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Balance of Power

Entry 210, on 2005-08-23 at 20:41:26 (Rating 3, Politics)

I recently listened to interview with economist Clyde Prestowitz. He was mainly discussing the changing state of the balance of world power, where the US is becoming less of a force, and Asia, especially China, is becoming more important.

Already, the US only dominates the world militarily. Its past domination in other areas is rapidly declining. In fact, the US, is totally dependent on foreign money, and its economy could be quickly destroyed if the countries who are propping up its balance of payments deficit of $2 billion per day decided they wanted to. In practice this isn't an option, of course, because the whole world would be dragged into a depression as a result.

Free trade has created this situation. Because of China's vast pool of cheap labour it is uneconomic to manufacture in most other countries. Its interesting to note that the supporters of free trade often aren't so enthusiastic when it comes to foreign investment in US companies though. A recent attempt from China to take over a US oil company was blocked by the same people who most loudly push foreign investment when they can benefit.

While the US is clearly superior in military strength, it still doesn't use this force effectively. Look at the disasters that Afghanistan and Iraq have become to see that power being misused. Unfortunately, now that the US really only has military action as a great strength its more likely to continue using it since it doesn't have the same economic or political power it once did. Obviously, this is not a good sign for our future.

Comment 1 (86) by SBFL on 2005-09-04 at 21:43:35:

OJB - it is naive to say "Already, the US only dominates the world militarily". The US dominates the world the most culturally. The whole West mirrors American culture, and other regions of the world are adopting American culture more and more (particularly Asia). Most would say this is a bad thing but we are the ones making the decision to embrace it. I believe this is how the US will influence the rest of the world the most, not militarily or economically.

Comment 2 (107) by OJB on 2005-09-07 at 22:05:18:

OK, that is a good point. American "culture" (if you can you call it that) dominates because American companies dominate. We see American movies (Hollywood), we eat American food (McDonalds), etc. Maybe Clyde Prestowitz underestimates this. On the other hand, there is evidence to show this economic power is diminishing.

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