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Entries in globalization (95)

10:26AM

This week in globalization

 

Clearing out my files for the week:

 

  • Martin Wolf on why the US is going to win the global currency battle:  "To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US."  We win because we have infinite ammo.  But better that we come, per my Monday column, to some agreement at the G-20. 
  • Sebastian Mallaby, also in FT, says that, despite the current currency struggles, the "genie of global finance is out of the bottle" and not to be stuffed back in.  Wolf had noted $800B capital inflows to emerging markets 2010-2011, which is gargantuan, thus the crazy struggle of some places to keep their currencies low.  As for America stopping China from buying US bonds in retaliation for our not being able to buy Chinese assets?  China holds only about one-third of the US T-bonds abroad ($3T total), so it can buy all its wants from others in the system.  There is no turning back, he says.
  • Meanwhile, the Pentagon makes plans to turn back the clock on the globalization of defense manufacturing.  A new spending bill provision--inserted at DoD's request--includes the power to exclude foreign parts suppliers (read China). Just about every US-based defense firm uses offshore suppliers, so this is going to get very expensive very fast.  It'll be a lot harder to find that $100B in savings over five years. This is almost a fifth generation warfare version of shooting yourself in the foot--first, before the other guy can.  China does nothing here, that frankly we shouldn't be able to handle, but we move down a path that instantly adds a significant tax to everything we buy in the growing-by-leaps-and-bounds IT realm.  One hopes there's a half-billion for that American rare earths mining co. that's looking for a new investor.  Interesting how China's becoming vulnerable to, and dependent on, so many unstable parts of the world for resources, and we're going to cut off the tip of our IT nose to spite our face.  I can imagine a cheaper way, but that would be so naive in comparison to spending all this extra money.
  • China continues to buy low, as a ruthless capitalist should. Giving us a taste of what it could be like if we don't get too protectionist, it's buying up Greece's "toxic government bonds."--and plenty more in Europe. All of the EU is getting a taste, says Newsweek, as Chinese investors are snapping up bankrupt enterprises and--apparently--putting people back to work.  China also, like a ruthless capitalist, seeks to make bilats reduce the chance of EU-wide restrictions on its trade. Old American trick.
  • Another sign of globalization on the march:  emerging economies buying up food and beverage companies in the West that would otherwise naturally be targeting them for future expansion. Bankers expect the trend to continue.  Gotta feed and water that global middle class that keeps emerging at 70-75m a year.  Emerging economies are buying up the companies from equity firms that had previously bought them during down times.
  • Great FT story on how Turkey has the Iranian middle class in its sights.  Long history of smuggling inTurkey dips a toe in, would like to drink entire tub eastern Turkey.  Sanctions hold up what could be a major trade, so the black-marketing local Turks mostly smuggle gasoline--and a certain amount of heroin.  But the official goal is clear enough:  be ready to take advantage whenever Iran opens up.  A local Turkish chamber of commerce official floats the notion of a free trade zone at the border. Those 70m underserved Iranian consumers beckon.
  • India's airline industry can't keep up with demand generated by itsGet me planes and pilots--now! booming middle class. Boeing says Indian airlines will buy over 1,000 jets in the next two decades. Already they're forced to have one-in-five pilots be foreigners.
  • Fascinating WSJ story on how China's car economy is going wild, with ordinary Chinese exploring the freedom of the road.  Drive-in service is taking off, weekend jaunts mean hotel business, etc. In past visits I saw a lot of this coming down the pike.  Just like when America's car culture went crazy after WWII, this is a serious social revolution.


Don't forget your meal of eternal happiness!

  • Funny thing about all this South China Sea hubbub: "Corporate ties linking China and Japan have never been stronger," says the WSJ.  Serious driver?  Japan is exporting its mania for golf to China--the fastest growing market for the sport.  It's what middle-class guys do.


Coming soon: the "golf wars"

 

  • WSJ story on Vietnam creating its own Facebook to keep a closer eye on its netizens.  Defeat the anti-capitalist insurgents!What caught my attention: "The team has added online English tests and several state-approved video games, including a violent multi-player contest featuring a band of militants bent on stopping the spread of global capitalism."  I would say we finally won the Vietnam War.

 

8:44AM

Report: NATO members foil Mumbai-style wave of attacks on Europe

 

From Michael Smith, the gist of the Sky News report:

 

Intelligence agencies have intercepted a terror plot to launch Mumbai-style attacks on Britain and other European countries, according to Sky News sources.

 

... militants based in Pakistan were planning simultaneous strikes on London and major cities in France and Germany . . . the plan was in the advanced but not imminent stage and the plotters had been tracked by spy agencies "for some time".

Intelligence sources told Sky the planned attacks would have been similar to the commando-style raids carried out in Mumbai . . . the European plot had been "severely disrupted" following intelligence sharing between Britain, France, Germany and the US.

It is not known whether the attackers are already in Europe.

News of the planned strikes came as the Eiffel Tower in Paris was evacuated because of a bomb scare for the second time in two weeks . . .

When the terror plan came to light, the US military began helping its European allies by trying to kill the leaders behind the plot in Pakistan's Waziristan region.

There have been a record 20 missile attacks using drone aircraft there in the past 30 days.

 

Why it's important to pay attention:

 

  • It's long been my contention that extremists operating in NW Pakistan, most likely in some collusion with al Qaeda (not a big leap), will keep trying to make some big splashy strike in the West.  Many experts saw the Times Square bombing attempt as a practice run using an expendable. Figuring how hard that is to pull off--in a relative sense, and with AQ and its net falling from our collective memory thanks to the economy, the default alternative for such groups to regrab the headlines is to do something easy and cheap like Mumbai II and to do it in Europe.  So yeah, I find this whole logic believable.

 

  • I think Obama is right when he says, we can absorb another attack without freaking out.  I don't think we would, having gone through Afghanistan and Iraq since and understanding that such unilateralism just leaves us holding the bag.  So the next strikes, I believe, can lead to more interesting and better cooperative opportunities with Russia, China, India, Turkey, et. al, if done well.  Is Obama the guy to do it?  While I don't think Americans would freak, I fear another attack would simply give the man another chance to come off as far-too-Vulcan for the average American voter.  While I think we're still in philosopher-king political mode and will be for a while, I think his off-putting style will mean we'll stop reaching for the smartest-guy-in-the-room option, because that guy should be the brilliant adviser (which Obama lacks because his smartest-guy-in-the-room mindset attracts other big egos and sycophants and apparently not much in between) and not POTUS himself, who should be all about leading and not aspire to such a title.  Therefore, I do not see a rally-round-the-prez dynamic unfolding when it eventually happens.  That bad feeling will simply be piled upon the existing glut of bad feeling about the economy.

