At year end, Foreign Affairs presented one of its best of 2018 essays to its readers, The End of the Democratic Century - Autocracy’s Global Ascendance, by Yoscha Mounk and Roberto Stefan Foa, which was originally published in Foreign Affairs May/June 2018 Issue. This article made an observation and concluded that the Democratic Century (of 20th Century) has ended. The authors attributed the failure of democracy to the change of economic landscape and the decline of the wealth and share of world economy of the U.S. led West. Mounk and Foa cited political scientists Adam Przeworski and Fernando Limongi that poor democracies often collapse, only rich democracies—those with a GDP per capita above $14,000 in today’s terms, are reliably secure. Since the formation of the postwar alliance binding the United States to its allies in Western Europe, no affluent member has experienced a breakdown of democratic rule (government). The authors further emphasized the effect of economy by stating that “absolute levels of wealth may have been just one of many economic features that kept Western democracies stable after World War II. Indeed, the stable democracies of that period also shared three other economic attributes that can plausibly help explain their past success: relative equality, rapidly growing incomes for most citizens, and the fact that authoritarian rivals to democracy were much less wealthy.” Overall, the authors strongly latched on the correlation between the success of democracy and its successful economic state and vice versa.

Mounk and Foa then sounded an alarm that the economies of the democratic nations have been declining for the past three decades. Among thirteen countries with per capita GDP above $20,000, two thirds of them are having an authoritarian government. Thus they proclaimed the end of Democratic Century with a bleak chance of reviving. Mounk and Foa further argued that strong economy translated to strong military power and great soft power which could help promoting democracy and maintaining a stable democracy. However, they noted that the re-growth of economy in the West would not be optimistic and the soft power of the non- democratic countries had increased steadily gaining self confidence. Therefore, they concluded with a pessimistic view: “the long century during which Western liberal democracies dominated the globe has ended for good. The only remaining question now is whether democracy will transcend its once firm anchoring in the West, a shift that would create the conditions for a truly global democratic century—or whether democracy will become, at best, the lingering form of government in an economically and demographically declining corner of the world.” They further proclaimed: “Hopes that the current set of democratic countries could somehow regain their erstwhile global position were probably vain. The most likely scenario, then, is that democracies will come to look less and less attractive as they cease to be associated with wealth and power and fail to address their own challenges.” They are pinning hope on that “authoritarian countries would find principles of liberal democracy appealing once they enjoyed a comparable standard of living..... If China were to do so, it would end the authoritarian resurgence in a single stroke.” 

I have no objection to Mounk and Foa’s principal point that there is a correlation between successful economy and the stability of Democracy, however, I must point out the illogical conclusion they made about the deterioration of economy in the West democratic nations were the cause of the end of democracy century and the rise of economic performance in authoritarian states accelerated the end of democracy century. I shall present my arguments below to show that one must analyze the cause of economic decay in democratic societies in order to understand why democratic governments failed with failing economy. In fact, I shall argue that it is the liberalism that caused the downfall of democratic governments. Liberalism is responsible for the decaying of economy. Decaying economy with no cure exposed the ineffectiveness of a democratic system. Mounk and Foa’s essay had treated this serious topic with a surface level observation, thus missing the link between the end of the democratic century and liberalism. In the following, I shall discuss why the liberalism is the real culprit for the end of democratic century. The infusion of conservatism and socialism into liberalism and capitalism may produce sustainable strong economy under either a democratic or authoritarian government. 

First, let us clarify a few conceptual terms. Democracy is not necessarily a political ideology. Democracy, employing voting as a method to elect public servants, government structure and/or policy and legal matters, whether through a representative scheme or a direct one person one vote scheme, does not necessarily define political ideology. In fact, voting is being used in different degree nearly in all political systems (governments). The political system (government) and the political philosophy behind the system actually define ideology. An ideology including conservatism, liberalism, capitalism, nationalism, communism or socialism and/or their combination and/or modifications may be adopted and practiced by any government whether it is democratically created (by voting) or not. (a royal empire with a king or a queen or a leader obtained power through his or her people’s choice, party’s designation or any other mixed methods). The liberal democracy, Mounk and Foa referred to, is the democratic government adopting and practicing liberalism and capitalism, led by the U.S.

