Thirty years ago, the United States dominated the world politically, economically and scientifically. But today?
"The tallest building in the world is now in Dubai, the biggest factory in the world is in China, the largest oil refinery is in India, the largest investment fund in the world is in Abu Dhabi, the largest Ferris wheel in the world is in Singapore," notes Fareed Zakaria. "And ... more troublingly, [the United States is] also losing [its] key grip on indices such as patent creation, scientific creations and things like that — which are really harbingers of future economic growth."
Zakaria, the host of CNN's Fareed Zakaria GPS and an editor at large for Time magazine, charts the fall of America's dominance and the simultaneous rise of the rest of the world in his book The Post-American World: Release 2.0, which shows how the collapse of communism and the Soviet empire — as well as the rise of global markets — has leveled the playing field for many other countries around the world.
"The result is you have countries all over the world thriving and taking advantage of the political stability they have achieved, the economic connections of a global market, the technological connection into this market," he tells Fresh Air's Terry Gross. "And we are all witnesses to this phenomenon."
America, Zakaria says, is also starting to lag behind other countries in education, building a competitive workforce, and fostering new energy and digital infrastructure to support those workers — all markers of long-term economic growth. He says America is now heading toward what he calls a "post-American" world, in which the United States' share of the "global pie" is much smaller — as the rest of the globe begins to catch up.
"In economic terms, the rise of the rest [of the globe] is a win-win," he says. "The more countries that get rich [and] the larger the world economy, the more people there are producing, consuming, investing, saving, loaning money. ... If we didn't have the rest of the world growing, the United States economy would be in much worse shape than it is today."
But Zakaria cautions that the economic growth around the world — and the benefits that global economic stability create — do not extend to the political arena.
"Politics and power is a realm of relative influence," he says. "So as China expands its role in Asia, whose role is diminishing? Of course, the established power — the United States. It's not possible for two countries to be the leading dominant political power at the same time."
America's political system, Zakaria says, becomes mired in debate and cannot deal with the short-term deficit. "To put it in perspective, if Congress were to do nothing, the Bush tax cuts would expire next year," he says. "That by itself would yield $3.9 trillion to the federal government over the next 10 years. We would go to the bottom of the pack in terms of deficit as a percentage of GDP among the rich countries in the world — we would basically solve our fiscal problems for the short term."
Interview Highlights
On the U.S. economy
"We have the leading companies and the leading sectors in the advanced industrial world, we have an incredibly dynamic society, and we have high levels of entrepreneurship. And we have the best universities in the world. ... We also have impeccable credit. What we don't have is a political system that can take the simple measures to deal with our short-term deficit."
On what might happen if the U.S. defaults on debt
"I tend to think it will be catastrophic. I think, more importantly, there is a high enough risk here that this is surely a game we don't want to play. ... There are events that economics call low-probability, high-impact events that you don't want to test. You don't want to see if this is one of those things that is an unlikely situation but once it happens could have a huge seismic global effect, because then the cost of dealing with the after-effects is just cataclysmic."
On the government's role in innovation
"We have this debate in America that is almost a theoretical debate about the role of government in the economy and whether government should be involved, and I worry that while we're having this theoretical debate, on the other side of the world, the Chinese government is vigorously promoting industry after industry, the German government is vigorously promoting its manufacturing center, the South Korean government is vigorously promoting its manufacturing sector — and by the time we've resolved our debate, there won't be any industries left to compete in. It is absolutely clear that government plays a key role, as a catalyst, in promoting long-run growth."
On Germany
"Germany is a fascinating role model. The Germans have maintained their manufacturing edge despite being a high-tax, high-regulation economy. Why? Because the government really set about ensuring that it maintained funding for technical training, technical advancements and programs. It made a concerted effort to retain high-end, complex manufacturing — the kind of BMW model, if you will. And they've done that so successfully that Germany, which has a quarter of America's population, exports more than America does.
Chapter 1: The Rise of the Rest
This is a book not about the decline of America but rather about the rise of everyone else. It is about the great transformation taking place around the world, a transformation that, though often discussed, remains poorly understood. This is natural. Changes, even sea changes, take place gradually. Though we talk about a new era, the world seems to be one with which we are familiar. But in fact, it is very different.
There have been three tectonic power shifts over the last five hundred years, fundamental changes in the distribution of power that have reshaped international life — its politics, economics, and culture. The first was the rise of the Western world, a process that began in the fifteenth century and accelerated dramatically in the late eighteenth century. It produced modernity as we know it: science and technology, commerce and capitalism, the agricultural and industrial revolutions. It also produced the prolonged political dominance of the nations of the West.
