Bill Emmott slumming in the Post, talking about a not-so-post-American world

ARTICLE: "Hold Onto Your Hat: Power's shifting, but not in the way you might expect," by Bill Emmott, Washington Post National Weekly Edition, 27 October-2 November 2008.

Emmott starts with four potential myths:

1) shift away from markets

2) US leadership role thus suffers

3) Shift to Asian global leadership accelerated

4) Authoritarian capitalism is the new model.

And then he dismantles all.

Cool factoid: cost to USG to bail out banks is about %5 GDP (so far), whereas Japan's cost across 1990s was more like 25%.

Yes, Old Core govs now taking on more private-sector responsibilities through such bailouts, but will that signal a desire to own more or create the subsequent desire of these govs to get out as quickly as possible?

Yes, more regulation coming, but "that is quite a technical matter of capital-adequacy rules and the treatment of derivative securities, not the stuff of new eras and paradigm shifts."

Thank you, Mr. Emmott (oops, shouldn't have added that period after Mr if I am to bow in the stylistic direction of the Economist).

As for post-American?

The dollar's role in global forex reserves today is about 63%, compared to 50% when we ruled the world in 1990, so even a big decline would just take us back to that time period--not exactly a post-American world.

As for alternatives? None yet really in Asia, and the Euro zone went into a recession even faster than we did. Guess which is more likely to pull out faster?

Hmm. Probably accounts for the dollar's recent rise.

China could surprise us by making the yuan suddenly convertible, but I'm not holding my breath on that one, not with 750m rural poor hanging in the balance.

Could we go protectionist and reduce the brand that way? Sure, and that's my main target in Great Powers, but membership in the WTO, Emmott argues, makes that a lot harder.

Meanwhile, China's domestic demand remains about the size of Germany's, or nowhere near the U.S.'s (about $3T compared to $14T), so our demand profile will keep this a most American world, reducing our influence only to the extent that China and India replicate our standards of living and consumption, with obvious tension in that evolution.

Emmott is right: "China needs to move upmarket, clean itself up, deal with declining industries and try to keep creating enough jobs to prevent social unrest."

Hmm, sounds familiar to readers of this blog over the years.

So, says Emmott, go slow on expecting Chinese global leadership until the 20s and 30s.

Hmmm, also familiar argument.

As for authoritarian capitalism ruling the roost?

China's government is cause of change through the extensive stuff but the obstacle to change once the intensive growth needs to kick in--as in, right about now.

Hmm, I feel a kindred soul here.

As for the axis of diesel types, what the market giveth it also taketh away.

Upshot?

American leadership ain't going anywhere--THE theme of Great Powers.

This remains a world of our creation.

Comments

[farhad]

If we were to say,that Obama contrary to present bunch,instead of injecting trillions in the market &seeing that as the answer to the problem,would have had believed,like FDR (new deal), who brought the cureing medicine for the crisis at that time,then it could have been believable to accept the continuance of the U.S demand profile and the standard of our living and consumption,would have kept oursocial stability and our leadership in this world of our creation.If we had spent this Fed's direct/indirect gurantees to the banks which amounts to $8 1/2 trillons(1/2 GNP) in creating jobs,in education, health,mass transit systems,and ....ect(and wouldn't have called it protectionist),what aheaven of our creation this country would have been, then we wouldn't have to borrow from China(banker)to keep our living standards,and wouldn't have had to say;"either sink together or swim to together".If only we (Obama's economic team; the group protege of Robert Rubin:who help bring Clinton in WH,likeR.Emanuel bringing Obama inWH)wouldn't travel the same direction that is going to be harder to return and more complex(it get to a point that by keep printing money to inject,the dollar will be worth just the paper,hence inflatioooon),it is becoming more clear that Obama not only isn't able to solve this crisis,but even maybe intensify it.