 

  • The other side's ability to sked our counter-reactions is a real problem, because, in our habits, we feel the need to "keep all balls in the air," so terror competes with WMD in NorKo and Iran competes with our growing fears of Chinese military build-up competes with global warming competes with . . .. What was nice about the post-9/11 period was the willingness of great powers to clear the decks on most everything else, keeping them in some big-picture perspective mode, and exploiting the common threat opportunity embodied by AQ to contemplate a serious recasting of the great power relationships for the better.  But then Bush-Cheney went wild on the unilateralism/primacy and that moment was largely wasted.  Can it happen the next time a crystalizing attack occurs?  Sadly, I don't see the leadership anywhere in the world to take advantage, so we go on with the current situation, where everybody is juggling balls and no serious progress is being made on anything. Meanwhile, mutual suspicions pile up, and increasingly we've all got enough gripes with every other great power to make cooperation an almost tortured affair. I'm not secretly wishing for something bad to happen; that is a dangerous intellectual route to go for someone who thinks seriously about the future. The point is, I don't have to. Globalization's penetrating speed has not abated one whit with the great recession--anything but. We're only dimly aware of that here in the States because we think that drawing down in Iraq and hoping to do the same in Afghanistan is a big deal for the system, when, in truth, it barely notices it right now and continues down its aggressive integrating path.  In short, we assume it's Old-Core-does-Gap-or-nobody-does-Gap, when in truth, it's New-Core-does-Gap-systematically and compared to that, the West's efforts are marginal and concentrated in bits and pieces.  I'm not looking to go back to the frantic push the US made after 9/11.  I'm looking for a better marrying up of those two efforts, because the mismatches in resources are vast and the big opportunities for new collaborations are slipping away.  AQ or others will accommodate that need whether we want it or not.  That's the dynamic we're in right now with globalization pushing into previously disconnected places with such force that serious blowback will be the norm for the foreseeable future.  Yes, we can dream it'll all come down to some naval battle in the South China Sea, but that's just habit talking.  And that's what I find so sad right now:  that whole "juggling the balls and keeping all of them in the air" mentality of Clinton and Obama is just a placeholder for real leadership, which events will eventually demand.  Why?  Because they will keep trying and eventually they'll get our attention.  As always, what we'll do in that moment will be far more important than the vertical shock laid on us.  Nation-states still run horizontal scenarios to ground, meaning the question of the day is, "When the next vertical shock comes, where will go with it?"

 

 

And that's why I pay attention to stories such as this.

8:13AM

Globalization cherry picks, and so do we on the failed-state carcass that is Somalia

Voice of America piece by way of reader Robert Prescott.

The opening (in more ways than one):

Somaliland’s Minister of Foreign Affairs said the willingness of residents living in the self-declared autonomous region to fully embrace democracy has played a pivotal role in making the area unattractive to hard-line Islamist insurgents, such as al-Shabab.

Mohammed Abdullahi Omar welcomed what he described as the renewed U.S. interest after a top official in the Obama administration said Washington wants to strengthen ties with both Somaliland and Puntland, located in the Horn of Africa.

The US official expressing interest is our top State diplo for Africa, Johnnie Carson.  Interest, for now, equals more diplomats and aid officials.  Our logic?  Keep the al Shabaab problem as small as possible geographically. 

These Somalis are more than happy to get direct US aid:

“Somaliland has been stable for the last 19 years and we have definitely adopted (a) system into our politics. And, we have had a free and fair presidential election a few weeks ago, whereby a new president won the election. This has demonstrated that Somaliland’s political system has matured.”

He added that Somaliland’s “matured” democracy has renewed interest not only from Washington, but also “other western countries, and made them change their view on Somaliland.”

And I would guess there is some eastern country interest as well.

Five points:

1) Note the pattern that where US troops go since the Cold War's end is to intervene mostly in fake states, and that one outcome of such interventions is that, where there was originally one state, now there are more than one state, meaning we effectively play mid-wife to the birthing of new countries--ones typically buried by past European colonial creations.

2) Globalization, which comes in many forms, has an interest in salvaging as much of Somalia as possible, making chunks open for business and access to East Africa, cutting down on the footprint of the pirates (not mentioned here so must not be a problem here), and keeping the al Shabaabh reach as small as possible. Somaliland really has been a break-away province going all the way back to our first intervention there at the junction of Bush-Clinton. It now presents just enough stability for the connectivity to happen.

3) This is my old story of the break-up of a fake or weak state when globalization shows up:  the more stable and ambitious parts are more than eager to break off and make a better life for themselves with globalization, thus ending--in their minds (and often in objective reality)--their tragic relations with the other "losers."

4) Somaliland's emergence shows that we and other Core powers will be in the nation-building business for the very long haul.  That doesn't--by any stretch--always result in troops or even aid, as most nation-building results from private-sector activity generating local public demand for government services--NOT THE OTHER WAY AROUND!  But yes, if you, the state in question, can put on a good show of a modicum of democracy and stability, that is highly attractive, because it means whatever public nation-building efforts are made will proceed with little to no controversy back home.

5) Our goal for places like East Africa is to encourage overarching economic union in a radial pattern, meaning from the inside of Africa to the coasts like slices of pie. We want to help stitch together a pattern of economic complimentarity wherever possible, so that even places with modest resources are at least selling their location for transit of other peoples' goods.  We want, in effect, to create larger associations to which these fledging states can belong.  So as Africa is remapped by globalization and more states appear (like South Sudan shortly), we help provide a larger regional pattern and structure for them to glom onto--local political disintegration married to regional economic integration.

This is a perfect example of SysAdmin function unfolding with merely modest US interest and resources.  It happens simply because globalization is coming to Africa whether or not America cares.  It happens because globalization will remap fake states whether or not America cares.  It happens because everybody and anybody, when given just the slightest chance by circumstances, reaches for connectivity and the options it brings.

All of this happening in a place where we've studiously avoided a military return.

2:52PM

Less absolutely, a deep reduction in flow/change in philosophy and a redirect to Twitter

Two triggers for yesterday's declaration:

1) interview with Canadian journalist (Globe and Mail; nice guy) where I found myself, as always, defending the SysAdmin concept from its usual caricatures (all military, all US or at best all West, and all public spending).  And you know, I just get tired of repeating myself after seven years, reminding everyone that I said from the start: more civil than mil, more USG than DOD, more rest-of-world than just US or West, and--duh!--overwhelming private-sector funded.  So what does Afghanistan tell us about Canada's future choices with its military?  It tells us that the West and the US in particular still myopically chooses to view the SysAdmin task as overwhelmingly military-centric, DoD-centric, NATO-centric, USG-centric, and official developmental aid-centric, and guess what? None of that, even piled on top of itself, constitutes a quorum for Afghanistan. The only package that works there will be heavy on Indians, Iranians, Turks, Russians and Chinese--in addition to the Pakistanis.  It will involve those countries building and defending networks and markets. Victory won't involve the creation of a democracy--at least not one we'd recognize any time soon. Instead, as usual, given our vast costs sunk thanks to our stubborn unilateralism and government-firstism, we'll view any such outcome along the lines of "We fought the war, but the X won!"  It's a stupid and petty mindset and eventually enough frustration with outcomes will drive it out of us, but such change tends to come generationally--go figure.  Anyway, I go on a long riff with this guy and I wonder why I'm still making these arguments in broadcast fashion to an audience that's apparently unready for it, when there are so many private-sector actors and non-US governments moving down this path with a vengeance--meaning better clients.  Why not run with them and pull back from this evangelical path here in the States, somewhat embodied in the time-intensive blog?

