Global economic reality check: beyond doom and gloom, a quiet boom
Robin Bew, chief economist at the Economist Intelligence Unit, discusses debt levels in the West, Obama's handling of the economy, capitalism in China, and why a message of fear often drowns out one of the great 'good news' stories of our time.
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The big story of our time – and this has been true for about a decade now – is this relative rise of the emerging markets and particularly Asia. Often, particularly in Western media, there is an acknowledgment that this provides an opportunity, but it’s broadly dealt with as a threat. The rise of Asia in particular is viewed as a very frightening thing. And a lot of policy – American policy, European policy – toward Asia is partly around trying to contain that threat.
But I think the good news story is this: Essentially what’s going on is that there’s a couple billion people who were basically not active in the global economy – and by that I also mean living pretty appalling lives – are moving into the broad economic mainstream. And you see this tremendous improvement in the lives and the welfare of huge numbers of people around the world. So if you look at what’s going on in China and what’s going on in India, you go back 15 years and you’ve got hundreds and hundreds and hundreds of millions of people eking out a living on the land, absolutely destitute who now have a standard of living which doesn’t look anything like the one we’d experience in the West but is infinitely greater than anything they’ve experienced before. And that’s a very uplifting story.
In the narrative around the threat that a rising Asia faces, those people who are being sucked into the world economy are doing two things. They’re entering factories and they’re making stuff and they’re selling it over here. There’s a real sense that that’s putting a lot of Americans out of work, or Europeans out of work. That’s causing a lot of angst. And you can completely understand that.
The other thing that it means, of course, is that there’s a couple billion consumers in the world who weren’t there before. And that provides the opportunity. So, the threat, if you like, is the fact that things that used to be done over here will now be done over there. But the opportunity is, there’s two billion people who weren’t buying anything before who are now trying to buy stuff. And that’s the thing that business is very focused on. But the political debate hasn’t really caught on to that.
Ten years ago, all of our clients in China were in China because they could get cheap labor and they were making stuff in China and all that stuff was being exported back to the States and Europe. Now, almost all our clients who are in China are there because they’re trying to sell stuff to the Chinese.
This tremendous improvement in the lot of people in countries who previously had a terrible existence actually goes hand in hand with this enormous opportunity for business around the world to prosper on the back of that. But that message tends to be drowned out by the other message, which is that China makes loads of stuff and it displaces jobs over here.