Jack Yan tries to peer into a crystal ball on where the world might head, if the USs soft power is being eroded
Jack Yan is founder and CEO of Jack Yan & Associates and president of JY&A Consulting.
Some experts are saying that the US’s inﬂuence in the world will drop because of the ﬁnancial fallout and the related, proposed $700 billion bailout of some ﬁnance ﬁrms.
But there have been signs of this long before the problems relating to Fanny Mae, Freddie Mac and others came to light.
Anti-Americanism was once primarily rooted in nation envy but increasingly it has come from a disagreement about its foreign policy. A great deal of this has been spurred by the media, especially in this country where Republican administrations tend to get a tougher ride. In recent memory I can only think of the 41st president’s term as being smoother among New Zealand media.
While it is not the scope of this publication to examine the right and wrong of, say, the Iraq War, it is within our scope to consider the shape of things to come.
US experts generally believe that hard power—inter alia, military—will not be affected immediately, but soft power will. The idea is that other nations will not look to the US as a model for their economies or political structures.
And this is a pity. There is nothing wrong with the principles at their core, but there is something very wrong with the way they have been applied.
At the Medinge Group, the branding think-tank on which I am a director, this was a familiar cry when No Logo came out. Author Naomi Klein tended to dismiss the branding model altogether. We argued that the model was ﬁne, but it needed to be more humanist.
The issues relating to the US are very similar.
Democracy is the worst system, excepting all others, if I may borrow from Churchill. The ideas of self-determination might hold ﬁrm. Capitalism, however, has serious faults, and the most recent crisis can be traced to unprincipled greed in the system. The lack of social responsibility and a poor understanding of brands have, among many other things—the idea of creating endless growth in wealth without backing it up being one of those—damaged the goodwill in the system.
Branding is perhaps one way of at least re-educating people about the basic principles of the ﬁnancial system to invigorate passion and understanding of it. Without at least some acknowledgement of the ﬁnancial system’s faults, nothing will change.
Risk models such as Black–Scholes–Merton probably got us in to the 1987 stock market crash and have their part to play in the latest row.
As Nicholas Nassim Taleb pointed out in his book, The Black Swan, one had expected the model to be abandoned after 1987. However, institutionalization saw it continue to be taught and used as though nothing was wrong. It was bound to end in tears again years later because no lessons were ever learned.
This is why the bailout has its problems. While fundamentally I oppose regulation, it probably needs to come in if the main participants and institutions in the system refuse to acknowledge and address their faults. If, however, the bailout programme is weakened so that those at fault prevail, then it will only be a short-term ﬁx for the global economy.
The seriousness of the 1987 crash and its subsequent failure to address the ﬁnancial system’s faults don’t provide much faith.
From governmental levels there was no re-evaluation of the Keynesian model which has proven to be more secure in governing some economies. Instead, the west continued to pursue its monetarist goals.
There is much to commend a global economy if it ever reaches its ideals. This is where anti-globalization types are given room to come in, because the way it is run now, those ideals are far away. For the most part, globalization has seen an abuse of power, hard and soft. Statistics show that there is a rise in the standard of living in general, but that the rich are getting richer at a far quicker rate. The gap between rich and poor—which Norman Macrae (formerly of The Economist) and my friend Chris Macrae have said was mankind’s most pressing concern a few years ago—has widened. If it was the ‘most pressing’ mid-decade, it is beyond crisis-point now.
While the US military has, in some parts of Iraq, been greeted as liberators just as former Defense Secretary Donald Rumsfeld said, opponents are simply reminded of the globalized abuses. They couch their words in other terms, perhaps anti-war ones, but I believe fundamentally they are about the failed promises, the inability to deliver the ideals.
In the books I have helped author, Beyond Branding with other members of Medinge, and to a lesser extent in my own Typography and Branding, you will ﬁnd there is a lot of idealism that also warned against these problems. They are nothing new.
The very ﬁrst line in the Medinge manifesto of 2002 is, ‘Finance is broken.’
The way we valued ﬁrms, which was a major theme at our 2002 conference, was just one of the criticisms we had, because the accepted stock market ways made little sense to us. They were detached from the people they affected. And now it looks like we have been proven right, because people are hurting, more so than in 1987.
And the greatest proponent of the monetarist, failed-globalization status quo was the United States, which bears the brunt of criticism in its failure today.
Added to the anti-war brigade, many of which had crossed over from leftist and Marxist groups, the cries are greater now.
Once again the media have fuelled more of those cries.
Among those media are now additional networks that have gone global, such as Qatar’s al-Jazeera, on whose English service I occasionally appear, providing an alternative viewpoint to the Hollywoodized image of the US.
Qatar, and to a lesser extent, the United Arab Emirates, have beneﬁted from the positive image of their globalized companies without the negative side of employee abuse. Either these companies are performing morally and ethically, or they do a better job at hiding abuses in countries which fail to investigate them, but at this point the former appears to be true.
India is also surging ahead on these matters, though Red China has suffered from its problems with internal corruption and favouritism.
The great irony is that the successes have been propagated by branding methods that have taken many of the best lessons of the west, although ﬁnancially the state has a greater role to play in these economies.
These forces indicate that it’s not the end of western-style consumerism.
Secondly, it will still take a while for the US model to fall because the country remains inﬂuential; but as I said many years ago, the next generation may be perceived as good rather than great.
In a society obsessed with quality rather than meaning, people may well wind up apeing or become attracted to the metropolitan centres of the Middle and Far East, kids heading off on their overseas’ experiences to these regions because of the money to be made.
As a result of their exposure, the new model may be more of a balance between public and private involvement, as is prevalent in these regions, until the public side becomes burdened with the same institutionalization, croneyism and corruption that calls for deregulation become loud once more. (In Red China, of course, these calls are never heard.)
The previous Swedish system under the Social Democrats might be closer to this public–private balance, with corporations largely opting to be socially responsible and ﬁnding its government a willing ally in providing a stable society. When a country can have Absolut Vodka as a state-owned enterprises (a situation recently changed by the ruling conservatives), then it was evidence that a public–private mix could work. It could have been the country to follow and in some respects, its ideas can still be easily grasped by the occident.
The best result of all the chaos is likely to be one that returns to basic principles, emphasizing why we have these systems in the ﬁrst place, embracing the idea of real corporate social responsibility, and removing greed from our list of ambitions.
It ultimately begins with education but also the institutions setting a positive example, something they have failed to do.
Otherwise, this bailout will be just another thing we go through without any real result or change at the end. Change is not a buzzword for an election campaign. It must strike against croneyism and the real players behind the present distress.
What might emerge is greater diplomacy between nations, more sharing of ideas, and increased globalization in communications. This might prevent the blind "business as usual" order that we had in 1987. The US’s soft power may well be lowered but provided that sharing is real, aimed at people rather than the élite (or, better yet, driven by people rather than the élite), the next few years might be economically positive rather than the doom and gloom being predicted by some.