The Good Samaritan

Amsterdam, 2020 – Last years the trend of the increasing US outstanding public debt and trade deficit, which started during the Bush administration in the early 2000’s, emerged further. More and more economic and political heavyweights have been warning the US administration that this path is not sustainable in the long term. To make this even clearer a senior economist of Morgan Stanley used the following metaphor: “it’s like jumping of the 100th floor of a building without a parachute and saying at the 50th ‘So far so good’”. However, the administration replied time after time that “these so called experts said the same 15 years ago and still nothing really happened”.

This time however, things seems to be different than before; the US economy really threatens to collapse which started with a 7 per cent fall of the $. China and the other Asian power block India realises that their investments in the US debt are bound to be rendered valueless, they cannot afford standing idle and they decide to support the US economy as the Good Samaritan (once again). The World economy has known unprecedented growth figures for a period of three years, but the United States and Europe have underperformed consistently. Because of the help of China and India for the US, the US and the EU economy are saved from a potential crash but have limited growth. However, weaker economies like the developing and poor countries have a serious setback of this and become poorer. In order to keep up these countries increase their debt as well.

In addition, the dollar-euro exchange rate has fallen dramatically and has caused tensions within the western world to rise. In this crisis, America has refused to come to the assistance of Europe, claiming that they needed to take care of “America First”. This increased tensions in the world not only within the Western world, but also between the different power blocks. This is the result of the fact that the United States have continued to rule the world: after their forced withdrawal from Iraq in 2009, they relived their Vietnam War syndrome, and resurrected with renewed vigour to prove they were still the world’s superpower. Although the US attempted to invade North Korea, they were stopped by the rest of the world, not by diplomatic or military means, but by the financial power.

Although relative shortage of oil is increasing, the western economies are too rigid to switch to alternative energy sources and therefore still focus on oil as a primary source of energy. The developing and growing eastern economies are still flexible enough to make the transition to gas as a primary source of energy. They benefit from the lower gas price and this gives their economies an extra boost compared to the western economies that rely on expensive oil. The oil prices will keep increasing and the US economy will decrease rapidly. This will also result in a Shift in the balance of power from oil producing countries to gas producing countries.

As a result of these developments, it becomes more and more clear that the real global political and economic power has already shifted from the west to the east. The US administration does still not want to see this, but large US companies like Coca Cola, GE and Ford have moved their headquarters a view years ago already to the eastern part of the world. Asia has really become the locus of international logistics and trade.

The fact that Asia became the centre of the world was also caused by a trend that emerged in the latter part of the 20th century: the difference in education between the western world (but especially the US) and China and India. In 2005 the National Research Council calculated that China had five times as many graduates majoring in engineering as the US (300,000 vs. 60,000). Because of the steady turnout of Chinese PhD’s over the last 20 years, China became the most innovative country of the world. The 2005 projection of the US Bureau of Labour Statistics that scientific and engineering occupations would grow at three times the rate of the overall workforce came true as well. The last years this effect gave a huge boost on the innovative power of eastern economies. Innovation is now more and more governed by Asian companies and their inventions boost the technical development of efficient and effective production techniques.

Western Europe sees the signs of an ageing population. A decreasing number of workers have to sustain an increasing number of the retired people. The inability of western governments to change retirement programs led to a serious liquidity problem in sustaining existing health and social security plans. In more and more cities retired people are looking for jobs to earn a living. Consumer spending is declining, and most of it goes to basic needs, like food, shelter and healthcare. This means a significant decline in the standards of living in western societies. The combination of the increased oil prices and reduced consumer budgets means that mobility is reduced and the focus on the immediate environment increases. The growing need for young workers makes large numbers of young Asian people migrate to Western Europe. Compared to the global economy of the early 2000’s this is an era where the western world is becoming more and more internally focused. Combined with the fact that the local population is now looking at the same jobs as the immigrant workers this increases social tension between the native workers and the large communities of Asian workers and causes a renewed surge of ethnical nationalism. The EU countries see a natural urge to protect their own (natural) assets. This leads to a threatening collapse of the EU, exacerbated by the fact that Europe no longer has the financial power to sustain the European Union (EU).

The norms and ethical values turn also into more eastern (Asian) focussed norms and ethical values. The economy changes its focus from eternal growth to a more holistic approach to living in the world. Humanity takes on a new responsibility as world research and development into global diseases and development aid spending is becoming more and more dependent on endowments of wealthy people and companies because governments have less money to spend. This is because the decreasing tax incomes in the western world and the demands for social welfare and education.

Overseeing the ‘Easternization’ of the EU countries Mr. Balkenende (chairman of the EU and former Dutch prime minister), states that it is very important to ‘safeguard our Western norms and values’. His statement is as futile as his politics; it isn’t nothing, but it isn’t much either.