[As a side-rant, let me skewer the inane stupidity that says, "Barnett's SysAdmin concept was doomed from the start" by pointing you in the direction of Africa, where SysAdmin "forces" and "functions" are in evident display all over the place.  And guess what?  The vast majority of the work is being done by non-military, private-sector-funded non-Westerners, and IT WORKS JUST FINE DUMBASS!  But sure, if you want to reduce that force/function in all its complexity and breadth within globalization's advance to a small-unit operation in some remote Afghanistan valley and ask the question, What was Barnett thinking when he said a bunch of US Marines with guns could somehow "connect" Afghanistan to the world?  Then yes, all my vision was completely invalidated by that one apocryphal firefight!  Meanwhile, while you stare at your most American of belly-buttons, globalization continues to penetrate the Gap with stunning speed and integrating effect--and never the twain shall conceptually meet.  But understand this, I don't sell theory; I sell observed reality, which I name.  You can wallow in your caricatures and claim my defeat, and I will shake my head at your complete inability to read what I write and hear what I say--in every single brief I've ever delivered.

But I regress . . .]

2) As I move down this path, I run into days where I find the blogging requirement crowds out too much good personal and professional stuff.  Today I spent a long block of time thinking through cyber governance issues and it was great.  If I have the blog on the usual high-volume sked, that's impossible, as is a certain amount of parenting. Plus, after seven years of being in the evangelical mode, I simply want to move on.

Still, I like the site that I've built, and I like having a place to centralize certain things in terms of presentation and archiving.  I also want to put certain things out there regularly, like announcing latest columns and posts at Esquire and other stuff I write and publish.  Then there's always that simple desire to express myself and to record, diary-style, certain things I do (like a planned trip to China in October).

So I know I'm going to finally cave into my wife on the time-lost-to-the-blog complaint (there's the two new kids impact), especially since my career evolution (different role at Enterra as it matures and thus wider network of activities, which was my norm until a couple of years ago) demands both more focus and concentrated efforts and involves a lot of partners who are, as I stated yesterday, not much interested in this broadcast mode but desire more exclusive content more exclusively delivered.  And when I realize that my most circulated stuff on the Web is what I write for WPR and Esquire, then why maintain the blog at such a high level?  Simply put, it strikes me an outdated model:  I started it as pure analytical diary and it became too much the formal presentation as the field was quickly crowded by mainstream venues re-establishing their natural hierarchy (so every mag now has a blog and most bloggers of note operate within organized structures).

[Second side rant:  Why did I talk myself or let myself get talked into this pathway of formalizing the blog? Too many people complaining that I didn't take myself or my legacy seriously enough, which I think I do in my formal writings.  I just don't think I should have to adhere to that level of formality here.  I didn't in the beginning, and I'd like to go back to that and screw all the references and some of the visuals and instead go back to the analytic diary and pure self-therapy of writing for release.  Too many times in recent months I've found myself staring at the blog entry screen, saying to myself, "Type something profound, damn it!"  And you know what?  As soon as you say that you're doomed to be boring and trite and predictable. Plus it takes so long.]

So the question becomes, why not drop out from the old model and go to something more relaxed--as in, write what I want when I want, and shift the quick-and-dirty recording of semi-interesting articles via Twitter, where the lack of visual requirements and the restrictions on text length guarantees a modicum of effort and no more?

And so that is what I will do, and I'll see how that goes.  What I know is this: I don't want to fill this space like I used to.  I find myself needing to retreat mentally from that level of broadcasting/sharing.  I've spent 7 years doing the evangelic thing and it's been fun, but having done it, I will admit to a certain level of boredom with it--the usual seven-year-itch that seems to regularly relocate me in a geographic sense (from Wisconsin to New England to mid-Atlantic to New England back to the Midwest and now plotting a return to the mid-Atlantic).  I'm about seven years having left my job at the Naval War College (I really left in 2001 when I went to OSD, then again in 2003 when I left OSD, and finally--truly--in 2005, so let's split the difference) and I can feel the reinvention coming, which corresponds nicely to Enterra's nifty maturation and settlement into three core areas of exploitation (healthcare, supply-chain management of consumer products, and supplier-chain management of complex sustainment efforts in the defense sector).  So as things are simultaneously settling down and expanding and blowing up, I find that natural itch to reinvent and recast and rebalance.

And so that is the way it will be:  irregular posts here on stuff I really, truly, absolutely want to archive, with the rest going via Twitter, where I will limit myself--poetically--to as few syllables as possible (I thought I did pretty well today).  I will continue the archiving of formal pubs, along with their announcements here, and I will likely archive travel and other special stuff.

But I will abandon the volume standard that I settled into (totally self-imposed) and let the rest migrate to Twitter (the pointing dog stuff).  That just doesn't interest me like it used to; been there, done that--done. Plus, when I compare my original posts from the spring of 2004 to now, I realize that, back then, I mostly riffed and made scant reference to MSM materials (just using them as launching points), and now the bulk of my text are excerpts, which feels like I'm playing fact checker. [Another triggering realization: I had a lot of fun riffing on that Andy Krepinevich piece recently, but I hardly go long like that any more in the blog; instead, I spend too much time cataloguing--and reminding--and watching what I say.  But again, what gets reposted mostly is the more careful, edited stuff I write on WPR and Esquire, so why not go back to the casual standard here--as in, I write-for-myself-so-f@3k-off!  Because that stuff I can write very fast when I choose to, meaning no real burden.

Anyway, I had long feared/hoped this would happen when I finished the Great Trilogy, and that day has finally arrived.

So I kill the formal blog and reclaim the diary, my debt to society and history fulfilled in the dead-tree Trilogy.

But yeah, I will still rant mostly about globalization, because it's the most interesting thing I know.

12:02AM

China confronts the green-eyed monster abroad

I've been preaching this one directly to the Chinese on trips going back to 2004: as you become the face of globalization, you will run into all the same hatreds that America has long endured--and then you'll want a different military than the one you've been wasting your money on.

From a WAPO piece earlier this month via reader David Emery:

In a spasm of violence this spring, an angry mob toppled the Kyrgyzstan president, torched his office and ransacked other buildings associated with his hated authoritarian regime. The crowd then turned on a less obvious target: a popular Chinese-owned shopping mall stuffed with cheap clothes and electronics from China.

An easy dynamic to spot, and even easier for me to have predicted years ago:

As China pushes beyond its borders in search of markets, jobs and a bigger voice in world affairs, a nation that once boasted of "having friends everywhere" increasingly confronts a problem long faced by the United States: Its wealth and clout might inspire awe and wary respect, but they also generate envy and, at times, violent hostility.

The "ugly Chinese" will compete, side by side, with the "China model"--bet on it.

Yes, no question that Central Asia's future is a whole lot more Chinese than Russian.  Just don't expect it to be a cake walk for anybody.

With great power comes great responsibility--and great envy.

9:48AM

WPR's The New Rules: Globalization's Staying Power a Triumph of American 'Hubris'

There’s no question that globalization, in its modern American form of expanding free trade, just went through its worst crisis to date.  But while economists debate whether or not we in the West are collectively heading toward a 1938-like “second dip,” it’s important to realize just how myopic our fears are about the future of a world economy that America went out of its way to create, defend, and grow these past seven decades.
Read the entire column, which you can consider my oblique response to Peter Beinart's "Icarus Syndrome" book, at World Politics Review.
See the references for my inspiration on this piece.
9:30AM

WPR's The New Rules: Listening to the Chinese Case for Strategic Partnership

The goal of global partnership between the United States and China, the cornerstone of my strategic vision for the past half-decade, has taken a beating lately.  The Great Recession has led too many Americans to doubt in our own economic system and political institutions, while encouraging undue appreciation of China’s.  Similar trends can be seen on the Chinese side, with our system unduly discredited and theirs fantastically exalted.  Is the world better-served by this growing Chinese hubris than it was by America’s recent bout of the same vice? Hardly. Zero-sum calculations have no place in this age of globalization’s rapid expansion.

