Ian Bremmer

This is an excerpt from Every Nation for Itself: Winners and Losers in a G-Zero World, published this week by Portfolio.

Is the U.S. really in decline? Can China become a superpower? Can Europe rebuild? How fast can the rest rise? These are interesting issues, but today’s world faces a more urgent and important question: While we’re figuring all that out, who will lead? Unfortunately, the answer is no one. In this G-Zero era, no one is driving the bus.

The United States and its European allies can no longer drive the global political and economic agenda. The scramble to produce a coordinated and effective multinational response to the 2008 financial crisis made that clear, but the growing leverage of emerging states like China, India, Brazil, Russia and others was apparent years before U.S. financial institutions began melting down and the Eurozone descended into crisis.

Yes, America remains the most powerful and influential country on Earth – and will for the foreseeable future. Its economy is still the world’s largest. No single nation can compete with its cultural influence, and only America can project military power in every region. But in coming years mounting federal debt and the domestic political attention now focused on this issue will force the architects of U.S. foreign policy to become more sensitive to costs and risks when making potentially expensive strategic choices.

At home, it will be harder for presidents to persuade taxpayers and lawmakers that bolstering the stability of countries like Iraq or Afghanistan is worth a bloody, costly fight. That means decoupling support for a “strong military,” an always popular position, from security guarantees for countries that no longer meet a narrowing definition of vital U.S. interests. Abroad, questions will arise about America’s commitment to the security of particular regions, encouraging local players to test U.S. resolve and to exploit any weakness they think they’ve found. Few want a global policeman, but some will have second thoughts when they realize they lack protection against a neighborhood bully.

Yet, other countries aren’t exactly lining up to fill this vacuum. The ongoing battle to bolster the Eurozone will discourage European leaders from searching abroad for new ways to extend the influence of their governments, and leading developing states have too many challenges at home and foreign-policy plans for their immediate neighborhoods to embrace the risks and burdens that come with a larger share of global leadership. China’s leaders, in particular, already have their hands full. They have already acknowledged that their country’s growth model is “unstable, unbalanced, uncoordinated and unsustainable,” and they know that their ability to guide the country through the next stage of its development is far from certain. India, Brazil, and Turkey can continue to grow for the next ten years with the same basic formula that triggered growth during the past ten. The United States, Europe, and Japan can reinvest in economic systems that have a long history of success. But China must undertake enormously complex and ambitious political and economic reforms if it is to continue its drive to become a modern, middle-class power.

China faces the added complication that today’s international environment is fast becoming less friendly to China’s expansion. Higher prices for the oil, gas, metals and minerals needed to fuel China’s expansion will weigh on growth. The rise of other emerging powers will add to the upward pressure on food and other commodity prices, undermining public confidence in government, the most important source of China’s social stability. In addition, as state-backed Chinese companies draw their government into the political and economic lives of so many other countries, they face the same backlash from local companies and workers that plagues so many other foreign firms doing business far from home. And because the Chinese government has such a direct stake in the success of these companies, Beijing will be drawn into conflicts it has never coped with before.

We can’t know what the future holds for the United States, China, or any of these countries. There are good reasons to bet on U.S. resilience, but that will depend on the ability and willingness of American leaders to rebuild the country’s strength from within. Europe has advantages that will reinforce the strength of its markets, and for all Japan’s problems, it is still the world’s third-largest economy. Most emerging powers will continue to emerge, but some will have more staying power than others.

G-Zero

We now live in a world without global leadership. The need to prevent conflict, grow the global economy, manage growing demand for energy, implement far-sighted trade and investment policies, and counter transnational risks to public health demands leaders who are willing and able to shoulder burdens and enforce compromise. Leaders have the leverage to coordinate multinational responses. They have the wealth and power to persuade other governments to take actions they wouldn’t otherwise take. They pick up the checks that others can’t afford, and provide services no one else will pay for. There are many countries now strong enough to block international action, but none has the power to remake the status quo.

