Wednesday, December 3, 2008

The last shall be first

No doubt Axl Rose thought he was scoring a point with irony when he named his long-gestating album Chinese Democracy, but the Chinese could as readily turn the tables by releasing one called, with equal justice, "American Solvency." China is devoting $586 billion, or 18% of its GDP, to stimulate its own economy; to reach an equivalent level of expenditure, our government would have to shell out $2.4 trillion, and by the time we finish rescuing enterprises "too big to fail," we may have spent not much less than that!

We are still the world's premier military power, but as Fareed Zakaria points out, in this week's Newsweek, economic growth is bestowing power of a different kind:

...the Obama administration should study the National Intelligence Council's newly published forecast, "Global Trends 2025: A Transformed World." "The international system—as constructed following the Second World War—will be almost unrecognizable by 2025," the document says, owing to the rise of emerging nations, a globalizing economy and a dramatic power shift. "In terms of size, speed and directional flow, the transfer of global wealth and economic power now underway—roughly from West to East—is without precedent in modern history." Some have seized on the fact that emerging markets are slumping to argue that the era of Western dominance isn't over yet. But the rise of the non-Western world—which began with Japan in the 1950s, then continued with the Asian tigers in the 1960s, China in the 1980s and India and Brazil in the 1990s—is a broad and deep trend that is likely to endure.

For some countries, the current economic crisis could actually accelerate the process. For the past two decades, for example, China has grown at approximately 9 percent a year and the United States at 3 percent. For the next few years, American growth will likely be 1 percent and China's, by the most conservative estimates, 5 percent. So, China was growing three times as fast as the United States but will now grow five times as fast, which only brings closer the date when the Chinese economy will equal in size that of the United States. [Emphasis added.] Then contrast China's enormous surplus reserves to America's massive debt burden: the picture does not suggest a return to American unipolarity.

The "rise of the rest," as I have termed it, is an economic phenomenon, but it has political, military and cultural consequences. In one month this past summer, India was willing to frontally defy the United States at the Doha trade talks, Russia attacked and occupied parts of Georgia, and China hosted the most spectacular and expensive Olympic Games in history (costing more than $40 billion). Ten years ago, not one of the three would have been powerful or confident enough to act as it did. Even if their growth rates decline, these countries will not return quietly to the back of the bus.

The President-elect has certainly given economic issues their due, with the appointment of a team of major players to address the crisis, but Steve Fraser argues in Salon that Obama's group of former Clinton appointees comprises "change only the brainiacs from Hyde Park and Harvard Square could believe in." To be so fond of invoking FDR and the crisis of 1932, Fraser writes, the new group seems to have forgotten the extent to which the members of Roosevelt's team of rivals were sometimes ideological opponents of each other:

Roosevelt was no radical; indeed, he shared many of the conservative convictions of his class and times. He believed deeply in both balanced budgets and the demoralizing effects of relief on the poor. He tried mightily to rally the business community to his side. For him, the labor movement was terra incognita and—though it may be hard to believe today—played no role in his initial policy and political calculations. Nonetheless, right from the beginning, Roosevelt cobbled together a Cabinet and circle of advisors strikingly heterogeneous in its views, one that, by comparison, makes Obama's inner sanctum, as it is developing today, look like a sectarian cult.

Heterogeneous does not mean radical. Some of FDR's early appointments—as at the Treasury Department—were die-hard conservatives. Jesse Jones, who ran the Reconstruction Finance Corporation, a Hoover administration creation, retained by FDR, that had been designed to rescue tottering banks, railroads and other enterprises too big to fail, was a practitioner of business-friendly bailout capitalism before present Treasury Secretary Henry Paulson was even born.

But there was also Henry Wallace as secretary of agriculture, a Midwestern progressive who would become the standard bearer for the most left-leaning segments of the New Deal coalition. He was joined at the Agriculture Department—far more important then than now—by men like Mordecai Ezekiel, who was prepared to challenge the power of the country's landed oligarchs.

That's all very well, and it's a safe bet that Obama could certainly have added variety to his Cabinet by summoning Phil Gramm to renew his warning about a nation of whiners, but I think Fraser is missing at least part of the point. A Cabinet-level rivalry of the Hamilton-Jefferson type no doubt shows opposing ideas in their most striking light, as they strive for dominance, but would hardly suit the professed "no drama" operating principle of the new President. Besides, without at all detracting from the place of Roosevelt among the great men of history, the new Administration need not relearn the lessons of 1932 (or at least, the rest of us fervently hope not). Just as it wasn't necessary for Stephen Jay Gould to travel to the Galapagos Islands to follow in Darwin's footsteps and verify natural selection anew, one hopes the new Administration can discover and apply sound solutions without having to learn the remedies for recession all over again.

Whatever may be said about Obama's economic team, one hopes that in implementing his announced goal of "greening the White House," either the President-elect or his wife selects a better team of interior decorators than the group invited by Tampa Bay Online to submit proposed redesigns of famous White House Rooms; the sketch for a new Green Room, by Kemble Interiors, seems to have been commissioned to reflect the esthetic of McDonald's and might be labeled "Change I Can't Conceive of."

© Michael Huggins, 2008. All rights reserved.

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