Rules-Based World Order: Whose Rules?

The adjective rules-based is not one I read very much before about ten years ago. But since then it has crept into The Economist and other publications with increasing regularity, to describe ways that nations should conduct their affairs. I have read it so often by now that I was prompted to ask: what rules? Whose rules?

Rules matter. In sports, they determine who wins. The referee has a big impact on the game, and any rules change or even interpretation or guideline is hotly debated. The teams that respond most smartly to such changes tend to win.

Within a nation, there are many rules and protocols. The nations that prosper tend to have good rules and strong institutions to update and uphold them. They can apply to citizenship, property, commerce and behaviour.Some are codified, some not – the British constitution is famous for not being codified. Nations have written rules and unwritten rules about human partnerships: the best nations update these every so often as well.

The default, when there are no rules or no enforcement, is rule by power, which usually results in abuse of power, meaning corruption. Power can come from brute force, charisma or acquired wealth – even the last of these is worthless unless backed up by force.

What about between nations? Until the 1900’s, there were no rules and little need for them, because nobody travelled. The elite had their own rules, and exerted influence beyond borders by force and by tactics like marrying. Then we had colonisation, the first widespread corrupt abuse of power. Then came mass trade and transportation, and there arose the need for some rules, initially as a way for elites to protect what they had stolen.

Before 1914, these inter-national rules were little more than military alliances, and it was the inter-connected and inconsistent nature of these that cause the Great War. In 1919 came the League of Nations, a worthy attempt at some fairer rules, with Woodrow Wilson as midwife, but the rules were mainly written by and for the victorious and they collapsed in the 1930’s, and we had another war.

Then came the late 1940’s, when most of the current rules and protocols were initiated, mainly under the banner of the UN, but also with institutions like the IMF and the WTO. With thanks to Eleanor Roosevelt and many others, the centrepiece became the Geneva Conventions, and these were remarkable because they intended not just to govern how nations interacted, but how humans would be protected within any nation. The “four freedoms”, of speech and religion and from want and fear, remain a benchmark to this day.

I looked up what rules the rules-based order might encompass, and was impressed by the scope. In its early days, the UN did some great work. We have its own governance, with the Security Council and the General Assembly, and we also have many agencies and programs, covering science and health as well as finance and defence. We also have the international criminal court and international court of justice, and a host of UN-affiliated specialist organisations. It is a fine list.

Of course, the first problem with the list was that it was immediately undermined by the Cold War. While all these great institutions were being set up, the US and Russia were forming blocs and blockades. Quickly, other countries saw the need to form a “non-aligned” group, and the Security Council became powerless in any dispute where one of the superpowers had a strong interest. In some ways, it is a miracle that so many institutions have survived and even achieved things, and a testament to many professionals at the UN and elsewhere.

Looking back on the period of the early 1990’s, after communism had been discredited in Russia, the world missed a wonderful opportunity to update its institutions and rules. The EU was expanding and offering a template for potential extensions of rules, including the bulwarks of free movement of citizens, capital, goods and services. China was just starting to engage with the rest of the world, and could have bought in to well-designed principles. The US enjoyed a long boom under Clinton, and had a window for a smart congress. Sadly, Newt Gingrich (blameworthy) and then Monica Lewinsky (not) put a kibosh on all that, and the window closed.

Why? Well, as from time immemorial, rules were written by the powerful and winners in recent conflicts, and proved hard to change short of an atmosphere of reconciliation following a catastrophic war.

The result is that those who call for maintaining the rules based order are usually just asking for their own privileges to be retained. How can we defend a Security Council that offers France and the UK permanent seats but not India or any nation from Africa? How can we defend that the WTO is always led by someone from the US and the IMF by someone from Europe? How can anyone claim that China building bases in its neighbouring sea contravenes some global rule, when the US has bases in Guam and elsewhere that clearly seek to control China? How can we insist on Iran or North Korea sacrificing nuclear weapons when Israel, India and Pakistan are quietly allowed to ignore such so-called rules and existing nuclear powers expand their arsenals? How can we defend a global financial clearing system that relies almost totally on a single currency, offering one country the opportunity to hamstring the economy of any country they consider an enemy?

Of course Donald Trump has brought all of these injustices into sharp focus. By defying rules designed to suit his own nation, he weakens the rules, the institutions and any possibility of progress. But we should remember that all the injustices pre-dated Trump, and that the rest of us in the west were happy to go along with them so long as it suited us and so long as big brother America paid most of the bill and acted as a relatively fair referee. We can blame Trump, and indeed he is blameworthy, but he did not commit the original sin in this case.

