When Will American Realize the World Has Changed? 42 comments
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Two recent articles by well-known authors are particularly insightful, yet particularly troubling. These articles are the work of Fred Bergsten, director of the Peterson Institute for International Economics, and Thomas Friedman, who is on the editorial staff of the New York Times. Bergsten’s article in the May 20 edition of the Wall Street Journal can be found here, and Friedman’s article in the May 21 edition of the New York Times can be found here. The nature of these articles is troubling because they both deal with what is happening in the world these days and how the United States government, all parts of the government, seems to be missing the boat.
Whereas these articles are not directed toward areas that I generally deal with, they are very important because they paint a picture of how the world has changed and is continuing to change and the failure of those in leadership positions in the United States to recognize the changes and productively deal with them. Both of these articles relate to the rising power of other nations in the world order.
Bergson is interested in world trade and the role that the United States is to play in this world trade. He is particularly concerned with the move in Congress to change the rules relating to congressional action on trade legislation. His concern is specifically in reference to the free trade agreements with Colombia, South Korea and Panama. The move of the Democratic leadership in Congress, Bergson argues, is leading to a collapse in the credibility of the United States and a decline in international trust. It relates to the willingness of the United States to negotiate faithfully with other sovereign nations. The United States has seemingly developed a bi-partisan approach to international relations, from both the Bush administration and Congress, that others in the world community can only label as unilateral.
Bergson contends that this will “remove the U. S. from any significant international trade negotiations for the foreseeable future.” Given the “large and dynamic economies of Asia”, the strength of the European Union, and the wealth amassed in the Middle East, there is a good possibility that trade pacts will be negotiated within and between these trading centers, pacts that will discriminate against rather than include the United States. The world has changed and the United States is going to have to adapt to it.
Friedman approaches the situation from another direction, but he starts off his essay by stating that a new President may not have to worry about who the United States should talk with because, “The real story is how few countries are waiting around for us to call.” Again, the picture is one of an America that has gone off on its own, believing that it can act as the sole super-power in a world in which it can always get its way. The world has changed and we, the Americans, have not been paying attention.
“It is hard to remember a time,” Friedman goes on, “when more shifts in the global balance of power are happening at once—with so few in America’s favor.” He focuses on three of these shifts that he considers to be the major changes that have taken place.
The first is due to the failure to develop an energy policy large, transfers of wealth have been channeled toward “petro-authoritarians” and from this wealth, power will follow. The second is the “rise of the rest” — BRIC and other rapidly growing nations—is resulting in growing “clout and self-assertion” that is being felt throughout the world. The third is the changing nature and location of leadership which is resulting in changing networks of communication and action.
I don’t want to get bogged-down in the negative aspects of this and I believe that there is enough blame to go around so that finger-pointing will not get us anywhere. The crucial issue, to me, is that the world is different from the one most of us believed existed and something needs to be done about it.
The United States is still a superpower, the only superpower. Yet within the globalized world that it desired and fostered, this power has become diffused. A lesson that has been learned in other areas is that a true monopoly is only local. Businesses have seen that they can dominate a geographic region because of the barriers to enter a market and the economies of scale that they can achieve within this area. However, when the local monopoly places an emphasis on growth and expansion into larger and larger areas it often finds that the expansion does not always produce the results it had anticipated. The larger market area contains more competitors that are not prevented from fiercely competing with the former monopoly and, due to the larger size of the market, the economies of scale that the firm relied on in the past are now not sufficient to differentiate the former monopoly from these other organizations.
The United States, rightly, I believe, pursued a policy of globalization. The success of this globalization can be observed throughout much of the world with many rapidly growing dynamic economies providing evidence that open trade can benefit many, many people and reduce poverty in major ways. But, as the rising level of economic performance has spread throughout the world, this globalization has rebounded back on the United States. As the rising levels of wealth and power among these nations has resulted in increasing self-confidence and authority, these nations have begun to talk with one another and have become more self-assertive. And their success has fostered a rising self-respect and willingness to stand up for themselves. Most believe that this trend will not end any time soon.
