Monday, May 17, 2010

West - decline or browning

Stephen King of HSBC has come out with a new book. According to the reviews, it forecasts the decline of the west in the context of the current crisis. I was of a similar opinion. 

The decline of west is not specifically a decline but more like mean reversion. Asia was a significant player in the global context for mos of the past 2000 years. The recent 500 years have pushed the west ahead. With this background, coupled with the current weakness in the households and governments, there is a compelling case for a relative decline or more correctly a stagnation of the west.

Yet the infrastructure in west is fundamentally very sound and hence it is hard to make a definitive conclusion. A more reasonable approach seems to be one suggested by John Hempton. He refers to what I call a "browning" of the west. It implies a population growth through migration, predominantly from Asian region.

If and how will the western world react to this new trend remains to be seen. One predictable response should be a wave of protectionism against people movement. Possible job protection and corresponding labour harsher labour laws is likely. Yet even this is not certain. Europe has shown surprising resilience in protecting and upholding democracy and capitalism. It is possible they might stand up to negative developments again.