The Big Three
As the car industry here in the US wanes and the geopower of the US wanes, the term The Big Three will cease to mean GM, Ford, and Chrysler and will mean the three global superpowers; China, Europe, and the United States.
That’s the conclusion I come to after reading Parag Khanna’s piece in this weekend’s New York Times Magazine. I highly recommend this article. It opened my eyes to a bunch of things that are happening right now or are going to happen in the next 5-10 years.
Here’s a quote from the article
The Big Three are the ultimate “Frenemies.” Twenty-first-century
geopolitics will resemble nothing more than Orwell’s 1984, but instead
of three world powers (Oceania, Eurasia and Eastasia), we have three
hemispheric pan-regions, longitudinal zones dominated by America,
Europe and China. As the early 20th-century European scholars of
geopolitics realized, because a vertically organized region contains
all climatic zones year-round, each pan-region can be self-sufficient
and build a power base from which to intrude in others’ terrain. But in
a globalized and shrinking world, no geography is sacrosanct. So in
various ways, both overtly and under the radar, China and Europe will
meddle in America’s backyard, America and China will compete for
African resources in Europe’s southern periphery and America and Europe
will seek to profit from the rapid economic growth of countries within
China’s growing sphere of influence. Globalization is the weapon of
choice. The main battlefield is what I call “the second world.”
That’s just a taste, I recommend you go read Waving Goodbye To Hegemony.
Southern hemisphere gets no love. Come to think of it…they do seem a bit upside-down
Only because the map is drawn that way!
Might I also recommend “Guns, Germs and Steel”:http://www.amazon.com/Guns-…I look to like back in order to move forward.
Excellent article. I’ve read the book it’s adapted from and it’s great as well.Parag is a Hoya too, so bonus points 🙂
I haven’t read both articles just yet, but it’s very interesting… Ever since the US left isolationism after WW2, there’s been a blatant struggle for power between the US and Britain over places like the Middle East, Africa, and East Asia. It’s interesting that for most of its history, China has been relatively isolationist, but they’re starting to break out of that shell.What I think is interesting is what role the Islamic role will play over the next decade. Now more than ever, the Muslim world is abandoning their nationalistic identities (actually created by the British-French from the remnants of the Ottoman Empire via the Sykes-Picot Agreement). If the Muslim world does ever unite, it will be another formidable contender in the rush for global dominance; especially since yesterdays powerbrokers are waning in both power and influence.Raza Imamhttp://BoycottSoftwareSweat…
Interesting article but the analysis of Russia is not based on facts.The birth rate of Russia will surpass its death rate in 2010 and there will then be population growth. Russia has the world’s 3rd largest currency reserves of almost $500 billion. The Russian government has almost no debt. The personal tax rate is 13% and people pay it.There is almost no consumer debt in Russia today. That is both a blessing and an opportunity for growth. The sub-prime crisis in the US and Europe will impact the Russian stock market negatively but have a zero impact on the “real” economy.The percentage of people with home mortgages is less than 2.5%. Think about what that means. The average family living in an apartment in some provincial city of a million people (say Volgograd) owns an apartment that’s worth $1,000 per square meter. At 80 square meters the apartment might be small and ugly (by our standards) but it’s still worth $80,000. That family owns it outright – 100%.This year or next the home equity industry will reach critical mass and that very same family will be able to take out a mortgage for $10,000 or $15,000. Since they have free health care, rising wages, no car payments, no mortgage, and free education for their kids almost all that money will be spent on consumer products. If you think the consumer products boom now (and there is!) wait until all that illiquid home equity is made liquid.The automobile market in Russia is the fastest growing in the world. It’s natural resources are second to none.There are a number of rumors that the Russian government is going to revalue the Ruble UPWARDS. Very unusual but brilliant. The Ruble is worth approx 25 to 1 right now (25 Rubles buy 1 US Dollar). After the elections in March (yes, Medvedev will be elected) the Russian government may make it so that 1 Ruble buys 4 US Dollars. Essentially, we would all trade 100 of today’s Rubles for 1 “new” Ruble note. Yes, they will need to print new paper.The rationale behind such a move is very smart. The US Dollar will I believe within the next 5 years lose its place as the reserve currency of choice. The other options are obviously the Chinese currency and the Euro. The Russians want the Ruble to be part of that mix. The revaluation changes the perception of the Ruble.So to close. The gist of the article is that the uni-polar world will become multi-polar. I disagree with the author’s assertion (quite black and white) that there will be 3 dominant players instead of 1. I would suggest that it is more realistic that the number will be closer to 10 countries/zones. Think Japan, Britain, Brazil, India, Russia, the EC, China, the Asian Tigers, Australia, South Africa, and Scandinavia. To limit it to 3 is too myopic.So, if one is like Howard Lindzon and looking for investment opportunities, don’t forget Russia and the Russian Ruble.
