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Can the East Save the West?

Asia’s emergence as the world’s geopolitical and economic center has lent global prestige to a new paradigm for achieving sustainable growth alongside social solidarity. With many other countries already studying the Asian playbook, the United States and Europe could benefit from doing the same.
Earth at night was holding in human hands. Earth day. Energy saving concept, Elements of this image furnished by NASA https://eoimages.gsfc.nasa.gov/images/imagerecords/79000/79790/city_lights_asia_night_8k.jpg

The past two decades have been either the best of times or the worst of times, depending on where you are sitting. Just when the global East was converging economically with the West, the two regions began to diverge psychologically. While America and Europe turned inward, toward pessimism and despair, Asia embraced globalization with growing confidence and optimism.

At the same time, Asians devised a new set of principles to govern the majority of the world’s population, and their models are spreading faster than Western-style democracy and development paradigms. As the world undergoes a rebalancing of power, the most important feature of the change is not economic or geopolitical, but intellectual. The years between the September 11, 2001, terrorist attacks on the United States and US President Donald Trump’s election in 2016 will be remembered as a historical rupture. The post-war decades of Western political and economic dominance are already behind us.

For Western elites and citizens alike, the future is now in doubt. Public disillusionment with prevailing political, economic, and social systems reflects a variety of factors. The disastrous wars in Iraq and Afghanistan struck a blow to Western global leadership. The 2008 global financial crisis exposed a deep disconnect between the Wall Street and the real economy. The failure to integrate Russia and Turkey into the West took the wind out of the sails of post-Cold War democratization. And democracy itself has now been hijacked by populists like Trump.

A TALE OF TWO TRAJECTORIES
The domestic situation in many Western societies leaves little to be desired. Citizens are drowning in debt, angry about rising inequality, and increasingly polarized politically and culturally. US millennials have grown up with a war on terror, stagnant real (inflation-adjusted) wages, mounting racial tensions, arbitrary gun violence, and political demagoguery – all amplified by the Internet. Likewise, European youths must put up with economic austerity, high unemployment, and increasingly out-of-touch politicians.

Though the West has pioneered wondrous technological advances in everything from communications to medicine, many of its people have not shared the benefits. Urban, educated elites have captured most of the economic growth, while the elderly and less educated – particularly in rural areas – have been left behind.

Meanwhile, billions of Asians who have grown up in the past two decades have experienced geopolitical stability, rapidly expanding prosperity, and surging national pride. Since the 1997 Asian financial crisis, most countries in the region have stabilized their currencies by shifting to floating exchange rates, built up large trade surpluses and currency reserves, and attracted growing volumes of foreign direct investment with which to construct modern infrastructure. And, thanks to globalization, Asians have captured the largest share of global economic growth for four decades and counting. The world young Asians know is defined not by Western dominance but by Asian ascendance. Last year’s hit film Crazy Rich Asians (based on a 2013 novel by Kevin Kwan) drives this point home.

The Western and Eastern experiences of the past two decades are not passing episodes; rather, they are each indicative of a historical sea change. As I argue in my new book, The Future Is Asian, even if the West can get its social-democratic model back on track, Asians will continue accelerating down their own path.

EVOLUTION BY NATIONAL SELECTION
The challenge for all societies today is to grapple with the intensifying complexity of geopolitical, economic, technological, social, and environmental change. This is a tall order, and there is little evidence that Western governments are equipped to manage the task.

Contrary to what many Western leaders would like to think, adaptability, not democracy or capitalism, is the most important feature of successful societies. While Westerners were telling themselves that they had reached the “end of History,” many others around the world were exploring a new post-ideological terrain where performance is the arbiter of success.

All societies seek to balance prosperity and stability, openness and protection, civic agency and effective governance, individualism and cohesion, and free choice and social welfare. But people do not measure such outcomes by how “democratic” their country is. Their judgments are based on whether they feel safe in their cities and can afford their homes, enjoy stable employment, save for retirement, and connect with friends and family.

