Chart of the day: remittance "corridors"

From the Economist.

I just love global maps indicating flows - naturally.

What do we see here?

Per my vernacular, in sheer volumen we see New Core being fed remittances by expats living in Old Core.  But when it comes to countries relying heavily on remittances as percentage of GDP, it tends to be mostly Old/some New Core and it all pretty much goes to Gap countries.

Per my flow concept:  whatever the resource, it flows from regions where it is plentiful (here, earning opportunities) to where it is less so.  Yes, we think of India, China, Mexico as New Core and thus "made," but all share the reality of significant numbers of rural poor.  In truth, in most New Core countries, there is massive internal remittances flows.

What I love about this:  this is the best foreign aid there is, because people use it as they see fit.  

You may say to yourself:  What a drain on Core - especially US!

Studies have shown, however, that expats living in new countries spend something like 90% of their earnings in-country, sending about 1/10th home.  It's just that those flows still number in the billions, swamping anything we do on official developmental aid.

Final column at World Politics Review

The New Rules: Globalization's Future Depends on Stable U.S.-China-India Order

BY THOMAS P.M. BARNETT | 30 APR 2012
COLUMN

Editor's note: This will be the final appearance of Thomas P.M. Barnett's "The New Rules" column at World Politics Review. We'd like to take this opportunity to thank Tom for the insightful, compelling analysis he has offered WPR readers each week for the past three years, as well as for the support he has shown for WPR over that time. We wish him continued success.  

Amid all our current fears regarding the global economy’s potential “double dip” back into deep recession, a longer-term question stands out: How can a supposedly declining America protect the golden goose that is globalization while managing the rise of twin economic superpowers in the East -- namely, China and India? History says that three is a crowd when it comes to system stability. Invariably, some conflict will arise to trigger a two-against-one dynamic that must yield to either the stable stand-off of bipolarity, as during the Cold War, or the emergence through decisive conflict of an acknowledged unipolar hegemon, as in the early post-Cold War period.

Read the entire column at World Politics Review.

Wikistrat post @ CNN-GPS: New global sources of demand

Editor’s Note: The following piece, exclusive to GPS, comes from Wikistrat, the world's first massively multiplayer online consultancy.  It leverages a global network of subject-matter experts via a crowd-sourcing methodology to provide unique insights.

When Americans are warned that the “era of cheap credit is over,” we’re really being told that the inherent advantage of owning the world’s reserve currency is coming to an end. No, it won’t happen overnight, because China’s renminbi is still far from becoming a serious rival.

But the end is coming all right, and it’ll make all that Thomas Friedman hyperbole about a “flat world” a whole lot more real. America simply won’t have the advantage of being able to float debt - of all kinds - as easily as we did in the past, which means we’ll need to compete more intensely on the price and quality of our goods.

The primary driver here is China’s need to shift from a super-saving economy to a super-consuming economy. It’s gone about as far as it can go with export-driven growth, and now it needs to turn on its domestic consumption big-time, but doing that means China’s willingness to finance the debts of others will decrease - thus the end of cheap credit.

So, accepting all that, what can America anticipate when it comes to new sources of demand in the global economy?  What are some of the hot goods and services of the coming years?  We asked Wikistrat's global community of strategists for some ideas, and here’s what they chose to highlight:

Read the entire post at CNN's GPS blog.

Chart of the day: Flat-liners versus climbers on L.T. energy demand

From an otherwise regurgitating Economist special report on state capitalism, a wonderfully clear chart on primary energy demand, aggregated as billion tons of oil equivalent.

Not amazing: semi-flat growth for Russia, given its demographic slide.

Impressive for US and EU: the efficiency angle keeping growth flat, despite modest economic growth and significant demographic growth for US.

Curious is Brazil's capacity to keep its curve semi-flat.

So that leaves only the two great risers as demand climbers: China's stunning trajectory and India's late-blooming-but-likely-to-skyrocket-from-that-point-on curve (India surpasses China in labor around 2030 and then grows 50% larger, suggesting it will replicate China's trajectory on some level, understanding that its energy profile could be dramatically different in those future decades).

To me, this is a great example of why the military containment strategy (keep the PLA boxed-in in East Asia is dangerous - and counterproductive.  China needs to go so incredibly global due to its energy demand that it's only natural that it build up power projection and become more contentious on the issue of energy security. America can address all that or go super-unimaginative and make it all about an arms race in East Asia, believing that we'll temper China's behavior by doing the same things we did with the Sovs in the Cold War.

