Fundamental Political and Economic Mistakes are Speeding Up America's Decline
Continued from previous page
Will Asia Save Global Capitalism?
Meanwhile Beijing is too busy remixing its destiny as the global Middle Kingdom -- deploying engineers, architects, and infrastructure workers of the non-bombing variety from Canada to Brazil, Cuba to Angola -- to be much distracted by the Atlanticist travails in MENA (aka the region that includes the Middle East and Northern Africa).
If the West is in trouble, global capitalism is being given a reprieve -- how brief we don’t know -- by the emergence of an Asian middle class, not only in China and India, but also in Indonesia (240 million people in boom mode) and Vietnam (85 million). I never cease to marvel when I compare the instant wonders and real-estate bubble of the present moment in Asia to my first experiences living there in 1994, when such countries were still in the “Asian tiger,” pre-1997-financial-crisis years.
In China alone 300 million people -- “only” 23% of the total population -- now live in medium-sized to major urban areas and enjoy what’s always called “disposable incomes.” They, in fact, constitute something like a nation unto themselves, an economy already two-thirds that of Germany’s.
The McKinsey Global Institute notes that the Chinese middle class now comprises 29% of the Middle Kingdom’s 190 million households, and will reach a staggering 75% of 372 million households by 2025 (if, of course, China’s capitalist experiment hasn’t gone off some cliff by then and its potential real-estate/finance bubble hasn’t popped and drowned the society).
In India, with its population of 1.2 billion, there are already, according to McKinsey, 15 million households with an annual income of up to $10,000; in five years, a projected 40 million households, or 200 million people, will be in that income range. And in India in 2011, as in China in 2001, the only way is up (again as long as that reprieve lasts).
Americans may find it surreal (or start packing their expat bags), but an annual income of less than $10,000 means a comfortable life in China or Indonesia, while in the United States, with a median household income of roughly $50,000, one is practically poor.
Nomura Securities predicts that in a mere three years, retail sales in China will overtake the U.S. and that, in this way, the Asian middle class may indeed “save” global capitalism for a time -- but at a price so steep that Mother Nature is plotting some seriously catastrophic revenge in the form of what used to be called climate change and is now more vividly known simply as “weird weather.”
Back in the USA
Meanwhile, in the United States, Nobel Peace Prize laureate President Barack Obama continues to insist that we all live on an American planet, exceptionally so. If that line still resonates at home, though, it’s an ever harder sell in a world in which the first Chinese stealth fighter jet goes for a test spin while the American Secretary of Defense is visiting China. Or when the news agency Xinhua, echoing its master Beijing, fumes against the “irresponsible” Washington politicians who starred in the recent debt-ceiling circus, and points to the fragility of a system “saved “ from free fall by the Fed’s promise to shower free money on banks for at least two years.
Nor is Washington being exactly clever in confronting the leadership of its largest creditor, which holds $3.2 trillion in U.S. currency reserves, 40% of the global total, and is always puzzled by the continued lethal export of “democracy for dummies” from American shores to the Af-Pak war zones, Iraq, Libya, and other hot spots in the Greater Middle East. Beijing knows well that any further U.S.-generated turbulence in global capitalism could slash its exports, collapse its property bubble, and throw the Chinese working classes into a pretty hardcore revolutionary mode.