The Post American World

I recommend Fareed Zakaria's book to anyone yearning for a macro perspective on shifts in global power at work in the recent past, today and in the near future.

His no nonsense analysis focuses on the rise of two of 'the rest', India and China, with some well researched detours into the decline of Britain and failures for China to develop in earlier times.

Zakaria (he is the editor of Newsweek) nicely contrasts the way in which China has been able to grow in a continuous spurt, thanks to a powerful centre, such that there will be increasing political power and influence by stealth, whereas India, dominated by regionalist democracy, will play the role of the third power, but more in economic terms than political. Even since the book was published, we are seeing signs of this, with the growing reach of the Chinese navy in the past few weeks.

The book is also excellent at helping us to understand modernisation and distinguishing it from westernisation. What is happening in India (the rise of the IPL for instance) and China (the glitz of the Olympics for instance) are not examples of westernisation, rather, they are signs of a certain level of development within capitalism. The consumerism we associate with malls in London or Los Angeles has acquired a local flavour in Mumbai or Dubai. Zakaria is interestingly confident that when per capita GDP rises above US$5000 per annum, forms of liberal democracy start to take emerge in any society. In that respect, the fraying at the regional edges we have seen in China of late may be the first signs of a revolution away from command and control centrism.

He comes unstuck however in the later chapters when he tries to propose policy responses to the rise of the rest for the US govt. One gets a sense of the newly arrived immigrant still in love with the dream, daring himself to not study the fissures closely. For instance, on page 192, he writes (apropos of America's failing standards of secondary education),

"America is a large and diverse country with a real inequality problem."

Just five pages later, when writing about the competitive advantage that America has in welcoming foreigners over Europe, he writes,

"America is creating the first universal nation, made up of all colors, races and creeds, living and working together in considerable harmony."

Which version is it to be Fareed? The dream or the reality? From what we are seeing in Arizona, it looks like the dream is gone.

Like the UK twenty years ago, America is losing its industrial base. However, the move to a services based economy (what alternative is there?) is much more risky than it was in the 1980s, precisely because of the rise of the rest: massively increasing global competitiveness. As China and India invest more heavily in tertiary education and improving their business environments, innovation will gradually shift eastwards. When universities in Beijing or Chennai develop the research depth and resources that many of the top US universities have (as they will in the next few decades), America will have no competitive advantage left.