The growth in emerging markets is not just at the economic level. It’s also happening in terms of psychology. Chinese, Indians, and Koreans are feeling a much greater sense of political confidence and assertiveness. You see this on the world stage everywhere.
Q. Governments are more confident, or their citizens?
A. Both. Chinese officials point out in painstaking detail how they handle their economy much better than the United States handles its economy. Indian bankers say that their central bank was much more sensible [than America’s] during the boom years. In the past, everyone tended to think that America knew how to manage its macroeconomy better than anyone else. Now these countries are experiencing 30 percent growth every year.
You see it in the private sector as well. The emerging countries’ middle classes are now playing out the American dream. The Indian middle class, for example, is bursting with optimism. They’re buying on credit in a way that they never did before, because they were too scared of the future. Now they all believe their lives will be better than [those of] their parents, that their children’s lives will be better than theirs.
Q. You write that “the rise of the rest is a consequence of American ideas and actions,” but also say that these countries are entering the Western order “on their own terms.” How are they doing it?
A. These countries have embraced open markets, open trade, free market economics – basic American ideas about how to control your supply. It’s the fundamental driver of their growth, growth that has produced a certain kind of cultural pride. It’s an inevitable consequence of success. Whenever societies do well, they believe that there is something in their cultural DNA that made it happen. The first phase of this power shift was a fascination with the West. But now these countries are rediscovering their own values and heritage.