Does he think state authoritarianism will enable China or some of these Arab countries with large sovereign wealth funds to control the world economy? Bremmer looks at the East-West theme largely through a political lens. If nothing else changes, we are witnessing the decline of Western supremacy.
In that sense they have a bigger utility function β one with a longer term horizon instead of a myopic view. I found this type of perspective very interesting. However, I think Ian would argue that there are still very big economic risks to the success of the emerging world that could cause things to unravel. What do you mean? To give you a specific example, I think Ian would say and many economists would agree that one of the key reasons that China has done extremely well is because her wages have been very low.
A confluence of factors β low wages, a large population and state-controlled capitalism β have worked well for China. At very minimum, these three factors have made it possible for China to perform phenomenally.
And even though you have state capitalism, there is still a risk that the whole thing falls apart. In an environment where wages are rising fast, you end up not only with inflationary pressure but widening income inequalities, and this can be very problematic for the state capitalism model. I think Ian, like most of us, would say that China is not out of the woods. Do you sympathise with his idea that state authoritarianism has advantages?
China is not democratic, nor is Singapore, nor was Chile in the manner in which we define democratic process. There are numerous countries around the world that have achieved long-term, sustained economic growth and lifted millions of people out of poverty without living in a classical democracy. The question is, as a long-term strategy is it possible for countries to have sustained economic growth with a large role for the state?
