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posted on 01 June 2016

The Tyranny Of Time

from STRATFOR

-- this post authored by Reva Goujon

As Americans commemorated their fallen soldiers this Memorial Day weekend, two European leaders met in the eastern forests of France to memorialize some of the darkest days of their nations' histories. Flanked by piles of French and German bones encased in the alcoves of the eerily militaristic

Douaumont Ossuary, French President Francois Hollande and German Chancellor Angela Merkel embraced as they remembered the more than 300,000 soldiers slain in the agonizingly long 10-month Battle of Verdun a century ago in World War I. The battle, which was designed to "bleed the French white," ended up burying both sides under a mountain of gruesome death so high that the memory of Verdun alone would give any hardcore Euroskeptic pause to consider the true cost of another bout of Franco-German antagonism in a freshly fractured Europe.

Standing beside his German counterpart, Hollande called for the protection of the European Union, warning that the "time needed to destroy it would be much shorter than the long time it took to build it." There is much truth to this statement. In fact, Hollande's warning reflects in some ways the basic structure of our universe. If entropy, or disorder, is always increasing, then it will always take more work to create than to destroy. And for politicians, that tyranny of time can be quite terrifying. Peace treaties, trade agreements and political institutions meant to impose order may take epochs to build. But in periods of extreme stress, time becomes compressed into blocks with edges sharp enough to snag and unravel even the most carefully woven political narratives.

Europe should know this well. From the 1951 establishment of the European Coal and Steel Community to the 1993 Treaty of Maastricht, a story of European integration was constructed over the course of several decades with France and Germany at its center. Yet it has taken just eight years of economic stagnation and political disillusionment for European factions - both mainstream and on the political fringe - to cast doubt on the union's legitimacy and to question the merits of deeper integration now that national interests are once again at stake. Gone are those benign and complacent days of Eurocrats contesting the origin of feta cheese. The debate has now turned to whether the weaklings of the union deserve financial mercy, whether new currency blocs should be formed and whether states should leave the European Union altogether. European leaders can invoke memories of a bloody past to try to suspend time and prevent the unraveling of their union, but they are also fighting against the entropy that threatens to overwhelm their idealistic intentions.

Universal Truths

Time imposes a double standard on political construction and destruction, but this problem is not relegated only to Europe. Further east sits a leader in Moscow who is hypersensitive to the grains of sand slipping through the hourglass. Russian President Vladimir Putin came to power 17 years agowith a mission to restore glory to Russia following the collapse of the Soviet Union. He worked fastidiously to rein in the country's oligarchs, to crush a Chechen insurgency, to rebuild a network of business and political patrons in Russia and on its periphery, and to draw from the country's resource wealth to modernize the military and to prepare Russia for bigger challenges in the decades ahead.

Putin rebuilt a security state, but he has also fallen critically short in his efforts to insulate and diversify the Russian economy. Half the federal budget, 70 percent of export revenues and a quarter of the country's gross domestic product come from Russia's energy exports. Though current Russian production is still competitive despite low global oil prices, Russia will have a much harder time staking its future on shale drilling and other expensive development in the Arctic and eastern Siberia. Many of these projects already face precarious delays from sanctions, entail much higher input costs, and will require technological advances and oil prices above $100 a barrel to be economical.

To create the conditions needed to attract investment and to diversify the economy, Russia needs time - especially considering its shrinking labor pool and the instability simmering domestically and in Central Asia. But Moscow lacks the luxury of time or focus, instead remaining fixated on every real and perceived attempt by the United States and its allies to encroach on it. The more domestic and international threats intensify, the more Russia's economic and security priorities will conflict and the longer it will take Russia to stabilize.

China, too, is under the gun. For a country that loves its five-year plans, China has a very poor record when it comes to meeting its deadlines. Starting in the 1980s, China's economy ballooned under an economic model that fed off a steady supply of cheap labor to coastal factories to pump out low-end manufactured goods for export. Massive amounts of state-backed investment in construction helped sustain high levels of growth but also created gross inefficiencies along the way. China's top party cadres have long understood that the diminishing returns on such a capital-intensive and export-dependent model could create severe social and political disruptions unless development was spread to the interior to create a larger, more sustainable consumer class. But Beijing was also surprised by and wholly unprepared for the 2008-2009 global financial crisis. The sudden economic asphyxiation drastically interrupted China's efforts to rebalance the economy, and China has been left in an awkward and painful lurch. A weak household consumption rate of only 34 percent of GDP and most of its wealth still concentrated in the southeastern coastal region puts the country of 1.36 billion people far behind its peers in terms of spreading indigenous wealth and harnessing its own citizenry to drive legitimate growth from within. (By comparison, household consumption is 70 percent of GDP in the United States, 61 percent in Japan, 50 percent in South Korea and even 59 percent in India.)

The political system cannot afford to wait for the economics to catch up under these circumstances. Chinese President Xi Jinping has shifted China from the more politically diffuse Deng Xiaoping model of consensus-driven decision-making back to a personality-centric authoritarian model. Given the rise of social, political and economic challenges, more work will be required to snuff out dissent and to preserve the legitimacy of the Chinese Communist Party. Over the past 67 years, the Party has swung from the radicalism of the Cultural Revolution to the turmoil of capital markets. And when the country finally does find its balance, there is no guarantee that the Party will still preside over China. A fundamental restructuring of the economy is necessary for the Party's long-term survival, but it will radically threaten the legitimacy of the Party in the short term. As an old Chinese proverb goes, an inch of time is an inch of gold, but an inch of gold cannot buy an inch of time. For all the wealth that China has amassed these past three decades, the Communist Party cannot buy the miles of time it would need to pull off this great rebalancing act in one piece.

Buying Time

Europe, China, Russia, and even the Saudi monarchy and other critically exposed economies are also racing against time to overhaul their economies for their own political survival. Relative to these, the United States seems to be basking in time and space. U.S. politics may be highly polarized, and the country may have a host of rising socio-economic challenges to contend with while it manages unavoidable responsibilities abroad, but the United States is by no means facing an existential crisis on par with those faced by its peers. The United States will remain for the foreseeable future a global superpower, a status afforded it by geography, natural resources, military dominance, technological strength and financial prowess. But could the United States' geopolitical strengths put it at risk of complacency? One could argue that the geopolitical advantages enjoyed by the United States have bred overconfidence in the American psyche, an excessive level of optimism leading to an unbounded sense of entrepreneurism and to "animal spirits," as John Maynard Keynes would say - the very elements that have fueled its capitalist society.

But excessive optimism can also be a double-edged sword. A cognitive bias that tells us everything will work out in the end may encourage risk-taking in the economic sphere, but it also gambles dulling one's survival instincts. Countries with much longer histories have a number of recorded failures from which to draw valuable lessons as they struggle to overcome their own constraints. And the harder the history - as Russia, China and even a Europe trying to shake off its own idealism can attest - the more cunning and sacrifice are needed to stretch time and avert collapse. This does not mean that the United States should be alarmist or paranoid about its future. After all, the United States has been dealt a generous timeline compared with the rest of the world and has decades of hegemony ahead. But it does call on the United States to be aware of the illusion of control. Thucydides said the strong do what they can and the weak suffer what they must. The United States is strong, but what more can it do with that strength? When it comes to maintaining a competitive edge in space,getting the most out of its allies abroad, driving the development of disruptive technologies while managing the associated social disruptions, and stabilizing finances to ensure the long-term primacy of the dollar, there is still much more to be done.

"The Tyranny of Time" is republished with permission of Stratfor.

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