The New “Cold War” – and Why The US Cannot Win It

Watching the shift of American mainstream views on China has been amusing for its irony. For decades, libraries of books have been written to describe the problems of the Chinese authoritarian – some call it totalitarian – state. For most Western observers, that kind of governance could never provide sustainable growth and would naturally be riven by wastefulness and corruption. Orwellian control, so their narrative goes, can never prevent people from craving liberty and seeking the “self-evident truth” of democracy.

It has not been surprising that, in the vast majority of these analytical tomes, China is reduced to having only two futures: either it would become more “democratic” and engage in the “free market” – or collapse. By that logic, whatever Beijing’s defense of the Chinese system, why should the West, especially the US, worry about the competition? From the Western perspective, if Red China became more and more monstrous, it would simply collapse and die, much like the Soviet Union did in 1991.

Yet, despite all the bluster of the China Cassandras, the storyline has not gone as predicted. And Chinese propaganda about its system has not been deflated. On the contrary, it has gained in volume, vigor and virulence. Many in the West now view China’s soft and sharp power (e.g., the so-called “wolf warrior diplomacy”) as ominous – formidable, fearsome and to be fought off with reciprocal ferocity.

Consider how US politicians, including mainly Republic Party senators such as Marco Rubio of Florida and Ted Cruz of Texas, called on the American government to impose transparency standards on Confucius Institutes (CIs) across the country and pressured host universities to close them. Funded by Chinese government grants, the CIs are cultural centers set up around the world that among other programs offer Chinese-language instruction.

In August 2020, the administration of US president Donald Trump designated the Confucius Institute US Center a foreign mission of China, which then secretary of state Mike Pompeo described as “an entity advancing Beijing’s global propaganda and malign influence campaign on US campuses and K-12 [Kindergarten-to-Grade 12] classrooms”. This move effectively made it difficult for CIs in the US to function. By May 2021, some 84 American universities and colleges had shut down or announced the closure of the centers on their campuses, reducing the number of CIs to 32, with even more expected to be deactivated.

This fear of Chinese propaganda is extraordinary, especially when compared to how little regard American elites had for the power of Soviet propaganda during the Cold War. Indeed, it was Moscow that was fearful of US propaganda, and their concerns were warranted. For the majority of Soviets, America was the Promised Land. They had practically a fetishistic worship of everything American, especially consumer goods.

The reasons for the adoration were clear: The US economy was booming, and its standard of living was rising. With China today, the story is different. The American economy is perceived to be in decline, with inequality growing and living standards falling. In September 2019, the US Census Bureau reported that income inequality had risen to its highest level in half a century. From 2018 to 2020, life expectancy in the US dropped by nearly two years, the biggest decline since 1943. The pandemic is expected to worsen the situation.

Meanwhile, China’s economy is expanding rapidly. The only major economy to have avoided contraction in 2020, it is expected to grow faster than other large economies this year and is estimated to be surpass the US as the world’s biggest economy by 2028, two years earlier than widely predicted.

The history of the Cold War between the US and the USSR might provide some insight into why American elites are so fearful of Chinese propaganda, when they were so dismissive of the Soviet Union’s. It might also show why they might not be able to deal effectively with the China challenge – and may in fact adopt some of the very methods of its rival as a way to counter it.

First, the context. The Cold War is reckoned to span the period from US President Harry Truman’s articulation in 1947 of the Truman Doctrine to contain Soviet expansionism to the end of the Union of Soviet Socialist Republics (USSR) at the end of 1991. Over this time, the attraction of America globally was not primarily because it was spreading “liberty” across the world. What made the US a role model was its rising standard of living, which was directly linked to its economic performance. From the 1930s through the 1960s, the American economy seemed to be an unstoppable machine.

Most American observers attributed this juggernaut run to the market economy and the country’s political and intellectual freedoms. Contrast this to perceptions in the West today that China’s economic progress has been due to “unfair” practices, American and Western naïveté, and of course China’s “theft” of American knowhow.

But a deeper look at the roots of America’s re-emergence and rise after the Great Depression reveals that a key factor in its success was the state’s active engagement in the economy and society – a robustly dirigiste approach that might be described as socialism with American characteristics. That was the period of Franklin Delano Roosevelt’s New Deal. Historians often juxtapose FDR’s America with Adolf Hitler’s Germany and Josef Stalin’s USSR. While the US at that time would seem not have been anything like those regimes, structurally there were similarities.

