Saturday, June 21, 2008

The economic troubles of the West, specifically in the US and to a lesser extent Europe has led some pundits to highlight the coming decline of the West while the East rises. This Asiatimes article proclaims that while Western capitalist bastions have fallen into serious debt, unemployment and inflation, Eastern powers like China and India as well as lesser former communist countries are experiencing the opposite fate as their economies power on. While my first sentence was a bit simple and filled with cliches, it still features some truth. What's really interesting is the writer's reference to an academic's claim that the defeat of communism emboldened and enabled Western capitalist elites to ramp up their economic dominance at the expense of the broader cross-section of their countries' society. The article also criticises Western economic elites and institutions for unsound economic policies such as reckless spending and actions like "collateralized borrowing and lending" in which certain assets are packaged into markets and borrowed over and over. Now my understanding of the complexities of economics and finance are virtually non-existent but I do think that reckless spending by both the public and the state, increasing budgetary deficits and capital based on over-valued assets is not very healthy.
I do find that this critique is much too optimistic of the "rise" of Asian countries, as with many similar pieces on the growing economic power of developing powers, because there are so many significant mostly domestic problems they face which can't or aren't yet addressed by their economic progress.