In the
first photo, taken in 1972, US President Richard Nixon made what was then
considered a bold move, visiting Mao Zedong in Communist China. Literally, as
well as figuratively, Chairman Mao is on the left and Mr. Nixon is on the
right.
In the
second photo, taken over forty years later, we have US President Barack Obama
making a similar visit to China. This time, again literally as well as
figuratively, Mr. Obama is on the left and Chinese President Xi Jinping is on
the right.
Over
the ensuing four decades, both countries have been changing dramatically. The
US has become increasingly socialistic, more focused on Big Government and more
of a totalitarian state. In 1972, it was the world’s foremost creditor nation;
it is now the world’s foremost debtor nation. By contrast, China, since the
death of Chairman Mao, has opened up considerably, with billions of people
becoming upwardly mobile, in response to China becoming increasingly
capitalistic.
To be
sure, both countries retain some of their historical features, but
increasingly, the US is acting like a country in decline, whilst China is
acting like a country on the rise.
As a
result of successful capitalism, the US became the world’s foremost power after
World War II. Then, in the 1960s, the US began apologising for the spoils that
came with that capitalism. It became increasingly popular for Americans
(largely at the urging of the media and the political structure) to be ashamed
of capitalistic achievements and to head in a more socialistic direction.
Republican
politicians have needed to soften their views on capitalism in order to appear
to be “good people.” (“Good people” has essentially come to mean “those who are
prepared to take from the rich and give to the poor.”) They are now Republicans
in name only. The US still has two major parties, but one is a moderately
liberal party and the other is a vehemently liberal party.
China
has gone in the opposite direction, becoming increasingly capitalistic. The
results have been dramatic. Many Chinese now have all the trappings that
Americans do. In addition, their government is expanding more each year into
capitalism.
Again,
these developments have followed along the lines of “Declining Empire” vs.
“Burgeoning Empire.” Increasingly, the US approach to the world has become one
of demanding that other countries subjugate themselves to the US, as though
they are subsidiaries of the empire. The US has demanded that trade in many
essentials (particularly energy) be settled in the US dollar.
As this
relationship has been crumbling in recent years, the US has responded by
threatening other countries, creating sanctions against them, and even invading
them. In doing so, the US has earned the reputation as the schoolyard bully of
the world—the country that the world loves to hate. They still have to play
ball with the US, but the resentment is growing globally.
(It
should be noted here that, if and when a schoolyard bully does fall from his
position, he is stomped on, not only by his challenger, but also by those who
resented and hated him but had previously deferred to him and pretended to
befriend him. Similarly, when empires fall from grace, “staunch allies”
frequently switch sides rather quickly.)
In
contrast to the US, the Chinese have, in recent decades, displayed the sort of
capitalism that is indicative of a burgeoning global player. They are, in
effect, saying, “We’re open for business and we’re here to deal. We have some
creative ideas to offer that we think you’ll welcome.” They’re not twisting
arms behind backs. They’re offering creative opportunities for other countries.
In
addition, they’re not aiming for immediate gratification. Their aim is for
long-term benefits, just as US goals once were. Today, the Chinese are buying
up properties on every continent, setting up businesses, and making
sure that the locals benefit from their investments.
In
addition, they’re creating deals with governments that those governments could
not create on their own. They seek out a country like Venezuela that is on the
ropes economically and offer to buy heavily into Venezuela’s primary
asset—oil—to the tune of tens of billions of dollars. The deal is not intended
to provide a major return for China in the short term, but it does place China
in the economic catbird seat in Venezuela over the long haul.
Around
the globe, state-backed Chinese developers are offering creative deals to other
countries’ political leaders. For example, if a small nation needs, say, a new
port and the port costs $50 million (an amount that the country does not have),
the Chinese offer to build the port for, say, $30 million, a bid that no other
developer can meet. The Chinese developer takes a loss on the construction, but
a part of the deal is that he gets a significant portion of the income of the
port for, say, 50 or 75 years.
Chinese
developers are now executing such deals in nearly every country in the world.
What they lose in profits upon completion is made up for in long-term income.
As a bonus, China not only owns property worldwide, it is a shareholder in
the economies of countries worldwide.
This
rapidly expanding global Chinese capitalism is receiving little notice in the
US media, but that, most certainly, will change. As the US reaches its own
economic tipping point—market crashes, currency collapse, etc.—and finds that
it can no longer pay even the interest on its debt, it will also discover that
it cannot pay out the benefits promised to the 50% of its population who pay no
income tax but are recipients of governmental largesse. The US government will
then find itself desperately trying to keep this portion of the population at
bay, as payouts to recipients decrease. As a result, governmental capital
projects will fail to receive funding. Someone will need to step in and offer
“creative bidding.” Enter the Chinese.
Once
the US is on more of a Third-World economic footing, it will have little choice
but to accept the kinds of deals that the Chinese have recently offered in
Jamaica, Egypt, Nicaragua, etc.
The
result will be Chinese ownership not only of considerable US real estate and
corporations within the US, but ownership of US infrastructure.
Today,
the vestiges of Communism undoubtedly remain in China, but the move is
decidedly away from Communism, toward capitalism. Conversely, the US seems to
be hell-bent on replacing US capitalism with a socialist totalitarian state.
Since more than 50% of Americans are now on the dole in some form, it seems
highly unlikely that the US will suddenly reverse that direction, since the
majority of Americans will vote for continued (and increased)
government hand-outs.
Both
Chairman Mao and President Nixon are now pushing up daisies, and their
present-day replacements are reverse images of them. The future belongs to
those who are productive.
As
investment guru Jim Rogers has stated, the future belonged to the British in
the 19th century and the Americans in the 20th century. The Chinese will own
the 21st century. Accordingly, Mr. Rogers made Singapore his home.
We are
passing through the early stages of a period of dramatic change. The economic
and political world is in the process of turning upside down. Those who come
out the other side of this change with their skin on will be those who have
diversified both their wealth (however large or small) and, indeed, themselves,
so that they are positioned to thrive in the future, rather than to remain where
they are and be a part of the decline.