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Entries in globalization (98)


No-fault separatism thanks to globalization

Old argument of mine:  globalization comes in and all manner of divorces ensue.  Typically it's a fake state in the Gap that's coming apart at the artificial seams, but the larger point is, the more overarching multinationalism you have, the lower the cost of divorce/remapping.  You're going to be together anyway (you still have the "kids" of the union), but why stay together if you don't have to?

Europe demonstrates this:  the more integrated it becomes, the more states appear.

Great FT one-pager on "long-simmering separatist movements . . . gaining strength."  You might think it's the Eurozone troubles that is responsible, but that's the proximate opportunity - not the ultimate enabler.  Real federalism is coming, so why not get out of your unhappy marriage in the bargain?

Here's the counterintuitive part: it's often the most competent and richest that want out.  The better want to leave behind the worse.

So this isn't about suffering.  This is about ambition.


The long-term threat of debt

Interesting FT column by Satyajit Das.

Two important factoids:


  • By 2008, $4-5 of US debt is required to create $1 of GDP growth; and
  • China now needs $6-8 of credit to do the same.


There was a time for both countries (US in 1950s and China at end of Cold War) where $1-2 of debt would do.

Then an almost Marxian critique:

Debt became a mechanism for hiding disparities in the wealth distribution within many societies.  Increased credit availabiliby allowed lower income groups to borrow and spend, encouraging housing booms, in order to deal with the underlying problem of stagnant real incomes.

A bit skewed in its causality.  Credit has always been the mainstay of growth in a capitalist society.  Reducing its function to "hiding disparities" is a very narrow view.

The stagnant real incomes problem is hardly universal in this current era of globalization.  It is felt primarily in the West, where jobs easily cordoned off from global competition now suffer it greatly.  This is the "cost" of letting so much of the world into the global party called globalization.  We can decry this, but the cost of our privilieged standard of living in the past was the vast exploitation/disconnection of much of the world, or the have/have-not divide that Europe begat in its previous extension of colonial-globalization.

Is it worth to me to live in a far more just world to suffer this income stagnation?  

As a Christian who believes I'm not just here to hoard and tell others to go f#$K themselves, yes, it is worth it.

Did we get addicted to cheap debt in the vast transaction strategy we ran with the world so as to spread the international liberal trade order already deeply embedded in these United States (this multinational economic union)?  

We sure did.

Will we eventually run out of new sources of cheap labor in the global economy?  

Absolutely.  Within my life.  But that will be a better problem than today's.

So where do find growth in the future?

The rise of the global middle class - the best thing to ever happen on this planet - will force magnificent resource utilization revolutions.  This will dovetail with new environmental challenges (or the exacerbation of old ones). Again, these will constitute our best problems yet.

But massive adjustments must be made to protect the vulnerable amidst globalization's continued rapid expansion.  And great investments must be made to bootstrap our national economy into a more realistically competitive shape for the struggles to come.

And that's why higher taxes are coming for the rich in this world.  We enter a length redistributionist phase so as to avoid political tumult.  It is capitalism's great genius - in combination with democracy - to recognize these moments in history and to address them head-on.  Once the oncoming global progressive era works its necessary magic (and no, those ideas and leaders are - by and large - yet to emerge), such a burden for the rich will be less necessary.

But to pretend that tax cuts are the answer now, amidst the populist anger spreading across this planet and in particular this country, is to stay pointlessly dogmatic.  There is no one economic theory that rules throughout time.  There are seasons for each.

A foolish consistency is the hobgoblin of little minds.    

- Ralph Waldo Emerson


Global inequality: before America ruled and when America ruled

No question we're heading for a globalized "progressive era" to match what America experienced at the end/turn of the 19th/20th centuries.  Been talking that one for about five years now, and it was THE major theme of "Great Powers" back in 2009.  Now the Economist joins in.

But this historical chart is interesting.  Note the rising inequality across Europe's long colonial age (let's say 1800 to 1950) and then look at what happens when US-style globalization kicks in (1950-now):  It slows, despite the ginormous wealth creation globally, and even flattens out and peaks across the period of its truest expression (1990-now).

To be sure, the 1% are slicing off too much wealth - just like during America's Gilded Age, thus my long-standing prediction of a necessary progressive era on a global scale led by coastal megacities (like NYC led ours and re-attempts to do so today with Bloomberg). But an interesting difference between how Europe ran the world and how we've managed to do it.


Interview at Casey Research conference

Thomas Barnett: American-Style Globalization Will Win the Day / October 10, 2012

During a break in the recently concluded Casey Research/Sprott, Inc. Navigating the Politicized Economy Summit, Alex Daley sat down with acclaimed military analyst Thomas Barnett to discuss how his consulting firm, Wikistrat, assesses global events.

Dr. Thomas P.M. Barnett is the author of a New York Times best-seller, The Pentagon's New Map: War and Peace in the 21st Century. He was one of 28 presenters at the recent Casey Research/Sprott, Inc. Navigating the Politicized Economy Summit, which featured a plethora of investment strategies from some of the most successful speculators in the world. You can hear every word of their actionable investment advice, as well as all of the recorded conference presentations, with the Summit Audio Collection, available in CD or MP3 format.


