Thursday, January 13, 2005

It's a Big World, after all

One of the things you realise when you look at the Tsunami is that what happens to large chunks of the world is of little importance even when it is of huge interest. Of course, for those who suffer directly from it the impact will be huge, but what will be the effects on those of us who have thankfully not lost a friend or relative?

Waves of migration? Political instability? Economic meltdown?

Well, no. If something of a hundredth of the destructiveness of this Tsunami were to affect France or Ireland we would have far greater knock on effects.

Which is a way of saying that what I'm going to write will be even more redundant and beside the point than usual, or should be. For what I'm about to say would be to many close to madness. We have nothing to fear from the rise of China.

And China will rise, here's some reasons:

- It's more capitalist than just about any other large economy in the world. There are lower taxes and fewer regulations than, to take two examples at random, the EU and the US.

- IQs are reasonably high. China has an average IQ of about 100. That's the same as us and a smidgen higher than the US.

- There is at present a strong correlation between IQ and national income, which becomes a lot stronger once you allow for state interference in the economy (which, guess what, is bad for national income.

- At the moment China has a GDP per capita at purchasing power parity of around 5 000 bucks. The United States has a figure (at purchasing power parity) of 35 750.

- So you're average Chinaman has a GDP of roughly 15% of what you'd expect. I'd say he's due a fairly hefty pay rise over the next couple of generations, even if the place were to become as statist as the EU.

- We're not talking about you're average Chinaman, we're talking about one billion of them. That's a lot of people.

- A billion well off people will also be able to buy a lot of weapons and more important weapons research. In the long term they could easily outspend (and are almost certain to outspend) the yanks on weapons research.

- There's gonna be a new sherrif in town.

There are going to be plenty of upheavals but they won't reach us unless we let them. Not only is China far away but it also does not have the millitary toe hold that America developed in Britain during the Second World War and the Cold War.

Now it may be bad news for those who believe that independence means swimming in the slipstream of te most powerful country on the block (pausing only to argue if it is the United States or United Europe, or in Blair's case both) but we are on the other side of the world from the Pacific and from China's land borders. The most compelling stories of the next century will play out on our TVs and not our borders.

With any luck we'll be swapping place with Australia as a sleepy relatively isolated island. And with the greenhouse effect we may even get some of their weather.

Normal gloomy service will resume shortly.


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