If one examines deeper why the economy of the liberal democratic countries had declined in the past three or four decades, one cannot help but notice that the liberalism is responsible for their economic failure. Liberalism encourages individualism, promotes liberal ideas with no fiscal constraint and divides society into many self-centered factions destroying the philosophy of ‘majority rule’, the most important merit of democracy. Activists representing many factions of special interest groups elect divided and counteractive government branches rendering government ineffective in decision making and inefficient in policy execution. This phenomenon is clearly exhibited by liberal democratic governments’ perennial budget deficit, huge national debt, infrastructure construction impedance, bloated welfare burden and poor economic planning, in many cases leading to bankruptcy. So correlating failing economy with failing democracy is like correlating drug addiction with death by overdose, meaningless. Expecting authoritarian countries with successful economy to turn to liberal democracy is like wishing a live person to choose living in a coffin, laughable. Democracy is only effective and desirable when it has a right ideology behind it to uphold the majority rule principle, i.e., the voters must accept proper dosage of conservatism to curtail run-away liberalism and adopt suitable level of socialism to balance class-generating capitalism with unselfish idealism. In a nut shell, adopting the appropriate ideology to make the government effective to produce a good economy for the people is the key issue, not any voting scheme or any specific form of democracy. China is a living example, perhaps, to have placed defining her ideology (finding a Chinese political and economic philosophy and system by combining and tweaking capitalism and socialism) as her main focus to develop and sustain her economic growth. Keeping one party system and applying ‘democracy’ within that party while fine-tuning her ideology (not exporting her system) seems to have worked for China for the past four decades. Will China turn to liberal democracy after her per capita GDP passes $20,000? It is doubtful, since the Chinese elites seem to have understood how the countries like Greece, Italy, Republic of Congo, Latin America (poverty issue) failed with their liberal democracy.

Dr. David Wordman​

Recently I came across two opinion articles in the Organic Media (Quora), one entitled, Can the U.S. “Win” a trade war with China? (May 22, 2019), by Alfonso Liances, who has a Master Degree in International Development. He has quoted generously from Nicholas Lardy, a China expert at the Peterson Institute for International economics, on pitfalls of US-China trade conflicts. Another opinion, entitled, what will happen if China and the United States do not reach a trade agreement? (May 7, 2019), by Robin Daverman, who self-claims as a world traveler. Daverman has criticized Trump’s behavior in creating a Mugger’s Alley where no one can do business. These opinions are different from the U.S. mainstream media which by and large have taken on an “official” “America First” view on the trade war. As of today, the U.S. is complicating the U.S.-China trade negotiation with national security issue making the trade agreement unreachable and at the same time the U.S. is pressuring Mexico and others to yield in trade negotiations. We citizens, particularly during travel, cannot help but hear righteous criticisms about our government and leader making us wondering whether the U.S. is doing the right things for her citizens.

Lardy laid out a set of arguments of why a US trade with China would be a losing enterprise. Raising a high tariff on hundreds of billions of Chinese goods will hurt China and cause a capital flight from China, but China is not unprepared and will react with several effective punches. First, a batch of Boeing orders may be replaced by Airbus hurting a strong American industry. Second, the U.S. sales in China, particularly autos and smart phones, will suffer. Third, the U.S. agriculture product export to China especially soybean and corn will be drastically reduced. Fourth, there will be an hurricane effect on many American corporations as seen by their nervous reactions to the ‘Huawei’ sanction the U.S. government has applied to it. Finally, the Chinese government may retaliate with a number of concerted efforts such as ordering her state owned enterprises to stop doing business with the U.S. hurting the U.S. supply chain, to restrict access to commodities such as rare earth material affecting U.S. electronic and military industries and to stop her on-going efforts of protecting the U.S. intellectual properties such as American music and movies causing more US trade deficit.

With extended trade war, the U.S. corporations will experience an anxiety of uncertainty. Trying to reform or recreate some of these corporations will be very difficult if not impossible. Moving U.S. owned corporations in China to other countries will produce massive outflow of capital or invite Chinese investment capital to participate. The Peterson Institute has made an analysis concluding that a full blown trade war with China and Mexico will push the unemployment rate in the U.S. from 4-5% to 9 % in 2020 hurting millions of Americans Trump proposed to protect from ‘unfair trade’. Disrupting relation with Mexico, trade or border issues, will help China in many ways. Today on the world stage, China has been viewed as a victim no matter how the U.S. denounces China’s bad trade behavior in the past; the developing countries and many major trade partners of China have the perception that China is the only major country proclaiming globalization and win-win cooperation; whereas the U.S. has pulled out of the Trans Pacific Trade ((PPT) agreement behaving like a protectionist.

