Belmont Club

Making Your Luck

A protest against rising taxes and the high cost of living turned into a riot in the French capital,(AP Photo/Thibault Camus)

The following is a reconstruction of a Powerpoint presentation I gave in Perth, Western Australia at the invitation of those who wanted me to speak on the question of whether Australia could remain “the Lucky Country”.

Countries, like people, have nicknames. Australia has been called the “Lucky Country” because it has been so rich and so secure for so long. But can this good fortune — if fortune it is — last?  Back in the 1960s, there was an American television series called the Land of Giants about people who are transported by space warp to a mysterious planet where everything is many times larger than on Earth, whose inhabitants the Earthlings nicknamed the Giants. In that world, everything – including cats, dogs, mice, insects – was terrifyingly huge, forcing the formerly dominant humans come to regard them in fear.

The show’s premise could serve as a metaphor for the situation Australia finds itself in. In 1914, Australia was an outpost of the mighty British Empire, on whom the sun never set, whose navies girdled the globe. The British Empire’s share of world GDP was 19.7% in 1913. Back then China produced only 8.8% of the world’s GDP, less than half the British Empire’s. A hundred years and a seeming space warp later Australia finds itself in the land of Pacific giants. The British Empire is no more. What’s left of the Royal Navy is on the other side of the world. Suddenly, like the TV show everything is big and frightening.

Giants can injure even without meaning to. Take Vancouver. A Bloomberg writes of it: “The money is arriving so fast, and in such volume, though, that standing by is no longer an option. Vancouver was perhaps the first major Western city to experience the full force of Chinese capital. Soon, it could be the first to learn what happens when you try to stop it.” China is so big it can hurt you without meaning to.  Not just Canada, but Australia, Africa, America but the whole world is feeling the impact of globalization. Yet too often China hurts not only by mischance but design. An article from the Wilson Center noted:

In June 2017 the New York Times and The Economist featured stories on China’s political influence in Australia. The New York Times headline asked “Are Australia’s Politics too Easy to Corrupt?,” while The Economist sarcastically referred to China as the “Meddle Country.”

The two articles were reacting to an investigation by Fairfax Media and ABC into the extent of China’s political interference in Australia, that built on internal enquiries into the same issue by ASIO and Australia’s Department of Prime Minister and Cabinet in 2015 and 2016. The media and official reports concluded that Australia was the target of a foreign interference campaign by China “on a larger scale than that being carried out by any other nation” and that the Chinese Communist Party (CCP) was working to infiltrate Australian political and foreign affairs circles, as well to acquire influence over Australia’s Chinese population.

The cooperation of China’s nationals for state purposes is not always voluntary. Bloomberg noted “Jack Ma, co-founder of China’s most valuable company, was officially confirmed as a member of the Communist Party.” If Beijing can make Jack Ma an offer he can’t refuse how can the ordinary Chinese refuse? Perhaps even more insidious is the other formula for expanding Beijing’s influence is “make the foreign serve China”. Coopting foreign academics, entrepreneurs, and politicians to promote China’s perspective in the media and academia has proved easy. Foreign companies, in their eagerness to do business, are often willing to meet the conditions of the Chinese state.

Two examples are illustrative. A lawsuit contends that Cisco built the Great Firewall of China at great human cost to dissidents. More recently Google has come under fire for prototyping a censored search engine tailored for China. In explaining to staff why the work on Dragonfly was “extremely important,” [Ben Gomes, Google’s search engine chief] referenced the sheer size of the Chinese market, saying “we are talking about the next billion users” for Google. He also called China “the most interesting market in the world today.” “By virtue of working on this,” Gomes added, “you will act as a window onto this world of innovation that we are otherwise blind to.”

But there’s trouble in the Land of Giants. The Paris Accord, TPP, NAFTA, the role of America in the world are all being amended or replaced with dizzying rapidity. The foundations are in a state of flux as never before. Let’s look at a few instances. The most obvious sign is America is now overtly pushing back against China. US vice president Pence, speaking at a Washington think tank declared what amounted to a new Cold War on China. It announced controls on Chinese investment, measures to manage their position within the supply chain and perhaps most controversially, the imposition of tariffs.

