Speaker 1: China's expanding economic power and projections it will surpass the
Speaker 1: US as the pre eminent commercial power have preoccupied people
Speaker 1: for years. But what about the idea of America as
Speaker 1: a kind of rogue state in its decline, lashing out here,
Speaker 1: lashing out there. That's not a perspective you run into
Speaker 1: every day, even in the Trump era. But as the
Speaker 1: Trump administration rolls on, more and more countries and world
Speaker 1: leaders might come to see America as the disruptor rather
Speaker 1: than the stabilizer. Welcome to Benchmark. I'm Daniel Moss, the
Speaker 1: columnist at Bloomberg Opinion in New York, and I'm Scott Landman,
Speaker 1: an economics editor with Bloomberg New in Washington. America as
Speaker 1: the economic and political renegade rather than the status quo
Speaker 1: is a pretty new concept, but Bob Carr says it's
Speaker 1: one we should take seriously. He's a former Australian Foreign
Speaker 1: minister and longtime student of US history and politics. He's
Speaker 1: the author of a new book, Run for Your Life.
Speaker 1: Bob joins US from Sydney, where he's Director of the
Speaker 1: Australia China Relations Institute at the University of Technology, Sydney.
Speaker 1: Bob thanks for joining us. Mike, pleasure, Dan and Scott
Speaker 1: By pleasure to be talking to you. You've had a
Speaker 1: long career in government. Before serving as Foreign Minister, you
Speaker 1: are a Premier of New South Wales for ten years,
Speaker 1: which for our American listeners is a little like being
Speaker 1: both governor of New York and California combined. I should
Speaker 1: also stress from the outset that you're no anti American
Speaker 1: rabble rouser. But what has America traditionally meant for you.
Speaker 1: We've seen America traditionally as a great sources of democratic values,
Speaker 1: and America's had a proud and mobile, even if inconsistent
Speaker 1: or patchy record evalivating human rights. I mean, there've been
Speaker 1: moments when I have thought, I guess twenty years ago,
Speaker 1: that if there's going to be a dominant power in
Speaker 1: the world, then it's it's good that it's America. Then
Speaker 1: came two shocks to that happy, rather optimistic view of
Speaker 1: American power, and Mike, one was the invasion of Iraq.
Speaker 1: In the absence of any concept of international law or
Speaker 1: any consensus in the West, the invasion of the Iraq
Speaker 1: was a huge disrupting influence. The other one was America
Speaker 1: deciding under Bush, that would really vacate leadership on on
Speaker 1: client to change that. That really got me thinking about
Speaker 1: the US. And of course under Trump, both those concerns
Speaker 1: has been magnified. Let's go back a little further, Bob,
Speaker 1: I learned about Chester A. Arthur at my eleventh grade
Speaker 1: US history class. I can't recall all the details, but
Speaker 1: can you tell us what is the Chester A Arthur Society?
Speaker 1: In the early eighties, Ion a group of friends formed
Speaker 1: the Chester A. Arthur Society to have dinners and to
Speaker 1: test ourselves with a paper on some aspect of US
Speaker 1: presidential history and a series of sometimes quite challenging trivia
Speaker 1: quizzes about about US the details of US presidential history.
Speaker 1: It was great fun. Do you still have the meetings, Bob?
Speaker 1: Or have you ceased them? In disgust? We ceased them
Speaker 1: and George W. Bush because it was you got to
Speaker 1: celebrate the presidency of Franklin Roosevelt or Abraham Lincoln. If
Speaker 1: all this pageant simply lead to the disasters of the
Speaker 1: George W. Bush presidency, it would be utterly impossible to
Speaker 1: hold them now. I mean, I've discussed with friends who
Speaker 1: like me, have been so fond of American history, the
Speaker 1: hollowness of any any celebration of this great feast for storiography,
Speaker 1: when it all seems to lead to the degradation of
Speaker 1: a Trump presidency. How you can extoll the shrewd, level
Speaker 1: headedness of Eisenhower's to term leadership of America, Let alone
Speaker 1: Franklin Roosevelt's leadership in depression and war when in the end,
Speaker 1: let alone Abraham Lincoln in the end, when it all
Speaker 1: devolves on a brabel rousing populist in Donald Trump, And
Speaker 1: without any sense, I might add, and I think this
Speaker 1: is an important point, Dan Scott, without had any sense
Speaker 1: of an imminent recovery, none of us believes, no, no
Speaker 1: friends of America. It was wild friends of America. Looking
Speaker 1: at the Trump presidency from Australia, I think there's going
Speaker 1: to be a return to liberal internationalism. China's ascendency in
Speaker 1: this context isn't really a new idea. What are people
Speaker 1: failing to grasp about the current moment. There are two
Speaker 1: new elements in perceptions in Asia, and that is that
Speaker 1: the China's economic rise is robust, and China's on a
Speaker 1: trajectory whereby two thousand and thirty it'll have an economy.
