Why the West is Lost

The current economic era has brought about questions that have not been seriously entertained in the Western world since the days of Paganism, when Christianity was the new kid in town. America is at the forefront of this seismic shift and each day we are being asked difficult questions. The following Niall Ferguson power point puts the most pertinent of those in a comical flip book format. I assure you guys, however, there is nothing funny about these ideas. Though we ignore many of them, they will not simply go away.

With the Western world slowly becoming the global minority we are going to have to come to grips with some painful changes. Your generation will not be privileged to escape with the ostrich approach of past generations. Punting is no longer an option, though we still try it every four downs. There are a lot of good points up for debate in these slides. I will point to a few that stick out to me and would like to hear your thoughts on them, as well as, any others which grab your attention:

Slide#12: US/China per capita GDP (PPP basis)

Purchasing power parity is the pet figure of many economists. Many real world practitioners claim it to be inadequate and misleading. Whatever the story, it is kind of tough to look at these numbers and not be concerned...isn't it?

Slide#19: Stimulus Effects

Though it is a long since lost battle, I still have to repeat the truth from time to time. The start of the stimulus will be looked back at as the beginning of the end. There is still time to fix the mistake, but is now less and less by the day. We traded one major league FUBAR beating for a lifetime of bi-monthly bitch slaps. Let's take that beating and move on.

Slide#29: Getting Our House in Order

Some interesting suggestions. Plain, simple to the point. Seemingly both sides of the boo-hoo, bow-wow circus show give up a little of their dear dogmas. What do you think of them? Real solutions or more theoretical fantasy?

Slides#52-54: Does Testing Tell the Whole Story?

Standardized tests are a big part of WSO lore and these statistics are nothing new to any of you. Have we really stopped to debate, however, what these trends will mean 20, 30 or 50 years down the road? It's one thing to argue policy, but a whole different story when humans are involved. How does a better educated populous not come to rule?

As the sun sets and rises on the earth every day, so does time expire on every product's shelf life. The West has expanded, grown and ruled the world for almost a thousand years. Are we seeing the beginning of the end or is it already here?

 

The West has been the best for more than a thousand years. The Romans were dominating two thousand years ago. And the Greeks were beating and then conquering the greatest empires of the Middle East 400 years before that. So the track record is a good one, and the West has recovered from far worse troughs than it is seeing today (decline of Rome, Middle Ages, etc). Somehow, Western culture has always been the most versatile, innovative and practical. We didn't invent gunpowder, but we applied it to more than just fireworks.

Asia is now experiencing the growth that the US and Europe experienced in the industrial revolution over a century ago. It was only a matter of time before they started catching up - the road was already paved for them. But people are too quick to extrapolate their current growth rates and claim that they will exceed the US/Europe. China won't grow at 10% forever.

By the way, for those interested in why the West has consistently dominated militarily throughout history, read "Carnage and Culture" by Victor Hanson. Provides a very interesting and controversial framework.

http://www.amazon.com/Carnage-Culture-Landmark-Battles-Western/dp/03857…

 
HireUp212:
Somehow, Western culture has always been the most versatile, innovative and practical.

a very overly simplistic appraisal of world history that ignores basically every facet of history that matters and merely looks at a naive us versus them, battle by battle, war by war post mortem. To group such an heterogenous mix of peoples as "western" is just silly, they are so divergent in ethnicity, religion, language that only western european countries could really be considered homogenic in any way. "western" powers have made alliances with many "eastern" empires and actively fought other "western" empires throughout history. many western empires actively conscripted eastern mercenaries/artisans/technicians and vice versa.

Even if we were to apply this bizarre viewpoint, the "west" has only been the best for the past 500 years, before that the east ruled supreme for nearly 700, then the west again for nearly 700 years and so on and so forth. During the Achaemenid period, Persia dominated the hellenic countries and the Hellenic countries for a time dominated asia. With the exception of the mongols and the Alexandrian empires, no clear side dominated the other entirely and even with those empires, the time periods in question were very short.

Every group of people has borrowed/improved up/internalized other groups best theories/ technologies/ innovations. the mixing of cultures is one of the hallmarks of nearly every great city in history and one of its keys to success. the deathknell of nearly every empire has been when a gradual decline in innovation sets in, coupled with internal conflicts.

 

PPP is a joke, look at GDP per capita and the US will be in front of China for hundreds of years to come. As for GDP output in China, this is just a reversion to the mean for thousands of years China has been the strongest world economy. Further this "study" doesn't take into account the USD reserve currency and the far superior US military strength.

 

in 1500, China was 35% of global GDP. Zhang He sailed to the Cape of Good Hope 100 years before Columbus, and Columbus' fleet combined could fit on the deck of a single Chinese ship. Point is, Western hegemony has been the exception - not the rule in global history.

