‘The Second American Century? Prospects for American Power and Leadership in the Twenty-First Century’

By

Professor Walter Russell Mead
James Clark Chase Professor of Foreign Affairs and Humanities at Bard College

Editor-at-Large of The American Interest

6 – 7pm, Tuesday 23rd October 2012

Committee Room 4A, House of Lords, London SW1A 0PW

To attend please RSVP to: clarissa.perkins@henryjacksonsociety.org

After only a decade, the 21st century has seen the emergence of tremendous change—from the rise of unconventional security threats to new economic models being proposed as alternatives to free market capitalism. Whilst the European Union, Japan and the US are struggling to keep apace with the transformations taking place, the rise of countries like Brazil, India, China and Turkey has challenged notions of the undisputed dominance of traditional powers. This development has prompted many to conclude that this is the beginning of the end of the US as a superpower, and perhaps the emergence of a new global power structure altogether.

By kind invitation of Lord Bew, The Henry Jackson Society is pleased to invite you to a discussion with Professor Walter Russell Mead, James Clark Chase Professor of Foreign Affairs and Humanities at Bard College and Editor-at-Large of The American Interest. Professor Mead will be discussing the changing power relations in the world today and its ramifications for the US. He will argue that the situation is too complex to warrant simple declarations of the demise of the American superpower – the world is witnessing a rise of new partnerships rather than definitive shifts in power.

TIME: 6 – 7pm

DATE: Tuesday 23rd October 2012

VENUE: Committee Room 4A, House of Lords, London SW1A 0PW

To attend please RSVP to: clarissa.perkins@henryjacksonsociety.org

Biography

Walter Russell Mead is the James Clark Chase Professor of Foreign Affairs and Humanities at Bard College and Editor-at-Large of The American Interest. From 1997 to 2010, Professor Mead was a fellow at the Council on Foreign Relations, serving as the Henry A. Kissinger Senior Fellow for U.S. Foreign Policy from 2003 until his departure. Until 2011, he was also a Brady-Johnson Distinguished Fellow in Grand Strategy at Yale, where he had taught in the Yale International Security Studies Program since 2008.

His book, Special Providence: American Foreign Policy and How It Changed the World (Alfred A. Knopf, 2004), was widely hailed by reviewers, historians, and diplomats as an important study that will change the way Americans and others think about American foreign policy. Among several honors and prizes, Special Providence received the Lionel Gelber Award for best book in English on international relations in 2002.

Professor Mead’s most recent book, God and Gold: Britain, America and the Making of the Modern World (Alfred A. Knopf, 2007), is a major study of 400 years of conflict between Anglophone powers and rivals ranging from absolute monarchies like Spain and France through Communist and Fascist enemies in the twentieth century to al-Qaeda today.

Professor Mead is also the author of the “Via Meadia” blog at The-American-Interest.com, where he writes regular essays on international affairs, religion, politics, culture, education, economics, technology, literature, and the media. Mead’s writings are frequently linked to and discussed by major news outlets and websites such as The New York Times, The Atlantic, the Financial Times, the Guardian, the Wall Street Journal, the Weekly Standard, Harper’s, the Washington Post, and RealClearPolitics, as well as by foreign periodicals. He serves as a regular reviewer of books for Foreign Affairs and frequently appears on national and international radio and television programs. In 1997, he was a finalist for the National Magazine Award in the category of essays and criticism.

Professor Mead is an honors graduate of Groton and Yale, where he received prizes for history, debate, and the translation of New Testament Greek. He has traveled widely in the Middle East, Asia, Europe, Africa, and Latin America, and often speaks at conferences in the United States and abroad. He is a founding board member of the New America Foundation. He is a native of South Carolina and lives in Jackson Heights, New York.

Transcript

Lord John Bew

It is an honour for me to chair this meeting with Walter Russell Mead. Before I talk about Professor Mead, I would just like to congratulate the Henry Jackson Society, because to have really the foremost and outstanding scholar of historical and political issues connected with American foreign policy, American strategy, America’s role in the world- to speak to London the night after the presidential debate on foreign policy is an achievement of planning going well beyond the Henry Jackson Society’s  quite remarkable skill at arranging and timing meetings but I think this is a spectacularly brilliant piece of timing. Congratulations to the HJS for their sense of timing. Now, I think everyone who is here is aware of what an important scholar Professor Mead is. He is a James Clark Chase Professor of Foreign Affairs and Humanities at Bard College, an Editor-at-Large of the American Interest. He is the author of many very well reviewed books, the most recent of which is God and Gold: Britain, America and the Making of the Modern World, and I think many of you will follow his regular and frequent comments on matters of international affairs and his regular and frequent broadcasts.

