Some books deserve a second shot!
Reviewing “The Retreat of Western Liberalism” by Edward Luce
Some books deserve a second shot!
Edward Luce wrote “The Retreat of Western Liberalism” in 2017, around the time Donald Trump was taking charge of USA Presidency and speaking of launching tariffs against China and ingratiating a sense of friendship with Putin.
When I read the book for the first time in 2017, I was caught with unease — Luce, a journalist at the core, appeared to be a touch hyperbolic, as he painted a world where the US and western economies was in decline and the epicenter of global economics was shifting and rapidly so to the Himalayas — paying due homage to the Chinese and the Indian economies. After all, around 1750, both these countries accounted for 3/4th of total global manufacturing and trade. He quoted data around how globalization and the birth of complex supply-chains was disastrously affecting US’s deficit and shutting down manufacturing and eroding the middle class of its American Dream. Most pointedly, he was referring to how potpourri of nationalism, far right wing MAGA-ism, jingoism, populism, and an angry working class in USA would dramatically push back the notion of ‘western liberalism’.
In 2020, the pandemic came, and by 2021, President Biden had taken charge … I forget all about this book — just this morning I was searching amongst dusty books at home, and the book called out to me!
Part 1: Re-reading ‘The Retreat of Western Liberalism’
Luce writes lucidly and the book can be read in a three-hour long flight. Reading it again, it does seem that Luce used a time-machine of sorts and was in touch with trends, hunches, gut-feels, and data — that makes the book come alive with “I told you so” as one witnesses the second presidency of Donald Trump. Some of the data and trends that Luce quotes across a four-tier structure of the book includes has a very Nostradamus sensing:
A) He speaks of China having profited beyond its wildest dream on global trading systems erected in the past 30 years, and warns that we should not take the West (USA) for granted in maintaining these trading supply chains. He cites the example of how most cross-border trade is “Intra-company” — the Apple’s iPhone is produced in nine different countries after they stopped manufacturing in USA. He warns us that the American middle class would unleash its politics where such trading systems and complex supply-chains would be challenged if not broken.
B) Luce quotes the ‘Toil Index’ — attributes it to the work of the economist Robert H Frank from Cornell. Frank speaks of the Toil Index as a measure of gauging economic well-being and measures the number of hours someone must work each month to be able to rent a house in a community where the schools are of at least average quality. Luce uses this trend to link the erosion of wealth and well-being of the American middle class and its susceptibility towards populism and Trumpism.
C) Luce offers scathing data on how the inequality is reaching biblical levels of ‘robber-baronism’ and with it would come no mobility of most classes except that of billionaires, and how the rich would ensure a decline of meritocracy and innovation within the society. For example, he quotes a Harvard study that demonstrated that the number of students who attend ivy league universities from the top 1% of elite families outnumber the students who come from the bottom 60%. The former are defined as ‘dream-hoarders’ — a term coined by Richard Reeves.
D) Another trend that I would like to quote from the book that Luce introduces us is to the myth that a STEM education would lead to a lucrative career. He offers data that nearly 1/3rd of STEM graduates are in jobs that have nothing to do with STEM — many take up jobs including working as temps and fast-food servers — for AI (way back in 2017) was already threatening STEM careers.
E) 60% of labor wages in USA are paid in terms of hourly wages as opposed to monthly and yearly incomes. The median hourly wage in USA in 2017 was US$15.61. The gig-worker (and I would know for I am one) suffers from huge anxieties, apart from depression and rage. The median hourly wage has stagnated while the same have risen in China and India across the last 3 decades.
These are some juicy tidbits that I thought of offering in this blog.
Part 2: Choices that lie ahead
Luce predicts the US-China standoff if not a showdown to begin in 2020 — he quotes Trump’s avowal in 2017 where “America would start winning again and protect its borders from the ravages of other countries (read China)”. As many of you know that the 2016 Trump cabinet included the famous Peter Navarro — who had already written a book — “Death by China — How America lost its manufacturing base, and Luce predicts way back in 2017 that Trump and Navarro would impose and unleash steep anti-dumping duties on Chinese steel, semiconductors, and engine parts.
Luce offers the reader the following choices:
a) Nurture US allies as opposed to branding them as ‘free-riders’. Do not be belligerent to China for the allies would shift to China. By allies, Luce refers to Korea, Japan, Australia, and Europe.
b) Build capacity in US government departments to anticipate and predict — as opposed to starve them of funds to survive. I think he essentially means that merely chasing cost-cutting inefficiencies would render the capacity to forecast, to predict, and to prepare for the churning that is bound to come. I am sure the DOGEists would disagree.
c) Accept and acknowledge that the centricity of USA in global politics and trade would not last and that we need to be ready for a ‘Brownian’ world — a world that is random, VUCA oriented, and cyber-chaotic.
d) And of course, tax the rich. As Warren Buffet stated some time back — “My secretary is taxed more aggressively than me …” The notion of wealth and increase in wealth has been well designed by the billionaires — there are arguments and logic that is postulated on how the wealthy cannot be taxed in the same fashion as the middle class.
On hindsight, many of Luce’s choices (there are others that I have chosen not talk about — for the book is worth a read) seem simple and I hope that some work happens on these fronts.
Luce is quite the fan of India’s rise. There is another book that he has written on India’s growth. What I like about his stance on India and China is that he sees their growth not out of ‘rage’ but a natural claim to be powerful economies that these two nations have been for a large part of the history.
