Honda - just in the last quarter of last year, China had to send 12 million workers home to their villages from the jobs on the coast due to economic dislocation. I ask the same question I've asked others: How is China, with an export-driven economy largely supported through an artificially low currency, supposed to maintain anything like its pre-'08 growth rates if, as you seem to believe, its main markets, especially the United States are in the toilet? If the dollar cracks, for example, then a) we won't be able to buy anywhere near as much Chinese stuff, b) our own exports will become more competitive, c) Chinese debt holdings are devalued. However things work out, China will have to make major adjustments. It won't be able to produce double digit growth rates year over year financed by American credit cards.
As for the PLAN, even if somehow China is able to finance a massive building effort despite their economy being stopped in its tracks, it takes decades to develop a functional Navy. No one in the world other than the US at this time even knows how to run a modern naval battle group, much less run it effectively. Even if China begins to make significant progress, it would inspire an active response not just from the US, but from its regional competitors, especially including Japan.
I think Friedman's view is more likely correct - that over the long term the US will be supporting China as it was prior to Mao in an effort to prevent other foreign competitors from dominating it and Eurasia instead.
The demographic challenge is real, but in some respects it's also been exaggerated. In any event the US is better positioned to cope with it than the other developed economies, whose age structure problems are much worse.
We may experience a labor shortage in the US, alongside real estate devaluation, loss of demand, shortage of investment capital, etc., but what we can do to address it is a big subject. When you consider that the retirement age for Social Security was set at 65 when life expectancy was 61, not pushing 80, you can see already a huge degree of elasticity that has been politically difficult to exploit, but which can sooner or later be exploited with the tap of a keyboard.
Anyway, I think you should read Friedman's book, since he defends his view in more detail and more expertly than I can, and his and my views do not coincide 100%. I also think you might want to research China in more detail. Basing your judgments on the Chinese you may have met in your travels is an unrealistic way of assessing the prospects for a country of 1 billion people in a changing world.
Well, acat, we'll see (or maybe our children or grandchildren will). I don't see how China advances as an integral geopolitical force if the consumer economies crash. See discussion above. On the other hand, if the consumer economies prosper, then the vulnerability you describe disappear. Given China's force projection and other limitations, why wouldn't those Chinese immigrants taking over port facilities in your example more likely in a generation or two to be flag-waving America Firsters than advance troops for the Chinese takeover?
You could certainly be right about the solar power collectors. Friedman believes that military needs will drive a massive expansion of lift capabilities and reduction in payload costs. I have no idea whether he's right. For all we know, nuclear fission or even fusion power or hydrogen or something undreamed of may be much more practical. I wasn't persuaded by his forecast, but took it as an illustration of a potential mid-century dynamic around the eventual transition from hydrocarbons to other energy sources.
One point about Europe and geography: In the age of sail, the positions of England, Spain, and Portugal were relatively much more advantageous vis-a-vis growth-phase Europe than they are in the age of steel-hulled tankers and aircraft carriers, which greatly reduces the Atlantic and Mediterranean in relative importance. The transformation in turn reduced Britain's margin of error, which WW2 used up.
I do tend to see "cultural rot" as more a symptom than a cause of political decline, and not always a reliable one. There've been some pretty darn rotten or otherwise dysfunctional cultures that have survived for centuries in place, if that place was secure enough. Sometimes, being secure gives a culture a chance to explore the outer limits of rot.
China does not do boots-on-the-ground, but mandarins running structurally significant businesses.
That's all well and good for the particular mandarins (though I don't know if that's really an accurate description of Chinese international businesspeople), but it doesn't strike me as a basis for predominating political power. Sooner or later, you need the barrel of a gun...
acat - China doesn't even have the naval resources and skills to invade TAIWAN. I think North America and Africa are safe from invasion for good while. Safe from investment and trade and pushy ruthless argumentative Shanghai capitalists - that's something else. What Friedman emphasizes, however, is that the lure of international trade affects coastal/cosmopolitan China much differently than interior/peasant China. 20 years ago today, the tension between the two Chinas climaxed at the Tiananmen massacre. In previous generations - except when under iron dictatorship - China has repeatedly been torn apart socially and economically. That doesn't mean that Hong Kong, Shanghai, Macao, et al stop doing business, it just means that they tend to be in it for themselves in alliance with foreign interests.