So now, every time I read about the so-called rules-based order I take a sceptical step backwards. In as much as it exists, it is a construct of the elite for the elite, mainly for the west, and is hopelessly out dated. It may be the best we have, and better than chaos, and quite an achievement when we consider what came before, but it is not good enough, and not an acceptable stick to berate China and others with.

It is worth remembering this every time some article argues for or against intervention in Syria. Recently in the Guardian, Andrew Rawnsley, a brilliant and brave writer, condemned those who argued against any intervention as naïve and unwitting supporters of destruction. This prompted many letters from those pointing out that all recent interventions have only made matters worse. Both are right, but the failing is in international institutions, and it is all of us who have allowed those to be weakened. In the same way, we can condemn Russia in Ukraine, but only if we also condemn Saudi Arabia in Yemen and Israel in Gaza.

Any updated rules would have to rebalance the Security Council, and improve enforcement of protocols on defence. New protocols would be required for things like the environment and cyber-security. It is time that secret services came under more scrutiny. Military spending should require equivalent investment into international bodies. There is a lot to do. 

The Trump presidency can have many possible legacies. Most of the direct ones will surely be negative. But maybe there can be some benefits from jolting the world out of complacency. The EU are already looking at how to side line the effects of Iranian sanctions or unreasonable trade practices. Eventually these institutions and rules will need renewal in order to be fit for purpose for today’s world. Undermining the current rules might be a necessary step to achieving this. 

Preparing for a Post-Work World

I have read a series of articles wondering whether the age of work is coming to a close and thinking about what might follow. I find many of the arguments convincing. It is time for policy makers to prepare. And it would smart for those of us under 60 to prepare too.

The first thing to recognise is that the modern concept of work is rather artificial, a product of the industrial revolution. Before that time, most people stayed in one village and worked at their own parochial needs and out in the fields. Then collective agriculture became established, and after that industry, which required people to move to cities and specialise. To make that an attractive prospect, owners had to pay money, and in return they demanded fixed availability and a contract. The working era was born.

We should not be too negative about the working era. The net result of specialisation has been prosperity, and prosperity has brought health and longevity. But it has had side effects. And it also was always a bit of a struggle for the market to ensure that the number of jobs more or less matched the number of available labourers.

That contrived market is breaking down. Mainly, that is a result of automation. No matter what lawmakers do to the tax system and incentives, it becomes progressively more sensible for more tasks to be done by machines. We should celebrate this too, because many of the jobs certain politicians are so nostalgic about were filthy, unsafe and degrading. Now the cry from these people is always for more jobs, by which they really mean ever-cheaper labour and higher profits for businesses, but it simply does not add up any more. We are in a boom right now, but the next downturn will be brutal for jobs, no matter what is tried in the form of make-work schemes and incentives.

We should celebrate this for reasons beyond the saving of drudgery and early deaths. Keynes suggested a 15-hour week as early as 1930, and the main reasons it has not come about are artificial. The breaking down of the consensus on progressive taxation has led to inequality, incentivising the winners to become more and more greedy and work harder and harder, and forcing everyone else to work whatever hours they can to stay afloat. There is also the mental side. Politicians need GDP and job creation for their ego. Workers, especially men need it for their ego as well. We are set up to keep running on this crazy treadmill until it finally collapses. Meanwhile people cram into urban areas, pay more rents, find their work meaningless and become disconnected from family and friends.

Two articles in 1843 were ostensibly not about this topic but seemed to relate to it. The first explored the craft movement. Some people are jumping off the treadmill to find meaning in their lives, often by starting artisanal companies. This is surely a signal that something is wrong. Even clearer was the next article about the prevalence of loneliness throughout society.

So, post-work is coming, and the end state could be much better for humanity. The challenge is the transition. And, in the clamour to maintain a dying system, almost nothing is being done to usher in the new era.

The obvious part is about incentivising people financially so that the remaining work is shared out more equally, and that people with less work can make ends meet. Progressive taxation can be a part of this. So can the modern fad of the Universal Basic Income. Personally, I prefer a model where people are still paid for work, but work is defined more broadly than between an employer and employee. I would include caring, including looking after the infirm and children. That is valuable work, but it is usually unpaid because it is seen as a family responsibility – not by co-incidence a responsibility traditionally borne by women. This single change would go a long way to sorting out the financial problems of transition.