When I first met Professor Mead, it was actually in Belfast. I think it’s probably a dozen years ago now and he was speaking at Queen’s University Belfast, and it was right about the time of the Good Friday Agreement, and again it was a good sense of timing on that particular occasion. I remember very well what a vivid talk he gave, but above all I think the thing we really come to listen to Walter Russell Mead for, the unflinching and objective eye which he brings to these matters. That sense of realism and trueness is the characteristic hallmark of his writing, his thinking, and his speaking. I still remember things he said that day, very glad to say that he is going back to Belfast in a few days time again, but this evening we are fortunate enough to have Professor Walter Russell Mead to speak to us. Professor Mead.

Professor Walter Russell Mead

Thank you, it’s very good to be here. This is the first time I’ve been in this building since I was 11 years old and my father who was a priest in the Church of England, or as we say Episcopal Church, had swapped parishes with a British rector and we were- so he was the temporary rector of Esher. He brought me in, sat in the gallery in the House of Commons, and this old man came in and sat down and went to sleep in the back-benches. It was Winston Churchill. So I’m looking forward with great eagerness to see who’s here tonight to provide a comparable moment of historical joy. But I thought I would do something that normally I try to avoid, which is to, you know, whenever you give a talk at one of these things, you don’t want to hear as a speaker that afterward someone comes up to you and says, “I just want to congratulate you on your courage,” and you think, “oh my lord what have I done, what did I say.” But I thought I would actually try and speak with a little bit of courage tonight and say something that is about as unfashionable as a statement can be, and say that I think that we are now headed into the 21st century as a second American century. I want to give you just a few brief reasons why, to kind of kick off a discussion and interesting time, and at that point I’d be willing to take questions on any of the points I’ve made, or if people want to talk about the debate last night, or the current US campaign, I’m happy to give whatever insight I have into that.

So, why is it? Why is America so well positioned for the 21st century? I am now old enough to remember five decades of people talking about the American sunset. Somehow, you know I can remember even back in the 1960s people were talking about our doom and gloom, the gold drain, American is finished, sputnik, the Russians are ahead of us in science. In the 1970s, I believe it was the Germans and the European Union that were leaping past us. In the 1980s, there was the specter of Japan, as you may recall, and these days it’s China. My friend Jim Fallows told me not long ago he’d gone to live in China to write a book about the Chinese ascendants, I said, “Thank God Jim, you went to Japan to write that book about them and you destroyed them, so get over there quickly and write!”

But anyway, I think there are actually some solid reasons for thinking that the United States is well positioned for a new era of leadership. And one, as some of you may be following this news and others not so much, the American energy picture has been revolutionized in the last few years. When people talk about energy independence now, for- certainly for North America- and actually quite possibly for the United States itself, this is a real prospect. Large discoveries of oil and natural gas that are newly accessible, technology has caused our production to soar; we expect that to continue and to accelerate. In fact by some measures, the potential recoverable oil, shale oil and other non conventional oil in the United States is greater, significantly greater, than the reserves in Saudi Arabia. Canada has even more than we do. This is a big change. But it’s also interesting that the US has a tremendous abundance and a very long current supply of natural gas. One of the interesting things about natural gas is it’s fairly cheap to get it out of the ground and put it in a pipeline, but if you really want to export it, you have to liquefy it and invest in very expensive processes and equipment and then ship it. The US will be exporting liquefied natural gas, but it’s also true that this means that the US gas price is likely to be significantly lower than the gas price in a number of other markets around the world. This will have a knock-on effect on US coal and oil prices as well. It means that for a number of energy intensive industries, the United States is now a more advantageous platform than many countries to which some of these industries have been outsourced. If you look at where the new energy discoveries are in the United States, they suggest that the new axis of economic development in the US will not be the coasts but actually goes up the Mississippi, Missouri, Ohio river system, and that you’re going to see a sort of re-kindling of development in places from Ohio to Utah in this area. This suggests a new kind of prosperity. It may, to some degree turn the US inwards a little bit, but I’ll get to that.

The second thing, second reason is that America- America’s location is extremely advantageous for the 21st century. People talk about how we are moving from an Atlantic century to a Pacific century. That works very well for the United States. We have a great deal of Pacific coast line, and with the state of Hawaii we extend quite far out into it. In fact if you put Alaska, Hawaii, and our west coast together, we have more acreage on the Pacific coast, a longer coastline on the Pacific, than we do on the Atlantic. Moreover, we remain the world’s luckiest country in terms of our neighbors. That is to say that we have Canada and Mexico, which are really terrific countries to have living close to you. And China and Russia are not quite so well situated. There are many other countries with neighborhood problems.