We can’t expect global institutions to take up the slack. The G7 group of industrialized democracies has become an anachronism, but the expanded G20 doesn’t work either, because there are too many players with too broad a range of interests and values seated around its negotiating table to produce agreement on anything more demanding than high-minded declarations of principle. Deep-pocketed emerging powers can’t decide whether to push for more power within existing institutions like the IMF and World Bank or to try to build new ones.

In short, we are now living with a G-Zero order, one in which no single power or alliance of powers has the muscle, the means and the will to provide the leadership needed to tackle a growing list of transnational threats.

Implications

What does this mean for relations among nations and the future of the global economy? In the world’s hotspots, regions where the United States has long helped to maintain a delicate balance of power, problems are now more likely than at any time since the end of World War II to become crises. For traditional powers, the issues start at home.

U.S. and European elected officials know that voters tend to support costly, extended military commitments only when they believe that vital national interests are at stake. That’s why, from Yugoslavia to Rwanda and Sudan to Syria, they tend to remain on the sidelines for as long as possible. Given the current demand for austerity on both sides of the Atlantic, we are likely to see both a larger number of local conflicts and an even deeper Western reluctance to engage – particularly in the increasingly complicated and volatile Middle East. In years to come, the NATO intervention in Libya will look more like the exception, and the hands-off approach to Syria’s civil war will be the rule.

But conventional conflict is not the only source of trouble. Given the market volatility of the past four years, governments of both established and leading emerging powers are more worried than ever about ensuring they have the means to create jobs and boost growth. That’s why the most important instruments of power and influence in coming years will be economic tools like market access, investment rules, and currency policies. In a variety of ways, governments will slow (in some cases reverse) the free flow of ideas, information, people, money, goods and services that we call globalization.

Expect great power competition in cyberspace as state-supported industrial espionage becomes a more widely used weapon in competition for natural resources and market share. Some authoritarian emerging players will find new ways to reestablish state control over information and communication, both across and within borders. Add the shared problem of climate change, the risk of food price shocks, threats to public health and other transnational worries, and the world will lack leadership just at the moment it needs it most.

Winners and Losers

This state of affairs won’t be bad news for everyone, because the G-Zero will produce its share of winners as well as losers. Over the past 30 years, those states that best adapted to the processes of globalization thrived, but in an international order in which no single country can afford to lead, those who still operate as if borders are opening, barriers are falling, and the world is becoming a single market will find themselves reacting to events they don’t understand. In years to come, governments that can build profitable commercial and security relationships with multiple partners without becoming overly reliant on any one of them will weather storms more effectively than those that cannot or will not.

For example, Brazil has built solid political ties and lucrative economic relations with the United States, China and a growing number of other emerging market countries. Its economy continues to enjoy access to U.S. consumers, but ties with China, now its largest trade partner, ensure that it isn’t overly dependent on U.S. purchasing power for growth. A serious downturn in the U.S. will still take a heavy toll on Mexico. That’s less true for Brazil, which emerged from the 2008 financial crisis and 2009 U.S. recession with much less damage than many other U.S. trade partners. A set of countries as diverse as Turkey, Vietnam, Canada, and Kazakhstan are actively developing this strategy to suit their own circumstances.

This G-Zero era of transition will pose a unique set of challenges for U.S. policymakers. America will have to learn to do something it doesn’t do very well these days: Invest in the future. In a country where political leaders focus so much of their energies on winning the next news cycle, and business leaders privilege quarterly profits at the expense of long-term reinvestment, Americans need to look beyond the horizon. Anyone who believes that American decline is inevitable has chosen to ignore the entire history of the United States and its people. For the time being, Washington can’t lead as it did during the second half of the 20th century. The balance of political and economic power has changed profoundly since 1945 – even since 1990.

