In the latest issue of Newsweek, Fareed Zakaria examines what many Americans have recently been wondering: “How Long Will America Lead the World?”
…Americans have replaced Britons atop the world, and we are now worried that history is happening to us. History has arrived in the form of “Three Billion New Capitalists,” as Clyde Prestowitz’s recent book puts it, people from countries like China, India and the former Soviet Union, which all once scorned the global market economy but are now enthusiastic and increasingly sophisticated participants in it. They are poorer, hungrier and in some cases well trained, and will inevitably compete with Americans and America for a slice of the pie. A Goldman Sachs study concludes that by 2045, China will be the largest economy in the world, replacing the United States.
It is not just writers like Prestowitz who are sounding alarms. Jeffrey Immelt, CEO of GE, reflects on the growing competence and cost advantage of countries like China and even Mexico and says, “It’s unclear how many manufacturers will choose to keep their businesses in the United States.” Intel’s Andy Grove is more blunt. “America … [is going] down the tubes,” he says, “and the worst part is nobody knows it. They’re all in denial, patting themselves on the back, as the Titanic heads for the iceberg full speed ahead…” [Link]
I find many parallels between this and the long denied facts surrounding global warming. I saw Gore’s fantastic powerpoint presentation/movie two weekends ago and it struck me how slow to react people can be even when they know they are on the losing side of time. Zakaria goes on to point out the same thing that I mentioned in an earlier post and that Vinod tried to push back on a bit:
The national academies’ report points out that China and India combined graduate 950,000 engineers every year, compared with 70,000 in America; that for the cost of one chemist or engineer in the U.S. a company could hire five chemists in China or 11 engineers in India; that of the 120 $1 billion-plus chemical plants being built around the world one is in the United States and 50 are in China.
There are some who see the decline of science and technology as part of a larger cultural decay. A country that once adhered to a Puritan ethic of delayed gratification has become one that revels in instant pleasures. We’re losing interest in the basics–math, manufacturing, hard work, savings–and becoming a postindustrial society that specializes in consumption and leisure. “More people will graduate in the United States in 2006 with sports-exercise degrees than electrical-engineering degrees,” says Immelt. “So, if we want to be the massage capital of the world, we’re well on our way…” [Link]
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p>Just this morning IBM made a related announcement as reported in the NYTimes:
I.B.M. announced Tuesday that it would triple its investment in India to $6 billion over the next three years — underlining the country’s growing importance as a market for technology products and a source of high-technology workers…“I’m here today to say that I.B.M. is not going to miss this opportunity,” Mr. Palmisano said. “If you are not in India making the right investments and finding and developing the best employees and business partners, then you won’t be able to combine the skills and expertise here with the skills and expertise from around the world, in ways that can help our clients be successful…” [Link]
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p>So is it all doom and gloom? Does America have anything going for it? Zakaria does list a whole host of reasons why America is still on top for the time being. I found one reason particularly interesting. The population of the U.S., unlike many European countries, is growing because of immigration:
The United States is the only industrialized country that will not experience a work-force or population loss in the coming decades, thanks to immigration. Germany and Japan are expected to see their populations drop by 5 and 12 percent, respectively, between now and 2050. China will also face a demographic crunch. By 2040, it will have a larger percentage of elderly people than the United States. The one-child policy has led to something that China’s demographers call the “4-2-1 problem”– four grandparents and two parents will have to be supported by one worker. [Link]
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p>I think (of course I am highly biased) that the coming Space Race with China and India will be a huge boon for America. Historically it has been proven that America is at its best when it rises to meet a challenge.
So what should the United States do? What has it done in the past? First, be scared, be very scared. The United States has a history of worrying that it is losing its edge. This is at least the fourth wave of such concerns since 1945. The first was in the late 1950s, produced by the Soviet Union’s launch of the Sputnik satellite…America’s problem right now is that it is not really that scared. There is an intelligent debate about these issues among corporate executives, writers and the thin sliver of the public than is informed on these issues. But mainstream America is still unconcerned. Partly this is because these trends are operating at an early stage and somewhat under the surface.[Link]
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Again, another parallel to global warming. Take a look at Zakaria’s full article. It is a good read.
Chandi:
I’m with you. I’m not anti capitalism, but do believe smart/effective regulations and control are absolutely needed. By the way, the “free market” is another myth. America and most countries not only have import/export controls but subsidize certain segments of their economy for political reasons. In America, for example, “we” strongly subsidize agriculture.
puccahindustani:
The common westerner, err American would have difficulty pointing out India on a map, much less be able to state the religions of it’s political leaders.
side note: once again, I’ve been happily sidetracked by SM. Should probably get back to work. 🙂
hopefully there’ll be a happy ending to this
decline? like many have pointed out, this is simply not true. for all its flaws, no country is even close to the US in finance, science, entrepeneurism or innovation. also, while the US forsees competition, it does not mean they are getting worse.
it is true markets cannot be allowed to have a free run, but the example of good regulation is closer to the US than india. china does not even count, it is not regulation there but whim of someone on top. mistakes happen in the US of course, but please, don’t hold up scandanavian countries as examples.
socialism is ok in scandanavian countries, as would be almost anything else. for that matter, even in scandanavian countries, socialism followed wealth not the other way around. today they are homogenous tiny rich nations lecturing the world about what they have no clue about—just because the 5 million blokes who have more or less the same background live in peace gives them no authority to say anything abt governing countries of several hundred million with hundreds of religious, ethnic and racial groups.
This cabal has to be disrupted. What can we do to dissolve them? They get everywhere! Cabal is also destroying Hindus in America by inclusiveness! No joke! Look here.
Is there no end to their reach, their conspiracy, their influence? From darkened rooms they plot and scheme. And now they try to shrink the Red, White and Blue balls too, as well as our saffron balls (which have an 8% growth rate, but not growing as fast as Chinaman balls)
Cabal everywhere, on every street, under the covers, in the shadows! Cabal – watch out! I know you read PseudoSecular Mutiny! Be afraid. We have 8% growth rate, maybe more, but not as much as Chinamans, but still, we are the most tolerant.
Hail Mogambo etc etc
Bytewords, You had me at the beginning. You’re right, the decline of the United States is vastly exaggerated. But then you went on this Scandinavia bashing rant that I simply don’t understand.
So, because they have a homogenous population and are wealthy, the lessons of their political, environmental, and business practices should be ignored?
I guess you’re saying that because rapidly growing countries like India and China are poor, they simply can’t afford the luxuries of a clean environment or health care. Should we just ignore the possible lessons from countries where health and the environment are a priority?
p.s. In Amriika, our current administration has done everything possible to weaken/unravel environmental regs and the ranks of the uninsured (50MM or about 1 in 5) is massive and growing.
Actually Moornam, following your definition, the one who asks the latter question. Trying to figure out why something happens significantly adds to number of brain cells. And no, science and math continue to be very popular in Am colleges, but the students who do best are those who have a foot firmly planted in both science and humanities, through course work, double-majors, extra-curricular activities or just diversity of interests. The one-track geek hardly creates a ripple during or after. Some of my best humanities students have been biology majors 🙂 PS–have taught at three American colleges in the last sixteen years–still at it.
not on the environment, and not completely in politics either. i was referring to socialism, in particular chandi, #49 (which i forgot to quote):
lots of people (especially scandanavians in my experience) show scandanavian countries to imply “maybe socialism works as good as capitalism”. i just don’t buy it in the indian or US context. these countries are simply too diverse for socialism to work imo.
oh, i am definitely not for “no regulation” at all. especially with ppl like bush waiting to dig up everything from alaska to my backyard for oil, something has to stop them. and with ppl who pretend global warming is a “liberal conspiracy”.
“More people will graduate in the United States in 2006 with sports-exercise degrees than electrical-engineering degrees,” says Immelt. “So, if we want to be the massage capital of the world, we’re well on our way…”
This reminds me of something that John Adams, the 2nd US president wrote in a letter, to his wife Abigail Adams:
“I must study politics and war that my sons may have liberty to study mathematics and philosophy. My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce and agriculture in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelain.”
The US is now on the logical third phase of its evolution as a culture and civilization.
Browndelicious
Fareed may not look like Saudi to you, but he does to the vast majority of the world – who couldn’t tell an Arab from Persian or south Asian (“they all look alike”). BTW by background I meant as a religion, not a specific nationality. As you very well know, al-qaeda operates in India and every naiton where they have moslem populations.
Fareed may consider himself an American but the fact remains he is not, and never will be. It is not that simple that anyone can become anything s/he wants. Imagine if you or I were to move to Ireland, and start referring to the catholic-protestant thing as “us” vs. “them” – how ridiculous and artificial that looks. (or for that matter, you or I getting involved as a us vs. them in the shia vs. sunni issue).
We are all products of our upbringing, no point denying it! Fareed can offer a unique perspective on world affairs especially Islamic fundamentalism, as he is a Moslem born and brought up in “secular” India. A unique perspective that someone with a surname like Smith or Green will not be able to provide. IMHO, his voice would carry a lot of credibility if he positions himself as an Indian Moslem, who based on his background has a credibility and understanding of the deeper issues than the analysts on CNN or MSNBC can (cf. Peter Bergen or Gen McAffrey). His current language seems to reflect his denial about his own identity.