Read between the lines on that article I linked above on China's economic situation and the contradictory methods the government has to consider - in short, liberalization vs. clampdown. It's hard to do both at once.
Your arguments are, as usual, very well-taken: A situation of relative decline/frustrated expectations can be much more de-stabilizing, and experienced as a much greater trauma by the subject population, than absolute misery. Niall Ferguson locates the syndrome as being at the heart of German self-destruction during the WAR OF THE WORLD, as he terms European civilization's century-long mass suicide.
Since I'm in effect arguing for Friedman's view on this thread, I think he'd say that, however much the US suffers from that syndrome, its main competitors are likely to suffer much more, while the next great opportunities will be outlined in the most last great disasters. As others have pointed out, our situation also affords us the luxury to overreact to historical hiccups without doing ourselves too much harm: Unlike Germany of the '30s, we don't have competitors on our borders and in our locale to fight a suicidal war with.
He also tries to explain what the real challenges facing the US are and how the most recent epoch defined by Reaganism and the power of the suburbs (following Roosevelt and the power of the urbs) will have to be replaced by a new paradigm, which he expects the elections of ca. 2028 to usher in.
I find his notion of 50-year cycles in US history to be a bit contrived except as a way of organizing what's already happened and helping to organize his forecast, but I can't to justice to it here.
As for Steyn, demographics and population extrapolation has led to some of the greatest forecasting errors. A generation ago, the Population Bomb/Limits to Growth/Malthusian catastrophe school dominated. The green types still believe in overpopulation. Friedman's in the "Population Bust" school, and does consider birth rates extremely important. He just doesn't seem convinced that Eurabianization will follow a straight-line progression leading to the kind of unified Moslem super-state that would be geopolitically important. You must be aware that there are other demography mavens and futurists who've either attacked Steyn's assumptions on various levels or who've pointed to countervailing factors. For instance, anything short of the Islamist best case instead suggests a Europe in economic decline and facing social turmoil, even civil war - a sad situation but not a geopolitical threat.
BTW, on Mexico, since it relates the demography question, Friedman's discussion of the North American showdown is in some ways the most speculative chapter, since it occurs furthest out - ca. 2080-2100 - but it's also one of the hardest to refute. In short, he argues that the borderland area is tending over time to become more Mexican than American, and that at some point the real national border may be 200 miles north of the legal border, creating a situation that the US will find extremely difficult to deal with by its traditional means.
On India: Friedman doesn't devote a lot of time to it except to explain why it is somewhat hemmed in geographically, unable to dominate the Eurasian landmass and directly threaten its competitors or secure resources for growth, and unlikely to contend geopolitically. It wouldn't have to fragment completely as a single political entity to be held back by its fractiousness, but there are even India optimists who predict a political break-up, and see it as a good thing. (If you ever read speculative fiction, Ian McDonald's RIVER OF GODS depicts an India of the year 2047 that has broken up into 5 countries. His story collection CYBERABAD DAYS expands on the themes. Yet he's very much an India optimist and, incidentally, a US pessimist of the leftwing persuasion.)
I think we have got a lot more than that and growing and with no end in sight.
Uh, no - not in relative terms: The number refers to the equivalent of non-performing loans China -$600 to $900 BN in an economy ca. $2.5 T in size. If you're thinking about US public deficits and debt, or maybe about the huge numbers sometimes conjured up in theoretical derivatives exposure, or maybe credit card debt, each is something else again. All god's chilluns got problems, but not all problems are alike.
Prognostication, especially when published to take advantage of a fad - such as the Fall of the Great Powers/Rise of Japan stuff that was so current during the late '80s/early '90s - is subject to making fools of the prognosticators. However, from my glance at the Amazon review, Friedman and his co-author were coy about a setting a date, and the mention of "hypersonic missiles" leads me to believe that the alarmist title was a bit off.
Hypersonics have been a favorite among future-war types for a while now. They re-appear in this book, and Friedman also still believes that the US and Japan are on an historical collision course - just not anything to worry about anytime soon.
He's almost 20 years older now. At least he's still in the same job! I'd hate to be held responsible for everything I thought made sense in 1991.
