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Tuesday 01 March 2011
Telegraph.co.uk Home News Sport Finance Comment Culture Travel Lifestyle Fashion Technology Jobs Dating Offers Companies Comment Personal Finance Economics Markets Your Business Olympics business Fund Game Business Club Blogs Evans-Pritchard Jeff Randall Damian Reece Edmund Conway Jeremy Warner Richard Fletcher Kamal AhmedJeremy Warner
America not yet down and out, or how the West is still winning It's nearly one hundred years since Oswald Spengler penned his best selling "Decline of the West". Its theme has been a favourite among writers, historians and economists ever since. An itinerant worker in the United States looking for a job during the Great Depression. Western economies have been in far more perilous shape in the past than they are today. Photo: Rex By Jeremy Warner 9:39PM GMT 28 Feb 2011Comments
Yet the one certainty in this century of Western angst has been that despite repeated war and economic crisis, the West has remained supreme throughout.
Admittedly, there is rather more reason for thinking advanced economies are about to be toppled today than there ever has ever been before, but even so, it is with considerable scepticism that I've begun reading the latest example of the Spengler genre – Dambisa Moyo's "How the West was Lost".
I'm not saying she's wrong about the series of policy errors that have led the US to its present, pretty pass, and most of us would certainly agree that radical action is required to stop the rot.
But following the financial crisis of the past three years, this is already very well trodden ground, and to frame the argument in terms of the demise of one empire and the rise of another - China - is both passé and not a little sterile.
As if to prove just how quickly such consensual thinking can be turned on its head, along comes the pro-democracy movement of the Arab world. As with the collapse of the Eastern bloc twenty years ago, the speed and manner in which this has occurred has taken everyone by surprise.
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Dambisa Moyo: US could 'be a socialist nation' 08 Jan 2011 Dambisa Moyo: in quotes 08 Jan 2011 If the Saudis revolt, the world’s in trouble 24 Feb 2011 Ireland's in a state of denial over the euro 23 Feb 2011 Oil price shock: Pandora's Box is opened 22 Feb 2011 Why Angela and David see eye to eye 17 Feb 2011There's no telling how it might end, but at this stage it looks relatively benign from a Western point of view. The uprisings seem to be driven neither by anti-western nor religious feeling. To the contrary, what's demanded is Western style economic and political freedoms. These do not look like countries about to follow the Chinese way.
Whether democracy can deliver the hoped for economic dividend is another question, but there's manifest determination to try. It's vital these hopes are not frustrated.
In any event, the immediate worry about regime change in the Arab world and beyond is not so much that the west could end up with hostile governments, but that short term disruption to oil supplies might tip the world back into recession. These are perhaps selfish concerns, but everyone suffers together - the US, China and the Middle East - if the economy starts contracting again.
Much Libyan production has now ceased, and given the country's heavy reliance on foreign expertise, is unlikely to return until the region stabilises. Saudi Arabia promises to make good the short-fall from claimed ample reserves of spare capacity, but with the market as much determined by futures activity as the immediate fundamentals of supply and demand, Saudi's pledge has failed to calm nerves.
What happens if Iran, or worse still Saudi Arabia, blows up? Another oil price shock is just what the world economy, still struggling to emerge from the ruination of the financial crisis, doesn't need right now.
Whatever. The fact is that Western economies have been in far more perilous shape in the past than they are today – during the Great Depression, or even the 1970s, to name but two of those occasions. The policy response to calamity has been markedly better this time around.
Economic models must of course adapt to survive, but it is already plain that the financial crisis was not a mass extinction event for the West. The indications are that growth is fast returning to the US. Assuming no oil price wrecking ball, Western economies could positively surprise over the next few years. It's inflation, not deflation, that will soon be the problem for the US to judge by the latest Chicago PMIs.
None of this changes the long term picture of an ascendant China. Size of population alone makes China and other fast growing emerging market economies a much more potent challenge to traditional Western supremacy than past pretenders such as Japan.
