everybody from Mexico, everybody from Latin America to come live inside the contiguous United States.

HH: (laughing)

TPMB: And you start getting close, because you’d have the right number of rich that China has, you’d have the right number of middle class, you’d have the right number of lower middle class. Then you’d have this vast sea of about six to seven hundred million poor people. And making those people happy is the sine qua non of their regime legitimacy. I mean, you can call them communists if you want. I taught Marxism at Harvard. My credentials are beyond reproach in an academic setting. I would tell you, I go there, and every time I go, I wander the streets looking for a communist somewhere in China.

HH: (laughing)

TPMB: I’ve not found one yet. In fact, capitalism polls higher there. It’s the only country in the world where the belief in capitalism is stronger than at its modern birthplace, I would argue, the United States.

HH: And so there’s no going back? You don’t believe that they can fall back into the Maoist…you make a pretty good argument that their thirty year experiment with communism really shouldn’t count against their thousands of years of being entrepreneurial.

TPMB: Right.

HH: But nevertheless, there are still some of the long march movement around there, second generation, third generation. And you don’t think they can go back?

TPMB: Well, you know, the thing that would really trigger some sort of nationalistic response would be some sort of sense that they’re not going to be able to achieve what they see as their kind of birthright as a nation, to reunify traditionally defined China. And that’s an interesting aspect. If you look at what they did with Hong Kong, you know, you go back and look at the EU in its original origins, it was France and Germany, a coal and steel deal in the early 50s, very minor, technical little deal to share on steel and coal between two countries historically great hatred, okay? You get this little deal between Hong Kong and China to bring Hong Kong back from the Brits in 1999, that deal is basically a deal for economic union, putting off the question of political union. And they’re basically pursuing the same sort of path with the Kuomintang, you know, only Nixon can go to China, so I guess only Chiang Kai-shek can go back to the mainland. Kuomintang come back into power in Taipei, they’re negotiating, in effect, a sort of economic association, ultimately union with China, and China’s putting off the question of political. So they’re allowing different political systems, but economic union over time. What I think you’re looking at, whether you realize it or not, is the beginnings of an Asian Union. China is beginning to negotiate what it is to have strong, deeply-integrating economic union with itself, putting off the question of political absorption and of political conformity. And if they can do that and still deal with their massive rural poor, I mean, I look at them as about 30 years old. I look ahead the next 20 years, because most countries when they join globalization, remain single party states for about 50 years, you see it time and time again. I think the complexity they’re looking at in terms of their aging demographic, the fact they’ve got to move up the production chain, the environmental legacy, okay? They’ve got a lot of stuff going on. There’s no question already there are factions and wings within the party. There’s great debate. The key thing is there’s regular rotation of leadership. I don’t think it’s a big leap looking 20 years down the road, and I think there’s a lot of preparation in terms of the sixth generation, the guys who are roughly my age inside of China, for the inevitability of kind of open competition within the party structure within the next ten to fifteen to twenty years, because they’re going to need a plurality, or pluralism of voices to deal with the complexity of the issues they’ve got facing them. The notion that ten guys in a politburo are going to figure out where China needs to go in all its complexity, all the stuff it’s trying to achieve, all the revolutions going on at the same time, it’s just pathetic, and they know it.

HH: More China talk coming up.

– – – –

HH: I want to go back to China ver quickly, Dr. Barnett.

TPMB: Sure.

HH: You point out there’s a sexual revolution going on inside of China. There’s also a gigantinormous expansion of the Christian Church inside of China, which many of my friends understand.

TPMB: Right.

HH: So how do they negotiate in this structure, this quasi-totalitarian structure, not just their Hamiltonian embrace of the American system…

TPMB: Markets…

HH: …but the demand for younger people to either worship the way they want, or couple the way they want?

TPMB: Right, right. It’s a huge challenge. I mean, with economic freedom, you get the kind of classic shift from your given family. You know, you’re stuck with the family you’re born to, you’re stuck on the farm, you’re stuck with all the rigid rules about who you couple with, who you marry, you know, can you marry outside your village and all that kind of stuff, is it all arranged. You send that same 19 year old female to the city, she gets a job, she gets some money, and all of a sudden, she is choosing her family, not just living with her given family, she is choosing family. So it’s a big shift in traditional societies from God’s way to my way, okay? And that can be hugely destabilizing. In a China, though, it’s strange, because they stamp down on religion so much, they’re really searching as they leave the village and move into this industrialized lifestyle, they’re searching for moral code, because they had lived in a sustenance-based economy that was highly religious, highly spiritual for many, many centuries. And all of a sudden, they’re moving into the possibilities of abundance. So reaching for codes of behavior, religion being a chief one, is an argument I make for China and for much of the world being the most religious century, this one, than any previous century. It’s a huge shift to go from that sustenance to abundance, and people will reach for whatever codes of behavior avail themselves to them. And for the Chinese, it’s fascinating to watch. I say you want to figure out anything in China in terms of social norms, watch South Korean soap operas now, because the Chinese do. Now why do they study South Koran soap operas? Because they’re trying to figure out how you behave when you get more affluence.