Interviewed by Alex Daley

Alex: Hello, I'm Alex Daley. Welcome to another edition of Conversations with Casey. Today our guest is Dr. Thomas Barnett, a famed author and chief analyst at Wikistrat, a massively multiplayer online consulting firm that specializes in bringing war games to public and private clients alike. Thank you, Tom. Can you tell us a little more about your work?

Thomas: Well, Wikistrat is a startup out of Australia by way of Israel. The fact that it comes through Israel is indicative of its focus on taking a product – a service line – and globalizing it rather quickly, early in the process. If you know anything about the startup culture in Israel, it immediately embraces that sort of globalizing ambition.

It's an attempt to create a global community of strategists from around the world and give clients the opportunity – the option – to crowdsource their strategy, rather than have that really tiny group within the organization – and you see this throughout the national security establishment in the United States. If you're in a globalized world, do you want to have two or three white guys sitting in a room, trying to think through China's perspective, India's perspective, Iran's perspective?

[Think of] All the complexity, all the iatrogenic unintended consequences that come from decisions you make in national security or as the head of a corporation. Would you rather have some of your ideas, your strategies, vetted through a much broader lens, a much wider global perspective?

We find that this is a huge cost saver. In many ways, we put together in the Hollywood model temporary teams of analysts from around the world. We war-game in two or three weeks online, 24/7: global community, or whatever strategic concept you want to look at. So we can do it cheaply compared to the classic "butts in seats" model of the consulting firms – the big ones like Booz Allen Hamilton and whatnot – but we can do it fairly rapidly.

If you have an idea, we can put it out, jury-rig it on top of the Wiki; and then we have analysts creating dozens, hundreds, thousands of scenarios if you let it run long enough and have a big enough crowd. You'll get ideas that you just hadn't thought about or considered. So it's fast, it's cheap, and it gets beyond the notion of relying on two or three great minds within your organization to somehow figure out all the complexity on the planet.

Alex: With a network like that, you must get a really interesting perspective on global politics and power and the problems the world is concerned with today. Will you give us some of the examples, some of the insights that you guys have gleaned through your work?

Thomas: Well, we did a war game – or a planning exercise, if you will – on Israel attacking Iran this summer. We came up with a lot of counterintuitive concepts. The further the war goes, for example, the more likely it is that you're really looking at a strategic pivot from that whole dynamic which has dominated American foreign policy the last five, six years, to Turkey sort of running the show in the Middle East. That's because you see an Arab Spring empowering Sunnis throughout the region. You see Iran being threatened by that, acting out more and more, using the whipping boy of Israel to justify its reach for the bomb, when it's really concerned about American regime-change ambitions, rightly or wrongly.

Well, that dynamic can play itself out. We can pitch it all in terms of nuclear proliferation and Shia versus Sunni, or Iran versus Saudi Arabia, or Iran versus Israel and Israel's right to exist, the Palestinian question and all that. That whole thing can blow out in a fairly substantial war. You [end up] looking at, to the surprise of many people, a Middle East once again dominated by an Islamist but yet secular democracy in Turkey. You have Iraq turning in that direction, very possibly Syria falling under Turkey's purview and influence... same with the Muslim brotherhood in Egypt.

We are looking at a very tectonic shift amidst all these things. Our fascination now is on "Is Iran going to get the bomb or not?" We are probably looking at something that's going to take that dynamic, and its centrality in American foreign policy, and just push it off the table. You'll be looking at a Middle East really led by an Islamist Turkey, and that will be a huge shift in the way we view things. That wasn't what we were looking for going into the war game. We weren't naturally assuming we were looking at a strategic shift of players and key influences in the region from what we were used to in terms of Saudi Arabia, Iran, Israel, to Turkey, Iraq, Egypt, Syria. That was something that came out because we didn't structure the war game in such a way that we only had one or two outcomes planned. We really threw it out to a global community of several hundred analysts. As you often find with crowdsourcing, people surprise you with the ideas and the creativity and the ingenuity they display.

Alex: It sounds like it's a Middle East based less on religious fundamentals and more on economic power, if Turkey's going to lead. Does that have any implications on American foreign policy? Are we making the wrong decisions out there? Should the Pentagon be changing its direction, or is the Pentagon well ahead of us and your work?

Thomas: Well, I like my private sector smarter than my public sector. In the public sector I like my politicians smarter than my military. In the national-security community, I like my military smarter than my intelligence. So counterintuitively, I like my intelligence – my spies – kind of dumber compared to everybody else, because if the spies are smarter than the military, it looks like Pakistan. If the military is smarter than the politicians, it looks like the Soviet Union, 1985. If politicians are smarter than the private sector, God help you. It looks more like Europe in terms of its creativity. The situation that they've got there now with the fight over the federal project, as opposed to an America that's led by its private sector…

So, I would say, if I'm looking at the planet, I'm looking at globalization. I'm much more comfortable with the view from America's private sector, for example, on how they view China. I would cite GM's relationship with Shanghai Automotive Industrial Group, SAIC, as probably the model that the US government should be following in its relationship with China. They partnered up with SAIC fifteen years ago. They're trying to grow it in such a way that it becomes a shared partnership. As a result, GM is the biggest seller of cars in Asia. But lo and behold, SAIC wants to grow kind of bigger and out of that partnership. That's a great analogy for the United States and China at this point in history.