But the G-Zero cannot last indefinitely, because tomorrow’s most important powers, whoever they turn out to be, won’t be able to allow it to continue. They will have to put out the fires that have begun to spread across borders. If Americans can rebuild for the future, the country’s underlying strengths – its hard power capacities and its democratic, entrepreneurial values – will ensure that U.S. leadership can again prove indispensable for international security and prosperity. The capacity to lead in a post-G-Zero world should guide both America’s foreign and domestic policies in years to come.

A generation ago, the United States, Europe and Japan were the world’s powerhouses. Now, according to Eurasia Group’s Ian Bremmer, we’re living in a world where everyone – and anyone – can set the agenda. So, what does G-Zero mean for the world?

It’s often said that kinship runs deeper than friendship. Lately, when it comes to chumminess among world leaders and their colleagues in neighboring countries, friendship has trumped citizenship.

Until recently, it was rare to find leaders willing to forge friendships with candidates across borders or to find would-be leaders campaigning inside foreign countries. There are good reasons for that: Candidates who cross these lines can find it harder to win elections or to govern once the electoral test is passed. Their foreign friends can pay a price for backing the wrong horse and for forfeiting a bit of diplomatic leverage once they find themselves sitting across the bargaining table from the man or woman they campaigned against. Consider three current examples.

Angela Merkel and Nicolas Sarkozy

German Chancellor Angela Merkel’s support for the re-election bid of French President Nicolas Sarkozy is especially startling. It’s hardly surprising that Merkel wants Sarkozy to win. The two leaders have forged a durable personal relationship as they navigated their way through Europe’s ongoing crisis of confidence. The French and German leaders deserve considerable praise for their well-coordinated bid to bolster the euro zone.

But for Merkel, there’s a big difference between privately willing Sarkozy on and campaigning at his side across France – particularly at a time when Sarkozy trails Socialist Party challenger François Hollande significantly in opinion polls. Given the populist mood in France, Merkel’s stated reasons for supporting Sarkozy – that he is a conservative candidate whose party is philosophically aligned with her own Christian Democratic Union – sounds less like a boost for his campaign than a nail in his coffin.

And in the end, Merkel will have important work to do with France’s next president, whoever that turns out to be.

Benjamin Netanyahu and Mitt Romney (and Barack Obama)

When you run for president of the United States, you have to say some pretty unrealistic things to get elected. Mitt Romney, for instance, recently singled out Russia as America’s top geopolitical foe and said he would be tougher on Iran than Obama has been. On social and economic issues, Romney has already begun tacking toward the center as the likely GOP nominee, and if he wins in November, the demands of his new job will force him back toward conventional positions on foreign affairs.

But Romney may have an unusual number of knots to untie on Israel and the Middle East, in part because of his special, longtime friendship with Israeli Prime Minister Benjamin Netanyahu. Mitt and Bibi go back almost 30 years, when they met at a Boston consulting firm where both worked. They have kept up the friendship over the years, and therein lies the problem. Just as candidate Romney attacks Obama for being soft on Iran, Israel’s Netanyahu is begging for U.S. support for a pre-emptive strike on Iran’s nuclear facilities.

The two men agree entirely on Iran and the threats it poses – at least while Romney is on the campaign trail rather than in the Oval Office. But if Romney wins, could his relationship with Bibi cloud his judgment on Iran? And if Romney loses – what happens to Netanyahu’s already frosty relationship with President Obama?

Barack Obama and Dmitry Medvedev

Of course, Obama has a bromance of his own. In March, Russia’s presidential election drew allegations of voter fraud both at home and abroad as the country’s top two politicians switched jobs – again. Yet the U.S. president has offered little criticism of President (soon-to-be Prime Minister) Dmitry Medvedev and has even indicated a preference for working with him over his partner and puppet master, Vladimir Putin. Former President George W. Bush once claimed to have “a sense of [Putin’s] soul,” but Russia’s once-and-future president is no great fan of the United States and gets plenty of political mileage out of attacking U.S. foreign policy. Why, then, would Obama try to build a friendship with the only man with whom Putin must share the spotlight, a man with little real leverage in Russia’s elite politics? Even as Secretary of State Clinton is challenging Putin on human rights, her boss is using Dmitry to “transmit” messages to Vladimir.

