“The World Will Be Messy…for Decades to Come”

By Shlomo   Maital  

 

  I recently had the privilege of hearing a talk by a senior diplomat, who spoke on “A First Hand View of Global Geopolitics”.   His overview of the world was insightful, disturbing and, I believe, valuable. Here is part of it:

   “ The world is a very messy place.  We will have a prolonged period, lasting a decade or more, of ‘messiness’.  The reason:  The world is not a self-regulated system.  It is an unpredictable place.  This contradicts social science, but it is the truth.  We must therefore live in a constant state of improvisation, in which the sum total is definitely not equal to the sum of the parts.   In order to move things, to change things, the world needs a leader.  The longtime leader is the United States.  The US is still at the top of the world hierarchy, despite its many problems.  There is loose talk about how we now have a multipolar world.  We do not have a multipolar world.  The US is still atop the global hierarchy, in terms of military power (unquestionable), [US spends half the world’s total defense spending, SM], and even in its economy, still the largest in the world.  The main markets in the world remain the US and Europe.  But the US and Europe are in a precarious fiscal position.  [A ‘fiscal cliff’ looms, after the US election, when the US will have to take decisive action to deal with debt and ballooning deficits, just as Europe is struggling to do.  SM].    There is currently no replacement in sight for the dollar, either as an international reserve currency (the currency central banks use to hold and back their own currencies)  or as an international trading currency (the currency nations use to settle their export/import and investment accounts).  This is part of the problem. There is a moral hazard issue (risk is transferred to 3rd parties, not to those who create and incur it).   [The US is creating moral hazard for the world, by printing massive amounts of US dollars,  perhaps good for the short-term US economy but necessarily risky for the world economy. SM].    We have learned bitter lessons about the unpredictability of the world, in the past decade; in the Mideast, this lesson is written in blood.   The US is pre-eminent but cannot do anything alone, by itself.  Nor is there any strategy in place for emerging nations like China to follow America’s leadership and take up its leadership role. This will not happen for a very long time.  Experiments like the G20 and the UN are NOT the answer.  ALL these institutions are designed to be less than optimal,  to leave room for the dominant power.  But the dominant power is weak.  So we will have decades of indecision and unpredictable global events.   BRICS?  Brazil, Russia, India, China. This is a marketing device invented by Wall St. [by Goldman Sachs, specifically], to make money and sell securities and investments in emerging markets.  BRIC nations are regional powers, not global ones.  Even Europe is a regional power.  Europe’s global stategy is non-existent.    The country with potential to be a global leader is China.  The most important bilateral relationship in the world today is that between China and the US.  But this is a highly complex relationship, characterized by lack of trust and by rivalry.  Each nation interprets sovereignty as meaning, there is no higher will than our own.  This creates conflict.  US-China relations sets the tone for Asia and the world.  Both countries differ in how they interpret the concept of ‘rebalancing’.  Rebalancing is an economic term meaning bringing new balance and equilibrium to macroeconomics – flows of capital (now one-sided, Asia to the West) and flows of goods (also one sided, Asia to the West).  But rebalancing is not primarily economic, it is political and geopolitical – rebalancing of political equilibrium.  There is a search for a new political, economic and social model.   Our key problem:  America, principally, is stuck with 18th C. political philosophy (which we call ‘democracy’) in a 21st C. world characterized by social media.  This is an unstable combination.  Social media make political debate far more pluralistic. But you cannot run a nation based solely on public opinion, on INSTANT public opinion.  It doesn’t work.  We thus now have deep social tensions that the political systems of democracy cannot resolve.  America is in a state of denial, regarding the depth of its problems.  It is denying its political gridlock, it is denying its deep structural economic problems.  American politics are dysfunctional.  So are those in other countries, especially where social media predominate.   America has ‘de-industrialized’.  It has lost its manufacturing jobs forever. They will never return. It needs China to make its goods for it.  China needs America as a key market. 

   America and China now have a modus vivendi, a ‘way of life’, a way of living together and coexisting.  China is having an easier time with it than the US.  China’s political and economic system is remarkably adaptable and flexible and has recovered from powerful shocks.  After 150 years of striving toward modernity, China is experimenting with a new system.   In the West, the US is convinced that it has a superior way of governance.  In Europe, Europe has tried a grand experiment which has failed.  Northern Europe has failed to make Southern Europe into ‘Germans’. 

    We now understand that in this world, you cannot shape your own environment.  So the race will go to the most nimble – the fastest to adapt.” 

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