I read an interesting article recently about economist Richard Duncan, who wrote was dismissed and even ridiculed because he underestimated the last economic growth spasm that accompanied the housing bubble, but has become fashionable again because he otherwise forecast the unfolding of the financial crisis rather accurately - with a collapse of the dollar or other major adjustment still to come. If you'd bought gold when he recommended, but held for just a few years longer, you'd have done quite well - but that's not the point. The point is that you can be off a few years with your predictions - an eyeblink in the grand scheme of things - and still have valid and useful arguments to make. Hyman Minsky gave what amounted to an excellent forecast of our financial troubles as well - in 1986. It's useful not because it can tell you how to make your own economic forecasts, but because the underlying thinking can help you to put solutions and non-solutions in perspective.
You have strange ideas about what forecasting is about, and frankly are coming across as kind of cranky, too.
Can't say I followed STRATFOR day by day over the last eight years, but from what I read they were always skeptics, without being alarmists, regarding the Iraq and Afghanistan adventures. Even in the review, I quoted Friedman's own rather pessimistic view of them.
I do believe that Mr. Friedman's probably doing a helluva lot better than I am financially. Betcha he bought gold, but I can't tell you for sure.
When you consider the degree of China's dependence on exports than there are only two alternatives: If the consumer economies recover, then China can perhaps stay afloat, though it's an open question whether it will ever resume the yearly double-digit growth that it had been accustomed to up until last year - that is, it faces major, uncertain adjustments even in what most consider a best case scenario for the world economy.
If, as so many here seem to believe, we're heading into the crapper, with a broken dollar unable to buy anything, then China is in deep trouble. If we get a cold, they get pneumonia. If we get pneumonia, they die.
Numbers? Maybe I am not looking in the right place, but I don’t see his “numbers”. He has numerical values that he puts on “deeply fraudulent bookkeeping and reporting, corruption, nepotism, inefficiency, etc., etc.” in the U.S. and in China? I don’t see them. Where are they and where did he get them?
They're in his book. My review is 1 page. His book is 270+. For instance, he refers to an estimate of the total value of bad loans (given out in the communist system for every reason other than economic efficiency) as $600 - $900 billion "or between a quarter and a third of China's GDP."
To your repeated questions, MB4:
I've already given his credentials. You can look up STRATFOR yourself.
Yearly benchmarks would be absurd: He's not pretending to be able to foretell the future in detail. He provides a forecast, explaining his method all along. You can assess his reasoning and evidence for yourself if it interests you, but I can't write the book out for your here, dude.
I have a feeling that the historian’s bedrock faith in the importance of geography will turn out to be one of those principles that remains reliably true… right up until it isn’t.
When someone figures out how to ship a barrel of oil or an aircraft carrier over the internet, then we'll be in a different world.
The 20th century left us with a remarkable ability to rearrange the topography of the planet - not just in the terrifying nuclear kaboom sense, but in the way we can transport food and raw materials cheaply over vast distances. What we do with these resources is increasingly dependent on collective human will.
Seems that way, because the USN guarantees free transit through the sea lanes. Air transport is extremely expensive compared to shipping - otherwise all those cars, containers, natural gas and oil tankers, etc., etc., would be dropping at airports and backyards instead of ports.
A flagging, exhausted West seems to be in the process of squandering the tremendous advantages geography and history have bestowed upon it.
Easier said than done.
Fortress America won’t be that hard to sack, if the gates are hanging open and the guards had to cash in their bullets to pay for national health care.
How are they going to get here? Swim?
The American Left is deeply invested in the idea that Europeans are our intellectual and cultural betters.
They'll get over it. Or we'll get over them.
What will the Left of 2030 make of those wise old socialist countries’ submission to Islam?
Not really convinced by the Steynian case, but, even if I was, who cares what the Left of 2030 makes of anything?
Geography and technology may ensure that no one could take America by force, but the more uncertain question is whether Americans can prevent their elites from handing America over to the outsiders who most passionately demand it.
Don't see any money it. Maybe the American elite of the present day is a parasitic sub-class that will change its tune when it senses opportunity elsewhere, or be dispensed with.
Such a bunch of defeatists on the right, these days. Sheesh. Some of you guys would have been worthless in 1942 or at Valley Forge! Even Lenin had more confidence in capitalism - always finding away out of its historical cul-de-sacs - than you guys do.
Does this George Friedman have a past record of successful prognostication that we can be impressed by?
STRATFOR is considered the world's leading private intelligence and forecasting firm. It's reports are used by corporations and governments worldwide. Take that as you will.
You're referring to generalizations. Friedman refers to numbers - for instance, in the comparison of "fraud and inefficiency" in the US vs. the same in China. He's not the only by any means who views China as an economic paper tiger, by the way.