Sure, “Zakaria can spew gansta (c)rap while wearing a lungi, no problem with me. “, but then he loses his identity, and with that his credibility. That is my opinion anyways.
Moor Naam,
Thats human nature. People want things the easy way. People get easily satisfied. Nobody wants to struggle, fight or compete.
People in US, want to live life the easy way, make big bucks without really struggling too much. That is why they have so many lawyers.That is why many Americans develop leanings towards the left. And when their lifestyle is threatened by countries like China or India, seek to take refuge in protectionism.
The really smart ones , the ones with real ambition , fire in the belly – take advantage of India and China , take advantage of outsourcing and globalisation.
People in India want reservations so that they can get a job in Infosys without having to compete too hard. Nobody wants to build an Infosys, they just want a job there.
Very soon, the company will have to first find a replacement from that person’s caste before they fire him. 0therwise the caste composition can get disturbed and huge financial penalties will be imposed…
Summary – Fareed’s life should be dictated by his race / birth and not his ideas / thoughts (well, at least if he wants to be authentic)
I’ve always thought a lot of folks bought into that view, but it’s wild to see it written up so directly. Sad.
Economics, unlike politics, is almost never a zero sum game. Increasing economic output from India / China / etc. improves our quality of life (engineers and masseuses alike), rather than erode it. Sure, someone will write a sensationalist headline about China / India’s faster growth rates (almost a tautology given where they are coming from) but aside from some wealth-apologetic loonies, the world will be better off if they achieve first world incomes…
Excellent point! Globalization has taken 400 million Chinese out of desperate poverty. No amount of foreign aid from the West could have brought about this dramatic a result in less than 2 decades.
I am sure the disenfranchised Brahmin’s, who have such a tough lot in life, will be glad to know the people of Sepia Mutiny are hard at work to ensure they are given a fair shake at things. They’ve had it so rough, living in India at the very top of an arbitrary food chain.
On topic, as others have pointed out, it doesn’t seem clear to me that Americans are willing to put in the hard work needed to re-establish their place as country number one. I get the impression Americans are happier thinking everything is A-OK.
The World is Flat is an excellent book on this topic.
MoorNam,
No fox news for you and stop reading WSJ editorial pages . If you want to run for office as a republican go ahead and do it. You almost covered the litany (trial lawyers, left wing media, regulators)except the homos. You surely are not going to get ahead if you exclude them form the list.
I know we need to go back to the days of the industrial revolution. Who cares about the worker. They are being fed this nonsense that they have some rights by the left. Health care- what an idea! Just give them some whiskey and ask them to get on with it. Don’t they know that the Marxists lost and capitalism rules uninhibited.
Also, I thought that in one of the earlier posts you said that a man/woman in their sexual prime should do it at least 3 times a week and today you are agianst “f…king like rabbits”. So anything higher than 3 is not acceptible?
#59, MIT Guy: You’re nuts. Of course, Fareed’s identity is a broad composition of his intellect, experience, race, religion, etc. But as a journalist and analyst, he defines himself first and moremost through his intellect. The world would be a far, far, far better place if everyone did the same.
>#61, Vinod: Backing off from the position in #59 above, it is critical to recognize that however much thoughtful people want to be judged on the whole of their being, the world is anything but open-minded. To many people, Fareed isn’t a senior foreign correspondent with his own nightly TV show, he is one of “them”. Unfortunately, all minorities must simultaneously push back on bigotry/racism while advancing their own intellectual ideas. (Sometimes the positions fail to reconcile themselves. Example of the week, the Log Cabin Republicans — how do you reconcile the desire for republican ideals in the face of the loss of civil rights?)
It IS sad Vinod.
It’s same sick presumption that underlies the “where are you REALLY from” question. You’re brown and born in a brownie country, right? Well then, my eyes do not lie. Quit acting white! I don’t care if you were educated and lived most of your life in the West. Citizenship, personal philosophy, field of study/profession are irrelevant.
Ultimately, there’s no logic that can defeat those that hold such perspectives. They can only see a man for the color of his skin or place of his birth, not for his words, thoughts, or actions.
Browndelicious, Vinod et al
You missed my point entirely…
Race/Religion/.. are not mutually exclusive to ideas, values and thoughts. If anything, ideas and values are a product of one’s background. What is “sad” is when one is in denial about his/her background and puts himself/herself up to be something that they are not.
I was born in India, moved to the US when I was 13, went to undergrad and now grad school here at MIT. What would be ridiculous, is for me to trying to be an “all-American boy”. I am not, never will be, nor do I want to be! I am an Indian guy living in the US, with a trace of desi accent. My views and ideas are the products of those two identities, and quite different from an Irish man in Southside of Boston or a Jewish man in Brooklyn. I wish Fareed were more honest and upfront about where he is coming from.
What is really sad is your position that race/ethnicity/background and ideas/philosophy somehow cancel out each other. IMHO the latter is, at least partly, influenced by the former, and what is wrong with that?
Some months ago the subject of America losing its edge technology and innovation was discussed on a blog I used to read. Here is what someone posted… I saved it as it succinctly described what the baffling American lack of interest about the state of science and tech in the country will ultimately do to the country:
The person who posted it worked as a tech outsourcer in the UK. And even he was baffled (laughing all the way to the bank) at the eagerness with which British and US companies were firing technologists with 20-30 years of experience and replacing them with cheaper engineers from Asia and Eastern Europe. America is a nation that loves technology but loathes science. As I like to describe it, “Generation iDiot” (no apologies to Apple )… a generation all plugged in listening tand watching something but unable to focus on the future.
MIT Guy- Won’t your undergrad school object to your MITGuy handle? Shouldnt you declare your online existence by including all previous schools in your name? Why not our-lady-of-limpidblossom,st.patrick’s-academy-umass-mit-guy?
I’m not sure how you think he’s being dishonest. The man isn’t wearing whiteface. He didn’t change his name to “Mike Smith” and his fairly extensive bio, including place of birth and religious heritage, is widely available.
Do you think black politicians gain credibility by wearing a dashiki? Perhaps with a small, easily (mis)led minority of people. But probably not with the larger, more mainstream audience. Have yet to see Barack Obama wear one. Newsweek is aimed at a mainstream sudience too, keep that in mind. I don’t think Fareed was hired by Newsweek to write opinion pieces from an Indian/Muslim immigrant perspective, although he’s given plenty of that to other MSM.
By the way, nobody is claiming that ethnicity/background isn’t an influence. Of course it is. We’re responding to your comment stating that you’re angry Fareed isn’t more up front about his background. SO I ask you, how is he not being upfront and what specifically would you, in your editorial opinion, suggest he write differently? What would you have changed in his latest Newsweek piece?
Browndelicious
Like I suggested in my first post, it would be better if he stopped referring to India as “they” and the US as “we”, because it seems so contrived & pretentious. He would also do better, IMHO, to stop referring to moslems as “they”, since he is one as well. I think, on the whole it would be better if he wrote in the 3rd person.
“The Indian economy” (cf. “their economy”)…blah blah…”the US education system” (cf. “our education system”). Simple isn’t it? If you think it is being anal about mere words, well then that’s what journalists are for – wordage is what they are all about, much more so in opinion journalism.
Those are my 2 cents.
Like I suggested in my first post, it would be better if he stopped referring to India as “they” and the US as “we”, because it seems so contrived & pretentious.
From Fareed Bhai,
MIT guys don’t know jack. My comments are better because I’m a Princeton guy.
I want to echo the things the people earlier have said about these assumptions that the US will fall behind. Younger people like me will know for a fact that the US doesn’t have to be the best at engineering or science to be competitive in the global marketplace. In fact, the US has moved (or will move) to other industries with value. The US education system, for all the criticism about its crappy ability to teach the “basics,” math and science does very well at teaching the skills that will be necessary for the 21st century.
And those aren’t technical skills as many people see it. It’s the ability to be creative, to find problems, and solve them thoughtfully. That’s how you get paid in this country and how you don’t get our job outsourced. You stay competitive by being creative– and it doesn’t have to be by engineering or technolovy.
MIT Guy– you’re killing me with this. My MIT fetish weeps. Stop, in the name of love. 😉
MIT = Mirzapur Institute of Technology 😉
Ok, so in his choice of words he’s expressing a position of where his (or perhaps Newsweek’s) values are. Meanwhile you’re assuming you know what his values should be based on his skin and origins.
In essense, you’re saying Fareed isn’t acting brown enough.
Look, I was raised muslim, but I’d probably write “them” too. Why? (1)my personal religious beliefs have moved away from mainstream Islamic dogma and I’d have a hard time claiming the muslim middle ground as my own. (2) I identify strongly with the community I live in and know full well which side my bread’s buttered on. I’m not only born/raised here, I’ve chosen this community.
Again, who are you to assume you know Fareed Zakaria’s values better than himself?
What’s kinda funny about this (perhaps overbeaten) discussion is that it sounds like a similar arguement I have with my mother from time to time. She assumes she knows the values and beliefs of her good little brown Muslim boy and what’s best for me, how I should be (workship,play,or pray).
Except I’m not a good little brown Muslim boy.
