Who Will Emerge Stronger After the Crisis?

Will China and the Gulf oil states have the U.S. over the proverbial barrel, or will the world’s leading capitalist economy get lucky once again? On May 26, 2009, two of the New America Foundation’s leading experts on geopolitics and the global economy joined with Foreign Policy magazine to debate which countries will emerge relatively stronger in the aftermath of the Great Recession.

The discussion coupled a long view toward the future with a keen sense of the past. Participants Michael Lind, Policy Director of the Economic Growth Program at New America, and Flynt Leverett, Senior Fellow and Director of the Geopolitics of Energy Initiative at New America, considered such topics as commodity prices, manufacturing, international institutions, and the global balance of payments. Susan Glasser, Executive Editor of Foreign Policy, moderated the discussion and subsequent question-and-answer session, which built on Lind’s and Leverett’s (along with Ian Bremmer) recent pieces for the publication.

Lind argued that talk of a post-American world was premature. He noted that the world economy is still characterized by the “Bretton Woods II” financial system, with the U.S. as the consumer of first resort. The rise of China and other surplus nations piggybacks on America’s prosperity, and these countries may pay a price for their mercantilist policies. Rising commodity prices coupled with increasingly subsidized manufacturing should put the U.S. in a relatively stronger position, according to Lind, given its highly productive agricultural sector and growing population. Although “the West” may be in decline-Europe will be the real losers over the next two generations-America will remain at the center of the picture.

U.S. military hegemony will indeed remain unchallenged, countered Leverett, but the Great Recession has only accelerated existing trends in the global balance of economic power. What remains to be seen is whether the post-crisis world will be truly multi-polar, with emerging powers working with the United States to manage the global economy, or non-polar, with no central authorities watching out for the system as a whole. Leverett agreed with Lind that commodity inflation will continue and that Europe will be the biggest short-term loser, but could not see America’s position rising. Instead, he believes, structural features of the world economy will favor China, the Gulf states, Brazil, and India. In Leverett’s view, Asia’s rise comes at the expense of the United States.

– -Event summary by Daniel Mandel, Program Associate, Next Social Contract Initiative, New America Foundation

Participants
Michael
Lind
Policy Director, Economic Growth
Program, New America Foundation

Flynt
Leverett
Director, Geopolitics of Energy
Initiative, New America
Foundation
Senior Fellow, New
America
Foundation

moderator
Susan Glasser
Executive Editor, Foreign
Policy Magazine