A TPDEARR Article
Trans-Pacific Dynamic Equity Allocation Research Report
There is no other way of putting it: we are currently in the era of nation-states (fueled by capitalism); participation is mandatory, and it occurs by default. And though the idea of crafting a state is itself not new, the ways in which it can be accomplished successfully in modern times are interwoven into the advantageous use of the international supply chains laid down by the capitalists’ collective agenda, so are now contingent upon trans-state cooperative efforts, perhaps much more so these days than is the motivation of “the stick” (i.e., military force), such as was so effective in the brute might of the empires of yore.
Today, mastery over the “rules-based” code of conduct upheld by internationally-oriented participants begets economic success, which comes with clout; both of which beget access to strategically critical supplies, treaties and defense agreements. The train of success seems to be straightforward:
Win the diplomatic game -> win defense from a large, friendly military (if one doesn’t already have it) -> gain advantages in the economic game -> perpetuate survival.
Everyone follows the rules; everyone wins. Right? If only it were so easy. Not only is it difficult to follow a single course without internal agreement (and internal political agreement is hard to come by with a diverse set of internal views, like there are in most places,) it’s even more so when “the dust has barely settled” in a newly forming nation-state. In statecraft, following the rules is much more difficult to practice than it is to say. And in the nation-state arena, most of the parties are pretty new to the modern version of the game, so let’s swing around the trans-Pacific and do a quick map of how old some of our focal “countries” are. To be clear, the right to vote/suffrage is non-universal and unequally applied, so we are placing a rough estimate of how recently each of the listed nation-states has “established” sovereignty in its current form of government, so that we can identify the contexts within which said states must negotiate for their geopolitical survival.
Americas (Eastern Pacific Seaboard, in clockwise arc)
- Canada – 1931 – Granted nominal independence from the British crown
- USA – 1776 – Declared independence from Great Britain
- Mexico – 1821 – Declared independence from Spain – male suffrage enshrined in 1857; female in 1953
- Chile – 1818 – Declared independence from Spain – transitioned to democracy in 1990
Asia-Pacific (Western Pacific Seaboard, in counterclockwise arc)
- Japan – 1885 – Replaced imperial Daijo-kan system with party politics – forced into democracy in 1945 after WWII
- North Korea – 1948 – Independence declared from Soviet Union
- South Korea – 1948 – Independence declared from US – Military rule ended in 1987
- People’s Republic of China – 1949 – the Xinhai Revolution ended the last imperial (Qing) dynasty in 1911
- Republic of China/Taiwan – 1912 – following the Xinhai Revolution; after period of martial law, first president elected in 1996
- Philippines – 1946 – Granted independence from the US – declared independence from Spanish Empire in 1898
- Vietnam – 1976 – Unification of North and South Vietnam into current Socialist Republic of Vietnam
- Thailand – 1932 – Absolute monarchy rule ended after Siamese Revolution – Virtually-complete military rule
- Malaysia – 1963 – Independence from UK declared in 1957
- Singapore – 1965 – Expelled from the Federation of Malaysia
- Indonesia – 1945 – Declared independence from Netherlands – Military rule ended in 1998
- Australia – 1942 – Commonwealth status granted from UK
Most of these states have been in their current form for less than a century, and virtually all of them have undergone numerous constitutional/governing document revisions in their modern histories. With so much governance change always in the mix, it’s difficult for domestic institutions to establish enough independence to even be able to faithfully follow rules without political or economic consequences, especially since the following of many rules has different outcomes for different parties depending on their size, makeup of constituencies, and all sorts of other variables. The preset establishment of such institutions in the US provides the platform other economies may use to develop and progress, as long as they don’t too-severely poke the bear.
What also stands out about the aforementioned list, though, is the “age” of the US, which is between decades and centuries older in comparison to the rest. Despite it’s laundry list of flaws, and the fact that it certainly hasn’t perfectly figured out how to best represent its peoples, the US, and its constitution, have paved many a modern way, and been the most visible example of constitutional democracy against which all other nation-states have been able to set their courses in this modern era. Nowadays, the progress of nation-states is largely influenced by their relationships with the “cool kids” that other countries are trying to emulate.
Some Piping Hot Statecraft Goss
OMG, did you hear who is buddying-up with whom?!