President Xi of China does face challenges in moving China into a service-dominated economy emphasizing across the board innovation effort; challenges include solving high State Owned Enterprises (SOE) debt, over capacity of manufacturing, technology independence, and government learning of managing and growing her financial industry. President Trump of the U.S. faces problems of meeting his campaign promises and maintaining popularity when reality of market and economy becoming apparent. According to economists, the balanced trade does not bring back jobs. Spending less (raising saving rate will cumulate capital) and produce more (having more investment capital will create jobs and production) are the solution to trade and economic problems. Trump seems to be ill advised by his current staff.

Daverman is more critical to Trump’s behavior and ignorance on world economy. He jokingly talked about people need to buy ‘Trump insurance’ since product quotes are only good for one day (no one knows what prices may be as they can be tweeted up and down any day) and Trump has created the “Mugger’s Alley” where no one can do business. In contrast to Trump’s tweets (no warning, no explanation and no debate), Daverman made an observation on Chinese media’s reporting. Since the U.S. -China trade talk broke down in May 2019, the Chinese delegate had been quiet and the U.S. had been making contradictory noises, thus the trade talk is in a suspension state. Things that both sides agree have been done and the not agreeable items are difficult to reach an agreement. In this trade war, the U.S. has been the attacking side and China the defending side; thus whether a deal can be concluded or not is up to the U.S. Daverman made a worse-scenario analogy equating China’s economy like a body on life support. If the U.S. would unplug the life support, you would get two dead bodies, meaning China and the U.S. What would you do with the dead bodies? He also cited a scenario that even China might stop her ‘made in China 2025 plan’, her trade with Asia, Europe, Africa and BRI would move the center of world trade currently in New York to Shanghai. In other words, the U.S. will not emerge as a winner in the US-China Trade War.

Despite of the new developments in the U.S., seemingly extending the trade war to national security issue, China appears to be calm. The U.S. has declared an all-out war against a private Chinese company, Huawei, banning its products and sanctioning U.S. component sales to it. Yet, Huawei’s corporate logo is brightly lit up in European cities such as Barcelona. In addition, the U.S. is playing the ‘Taiwan’ card by having Congress passing the ‘Taiwan Travel Act’ on 2/21/2018 (signed into law by President Trump on 3/16/2018) and the ‘Taiwan Assurance Act’ on 4/1/2019 (pending in the Senate). China seems to have been prepared to deal with the trade war in much longer term. Regarding the ‘Taiwan Play’, however, it may offer China an opportunity to reunite with Taiwan on a short time table following the Crimea example. It is doubtful, the U.S. is willing to risk lives to engage a real war with China on behalf of the pro-independence party in Taiwan. China stands to win.

Historically, China has been the world largest economy a couple of times without adopting colonialism. In fact, no one economy in the world like China's has become a dominate economy without resorting to military power or bullying. China was quite adaptable to being an isolated power. On the other hand, the U.S. achieved her global power status through large immigration of people coming into the country and by colonial and military expansion outward. Therefore, I personally agree with the above Organic media opinions that the U.S. can not win the trade war with China and if the trade war persists, the outcome for the U.S. is not rosy. Therefore, the U.S. ought to exercise caution seeking a reasonable trade agreement.

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My readers may wonder why is Dr. Wordman interested in the title topic? Is it important and related to world politics and US-China relations? Singles Day Event did not exist when Dr. Wordman built his first e-Commerce website, osmart.us (originally started as osmart.com but that name was first used by a department store). OSMART stands for Online Shopping Mart or O! Smart! with a grand vision. (Believe it or not, stores like Macy’s etc all placed their sales on osmart.us) OSMART was promoted as a ‘mega’ e-Commerce site in year 2000. Well, OSMART did not fly as it was suffocated by ‘dotcom crash’. However, for sentimental reasons and patent filing purpose, osmart.us has been kept as a historical archive website still accessible today. With the above explained, you will understand why Dr. Wordman is interested and somewhat experienced in discussing the title subject. The subject indeed relates to US-China trade war and globalization.

The Singles Day online shopping event, happening on November 11th, (Well known as Double 11 in China) was started and promoted by Alibaba.com ten years ago (2008). Today, Double Eleven clicked in the biggest shopping spree the world had ever seen; shoppers purchased 314 RMB ($45B) goods and services within 24 hours. What drove people to Double 11? Of course it is discount sales. (OSMART was based on that principle) Average discount of 30% or more were offered by merchandisers on that day. Would merchants make profit? Here are some statistics McKinsey published: For Mom and baby stuff, merchants get 18-19% sales on Double 11 versus 6-7% on normal days, that is, at least 300% increase of sales for offering a 33% marked-up ‘discount’. For skincare and cosmetics, merchants get 12-15% sales on Double 11 versus 3-5% on normal days for offering a 30% marked-up ‘discount’, that is, 300-400% increase in sales on one day. You do the math, would you want to miss this kind of opportunity to get sales, brand recognition and customer base? By the way, $45B is about three times of sales of U.S. Black Friday and Cyber Monday combined. Furthermore, 90% of the Double 11 sales happen on mobile devices versus 34% for Cyber Monday.

