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Comment by tcbawo | Hacker News Reader

Do you think GDP is the critical factor for determining a global reserve currency? IMO, respect for property ownership rights, legal/judicial recourse, ubiquity of US banks, and political stability are large contributing factors that few other countries can compete with. China has a pretty checkered past regarding ownership rights for citizens who are critical of its leadership.

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Property rights and such are secondary. The primary issue is: who has the power? Right now the answer to that question is "US", but since China is catching up on GDP, and, unlike US, actually manufactures things. If China decides that they want payments for all the goods that they export to be in RMB then there's nothing the rest of the world can do about it, except stop all the imports from China (which would take decades, because they have to learn to manufacture all those goods themselves). Once most of your imports come from China instead of the US it does make sense to use Chinese currency as the reserve currency, since you are going to need a lot of RMB to pay for your imports anyway.

Saudi Arabia (to pick a major oil exporter) imports about 20% of its goods from China. But it also imports vastly more from regional partners and the US and Europe, not to mention that it depends on the US to secure all of its oil exports to China across thousands of miles of vulnerable ocean routes.

China can't tank imports until they finish pivoting to their own internal, consumptive middle class. And probably not even then.

The plan the international community hoped for is actually somewhat working, the timeline for China's giant population to metabolize it was just wrong.

Large Chinese middle class = power = political risk to disrupting the economy = incentive not to rock the international trade boat's status quo.

The CCP is already seeing with the anger over zero-COVID that {middle class life} >> {good of the Party} for most of the population.

Unfortunately, China probably also learned from the USSR that the entire charade only collapses when you blink and refrain from using the military to crush civilian dissent. Which doesn't bode well for Chinese citizens...

>"Unfortunately, China probably also learned from the USSR that the entire charade only collapses when you blink and refrain from using the military to crush civilian dissent."

Baloney. USSR did not crush because of "civilian dissent". All the changes were driven from the top.

The Berlin Wall fell because the East German authorities and the USSR declined to shoot civilians.

And the fact that order wasn't given was mostly due to bureaucratic ineptitude and delay, rather than intent. https://en.m.wikipedia.org/wiki/Fall_of_the_Berlin_Wall#Crow...

It could have easily been Hungary 1956, Czechoslovakia 1968, Georgia 1989 instead.

Progress trends towards freedom, but it can walk over a lot of corpses on its way there. :(

Berlin Wall did not cause the collapse of the USSR, it was one of the results of generally declining empire and change of it policies that again came from the top. Gorby and Reagan had decided to be "friends"

I suspect it's a prerequisite, though perhaps not the only one.

I also suspect that political stability is more likely to favour China than the USA over the next few decades — it is very human for success to be followed by the assumption of indefatigability and that to be followed by fighting over who leads the nation, rather than continuing to focus on what actually made a nation dominant and how to keep it that way. The UK lost its literal empire that way; the Soviet Union took 50 years to go from agrarian to space, but by the end they had become at least as out of touch with their own people as the last Tsar had been; I think the US may lose its metaphorical empire similarly to the UK's actual empire, though the group deciding to call itself "The Tea Party" at least implies the possibility of it failing, with analogy to the USSR, in the same way it was formed.

The US may have backslid a bit, but it still leads the world in property ownership rights and fairness of the legal system. When a foreign corporation takes a domestic corporation to court, which jurisdiction will they get the fairest shake? What happens to billionaires when they speak critically of the Chinese government? Despite claims to the contrary, freedom of speech and rights of the property ownership are still vigilantly protected in the US.

Certainly; this is a hypothetical about a future where both China improves and the USA continues downhill. But even then, don't image a static world, imagine the difference (on the world stage, not in absolute terms) between the UK in 1922 and 1950, and assume the USA might fall proportionally as far by 2050. Or the growth of the Soviet Union in the same period, and apply that to China by 2050.

>the Soviet Union took 50 years to go from agrarian to space

That's a naive view of russia. Up to this day, one of the main tasks of russian army - as previously soviet - is potato harvest.

I can certainly believe they're like that today, given how inept they obviously are in every aspect of the Ukraine war. So much so, I will take that at face value without even bothering to google it even though it would've seemed like a surprising and unbelievable claim this time last year.

That doesn't mean they didn't go to space, nor does it mean they didn't industrialise, nor does it mean they weren't a significant word power and viable threat to the USA during the Cold War.

Agreed. It's also important to look at context of all of those achievements.

For example, industrialization was greatly driven by foreign engineers and companies.

Like, one of the most important figures in pre-WW2 industrialization.

https://en.wikipedia.org/wiki/Albert_Kahn_(architect)

That continued after WW2. Russia was dependant on western trucks, a lot of which they gained via Land-Lease. So, they literally bought truck factory from the western companies - Kamaz - that they obviously branded as their great achievement.

Production: https://pbs.twimg.com/media/FVI8MeOWAAEBhMB?format=jpg&name=...

Receipts: https://pbs.twimg.com/media/FVI8lAGWUAA37eD?format=jpg&name=... https://pbs.twimg.com/media/FVI8l9eXwAEvMKM?format=jpg&name=...

