This article first appeared in Forum, The Edge Malaysia Weekly on November 30, 2020 - December 6, 2020

November has been a month of great surprises. First, the outcome of the US presidential election was as the polls predicted, but it was much closer than expected. President Donald Trump lost, but gained 10.8 million votes more than in 2016. The Republicans are likely to hold on to the Senate but they also cut the Democratic majority in the House by seven.

This shows that Trumpism is alive and well, dividing the country down the middle. So, if the Republicans manage to block any of Joe Biden’s efforts to reform in the next two years — and the Democrats were to lose their majority in Congress in 2022 — it will make the Biden administration a lame duck for the rest of the term.

Second, two big news on trade came out. On Nov 15, China and 14 other countries signed the Regional Comprehensive Economic Partnership (RCEP), which accounts for 30% of the world population and 30% of global GDP. This is the world’s largest trading region, and would have been bigger if India had not pulled out of the negotiations. Then last week, China’s President Xi Jinping made a surprise announcement at the Asia-Pacific Economic Cooperation (Apec) meeting that China wants to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is the group of countries around the Trans-Pacific Partnership (TPP) that Trump pulled out of.

Third, a number of Covid-19 vaccines have been successfully tested and will be rolled out early next year. Hence, there is hope that the coronavirus will be controlled, after which countries around the world may slowly build back better. But the economic landscape has been devastated in many of them. Online tech platforms have done better, but traditional brick-and-mortar businesses have been severely damaged, especially small and medium businesses.

Even though Trump will not go quietly, his legacy of the past four years has left a deep impression on all. It signalled a major shift in the US-led world order. Once the pandemic hit and the US went into negative growth, with China the only major economy to record positive growth in 2020, the gap between the two powers narrowed. America’s foreign relations with allies and rivals alike have been damaged and going forward, they will not be the same. As former Australian prime minister Paul Keating bluntly put it: “If you pawned the crown, it is incapable of being redeemed at the same value.”

The world order is definitely changing, and its final shape may not be clear for some time. However, the broad parameters can already be seen.

In terms of wealth, there is no question that the US, Europe, Japan and China are now significantly ahead of the others. However, in terms of net wealth, the world is divided between the net borrowers and the net lenders. The biggest net borrower is the US, with a net international debt position of US$13.4 trillion (60% of GDP), followed by Spain, the UK, Ireland, France, Australia and Mexico in the range of US$0.5 trillion to US$1 trillion each.

The biggest net surplus economies are Japan (US$3.6 trillion), Germany (US$2.7 trillion), China (US$2.2 trillion), Hong Kong (US$1.7 trillion), Taiwan (US$1.3 trillion), and then Norway, the Netherlands, Singapore and Switzerland (between US$0.8 trillion and US$0.9 trillion each). In other words, the US and some European debtors essentially owe mostly to East Asia (US$9.8 trillion) and Northern Europe, including Switzerland (US$5.3 trillion). The oil-rich countries, such as Saudi Arabia, will not be adding much to their surpluses as oil prices remain flat.

The golden rule — he who owns the gold rules — still broadly shapes global power. The US may have more wealth, but on a net basis, it is pawned through the dollar.

According to Credit Suisse’s Global Wealth Report 2020, of the total world wealth of US$399 trillion, North America accounted for 31%, Europe 24% and Asia, including China and India, 41%. Africa and Latin America accounted for 1.2% and 3.1% respectively. Since East Asia was the first to be hit by the pandemic and the first to recover, the real question is, in the post-Covid 19 era, which region is able to restructure faster for the new online and green economy.

In other words, as the rich nations age, savings will move out of the surplus economies into regions that deliver higher ROI (return on investment) net of risks. The US was a net recipient of funds, partly because of the dollar’s reserve currency status, but also because ROI on US bonds, equities and real estate has been higher than in Europe and Japan. But if the Fed keeps on printing money to finance US fiscal deficits, causing debt to rise way above even the levels of World War II, then funds will move to East Asia, which still offers positive real interest rates and, going forward, better ROI prospects, provided political stability and technology continue to drive growth.

Strategically, the short game is for the US and Europe to recover and rebuild. For the US, the key is whether the Biden administration will be able to get infrastructure investment going, on top of cleaning up the mess inherited from Trump’s pandemic mismanagement and traumatic damage to the lower half of the population in terms of both health and jobs. If the Republicans refuse to cooperate and block reforms, then the US will be doomed to slower growth, which Larry Summers has termed secular stagnation. The faster the gap with China narrows, the higher the prospects for bigger clashes.

The long game will require the Great Powers to cooperate on dealing with trade, climate change and investing in emerging markets to slow down migration that is pushing populism and promoting global recovery. The moral dilemma is whether human rights issues in individual countries outweigh human rights to good jobs, lifting everyone out of poverty towards communal security and global peace. In the name of human rights, the West actively removed autocratic dictators that kept the peace but abused their people. But the West was not able to rebuild viable democracies in their place, causing massive human suffering as civil war led to migrations and further devastation.

In short, the new world order is forced to confront whether the Westphalian principle of non-interference in each country’s domestic affairs is a better alternative than continual intervention in each country on the basis of human rights. If by interfering, the outcome is better for the population, that is a win-win for all. But as we have seen, if the West has neither the resources nor the political will to build better governance in these fragile states, and these failures then come back to infect and haunt the West, there has to be a better way to solve this moral dilemma.

Make no mistake, the global order is not just an economic pact or a political system, but also a moral issue. The pandemic and climate change have shown that despite borders, culture, creed and ideologies, we live on one planet that is dying because of human abuses of the natural environment, compounded by abuses against other human beings.

Pax Americana was a unipolar order in which the mightiest and richest country played the role of global policeman and contributed generously to global public goods because it was in her interest to do so. Today, America still has the military power, but alone, her economic resources and political will to perform the old job have come under passionate dispute. Hence, as we move towards a multi-polar world, who will contribute to global public goods?

The harsh reality is that no single country can do so. And without the moral courage to work together with people and countries with different viewpoints, the world may be doomed to climate warming that will lead to massive planetary loss, if not human extinction.

Religious leaders from different fields have woken up to this moral threat. In his 2015 encylical Laudato Si, Pope Francis reminded the world that we have a common home, which we destroy at our peril, either through war or neglect of climate change.

In his book Morality 2020, Rabbi Jonathan Sacks, who tragically died this month, argued that “societal freedom cannot be sustained by market economics and liberal democratic politics alone. It needs a third element: morality, a concern for the welfare of others, an active commitment to justice and compassion, a willingness to ask not just what is good for me but what is good for all of us together”.

It is about “us,” not “me”, about “we”, not “I”. In essence, he argued that just as climate warming is about all of us, we are undergoing “cultural climate change”. The environment is global, but culture is local, so to make a difference in the world, “all we need to do is to change ourselves”. To paraphrase former US president John F Kennedy, ask not what the country can do for you, but what you can do for humanity and the planet.

Change for the world cannot come from others. It has to come from each and everyone of us, and that is why no one is smarter than all of us. To be aware of that and to contribute to all of us without fighting is itself a moral decision.

Tan Sri Andrew Sheng writes on global issues from an Asian perspective

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