Are we getting that from the Pentagon? Absolutely not. We're getting a search for a budgetary floor for the big war force, maybe, and air force, in this new "air-sea battle concept." That's basically taking an old Cold War construct: the Fulda Gap (in Germany) air-land battle. We were going to take on Russian tanks in Germany, and now they have us taking on Chinese submarines and missiles in the South China Sea. Underlying all that is really a seabed contest. If you talk to businessmen, they'll tell you they're going to have to split the difference – they're all going to have to invest. It's going to be massively capital intensive. If you want Shell or anybody to go in there and actually get the hydrocarbons at the bottom of the ocean, even CNOOC or Sinopec (Chinese companies), you can't have people shooting off missiles at each other, arresting fishermen, and having spy trawlers bumping into submarines, and stuff like that.

I think we're at a point in history where the complexity and the spread of American-style globalization – which I think is very much modeled on these United States… We went from a sectional to a continental economy in the late 19th century. I think we are seeing a repeat of a lot of that history, right down to the populism, the angry populism we see around the world today, [which was] very much evident in the United States of the 1880s and 1890s. I think business has a more comfortable, comprehensive, systematic take on what's going on in all that complexity than the politicians or the military types do.

Alex: Is this driven by the fact that businesses really don't care about national borders – they're going to go wherever they can find growth, wherever they can find revenue?

Thomas: It is a function of that, because businesses are more interested in getting transactions, customers, getting the investment in. They like security. They're more willing to split the difference. You layer that spreading reality of all the economic activity and financial flows with what happens to traditional societies when globalization comes in. This is a major theme in my books and in my work throughout my career.

You know, we're seeing traditional societies [facing a] very liberating construct. Basically: "Hey, women should go to school, women should go to the workplace. Maybe you should expect more divorces and less control over women in society if you want to develop and rise as an emerging power." We've seen that time and time again; it's all about liberating women, educating them, putting them into the workforce, delaying sex and pregnancy and marriage, getting a "demographic dividend." There's your economic miracle, repeated time and time again. China's just the latest to do it.

When that comes in, it creates social tumult. When men no longer control women in society, man, you get blowback. You get insurgencies, you get fundamentalists of all stripes rejecting that. That's what’s going on. That's what the politicians see, that's what the military sees and that's what we saw with 9/11. But underlying all that is the transaction growth and the network growth being propagated by the business types. When they come to the South China Sea, they look at it and say, "You know what? This is not a fight about where we draw the line. This is: 'Who's got the money? Can we get enough security? Can we get the investment? Can we access the resources? Will you get a proper profit-sharing model here?'" Well, if it's China rising, Japan's sort of fearful of that. All sorts of social and economic tumult going on. The politicians – it becomes very Manichean in their worldview.

So we have a disjuncture between a business network connectivity that is vast – that really defines globalization – and a time lag in understanding between that universe and what's happening in the political and military realm. There, we're still talking in 20th-century nationalism, "this is my border" kind of stuff. We're still seeing a lot of, I would say, earlier than 20th-century responses in the form of Al Qaeda and other types of fundamentalists who fear the essential liberating mode that is globalization, when it comes to traditional societies.

Alex: So the tumult we're seeing across the Middle East and Asia these days is really just a symptom of these countries following America down the path to prosperity and a growing middle class?

Thomas: It's a symptom of globalization coming to parts of the world that have been off-grid for a long time. Our transactional relationship with the Middle East for the last thirty years has been really pretty bare bones. We give you cash, you give us oil, and we really don't interact a whole lot beyond that.

[Think of it as being like] an American south, pre-Civil War, that dominates cotton markets like the Persian gulf dominates oil markets. The more you come in and allow that connectivity – and it comes in all sorts of networking forums, Facebook, the Internet and all that stuff that we've seen drive a lot of the Arab Spring dynamics to a stunning degree. I mean, no one's in charge – who's making these things happen? We're not quite sure. It's just unfolding. We're seeing a lot of young people move into a kind of strongly oppositional mode against what has been the traditional hierarchies in that part of the world. But at the same time it's frightening to us, because those traditional hierarchies have been maintained largely by suppressing religion and identity. And the conundrum for us is realizing as globalization comes into a traditional place like the Middle East, you're going to see more religion, more nationalism, people are going to want to hold on to identity. Why? Because Facebook and the Internet and social networks and globalization and foreign direct investment and all these things are coming in and transforming societies that have been pretty stable in their social structures for hundreds and hundreds of years.

Alex: Big implications for the world. How can America stay on top in a world like this? Do you think it's realistic that we can continue to maintain our position in the global economy with huge populations now coming into these sort of American-style markets?

Thomas: I think you've got to remember that even though we are a young country, we are the world's oldest and most successful and thus most experienced multinational union. What's going on, on a global scale, we practiced and pioneered on a continental scale in the United States in the latter half of nineteenth century. We went from a Civil War package to an America that dominated the whole continent and had 48 states, roughly, or 45 by the end of the century. That process, all the things that went in to it – the railroad building, the insurgencies, the private security firms, doing stuff on the frontier, the religious revivals – that whole package that we see in America in the latter decades of the nineteenth century, we're watching that experiment writ large on the globe. [That's] primarily because we spent the last seven decades trying to make that economic international liberal trade order come about, defending it and encouraging it. But what that does to us now – in Thomas Friedman's language – is create a level playing field. That means our privileged position [is going to be challenged.] The notion of the American dream in the 1950s came off the weird situation where America was still strong and powerful, and the rest of the world was either underdeveloped or decimated by World War II. We got into this mindset that said, "high school degree, blue-collar, middle-class existence."

