The rest of the world is catching up to and will soon pass the dominant US. It is estimated that today’s developing countries will be responsible for roughly two-thirds of the global GDP by 2030.
That is great news for the US and Europe, if the right steps are taken, says Charles Kenny, resident optimist and Senior Fellow at the Center for Global Development. His book The Upside of Down: Why the Rise of the Rest is Good for the West describes why the future is rosy for the world. Although the economic center of gravity is heading back East, there is reason to be excited about what is to come.
The rise of the economies of China, India and Brazil are all but a foregone conclusion. Recent hiccups aside, the emerging economies of today will be meaningful economic forces in the coming decades.
The once dominant US will concede its top spot in the coming years. What it means for the world is where experts begin to diverge.
“[T]he fortunes of Americans have irreversibly declined and their future has been mortgaged,” has repeated Shanghai venture capitalist Eric Li in the Huffington Post, New York Times and elsewhere.
Fears emerged during the recent financial crisis that China would take advantage of the fact that it holds a large amount of US debt. Such concerns overstated the ability of the Chinese economy. Current trade deals and organizations are already normalizing trade, and China is not at a point where it could weather a serious global trade disruption.
“If China was to really strong arm the rest of the planet some way or another—try to push a really biased trade deal or manipulate its currency—the cost would be greater to it,” said Kenny to Humanosphere. “It is far more exposed, when looking at its trade, than the US.”
The statistic-driven book condenses some of Kenny’s writings for Foreign Policy and Bloomberg Businessweek to explain how the world is getting better and what Western nations can do to reap the benefits. Just under 200 pages, the book uses global projections and trends to build a strong case for a steadily growing global economy. The book is a relatively easy read. It feels at times that Kenny is trying to list as many pieces of data in the fewest possible space, but lighthearted metaphors and references propel the pace of the text.
Kenny’s optimism is buoyed by the decades of global progress that have seen millions leave poverty while fewer people are dying from malaria, measles and polio.
In fact, his previous book covered the subject of why global development is succeeding. The pace of progress that will lead the US to have a lower overall share of the global economy will be a great thing for Americans. The global expansion of US businesses like KFC and Starbucks are examples of ways that the US is already benefiting from global development.
“In economics we are used to the idea of mutual gain,” explained Kenny.
The opposite is held in some international relations circles. The zero-sum theory holds that gain for one is a loss for another. Such a point of view has contributed to concerns that a ‘declining’ US will result as China grows. It also supports policies that seek to hold tight to power and influence at the expense of others.
That point of view is wrong, says Kenny. Being number one is not all that important, just ask European nations.
“For Britain and Denmark to think that the only way to be happy is to be top nation would mean there are a lot of very depressed people,” joked Kenny.
All the great news does not come without its caveats. Changes within western nations, especially the US, are needed. All are sensible and easy in terms of execution, but are political third-rails at the moment.
Standing out the most is the issue of climate change. Kenny says that the debate over the issue can get to be “a bit apocalyptic” on the extreme ends, but it is “a serious problem that is only going to get more serious.” Carbon emissions need to be cut and the most important changes need to happen in the US, China and India.
Despite the US not agreeing to international treaties, Kenny is hopeful for change. He cites emission goals for the state of California and recently enacted national policies to reduce car emissions as evidence that bigger policy changes are possible. The willingness of President Obama to use executive privileges to move stalled policies is another opportunity.
“I don’t think the Obama administration has gone far enough on using its executive powers regarding the EPA and environmental action,” argued Kenny.
Additional changes are needed in the areas of immigration, patent law and tax policy. Kenny’s recommendations will find many US liberals nodding their head in agreement while the more politically conservative will stumble over the call for more taxes, publicly financed healthcare, investments in green energy and less restrictive borders.
Kenny succeeds in not making the book overtly political. He does not attack certain groups or tout one group above the other, as one might see in a book by Fox News and MSNBC pundits. The practical recommendations will help to make the US better off and in position to take advantage of an improving world.