But what “lithium” can we apply to this manic-depressive relationship lest it collapse into full-blown bipolar meltdown?

Read the rest at World Politics Review.

Find the book mentioned in the piece here.

 

12:11AM

Good globalization = $20T in annual trade; bad globalization = $130B in annual criminal trade

Fabulous chart in FT story meant to disconcert you: global crime gangs' muscle growing--yet another thing for me to fear!

So I look through the article for the summing up dollar figure and get $130B, with $105B of that being drugs.

Then I check the size of the global economy, because the number I have stuck in my head from my NewRulesSets.Project days with Cantor at the start of the 2000s is $30T.  Well, the global economy is now twice that size, or about $60T, and despite conventional wisdom, all that money didn't go into the pockets of Goldman Sachs (about $12B in profit in 2009).

Of that global economy, about 1/3rd is traded ever year.  For example, in 2008 (and 2010's numbers will be roughly similar after recovering from 2009) the global merchandise trade (stuff) came to $16T and the service trade was almost $4T, so a total of $20T (see this WTO report).  So you put $130B over $20T and get rid of all those matching zeros, and your equation becomes 130 over 20,000 (please catch any mistakes here), and when I reduce it further, I come up with 65 over 10,000, then 13 over 2,000, and then 1 over about 150.

And then my heart rate slows and I don't feel so freaked out. Global crime equals less than 1% of global trade?

Now let's assume the UN calculations are way off, and the global crime numbers are 5 times larger!

So I start with $650B and I come up with a fraction more like 1/30. Does anyone expect to live in a world where there isn't crime that equals 3% of legal economic trade (understanding that means the UN stats miss 80% of all global crime)

Again, please tell me where my math is wrong.

Does it sound to you like criminal gangs are running the world?

Yes, there are aggregate estimates of illicit activity that run higher than the UN's focus here, and they're always bulked up overwhelmingly by estimates of illegal financial flows (for example, there are credible estimates of $1T a year of illicit financial flows from developing to developed markets). If you want to run with such aggregate estimates, fine, but the UN's record on statistics is pretty good, and here I'm comparing apples (smuggling stuff and people) to apples (legal trade in merchandise and services), not adding in money flows and then comparing that fantastically boosted total to just global trade--a typical misleading trick of those who like to scare people. Because if you add up global financial flows, you're into a whole new scale and if you engage in legitimate apples-to-apples comparisons there, your percentages will yield the same small fractions.

12:10AM

The end of the Third World?

A map of the world distorted to depict projected shares of global GDP in 2015.

Economist piece.

Bob Zoellick, World Bank pres., says "2009 saw the end of what was known as the third world"--meaning the end of a distinct, separate part of the world that is aid-dependent and unimportant.

Is this a plausible notion? asks The Economist:

While the rich world stumbles out of recession, Asia, Africa and Latin America are accelerating and contributing more than ever to world output. Two fast-growing countries, Turkey and Brazil (“powers of the future”, says Iran’s president), struck a deal in May that was intended to break the deadlock over Iran’s nuclear programme. Though less than meets the eye, the agreement was still an intriguing case of emerging-nation diplomacy. And the football World Cup gets under way this week in South Africa, arguably the poorest country to host the event.

Yet at the same time, Mr Zoellick’s bank is not in any danger of going out of business. 

The simpler argument, says the paper, is that the Third World dies when the division between First and Second Worlds ends in 1989 ("end of history").

But the world is still "binary," says the paper, noting that 1B ("bottom billion" live on less than $1.25 a day (basically one half of the one-third of the world's population in my Gap).

Can we at least still buy the dependency theory?  Not when south-south trade (and south-BRIC trade) rises twice as fast as global trade.

But aren't these nations hopelessly in debt?  Public debt in emerging economies is 40% of GDP and flat, while Old Core public debt was 75% of GDP in 2007 and rising toward 110% by 2015, says the IMF.  So South Africa has a better credit rating than Greece.

Nice conclusion:

In 1826 the British foreign secretary, George Canning, boasted that he had “called the new world into existence to redress the balance of the old.” Now the third world has come into its own to redress the imbalances of the old. Canning and others also helped to transform the diplomatic architecture of Europe after the end of Napoleon. Far less has been done—in international financial institutions, in patterns of aid-giving and in diplomatic habits—to reflect the reality of the third world’s end.

As I've long argued:  dependency theory turned on its head, and if that's not the end of history, then it's the end of Leninism.

12:07AM

Alterman on the underlying challenge posed by globalization's embrace of the Middle East

Great Jon Alterman piece in World Politics Review.

It is not surprising that discussions with government officials from member states of the Gulf Cooperation Council often dwell heavily on security threats. Terrorism remains a persistent concern of theirs even if some of the urgency they feel has passed. A conventionally armed Iran is a constant source of worry. And the prospect of a nuclear-armed Iran is an unending nightmare.

Yet, among the most-senior leadership, there is also some perspective. The terrorism threat no longer feels existential, as a combination of effective security initiatives, internal cooptation and international cooperation have made their mark. On Iran, there is a sense of fatalism: The Gulf has relied on external guarantors to keep the Iranians at bay since the days of the Portuguese empire, and the Iranians have sufficiently agitated the world to ensure that external guarantors, in some form or another, will remain.

But in private conversations with senior GCC royals last month, it was clear that one security concern does indeed loom large. It is one not of physical security, but of human security. Their nations can almost certainly survive the other threats they face. But unless they can create dynamic, hard-working and creative populations over the long term, these countries will fail.

For the last half-century, the GCC's human security story has been a positive one. After World War II, today's gleaming Gulf capitals were impoverished collections of reed huts. Schooling was uncommon, and fresh water was scarce. Traffic-clogged roads did not exist, because traffic did not exist. Radios were a rarity, in contrast to the ubiquity of the satellite dishes that now deliver more than 500 channels in Arabic. Life expectancies doubled in the 20th century. Malnutrition and the endemic diseases of the 1950s have disappeared, and the diseases of the 2010s -- heart disease, kidney disease and diabetes -- are all diseases, not of poverty, but of plenty. For Gulf Arabs who came of age in the 1960s, the contrast between their youth and their adulthood could not be starker.

What will the future look like for today's youth? It is hard to imagine that they can enjoy a jump in living conditions similar to the one their parents and grandparents experienced, especially as oil and gas markets seem unlikely to expand as much over the next half-century as they did over the last. Much of it comes down to a basic problem of mathematics: Per capita income increased a hundredfold, from $500 in 1960 to $50,000 in 2010; it cannot increase another hundredfold, to $5 million, in the 50 years to come. 

Even more importantly, what might drive future growth? There is a growing recognition that oil has wrought about all that it can.

The GCCs are the natural lead geese on this evolution of thinking, so every step they consider or take is worth watching. Because when the world moves beyond oil, all the Middle East is left with are the people as a resource.  Nothing that's happened in the past decade has altered that reality; indeed, most of what's happened has accelerated it.

Excellent article.

10:01AM

WPR's The New Rules: Whatever Happened to Deglobalization?

