Courtesy Dr. Mohamed Elmasry, The Canadian Charger
Economically, by 2010, Brazil will surpass Canada; India will match Spain; and China will be second only to the U.S. By 2020, China might even be in first place. These changes are extraordinary because it would mean that the first time since the Second World War the West would not be leading the world economy and dictating its financial policy.
Already, Chinaâ€™s financial and political clout is undeniable. It boasts the worldâ€™s three largest banks by market capitalization, and is becoming the number one foreign investor in Africa. Unlike the U.S., it does not betray any imperial tendency, and it respects cultural differences. China is also calling for a switch in the worldâ€™s trade and reserve currency from the American dollar to gold or another currency. It is making this call despite the fact it holds about $1 trillion in U.S. government debt.
On the corporate front, Indiaâ€™s Tata group is taking over the U.K.â€™s Jaguar and Land Rover. The U.S., though, is resisting a Japanese or Korean takeover of its car manufacturing giant General Motors. Also, American financial institutions are trying to resist a Chinese takeover.
The lesson is obvious: the Western economic model has failed, and unless a great change happens soon, Western economies wonâ€™t survive, despite massive taxpayer-funded bailouts. The crisis demonstrates that the rich tend to get richer not only at the expense of the poor but at the expense of their own economic system. The president of Brazil Luiz Inacio put it this wayâ€”the current economic mess is the fault of â€œwhite people with blue eyes.â€
The way the U.S. market functions highlights two major issues. One is the relation between individual desires and collective interests; the other is the tension between optimum short-term adjustments and long-term development. The thesis that the first issue can resolve itself has been proven a failure, since it presumes that honesty is a major force in the marketplace. Similarly, short-term adjustments can threaten long-term development.
Americans have long had dogmatic faith in the virtue of â€œThe Market,â€ but this crisis is a wake-up call, as brutal and loud as it gets. Yet, the old model is still in operation: companies lay off workers during a recession and hire them back when the time is right. This practice at odds with other models, which treat highly qualified workers as important human resources and valuable assets.
The result of all this is that nobody, not even the leaders at the recent G20 meeting in London, can put together a workable strategy for putting the U.S. economy back on the rails. The fact that leaders from 20 nations rather than the usual eight attended is significant: it means that Brazil, Russia, India and China (the Brics) will have a say at all future summits.
Also significant were more than 4,000 protesters demanding that the leaders pay attention not only to the rich and powerful few, but also to the masses who are losing jobs, pensions and savings. However, the corporate media called the protesters â€œanarchists,â€ a term that should be reserved for the bankers who created this mess and had the gall to reward themselves with generous bonuses. As expected, the British media made clashes with police, not the protestersâ€™ demands, the main story.
In his book /10 Reasons to Abolish the IMF and World Bank/, Dr. Kiven Danaher famously observed: â€œWe abolished slavery; we abolished Jim Crow laws; we abolished child labor; we abolished the exclusion of women from voting; we abolished the 60-hour work week; and we can abolish international banking institutions that do more to prevent (global) democracy than promote it.â€ His statement is as true now as it was 10 years ago when he made it.
What the world needs now is a power shift from the corrupt greedy few to the needy masses worldwide, who, after all, constitute the majority.
Prof. Dr. Mohamed Elmasry is Professor Emeritus of Computer Engineering, University of Waterloo; Founder, The Canadian Islamic Congress; and member, editorial board â€œThe Canadian Chargerâ€ www.thecanadiancharger.com He can be reached at firstname.lastname@example.org.