The job of head of state is tough enough, and the various international crises of the past four years have done nothing to make it easier. Yes, world leaders can feel a kinship that comes with membership in an elite and demanding club, but some of their friendships aren’t doing them – or their constituents – any favors.

This essay is based on a transcribed interview with Bremmer.

PHOTO: A carnival float with papier-mâché depicting German Chancellor Angela Merkel and French President Nicolas Sarkozy (L), at the traditional Rose Monday carnival parade in Düsseldorf, Germany, February 20, 2012. REUTERS/Ina Fassbender

Egypt’s Muslim Brotherhood is well organized and popular. Its Freedom and Justice Party easily won a plurality of seats in the first post-Hosni Mubarak parliamentary elections, and the party is set to remain a dominant force in Egyptian politics for the foreseeable future. Important party members are touring Western capitals, including London and Washington, on a charm offensive.

The Brotherhood’s Islamist origins and ideology have caused much hand-wringing in the U.S. about the group’s commitment to democracy and liberalism. But the short-term risk of the Brotherhood’s rule for the U.S. isn’t its religious beliefs, which are not out of step with those of most Egyptians and which their need to maintain international reputability is likely to moderate. Rather, it’s the group’s political incompetence.

Foreign media are no longer enamored with revolutionary Egypt, but this is the most critical period in its transition since Hosni Mubarak’s ouster in February 2011, with the process of writing a new constitution and conducting a presidential campaign happening simultaneously. On both fronts the Muslim Brotherhood, already in a tense and fraying accord with the ruling Supreme Council of the Armed Forces (SCAF), has shown an alarming political tone-deafness.

Yet the main risk of increasing Brotherhood-SCAF tensions is not, as commonly portrayed in the U.S., sustained military rule. Rather, the tensions belie a much tougher challenge: an Egypt in which the only power centers are the Brotherhood and/or SCAF, with all other groups alienated or disempowered. This is a negative outcome for both U.S. foreign policy and Egyptian stability – but it looks increasingly probable.

Back when SCAF and the Brotherhood were playing nice, Egypt’s military leaders decided that parliament – which the Brotherhood dominates – would elect a 100-member constituent assembly to write the document. All political parties and most political forces in Egypt, the Brotherhood and liberal groups included, could agree on more or less the same thing: a semi-presidential system, a compromise on the role of the military and Sharia as a principal source of legislation.

The  Brotherhood-led, Islamist-dominated parliament could easily have crafted an assembly with only 30 or so Islamists, ceding the remaining seats to Coptic Christians, women, liberals, civil society activists and legal experts, and still have gotten the constitution it wanted. And by including a broader array of forces in shaping Egypt’s post-revolutionary political bedrock, the Brotherhood would have garnered increased trust and credibility from its opponents.

Instead, the Brotherhood clumsily overplayed its hand. In a move guided as much by historical insecurity as newfound power, the group’s leadership created a constituent assembly list dominated by Islamists, alienating Egypt’s non-Islamist political class – the Brotherhood’s natural ally against SCAF. In response, most of the non-Islamists on the list, dejected and no longer feeling they had a stake in the political process, announced their withdrawal from the assembly.

Rather than moderating its approach, however, the Brothers doubled down. Exactly a week after the constituent assembly debacle, the Brotherhood announced it was reneging on its promise not to field a presidential candidate. The Brothers originally made the guarantee – repeated countless times over the past year – to assuage domestic and foreign concerns that they sought to monopolize politics in much the same way Mubarak’s National Democratic Party had. The backtracking announcement immediately raised hackles within military circles and unsettled Egypt’s already wary non-Islamist groups.