I’m a 31 year old man with his own thoughts/beliefs that she’s deaf and blind to. She doesn’t have a clue how I really think or what I really believe, nor is she interested any more than I’m interested in hearing another lecture about how I should live my life.
You’ve got the same presumption problem with Zakaria, except you’re not even his mother!
carameshian: >>You stay competitive by being creative– and it doesn’t have to be by engineering or technolovy
Ahh… the “We think – they sweat” argument. I was wondering when someone would bring that up.
A country remains at the top my making and selling stuff that others covet. If you end up outsourcing all ritualistic production to sweatshops in Asia and concentrate only on theoritical research at home, 90% of your population will be unemployed. Eventually, those poor rice-eating Asian runts will start to think for themselves, and since you will have lost the ability to sweat, even the other 10% will be out of a job.
By no means am I writing a requiem for the US – I think eventually it will overcome obstacles. However, for the next couple of decades there will be severe lifestyle adjustments that will be painful for many. I am talking unemployment levels of ~20%. I am talking gas riots, heating-oil riots. I am talking hatred of people “who steal our jobs”. A lot more racism. Definitely more religious fundamentalism.
If you can ride it out, good for you. The next wave of progress will be simply stupendous, and will be led by the US. Check out this great book: Singularity for more details.
M. Nam
Al Mujahid for debauchery, thanks for that link. It was really an interesting article that Fareed wrote. Seeing how far/fast the Zakaria boys have risen is inspirational. Fareed’s a first class (“Double Ai Von”) Mutineer in my book.
The wealth of a nation is not directly proportional to the number of engineers and hard science graduates it produces. What matters most is how friendly are the local market conditions to create incentives and provide rewards to various individuals with differing talents. Although I don’t care much for interior decorating, could a Martha Stewart, Laura Ashley found a more favorable market than the U.S? Maybe Phil Knight was just looking for a comforable running shoe when he started Nike – but could anyone anticipate that he would start a whole sports clothing industry, often on the cutting edge of marketing and advertising? And one word – Starbucks. Yes, they can be expensive and make-up names for flavors, but this one company launched a whole industry.
America should not rest on its laurels, but its critics should hold off on writing its epitaph.
well said, KXB.
And M. Nam, the US already isn’t the world’s leading producer of stuff. In fact, around 70% of the US GDP comes from services, not goods. As India, China and other countries get richer, the size of their markets increase. They will want more things, more services. Not just consumers, but Indian businesses. Who manages their finances, their business’s stocks?
US businessmen need to pay attention to the huge market that’s being created as other people in the world get richer (and they are, for the most part). Sure, eventually other people will figure out how to do things better than the US does it for them. But then, as they figure things out on their own, they get richer, and the market size increases. This is how growth happens. As long as you’re at the top of your game, you’ll be fine.
Just off the top of my head, here are some long term reasons to posit a decline in the U.S.’s hegemony (though perhaps not material well-being):
Whether you believe in the free market or social justice or support the U.S. goernment or don’t, it seems like people in the United States have to be prepared to except in 0-10-20-30 years: a) a decline in the power of the United States that has already begun and b) a leveling off or decline in the rate at which the standard of living for the middle class and working class in the United States improves.
Jane Jacobs’s Dark Ages Ahead is a good read on this, though a bit overdone possibly.
ust off the top of my head, here are some long term reasons to posit a decline in the U.S.’s hegemony (though perhaps not material well-being): 1. An increasing aversion towards science that’s made its way to the top of the U.S. government. When stem cell research is being carried out in Korea but not in the U.S., that’s an example of the problem.
Rubbish – you omit the distinction between research into adult stem cells and fetal stem cells. You also draw no distinction between money coming from the federal gov’t (who is off limits to fetal stem cell research) and private funds and state government funds, as in California. And I’m far too cynical about doctors to think that if they did come up with a cure for Parkinson using stem cells, they would rush out and produce. All that money for Jerry’s kids hasn’t done a damn thing. I know I borrow from Chris Rock jokes a lot, but he was on the mark when he joked, “Doctors don’t cure s***. There’s no money in a cure, the money is in the medicine. What was the last thing doctors cured – polio. That was the first season of Lucy.”
2. A decreasing separation between religion and rational modes of thinking in education and other realms of society.
If you look at Western Europe, which is completely divorced from its Christian past – has that aided in their global standing? Western Europe had more influence in the 1980’s (due more to its frontline status during the Cold War). India was religious before economic reforms, it’s still religious after economic reforms.
3. Short-term profit-taking by the wealthy over the past twenty years at the expense of investment in the human infrastructure of the society (which includes shutting down factories, cutting safety nets, failing to provide preventative heatlh care and thereby increasing its overall health care costs, etc.).
We spend more on education (look at your property tax bill if you don’t believe me) and health care (check your premiums) now than 20 years ago – both in private and public spending. Most people still send their kids to public schools, and more students than ever continue onto college. Again, if a factory is shut down, but a FedEx distribution center replaces it – is that a loss or gain?
4. Relying on the idea that the U.S. will always be able to draw immigrants to provide its high and low skill labor needs when this is a function of the market. At some point, Chinese and Indian and other immigrant engineers and IT people will simply go to China and India.
Considering that China and India are not nations with an immigrant history – this is unlikely. China has strict controls on who can enter, and India is spending millions in fencing off Bangladesh. Two nations with poverty populations numbering in the millions are not going to allow job-seeking immigrants in the scale that America lets in foreigners.
5. At the same time, antogozing a lot of the rest of the world through a variety of means.
This is an old joke – they protest America at 9:00 AM, stand in line at the US Consulate at 10:00 AM.
6. Failing to invest a lot of money in local economies that generate jobs, productivity, and innovation, and instead providing those resources to larger corporations that are less geographically tied to the United States.
Not backed up by facts – indeed, states can become fiscally reckless when it comes to offering tax breaks to companies in attracting business. Illinois offered a lot of sweeteners to Boeing to set up shop in Chicago. Alabama gave a lot of incentives to Mercedes to set-up a plant. Foreign car companies are setting up many plants in the U.S. to take advantage of productive, efficient American labor.
7. Freaking out and spending a hundreds of billions of dollars on the military rather than some of the other priorities listed above.
The responsibilities borne by the U.S. military are unlike those of other Western nations. Could there be more sensible spending – sure. IÂ’d shut down all the American bases in Western Europe, and let them defend themselves. But considering that almost all global commercial shipping is secured by the U.S. Navy (all thoe world’s oil is pretty much secured by the U.S.), it is not surprising that we spend more.
8. Basic structural causes–If India and China develop a middle class / upper class that makes up 20% of the population of each country, those are both consumer markets that are the size of the U.S.’s entire population. Combining that with some of the other trends, it seems, short of the use of force (which is not undeniable), there will be a problem. Similarly, an Indian friend of mine who works for a major multinational corporation asked me, incredulously, “why is the United States deindustrializing? This seems like a terrible miscalculation.”
The size of the market is less important than its accessibility. India has had a sizable middle class for many years, even during the 1980s, but non-Indian companies did not want the headache of doing business in India. For all the excitement over China and India, American companies are still more likely to make profits in markets of Europe and even Latin America.
Concerned about corruption? Then IÂ’d advise you to stay out of China and India.
10. A failure to confront many of these problems head on through complacency. Whether you believe in the free market or social justice or support the U.S. goernment or don’t, it seems like people in the United States have to be prepared to except in 0-10-20-30 years: a) a decline in the power of the United States that has already begun and b) a leveling off or decline in the rate at which the standard of living for the middle class and working class in the United States improves.
Again, America has been through this before. After Sputnik – the Russians were supposed to take over. We heard the same in the 80s about Japan and Germany. It’s a good thing that the developing world is getting richer – but it is a mistake to think America will, by default, get poorer.
Princeton Guy – I am with you on this. We know diddly-squat about anything, which is why need disambiguation with the pronouns etc. Hence my request for writing in 3rd person. 🙂
Browndelicious – Relax! I don’t think it was a question of being “brown enough” or not.He is brown, moslem, indian, Harvard-grad, US citizen and all that…but I think he should be what he is, not a schtick with his “us” and “they” act. Seems put-on, contrived and unbecoming of Mr. Zakaria’s talent – and that is just my POV.
I agree with you, this topic has been done to death, so this is my x-off on this topic. over and out!
Perhaps fareed isn’t religious. maybe his family was westernized. i believe he is from the malabar hill (very rich area) of bombay. here’s something:
September 24, 1999
At 34, Worldly-Wise and on His Way Up By Elisabeth Bumiller
On the wall of Fareed Zakaria’s office hangs a great trophy of his trade: an autographed copy of George F. Kennan’s historic ”X” article, published in 1947 in Foreign Affairs, that first articulated America’s policy of Soviet containment. Nearby is a signed copy of Henry A. Kissinger’s ”Reflections on American Diplomacy,” published in 1956 in Foreign Affairs, which launched the would-be Secretary of State as a public intellectual.
And alongside that, in case one does not yet get the picture, is a signed copy of “The Bent Twig” by Isaiah Berlin, published in 1972 in Foreign Affairs, which became a prophetic treatise on the rise of nationalism in the Third World.
“I got him to sign it a month before he died,” Mr. Zakaria said.
