Posted tagged ‘West’

WESTERN ECONOMIC SHRINKAGE A REALITY AS ASIA RISES

January 14, 2011

Erle Frayne D. Argonza                                                       

 

Magandang araw sa kapamilyang global! Good day to fellow global citizens!

For three decades already, I have been echoing a prognostication that was already current stock within sociology, about the ‘decline of the west’. Let me return to the same theme, as the rapid decline of the West and the fast rise of Asia is now a reality of the current historical juncture.

Just a couple of days ago, the Philippine Daily Inquirer’s or PDI’s opinion pages published an article by the past recent premier of the UK, Gordon Brown (PDI, 7 January 2011). Titled “Reviving the West,” it was a rather straightforward admission of the techno-economic decline that the West had undergone and the rapid ascent of Asia as the global economy’s growth driver.

As Brown succinctly stressed, “Time is running out of the West, because both Europe and the United States have yet to digest the fact that all the individual crises of the last few years—from the sub-prime crisis and the collapse of the Lehman Brothers to Greek austerity and Ireland’s near-bankruptcy—are symptoms of a bigger problem: a world undergoing a far-reaching, irreversible and, indeed, unprecedented restructuring of economic power.”

That was the former premier speaking, a technocrat and economic manager prior to his premier stint, so it does carry weight as much as those of the globe-trotting former US president Bill Clinton. Gordon went on to demonstrate his deep knowledge of the rising middle class consumers of Asia who altogether will make the greatest consumers the world over in the foreseeable future.

Said Gordon:

Of course, we all know of Asia’s rise, and that China exports more than America and soon will manufacture and invest more as well. But we have not fully come to terms with the sweep of history. Western economic dominance—10 percent of the world’s population producing a majority of the world’s exports and investment—is finished, never to return. After two centuries in which Europe and America monopolized global economic activity, the West is now being out-produced, out-manufactured, out-traded, and out-invested by the rest of the world.

That indubitably is an empirical substantiation of the thesis long held by Western social forecasters about the ‘decline of the West’. Oswald Spengler, Arnold Toynbee, Daniel Bell, Alvin Toffler, and John Naisbitt have churned out voluminous prognosis and forewarnings about the same thesis within a century’s span…and that thesis is now a reality.

In the middle and last portions of Brown’s article, he admonished Americans in particular to re-invent the ‘American dream’. The way to the revival of the West, with the USA showcasing the compass, is to re-structure the economy altogether. Accordingly, the nascence of over a billion middle class Asian consumers is a huge opportunity for America to re-invent itself and revive a strong economy.

Brown also forewarned America’s politicians, notably the Right, about criminalizing external forces, such as China’s currency, as culprits behind the decline of the US economy. Intervention measures such as currency wars are flawed, precisely because they fail to address the internal factors that are truly the causes of the economic decline.

To a great extent, I do agree with the evaluations and interventions of Brown. Fact is, I have already begun to echo the theme that America and Europe ought to reverse the policies of liberalization, privatization, and deregulation that led to de-industrialization, agricultural decay, infrastructure decay, and the rise of a ‘virtual economy’ based on predatory finance (vulture funds, derivatives or hedge funds). As I had been saying all along, the West should go back to the principles of the ‘real economy’ where wealth is produced from agriculture, manufacturing, infrastructures, transportation & communications, and science & technology.

As a matter of fact, I have been among Asian analysts and development practitioners who have urged the Americans to go back to the economics of New Deal propounded by the late Franklin Delano Roosevelt. Likewise should the tried & tested policies upheld by Alexander Hamilton, Abraham Lincoln, Frederick von List, and John F. Kennedy, policies that impelled the rise of the physical economy and brought bountiful prosperity to Americans (read: created a predominant middle class), be put to the fore in rebuilding America.

Gordon resonates somehow with the ‘physical economy’ framework, even as he heralded the need for a new Marshall Plan for the world. Accordingly, the Plan could help to recast the banking system that was dirtied by its engagements in speculative financing and contributed to creating financial bubbles. The Western peoples should better listen to him, more so the youth who will be tomorrow’s Western leaders.

Let me re-echo the same message I have been saying all along: that prosperity should be a win/win phenomenon. No one here in Asia would ever want the USA and Europe to go back to the era of ‘cave man’ economy of hunting & gathering. I’d be happier many more times if the West should re-invent itself, cease from playing the destructive game of win/lose logic in order to prosper, and move back to reconstruct its physical economy altogether.

