Gregg Easterbrook’s Sonic Boom: Globalization at Mach Speed looks beyond the economic crisis to the boom that’s bound to follow, one that, Easterbrook argues, will be unlike any we’ve experienced before. In the excerpt below, Easterbrook, author of six books and a past Zócalo guest, explains why globalization is just getting started.
From the Industrial Revolution until the current generation, most nations threw much of their wealth and energy into building machineries for warfare. Nations eyed one another suspiciously, attempting to raise barriers to trade and intercourse, dealing with each other economically only when they believed it suited them at the expense of their partners. Now most nations put the majority of their efforts toward improving their standing in international commerce – that is, toward cooperative competition in which some members of the group may do better than others, but all members of the group become better off than if they had not participated.
Exactly as global trade has expanded, military spending has declined. Global military expenditure peaked in 1985 at $1.5 trillion in today’s dollars and has fallen since, to $1.4 trillion in 2008.2 Because the world’s population rose during that period, total military spending might have been expected to rise. Instead it decreased, falling by almost 40 percent relative to population growth. In turn, the frequency and severity of worldwide combat has declined. According to the annual survey conducted by the Center for International Development and Conflict Management at the University of Maryland, the number of country-to-country conflicts in the world grew steadily from 1950 until peaking in 1989 and has dropped in most years since, to a 2008 level that is below the 1970s average: in the years after World War II, the number of global fatalities from combat peaked in 1989 and has tended to decline since. Because television beams into our living rooms close-up images of belligerence wherever it occurs on any continent, it may seem that the world grows ever more deadly. The opposite is true, with a person’s chance of being engulfed in war much lower than for most previous generations.
There are many theories on what caused World Wars I and II. Cordell Hull, Franklin Delano Roosevelt’s secretary of state, believed the root cause of both conflicts was the system of high tariffs and strict trade barriers in place at the time. These barriers gave nations little reason to cooperate, leaving them to channel their competitive urges into militarism. Hull pushed FDR to host the 1944 Bretton Woods Conference, at which the Allied nations agreed that when the fighting stopped, they would begin to engage in free trade, and would extend free trade to the defeated Axis powers, allowing them to recover. The Bretton Woods Agreement set in motion what we now call globalization. And since that moment, five hundred years of nearly continuous European conflict has ended, while more than fifty years have passed without great-power combat. Nuclear deterrence is obviously a major factor, and “low-intensity” warfare continues, but the interconnectedness caused by trade has been a leading reason the great powers have stopped shooting at one another. Global trade has increased twelvefold since World War II ended, partly because the average international tariff has fallen from 50 percent to 5 percent. Tariffs, once used to discourage international commerce, a deleterious purpose, are now merely used to raise money for governments. Big increases in trade cause most nations to stand to gain from a stable international system untainted by combat, and in the era of biggest-ever increases in trade, we observe a mainly stable international system untainted by great-state combat. As the transition toward knowledge-based economics makes ideas more valuable than physical resources, the incentive for war to seize resources declines. In the past, nations invaded other nations to seize the value of land or resources. Today it is more cost-effective to buy what you covet than to seize it, and so military spending and military adventurism are declining. Economists have long maintained that if only people stopped fighting one another and cooperated, prosperity for all would rise, while most nations would acquire incentives to get along rather than inflict harm. Because the new internationalized economic system has existed for only a few decades, we should be cautious about drawing conclusions: so far, however, the globalization of economics is guardedly positive for almost everyone. That countries are furiously devoting their energies to commercial production and trade, rather than missiles and submarines, can have unhappy effects, such as job insecurity and environmental harm, but its overwhelmingly positive side is inarguable. At this writing, China was breaking ground for the most expensive public-works project in world history – a $62 billion system of aqueducts to supply the populous part of the nation with fresh water for drinking and agriculture. Once completed, that system could be rendered worthless in mere minutes by precision-guided U.S. conventional weapons. That Beijing is investing such a huge amount in a structure vulnerable to rapid destruction from the air shows that the government of China believes it will never go to war with the United States. Capitalism causes all kinds of problems, but is so much better than militarism, there’s just no comparison.
Clearly the last two years have been disagreeable ones for the world system. But many of the years before then were good, and what did the majority of Americans and Europeans do in those good years? Complain. The larger context of recent generations has been persistent focus on the negative, with little heed paid to the positive. Heeding the positive is not Pollyannaism – it is perspective. To achieve perspective, both positive and negative must be considered. There’s an ample supply of negative. Yet most underlying global forces have mainly been good in recent decades; one shudders to think what the world might be like today if most underlying forces were not mainly good. Consider the underlying forces that point toward a Sonic Boom: GLOBAL GROWTH ACCELERATES
Even taking into account the post-2008 slowdown, worldwide economic production has risen at a pace that is difficult to believe. In the last thirty years, China’s gross domestic product rose from around $500 billion to $2.7 trillion-that is to say, five times as much new economic production in the last thirty years as all forms of economic production just a generation ago. China is not some spectacular exception to a rule; rather, it is the leading indicator of an extraordinary economic surge across most, although of course not all, of the globe. Costa Rica, for example, increased its economic production from $8 billion in 1977 to $30 billion in 2008 – more than three times as much new economic activity in the last three decades as total economic activity a generation ago. India increased its economic production from $400 billion in 1977 to $1.2 trillion in 2008, three times as much new economic activity created in the last thirty years as all forms a generation ago. (This chapter uses the period since 1977 as its benchmark not because Led Zeppelin broke up that year, but because modern Shenzhen is roughly three decades old.) Much of the new global economic activity does an end run around the wealthy West – for instance, the fast pace of construction in China has meant increased business for ArcelorMittal, the Indian firm that is now the world’s leading steelmaker. Neither India nor China consult Washington or London about their steel trade – they’re just taking care of it on their own.
Excerpted from Sonic Boom by Gregg Easterbrook Copyright © 2010 by Gregg Easterbrook. Excerpted by permission of Random House, a division of Random House, Inc. All rights reserved.
*Photo courtesy dcmaster.