In short, no one should ever doubt Mr. Zakaria’s sense of history, or his desire to be a part of it.
In 1993, at the age of 28, he became the youngest managing editor of Foreign Affairs, taking over the No. 2 spot at the nation’s premier foreign policy journal. Six years later, he is spinning comfortably in the innermost orbits of America’s foreign policy establishment. He has published a book on the United States’ origins as a global power, is at work on another about “democracy everywhere, past, present, future,” and is a columnist for Newsweek.
And although it is still too early for him to be flown down to Texas to advise the Presidential candidate George W. Bush — Mr. Zakaria says he likes moderate Republicans and conservative Democrats — it is not too early for him to know everyone who has. Condoleezza Rice, Mr. Bush’s chief foreign policy adviser, calls him “intelligent about just about every area of the world.”
But there is an obstacle. Mr. Zakaria is still a citizen of his native India, though now in the final stages of becoming a naturalized American — a move that he sees as inevitable but also central to his acceptance inside a campaign, and certainly a White House. And although he is following in the footsteps of two other immigrant-diplomats, Mr. Kissinger and Zbigniew Brzezinski, he does not come out of a European tradition.
“I don’t think anyone ever imagined that in the next decade or so there could be a national security adviser from India,” said Leslie H. Gelb, president of the Council on Foreign Relations (publisher of Foreign Affairs) and a former columnist for The New York Times. “This is in the realm of possibility.” (Mr. Zakaria smiled, carefully, at Mr. Gelb’s pronouncement. “Les has a certain set of ambitions for me,” he said.)
Mr. Zakaria’s traditions, like those of a lot of upper-class Indians, are in fact more Westernized than Americans might suspect. “I found myself, at a fairly young age, intellectually more at home in the West,” said Mr. Zakaria during a two-hour talk this week in his small office just off Park Avenue at the Council on Foreign Relations, where he said at least twice that he had no connection to the Bush campaign and seemed most worried about sounding arrogant.
“I also think I grew up in an India that’s vanishing,” he said. “The secular, somewhat Anglicized India of the 1960’s and 1970’s is giving way to a much more authentic, Indian India . But it’s not an India I feel that comfortable in.” Mr. Zakaria grew up on Malabar Hill, Bombay’s Bel Air, in a big house, Rylestone, where his parents held Urdu poetry readings and had plenty of space for him to play cricket out back. His father, Rafiq Zakaria, was deputy leader of the ruling Congress Party under Prime Minister Indira Gandhi. His mother, Fatma Zakaria, was the Sunday editor of the The Times of India.
Rylestone, built during the Raj for a British high court judge, bustled in the evenings with writers, artists and politicians. During the day, Mr. Zakaria received a classical English education at the Cathedral School, where 800 Hindus, Sikhs and Muslims “would gather together and sort of lustily sing ‘Nearer My God to Thee.'”
Mr. Zakaria went to Yale, fell in love with America and abandoned England as any kind of spiritual home. “You can’t penetrate English culture — you can admire it,” he said. “Whereas in America, there’s absolutely no sense of that.”
After receiving a doctorate in political science from Harvard in 1993, Mr. Zakaria was quickly hired by James Hoge, the editor of Foreign Affairs, plunging into life at the council on East 68th Street. “People think of America as a strongly materialistic culture,” Mr. Zakaria said. “But it really isn’t. There’s an extraordinarily vital intellectual life here.” It’s not that people aren’t interested in politics, he added, but “it’s a big, vast country where the stakes are lower. In India, politics can be about life and death if you’re on the wrong side of an issue.”
Yesterday, predictably, CNN had him assessing Mr. Bush’s foreign policy speech at the Citadel, which Mr. Zakaria praised as “smart, hard-headed Republican internationalism” and “not a crazy, let’s go all over the world and spread democracy and justice” screed.
Mr. Zakaria is married to a jewelry designer and has a 3-month-old baby boy. He is wine columnist for Slate, the Internet magazine, speaks and dresses elegantly, but has an American approachability and a very specific American fantasy. “The immigrant in me,” he said, “wants to go off to some Northeastern dock and sail off in topsiders and a polo shirt.”
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America is not about the number of engineering graduates, annual GDP growth, service sector vs. manufacturing and all those trailing metrics used by economists. America is a state of mind, and that is the greatest economic – yes, purely economic, strength of America. When other countries advance and start making more money, there are always plenty of American entrepreneurs – including a lot of American desi ones – who know how to get their cut or just step in and buy them out. Did you hear that the largest BPO firm in India called Emphasix or something like that was bought out by an American company? Yeah, outsourcing is now an American industry.
When American manufacturing got outsourced 50 years ago, every economic pundit called it the beginning of the end. Lee Iacocca, no mental slouch he, labeled America a colony because it fit the classic definition of a colony – export raw materials, import finished goods. Yet in the last 50 years, the American economy grew significantly, notwithstanding the loss of $18/hour factory jobs held by semi-literates? The point is – the American economy changed but its ability to grow did not.
The reason why America will always be among the top – among, not at the top – is because of Americans. Of course, that includes every immigrant whether he arrives here from India with an IIT degree or from Mexico with nothing but a strong back. They along with Americans born and raised here drink the same Koolaid and become a nation of enterprising value-adders and out of the box thinkers who naively assume anything is possible. No other country comes close to having this kind of intellectual capital. That is America.
Undoubtedly, India and China will become gigantic economies simply by leveraging their huge populations. But to remain the leaders as America has for centuries, they will have to acquire that most intangible, hard to define asset – an attitude and mindset similar to America’s.
Great empires do rise and fall but it’s awful hard to predict as Floridian demonstrates. I remember reading (or writing–I’m not sure) around 1990:
“the cold war is over…and Japan won”
or maybe I both read and wrote it…ie, I Kaavya Viswanathaned it.
KXB, thanks for responding in depth.
On the first and second points (aversion to science) my point was not that stem cell research won’t happen, but that federal, state, and local policies that call evolution and global warming a theory and allow religion to dominate the discusison of stem cells and abortion have a technological and human (and economic consequence). I stand by that. And as someone who knows a lot of doctors, I think the Chris Rock joke is better applied to Big Pharma than doctors. Also, part of the point is the trend as much as the current state of things. In the United States, the influence of fundamentalist religion (or other orthodoxy) over science has increased, not decreased.
I don’t think you really addressed my third point (that a lot of money has been devoted to tax cuts and other means by which the rich have taken a larger cut of gdp) though I didn’t really flesh it out. My point is that the short-sightedness is what leads to the ineffectual spending on health care.
On the fourth point (the assumption that high tech labor will always come to the United States), you ignore that two of the primary sources of the high tech immigrant labor will eventually be competitive enough that people won’t leave. Why would a Chinese or Indian citizen, all else equal, emigrate to the United States on an H1-b if/when they can stay where they are? I also think that countries adapt to economic needs and if India and China needed more skilled labor, they’ll find a way to get it. You also ignore other places they might go (like Europe).
On the fifth point (increasingly poor conception of the U.S. abroad), I think that this echoes a lot of your other arguments by violating the idea: past performance is not always indicative of future results 🙂
On the sixth point, I think that examples like the use of Big Box stores like Wal-Mart (which destroy local economies), tax subsidies to huge corporations, military contracts (Again, see Jane Jacobs–cities and the wealth of nations i think), etc. and other tactics are the exact opposite of microlevel economic development that actually self-propagates. There is some of that obviously, but it’s few and far between compared to what the economic strategy has been. The Fed-Ex distribution center depends on many people needing to fed-ex something to someone else, most likely for business purposes.
On the seventh point (overspending ont he military) I would point out that whether or not your argument is true, it still doesn’t affect the fact that the U.S. spends too much of its GDP (from an economic vantage point) on its military. Sadly, its military is probably the closest thing it has to a jobs program. But in any case, if, as you argue, the U.S. is overspendign for the benefit of global trade routes, how does that hurt its competitors and help it from a purely economic benefit?
On the eighth point (the size of markets in India and China vs. the U.S.) this is belied by your own example of the car factory. Why would toyota build more car factories in the U.S. if the fastest growing markets are in India and China if it can build them there? Obviously the size and accessibility of the markets are both important, but there seems to be no indication that India, at minimum, is shutting off its consumer markets to foreign goods any time soon. I don’t know if the same thing is true for China just because I don’t know.
On the ninth point (corruption and the failure of government institutions), again, the point is the trend, not the comparison to India and China. I’m presenting evidence of a decline, not an argument that things will hit rock bottom. Also, corruption is only one part of it–the consequences of corruption–like the mass exodus of career bureaucrats from a number of executive branch agencies and departments in a whole arena of fields are the real problem. That then leads to disasters which, again, from strictly an economic standpoint, are more costly to resolve afterwards than they would have been had the state been maintained effectively.
On the last point, I agree that jeremiads are common. However, I would argue that the decline extends back to policies that were begun in the 1980s, if not earlier. Also, again, the argument I’m making is that the United States will get relatively poorer (as Europe did compared to the United States) and lose its hegemony, not that it will get poorer in absolute terms. Also, I think this will disproportionately affect working class and middle class people in the United States.
Anyway, obviously no one has the “right” answer on this, but I think that the things I’m pointing to, absent specific refutation on facts, are more indicative of the way things are headed than the arguments you’re making.