Well, that dream started disappearing within twenty years of its formation in our minds. It is really gone now, to the point where we've experienced an economic boom over the last ten to fifteen years that really didn't, for the first time in history, include income growth for the middle class. If you look at American history, we are democratic, open, and tolerant whenever middle-class incomes are rising. We are intolerant, nondemocratic, and pretty nasty to ourselves and others whenever middle-class incomes stagnate.

India is rising despite a massive Maoist insurgency across the interior. China is booming on the coast, but stagnating in many ways, not developing, still kind of holding to a collectivist mindset in the interior. What's going on between red states, blue states, Tea Party, all that kind of populist anger in America. We're seeing a lot of these same dynamics that we saw in the late 19th century in America. The rise of the global middle class, much like the rise of the American middle class at that time frame – it's a tumultuous process. It's a democratizing process. But anybody who expects that the spread of globalization to bring immediate peace, stability, tranquility – everybody's getting along in a Kumbaya kind of fashion… I mean, that's why I called my first book The Pentagon's New Map. There's going to be tumult and violence, most of it subnational, transnational. Globalization, American-style globalization, is pure social economic revolution.

Alex: That's an incredible change for the world. Does that mean that the next few years are probably going to look a lot more like the last few years then they are the earlier days of American history where we were the one growing economy around the world?

Thomas: Well, we were the China of the late 19th century. And we scared people like China scares people now, and we were kind of a rough, rowdy, corrupt, jingoistic democracy, pretty warlike. And we still have that warlike image in a lot of people's minds, because we've played leviathan to the global system for quite some time. We've been very successful in that. We haven't seen any great power in war across the system for close to 70 years. Part of that's nukes, part of that's America basically saying, "I'm not going to allow that." Well, that role that we've played in the last six, seven decades has given us kind of a privileged sense that we run the world. The problem is, our strategy – our open-door strategy, if you will, of encouraging trade and investment to lead to connectivity, to hopefully, over time, lead to democracy – our success in doing that has created so many rising great powers out there that we're no longer able to boss people around. That creates a certain crisis of confidence in our ability to manipulate the world around us. It forces us to kind of look inward and recognize that there are some big parts of our society and economy that don't work particularly well: health care, education that's still structured in an industrial-era model – that really needs to be revamped if we are going to compete with not just the other players out there in the West but a global middle class that is ravenous in its demands. I mean, changing the resource-utilization models across the planet, but giving us a chance to sell to massively larger numbers of consumers than we've ever had in this world.

It's a great time for us to reinvent ourselves. I look to a future that's in my mind logically, say, 2030 and beyond, dominated by a China, India, and America. I call it my "CIA model of the future," kind of three great superpowers. We are more likely to get to 2030 in great shape, compared to a China that has to democratize and create an environmental movement to really deal with the way it's raping its own ecosystem and using up its water tables. Same for an India that has to deal with all sorts of tumult and a caste system that still residually exists throughout.

We've processed populist anger in America three or four times throughout our history. As much as we like to demean our own democracy, we're actually pretty good at dealing with this kind of change. I give us much better odds than India or China, especially when you realize that compared to them we are chock full of cheap energy.

The fracking revolution reminds us and gives us that possibility again. And then we are, frankly, the OPEC of food, which is an unknown in most people's minds here in America. We are the source – North America writ large – of 70% of the world's moveable feast in terms of poultry, pork, the major grains, beef as well. We are an immense player in that realm; and when you layer on climate change, which is mostly going to be an equatorially centric phenomenon – massive droughts, much more difficulty with water shortages – we have a fairly long-term bright future. We're going to be able to grow food. We're going to have cheap energy. We've got an innovative economy. We've just a couple small things to fix, relative to India and China: health care and education.

We get some serious political leaders willing to do that – which to me probably involves the boomers retiring from politics, because they've proven to be just about the worst political generation we've had in a century – and I think most of these things are quite fixable. We're looking at a major industrial renaissance in America. We're looking at a rebound that will put us back up on top, to the point where I think you can legitimately argue a second American century, very likely. Not the same package we had in the second half of the twentieth century. We won't get to rule by default, but I think there are attributes to this system that put us in a great leadership potential situation for the next five or six decades, easy.

Alex: That's a fascinating insight on the way the world is working, and quite an interesting picture for America, which I think is different than many people paint today. I want to thank you for giving us your unique perspective on the world.

Thomas: Thank you.

Find this whole package at


Chart of the day: globalization - that great reducer of fertility

From great Gerald Seib WSJ column.

Islam, hugely fertile throughout history (a sign of high infant/child mortality), starts losing fertility big-time once globalization kicks in.

You know my Core-Gap map.  You're looking at the Gap highlighted there and numbers are dropping rapidly as globalization creeps in.