While the relationship between SCAF and the Brotherhood has not collapsed completely, it is clear that the political accord between the two, which sustained stability for much of the past year, is unraveling. Had the Brotherhood not tried to pack the constituent assembly with allies and extremist Salafis, non-Islamist political forces would have rallied to the Brotherhood’s side on the presidential question. (In fact, a court in Egypt today ordered the constituent assembly disbanded.) But now many non-Islamists mistrust the Brotherhood as much as SCAF. And this poses a significant challenge for the U.S.

Throughout Egypt’s difficult transition, the U.S. has sought to encourage reform while maintaining its distance, wary of sabotaging the process by fueling a nationalist backlash. And though the U.S. has not been entirely comfortable with some of SCAF’s moves, it recognized that Egypt was heading in fits and starts toward a civilian-based regime, even if the road was bumpy. Likewise, the Brotherhood’s success did not especially unsettle the U.S., as the group’s leaders appeared committed to assuming power only as part of a broad coalition – an outcome with which the U.S. could live.

Now, however, the U.S. faces two alternatives, equally unappealing and dangerous. Some Egyptians on the fence would now have no problem if the military staged a coup – the logic being that a military dictatorship you know is safer than an unpredictable Islamist dictatorship you don’t. With the U.S. already struggling to regain stature in the Middle East in the wake of the Arab Spring, supporting a new authoritarian regime in Egypt would do incalculable damage.

Yet a government over which the Brotherhood effectively has a monopoly and that may be emboldened to pursue Islamist goals and reconfigure regional geopolitics, is equally unpalatable. The U.S. would be forced to work with a regime to which it is ideologically opposed, while marginalizing the very political forces in Egypt (liberals, youth, women, Islamist youth and civil society activists) whose uprising last year ultimately led the U.S. to cease its support for longtime ally Hosni Mubarak.

In either outcome, the U.S. finds itself stuck. And that’s not good – not for the U.S., not for the Muslim Brotherhood and, most of all, not for the Egyptian people.

PHOTO: Supporters of presidential candidate from the Muslim Brotherhood and the Freedom and Justice Party (FJP), Khairat al-Shater (C), try to embrace him, as he presents recommendation documents to the Higher Presidential Elections Commission (HPEC) headquarters in Cairo April 5, 2012. Al-Shater was cheered by supporters on Thursday when he registered to run in an election where his main rivals will be other Islamists and candidates who served under the ousted president, Hosni Mubarak. REUTERS/Asmaa Waguih

We can’t afford to throw him out.

Last week, likely GOP presidential nominee Mitt Romney caused a tempest in a teapot when he told CNN that he thought the top U.S. geopolitical foe is Russia. President Obama’s White House seized on the comment, rebutting that al Qaeda is actually our top foe abroad. But if we look at the way American foreign policy has been enacted since the beginnings of the global crisis, it’s clear that America’s biggest opponent on the world stage is really itself.

Take what’s going on in Syria as the most recent example. That country’s leader, Bashar al-Assad, continues to tease the world’s diplomats by claiming to want peace for his people, yet he cracks down with unfettered abandon on their protests against his oppressive regime. Having just agreed to yet another peace plan, a troop withdrawal by Apr. 10, it’s clear he’ll find some way around his latest bargain, as he always has. What’s even more shocking is that the peace deal, negotiated by Kofi Annan, did not even call for Assad to leave power, which to outside eyes seems like a precondition for any sort of success. And the absence of the demand that Assad go is squarely due to the U.S.’s refusal to back it up with the sort of severe consequences it used to dole out: military strikes, preemptive wars and overwhelming use of force. For the U.S., at least for now, those days are over. And Washington won’t make foreign policy promises it can’t or doesn’t intend to keep.

