Shifting Power.

In the late 80s Paul Kennedy’s The Rise and Fall of Great Powers, was the book that everybody was reading. American’s were worried about their relative decline compared to Japan. Then the technology induced revival of the US, the bursting of the property bubble in Japan changed all that.

Fast forward 18 years or so and now it is the rise of China. The West worries about the movement of industry to the East, and I do sometimes wonder what we will have to export to them…

The most important impact of the rise of Chinese power, and of Russian power will be those middling countries in the developing world. The global agenda will increasingly be set by Chinese ideas, views and attitudes. The rise of China is more important to them than it is to the West, as they have far less wealth. China is inviting a whole host of African leaders to Beijing, is investing huge sums of money throughout Africa. This will only spread, with their war chest of money, and with huge swathes of the West increasingly financially under pressure they will have little competition from the liberal democratic West. Perhaps it won’t be just Chinese money but also the financial wealth from countries such as Russia.

In the UK there is a massive debate regarding the correct level of taxes, this misses the point somewhat. The reason we are having this debate is financially we are struggling to support our social and military commitments. We have constructed a very worthy social support network that is coming under strain.

Paul Kennedy said that when a country’s military expenditure and commitments become too much of a burden for an economy then this is when their decline begins. In the modern world this is social and military commitments. The huge problem, in the West, is that we have reached this stage across a huge range of countries. The countries that are performing fiscally are well managed small countries.

So as has been discussed in many papers the balance of power is shifting, in many ways the balance of power has shifted…. We the people are just catching up.

So what is the future?

Competing on innovation they say is the only way but how much of development is due to innovation, the Brits have been wonderful inventors, yet the US they say is the country that has benefited more from British creativity. Move into higher value products, however, can everyone in the UK/US really do this.. Surely there is a limit to the amount of higher value work a country can do. Any teacher will tell you there is a huge difference between the abilities of children. Not everyone can be a PHD scientist.

Far more important than our ability to innovate, is the general quality of education, fiscal intelligence, social harmony and diversity allowing us to be more open to new ideas… and the ability to change as the world changes. The US for all its deficiencies is the country in the world that has a greater ability to transform itself than anyone else… and the dark cloud, whether liberal democratic countries will be able to make these changes. Another political economic challenge is rising, the economic argument was won, with the collapse of Russia, what we are seeing now is a new political system and way of doing things.

Anyone that is close to China will tell you how they are more divided, have more internal dissent than you would ever believe from the outside, however, the political gauntlet has been thrown down, and not just by China but also Russia. Perhaps it won’t be the West that faces China with an alternative liberal political system but India..now there is a thought…