Discard the Nordic and US references.  Those are tiny numbers in absolute terms.

Point is, Islam responds to global connectivity/globalization/ modernity like everybody else: fertility drops.

Remember that when somebody tells you that Muslims are going to take over the world because of their incredible fertility.


Cancer to go global - along with globalization and the rising income reality it creates


From FT story about advances in cancer treatment.

Me?  I see a fairly scary map that says higher cancer frequency is sure to spread rapidly over next couple of decades as massive global middle class comes online in emerging and developing markets.  

What this map tells me is high rates of cancer come with economic advance, meaning we're looking at a vast global industry within a generation.


Chart of the day: World greatest aid flow keeps getting greater

WSJ story noting that:

Migrant workers abroad sent more money to their families in the developing world last year than in 2010, and they are expected to transfer even more cash home this year despite the economic uncertainly gripping the globe.

You can see the divot created by the financial crash in 2008, but note how the trajectory resumes like it never even happened.

The number is staggering:  $372B last year.  World Bank predicts almost half a trillion will flow in 2014.

Key bit:

Remittances remain a key source of hard currency for developing countries, often outstripping foreign direct investment and foreign aid.

It can "immunize" your country from downturns, so sayeth a new WB book on the subject.

Both intra- and inter-regional flows are rising in same manner, with key technological enabler being how cheap it is for ordinary people to wire money.  

One of the biggest players in this realm at about 1/7th of global market?  Western Union.

How's that for a frontier metaphor?  Back then it was all about telegraphs.  Now it's all about remittances.


US ag industry: the greatest force for stability on the planet

Pick out the world's biggest exporter of wheat from this chart.

It's the US, which is also the biggest exporter of corn, soybeans and food aid.

Guess what got devastated this year?  Corn and soybeans (where the US just lowered its forecase of yields for the 3rd time), but somehow the US pulls off a slight increase on wheat.  Problem is, everybody else is down.  From the WSJ story (which provided the chart above):

The weather troubles, if they continue [read, winter wheat], risk pushing wheat back to the fore of global concerns about soaring food prices.  Wheat is a staple food around the world and a major source of basic nutrition for the poor, and prior price spikes in recent years contributed to political unrest.

Like the doubling of bread prices in Egypt in the months leading up to Mubarak's fall.

I say this in presentations all the time: the biggest force for global stability right now is the U.S. farmer.


Good piece on US concerns: Libya v. Egypt

Appears in NYT.

The one thing that's been clear about the Arab Spring to date:  it is a process of Sunni empowerment that comes with a great deal of identity politics.  America is now experiencing some payback for all those decades of supporting dictators who kept a lid on that identity.  in the past, I felt we did that in deference to the volatility generated by similar dynamics among the Shia in the decades after the Iranian Revolution.  But that was a conundrum-like choice:  we deeply angered half of the Middle East out of fear of the other half.

Now the Shia half seems back on its heels.  We might have imagined a tipping point with the re-Shia-ization of Iraq, but that seems rather puny right now with Syria almost literally coming apart and Iran still in internal lockdown against domestic opposition and external lockdown over the nuke program (those dropping oil exports . . .).

Yes, we now get a chorus of experts saying, "Aha!  I told you the Arab Spring was a disaster!"  But it's like that quote I gave Esquire back when it started:  the Arab Spring is like a kidney stone.  Sure, it's no fun passing it, but if you think it's going to stay in that kidney forever, just getting bigger, that's no answer either.  So yeah, passing it will hurt, but what's the alternative to trying to get it done quickly?  Pretending it's never going to come?

But the major (for me, at least) theme remains:  globalization has arrived in the Middle East, and it has triggered a lot of social and political tumult.  Large chunks of the population (mostly young) do not see a future they like, while Africa is booming and Asia keeps getting richer and a middle class blossoms across Latin America.  The Arab world is still losing - dramatically - at globalization.  As the region ages demographically from a mean age of about 22 to 32 across this decade and the next, the lack of jobs will be magnificently destabilizing.  That youth bulge is not being served, and when you can't produce the jobs (the MB's real problem now), you - those who pretend to rule - have to indulge the anger.

That's what we're seeing now: the Sunni Islamists in power are no more clued in than the secular dictators who preceded.  They are, however, more willing to indulge the populism.  This can go on for a long while.  It just can't go anywhere in terms of progress, because global investors will want none of this uncertainty.  Frankly, it's why China greatly prefers Africa.


The political/generational impact of the Great Recession

Check out this bit from today's NYT:

In the four years since President Obama swept into office in large part with the support of a vast army of young people, a new corps of men and women have come of voting age with views shaped largely by the recession. And unlike their counterparts in the millennial generation who showed high levels of enthusiasm for Mr. Obama at this point in 2008, the nation’s first-time voters are less enthusiastic about him, are significantly more likely to identify as conservative and cite a growing lack of faith in government in general, according to interviews, experts and recent polls.

Polls show that Americans under 30 are still inclined to support Mr. Obama by a wide margin. But the president may face a particular challenge among voters ages 18 to 24. In that group, his lead over Mitt Romney — 12 points — is about half of what it is among 25- to 29-year-olds, according to an online survey this spring by the Harvard Institute of Politics.  And among whites in the younger group, Mr. Obama’s lead vanishes altogether.