But making China feel nervous at home makes it harder for it to address its growing overseas dependencies in the very same regions where the U.S. is becoming less interested in providing stability and more focused on just killing bad guys. Conceivably, our willingness to go anywhere we want, when we want, to kill anybody we want, would make the Chinese feel better about their interests in these regions. But this thin-green-line approach, augmented with the transparent encirclement strategy in East Asia, essentially works to keep China nervous on both scores by insinuating that growing Chinese military capacity is automatically bad - both at home and extra-regionally, unless, of course, the Chinese become "transparent" in the direction of the very same superpower that threatens them in their home region with its world-class military (the same one that's just declared China to be its primary force-sizing threat from here on out).

Bit much, huh?

WPR's The New Rules: India's Pastoral Ideal an Obstacle to Globalized Future

When most people think of revolutions, they imagine the overthrow of political orders. By contrast, most of what we see today in globalization’s continued expansion is not violent political revolution, but rather unsettling socio-economic revolution. Yes, when existing political orders cannot process that change -- and the angry populism that typically accompanies it -- they can most definitely fall. This is what we have seen in the Arab Spring to date. But more often this populism leads to political paralysis in countries both democratic and authoritarian. A case in point is the recent controversy in India over Prime Minister Manmohan Singh’s plan, since scrapped, to allow multinational retail chains like Wal-Mart, Carrefour and Tesco to mount joint ventures with local firms in direct retail sales operations. The public uproar showed that at times, globalization is simply too much change, too fast..

Read the entire column at World Politics Review.

India matches China's $3B investment in copper by investing $14B in iron ore

WSJ story from 30 Nov.

India consortium of firms makes winning $14B investment bid on Afghanistan's largest iron-ore deposit, called by experts the crown "jewel" of the country's estimated $1T in minerals.

Supposed to take five years to get mine up and running.  Canadian firm got the fifth block, as the Indian crew won the other four.

This award comes just a couple months after New Delhi and Kabul signed a strategic cooperation agreement.

Article makes the usual noises about Pakistan getting unnerved, but I think this is great - and totally natural. China and India making big investments and ultimately owning the security responsibility surrounding those investments.

To date, China's done nothing with the Aynak copper site, it is reported, due to security concerns.  Chinese companies now projecting a 2014 start date.  

Bet that gets moved up once NATO troops move out sooner.

WPR's The New Rules: How to Stop Worrying and Live with the Iranian Bomb

The International Atomic Energy Agency’s latest report on Iran’s nuclear programsurprised no one, even as it created the usual flurry of op-eds championing preventative “next steps.” As I’ve been saying for the past half-decade, there are none. Once the U.S. went into both Iraq and Afghanistan, the question went from being, “How do we prevent Iran from getting the Bomb?” to “How do we handle Iran’s Bomb?” That shift represents neither defeatism nor appeasement. Rather, it reflects a realistic analysis of America’s strategic options. With that in mind, here are 20 reasons why Iran’s successful pursuit of the Bomb is not the system-changing event so many analysts are keen to portray.

Read the entire column at World Politics Review.

When politics stops being "low," the middle class-fueled "progressivism" kicks in

Theodore's respectable and well-to-do New York-based Dutch family was aghast when, as a young man, he told them that he wanted to go into politics. But he was swept up in an emerging progressive age that was directly fueled by America's rising middle class.

India is at the same point now.

Great quote today in NYT:

"We've been told since our childhoods, 'Politics is bad, don't get into politics.' But the point is that somebody has to clean it up. We can't just scold people."

PARTHO NAG, on a new activism among the middle class in India.

Politics considered bad. Somebody has to clean it up.

There's your progressive impulse in a nutshell.

Wikistrat's "The World According to Tom Barnett" 2011 brief, Part 6 (Flow of Security)

In this section I cover the symmetricization of the Long War, nuclear proliferation (and the lack thereof), how America shaped this world with its grand strategy, and who the key superpowers will be in the post-2030 landscape.

WPR's The New Rules: Turkey's Long Game in the Cyprus Gas Dispute

"Resource wars" enthusiasts worldwide have a new -- and unexpected -- poster child:"zero problems with neighbors" Turkey. The Turkish government of Prime Minister Recep Tayyip Erdogan is beside itself over Israel's recent moves to cooperate with Cyprus on surveying its Eastern Mediterranean seabed for possible natural gas deposits thought to be lying adjacent to the reserves discovered last year off the coast of Haifa.

Read the entire column at World Politics Review.

The real leading indicator of China's power

Apologies for no post for two days. I was in DC and busy.

FT story here on how the demographics are already playing out in China: fewer workers entering the work force can be choosier and more demanding on wages. That sends wages skyrocketing in China along the coast. Companies have two choices: go inland for cheaper Chinese labor - but then accept the higher transpo costs, or they go to neighboring states - all of which are just now on the cusp on a very big and long demographic dividend that will make their labor cheaper than China's from here on out. Those neighbors are basically all of Southeast Asia and especially India and Bangladesh.

