Feature

Fareed Zakaria speaks at Blumenthal on the “rise of the rest”

Posted on 28 Oct 2010 by James Willamor

Pulitzer Prize winning author, TIME editor-at-large, and CNN host Fareed Zakaria spoke Tuesday evening at Charlotte’s Blumenthal Performing Arts Center. A guest of the Queens University Learning Society, Zakaria spoke on the phenomenon he refers to as “the rise of the rest.”

The Twentieth century was the American century. The industrial revolution and two world wars thrust the United States into power, and the end of the Cold War left the U.S. as the world’s lone superpower. The twenty-first century is a time of dramatic change, as new powers emerge around the world.

Zakaria described this as

“… a phenomenon I call the rise of the rest. The last 350 years the West has been the dominate player in the world, and now you see the rise of the rest. Go anywhere in the world today from Brazil, to South Africa, to Kenya, to India, to Sri Lanka, to Malaysia, to of course China, and you see these countries politically stable, economically well hinged — booming.”

The first factor that has allowed the rise of the rest is a relative peace and political stability which resulted from the ending of the Cold War and its related proxy wars. “The number people who have died of war are a steady downward trend.” Zakaria asked, “When was the last time the ten richest countries in the world were not in any significant geo-military competition with each other? You’d have to go back 300, 400 years. This is a very unusual, unprecedented level of political stability.”

The second factor in the rise of the rest was the end of the cancer called hyperinflation.

“In the 1970s the United States had 15 to 19 percent inflation, Brazil 1000 percent, Turkey 2000 percent.” Zakaria described hyperinflation as, “deeply destructive to the social fabric of a society.”

“A recession, even bad recession, robs you of what you would have had. Hyperinflation robs you of what you already have. It destroys your assets. Everywhere you have had significant hyperinflation often you will see a regime collapse — a collapse of government. The number of countries which had hyperinflation in 1979 was 35. Today it is zero; the last was Zimbabwe. Without hyperinflation you can have low interest rates, you can have cheap credit, you can have stability, and people plan for the future, build for the future, invest for the future, spend for the future, which does not happen in times of hyperinflation. This is the crucial economic stabilizing force that has unleashed enormous opportunity.”

The third factor in the rise of the rest is technology. “Information is plentiful and you can see what’s happening all over the world from the mines of Chile to the markets of Shanghai.” Zakaria described how, in 1990, the Iraq invasion of Kuwait was considered a Saudi state secret as the Saudi’s debated whether or not to ask the U.S. for assistance. “Today, how long would that stay a state secret?” asked Zakaria. “Three minutes? Some guy in Kuwait would Tweet, ‘I’m being invaded by Iraq.’”

Zakaria also described how technology played a role in allowing the Iranian “Green movement” to mobilize protests after last year’s elections. “They were connecting, networking, and talking to each other on these mobile platforms.” The only way the Iranian regime could actually stop people from gathering in parks was to shut down the entire cellular network. “Technological connectivity has create a more connected, more globalized society.”

Given the world is now more economically stable, politically stable, and technologically advanced than ever before, “Why are Americans so glum?” asked Zakaria.

“These same forces have had a very interesting and challenging effect on American middle class. The problem is that capital is mobile, technology is mobile, but the average American worker is in America, and America is one of the highest wage countries in the world because it is one of the richest countries in the world – you wouldn’t want it otherwise.

It’s not outsourcing anymore. The term actually doesn’t make sense anymore. All these companies have global operations and global suppliers. They are just investing in the India operation, the China operation, the Brazil operation, the South African operation, but they are not investing very much in the American operation.“

Zakaria described how a union worker at an automobile manufacturer makes 28 dollars an hour and a non-union worker makes 14 dollars and hour. Mexican worker makes seven dollars and hour and are now as productive as the American workers.

“In the past ten years productivity levels of emerging market factories have begun to reach or match those in America. Fourteen dollars an hour translates to $35,000 a year. This $15,000 below the median family income in the U.S., and that is a good job at one of America’s greatest companies. This is not a game we are going to win. We have to move up the value chain. We have to get in the new industries, the industries of the future.”

These future industries include biotechnology and nanotechnology, according to Zakaria. “This will take enormous investments,” said Zakaria, who described how the U.S. had invested greatly in research during the Cold War and has much to show for it, from semiconductors, to GPS, to the Internet.

“If we view it properly this is an enormous new opportunity. And it is, by the way, the world we wanted to create. We’ve been going around for the last 70 years telling the rest of the world open up your markets, open up your politics, open up your technology, buy into the American dream, and they all did.

A hundred years from now somebody is going to write a history of the U.S. at this moment and say, ‘The odd thing about the U.S. is in the early twenty-first century they actually achieved their one historical objective; they globalized the world. They just forgot along the way to globalize themselves.’”

Fareed Zakaria discusses these themes in depth in his New York Times Best Selling book, The Post-American World.