The US, China and libertarianism
About two trillion remain idle in corporate coffers until a clearer economic picture emerges
By Jean-Luc Burlone
Over and above periodical information, a new state of affairs between the US and China must be assessed as acceptable before long-term investments are initiated. Any trade deal between the US and China will trigger no more than an economic sugar high as their quarrel will linger on for a couple of decades, each power seeing the strength of the other as an existential threat.
Under Xi Jinping, China maintains its course toward the world superpower status by 2049. At the 70th anniversary of the revolution, Xi Jinping reiterated that China will no longer be humiliated by western powers. He stated: “No force can ever shake the status of China, or stop the Chinese people and nation from marching forward”. He hailed the army, the Party (CCP), the nation and the people.
Over and above periodical information, a new state of affairs between the US and China must be assessed as acceptable before long-term investments are initiated.
The re-appropriation of Hong Kong and Taiwan are unshakable elements of Xi’s vision for a rejuvenated China. Hong Kong should integrate the mainland by 2047; the expiration date of the 50-year period of transition called the ‘one country two systems’. In the meantime, the business community of Hong Kong (the tycoons) have strong ties with the CCP that have granted them favourable access to the huge Chinese market. As well, the CCP has established strong links with the Hong Kong labour movement and the underground (some criminals organisations included).
Taiwan is a more conflicting issue, as the reunification has never been stipulated in an agreement. On the contrary, the expressed support from the US towards the Taiwanese was reinforced by the sale of weapons by the Trump administration to the island. This said, the unreliable Trump administration has turned its back on the Kurds, their allies in Syria against ISIS.
In spite of the current administration neglect and offhand attitude towards its allies, the United States can still rely on the support of many wealthy countries in its struggle against China – an advantage that eludes China despite its deep pockets and the Belt and Road initiative. On the other hand, Xi has a 30-year plan to take China to the 100th anniversary of the revolution, while Trump rams ahead without a plan and specific objectives but resorting to foolish declarations to serve his deal-making image.
‘When global chief executives met in Spain… they concluded that the new world order will result from a standoff between not two but three systems; the two political ones and the cyber libertarianism vision.’
As for a resulting new world order, one educated guess sees a split world where each power will enjoy its own technology and its own political and economic system and sphere of influence. But it may not be that simple! When global chief executives met in Spain in the first week of July, they concluded that the new world order will result from a standoff between not two but three systems; the two political ones and the cyber libertarianism vision. (Financial Times, July 8, 2019)
A fantasy world?
The power of networks is overwhelming. Facebook, with Instagram and WhatsApp, have secured the communication tools of over 1.5 billion people. They control the means that distribute, diffuse and communicate information (over one billion posts per day on FB alone). Such power is staggering and it feeds itself by its ability to use the information gathered to answer people’s needs as they are created.
Zuckerberg Media is at the forefront of people’s emerging need for deeper analysis and content of quality. Short and bullet information is passé and the market’s appetite for deeper information is now peremptory. “…people seek experts to tell them what to watch”, according to Randi Zuckerberg, President of Zuckerberg Media. (Bloomberg Surveillance, October 10, 2019)
‘The power of networks is overwhelming. Facebook, with Instagram and WhatsApp, have secured the communication tools of over 1.5 billion people. They control the means that distribute, diffuse and communicate information…’
Knowing the need of hundreds of millions of people, in real-time, entice serving them and then, why not create a cryptocurrency to facilitate their transactions? The potential result would be a virtual society, larger than China or India, that could exchange goods, services and ideas on the cyberspace… outside the control of governments, if the libertarians have their say!
Back on the ground
At a CORIM breakfast on October 16, the Honourable Paul Martin and the economic expert Lawrence H. Summers had a talk on the usefulness of the G20 in a coming world order. In 20 years, Mr. Martin foresees China and India as the two largest economies followed by the United States. The former Prime Minister predicted that Asia would host more successful economies than Europe. And that a world without a hegemon will require a high level of international cooperation to face global issues like the environment.
I asked both of them about the possibility that a cyber society would have a direct influence on the coming world order. Their answers were clear, ‘no’. Mr. Summers gave several actions that governments could take to rein in powerful networks. And when I asked if governments have the power to control those networks (and, for that matter, cryptocurrencies), Mr. Martin answered a clear ‘yes’.
‘…planning long-term investments – that create new jobs and wealth – needs a good level of certainty about the future to proceed and certainty is hard to envision in today’s context.’
Elisabeth H. Warren, a democrat hopeful, has stated that, if elected, she would act to control Facebook. Of course, Mark Zuckerberg replied that he will fight back. Be that as it may, the next world order will be quite different from the old one.
What does all this have to do with investors? Well, planning long-term investments – that create new jobs and wealth – needs a good level of certainty about the future to proceed and certainty is hard to envision in today’s context.
Images: Sylvie-Ann ParéRead also: other articles by Jean-Luc Burlone
Jean-Luc Burlone, Ms. Sc. Economy, FCSI (1996)
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