In the midst of deep crisis, cooler heads rarely hold sway -- at least in the public discourse.  Thus it was that just a year ago, we heard from many experts -- and joyous activists -- that globalization was on its deathbed: The global economy was on the verge of a great and permanent unraveling.  It was to be an inexorable and exact reversal of everything that defined the go-go globalization of the 1990s, replete with social and political unrest of the highest order.  In effectively re-enacting the Great Depression of the 1930s, we even faced the incredible prospect of resumed great-power war.

Read the rest at World Politics Review's "The New Rules" column.

12:06AM

More evidence of the myth of de-globalization: outsourcing to India rebounds dramatically

WSJ story:  India's three top outsourcing firms (TCS, Infosys, Wipro) all experience big rebounds in revenue for work outsourced from West.  Each had negative first and second quarters in 2010 and each will have 10-20% boosts happening in 2010's 4Q.

Doesn't mean everything goes back to what it was; it never does.

The turn of events marks a reversal from a year ago, when Indian firms were reeling from a steep drop in orders for software services. But the tech-services sector differs now from the Indian firms' boom years of 2003 to 2007, and new hurdles have arisen. 

Long-term challenges include rising labor costs, sliding billing rates and currency-exchange risks. The upshot is that despite optimism in Bangalore and Mumbai spurred by the recent turnaround, the companies likely won't be able to return to 30%-plus annual revenue growth without restructuring their business models and the types of services they provide.

"Is there a revival? Certainly. But is it a return to the go-go days of offshoring three years ago? No," said Sid Pai of Houston-based outsourcing-advisory firm TPI.

Pricing will be a long-term issue. Indian firms cut billing rates 5% to 10% during the downturn to keep clients, and many analysts say increasing prices now won't be easy.

"There'll be niche services where you can charge a premium, but in other areas, the pricing pressure is only going to continue," said Forrester analyst John McCarthy.

Meanwhile, as they grow bigger, the top Indian companies are beginning to confront a problem that larger competitors like International Business Machines Corp. and Accenture Ltd. have struggled with for years: how to increase revenue faster than head count.

A sign that the outsourcing sector in India is moving off the easier challenges of extensive growth to intensive growth.

It happens to the best; it happens to the rest.

[name the movie by David Mamet in which that line appears!]

12:07AM

What history predicts regarding a revalued yuan

"Economics focus" column from The Economist.

Story is an old one:  US in the 1920s, West Germany in the late 1960s, Japan in the early 1970s, Asian tigers in late 1990s, and China today.

The description:

A big export-oriented economy is booming but its trading partners are livid. Year after year, they point out, it runs large current-account surpluses. The country regards itself as an export powerhouse whose goods are prized abroad. Others castigate it for mercantilism. Some argue that it subsidises its exports unfairly by giving exporters credit at cheap rates and by keeping its currency artificially undervalued. Pressure builds on the country to revalue its currency and boost domestic consumption, which makes up an unusually small share of its GDP.

Nor is the size of China's surplus unprecedented:  both Germany and Japan owned one-fifth of the world's export surplus in their day, just like China now.

All ended up revaluing their currencies, and as the charts show, China has little to fear by doing so:

 

The contribution of net exports to GDP will fall slightly, but growth not impacted much at all--in either direction.  The slack was picked up by private consumption and investment.
The fly in the ointment:  better to have pursued a monetary stimulus than just revaluing the currency.  If you only do the latter, then every 10% in appreciation takes a GDP growth point off.  When Taiwan and South Korea did the same, they proceeded to liberalize their financial markets--meaning China should continue to do the same now.
Classic example of connectivity driving code: you connect to globalization to enrich yourself, and you end up having to conform your internal rules to those of the global economy--or you get burned.

 

12:08AM

Pass me that hamburger, and my cousin's phone number!

 

NYT story about how globalization is changing diets in the Persian Gulf and how Qataris' tendency toward tradition (marrying cousins) combine to render the population unusually unhealthy--as in, too heavy, too much diabetes, and too many genetic issues.

Like other oil-rich nations, Qatar has leaped across decades of development in a short time, leaving behind the physically demanding life of the desert for air-conditioned comfort, servants and fast food.

While embracing modern conveniences, however, Qataris have also struggled to protect their cultural identity from the forces of globalization. For many here, that has included continuing the practice of marrying within families, even when it predictably produces genetic disorders, like blindness and various mental disabilities.

“It’s really hard to break traditions,” said Dr. Hatem El-Shanti, a pediatrician and clinical geneticist who runs a genetics testing center in Doha, the capital. “It’s a tradition carried from one generation to the next.”

Qataris live in a nation no larger than the state of Connecticut where they are a minority among the more than a million foreign workers lured here for jobs. But their problems are not unique.

Kuwait, Bahrain, the United Arab Emirates and Saudi Arabia all share similar struggles with obesity, diabetes and genetic disorders, each suffering the side effects of an oil-financed lifestyle and a desire to hold on to traditions.

Yet, even in this neighborhood, Qatar stands out.

You know the old Godfather bit about, "Leave the gun, take the canoli"?

When globalization comes to you town, my advice is, "Forget your cousin, take the spinach salad."

But tradition is a hard habit to break:

For all of these challenges, and for all of its wealth, Qatar has primarily focused on the treatment of diseases rather than on prevention.

Everyone here points to lifestyle and tradition to explain the nation’s health crises. While it was once taboo to talk about the problems involved with marrying relatives, they are now talked about openly. There have been some discussions about premarital genetic screening, or genetic testing done at birth. But the tradition is so strong, no one has raised the prospect of curbing it.

“You can’t tackle the issue,” said Moza al-Malki, a family therapist and writer. “There are some big families, clans, they don’t marry outside the family. They won’t allow it.”

The issue of obesity seems to run into the same wall of tradition, health experts here said.

“If you don’t eat, it’s considered a shame, and if you leave someone’s home without eating it’s a shame,” said Abdulla al-Naimi, 25, who refers to himself as “chubby” but is noticeably overweight. “Half of my family has diabetes,” Mr. Naimi said. “My mother has diabetes. Three cousins younger than me have diabetes. For me, I eat too much and I don’t exercise.”

He is also married to his first cousin.

 Everywhere I have traveled in this world, I find the same attitudes:

 

  1. Everyone says their culture is based on food; and
  2. Everyone says everybody else's culture is more sex-obsessed than their own.

 

The inter-marrying thing is tough.  It pretty much has to change from within--as in, grandmas getting too unhappy about their damaged progeny.

On the food front, though, I'd love to America led a positive redefinition.  We need it desperately for ourselves, and we should make money spreading to the world.

12:10AM

EnlightenNext's interview with Tom

The Genie's Out of the Bottle: Dr. Thomas Barnett explains why globalization may actually be the most unifying, progressive, and liberating force in human history.


An interview with Thomas Barnett
by Carter Phipps

June-August 2009

Text of interview finally available on line. 

Comes with a lengthy--and neat--introduction from Phipps

I repost the interview here, for my records.

Interview

EnlightenNext: Dr. Barnett, you have a background in political science and military analysis, but you refer to yourself as a grand strategist. Can you explain what you mean by that term?

Thomas Barnett: A grand strategist in the way I understand it is someone who is thinking about the world in a very broad, synthetic way. I’m talking about someone who is thinking across different domains with a perspective that spans decades. I believe that in the years since 9/11, America has really been searching for a kind of grand strategic vision to guide our actions. And frankly, I think the world needs America to think long term and strategically now more than ever.