This was the same for every industrialising country save Great Britain and a handful of others though.

The UK lost its literal empire because of the costs of two wars that devastated the continent - not domestic politics. On the other hand, the PRC is turning back on itself. It has been unable to produce a successor to Xi - making it very hard to change direction. Under Xi, it has actively cultivated hostility against itself and only manages to exercise influence others through force. It also has much less stable demographics. It is not reasonable to expect China to collapse and it would be fearful if they did, but they are likely to have a much less stable period ahead as they come to terms with their situation.

As for the US, they're not alone in this but they are now in a situation where younger voters with a longer time horizon are able to win majorities against older voters with shorter time horizons. This means they're entering into a period of creativity. It is not clear what the outcome will be. But it is clear that we cannot take for granted that pursuit of an unreformed ideology will distract them from the compromise and teamwork that brought them to strength.

In both cases, I think you're extrapolating from recent politics. But both countries are in different turns of the demographic wheel, and have different ways of dealing with that. Democracy also tends to make turmoil more obvious to external observers, so it's easy to accidentally compare apples to oranges when you're looking at a democracy and an autocracy.

> The UK lost its literal empire because of the costs of two wars that devastated the continent - not domestic politics.

That’s the story the British like to tell themselves.

I don’t think it fits the counterexample that Germany was able to rebuild itself enough after the first to be a world-scale threat by the second (and might have won the second in the alternative timeline where they had not been so anti-communist to attempt to conquer the USSR before the UK, and possibly also in the hypothetical alternative timeline if they had not been anti-Semitic — even before all the horrors of Holocaust became known, they were bad enough to make a significant number of Jewish scientists run away, in particular the ones went to the USA and helped with the Manhattan Project); and again after WW2 and being divided by the Allies, that Germany went from having their industrial base punitively dismantled in 1949 to The Times referring to the its reconstruction as a Wirtschaftswunder by 1959. (Yes I do know they got help, but it’s important to also know why the UK didn’t get that help, and I think part of that is the USA while part is internal domestic UK politics).

It also doesn’t fit that the observation that empire, which was worldwide, had been bringing riches to the UK before the war. One thing that might have changed the cost/benefit ratios was all the locals finally getting their hands on sufficient firearms to make it expensive to suppress independence movements. Given what else the British government was busy doing with local industrial policy at that point, and the honours granted to those directly involved in war crimes during the Mau Mau uprising, I don’t think they were that self-aware. (Could also be that the USA was putting pressure on the old powers to drop their imperialism, but I don’t feel confident about the dynamic there given British cultural attitudes to the USA vary from it being “one of us, even if they don’t realise it” (no, I don’t get it either, but I’ve seen it) to “if they say jump, we ask how high”).

It also doesn’t fit that the Commonwealth’s GDP is now about $11 trillion, about 3 times the UK itself; although I would regard the end of Imperialism as a morally good thing and correct all by itself, I don’t think “money” is a reasonable justification for giving up on that potential. Morally, sure. Politically, it is “gave up an empire to gain a continent… hang on, why isn’t the continent doing what we say? That must mean they are dictating to us!”

Your argument leaves aside the fact that Germany lost the second world war and was absolutely devastated by it, and that a lot of their military power in that war came about at the expense of their citizens. It's also way too narrow: the resources the UK devoted to controlling its empire, couldn't be devoted to holding Germany down. The UK was never the sort of monopolar superpower that the US was 1989-2008 (the US very much learnt from the UK's more primitive form of partial dominance).

Moreover, even if any of your claims are true, it still doesn't show that they collapsed due to domestic politics. If they didn't have a goal of maintaining their global empire - and you seem to argue that they didn't - then it's not domestic politics but rather public opinion that led to the end of the empire. That is to say, it offers no real lessons for a country that wants to remain dominant. Maybe the US wants to leave its empire behind it, but if so you can only learn that if a country wants to leave its empire behind it, then it might succeed. So what? The British example in your presentation doesn't say anything about a country that wants to remain dominant. And it is completely one-sided, failing to account for domestic politics in China, which is in a far far worse situation than the US in terms of being able to gain/retain the (international) support needed for a dominant position.

> Politically, it is “gave up an empire to gain a continent… hang on, why isn’t the continent doing what we say? That must mean they are dictating to us!”

This is chronologically wrong. The British had already lost almost every bit of their empire, and certainly their imperial standing, before they tried to join the EEC. It cannot be maintained by anyone with even a milligram of dedication to the truth that they "gave up an empire to gain a continent". It's true that the price they had to join the EEC was to end the imperial preference, but they were poor, the sick man of Europe, and their ability to conduct internal imperial trade was dependent on the United States. Even their very best colonies in Australia and New Zealand, although still dependent on imperial trade, had turned and saw their future as key allies of the US - not dominions of the British Empire.

So while it might be the case that more lately, some British politicians have sought to build domestic support by lying to their constituents and claiming they "gave up an empire to gain a continent" only to be surprised that it was a partnership, they didn't lose their empire to join the EU/EEC. Your false-quote has resonance in the context of the Brexit debate, but it has no meaning in the original circumstance.

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