So the subheader here says it all: "Demographcis and Beijing policy on workers' pay mean manufacturing is relocating in Asia."

Won't change a whole lot about America's trade deficit with Asia. It was large when "factory Asia" was just Japan and South Korea and ASEAN, and it got bigger when China cleverly inserted itself at the top of that assembling chain and consolidated the region's trade suprlus with America into its massive foreign currency holdings. And it won't go away when others displace China increasingly.

But it does mean that China's days of "inexhaustible" cheap labor are already ending.

And it means that India's eclipsing of China as the next big thing - to include all the soft power that goes with that (which will be greater for democratic India than authoritarian China) - has already begun.

WPR's The New Rules: U.S. Must Not Close the Door on Nuclear Energy

Prior to the Fukushima nuclear power plant disaster in Japan, the nuclear energy industry was poised for a global expansion of unprecedented size. Proponents of nuclear energy still see a bright future in a world where electrical demand grows hand in hand with a burgeoning global middle class and everybody wants to reduce CO2 emissions. But vociferous industry opponents now claim nuclear power has been dealt a Chernobyl-like deathblow. Unsurprisingly, most pessimists are found in the advanced West -- witness Germany's decision to abandon nuclear power -- while most optimists are found in emerging economies such as China and India.

Read the entire post at World Politics Review.

WPR's The New Rules: The Race for Global Leadership in the Age of Anger

Ian Bremmer, the founder and head of Eurasia Group (for which I work as an analyst), has argued that we are living in a "G-Zero" world, or one in which there is no genuine great-power leadership. From the perspective of political science, it is hard to disagree, as anyone reading a newspaper these days can attest. Still, the historian in me says this situation cannot last for too long. My reasoning here has nothing to do with the global correlation of military force, since thanks to globalization's emerging middle class, "butter" will inevitably emerge as the winner over "guns." 

Read the entire column at World Politics Review.

Mr. Dalit Comes to Class

FT story on new Bollywood film depicting "untouchables" and the discrimination they suffer. The film is already banned in three Indian states out of fear of inciting social unrest.

Ask yourself, what period of US history does this remind you of?

Fair dynamic comparison, although here the pushback comes more from dalit politicians and those in favor of their rights.  Why? Film focuses on quota system for dalits/untouchables set up at time of independence. Upper castes say film makes them look bad, but dalits say film denigrates positive impact of quota system - aka, India's version of affirmative action. 

What I remember from visiting India: it seemed like the taller you were and lighter your skin, the more likely you were more powerful and thus from a higher class.  Conversely, lower caste people seemed shorter (poorer diet) and darker.  So when I mixed with elites, I looked them in the eye, but when I moved among ordinary people, I felt like a frickin' giant. The dichotomy rather stunned me.

If you mention that observation, you tend to get a strong response from Indians who find any comparison to racism in the West to be completely offbase. I'm not sure what you call it, but it strikes me as a deep legacy of discrimination based on birth (meaning you can't change who you are no matter what, which smacks of that "one drop of blood" logic) and thus is reasonably compared to racism elsewhere in the world, despite its "sophisticated" and multivariate application.

Point of post: rising India, like rising China, is racing through a lot of history and "phases" that US went through a much more leisurely pace.  That's incredibly hard but facinating to watch.

Blurb on film only hints at controversy (from Rotten Tomatoes), but understand that Prabhakar has a special space for dalits in his school and that Kumar, who is in love with Prabhakar's daughter, is himself a dalit. This is classic Bollywood (father-daughter conflict over undesirable match) with the twist that here the father is the perceived liberal:

Aarakshan is the story of Prabhakar Anand (Amitabh Bachchan), the legendary idealistic principal of a college that he has single-handedly turned into the state's best. It is the story of his loyal disciple, Deepak Kumar (Saif Ali Khan) who will do anything for his Sir. Of Deepak's love for Prabhakar's daughter, Poorbi (Deepika Padukone), of his friendship with Sushant (Prateik). It is the story of their love, their lively friendship, their zest for life, and of their dreams for the future. Centered on one of the most controversial issues of recent years, with the Supreme Court's order on reservation, the story suddenly becomes a rollercoaster ride of high drama, conflict, and rebellion, which tests their love and friendship for one another, and their loyalty to Prabhakar Anand.

Film is already in US, probably because Bachchan is the Cary Grant of Indian cinema. Done about 300k, so art-house limited.

Be interested if anyone has seen it and can provide impressions.

Leading indicator of India eventually surpassing China as globalization's factory floor

Fabulous Economist story entitled, "India's Guangdong."