After all, consider the fall of Gaddafi in Libya. Here was a decades-long enemy of the U.S. whose people rose up against him in a huge insurgency. His people lived in a backward state while he enriched himself with billions of stolen dollars. To borrow a phrase, the case for his deposal was a slam-dunk. Yet even this most climactic act of the Arab Spring did not draw out a single ground-troop commitment from the Obama administration. The U.S., in fact, only ran about 10 percent of the total NATO bombing runs over Libya – not exactly the type of campaign the U.S. military is used to making against brutal dictators with bad reputations who antagonize it.

So what’s changed? Well, first it’s worth noting that while Libya was a lost cause, Syria has been a pawn in a larger proxy war in the Middle East being fought in the U.N. Security Council chambers, with Russia and China blocking every U.S. move to force Assad out. Second, even though the Gulf Coordinating Council is eager for U.S. help in Syria (and with containing Iran, and all its other problems), there is obviously fatigue over the amount of blood and treasure that’s been committed to the region by the country over the years, one that Obama is sensitive to. He’s going to support the GCC, but he’s not going to fight its battles unless the American interests in them are great and unmistakable.

But perhaps the real reason the U.S. is not leaping into the breach is because its own house is not yet in order. The U.S. still has high domestic unemployment and a structural debt problem, thanks to years of reduced tax revenue and the prosecution of two expensive wars in Iraq and Afghanistan. Americans are bracing for a summer oil shock that everyone seems to know is coming. All this is what has led us to the world’s present G-Zero condition: The U.S. isn’t in Syria because, among other reasons, it simply can’t afford it. This is a symptom of a leaderless world.

Whether you think America’s habit of leaping into foreign conflicts is good or bad, here’s the reality of how tepid U.S. support of the insurgency in Syria will play out: Assad will find a way to keep military control over Syria, even as his support from other leaders in the region withers. (Former ally Turkey, for example, has turned strongly against Assad’s government.) Meanwhile, Syrian citizens will continue to push for a popular uprising, which will lead to more violence in the streets. But without U.S. backing, neither Saudia Arabia nor Turkey – nor any other country in the Middle East that wants to see Assad gone – will dare go in alone. We’re reaching the limit, in other words, of kicking this particular can down the road. The stalling won’t work, the humanitarian crisis will get worse, and by the end of the year, Assad will most likely still be in power, and many more people in Syria will be dead because of it. The probability of a successful outcome in Syria is falling off a cliff.

The world is looking for the U.S. to get its house in order so that it can pay attention to global affairs again. The Arab League, NATO, the United Nations, and many others are beseeching Washington to play a role. In fact, the U.S. is playing one, but it’s nothing like what it’s been typecast for. To be sure, American diplomats are active, but they are doing things differently than the U.S. has done them in a very long time. We’re never going back to a pre-2008 world, the one where the U.S.’s “cowboy mentality” defined its foreign policy. Whether that change is good or bad – right now it looks like a little of both – the bottom line is the U.S. just can’t afford to be that cowboy.

This essay is based on a transcribed interview with Bremmer.

President Obama’s recent trip to South Korea may have gained attention for his “open mic” slipup with outgoing Russian President Medvedev over missile defense, but that’s just a media distraction from the importance of Obama’s visit to the Korean peninsula. After Kim Jong Il’s death in December, the U.S. took an early lead in negotiations with North Korea – doing so because Obama and his team thought it could be an easy diplomatic win. With the promise of aid and food, the U.S. could let new leader Kim Jong-un quietly drop the consistently belligerent stance the country has taken in what passes for its foreign policy.

It’s now clear that easy win is not going to happen. Despite Kim’s titular status, we still don’t really know who is in charge in North Korea. While there have been no major coups, protests, or blowups, there have been plenty of smaller events, like military executions due to insubordination, that point to a high likelihood of purges happening in the regime. Now factor in that North Korea has gotten decidedly more, rather than less, militant on the nuclear arms front. Its announcement of a satellite test is a thinly veiled attempt to launch a long-range ICBM. The global community is perceiving it as such – with South Korea threatening to shoot the missile down. The vitriol coming out of the North Korean propaganda machine is as hardline and aggressive as we’ve seen in many years.

