The Post-American World

I just finished an excellent book, The Post-American World, by Fareed Zakaria. Zakaria is the editor of Newsweek International and writes a column for Newsweek on foreign affairs. I've read his column since I got a chance to meet him when he came to Calvin to give a lecture at the January Series.

Zakaria is probably a liberal, but he is no ideologue, and while I don't agree with all his ideas, he is as knowledgeable as anyone on what's going on in the world. The book is not about the decline of America, but about the rise of the rest: since the fall of the Soviet Union, as the world embraced the free market, there has been huge economic growth in Asia, Africa, and and South America. Zakaria gives special attention to China and India.

I was amazed to learn that for most of the last 650 years, the GDP per capita in China and India remained stagnant at about $500-600. Since embracing free markets about 30 years ago, China's economy has grown by 9% a year. 400 million people have been lifted out of poverty and the average income is seven times higher.

Globalization is changing the world, and fast. The "rise of the rest" is changing the balance of power. Zakaria claims that this post-American world is "one defined and directed from many places and by many people." He explores what these developments mean for our economy and our foreign policy. He is very critical of the Bush administration but also laments the lack of support within the U.S. for free trade. If you are interested in these topics, I think you'll really like the book.

Generations from now, when historians write about these times, they might note that in the early decades of the 21st century, the United States succeeded in its great and historic mission - it globalized the world. But along the way, they might write, it forgot to globalize itself.

Obama's NAFTA Problem

Obama's NAFTA problem has become highly amusing to me. I wrote earlier of Obama's transformation into an anti-NAFTA crusader just in time for the Ohio primary. Understandably, the Canadian government was quite concerned about the potential leader of their largest trading partner reneging on our trading agreement. So the Obama camp sent his economic advisor Austan Goolsbee to reassure them that this is all just campaign rhetoric and that Obama has no crazy plans to change NAFTA. This soon leaked to the press. The memo reported that "He (Goolsbee) was frank in saying that the primary campaign has been necessarily domestically focused, particularly in the Midwest, and that much of the rhetoric that may be perceived to be protectionist is more reflective of political maneuvering than policy."

It is a relief to hear that the the Obama camp may have some understanding of the benefits of free trade to our country. This story also shows that Obama is perfectly willing to mislead the American people to get votes, even by promoting policy that he knows is bad for our country.

Fareed Zakaria exhoriates both Clinton and Obama for their protectionist rhetoric in his most recent column in Newsweek. Please read the whole thing, it's great. Highlights:

...The two Democratic candidates are united in the view that one of the big benefits of electing either of them would be an improvement in America's reputation and relations with the world. Hillary Clinton promises to send special envoys to foreign capitals the day after she's elected. Barack Obama offers to reach out to America's foes as well as friends. Unfortunately none of this will matter if they continue to spout dangerous and ill-informed rhetoric about trade.

The facts about trade have been too well rehearsed to go into them in any great detail, but let me point out that NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy. And, in Lawrence Summers's words, '[it] didn't cost the United States a penny. It contributed to the strength of our economy because of more exports and because imports helped to reduce inflation.' Trade between the NAFTA countries has boomed since 1993, growing by about $700 billion. There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.

But both candidates surely know that no one is really paying attention to their policy papers on the topic. It is their general attitude and rhetoric that matter. And on this crucial topic they are pandering to the worst instincts of Americans, encouraging a form of xenophobia and chauvinism and validating the utterly self-defeating idea of protectionism.