Western dominance accelerated during the late 1700's and throughout the 1800's-1900's primarily because of the industrial revolution that granted the western world superior technological innovations. Then, using that technology, the western countries went into Asia and forcibly pried open Asian trade (e.g. Opium Wars, opening up of Japan).

The tides are reversing. While it's impossible for anyone to predict what will happen, what is a sure bet is that unless something catastrophic happens, Asia will be the driver of global growth for the decades to come. Really, it's simple math. China + India = 25% of the world's population that is just beginning to grow richer (by modern standards) and has increasing access to technology / education. Historically, these people have also demonstrated a strong work ethic and versatility.

Reverse brain drain is very, very real, and in our lifetimes, American will inevitably lose its hegemonic status.

 

Persia did not dominate the Hellenic countries. Greek city-states, outnumbered and only loosely-united, stopped both of their invasion attempts. I don't know what your definition of "Eastern dominance" is - I'm not talking about philosophy, culture, art or science (though the West has certainly produced its fair share of it) - I'm talking about military dominance. Eastern armies have never consistently defeated Western ones. Even in the Middle Ages, with no scientific or artistic progress, European countries were still able to stop Arab armies from expanding into Spain and the Ottoman Empire from expanding into Eastern Europe. If the last 500 years of Western hegemony have been the exception - please point me to historical examples of the norm.

And you can claim that "Western civilization" is not a real concept - that these countries all speak different languages and have different cultures - but there are very much "Western" principles, rooted in ancient Greece and Rome, that are common to all of them. These are mainly the concept of citizenship in politics and the concept of discipline in warfare.

Though it has ebbed and flowed through different periods of absolute and enlightened monarchy, the concept of "citizenship" has always existed in "Western" countries, and it is ultimately what allows these countries to prosper as stable democracies today. The "East," including Russia (which is a unique mix of both cultures), seems to consistently struggle with this...

"Discipline" in warfare refers to standing your ground as an organized unit as opposed to fighting as an individual collective. Contrast Greek and Roman well-trained, heavily-armed infantry fighting in lines with Persian and Mongol armies that emphasized speed (cavalry) and sheer numbers over discipline. Disciplined infantry has always been the basis of Western military strength - it's the reason why consistently outnumbered Greek hoplites beat the Persians, why Roman legions beat huge Germanic armies, why Spanish conquistadors completely dominated Latin America, etc, etc.

 
HireUp212:
Persia did not dominate the Hellenic countries. Greek city-states, outnumbered and only loosely-united, stopped both of their invasion attempts. I don't know what your definition of "Eastern dominance" is - I'm not talking about philosophy, culture, art or science (though the West has certainly produced its fair share of it) - I'm talking about military dominance. Eastern armies have never consistently defeated Western ones. Even in the Middle Ages, with no scientific or artistic progress, European countries were still able to stop Arab armies from expanding into Spain and the Ottoman Empire from expanding into Eastern Europe. If the last 500 years of Western hegemony have been the exception - please point me to historical examples of the norm.

Well there was this dude named Genghis Khan...

And how are you even comparing their military powers? What exactly do you know about historical military powers of the East? I honestly don't have a clue, so I refrain myself from making any judgment, although I think it's safe to say that between 500-1500 AD the West didn't have much going on for them.

And before you bring up Persia and Ottoman again, I doubt anyone here is referring to the current Middle East when they say East...

 

We have the food, they don't. The world has a population reset every couple decades or so- one that does not affect the US, Canada, Australia, and (historically) Western Europe.

Expect trade balances to start reversing in short order as food prices go up. A global famine would be the best thing to happen to the US since WWII.

Does anyone remember stories about the '70s gloom and doom from their parents? Japan, Germany, and everyone else were stealing our jobs. The Middle East hated us and caused gas prices to quintuple overnight in 1973. The US was defaulting on its gold-backed currency. One would look out of the World Trade Center in the 1970s at New Jersey and see smoke from out-of-control landfill fires along the Hackensack- even see the river on fire from some upriver chemical company on a bad day. Inflation was running in the double-digits. The American dream of everyone taking a rocket ship to the moon burning millions of gallons of fuel was replaced with the American nightmare of the environmental damage and resource depletion we started to see resulting from the postwar boom. Paul Ehrlich was going around saying the planet would have died off from toxic chemicals and famines by 1990. Finally, when things couldn't possibly get any worse- after Three Mile Island, the Iranian Revolution, the Soviet invasion of Afghanistan,and 21% overnight rates all happened within about a year or two, the S&P 500's P/E ratio bottomed- with the index up about 50% from where it was in 1965- the last market P/E peak- after factoring in dividends.

