Globubblization Part III: The Creation of East and West Economic?Spheres

How Technology Will Intensify Globalization, and the New Levers of?Power

The spheres of East and West have been circumscribed. With pressure from political, social, and technological dynamics, a new macroeconomic cycle in a new world order is underway. China and its allies have laid out a centralized strategy of infrastructure development, with designs on exporting a uniquely Chinese style of capitalism. The effect of this on decentralized Western infrastructure and its egalitarian values has been a coalescence of Europe and the United States in opposition to the Eastern up-thrust.?

It’s increasingly clear that these polarizing bubbles will begin to harden over the next decade. As they do, nations caught in the crossfire will be confronted with diminishing permeability. China is fortifying its dome with debt and concrete, and the West with the liquid armor of free markets. Nations like India, Brazil, and still-untapped sub-Saharan Africa will be tested by the enticement of wealth and the realities of geography. Others, like Saudi Arabia, will reinvent themselves as neo-Swiss liaisons of tech and trade in the post-carbon energyscape.

Then there are those for whom hemispheric fission will be existential. Ukraine and Taiwan are obvious examples, but global stability will be equally determined by the technological capacity to address climate change in places like Mozambique, Sudan and Sri Lanka.

In short, this is about seizing the future. Like Proteus, the shapeshifting Old Man of the Sea, the prosperous will not be those who guess his next form. They will be the ones who hang on as he takes his new shape. It’s going to be a wild ride, and we’re all going to get soaked. Let’s dive in.

Digital Technology and the?Future

Without a doubt, technology and digital infrastructure are going to be the single most consequential engines powering us into the future. The problems in tomorrow’s news will not be solved with walls and stop signs. Everything will be about flow, and whoever is the maestro of the electrons will conduct the symphony on the next decade’s concert stage.?

The first thing those electrons are going to move around? Money. With the rise of a huge middle class of previously impoverished Chinese citizens, demand for goods and services will go one way: straight up. We’re talking Great Glass Elevator stuff here. Today, the US and China are still each other’s number one goods trading partner, but the balance is already beginning to shift.?

China has historically enjoyed a huge export surplus because the cost of manufacturing is so low. However, with rising standards of living comes increased purchasing power, and in 2020 Chinese importation of US goods were up 16%. More importantly, US imports from China have been trending down since 2018, and it’s not just COVID. Both of these factors together strongly suggest we’re approaching an equilibrium.

Meanwhile, US imports from Western democratic nations are taking off. Mexico: up. The EU: up. Rising economic powerhouse and bastion of democracy on the Asian continent, India: way up. If you look at the US’s 2021 Trade Policy Agenda, it’s all about moving away from China and building trade volume with democratically-inclined allies. As polarization accelerates, issues of technology and compatibility are necessarily going to become more challenging.

Cybersecurity Concerns

Make no mistake: this is not just a matter of capitalization. The more digital infrastructure is integrated into everyday life, the greater its provenance will weigh on issues of national security.

Chinese telecommunications competitors such as Huawei have been implicated in corporate espionage, with the collateral potential that these weaknesses could be exploited by Beijing.

The Biden administration signed a bill in the summer of 2022 to increase domestic superconductor production. The move is alarming because 63 percent of the world’s superconductors are manufactured by industry giant TMSC on a little island called Taiwan. Clearly, DC is telegraphing its confidence in the South China Sea status quo.?

By itself, Western companies could probably accept free market dynamics on chip production as part of a globalized landscape, but nation-driven competition? That’s a different story. When every corporate collision involves the vehicles of the state, a fundamentally different variable enters into the equation.

The Digital Cold?War

In practical terms, these issues rise well above a portfolio of electrical socket adaptors. When data is power, every cell phone in the pocket of a traveler becomes a liability. As the yuan and the dollar diverge, so too could international compatibility.

At best, a subtle shift in political content and accessibility between regions could result in mild nationalistic exploitation. But if it gets ugly, we can expect escalating cybersecurity wars as people are required to unplug from one sphere and plug into the other when they traverse the digital membrane. These developments would have a cooling effect on cultural transmission and intensify sphere hardening, but the dissociation of cultures and peoples creates distrust and fear, and that inevitably leads to conflict.

The next global conflagration will not be marked by the threat of nuclear exchange. That tired logic is the vision of an exhausted post-Soviet state. The war of the future will expose the cynical extent to which the humanitarian promises of digital infrastructure can be perverted into death and devastation. Beijing regularly engages in malicious cyber activities that target American industries as diverse as healthcare, financial services, IT, critical manufacturing, and energy. That’s in addition to efforts to steal intellectual property and sensitive data from sectors engaged in pharmaceutical and healthcare research related to the pandemic.

The implications of this alone are enough to invigilate the agents of international warfare. The calamity of a few electrons gently brushing down a hair of fiber with a fingertip is so much more unimaginable than the clumsy ham-fisted rage-mashing of a big red button. The terrible ease of it compels the question scrawled on the manuscript of the last movement of the last piece Beethoven ever wrote:

“Mu? es sein?” — “Must it be?”

The hydroelectric dams and superhighways in the Sino-sphere and the free markets and founding documents of the Western bubble are monuments symbolic of the future. They are meant to go on, and nations with a desire to continue can discover the values and feelings necessary to coexist.

In late 1987, Gorbachev and Reagan met in Reykjavik at a modest house by the sea to discuss the mutual nuclear disarmament of the previous cycle’s rivals for power and influence.

They failed. Never since has the world come so close to resolving the nuclear problem.?

Although they could not bring themselves to put down their arms, they found the strength to tear down their walls. Within five years Russia was a free market nation with a functioning democracy that enfranchised hundreds of millions of people, ushering in an unprecedented decade of Russian cooperation with the Western world.?

As a dear friend in the state department often reminds me, “China does not want to destroy us. They want to be us.” That is not the philosophy of a mortal enemy. Those are the dreams of people who represent 18.5% of the world’s population with a per capita GDP of $12,500.

Although the answers today are moving us into an uncertain and polarized world, let’s take heart in the following:?

1. ?The ideas of Adam Smith govern our world not because of his culture or his temporal wealth. They govern our world because they are true for everyone, everywhere.
2. Humanity’s freedom and prosperity have been increased in every macrocycle of humanity, never diminished.?
3. The electron — the smallest unit of energy in the universe — is the common potential in us all, no matter its current form. This is worth some meditation.

The Potential of Our Technology

The technologies that will ignite the future world order contain, as great forces always do, the possibility of our end as they energize our new beginning. And remember: the competition between these new spheres of influence that sows fear and doubt is simultaneously fertilizing wonderful new growth.

It’s catalyzing the development of impoverished and drought-stricken Africa, and that means greater healthcare, education, and opportunity for its 1.2 billion people. The need to evolve progressive social and environmental systems is promoting the advancement of women and the terraforming of deserts in the Middle East. Digital automation and AI are driving the nations of the Amazon towards a paperless future that is underpinned by values of stewardship and shared community with its native cultures and the world at large.

In the next 30 years, our advancements will sculpt the world in which we live into a place that is more educated, healthy, and happy. That has been the story of the West for the last 500 years, and the oppositional forces evolving in the East are simply the growing pains of onboarding 80% of humanity onto that train. It’s going to be challenging, but it’s high time.

As technology becomes pervasive and collaboration increases, a sustainable future is not only desirable but highly achievable. Our systems and capabilities will bear us along while empowering everyone to find a more local, personal, and individual way in that world.