The classic definition of grand strategy has to do with a country wanting to advance its own interests, bringing to bear all its national power toward that end. But that definition is too restrictive, especially for the United States. It’s not enough for us to advance our own interests. It’s about having a vision of a future world that we want to move the whole planet toward, and it’s about what we can do to serve that vision, not just in terms of government but also the entire panoply of our social and economic systems. So grand strategy means looking at the entire structure of our world and how to move it forward, as opposed to just advancing our self-interest within a chaotic environment of independent nations. Ultimately, it’s an attempt to bring greater order.

Thinking in terms of grand strategy is not a skill set we value enough. The complexity of the world is so dense today that much of what passes for expertise in Washington and European capitals is a vertical drill-down knowledge: “I know the tax code in this particular area” or “I’m an expert on the enrichment of uranium.” Individuals who think horizontally, meaning across many different areas of expertise, are actually amazingly rare. Political science is a broad enough background and a natural starting point for people who want to do grand strategy. But the skill set of the grand strategist should involve a lot more than politics. It should mean that one actually reads a lot outside of one’s preferred domain. I read everything but political science; I read technology, history, economics, sociology, religion, all kinds of fields because I’m trying to explore how the many intersections between all of these big domains are affecting politics. And history is particularly important. You can’t think long term and strategically if you don’t understand your history.

I often go places to speak and people ask me, “How many others do you know who think like this?” and I say, “Not very many.” I find it very disturbing to have to offer that answer. Instead, what passes for grand strategy is usually national self-criticism of the most dispiriting sort. So college kids are growing up on Noam Chomsky. That’s a disaster. He’s a great linguist, but he’s not a grand strategist or a good political thinker or an international relations expert. Neither is Chalmers Johnson; neither is Naomi Klein. On some level the best versions we have are op-ed columnists, but they tend to be too news-cycle driven, and I think that a successful grand strategist is someone who can, with equanimity, think across decades.

EN: Your new book is called Great Powers: America and the World After Bush. In it you outline an economic and political strategy for America’s engagement in the world after Bush. Could you explain to me what your purpose in writing the book was?

TB: Well, a variety of purposes. First, I wanted to explore explicitly what should be America’s grand or overarching geopolitical strategy at this point in history, and I wanted to expose the reader to what I thought was the general arc of American grand strategy historically. I want people to understand that this is very much a world of our creating, and in that self-awareness, I want them to understand exactly what the possibilities are for our global society going forward.

EN: One of the points you make in the book is that America is largely responsible for the kind of global economic system that we have today. Is that what you mean when you say this is a “world of our creating”?

TB: Let me provide some context. Let’s go back to World War II. If you look at the global political system that existed at that time, it was the Eurasian colonial system. The Eurasian powers had basically carved up the planet. And then there was the United States, this weird, hybrid, multinational union kind of doing its own thing on its own continent. President Roosevelt decided that after the war he wanted to create a new economic and political landscape, not only in America but across the entire planet. So he engineered the creation of what we now call the international liberal trade order. Essentially, what Roosevelt did was to create a global framework for the same sort of open-market, free-trade system that America had been pioneering within its own borders for decades.

To make a long story short, this new system succeeded dramatically, and by 1980 the West was fabulously wealthy and began to attract emulation from the East. Perhaps the critical point in the development of this global economic system was when Deng Xiaoping opened up China and their economy in the late seventies and early eighties. When that happened, we achieved a sort of critical mass for this international liberal trade order.

So part of Roosevelt’s initial postwar strategy was economic, but the other part had to do with security. After the war, we agreed to step in to provide our allies, both in Japan and in Europe, with the military force they needed to defend against the Soviets. As a result, none of these countries went back to the kind of militaristic structures or large industrial bases devoted to the military that they had prior to the war; instead, in an amazing historical turn, they largely outsourced that function to us. In effect, we became their provider of security.

EN: That highlights what I think is one of the most interesting aspects of your work, and that is your unique view of the American military. You point out that the overwhelming military advantage that America developed over the years has a pacifying effect in the world today.

TB: Right. Our overwhelming military power represents a sort of God-like force, which for all practical purposes rules out the question of major war between great powers. Again, in order to appreciate that achievement, we just have to look back at the first half of the twentieth century. On the Eurasian landmass, ten great powers managed to kill a hundred million people in a conflagration that ran fairly unabated from 1914 to 1949—all the way to the end of the Chinese civil war. It was war on an unbelievable scale; nobody has ever before accomplished that kind of warfare, taken it to those heights. Then there was the Cold War. But once you get to the end of that and then fast-forward to now, you have to admit that this is the first time in history when Britain, France, Germany, and Russia are all peaceful, all relatively more prosperous—although obviously there’s a downturn now—and all are integrating. There’s really no question of great power war. This is a relatively recent phenomenon. I mean, through the early 1980s, there was still tremendous fear in Europe of war.

We also have now for the first time in Asia something that’s never been accomplished in history: India, Japan, China, and South Korea are all relatively prosperous, rising, integrating, and peaceful, with no prospects of a great power war on the horizon. We’ve never before had that quartet of powers all strong and prosperous, and yet no one really talks about a possible war among them. Even with North Korea, it gets harder and harder to raise plausible scenarios of war. And Taiwan has begun what looks like negotiations for economic integration with China, not unlike Hong Kong. They’re negotiating the idea that they can be economically unified but retain their political differences for now. That’s what the European Union was for quite some time. So we’re looking at what is inevitable in Asia: an Asian union centered on China.

This is not to say there aren’t things that fill headlines, but here we are in our first global recession, and even with this somewhat frightening economic downturn, what most people seem to be discovering is an intense amount of economic interdependence. Countries are doing what they can within the World Trade Organization rules to protect themselves, but nobody’s really transgressing those rules. Nobody is talking about war or a Nazi-like rise to power, and that’s a pretty amazing achievement for us to have accomplished.

We’ve made our interdependence so profound that we really do sink or swim together in this global economy. The point of my book is that it is all modeled on America’s own economic and political union. I like to say that America is the source code for globalization. We are the models. We are the spreaders. We are the DNA. This process of globalization is very much modeled on our own multinational union that says states unite over time, economies integrate, networks proliferate, rules accumulate, incomes rise, and collective security expands.

EN: In many progressive circles, this kind of thesis is anathema. I have many European friends, for example, who see globalization in quite a negative light, as exploitative and repressive and driven primarily by American interests. So tell me, why is it a good thing that this is happening? Why is globalization good?