In Europe the shifts are just as great. Britain is once again venturing forth to seek its fortune in the world. International Trade Secretary Liam Fox recently pointed out that Brexit was not just about leaving Brussels. It was about going somewhere. “The withdrawal agreement and the political declaration will not please everyone, and we have had some tough choices to make, but the deal we’ve reached will give us a firm and stable base on which to leave the EU and build this country’s global future, a future that still encompasses Europe, of course, but also the wide fast-growing markets beyond, with all the opportunity that entails.”

In Brexit one can hardly help but hear echoes of the famous passage from King Solomon’s Mines as the adventurers prepared to cross the trackless desert in search of rumored riches.

“Gentlemen,” said Sir Henry presently, in his deep voice, “we are going on about as strange a journey as men can make in this world. It is very doubtful if we can succeed in it. … Now before we start let us for a moment pray to the Power who shapes the destinies of men.“

I do not say that I am a first-rate praying man … anyhow I do not remember, excepting on one single occasion, ever putting up a better prayer in my life than I did during that minute.

“And now,” said Sir Henry, “trek!”

Trek. But the once lonely rebels against the global world now have company, even if reluctant. Listen to Hillary Clinton. “I think Europe needs to get a handle on migration because that is what lit the flame,” Clinton said, speaking as part of a series of interviews with senior centrist political figures about the rise of populists, particularly on the right, in Europe and the Americas. Listen to Barack Obama. “I know we’re in oil country and we need American energy. You wouldn’t always know it, but it went up every year I was president. That whole — suddenly America’s like the biggest oil producer and the biggest gas — that was me, people.”  Imitation is the sincerest form of flattery.

Events are further reflected in that shadow counterpart to the material: tech. “It’s the end of the world and I feel fine,” went the line from 80s song.  The 2018 equivalent of the sentiment can be found in George Gilder’s book Life After Google.  The era Big Data is ending and it’s good news.  Perhaps not just Google but a whole way of centralized control may be passing away, the victim not so much of hostile populism but of changing times. Big silicon’s model of selling everyone’s information to advertisers, politicians and secret policemen for an absolute fortune yet a relative fraction of real value is running out of steam.

The revolution is occurring in response to some long standing problems rooted in the current centralized structure which is the very opposite of the model we used to know. In the world before the big servers we stored our valuables in a million places with a million separate locks. To burgle a million homes you would have to invade a million places. Today you need only burgle a giant database, whose locks no matter how good, are nevertheless weakened by the need for constant access.

Data centralization has made it possible not only for China but also Western governments to spy on their populations.
Facebook will allow French regulators to “embed” inside the company to examine how it combats online hate speech, the first time the wary tech giant has opened its doors in such a way. What could go wrong?

At the technical heart of the decentralization rebellion is the blockchain. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block, a timestamp, and transaction data. By design, a blockchain is resistant to modification of the data. This decentralized datastore can make possible

  • The secure ledger of ownership
  • The ability to assign tokens to any physical or logical object in the world and enable a trade in the same.
  • Create a tamperproof ledger of contracts that can potentially alter governance.

If the decentralization revolution succeeds it will be the 4th such in as many decades. Since the computer revolution we’ve gone from Mainframe, PC, Cloud, Blockchain. How far these fires of rebellion will spread is yet to be seen, but their effects are already being seen in the strange coalitions being built all over the world by the left and right in Italy and even among the left and right protesters against fuel prices in Paris. In America the liberals may simply chart a separate destiny from their ideological adversaries. If there are sanctuary cities for illegal immigrants in Blue States there are proposed sanctuary cities for guns in Red States.

Of course, not everyone is happy at the turn of events. The Nation, one of America’s best known left wing publications says: “A Leftist Foreign Policy Should Reject Economic Sanctions”, that the United States should use its financial powers to bust oligarchs, end tax evasion, and create a fairer world economy. It complains that  “the Trump administration has imposed new economic restrictions on the governments of Russia, Iran, China, Venezuela, and Turkey. … Instead of diminishing international rivalry, sanctions are now exacerbating it. Iran sees the re-imposition of sanctions as creating a ‘war situation.'”

