Few foreign policy experts dare to claim who will be the world´s next super power. Many of them broach to the fact that the United States is a falling “empire”, some critics mention George's last trip to the Middle East as prove that America has lost its path. We all saw when George was abase by Saudi Arabia -- who enjoys the ability to control its petroleum supply -- when he couldn’t negotiate a clear deal to bring the price of oil down. It seems that the United States has lost power and presence in the world, it can no longer dictate what could or not be done and with two wars, that seem a hubristic disaster, many allies had turned away from it.
Some foreign policy experts say that the world's hegemony is over and that a new world order will be driven by three powers: China, governing Asia some parts of Africa and will execute some influence in Latin America; Europe, who will expand its political model to all its continent reaching all the way to Russia; the last one will be America, hanging alone in the west, obviously without much influence over its so call “backyard”.
This new world order lies on the assumption that no new economic model will rise in the near future and that things will proceed as schedule and planned so far. As we economist like to say -ceteris paribus.
What they don't realize is that our current economic model has fundamental flaws that are not sustainable in the long run.
I don´t really get the creation of wealth, for example, based on the abstract reality of the stock market and more recently on the evenly ironic increase of the housing market.Wealth is composed almost entirely of “papers” (stock) that are “tradable” for money, which is “tradable” for “goods”. If the stock price goes up, your wealth increases, if it goes down the opposite happens. So you see how absurd is the idea of a individual being the richest man in the world and someone being the poorest. If I was to have millions of GOOG stock when the y first went public, right now I may be wealthy, without having anything to back it up (cause the price could fall to 0).
This is our current economic model, a big monopoly game where the bank (Fed) never runs out of money and where you can create value out of nothing. This is why Central Banks (almost all of them) can print as much money as they want to and companies can be worth more than the GDP of small country.
The diatribe between China and America is worth explaining so you get an idea of how their relationship works. The main concern of the "West" toward China is no other than economic; China gets billions of dollars for their surplus with America, which upsets the trade balance, and also China's excessive production and local growth is bringing the price of rough materials considerably up world wide.
That is why we should focus only on the economic factors that put tension in the China-America trade policies.The appetite for foreign goods in the Unites States was uncontrollable about a year ago, but now that the source of wealth for many families is falling (the housing market burst) that appetite is declining fast. The Chinese fear that souring prices will affect their exports, while Americans -already in a recession- have second thoughts about buying too much. This bring us to a serious problem; which other country could absorb the excessive Chinese production?
Look at the current situation of the Chinese-American export-import phenomenon. China will be "C", America "A" and the exportable “goods” will be reduce to: manufactured products "B” and service "D". "C" produces a lot of "B" that exports to "A", but "A" does not have the money to pay for all the "B" that "C" want to sell. So "A" needs to borrow money in order to buy those "B". "C" thinks that it is a good idea to lend money to "A" so "A" can buy "C"`s "B". "A" prints a lot of papers (Treasury securities) that are payable to "C" --with interest--, those papers end up in "C"`s bank account. In exchange for the papers "C" gives billions of dollars to "A". "A" takes those billions of dollars and purchase a lot of "B" from "C". "A" sells some "D" to "C", but that is not enough to make the equation "B"-"D"=0, or something close to that. That reflects the trade imbalance that "A" has with "C”.In the end what "C" does is: produces "B", sells those "B" to "A" and lends dollars to "A" so "A" can keep on buying, and the only one who benefits from this plethora of production is "A". Why "C" does all of this? It seem like a really stupid idea to me.
What was described above is how China and the United Stated do business. The first one allocates most of its production in foreign countries, while those foreign countries allocate billions in investments. The second one borrows billions of dollars and purchases a whole range of products around the world, but without producing much to export.
Lately though, few countries, some of those OPEC members, had supported the claim by Mahmoud Ahmadinejad that the dollar is a "worthless piece of paper"- and that they should start pledging the price of oil to a credible hard currency. This means that the core of our current economic system is falling apart, if there is no trust in the exchangeability of the dollar, then there is no incentive to trade products with certain countries, in this case, the United States.
No trust- no "goods" sold to you.
If the world never loses its confidence on the dollar being "tradable", the United States could keep on borrowing money with no collateral. On the other hand, if the world loses its confidence on the dollar being “tradable”, the dollar will fall even further and it could end in a point where countries or individual companies will have no incentive for selling anything to the United States.
This brings us to the fact that America will officially fall into recession and possibly out of its unique position as the solely super power, one that lost its path after Bush was sworn President back in January 2001. (That is a bold statement, but nonetheless somehow true).
So which theory will be correct, another great superpower of three powers?