Speaker 1: According to an official Australian government assessment published in our
Speaker 1: Foreign policy white paper out late last year, we're the
Speaker 1: Chinese economy will be twice the size of the US economy,
Speaker 1: and I think that's a trauma for many Americans to
Speaker 1: contemplate no longer the as largest economy. And the second
Speaker 1: thing has been the Trump presidency. Across Asia, the consensus
Speaker 1: has formed that you cannot rely on America. It's behavior
Speaker 1: is going to be uddly, unpredictable. Do you think with
Speaker 1: regards to China, is it really the fact that China
Speaker 1: is getting that big you think is threatening America? Or
Speaker 1: is it the fact that China's economy is becoming so
Speaker 1: much more sophisticated. I mean, it used to be all
Speaker 1: about sweatshops producing cheap clothes and shoes and that sort
Speaker 1: of thing. They still do a fair amount of that,
Speaker 1: and yet the economy has evolved so much that you
Speaker 1: have technology powerhouses like Ali Baba, ten Cent that are
Speaker 1: being mentioned often in the same breath as American giants
Speaker 1: like Facebook, Amazon and so on. All of that's true.
Speaker 1: Another way of putting it is that when Joe Biden,
Speaker 1: Joe Biden used to say, he said to me, China
Speaker 1: doesn't innovate. Well, that that can't be said today in
Speaker 1: view of already have pointed to China is a great
Speaker 1: source of innovation and in many respects has already overtaken
Speaker 1: the US in innovation. And I think that makes it
Speaker 1: even harder for American aggress I noticed in the New
Speaker 1: York Times there's hardly any coverage of this, of China's
Speaker 1: transition to an economy based on services and based on consumption.
Speaker 1: The Chinese have already pulled off that transition. And as
Speaker 1: I look at the pages of the New York Times
Speaker 1: every day, and it's it's almost stubborn failure to cover
Speaker 1: what's happened in China. I think there's that there might
Speaker 1: be a latent American jealousy or distaste for what China represents.
Speaker 1: And I can understand that China's pulling off this economic
Speaker 1: transition without using the democratic means that we we'd all
Speaker 1: prefer to see China using. It's it's becoming a predominantly
Speaker 1: middle class nations, becoming by international tests, a rich country,
Speaker 1: and without permitting more political freedoms. And this is this
Speaker 1: upsets the The rule book contradicts the rule book and
Speaker 1: the expectations that all US Democrats have had. American declinism
Speaker 1: is nothing new, As you're well aware, the country has
Speaker 1: a long history of reinvention. Can it do it again? Yes,
Speaker 1: that's got to be admitted as a possibuilding and other
Speaker 1: possibuilding is that American decline is attenuated, it stretches out.
Speaker 1: None of us knows, None of us knows what form
Speaker 1: American decline will take. But we ought to be focusing
Speaker 1: with laser like concentration on the political crisis. There's a
Speaker 1: political crisis in Washington that is seeing the character of
Speaker 1: the two great political parties transformed. Just think the Republican
Speaker 1: Party is becoming a party opposed to immigration and opposed
Speaker 1: to trade. It's also becoming the first choice, the first
Speaker 1: preference the white working class American males. The Democratic Party
Speaker 1: looks more and more like an alliance of America's rich
Speaker 1: living on the East and West coast and its welfare
Speaker 1: dependent classes. Now, these these are big shifts, and the
Speaker 1: bonapartism of Trump has produced this change, and that represents
Speaker 1: nothing short of a political transformation in the US. But
Speaker 1: it's only one measure of the way America has changed politically.
Speaker 1: You could have a second career as a political analyst
Speaker 1: on one of the American television networks. I think with
Speaker 1: what you just said. But what you were just talking
Speaker 1: about reminded me of a quote that I saw that
Speaker 1: got some wide play back in when you were the
Speaker 1: Foreign Minister, and you said something along the lines of
Speaker 1: America was one budget deal away from restoring its global
Speaker 1: pre eminence. Do you think it's going to take a
Speaker 1: lot more than one budget deal or one election even
Speaker 1: now to get back to that level. Yeah, I don't.
