Geopolitics Chindia - Latest Articles The World Turned Upside Down | The World Turned Upside Down |
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The Impact of the Return of India and China to their Historical Global Weight. The world isn’t so much flat as gravely tilting, “and may be on the way to some kind of self-destruction,” believes Clyde Prestowitz, Jr. We’re due for a major rebalancing of global economic might, which the U.S. may well experience as catastrophic change. MIT World, 2006 - Watch Video
There are historic cycles, he tells us. As recently as
1850, China was the world’s largest economy, but by 1950, the U.S. and Europe
had come to dominate the scene. Once again “the hinge of history is taking a big
turn.” China and India are fast overtaking Western nations in economic growth,
driven by the digital revolution: “Half the world has come onto the capitalist
road …at the moment when the road becomes a freeway,” says Prestowitz. The implications are staggering. While millions may rise from poverty, the
possibility that these new economies develop along the lines of the American
consumer model means increased competition for global natural resources, such as
water and oil, and a drastic rise in global warming.
In the meantime,
says Prestowitz, Americans “are having a party.” This nation is the world’s only
net consumer, while everyone else is a net seller. We assume the dollar holds
universal sway, since all international commodities, from coffee to airplanes to
semiconductors, are priced in dollars. So we run huge trade deficits, and live
above our means, while we “outsource the management of the value of the dollar
to Asia.” This is unsustainable, Prestowitz warns. The central banks of China
and Japan, which each hold a trillion dollars, “have become increasingly
nervous” about the value of the money the U.S. prints, and may start to “dump
dollars” in exchange for gold and other commodities.
Prestowitz says the
U.S. still has “the best hand of cards” but is playing them as badly as
possible. We must balance the federal budget deficit right away, through tax
increases; prepare for a drastically devalued dollar; and strive for global
agreements where Asian nations agree to spend more, and the U.S. agrees to save
more. Watch Video
Clyde V. Prestowitz, Jr. Economic Strategy Institute
(ESI)
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