“It is the moment when what was chaos is now seen as having a center of gravity. There is a shape where a moment ago there was none.”
“If one shifts the center of gravity of life out of life into the “Beyond” – into nothingness – one has deprived life as such of its center of gravity.”
Given the recent study showing 42 people have the same wealth as maybe 50% of the world’s population I thought I would republish this awesome study completed in late 2010 called “Global Economy’s Shifting Centre of Gravity.”
Maybe not awesome to some people … but to me? Fascinating reading <I actually read it over a vacation sipping some cocktails>.
Here is the net:
- In 1980 the global economy’s center of gravity was somewhere in the middle of the Atlantic ocean.
- In 2010 the center of gravity shifted to just east of Helsinki/Bucharest latitude (oddly the longitude doesn’t seem to vary much over time in this modeling).
- In 2049 the center of gravity will shift almost two-thirds of the earth’s radius from the 1980 center to somewhere say in west Asia.
What the heck does his have to do with wealth inequality? Well. Because wealth is accumulating on 2 dimensions – on both the y axis as well as the x axis <just not at the same rate>.
Let’s just say that the x axis is shifting upwards globally <average wealth of global individual is improving>. This is good. This means the overall tide is rising.
Let’s just say that the people on the y axis are disproportionately reaping the benfis of a better global wealth improvement. That is bad. This means few continue to benefit at the overall expense of the many <yes, people will haggle with how I worded that>.
All that said … I would envision most people wouldn’t be surprised by this. But I am fairly sure we talk about the y axis all the time and forget to mention the x-axis … that’s my point here.
Anyway. There are some nuances to the study I mentioned that should make people think a bit.
I am not going to go into the modeling analytics … but suffice it to say this researcher at The London School of Economics knows his shit and figured out a way to analyze economic power not by clustering <which is an important distinction> but rather center of gravity <it’s kind of like figuring out how to measure the dynamic behavior of spatial economic distribution rather than simplistic clustering>. The study offered truly fascinating cylindrical spatial global maps in which it is almost like viewing an economic holographic image.
I will spare you. What I won’t spare you is what this analytic stuff means.
Suffice it to say that the income dynamics of the average location of the planet’s economic activity is shifting.
I think we all knew this in our gut but now we have actual proof. And it’s kind of sobering proof for those of us in the Western hemisphere <I include South America, Latin America and North America into this pot of people. That global economic activity moves east in this graphic fashion shows the rapid growth in incomes going to the large chunks of humanity who live in India, Africa, China and the rest of East Asia.
<note: population itself changes much more gradually therefore this sharp east-directed rise of the rest is not driven by population growth>
Overall this shift is a reflection of a lot of good things happening in the world <not America getting weaker but rather America becoming a smaller larger global component>. For example 600 million people have been lifted from extreme poverty – a large and rapid improvement in the well-being of humanity that is unprecedented in the history of this planet.
And there is more is to come. In particular, Africa and China will remain growth areas <albeit both in different ways> and poverty will continue to be eradicated.
All of this could be concerning in a variety of ways.
This isn’t just about money, or income, this is about power. Economic shifts lead to governmental shifts … and intellectual shifts.
Let’s talk “intellectual shifts.” Eliminating poverty <or limiting poverty> means releasing probably the greatest restraint to education. And mind power is the great equalizer.
Yeah. Mind power. Sorry folks … it isn’t democracy <or any real ‘freedom of’ … although some people may debate the cause/effect of that relationship>. When economic shift permits an elevation of intellectual power that tends to be the formula for sustained shift in economical gravitational pull. I even have an example on economic opportunity … and economic opportunity lost.
We have faced a similar foundational economic re-construct situation before … only to have the economic center of gravity remain skewed toward the western hemisphere. And although the economic center of gravity was threatened at that time … there wasn’t the intellectual shift attached to the economic shift to sustain the movement.
Let’s look back at the last time we may have faced something like this.
The cold war. Soviet Union versus United States <actually … the rest of the world>. The reality is that while Russia tried to fill the void <of prosperity … or maybe better said … ‘better than what is’> and sought to increase its global engagement under the guise of government doctrine it was actually an economic battle. Huh? Think people labor versus capitalism <simplistic but you get the point>. Russia was certainly good at destroying governments and economic construct. However, because of their economic corruption they were unsuccessful in replacing what they destroyed.
Ultimately that was their failure … not a failure of communism but a failure of economy. Which, in the end, meant their failure to sustain an economic shift translated into the fact intellectual power was never maximized.
I promise you that mistake will not happen again. In fact it is happening all over again <not Russia but Eastern Hemisphere & Africa> but … but this economic shift is being sustained. There are two <to me> primary locations pulling the center of gravity. And I will outline each <and why we in the western hemisphere should sit up and pay attention>.
The two? China & Africa <some people may argue India>.