The economic policies of the United States in the last seven years have also contributed to the growing independence connected with the “rise of the rest.” Because of the monetary, fiscal, and regulatory policies followed by the United States during this time, the trends that were already in place, but that were unrecognized by the leadership, were stimulated and even encouraged. Whereas other nations around the world had come to the conclusion that they could not run their economic policies independent of the rest of the world, the United States acted as if this knowledge did not apply to them. The result was that the United States, economically and financially, got further and further into a hole. The leadership did not seem to realize that more of the same was not the answer. As Friedman concludes his essay, “The first rule of holes is when you’re in one, stop digging.” But, it still remains to be seen when we in the United States will understand this.
Others are moving, even if the United States is not. For example, Friedman reports on the testimony of Gal Luft, an energy expert, before Congress where Luft says that with oil at $200 a barrel, “OPEC could ‘potentially buy Bank of America in one month worth of production, Apple computers in a week and General Motors in just 3 days.” As many know, the purchase of United States assets has already started. With a continuing rise in the price of oil…it will just accelerate if nothing else is done.
Another example pertains to the decline in the value of the dollar. In the Financial Times on Monday, May 19, Harold James wrote about the possibility that the Eurodollar will become “the world’s hegemonic currency.” This may result from the weakness in the value of the U.S. dollar and the fact that the eurozone is overtaking the United States as the world’s largest economic area. Unless things change, James surmises, this could result in a passing of the baton. You can read his article here.
One final example is the suggestion of France’s finance minister who recently urged action by central bankers to reduce the “misalignment” in the world’s major currencies, especially “the low American dollar." You can read the article here.
The world that the new President is going to inherit is not the world that the candidates are now talking about in the campaign for the presidency. In one sense we can be thankful that the political discourse seems to have moved from that dominated by the attitudes of the 1960s. Hopefully, we can move the discussion about economic possibilities, policies, and programs into the 21st century.
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This article has 42 comments:
Where does one learn about change? Not from a Wall Street pitch persons who want the succors to buy Bank of America, General Motors, and Apple, and will then consul buy and hold next.
The conservative fascist agenda!
We ARE paying attention, to the fact we are a COLONIAL IMPERIAL POWER. Do you see China invading other countries for oil? Do you see any other developed country SPENDING 60% OF EVERY TAX DOLLAR ON THE MILITARY? Yes, we are paying attention. And don't throw out that RepubliCon-created term "protectionism" every time we question this corrupt government's foreign policy and trade agreements. We've had enough. We're retiring in a country that values PEACE.
So much for the authors appreciation of international affairs, when one cannot spell a country correctly!
as for it being "the democrats" fault, after 8 years of a war-mongering, free-spending and fear-inspring republican administration, such ignorance isn't even worth a reponse.
america has had it pretty good for a long time. most people in the world would still rather be educated here, live here and work here. when our citizens leave, it is only to retire. this is the land of the living, where ideas come from, the heart of capitalism.
we let their smartest and hardest working people come to the u.s. for centuries. suddenly, we're surprised that the remaining detritus hates us. please....
maybe we should just let them buy bank of america and anything else they want, then we can renationalize everything. that's what they do to us, isn't it?
let's face it, we've already moved the rest of the world towards capitalism and democracy. at this point, we should defend our shores, rebuild our infrastructure and create an energy policy that secures our future.
yes, that is exactly true. democrats are no less to blame than republicans for our economic plight today. i lambast republicans because the iraq war...bush's war of choice...was the genesis for much of what followed. our exploding budget deficits, collapsing dollar, the rise in crude oil and our ever-declining international prestige are tied to it.
it is not democracy that is the glue that holds our country together....it is economic opportunity; and it is that which made the u.s. a great world power. remove it and we're just another struggling country with a declining standard of living. if economic opportunity goes, our military might will follow.
the old soviet empire brought about its own collapse by overreaching militarily and ignoring its domestic needs. in our case, the military spending is symptomatic but it is just the tip of the iceberg. we subsidize everyone and everything, domestic or foreign, and we borrow from foreign nations to do it...mostly from our "adversaries." and our political leadership maintains the view that "deficits don't matter."
we are being sold out by self-interested politicians, democrat and repubican, who care about their own future...not ours. if we don't get leadership with a deeper understanding of the importance of eonomic stability and opportunity, our national trend toward world irrelevance will accelerate.
The British prevented free trade in America before the American Revolution and, in fact, this was one of the causes of the "civil war" with the mother country that we call the American Revolution.