Relative to inflation, folks are probably paying a small bit of a premium for stocks right now. But not a whole lot. And if you can get some inflation-resistant dividend payer with fairly low risk, why not?

Looking at the charts, despite all of the doom and gloom in the 1970s, if you'd bought dividend-paying utilities well after the stock market recovery from the recession of 1974, you'd have more than broken even on the stocks even after inflation.

Sentiment sucks, pundits are scaring folks out of the equities market, and while equities are maybe 5-10% above their historical multiples, they're still pretty darmed cheap. If you're a long-term investor and you're willing to take the risk of a 10-20% correction, there have been worse times to buy and you should not stop investing yet. Especially when the alternative is getting sub-1% yields on two year bonds or sticking money into volatile gold and silver (which crashed with a vengeance in 1981 ultimately wiping out the Hunt Brothers.)

Long-term, the US is a pretty darned safe bet- especially at a P/E of 15 right now. We've got the food. We've got the water. We've got the natural gas. We've got the postsecondary education system. And we've got the geographical advantage in the event of geopolitical uncertainty. Taxes will go up and the country may make a mild shift towards a little more socialism, but we're the only country besides maybe Canada and Australia that doesn't have to worry about famines triggering econopolitical resets that destroy or nationalize capital. And we're a nation where natural selection has been particularly fierce for the past two hundred years- attracting the toughest and most innovative immigrants who could figure a way out of their home countries.

 
cranium:
IlliniProgrammer:
A global famine would be the best thing to happen to the US since WWII....

So are you saying you need another World War and maybe a global famine or two to get your economy back on track?

Looks like I should be worried...

I'm saying that as population increases, civil unrest and perhaps war in food-poor nations are inevitable. When the fighting is over, the resource rich nations will be the only ones with infrastructure left, and we'll see a flattening of the wealth distribution in the US and then the rest of the world as it recovers.
 

Look did everyone really expect asia, the middle east, and africa to stay in the dark ages forever? No of course not eventually they were going to pick up on what he west had already done and begin to grow. This new growth shouldn't be a surprise to anyone and it, like the west's huge expansion, will come to an end. Yes the U.S. and Europe might lose some of their power and world will become more globalized but that doesn't mean at all that the west will just shrivel up and go away.

 

@IP we got the guns and butter eh?

Slide 52 is the most disturbing. Say what you want about test scores but canvassing through the EU nations and to an extent the U.S., we have hordes of unskilled young workers that are going to be largely unemployable in the future if they remain as such. These are the ones that consume more than they are able to produce. Creating the drag on social services.

Making money is art and working is art and good business is the best art - Andy Warhol
 

The US became far more powerful than any civilization, FASTER than any civilization, and the financial blowout reminds us that the US could sink almost as fast; at least in relative terms. The resource and human capital bases, the overall capital structure, and methods+ethics of labor and governance have much room for improvement but are still the best current overall model for how to run a civilization.

Personally, I would like our politicians and society in general to stop dicking around with half baked ideologies, start getting in touch with what works in the real world, and start doing more of what is actually good for the nation: it is vital to retain American primacy at this point in the developement of the world because allowing a system such as the ones currently employed in China or MENA to shape the longterm face of global civilization would be a disaster.

Get busy living
 
Best Response

The USA stood on the shoulders of great nations. We didn't build this from scratch. China is standing on our shoulders. That is why they are able to skip whole cycles of production. They went from agrarian to industrial to information based in the blink of an eye.

People really need to relax. China and Indian each have a billion people to feed and provide a life to. They will grow out of pure necessity. The USA will continue to grow and innovate. Hopefully we can get our debt under control and start investing in the core of this country.

I think people have this idea that as China gets better we get worse. In reality, China will elevate and we will elevate higher, albeit at a slower pace.

The Japanese went from a modest nation to the 2nd largest by GDP (now 3rd) in 50 years. China has grown about as fast with far more resources and people. This is more common than people think.

Remember, the USA is a democracy. Love it or hate it, its real value is that it is a safety valve for society. People can protest, vote, pressure elected officials, etc. In China the people can do nothing. This works fine when things are growing and prices are under control. When things go wrong, you see Libya and Egypt happen.

The Chinese government might control the people, but the people force the government to keep things running smoothly. Unfortunately, as the USA has seen and is currently seeing, the brightest minds make mistake. When China experiences a recession like we just went through (still going through) we will see how well the government holds up.

 
ANT:
The USA stood on the shoulders of great nations. We didn't build this from scratch. China is standing on our shoulders. That is why they are able to skip whole cycles of production. They went from agrarian to industrial to information based in the blink of an eye.

