Wednesday, November 09, 2005

Next New World Order Redux, Part I

Yesterday, the NYT ran an article by Richard N. Hass (director of policy planning at the State Department from 2001 to 2003) titled "Is There a Doctrine in the House?"
What policy should the United States adopt toward China's rise? How should we greet India's emergence, Japan's new assertiveness, Europe's drift or the possible decline of Russia? How can the United States reduce terrorism, promote trade, stop nuclear proliferation and increase freedom?

These are among the toughest questions on the foreign policy agenda, and right now Washington is trying to answer them without a compass. Containment, the doctrine of resisting Soviet and communist expansion, survived some four decades of challenge, but could not survive its own success. What we need is a foreign policy for both the post-cold-war and the post-9/11 world.

Hass's article prompts me to trot out my "Next New World Order" theory again, which I'll give a new working label of "Leveraged Balance of Power."

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The Leveraged Balance of Power theory suggests that the world is headed toward a multi-tiered organization of state, cultural, and geographic political entities. For now, we'll define the tiers as major powers, balance powers, regional powers, and others.

In the top tier, the major powers will be the world's three largest economies: the United States, the European Union, and China. These three entities will likely remain dominant for a significant amount of time, as China's Gross Domestic Product--third globally in 2004 at $7.3 trillion--is nearly twice the size of Japan's, which was number four at $3.7 trillion. (The US and EU were roughly tied at about $11.7 trillion.)

The next tier, the balance powers, will function as the "greased wheels" between the major powers. The most likely candidates for balance power status are the United Kingdom, Russia, and Japan, nations that have long histories of friendly and/or hostile relationships with the major powers and which are geographically distributed evenly between them.

The regional power tier will include countries like India and Brazil, entities whose economic clout is profoundly less than that of the major and balance powers, but significantly greater than that of their neighbors.

Africa, the Middle East, and North Korea will be the primary wild cards, entities that entities that could evolve into 21st century societies, fall into semi-permanent, medieval chaos and decay, or hover uncomfortably somewhere in between.

For the time being, the "other" entities fall somewhere between the wild cards and the regional powers. They are those reasonably stable, reasonably rational nations and states that show every indication that they're "up and comers" in the global scene, but have histories that suggest they could, if neglected, tumble into wild card status. Australia is a good example of a country at the stable end of the spectrum. Venezuela the former Czech Republics, and other entities rank somewhere lower on the stability scale.

The Flux Factor

We would be foolish to think that our original Leveraged Balance of Power theory is a perfect model, or that it strictly describes a rigid world order will persist indefinitely. "The only thing constant is change," as they say, and by the time we think we've figured out what happened yesterday, it's already tomorrow.

But barring some apocalyptic event like an alien invasion or the next coming of whatever God you pray to, it's prudent to assume that the three major powers of the Leveraged Balance model will maintain their status for twenty or more years. There will be competitive jostling among them, and that will have a trickle-down effect on the rest of the world order. But not too much, I don't think.

The economic growth rates
of the three majors alone indicates that changes in their relative status within their power tier are inevitable. China, with the number three GDP, gained 9.1 percent in 2004, more than twice the economic growth of the United States (4.4 percent) and almost four times that of the European Union (2.4).

Don't get too alarmed by those numbers. Economic growth rates do not remain constant. But if they did, and we use them to project out 16 years, the relative GDP ranking among the big three changes. In the year 2020, China leads the pack with 29.3 trillion. The U.S. GDP follows at $23.4 trillion, and the European Union is a close third at $22.6 trillion.

Nonetheless, the basic premise of the Leveraged Balance of Power concept doesn't change. If we test Japan--today's fourth largest economy and richest of the three theoretical balance powers--against the same projection criteria we used on the major powers, it still falls far behind them. Applying Japan's 2004 growth rate of 2.9 percent, its 2020 GDP works out to $5.9 trillion, a "mere bag of shells" compared to the individual and combined monetary might of the major powers. Even if we granted Japan a sixteen-year growth rate equal to China's fantastic 9.1 percent growth rate of 2004, it arrives in 2002 with a GDP of $15 trillion. That unlikely possibility would certainly give Japan a "first among balance powers" status, but it wouldn't put the island country in the "major league."

Also consider that if we grant England and Russia--Japan's fellow balance powers--China's fantastic 2004 growth rate, they land in 2020 with GDPs of $7.2 trillion and $5.7 trillion respectively.

Still sucking the major powers' posterior-most mammal glands, so to speak.