Or in resources - even with both hands tied behind our backs, the US is still one of the leading oil-producing countries in the world. It's just that our super-huge economy demands a huge amount of energy.
It's not all geography, though it does in an indirect way all go back to it eventually. All of those oil tankers safely transit from the Persian Gulf and other regions to China because we like it that way.
We're so conscious of our limitations and focused on ourselves that we've lost awareness of how far ahead of a country like China we still are in per-capita income, energy usage, production, etc., not to mention overall military power. Our "hollowed-out" manufacturing sector (accounting for something like 20% of our economy in 2007) is still larger than China's entire economy.
The Left will cut both down, and end up with a U.S. that resembles Europe… Broke, buried under social programs, and incapable of being more than another spent wad .. or, my guess, balkanized and ripe for a partial or total takeover.
Mew
acat on June 4, 2009 at 12:02 AM
The first part is a complex subject, and Friedman's own predicted "solutions" to our entitlements/age structure problems may not be something conservatives are primed to endorse, but there's nothing that can be put into law that can't be revised in law.
Who's going to take us over? Even if we disbanded our military tomorrow (though why would we?), who has the financial wherewithal to launch a takeover overseas? On our own continent, who's going to take over? Canada? Mexico, for now, can't even run itself.
If we continue to inflate our dollar to neverland standards, then our own government will be the dictatorial culture…who lacks English Common Law understanding, property rights, human rights etc.
Conservative Voice on June 3, 2009 at 10:10 PM
I don't want to be in the position of defending Obama-Geithner-Bernankonomics, but, on the other hand, it's not good forecasting to assume facts not in evidence. We've withstood extended bouts of inflation and other relatively radical economic problems before without turning into "neverland."
Friedman doesn't predict unicorns, rainbows, and uninterrupted good times. He just asserts that the US has a lot further to fall and a lot more to fall back on than anyone else. Before determining that our decline is irreversible and illimitable, I'd like to have better evidence than inchoate fears and generalizations.
So his whole case rests on a foundation of China being “torn apart” or something in about 10 years. Pretty thin gruel to rest all his sweeping predictions on.
MB4 on June 3, 2009 at 11:37 PM
Well, you'll have to sip the gruel at the source to determine for yourself how thin it is. I certainly wouldn't expect you to take my word for it. I wouldn't say at all that his whole case rests on it at all. In brief, China is limited by its geography, boxed in by virtually impassable regions east and south, with a channel into Sibera to the north, and other than that Korea. The coastal area's interests and development tend to diverge from the inland regions, and the central government has been able to keep the centrifugal forces in check mainly by economic growth, which is insustainable at past rates, and even more vulnerable to international economic disruption. That's the torn apart part. The isolationism part - China's preferred pattern historically - comes when the central government tries to deal with inequities by clamping down. Resource limitations, deeply fraudulent bookkeeping and reporting, corruption, nepotism, inefficiency, etc., etc. If the US dollar cracks, then Chinese exports crack and Chinese holdings of US debt is devalued. For the US dollar to hold, China has to keep on buying and holding US debt.
Why do you think they were all laughing so hard about their money being safe?
Hey, Odie1941 - thanks for your comments. I hope you'll bookmark this page and come back after you've picked up and fnished the book! That goes for anyone else who reads it.
I'll also say that Friedman addresses many of Honda's arguments - from shrinking of the world and, relatedly, to the complex of oil/hydrocarbon issues to the building and running of navies, though not to the same level of "granular" detail regarding specific submarines (it's only a 270-page book covering 100 years plus background). Shrink as the world might, the bulk of trade, which includes the world energy economy, depends on the oceans and will likely do so for generations to come. He does see the US eventually leveraging its command of the seas, its technological head start, and its economic and political primacy into a virtual monopoloy on outer space.
He believes China's going to be either torn apart or forced to relapse into isolationism by around 2020, and he devotes extensive analysis to China and the other Asian nations.
As for our problems, considering the importance of the Navy, I'm all for keeping it, um, shipshape!, and making up for our derelictions post-haste, but I don't think our polarization even comes close, so far, to what we had during the '60s or even the early '80s, much less the pre-Civil War period. Oldie's comments about Civil War and recovery are on point here, too.
After all, the indians had all the same geographic advantages, and that did not save them or their culture.