In pursuit of such social and economic goods, Asia’s societies have, to varying degrees, developed a set of norms. The region’s principles for achieving prosperity, security, and fulfillment in the twenty-first century fall into three categories: mixed capitalism, technocratic governance, and social conservatism. Let’s consider each briefly in turn.

THE NEW ASIAN STATE
Under mixed capitalism, Asian governments rely on markets to drive growth, but they also play a strong role in the economy, subsidizing national champions and steering investment to strategic sectors. Whereas “managed innovation” might sound like a contradiction in terms to free-market liberals, it has nonetheless produced world-class companies such as Huawei and Tencent in China.

To be sure, Asian countries started from a low base and have benefited from the “catch-up” effects of adopting Western technologies and production methods. But they are also leapfrogging over some stages of the industrialization and urbanization process, shifting quickly from manufacturing to digital services.

They are also introducing ambitious national initiatives that previously would have been associated only with Western developed countries. Indonesia, for example, is already pursuing universal affordable health care. In sectors such as mobile finance and autonomous vehicles, Asia is not just catching up, but leading the world. In addition to falling technology costs and commitments by governments, many Asian countries have benefited from large populations that make them attractive testing grounds for multinational corporations.

With billions of lives on the line, Asians aren’t willing to wait around for markets to get things right. By steering markets rather than allowing markets to steer them, Asian governments have maintained very high levels of public support for globalization. Tellingly, Trump’s first major decision was to withdraw the US from the Trans-Pacific Partnership (TPP), whereas many Asian countries have embraced it – and they will soon ratify an even larger agreement: the Regional Comprehensive Economic Partnership (RCEP).

GROWTH FOR THE MANY
One of the more recent success stories in Asia’s experiment with mixed capitalism is Vietnam. In 2017, Vietnam’s trade-to-GDP ratio surpassed 200%, despite the government’s decision to maintain non-tariff barriers (NTBs) and pursue only incremental trade liberalization. Generally, such an approach would be considered sub-optimal; in Vietnam’s case, it has given the government time to retrain workers and ensure that growth remains inclusive.

This strategy helps to explain why public trust in government is higher in large developing Asian countries such as Indonesia and Vietnam than it is in much of the West. In recent years, some of Asia’s largest democracies, India, Indonesia, and the Philippines – accounting for around 1.8 billion people – have elected no-nonsense leaders who have doggedly pursued economic development. Despite their illiberal impulses, all three have enjoyed strong public support.

Asia’s high levels of public trust in government may owe something to the fact that Asian leaders actively consult the citizenry, whether through democratic elections, digital surveys, social-media monitoring, or all three. This applies even to an authoritarian country like China, where most citizens actually support the Social Credit System that has been so maligned in the Western press.

According to data from the Economist Intelligence Unit, governments across Asia are becoming both more inclusive and more effective, focusing on meeting public demands and building institutional capacity. Many Western scholars have cast aspersions on Asia’s centralized states for their apparent vulnerability to “bad emperor” scenarios, but it would appear that America is now the one afflicted with that problem.

Moreover, while democracy appears to be backsliding in the West, many Asian regimes are becoming more democratic and liberal, even as they remain focused on maintaining legitimacy through performance, not just elections. Asians are not afraid to toss out leaders who lose the public’s trust or fail to deliver on promises. Recent events in South Korea and Malaysia – and elections in India, Indonesia, the Philippines, and Thailand – should serve as a reminder that Asians will not settle for second-rate governments when they see their neighbors succeeding.

Asia’s rise, then, is much more complicated than the typical Western image of a monolithic authoritarian threat emerging from a culturally distant East. China accounts for just one-third of the region’s population, and far more Asians now live in democracies than do not. They are pursuing governance models that combine democracy and technocracy – models that, judging by their performance so far, will enable them to confront the challenges that lie ahead.

THE SINGAPORE CONSENSUS
All people aspire to greater political rights and individual autonomy, but Asian societies have been willing to defer civic agency for the sake of social stability. Hence, most Asians continue to favor strict justice systems, including institutions such as capital punishment and initiatives like Philippine President Rodrigo Duterte’s war on drugs, despite the cost in lives from extrajudicial killings.

