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is it now a 0 sum world?

Friday 18 February, 2011

The chief foreign affairs commentator for the Financial Times, Gideon Rachman, finished a book entitled Zero-Sum Future:  American Power in the Age of Anxiety & was in town to talk about it @ Zero-Sum World sponsored by the Chicago Council on Global Affairs.  The basic premise of the book is that the world has transitioned from from a perceived win-win mentality to 0-sum game.  When Hu Jintao was in the US recently, he made a point of saying the world economy is not a 0-sum game, as have had all US presidents since Bush the 1st.  This issue is not only economic, but political as well.

Rachman divides the last 30 years into 2 eras:

  1. 1978-1991:  Capitalism wins.  China opened up.  The USSR failed.  Europe came together.  India averted bankruptcy & opened up.
  2. 1991-2008:  Native optimism, indicated by Krauthamer’s American unipolar moment defining globalism, the technology boom, Europe expanded & debuted the Euro, Latin America democratized, & Brazil emerged.

The economic crisis changed things.  It accelerated the shift of the economic axes from West to East & North to South.  China & India decoupled from the world economy by growing despite the crisis.  It’s come into question whether or not the EU is sustainable.  These shifts in power have created tension.  The Germans are resentful of bailing out the Greeks, while the Greeks & Irish are resentful of the impositions being placed on them.  Global problems like the environment & nuclear proliferation can’t be solved by 1 country alone.  The G7 realized it couldn’t work without others, so it expanded to the G20, but currency issues are still unresolved, Kopnhagen was a debacle, reflecting that national interests are more starkly opposed.

The US-China rivalry is at the core of this debate.  The economies are firmly interlocked, but does a richer China, (which is actually both richer-in the cities & poorer-in the countryside), mean a poorer US?  Today not only labor is endorsing protectionism.  China is a growing military threat in the Pacific & becoming more territorial with India & Taiwan.  They simply expect the US to pull back.  The Chinese don’t want confrontation;  they simply expect power to fall back to them.  America can’t afford to defend the rest of the world.  While allying with the US & trading with China, other Asian countries are simply acknowledging the creation of a new Sinosphere.  The Chinese have a much longer time horizon:  the question is “Will China still be a good neighbor to the US in 1000 years?”

On other topics, Rachman said integration into the global economy is the solution in places like Egypt & the Middle East.  Although democracy has won, we have a bumpy road ahead.  We must regain faith in economic solutions in the US & Europe.  Obama’s Spudnick moment seems appropriate.

Q&A

  • World War III is too dangerous & not required for an economic recovery-mutually assured destruction as a deterrent is old cold war thinking
  • Whether or not a US economic & military pullback is positive depends on your point of view.  Is leaving a single power more stabilizing in the Pacific?  We’ve always assumed there were enough resources for the world, but commodity prices are rising.
  • Human rights in China are an up/down issue.  Hillary Clinton has downplayed it & Obama has been interpreted as backsliding on the issue, while the US endorsed the Nobel Peace Prize being awarded to an imprisoned Chinese dissident.
  • The west has been ambivalent while China has courted influence in Africa to secure resources.   Kofi Annan was surprised to find Chinese television stations in Sierra Leone.
  • The enlargement of the EU created a backlash & it’s doubtful they will expand much more.  1M Poles relocated to the UK rather than the expected 13K, which resulted in lower prices for services there.
  • The Chinese currency is essentially pegged to the US$ against which the Euro has been appreciating, so Europe won’t necessarily lose as China cozies up with the US.
  • Turkey’s relationship with the US has changed from being a staunch ally to voting against the US & European positions on Iran & Israel.  Despite being a Muslim democracy, the AKP party makes the US uncomfortable.
  • Although center-leaning economists are opposed, isolationism & protectionism are increasing.  No 1 wins in trade wars.  Business lobbies for access to China’s vast market, but the Chinese are now demanding technology transfers.
  • Europeans don’t want a Brussels solution.  They’ve rejected a EU constitution, but a voluntary agreement might work.  Stronger integration would require an even bigger crisis-it’s now like herding cats.
  • Increasing Muslim populations in Europe is a problem for which there is no solution.  You can’t impose values, which is resulting in a massive security effort.
  • Russia’s future hinges on the price of oil.  Putin wanted to embrace the west, but is still a nationalist & pushed back against democratization.  He’s trying again to create another sphere of influence.
  • The 2008 loss of confidence in free market models has brought back the debate as to whether or not authoritarianism works.   The debate will be won by those who best unleash creativity in changing technologies, etc.
  • The internet hasn’t created freedom the way Bill Clinton predicted it would.
  • Completing the Doha round of WTO talks has become a cliche.
  • The EU still thinks of China as an emerging market.
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