Friday, July 03, 2009

The Next 100 Years

I recently finished reading George Friedman's book, The Next 100 Years. Friedman is the founder and CEO of STRATFOR, the world's leading private intelligence and forecasting company, and an occassional guest on Dennis Prager's radio program.

The book is an intriguing look at geopolitics as Friedman, with his extensive knowledge of both history and current world economics, politics, and military strategy, envisions it might unfold over the next century. The first 4 chapters are a look at the historical events and conditions that set the stage for his forecasts that make up the rest of the book, and I must confess I found these even more interesting and compelling than his predictions. Here are a few short excerpts to give you a flavor:
Americans constitute 4% of the world's population but produce about 26% of all goods and services.

The US's industrial production is $2.8 trillion (in 2006), the largest in the world, larger than Japan's and China's combined.

Although there's great concern that the US is wholly dependent on foreign energy, it's actually one of the world's largest energy producers.

US oil production is 85% that of Saudi Arabia. The US produces more oil than Iran, Kuwait, or the United Arab Emirates.

Consider this simple fact: the US controls all of the oceans of the world. Every ship in the world moves under the eyes of US satellites.

A Chinese junk, African dhow, Persian Gulf tanker, or luxury cabin cruiser all move guaranteed--or denied--at will by the US navy.

The combined naval force of the rest of the world doesn't come close to equalling that of the US navy.

A selection I found particularly interesting (and poignant in our present economic circumstances) was his account of the fall of the Japanese economy in the 90s. It's a story I had never really heard in its entirety, and after reading his telling of it I realized that the few details I had heard from the press were, as usual, distorted or just plain wrong. Here's a bit of the story:
Japanese banks, under government regulation, paid extremely low interest rates on money deposited by ordinary Japanese. The only option was to put money into Japan's post office, which doubled as a bank. The government turned around and lent this money to Japan's largest banks, again at interest rates well below international levels...
It was no surprise that Japanese businesses did better than American ones. The cost of money was much lower. While high interest rates imposed discipline on Western economies, culling out the weaker companies, Japanese banks were lending money at artificially low rates to friendly corporations. No real market existed. Money was flowing and relationships were the key. Boards of directors consisted of company employees and bankers who were not interested in profits nearly as much as they were in cash flow that would keep their companies afloat and pay off their debts. So Japan had one of the lowest rates of return on capital in the industrialized world...
From the outside, Japan was surging, taking over markets with incredible products at cheap prices. It was not obsessed with profits like American firms were... In fact...Japan was living off the legacy of cheap, government-controlled money, and low prices were a desperate attempt to keep cash coming in so the banking system would hold together.
In the end Japanese banks began to collapse and were bailed out by the government. Instead of permitting a massive recession to impose discipline, Japan used various salvaging means to put off extreme pain in return for a long-term malaise that is still lingering.

While interesting, it was frightening to read this because the United States seems to be following so many of the same policies.

Friedman also addresses many of the same demographic changes in the world that Mark Steyn dealt with in his fabulous book, America Alone, especially since these changes will feature so dramatically in the geopolitical events of the coming century. One of the truly startling results he forecasts will be the ascendancy of Mexico as a contentious near-peer of the United States.

A few other startling high points:

Russia will try to regain its superpower status in the world but will ultimately once again collapse.
China will suffer a terrible economic collapse that may fragment the country.
Japan and Turkey will rise as an economic and military coalition that will, in mid-century, attack the United States and challenge our control of the world's oceans and Earth-orbital space.

My one annoyance with the book is what seems to me Friedman's highly cynical view of America's culture and geopolitical motivations. For instance he categorizes nations in three ways, barbaric, civilized, and decadent. The United States is, he believes, still in the barbaric stage, being he says, "a bizarre mixture of overconfidence and insecurity," which he feels makes us often over-react to world situations. I also get the impression that, while he does not specifically say so, he believes we will inevitably completely abandon the Judeo-Christian underpinnings of our culture and embrace a completely materialistic and humanistic ethic such as now dominates Europe.

Aside from these misgivings and disagreements I still highly recommend this book as a bracing and thought-provoking look at where our present predicament might lead us over the next 100 years.