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This one stood out for me: "Japan will be the central economic power in the world, owning or controlling a significant part of European and American industries

by damian2000 14y ago

This one stood out for me: "Japan will be the central economic power in the world, owning or controlling a significant part of European and American industries. This "economic dictatorship" will be beneficial to Japan's client states, since Japan benefits by keeping its customers healthy and wealthy. Indeed, a peaceful and prosperous world community will owe its existence to this Pax Japanica." --SHELDON GLASHOW Replace Japan with China and he's spot on. The idea has also been given the name "Chimerica" by some economists [http://en.wikipedia.org/wiki/Chimerica http://en.wikipedia.org/wiki/Chimerica].

cjensen 14y ago
China has indeed replaced Japan as the bogeyman in our tales of decline, but does not Santayana have something to say about how this tale ends?
- damian2000 14y ago
  Outside of the US, demand from China is mostly seen as a kind of saviour, bringing with it huge economic development, e.g. especially in Africa, Brazil and Australia.
quesera 14y ago
> Replace Japan with China and he's spot on. ...except for the prosperous and peaceful part, right? And oh yeah...everything else? I think you will find yourself just as wrong about China as Glashow was about Japan.
- nl 14y ago
  ...except for the prosperous and peaceful part, right? Prosperous: clearly people in Asia & Africa are much, much more prosperous than in 1987. In the developing regions, the proportion of people living on less than $1.25 a day fell from 47 per cent in 1990 to 24 per cent in 2008. [snip] The number of extreme poor in the developing regions fell from over 2 billion in 1990 to less than 1.4 billion in 2008.[1] Even in the US and Europe income per person has grown substantially since 1987[2]. Don't let the current economic problems overshadow longer-term trends. Peaceful: If you live outside central Africa the last 25 years haven't been bad. In 1987 Iraq was at the end of the Iran/Iraq war and Afghanistan was in the middle of attempting to expel an invading superpower. Not much change there. Of course, the various central African wars have been a complete disaster - only WW1 & WW2 have been comparable. OTOH, there hasn't been a nuclear war, which was what people expected in 1987. [1] http://www.undp.org/content/undp/en/home/mdgoverview/mdg_goals/mdg1/ http://www.undp.org/content/undp/en/home/mdgoverview/mdg_goa... [2] http://www.bit.ly/SWICYq http://www.bit.ly/SWICYq (Sorry about the short URL - it goes to a Flash Gapminder page)
  - quesera 14y ago
    Good points, but I would argue that there is a vast difference between being raised out of extreme poverty and being "prosperous". Also, be careful with top line income stats for the US and Europe, they just don't reflect conditions on the ground. As for peaceful, Glashow's reference to a Pax Japanica implies that, at least within its economically-annexed countries, there would be genuine peace over and above what he observed in 1987. Since the establishing event didn't happen, I guess it doesn't make sense to analyze the effects...but I'll grant you that for several years between 1987 and now, the international rhetoric among nations with large standing armies has cooled. But this isn't the Golden Age of anything, certainly not Japan. Regarding the OP, China has nothing to do with any of it. Their assertions of economic influence in Africa and South America are just a shift in patron and beneficiaries from the old world order. Great for some countries (at least in the short term), less so for others.
InclinedPlane 14y ago
You're more right than you know. Many people thought that Japan was going to be the global economic hegemon. This was based entirely on the pace of their economic growth over about two decades combined with some odd quirks of international finance. But as it turned out that prediction was off, by a lot. Today Japan is still strong but their economy is troubled and nobody thinks that they are poised to control the world. And now we see people making similar predictions about China. Again based on a short period of economic growth combined with some odd quirks of international finance. But it's no more true this time than last. China has some very fundamental, deep seated flaws in its governance, society, economy, and industry. And it's likely that those flaws will become more apparent and become more of a drag on Chinese economic growth as the country gets wealthier and more modern.
Gormo 14y ago
> Replace Japan with China and he's spot on. Is he? I don't know of many Chinese companies that own stakes in American or European industry - maybe Lenovo counts to some extent, but what others? It seems that the sources of China's capital and the markets for the resulting industry are almost entirely Western, and primarily American. China's fate is far more determined by American investors and consumers than the reverse. China's government scrambles to buy dollars to keep the RMB artificially weak against the dollar so this pattern can be sustained for a while longer. But how long can that last?
- damian2000 14y ago
  I'm not sure to the overall level, but it is increasing - looking to top $8bn of direct investment in the US this year... http://money.cnn.com/2012/07/25/investing/china-investing-us/index.htm http://money.cnn.com/2012/07/25/investing/china-investing-us... Speaking from Australia, China made $9.9bn investment last year, also growing... http://blogs.wsj.com/dealjournalaustralia/2011/12/30/chinese-ma-into-australia-reaches-record/ http://blogs.wsj.com/dealjournalaustralia/2011/12/30/chinese... - here they are generally looking to up their stake in mining/energy companies. I think its much the same in Canada as well.
  - bzbarsky 14y ago
    The investment share of GDP for the US was 12% in 2010 according to https://www.cia.gov/library/publications/the-world-factbook/fields/2185.html https://www.cia.gov/library/publications/the-world-factbook/... and I would expect it hasn't moved much since. US GDP is about $15 trillion/yr right now. So the $8bn of direct investment you mention is about 0.4% of the investment that happened in the US last year. A far cry from "owning or controlling a significant part of European and American industries". ;) Oh, and the $10bn investment into Australia, which has "only" 27% * $1.5e12 = $405bn of investment yearly, is about 2.5% of yearly Australian investment. At that rate you _could_ get to "significant" in several years, if the economy doesn't also grow at several % a year.... (For further comparison, the EU gdp is about 17tn/year and investment is almost 19% of that, so figure about 2.9tn/year.)

