America’s Future: Economic Hub or Hermit Kingdom?


The Consummation of Empire from Thomas Cole’s five-part series The Course of Empire

When we study some of the great civilizations of the past, we are treated to a retrospective view of their successes and failures, their assent to greatness and then their eventual decline. It makes me wonder where we are in our arc of power and influence. We undoubtedly rank amongst the most powerful nations in the history of human civilizations.

Our style of world leadership has been a unique blend, much of it borrowed from the Romans and even the United Kingdom. A unique difference, I think, is how much the world has changed since the founding of this nation. There were huge advancements in engineering and science in the past but nothing compares to the type of growth and evolution the United States has seen.

Another thing that sets us apart is the different way acquisition of wealth occurs. Gone are the days where legions of armed men invade a country and lay hold of its land and resources. While countries still invest (sometimes quite forcefully) in regions like Africa and the Middle East for their oil, earth elements, and precious metals and gems, the days of all out conquering are past. Diplomacy is more necessary than it was before. There is no longer one dominant society that rules among a rabble of barbarians. The playing field is becoming more equalized.

Part of this is due to the technological advancement we were talking about. Even countries that aren’t major players on the world scene have the ability to obliterate a large portion of the planet. The development of the atomic bomb during World War II is one of the large suspects. The ascending problem seems to be hacking and an increasingly connected world. Hackers in China have shut down major news sites, tampered with nuclear plants, and stolen technology from some of the biggest American countries, all from an ocean away. This has, in a sense, led to more checks and balances. It has also led to an obligatory sense of responsibility. The cards that can be played are part of an ultra-high stakes game.

All of this means that countries are all more or less boxed in geographically. Mass land conquests are no longer on the table, baring drastic circumstances. This means that the traditional problem of overextension is not as much of an issue. Instead, I see economics being the main issue. Monetary overextension is still very much on the table and the consequences are equally high. When the United States created the bubble that burst in 2008, the ripples were felt around the world.

We are still dealing with a lackluster economy and we are now saddled with the debt of multiple wars fought abroad. Unlike the World Wars, the wars since then have not resulted in economic benefit for the country. They have resulted, instead, in colossal mounds of debt and a negative attitude towards military action. We must turn our attention now to strengthening our monetary foundation through smarter spending and a stronger export economy.

It is the unknown result of these factors that has me curious. What will the United States look like in 10 to 15 years? By necessity I think we will become more concerned about domestic issues and less involved in foreign conflicts. I wonder, though, whether we will become the Hermit Kingdom or something else?

Given the dynamics of the world today, I’m not sure that seclusion is a viable option. Economies are more linked than ever. We can no longer live within our own bubble. Our fate and the fates of nearly every other region in the world are interdependent.

It seems that military threats are also becoming more globalized. When governments rise and fall, their information and weapons hang in the balance and the weapons at stake can affect the United States and its allies. It would be irresponsible and unrealistic to think that we can withdraw all of our military presence and not suffer for it. The type of instability left in the wake of an action like that has been abundantly clear in Fallujah.

The bottom line is that some of the emerging countries like China and Russia must shoulder more responsibility. It’s only fair that those partaking in the benefits of relative stability would contribute to sustaining it. The question is, can the United States learn to be comfortable with that? And perhaps more importantly, should we be more comfortable with that?


The J-Curve And How It Relates To China’s Future


Ian Bremmer, founder of The Eurasia Group

During the last few weeks I’ve enjoyed listening to a few conversations with the political scientist Ian Bremmer. A Stanford graduate, Bremmer is the founder of the Eurasia Group and specializes in subjects like US foreign policy, countries or entities in a transitional phase, and political risk. I’ve found his words to be insightful and approachable.

The concept of Eurasia Group, the consulting company he started, is an interesting one. In the realm of consulting I typically think of powerhouses like the Boston Consulting Group who provide fairly typical business solutions. The Eurasia Group is geared more toward advising clients based on the insight they get from people they have on the ground in the region. As Bremmer’s specialties might indicate, they provide consultation from a political standpoint. By having experts on  in regions around the globe they are able to give their clients a sense of what it’s like to operate in those regions. They are also able to comment on the health and stability of countries and their governments. I suppose I find this more appealing than a more traditional consulting approach because it requires a broader scope (in some ways) and an awareness of country’s dynamics and history.

While reading about Bremmer’s background and ideas there was one concept that struck me as especially interesting. It is a graphical presentation of the correlation between a country’s openness and stability called the J-Curve. What results is a thought provoking theorem that is extremely relevant to the increasingly globalized world we live in today. It is especially edifying in the context of the Middle East and the Arab Spring. I want to explore this concept with you in more depth so, for the sake of an even footing, here is my three sentence summary of the J-Curve:J_Curve

The most stable countries are the most open. The graph is steeper on the left side because it’s easier (and quicker) for a country’s leader to rapidly isolate it than to build reliable infrastructure and state institutions. There is a very dangerous section in the first third of the graph where stability is almost nil due to a lack of openness that falls short of near absolute isolation.

From my observation, this third sentence is the reason for most of the strife in the Middle East. We see countries that have repressive governments but that are not isolated to the extent of Cuba or North Korea. What results are situations of sustained instability like we’re seeing in Syria, Egypt, and Libya.

What I’m really fascinated to see, however, is how this affects a country like China. With a huge population, a large stake in international trade, and a burgeoning middle class, the country is becoming more than just cheap labor for countries like the US. The Communist Party, however, remains firmly in control. What I’m wondering is, for how long?

When the country was split predominantly between a ruling elite class and poor working class this system of quasi-capitalism seemed more plausible. A growing middle class means an educated sector of the population which has increasing economic clout. They create jobs and fortify the country’s economy through their consumption. China’s middle class is what’s going to help them evolve into more than just an export economy. All this is happening, however, as the Communist Party attempts to tighten its control. They dictate much of the industry in the country, as well as its cash flow. In this way, they are in a very secure position of power.

I think the middle class might be the unstoppable force that ushers in large scale reform, albeit in a relatively extended time frame. If China wants to belong, in the full sense, on the global scale they’re going to have to make concessions. I believe unfettered access to information and increased transparency in government are items that a world power must eventual embrace. The United States, Japan, South Korea, Germany, and Israel all operate on a relatively transparent level. How will China and those in power there adapt to their increasingly important role in the world?

I think another Bremmer concept is relevant here. He looks at state capitalism as an emerging alternative to a free market economy. This certainly seems to be the case in China. It’s been the almost absolute government authority that has facilitated the artificial growth rates we’ve seen coming out of the country. Only a government could hedge so much widespread debt. They’ve succeeded in growing their economy at an incredibly rapid rate but at what cost? It’s this and the emerging presence of a middle class that has me wondering what China will look like in 10 years. Will they start to look economically like Taiwan or will their authoritarian social and monetary presence serve as a viable long term arrangement? It is certainly a development we should be following given the intertwined fates of China and the US.