At the G7 meeting, some members were ruminating about how Donald Trump may be the single catalyst destroying the world order that Western Powers have enjoyed for 7 decades. Since the end of WW2, the United States has been the leader of the free world. The United States historically stopped the Soviet push for world domination during this period and by economic dominance threw them into the ash heap of history. The USA contained the spread of communism and aggressively promoted democracy worldwide. Through economic leadership by promoting a free market style hybrid capitalism, the USA brought unprecedented wealth to the free world, and along the way assisted societies like China and Vietnam to achieve unimaginable economic results. Some G7 members feel that this relationship with the USA is starting to unwind. Is it, or is this just a symptom of a changing world?
After WW2, most of the world was in various states of destruction. Western Europe was in ruin, China was battered, Russia suffered unimaginably, Korea was decimated, Japan was even nuked, and literally the last man standing was the USA. Unlike the aftermath of WW1, when the Europeans at Versailles made it a point to compound Germany’s pain by implementing crushing reparations that ultimately led to another world war, the United States took a different direction. In a very benevolent fashion, the USA altruistically implemented the Marshall Plan in 1948, investing over 13 billion taxpayer dollars (145 billion in today’s currency) to rebuild Western Europe, including Germany. This resulted in a very fast recovery for them, and they also adopted various forms of hybrid capitalism and democracy. They were now on a road to prosperity that they had never seen before.
Japan also was given favorable treatment by our occupation and investments in their rebuilding efforts. They also developed a new, democratic form of government and embraced a form of capitalism, resulting in a fast recovery and undreamed of wealth for the average Japanese citizen. This was all the result of our occupation led by General MacArthur.
After the creation of North and South Korea, US investment in South Korea was massive, and once again with very positive results. Unlike North Korea, that to this day is one of the poorest and most politically oppressed nations in the world, South Korea is a shining example of what capitalism and democracy can do for a nation. They are a model of what a 1st world nation looks like, and able to compete with any nation on the face of the planet.
During this post-war rebuilding period, we gave recovering countries free access to our markets, with very little in the way of trade barriers. Conversely, these same trading partners put up barriers of their own, and we looked the other way. We were at that time the strongest economy in the world, one that was assisting in rebuilding many nations after the war, and had the insight to know at that time our partners trade barriers were there simply to assist in recovery.
Since the end of WW2, there has been a resurgence in both prosperity and freedom for most of the planet. Even so called communist states like China have eased up on their absolute control of the individual. Although regional conflicts still arise from time to time, no major worldwide conflict has reared its ugly head, and this is largely because of the influence of the USA. The United States still controls the largest and most lethal military in the world, and uses that power to stabilize a world that has a natural proclivity to go out of control.
But the times “they are a changing”! Russia has come back under the leadership of Vladimir Putin. Although their economy is relatively small, approximately 10X smaller than USA, Russia is investing a lot of money into military preparedness. Mr. Putin is not afraid to use this relatively newfound power, and has recently taken over the Crimea by force from the Ukraine, has invaded Georgia, and has inserted itself in the Libyan conflict. Putin is causing great concern with former satellite states, with the worry that they may be next. Russia has made overtures to the Iranians, Pakistani’s, Turkey (a NATO member), North Korea and China, with positive results.
China, largely through the efforts of the USA and the rest of the Western World, has emerged as an economic powerhouse. In the past 3 decades, much manufacturing has left the Western World and relocated to China in order to enjoy lower prices. In many cases, the move was forced upon manufacturers by retailers like Walmart, Home Depot, Lowe’s, etc…, who pushed their vendors into this action through outright threats and intimidation. China has invested much of their newfound success into their own industries (Steel, Aluminum, Aerospace, Cars, Electronics, etc…). Further, they have required Western businesses to share technology in order to benefit from China’s low wages, and many businesses have capitulated to that threat, resulting in China having one of the fastest growing economies in the world.
China has also invested heavily in its military, and has built what many claim to be the 2nd most lethal military in the world. They have also claimed as theirs a major trading route, the South China Sea, and have built islands on top of reefs strategically throughout this maritime region, weaponizing them like stationary aircraft carriers, complete with planes, missiles and other weaponry to head off any interference by foreign (primarily American) Navy’s. They have become a power to deal with, and they are now heavily aligned with other bad players, including but not limited to Russia and Pakistan.
In addition, China in cooperation with Russia is attempting to create a new “Silk Road” using both ports and railways in order to exploit trade with the European continent. This is being done by forming relationships with other countries like Pakistan and Sri Lanka for ports, and countries like Myanmar, Cambodia, and Turkey for “right of way” to build a railroad from China to the European Markets. This is done in part through investments made in infrastructure by China in order to gain influence. China is also gaining influence in Africa, Central and South America using similar strategies in order to have free access to their raw materials, and to open up new markets for Chinese goods.
Russia and China are cooperating in other areas too! Militarily, there is a cross-fertilization that assists both players in a “catch up” game with the USA. Between sharing technologies and hacking American military databases for military technology secrets, they are rapidly coming closer to USA’s capabilities. China is also dependent on energy purchases from the Russian Regime for their basic energy needs, and Russia is dependent on China for low cost consumer goods. They truly are partners, and with military and economic moves, along with newly formed alliances, they are together a force to be reckoned with.
There is a new world order in the making, and it appears that Russia and China will be major players in this creation. The USA and Western Civilization will also be major players, but the game is changing and the play has not yet been set. In a sense, some G7 members are right, the current world order is going away. Talk of abandoning the USA because of Donald Trump’s push for open markets, using tariffs as a catalyst is not the reason. Trump’s push for fair trade is actually a plea to come together, not to come apart. Tariffs are being used to start a conversation, not to end it. He is trying to pull nations together that we helped to recreate after WW2. He is also trying to use tariffs to negotiate with China on leveling the playing field. Nations no longer need us to give them unfettered access to our markets, whilst they do not reciprocate. If we are to create a new world order based on our shared values, equitable trading standards are a required first step.