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Archive for October, 2012

Centres of Gravity

So, I actually passed math!

Well, most of it.  Macroeconomics was my weakest section by far, but given the fact that I went from 0 knowledge in the area to kind of sort of understanding the mechanics of the Bellman (but not even coming close to a deeper comprehension of the Hamiltonian) is enough for me.  New standards!

So I dropped out of the required economics course for my degree and moved onto something that seems a lot more scary challenging.  Macroeconomics and Political Science are my two favourite courses so far (I only have four, so I guess it is redundant to say I like half of my courses more than the other half) and macro has presented me with some new ideas which are interesting, open for discussion right now, and in the process of happening.  How often can you say that about science?

Danny Quah (economics rock star extraordinaire) is our lecturer right now and presented us, on the first day, with an interesting illustration of the “average location, on earth, where the dollars are happening” – also known as the Economic Centre of Gravity.  It used to be somewhere in the trans-Atlantic, but is slowly moving to a place that’s *ahem* a bit further east.  Look at the prediction.

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So it starts out between Western Europe and the States (because that’s where everything was happening 30 years ago, but as Asia continues to rise, the average location of output starts moving East.

It’s weird to think about the implications of this.  I’ve never really given serious thought to what the changes mean; will trade start happening in a different currency?  Will children be learning a different language?  In fact, will parents send their children to universities in China?  Will trade happen on China’s terms more-so than it does now?

Just think about all the assumptions you’ve become accustomed to in your lifetime knowing that the United States, like it or not, is the global centre of cultural, economic and military power.

Professor Quah then moved on to the difference between “hard” and “soft” power.  It can be argued that even if China rises economically and develops military influence, they still will not be able to attain the “soft” power that the United States has, the ability to influence ideas and culture.  People in China still look up to American culture in ways they don’t even realize.  The music videos are very much modelled after American MTV culture.  Pizza Hut and Macdonalds are huge.  Starbucks has taken over every major city.  In a more important way, America will still retain a type of cultural influence over global policy in areas like its insistence on personal liberties and free-markets.  These are things that money cannot erase too quickly.

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So, if China cannot acquire soft power, then for a while, the world will have to divergent centres of of gravity, one which is economic and one which is cultural and public policy oriented.  The world has really only ever seen one centre of gravity (think about Britain and then the US).  Does that mean that holding the economic power will pull cultural influence towards the east as well?  Or maybe this time is different, and we will see a more permanent fracturing between the East and West?

I’m not entirely sure that China has the power, as of yet, to much influence cultural capital the way that the United States has.  China has so far been an amazing copy-cat, from technology to fashion to media. But imitation does not an innovator make.  In fact, the plagiarism is an implicit acceptance of America’s role as the cultural centre of the world; if it was not so influential, China would not lap up American ideas with such eagerness.

In order for China to unify the hard and soft centres of gravity, it would need to do something it has not done in very long; innovate.  I’m not sure what this would look like, or how they would achieve this, but without it, it is seems inevitable to see this sort of fracturing between the two kinds of power.

After all, it’s hard to copy someone, when you are supposed to be ahead of the game.

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