On the Wrong Side of History
Once in a rare while, tectonic historical change occurs with the span of only few days. The dramatic fall of the Berlin Wall heralding the sudden collapse of the Soviet Union, was one of those watershed moments. And for many Americans, the events of the last 10 days of January, with the Rice confirmation, the Bush second inaugural, and the Iraqi elections, represent a democratic tide sweeping the Middle East, a sea change the whole world is watching.
Sometimes, though, dramatic changes in the global balance of power and riches slip by almost without notice. And for the United States, the signs of silent upheaval come not from Iraq and the terror threat of radical Islam. Instead, while all eyes here were focused on Iraq, other January developments in Europe and China may augur more dramatic change and a more difficult future for American global dominance.
Start with the rumblings in Europe. As Condoleezza Rice testified before the Senate Foreign Relations committee, in France the European aircraft consortium Airbus was announcing its new superjumbo jet, the A380. Seating up to 800 passengers, the double-decked A380 dwarfs the Boeing 747 and aims to capture market supremacy in trans-oceanic long haul travel. And no less than staunch American ally British Prime Minister Tony Blair was on hand at the unveiling ceremony to drive that point home:
"It's [the A380] a symbol of economic strength, technological innovation, the dedication of the work force that built it and above all of a confidence that we can compete and win in the global market."
Once sneered at by U.S. business and government officials alike as a European-subsidized financial black hole, Airbus passed Boeing as the global market share four years ago. With 150 advance orders and building interest in China, Airbus will break even on its $13 billion investment by 2008. The United States clearly has a serious competitor for the global market for commercial and military aircraft, and the feeder avionics industry that support it.
Speaking of China, its continued emergence as an economic and military superpower was also on display in January. A new CIA strategic forecast projects China (as well as India) as rising powers which could potentially threaten U.S. leadership. As we've written previously, China's massive trade surplus with the United States, its huge holdings of U.S. treasuries and its unquenchable thirst for energy increasingly impacts American economic prosperity. Last week's announcement of IBM's sale of its PC division to Chinese leader Lenovo was a potent symbol of things to come. Worried U.S. officials may seek to block the deal. But whether it goes through or not, the tensions over China's regional and worldwide economic power will only grow.
To bring the changing global landscape for the United States full circle, EU leaders announced last week that they would seek to end the European Union arms boycott of China. Driven by France and Germany, with the grudging approval of the UK, the EU will end the Chinese arms ban imposed after the 1989 Tiananmen Square massacre.
Pentagon officials and the U.S. national security establishment will have more sleepless nights with the prospect of an increasingly muscular and belligerent Chinese military acquiring sophisticated European weaponry. China is a strategic rival for the United States; not so for the EU. So while President Bush and Condi Rice may speak of greater cooperation with Europe in the war on terror, this issue of growing strategic divergence across the Atlantic will require serious diplomacy - and soon.
Among the favorite phrases of President Bush and the conservative ascendancy is being "on the right side of history." In his fantastical Second Inaugural, President Bush noted that "history also has a visible direction, set by liberty and the Author of Liberty."
That may or may not be the case. But while Iraq burns, the world turns. And a preoccupied United States could be, as another conservative mantra goes, "mugged by reality."
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That's all fine and dandy.
Except that Boeing is also a US-subsidized financial black hole.
Corporate Welfare on a massive scale (in the form of the Military Industrial Complex) has bred a stable of Corporate Welfare Queens. Executives living lavishly, neglecting their children (employees), and utterly unable to compete competently on a level playing field. So they fight tooth-and-nail to ensure that the playing field remains un-level. (I suspect this is the actual source of much of the US-criticism of Airbus, rather than legitimate technical concern).
Personally, I believe that rising energy costs, and the conservative war on the middle-class in the US are going to kill the air-travel market, long-term, as fewer and fewer people will be able to afford ever-skyrocketing ticket prices. Big planes like the A380 are like dinosaurs who don't know they're extinct yet. China may keep them alive for a while. But in the long run, with their totalitarian free-marketized government (Communist In Name Only), I doubt a robust middle-class will develop on that scale. Not without major political upheaval. Paeons who sew Nike shoes for a dollar a week can't pay for airline tickets.
Posted by Osama_Been_Forgotten on February 2, 2005 12:51 PMNearly 50% of the dollar value of the A380 is produced in...the U.S. Including much of the engines, landing gear, and avionics.
The A380 is a fine plane, but it won't stop the fact that France just had a quarter with 0% GDP growth, near 10% unemployment, etc.
Just before Chirac did the global poverty tax thing at Davos, he was getting speared at home for suggesting tax cuts to jump start the economy...
I am sure China (with some political issues along the way) and India will become economically powerful countries. That is great! The global economy is not zero sum (as the A380 example shows).
Posted by Mr. Econotarian on February 2, 2005 12:57 PMI'm currently working on an internet-delivered english language course for airline pilots. Guess where the biggest market is?
Yep, China.
If we can sell it to China we are set. It's a simple as that.
Their aviation market is growing at 20% a year. And no, that ain't a typo.
Posted by floopmeister on February 2, 2005 7:11 PMCouldn't agree more on the European front. Both the American people and the American government have completely underestimated the rise of the EU and what it effectively means for American power in the world.
The EU has to now be considered a single, unified economy and by that standard, they are the largest in the world. In addition, in reaction to the unilateral policies of the US the citizens and member-states of the EU are highly motivated to form an ever tighter community and they will do just that.
And, in comparison to the US, the EU is continuing to expand so we can expect their population, economy, and land mass to all increase in the next few years along with their global power.
There are plenty of additional facets to this argument but the salient point is simply this: the world's next superpower is here now and it is the EU.
Posted by Bob Baxley on February 3, 2005 8:01 PMROFL, Bob!
The EU states are taxing themselves to death, are experiencing the world's worst baby bust, and much of their entrepreneurial spirit got fed up and left for more hospitable climes. I wish them well but at this point I don't expect Europe will amount to much given their ongoing demographic disaster.
Posted by Matthew Cromer on February 7, 2005 2:20 PM