The Post-American World: Release 2.0 by Fareed Zakaria Read Free Book Online

of how to respond to food inflation. UN Secretary-General Ban Ki-moon issued a plea in the Washington Post for “an effective and urgent response” to the emergency. Raw materials of all kinds became dear. The cost of construction exploded from New York to Dubai to Shanghai. Even the humble gas helium, which is used not merely in party balloons but also in MRI machines and microchip factories, was in short supply globally—and it’s the second-most-abundant element in the universe.
    When the financial crisis struck later that year, prices quickly deflated. If the 2008 commodity boom had been a one-off event—a by-product of speculation, say—we might be able to leave it aside for the study of historians. But it wasn’t. Rather, it was the result of the long, inexorable rise of the billions who inhabit China, India, and other emerging powers. How can we be sure? When global growth returned in 2010, commodity prices resumed their upward march. Coffee, cocoa, and wheat prices all saw double-digit increases that year. The price of cotton more than doubled.
    Because of this, certain countries—those endowed with natural resources, especially petroleum and natural gas—get free rides. They are surfing the waves of global growth, getting rich without having to play by most of the rules that govern the global economy. This phenomenon is the strange but inevitable outgrowth of the success of everyone else. These countries are the nonmarket parasites on a market world.
    Consider the principal political challenges to the United States and to Western ideas of international order. In the Middle East they come from Iran, in Latin America from Venezuela, and in Eurasia from Russia. All have newfound strength built on oil. Sudan’s ability to defy the world over Darfur would be difficult to imagine absent its oil reserves. Petroleum brings in eye-popping amounts of cash. Iran’s take from oil in 2006 amounted to $50 billion—enough to dispense patronage to interest groups, bribe the army, and stay in power while still having piles left over to foment trouble abroad. This situation is unlikely to change. Resource-rich countries will thrive as long as the others are growing. It’s the yin and yang of today’s globalization.
    Not all resource-rich countries are rogues, and the climate of good economic management has led some to use their riches more wisely than before. Canada is becoming a major power, and yet acting extremely responsibly. The Persian Gulf, where so much of the oil revenue flows, is investing more of its profits in infrastructure and industry, rather than in Swiss bank accounts and Monte Carlo casinos (though there is certainly much of that as well). Dubai has become a business-friendly entrepôt, a Middle Eastern Singapore. Other Gulf states are now trying to emulate its success. Saudi Arabia, which for decades has mismanaged its vast fortune, plans to invest $70 billion in new petrochemical projects, aiming to become a leading petrochemical producer by 2015. The Gulf states made $1 trillion in capital investments between 2002 and 2007, and McKinsey and Company estimates that they could invest another $2 trillion over the subsequent decade. This is a state-directed form of capitalism, which is likely to result in narrow development and unlikely to produce self-sustaining growth (although there are strong state-directed elements in European and East Asian capitalism as well). But it is much closer to the global capitalist norm than the economic systems in these countries—from Russia to Saudi Arabia—a generation ago.
    Over the long term, the most acute problem of plenty is the impact of global growth on natural resources and the environment. It is not an exaggeration to say that the world is running out of clean air, potable water, agricultural produce, and many vital commodities. Some of these problems can be fixed—by improving efficiency and developing new sources of supply—but progress has been far too