MikeA on June 3, 2009 at 8:10 PM
Given the Indians' technology, they weren't in a position to exploit North America's geographic advantages fully - to state the obvious. On the other hand, they had a pretty good run, and some major civilizations, that benefited mightily from not being interfered with by the rest of the world. Viewing the situation very broadly, the US still benefits from its relative isolation in that regard.
DtU - Friedman considers Western Europe pretty much a shot wad geopolitically. He does consider the "population bust" to be extremely important worldwide, but I don't think he accepts the "worst-case" predictions about the Islamicization of Europe, among other things because Islamic birth rates are also tapering off. In truth, he doesn't show much interest in Steynian projections, and seems to believe that France, Germany, Great Britain, and others will all become third-rate powers anyway. I suspect that, even if he did think Europe was going to be Islamic by 2035, he wouldn't see it as in itself a major threat to U.S. power.
Honda - just in the last quarter of last year, China had to send 12 million workers home to their villages from the jobs on the coast due to economic dislocation. I ask the same question I've asked others: How is China, with an export-driven economy largely supported through an artificially low currency, supposed to maintain anything like its pre-'08 growth rates if, as you seem to believe, its main markets, especially the United States are in the toilet? If the dollar cracks, for example, then a) we won't be able to buy anywhere near as much Chinese stuff, b) our own exports will become more competitive, c) Chinese debt holdings are devalued. However things work out, China will have to make major adjustments. It won't be able to produce double digit growth rates year over year financed by American credit cards.
As for the PLAN, even if somehow China is able to finance a massive building effort despite their economy being stopped in its tracks, it takes decades to develop a functional Navy. No one in the world other than the US at this time even knows how to run a modern naval battle group, much less run it effectively. Even if China begins to make significant progress, it would inspire an active response not just from the US, but from its regional competitors, especially including Japan.
I think Friedman's view is more likely correct - that over the long term the US will be supporting China as it was prior to Mao in an effort to prevent other foreign competitors from dominating it and Eurasia instead.
The demographic challenge is real, but in some respects it's also been exaggerated. In any event the US is better positioned to cope with it than the other developed economies, whose age structure problems are much worse.
We may experience a labor shortage in the US, alongside real estate devaluation, loss of demand, shortage of investment capital, etc., but what we can do to address it is a big subject. When you consider that the retirement age for Social Security was set at 65 when life expectancy was 61, not pushing 80, you can see already a huge degree of elasticity that has been politically difficult to exploit, but which can sooner or later be exploited with the tap of a keyboard.
Anyway, I think you should read Friedman's book, since he defends his view in more detail and more expertly than I can, and his and my views do not coincide 100%. I also think you might want to research China in more detail. Basing your judgments on the Chinese you may have met in your travels is an unrealistic way of assessing the prospects for a country of 1 billion people in a changing world.
Well, acat, we'll see (or maybe our children or grandchildren will). I don't see how China advances as an integral geopolitical force if the consumer economies crash. See discussion above. On the other hand, if the consumer economies prosper, then the vulnerability you describe disappear. Given China's force projection and other limitations, why wouldn't those Chinese immigrants taking over port facilities in your example more likely in a generation or two to be flag-waving America Firsters than advance troops for the Chinese takeover?
thirteen28 on June 4, 2009 at 11:14 AM
You could certainly be right about the solar power collectors. Friedman believes that military needs will drive a massive expansion of lift capabilities and reduction in payload costs. I have no idea whether he's right. For all we know, nuclear fission or even fusion power or hydrogen or something undreamed of may be much more practical. I wasn't persuaded by his forecast, but took it as an illustration of a potential mid-century dynamic around the eventual transition from hydrocarbons to other energy sources.
One point about Europe and geography: In the age of sail, the positions of England, Spain, and Portugal were relatively much more advantageous vis-a-vis growth-phase Europe than they are in the age of steel-hulled tankers and aircraft carriers, which greatly reduces the Atlantic and Mediterranean in relative importance. The transformation in turn reduced Britain's margin of error, which WW2 used up.
I do tend to see "cultural rot" as more a symptom than a cause of political decline, and not always a reliable one. There've been some pretty darn rotten or otherwise dysfunctional cultures that have survived for centuries in place, if that place was secure enough. Sometimes, being secure gives a culture a chance to explore the outer limits of rot.
