Tag: Fukuyama

Innovation, prosperity and markets

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My latest post and recent Tweets – on why and how the West is rapidly losing the right to talk about propaganda and moral values in any meaningful way – make me realize that my readers think I may be going nuts. In fact, that is a euphemism: you must think I am way beyond nuts. You are right, and not. I am not. Why not?

Because I believe in very obvious and down-to-earth things. What things? Innovation, prosperity and markets. That’s it. And that is all what current world news is about so I must be right. That is also what makes me feel optimistic about the future (OK – please do put lots of salt on your table now to make sure that everything that I write below can be taken with the required ‘pinch of salt’):

1. The war with Russia is bad. And sad. Exceptionally bad. And exceptionally sad. Yes. American and British experts had warned us: it would happen. We were sleeping in continental Europe. You were right. Still, I will not agree with the next Doomsday prediction – and that is that this war cannot be ended any time soon.

Sure, I suffer from exaggerated optimism: I am optimistic, always (otherwise I would have been dead already). I do think smart European politicians (not the warmongers – who dominate now, unfortunately – led by a von der Leyen (I did like her initially, if only because I thought she would put German genius and leadership back on the map, which she did not manage to do) or a Josep Borrell Fontennes – who, sadly, did not learn nothing from Spanish separatist movements and, as a result, has alienated himself from a very natural constituency in Southern Europe: smart locals who think in terms of multi-layered identities rather than in grand European ideas) will turn it around and find ways to prepare for peace not based on antagonism but true people-to-people exchanges. [I should create my own political party here – together with some second- or third-generation immigrants – to prove myself wrong on this point: foreign policy does mobilize voters, and I will be proud of the few hundred votes I will probably get. It is easy to create a political party in Belgium, and so I will fully enjoy that little adventure of mine.]

2. The war with Russia will do what 20 or 30 years of green subsidies have failed to do, and that is to push economic actors – both households as well as industry – to invest in energy-poor and environment-friendly consumption and production wholeheartedly. All economists knew that is how the long-term externalities that our energy addiction brings with it (climate change) should be addressed. They knew it since the 1970s. It takes a market shock. Huge price rises – like those we had in the 1970s (but which were not seized upon by politicians to come up with a truly new economic-political-societal model, either).

Subsidies only create bureaucracies and vested interest groups. The EU Commission criticizes the Belgian budget not because our debt-GDP ratio has gone up to 100+ percent again, but because the budget for subsidies is 6 times (yes – six times) that what it is for true investment expenditure. [Do not get me started on that: I will demolish whatever arguments you have. Politics may not be my number one competency or field of expertise, but economics is.]

We have too many energy subsidies now, and they unfortunately keep pushing the wrong buttons: we must go nuclear again. Sorry for hurting your feelings, but scarcity and market shocks is what triggers behavioral change. Do not count on good intentions. Did good intentions ever change your own life? Shock (and awe?) is the only thing that works (I did learn something from my experience with the likes of General Petraeus) so, yes, shock and awe is there now. And, yes, we finally, see behavioral change happening now.

3. The new Cold War with China shows what superpower competition is all about now: it is about brains and technological assets. Taiwan is the technological equivalent of what the Suez canal is/was in geopolitics. Current tension in Asia is not about keeping sea lanes, shipping routes or economies open to all of the world. The world’s future digital and, therefore, economic revolution depends on Taiwan’s microchips and the related nanometer industries. That is what it is all about, and why Taiwan must effectively remain open to all who want to advance the world economy. China’s military exercises may look worrying but – based on my 20+ years of experience in Asia – I can confidently state that China is keeping its cool. Very much so, in fact. That is good: some experts in the US and Europe seem to lose it completely. [I am pretty damn serious here: I’ve been in a few situations where I literally had to order people with guns to hold their guns. This feels – eerily – very much the same, except that no guns are out now. But the safety on the guns did get switched off, which scares me.]

[…]

I have always been fascinated and enthusiastic about IMEC. Because it is a fine Flemish/Belgian company, of course ! But – more than being fiercely proud as a Belgian – I do believe its business model is truly unique and leading the way for the most urgent need of the day, which I mentioned above: applied technology is effectively what is going to avoid long-term disaster and allow us to live happily.

