On China’s bullying, we ain’t seen nothing yet

If you thought the Cold War was bad, you’re in for a rude awakening.

Illustration: Eric Lobbecke

The bad news just keeps on coming during this crisis.

Our children are set to enter a very different world when they start their working lives than the one we all anticipated (and hoped for) just months ago. How Australia recovers from this health and economic crisis will define whether we ­remain the lucky country.

History is littered with nations that have catapulted down the international wealth index courtesy of poor decision-making.

The 20th-century example etched in my brain is that of Argentina. In his 2008 book The Ascent of Money: A Financial History of the World, historian Niall Ferguson details how poor choices led to Argen­tina’s transformation “from the world’s sixth richest country in the 1880s into the inflation-ridden basket case of the 1980s”.

Nations the world over will face important policy choices in the here and now that will determine their future, and those decisions will shape (or perhaps reshape) the world order.

Protectionist tendencies are likely to be fuelled by hyper-­nationalism in the aftermath of this crisis. Debt will inevitably balloon, such that it consumes a growing portion of gross domestic product, reducing the government’s capacity to spend on everything from health and education to welfare. How we choose to respond to this reality will shape our destiny.

Less travel and tighter social restrictions will change the way we culturally interact with one another. This will feed some people’s feelings of isolation, with potentially profound mental health consequences. It will also affect the electorate’s attitude towards the political class and the decisions of government.

Do we become more contrarian and, if so, with what cultural ramifications? Or does compliance take hold in our political culture, giving government the imprimatur to erode rights without political consequences?

We already know that in the short to medium term the unemployment queues will be longer, and underemployment will increasingly define the working lives of many of us still gainfully employed. This will hamper the budget bottom line, but it will also rock the national psyche. Do Australians turn to higher education, as they traditionally do when jobs are scarce? Perhaps not this time, because of the reconfiguration of that sector, which has been gutted by the crisis. Lower enrolments in further education in the aftermath of the crisis may reduce the country’s capacity to come out the other side of it successfully, as we have in the past.

The budget will come under increasing pressure because of closed borders and what The Economist describes as the new 90 per cent economy, where capacity constraints drive down growth. That, sadly, is an optimistic forecast in the current climate.

I have seen plenty of attempts at glass-half-full analysis of the ­future: more flexible working conditions, improved hygiene, new inventive ways of doing business, more time with family creating a better appreciation of work-life balance. None of these are out of the question, but they come hand in glove with the downsides, which will likely be far more defining and more difficult to navigate.

A less prosperous world awaits us. But as the Argentinian example highlights, there are better choices to be made. We are already seeing the consequences of a rising China in the context of a declining US. The latter has long been the butt of jokes and attacked for its self-interested soft diplomacy. But the world ain’t seen nothing yet. A rising China will see democratic institutions tested like never before. China as a stand-alone superpower — assuming the US falls completely off its perch, as some are predicting — is a scary thought. It does not respect the rule of law, the rights of individuals, international norms or democratic institutions. It outwardly projects its power with a bullying streak.

The Soviet Union always faced a powerful Cold War enemy in the US. China is a far bigger threat than the Soviet Union ever was. We are now in an era of trade interdependence, with a greater global reach than ever. Unlike the Soviet Union, China is an insider within this system, able to benefit from it economically, as well as throw its weight around. This context matters not only in a security sense as we look forward, but economically as well.

All of the above will require the best of the best making the political and public policy decisions in Canberra and in state parliaments. This is where things get particularly scary.

Who reading this honestly believes that our nation is served by a stellar line-up of qualified political leaders, across state parliaments as well as federally? Because if this crisis has taught us anything, it is that the federation is more robust than previously thought. State governments are not subservient to Canberra beyond vertical fiscal imbalance. Their autonomy of decision-making and importance on the service delivery side of government has been made abundantly clear as premiers have regularly defied the Prime Minister during this crisis.

Even if you do have a healthy regard for the quality of our politicians, that is likely because your partisan rose-coloured glasses lead you to believe that one side of politics is excellent while the other side is a joke. In other words, your partisan bias distorts your views. To truly believe that we have first-rate political leaders, you have to believe they are represented on both sides of the major party divide, not just one.

Most Australians haven’t felt that way for years. Certainly not since the glory days of Bob Hawke, Paul Keating, John Howard and Peter Costello, who led partisan teams capable of making tough decisions.

To be sure, tough decisions are reforming decisions, which are not necessarily always popular. These do not include spending our way out of the global financial crisis, or indeed this crisis. While doing so may (or may not) be the right course of action, deciding to spend money isn’t a difficult decision. It is a big decision, but not a difficult one. Difficult decisions are the ones that challenge your base, are hard to sell, and require a passion and belief to do so.

That is what Hawke’s micro-economic reforms were, and Howard’s gun reforms.

In contrast, the COVIDSafe app — which apparently is “vital” and “necessary” and “paramount” to defeating this virus — is optional. As the number of Australians who have downloaded it stagnates at a quarter of that which experts tell us must use it for it to be effective, we hear no noises that the government will up the ante to ensure its deliverance.

That is surely weak politicking. Unless they overstated its importance in the first place.

Difficult decision-making also needs to include being able to sell one’s ideas effectively, otherwise it’s just foolhardy politicking. If you can’t take the people with you eventually, you may as well not bother because in a democratic polity winning elections is a necessary ingredient in achieve difficult reforms.

Julia Gillard failed this test with her climate change policies, as did Tony Abbott with his early attempts to fix the budget.

The aftermath of this crisis is going to be all important, and we need politicians who can do more than hand out money and preside. Otherwise our days as the lucky country will soon come to an end.

Peter van Onselen is a professor of politics and public policy at the University of Western Australia and Griffith University.