The Post-American World - Fareed Zakaria [14]
Along with these political and economic factors moving countries toward a new consensus came a series of technological innovations that pushed in the same direction. It is difficult today to remember life back in the dark days of the 1970s, when news was not conveyed instantly. But by the 1990s, events happening anywhere—East Berlin, Kuwait, Tiananmen Square—were transmitted in real time everywhere. We tend to think of news mainly as political. But prices are also a kind of news, and the ability to convey prices instantly and transparently across the globe has triggered another revolution of efficiency. Today, it is routine to compare prices for products in a few minutes on the Internet. Twenty years ago, there was a huge business in arbitrage—the exploitation of different prices in different places or during different times—because such instant price comparison was so difficult.
The expansion of communications meant that the world got more deeply connected and became “flat,” in Thomas Friedman’s famous formulation. Cheap phone calls and broadband made it possible for people to do jobs for one country in another country—marking the next stage in the ongoing story of capitalism. With the arrival of big ships in the fifteenth century, goods became mobile. With modern banking in the seventeenth century, capital became mobile. In the 1990s, labor became mobile. People could not necessarily go to where the jobs were, but jobs could go to where people were. And they went to programmers in India, telephone operators in the Philippines, and radiologists in Thailand. The cost of transporting goods and services has been falling for centuries. With the advent of broadband, it has dropped to zero for many services. Not all jobs can be outsourced—not by a long shot—but the effect of outsourcing can be felt everywhere.
In a sense, this is how trade has always worked—textile factories shifted from Great Britain to Japan in the early twentieth century, for example. But instant and constant communications means that this process has accelerated sharply. A clothing factory in Thailand can be managed almost as if it were in the United States. A Nebraskan sporting goods store can source from China, sell to Europe, and have its checkbooks balanced by accountants in Bangalore. Companies now use dozens of countries as parts of a chain that buys, manufactures, assembles, markets, and sells goods.
Since the 1980s, these three forces—politics, economics, and technology—have pushed in the same direction to produce a more open, connected, exacting international environment. But they have also given countries everywhere fresh opportunities to start moving up the ladder of growth and prosperity.
Consider the sea change in two representative (non-Asian) countries. Twenty years ago, Brazil and Turkey would have been considered typical “developing” countries, with sluggish growth, rampant inflation, spiraling debt, an anemic private sector, and a fragile political system. Today, both are well managed and boast historically low inflation, vigorous growth rates, falling debt levels, a thriving private sector, and increasingly stable democratic institutions. Brazil’s inflation rate is now, for the first time in history, in the same ballpark as that of the United States. Brazil and Turkey still have problems—what country doesn’t?—but they are serious nations on the rise.
More generally, the story of the last quarter century has primarily been one of extraordinary growth. The size of the global economy doubled every ten years or so, going from $31 trillion in 1999 to $62 trillion in 2010, and inflation stayed surprisingly and persistently low. Economic growth reached new regions. While Western families moved into bigger homes and bought laptops and cell phones, subsistence farmers in Asia and Latin America found new jobs in rapidly growing cities. Even in Africa, people were able to tap into a global market to sell their goods. Everywhere, prices