At this year's Schwab Advisor Services IMPACT 2011 conference, probably the most provocative speaker was Joshua Cooper Ramo, a managing director at Kissinger & Associates and an expert on China. His message was deeply disconcerting.
A former Beijing editor of Time who recently authored The Age Of The Unthinkable, Ramo described the rise of China as unprecedented in speed and scope. While he said the result of this phenomenal growth will be uncertain, he believes China will go a long way toward determining America's future.
Beyond the U.S. and China, the entire world is changing at an increasingly rapid rate, and the number of non-nation state players is upending the geopolitical calculus developed by global leaders in the last century (Ramo's current boss Henry Kissinger among them). For example, the explosion of actors on the global stage is proliferating. Hedge funds and terror cells are multiplying at similar rates-the good news he forgot to share is that both seem to be shrinking at roughly the same rates in recent years.
Urbanization in China is a phenomenon unto itself. China now has 160 cities with more than 1 million residents, compared to 16 in the United States. Between 1986 and 2006, the city of Shenzhen grew from 1 million to 12 million people, causing an explosion in everything from taxi driver unions to underground churches.
Increasingly, we are living in a world of instability and no one ever knows what is going to happen next. Ramo suggests the credibility of our leaders and institutions is in doubt because people sense these groups have less control over the future than the previous generations of leaders.
He produced several examples. After the Fed chairman said in 2007 that the subprime lending problem wouldn't hurt the overall economy, after the U.S. president declared in April 2003 that the mission was accomplished in Iraq and after the U.S. administration's chief economist said in February 2009 that its stimulus package could keep the nation's unemployment under 8%, it's little wonder now that people's incredulity is on the rise.
During the 20th century, Ramo told attendees, we moved from the pre-modern world in which our life was defined for us, most likely in agriculture, to the modern era when people could invent a life of their own. Today, we are entering the post-modern period where people must constantly reinvent themselves.
A more networked world means that financial crises spread at the speed of light. It's not just the Chinese who are charged with the task of managing a tremendously complex, unstable global economy. Just witness what is happening in Europe. Already, the Chinese are much smarter investors than they were in 2008.
Ramo expressed fears that most of the 94 wars between 1648, when the Peace of Westphalia inaugurated the age of the nation state, and 2008 have been contested by a dominant power and a rising power, and that misperceptions and misunderstandings between America and China could spark another war.
I'm not so sure. After all, he noted that in 1981 the average provincial leader in China had a fifth-grade education. Today, they all have Ph.D.'s. Smart people can do some pretty stupid things, but I doubt they can do something that stupid.
Evan Simonoff, Editor-in-Chief
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