Ringing in the Asian century

[Marulus]

Ringing in the Asian century

The West needs to get used to the end of its era of world domination.

By Kishore Mahbubani

February 19, 2008

We are entering a new era of world history: the end of Western domination and the arrival of the Asian century. The question is: Will Washington wake up to this reality? When the new president meets with schedulers in January, will he or she say, "Cut down on the visits to Europe. Send me across the Pacific, not the Atlantic. The G-8 represents a sunset process. Let us focus on the new sunrise organizations in Asia."

If such a shift seems inconceivable, it shows how much old mental maps continue to cloud the vision of leading Americans. The West has so dominated world history for the last 200 years that we forget that from the year 1 to the year 1820, the two largest economies in the world (as demonstrated by British economic historian Angus Maddison) were China and India. A study by Goldman Sachs in 2003 confidently predicted that by 2050, the four largest economies in the world will be China, the U.S., India and Japan, in that order. A more recent evaluation by Goldman Sachs showed that this could happen sooner and that the Indian economy could surpass that of the U.S. by 2043.

The changes will be dramatic and happen quickly. Economist and former U.S. Treasury Secretary Lawrence Summers put it this way: During the Industrial Revolution, the standard of living rose at a rate of maybe 50% during a person's life span. Asia's current growth rate represents an unprecedented 100-fold (that is, 10,000%) rise in standards of living during one lifetime.

The paradox about the American inability to recognize this great shift is that the United States has done more than any other country to spark this Asian revival. In the 19th century era of European domination, Asia was subjugated and colonized. As the U.S. became the dominant power, Asia was progressively liberated.

More important, before World War II, conquest and/or colonization were the only ways for a nation to expand its power and influence. With the creation of the United Nations in 1945 and the formulation of the rules of trade that followed -- efforts advanced by the United States -- a country could grow its economy without conquering new territory.

This rules-based system leveled the international playing field, allowing nations such as Japan and Germany to economically reemerge without massive disruption to the world order. In this century, it may be China and India that peaceably emerge as world powers.

That would be a historic achievement. All previous shifts in global power (with the sole exception of the transition from Pax Britannica to Pax Americana) have been accomplished through conflict. In the 21st century, we will have a great opportunity to avoid this -- if we continue to abide by the 1945 rules.

One key element of this 1945 package is trade liberalization, an approach the world has sustained since the creation of the General Agreement on Trade and Tariffs, or GATT, in 1947. Unfortunately, calls for protectionism are rising in the U.S. and Europe. CNN's Lou Dobbs has created a cottage industry by railing against unfair Asian competition. Similar voices are emerging in Europe. The first line of defense against any potential shock to the global economy is to resist these calls for protectionism. (The defeat of the populist and protectionist John Edwards in the Democrat presidential primaries fortunately shows that the U.S. is still resisting the slide down the slippery slope of protectionism.)

At the same time, as new Asian powers emerge, the architecture of the world order will have to be reengineered. Take the case of the two most powerful international economic organizations of the world, the International Monetary Fund and the World Bank. There is a 60-year-old tradition that the head of the IMF has to be a European and the head of the World Bank an American, a practice reaffirmed by the appointments in 2007. Representatives of Asian nations, which make up the majority of the world's population, do not qualify. But Asia is now home to the world's fastest-growing economies, which have accumulated over $3 trillion in foreign reserves. It is absurd to exclude Asians from the leadership of the IMF and the World Bank. Such anachronistic policies must be discarded if we are to engineer a smooth transition to the Asian century.

Similarly, the permanent members of the U.N. Security Council (which has the capacity to make decisions binding on all countries) should reflect the great powers of the future, not the victors of World War II. One simple, common-sense step would be to have a single European Union seat on the council in place of two seats for Britain and France, as there will be a single EU foreign policy in January 2009. In private, virtually all thoughtful observers agree that this is the only logical solution. In public, no American policymaker dares ruffle feathers across the Atlantic.

Democratic presidential candidate Barack Obama is absolutely right when he says that change is imperative. In our lifetime, as Summers has indicated, we will see more change than in any previous era. So, will the U.S., under its new president, be a force for change and forge new relationships across the Pacific? Or will it become an obstacle oriented stubbornly toward the Atlantic? The choice will determine the course of 21st century history, for if the U.S. chooses to work with Asia, as it rises, we will sail into a more peaceful era.

Kishore Mahbubani is dean of the school of public policy at the National University of Singapore and the author of "The New Asian Hemisphere: The Irresistible Shift of Global Power to the East."

[source]


Amazon.com: The New Asian Hemisphere: The Irresistible Shift of Global Power to the East: Kishore Mahbubani: Books

Kishore Mahbubani