Roosevelt engaged in dramatic expansion of the social safety nets in the US economy through such policies as the introduction of social security. This made the patrician president highly popular among average Americans. He was elected to an unprecedented four terms.

What were the precedents for his actions? Was it the democratic countries of Europe? No, it was Nazi Germany and its dramatic widening of the social safety nets through such highly popular policies as guaranteed employment, old-age insurance, unemployment and disability benefits, health insurance, interest-free loans for married couples and housing. In 1889, it should be noted, Germany under the leadership of chancellor Otto von Bismarck had become the first country in the world to implement a social-security program. But it was the National Socialist German Workers’ Party, the Nazis, that expanded social safety nets significantly.

There were other aspects of Roosevelt’s New Deal that were not exactly out of the free-market, capitalist and democratic playbooks. Direct government engagement in economic activities, for example. Historians have noted that FDR’s National Recovery Administration (NRA), the agency that brought industry, labor and government together to set fair business practices and set prices, was based on similar institutions in Nazi Germany and fascist Italy. In a unanimous decision in 1935, the US Supreme Court determined that the law that created the NRA was unconstitutional.

Under Roosevelt, the federal government engaged in a huge infrastructure development program, building large-scale public works including bridges, dams, hospitals and schools. These projects were not undertaken by the private sector and simply regulated by Washington. Neither were they carried out by the public and private sectors working together. It was the federal government itself that was doing the funding and construction. (Infrastructure development remained a major federal priority into the1950s and beyond with the construction of the interstate highway system.) The precedent for this massive program was not democratic Europe but totalitarian Germany and even the Stalinist Soviet Union, which was in the midst of a crash industrialization effort.

Roosevelt, it may be argued, even delved into policies that were draconian and decidedly undemocratic. With the stroke of a pen, he put Japanese Americans in detention camps, ignoring the Bill of Rights and constitutional practice. His actions were accepted by most of the American public as necessary on the grounds of national security and public safety. But it might well be argued that FDR was following in the path of “Uncle Joe”, who as an ally of the US was recast from bloody tyrant to benevolent dictator. Stalin had consigned thousands of Russian Germans, Chechens and Koreans to hard labor in the heartland of the USSR, leading to many deaths. At that time, the Western allies did not accuse the Soviet leader of genocide.

The entry of the US into the Second World War not only brought the Great Depression to an end but also led to continuous economic and technological expansion. By the end of the conflict, the US was the leading industrial nation, producing more than half the global industrial output. These goods needed to be transported, and a web of new routes emerged. At the same time, the federal government invested huge amounts of funds in American universities for research, promoting research and development at a breakneck, publish-or-perish pace.

The question today, as the United States is locked in a strategic competition with China, must it become more “Chinese” to solve its problems, that is, should the state get more deeply involved in socioeconomic life?

The major difference from the past is that the economic foundation of the US today is much weaker than before, despite statistical gimmicks to indicate otherwise. Industrial production (e.g., cars, steel) has declined for several decades, not just in relative, but also in absolute, terms. The economy is measured more by a service “bubble” than Once highly regarded for its efficiency, productivity and business-like behavior, it has become a cautionary tale of bureaucratic red tape. Merit – a record of achieving results – is often not the reason for hiring and promotion. American universities have not been immune to this dysfunction.

Today, the authoritarian streak in American political culture and the paradoxical trust in government institutions that it generated are no more. The attack on the US Capitol on January 6, 2021, indicated that what had once been revered as a “sacred” institution of the US government had been reduced to being just a tool in the hands of different interest groups. Mobilization of the nation for a common goal – what President Joe Biden keeps stressing is the only way forward for the US – is impossible. Printing dollars and letting the national debt balloon are only temporary solutions to mounting problems. The living standards of the majority of Americans would hardly be improved.

This is a major reason why propaganda from China, Russia and other countries touting a different model might be increasingly attractive to some Americans, offering a fresh ideological narrative different from that offered by the left or right, who are waging a wasteful and unproductive war of obstruction and negativity. The gridlocked politicians may dismiss the alternative narratives as malicious foreign influence. But blaming China or Russia for America’s problems plainly indicates that the insecure elites in the US have no real solutions.

It is impossible to imagine that the Biden administration might try to engage in some Chinese-style politics and management to get the big and necessary things done to transform the American economy and society. With all the chips down, the only card that is left to play is the one that blames the foreigners. If there is to be a new “Cold War”, the US will surely come up short.