When I was born back in 1969 (a year which you may associate both with men landing on the moon as well with Nixon’s escalation of the Vietnam war – your choice), the world’s population was (a bit less than) half of what it is now: 3.6 billion, as opposed to an estimated 8 billion today. We will likely be close to the 10 billion mark in 2050, after which the UN does project some kind of leveling because most countries will have made the usual demographic transition that prosperity inevitably brings with it: instead of producing children as a productive asset to protect us against insecurity and old age, we will just want to reproduce and invest in their future – rather than our own. You will wonder: this has nothing to do with my story about microchips and IMEC, does it?

It does. IMEC’s model is about access to technology to all. IMEC works with more than 5,000 expert scientists from over 95 countries – including countries that China cannot or does not want to work it, and countries that the US (and now the EU) cannot or does not want to work with. IMEC also connects an ecosystem of more than 600 world-leading industry partners and a global academic network which US-based companies or, conversely, Chinese companies cannot knit together. Why? Because Flanders is very small and innocent, because Belgium is very complicated and very innocent too (we are just a weird and funny multicultural chocolate-and-beer country around Brussels, right?) and – most importantly – because people like Luc Van den Hove and Luc Sels (I could mention others but I saw him speak at the occasion of the graduation of both my daughter and my son, and I was hugely impressed) are – without any doubt to me – among the smartest people in the world.

I am an old man. Perhaps not in years: 50+ is nothing (right?) and I am quite fast on the bike and – yes – very quick in a personal fight if you’d look for one. 🙂 But, yes, old – quite old: I survived an aggressive cancer last year and – I will be honest – it was my very last fight. [OK – I had to go to Ukraine to personally see what was happening there but that was the last, even if I cannot completely rule out that there might be some other thing I do not want to see on TV and, hence, go witness by joining personally. I am no couch potato and will not die in bed.]

I am happy and tired now and I want all people from my generation on this planet to be as happy and tired as I am. I am pleased to see we are getting there. At several occasions – most notably on my management blog (yes – I write provocatively on almost anything, including quantum physics and math) – I lashed out against postmodernism, nihilism and Doomsday thinking in general. Times are tough but great:

1. We are witnessing a new Schumpeterian restructuring of the world economy. Painful, but it will do what it must do: homo sapiens is not an obsolete algorithm. I totally disagree with popular thinkers such as Yuval Noah Harari here. The contrary is true: homo sapiens is rocking and rolling. If anything, homo sapiens moved away from catering to immediate needs (a homo economicus) to a world of adventure, play and culture (homo ludens). Man has never been in more control of destiny as now. 

2. Europe is no longer ‘the Evening Land’ – even if that is the first thing I would say to Russian or Chinese friends when meeting them. My opening line to Chinese tourists (my GF is Chinese and she brings quite a few) is usually something like this: “This is a place that has nothing to offer but wisdom from past mistakes. I am sure you will see it as such and distinguish us from the ‘rest of the West’. The buildings and museums here are very wonderful. I am sure you will enjoy them.”

As far as I can see, they do. They enjoy them just as much as other casual visitors from Asia (the continent where I spent most of my life and, yes, I admit it: I am totally biased because of that) who come back to see me here in Brussels. If someone would want to murder or poison me (extremely unlikely but I do watch out after a rather adventurous life), it would be the Russian state apparatus (they should not after all that I wrote above: Russia is not our enemy but an attack on Europe cannot be tolerated) or – strangely – some idiot in some CIA unit. He will not kill or poison but just make my life as a professional one-man company as difficult as he can. I am not worried about that. We’re finally talking, right? 🙂

Innovation, prosperity and how markets – political or economic – actually function. That is always a good topic to talk about. The Chinese state apparatus offers much better food for thought for that lately than any other state apparatus currently does. A friend asked me lately: yo would not want to live in China, do you? I was completely honest in my reply: I am happiest here in Brussels – but I would not mind to retire in China. I know Chinese propagandists would probably look at that as a very poor answer, but I actually mean it: what is wrong with a strong state providing for, and deeply respecting, elderly people like me? I am ready to forgive any other state sins China has committed and, without the slightest trace of doubt, will keep committing.

China is polluted, busy, hectic, random, dangerous and whatever other bad epithet you would want to add. I agree. I’d rather retire there than in Washington DC. Full stop. [I repeat: I’ll retire in Brussels, of course. There is no place like home.]

Yes. However. To Europe: please start talking to companies like Huawei on 5G and – more generally – how the EU and China can work together. The new Digital Markets Act is going to be challenged anyway by the Googles and Microsofts from the US. Why not talk somewhat more seriously to companies such as IMEC (here at home) or – more risky, perhaps, but surely worthwhile – Huawei? Huawei is not giving up on Europe. Why would they? The Chinese market is sufficiently large for them, but then it is not about that, is it? I honestly believe Huawei’s senior management team has a vision, and that its vision is as mature as that of a Luc Van den Hove or a Luc Sels.

