Book Review: The Next Decade

Long-time readers have heard me comment on the work of George Friedman, the founder of the Austin-based geopolitical forecasting firm Stratfor. I consider Friedman to be one of the insightful thinkers in the field today, and I wrote a lengthy, highly-complimentary review of his The Next 100 Years.Today, I’m going to take a look at Friedman’s follow-up book, The Next Decade.The Next Decade is a very different type of book than The Next 100 Years. While 100 was a bold forecast of political, economic, technological and even demographic trends for the next century, Decade is more philosophical.

In the opening chapters, Friedman discusses America’s place in the world and struggles with some of the questions that perplex thinkers on both the left and the right. Is the United States a republic—or an empire? And if it is an empire, how should its massive power and influence be used? And in such a system, what are the respective roles of the American president, congress, and international institutions like the United Nations and NATO?

In addressing these issues, some of Friedman’s conclusions may prove to be unsettling to some readers. Friedman writes:

I invite readers to consider two themes. The first is the concept of the unintended empire. I argue that the United States has become an empire not because it intended to, but because history has worked out that way. The issue of whether the United States should be an empire is meaningless. It is an empire.

The second theme, therefore, is about managing the empire, and for me the most important question behind that is whether the republic can survive. The United States was founded against British imperialism. It is ironic, and in many ways appalling, that what the founders gave us now faces this dilemma. There might have been exits from this fate, but these exits were not likely. Nations become what they are through the constraints of history, and history has very little sentimentality when it comes to ideology or preferences. We are what we are.

The theme of this book…is that justice comes from power, and power is only possible from a degree of ruthlessness most of us can’t abide.

In a departure from his usual political aloofness, Friedman does make specific recommendations in The Next Decade, making it a very different kind of book for the veteran analyst. Unlike most “policy” books, however, Friedman appears to go beyond politics and ideology, focusing instead on the concept of power itself and how it is wielded. In words sure to alienate and offend readers across the political spectrum, Friedman suggests that the American president—be he a republican or democrat—must be a duplicitous, Machiavellian character that tells the voting public what it wants to hear while at the same time running a complex foreign policy in which what is said publicly is often very different from what is said and done behind closed doors. He must be utterly ruthless in executing a strategy that is nonetheless guided by moral principle. The ends—when critical enough—justify the means, even be they immoral or unconstitutional. The realities of running a global empire—even an informal one like that of the United States—requires quasi-autocratic power.

As Friedman explains,

In bringing order to empire, I propose that future presidents follow the example of three of our most strikingly effective leaders… Abraham Lincoln preserved the Union and abolished slavery by initiating a concerted program of deception and by trampling on civil liberties…

Seventy-five years later, in the midst of another grave crisis for the nation, Franklin Roosevelt also did what needed to be done while lying to hide his actions from a public that was not yet ready to follow his lead. In the late 1930s…[Roosevelt] secretly arranged for the sale of arms to the French and made a commitment to Winston Churchill to use the U.S. Navy to protect merchant ships taking supplies to England—a clear violation of neutrality.

Ronald Reagan also pursued a ruthless path toward a moral purpose. His goal was destruction of what he called the evil empire of the Soviet Union, and he pursued it—in part by ramping up the arms race, which he knew the Soviets could not afford. He then went to elaborate and devious lengths to block Soviet support for national liberation movements in the Third World. He invaded Grenada in 1983 and supported insurgents fighting the Marxist government of Nicaragua.

Friedman’s suggestions are not particularly appealing, but they are not designed to be.  The man is a realist, not a idealist.

Thoughts on the Rise of China

Friedman is very much a contrarian thinker in his view of American power. While decrying the decline of America is a virtual national pastime on both the left and the right (see the SIL review of the Post-American World), Friedman does not subscribe to this dreary view. Even if Afghanistan and Iraq have demonstrated the limits of the country’s military capabilities (at least within current budgetary constraints), America’s economy accounts for fully a quarter of all global output. Though new innovation centers are popping up in places as far away as Israel and India, Silicon Valley continues to be the engine that drives technological innovation. Even after the ravages of Dodd-Frank, New York remains in a virtual tie with London as the world’s financial center. And while Russia, Brazil, Turkey, and Iran are all running more assertive foreign policies these days, the world continues to operate in an American-dominated political order. America’s place in the world will not be challenged anytime soon—least of all by China.

As Friedman writes,

Absent a major, devastating war, any realignment of international influence based on economics will be a process that takes generations, if it happens at all. China is said to be the coming power. Perhaps so. But the U.S. economy is 3.3 times larger than China’s. China must sustain an extraordinarily high growth rate for a long time in order to close its gap with the United States.

In 2009, the United States accounted for 22.5 percent of all foreign direct investment in the world, which, according to the United Nations Council on Trade and Development, makes it the world’s single largest source of investment. China, by comparison, accounted for 4.4 percent. The United States also may well be the largest borrower in the world, but that indebtedness does not reduce its ability to affect the international system. Whether it stops borrowing, increases borrowing, or decreases it, the American economy constantly shapes global markets. It is the power to shape that is important.

Furthermore, China lacks the economic and demographic depth of a developed country. According to the People’s Bank of China sixty million Chinese (as Friedman notes, a population equivalent to that of a large European country) live in middle-class households, defined as those earning more than $20,000 a year. But given China’s population of 1.3 billion people, 60 million is less than 5 percent of the total population.

Six hundred million Chinese live in households earning less than $1,000 a year, and another 440 million Chinese live in households earning between $1,000 and $2,000 a year—conditions that compare with the poverty of sub-Saharan Africa. Yet in spite of this, Chinese labor costs are rising, and China no longer has a wage advantage over countries like Pakistan and the Philippines.

Friedman sees China facing the threat of massive internal unrest and even the possibility of civil war. Rather than continue to expand its influence on the international stage, the Chinese government will be forced to dedicate more resources to keeping the peace at home. Suffice it to say, the next century will not be the Chinese Century as many now proclaim.

On the Role of the State

Friedman’s analysis here will no doubt ruffle some feathers. As irritating as it might be to free-marketers like myself, it is nonetheless true: “The modern free market is an invention of the state, and its rules are not naturally ordained but simply the outcome of political arrangements.”

My lip instinctively curled at that statement, but it is true in all practical senses. As Friedman elaborates, the foundation of the modern economy is the corporation, and the corporation is a legal entity created by states (as are limited partnerships, LLCs and other entities). The state is also essential as a settler of disputes via the civil court system, and the crafter of the regulatory and tax regime in which companies and individuals operate.

Though we prefer the state to be as unintrusive as possible, there is unfortunately no such thing as a truly free market. Even Hong Kong in its heyday under British rule had some small measure of state authority.

The balance of power between the state and the private sector oscillates with public confidence in both. Rightly or wrongly, Americans lost faith in the market in the early years of the Great Depression and turned instead to the state. When it became obvious that the Roosevelt political realignment was impeding American growth and competitiveness in the late 1970s, the Reagan Revolution swung the pendulum back towards the market. Now, in the aftermath of the mortgage meltdown, financiers are again held in disrepute and the state has assumed a larger role. Politics, like most things in life, tend to follow cycles.

While I consider The Next 100 Years a better all-around read, I do recommend The Next Decade. Friedman’s comments about the wielding of imperial power will be somewhat offensive to some, but try to resist shooting the messenger. Friedman simply explains what he believes to be the cold, hard reality