Asian spiritual masters, who incidentally also discoursed on economic doctrines (i.e. Baha’ullah, Gandhi, Vivekananda, Sarkar, Sri Aurubindo), left us all the legacy of building prosperity through the way of peace, cooperation, and mutual-help. It’s time for the Western peoples to retool themselves, by throwing away the binary and destructive thought system they inherited from their forebears, and by learning from Asia’s spiritual and intellectual giants.

[Philippines, 09 January 2011]  

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EUROPE & AMERICA ON DOWNWARD SLIDE TO 3RD WORLD ECONOMIES

July 24, 2010

Erle Frayne D. Argonza

Magandang gabi! Good evening!

It’s dusk time as I write, and this dusk at a time of intensifying monsoon rains seems to bode images of a grim future for the West at large. The European Union or EU members and the USA, the gigantic pillars of the global economy, are particularly in dire straits as they have entered the zone of flat growth and perpetual recession.

As already tackled by me in diverse articles, the East is surging forward bringing life to the global economy as a whole. In contrast, the West is spiraling downwards, and the strategies their stakeholders are putting into place to arrest the downslide are at best palliative. As the East continues to surge upward, the West continues to stagnate and decay.

After World War II, both Europe and America embarked on massive infrastructures and heated industrialization that saw both economies dominating the global economy’s wealth production. The result of that was an OECD producing 60% of Gross World Product or GWP for some decades (today that’s down to 40% of GWP and will still go down).

That was the situation back then. By the 1990s, the situation had been badly reversed as a result of liberal economic policies instituted in the previous decade (80s). The rise of a ‘virtual economy’ dominated by predatory finance was instrumental in the West’s massive de-industrialization, decay of relatively unattended infrastructures, decline in science & technology research, and neglect of the transport sector (only Japan & Germany were actively pursuing maglev railways).

By the early 1990s yet, certain experts among economists and sociologists in America began echoing alarming notes about the possible downslide of the USA into a 3rd world country should the economic decay, such as that of relatively unattended infrastructures,  be allowed to continue till past 2010s.

In the late 1990s, my own circle of political economists in Manila (Sunday Kapihan/Independent Review) saw such a possibility ourselves as we consolidated the data made available to us thanks to the internet. By 1998 all fellows of our circle were convinced of the catastrophic direction that the USA and Europe were plunging themselves into, which could begin with a depression past 2005 and a thirdworldization by 2010s (both have been hit by recession this decade as a matter of fact).

When Katrina struck the USA and when those floods struck Europe just a few years back, and the same free market policies stubbornly remained in place, I knew the downslide would turn out to be irreversible. The fate of New Orleans, with its residents lining up for food akin to a depressed city, revealed an appallingly decayed 3rd world city inside the USA which, to my mind, is but a fractional tip of a gigantic iceberg that are America’s decaying cities on the way to 3rd world infamy.

If, for instance, just about 55% of the top 700 cities of the USA will be so badly decayed by 2015 and be declared as 3rd world or ‘developing cities’, then we know more or less that America had catastrophically seen its worst state. With 97% of U.S. population living in cities (urban), likewise will the whole of the USA be declared as a ‘developing economy’ as early as 2015.

That is, again, if the destructive ‘virtual economy’ policies will not be taken down and reversed sweepingly. As I’ve declared in previous articles before (when Obama was still campaigning for the presidency), America must quickly return to a New Deal-type policy regime: interventionist, with great stress on revivifying infrastructures, revitalizing transport R&D (railways, shipping, etc), upscaling science & technology investments (including rockets), returning heavy industries (revive steel and many dead manufactures), and ensuring agricultural productivity.

Europe is not far behind such near-catastrophic downslide of the USA, just to remind our friends in Europe and the globe. Decisively institute interventionist policies in the continent, regulate the financial-banking sectors (criminalize predatory finance), and revivify social policy that were hallmarks of a once strong and mighty European economy.

And there’s no better time to act then now. Failure to act soon, by stubbornly instituting the palliatives (e.g. bailing out failing big banks, semi-regulating stock exchange), will be the best sure-fire formula to see a rapid thirdworldization of the West.

Before long, some messianic mad leaders in both continents would be drum-beating their being “stubbed behind the back” and generate  new Hitlers and Bonapartes in their backyards. Act now, Western peoples, to avoid this eventuality from ever taking place at all.

[Philippines, 21 July 2010]

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

WEST MARKETS SHRINK, ASIANS’ RISE AND OVERTAKE WEST SOON

July 19, 2010

Erle Frayne D. Argonza

 

Good evening from the Pearl of the Orient! 

