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The paradox of America's fading empire

The most important event of 2013 was the change in the relationship between the U.S. and Iran (through the nuclear talks). I have always said that a new kind of civil society has emerged in Iran, so there is nothing new as far as that country is concerned. The new American policy is a dramatic shift.

     My prediction of a decline in American power turned out to be absolutely correct. But what we are seeing is that this reduction in power is producing, at last, a more reasonable attitude toward the outside world. In the days of President George W. Bush, there was something unbearable about the U.S., about the idea that there is just one form of democracy with a specific type of financial capitalism, and that this must be extended all over the world. Perhaps the emergence of a new, more reasonable American foreign policy is important in terms of geopolitical balance. It means the risk of war and the risk of conflict, or hysterical conflict, is lower or nil.

     I was not very impressed by the election of Barack Obama as the first black president. I took it as a gimmick. At the time, there was a sort of panic over the financial collapse, and I thought the election was used to trick us into forgetting the incredible financial mess the U.S. produced.

     Obama's re-election was something different, however. The social security debate in the U.S., such as the one over Obamacare healthcare reform, is something very important to me. When you start discussing these things, people will tell you, "Look at how the tea party is taking control of the Republican Party." But I know that the tea party receives most of its support from Americans over 60, the aging generation.

     Perhaps the U.S. is again turning into something different. Perhaps we are on the verge of a new phase where America tries to think again in terms of equality. I have no conclusion, but one must not miss the turning points in history.

     It is obvious we need the U.S. and the American imperial system. The period from 1945 to perhaps 1980 was good for the "free world" when there was the Soviet threat. But after the Cold War, the U.S. was losing industrial might and tended to compensate by using military action. This produced negative reactions everywhere and produced the defeat or disaster in Iraq in the George W. Bush era.

     When Bush was in power, Americans became -- by pretending to be so militarily powerful -- completely repulsive. But as soon as they admit that their power is waning, people on the periphery of the empire can start worrying about a world without the U.S. Army. And what they imagine is not very pleasant. Once the U.S. acknowledges that it is not the ruler of the world, once it acts reasonably, then many, many nations will realize that they need the U.S. This is the paradox.

     Once the U.S. admits this, the decline in America's hard economic and military power will produce a rise in its soft power.

China's control issues

Many people will tell you these days that China will be the great power after the U.S. I do not belong to that school. No demographer believes in a brilliant or simple future for China, because of its demographics. We have learned that China is going to change its "one-child policy," but it is simply too late. We have no experience of this kind of demographic imbalance in a country of 1.3 billion people. A small country can make adjustments through immigration or emigration, but China is so big that there is no correcting what it has done.

     China was able to produce a Communist revolution, like Russia did, by strongly promoting equality among all people. What is happening now in China is a tremendous rise in inequality, more than in other countries. Development through exports of goods and imports of foreign capital, and China's transformation into the "workshop of the world" -- this was very much a decision taken by the oligarchies and capitalist system in the West. The Chinese Communist Party is a little like a rodeo cowboy trying to stay on a bucking horse. 

     It is quite unpleasant these days for Japan to be so geographically close to China (with the security tensions in the East and South China seas).

     I talked about this at a symposium in Kyoto in December 2013. I said China would use such tensions to ease domestic resentments and difficulties. I would say that, mentally, China seems much closer to the year 1900. You have a mix of basic literacy, economic takeoff and the collapse of traditional religion -- in this case communism. So the Chinese have a tendency to become over excited and therefore develop strong nationalistic attitudes. It would be ridiculous to overestimate China's military ability. If the U.S. and Japan stick together, there ought to be no problem.

     In the Arab world, we are seeing revolutions in Tunisia and Egypt, and there is a dramatic problem in Syria. But this is no worse than what we experienced in Europe. If you compare everything that has happened in the Muslim world -- the Taliban, Osama bin Laden, the revolutions -- to European history -- the French Revolution, the Russian Revolution, Nazism, fascism -- this is nothing. Europe was the place for people killing each other in the name of ideology. Things were much worse in Europe. What is happening in Syria, though, is on a European scale.

Europe: free to a fault 

Besides China, the other big problem in the world is Europe. There is a connection between free trade and the rise of inequality and, additionally, depression. There is so much pressure on wages in most developed countries. When you get close to actual free trade, what you have is economic war against all. As long as you can manipulate your currency, you can use what we call in French protection par le change -- "protection through currency management." But we cannot do this in the eurozone. Europe used to be a place with a preference for social and trade protection; now it is turning into a zone of raging free trade wars and maximum deflation.

     What we have is German industry destroying French, Italian and Spanish industries, and so on. Germans are charming people; their problem is that they are too efficient. You have Germany as a continental hanger-on and dominant power. It is like the story of the novel "Metamorphosis" by Kafka, in which a man goes to sleep and wakes up transformed into a giant bug. To me, this is a metaphor for what is happening to Europe. We went to sleep a community of free and equal nations and woke up as ... a hierarchy of nations with the Germans on top. Europe no longer is the continent of democracy. The problem we have in France is that the ruling class has a German inferiority complex. 

     Things are getting worse and worse in Southern Europe. What we have there is a collapse of social systems and democracy, and so much violence. The economy is supposed to save the currency, so we keep saving the euro. It is like a god, and you have to make sacrifices to the gods.

     I used to think the euro was bound to disappear. I'll probably be vindicated someday -- the euro will collapse and I'll be considered a major prophet. But I wonder what will happen over the next few years. The elite say the disappearance of the euro, the collapse of the euro, would be a complete disaster, that it is impossible.

     There was a time when I thought protectionism would be good for Continental Europe by pushing up wages and thereby increasing global demand. But I no longer think this is a viable option because of the attitudes of Germany and France toward trade. My preoccupation now is not protectionism; it is getting rid of the euro. Protectionism through currency management is my only real goal now. All I want is to move away from the ideology of absolute free trade. The French will protect their cinema. Americans will protect their military things. The Japanese will protect a lot of things.

In praise of Abenomics

I know Japanese Prime Minister Shinzo Abe and the ruling Liberal Democratic Party are right-wing, and I'm just like any center-left person in Europe or the U.S., but I'm all for Abenomics. That is because the implicit goal of the policy mix is the welfare of the general population. I wish we had something like this in Europe.

     I have always been fascinated by comparisons of Germany and Japan. They have so much in common -- the same family structures, male primogeniture traditions, industrial traditions and emphasis on technology. These days, however, I'm fascinated by the complete divergence between the two.

     Germany has adjusted to free trade by placing maximum emphasis on trade. The country seems to be unconsciously going back to some kind of power politics on the European continent, organizing the eastern part as labor and using the western part as consumers and controlling the whole lot. In contrast, Japan is isolated, so there is no possibility for it to dominate and expand. But this also means Japan will try flexible monetary policies, which is rather the opposite. Now you have a flexible Japan and a rigid Germany.

     I'm instinctively against the TPP (Trans-Pacific Partnership) because I think less free trade is the solution. I have always been under the impression that the TPP is a political thing; it is not free trade but regional trade. It leaves out China. I always thought the purpose was much more ideological than practical.

     When I think about Japan, the real problems I see are not with the economy but rather with the birthrate and aging population. These issues are much more important than the TPP.

Emmanuel Todd is a French historian and demographer at the National Institute of Demographic Studies (Institut National d'Etudes Demographiques=INED) and the author of "After the Empire." This article is an excerpt of an interview with Mikio Sugeno, Nikkei senior correspondent for Europe.

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