TB: First of all, globalization is not happening only because America backs it. Globalization happens because people find value in it. They find value in the connectivity; they find freedom in it; they find better lives. What is driving globalization are three billion capitalists. They’re being transmuted into a global middle class, which will be the dominant power in the global economy and the global political system in the twenty-first century. The genie’s out of the bottle. We were too successful. Also, as I said, war has gone away in this time frame. When the Americans really took over and sought to reshape the world in our image, what happened? Great power war disappeared! The latest tallies of international violence say that it’s almost all occurring in places that are yet to be deeply integrated into the global economy, which tells me that we’re in a frontier integrating age, just like we went through in America in the nineteenth century. Then the Europeans get very uncomfortable with that because they say, “We tried that.” And I say, “Yes, you did, but in a very exploitative manner.” And they say, “Your version is also very exploitative.” And I say, “Compared to yours, it’s not even close.” But Europe is not in charge of this anymore, and frankly neither are we. Indeed, if you look at the regions of the world that are poorly developed or poorly connected, like much of Africa, it’s Arab money and Asian money that is increasingly the main source of funding flowing into those places for development and infrastructure. I go to Africa, and to me it looks like a disaster. The Chinese and Indians go to Africa and they say, “Crappy soil, crappy climate, crappy infrastructure, crappy government, crappy work attitude—it’s just like home. I’m going to make this place so profitable. I can’t wait to exploit it.” Africa is going to be brought into the global economy by the Arabs and the Chinese and the Indians. The Europeans aren’t going to be asked. No one’s waiting on their okay, much less their veto.

So the question for all of us is, “Do we want to participate in this to make it better, or do we want to wash our hands of it and hope that it works out, hope that the Indians and the Chinese and the Arabs don’t exploit these situations?” I know that absent some sort of cooperation on our part, it won’t go well, but it’s also clear that we’re at the point where we can’t manage globalization alone because it’s gotten so large.

EN: In your books, you point out that those regions that have the most poverty, the most exploitation of labor, the most corrupt governments, and the most violence are also the places that are the most disconnected parts of our global society.

TB: That’s where all the violence is happening. That’s where all the terrorism happens. Virtually all of it happens inside the non-integrating parts of the world. But globalization is coming to these places. It’s coming because these places want it. They look at China and they want some of that wealth. Everything you can say about Africa today we said about China fifty years ago. And now they’re getting rich. Globalization has gone critical mass, and there’s no way to stop it. The only question is, how do we deal with it? We need to deal with it efficiently, because if you add the factor of global climate change and add the problem of resource depletion, then you realize that we’re heading into a period that is going to demand tremendous innovation and tremendous cooperation among all the major powers involved. And in terms of security, we’re tapped out. We need help. We can’t possibly run the world with only the Europeans and the Japanese, because they won’t go anywhere and kill anybody. We need Russians, we need Indians, we need Chinese. They have to be willing to fight and kill and in effect defend globalization’s advance.

People may say that I’m talking about globalization at the barrel of a gun, but that’s not a bad thing. It beats no globalization at the barrel of a gun, because I can take you to the places where you’re the most subject to the gun, and they tend to be the least connected parts of the world. It’s like the rapid integration of the American West. If the military authority doesn’t show up, then people will fight each other. They’ll kill in large numbers. There’ll be insurgencies. There’ll be bad individuals. Or you can instill real governance and security and, on that basis, empower people and enrich them.

We’ve empowered and enriched a lot of people on this planet in the last fifty years by following this grand strategy. Now we’re coming to the harder nuts to crack because these are the more off-grid places, and in terms of development, they lag far behind. They’re the places where you have the most intransigent forms of religious structures (and stricture, for that matter) and, of course, amazing population growth. Then on top of that, these are all places that are going to get the hottest because of global climate change and will therefore have the hardest time growing food. So as a strategist, I’m looking at this reality and thinking that we need to get these places wired up. We need to get them safe, we need to get them transparent, we need to get them marketized. We need to get the women into the labor force through education. We need to emancipate these situations. And we need to do it fast, because the amount of environmental stress and demographic stress and climate-based stress that these people are going to be under in the next thirty or forty years is going to be profound—unless we raise their incomes dramatically. Otherwise, we’re setting ourselves up for all sorts of nasty business and much suffering and premature death.

So, yes, I’m willing to do more than merely fortify America and Europe. I’m willing to do more than put up fences to keep these “nasty dark people” from coming to our countries. I don’t see that kind of mentality working. There is a lot of anger being expressed in those parts of the world. And bin Laden gave us an early glimpse of that.

EN: It makes sense, but what you’re saying also stands in stark contrast to those who insist that globalization is destroying cultures around the world and that we should allow people to retain their culture and identity on their own terms.

TB: Yes, what they say is, let’s deny them the connectivity. Let’s decrease their sense of fear. Let’s keep them off-grid. We’ll keep them pristine; we’ll allow them to retain their culture and their poverty and their disconnectedness because if we connect them, it makes them angry and demanding, and we’re not sure if we want to process all that anger. But people on the other side look at us and say, “That’s the most hypocritical thing I’ve ever heard. You’re all about keeping us down in the name of some antiquated bullshit.” So why take down these mud huts? Well, because they’re disease ridden. We live in nice houses, and they want nice houses too. We’re telling them they’ve got to live in these hovels that are four hundred years old to “preserve their culture.” They’re tired of the hypocrisy.

Marx was right. Back in the 1840s, he said that capitalism is going to sweep the planet, just crush everything in its way. It’s just that it took a certain type of capitalism to do it—not the European version, not colonialism. It took an American-style, truly liberal, free-trade version. It took political adaptations that Marx considered impossible to achieve. Marx was diagnosing capitalism on the basis of Europe in the nineteenth century. He saw castes, he saw elites, he saw viscounts and dukes and duchesses. He said this is never going to work. But if he’d come to America, he would have seen that this is the place where anybody comes, anybody joins. The synthetic identity is crucial to us. We are a version of globalization before globalization.

EN: Globalization may have been initially driven by the West and America. But as China and India begin to rise up, it’s going to decouple globalization from being almost exclusively associated with the West. As you say in the book, it will be post-Caucasian.

TB: Yes, there was a globalization that may have been Anglo-Saxon inspired, but now it’s going to be overwhelmed by the rise of the rest. It’s a post-American world, as my friend Fareed Zakaria likes to say. And I reply that it’s post-Caucasian world, not post-American. This post-Caucasian world has also already arrived on our shores. It’s already here in all of America’s major cities; it’s already here in our biggest state, California. In America’s zero to five-year age demographic, Caucasians are no longer a majority, and European-Americans are no longer a majority. So the power-sharing agreement that is part of that post-Caucasian world is being negotiated in preschools all across America right now. And what I know about social change in this country is that when something is figured out in preschools and kindergartens across America, fifteen years later it is the dogma that unites us all. It becomes the conventional wisdom. Look at recycling, drunk driving, antismoking—once you inculcate a new ideology in kindergartners, fifteen years later it becomes the way it is.

EN: What role does the European Union, the “European Dream” as Jeremy Rifkin dubbed it, play in this larger picture?

TB: Well, the problem I’ve always had with commentary on the European Union is people claiming that this is the first multinational union in history. I don’t think so.

People say, “They’re going to have a single currency. They’re talking about a single foreign minister for all of their states. They’re organizing a parliament.” Doesn’t anyone recognize this? We had a single currency in 1862 when Lincoln signed the Legal Tender Act. We went from having eight thousand varieties of bank notes in America to a single green piece of paper, the greenback. That was as revolutionary as creating the euro. Every-body assumes that we put Washington’s face on the dollar the minute he stopped being president, but there wasn’t such a thing as the dollar until 1862. So we’re further along in this process than we realize.

I admire having an alternative to America. I think it’s good to have both models and to have competitiveness between us. Otherwise, too much of the world will look at the Chinese model and think that that’s the way to go. And the Chinese one has huge flaws: It’s pre-progressive, it’s pre-political pluralism, it’s pre- a lot of things. China is slated for a lot of amazing change in the next couple of decades. It won’t be able to go on the way it has been.

