Wednesday, 21 December 2011

Book Review: The Next Decade

It seems that Friedman is an author whom if you read one of his book, you have read all. In the review of The Next 100 Years: A Forecast for the 21st Century, I deposed that he has missed a number of key factors which will affect the next 100 years. In this book, I was expecting to read a proper analysis of the leading up to the current financial situation and what are the policy options for USA in the next decade. I am equally disappointed by his stubborn obsession of American domination as his book I last reviewed.

I disagree with his reasoning that the current financial situation in the America is part of a financial cycle. I agree with the view that it is the accumulation of no real wage growth while corporations reported soaring profits since 1980's. [ref] The middle class of USA has been collapsing. [ref] USA Government debt is about 100% GDP, almost as high as the one during the second world war [ref] The American's industrial base has almost completely off-shored to China. As I have noted in my last review, the intellectual capital of USA is also declining.

IMF predicts that China economy will overtake USA by 2016 which is within the scope of this book and Friedman just seemed unaware of this and continued to paddle that China will collapse due to internal conflict. [ref] Is that selective data gathering?

Politically, USA is corrupted. Bribery is legalized as lobbying. Friedman's notion that USA is an empire is ironically head-on. The government is working for a few privileged. The current style of western democracy has only been around for a few hundred years. When political leaders are elected based on popularity rather than demonstrated ability to govern and decision-making, one would wonder if the political system evangelized by USA is reaching its limits.

The next decade is an important decade for humanity. There are difficult decisions to be made, especially for the environment and climate - which is very much linked. Water, food, energy, climate, displacement of people are some of issues I was looking forward to.

Friedman did mention about water. He deposited that there are plenty, except not directly usable by human. The scarcity is fresh water and desalination is energy intensive and costly. Here are two possible projects USA government would have chosen to support. A few years ago, there was a project in Eritrea at which sea water was used to farm shrimps and fish. After that, the nutrient rich water is used to feed salt loving plants such as salicornia and then mangroves before returning to sea. Salicornia can by consumed by human, animals and/or converted into bio fuel. Unfortunately, the project was terminated by political reasons. If USA is to be a force for good, her political capital could have been used to save these projects. [ref] The other is seawater greenhouse as a possible solution for food and fresh water. [ref] While it is not too late to rescue the former project and provide support for the latter, if USA leaders, however, continue to think in line as described by Friedman, she could miss a golden opportunity and the world would be a little bit worse off.

Production of oil looks like have peaked in middle of the first decade of 21st century, a fact acknowledged by Friedman. If that is true, the price of oil will only go up. If USA economy can magically recovered in the next few years, the competition of oil from China and USA will drive the price to the roof, creating mayhem to a lot of people. Switching the transportation system to renewable energy source will need at least a decade. Switching baseline electricity load to renewable sources is also decades ahead. These infrastructures takes time to change. The geopolitical issue resulted from this is very dangerous if according to Freidman. Bumpy roads ahead, both for governments and people!

Food production is tightly linked to climate change. As the earth's average temperature is expected to continue to rise, extreme weather events will make food production unpredictable. Food price fluctuations would have significant political implications around the world - not only to USA.

If the consuming economy continues, one of the key resource in electronics and battery is rare earth elements. China has the largest reserve of them and produces almost 90% of all the rare earth elements in 2000. [ref] Again Friedman failed to see the importance of the control of these elements in a technological age and the implication to the USA economy.

When a country has been living out of her means for an extended time, when her political system is showing signs of weakness, when her economy is in trouble, when she is spending disproportionately in military rather than upgrading old and mal-functioning infrastructure, when intellectual capital is declining (comparatively), when health care cost is double that of the other nations' average without significant benefit, when a significant portion of the population is plagued by obesity, heart disease and/or diabetes, and a changing climate, declining energy source are in the near future, a world domination mentality would only led to a more dramatic decline. A policy based on military means to secure the scarce resources would only led to conflict. As there are many nations with nuclear capability, such a policy is very dangerous if not outright infeasible.

To be fair to Freidman, this book is about geopolitics and he was trying to look into a crystal ball. By missing several key factors, his future can only be wrong. He is also driving his predictions by a USA centric, dominating role overtune. For the sake of humanity, I hope there is no USA political leaders who will take his future as policy guides.

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