Both theories asume the following; that in neither case the United States would be the superpower that it is today. We all know that empires don't last forever, what we can't predict is when they are going to fall.
So the important question will be; would we see the end of the American empire in our life time?.
But to analyze an answer you have to know several factors that will determine how the future will unfold. Those are part of a complex level of paths taken by individuals, companies and governments that made it possible for some countries to be in the "first world" or in the "developed world" category.
For this current article I will keep any other factors that are not economic out of the equation; otherwise we would have to talk about the impact of global warming, elderly population in Japan, Russia and some parts of Europe, the scarcity of natural resources, shortage of water supplies, the likelihood of wars in some regions, the impact of brutal deforestation, the outcome of plagues, the health problems of an over polluted environments and China's crowded population.
Which is the critical resource that a country needs in order to become a superpower?
Its not oil or any other natural resource, its not the geographical space where a country is situated, its not the technology developed, its who made all this materials and inventions work. Yes the human capital. This brings us to the key element that will transform regions and countries in this century, this is the answer to which country will become the next superpower.
The United States had had a great influx of foreign people during its existence, in the last century millions flew from Europe and Asia to America in searching of a better life, on the past two decades millions of latinos had also gone for the same reason. This had kept the United States as a multiracial nation that was able to adapt its image and make it appealing to the world. We all know someone that lives in the US, the world follows what happens in the US, everyone around the world has some connection to the US, this is why the country has been able to stand as a great power.
Students all over the world fought on the last century for a place in an American University. The best minds were going to America to study, research, explore, forge an entrepreneur spirit and, maybe live there. This means that the "best minds" from the world left their countries and went to the West. The United States benefited from the billions of dollars saved in education that other countries paid (mainly for undergraduate studies) for their best students to left to the US.
This created a pool over six billion workers willing to travel from all over the world to America, this creates a bond from many cultures with America, this gave to America what no other country had, the immigration of millions of smart brains to its land, at $0 cost.
So the next super power(s) will be the one that takes the advantage of a globalize world and open its borders to as many foreign as it can handle.
Why there is not a passionate palaver from our world leaders about this?
You may want to look at the same phenomenon in your country (“immigration”) the most dynamic cities are the ones that have received lots of immigrants. The only countries that will succeed in the future will follow the same pattern. That is why people around the world once admire America and urn to go and live there, even when their own countries could have given them the same opportunities.
After 9/11 everything changed, obviously George W. Bush had to take some hard measures in order to protect the country and also to ensure that no more terrorist attacks could happened. However, the outcome (that was unintended) rested competiveness in the United States.
Millions of international students, after their visas were declined by the United States or the paper work was harder to comply, decided to go to Europe, Asia, Australia even Canada. That brain power that was filling the seats at prestige American Universities, were taking planes to other places other the United States.
After years of this same policy ("with-us-or-against-us" -George W- Bush), America was seen as a misanthrope creature that couldn't control its urge to invade countries, without plausible caused. Not WMD or chemical weapons, not enough troops or planning; the world had a feeling that any excuse was more important that the sake of human kind. North Korea and Iran, which were more aggressive than Saddam Hussein in Iraq, were not invaded, while the genocide in Sudan expanded to uncontrollable proportions without any intervention, even in America's soil things were going badly. The world watched as Katrina destroyed the beloved and unique New Orleans. The empire was trying to understand what was going on, what did it missed?
All this problems brought the United States to an awkward position, when the Bush administration had to decide just how much money and resources to put in the wars and how much in their own country.
With billons of dollars expended on two simultaneous wars the impact on the economy is enormous, but also the distraction that it creates from the future policies that must be adopted.
Japan was always reluctant to take immigrants and now faces a serious population problem, with some projections pointing that the decline will start as soon as next year. That translates into more people being out of work or too old to be a 100% productive and few young people trying to keep up the entire economy.
Europe faces the same challenging problem that Japan does. It is estimated by AP that Europe´s population in 2050 will be about 658 million down 70 million from the currently 728 million. China will have it worst, by 2043, as an article from Xinhua News Agency May 10, 2004 say, the population will start to decline, but also the sex disproportion of new born will accelerate.
From data projected with information provided by the United States Census Bureau and U.S. Department of Commerce, we see a trend of population growth in the United States until 2100. That gives the United States a wide advantage from other countries, in the best scenario which included immigration to America, the population will be over 552 million by 2050.
So my theory is that we wont see in our life time the fall of the America empire, nor the incredible rice of any other. China and Europe face some serious challenges in the near future, cause mainly by their loath to a rational immigration policy approach.