The second shift, which took place in the closing years of the nineteenth century, was the rise of the United States. Soon after it industrialized, the United States became the most powerful nation since imperial Rome, and the only one that was stronger than any likely combination of other nations. For most of the last century, the United States has dominated global economics, politics, science, and culture. For the last twenty years, that dominance has been unrivaled, a phenomenon unprecedented in modern history.
We are now living through the third great power shift of the modern era. It could be called "the rise of the rest." Over the past few decades, countries all over the world have been experiencing rates of economic growth that were once unthinkable. While they have had booms and busts, the overall trend has been unambiguously upward. Even the economic rupture of 2008 and 2009 could not halt or reverse this trend; in fact, the recession accelerated it. While many of the world's wealthy, industrialized economies continued to struggle with slow growth, high unemployment, and overwhelming indebtedness through 2010 and beyond, the countries that constitute "the rest" rebounded quickly. India's annual growth rate slowed to 5.7 percent in 2009, but hummed along at a 9.7 percent rate in 2010. China's GDP growth never fell below 9 percent.
This economic success was once most visible in Asia but is no longer confined to it. That is why to call this shift "the rise of Asia" does not describe it accurately. In 2010, 85 countries grew at a rate of 4 percent or more. In 2006 and 2007, that number was 125. That includes more than 30 countries in Africa, two-thirds of the continent. Antoine van Agtmael, the fund manager who coined the term "emerging markets," has identified the 25 companies most likely to be the world's next great multinationals. His list includes four companies each from Brazil, Mexico, South Korea, and Taiwan; three from India; two from China; and one each from Argentina, Chile, Malaysia, and South Africa.
Look around. The tallest building in the world is now in Dubai. The world's richest man is Mexican, and its largest publicly traded corporation is Chinese. The world's biggest plane is built in Russia and Ukraine, its leading refinery is in India, and its largest factories are all in China. By many measures, Hong Kong now rivals London and New York as the leading financial center, and the United Arab Emirates is home to the most richly endowed investment fund. Once quintessentially American icons have been appropriated by foreigners. The world's largest Ferris wheel is in Singapore. Its number one casino is not in Las Vegas but in Macao, which has also overtaken Vegas in annual gambling revenues. The biggest movie industry, in terms of both movies made and tickets sold, is Bollywood, not Hollywood. Even shopping, America's greatest sporting activity, has gone global. Of the top ten malls in the world, only one is in the United States; the world's biggest is in Dongguan, China. Such lists are arbitrary, but it is striking that twenty years ago, America was at the top in many, if not most, of these categories.
It might seem strange to focus on growing prosperity when there are still hundreds of millions of people living in desperate poverty. But in fact, the share of people living on a dollar a day or less plummeted from 40 percent in 1981 to 18 percent in 2004, and is estimated to fall to 12 percent by 2015. China's growth alone has lifted more than 400 million people out of poverty. Poverty is falling in countries housing 80 percent of the world's population. The 50 countries where the earth's poorest people live are basket cases that need urgent attention. In the other 142 — which include China, India, Brazil, Russia, Indonesia, Turkey, Kenya, and South Africa — the poor are slowly being absorbed into productive and growing economies. For the first time ever, we are witnessing genuinely global growth. This is creating an international system in which countries in all parts of the world are no longer objects or observers but players in their own right. It is the birth of a truly global order.
The emerging international system is likely to be quite different from those that have preceded it. One hundred years ago, there was a multipolar order run by a collection of European governments, with constantly shifting alliances, rivalries, miscalculations, and wars. Then came the bipolar duopoly of the Cold War, more stable in many ways, but with the superpowers reacting and overreacting to each other's every move. Since 1991, we have lived under an American imperium, a unique, unipolar world in which the open global economy has expanded and accelerated dramatically. This expansion is now driving the next change in the nature of the international order.
The rise of the rest is at heart an economic phenomenon, but it has consequences for nearly every other sphere of life. At the politico — military level, we remain in a single — superpower world. But in all other dimensions — industrial, financial, educational, social, cultural — the distribution of power is shifting, moving away from American dominance. That does not mean we are entering an anti — American world. But we are moving into a post — American world, one defined and directed from many places and by many people.
As countries become stronger and richer, we're likely to see more challenges and greater assertiveness from rising nations. In one month in 2008, India and Brazil were willing to frontally defy the United States at the Doha trade talks, Russia attacked and occupied parts of Georgia, and China hosted the most spectacular and expensive Olympic Games in history. Ten years ago, not one of the four would have been powerful or confident enough to act as it did. Even if their growth rates decline, which they surely will, these countries will not quietly relinquish their new roles in the global system.
Excerpted from The Post-American World: Release 2.0 by Fareed Zakaria. Copyright 2011 by Fareed Zakaria. Reprinted by permission of W. W. Norton & Co.
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