The U.S. is no longer fit to lead in global governance and that is driving a change in the world order. As a result, the coming decade will be vastly more unstable, according to Ian Bremmer.
Bremmer is the president and founder of Eurasia Group, a leading global political risk research and consulting firm. He spoke at a luncheon for the Boston Committee on Foreign Relations luncheon on November 14.
“No one should think we live in a global free market anymore,” according to Bremmer.
“I’m not talking about the United States,” he said, “I’m talking about the fact that the most influential economic strategy globally is not a free market economy.”
I will go over Bremmer’s comments about what is right in the world and his predictions about how the global economy will change in the coming decade.
Changing global order
“In my life there have been two speeches that made you rethink the global order,” Bremmer said.
“The first, and of course most important, was when Gorbachev declared the dissolution of the Soviet Union in 1991,” according to Bremmer.
“The second, and it’s early to say this but I’m going to go out on a limb, was Xi Jinping two weeks ago,” he said.
According to Bremmer, that speech was about China’s leadership stating that it is “prepared to publicly say we are going to become a global superpower and we’re going to start taking the leadership role.”
Xi’s speech wasn’t momentous in the United States, but having spent the past two weeks traveling across Asia, Bremmer said it was the main topic of conversation amongst global leaders. “They were talking about the rise of China,” he said.
“They were talking about the strongest leader that the Chinese have had since Mao [Zedong],” according to Bremmer. “While, at the same time, the Americans have the weakest leader in their modern history.”
Bremmer described the shift in global order as “the abdication of U.S. leadership and the creation of an alternative model, some of which will be Chinese-led.” He explained that China’s growing role will be clear on climate, trade, diplomatic and military issues.
“The interesting thing about my G-Zero thesis – which is that the Americans aren’t going to lead [to drive an international agenda] and therefore nobody is going to – is that we are now starting to see the Chinese stepping up in some areas,” he said.
Bremmer argued that these shifts should prompt us to consider the role of different governance models around the world.
“The most controversial thing is that in 2017, we have to ask ourselves a serious question about whether our liberal democratic model is still fit for purpose,” he said.
“We don’t talk much about real structural reform in the United States, and people who do are branded as lunatics,” according to Bremmer. “But outside of the United States, people believe that our system is no longer fit to lead global governance.”
The rise of China
Bremmer cited three key reasons why China has been stepping into a global leadership role faster than he anticipated.
First, according to Bremmer, “with the size of its economy – which is about 60% of the American GDP – and the fact that the Chinese economy is so much more directed by its government, other countries around the world are paying a lot more attention to the Chinese leadership.”
Bremmer explained that the Chinese government has a lot of influence on global economic matters. Whereas, in contrast, Trump’s claims are less meaningful given the structure of the American private sector.
Second, Bremmer cited China’s workforce and political structure as key advantages. With technology driving changes in labor demand around the world and causing many to find themselves unqualified to compete in job markets, a growing number of people have lost faith in globalism.
However, Bremmer explained, China has maintained strong employment levels. It may have done so by employing labor inefficiently, since many members of its population not trained for in-demand technological roles, but at least people have jobs. This has made the Chinese model of governance appealing in some ways.
Bremmer argued that systems where citizens have jobs, like socialism and communism, are no longer viewed with the same criticism anymore.
“I didn’t grow up with any capitalists,” he said, “because they didn’t have any capital.”
“If you don’t have capital, you are not a capitalist, you just want to be paid properly for a job,” according to Bremmer.
“That’s one of the reasons why the average American finds that the present political system doesn’t really work for them,” he said.
“The average Chinese is also not a capitalist and the average Chinese increasingly feels like their system is doing well by them,” according to Bremmer.
The third reason Bremmer cited was technology. He said China has been investing in key areas in this area that will change the future of global business, such as augmented reality and artificial intelligence.
“The Chinese understand that it wants to win at AI,” Bremmer said. “Elon Musk and Putin agree on one thing, whoever gets to AI first wins the ball game.”
“This is probably not the foreign policy talk you were expecting,” Bremmer said, “but I honestly think technology is the game changer.”
Inequality and the United States
Bremmer commented on the leadership in the U.S., and the impact that growing inequality has had on the nation.
“I see the way we’re living right now, and I just don’t feel crisis with Trump,” he said. “I travel all over the world, I’ve seen what crisis looks like, and this doesn’t feel like crisis.”
According to Bremmer, “Crisis implies that someone is going to do something about it, and I don’t see that.”
“I think Trump could win second term,” he said. “He’s old and morbidly obese, has a lot of stress and clearly is not very happy. Actuarial tables aside, it’s a coin flip,” he joked.
Bremmer explained that he felt what’s going on is personally disturbing, but it’s not a crisis because it doesn’t require immediate change.
“This is the thesis of my new book ” he said, “is that the next 10-20 years are going to be vastly more unequal and vastly more unstable for much of the world’s population because of the way that we will choose to respond.”
“And when governments don’t get things done, that’s when the mayors, governors, and CEOs step in,” he said.
“The response to the structural inequality in the United States and elsewhere is going to happen the same way,” according to Bremmer.
Marianne Brunet is a financial markets analyst at Advisor Perspectives.
Read more articles by Marianne Brunet
The U.S. is no longer fit to lead in global governance and that is driving a change in the world order. As a result, the coming decade will be vastly more unstable, according to Ian Bremmer.