The emotional problems are quite another thing. Here, I find a remarkable parallel with the blog I wrote a couple of months about overcoming fear of early retirement. For basically that is what post-work would entail – early retirement on a massive scale.

I listed a hierarchy of five fears, and then concluded only the first and the last were real, the middle ones being symptoms of the last. The first fear is of poverty, and that is real. No one can consider quitting work if they can’t see their way to a fair standard of living afterwards. In the post-work era, this fear is mitigated by Universal Basic Income, pay for care and similar policies.

The next three fears I noted were fear of ageing, fear of boredom and fear of irrelevance. All of these I thought were a symptom of fear of self, by having one’s core ideas exposed as hypocritical or unworthy, or having uncomfortable truths exposed, such a flawed core relationships. The fear of self is all about mental health. Each successive generation has markedly stronger mental health, and advances in social standards and medicine are even accelerating this trend. The fear of self will not disappear, but it will become less prevalent. Public dollars invested in mental health are a great use of funds.

I find fear of ageing to be largely an illusion. If we do less work and are healthy mentally, then we will probably become healthier physically as well and live longer, so long as we can evolve our daily routines. So if we currently commute on the subway and walk a mile a day that way, we would need to replace that mile somehow in a post-work society. That should not be too hard, with all that extra time freed up for walking and for everything else.

But this does play into the next fear, that of boredom. From a policy perspective, I find this is the crucial one. Somehow work has evolved to become our driver of energy, physically and socially. When people stop working, especially involuntarily, they tend to lose energy and struggle to fill days healthily. It is part of the conundrum between the time poor and the time rich. The time poor are full of ideas but never find time to execute them, while the time rich have all the opportunity but can’t find ideas or the energy to put them into effect.

So the fear of boredom is somehow justified in this case, and a job for policy makers is to prepare us for more leisure time so we don’t become bored. That starts with education. There can be a greater emphasis on cultural appreciation, sports, and on building skills beyond their application to paid work. The fringe parts of education today can become core tomorrow.

There is also an aspect of urban design. There will be greater value in community activities, and these can be designed in, including transport links. If there are more carers, then more elderly people can stay at home, but both the carer and cared for could benefit from different kinds of social amenities to help this work.

The other fear is fear of irrelevance. This is about requirements of the ego, and can only change slowly as society accepts that a valuable life does not to be a classic working one. This can be handled like other large public campaigns such as smoking and seat belts.

So, the world of post-work is close at hand, it is something we should celebrate, but the transition requires some actions now. The financial aspects need to be complemented with social aspects and with changes in priorities for education, healthcare and urban design.

I wonder if any nations will have the courage and foresight to act on this agenda, before it becomes a crisis. It is a big shift and not an easy message to sell at the beginning, and competition between nations will also be an inhibitor. Perhaps the Scandinavians, as usual, will lead the way. Maybe China, with its high state involvement and trust, will surprise us. Sadly, I can’t see the US, the land with the most to gain, taking much of a lead. 

The Dangerous Months

The Trump presidency was always doomed to slide into ugliness. The lack of any agenda, integrity or competence ensured that. In some ways, we can count ourselves lucky. Without the incompetence, more damage could have been incurred in a shorter time. But lasting damage has been done, and more will follow. I believe the next six months represents peak danger. After that, things could get better.

While I am surprised every day, in the bigger picture not all that much has surprised me. We knew that most politicians look mainly to power and hence donors, so Trump would be given fairly free rein, and where that would lead. We knew that Trump had no integrity and a dirty past that was likely to slowly engulf him once in office. We could surmise that any thoughts of a positive legacy would be subsumed by an agenda focused on revenge and money and then by survival. His base knew all about him before, so why would they desert him now?

If anything has surprised me, it has been the revelation just how appalling a manager the man is. Even mafia leaders know that you support your own team in public. The initial humiliation of Sessions was perhaps the most jaw-dropping moment so far, and we can conclude and observe just how morale and trust must be at rock bottom inside the White House, so that eventually only sleasebags remain and each of those sleasebags becomes a potential scandal.

Where does this go from here? It is spiraling down quickly, and I think the next months are the dangerous ones, but that the midterms in November will change a lot and reduce the danger level.