The third reason: demographics. While our birth-rate has slowed a little bit during our current recession, nevertheless our birth-rates are much higher than those of other developed countries and, in many cases now, developing countries. But added to this, the United States continues to be pretty good at assimilating immigrants. There has been some concern- lately people have talked, “Ohhh, the Mexicans, a great flood of Mexicans are going to swamp the United States.” Demographic trends in Mexico- there has been a fertility transition in Mexico. The number of 18 year-olds, people reaching 18 each year in Mexico, will begin to diminish quite soon. Additionally, with more economic development in Mexico itself, there is less push. And in the last three years, the US has actually been receiving more immigrants from Asia than from all of Latin America. Our Asian immigrants tend to be Koreans, Filipinos, others, Indians more than Pakistanis interestingly enough. If you look at the economic behavior of these immigrants, they tend to create jobs and add wealth very quickly. So our immigrant population continues to be diverse, it continues to be interested in assimilation, it continues to be net positive in terms of the country’s economic growth.

Fourth, technology, in case anybody hadn’t noticed this, is accelerating the rate of social change that we’re all living with. Whether it’s social media, whether it’s the collapse of old industries and old forms of corporate organisation and management and what have you. America’s greatest cultural strength has been this adaptability. It’s something, with some degree, we actually inherited from the British. Americans have a sense of the future; it has got good things in it. Ronald Reagan’s description of the optimist is the boy who’s given a shovel and told to go clean a pile of manure and he is very excited, he sees the pile of manure and says, “well there’s gotta be a pony in here somewhere.” That remains a kind of cultural default in America, and there’s a willingness to accept the disruption that comes with change. There is less organised effective resistance to change, which means that America tends to get to the future faster than other places. That still is very much with us. It’s interesting if you even listen to the current debates, both candidates want to position themselves as the candidate of the future. You don’t actually have candidates going around the United States saying “I’m going to stop this change nonsense, I’m going to bring back the good old days.” It’s not really where we are. In the 21st century, that adaptability is going to be crucial and you can see it I think in Europe, you see it in other parts of the world where the inability to adjust institutions and practices and expectations to technological and social change creates enormous political problems for policy makers trying to move their societies in a way that will enable them to exploit the advantages that technology is bringing us.

The fifth point is that our rivals actually have big problems. I’ll take China in particular. We can certainly talk about others if you want to. The Chinese communist party now faces perhaps the worst nightmare in the world. That is to say, they have built an industrial working class. The industrial working class is not happy in China, and it is getting less happy as time goes by. It wants to do what the industrial working classes did in the Western world. It wants to organise, it wants to defend its rights, and it wants to raise its pay and its standard of living. The first generation of people who have come from the country to the city will take any job and are just happy not to be mucking out the pigsties back in Shenzhen.  You know that’s great. But, the second generation has lived in the city, they watched television, they see the fancy cars go by, they walk past those fancy stores and they want some! They want a taste. And they have the ability to organise politically around their concerns. But here’s the problem, where will China get the money to gratify these expectations? If Chinese wages rise, jobs immediately move to Bangladesh and other lower wage countries. Manufacturing profits in China are very, very thin. The margins are thin. And the competition is getting tougher. And it is competition on the one hand from low wage markets and on the other from automation. And it is unlikely that manufacturing, even in countries like China, is going to provide the basis for stable middle class existence for the mass of the population. The world is moving past that kind of 20th century mass consumption, mass production, mass industrial middle class type of existence. And it is a problem for the advanced countries. But for countries like China, it may prove soon to be an even more serious one. Internationally they have another problem, they sort of, you can call it the Kaiser’s cage, that China today is a little bit like Wilhelmine Germany in Europe. That is, it is too big for anyone to trust it and too small to get its own way. That when China wants to assert itself and it wants to build a navy and it wants to argue about islands, all the countries on its boundaries flock to the United States. Moreover, when people think about, “oh my gosh, how can the United States maintain its position, China’s economy is growing, it can build all these ships, build a blue water navy to challenge the US.” Much harder than people think. For one thing, Chinese-US naval rivalry is not really about a bunch of little rocky islands in the South or East China Sea, China’s real naval problem is that in order to get the energy from the Middle East on which everything in China depends, it relies on the protection of the US navy for its oil shipments. The chance that China could build a navy strong enough against the opposition not only of the United States, but India, Japan, and a number of other countries to provide its own maritime security is almost unimaginable. And should China actually embark on that kind of program, it is not a one-on-one arms race with the US. China builds a ship, Japan gets alarmed and builds a ship. China builds another ship, India builds a ship. China builds a third ship, Australia builds a ship. Another ship and Indonesia will build one, and finally America will build one. This is not a race China can win. And to the extent that it asserts itself regionally, it actually cements a US alliance system. Now our goal is not to get into some kind of containment policy with China, but rather our goal is to help China understand, and for China to achieve more or less what Germany did without the intervening step of two world wars. And if we could skip those middle steps, it would be much better. We’ll see what happens.

