Continuing each Monday another post from my 2001 book Hoover’s Vision, which you can buy here (www.scribd.com/doc/25085990/The-Art-of-Enterprise-by-Gary-Hoover-January-2010):
Eight Thoughts About the World
1. The “Pacific Century” is probably an American myth.
We have gotten into the habit of talking and thinking of the “Pacific century,” an outgrowth of the supposed “Pacific economic miracle” of the past two decades. This is usually phrased in the context that the previous era was the Atlantic era, and now we are switching to the Pacific. But the reality is that the “economic miracle” has primarily taken place in East Asia and Southeast Asia. It could be argued that we are at the beginning of the Chinese or East Asian century, but we are probably not on the threshold of the Pacific Century.
Furthermore, American writers describing “the Pacific Century” may be just trying to cut Europe out of the Asian opportunity. While the west coasts of North and South America have benefited from sharing access to the Pacific ocean, they are actually no closer to Asia than is Europe, as shown below. And most of Europe is considerably closerto Asia than London is. It’s possible to travel from Kowloon, the northern part of Hong Kong, all the way to Paris and Amsterdam by land.
When I travel around Asia, I see some elevators and escalators manufactured by Otis (an American company) and some by Mitsubishi (Japanese), but just as often I see ones manufactured by Schindler (European). Neon signs on the Shanghai riverfront include advertisements for such European brands as Nestlé and L’Oreal. A visitor to Asia sees as many signs for Unilever as for Procter and Gamble, and the streets contain a lot more Mercedes’ than Cadillacs or Lincolns. My guide tells me there are 45,000 Santana taxis in Shanghai, manufactured by Volkswagen.
The bottom line is that both Europe and the Western Hemisphere have the opportunity to participate in the Asian miracle, but only through hard work and paying attention to the needs of the marketplace, not by relying on any mythical shift of oceanic power.
2. It’s pointless to speak of one Asia.
Asia is best understood if it is broken into four regions – East Asia, Southeast Asia, South Asia, and Russia. While Russia is in many ways more closely related to Europe, most of its landmass falls into Asia. It is easy for Americans to think of Asia as one big continent and to think of its people as having a great deal in common – millions of poor people, good at math, etc., etc.
The reality is that this huge swath of territory contains peoples who have fought one another more ferociously than the Germans and French and for more centuries. The distances involved are enormous. On one trip to Singapore, my flight arrangements brought me back to the US through Tokyo. Before departing, I thought of this as a small detour. But once I got on the plane, I realized that flying from Singapore to Tokyo was the same distance as flying from the US to Europe.
The “Asian miracle” has taken place in selected countries from Japan to Thailand. Many others have not participated: Communist Myanmar remains locked off from the rest of the world, much like Cuba in our hemisphere. South Asia, anchored by India and including Bangladesh and Pakistan, vies with Africa for the dubious distinction of being the poorest part of the world.
Singapore, Hong Kong, South Korea, and Taiwan have sometimes been referred to as the “dragons,” up-and-coming nations following in the steps of Japan. But it’s risky to group these places so glibly, because they are all very different. Singapore and Hong Kong are the world’s two remaining city-states – compact, powerful port cities, completely urban, dominated by and reliant on vibrant international trade. But Singapore is in the heart of Southeast Asia, which has dynamics of its own, and Hong Kong is now a “special administrative region” within China. Taiwan, formerly part of China, may re-merge with China at some point in the future. The path to that end may be very rocky, but twenty years ago the peaceful reconsolidation of East and West Germany appeared impossible. And South Korea, perhaps the most dynamic of all, remains separated from North Korea – the same traditions yet so different – after fifty years.
The following table compares the economic growth of some of the “dragons” with selected other nations around the globe. You can see why economists get excited by just a few percentage point differences in annual growth rates.
GDP PER CAPITA (INFLATION-ADJUSTED)
Nation 1950 1989 Annual Growth Rate
United States 8,605 18,282 1.95%
Japan 1,620 15,336 5.93%
Mexico 1,594 3,728 2.20%
Brazil 1,434 4,402 2.92%
Thailand 874 4,008 3.98%
South Korea 757 6,503 5.67%
Taiwan 706 7,252 6.15%
India 502 1,093 2.02%
China 454 2,538 4.51%
3. The nation to watch is China.
“There is no people in the world wealthier than the Chinese.” So wrote Ibn Battuta, the “Marco Polo” of Islam, in the fourteenth century. His words may well come true again during this century.