The International Monetary Fund or IMF has been quite bullish lately about Asian growth. It had forecast East Asia’s average growth at past 7% for this year, and shares an equally positive growth trend for RP at 5.5%-6%. Just what could be the implications of the growth trends on the global economy and the West? 

As Asia expands, the West (Europe, USA, Canada, Japan) contracts. The trend will not change much over the next five (5) years, so let’s see where the East and West are headed for in the foreseeable future. 

In early 2008 yet, the economists and financial analysts of the West (or North) were of the opinion that the technological cutting edge of the West was already breached by Asia by the end of 2007 yet. Remember that 2007 was the beginning of a new cycle of recession for the West which began in the USA with the implosion of the realty bubble. 

Given that the Western economies are flat on their back growth-wise, and their toxic bubble economies have given them only virtual economy results (read: inflated values not based on real production but on speculation), there is ample reason to forecast that they will be mired in problems of saving their ailing banks, financial-monetary systems, and providing sovereign guarantees to their capitalists at the expense of taxpayers and infusing investments in the physical economy. This is now matter of fact, as we can clearly see. 

Western economies have suffered from the ill effects of continuous de-industrialization for decades, of being remiss in their own infrastructures (USA seems to be the worst in infrastructure decay), and deteriorating investments in science & technology. From being a producer economy, Western economy generally has become a parasitical ‘eater economy’ that stands on no clear foundation other than financial quicksand. 

In contrast, the Eastern economies have steadily built their strategic industries across the decades, reinforced their infrastructure expenditures and projects, and invested in science & technology. The Eastern economy generally has therefore been role-playing as ‘producer economy’ worth the emulation of other developing economies worldwide. 

Result: by 2007, at the downspin year of a recessionary West, the East overtook the West in terms of cutting-edge technologies. To qualify, the technologies we refer to are those life-inducing technologies, not those death & destruction technologies that the West has clear edge till these days. 

I still remember what my nationalist colleagues in the Sunday Kapihan that we then held every Sunday at the Sulo Hotel in Manila: the West knows nothing but perfect its Armaments.  Dr. Emmanuel Yap, an economist who finished his PhD at Harvard University, was the most vocal about that emphasis on the death & destruction focus of Western innovations. 

To continue, the added forecast that I’d share at this moment is this: from the years 2007 through 2015, Western markets will contract by at least 30%. That means their own consuming public will spend less and less across a 9-year stretch, until the consumption pattern will settle down by 2016 or so. Real GDP (gross domestic product) will radically decline during the period, shrinking by as much as 30%-40% contrasted to their 2006 levels (the last of the best years of the West). 

In contrast, the Eastern markets will expand by at least 100% during the period. The giants China and India will go farther than that, with China expanding by as much as 200% during the same period. That means the middle income earners in the East will continue to rise by the year and consume more products by the year, even travel more overseas year by year. 

Result: China will clearly overtake the shrunken economies of EU and USA by end of 2015. India may follow suit, at around the years 2020-2025. The last would be ASEAN, which will overtake the West by 2025-2030 period. 

Once a region overtakes others technology-wise, it will just be a matter of time before the same innovator region will overtake the rest wealth-wise. Technologies—physical technologies, biotechnologies, social technologies, medical technologies—are precisely the cutting edge practices that will enable one region to overtake others across the globe. 

The bad news for the West is this: if their own states and markets will fail to solve their ailing problems in infrastructures and reverse de-industrialization, they will pathetically go down as 3rd world or ‘developing economies’ past 2020. No less than their own economists warned of this possibility in the early 1990s yet, and sadly no one paid attention to them in their own backyards. City after city in the USA and EU will immerse in urban decay, becoming 3rd world cities in the process. 

My mother just retired from New York where she migrated since the 80s yet. She decided to come home back to the Philippines, and visited the Libis & Cubao areas of Quezon City/Manila suburb pronto upon her arrival. She was so deeply enchanted by the esthetic beauty of the architectures and planning in those mixed land use zones, while she complained of the dilapidated buildings and nauseating smells of cinema theatres in downtown Manhattan. 

Those observations are signs of the times indeed. In just a year from now, the Pagcor City will rise in Manila, housing the world’s tallest tower. Burj Dubai, Petronas Twin Towers, and Taipei 101 are already similar hallmarks in other Asian cities, signifying the power shift from East to West. 

The message is hereby brought to the West’s peoples: shift back from virtual reality to physical reality, from the virtual economy to the real economy. We Asians will help you along the way, as we’ve already been doing through our colossal treasuries investments, direct foreign investments, and quality Asian expatriates in your backyards that have been saving your collapsing economies from rapid decay.  

[Philippines, 13 July 2012] 

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com, ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]