Tuesday, May 19, 2009

Middle Path Policymaking in the US and China

A couple of years ago in anticipation of a Democratic White House and a new approach toward trade policy, I advocated a revised definition of "fair trade:"
Adam Smith showed that economic freedom allows people to maximize their potential to the benefit of all society. But total freedom, as Thomas Hobbes argued, leads to a short and nasty life. The Aristotelian notion of moderation might help reconcile this paradox: Trade should be neither too free nor too regulated.

Moderation, the "golden mean," and the middle path have recently come to characterize the current administrations of the two largest economies (using PPP) and largest emitters of CO2--the so called G2, China and the United States. Based on our conversations in China during our last two trips in the past year, two themes keep coming up: One is that although China's fate is tied to that of the United States, many Chinese feel fairly confident that their economy will pull through the financial crisis with no major political instability. In fact, some Chinese have sounded downright triumphant about their country's more influential status and its potential economic robustness.

Another theme that we have heard is that China will be drawing on many traditions to formulate its future policy platforms. One of those traditions includes Confucianism and the golden mean. Both of these themes come together in this fascinating op-ed in the China Daily, "Chinese model and the doctrine of mean," by Zheng Yongnian. Here is an excerpt:
But what exactly is the Chinese model? I think the Chinese model is a composite or mixed economic system. Its features include a mixture of ownerships, a combination of foreign and domestic demands, and the balance between the State and the market. The mixed economic model embodies a Chinese philosophy - the doctrine of mean. Guided by that philosophy, China has avoided extremes in the past 30 years. Neither neo-liberalism nor the traditional planned-economy socialism has dominated its economic practices.

China is the very incarnation of mixed-ownership economy. In the age of reform and opening up, China has allowed various types of ownership, including private ownership, foreign capital and joint ventures. But it has shunned hasty and complete privatization, and instead chosen a step-by-step trial-and-error approach. While reforming the sclerotic State-owned enterprises (SOEs), it encouraged the emergence and development of other types of ownership and gradually granted legal protection to all.

It is curious that the author is attempting to describe a "Chinese model" for economic growth—something that many Chinese and China watchers are reluctant to do for many reasons. One reason being that the historical factors that led to China's current position are so complex they cannot be emulated; another is that China's growth strategy, in all reality, has been ad hoc, not a coherent model.

In the US case, Obama has also been following the middle path of policymaking--an approach that carries its own risks. While the Bush Administration was almost simplistically clear about its policy goals, the Obama Administration is much more nuanced, measured, and therefore challenging to grasp. Some of this analysis has appeared in Slate this week.

In Jacob Weisberg's attempt to create a general theory about Barack Obama, he first notes Obama's equation of the middle ground as inherently a more moral ground:
He sees the middle ground as high ground. Candidates who talk about bringing people together, being uniters not dividers, or changing the tone in Washington are usually blowing happy smoke. At this point, however, Obama's focus on reconciliation is clearly more than shtick. We saw this impulse at work when he made pre-emptive concessions on his stimulus package in an unsuccessful effort to win Republican support. We saw it in another way when he personally brokered a compromise between the French and Chinese presidents at the G20 summit in London. Every few days, it seems, Obama, tries for a "new beginning"—with Iran, Cuba, the Muslim world, even Paul Krugman. Engaging with opponents animates him more than hanging with friends.

Similarly, and as several other observers have done, Slate author John Dickerson compares Obama to the Star Trek character Mr. Spock:
Obama is often compared to Spock because he never gets too hot or too cool and speaks in the careful way of a logician. But the president and the fictional character seem to have the same kind of empathy, too. Conservatives have interpreted Obama's call for empathy as some kind of soft-headed, group-hug approach to law, where how a judge feels about a case or a plaintiff is more important than anything else. Actually, as Dahlia and others have pointed out, all that Obama appears to be asking is that jurists have the capacity to embrace different perspectives and as much as possible stand in the shoes of those who will be affected by their rulings. The point is not to be overcome by fellow-feeling but to gain perspective.

All of this moderation in policymaking is a refreshing rejection of ideology- and faith-based policies of the past. It certainly bodes well for peace among great powers. But what, I wonder, will happen when bold action is required, for example in Copenhagen this winter? May I quote the singer Seal: "But were never gonna survive, unless...We get a little crazy." Will President Obama channel or find his Captain Kirk? Doing something radical for climate change will give the United States moral ground to push other countries to reduce emissions.

Photo by oceandesetoiles.


JSN said...

I don't believe you give Mr. Smith enough credit. On page 267 of the Glasgow edition of the tome commonly referred to as the Wealth of Nations he writes:

"To widen the market and to narrow the competition is always the interest of the dealers... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted, till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

That said, sometimes I definitely feel like CCEIP seeks to deceive and oppress people.

Leo said...

I enjoyed your post, and agree with the thrust of it.

Like you I find it unhelpful - misleading in fact - to think of China's growth over the past two decades as evidence of a successful 'model'. Pragmatism, opportunism and a piecemeal approach to instigating and managing change are the hallmarks of China's success. (see my post on this topic at: http://www.thomascrampton.com/china/leo-horn-phathanothai-china-developed-by-luck-not-planning/).

Obama and the Chinese have in common a pragmatic approach to policy. But there is an important difference: the Chinese government speaks with one voice and acts as one: pragmatism goes hand in hand with strategic, integral thinking. In Obama's world however, pragmatism means making space for many different and competing voices, and often results in unclear and confused messages.

The recent visit of Todd Stern is a case in point. He stunned the Chinese by publicly conceding (at a Press Conference with Chinese journalists) that the US did not expect China to commit to a cap (see article at: http://www.chinadaily.com.cn/bizchina/2009-06/11/content_8272942.htm).

This is just a couple of weeks after Kerry and Pelosi were in town trying to persuade the Chinese leadership that Congress would torpedo any US commitment that was not joined by a reciprocal commitment from China to reduce its emissions.

This may have been a blunder or a signal of a genuine shift in the US negotating approach. Whatever the case, the effect was to reduce the credibility of US messenging on climate change, at a time when clear messenging is key to securing a successful outcome at Copenhagen.