That's all well and good for the particular mandarins (though I don't know if that's really an accurate description of Chinese international businesspeople), but it doesn't strike me as a basis for predominating political power. Sooner or later, you need the barrel of a gun...
acat - China doesn't even have the naval resources and skills to invade TAIWAN. I think North America and Africa are safe from invasion for good while. Safe from investment and trade and pushy ruthless argumentative Shanghai capitalists - that's something else. What Friedman emphasizes, however, is that the lure of international trade affects coastal/cosmopolitan China much differently than interior/peasant China. 20 years ago today, the tension between the two Chinas climaxed at the Tiananmen massacre. In previous generations - except when under iron dictatorship - China has repeatedly been torn apart socially and economically. That doesn't mean that Hong Kong, Shanghai, Macao, et al stop doing business, it just means that they tend to be in it for themselves in alliance with foreign interests.
Read between the lines on that article I linked above on China's economic situation and the contradictory methods the government has to consider - in short, liberalization vs. clampdown. It's hard to do both at once.
Doctor Zero on June 4, 2009 at 9:58 AM
Your arguments are, as usual, very well-taken: A situation of relative decline/frustrated expectations can be much more de-stabilizing, and experienced as a much greater trauma by the subject population, than absolute misery. Niall Ferguson locates the syndrome as being at the heart of German self-destruction during the WAR OF THE WORLD, as he terms European civilization's century-long mass suicide.
Since I'm in effect arguing for Friedman's view on this thread, I think he'd say that, however much the US suffers from that syndrome, its main competitors are likely to suffer much more, while the next great opportunities will be outlined in the most last great disasters. As others have pointed out, our situation also affords us the luxury to overreact to historical hiccups without doing ourselves too much harm: Unlike Germany of the '30s, we don't have competitors on our borders and in our locale to fight a suicidal war with.
He also tries to explain what the real challenges facing the US are and how the most recent epoch defined by Reaganism and the power of the suburbs (following Roosevelt and the power of the urbs) will have to be replaced by a new paradigm, which he expects the elections of ca. 2028 to usher in.
I find his notion of 50-year cycles in US history to be a bit contrived except as a way of organizing what's already happened and helping to organize his forecast, but I can't to justice to it here.
As for Steyn, demographics and population extrapolation has led to some of the greatest forecasting errors. A generation ago, the Population Bomb/Limits to Growth/Malthusian catastrophe school dominated. The green types still believe in overpopulation. Friedman's in the "Population Bust" school, and does consider birth rates extremely important. He just doesn't seem convinced that Eurabianization will follow a straight-line progression leading to the kind of unified Moslem super-state that would be geopolitically important. You must be aware that there are other demography mavens and futurists who've either attacked Steyn's assumptions on various levels or who've pointed to countervailing factors. For instance, anything short of the Islamist best case instead suggests a Europe in economic decline and facing social turmoil, even civil war - a sad situation but not a geopolitical threat.
BTW, on Mexico, since it relates the demography question, Friedman's discussion of the North American showdown is in some ways the most speculative chapter, since it occurs furthest out - ca. 2080-2100 - but it's also one of the hardest to refute. In short, he argues that the borderland area is tending over time to become more Mexican than American, and that at some point the real national border may be 200 miles north of the legal border, creating a situation that the US will find extremely difficult to deal with by its traditional means.
On India: Friedman doesn't devote a lot of time to it except to explain why it is somewhat hemmed in geographically, unable to dominate the Eurasian landmass and directly threaten its competitors or secure resources for growth, and unlikely to contend geopolitically. It wouldn't have to fragment completely as a single political entity to be held back by its fractiousness, but there are even India optimists who predict a political break-up, and see it as a good thing. (If you ever read speculative fiction, Ian McDonald's RIVER OF GODS depicts an India of the year 2047 that has broken up into 5 countries. His story collection CYBERABAD DAYS expands on the themes. Yet he's very much an India optimist and, incidentally, a US pessimist of the leftwing persuasion.)
Uh, no - not in relative terms: The number refers to the equivalent of non-performing loans China -$600 to $900 BN in an economy ca. $2.5 T in size. If you're thinking about US public deficits and debt, or maybe about the huge numbers sometimes conjured up in theoretical derivatives exposure, or maybe credit card debt, each is something else again. All god's chilluns got problems, but not all problems are alike.
