The nation that complacently and fearfully allows its artists and writers to become suspected rather than respected is no longer regarded as a nation possessed with humor or depth.

This phrase means that when a country vilifies the people who create art and literature, like artists and writers, other countries will no longer view them as a nation that is funny, interesting, or intellectually deep. Instead, they will think that the nation is not a place of creativity, intelligence, and compassion. It means that if a nation silences its creative voices, then it will no longer be viewed in a positive light as a funny and intelligent place.