Among all 18- to 29-year-olds, the poll found a high level of undecided voters; 30 percent indicated that they had not yet made up their mind. And turnout among this group is expected to be significantly lower than for older voters.

“The concern for Obama, and the opportunity for Romney, is in the 18- to 24-year-olds who don’t have the historical or direct connection to the campaign or the movement of four years ago,” said John Della Volpe, director of polling at the Harvard Institute of Politics. “We’re also seeing that these younger members of this generation are beginning to show some more conservative traits. It doesn’t mean they are Republican. It means Republicans have an opportunity.”

There is the strong evidence that a minority-white/majority non-white America favors the Dems long term, but history also says that an extended "tough time" favors the GOP, especially when you remember that the average voters behaves - over the course of his or her life - much like a car-buyer, meaning your first "purchase" typically creates a brand loyalty that is highly consistent over your life (meaning, it has an imprinting function that is profound).  Simple example:  If the first car you buy is a Ford, you will  - on average - buy more Fords over the rest of your life than any other car - hands down.  Same is true in voting for president.

Point being, while the demographic shift will still favor Dems (as currently defined) against Republicans (as currently configured), this long recession will have its own profound imprinting impact as well.  I see it in kids through the prism of my 20-year-old daughter (now in college).  They face a hostile labor market not unlike the one my generation faced in the early 1980s.  Between that point and 2008, college-age cohorts faced a fantastically (in historical terms) consistent positive labor environment. But my impression is that those days are gone - probably for good given the competitive landscape now created by a maturing globalization.

So, again, you have your demographic trends and you have your economic realities trend.  Both are profound influencers. I'm just saying nothing is carved in stone in terms of long-run trends, especially as I expect both parties to be significantly reshaped by these dueling trends over the next decade or so.

Still, I see little in any of these reports that convinces me Obama will fall in the Fall.


Chart of the day: US economic interdependence with globalization

From the Financial Times and very interesting.

Key fact:  goods and services trade only 1/5th of US economy in 1980.  Now it's one-third.


Other key data:


  • US outward FDI stock 13% of GDP in 1990 and 33% now.
  • Inward is 9% in 1990 and 24% now.
  • So combined = 22% of GDP in 1990 and 57% now.


We also have the highest percentage of foreign born citizens since 1920.


Brilliant movie-chart on Kiva loans from Core to Gap

HT to Thomas Frazel at Tulane.

I wrote about Kiva in Great Powers, naturally, because there my focus was on subnational and transnational actors (the trilogy, in Waltzian terms, went PNM = system, BFA = states, and GP = trans/subnational & individuals).

No surprise on the flows here: it's virtually all Core to Gap (wait for the "actor" credits at the end).

What I saw were four big flows:

1) US to Africa

2) US to Greater Middle East

3) US to Asia

4)Europe to Asia.


Fascinating stuff.


Meanwhile, I'm on the road giving a speech to a financial conference in Atlanta.


Globalization and the remaking of parts of this world

Nice piece by Friedman talking about the supranational challenges foisted upon Europe by globalization and the subnational challenges foisted upon the Middle East by the same.

He makes a big deal about both happening at the same time, but in my mind, the connecting logic is not all that hard to see.

Globalization requires strong states.  It does not eliminate them as many suppose, nor particularly weaken them. Data upon data shows that the national economies most able to successfully engage globalization do so thanks to strong states (strong in power, less so in reach as they tend to be democracies).

So when globalization comes to weak/fragile/fake states, like we have in the Middle East, it tends to fracture them, revealing the subnational fissures below.  In this way, the "divorces" we're witnessing now are very much like what we saw in the Balkans in the 1990s, where we saw a fake supranational state dismembered by the heterogeniety of the players within (some were ready to take on globalization and win, others less so).

So what are we looking at in the Middle East?  A long period of nation-building done by somebody, but mostly by the locals with help of foreign investors because outside governments with their aid are so bad at encouraging such things.  Beyond that, these relatively small states must come together in supranational organizations that reward their collective strength.  Imagine the US as 50 competing states versus a supranational union, because we are lucky to be so organized (actually, luck had nothing to do with it, because, once we made our miniature version of globalization happen in North America, we successfully set about replicating it globally over the past seven decades).

So yeah, a long row to hoe in the Middle East.

Europe is far more fortunate, and it's incorrect to make it seem like it's suffering similar dynamics.  Europe is full of real states and they have all the instruments necessary for true supranational union. They just need to evolve those instruments and their rules toward that end. So, if the Middle East faces a massive evolution/transformation that stretches over decades, Europe faces nothing of the sort.  It's just a matter of political will among the richer units (Germany especially).  The legimimate solution to Europe's problems can be set in motion in a matter of weeks.  It's simply a question of whether or not Europe wants that future or still fantasizes about a world in which smaller states can do better at globalization than supranational unions.

Look around your world on the question of resources.  Check out energy and food and ask yourself: do you see far more interdependency on the horizon or far less?  If you see the latter, you say, "We'll get by on our own!"  If you see the former, you say, "We'd be safer in a larger multinational setting."

The Middle East has little hope for such solutions, except among the rich PG states, where Riyadh pushes such confederation instinctively.  Europe is in a good enough place.  It just lacks the political will to do what needs to be done. 

