Friday, December 11, 2009

The Post-American World Book Review

Zakarias book does not discuss the fall of America as the title might suggest but the rise of other countries (the others) and how this is changing the worlds political and economical power structure.
In the preface of the book Zakaria analyses the current financial crisis and how it’s related to globalization. According to his analysis the global financial crisis in 2008, could only happen because the debtors and creditors, across national borders cheered each other on, leading to a vicious cycle of out of control lending and spending.
The United States is a nation in which each household has an average of 13 credit cards and more than $100000 debt in mortgages and its entire economy relies on loans. I have to say that especially the number of 13 credit cards seemed mind boggling to me. I couldn’t find a statistic on how many credit cards the average German has but I assume it’s a lot less. My father for example got his first credit card a year ago because he wanted to rent a car. To my knowledge this is the only transaction he ever used his card for. My mother doesn’t even have a credit card and a lot of my friend don’t have one either. The predominant plastic money is debit cards. Also the fact that the average household owes 100.000 was quite interesting. In comparison the average household on Germany is 8078 Euros (approx. $12.000) in debt. I think besides the availability of credit and the differences in the tax code (in Germany interest is only partially tax deductible) there is also a cultural component. While it’s completely normal and acceptable to live on credit, being in debt has a negative connotation.
Zakaria goes on to present how China (in contrast to America) is very cautious and conservative in terms of borrowing credit. Over the past few years the Chinese have saved enormous amounts of money invested it not in their own country but loaned it out to countries like the US driving up the debt even further. Eventually, the giant house of cards collapsed in a giant crash leading to the financial crisis we are facing right now.
Zakaria notes that this crisis is particularly worrying because it originated in the capitalist country of the world, the United States of America.

The rise of the Western World and the emerge of the US as a super power
In history there have been three major shifts in power. In the 15th century science and technology, commerce and capitalism, the agricultural and industrial revolution led to the rise of the western world.
At that time China could have been one of the greatest seafaring nations of the world. The emperors of the Ming Dynasty, built ships so big which would have made Columbus’ Santa Maria look like a little nutshell. But then politics changed. The Chinese decided to isolate themeseves, burned their ships and prohibited their citizens from exploring the seas.
As a result, the Chinese culture stagnated, and they left it to the West to make the great discoveries of the modern era.
In the late 19th Century the United States ascended to be the undisputed number one in the world. Now, at the beginning of the 21st Century, we are witnessing the emergence of other nations, which previously stood in the shadow of the US in terms of economic and political power. There are countries such as China, Brazil, Mexico, South Korea, Taiwan, India, Argentina, Chile, Malaysia and South Africa who become more self confident and powerful.

The rise of the rest (the rise of asia)
Between 2000 and 2007 we witnessed an enormous boom in the global economy. Despite all the wars and the terror threats that shook the world, the world per capita income (per year) grew stronger than ever before. These conditions make the rise of other highly likely.
The free-floating capital without fixed exchange rates that became available in the ’70 and ‘80 enabled a limitless supply of capital for the entire world. Also new emerging technologies such as the internet flattened the world.

China - The Challenger
In the opening of chapter four, that analyses “the challenger” China, Zakaria notes that Americans are “truly dazzled by bigness”, naming a few examples for his argument. I found that passage particularly funny/striking because that was the first thing I noticed when I first set foot on US soil.
One other interesting titbit of information that I found quite interesting was the fact that in 1978, China produced about 200 air conditioners. About 20 years later the production rose to an incredible 48 million. The yearly output of air conditioners in itself is not very interesting but the unreal increase in that number demonstrates the almost unimaginable magnitude of change that happens in China. This development was triggered by a decision by the communist party leader Deng Xiaoping in December 1978, when he called for a focus on economic growth. He noted that “It doesn’t matter if it is a black or a white cat. As long as it can catch mice, it’s a good cat.” to underline the necessity to let facts not ideologies lead the path of Chinas economic development.
This policy was put into action with great success. Today, China has 400 million less poor people, the average income of the population has increased sevenfold and the economy is growing almost 10% on average each year.

India - The Ally
If we can believe the current predictions India is looking at a bright future. Compared to China India’s economy is still small but according to the latest data in 2020 India India will surpass Britain in terms of economic performance and is projected to become the worlds number three only 20 years later. India has a vast pool of well-educated young people which is one significant edge over China that suffers from a shortage of “human capital” which was brought about by the one-child policy.
Another main arguments for India is the fact that every citizen speaks English very well, a relic of Colonial times. Also India is an old democracy with all the important democratic institutions in place (at least in theory) which is also a cornerstone of economic prosperity. However corruption and waste of resources have become a pressing issue of the past few years.

American Power and American Purpose or “What will happen to the U.S.?”

While according to Zakaria China and India - the prototypes of the others - are on the rise, the
contours of the current economic nation's number one blurred. While the U.S. is not nearly as bad as is sometimes represented -- as an example the number of engineers graduating each year compared with the numbers in China and India is often quite distorted in the media.
Nevertheless, the US needs to prepare for new challenges. America still a superpower: economically, politically and above all militarily. During negotiations with other countries the US dominate these negotiations heavily. This shows how powerful the US are but sometimes also the arrogance in which this power is used.
The US must work on how other nations perceive it and in turn its partners will respect and appreciate US leadership. The international reputation of the US will determine the future role of the superpower in the world. The President must try to build good relations with all governments to be able to push an American agenda successfully and to resolve problems.

Final thoughts and comments.

I really liked the Post-American World. It’s easy to read, entertaining but also very informative at the same time. Zakaria presents a lot of data and numbers in his book but presents this data in a very interesting kind of way. However, I had the feeling that Zakaria repeated himself a few times in the book and went into too much detail in some parts.
At times Zakaria is almost bashing the US only to relativize that claim in the next sentence.
The fact the BRIC countries are on the rise is a commonly known fact these days, however I think Zakaria did a good job analyzing what that could possibly mean for the US. I really enjoyed reading the book and I would recommend it without hesitation to everyone who is interested in politics or world economics.

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