People really need to relax. China and Indian each have a billion people to feed and provide a life to. They will grow out of pure necessity. The USA will continue to grow and innovate. Hopefully we can get our debt under control and start investing in the core of this country.

I think people have this idea that as China gets better we get worse. In reality, China will elevate and we will elevate higher, albeit at a slower pace.

The Japanese went from a modest nation to the 2nd largest by GDP (now 3rd) in 50 years. China has grown about as fast with far more resources and people. This is more common than people think.

Remember, the USA is a democracy. Love it or hate it, its real value is that it is a safety valve for society. People can protest, vote, pressure elected officials, etc. In China the people can do nothing. This works fine when things are growing and prices are under control. When things go wrong, you see Libya and Egypt happen.

The Chinese government might control the people, but the people force the government to keep things running smoothly. Unfortunately, as the USA has seen and is currently seeing, the brightest minds make mistake. When China experiences a recession like we just went through (still going through) we will see how well the government holds up.

^ That and nothing else. It's the first time I find myself agreeing with you ANT.

'Oh, yeah, that's right. That's what's it's all about, all right. But talkin' about it and bein' it, that's two different things.'
 
fitzmanon:
ANT:
The USA stood on the shoulders of great nations. We didn't build this from scratch. China is standing on our shoulders. That is why they are able to skip whole cycles of production. They went from agrarian to industrial to information based in the blink of an eye.

People really need to relax. China and Indian each have a billion people to feed and provide a life to. They will grow out of pure necessity. The USA will continue to grow and innovate. Hopefully we can get our debt under control and start investing in the core of this country.

I think people have this idea that as China gets better we get worse. In reality, China will elevate and we will elevate higher, albeit at a slower pace.

The Japanese went from a modest nation to the 2nd largest by GDP (now 3rd) in 50 years. China has grown about as fast with far more resources and people. This is more common than people think.

Remember, the USA is a democracy. Love it or hate it, its real value is that it is a safety valve for society. People can protest, vote, pressure elected officials, etc. In China the people can do nothing. This works fine when things are growing and prices are under control. When things go wrong, you see Libya and Egypt happen.

The Chinese government might control the people, but the people force the government to keep things running smoothly. Unfortunately, as the USA has seen and is currently seeing, the brightest minds make mistake. When China experiences a recession like we just went through (still going through) we will see how well the government holds up.

^ That and nothing else. It's the first time I find myself agreeing with you ANT.

Welcome back, where you been?
Get busy living
 
April 20, according to media reports, Microsoft recently new launched Streetside service on Bing map, plans to compete with Google in the "Street View" field.
 
It is learned that, if there is a barrier on the road, such as Google can not provide those image that vehicles in the queue at roadblocks, then Microsoft's "Streetside" can do it. Microsoft is working with Google in the rivalry of Street View service. For the local residents live in London, Paris, Barcelona, New York, San Francisco are very lucky for the street map here will become more accurate, as Microsoft began to move .... Read more hot news on tracehotnews.com.
 

I agree with ANT. I don't really se the U.S. diving off a cliff anytime soon. I do think that there are many things that can make us get farther ahead or stay ahead longer, but I don't see the U.S. with a good society, falling anytime soon. People could compare the U.S. to Colonial Britain / other past empires, but the differences about. I wrote a paper with my professor for a journal recently about this subject. And while there are many similarities, the amount that the fact that, America has the capacity to produce in times of international duress will allow the U.S. to stop falling off a cliff. But other things like debt, militarism, etc. can hurt our long term prospects.

Too many nationalistic Asians on this board. China is big because of the U.S. and western nations. There is little chinese innovation, it is mainly streamlining of western processes and cheap labor. Let the Yuan float and we'll talk.

Reality hits you hard, bro...
 

What people fail to mention (and I hope Chinese people realize) is how ruinous this drive for growth has been. The Communists took Russia from an agrarian society to an industrialized nation in a few years, but the pollution and environmental destruction was enormous. This is happening right now in China.

Also, the effects of the one child policy are still to be felt. I understand why they did it and am not attacking it, but every action has a reaction. This reaction is a nation with a more men than women and an aging population. This doesn't bode well for reduction in savings. The Chinese have way too high or a savings rate as it is (because of the lack of safety nets, etc).

Lot of upside and a lot of downside.

I agree with the above comment that one should look at the UK as a model for the USA, post global dominance. With that said, I think the USA is in a much better position, on nearly every front than the UK or other once powerful nations.

Cheer up people. More people will see their standard of living increase in the next 10-20 years than have seen in the past.

 

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Reality hits you hard, bro...
 

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