Asian societies have also been slow to legalize gay marriage, and are cautious about unrestricted free speech. From Turkey and India to the Philippines, social-media platforms are active forums for political mudslinging. But most Asian governments have drawn a line at fake news and other forms of online manipulation, forcing Big Tech companies to deploy monitors and filters to insulate the national discourse. Western countries have only recently begun to come around to the idea that they must do the same.

To be sure, the first homages to “Asian values” in the mid-1990s were premature. The financial crisis in 1997 soon exposed the costs of rampant crony capitalism and the flaws of paternalistic but incompetent governments. But the new iteration of Asian values isn’t going away. Asians are not only doubling down on their own principles of mixed capitalism, technocratic governance, and social conservatism; they are also exporting them through intensifying commercial relationships, coordinated investments, and technology transfers.

Singapore is one of the hubs where these intellectual and geographic trends have converged. Each week, the Lee Kuan Yew School of Public Policy and the country’s Urban Redevelopment Authority host policymakers from India, China, Saudi Arabia, Kazakhstan, and many other countries to learn from Singapore’s public servants. Among other things, attendees receive instruction on deploying sustainable architecture, managing public-housing schemes, upgrading sanitation and recycling systems, establishing public-private-academic partnerships, and creating innovative industry clusters.

This is the “meat and potatoes” of twenty-first-century performance-driven governance. And, thanks to the transfer of knowledge and best practices, Asian-style master planning has become the template for more and more Middle Eastern and African governments as they pursue economic diversification and technological innovation. In fact, the vast majority of the world’s population is now either in Asia or in a country that is gravitating more toward the Asian model than that of the West.

Not surprisingly, a growing number of Western officials, businesspeople, journalists, scholars, and students are also tapping Asia for lessons in building large-scale, world-class infrastructure and futuristic cities. They are learning how Asian governments use data to align industries and universities, and to promote national solidarity through social policy. Civilizational emulation is no longer a one-way street.

ASIAN FUSION
Needless to say, Asian societies are far from perfect. China and Myanmar’s large-scale persecution of minorities has drawn international condemnation, as have attacks on press freedom in India, the Philippines, and elsewhere. Most Asian education systems still focus more on rote learning than on fostering creativity. Alongside breakneck wealth creation is sky-high inequality.

But Asians are no longer fighting over a shrinking pie. Governments are focused squarely on ensuring inclusive growth through access to basic services and policies to reduce poverty. At the same time that they are protecting industries, they are also liberalizing trade to improve access to one another’s markets. And despite the persistence of racism across the region, migration is rising rapidly, as young people from South and Southeast Asia pour into China, South Korea, and even Japan to work in construction and elder care.

As the West continues to veer off course, it should consider what it might learn from the East. Asian societies’ focus on long-term development and social solidarity is a far cry from the short-term perspectives and hyper-individualism that have come to dominate politics and policymaking in the US and Europe.

And yet, it would not be so difficult for the West to pursue a more inclusive agenda. After all, many features of the new Asian model are innovations on traditions inherited from the West. After World War II, Japan led Asia in adopting – and improving upon – Western technologies. Its model has since spread across the region, to South Korea, China, and even India.

Moreover, Asian civil services are modeled on those of the British Empire. The irony is that it is Britons who are now bypassing those institutions with populist referenda. Asians, meanwhile, trust professional bureaucrats to make long-term policy decisions. Likewise, while the US has returned to self-defeating policies of protectionism and financial deregulation, Asians are opening up their economies and adopting a Western model of prudential financial governance. While Western corporations have gained notoriety for avoiding taxes and spending lavishly on share buybacks, Asian firms have become generous welfare providers in the mold of Americans companies during the post-war decades.

Just as lessons from the West have played a critical role in Asia’s spectacular rise, Asian modifications of Western institutions and practices could help the West get back on track. In confronting an uncertain and difficult future, both West and East can benefit from further fusion.

(Author Parag Khanna is Managing Partner of FutureMap, a data- and scenario-based strategic advisory firm, and the author of numerous books, including Connectography, Technocracy in America, and The Future is Asian.)

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