The success of the US’ hegemonic rise and its economic might have made it, in many ways, the “cool kid” of the nation-state era, and the envy of all other economies. One wants to be on good terms with the cool kid as it affords them benefits, just as bad terms have their drawbacks (which are usually costly, in this modern capitalist era,) and geopolitics is a game of social terms as much as it is a dialectic of war. If we are to take diplomacy (i.e., socializing) and warfare as the two primary fields of statecraft, as the Foreign Policy Research Institute does, then we have to assume that all sovereign states are fighting to maintain or expand their physical boundaries and citizens’ quality of life at all times; and if we can’t see this fighting occurring violently, we can rest assured that it is occurring diplomatically.
Let’s take a look at the Asian arena, shall we? The two, great, global economic poles, the US and the PRC (the new-kid-on-the-block threat to the US’ “cool kid” status), are presently standing on opposite sides of the “court”, and everyone else is choosing teams.
On the US side, comprehensive strategic partnerships, defense agreements, and trade pacts have been established between the legacy Western hegemon and Japan, South Korea, and Taiwan, along with the Southeast Asian nation-states of Singapore, Malaysia, Indonesia, the Philippines, Vietnam, and Thailand, as well as with ASEAN as a whole.
On the PRC side, China has continued to maintain tenuous cooperation with North Korea (ever the Western antagonist) while also improving some aspects of its trade and diplomatic relationships with SEA economies1 through projects in its Belt and Road Initiative (BRI), such as with Indonesia, Malaysia and Thailand, who have all benefitted from infrastructural upgrades, though none have raised enough pomp about it that it might be perceived by Western powers that they’ve “switched sides”, as it were. In other words, “I’ll go to their birthday party, but they’re definitely not my best friend.”
The PRC has also made strong connections with some smaller island nations in the Pacific, but the advantages at this stage of the game are limited compared to the massive multilateral arrangements coordinated by Western powers.
Leadership turnover is also an obstacle for PRC “team” formation. Former President of the Philippines, Rodrigo Duterte, had previously approved a few BRI projects, only to have current President Marcos cancel them on his turn towards specifically Japanese and Western counterparties. Is it petty? True? Petty that it’s true? Who wins from a decision like this, other than people who have already been paid?
Things get even stickier when we factor in how trade relationships impact domestic industries. For most economies in Asia (as well as the US, the EU and Australia), the PRC is their largest import partner, so nobody wants to anger the source for (nor destination of) such a significant economic influence. Yet cozying up too close to the PRC to improve economic relations will bring trouble and consternation from the US, who, along with Japan and Australia, provides the prominent defense and security presence to the very same supply lines and “free” market trading that everyone so desperately covets. Everyone is caught in the pull between the poles, just as the poles are likewise caught themselves; neither the US nor the PRC can escape the existential presence of the other, though countless mutual benefits do exist.
To get a sense of how the “rules-based order” (which Western powers have been expanding since the end of WWII) impacts geopolitical relationships we turn to an example in the “Joint Statement from the Leaders of the United States and the Republic of Indonesia“, released by the White House in November of 2023. In this statement we find the two nation-states reaffirming their Comprehensive Strategic Partnership through an alphabet soup of connecting agreements. The following list of acronyms is pulled from the statement:
- TIFA – U.S.-Indonesia Trade and Investment Framework Agreement
- OECD – Organization for Economic Co-operation and Development
- WTO – World Trade Organization
- IPEF – Indo-Pacific Economic Framework for Prosperity
- ITSI – International Technology Security and Innovation
- US CHIPS Act of 2022
- USAID – U.S. Agency for International Development
- USTDA – U.S. Trade and Development Agency
- JETP – Just Energy Transition Partnership
- CIPP – Comprehensive Investment and Policy Plan
- GGI – Greening Government Initiative
- FIRST – Foundational Infrastructure for Responsible Use of SMR Technology
- IISMA – Indonesian International Student Mobility Awards
- YSEALI – Young Southeast Asian Leaders Initiative
- KL-YES – Kennedy-Lugar Youth Exchange and Study
- UNCLOS – United Nations Convention on the Law of the Sea
Each of these sets of terms refers to, essentially, a document or set of documents that delineates further cooperation among member participants: in short, more rules: text. Nested sets of rules (i.e., nested hierarchies) are how the (Western) powers-that-be are seeking to use diplomacy to cement cooperation and beget commerce and progress.
“That’s it; it’s in writing! It’s official now! Bffs. No backsies.”