Its hara-kiri for a country not to address the challenging future with all the current resources available, only the strongest will survive and if politicians are too dumb to realize the need to bring the best brains to their countries, then we should elect sport coaches, they do realize that, in fact their teams are great, when they get the best players from countries all over the world.
Some foreign policy experts say that the world's hegemony is over and that a new world order will be driven by three powers: China, governing Asia some parts of Africa and will execute some influence in Latin America; Europe, who will expand its political model to all its continent reaching all the way to Russia; the last one will be America, hanging alone in the west, obviously without much influence over its so call “backyard”.
This new world order lies on the assumption that no new economic model will rise in the near future and that things will proceed as schedule and planned so far. As we economist like to say -ceteris paribus.
What they don't realize is that our current economic model has fundamental flaws that are not sustainable in the long run.
I don´t really get the creation of wealth, for example, based on the abstract reality of the stock market and more recently on the evenly ironic increase of the housing market.Wealth is composed almost entirely of “papers” (stock) that are “tradable” for money, which is “tradable” for “goods”. If the stock price goes up, your wealth increases, if it goes down the opposite happens. So you see how absurd is the idea of a individual being the richest man in the world and someone being the poorest. If I was to have millions of GOOG stock when the y first went public, right now I may be wealthy, without having anything to back it up (cause the price could fall to 0).
This is our current economic model, a big monopoly game where the bank (Fed) never runs out of money and where you can create value out of nothing. This is why Central Banks (almost all of them) can print as much money as they want to and companies can be worth more than the GDP of small country.
The diatribe between China and America is worth explaining so you get an idea of how their relationship works. The main concern of the "West" toward China is no other than economic; China gets billions of dollars for their surplus with America, which upsets the trade balance, and also China's excessive production and local growth is bringing the price of rough materials considerably up world wide.
That is why we should focus only on the economic factors that put tension in the China-America trade policies.The appetite for foreign goods in the Unites States was uncontrollable about a year ago, but now that the source of wealth for many families is falling (the housing market burst) that appetite is declining fast. The Chinese fear that souring prices will affect their exports, while Americans -already in a recession- have second thoughts about buying too much. This bring us to a serious problem; which other country could absorb the excessive Chinese production?
Look at the current situation of the Chinese-American export-import phenomenon. China will be "C", America "A" and the exportable “goods” will be reduce to: manufactured products "B” and service "D". "C" produces a lot of "B" that exports to "A", but "A" does not have the money to pay for all the "B" that "C" want to sell. So "A" needs to borrow money in order to buy those "B". "C" thinks that it is a good idea to lend money to "A" so "A" can buy "C"`s "B". "A" prints a lot of papers (Treasury securities) that are payable to "C" --with interest--, those papers end up in "C"`s bank account. In exchange for the papers "C" gives billions of dollars to "A". "A" takes those billions of dollars and purchase a lot of "B" from "C". "A" sells some "D" to "C", but that is not enough to make the equation "B"-"D"=0, or something close to that. That reflects the trade imbalance that "A" has with "C”.In the end what "C" does is: produces "B", sells those "B" to "A" and lends dollars to "A" so "A" can keep on buying, and the only one who benefits from this plethora of production is "A". Why "C" does all of this? It seem like a really stupid idea to me.
What was described above is how China and the United Stated do business. The first one allocates most of its production in foreign countries, while those foreign countries allocate billions in investments. The second one borrows billions of dollars and purchases a whole range of products around the world, but without producing much to export.
Lately though, few countries, some of those OPEC members, had supported the claim by Mahmoud Ahmadinejad that the dollar is a "worthless piece of paper"- and that they should start pledging the price of oil to a credible hard currency. This means that the core of our current economic system is falling apart, if there is no trust in the exchangeability of the dollar, then there is no incentive to trade products with certain countries, in this case, the United States.
No trust- no "goods" sold to you.
If the world never loses its confidence on the dollar being "tradable", the United States could keep on borrowing money with no collateral. On the other hand, if the world loses its confidence on the dollar being “tradable”, the dollar will fall even further and it could end in a point where countries or individual companies will have no incentive for selling anything to the United States.
This brings us to the fact that America will officially fall into recession and possibly out of its unique position as the solely super power, one that lost its path after Bush was sworn President back in January 2001. (That is a bold statement, but nonetheless somehow true).
So which theory will be correct, another great superpower of three powers?
Both theories asume the following; that in neither case the United States would be the superpower that it is today. We all know that empires don't last forever, what we can't predict is when they are going to fall.
So the important question will be; would we see the end of the American empire in our life time?.
