Zero sum games in a positive sum world

Charles Kenny of CGD has got a new book out: The Upside of Down: Why the Rise of the Rest Is Good for the West. I haven’t read it, and am not sure when I might find the time, but there’s a handy CGD wonkcast which summarises the main points.

“The US will lose some global influence, as China’s GDP overtakes it, maybe as India’s GDP overtakes it; but Britain has much less global influence today than it had at the height of the British Empire and it’s also just a much nicer place to live [for the majority].”

I.e. economic development is a positive sum game: one person getting richer does not diminish the amount of wealth available to everyone else. Add in some nifty technological innovation and the quality of life can improve out of all recognition.

So why fear the rise of China? In particular why do Western elites (as opposed to the ‘working classes’ who have seen jobs migrate eastwards) appear so wary? Is it because the unipolar world that emerged after the collapse of the USSR seemed so cosy, and they fear losing that?

Diplomacy, at least in the context of superpower rivalry, often seems to be treated as a zero sum game. My guess is this is why so many international negotiations – and especially the climate change ones – are utterly bogged down at present. The US feels it can afford to be magnanimous to Chad but not to China, and with that thought we kiss goodbye to the notion of altruistic global leadership.

I have a little theory. You know those studies that suggest after a certain level becoming richer does not make us happier? (Yes I know they are not without their critics.) Could it be that we are not so much made happy by increasing material wealth, but by how we compare to our peers? By this logic it matters little if we cook the planet so long as at the end of it we are still richer than the Chinese.

Depressing, huh? Have a little listen to the resolutely optimistic Charles Kenny, and maybe you’ll cheer up a bit.

One response to this post.

  1. Posted by am on March 10, 2014 at 6:18 pm

    It is notable that some are predicting an economic crisis in China caused by shadow banking which used copper as collateral. Seems hard to believe.
    But before the great crash in the West I was on a plane from Joburg to London and the man next to me was a financial adviser. I asked his opinion on economics. He said that the world was going to crash and I should buy gold. I was a bit shocked at this rather abrupt answer. He made several economic statements which were difficult for me to comprehend but they seemed to mean things were going to go belly up. He was right. He had been advising his clients to buy gold and many of them did. This was before gold went through the roof. They must have made a fortune.
    Some people are saying the same things now about China. The view is that a crash in China will be more serious for emerging economies if they are commodity exporters than the crash in the West was for them.
    This may not have any real impact on aid and development budgets but the economies in general may suffer a downturn which will have an impact on the ease of field work etc.
    Hopefully it won’t happen. But just in case try this link if you have a few spare shekels: If there are any British out there it is worth noting that gold sovereigns don’t seem to be liable for capital gains tax. All at the person’s own risk of course.


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