Relativity

I’m reading Kennedy’s Rise and Fall of the Great Powers, and what I thought would be a depressing read when viewed in the current context, has turned out to be just the opposite. What I often hear, and from time to time preach myself is an America in decline, soon to be overtaken by some other power in which I have much less faith to run the international system than I have in America. Sure America is in decline. There are massive deficits, a lack of trust in the government, and looming extra problems just over the horizon, but these issues present themselves everywhere in the world, and often combine with other problems that America does not face. Measures of world power are relative, not absolute, so even if America is declining, if everyone else is too, there is really no change in the distribution of international power.

Europe does not seem in a position to challenge US primacy when viewed in relative terms. Western Europe faces a demographic situation worse than that in the US, and Eastern Europe is still striving to develop. The current financial crisis has impacted the EU almost as badly as the US. Even after the crisis passes, Europe still has to deal with EU expansion, especially the Turkey question not to mention attempting to sort out their internal policies. There doesn’t seem to be much room left for global ambition. Russia is only pretending to still be a great power because of history and a nuclear arsenal.

This leaves only “developing” countries to potentially unseat the US as the dominant nation in the world. As I have said before, I don’t think China is using the current situation to its fullest advantage. Even if China comes out of this economic crisis with its government intact, there are still looming problems ranging from banking to the environment. The US has had to face up to their banking challenges, but China has not. After the current problems pass, the US will likely be in a much stronger position relative to China.

Perhaps the best options, are those who do not seem like the ideal candidates today. The most obvious is India. While India has not demonstrated the same rapid growth as China, it has been impressive none the less. There seems to still be considerable room for improvement either in the form of reduced regulation (I suppose not high on people’s list of priorities these days, but I think there is a big difference between deregulating banks, deregulating to allow Wal-Mart to operate) or enhanced infrastructure. In the wake of China’s growth, India is seldom mentioned, and is certainly not viewed as threatening in the same way many people view China.

India will also not face the same obstacles that China will if a transition to democracy becomes unavoidable. Democracy may seem to slow progress in India, but it also makes governance institutions much less brittle. We could see a rapid shift in relative economic power and influence on the world stage in ten years if India keeps growing at 6%, but China has a revolution.

My second long bet on a developing country is Brazil. While there are disputes about who speaks for Latin America, if anyone can claim that role it is Brazil. They hare the largest population in Latin America and I think have a number of stealth factors which could propel them to a higher level in the international standings. Brazil’s bet is long because it relies on external shocks to propel it to higher standing.

The first shock could be a climate change agreement which places substantial value on Brazil’s existing rainforest. Additional revenue, as well as the recognition of the critical function Brazil performs for the world could alter the balance of power as a great deal of wealth would likely be transferred form the US and EU to Brazil.

The second shock would be related to oil. Anything dramatically drives up the cost of oil, which Brazilian ethanol can replace. This industry is already well established in Brazil and could likely be scaled up very quickly especially if the oil shock looked to be long lasting. If this were combined with some climate agreement, it could be doubly beneficial to Brazil’s standing.

But since international power is all relative, as long as everyone is being hurt almost equally by the present circumstances, there is very little likelihood of a change in global power structure. As long as the American’s aren’t worse than others at managing the fallout, their relative position is unlikely to be eroded. I have faith in the power of Western democracies and as Churchill said, "Americans can always be counted on to do the right thing...after they have exhausted all other possibilities." At least there is a country and people that’s willing to try. A triumph for the world.