The one big question I think that most people have of the future of the US in the world is whether the US actually will stay engaged. Will American public opinion revert to isolationism? Perhaps, especially if we think of our oil, you know if we became energy independent. Would we be basically tempted to write off the rest of the world? I would say probably not. In fact, probably the structure of international politics will keep the American people interested and engaged and committed enough so that our governments, whether they are Republican or Democratic, will continue to make the sort of basic investments that we need for defence. The reason is that the perception of threat among the American people in the world outside is high enough to keep a certain engagement. And it is an interesting perception of threat. On the one hand, you have the concern about radical religious Islamist terrorism and a threat that is seen as operating across national boundaries, a threat that involves a kind of general, real and very frightening escalating threat in some ways, something that is not going away, and the American people want to have a defence establishment that can act on that and an intelligence establishment that can do it. And you’ll notice that neither candidate in our current debate is talking about “let’s write it off, let’s reduce our intelligence, let’s not have even more drone strikes.” Some of our policies may not be wise, but I think the commitment is pretty deep.

And the other issue is China. That you have, you know, a very large country building up its naval forces. You know ten, twenty, thirty, forty percent increases a year. People notice that. But also, the Chinese threat is seen as an economic threat: my job, my wages. So people feel a connection between their personal situation and what’s going on out there in the world. And I think those two perceptions are strong enough to keep the population engaged, but they are sort of diverse enough that political leaders have the opportunity to craft serious policies based on those perceptions. It’s not one simplistic problem; it is two quite different ones with a range of issues. And my guess is, we will continue to be able to develop reasonably effective and sophisticated policies.

I will end with just a very quick thought on the challenge that faces all countries, including the United States, in the 21st century. Maybe the decisive one, and one that I think we do not have answers for, but I would hope that the US will get there, and that is, many of us here are old enough to remember when the word “developed nation” meant something. That is to say that the European social democracies or liberal capitalist’s social market economy, whatever you want to call it, had achieved a sort of final social state: mass industrial employment, rising living standards year after year, sort of a small group of largely oligopolistic corporations that were regulated with the sort of rents divided between government, shareholders, and workers in some sort of reflecting political arrangement. A stability that looked like the solution to all the problems of the industrial age in history. And we thought basically that, that’s it, it’s done, that Frank Fukuyama really was right, that’s the end of history. It ended in 1967 or so. But obviously the reality is that’s not happening. My sense is that we’re in a transition from a late stage industrial society to an early stage information society. And we have absolutely no idea what that looks like. We don’t know how we will be able to address questions of welfare entitlements. How will we manage social insurance? How will we regulate industry? How will we manage in some way with capital becoming ever more global and so on? How will we find the right balance? We don’t know. The next generation will have to figure that out. Until we do, life is going to be far more difficult in the advanced industrial democracies including the United States than many of us have expected. And again, we are used to- the default assumption is that we know the answers to these problems, we just need to apply the right methods, the right solutions. I think we genuinely face now a whole range of social problems for which the answers are not known. The institutions that could solve them maybe have not been built, and that is a problem. But it’s an interesting one. So that’s about all the courage I can muster up for one night. I’ll stop, thank you very much.

Lord John Bew

Professor Mead has indicated that he would be very happy to take questions.

Question 1

Thank you very much for a very interesting presentation. Even though you said that we don’t know the answers, but to pick up on that, there’s a very significant percentage in American population, and we can argue whether it’s 47% or somewhere nearby-

Professor Walter Russell Mead

Are there any video cameras here present?

Question 1

– or at least we know it’s very significant, it’s getting towards half of the people getting more from the government than they pay in. So I slightly defined it differently. Basically are we not entering a vicious circle which, if we assume the voters will vote their economic interests, then more of them are getting into this percentage? They will vote for the politicians, and we know that politicians by definition, their main priority is to get re-elected, that they will vote themselves more and more benefits thereby increasing this strata of society. And then where do we see the solution? What is likely to happen?

Lord John Bew

Sorry, before you spoke I should have asked, everybody else who asks a question, just to identify yourself, it’s my fault.

Question 1

My name is Alexander [Inaudible] and I’m a businessman.

Lord John Bew

Ok.

Question 1

And the only thing I can say, the famous Margaret Thatcher’s words come to mind, I don’t know if you agree or not, about the problem with socialism is that eventually you run out of other people’s money. But where do you see this? What is most likely to happen?