Short explanation from me b/c fighting ear infection:

Demographic dividend huge in India, and will stretch deep into mid-century.  China's, by comparison, had heyday from 1980-2010 and now starts slow decline.  China, for example, loses about 1/3 of labor entering workforce over next decade - decline finally set in motion by one-child policy.  India surpasses China in labor around 2030, and has 50% more by 2050.  SE Asia on similar trajectory.

All comes to say: China, as it moves up value chain (all those Foxconn robots!), exports jobs to India and SE Asia - inevitably.  Good and bad thing for China, just like it's been good and bad for US last 30 years.

As I watch this, I keep saying to myself: where is the leading indicator of how India actually gets around to seriously industrializing?

That's why this article so cool:  says Gujarat is the state to watch.  It's India's Guangdong.

So stay tuned.

WPR's The New Rules: The New World Order-After-Next

There is no faster route to second-tier great power status than for an actual or aspiring superpower to fight a crippling conflict with another country from those same ranks. Moreover, if history is any guide, the glass ceiling that results is a permanent one: This was the fate of imperial Britain, imperial Japan and Germany -- both imperial and Nazi -- in the first half of the 20th century, and the same was true for Soviet Russia in the second half of the century, despite Moscow's conflict with the West being a cold one. The lesson is an important one for Washington, Beijing and New Delhi to keep in mind in the years ahead, given that the two most likely dyads for major war in the 21st century are America-China and China-India. 

Read the entire column at World Politics Review.

WPR's The New Rules: A Post-NATO Europe Should Look East

Among the mutual recriminations ringing out between the U.S. and Europe regarding NATO's already stressed-out intervention in Libya, we have seen the usual raft of analyses regarding that military alliance's utility -- or lack thereof. As someone who has argued for close to a decade now that America will inevitably find that China, India and other rising powers make better and more appropriate allies for managing this world, I don't find such arguments surprising. You don't have to be a genius to do the math: Our primary allies aren't having enough babies and have chosen to shrink their defense budgets, while rising powers build up their forces and increasingly flex their muscles. In terms of future superpowers, beyond the "CIA" trio -- China, India and America -- nobody else is worth mentioning.

Read the entire column at World Politics Review.

Time's Battleland: Future grand strategists speak: Why US withdrawal from Afghanistan would stabilize Pakistan

In my continuing role as Head Judge  for the online strategy community Wikistrat's month-long International Grand Strategy Competition featuring roughly 30 teams from top-flight universities and think tanks around the world, I get to peruse all manner of provocative thought from some of tomorrow's best and brightest thinkers.  And yeah, full disclosure, I get paid to judge as the firm's chief analyst.

Well, this last week, our participating teams drew up elaborate national trajectories and regional trajectories for their 13 countries (Brazil, China, EU, India, Iran, Israel, Japan, North Korea, Pakistan, Russia, South Africa, Turkey and US), and the two entries that really jumped out at me in their immediate dueling were the two Pakistani teams populated with grad students from Claremont Graduate University (CA) and Yale (CT).  Let me tell you why.

Read the entire post at Time's Battleland.

Time's Battleland: "The CIA-After-Next: Who's Gonna Run This World"

Outgoing Defense Secretary Robert Gates has done a lot of good things over his tenure:  he carved out a bureaucratic space for the small-wars crowd (Army, Marines, SOF) and he engineered the Navy-Air Force Full Employment Act (otherwise known as the AirSea Battle Concept) to keep the rest of the Building happy; he was tough enough on the budget but likewise hard enough to make sure he got more for the frontline troops.  All in all, I can't fault him on anything major. He was just what we needed after Rumsfeld.

Now he does us the final favor of speaking the truth about our European allies and a relationship that has clearly run its historic course.  I have been writing about needing to shift from West to East for almost a decade ("Forget Europe:  How About These Allies?" 11 April 2004, WAPO; "The Chinese Are Our Friends," November 2005, Esquire), and for years my suggestion that our future strategic partnerships will be with India and China instead of the UK and the rest of NATO were greeted with wide-eyed shock by briefing audiences.  But the global financial crisis opened a lot of eyes.

Read the entire post at Time's Battleland.

Time's Battleland: "US bases in Afghanistan for decades?"

Waiting on the Obama speech explaining this one.

Guardian piece Monday predicts that current US-Afghan talks will cement a very long-term deal on presence [hat tip to World Politics Review Media Roundup].

American and Afghan officials are locked in increasingly acrimonious secret talks about a long-term security agreement which is likely to see US troops, spies and air power based in the troubled country for decades. [italics mine]

This is described officially as a "strategic partnership," but nobody in their right mind would describe it as such. It's a dependency - pure and simple. The longer we stay, the more we'll infantilize the system. Ten years in and virtually everything we've set about to create is still described as "fragile" - meaning it collapses and disappears the minute we pull out.

Read the entire post at Time's Battleland.