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Yeah, this is "back of the envelope" stuff; but my experience tells me that when it comes to predicting the future of societies, common sense SWAGS are as good as a team of think tank funded statisticians and a bank of Cray computers.

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Coming attractions: exciting new jingoistic labels to explain the new balance of power strategies, with doses of fiction to break up the boredom.

8 comments:

  1. That's an interesting idea. It reminds me of the book The Pentagon's New Map, by Thomas Barnett. He divides the world into two major sections economically, (essentially the first and third worlds) and he makes the claim that the difficulties of the third world in trying to integrate into the first world will be the source of the greatest threat to our national security in the near future.

    I agree with your assessment that the new economic paradigm is going to be a balance of power between the major economic powers (and I think you nailed them cold). I do think, however, that China is in a much better strategic position to "take off" than you seem to give them credit for. For one thing, although their growth rate is twice that of ours, it's being artificially deflated by their central bank's heavy investment in US debt. That same factor is artificially inflating our economy. If (when?) they decide to stop buying our foreign debt and start channeling that cash back into their own economy, we're going to watch our growth rate drop and theirs rise. It will profoundly change the dynamic of our relation with China, as well as the rest of the developing world.

    I wrote something on that topic on my blog, under the heading Threat Assessment. I'd be honored if you would check it out and tell me what you think.

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  2. Also, aside from a "rising China", we have to be aware of India's continued expansion. Their access to training and entry into the skilled labor market is having a significant effect on their economy. With a labor force comparable in size to China, an open market economy that favors cooperation with the west, a labor force that is integrating into the telecommunications and technology fields, a high number of native or near-native speakers of English, and a culture that favors strong community ties and a willingness to import education and capital to India rather than sending their capital oversees, I predict that India is going to be one of the next rising giants. Their current GDP growth rate is only 6.2 (yeah, "only"), and their GDP is $3.3 Trillion, but their massive investment rate and growing labor force are working in conjunction with all of the previously mentioned indicators suggest that they will soon outstrip the Japanese in GDP and certainly in their influence in the international labor market.

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  3. Sadiq is raising valid points. From my view in the high tech world I see India and China as the rising stars economically. The U.S. has set its self up for a big problem by relying too heavily on investment by China and Japan and I am not sure our economy can support a withdrawal of their largesse.
    I will not be surprised to see the U.S. take a secondary role in the global economy over the next 10 years.

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  4. Given the ability of American students to think and reason, I expect the US to take a secondary role in the next ten years. As I've ranted here before, I still cannot believe how much worse every new group of university students is each year.

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  5. Thanks to sadiq and monk for the considered feedback.

    Ariadne,

    If I ruled the world, I'd dictate just one thing: that everyone be introduced to the field of General Semantics.

    http://www.general-semantics.org/

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  6. If I ruled the world, I would dictate a bunch of things! The third thing I'd do is demand that Logic 101 be required as a course to graduate high school. You'd start in 9th grade, and spend four years simply learning how to reason, culminating in getting three college credits when you passed your AP Logic exam as a senior. If you didn't pass, you'd just get a high school certificate rather than a diploma.

    The SECOND thing I'd do is insist that everyone receive training in the field of ethics. Starting in kindergarten. And that people other than parents be able to discipline children for their unethical behavior, especially in those ethics classes. Humanity trumps pure logic, however narrowly, and I think it's important for our society to be reminded of that. Knowing how one SHOULD behave is even more important than understanding the legalistic reasons WHY one should behave that way, and it would cut down on the VAST majority of issues that most people have in society. (maybe I'm just too Maoist in my thinking....)

    Of course, the first thing I would dictate would have to do with me personally, a room full of strippers and whores, and an evening that nobody would talk about, but that's a completely different conversation altogether....

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  7. Sadiq,

    If you ruled the world, you could make the strippers and whores thing happened.

    Teaching people how to think and to behave ethically might require more power than a world emperor could wield.

    ;-)

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  8. Heh... seeing the state of the US educational system, I'm inclined to agree; but I don't think it's that way in the rest of the world.

    In America, being simple is elevated to a virtue. And being simple is code in our society for being dumb. But it's not that way in other countries. There are plenty of other nations that reward intelligence, thoughtfulness, reason, et cetera. Here, the primary concern is the "bottom line". If you can make money, your capacity for reason doesn't matter.

    Actually, let me take that back; if you HAVE money, you rule. In how many companies has Bush been in senior management? And how many of them have made money?

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