Great post and great article by Fareed Zakaria. I have seen Prestowitz talk about his book on C-Span. Frankly, he did sound a little bit alarmist to me, although he does have some data to back him up.
Even if Americans dont study Electrical Engineering, as long as other smart people from all over the world keep coming to the US to study EE, the US is fine.
Like already noted in earlier comments that US need not be afraid of rising wealth of China and India, but embrace it.
For example rising wealth of India will require more infrastructure to be built, well thats business for CATERPILLAR. More airplanes, thats business for Boeing and GE.
A race for finding the next generation alternative fuel can also do the above. GORE for President 2008 !!!!!
Hey folks – worry not …. soon we will see a new wave of immigration of a whole lot of highly educated Brahmins driven out of India because of the reservation policy in the private sector is implemented. They will save America….
Americans can go back to superior pursuits of humanities and literature and other amazing creative stuff that they do so well. The brahmins will take up the nerdy techie jobs no decent American would want to do….Everybody happy.
India meanwhile goes down the tube..
Mr. Zakaria’s traditions, like those of a lot of upper-class Indians, are in fact more Westernized than Americans might suspect.
Fareed like all good secular Indian Muslims is also married to a white Jew.
Please meet Chicken little
MoorNam:
What kind of “leftist school system”?
I really don’t know how you are making these assertions.
As far as the supposed shittiness of the US education system and its wimpy, ball less graduates, keep in mind that most of the globalization policies are under the hand of AMERICAN economists, most from the University of Chicago economic school. Furthermore, if the US’ educational system regarding science, technology, economics, engineering and business is churning out idiots, why are there so many Indian students coming here for grad school in these fields? Indian foreign students make up the largest composition of foreign students in the US.
I have my own critique of the US educational system, but I certainly don’t see it producing brainwashed lefties. Brainwashed, yes; lefties, no.
As in….? Kids have to pay to go to school and come out with a degree (unless Daddyji and Mummyji are able to fork over the cash). Then they have to find a job right away to start paying back their loans. How are they free-loading?
As some have already pointed out, I think that describing the US as a declining empire headed towards doom is an overstatement and an overreaction. This puppy ain’t going anywhere for a while.
PS. Sorry if I was off topic.
I agree with you CheapAss. The American educational system has its flaws, but the aspiring countries around the world ought to focus on its strengths and try to reverse engineer some of our good stuff. That’s how the Japanese did it, right down to adopting our Quality Guru, Edward Deming (did I get the first name right?) and making him their own.
You have left out much of the positives in Zarqawi’s article. The talk about the U.S.’s downfall is neither new nor on target. The fear mongering numbers on China tend both to be inaccurate and to emphasis quantity over quality.
The End Of History The End Point and The End Game
With the fall of the Soviet Union it was widely believed that we had witness the end of history, the end of the historical war between democracy and Marxism. But with the rise of communist China, we are again faced with the historical question: who will be left standing at the end of history?
This time around it looks like the final battle. And the news from the front isn’t good. Communist China, simply by opening its trade door to the world’s capitalists has pretty much captured the means of production along with the technology and the wealth and so the wherewithal to build up its military strength. Does this mean that Marxism is set to dominate the world? Not quite. It is not the rise of worldwide communism that China has in mind, but “socialism with Chinese characteristics.†It is China that has captured the means of production and it is China that seeks to dominate the world. And they intend to do so not by military dominance, but by waging total economic war. A war we are on the verge of losing. And as we lose it, so goes the world. This is China’s end point and end game. So, before they succeed, we have to get in the game. Not only do we need a vision that pulls our economy out of recession, we also need one that will win the ideological war. That is, we need an end point and end game of our own. But first, it is necessary to put China’s end game in perspective. To do so, however, we have to take communist/imperialist China temporarily off the board and view them as just another global player. To begin we have to go back to 1976. That’s the year the United States began running a continuous and mounting trade deficit (a continuous rise in global unemployment). It began as Japan and Germany rebuilt their economies and emerged as formidable competitors, followed by the Asian tigers and then the Asian tyrannosaurus-rexâ€â€China. According to economists, however, this should not be a problem. America’s trade deficit would be brought into balance as a weakening dollar gives the U.S. a competitive edge, regardless of their technological and low-wage comparative advantages, and bring our current account into balance. But China to ensure its economic growth pegged its currency to the dollar. If it had not done so their economy would have stagnated as its exchange rate rose to a point where it lost its competitive edge and the global economy would have lost a significant trading partner. But since it has become the factory to the world, it has been pressured to reevaluate the yuan and has modestly relented. But since China has become the factory to the world, the benefits are doubtful. As the yuan strengthens, the costs of their exports rise, which translates into fewer exports, and a rise in domestic unemployment. For us it means they export inflation while we export more dollars. So, pursuing this line of thinking could push the global economy into a recession. Then there is this: In the real world our competitors distort the currency markets by purchasing dollars (one aspect of pegging) to keep their currencies competitive that become part of their dollar reserves. To date Japan and China have both stashed a trillion dollars under their mattresses. And it’s just not here that there is a problem. Japan holds approximately 600 billion dollars in Treasury securities while China holds nearly 400 billion dollars. This is not altruism. The investment angle aside, they are simply pursuing their own self-interest. By investing in government bonds they further prop up the dollar and in so doing protect their economies while allowing the United States to remain a significant export market. Yet despite all this the dollar remains weak. And so there is a rise in our exportsâ€â€but not enough to keep our trade deficit from widening. This is a problem that begs the question: how much longer will other nations prop up the dollar and our financial house while allowing us to keep bellying up to the pot while putting less in as we continue to export more dollars?
China and Japan are our major competitors and it’s not necessary to go on down the list, the point is they reflect the world at largeâ€â€a global economy not only out of balance, but unlikely to be balanced. The reason that it has yet to reach a tipping point is that while they shored up their economies by propping up our financial house, we became a nation of rampant speculators and unrestrained shoppers. Hype in the stock markets over dot.com ventures led to a rapid expansion of paper wealth that fueled an economic boom as well as a boon in capital gains taxes that not only contributed significantly to budget surpluses, but had economists forecasting that they would continue far into the future and within ten years our national debt would be zero. It was the age of irrational exuberance. And when the bubble burst, budget surpluses evaporated, fell into deficit, and the economy itself, in 2001, slipped into recession.
Not so much in response, but for disparate reasons, the nation’s fiscal and monetary arsenal was pretty much deployed. Massive tax cuts (mostly for the wealthy) and massive pork barrel spending by a Republican Congress (trading principle for power) and a maximum cut in interest rates, by a sober Federal Reserve, to rock bottom quickly brought the economy out of recession. But rock bottom interest rates quickly led to a housing boom and a frenzy of speculation in the housing markets and a windfall for homeowners who refinanced and cashed out on their inflated equity and went on a spending spree buying SUV,s, remodeling their homes or moving up, buying high end televisions or whatever their hearts desired. But eventually reality checked in as rising prices soared out of reach for prospective buyers and the bubble collapsed. Now the economy again is slippingâ€â€despite a weak dollar and a rise in exportsâ€â€into recession (this time with no bubbles in sight). So, again, the Fed is pushing interest rates to rock bottom at the same time providing greater liquidity to the financial markets while the President and Congress throws out a stimulus package of rebates for individuals and tax incentives for businesses. But given that America is an upside down nation facing a credit crunch, rising food and oil prices, and in the midst of a severely slumping housing market, they will not have a sustainable effect. So here the problem isn’t simply with China, nations regardless of ideology seek, or attempt to seek, their own self-interest, and in so doing play a dangerous zero-sum game. A game where economists have no viable answers, other than pursuing more trade agreements, as such politicians are at a lost. We are out of the game.
That said, communist China is very much in the game; their end game is to win the zero-sum game. The backbone of Marxism is that capitalism has gone down a path that ultimately leads to its collapse. For the “bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the whole relations of society… The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere… All established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones… In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations… The bourgeoisie, by the rapid improvement of production, by the immensely facilitated means of communication, draws all even the most barbarian nations into civilization… The cheap prices of its commodities are the heavy artillery with which batters down all Chinese walls, with which forces the barbarians’ intensely obstinate hatred of foreigners to capitulate… The bourgeoisie has subjected the country to the rule of towns. Has greatly increased the urban population…It is enough to mention the commercial crises that by their periodical return put on trial, each time more threateningly, the existence of the entire bourgeois society… In these crises there breaks out an epidemic that, in all earlier epochs, would seemed an absurdityâ€â€the epidemic of overproduction… society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence, industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, to much industry, too much commerce… And here it becomes evident that the bourgeoisie is unfit to be the ruling class in society… It is unfit to rule, because it is incompetent to assure an existence to its slave within this slavery, because it cannot help letting him sink into such a state that it has to feed, instead of being fed by him.†So said, worldwide unemployment reaches a critical mass, and capitalism collapses. As it does, the workers rise en masse, overthrow the existing order and establish a “dictatorship of proletariat†that oversees the shift from socialism to communism.