Speaker 1: I don't think America can return to the liberal internationalism
Speaker 1: that was once synonymous with its power and might. I
Speaker 1: just can't see that happening. I think Trump is the
Speaker 1: most transformative president since lb J or Franklin Roosevelt. He's
Speaker 1: the most successful demagogue in American political history. He's a
Speaker 1: true bonapartist, the leader above party, above faction. And the
Speaker 1: fact that the Republican Party is shackled to him rather
Speaker 1: than the relationship being the other way around, him being
Speaker 1: a product of the Republican Party and its values. All
Speaker 1: this counts greatly. And I can't see the Democrats under
Speaker 1: any the candidates for presidency that are now now imaginable
Speaker 1: beating him in two thousand and twenty. I see him
Speaker 1: as a a two term president. Certainly that's the most
Speaker 1: likely outcome. And I think America will be changed utterly
Speaker 1: by eight years of Trump and the Republican leadership that
Speaker 1: will emerge after him very different from the Republican leadership
Speaker 1: at the Bushy Earl let alone. What was there before
Speaker 1: George W. Bush and before the Tea Party. How do
Speaker 1: you get from the sense of political crisis and political
Speaker 1: trauma to security threat. I think the political crisis in America,
Speaker 1: and that for once the term crisis is not is
Speaker 1: not hyperbole, is of significance precisely because it's changing America's
Speaker 1: international character. America is tearing up the rules on free trade.
Speaker 1: The next step can only be withdrawal from the World
Speaker 1: Trade Organized Nation because it's not adhering to the rules
Speaker 1: of the w t O. America is looking down, dusting
Speaker 1: off its allies like Canada, like the Europeans. America is
Speaker 1: saying alliances don't matter to us anymore. America seems to
Speaker 1: be treating a North Korea and a Russia with more
Speaker 1: respect than it's treating Germany or the United Kingdom or Canada.
Speaker 1: You can't pawn the crown of global leadership and then
Speaker 1: buy it back at the old price. If there is,
Speaker 1: in a stunning reverse all the election of a president
Speaker 1: who wants to abandon the key tenants of Trump's leadership,
Speaker 1: then he or she is going to find it very,
Speaker 1: very hard to rebuild alliances, to re establish respect because
Speaker 1: during the eight years of Trump and during whatever follows Trump,
Speaker 1: the world Asia, for example, but the Europeans as well,
Speaker 1: again to be making their own security arrangements. Australia might
Speaker 1: be the most rusted on and the most unquestioning of allies,
Speaker 1: but I suspect even Australia I would need to take
Speaker 1: account of what appears to be happening in Southeast Asia,
Speaker 1: that is, the Ten Nations of Asigan reach in its
Speaker 1: own way accommodating Chinese power and counting on America to
Speaker 1: be utterly unreliable. But let's talk about China for a moment.
Speaker 1: I spent three years in China as an economics editor
Speaker 1: in Beijing. It is an impressive place, but it also
Speaker 1: has its weaknesses that you might not be visible from
Speaker 1: a long distance. And there's this idea that China supports
Speaker 1: free and fair trade. They talk about a lot, but
Speaker 1: it seems like it's something that could be challenged. But
Speaker 1: to me, at least, China does talk about free and
Speaker 1: fair trade, and maybe isn't the one that's trying to
Speaker 1: ratchet up the tariffs like the Trump administration is. But
Speaker 1: let me ask you, is China kind of getting a
Speaker 1: free pass right now for all of it's you know,
Speaker 1: the many kinds of violations they've been accused of in
Speaker 1: the economic arena for many years. Are those being kind
Speaker 1: of looked over just because America is being such a
Speaker 1: bad actor. Yes, I think they are getting a free pass.
Speaker 1: And I think if there's a defense to be made
Speaker 1: of Trump's aggressive behavior on trade, it might be this
Speaker 1: that it will greatly strengthen the hand of the reforms
Speaker 1: in China. The people who do want to see the
Speaker 1: Chinese economy open up, who do want to see a
Speaker 1: burst of economic liberalization, It could well be that they
Speaker 1: get the upper hand, and faced with the provocation and
Speaker 1: the challenges of all the Trump's doing on trade, that
Speaker 1: we see China introduced market based reforms at a faster
Speaker 1: rate than the Party, and the government has promised to
Speaker 1: introduce that would be good for the world, would be
Speaker 1: very good for China. Already, China's got a smaller public
Speaker 1: sector in terms of the percentage of its workforce employed
Speaker 1: by government, including state earned enterprises, than many countries in
Speaker 1: the Western world, including Australia. But imagine if in response
Speaker 1: to Trump reformers really forge your head in China. It
Speaker 1: talked about the Asian countries making their own accommodation with China.
