21 highlights
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because friendships that are obtained by payments, and not by greatness or nobility of mind, may indeed be earned, but they are not secured, and in time of need cannot be relied upon
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I think that goodwill is an important force in human affairs, at individual, group, and national levels. I think it is a virtue in an ethical sense and wise as a practical matter to offer and seek to elicit goodwill.
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[W]hether it be better to be loved than feared or feared than loved? It may be answered that one should wish to be both, but, because it is difficult to unite them in one person
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It is not as difficult in a nation, as in one person, to unite both fear and love. That the military of a country is strong and therefore fearsome does not preclude friendly relations with other countries, whether peer or weaker powers.
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Beyond this war — we must pray there is a beyond this war — the collapse of goodwill between the United States and China since 2016 has been a catastrophe. As Scott Sumner very effectively points out, while there’s lots to dislike about China’s government, it is the United States that started the current cold war. We lashed out in hostility, blaming China for what in fact were our own poor choices. We should not have allowed, even encouraged, so much of our industrial base to migrate to China, and we certainly ought to work to restore what we have lost.
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Durable goodwill depends upon parties setting and enforcing their own boundaries.
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When we are concerned about our trade balance — which we absolutely should be, the insouciance towards international balance of the neoliberal period was sheer idiocy — we should intervene in the capital account, taxing purchases of our debt by foreign entities of any nation, on nondiscriminatory terms, and/or interest payments on our debt to foreign entities.
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In their magisterial Trade Wars are Class Wars, Matt Klein and Michael Pettis suggest capital controls as one approach the US might use to manage its imbalance (though they suggest accommodating imbalance by expanding public investment rather than private debt might have been an even better approach, a case I’ve made as well).
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When there are domains, such as communications infrastructure, that for national security reasons we insist should be produced domestically, we can regulate to require that, without calling other countries’ manufacturers spies or puppets of their state (whether they are or not)
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In May of 2020, the Chinese Communist Party (CCP) declared its economic strategy, using the phrase “dual circulation.” Dual circulation meant fostering a domestic productive apparatus that is independent of foreign technology and finance, while making sure the rest of the world is dependent on Chinese control of key supply chains, whether it’s shipping, railroad construction, electric batteries, or solar panels.
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I’m sure this is right. But don’t we, and shouldn’t we, do the same? That is to say, for the same reasons all countries should maintain some degree of military deterrence of invasion, all countries should seek an “autarky option” that may be expensive to exercise, but that in extremis can be exercised in order to limit foreign powers’ ability to coerce them via trade dependencies.
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But occasionally, national sovereignty requires defying trade partners, and enduring what costs they impose, as food self-sufficient Iceland demonstrated during the financial crisis or (much less positively) Russia is demonstrating now.
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So the first of China’s dual circulations seems like a good aspiration for all countries (albeit more achievable for large countries, or blocs like the EU, than for small states).
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The second circulation, the ambition to foster dependence of trade partners, ideally to become a monopolist in critical sectors, is not so nice. But it is hardly a Chinese invention. The country that has most frequently and successfully “weaponized interdependence”, as Henry Farrell and Abraham Newman put it, is the United States with its extraterritorial monopoly over the US dollar financial system.
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In global affairs as in business, I don’t think it’s plausible to demand that ambitious players unilaterally desist from seeking monopoly. Monopoly, with the coercive power it affords over others, is agreeable.1
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The US should strive to reduce its dependence on Chinese manufactures, just as China should seek to reduce its dependence on US aviation, not because trade in these things is bad, but because for trade in these things to be good, it must occur on noncoercive terms.
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The United States has no need to impose discriminatory bilateral tariffs, or to adopt a hostile rhetorical posture against China, or any other country for that matter. We have to tools necessary to see to our own interests, and should seek a warm peace and friendship with the people of every country. China does some terrible things. What it is doing with the Uyghurs is horrid, indefensible. But rhetorical hostility does the Uyghurs no good, and we have no effective means of coercing China to change its policy. The best we can do is try to persuade its leaders that there are better ways of addressing whatever problems they think they are addressing. We are more capable of persuasion and assistance as friends than as adversaries.2
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Our current posture of hostility towards China derives from trade disputes and military rivalry in the Asia Pacific, but we imbue it with moral weight by attributing it to human rights and autocracy, even though we overlooked those concerns, from Tiananmen to Tibet, for decades when our elites perceived the trade relationship as more profitable than threatening.
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But goodwill, properly understood, is free. It should be offered unilaterally, whether reciprocated eventually or not. Expressing goodwill does not mean sacrificing ones interests.
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Indeed, it was failing to look after our own interests that led to the recent collapse of the goodwill. Goodwill does mean, rhetorically, expressing warmth, a desire for peace and fruitful intercourse. It means working diplomatically, assiduously and proactively, to find ways of reconciling our interests where they diverge, rather than relying solely on mutual deterrence.
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Goodwill is not weakness or naiveté. Our foreign policy should offer and seek to cultivate goodwill, sincerely, ostentatiously, and without apology.
Footnotes
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Would it be fair to say that the EU has managed to do this i.e control the influence of monopolies via regulation especially in big tech? ↩
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While this may make sense between two people will it apply to two large and diverse nations such as China and US? Wouldn’t adversaries have more power over friends in influencing policies in this case? ↩