Professor Walter Russell Mead

It’s a good point, it actually reminds me of the famous American politician Huey Long who was governor of Louisiana and he was famous- in one of his stump speeches he said, “if you’re not getting something for nothing, you’re not getting your fair share.” And you know, it’s a wonderful political line. Look, I think that obviously this is a real problem, but I would look at it, you know I think we have to take a step back to think about what the solutions are going to be, because I would say, look at our health care system, which is one of the main causes of people getting more out than they put in. Health care is just so gosh darn expensive. Nobody knows how to pay for their own care. Most people can’t do it so we create these common pots. What will the health care system look like thirty or forty years from now? How will it work? My guess is that it won’t look very much like what we have now. Somehow I imagine something like, there’s a little box in your apartment and you stick your finger in it or something like that, and it takes a little blood sample or even has transcended that, and this thing has all of your medical records from your life. It has your entire genetic record, it has the genetic information of all of your known ancestors, it has every medical study, it’s connected to computers that have every medical study ever done on every possible medical condition, how they work out for people with your genotype and medical history, and on and on and on and on. And this thing gives you a diagnosis and a prescription that is better than any human doctor could possible do, and it knows all of the other medications and so on that you’re taking. And you know, there will still be people in the health care system, but they will be more like the flight attendants on the airplane. They will be making you feel better about the process and ensuring that your ride is comfortable. And you know- so that this is a very different system. If we don’t move to something like this in some way, we will, you know, our economies will simply explode because the old system is so expensive and we need so many more goods than it would provide.

In this sense, it is comparable to what the industrial revolution did to manufacturing. Instead of the few highly skilled craftsmen creating, you know, very expensive goods, suddenly you mechanize the production of these things and you flood the world with goods. And this is going. This has to happen to some of the knowledge professions. We have to move simply from using IT to speed up individual parts of the work process to IT industrialising knowledge in some way. I think the legal system will have to change in this way, the delivery of government itself, the educational system I think is going to change in many profound ways. This is what I mean about moving to an information, an early stage information society, out of being a late stage industrial society. And it involves a, we have a tremendous need to radically increase the productivity in the delivery of what are now sort of professional guild-made professional services. If we don’t do this, things will blow up. It’s one reason I don’t like Obama-care, anything that sort of locks existing interests and guilds into position and creates sort of a political monopoly. It’s like letting the spinners and the weavers decide how fast the steam room can be introduced. Answer: it will never be introduced. But I think this is the problem, it’s not so much we have too many takers in this, it’s that we have organised ourselves so inefficiently; it’s ridiculous that 47% of the population needs help to be able to go about its business. That’s wrong.

Question 1

So a technological solution basically. Progress, technology…

Professor Walter Russell Mead

Progress and technology to dramatically reduce the cost of the services for which people now need subsidies from government.

Question 2

[Inaudible] from the LSE. Two quick questions- I agree with what you said about the potential of the United States to survive this situation and move on and still lead, but I have two questions about it. A.) Why is it that the US is now actually projecting weakness around the world? It does seem weak. And number 2.) What do you expect the system, the international  system, to look like in the near future? Would it be like a new cold war with China? Or are we going for cooperation, multi-lateral management of the world? Or perhaps the US will move to a new phase of privacy and preponderance?

Professor Walter Russell Mead

Ok, good questions. Um, let’s see, first I would say, you know, my book Special Providence is kind of the starting point in that everybody in the world shares two perceptions of the United States. One is that Americans are just not very good at foreign policy, not clever and subtle like the Europeans; moralistic, ignorant, I mean the list is long and you could all add things. And to some degree, it’s all true, it really is. But on the other hand, most people understand that a key trend in international politics for the last two hundred years has been the rising power and influence of the United States in the international system. So you have this phenomenon that the team that everyone thinks has no talent for the game keeps winning the trophy year after year, you know, why? And, you know I think American foreign policy does have this ability to look terrible and even cretinous. And yet, somehow, like Mr Magoo, the United States keeps going through these terrible situations. Other people are definitely getting hit by all kinds of catastrophes, some of them caused by Mr Magoo, but Mr Magoo moves straight on through. And I think it has something to do with the fact that in America, we don’t do what most countries do of having a foreign policy bureaucracy, a foreign ministry which is all professional and it charts the course and the politicians don’t affect it much. Our machine is much more responsive to public opinion. And to the extent that there is any stability in American foreign policy from decade to decade, it does not lie in an establishment that mandates this, it’s more that the outcomes of political struggles keep coming back to the same sorts of things. The same, you know, balance of power. That instead of a light house state where the elite at the top of the tower is gazing out and figuring out what lies ahead, we have a mirror state where the state tries to reflect the various strains and interests in the body politic. And so it appears that it is un-steered, and yet over time it gets there. We can talk about that more afterwards, but that’s it. And the international system in 20 years? I don’t know it can be a number of things. My guess is, we will not blow ourselves up, nor will we achieve utopia. It will be somewhere in between.