Well, as we know, history didn’t go according to Marx. Lenin and Mao became impatient vulturesâ€â€instead of waiting for the death of capitalism, they became birds of prey, they wanted to kill now. And to achieve the means to their end, command economies that would bury capitalism, they started on their own people. So today we are faced with communist China (and to some extent Russiaâ€â€their favorite monkey). And while the means haven’t change, their end game has. Faced with the concrete reality that centrally planned economies have failed, China opted for the capitalist road and in so doing are now in a position to accelerate the collapse of capitalism (it is the heavy artillery of cheap and vast Chinese assemblers that is destroying the foundation of capitalism). And they have targeted the United States as the first domino. While we shipped them our manufacturing jobs, they gave us the trade finger (say unfair trade practices doesn’t quite cut it). They knew full well that their peg was a cannon in their arsenal. So, together with our loss of jobs we are being pushed to the brink. There is no real surprise here. But there is tremendous anxiety and an acute sense of danger. We are in a recession, a recession that feeds on itself as unemployment begets more unemployment that will lead to a severe depression; as such, we are faced with the very real prospect of economic collapse that precludes any revolutionâ€â€China has already captured the means of production. Even so, does this mean that Marx was right?
If so, China has played the game well. Opening their door to the world’s capitalists set off a race to the bottomâ€â€the constant search for cheaper wages, lower taxes and weaker environmental and other regulations by capitalists who in the end produce a downward spiral in socio-economic conditions in the United States and other countries around the worldâ€â€as the Atlases shrugged and beat feet to China. The underlying rationalization, other than exploiting a vast and untapped market (that would benefit America), was that as communist China shifted to free markets, with a rising middle class, there would an inexorable shift to democracy. Anyone that believes that today is wearing some serious rose-tinted glasses. Meanwhile China got a firm grip on the Shruggers’ financial balls, and as they lobbied Washingtonâ€â€don’t offend them, don’t make them squeezeâ€â€their hearts and minds soon followed. The appeasement by previous administrations is now firmly locked into the present administration. And looking over the horizon there is no would-be president that even dares to step out on the yellow brick road. That said, China, in their quest, was never going to risk a nuclear war (and if they did, did they consider the China syndrome. A doomsday scenario where the U.S.’s thirty-five nuclear power plants melt down and spread nuclear radiation around the world to China). They were never going to risk the means of production. Their end game is total economic war. It is The Art of War: “To subdue the enemy without fighting is the acme of skill.†And while its author, Sun Tzu, lived in 6th century B.C. imperialist China, his ideas are alive today. And their skill is still paramount. Fools still rush inâ€â€or are they fellow travelers or just anti-America? It’s hard to tell. But it is easy to see that the President and would-be presidents, other than the occasional complaining about unfair trade practices and meaningless sanctions by Congress, do not want to offend our “ bankerâ€Â. Better to focus on NAFTA, North Korea, Iraq, Iran, al qaeda, and illegal aliensâ€â€anything but saying these are Marxists whose intentions are to “overthrow the existing order.†As such, it seems like we have pretty much surrendered.
Even so, rumor has it that after the Munich games, China will deploy the nuclear option under the guise: it only makes financial sense to shift from the dollar, from treasuries, and invest in a basket of currencies (is this de-peggingâ€â€they are only giving us what we want?). Whatever, it is only the senseless that will not see this as an overt act of unrestricted warfare against the democracies of the world. And while China threatens foreclosure, we are working against ourselves, as politicians cannot agree on a plan that forestalls home foreclosures that must include mandating a freeze on the resetting of adjustable rate mortgages. In the meantime Taiwan has become less of an issue and more of a deception. They too joined the race to bottom and invested heavily in China while approximately one million Taiwanese moved to China to live and work. So at home, Taiwan is paying the price, unemployment is becoming an issue. As such they have already been conquered. And we too are about to be conquered. They’ve have propped up our economy so they could suck out our jobs, our technology (by hook or crook), our resources, until finally they’ve sucked out our last economic breath. And even if they hold on to their dollars and U.S. bonds, it was a good investment. So what if they lose trillions of dollars, they will suffer no casualties. As our economy heads deeper into recession our credibility in world’s financial markets wanes, especially as the Fed drops interest to rock bottom. Along with a financial meltdown, the dollar crashes and is no longer accepted in the world’s oil markets. Without imported oil, a sound economy, our military becomes a wounded paper tigerâ€â€limping its way back home. When that day comes, China will be in control of the world.
As the U.S. economy falls deeper into a depression, the price of raw resources will plummet in the world’s commodity markets, notably oilâ€â€and those exporting nations will lose significant revenues. To maintain their economies, they are going to have to sell more for less. And as they do, they will have little choice, they will have to turn to Chinaâ€â€who will demand long-term contracts. But in the not so long term, China’s voracious consumption, its need to build so-called modern cities for the remaining four hundred million or so Chinese living in rural poverty, will draw down their oil reserves. And as they continue to put away their bicycles and put a billion cars on the road they will drain their reserves and as they decline, so does their economy. Then what? In a post-American world China is free to do whatever it wantsâ€â€take whatever it needs. So Russia and Iran what do you think about that. And how about Bin Laden, what does he think happens as a godless ideology dominates the world (mess with them and they will mess with Meccaâ€â€turn yourself in or else)? China is at war with the world. And they are close to achieving their end point–the end of history: the final battle for the survival of the fittest.
Even so, this is risky business. Having gone down the capitalist road, they to may have gone down a road of no return. With the fall of the United States, Japan, Germany, India, and other industrial economies immediately go into decline; aided by a falling dollar and a concurrent rise in their currenciesâ€â€except for the yuan. So even while China maintains a competitive edge, their zero-sum game threatens their economy.
While the irony for capitalism is that it provided the shovel that will bury us, the irony for China is that its reserve army of unemployed becomes so large that they will rise up en masse and attempt to overthrow the existing order. But revolution, in Marxist theory, is no longer possible (unless the dogs of war cut their leashes and join the revolution). In Marx’s day it was muskets and cannons that revolutionaries facedâ€â€today, as we know, it is at least tanks and machine guns. If the Chinese communists have to slaughter millions of Chinese, so be itâ€â€what’s another few million more (when your goal is power for the sake of power)? So, in the end, if they do rule the world they will be a country that continues to live in fear of its Orwellian rulers.
Of course China intends on applying the Marxist end point maxim: “From each according to his ability, to each according to his needs.†Some work and some don’t? Whatever, how this plays out is a moot question. The game is not over. Here is where it gets risky. Bush’s invasion of Iraq was about oil. But it only makes sense (it wasn’t going to be our oil) if it was about keeping China out. They were in the midst of a securing a long-term oil contract with Husseinâ€â€no more Saddam, no more pending deal. But today China again is pursuing the same deal. And while it’s not a done deal, yet you have wonder is China influencing Iraqi politicians to push America out? And once out, they renegotiate all oil contracts in favor of China? Whatever. Oil is the life-blood of all industrial nations. The ideological struggle between China and the U.S. becomes second fiddle to the battle for oilâ€â€a war that could bring on the end of all history. Before any of this happens, we have to get in the game. So what is our end point? The ideological battle began with the industrial revolution and it will end when it comes to a sustainable endâ€â€so whither the industrial revolution? Here’s the vision: The lights out factory. Lights out because there are no workers. It is robots with the smarts, dexterity, tactile reflex, and the eye-hand coordination (O.K, some lights) that will assemble (and disassemble for recycling) the components already pretty much produced by machines. Now picture a factory where robots shift from assembling toasters to assembling computers. Here, potentially all brands, all products can be produced and assembled in one factory (scaled to meet local or regional needs)â€â€here we have the ultimate in productivity and efficiency. So as these factories rise throughout the world, the industrial revolution comes to a peaceful end. The problem is that right now is that the free market, driven by pure self-interest continues to produce more unemployment. That has to end before our economy collapses. Our first move is shift from an economy that is unsustainable to one that is. The second is to put aside the issues and vitriol (at all levels) that divide us and focus on the challenges that are threatening us all. It’s time for a change. It’s time to realize what empowers our marketplaceâ€â€and so our democracyâ€â€is a collective free market will where self-interest rightly understood is that it is in all our best interest to insure the integrity of whole. And there is no in point in pointing our many faults. The point is we have to shape up and stand together to meet the challenge. And as we make these key moves, we pull our economy out of recession and away from the specter of collapseâ€â€it’s what economists (forget Marx) call creative destructionâ€â€in other words, out with the old and in with the new. The lights in the global economy are dimming and we have to get ahead of the curve. We have to get our heads out of the short-term box and start thinking about how we become more self-reliant and more creative. This is our end game. But before we go there we have to understand the crisis that threatens us all. Total economic war means not only a run on the dollar, our banks and stock markets, but also a run on our supermarkets. Here, there is a two-edged sword. The skyrocketing in oil prices is impacting food prices (compounded by the absurdity of trading food for fuel). And while they may impact the head of the food chain, the conventional farms, rising fuel prices can crush the tail of distribution. Our supermarkets are replenished every day. What happens if truckers are priced out of the market and our stores not restocked for a couple of days? Actually, this is a cart before the horse question. Rising oil prices is reducing the purchasing power of consumers producing a tailwind that is driving our economy deeper into recession. Here’s where we get cut to the bone. What happens when rising unemployment pushes our economy into a depression and impacts those unable to afford food? In a free market when demand goes down production is cut back. In the case of rising oil prices, the weak are priced out the market, and resort to bicycles, or walking, or whatever. And as they do prices go down to the point where they can enter the market again. But in the case of factory farming the unit price goes up and the weak are priced out of the supermarket (soup lines and food stamps are not going to cut it). But they are not about to roll over and die. They will resort to stealing. And when stealing becomes endemic, people panic and hording becomes widespread. And when they go back for more they find the food markets under new managementâ€â€Old Mother Hubbard standing at the door with her arms crossed; no more food for you. And so as people turn away from supermarkets, they turn on each other, “a war of all against all.†This is the art of war. Let the enemy destroy themselves. And second as our economy slips deeper into recession it falls into what is known, in economic jargon, as a liquidity trap. As the Fed pushes interest rates to rock bottom and flood the banks with cash it just sets there, as recession forces consumers to cut back on spending and so firms cut back on production, investment and workers. As they do the opportunity for investments dim and venture capitalists cut back and sit on their hands and the economy freefalls. The usual economic remedy is to resort to what is called in the trade: helicopter moneyâ€â€throwing out a hundred and sixty billion dollars in tax rebates and tax incentives into the wind in the vain hope that our economy will step over the trap.