Yet to believe China, still a comparatively poor country with vast internal challenges to overcome, poses a threat to the West is to see the world in terms of the bankrupt models of the past where economic progress is won through the subjugation of others to alien cultures and means. There may be an element of that in the now global competition for scarce resource - once a Western monopoly - but pursuit of empire can't instruct any kind of a sustainable future for the world economy.
Looking around the world today, you see very little sign of the West being lost. In fact the opposite is the case. The over-riding picture remains one of progressive Westernisation. But there is an important change. The West may have created today's global economy, but it no longer runs it. True enough, the next century is unlikely to be American, but nor will it be Asian. Instead, it will be the world's first ever truly global century.
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Comments
Yet the one certainty in this century of Western angst has been that despite repeated war and economic crisis, the West has remained supreme throughout.
Admittedly, there is rather more reason for thinking advanced economies are about to be toppled today than there ever has ever been before, but even so, it is with considerable scepticism that I've begun reading the latest example of the Spengler genre – Dambisa Moyo's "How the West was Lost".
I'm not saying she's wrong about the series of policy errors that have led the US to its present, pretty pass, and most of us would certainly agree that radical action is required to stop the rot.
But following the financial crisis of the past three years, this is already very well trodden ground, and to frame the argument in terms of the demise of one empire and the rise of another - China - is both passé and not a little sterile.
As if to prove just how quickly such consensual thinking can be turned on its head, along comes the pro-democracy movement of the Arab world. As with the collapse of the Eastern bloc twenty years ago, the speed and manner in which this has occurred has taken everyone by surprise.
Related Articles
There's no telling how it might end, but at this stage it looks relatively benign from a Western point of view. The uprisings seem to be driven neither by anti-western nor religious feeling. To the contrary, what's demanded is Western style economic and political freedoms. These do not look like countries about to follow the Chinese way.
Whether democracy can deliver the hoped for economic dividend is another question, but there's manifest determination to try. It's vital these hopes are not frustrated.
In any event, the immediate worry about regime change in the Arab world and beyond is not so much that the west could end up with hostile governments, but that short term disruption to oil supplies might tip the world back into recession. These are perhaps selfish concerns, but everyone suffers together - the US, China and the Middle East - if the economy starts contracting again.
Much Libyan production has now ceased, and given the country's heavy reliance on foreign expertise, is unlikely to return until the region stabilises. Saudi Arabia promises to make good the short-fall from claimed ample reserves of spare capacity, but with the market as much determined by futures activity as the immediate fundamentals of supply and demand, Saudi's pledge has failed to calm nerves.
What happens if Iran, or worse still Saudi Arabia, blows up? Another oil price shock is just what the world economy, still struggling to emerge from the ruination of the financial crisis, doesn't need right now.
Whatever. The fact is that Western economies have been in far more perilous shape in the past than they are today – during the Great Depression, or even the 1970s, to name but two of those occasions. The policy response to calamity has been markedly better this time around.
Economic models must of course adapt to survive, but it is already plain that the financial crisis was not a mass extinction event for the West. The indications are that growth is fast returning to the US. Assuming no oil price wrecking ball, Western economies could positively surprise over the next few years. It's inflation, not deflation, that will soon be the problem for the US to judge by the latest Chicago PMIs.
None of this changes the long term picture of an ascendant China. Size of population alone makes China and other fast growing emerging market economies a much more potent challenge to traditional Western supremacy than past pretenders such as Japan.
Yet to believe China, still a comparatively poor country with vast internal challenges to overcome, poses a threat to the West is to see the world in terms of the bankrupt models of the past where economic progress is won through the subjugation of others to alien cultures and means. There may be an element of that in the now global competition for scarce resource - once a Western monopoly - but pursuit of empire can't instruct any kind of a sustainable future for the world economy.
Looking around the world today, you see very little sign of the West being lost. In fact the opposite is the case. The over-riding picture remains one of progressive Westernisation. But there is an important change. The West may have created today's global economy, but it no longer runs it. True enough, the next century is unlikely to be American, but nor will it be Asian. Instead, it will be the world's first ever truly global century.
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