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As the threat of a general global recession grows, the eurozone teeters, the United States slows, and the main developing countries revise their previous confident predictions of bounding to regional or even global leadership like Biblical gazelles leaping from mountain top to mountain top, we can see more clearly which economies will remain healthy.
For years, we heard of the rise of the “BRIC” nations — Brazil, Russia, India, and China — countries anointed as battering rams to the future, inexorably surging forward, into and through the ranks of the tired incumbent economic leadership provided by North America, Western Europe and Japan. BRIC nation even held their own meetings, to compare notes on their vertiginous rise.
Of course, it was utter nonsense; no such rise persists, and these countries have almost nothing in common anyway. In the case of Russia, India and China, the three great national land masses of Eurasia, there are ancient and vivid rivalries between them, both geopolitically and culturally.
China and Brazil, and to a lesser degree India, have performed well as developing economies, pulling tens of millions of people out of poverty and putting up 6% to 10% growth rates for a time, about as good as it gets when under-developed countries become serious about economic development.
There is always the temptation, to which the Chinese succumbed — to the thunder of hundreds of millions of running feet in heavy work-boots — to imagine that 10% growth rates can continue indefinitely. There is never a shortage of people to point to such trends, extrapolate them, and declare the pre-ordained verdict of the forces of history.
This is the same sort of false reasoning that held that the United States would be so swamped with Latin Americans that it would cease to be a mainly white country within 20 years; that the last ethnic German in Germany, following recent demographic trends, would expire in 2297; and that Muslims will rule all Europe in 40 years.
Recently, the Chinese economic growth rate seems to have declined to about 7%, with the number showing signs of continuing downward. The Chinese public is not following orders from the autocratic government to replace lost foreign exports with domestic consumption, and the regime is reduced to Keynesian pump-priming, including two new, very large steel mills, despite chronic over-production in the world’s steel industry.
In order to try to preserve the mythos of the invincible rise of China, its leaders also are lowering interest rates and massively increasing the money supply, the traditional macroeconomic dynamite that central bankers invariably are reported to be toying with just before their career obituaries are published (unless they are fighting deflation or flat-line growth — rather than trying, as in China’s case — to continue a counter-gravitational economic levitation).
Russia always has been an impostor in the BRIC clique, a completely corrupt (the other three are pretty rotten by this criterion, but Russia is positively rancid) country with a narcissistic embezzler and thief of elections at its head, dependent on exports of oil and precious metals.
For the rest of this column, please go to the National Post website: http://fullcomment.nationalpost.com/2012/07/14/conrad-black-brics-spectacular-rise-not-so-spectacular-after-all/