The usual isn’t working. We have to put our economy on a war footing. And as we engage in economic war we set off an investment and spending multiplier effectâ€â€a ripple effect that creates new jobs and hence more spending and more investment. And as it does the Fed does what it can to provide the necessary liquidityâ€â€without any fear of long-term inflation. Scarcity is the source of inflationâ€â€it is the economic problem, and sustainable development is the answer.
On the energy front our end game will depend on stable oil prices. Yet, oil has, or will shortly reach peak production; reflected by the canaries in the futures markets reading the handwriting on the wall (and as the economy heads into recession they will reverse their bets). And even if oil hasn’t reach peak, the buffer of excess capacity is thin, and any disruption in production sends prices skyrocketing. Even so, when oil does reach peak, there is a plateau of productionâ€â€how wide depends how fast we shift to renewable sustainable energy and sustainable development. Peak oil is an historical turning point just as threatening as the rise of communist China. We have to understand that it is in our national interest to dramatically reduce our consumption of oil (even as prices drop). Our national security depends on it, as well as our international credibility. The United States, with five percent of world’s population, consumes one-quarter of the world’s supply of oilâ€â€more than China, India, Japan and Germany combined. If the rest of the world is to prosper, if our nation is to survive, we are going to have to take the lead–we have to be the agent of change. We have a narrow window of opportunity and the sash cord of rising oil prices if not arrested, will slam it shut.
Of course change is underway. Airlines, struggling to survive, are grounding planes. And drivers are restricting and altering driving habits, shifting to public transportation and turning to rail for their commutes. But unless others, those that don’t care or the affluent who remain aloof to the crisis, don’t curtail their consumption, and limit their driving and flying to essential trips, we’ll lose the war before we even get into battle. A unfortunate, but unavoidable outcome is that cutting back on travel means some businesses, large and small, may suffer, and some workers will lose jobs, but it is a small sacrifice as we invest in sustainable enterprises that puts us on a path to economic recovery. And while for some, as they shift professions, they’ll see in a decline in their life styles, but they’ll have a job, so while they may move down, many more will move up to better jobs with better pay.
That said our first line of defense is energy. While coal provides 50 percent of our electricity its costs are rising along with those of natural gas. To fight this war we are going to need to rely on new stocks of sustainable electricity, stabilizing the price of coal and natural gas (we are at war, and if coal and natural gas industries seek to defend their self interest they serve only to weaken the war effort). This is the path to energy independence, and it’s going require immediate and significant investment. But shifting to electricity means nothing unless the automakers quickly shift to producing inexpensive A to B electric cars. Or consider Air Cars that run on compressed air (if proven to be viable). If not, there is no path to energy independence and we’ll remain on the oil trackâ€â€heading us away from the front lines. To fortify our energy line we have to invest in those technologies that can be quickly be developed and deployed. On the energy front we have a choice of windmills, photovoltaic solar thermal power, deep geothermal, and so on. While not eliminating the development of any, still, we should focus on those that are the most viable and the most promising. While it makes sense to immediately begin installing solar arrays on homes that use natural gas or oilâ€â€financed by loans or second mortgages whose monthly payment matches or reduces their monthly energy billâ€â€it also makes sense to focus on solar thermal technology at the same time. For example: Ausra, an up and coming entrant into the renewable energy field, have embraced the technology that has significantly reduced the costs of bringing on line base load (day and night) solar thermal energy to the point where it is becoming competitive with coal-fired and nuclear power plants. Currently they have completed an automated factory in Las Vegas that produces the necessary components for their domestic power plantsâ€â€and eventually, as they spread throughout the country these components can be produced for export. The problem is that the proof is in the pudding. Yet, we have to believe in something, do something, before our economy turns to mush. Whatever it takes, our goal is energy independence and without a sustainable supply of energy, any vision is powerless.
So said, on the consumer front we can invest in factories today where various brands share the same assembly line of robots and workersâ€â€from breakfast cereals (packaged in reusable plastic containers) to toasters, microwaves, refrigerators, computers, and so onâ€â€bringing down unit costs. And as we as do, we take it upon ourselves to produce untainted and cradle to cradle products. And while it may be improbable to compete with worker’s that barely have subsistence incomes, nonetheless, we just have to cut back on superfluous spending. Think of it in terms of organic food, you may pay more, but our nation becomes healthier (and this applies also to domestically produced steel). Here’s how we wean ourselves from China while creating new jobs.
On the agriculture front there is controlled-environmental (indoor) farms that can provide cities with a local sustainable food supply while playing a significant part in meeting the challenges of severe droughts and weather (that appears to worsening on both fronts), looming worldwide water shortages, along with rising oil costs and rising food prices.
While there are variations of CEF’s, they all are pretty much based on hydroponics and tout the same economic efficiencies. They all can be located within cities or neighborhoods. They all run on electricity, require no pesticides, herbicides nor conventional fertilizers (all derived from fossil fuels). They produce crops year around, and depending on the technology, use from one-tenth to one-twentieth the water of conventional farms. They not only use less water, they can use recycled water from the surrounding communities.
One up and running venture was the phytofarm (re: Discover magazine December 1988, The Green Machine: Indoor Farming). This is a fully enclosed farm fed by artificial lighting where one acre can produce 100 times the yield of conventional farms (in the dead of winter). And while it was geared (literally) to produce leafy greens and herbs, there is practically nothing that cannot be grown indoorsâ€â€albeit it would require a shift to growing some food in composted earth pots. Yet, while the project had a successful run for a number of years, in the end it lost out due to high-energy costs and closed its doors in the early 1990s. But with rising fuel costs, it becomes competitive, and we can open its doors again. In the meantime greenhouses are up and running. And they are in the process of literally reaching new heights. Visionaries are proposing vertical farmsâ€â€high rises with greenhouses stacked on one another (check out the technology on the internet). Yet they have not gotten off the ground, and so their technology remains unproven. But as venture capitalists get off their hands and get to work, this could quickly change. Even so, indoor farming is the wave of the future and as we Johnny Appleseed these farms throughout the country, or economy grows as well as our confidence while taking the pressure off of conventional farmsâ€â€that we’ll depend on well into the future. And consider this: While it’s O.K. to throw out money from helicopters to the people, imagine, instead of throwing billions into the wind, those tax rebates were invested in sustainable enterprises. A hundred billion dollars could have immediately funded the construction of three hundred and thirty vertical farms at a cost, at the high end, of three hundred million per building. But investing in sustainable energy and sustainable agriculture is not going to be enough. We need a major construction boom. And it is not going to happen within the confines of urban sprawl. Nor should it. We are not addicted to oil, but to a pattern of development that is unsustainable. To live here, cars and light trucks are a necessary fact of life. Not only a fact but are a status symbol (the bigger the better), but a fact and status that reflects our decline. Today owners of SUV’s and their light (heavy weight) truck cousins are feeling the pain at the pump and are not only upside in their loans, but are finding that their resale value have significantly droppedâ€â€they are stuck with a dinosaur or at best a lawn ornament. But as some grieve their demise, understand they played a significant role in the depletion of our oil reserves, and now as we turn to the world for more, they are a major factor in driving up world prices, slowing down the global economy, pushing up our trade deficits while pushing the dollar to the edge of credibility. And in their production and use they produce air pollution as well as heatâ€â€pollutants that contribute significantly to global warming. And too, as they roll off of assembly lines they demand too much energy and resources for their infrastructureâ€â€and there are never enough highways. So there is a constant need to tear down homes and businesses to expand their capacity. And even as we enter and exit them, our roads are clogged. And just consider the costs of traffic lights. At the top end they cost $250,000 per intersection to regulate their flowâ€â€so, if we don’t find ourselves inching our way to work on our super-highways, we find ourselves idling away our time and our gasoline at intersections. Sprawl is a phenomenon that survives by feeding on itself as it adds on more suburbs (and longer commutes). But since the housing crisis is in play, as we drift towards a depression few will be buying existing homes no matter if their prices do bottom out. More people will rent houses, move into smaller apartments, or move in with family and friends or rent rooms. The only new home construction here will be that of cardboard boxes (made in China) as more people lose their jobs. Productivity is the hallmark of capitalism and the source of our prosperity. But in the case or urban sprawl prices and taxes go up while efficiency goes down. Meanwhile, as it grows, it reaches out for more water, food, energy and land. But it is the demand for land that is the primary threat as it bids up the price of real estate. The thing is, as the price of real estate went up, so did the sale price of everything, and to keep up to it was necessary for wages to go upâ€â€setting off a price/wage spiral that in itself is unsustainable. Nonetheless economists have always viewed homes and high-rises as assetsâ€â€good investments. In reality they are a source of inflation. And eventually, regardless of the current housing crisis, stagnating and declining