The thing that has kept me alive through all of my troubles in my adventurous life is this: I recognize people who are smarter than me. I can count those people on the digits of my hand. Still: they are smarter than me. Full stop.

Post scriptum: I got a message from LinkedIn just now (only five hours after me stating my protest on perceived censorship) stating that my rather forceful comment on an post pleading for a ban on Russian tourism is back online. The link to the post did not work so I am not quite sure, but it is sufficient to restore my confidence in LinkedIn as one of the very few open social media in this rather bizarre world of social media and public discourse. I did learn my lesson, though: I will try to refrain from posting messages that go against the grain of sentiment. It is – quite simply – not very productive.

Post scriptum 2: One hour later, I got a message that LinkedIn re-reviewed their decision. I copy below. What the hell?

Reference # 220815-003288 Status: ClosedView your case(s) on our Help Center You may reply to this case for up to 14 days

Response (08/15/2022 13:16 CST)

“After taking a second look, we confirmed your content goes against our Professional Community Policies, https://www.linkedin.com/legal/professional-community-policies. We understand that this might not be the response you wanted, but we work to apply our policies in a fair and consistent way for all of our members. Thanks again for being part of the LinkedIn community.”

The end of ideology and the (ir)relevance of NATO

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Shortly after the Berlin Wall came down, the US-led alliance of nations that is known as the North Atlantic Treaty Organization (NATO) pushed the eastern borders of its territory all the way up to what are now the western borders of Russia, Belarus and Ukraine. [Instead of NATO, I could have referred to ‘the West’ as a whole, but it is better to be precise when writing about these things.] It is a rather moot point whether or not such expansion was tacitly agreed with the leaders of what was then a rapidly disintegrating Soviet Union. In 2014, former Soviet leader Mikhail Gorbachev said that NATO’s enlargement was, quite simply, “not discussed at all” at the time, so we should probably leave the historical discussion at that.

One thing is quite clear, however: no one in Europe thought Ukraine was part of Europe until Mr. Putin decided to invade it. That is the number one reason why NATO refused to get involved in it: the ‘in’ or ‘out’ of area distinction is just a legal nicety which NATO (the US, I should say) uses as it pleases. Indeed, NATO went to Afghanistan so there is no reason why they should not go to some other area if NATO member countries would agree on going there. Personally, I think it is a very wise decision for NATO members to leave NATO out of the war between Ukraine and Russia. Furthermore, from the historical record, it may not be very clear that NATO would be pushing east, but one thing that is very clear is that NATO would not turn against Russia. So what is it that I want to say here?

I just want to illustrate such things are a matter of choice and, at the same time, question the relevance of NATO: if NATO is not there to defend us against potential Russian aggression, then what is its use? The only reasonable answer is: NATO is there to do whatever the US wants its European partners to do with it, and they can decide to go along with it or not to go along with it. If Europe is serious about European defense integration, then we should cut the umbilical cord with the US.

Think of it. Shortly after the Berlin Wall came down, political philosophers (read: ideologues) like Fukuyama mourned or, more likely, celebrated the ‘end of ideology’. Fukuyama, for example, wrote this: humanity has reached “not just … the passing of a particular period of post-war history, but the end of history as such: That is, the end-point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.” Thirty years later, history proved him wrong: unlike the Soviet Union, China did not disintegrate. It successfully suppressed the Tiananmen protests and it restructured its economic and political system, in a very unique model which you may or, more probably, may not want to qualify as liberal. I think of this as follows:

1. From an economic point of view, it is probably more liberal than any other system (just care about money, business and wealth production).

2. From a political point of view, the system is not what many casual observers think it is: China’s one-party system clearly allows for different opinions being expressed internally and fierce competition from within the system. Otherwise China would not be where it is now. Also, I have had the pleasure to interact with Chinese diplomats in Asia (12 years of diplomacy, which ended in Afghanistan) and I found they suffered less from the typical ‘groupthink’ problem that marks some other diplomatic corpses.

In any case, what is obvious is that its system is, by far, more successful than the Anglo-Saxon (US or UK) or European system, as evidenced by the fact that China, over the past decades, grew to become the largest economy in the world. Indeed, China’s GDP is now commensurate with its population: measured in purchasing power parity terms, it is the largest in the world. Back in 1989, China’s GDP was only ninth in the rankings. So are we or are we not witnessing the end of ideology or – worse – the end of history, or not?