Prognostication, especially when published to take advantage of a fad - such as the Fall of the Great Powers/Rise of Japan stuff that was so current during the late '80s/early '90s - is subject to making fools of the prognosticators. However, from my glance at the Amazon review, Friedman and his co-author were coy about a setting a date, and the mention of "hypersonic missiles" leads me to believe that the alarmist title was a bit off.
Hypersonics have been a favorite among future-war types for a while now. They re-appear in this book, and Friedman also still believes that the US and Japan are on an historical collision course - just not anything to worry about anytime soon.
He's almost 20 years older now. At least he's still in the same job! I'd hate to be held responsible for everything I thought made sense in 1991.
I read an interesting article recently about economist Richard Duncan, who wrote was dismissed and even ridiculed because he underestimated the last economic growth spasm that accompanied the housing bubble, but has become fashionable again because he otherwise forecast the unfolding of the financial crisis rather accurately - with a collapse of the dollar or other major adjustment still to come. If you'd bought gold when he recommended, but held for just a few years longer, you'd have done quite well - but that's not the point. The point is that you can be off a few years with your predictions - an eyeblink in the grand scheme of things - and still have valid and useful arguments to make. Hyman Minsky gave what amounted to an excellent forecast of our financial troubles as well - in 1986. It's useful not because it can tell you how to make your own economic forecasts, but because the underlying thinking can help you to put solutions and non-solutions in perspective.
MB4 on June 4, 2009 at 1:01 AM
You have strange ideas about what forecasting is about, and frankly are coming across as kind of cranky, too.
Can't say I followed STRATFOR day by day over the last eight years, but from what I read they were always skeptics, without being alarmists, regarding the Iraq and Afghanistan adventures. Even in the review, I quoted Friedman's own rather pessimistic view of them.
I do believe that Mr. Friedman's probably doing a helluva lot better than I am financially. Betcha he bought gold, but I can't tell you for sure.
Here's a straightforward, mainstream report on China's economic situation, just one of the first articles that turned up on a Google search.
http://blog.aranca.com/global_recession/2009/03/unemployment-in-china-%E2%80%93-trouble-looming-ahead/
When you consider the degree of China's dependence on exports than there are only two alternatives: If the consumer economies recover, then China can perhaps stay afloat, though it's an open question whether it will ever resume the yearly double-digit growth that it had been accustomed to up until last year - that is, it faces major, uncertain adjustments even in what most consider a best case scenario for the world economy.
If, as so many here seem to believe, we're heading into the crapper, with a broken dollar unable to buy anything, then China is in deep trouble. If we get a cold, they get pneumonia. If we get pneumonia, they die.
They're in his book. My review is 1 page. His book is 270+. For instance, he refers to an estimate of the total value of bad loans (given out in the communist system for every reason other than economic efficiency) as $600 - $900 billion "or between a quarter and a third of China's GDP."
To your repeated questions, MB4:
I've already given his credentials. You can look up STRATFOR yourself.
Yearly benchmarks would be absurd: He's not pretending to be able to foretell the future in detail. He provides a forecast, explaining his method all along. You can assess his reasoning and evidence for yourself if it interests you, but I can't write the book out for your here, dude.
When someone figures out how to ship a barrel of oil or an aircraft carrier over the internet, then we'll be in a different world.
Seems that way, because the USN guarantees free transit through the sea lanes. Air transport is extremely expensive compared to shipping - otherwise all those cars, containers, natural gas and oil tankers, etc., etc., would be dropping at airports and backyards instead of ports.
Easier said than done.
How are they going to get here? Swim?
They'll get over it. Or we'll get over them.
Not really convinced by the Steynian case, but, even if I was, who cares what the Left of 2030 makes of anything?
Don't see any money it. Maybe the American elite of the present day is a parasitic sub-class that will change its tune when it senses opportunity elsewhere, or be dispensed with.
Such a bunch of defeatists on the right, these days. Sheesh. Some of you guys would have been worthless in 1942 or at Valley Forge! Even Lenin had more confidence in capitalism - always finding away out of its historical cul-de-sacs - than you guys do.
STRATFOR is considered the world's leading private intelligence and forecasting firm. It's reports are used by corporations and governments worldwide. Take that as you will.
MB4 on June 4, 2009 at 12:16 AM
You're referring to generalizations. Friedman refers to numbers - for instance, in the comparison of "fraud and inefficiency" in the US vs. the same in China. He's not the only by any means who views China as an economic paper tiger, by the way.