Fine print2. Nerd stuff. Don’t break the rules, or you’ll have to pay, and if you don’t pay, you’ll get kicked off the team. Barf emoji…?
…though, consider the combined reach and influence of these groups, agglomerating together the international, multilateral staffs of tens of thousands of dedicated officials and their sprawling networks of influence. How many of their operations do you think are fundamentally reliant on computation (read: semiconductors)? This, along with other such joint efforts by enormous governments with economic policy and fiscal outlay control, makeup a key support basis for [MAR.24 Squad Asset #1].
Not only that, but the preceding example only touches upon one particular bilateral relationship: that between the US and Indonesia. It also barely even touches upon any type of security/defense agreements, such as those that so heavily influence other US-Asian relations, like in the Philippines—the former US colony and host to no less than 9 major US military bases. Those bases are a small portion of the 313 confirmed US military bases in East Asia, which themselves are a part of an unprecedented 750+ known US military installations globally. [ As another pillar of support for [MAR.24 Squad Asset #1] and [MAR.24 Squad Asset #3], consider the computational and Natural Elements needs for this sprawling defense apparatus, the largest ever in human history. ]
The point is, the US has “the most friends”, even in Asia, including those friendships which are upheld with very unequal power dynamics at play; and yet, all hegemons fall in the end, so it kind of also feels like just a matter of time. The opportunity for a perceived betrayal is ineradicable; it is an emergent property of human relationships, which themselves are always capable of forming. Sacrifice and humility in these “friendships” are sure to be required of the US if it continues to desire to be the world’s standard-bearer, but the costs for important things should be, and are, high. Some of this sacrifice will surely be in the distribution of economic power to some, while perhaps also needing to reluctantly cede other types of power to others in other fields, such as ideological or military (What? I said it wouldn’t be easy.) Power, of the geopolitical variety, is a very valuable currency; and like with any currency, those who hold it are those who are capable of distributing and bequeathing it, as well as the only ones who can lose it.
“Stay tuned in to find out who betrays whom in next week’s episode! Does he go behind her back and make a deal with the scorned ex?! Don’t miss the next exciting twist!”
…
…
“Do you have moderate to severe ulcerative colitis, or Crohn’s disease?”
Sorry. I couldn’t help myself.
Deep breath; back to basics.
Sovereign State Stationarity
Countries can’t move. That is, though national borders are always in flux, generally speaking, a country of people is fixed in its place, between its neighbors and surrounded by and amid its geographical features. Countries are stationary.
Wow, great. Countries don’t move3. Dumb idea, you say?
Forget thee not the continuing implications of being stuck where one is, which healthy humans are not. Captivity is something humans do not thrive within. We move around to get our food and find our most-desirable accommodations. We have legs; where are a nation-state’s lower appendages? Countries are limited to the resources within their borders, particularly if deep domestic pockets don’t exist or choose not to buy them from foreign sources. What is one to do if one doesn’t have liquid fuel bubbling out of the ground to use and sell, or arable land on which to reap the advantages of commercial irrigation and feed its peoples? The “I Want It, It’s Mine” game has drawn up the world map, via imperial powers, into largely arbitrary and imaginary international borders that nonetheless determine naturally-endowed allocations of Natural Elements.
Until matter replicators come online, the only other means of accessing resources, including basic ones like water, are purchase and trade (and theft, unfortunately), all processes which companies engage in around the world to reap capitalistic benefit. As resource-stress grows with populations and economic development around the world, opportunities for profitable investment are constantly sprouting up to accommodate market evolutions. Now, while you take the time to silently, internally debate the ethics of potentially profiting from investments in a company that develops and distributes life-saving water desalination technology, we’ll call everyone else’s attention to [MAR.24 Squad Asset #3], who is doing exactly that.
Countries are also stuck with the neighbors they’ve got, whether they get along with them or not. And relationships are complicated; look at the Russia-PRC or the US-Mexico “ships” which have grown incredibly complex over the past century. Economic ties (and profits!) therein continue to grow, while social and migration concerns populate all sides of new issues as they arise. This is classic geopolitics, and nothing new. As the capital flows grow, though, power dynamics shift. Catastrophic failure will come to such a relationship when neither party succeeds in communicating and receiving from the other a sharable vision of peace for the future, whatever that means to each of them. Many contrasting eventualities are possible at this point. Like we said: classic. But no matter the outcome, as long as modern human society continues to exist, countries will continue to be stuck where they are, and we can’t deny that there will be ongoing demand for basic resource-based services such as those provided by [MAR.24 Squad Asset #3] and [MAR.24 Squad Asset #4].
