1. Meritocracy and Democracy

“East is East, West is West.” But, today, the twain are intertwined.

Everyone knows the contrasting traits that distinguish these broad civilizational spheres: authority versus free­dom, the community versus the individual, the cycles of the ages versus the progress of history, and representa­tive democracy versus, in China’s case, rule by a meri­tocratic mandarinate. Yet, we also know that China has become the factory of the world and the largest creditor of the United States.

In this book we revisit the twain that Rudyard Kipling famously said “never shall meet” in this new historical context where China and the West are as tightly teth­ered as they remain highly distinct.

As the West recedes from its centuries-long dominance and the Middle Kingdom regains its solid foothold in history, we are obliged to look out on this changing landscape with Eastern as well as Western lenses.

If the reader will permit the reduction of some essential truths, the modern Western mind tends to see contradiction between irreconcilable opposites that can only be resolved by the dominance of one over the other. Following the German idealist philosopher Georg Wilhelm Friedrich Hegel,1 this was the approach Francis Fukuyama2 took when he argued that “the end of his­tory” had arrived after the Cold War in the triumph of liberal democracy over other forms of human govern­ance. In the geopolitical mind of the West, territories and ideologies are either won or lost.

The conventional, though not incorrect, wisdom in the West is that, despite the awesome achievement of lifting hundreds of millions of people out of pov­erty in just three decades, the modern mandarinate of nominally Communist China is not self-correcting, and thus not sustainable. Unless it loosens its autocratic grip by allowing freer expression and more democratic mechanisms for popular feedback and accountability, the “red dynasty” will succumb to terminal political decay – rife corruption, arbitrary abuse by authorities, and stagnation – just as all previous dynasties have in China’s millennial history.

The unconventional observation of this book is that, just as we’ve seen with financial markets, Western democracy is no more self-correcting than China’s system. In a mirror image of China’s challenge, one-person-one-vote electoral democracy embedded in a consumer culture of immediate gratification is also headed for terminal political decay unless it reforms. Taking a cue from China’s experience with meritocratic rule, establishing capable institutions that embody both the perspective of the long term and common good in governance is key to the sustainability of the demo­cratic West. The argument we will make in this book is that restoring equilibrium in each system will require a recalibration of political settings through mixed con­stitutions that combine knowledgeable democracy with accountable meritocracy.

2. Convergence and Divergence: Globalization 2.0

The challenges produced by the present global power shift, combined with rapid technological advance, are daunting for the rising powers no less than for the receding ones. All political systems are in some way experiencing disequilibrium as they seek to adjust to the repeated shocks caused by the transition underway from what we call Globalization 1.0 to Globalization 2.0.

In the decades since the end of the Cold War, American-led globalization – 1.0 – has so thoroughly transformed the world through the freer flow of trade, capital, information, and technology that it has given birth to a new phase – Globalization 2.0.

“In the past few centuries what was once the European and then the American periphery became the core of the world economy,” writes Financial Times analyst Martin Wolf. “Now, the economies of the periphery are re-emerging as the core. This is transforming the entire world . . . this is far and away the biggest single fact about our world.”

Nobel economist Michael Spence reinforces this point. What we are seeing today, he writes, are “two parallel and interacting revolutions: the continuation of the industrial Revolution in the advanced countries, and the sudden and dramatic spreading pattern of growth in the developing world. One could call the second revolu­tion the Inclusiveness Revolution. After two centuries of high-speed divergence, a pattern of convergence has taken over.”4

This great economic and technological convergence that is the consequence of Globalization 1.0 has at the same time given birth to a new cultural divergence as the wealthier emerging powers look to their civiliza­tional foundations to defi ne themselves anew against the waning hegemony of the West. Since economic strength engenders cultural and political self-assertion, Globalization 2.0, above all, means the interdepend­ence of plural identities instead of one model for all. The once regnant Western liberal democracies must now contend on the world stage not only with neo-Confucian China but also with the likes of the Islamic-oriented democracy within Turkey’s secular framework, which has become an attractive template for the newly liberated Arab street. In short, the world is returning to the “normal pluralism” that has characterized most of human history.

Historically, a power shift of this magnitude often ends in collision and conflict. But, given the intensive integration that the post-Cold War round of globaliza­tion has wrought, it also poses entirely new possibilities of cooperation and cross-pollination across a plural civilizational landscape.

We are thus at an historical crossroads. How we govern ourselves in the coming decades within and among nations will determine which of these paths the 21st century follows.

3. Harmonism

Intelligent governance’s chief aim is to seek a harmonious equilibrium in human affairs – between responsibility and personal choice, community and the individual, freedom and stability, well-being and well-having, humankind and nature, present and future – based on the wisdom of what has worked best when faced with the circum­stances at hand.

It is a given that any universal approach that arises from new global conditions must pragmatically accom­modate diversity and varying levels of development. Cooperation, which implies different paths to the same end, not the lock-step uniformity of one model, is the means to achieve harmonious collaboration. From the shattering of the Tower of Babel to the collapse of the Soviet Union, history has taught us that diversity is the way of human nature.