They don’t necessarily destroy. In fact they do the opposite. They simply take less than successful scenarios and through economic success makes each … well … more successful.
Ok. There is a point here. What most Americans <let’s say ‘outsiders’ in general> fail to see is the “more successful” part. Many people measure success off of what we have <or how high is up>. In fact it is through those eyes that we tend to damn China.
Take a step back.
As Mao suggested for China … success would be enabling the majority to afford another pair of shoes. Not a mansion … heck … not even a house … just another pair of shoes … for a gazillion people. And he did it. And China has continued to grow.
Sure. It becomes more difficult from there. But that’s not the point. Other ‘industrialized’ countries measure them in a different way and are being foolish by doing so. China is being successful <for a number of reasons> but because they have taken what they have done well internally within their own country <helped a segment make the next step up> and go elsewhere and offer the same opportunity. They are creating an infrastructure within emerging countries, and emerging economies, <outside of China> to ‘be better than what is.’
In Africa it is transportation and communication interface. In southeast Asia its internal infrastructure.
China is becoming an enabler rather than a destroyer.
In Africa the picture continues to improve.
Wars have subsided and governments have stabilized and they are also adopting their own quasi capitalist-communist economic attitude, i.e., private subsidized by government. Their average GDP has consistently grown almost 5% annually. Over the past 8 years over 80 million households have been elevated above poverty level – to a level where discretionary spending commences in the household. Telecommunications, banking and retailing is flourishing.
This reflects a significant rise in the African urban consumer. In 1980 28% of Africans lived in an urban environment and today over 40% do. In countries where infrastructure is isolated, typically in more urban environments, this means that a more significant portion of the population has access to education, skills development and jobs <note: remember my point on mind power>. In addition, African governments are increasingly adopting policies to maintain the economic growth as they privatize state-owned businesses, open lines of trade <foreign>, strengthen legal systems and provide well needed physical & social infrastructure (a byproduct of that last factor is an increased labor force and economic distribution among the population).
Having used those examples maybe I am maybe actually suggesting the bigger thought is a new communist-capitalism attitude shifting the economic center of gravity <I am erring on the side in my point of view that USA isn’t doing something wrong but rather that others are doing something well>.
I do find it impressive that traditional & evolving governments have attained this balance of communism embracing capitalism. Historically, the two are ideologically irreconcilable. Yet even the traditional communist based governments are proving to be quite pragmatic in supporting pro-growth economic policies <by non traditional communist means>.
China unapologetically clings to communism in every other sense of government policy. A number of more dictatorial based governments in Africa. Everyone should note it is Africa’s more quickly growing economies, characterized by low, stable business tax rates, responsible government spending, reasonable levels of regulation and incentives for business expansion, which certainly represent the highest growth opportunities.
As a result, their economies are expanding, businesses are thriving …. and maybe more importantly … the population is gaining a better way of living.
Once again … in my words … better than what they had.
It is interesting to me that it is the economies of communist <or communist like> governments are thriving due to capitalism and responsible pro-growth economic policies. America has taught them well. And because of all that we are seeing a shift in the economic center of gravity.
Sorry. I digressed.
Getting back to the center of gravity. This study reflects how we should be looking at things. Millions of millions of people in developing countries are becoming more wealthy.
Simply moving all developing countries <or the majority … call it a ‘large mass’> to non-poverty from poverty is a massive shift. And by doing so it enables that population to be more productive. More healthy. More educated. More knowledgeable. This is simple shit. But we in the ‘industrialized world’ get caught up in the wrong issues … we assess success by where we are today .. <silly silly people>.
Be careful with what I say next.
While USA focuses on government constitutional aspects and “enhancing their constitutional situation” … China is focused on economy.
I am a HUGE freedom of guy. But. If you want to grow and expand your government/country/culture more … a good economy is a really good thing. But having a realistic point of view on economy is an even better thing. Maybe if we look at the shifting economic center of gravity here in the western hemisphere we shouldn’t look at it as a loss of stature but rather maybe we should seek to gain some learning.
Is this post a message to our government and regulators? Nope.
This is a message to you & I that we have it pretty good here in the good ole USofA.
Is it as good economically as it was? Nope. Is it good? Yup.
This is a message to you & I that people in other countries also want their version of ‘self actualization’ and if economically it comes within grasp … they will try and grab it.
This is not a warning or threat but a suggestion this is an attitude issue for ‘we the people.’ Because with the right attitude then we can create the right behavior. But that is my next economic article. A rant on the everyday American’s economic behavior <because other cultures aren’t as addicted to spending & having stuff as we are>.
In the end.
The economic center of gravity was always going to be tugged away from America as the sheer numbers of the ‘rest of the world’ starting generating … well … economy. However, America needs to remember that at the core of economic gravity is not making shit … its mind power. The smarter the population, the healthier the population and, therefore, the more productive the population.
It’s a simple formula I tend to believe we forget.