This is not the tragedy of the commons.  This is tragedy defined by political generations of leaders not being ready for what history has thrust upon them.  You look at Merkel.  You know her story.  You know what she's been through and what she fears.

Merkel may still be up for the challenge.  Women tend to spot these opportunities better than men.  She may also be playing the clever game of letting events deteriorate to where she gets what she wants and believes Europe needs.  I suspect that is the case.

I also suspect we are witnessing an enormous gamble.  

But, in the end, I expect Europe to pull it off.  It won't be pretty.  It'll just be enough.

Europe, after adding so many stars so fast, truly risks losing some now. America went through that under far worse circumstances.  But have no doubt, Merkel needs to become a bit Hamilton and a bit Lincoln.


Globalization and the need for a "second life"

An old friend Hans Suter sends me the link to the New York Review of Books piece by Tim Parks.  In the piece, he argues that globalization is favoring English-language literature in the reading lives of elites within countries (here, I am defining "elites" just as urbanites with access to bookstores and a strong desire to read). That description is probably a disservice to the piece, which presents the usual sort of density of a NYRoB effort (and I use that term in a flattering fashion).  You really just need to read it yourself to enjoy and take from it what you will.  I personally enjoyed it immensely in the way I enjoy such things: not being terribly all that interested in the subject itself but immensely interested in the thoughts the piece triggered in my head (which, when you think of it, is exactly how a literary piece - even analysis - should make you feel).

It reminded me of how much I like the English remake of foreign films (think of "The Girl with the Dragon Tattoo") but how I still always prefer the originals in every instance.  I don't want a foreign experience translated for me any more than necessary (namely, the subtitles), because I like to immerse myself in the way they present themselves to themselves.  It's like eaves-dropping.  I mean, I've learned more about Iran in two movies, "Children of Heaven" and "Persepolis," than I have in all the non-fiction writing on Iran (to include serious political analysis) that I've ever come across.

So, where the Parks piece took me is this:


  • I really think non-fiction will predominate over fiction as globalization advances. I feel like non-fiction will do "more good," if you will.  
  • For now, I think English-language novels enjoy a dominance much like Hollywood does, and I think we're seeing now in novels the same things we've long seen in movies: increasingly, the purposeful structuring of literature for both a domestic and overseas audience. 
  • Much like in the movie industry, you see the same conclusion reached in literature:  tent-pole products seemingly "conquer" the world while subtly being productized in such a way as to exploit inherent advantages afforded by globalization's advance, and yet, there still will always be a highly heterogenous local supply of "smaller" versions (smaller books, smaller movies).  The local "language," if you will, survives in its own way, while bridging languages (especially English) connect publics across borders.
  • I think the more non-fiction and movies link up societies, we see the death of expertise on those societies within our own culture.  Notice, for example, how there really aren't any important Russian experts anymore - now that the Cold War is dead and buried.  Once the connections are made to the point where fiction and movies offer true connections (not a cause, but a characteristic of the connectivity I'm describing), you reach that point where the best experts are from the country itself - thus killing the local variety and relegating them to academia (e.g., we're so close to most of Europe now that you rarely see European experts on US news programs, because why not just ask experts on the subject from Europe simply to appear?).  Right now we're still dominated by experts on China and much of Asia and much of the Middle East and most of Africa, but in a couple of decades, those entire mini-industries will be erased from the public discourse - replaced by direct comms with the cultures in question.  And let me say that, in all instances, I can't wait!
  • I could say, as a former regional expert on the former Soviet Union, that this is a bad development, but, in truth, I think regional experts mostly misinform and mislead rather than create genuine understanding (primarily because there is such an odd mix of orthodoxy and arrogance in such communities). So I'm happy to see the novelists win out in the end, along with the filmmakers, because I see them doing far less harm and far more good.
  • Having said all that, I can still make a selfish argument regarding Wikistrat and its ability to amass expertise from the countries themselves versus relying (as we still do) too heavily on Western experts on the same.  Which is to say, I don't think Wikistrat is yet there, and yet I see it as a perfect vessel to increasingly "get there" over time - as in, diversity and numbers beat all.
  • I would also argue that translation skills increasingly trump traditional expertise on foreign culture.  I think we'll need oodles of translators amidst this shift, and that that will be a very good thing.  So when I advise young students going into International Relations today, I tell them to focus on their skills as translators (not so much in the mechanics of language itself but in taking that direct-conduit role and applying it to what is traditionallyt known as expertise - so seeing themselves more as translators than experts) and eschew the achievement of deep insight for personal professional achievement.  You might think that request too self-sacrificing and self-effacing for young people entering a field, but it's not for most Millennials.  They already think that way.
  • Personally, having just turned 50, I find myself thinking that my future ultimately lies in fiction, for all the logic cited here.  Part of me says it's like the old bit about necessarily being a liberal when you're young and a conservative when you're old: I feel like you write non-fiction until you can move on to a level of wisdom that allows more creative expressions. [As for those who start in fiction, God bless 'em because that ain't me.]


Anyway, a very interesting read that took my mind to a lot of places.  I think it might do the same for you.