Several months into the Kim Jong-un regime, there’s little cause for optimism. There’s much cause to be on heightened alert, though, because other than belligerent press releases, the new regime has not shown any ability to deliver on its promises. The South Koreans recently held live-fire exercises on five islands near the disputed Yellow Sea boundary with North Korea; their angry neighbors, despite loudly promising a response, did nothing. As much as we can be glad there was no international incident as a result, it’s not a good sign if the reason the North Koreans didn’t follow through on their threats was that the Kim Jong-un regime was unable to control the military well enough to direct it to do so. The regime change, in other words, has not yet stabilized.

There are two countries right now – China and the United States – that could contain North Korea, which remains among the poorest and most totalitarian countries in the world. China, in the middle of its own transition of power, which has been peaceful but not without intrigue, hardly has the capacity to fully engage on North Korea. Obama has learned that there is no quick win to be had in North Korea – and if he is telling the Russians he doesn’t want to deal with issues surrounding missile bases before the November election, we can imagine he has no desire whatsoever to contend with an entire rogue country, especially one as bizarre as North Korea.

While the U.S. would love China to step up here, that’s not going to happen. As has been said, a good analogy would be that China would sure like it if the U.S. could step up on Iran already. To put it simply, what everyone would most like is for North Korea to stay quiet for much of the next year. That way China can get its transition under way, and Obama and the Republican nominee can talk tough on North Korea without actually having to do anything about it.

The last thing either country’s leadership needs is for anything on the Korean peninsula to escalate in the coming months. It’s a sort of limbo diplomacy, where Obama’s best friend is the boring passage of time that would allow him to push off the North Korean situation onto the Chinese. It’s a good plan – but it’s still early in the year. Will things work out that way? Stay tuned.

This essay is based on a transcribed interview with Bremmer.

PHOTO: U.S. President Barack Obama looks through a pair of binoculars as he visits U.S. military personnel stationed at Observation Post Ouellette along the Demilitarized Zone (DMZ) that borders North and South Korea, March 25, 2012. REUTERS/Larry Downing

The world’s great powers don’t have enough incentive to intervene in Syria, Eurasia Group President Ian Bremmer tells Chrystia Freeland.

Is China’s system of capitalism better than that of the United States? That depends — do pigs fly? While I have no question in my mind that the U.S. is still the paragon of success when it comes to the capitalist system, lately a strange coalition of think-tankers, investors and politicians have been advancing the idea that China is eating our lunch when it comes to deploying capitalism.

More specifically, this bunch claims that China’s unique brand of centrally planned capitalism is working better than the U.S.’s overregulated, bloated, inefficient and slow-growing economy. They say that our capitalism has been so bogged down by our developed-nation cost structure that we’ll never again be a competitive center of investment for the great global pools of money in search of a safe investment out of which to make a parking spot.

Baloney.

China has indeed grown by leaps and bounds over the past decade. That’s a huge credit to a country that has modernized and industrialized on a previously unseen scale. And because of its 1.3 billion citizens, China has quite a bit of growth (read: catching up) still to come. China’s style of governance leaves the country light on regulation. However, it’s also light on rule of law, transparency, freedom of speech and several other key features that make the U.S. economy go ’round. Just because the Chinese government can move a village and build a road without holding a single hearing doesn’t mean the free market has taken hold. Indeed, it shows the opposite: China’s economy is largely state-planned, state-owned and state-run. The government uses capitalism only as a tool to reach its ends, not as a true expression of a free market.

Worse, where the Chinese government compromises the free market, it does so to fulfill its own desires of effective control over the entire country. It’s capitalism of the state, by the state and for the state, where the state is the principal economic actor. That’s in marked contrast to where the U.S. compromises on “pure” capitalism, adding things like the social safety net, worker safety, product safety, health insurance and retirement planning.