In the 19th century, America behaved as the Chinese do, in practice, today and didn't even recognized patent rights and copyright laws. At least China recognizes these laws formally if not in practice. We protected most of our markets in the 19th century also.
This is not a controversial view, it is simply historical fact. The book Bad Samaritans by Ha-Joon Chang discusses these topics very clearly.
The statement: "with oil at $200 a barrel, “OPEC could ‘potentially buy Bank of America in one month worth of production, Apple computers in a week and General Motors in just 3 days." proves that economics is not mostly about free markets.
At least I hope it does. The specter of American speculators selling America to the Saudis and allowing them to buy all of the real estate in America just to reignite the housing bubble seems pretty remote to rational beings but then again, World War I and World War II seemed pretty remote to those same rational beings who were our fathers and grandfathers.
We Americans need a challenge to wake us up from the nightmare that money is the most important thing in life and that we must stop at nothing to get it.
biz.yahoo.com/ap/08052...
www.alternet.org/story...
Rest of world, keep buying our debt before we open a can of whoop-ass on ya. USA! USA! USA!
en.wikipedia.org/wiki/...
Members of the Board of Directors of the Peterson Institute reads like the who's who of international banking. Blackstone Group L.P. was founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman.
Relations. en.wikipedia.org/wiki/...
Peter G.Peterson is also currently chairman of the Council on Foreign
en.wikipedia.org/wiki/...
The Peterson Institute, formerly the Institute for International Economics, is a private, non-profit, and nonpartisan think tank focused on international economics, based in Washington D.C. It was founded by C. Fred Bergsten in 1981, [Hmm, not just a director.]
in response to a proposal from the German Marshal Fund.
en.wikipedia.org/wiki/...
Robert Zoellick, was a former board member of German Marshall Fund.
He announced his resignation as Deputy Secretary on June 19, 2006 to join the investment bank Goldman Sachs as a managing director and chairman of the company's International Advisors department.
He is currently the eleventh president of the World Bank, a position he has held since July 1, 2007.
en.wikipedia.org/wiki/...
Damn if Goldman-Sachs doesn't pop up every which way we turn.
We'd probably better pay close attention to this little commentary. Seems like a whole gang of rabid pit bulls (financial predators) getting ready to rip up the world.
I'm surprised an article like this has taken so long to appear on SA. The government and media have a vested interest in keeping Americans thinking that we're still on top of the world. The truth is, we aren't. For some bizarre reason our leaders have thought that all we need to do is keep doing what we're doing and we will remain on top. The Romans thought that too, and that didn't get them very far.
The fact is, third world countries won't stay third world forever (unless through authoritarian control you keep them there). We've been surreptitiously or blatantly throwing our weight around for decades, and the world has become a little bit tired of it (especially after the last eight years). Now that they have clout, they're beginning to turn the tables. Surprise, it sucks.
We are following the same path of decline that many other great nations have followed before us. It seems strange that no one is doing anything about it. In fact, they're making it happen faster. Can anyone else think of something better to do with $400 billion for this country than throwing it into the deserts of the Middle East?
I think the world (not the one portrayed to you by CNN) has realized that the US may actually be in trouble. We have the strongest military, but in this day and age that is almost meaninglessly. Wars are too costly and end up using/destroying resources and infrastructure that can be put to better use. The rest of the world has figured this out for the most part, but we haven't. The rest of the world is more than happy to watch us spend ourselves into oblivion for our arrogance, while they use their economies to accomplish their goals.
The world changed. We didn't. Now we're in a game of catch up but we have dug ourselves into quite a hole. We have maybe a decade or two left to figure things out before we really hit some bad times.
But for now American Idol will have to do.
~X~
Also, we have had no real leadership for the entire duration of the Bush administration. When Obama is elected, we will start moving forward without having to give-up our human and environmental rights in order to compete.
1) stop the asinine military expansion - withdraw from NATO, and Japan - they're big boys and can defend their own interests.
2) Energy policy - let's get one - we are the Saudi Arabia of coal and natural gas and for now, that might be the less than optimal way to go until the nuclear plants can be built for our electric cars.
3) Econ. policy - embrace the JFK approach - low taxes, reasonable interest rates.
4) Stop electing lawyers.
Best to all...