Lord John Bew

The backhand corner, the man with the piece of paper first.

Question 3

I admire your courage-

Lord John Bew

Name please?

Question 3

Oh, John Pickup. I travel to China a lot of the time and I work with the Chinese very closely, and I admire your American your courage in putting forth such an American centric view of the world. But the China situation, you ignored just one key factor, I think, which is going to make China predominant in time, and that is the Chinese work ethic. They work, work, work, work, work. And that comes through in so many ways when they surprise the West with their development. And they are moving to an innovation society, and I’m sure that you have read the five year plan, and they’re away from this cheap and cheerful manufacturing to high value and it’s happening. It’s not simple, it’s not easy, and the Chinese are determined to make it work.

Professor Walter Russell Mead

Well if we only substituted the word Japan for China in your last remark, it’s exactly what I could have heard twenty years ago.

Question 3

A lot of people make that mistake as well, but China is different, and we can debate that afterwards.

Professor Walter Russell Mead

I agree, the party is even more corrupt than the LDP, but we can discuss that. And that’s an achievement.

Question 4

I’m Charlie Wolf. I’m a broadcast analyst. I wanted to ask about the debate last night but I’ll frame it this way: considering your vision of the American century, and I agree with you that there is one coming, who do you more feel fits that role? I mean you have Mr Romney who seems to have that valiant and traditional approach and Mr Obama who seems to not so much though he may claim so. I guess I’ll ask it like this, could Mr Obama hold back the American century?

Professor Walter Russell Mead

I guess I’m something of a believer in the idea that God writes straight with crooked lines. It’s interesting to see that one of the people who’s doing the most to change municipal governance in America is the current mayor of Chicago, who is the former Chief of Staff of President Obama in the Whitehouse. And as mayor of Chicago he can look at what the teacher union wants and other municipal unions want and he can see that it is destroying Chicago, and you can look among other democrats, Andrew Cuomo in New York- and what is happening is that the force is pushing, it’s not a question of America summoning up the gumption and the courage to do something difficult, it’s more that the pressures of the inefficiency of the old way of doing things are growing so quickly that its forcing change. Governor Romney- President Obama might try to slow it down a bit, Governor Romney might try to step on the accelerator a bit, but I think this thing is happening. And, it’s hard to predict which of the two would actually, you know, where we’d be four years from now with each of the two, but I think the transition is bigger than government, and deeper than policy.

Question 5

John Hemmings, doctoral candidate at LSE and also a non-resident fellow at Pacific Forum CSIS. I had the great honour to see Professor Joseph Nye and John Hamre speak on this very topic this year and it was interesting, the contrast between the two. On the one hand Joseph Nye kind of reiterated your message saying that the US has the-

Professor Walter Russell Mead

He would say I reiterate his but I like your form by the way.

Question 5

But one thing that John Hamre spoke about you know being a former, being I guess a current Washington insider, was saying how dysfunctional the system has become inside the beltway. Can you comment on how we are going to get through that period and how do we get through the tension between left and right and the real cleavage that is causing in the American political volume.

Professor Walter Russell Mead

I actually compare this period in American politics, it reminds me of the Gilded Age in America between 1865 and 1900, when again it’s sort of pre-civil war America. Political institutions no longer work or make sense, it was a time of complete corruption. Many scholars in American history can’t name a single senator who held office in that time. It was an era of enormous political hostility, mobilisation, mediocrity and failure. Yet by 1900, the United States had emerged as the greatest industrial power in the world and was beginning the transition from being an agricultural society to being an industrial society. I think what happens in some cases is that effective politics doesn’t lead effective economic and social development, it is the fruit of such development, and that the ideas, the institutions, the cultural practices necessary to harness the tremendous power of industrial productivity in society for human good through the political system didn’t exist in 1875, didn’t exist in 1885, could begin to be imagined in 1895 and by 1905 we were moving on it. So, I think we are in something very like a Gilded Age, and one can well have a great deal of political dysfunction in a society that is moving forward. And in fact, that may be the case. It may be an indication of how quickly society is moving. Yes, there will be problems as a result of all this dysfunction. Corruption, stupidity, waste, all kinds of things will take place. Yes, and yet somehow, the foundation for something greater is being laid.

Lord John Bew

Chap down in the middle of the avenue; give us your name and then the man to the right.

Question 6

[Inaudible] I came to a talk by Professor Niall Ferguson hosted by the Henry Jackson Society and it was on the decline and fall of empires. And he from his studies and observations suggested that empires reach a tipping point when the rent of servicing the sovereign debt exceeds the defence budget. When the situation where the US defence budget is increasing, as is the sovereign debt, do you see that point approaching? If so, when or never?