Such mutually beneficial cooperation is more poss­ible today than at any previous point in human history. Some scientists argue that the capacity to share knowl­edge across cultures enabled by the “global thinking circuit” of our wired world and the planetary reach of the media is akin to “horizontal gene transfer.” This suggests that rule by more intelligence sharing instead of competitive differentiation might mark an “evolution of evolution.”

When joined with the knowledge explosion in sci­ence and the information revolution, the necessity for all of humanity to work together for survival raises the hope that our species will graduate from the primitive, competitive mode of human evolution – “survival of the fittest” – to a less conflictive, more intelligent, and more cooperative mode – “survival of the wisest.” Intelligent governance is, in this sense, the practical application of an evolved worldview.

Bowing to the historical seniority of the East, that worldview might be called harmonism. It is perhaps the 21st-century alternative to a narrow notion of “pro­gress” that, while achieving fantastic leaps forward, has also brought much damage in the wake of its ambitions – extinguished cultural diversity, sacrificed lives, and a degraded environment. While harmonism doesn’t regret the future, neither does it imagine a utopia at some end­point in history. Rather, it constantly strives for a state of equilibrium.


4. Intelligent Governance in Action: G20

The 21st Century Council gathering in Mexico City in May 2012 pro­posed a hybrid approach for the G-20 to provide global public goods.

First, summit agreements make sense on financial regulation, cross-border capital flows, and international bailouts bolstered by strong and independent “surveil­lance” of G-20 economies on practices that contribute to imbalances. Our recommendations here included the establishment of “two-track sherpas” (permanent and annual) to carry out and ensure the continuity of policies from summit to summit, organized through the “troika” of the immediate past, present, and future G-20 chairs, and the expansion of the Organization for Economic Cooperation and Development (OECD) to include the G-20 emerging economies. Among the tasks of the G-20 OECD would be to measure trade flows in a new way that takes into account contemporary global scattering of production (as in iPad manufacture, see Chapter 4) and its impact on trade and employment. Coordinated global policy on reducing imbalances must be based on an objective commonly shared analysis of the facts or it will lead to unnecessary tensions and conflict.

Second, a web of national and subnational networks should be fostered to provide global public goods – such as low-carbon growth to combat climate change – from below through “coalitions of the willing” work­ing together to build up to a threshold of global change.

As proposed at the May 2012 G-20 meeting in Mexico, where President Calderón focused on “green growth,” arrangements like the Clean Development Mechanism under the Kyoto Treaty could be bolstered. It is essentially a global “commodities exchange for carbon permits” that enables trading among national and subnational jurisdictions that already have or are planning a cap and trade system – such as California, Australia, Quebec, some European states and Chinese provinces. Ultimately, the resulting liquidity created by this exchange would encourage other jurisdictions to join.

A further idea we discussed was to link the R-20, or “regional 20,” with the G-20 goals on climate change. The R-20 was founded by Arnold Schwarzenegger when he was California governor and its members range from the Gujarat State in India to the Gyeonggi Provincial Government in South Korea to Puglia in Italy. The idea is that, even if progress on climate change and clean energy is stymied at the level of global governance or the nation-state, the subnationals can still move ahead to build a critical mass from below.

Aside from advising the G-20, the 21st Century Council has taken on projects where it can have a direct impact through its personal networks of relationships. One example is following up Zheng Bijian’s argument for “building a community of interests” between the US and China, the core of the global economy, by encour­aging direct foreign investment of China’s surpluses into infrastructure and jobs in the United States —  thus elegantly squaring the circle of trade and employment and staunching the rise of protectionist sentiments by showing that globalization can put people to work in the US as well as China.

When Xi Jinping visited California in February 2012, Governor Jerry Brown, speaking as one princeling to another (Brown’s father was also governor; Xi’s father was a top member of the Politburo), proposed that China might be able to help finance the state’s planned $90 billion bullet train system as well as invest in “plug and play” zones* in the more impoverished, high-job­less areas of California such as the Central Valley and Riverside County.9

There is a certain elegant symmetry in this latter endeavor as well. When Brown visited Guangdong province in the early 1980s,10 just after his first terms in the statehouse, he was hosted by Xi Jinping ’s father, Xi Zhongxun, who at that time was governor of Guangdong. Xi senior, an intimate of Deng Xiaoping, was the mastermind behind China’s new experi­ment at the time with the “special economic zone” in Shenzhen. He was seeking investment from the United States!

Through its network of contacts in California on the Think Long Committee and ties in China to the top offi ­cials of the China Investment Corporation and Zheng Bijian, the 21st Century Council was able to facilitate the advance of these projects.

This project is but one example of how a “global civil society” group like the 21st Century Council, along with business and government at all levels, can contrib­ute to resolving the divergence/convergence and global/ local contradictions of today’s power shift.

Applying the “devolve, involve, and decision- division” paradigm of intelligent governance can help build the “primary legitimacy” the G-20 will need to address the new global challenges.

The alternative is a power vacuum, drift, and then the risk of destructive conflict. There is no higher priority for global governance than doing all one can to make sure the present is more like 1950 than 1910.