I heard Jim O'Neill speak yesterday. He's the Chairman of Asset Management at Goldman Sachs and the macro-economist who coined the expression "the BRICs". He pointed out that while the European press is full of the Greek debt crisis, on a global scale it simply doesn't matter. The Chinese economy is growing so fast that it is increasing its GDP by the equivalent of the Greek economy every 11.5 weeks. If Greece stopped producing anything at all as of today, China would make up the loss to global GDP in less than one quarter! He also pointed out that Russia's GDP is expected to grow by 2020 by more than the GDP of the whole Eurozone.
His point is that the economic 'crisis' is not 'global', as billed. It's an economic crisis of the West. It seems to me that the question is, are we also witnessing the collapse of the corrupt political model of buying votes with current 'benefits' by borrowing against the work of tomorrow's voters? Is Greece mainly important as a warning to all Western governments of what lies ahead if they continue to refuse to balance their budgets? I hope so - and I hope they heed the warning.
My apologies for the awkward angle of the image. If you click on it to enlarge, I hope it's legible. It does put a lot of current discussions in context. The West simply doesn't matter as much as it used to and is going to matter less. My own response, economically, is 'so what?' Do Luxembourg and Switzerland (whose citizens are wealthier than Americans) care that they don't matter on a global scale?
The expansion of the global economy represented by hundreds of millions of growth economy citizens being lifted out of poverty is good news for us as well as for them. Forget the Chinese billionaires and remember the 300 million Chinese who - thanks to capitalism - are no longer poor. The ex-poor in China and elsewhere already drive the growth of the US and German motor industries, for example. China matters far more to BMW or for that matter Siemens than does Germany. If we can all adjust our thinking to provide the goods and services these people want (and stop worrying so much about how they are led) the economic future can be bright for us too. If we continue to regard them as less important than us, that will be another story.
O'Neill doesn't address the politics of all this, but I think we also need to recognise the significance of the fact that the successful new growth economies have balanced state budgets. Unlike every country of the Eurozone except Finland and Slovakia (and very unlike Britain and the United States) - most would meet the original Maastricht criteria for European Monetary Union. I don't advocate that we adopt the political models of China or Russia, but we do need to understand and moderate the tendency of our democratic politicians to mortgage our children's future to buy our economically-illiterate support.