But to analyze an answer you have to know several factors that will determine how the future will unfold. Those are part of a complex level of paths taken by individuals, companies and governments that made it possible for some countries to be in the "first world" or in the "developed world" category.
For this current article I will keep any other factors that are not economic out of the equation; otherwise we would have to talk about the impact of global warming, elderly population in Japan, Russia and some parts of Europe, the scarcity of natural resources, shortage of water supplies, the likelihood of wars in some regions, the impact of brutal deforestation, the outcome of plagues, the health problems of an over polluted environments and China's crowded population.
Which is the critical resource that a country needs in order to become a superpower?
Its not oil or any other natural resource, its not the geographical space where a country is situated, its not the technology developed, its who made all this materials and inventions work. Yes the human capital. This brings us to the key element that will transform regions and countries in this century, this is the answer to which country will become the next superpower.
The United States had had a great influx of foreign people during its existence, in the last century millions flew from Europe and Asia to America in searching of a better life, on the past two decades millions of latinos had also gone for the same reason. This had kept the United States as a multiracial nation that was able to adapt its image and make it appealing to the world. We all know someone that lives in the US, the world follows what happens in the US, everyone around the world has some connection to the US, this is why the country has been able to stand as a great power.
Students all over the world fought on the last century for a place in an American University. The best minds were going to America to study, research, explore, forge an entrepreneur spirit and, maybe live there. This means that the "best minds" from the world left their countries and went to the West. The United States benefited from the billions of dollars saved in education that other countries paid (mainly for undergraduate studies) for their best students to left to the US.
This created a pool over six billion workers willing to travel from all over the world to America, this creates a bond from many cultures with America, this gave to America what no other country had, the immigration of millions of smart brains to its land, at $0 cost.
So the next super power(s) will be the one that takes the advantage of a globalize world and open its borders to as many foreign as it can handle.
Why there is not a passionate palaver from our world leaders about this?
You may want to look at the same phenomenon in your country (“immigration”) the most dynamic cities are the ones that have received lots of immigrants. The only countries that will succeed in the future will follow the same pattern. That is why people around the world once admire America and urn to go and live there, even when their own countries could have given them the same opportunities.
After 9/11 everything changed, obviously George W. Bush had to take some hard measures in order to protect the country and also to ensure that no more terrorist attacks could happened. However, the outcome (that was unintended) rested competiveness in the United States.
Millions of international students, after their visas were declined by the United States or the paper work was harder to comply, decided to go to Europe, Asia, Australia even Canada. That brain power that was filling the seats at prestige American Universities, were taking planes to other places other the United States.
After years of this same policy ("with-us-or-against-us" -George W- Bush), America was seen as a misanthrope creature that couldn't control its urge to invade countries, without plausible caused. Not WMD or chemical weapons, not enough troops or planning; the world had a feeling that any excuse was more important that the sake of human kind. North Korea and Iran, which were more aggressive than Saddam Hussein in Iraq, were not invaded, while the genocide in Sudan expanded to uncontrollable proportions without any intervention, even in America's soil things were going badly. The world watched as Katrina destroyed the beloved and unique New Orleans. The empire was trying to understand what was going on, what did it missed?
All this problems brought the United States to an awkward position, when the Bush administration had to decide just how much money and resources to put in the wars and how much in their own country.
With billons of dollars expended on two simultaneous wars the impact on the economy is enormous, but also the distraction that it creates from the future policies that must be adopted.
Japan was always reluctant to take immigrants and now faces a serious population problem, with some projections pointing that the decline will start as soon as next year. That translates into more people being out of work or too old to be a 100% productive and few young people trying to keep up the entire economy.
Europe faces the same challenging problem that Japan does. It is estimated by AP that Europe´s population in 2050 will be about 658 million down 70 million from the currently 728 million. China will have it worst, by 2043, as an article from Xinhua News Agency May 10, 2004 say, the population will start to decline, but also the sex disproportion of new born will accelerate.
From data projected with information provided by the United States Census Bureau and U.S. Department of Commerce, we see a trend of population growth in the United States until 2100. That gives the United States a wide advantage from other countries, in the best scenario which included immigration to America, the population will be over 552 million by 2050.
So my theory is that we wont see in our life time the fall of the America empire, nor the incredible rice of any other. China and Europe face some serious challenges in the near future, cause mainly by their loath to a rational immigration policy approach.
Its hara-kiri for a country not to address the challenging future with all the current resources available, only the strongest will survive and if politicians are too dumb to realize the need to bring the best brains to their countries, then we should elect sport coaches, they do realize that, in fact their teams are great, when they get the best players from countries all over the world.
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