The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.
There’s something you crucially need to understand about the global economic crisis: It doesn’t exist.
Sure, Europe may be weeks away from a monetary cataclysm that has the potential of crashing all its economies plus some of the euro-exposed banks across the Atlantic. The United States may be suffering its highest poverty rates in half a century. And here in Britain, the combination of high inflation and an economy that actually shrank last quarter may return the ugly word “stagflation” – stagnation plus inflation – to our vocabulary.
But that hardly constitutes “global.” If you live in Sao Paulo, Moscow, Mumbai, Shanghai, Mexico City, Jakarta, Istanbul, Johannesburg or a dozen other centres in the eastern and southern three-quarters of the world, then your country hasn’t been experiencing any kind of crisis, beyond a few rough months in 2008 and 2009. In fact, most of those places have been enjoying a more or less continuous boom.
If you view the world rather strictly through the lens of economic growth, you can paint a picture of neatly symmetrical rebalancing.
That was what I was told the other day by Jim O’Neill, the brusque Mancunian who runs Goldman Sachs Asset Management and is most famous for having coined the acronym BRICs (Brazil, Russia, India, China) 10 years ago to unite the ex-poor economies that were becoming economic powerhouses.
He remains a proud defender of his four-letter word. “I find it quite astonishing as I travel around the world, the amount of time that the conversation is completely dominated by Greece and this mess over in Europe,” he said. “China growing by a trillion dollars of GDP every year is effectively creating a new Greece every four months. … What happens to these guys is way more important than anything that’s going on in Europe.”
Mr. O’Neill has been in a rather triumphant mood in recent months, as his glowing prognostications a decade ago proved to be conservative: Growth in all four countries has surpassed all his forecasts; Mexico, South Korea, Indonesia and Turkey have done equally well, and several economies in sub-Saharan Africa have been growing at a record pace. We reached a certain apex this past autumn when the BRIC countries made a serious proposal to provide Europe with a financial rescue package (fortunately for everyone, it did not happen). It is easy to imagine that the world has simply inverted itself.
For the rest of this column, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/world/doug-saunders/the-worlds-not-in-crisis-its-just-between-stabilities/article2317998/