Stuck in the middle of U

It’s good to see that the ‘Option J’ paper Ben Schreer and I wrote is generating responses. Hugh White and Sam Bateman raise concerns about a closer relationship with Japan: both of them argue that it’s possible to get too close to Japan in a security sense, leading to unwanted outcomes, and that a submarine deal would do that. Both of them think there’s more in a sub deal for Japan than for Australia. And both argue—Sam explicitly and Hugh implicitly—that we should be less active in trying to maintain a liberal democratic order in the Asia–Pacific.

We’ll concede one point: of course it’s possible for two countries to get too closely entangled, where one is inexorably drawn into the other’s bad judgement and misadventure. (WW1 comes to mind.) But it’s also possible to do too little, and the notion of an ‘inverted U curve’, is a useful tool for this discussion. Basically, it’s a model of phenomena in which both small and large values of an input parameter produces low outputs, but intermediate inputs produce a larger effect. Think about a therapeutic drug: at low doses it won’t have much effect at all but at high doses it’ll do more harm than good, or even be fatal. In between there’s a dosage that produces the best clinical outcomes. Here’s a schematic:

Inverted U curves also appear in economic theory and other applications—Malcolm Gladwell sees them at work in school class sizes.

Applied to the Australia–Japan relationship, the ‘low dose’ part of the curve corresponds to the two countries doing little or nothing together in security terms, so missing out on benefits to be had by combining resources to meet common security threats. The ‘high dose’ regime is what Sam and Hugh worry about—getting in so deep that we’d be forced to follow when Japan pursues its interests even if the outcomes for us are worse. By ‘worse’, they mean getting embroiled in Sino-Japanese competition to our detriment, in a world where China is economically and militarily more powerful than today and the US less so.

As we said in our paper, we don’t buy that. We argue that we’re still on the upswing of the curve, and that a deeper security relationship will take us to a better, not worse, place. (A to B in the figure below.) That conclusion’s based on two key judgements. First, that China’s leverage over Australia is much weaker than is commonly supposed. Second, that it’s too early to give up on the order that has provided security and prosperity for the entire region—China included. We thoroughly explain the point about Chinese leverage in the paper.

But even if those judgments are wrong—i.e. if China does hold significant coercive power over Australia and the liberal democratic order much valued by Australia and Japan is doomed by the rise of China—we’re still not convinced that throwing up our hands and letting concerns about Chinese reactions effectively dictate Australia’s security policy is the right approach. That’s what we think the practical effect of Sam’s prescribed ‘even-handed neutrality’ would be—even if Australia could affect neutrality given its long and dearly held alliance with the US.

Simply put, if we let China dictate the regional order, we’ll get what China wants, and it’s unlikely to be what we want. Even with American power in relative decline it’s still formidable, especially when reinforced by like-minded allies. The downside risk is an escalation of tension, perhaps to the point of war. That’s a risk that certainly has to be taken into account, and the outcome could be dire, though a mitigating factor is that American military power is backed up by nuclear weapons, which should put a brake on most adventurism.

The democratic states mightn’t call all the shots any more (and shouldn’t) but we’d certainly still have a vote. The resulting compromise is more likely to be acceptable if we negotiate with resolve from a position of solidarity. The future will probably have features we’d prefer not to have, but we should try to minimise those. Giving up now and eschewing partners like Japan could take us down into the left-hand part of the curve to a bad outcome.

Finally, Hugh and Sam argue that there’s more in Option J for Japan than Australia. That’s probably true, because Japan’s circumstances are more fraught than ours. But that actually strengthens our argument, because it means that there’s little incentive for Japan to withdraw support for Australia’s subs. We’re never going to be on the other side of a Sino-Japan conflict—at worst we’ll be bystanders—but we’ll always be potential partners, so why would Japan choose to undercut us? Like China, but for different reasons, Japan has little leverage over Australia.