Share of the World’s GNP
Based on the work of Angus Maddison; see Gateways.
You’ve probably heard that China is going to become one of the most powerful economies on earth. Don’t believe it. China is going to become the largest economy on earth. It is just a matter of when. Even the Chinese government cannot decide for or against this, they can only accelerate or slow down the inevitable process. The nation has 1.2 billion people, and its economy is already ranked in the top seven today. And after China’s conversion to capitalism, I believe its conversion to western-style democracy is inevitable.
Jiang Zemin is possibly the most powerful man on earth, in terms of his ability to influence the way the world will change in the years to come. The rise of China is being fueled by a smart, hard-working, disciplined citizenry. They are eager, reaching, and ambitious. Their children will not grow up in the same country that they grew up in. Change is taking place at breakneck speed. If you go to Shanghai today, you will see more neon than anywhere outside Las Vegas. Ten years ago, there was none. As of 1999, there were 54 KFC outlets in Shanghai. Across the river, they are building Pudong, an entirely new business city, replete with some of the world’s tallest skyscrapers.
When China “recovered” Hong Kong, it got back its commercial center, its New York City. When it got back Macau a few years later, it recovered its Las Vegas – its playground and den of forbidden pleasures. When and if Taiwan re-integrates into the mainland, then China will recover its Silicon Valley, with all the entrepreneurial and technological prowess that implies.
There is no turning back for China. Their leaders have said that they will not tinker with Hong Kong’s capitalism for at least fifty years. By the time those fifty years pass, those leaders will be long dead, and the new leaders will be children of MTV and KFC. They will have been raised with freedom of action, freedom of choice, and capitalism. I’d like to celebrate my one hundredth birthday in Shanghai just to see how it changes, how it all “turns out.”
It is unlikely that China will completely lose its traditional cultures in its transition to modernism. It is more certain that China will have an enormous impact on the lives of all of us. Our language, our music, our movies, our clothes, our thinking – all will be affected by the depth and intensity of historical Chinese culture.
As we deal with this powerful emerging nation, we only look like colonialists when we behave as if we have all the answers or “know what’s best” for these people. The Chinese people were powerful and innovative long before the rise of the western world – and they know it. Only they can control their own destiny.
4. Malaysia and Singapore are nations of the future.
Two of the clearest examples of strong leadership, where elected politicians have tightly controlled the evolution of their countries, are the neighboring nations of Singapore, long ruled by Lee Kuan Yew, and Malaysia, led by Mahathir Mohammed. While Lee recently retired and Mahathir may soon do the same, the effects of their leadership will last for generations. For these are two unique leaders – unique in their practical wisdom, their depth of vision, their ability to develop political systems customized to their nations and peoples, and in their readiness to put the welfare of the average citizen ahead of their own self-interest or the interests of powerful friends. In the west, Mahathir is often berated because he is cantankerous and opinionated. But the evidence I saw on my recent first visit to Malaysia suggests that he has been one of the most profound leaders of the twentieth century.
If you want to see people of all races living together in harmony, visit Singapore and Malaysia. Malaysia is roughly 60% Malay, 30% Chinese, and 10% Indian. All three groups are participating in the growth of the national wealth.
When I tell Americans that everyone gets along in Singapore, they sometimes respond, “In a little city, that’s easy to accomplish.” But Singapore is not so small—its population of four million people is greater than that of Ireland. How many US cities of comparable size are noted for racial, ethnic, and social harmony?
If you want to see a city of the future where everything works, visit Singapore or Kuala Lumpur, the capital of Malaysia. Both cities are remarkably clean and safe. You check in for your airline flight downtown and are whisked to the airport on a high-speed rail system that would be the envy of any US city.
If you want to see neighborhoods of the future, where fiber-optic cable is laid before any homes and offices have been built, visit Cyberjaya outside Kuala Lumpur.
If you want to see intelligently-planned urban growth, take a look at the Klang Valley, extending outward from Kuala Lumpur, where they are building three cities of 500,000 people each rather than one overblown and overcrowded metropolitan center.
If you want to invest in a stable economy built on the strong base of a well-educated population with a large middle class, invest in Malaysia or Singapore. I think of them as the Netherlands and Switzerland (successful smaller nations) of the future although Malaysia already has as many people as those two countries combined. Its potential is enormous.