According to McKinsey (What Singles Day Event Can Tell Us How Retail in China Is Changing, Lombard Bu, Anne Kronschnabl, Kelly Ungerman and Daniel Zipser, December 2018, McKinsey) the Singles Day Event grew 79%, 59%, 44%, 44% and 24% from 2014 to 2018, tapering off this year. (with sales volume 81B,123B, 177B, 254B and 314B RMB) Would you be concerned that this event will die? This year’s Singles Day featured at least four other retail platforms or ecosystems of companies, with Alibaba capturing 68 percent of total sales. The 24% growth was compatible with China’s retail growth which suggests that Double11 may have to expand more into global markets. It appears that it is going that way. McKinsey reported, for example, online games and interactive shows, including a “See Now, Buy Now” fashion show that let consumers buy items featured on models, helped creating excitement leading up to Singles Day. The actual day kicked off with a four-hour, star-studded gala of performances in Shanghai’s Mercedes-Benz Arena, watched by 240 million viewers. Games and coupons cross offered from online and in-store retailers are obviously also helping exciting the massive consumers.

This year for Singles Day, e-commerce giant Alibaba made a concerted push to connect its online operations with its stores throughout China, that is consumers could find the Singles Day promotions and offers offline as well, in 62 Intime department stores, around 100 Hema supermarkets, and 222 Easyhome furniture and home-improvement stores. But it is obvious that to sustain growth and promote further Double 11, Alibaba must move to global markets. Amazingly, a record number of multinational brands (more than 19,000) already participated in Singles Day, resulting in a major spike in sales from imports.

It is important to emphasize that while overall Singles Day sales grew by 24 percent, the growth of products imported into China was much higher, at 63 percent on Tmall. This is a significant data in view of the US-China Trade War demanding an increase of exports from the U.S. to balance the current trade deficit. McKinsey noted the top-selling multinational brands on Tmall, including Spanish beauty company MartiDerm, Japanese diaper brand Moony, Dyson appliances, and the US supplement brand Schiff. Alibaba’s Tmall offers access to a large consumer base and a wide range of supporting capabilities, such as data analytics, logistics, and product innovation, potentially capable of facilitating more global sales.

For example, Lazada, approximately 91 percent owned by Alibaba, featured Singles Day in Singapore, Malaysia, Thailand, Indonesia, the Philippines, and Vietnam simultaneously with its initial sales during the first hour of Singles Day growing sevenfold over last year. Shopee, the leading online shopping platform in Southeast Asia and Taiwan, grew its total customer orders on Singles Day by 4.5 times. Why can’t the U.S. retailers join the growth? I don’t think it is because the U.S. has no merchandise for exporting to China, it is the atmosphere and attitude the government is casting over U.S.-China trade. We hope that the U.S. will reach a trade agreement with China soon, so the U.S. businesses can ramp up more global sales especially to China.

Alibaba has publicly said its long-term goal is to get half of its total sales from overseas. Alibaba already brought Singles Day to the United Kingdom, France, Spain, Poland, Russia, and Turkey through AliExpress, an online site that exports Chinese products to international buyers. In Europe, AliExpress partnered with El Corte Inglés department store to create more than 2,000 click-and-collect pickup locations, including pop-up stores. This year, AliExpress’s total sales on Singles Day were up 40 percent. As Alibaba and other Chinese retail platforms continue their expansion abroad, we should expect the U.S. capturing a significant growth in Singles Day sales among Europe, Southeast Asia and other markets.

Singles Day sales growth tapering from 44% to 24% is just a single data point for one year when the U.S. and China are saber rattling threatening each other with a tariff war. The Singles Day event has a solid five year record and is certainly still a behemoth for Chinese retail, thus representing a significant opportunity for the U.S. brands to grow in China. According to McKinsey’s assessment, participating in Singles Day is no longer optional but a requirement for any international brand that sees itself with a future in Asia and wants to build brand engagement and craft unique experiences with consumers. I fully agree on this assessment. Therefore, I urge the U.S. commerce organizations immediately conducting a task force to develop a plan to fully engage with Singles Day (Double 11) Event to stimulate the U.S export to China and make it a success. I personally will be glad offer consulting free of charge on Mandarin language and/or business needs to any American businessman who is interested in engaging the Singles Day Event (Double 11).