Why are these months dangerous? Start with personnel. Even an autocrat works mainly through a team of staff. And gradually, as the administration has become more and more toxic, even the few competent people that were initially appointed are weeding themselves out. What are left are sleasebags like Cohen and Pruitt, unhinged fanatics like Bolton and Pompeo, and a huge vacuum of empty positions. The sleasebags will cash in, while the fanatics will counsel escalation and recklessness. This is not a good set of conditions for sound decisions.

Then look to the president himself, increasingly anger and hemmed in. Mueller started with his Russia probe, but inevitably followed the trail back to the corruption and illegality of everyone around the president and his companies. This changes the game. The Republicans will not impeach, because it is not in their cynical interest to do so. The scandals will not affect the base either. But follow the money. Trump could well lose his companies, his cash and potentially his freedom, once out of office. He will become more and more reckless as this risk grows, and seek protection from backers demanding ever more from their own agendas, whether that be war against Iran or financial state capture.

Next, look at the global agenda. Everyone managed to pull together for a year or so, barring the climate change pull out (which in itself does not mean all that much), but now things are getting hotter. North Korea is a bit of a side show, and well played The Economist for admitting that it, and everyone else, underestimated Kim Jong Un. He’ll get what he wants but Trump will claim credit. But look at Syria, and who is involved and threatening each other. Israel could end up at war with Iran, cheered on by Saudi Arabia and the US, and Russia and Turkey will cause as much nuisance as they can in the carnage. This is dangerous; it can shake up global alliances, disturb markets, escalate armament and trigger more refugee crises, while of course slaughtering more innocent people. Trump needs money from supporters of Israel and Saudi Arabia, so he will make war more not less likely.

Then there is China and trade. A common factor is long-standing leaders who have the mandate and the patience to wait Trump out and take opportunistic advantage. China is top of this list. Russia, Iran and Germany are on it as well. China will act as broker with North Korea and then seek a wider accommodation with Trump, but I don’t see the humility or competence from the US to let this happen. NAFTA could be sacrificed in a fit of anger towards a new leftist Mexican leader. Then down will fall stock markets and the global economy will show its fragility again.

So we have a bumpy ride ahead. Throw in the likelihood of unexpected events, like hurricanes or new wars or shootings or Stormy stuff, and we can anticipate increased volatility from the administration, hollowed out and distracted, as it will be.

But then will come the midterm elections, and I think that will change the calculus for the real power brokers, congress and especially Republicans in congress and their donors. The donors have had their huge ugly gift in the form of the tax and regulation changes, and won’t look for more until after 2020. At the midterms, the base will still support Trump but fewer will show out, whereas the rest of the angry country will turn out to give him a bloody nose. Then we will have a Democratic house, maybe even a Democratic senate, and a president who everyone knows is out of control. And the Republicans and their donors will start to look beyond Trump and play damage limitation.

Then we could easily see a deal, never published, but a deal nonetheless. Trump will still have the threat of impeachment hanging over him, and, even worse for him, financial ruin for his companies. He will have to deal. The cost will be loss of control over administration appointments and their activities. Out will go the sleaseballs and fanatics, and in will come competent centrists. From then on, the worst of the danger will have passed. Trump will be allowed to stay in office and tweet all he likes, and his companies partially protected, but his actions will be circumscribed. Many new appointments will be military people, and it may even feel like a bloodless coup at the White House.

My guess is that Xi has worked this out. The Europeans and the UN leaders probably have too. Less comfortingly, so have Russia, Israel, Turkey, Saudi Arabia, greedy corporate sorts, the NRA, and others looking to consolidate gains while scrutiny is low and priorities blurred, and to make sure they don’t lose them once order is restored.

So probably China and the world economy will be OK. The US institutions will be battered but can be rebuilt, even if the key systems will be even more broken than before once the dust has settled. But it will take a lot of skill and luck no avoid a conflict in the Middle East, one that becomes so entrenched in the next months that it may take a decade to unravel. The coming months are the dangerous ones, and that is the greatest danger.

Smart people will also be planning for the second half of the Trump presidency. Republicans will realise that they need to build a new agenda from almost nothing. Democrats should realise that the midterms will be easy, but 2020 might not be, and focus relentlessly solutions for those voters that deserted them in 2016. Everything else is just noise.

I hope this prognosis turns out to be at least partly right. Anything is possible with this administration. All the other players are subject to all sorts of complex forces, and events can come and bite us. But, as usual, I am optimistic. In six months time, I hope I can be even more optimistic.