cjensen 14y ago

China has indeed replaced Japan as the bogeyman in our tales of decline, but does not Santayana have something to say about how this tale ends?

damian2000 14y ago
Outside of the US, demand from China is mostly seen as a kind of saviour, bringing with it huge economic development, e.g. especially in Africa, Brazil and Australia.

quesera 14y ago

> Replace Japan with China and he's spot on. ...except for the prosperous and peaceful part, right? And oh yeah...everything else? I think you will find yourself just as wrong about China as Glashow was about Japan.

nl 14y ago
...except for the prosperous and peaceful part, right? Prosperous: clearly people in Asia & Africa are much, much more prosperous than in 1987. In the developing regions, the proportion of people living on less than $1.25 a day fell from 47 per cent in 1990 to 24 per cent in 2008. [snip] The number of extreme poor in the developing regions fell from over 2 billion in 1990 to less than 1.4 billion in 2008.[1] Even in the US and Europe income per person has grown substantially since 1987[2]. Don't let the current economic problems overshadow longer-term trends. Peaceful: If you live outside central Africa the last 25 years haven't been bad. In 1987 Iraq was at the end of the Iran/Iraq war and Afghanistan was in the middle of attempting to expel an invading superpower. Not much change there. Of course, the various central African wars have been a complete disaster - only WW1 & WW2 have been comparable. OTOH, there hasn't been a nuclear war, which was what people expected in 1987. [1] http://www.undp.org/content/undp/en/home/mdgoverview/mdg_goals/mdg1/ http://www.undp.org/content/undp/en/home/mdgoverview/mdg_goa... [2] http://www.bit.ly/SWICYq http://www.bit.ly/SWICYq (Sorry about the short URL - it goes to a Flash Gapminder page)
- quesera 14y ago
  Good points, but I would argue that there is a vast difference between being raised out of extreme poverty and being "prosperous". Also, be careful with top line income stats for the US and Europe, they just don't reflect conditions on the ground. As for peaceful, Glashow's reference to a Pax Japanica implies that, at least within its economically-annexed countries, there would be genuine peace over and above what he observed in 1987. Since the establishing event didn't happen, I guess it doesn't make sense to analyze the effects...but I'll grant you that for several years between 1987 and now, the international rhetoric among nations with large standing armies has cooled. But this isn't the Golden Age of anything, certainly not Japan. Regarding the OP, China has nothing to do with any of it. Their assertions of economic influence in Africa and South America are just a shift in patron and beneficiaries from the old world order. Great for some countries (at least in the short term), less so for others.

InclinedPlane 14y ago

You're more right than you know. Many people thought that Japan was going to be the global economic hegemon. This was based entirely on the pace of their economic growth over about two decades combined with some odd quirks of international finance. But as it turned out that prediction was off, by a lot. Today Japan is still strong but their economy is troubled and nobody thinks that they are poised to control the world. And now we see people making similar predictions about China. Again based on a short period of economic growth combined with some odd quirks of international finance. But it's no more true this time than last. China has some very fundamental, deep seated flaws in its governance, society, economy, and industry. And it's likely that those flaws will become more apparent and become more of a drag on Chinese economic growth as the country gets wealthier and more modern.

Gormo 14y ago

> Replace Japan with China and he's spot on. Is he? I don't know of many Chinese companies that own stakes in American or European industry - maybe Lenovo counts to some extent, but what others? It seems that the sources of China's capital and the markets for the resulting industry are almost entirely Western, and primarily American. China's fate is far more determined by American investors and consumers than the reverse. China's government scrambles to buy dollars to keep the RMB artificially weak against the dollar so this pattern can be sustained for a while longer. But how long can that last?

damian2000 14y ago
I'm not sure to the overall level, but it is increasing - looking to top $8bn of direct investment in the US this year... http://money.cnn.com/2012/07/25/investing/china-investing-us/index.htm http://money.cnn.com/2012/07/25/investing/china-investing-us... Speaking from Australia, China made $9.9bn investment last year, also growing... http://blogs.wsj.com/dealjournalaustralia/2011/12/30/chinese-ma-into-australia-reaches-record/ http://blogs.wsj.com/dealjournalaustralia/2011/12/30/chinese... - here they are generally looking to up their stake in mining/energy companies. I think its much the same in Canada as well.
- bzbarsky 14y ago
  The investment share of GDP for the US was 12% in 2010 according to https://www.cia.gov/library/publications/the-world-factbook/fields/2185.html https://www.cia.gov/library/publications/the-world-factbook/... and I would expect it hasn't moved much since. US GDP is about $15 trillion/yr right now. So the $8bn of direct investment you mention is about 0.4% of the investment that happened in the US last year. A far cry from "owning or controlling a significant part of European and American industries". ;) Oh, and the $10bn investment into Australia, which has "only" 27% * $1.5e12 = $405bn of investment yearly, is about 2.5% of yearly Australian investment. At that rate you _could_ get to "significant" in several years, if the economy doesn't also grow at several % a year.... (For further comparison, the EU gdp is about 17tn/year and investment is almost 19% of that, so figure about 2.9tn/year.)