Our Global Muscle
With America’s economy pummeled and its financial system all but socialized, a once-unthinkable reality has dawned on the populace: we may not be the world’s only superpower for much longer.
True. But neither will anybody else.
Over the past year, the U.S. economy softened as that of two erstwhile underdogs emerged: India and China. Good money was on Russia and Brazil seeing increased economic strength, too. And as pundits marveled at the breakneck speed of these emerging economies’ growth, the thinly veiled subtext to their awe was, “how much trouble are we in?”
China and India presented a real threat to America’s status as top economic dogs, and it stood to reason that our power might recede as theirs rose. Then came the fall of 2008.
The spectacular events of the past month smashed Wall Street records and were enough to convince anybody that far from being invincible, we had been living in a house of cards. Actually, it was more like a house of gum wrappers.
But as we faced the very real possibility that America might have to give up its role as world economic leader (and by extension world police, nation-builder and sometimes bully), something else became just as clear. We were going to drag down everyone with us. I’m looking at you, BRIC countries.
Now, not only is Europe’s economy faltering partially as a consequence of its investment in U.S. mortgage-backed securities, but India and China’s economies have proven inextricably linked to ours, and therefore very vulnerable. China holds up to 70% of its foreign reserves in dollar assets including Treasuries and Fannie and Freddie. It would have seen its economy crater had those two entities been allowed to fail. India’s growth is slowing, due not only to the global financial crisis but its own slump in consumer spending and high inflation.
Could we be heading towards a world with no superpowers? And what does that look like? A utopian future world where countries are equally represented, or a globally depressed economy without a benevolent parent to spread the wealth around? The answer is not at all clear.
Apparently, being a superpower means that when you give up the title, you also get to torch the arena. Super.
October 17th, 2008 at 9:51 am
Good stuff! I read a story a while back (I think in Mother Jones) about China and India going through the same thing the U.S. did during its industrial revolution and that was the emergence of a powerful middle class that would dominate its politics and economy. For how long will China and India’s growing middle class remain docile? Eventually, they will unionize or push for more rights and economic fairness. And when that happens the countries with the ideas will still remain at the top (IMO) and cheap labor markets will emerge elsewhere.
October 19th, 2008 at 1:29 pm
Interesting theory with some good facts.
October 25th, 2008 at 6:36 am
Your post left me thinking, Francesca. Since the whole worldwide cooperation over the crisis came about, I keep wondering just how connected we’re all going to become. Will we all be considered “equal”? It’s a question I really have no answer for. But, I do have a feeling this global bond will only continue to get stronger if Obama wins the election.