Final Thoughts on Statecraft-opoly
The geopolitical game is a veritable bed of Procrustes in modern society: it never ceases or stops; everyone has to play; and if you don’t fit within the system, you’ll be stretched or shortened by the powers that be to fit the “bed”. As all states are collections of humans who embody and promulgate competition itself, all states thereby participate in statecraft, and participation is necessary, ongoing, and consequential. Levers of the system are pullable via the processes of capitalism, and everyone’s “hand” is stacked unevenly with different amounts and compositions of resources, so no, it’s not “fair” by any stretch of the imagination. Nonetheless, quitting the practice of statecraft is abdication of the throne (surely to be picked up by another player-state representation of power in the geopolitical game,) and there is nowhere else to go except other spaces on the gameboard (i.e., planet Earth).
Is it difficult? Yes.
Do most administrations do it poorly? Yes.
Does it produce undesirable outcomes for citizens of all stripes? Yes, frequently.
…But is it profitable…?
…If it weren’t, what exactly would you say you’re doing right now? Why are you reading this?
Additional Notes
An exciting presidential election in Indonesia has resulted in a convincing victory for Defense Minister and former army general Prabowo Subianto, whose running mate is outgoing president Joko Widodo’s son. Some controversy swirls around Prabowo’s history in the military in the last years of the former dictator Suharto’s regime, as well as obvious claims of nepotism/dynastic control, but Washington seems to be playing its cards as though the upcoming five-year term will be a cooperative extension of Widodo’s modernization agenda, which Prabowo used as his campaign platform to great success.
Though Indonesia is the largest country in Southeast Asia and the world’s third-largest democracy, it is still very new to its current form of politics as military rule in the nation didn’t end until 1998, so much remains untested. Measured against other tans-Pacific voting states, electoral democracy in Indonesia is the new kid on the block4, younger even than it is in Japan, South Korea, Taiwan, or Mexico, all of which have experienced democratic revolution within the past hundred years. The world will surely be watching how Prabowo manages political dissent and human rights during his tenure, but for the time being, Asia-watchers and global investors are largely recognizing the election is a democratic success and a win for economic progress in the region.
By contrast, Vietnam has just experienced its second presidential resignation in two years, and supposedly much less clarity about its stability in the near future. We should be clear, though, about an important distinction between the two SEA neighbors of Indonesia and Vietnam. Unlike in democracies, now-former president Võ Văn Thưởng was not the single most significant person in the Vietnamese government; that distinction goes to the General Secretary of the Communist Party of Vietnam. Further, it was for violating Communist Party regulations that Võ Văn Thưởng has resigned. Investors are right to be skeptical of potential market evolutions in general, but this resignation is not uncharacteristic in this environment, and certainly does not necessarily indicate a new level of economic fragility. Citizens of democracy who find this type of behavior disconcerting or confusing may not be overly familiar with how political dynamics in one-party states differ from those in democracies. Turn to the example of president Xi Jinping of the PRC for an ongoing demonstration of how manipulating a socialist version of “rules-based” policy can be implemented effectively in a Communist state. No, it’s not universal suffrage; but it can still “work” in that it can provide steady quality of life increases to its peoples.
- Even greater economic benefits have flowed to the less developed states of Laos, Cambodia and Myanmar, though these are of less significance to us as the latter economies have yet to develop independent and robust public markets accessible to investors. ↩︎
- Let us not forget the fine print of the fine print: the maintenance of the old guard power structure that’s implicitly reinforced through the litany of textual agreements. What do you expect will be the will-to-power outcome of following rules written by the hegemon? ↩︎
- Okay, some island nations are trying to relocate, due to, obviously, sea-level rise. But it would appear that the popular interpretation of the term conflates the idea of “country” with a sense of place-ness, which is particular and unique to where it is located and what physically constitutes it. ↩︎
- To be fair, Indonesia is already a much “better” democracy than the US; with a far smaller population, they were still able to turn out ~200 million voters in the recent presidential election; that’s ~45 million more than the US electorate was able to muster in 2022! ↩︎
tkscm, limited 