While China has a lot more growth to go, there’s another problem with its unique system of capitalism: Its outputs are far more volatile, and far less predictable, than our own. Consider where the Chinese central bank chooses to park its own money — in U.S. Treasuries, perhaps the safest investment that can be made in large enough quantities. If the Chinese could find a better place for their cash reserves, they would surely try it, but they really can’t. And if other Asian countries thought China had it all figured out, why would they all — even the reclusive Myanmar — have warmly welcomed the U.S.’s recently announced plans to solidify its presence in the Asian sphere?

A recent study showed that over 50 percent of Chinese millionaires prefer to live in the United States. Now, let’s assume these millionaires are rational actors: Their desire for a stable living situation, improved economic opportunity and access to capital not controlled by the government brought them here. These are the lucky few who have profited most from China’s economic boom. So if they’re smart, they choose to live in the U.S., giving us a clear sign our country’s system is better. If they’re not that smart, then China’s most successful choose to live in the U.S., and we should question by what form of corruption or perverse reward system they managed to do so well in China!

One of the major problems China has had with its economic model is that at nearly any time, the majority owner of most of its economy — the state — can jump into an enterprise and distort it for its own purposes. It can cook the books, it can pull out profits, it can hide losses, it can launder money and it can even shut down a company altogether. While China does have tech companies that mimic the features of Google, Facebook and Twitter, note that those Western companies haven’t been able to operate in China. What China wants is not an environment where tech revolutionaries can flourish; it wants Chinese, state-run versions of these startups, which means it will never foster the entrepreneurial spirit that makes companies like these possible.

That desire — that seemingly irrepressible urge of the Chinese to copycat everything foreign, from cars to watches to iPhones to social networks, is ultimately why no matter how good the Chinese get at tweaking state capitalism, it will never match up to the promise of a truly free capitalist economy.

Here in the U.S., we don’t know what the next huge industry will be, and that’s great. Silicon Valley could invent another new gadget. Oil sands or fracking could benefit from more extraction breakthroughs. Electric cars or solar panels could jump an order of magnitude in a generation. One of our philanthropic billionaires — Bill Gates, say — could invest in some promising new technology tomorrow. Some other completely unknown idea could erupt from a university or government lab. But whatever the manifestation, our economy holds the promise of such discoveries. Those ideas are where real new pools of capital are created and how a country becomes wealthy. Cranking out iPhones might employ more people, but it’s not the foundation for a new kind of industry or economy we’ll need in the 21st century.

In short, it’s become fashionable to look at the rough stretch of the past few years and wonder if the industriousness and resilience of the American economy is at an end. But look around the world. While one could make a viable argument that some are doing capitalism better than us (look at our neighbors to the north), a state capitalist country like China doesn’t compare. Sure, we’re at a crossroads — but that’s a lot different from being at the end of the road.

America does creative destruction — that mystical economic force of continuous reinvention — as good as any country in the world. Our game-changing innovations go on to change the entire world, again and again. What China has found is that it can shoehorn a crude version of a beautiful financial system into its state-controlled economy and get some good results; it can bite off small pieces of capitalism and enrich itself. But ultimately state capitalism is just a pale imitation of the real thing, where there’s neither the ability nor desire to fall back on totalitarianism when the going gets tough. Like that knockoff iPhone, China’s form of capitalism might look the part, but that’s where the similarities to the world’s still-largest and preeminent capitalist economy — our own — end.

This column is based on Bremmer’s remarks in the recent Intelligence Squared Debate: “China Does Capitalism Better Than America,” held in New York on Mar. 13.

Iran’s nuclear brinkmanship is leaving President Obama with few options: push Iran too hard, and energy prices rise. Do too little, and leave Israel in danger. Eurasia Group President Ian Bremmer explains how the U.S. can contain the Iran threat. Part 2.