Speaker 1: Why has the issue of China become so politically toxic
Speaker 1: in Australia of late Yeah, I think the government of
Speaker 1: Australia tilted against China from early two thousand and seventeen,
Speaker 1: so it left people like me running a think tank
Speaker 1: as I am on Australia China relations saying, as I've
Speaker 1: been saying very recently, we more or less had it
Speaker 1: right as an American ally running a pragmatic China relationship
Speaker 1: back under the prime ministership of Tony Abbott, the Prime
Speaker 1: minister immediately before our current Prime Minister, Malcolm Turnbull. So
Speaker 1: we've gone through a period of shock and trauma because
Speaker 1: of the rapidity of China's rise. It's been a shock
Speaker 1: to the inherently pro American defense and security establishment in Canberra.
Speaker 1: It's just been a shock. It's been China's economic influence
Speaker 1: in the region to our north and China's success in
Speaker 1: its assertiveness in the South China Sea. I think Chinese
Speaker 1: behavior too has contributed to the the way views of
Speaker 1: China have turned have turned negative among the Australian leadership.
Speaker 1: China lifting the two term limit that applied to its
Speaker 1: its president is the biggest element in that. But while
Speaker 1: the Australian leadership has moved to a more entrenched or
Speaker 1: more flamboyant any China position, at least in terms of rhetoric,
Speaker 1: I mean we haven't repealed repealed our free trade agreement
Speaker 1: with the Chinese, public opinion has moved in the opposite direction.
Speaker 1: The highly respected Lowing Institute, our leading foreign policy think tank,
Speaker 1: produced a poll three weeks ago that showed the percentage
Speaker 1: of Australians who see China more as economic opportunity than
Speaker 1: security threat went up in the last year. It now
Speaker 1: sits at In fact, over the last two years, I
Speaker 1: think it's increased by five percent. So Australian views of
Speaker 1: China's economic potential in terms of mass public opinion have
Speaker 1: actually strengthened listen inclined to see China is a geo
Speaker 1: strategic threat then a couple of years ago, but which
Speaker 1: to me is very interesting now. Bigger than any class
Speaker 1: between China and Australia would of course be one between
Speaker 1: China and the United States. And this topic has gotten
Speaker 1: some attention lately because Graham Allison, a scholar at Harvard,
Speaker 1: published a book about the Thucidities trap, which is when
Speaker 1: one great power threatens to overshadow another conflict typically not always,
Speaker 1: but but typically is the result. Now with China going
Speaker 1: down a more authoritarian path, like you mentioned, America being
Speaker 1: fundamentally reshaped by the age of Trump, how have these
Speaker 1: odds of such a conflict increased over the past year
Speaker 1: or two. Well, you can say that the China and
Speaker 1: the US has moved into a trade war. You can
Speaker 1: say that that has got elements of a Cold war,
Speaker 1: especially with America reclassifying the way it regards China and
Speaker 1: seeing China as a strategic rival instead of a partner
Speaker 1: or a competitor. That's a huge challenge for Australia. But
Speaker 1: to conservative Australian politicians in the last twenty years have
Speaker 1: actually addressed it. Alexander Dana, who was Foreign Minister in
Speaker 1: the Howard government said in two thousand and five in
Speaker 1: respect to the prospect of a clash in the Taiwan
Speaker 1: Strait that and wouldn't apply, that the security treaty between
Speaker 1: Australia and the United States would not drag us into
Speaker 1: such a conflict, and that made a lot of people
Speaker 1: pay attention. And again in two thousand and thirteen or fourteen,
Speaker 1: the Defense Minister in the Abbott government said in respective
Speaker 1: conflict in the East China Sea that it was most
Speaker 1: likely that the Answers Treaty would not apply. In other words,
Speaker 1: and a conflict between China and Japan with the US
Speaker 1: intervening on behalf of Japan, Australia's obligation to protect its
Speaker 1: allied the US would not apply. We would not be
Speaker 1: dragged into it. And you got away with that comment
Speaker 1: without any blowback in Australia. So there there two signals
Speaker 1: that really stand out that even on the conservative side
Speaker 1: of Australia, it would be seen as not in our
Speaker 1: national interest to enter a conflict between China and the
Speaker 1: United States. Only stores in the wind, but I think
Speaker 1: people in the U s state department focused on game
Speaker 1: playing about these sorts of eventualities would have to take notice.