Peter Beinart, writing in the Atlantic agrees China should be confronted, but primarily by the power of virtue. “By undermining America’s soft power—both its moral authority and its diplomatic capacity—even as it ramps up competition with China, the Trump administration is sabotaging its own strategy. It’s also making that competition more dangerous. Soft power is the power to attract. The less of it America has, the more it will rely on its power to coerce.”

Nor are these warnings wholly unwarranted. “Military expenditures by the US during the Cold War years were estimated to have been $8 trillion, while nearly 100,000 Americans lost their lives in the Korean War and Vietnam War.” That is nearly as many as the number of American KIA in the European theater of operations for all of WW2. Cold Wars are neither safe nor cheap.

But despite those dangers change seems inevitably on the way. One of the big drivers is technology. For one thing decentralized unalterable databases will mean China’s efforts at censorship must inevitably collapse. Technology has created indelible ink, uneditable records. Technology is striving to create unstoppable networks. Low earth orbit constellations are scheduled for deployment fairly soon. These create the possibility of broadband Internet from any point on earth to a WiFi in the sky. The mandated design cost for terrestrial uplink equipment is not more than $200 in some designs. This can create huge challenges for the Chinese surveillance empire.

The other driver of change is the growing doubt in the wisdom of transnational project. Empire’s order can all too easily become a nightmare. In this bewilderment people are once again looking to themselves. The Israeli Yoram Hazony asks: when did nationalism become a bad word? Hazony argues nationalism, now a synonym for evil and bigotry, is the creative, empirical part of the world.  Mindful of the calamities that men have brought upon us in the political realm by Babel-like overconfidence, “we may say, in other words, that a nationalist politics invites a great debate among the nations, and a world of experiments and learning. Whereas an imperialist politics declares that this debate is too dangerous or too troublesome, and that the time has come to end it.”

Hazony asks if it is possible to believe that “it is not Israel that is the answer to Auschwitz, but the European Union”? That “a united Europe will make it impossible for Germany, or any other European nation, to rise up and persecute others once again. In this sense, it is European Union that stands as the guarantor of the future peace of the Jews, and indeed, of all humanity”? He doubts this and so do many.

But suppose we have only been offered a fake globalization so far? One way to get understand what real globalization looks like is to examine the global schemes that actually work. A familiar example is your computer or phone. They’re studded with icons each represents different programs all of which can run simultaneously because of walls. It wasn’t always this way. When PCs first came out they could only do one thing at a time. You loaded up a floppy and ran Visicalc. To run Wordstar you exited Visicalc and loaded another floppy. When programs tried to coexist in the same space they initially ran into problems. Program A interfered with the resources of Program B and you got – the older people will remember – the Blue Screen of Death.

Then we learned that walls can make them work together. This is called componentization and clearly described by Leo Linbeck in his article at AEI.

The first strategy is to break a big, complex system into smaller, simpler subsystems and carefully define the way those subsystems interact. Even after such a breakdown, if a system continues to grow, the subsystems themselves will become too large and must be broken down further into smaller sub-subsystems. Through this subdivision process, we not only reduce the complexity of the subsystems but also increase the number of people who can deal with the problem. …

Yet creating a hierarchy of subsystems is not enough. There must be a commitment to subsidiarity—thatis, pushing control as low in the hierarchy as possible. We do not reduce complexity if we create additional subsystems but still control everything from the center. In fact, it makes the complexity problem worse. In programming, interaction between components is managed through an interface. Higher-order components, for instance, cannot directly access and modify the properties of lower-order components—they must access those properties through the interface of that lower-order component. This rule—which, perhaps counterintuitively, limits the power of the higher-order component—is a way to keep complexity under control.

That should be our model for the world.  In our haste to dismantle walls we have made local conflicts international: witness the refugees streaming out of Venezuela, Syria and Central America toward their neighbors.  We have made the international local.  That’s why we have ‘collusion’.  The implication is clear. You create a working global world by building down and hooking the components together not by creating ever more complex Rube Goldberg multilateral institutions. It also aligns nicely with Yoram Hazony’s concept of a community of nations.