We cannot act as the world's policeman, leave 50,000 troops in Iraq and 20,000 in Afghanistan and pull the rest back globally. If we want to compete economically on a global scale, we must rapidly innovate and give the global customer the must have's: Energy, agriculture, metals and medicines. Our lack of any large scale energy solutions from the top three Presidential contenders is beyond disturbing.
People from all over the world still want to come and live in America. Super, we need there brains, enthusiasm and taxes, increase legal immigration 1,000%. Sell foreigners the big U.S. oil ports and equity in everything. What's the difference, America outsources/offshores everything these days, just few people know it. Declare national energy independence, de-regulate and subsidize $300 B from Treasury into biofuels, coal liquification and nuclear plants (slow Ethanol build-out now though). Do drill in ANWR and offshore. This would deflate the commodities bubble and allow the rest of the world to invest back into America that has a future.
I have to say it: We're all going to bite the bullet of our easy liquidity overexpansion economy, bubble's and currency devaluation monetary policy creating inflation and taxing the non-suspecting as a remedy. Both Democrats and Republicans have been acting shamelessly, battling for power over a dwindling global empire while ignoring domestic and foreign issues besides Iraq and Iran.
I read Thomas Freidman's book, the World is Flat. He makes some great, factual points in the book and also gets into human nature as to how America could have not noticed the world getting vastly more mature in the last few short years and to take advantage of that. It's a worthwhile read.
It is entirely the fault of the American voter. For the past 30 years, our oil dependence has never been a priority for anyone except a few lonely visionaries (Jimmy Carter comes to mind). The Republicans, the Democrats, the Congress, and our Presidents have done exactly what the American voter wanted: NOTHING!
bush is the leader of the country and it is incumbent on him more than anyone to at least rally the public to constructive behavior in times of crisis. "park your gas guzzler one day a week" might be good for starters. but what does he do? he goes hat in hand to the saudis asking them to pump more oil. and what advise has he given the public?
"SPEND YOUR REBATE CHECK FOLKS!"
debt-saddled americans being told to spend their rebate check their own government had to borrow...from china no less. you can expect crap like that from a 3rd world country but from the u.s.a? it's laughable.
1. Don't believe everything you read.
2. Educate yourself. Wikipedia can be helpful.
3. Vote in November...even if you have to write in the name of your favorite candidate.
4. Beware of investment advice that is bull__sht.
5. Realize that if you spend your money on junk, you will not have any money for a down payment on a house.
6. Stop buying junk made in other countries.
7. Saving money is as important as saving energy, water, your health and your time.
8. Be kind to all your neighbors.
9. Complain to your Congressman and Senators if they are not running the country to OUR BENEFIT.
10. If your present Senators and Congressman/woman are not doing a good job, VOTE THE INCUMBENT OUT OF OFFICE.
11. Learn how to spell, use the English language and write clearly and concisely. All it takes is a little extra time and it will make your comments more effective.
12. Say thank you and please more often because it makes more friends wherever you travel in the world.
OBAMA 08 Peace is always better than war.
I hope all that post on this site , will have a open mind & reply back, our Congress has let this nation down, & if Americans don't get their heads out of the sand, to get facts, before they jump on the band wagon of the Cap & Trade, Laws of the SEA TREATY, & many more laws, that this Congress is doing, it will only lead to more pain for Americans!!
We start wars that solve nothing yet don't fight wars that could solve problems; we support dictatorships that imprison their people (pick a South American country of your choice here), ignore dictatorships that commit outrages (Myanmar, Zimbabwe), topple those that didn't ask for our help (say Iraq 10 times fast), and punish dictatorships with popular support (say, Hello, Fidel)...need I go on?
Yet we don't have our own house in order. The world was dumb-founded at America's response to Hurricane Katrina. THAT, my friends, was the moment when the rest of the world realised that America was no longer a superpower, but rather a façade. Indeed, I spend a lot of my working life apologising for America
Our time is over; we've been fatally wounded by our own hand; while we're still standing, that fact merely reflects one of the laws of thermodynamics
Well... some of us did. I have been voting third party and independent for decades. If only more people would follow suit.
Fire 'em all and start over.
This article expresses the delicacy of the dilemma, and the need to ask the right question as America moves from benefactor to cooperator that it must be to survive in the new world planet.