Speaker 1: That's Australia, I guess, is the most serious and rusted
Speaker 1: on American ally in the Pacific, apart from Japan, giving
Speaker 1: a strong cig no that in a show down between
Speaker 1: the U S and China it would have to consult
Speaker 1: its own national interests. One of the arguments advanced for
Speaker 1: why a conflict between the US and China is unlikely
Speaker 1: is that their capital markets and their economic systems are
Speaker 1: so enmashed. What's your perspective on that argument. Yeah, I
Speaker 1: support that argument. And there is now some critical assessment
Speaker 1: of Graham Allison's notion of the vicidities trap emerging, among
Speaker 1: other things, people pointing out that it's it's got no
Speaker 1: historical residence in East Asia. It's a bit of historicism.
Speaker 1: Because some things have happened in the past, these same
Speaker 1: things have got to happen in the same way in
Speaker 1: the future. So I'm basically optimistic. I think a clash
Speaker 1: would be disastrous for both powers. I am worried about
Speaker 1: the War Party in the United States at work in Washington,
Speaker 1: as advisors and commentators and think tankers moving around the
Speaker 1: circle of power, and I wouldn't hesitate to make the
Speaker 1: same point abount hawks in Beijing, but that simply puts
Speaker 1: an obligation on the rest of this to cause in
Speaker 1: realism and a bit of Kissinger style realism on the
Speaker 1: part of the the US is needed to avoid an
Speaker 1: ideological cold war approach to China, which sets us up
Speaker 1: for the inevitability of some conflict. Bob, let's finish on
Speaker 1: a slightly different note, talk about some of your days
Speaker 1: in the government. One typically here's the bemoaning of the
Speaker 1: age of social media, how it's become almost impossible to
Speaker 1: govern these days, you know, to properly develop policy, to
Speaker 1: sell it to an increasingly distracted electorate. You lead Australia's
Speaker 1: biggest state for ten years. What do you think of
Speaker 1: that argument? You're I come out of a different era,
Speaker 1: out of the era of newspapers, a time when people
Speaker 1: on buses and trains going to work were devowing newspapers,
Speaker 1: and an era when people watch the free to wear
Speaker 1: TV news at night, and you can sell a message
Speaker 1: by appearing on the front pages and on the TV
Speaker 1: captual summaries of the day's events and throughout the day
Speaker 1: on that wonderful medium radio. Everything's been shattered, everything's been
Speaker 1: broken up, but politicians are pretty unconvincing when they complain
Speaker 1: about it. If the rules have changed, you've simply got
Speaker 1: to change with the rules. And that means, if necessary,
Speaker 1: putting the twenty four hour media, the social media to
Speaker 1: your use, if you've got a good record, if you're
Speaker 1: listening to the public, if you can pitch your case,
Speaker 1: the new media rules should not disadvantage. In fact, I'd
Speaker 1: enjoy the challenge of being back in it again, being
Speaker 1: able to to take that new rule book and to
Speaker 1: make it work for me and for the government whose
Speaker 1: workers in charge of Or you could just take the
Speaker 1: new rules and take advantage of them as much as
Speaker 1: you possibly can and become president of the United States.
Speaker 1: You did once fantasize about being a senator, didn't you, Bob, Yeah,
Speaker 1: I did. That would have been nice. I thought i'd lead.
Speaker 1: In my book, I share a fantasy that I'd lead
Speaker 1: the six Australian states in the American Union. There would
Speaker 1: have been some disadvantages, some disadvantages applying to that, of course,
Speaker 1: we would have had to live with America's gun laws. Bob,
Speaker 1: Thank you very much. For joining us. It's been great
Speaker 1: to have you good Dan, It's been my honor. Thank you. Scott.
Speaker 1: Benchmark will be back next week. Until then, you can
Speaker 1: find us on the Bloomberg terminal, Bloomberg dot com or
Speaker 1: Bloomberg App, and podcast destinations such as full podcasts of
Speaker 1: Spotify or wherever you listen. We love it if you
Speaker 1: took the time to rate and review the show so
Speaker 1: more listeners can find us. You can also find us
Speaker 1: on Twitter, follow me at Scott Landman. Dan You're at
Speaker 1: moss un the School Echo, and our guest is at
Speaker 1: Bob J. Carr c A r R. Benchmark is produced
Speaker 1: by Top Foreheads. The head of Bloomberg Podcasts is Francesco Levie.
Speaker 1: Thanks for listening. See you next time.