The building of national identity based on a shared culture, language or identity enables globalism — without abolishing the nations. This model is often embraced by small nations surrounded by giants, like Switzerland, Singapore or Israel, but not curiously Australia.  The development of identity, a network of trust, loyalty and belonging is deemed vital to their survival in the face of surrounding empires be they European, Asian or pan-Islamic.  In marked contrast “more than 100 academics from the University of Sydney have signed an open letter opposing any push to introduce a western civilisation degree funded by the John Howard-backed Ramsay Centre. The university has confirmed it is in conversations with the Ramsay Centre about the possibility of running the degree following the Australian National University’s decision to pull out of negotiations. Published on Friday, the letter states the academics’ strong opposition to the Ramsay Centre proposal, describing it as European supremacism writ large.”

For the first requirement of remaining lucky is to play to win. Is Australia playing to lose?  The old world order is changing into something else and everyone should be alert for opportunity. Britain has ventured forth, though like Frodo it does not know the way. Eastern Europe is seeking its own complementary linkages like the Three Seas Initiative. America has become more politically diverse yet seems not the worse for it. We are not going back to the 1930s. Neither the global world nor the nations are at an end. They are only seeking a more secure basis. Catastrophe is not necessarily at hand so long as we do not lose our enterprise.

If one goes back to 1770, when James Cook first reached the southeastern shore of this continent, it was still a dark shape on the horizon, full of danger, mystery and opportunity. It was not yet the Lucky Country. The luck was the outcome of the wager accepted, it would never have happened without taking the chance. As the 21st century dawns, Australia is no smaller than Cook’s ship on that vast ocean, even in the present Land of Giants. The future has never been so immense nor so perilous. Yet the only sure way to fail is to lose heart and do nothing. The greatest danger, greater even than the Chinese Public Security Bureau, is that we will lose faith in ourselves.

This we must not do.  Perhaps Canadian Stan Roger’s famous lyrics from Northwest Passage best express the attitude we should take. For those who don’t know them, here they are for you, the descendants of Captain Cook’s voyage on the 21st century’s uncharted seas.

How then am I so different
From the first men through this way?
Like them, I left a settled life
I threw it all away
To seek a Northwest Passage
At the call of many men
To find there but the road back home again

Ah, for just one time
I would take the Northwest Passage
To find the hand of Franklin
Reaching for the Beaufort Sea
Tracing one warm line
Through a land so wild and savage
And make a Northwest Passage to the sea

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Support the Belmont Club by purchasing from Amazon through the links below.


Custer’s Trials: A Life on the Frontier of a New America, by T.J. Stiles. Winner of the 2016 Pulitzer Prize in History, this book paints a portrait of Custer that demolishes historical caricature, revealing a volatile, contradictory, intense person — capable yet insecure, intelligent yet bigoted, passionate yet self-destructive, a romantic individualist at odds with the institution of the military (he was court-martialed twice in six years). The key to understanding Custer, Stiles writes, is keeping in mind that he lived on a frontier in time. In the Civil War, the West, and many other areas, Custer helped to create modern America, but could never adapt to it. Stiles casts surprising new light on a near-mythic American figure, a man both widely known and little understood.

Tribe: On Homecoming and Belonging, by Sebastian Junger. We have a strong instinct to belong to small groups defined by clear purpose and understanding or “tribes,” a connection now largely lost. But its pull on us remains and is exemplified by combat veterans who find themselves missing the intimate bonds of platoon life at the end of deployment and the high rates of post-traumatic stress disorder suffered by military veterans today. Combining history, psychology, and anthropology, Junger explores what we can learn from tribal societies about loyalty, belonging, and the eternal human quest for meaning. He explains why we are stronger when we come together, and how that can be achieved even in today’s divided world.

For a list of books most frequently purchased by readers, visit my homepage.

Did you know that you can purchase some of these books and pamphlets by Richard Fernandez and share them with your friends? They will receive a link in their email and it will automatically give them access to a Kindle reader on their smartphone, computer or even as a web-readable document.
The War of the Words, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
Rebranding Christianity, or why the truth shall make you free
The Three Conjectures, reflections on terrorism and the nuclear age
Storming the Castle, why government should get small
No Way In at Amazon Kindle. Fiction. A flight into peril, flashbacks to underground action.
Storm Over the South China Sea, how China is restarting history in the Pacific
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