Professor Walter Russell Mead

First of all, let me say, I’m on a personal mission to tell everyone in the world that his name is pronounced “Neil.” And I know this because I asked him. So let me just clear that up. Look, I think, you know it’s so easy to come up with these grand patterns, and we all want them to be true, but the reality is this, you know, no biologist, no physicist, no serious scientist would ever sort of say, “all empires reach a certain tipping point when X happens,” because each X is so different. For one, I could well imagine the United States might cut its defence budget quite dramatically if we reached an arrangement with China and a sort of wave of religious apathy infested the Middle East. That would not be a sign that America had reached some kind of terrible tipping point. I do think it is important to manage one’s budget, but I also think some of you may have read Macaulay’s History of England, and there’s a wonderful passage in there when he talks about the progress, the rise and progress of the English national debt, from at that point 1689 to about 1850. He sort of goes through how in each generation, oh the wailing, “oh my god, it’s awful” and how from war after war it gets worse, and numbers get worse and sage and brilliant calculations and, now the moment, this is, “we are no longer on the road to ruin, we’ve reached the destination!” and so on. And yet oddly, the country keeps, you know, better houses and better shops with better wares on better lighted streets. It’s a complicated question, the relationship of debt. I agree that there is something out of whack in the American picture, but my sense is, it is this need to transform from the late industrial society to one of early information. We’ve run the limit of the 20th century’s predominate form of social organisation, and we’ve got to find the next way. I think we will. I think we are better than other people at finding it, but we’ll see. So I am less worried about the debt than I am interested in looking at innovations that are making the country more able to take advantage of what information technology can bring us.

Lord John Bew

Because we are running out of time, we are going to try and run the next three questions. First of all, the gentleman at the end of the table on the right, and then across the table, and then at the back.

Question 7

Thank you very much. Dr James Boys, visiting fellow at Kings and consultant with Sky television. Charlie asked about whether either Romney or Obama could put the brakes on the American century- second American century- or you could comment briefly upon the President actually Bill Clinton when you spoke about the second American millennium, and he spent much of his administration locking America into a series of new organisations on the global scale, that may help America moving into this millennium, and what his contribution could be to that process.

Lord John Bew

In that case the gentleman there and this gentleman here and we will have three.

Question 8

Gavin McNicoll, co-founder of cyber technologies, creative cyber technologies. The Chinese hold the US federal debt. In that balance, who holds the asset and who holds the liability?

Question 9

My name is Alan Lee-Williams, a former Labour Member of Parliament. If I may start off, I think you’ve been very courageous, if not audacious.

Professor Walter Russell Mead

Oh dear.

Question 9

You refer to past relations of I assume livery companies and guilds, and of course they did play a big part in the industrial revolution, but these bodies have been adapted over the years, and they borrow a lot of money. They give money to young people to run programs and a lot of them back the city of London, which is doing a pretty good job. So it’s a mixture of the old and seeing what they can do. What is your point here? Are you looking for new institutions and these others have gone past their sale date forever?

Professor Walter Russell Mead

Well, I think very quickly, Bill Clinton is discovering the misfortune of being an ex-President, and you know, he is a wonderful and a fascinating guy, but people are much more interested in his wife these days, who is someone who in 2016 might be running. He has a lot of ideas, he is our most effective, living ex-president, and that may be about it, but.

Question 7

I was thinking more about what he did in office.

Professor Walter Russell Mead

Oh what he did in office. Oh well, you know, again I think the World Trade Organisation has been a profound, made a profound change to  things, and is part of this transformation. It, I think the World Trade Organisation has come, in a way, to its limit. The idea, you know, that any member can block a new trade round and so on, it’s getting harder and harder to make progress in the WTO framework, and I think we are going to have to think around the WTO perhaps. I don’t see, you know, you don’t often hear people talking about the Doha round. And I don’t think it’s coming back. Interestingly NAFTA, one doesn’t hear people say “Let’s build on what NAFTA has done.” I think in some ways the globalisation of the 1990s was based on a somewhat, an overly optimistic reading of how easy, you know we can all envision the high mountain of a perfectly free and equal world where trade and so on, and one thinks, “well, we’ll just walk in a straight line uphill and we’ll get there.” But in fact, progress is going to take you sometimes downhill, twisty ways, it is easier to see a summit than to achieve it. I think a lot in the 1990s, there was a sense that the end of the Soviet Union, “one quick sprint and we’re there.” And I think now we’re going to have to think in much more complicated ways about how do we reach that summit, or at least approach more nearly.

