The Good the Bad and the Ugly

Out here on our little islands in the Pacific, can we better judge the world dispassionately? Or do we simply enjoy the feelgood factors that we abundantly have? Does our America’s Cup runneth over?

The world has not caught fire in a great clash of great powers. But flammable material is accumulating, and it’s a shrinking group of political leadership willing to step outside their own boundaries to put the small fires out.

So is the world more secure than a year ago? Is the danger of serious economic crisis higher or lower? Are the institutional arrangements and norms that resolve conflicts and enhance the prospects for international cooperation more or less robust than they were in July 2016?

With apologies to the late Sergio Leone, here’s The Good, The Bad, and The Ugly.

THE GOOD

The level of conflict between human beings is still at historic lows.

The likelihood that you will die a violent death is vastly lower than it was at nearly all other moments in human history. The number of low-level conflicts have not increased significantly in the past year, even when you take the deteriorating Middle East into account. The odds that a European or American will be murdered in a terrorist attack are vanishingly small. New Zealand hasn’t had a terrorist attack fatality on shore since July 10^th 1985.

Despite plenty of provocation, voters in France, the Netherlands, the U.K., Austria, and Canada have rejected xenophobic nationalism. The Islamic State’s self-proclaimed “caliphate” is now headed for the dustbin of history – it won’t eradicate violent extremism, but it’s a good step.

The Colombian peace agreement is holding after a long and gruelling civil war.

Crony capitalism in South Korea, Malaysia, and Brazil is getting slowly lanced out of the concept of state directed development. Very good.

The current Pope has reformed little but is at least competent. That’s better than all popes since Vatican II.

Global energy systems are being transformed away from carbon. Not fast enough, but it’s happening.

Resistance against Donald Trump is growing. Not coherent, but growing – and crucially has MSM backing.

In a few states like Canada and France, newer leaders look promising.

The war in the Ukraine has settled down into a half-frozen conflict that seems unlikely to escalate.

The European Union is in its fifth straight year of economic recovery, despite uncertainties from Brexit.

Closer to New Zealand, we’re economically in shape. According to the OECD June 2017 report on New Zealand, we continue to have strong economic growth that is being driven by “booming tourism, strong net inward migration, solid construction activity, and supportive monetary policy.”

Even in banking and housing, the Australian banks that dominate New Zealand are pricing risk better, scaling back any interest-only loans to investors, and in turn indirectly cooling the entire Auckland housing market.

In our trade vulnerabilities, China is economically strong, as is Australia, and those two together set us up to make good coin for as long as we can see.

We have nothing to worry about directly according to the Ministry of Defence, and the broader region is developing very positively. Its’ last advice emphasised that “there have been a number of positive developments in the international environment since the last White Paper, including the continued rise of a more prosperous Asia, and a South Pacific which has remained more stable than expected.” A week ago the RAMSI mission folded. Soldiers seeking different jobs is a good thing.

THE BAD

Nothing seems to help North Korea get any less aggressive – not China, not the U.S.

Indonesia’s moderate Islam is turning far darker.

That is one massive country pretty close to us to see going sideways into intolerance.

China’s sustained economic success is also reflected in its greater territorial swagger. The U.S. President can do golf in Florida, but it is China with all the plans, momentum, and drive for the countries around it. Xi’s message to Hong Kong to shut up, make money and kowtow was blunt last week. Expect to hear more of that in other regions surrounding China.

The Philippines’ presidential crackdown on drugs is already an inhuman war making little difference other than instability and chaos.

It’s not easy to interpret this as saying that our region – Asia-Pacific – is a safer place than it was a year ago.

One our own home front we may be internationally virtuous, but diplomacy is weakening. Our strongest ally, Australia, has made it abundantly clear that we are to be treated just the same as any other immigrant on a boat. Our diplomacy in the Pacific Forum has achieved very little. Our economic allies in China act from cold self-interest and simply buy enough food production facilities to secure their own interests. Even those countries with a similar socially liberal outlook to ourselves like Canada have gone out of their way to keep protectionist trade barriers as high as possible – specifically against New Zealand. We have fewer friends than we had.

Broadly, with the exception of the Paris Climate Agreement aside, the institutional underpinnings of the present international system continue to fray. Even in the ashes of the TPPA, there is no apparent and better-structured successor agreement on the horizon that might have driven a new era of multilateral strong diplomacy. The TPPA could have been the platform for a full renewal of global cooperation. Fail. A failure in no small part on New Zealand’s head.

The major vulnerability facing our economy is high levels of household debt associated with rapid house price increases, particularly in Auckland. New Zealand is also exposed to protectionist trade policies abroad and to slowing Chinese economic growth. We have long-term challenges from low productivity growth and a changing labour market with badly mismatched skills, and a government content to be content. Our longer term vulnerabilities are: most people are keeping busy but no-one’s getting a pay rise, most people are going backwards, and on average our children are in a bad state.

There’s no sign of economic or military apocalypse, but no global state cooperation beyond what we have, and truckloads of complacency from small-c conservative governments who are generally running things now.

THE UGLY

Afghanistan. Not so much a quagmire as a deliberate “stalemate machine” that keeps the Pentagon’s all-powerful policy-and-budget Red Giant Sun sucking more and more of the entire U.S. federal system into its maw and well beyond any democratic oversight.

Plenty of risk of the Saudis and Iranians and Syrians expanding distinct regional wars into one almighty fire. The worst case is that the United States gets pulled into it all even worse than it is, through sheer incompetence and incoherence rather than with any goal at all. Trying to make peace with perpetual war, from the first Gulf War to the Arab Spring to now, has made the whole earth less stable.

There’s still no settled commonly-accepted economic renewal programme to replace hard-communist or hard-monetarist ones – which means in turn there are no renewal programmes to fight for. There are no new ideals, only stale ones.

After a dozen warnings, the EU have not figured out how to make their core ideals and competencies the shining beacon of inter-state cooperation that they should be. The EU remains vulnerable.

There’s no leadership. Not a Charles de Gaulle, Konrad Adenauer, LBJ, Curtin or Savage anywhere on the horizon. I’d settle for a Hawke or a Lange right now. Our current government makes Holyoake look bold.

Those leaders who have gained stronger power and governmental control have generated no evidence that was a good idea. Overall, strong-state leaders have made it a lot worse. U.K. ex-PM David Cameron used considerable political goodwill to blow it all on a foolish and unnecessary punt on Europe. His successor even worse. Recep Erdogan has gained all the power a Turk could possibly wish for, but not improved his country. The leadership of the United States – in White House, military, Supreme Court, and in Congress and Senate – are in the most spectacular motorway pileup with no-one applying the brakes anywhere.

There are no strong global instruments to protect biodiversity or water or climate change, anywhere in the world or on the horizon.

IN SUMMARY

My summary of that? To me, the good bits of the world are shrinking. There’s still plenty to play for, but within smaller boundaries. We are less secure than a year ago. And that’s only in the space of one year.