Chart of day: Rapidly falling under-5 mortality across Africa

From Global Development blog via Craig Nordin:

Under-5 mortality (per 1,000 live births) in selected
sub-Saharan African countries surveyed since 2005

Go to the blog post for analysis. My point:  interesting how opening up to globalization coincides with this.  Not arguing initial causality, which is multivariate.  Point is:  opening up to globalization certainly doesn't "impoverish" along these crucial lines.

This joyous development begets a demographic dividend, which sets a clock a'ticking.  How Africa handles this historic opportunity is crucial of course, but clearly this is the best problem yet for the continent.

And what is progress other than moving off worse problems to better ones?

This story is nothing new.  We saw doubling of human life expectancy across 20th century (started in low 30s in 1900 and reached 65 by 2000) and that was almost all about reducing under-5 mortality - and that was overwhelmingly due to vaccines, with clean(er) water a crucial second.


Chart of the day: remittance "corridors"

From the Economist.

I just love global maps indicating flows - naturally.

What do we see here?

Per my vernacular, in sheer volumen we see New Core being fed remittances by expats living in Old Core.  But when it comes to countries relying heavily on remittances as percentage of GDP, it tends to be mostly Old/some New Core and it all pretty much goes to Gap countries.

Per my flow concept:  whatever the resource, it flows from regions where it is plentiful (here, earning opportunities) to where it is less so.  Yes, we think of India, China, Mexico as New Core and thus "made," but all share the reality of significant numbers of rural poor.  In truth, in most New Core countries, there is massive internal remittances flows.

What I love about this:  this is the best foreign aid there is, because people use it as they see fit.  

You may say to yourself:  What a drain on Core - especially US!

Studies have shown, however, that expats living in new countries spend something like 90% of their earnings in-country, sending about 1/10th home.  It's just that those flows still number in the billions, swamping anything we do on official developmental aid.


Final column at World Politics Review

The New Rules: Globalization's Future Depends on Stable U.S.-China-India Order


Editor's note: This will be the final appearance of Thomas P.M. Barnett's "The New Rules" column at World Politics Review. We'd like to take this opportunity to thank Tom for the insightful, compelling analysis he has offered WPR readers each week for the past three years, as well as for the support he has shown for WPR over that time. We wish him continued success.  

Amid all our current fears regarding the global economy’s potential “double dip” back into deep recession, a longer-term question stands out: How can a supposedly declining America protect the golden goose that is globalization while managing the rise of twin economic superpowers in the East -- namely, China and India? History says that three is a crowd when it comes to system stability. Invariably, some conflict will arise to trigger a two-against-one dynamic that must yield to either the stable stand-off of bipolarity, as during the Cold War, or the emergence through decisive conflict of an acknowledged unipolar hegemon, as in the early post-Cold War period.

Read the entire column at World Politics Review.


WPR's The New Rules: In Globalized World, Time Is on America's Side

Second-to-last column at WPR.

There is a popular tendency to characterize globalization as an elite-based conspiracy or as something imposed by greedy outsiders upon unsuspecting native populations, hence the enduring belief in the possibility of its systemic reversal. In truth, the spread of modern globalization reflects a bottom-up demand function, not a top-down supply imposition. People simply crave connectivity -- in all its physical and virtual forms -- as well as the freedom of choice that it unleashes. This simple truth is worth remembering when we contemplate America’s global role in the decades ahead.

Read the entire column at World Politics Review.


West Hemisphere way behind on integrating intra-regional trade

Per the 10 March Economist editorial on Latin America's growing fears about being recaptured by China as just a source of commodities (deindustrialization) and per the recent Wikistrat sim on North America's Energy Export Boom where we discussed, in one master narrative, the notion of NAFTA using the lure of cheaper and cleaner energy to re-energize the Free Trade Area of the Americas initiative.

Now, you have to understand that this chart is misleading, because it counts intra-EU trade while not counting interstate trade within the multinational union known as the US.  If the stats were equalized on that scale, then the NorthAm numbers would be unreal.

But larger point about Latam's numbers being small (and presumably the W Hem numbers being commensurately low) is valid.  The US and the rest have not made the regional trade integration effort that is possible here, as South America is beginning to recognize its mistake is not pursuing FTAA.

People will paint this as de-globalization, but it's not a binary choice.  Globalization tends to push regions to up their regional integration for all sort of reasons, the primary one being the title of the editorial here: "unity is strength" in trade negoations.

But the long-term advantage here is substantial: if you want to grow, then you want to have high trade flows with faster-growing neighbors first and foremost.  China is doing that in SE Asia but US is not doing the same in W Hem, thus the strategic impulse now to go after things like reviving FTAA.


WPR's New Rules: Worried by China's Rise? Watch Out for its Decline

Much of what drives America’s current phobias regarding China stems from the dual -- and fantastically linear -- assumptions of America’s terminal decline and China’s perpetual ascension. We are thus led to believe that China no longer needs the United States and that America, in turn, can do nothing -- short of increasing military pressure -- to constrain the Middle Kingdom’s rise to global hegemony. On all scores, nothing could be further from the truth. China and the United States suffer a level of strategic interdependency that is vast and shows no signs of reduction. Simply put, America cannot stay rich without China, and China cannot get rich without America.

Read the entire post at World Politics Review.