wages would have brought on a similar crisis. While economists refuse to believe that cities and their sprawling suburbs are a source of inflation, nonetheless the marketplace is signaling for a better product. And while some cities proudly wear the sustainable label, they are among the most expensive places to live and do business. And while they embrace indoor farming, they need to embrace the idea of competition to stabilize their cost of living. It’s time to move beyond sprawl and shift our growing population to new cities. This isn’t to say we shouldn’t revitalize those cities on the edge, but with an expected seventy million per year population increase, we are going need a lot more cities. Cities that not only work hand in hand with nature, but do more with less. So out with old and in with the new. To do so, enlightened planners, politicians and investors are going to have to take the lead. And to a small to degree, they already have under the rubric of new urbanism. They have taken an old idea and made it new (check out Garden Cities of Tomorrow on the internetâ€â€here you will find the seeds for sustainable cities) to reshape sprawl by building urban centers where homes and businesses are mixed within a short walk and travel is shifted to public transportation. But from here it is a short step to begin to build whole new cities (connected by railroads carrying passengers, cars, trucks, construction equipment and freight)â€â€whose construction will ripple throughout the economy revitalizing our industrial, service, and tourist sectors (where taking the train is part of the packageâ€â€while our auto infrastructure needs investment, more so does our railroad industry). Here, in the new cities, while some workers will be sending money back to their families, others become would-be homebuyers and lenders can feel confident in providing them with mortgage loans that will help finance their development. Here too there is a safe haven for those displaced by wildfires, droughts, floods, hurricanes, and tornadoes. So, first, these investors and developers survey our regions, our nation for a sustainable niche and inexpensive land (owned entirely by the developers) and begin building new cities. And as they come up on exceeding the limits of the region, we move on and build new cities in other regions. This is a long neglected vision put forward by enlightened urban planners. We can neglect it no more. And while there is no shortage of willing architects (western architects who are designing sustainable cities in China (notably in Dongtanâ€â€albeit, not pursuing their development with their usual vigor), what’s one more model? First, however, these are sustainable city planners and the first thing they plan for is either to eliminate cars, or greatly reduce their number. And second, these architects fully embrace green building and innovative technologies.
That said, this is how I see it: clusters of neighborhoods (linked by elevated transportation arteries shared by bikes, pedestrians and rapid transit systems) will form the city. Here the neighborhood is a large terraced multi-storied structure sheltering thousands. Here the terraces are reserved for greenhouses and homes and their centers for fully controlled-environment farms, factories, convention centers and stadiums. So, as you walk out into your neighborhood you encounter not hallways, but wide walkways, allies and breezeways lined with schools, libraries, theaters, businesses, shops, and restaurantsâ€â€all within walking distance. And when you go to the first floor, at ground level you find barns (for pigs, beef and dairy cows, and chickens that are butcheredâ€â€harvested next door) opening onto natural habitant mixed with organic farms, orchards, parks, playgrounds, and golf courses. Here, instead of sending our table and produce straps, our unwanted leftovers, dry bread, spoiled fruit to landfills, we recycled them to neighborhood barnyards or to community organic orchards and gardens. In their development, in the short-term they create hundreds of thousand jobs as we prepare for their building, and as they rise they will provide a steady stream of employment that will ripple out to existing cities and suburbs underwriting their tourist and service economies as they provide the logistical support while bootstrapping their local economies as they develop their own means of producing consumers goods, sustainable agriculture sites or connect to or develop their own of sustainable energy plants while shifting to A to B cars. And forget about developing more casinos and theme parksâ€â€they are not part of the solution. So as sprawl stabilizes those homebuilders and high-rise developers can finish their projects and become part of the solution. Not only do sustainable cities provide a sustainable stable source of energy, food and sustainable products, not only do they more with less, not only promote the rebuilding of our industrial base but they provide the economic benefit of lower taxes (since the infrastructure is fixed, so then are taxes), lower prices and greater efficiency, while providing shelter from climate change and providing the term solution to global warming. So, altogether our economy becomes more efficient and robust and the world becomes a better place for all its inhabitants. And as it does, as we channel investments into IPO’S that rise to meet the sustainable challenge, the stock markets too becomes robust and produce their most important productâ€â€taxes on capital gains. So along with ending the tax cuts for wealthy and a cut in military spending as the world shifts from conflict to cooperation, we pay down our debt, and eventual surpluses can be used to underwrite health care and the social security system. In the long term, when cities are fully sustainable, and stock markets stabilize and decline, they will provide their citizens with health care and provide for the social security of the elderly.
Cities are also the key to stabilizing global population growth. As nations modernize and urbanize their citizens have fewer children that fall below the replacement rate. As such their populations stabilize and then decline in the long term. There is, however a problem in the short-term. As countries modernize and urbanize they create what economists term mature economies, that is, along with a decline in population there is a decline in home construction and infrastructure and so a decline in economic growth and tax revenues threatening their entitlement packages. So most industrial nations turn to immigration as an answer to maintain their economies to keep their population stable and the social fabric tightly knit. But immigrants do not easily assimilate and have more children exceeding the replacement rate and in so doing create social stress. Especially in the United States where immigration goes beyond what is it necessary to maintain a stable populationâ€â€it’s betting on growth to sustain its economy. Nonetheless, immigration will remain a fact of life in the short term. In the long term, as new cities rise in their homelands, immigration will decline. Meanwhile, the U.S. is being invaded by millions of illegal immigrants. This is a problem because politicians haven’t come up with a simple guest worker program. There’s no point in sending them back. Have them provide the necessary information, give them a work card, and let them find jobs on their own. Putting up a border fence is not the answer. What we should be doing is mending fencesâ€â€on both sides. If our economy is going recover, if we are going to pursue sustainable projects, we are going to need those workers from Mexico. And as far as closing the borders to drug dealers, it is no time (is there a right time?) to be getting high, sober up, take that money and invest in the defense of your nation. In the meantime, we’ll work together with our neighbors Canada and Mexico in the development of sustainable citiesâ€â€this is the new North American Trade Agreementâ€â€better jobs with better pay. And what works for us, can work throughout the world. The industrialized nations should form an economic coalition (the moral equivalent to war) to assist the Palestinians, the nations of Afghanistan and Pakistan (first developing sustainable food and energy projects), and other nations, in the development of new cities that in turn sustain the economies of those participating countries. And Iraq should consider forming a coalition government, take its oil wealth, while it can, build up its infrastructure and begin the construction of their new cities (separating the factions or not). Regardless what criticism may arise, this is a war economy, and it is how we win the ideological battle–it is how we fight World War III. A war that will be led by our captains of industryâ€â€captains who fully support their employees. This is not to say that the President, Congress, the Federal Reserve, governments at all levels and the people will not have a significant role to playâ€â€it means that if our corporate CEO,s (those who focus on the bottom line and their personal wealth and those geniuses who focus on exploiting currency and financial markets) don’t step up, they put the war effort at risk and so put our nation at greater risk.
There is also something that all nations should consider: that it is their best interest to shift to a global economy where trade is no longer a zero-sum game, but a sustainable end game where everyone wins–it’s about cooperation and balancing trade. There is a huge amount of work to make the transition to would-be sustainable cities and that requires that nations with a trade surplus, who are shifting their economies (their workers) to the development of new cities, turn to those nations with a trade imbalance–an imbalance in employment–take their foreign reserves and invest in or directly trade for whatever is necessary to facilitate and expedite the building of their cities.
Certainly, development cannot exceed available resources, but given a sustainable agenda and paced development (and perhaps a simplified city design that reflects the realities of available resources) there are no market uncertainties and investors and producers can feel confident in bringing the necessary commodities to market. While the people of developing nations can feel confident that their leaders will channel their resource revenues into the development of new cities–as a condition imposed by those enlightened countries who import those resources.
Now, those jobs going to China, India and elsewhere is a good thing. Instead of a zero-sum game, instead of a world teetering on the abyss of nuclear war, we now have a global alliance for peace and sustainability. Humankind was conceived in ignorance. What is done is done. There’s no going back. If we remain ignorant, if we seek revenge for past injustices, if we don’t seek redemption for past transgressionsâ€â€well, we are just too stupid to live. Freedom, rightly understood, is that it is the spirit of the mind, the advance of knowledge that allows us to hurdle the obstacles that we created in our infancy. And as we put away our childish ways, we allow history to continue and so allow the truth, the underlying of reality of everything, to will out. This is God’s will.
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