Any country that defaults on its debt is pretty much disqualified as a reserve currency for a generation, no matter what reserves or oil or nuclear weapons it has.Because if I want to keep ruble-denominated reserves, what do I keep them in?It has to do with willingness to repay and deal fairly with the foreign investor, not just ability to repay.
hmmm makes me glad I moved to china permanently!
Fred, thanks for the link.In raising awareness of how far the US has fallen, the article is valuable. The causes and solutions could not be more off-base. The major correlation between the movement from US leadership role to US laggard is not George Bush or our so called imperialism or our so call strong-arm presidential government form; it is the inefficiency and demoralization caused by the exponential growth of the government control and taxes over last sixty years.Furtheremore, London’s recent financial leadership can be traced to the passage of Sarbanes-Oxely. A friend who lawyers for mega-deals tells me that nearly all $100M+ deals do not happen in the US as they once did because of Sarbanes-Oxely.The dollar is down because the US won’t stop printing money.In this ever smaller world, how does the US geography become a new limiting factor?Also, the US financing the military protection of the world (Middle East, Europe, Japan, Korea etc) frees our economic competitor’s resources. It is strange to hear: “No more “us” versus “them,” only “we.” I guess it can be a good marketing slogan but I think the average person in the world may be a little weary of this type of appeal. The postzavtra comments about Russia were very good and accurate and made me wonder about the accuracy of the rest of the article.
This isn’t a new concept. 20 years ago the same thing was discussed. Except than, it was US, Germany and Japan.
Let’s not forget that WAR is the father of us all.Although it’s hard to swim against the prevailing opinion, the reality is that we are witrnessing the wars of succession of the two dimming superpowers. We are living in a messy foggy world and if it’s gonna get clean in order to be occupied by the next set of powers to be; it needs to be purified by fire. The wars are inevitable but also beneficial. We cannot foretell who the ultimate winners are as some haven’t emerged clearly yet as contenders. Add into this volatile mix the culture wars and the manifest destiny reason fanatics and you have a great dilemma of uncertainty for the eventual winners. Things are a-changing. Human beings’ blood, faith and cultural loyalties claim, and define, the world of the future more than the national borders of states or the borderless world wide web.The web and the client culture of commerce has not delivered us out of history’s passions yet. Facebook will not prevent the next Fuhrer from unleashing war on his friends yet. The World Wide Web has not displaced blood, kin and faith. It is no fault of the Britisher that India bled in 1947’s independence and division with Pakistan. A disintegrating empire had no choice but to flee. This separation, might give us a clue as to where we are headed in this darker, and possibly crueler, vision of the future.
I read that article too and while I think there are some good points in there, it struck me as a bit too “realist” in its outlook.Yes the importance of the dollar is shifting and yes US soft power is not really there anymore, but I think this change isn’t really anything that new, just the culmination of a long trend, and more importantly, I think that American cultural hegemony is far from over (although that may depend on the writer’s strike…).