EN: I recently interviewed futurist John Petersen, who’s an acquaintance of yours, and he’s very pessimistic about our short-term prospects. He expects a much bigger crash over the next year. In fact, there is a lot of doom and gloom these days, especially with the financial meltdown. Even many progressive spiritual types are talking about 2012 as being some sort of crisis point. How do you relate to that kind of apocalypticism? Is it justified by our current crisis?

TB: Well, they always have a new date. But it’s also true that none of what I’m describing is predicated on linear motion, with no U-turns, no backtracking, no pauses, no problems. And this time, to no one’s great surprise, the financial experimentation and the increasingly complex nature of risk management got out of hand. This has happened pretty regularly throughout our history, except this time it was sold and packaged around the world. We had an entire economy based on maximizing our borrowing, keeping no cash on hand. And then we have this financial panic where suddenly we need to have lots of cash on hand. And everybody looks at each other and says, “What do you mean cash on hand? Are you kidding me? You told us for the last twenty years, no cash on hand.” That’s the panic we’re in now. But deep in our hearts, I think that we knew that discipline was eventually going to have to be applied. Ideally, we all would’ve come to a calm collective judgment that we can’t live this way anymore. But that’s not how markets work. They tend to go right to the edge, and then people panic. In that process, there’s a tendency to look back and conclude, “It was all bad. This is a terrible system.” It’s our way of generating enough political will to change. So we’re at the end of thirty years of less regulation, and now we’re going to tack in the direction of more regulation. So is it socialism? Is it the end of the world? Is it Armageddon? Is it the end times? Is Christ coming back? I think it’s just a change of tack.

We’ve got a generation now that’s lived a very, very charmed life. They are now having their expectations altered, and it’s probably for the better. So I see the current situation as a healthy corrective to a twenty-seven-year global boom. A lot of bad habits accumulate in twenty-seven years, and now we’re being much more realistic about some of the challenges. I wrote in a blog post today that India and China are talking about cooperating on the environment, on counterterrorism, on all kinds of things. They’re really stepping up to the plate. In a big, fat, booming world where America is covering all bets, India and China don’t step up and take control of anything. But in a more frightened world where the challenges are more apparent, India and China step up.

But I love these doomsayers who’ve been saying for a long time, “I told you we’re going back to the 1930s, back to the depression.” I mean, they’ve only been wrong for the last seventy years! I hope they enjoyed their life.

EN: Another factor that gets cited by people concerned about the state of the world is the rise of religious violence. How does that dynamic affect your optimism about globalization?

TB: When you take people in the developing world from sustenance to abundance, it creates a kind of socioeconomic change that will cause people to reach for religion more and more. So this is going to be a highly religious, highly nationalistic century because of the amazingly rapid rise of a lot of previously off-grid, sustenance-based populations. Some look at that increasing friction and say, “That’s the future of the entire planet. We’re going to be all inundated with religious nutcases.” But globalization isn’t something we’re supplying; it’s something they’re demanding. It can’t be turned off. So when people’s lives are being changed and networked and reformatted, their demands for identity are going to skyrocket because they’re trying to hold on to their identity amidst all the change. We’ve destroyed all of their agricultural rhythms and all of their religious rhythms and all of their ways of viewing the world. If you do that too much, you’re inevitably going to get wild and radical responses. And those wild and radical responses, at their base, are all about “Recognize me, recognize my desires, recognize my uniqueness, recognize my identity.” So a lot of people are looking at this and worrying that the world’s going crazy. But I say that this is all part of the success of globalization’s spread. It’s creating demands. Those demands have to be met; they cannot be squelched.

So we’re heading into a very religious century, but that’s not a bad thing. I often look at America’s domestic history as a sort of forerunner model of globalization in miniature. And if you look at the latter decades of the nineteenth century in America, I think we’re replaying on a global scale what happened then. We went through a very nasty age where politics was considered very low, very divisive, and very corrupt, and robber barons and titans ruled. Our system was very brutal, tough on labor. The child labor was intense. A lot of people were rapidly joining the middle class, but the income inequality was the greatest in American history. In many ways, we were much like China today.

Then that anger started to translate into answers, and we shifted into a new progressive age. In that time, we had people like Upton Sinclair and Booker T. Washington pushing progressive agendas, and we had a great many religious and civic groups pushing for changes as well. It was the religious groups and the great awakenings of the time that were essential for that progressive era. There was a sense that we were going to self-destruct unless we cleaned things up.

So in the same way that we did in the nineteenth century, we’re going to have to co-opt and channel the current anger into a progressive search for answers globally. The good news is that in the long run, religion is going to be one of our greatest allies—not our foe, not a complicating factor, and certainly not a sign of a coming Armageddon.

EN: You said at the beginning of this interview that you like to read things besides political science. What have you been reading lately that is helping inform your own grand strategy?

TB: Science fiction. Right now, I’m reading Neuromancer, William Gibson’s classic book. I think science fiction is about presenting current fears in the context of the future. It’s interesting to me that for a long time the favorite villains in science fiction have been corporations. The stories often portray huge divisions between haves and have-nots and a sort of rapacious global capitalism. It’s a capitalism that has not been curtailed by the shaming and taming of the system that comes with populism and progressivism. So I would say that science fiction lately has done a good job of presenting us with a series of future dystopias. These stories suggest that as we successfully project this American capitalist model on a global landscape, our failure to set in motion the commensurate social and political change—to shame and tame the more rapacious parts of globalization—is going to come back to haunt us. Now, it is true that if globalization is done in too loose a fashion, it could definitely evolve into a have/have-not world. But I think it’s an overplayed concept. Look at America. Our biggest income inequality was in the 1880s and 1890s—until an age of progressivism kicked in. It’s true, of course, that globally we haven’t yet succeeded at political and social change at a speed that we would find satisfying. But if you look at American history, we were pretty slow on a lot of these things too. So we need to be patient and recognize that we have won the fundamental argument about what kind of basic model the world is going to follow.

That kind of confidence, to me, is very important for America to demonstrate. Look what is happening now with the financial panic. I know that when things like this happen, there is always that schadenfreude that finds elation in America getting its comeuppance, like there was on 9/11. But I would argue that underneath that, there is a much more significant unease. The idea, which some are expressing, that we as a country might no longer believe in certain aspects of our model is very threatening to others. The rest of the world likes having us as a model. They know it’s a model that they need to move toward, even though they fight against it a little bit. People like having ideals to work for. We represent reinvention and diversity. We are the first globalized culture. We are globalization inverted. We’ve been working on the complexity of globalization a long time, and we’re still perfecting it. I mean, when I was a kid, the state cops would chase a bad character to the state border and then they’d stop. States are still fairly distinct. When we go through something like the vote recount in 2000, we realize that there are very different state laws in this country.

So we’re still perfecting this model. We don’t recognize the significance of the fact that we’re the world’s oldest and most successful multinational economic and political union. And that’s a huge responsibility, because if we fall apart as a country or fail in our continuing quest to perfect ourselves, it would be a huge blow to the world. There is an underlying logic to our model that’s inescapable. It says that we have to get along, we have to cooperate, we have to integrate, we have to increase collective security, we have to increase transparency. We’re just the furthest along, so we underestimate the power of our example and the responsibility of it.

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