The answer is rather obvious to me: history never ends (it was so foolish to write something like that) and, therefore, our views on how to manage our societies will also continue to conflict. In that sense, we are surely not witnessing any end to ideology. If anything, that is what the recent clash around the US and China is all about. Truly wise political philosophers should just observe current international realities: the world has, de facto, become multipolar. It is one interconnected world indeed, but it is comprised of many cultures and very different political and economic systems. Such diversity is good.

So, yes, while we are not seeing the end of ideology, we should move beyond ideology and focus on peaceful coexistence and finally be very serious about working towards “the greatest good for the greatest number”, as Jeremy Bentham – the father of liberalism, utilitarianism and pragmatism – said we should aim at above anything else. That means, among other things, working with rather than against China. And it surely means refraining from any aggression or interference in the internal matters of other countries – especially those countries that, through sheer hard work, have seen their wealth growth to levels that are at par of the wealth of the West.

Also, when war is inevitable – as it was between Ukraine and Russia this year – then one should respond firmly (as Europe and the US did) but one should also prepare for armistice and peace as soon as possible. That is not happening now: shipping US$40b arms packages to Ukraine is not what is needed now. For those who are not familiar with such numbers: the annual defense budget of Russia is about US$65b and most of that is spent on salaries: not on highly lethal offensive equipment. So, yes, such interventions totally reversed the initial perception of a David versus Goliath relation between Russia and Ukraine: Ukraine is now, by far, the most powerful army in Europe, and it is not because of NATO or European support. It is because the US took over. That is a fact. Do we want that? Possibly. We just need to be aware of it.

The frontlines are all but frozen now, and the US and Europe need to work with China to end the war. Through hard-nosed diplomacy rather than more sabre-rattling. More sanctions do not only hurt ourselves but – more importantly – risk alienating Russia (not only its leaders but – much more importantly – their citizens) to a point of no return. That is not what we want: Russia is and remains our neighbor, and – just like individuals – countries need to learn how to live with their neighbors. :-/

Post scriptum: When you are a European or an American reading this, you may be irked and think that I think of the Chinese way of living as, somehow, being superior to ours. I do not. I lived in Asia for a long time (20+ years), and I also lived in the US (Washington DC) for a couple of years (I was married to an American woman). Now I live in Brussels. In the country where I was born and grew up: Flanders, Belgium, Europe (Europeans have multi-layered identities, don’t they?). I think of it as the best place in the world, but that is probably because, yes, I was born and grew up here. There is no place like home and, yes, ‘home’ is, of course, a very different place for all of us – just like family is different for all of us. That is good. That is how it should be. That is why the world is such fun place and why wars should be avoided at all costs: war destroys homes and families. I have witnessed that in Afghanistan and in Ukraine. I have seen enough of it.

Just for the record, I add a personal note on why I think I should speak up in regard to the need to seek peace with Russia. I left for Ukraine as soon as President Zelensky made his appeal to European and other international volunteers to join the fight. I would have stayed on (many left after the terrifying strike on the Yavoriv base, but I did not) but, sadly, when seeing lots of idiot volunteers and private companies and militias from the US swamping in about a month after we had arrived, I thought it was no longer worth it: we are all ready to die for the right cause but if, I use Sun Tzu’s words here, you no longer find yourself on the right side of the Moral Law, then it is better to go home. From a practical point of view, the Ukraine-Russia war is now a war between Russia on one side, and Ukraine and the US on the other. It is no longer the war between Russia and Europe that our media pretend it to be. Here too, I do not mince my words: Yankee, go home. Please. We Europeans can and will deal with Russia. They are our neighbor. We will find a way. How?

Well, for starters, the EU’s relationship with the country that now has the most leverage on Russia (yes, China) has remained relatively unaffected. Let us bank on that to begin with. I also think Europe’s diplomats do not have the kind of ‘with or against us’ attitude that is so harmful in such situations. Let me be blunt here: European diplomats do not display arrogance and are not complacent. That is why Chinese and Russian diplomats will probably find it easier to talk to them. If your only tool is a hammer, then every problem looks like a nail. So, if your only tool is a gun, then… Well… Then everyone looks like your enemy, right? Europeans do not think like that. Why? History: this continent remembers its wars and has learnt from them. Unlike the US, Europe did not go to war again after WW II (except for the Korean war, perhaps, as part of the United Nations). The US has fought many wars in foreign lands since then, and participated in even more proxy wars during the Cold War. These wars have been everything but successful, and I see little or no learning from them at all. :-/