HH: Well, how will that translate into, you’re very detailed how they deal with rogue states. They’ll deal with Iran, they’ll go get the Darfur’s oil, they’ll do anything they can wherever they can, because they’re so resource starved, they need it. How do those moral codes shift up to begin to embed norms of international behavior with their elites?

TPMB: Right, I mean, where they are is sort of like where we were about 1880, okay, 1890. We could see that our economic interactions with the outside world were far outpacing our political military ability to protect them. And since they’re so reticent at catching any sort of flack from America about any sort of military build up, they’re very sly about pursuing it, and they’re very sly about their interactions with these rogue nations. But again, back to the point of inter-rural poor and their development requirements, they’ve got no choice but to go to any space, any resource that isn’t already totally tied into the global economy, and make whatever kind of offer is necessary to gain access to those resources. I mean, they’ll buy anything on legal markets, they’ll buy anything on illegal markets. They’ll lock down anything they can simply because when you add up all their resource requirements, they’ve got to buy everywhere and anywhere possible. So they’re dealing with the dregs. I mean, they don’t prefer to do that. They would prefer to deal with people that they could just give money and trust, but that’s the environment they face. A lot of these resources are already locked down in relationships with advanced country economies, so they’re doing the Wee Willie Keeler approach, which is hit ’em where they ain’t, and just run to any place where there isn’t already an established Western corporate profile, and make whatever deal is necessary to pull that resource in the direction of China.

HH: And in the course of doing that, you also argue they are exporting technical, technocratic and entrepreneurial expertise to the disconnected core.

TPMB: Good stuff, but also bad stuff. They’re exporting lax attitude towards environmental damage.

HH: Yup.

TPMB: They’re exporting a tolerance of corruption. You know, we go to Africa and we say to corrupt regimes I’m here to bring democracy, you may be out of a job next week. The Chinese show up with big, fat red envelopes. That’s how they prefer to kick down doors, with a big, fat, thick red envelope stuffed with cash. They slap that down on the table and they say I’m not here to bring democracy. I’m here to make you, my friend, rich and keep you in this job. So you can imagine who wins that conversation at first blush. Now when they do that, not only do they end up paying off the center, the capitol city, but as they discover over time, they go to more and more remote places to get access to resources. Ten oil workers were killed last year in Eastern Ethiopia. Government and Addis Ababa can’t do much about it, so what do the Chinese end up doing? I guarantee you they end up paying off the local rebels, too.

HH: Sure.

TPMB: Now they’re paying the center extra costs to gain access, corruption. Now they’re paying off the local rebels. And when you add in all those costs, they’re paying two or three times, sometimes, often, market price for these resources, which I don’t want to see them do, because what are they going to do? Take those resources back to China, and export that inflation to my economy through higher prices, okay? Plus, they’re not making the political and military developments come about in a place like Africa that I want to see. Instead, they’re replicating the same mercantilist strategies that the Europeans did a hundred years ago, and already they’re getting a lot of blowback. So when I look at Africa, do I have economic interests there, the United States? Other than oil, not much. China is going to integrate Africa in a big way, and into buyer chains like Wal-Mart is the model, and into producer chains like Toyota as the model. India’s doing the same. Foreign direct investment from both countries increasing very rapidly in Africa, and you see the Chinese and the Africans all over the continent. But they’re not making the political demands in terms of better governance.

HH: Very quickly, we’ve got a minute to the break, Dr. Barnett, the India-China competition. That has led to wars in the past. What’s that risk on that border? We look at the India-Pakistan border all the time, but what about the India-China border?

TPMB: I would say it’s minimal. I mean, I am a big believer that when you get two big powers and they’ve both got nuclear weapons, you’re done with that sort of competition, and you’re into other sorts of competition. I would be more afraid, speaking from an American perspective, of China and India realizing their combined purchasing power, and becoming in effect a buyer cartel on certain commodities. If they get smart like that, then they’re going to start wielding power more cleverly. I would actually welcome it, because I would welcome their higher profile. But then you have to have leadership in the United States that recognizes and accepts a higher profile from the Indians and the Chinese who I think are our two most important allies going forward.

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