Foretelling--at least of the crystal ball variety--is a reckless business. No-one knows with certainty what the future holds--at least no human being. The best we creatures can do is make educated guesses--but guesses nonetheless.
The present economic crunch is applying the blow torch to global politics in that it is likely to exacerbate and turbocharge some longer term trends which have been percolating away for decades now. For the light relief of our readers, and their mild (possibly raucous) amusement, we thought we would throw out a few thoughts as to what the next few years may see eventuate.
The West has been in decline relative to the rest of the world for nearly thirty years now. The end of the Cold War meant that the binary division of the world into those for us and against us was relaxed; new configurations and alignments have arisen--most of which have involved other nations and regional groups growing in power and influence.
One evidence of this has been the rapid military build up in countries like Indonesia and China. As Huntingdon observed:
Increased military spending and force improvements were the order of the day; China was the pacesetter. Stimulated by both their increased economic wealth and the Chinese build up, other East Asian nations are modernising and expanding their military forces. Japan has continued to improve its highly sophisticated military capability. Taiwan, South Korea, Thailand, Malaysia, Singapore and Indonesia are all spending more on their military and purchasing planes, tanks, and ships from Russia, the United States, Britain, France, Germany and other countries.
Samuel P. Huntingdon, The Clash of Civilisations and the Remaking of World Order (New York: Simon and Schuster, 1996), pp. 89,90.
The world is no longer a Western lake. The economic crisis will likely speed this Western declension. The welfare policies favoured by rights-based western nations, requiring greater and greater government spending to meet entitlements, have been funded by increases in taxes, rising levels of national debt, and easy-credit-consumption led economic growth. Now the credit bubble has burst in the West (and it is predominantly a Western problem--this economic crisis.)
The upshot is that Europe, the UK, and the US cannot afford their entitlement programmes. But even less can they afford the reckless government spending to try to get their citizens ramping up their consumer spending and appetite for still more debt (which they argue is the way to get out of the current economic downturn.) The rise in national indebtedness (and therefore of the dead weight of taxation upon their economies) will weaken them still further over time.
We will likely see a significant quantum shift in economic power and influence away from Western nations to the emerging economies of Asia. The Western economic crisis will make this transfer more quick and palpable.
There are signs that this is happening now. The whole artificial construct of the European Union is under threat. It may not be able to withstand the strain put upon it by the pain of the current economic deleveraging and deflation. Right-based entitlement societies don't usually cope well with hardship. They just make their demands more loud and querulous.
The Herald Tribune recently carried a piece on the current economic crisis threatening the idea of "one Europe."
The leaders of the European Union gathered Sunday in Brussels for an emergency summit meeting designed to tamp down the centrifugal forces unleashed by the global economic crisis that threaten to spin the bloc - and its single currency - apart.
In a statement afterward, the leaders tried to reassure their publics, promising to hold to the single market, promote growth and reject protectionism.
A call from Hungary for a large bailout for newer, eastern members of the union was rejected by Germany, the richest EU nation, and received little support from other countries. . . .
Europe may now be "whole and free" after the collapse of communism. But the European Union is not a country, and the deep global contraction is stimulating nationalism, not consensus.
With uncertain leadership and few powerful collective institutions, the union is struggling with the strains this economic crisis has inevitably produced among 27 different countries with different economic histories. The traditional concept of "solidarity," of one for all, is being undermined by protectionist pressures from political leaders with national constituencies and agendas. . . .
"The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny," said Stefan Kornelius, the foreign news editor of Süddeutsche Zeitung in Germany. "The whole project of a joint currency is being tested for the first time. We always said you can't really have a currency union without a political union, and we don't have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud." . . .
The construct of a united Europe has always been artificial; it was likely never to endure. (Bernard Connolly, The Rotten Heart of Europe: The Dirty War for Europe's Money. London: Faber and Faber, 1995. While Connolly was writing over ten years ago, this volume is showing up to be prescient in the light of the present internal struggles within the EC.) The present pressures are merely bringing the fault lines and the fissures into sharper focus.
Secondly, we have recently seen Gordon Brown grandiosely calling upon President Obama and the United States to join with Britain and march forward to save the world. Obama for his part recently called upon Brown to join forces to help deliver an international climate change treaty--due to be negotiated in Copenhagen at the end of this year.
Climate change lunacy has generally been ardently propagated in the West. Third world and Asian countries have been happy to go along--provided everybody agree that it is a Western problem and the West must pay. It is the only kind of deal they are interested in. Obama and Brown will have to agree to cap and tax their respective nations into poverty if they are to get a "genuine" international agreement on climate change. We expect that those two will be supine on the issue (while trying to sell it to their own electorates by rhetorical teleprompter flourishes such as "leading the world" and "setting the path forward" and "change we can believe in" etc.)
We expect that the East will negotiate harder than ever in Copenhagen this year for the West to bear the brunt, if not all the cost for so-called global warming. "You caused the problem, you fix it" will be the script. The dependence of Western upon Eastern and Middle Eastern capital to fund their ever burgeoning deficits will lead to capitulation--or at least far less Western stridence. Cap and tax regimes will lead to one of the greatest global wealth transfers we have seen in recent history. And so it gets worse.
Shades of things to come were evident in Hillary Clinton's recent trip to China. Gone was the vexatious hectoring the Chinese over human rights (the Chinese have never bought into western rights-based ideologies). Hillary put her harpish persona in the closet and brought out the sweet, reasonable face. She did not mention human rights. Instead sShe encouraged the Chinese to keep buying up American debt (that is, encouraged them to keep lending money to the US). There we have it in a nutshell. You don't bully people or nations upon whom you depend for economic survival.
Obama will soon find that negotiating international climate treaties with other nations, whilst you are sit on a mountain of national debt which is exploding volcanically under your reckless ideological spending binge, means that you are forced to speak very loudly while you wave nothing more than a limp feather. He will need his teleprompter more than ever. But he will end up being humiliated, along with the nation he leads.
For our part, we are glad that New Zealand is increasingly forging its economic future in Asia and doing do by a growing raft of free trade agreements. We are also glad that whilst our debt is worrying and we certainly have more de-leveraging to go through, we will likely end up less scathed than most.
If only we could get rid of our own rights based entitlement ideologies. In the long run they will kill us just as surely as they are ravaging the US, Europe, and the UK at present.
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