The China-dollar-US question, it is very interesting. You know in ancient times, if you had two peoples, and one of them worked all year round and produced immense piles of very attractive goods, and then shipped it to the other people, and the other people than gave them beautifully engraved certificates of appreciation and esteem, the relationship would be known as tribute. If you look very carefully at these bonds and so on, they say, “well we promise that if you bring this to the Federal Reserve Bank, we will exchange it for another certificate of equal value. We swear we will do that.” And we will! You know, if anybody has any doubts in the room, we will do that. In that sense, for China to attempt to use its holdings of American debt to, as some sort of leverage, essentially it’s this sort of perverse hostage situation where you would have to shoot the United States, the United States would have to shoot through it’s own head, to reach so that the bullet could get to America, that an attack on the dollar would have far graver consequences right from the beginning in China than in the United States. And you’ll notice that China is spending a great deal of money to keep its currency down, rather than to move it up against the dollar. So it’s unsustainable and China doesn’t really like it, we say we don’t like it, and yet it’s very nice to drive out to Costco and buy a lot of really cheap, great things for these beautiful little certificates that they seem to like so much. It’s an interesting problem. But one thing I would suggest to you is that both, you know the two most important acts of financial statesmanship in the last three hundred years have all been about understanding the political power of debt. The Bank of England realised, you know this sort of new government of William III, realising that once rich people in the UK have plunged all their assets into bank stock, and are dependent on the Bank of England, they won’t want the stewards to come back, because the stewards won’t honour that promise. So you cement the leading people in society to your cause in the same way Alexander Hamilton, the first bank of the United States, the assumption of state debts by the federal government, you know he consciously understood this would convert all of those people in the different states, colonies, to stakeholders in the federal government with a powerful financial incentive to make that government work. In this way, China has in fact become a rather large stakeholder in American success. It’s a good thing. It’s a very good thing. In general, relations of deep, mutual dependency have been very, very, good for peace. In America, the archetypal one that has shaped the way we think of the whole world is our 19th century relationship with the UK, where both countries depended on each other in so many different ways, that every time, and there were many times when political leaders and sort of angry newspaper editorialists were whipping up some kind of a controversy from 1812 on, after that war, bankers, farmers, workingmen’s associations, all these interest groups rush into the political process and say, “are you crazy? A war with these people would ruin everything.” And there’s also the interesting combination of, you know, war. The British navy would immediately destroy all the major cities rapidly to be followed by the American conquest of Canada. So there was a kind of strategic stand-off as well as an economic dependency. I think that is a reason why US-Chinese relations are as resilient as they are, and this is, I think, what many people miss. Making these kinds of, in my view kind of infantile, superficial, US-China clashes, rising power, reigning hegemon, inevitable clash and so on, they don’t really understand the depth and interpenetration of the two societies and the degree to which debt is playing as it did in 18th century America and 17th century Britain, a key role in sort of relationship building, and power building.

Finally, on the question of institutions. Look, I think a genius of Anglo-American society is exactly this ability to do something completely different while acting, and in some ways, if nothing had changed. You know the building we’re in is built at a time when Britain was at the cutting edge of modernity in the world, and sort of horrifying everybody with these smoky steam engines and soot-flying in the industrial revolution and so what did they do? They built this neo-gothic, oh you know, it’s just a bunch of peers, medievally sitting around. So, this idea that Britain, which has been this great modernizing engine that has revolutionized the whole world has a Queen, and it has all of the funny wigs, and all of these things that it does, and these very old institutions are playing a role in a society that is unimaginably different than the one in which they took shape, that’s the adaptability.

We in America have it also in a slightly different form. This ability to somehow mix the old and the new without it blowing up is one of the reasons why in the English speaking world, really since 1689, there’s been only one violent successful revolution. Australia, Canada, the United States, New Zealand, we just have an unfortunate incident when you people misunderstood tea. But other than that, and again these are societies that have had huge economic changes, huge cultural changes, huge changes in their external position and role, and yet they have somehow managed to be both on the cutting edge of world history and yet also in some odd way, more deeply rooted in a traditional and continuous notion of self identity than others. I don’t think we’ve lost that yet. And as long as we don’t, I actually think this is one of the sources of the ability to be an unmoved mover in a rapidly changing world.

Lord John Bew

Well I’d like to thank Walter Russell Mead on your behalf for the tour de force, I said at the beginning, I remember very much from his talk in Belfast his unflinching eye, you heard the unflinching eye, especially the last third of his presentation, but also there’s another feature of his presentation tonight which I’m sure you all observed, which is the stunning originality the way his mind works. We are really very grateful for the very full way he’s addressed us but also answered questions. I’d really like to say thanks on your behalf to Walter Russell Mead but also to the Henry Jackson Society for arranging this event. Thank you very much Professor Mead.

HJS



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