Or in resources - even with both hands tied behind our backs, the US is still one of the leading oil-producing countries in the world. It's just that our super-huge economy demands a huge amount of energy.
It's not all geography, though it does in an indirect way all go back to it eventually. All of those oil tankers safely transit from the Persian Gulf and other regions to China because we like it that way.
We're so conscious of our limitations and focused on ourselves that we've lost awareness of how far ahead of a country like China we still are in per-capita income, energy usage, production, etc., not to mention overall military power. Our "hollowed-out" manufacturing sector (accounting for something like 20% of our economy in 2007) is still larger than China's entire economy.
The first part is a complex subject, and Friedman's own predicted "solutions" to our entitlements/age structure problems may not be something conservatives are primed to endorse, but there's nothing that can be put into law that can't be revised in law.
Who's going to take us over? Even if we disbanded our military tomorrow (though why would we?), who has the financial wherewithal to launch a takeover overseas? On our own continent, who's going to take over? Canada? Mexico, for now, can't even run itself.
I don't want to be in the position of defending Obama-Geithner-Bernankonomics, but, on the other hand, it's not good forecasting to assume facts not in evidence. We've withstood extended bouts of inflation and other relatively radical economic problems before without turning into "neverland."
Friedman doesn't predict unicorns, rainbows, and uninterrupted good times. He just asserts that the US has a lot further to fall and a lot more to fall back on than anyone else. Before determining that our decline is irreversible and illimitable, I'd like to have better evidence than inchoate fears and generalizations.
Well, you'll have to sip the gruel at the source to determine for yourself how thin it is. I certainly wouldn't expect you to take my word for it. I wouldn't say at all that his whole case rests on it at all. In brief, China is limited by its geography, boxed in by virtually impassable regions east and south, with a channel into Sibera to the north, and other than that Korea. The coastal area's interests and development tend to diverge from the inland regions, and the central government has been able to keep the centrifugal forces in check mainly by economic growth, which is insustainable at past rates, and even more vulnerable to international economic disruption. That's the torn apart part. The isolationism part - China's preferred pattern historically - comes when the central government tries to deal with inequities by clamping down. Resource limitations, deeply fraudulent bookkeeping and reporting, corruption, nepotism, inefficiency, etc., etc. If the US dollar cracks, then Chinese exports crack and Chinese holdings of US debt is devalued. For the US dollar to hold, China has to keep on buying and holding US debt.
Why do you think they were all laughing so hard about their money being safe?
Voltaire's Bastards is now on my list, Odie. Thanks for the tip.
Hey, Odie1941 - thanks for your comments. I hope you'll bookmark this page and come back after you've picked up and fnished the book! That goes for anyone else who reads it.
I'll also say that Friedman addresses many of Honda's arguments - from shrinking of the world and, relatedly, to the complex of oil/hydrocarbon issues to the building and running of navies, though not to the same level of "granular" detail regarding specific submarines (it's only a 270-page book covering 100 years plus background). Shrink as the world might, the bulk of trade, which includes the world energy economy, depends on the oceans and will likely do so for generations to come. He does see the US eventually leveraging its command of the seas, its technological head start, and its economic and political primacy into a virtual monopoloy on outer space.
He believes China's going to be either torn apart or forced to relapse into isolationism by around 2020, and he devotes extensive analysis to China and the other Asian nations.
As for our problems, considering the importance of the Navy, I'm all for keeping it, um, shipshape!, and making up for our derelictions post-haste, but I don't think our polarization even comes close, so far, to what we had during the '60s or even the early '80s, much less the pre-Civil War period. Oldie's comments about Civil War and recovery are on point here, too.
Given the Indians' technology, they weren't in a position to exploit North America's geographic advantages fully - to state the obvious. On the other hand, they had a pretty good run, and some major civilizations, that benefited mightily from not being interfered with by the rest of the world. Viewing the situation very broadly, the US still benefits from its relative isolation in that regard.
DtU - Friedman considers Western Europe pretty much a shot wad geopolitically. He does consider the "population bust" to be extremely important worldwide, but I don't think he accepts the "worst-case" predictions about the Islamicization of Europe, among other things because Islamic birth rates are also tapering off. In truth, he doesn't show much interest in Steynian projections, and seems to believe that France, Germany, Great Britain, and others will all become third-rate powers anyway. I suspect that, even if he did think Europe was going to be Islamic by 2035, he wouldn't see it as in itself a major threat to U.S. power.