Deep Factors Shaping the Global Economy

Outrageous Fortunes is a book about what in economic terms, could be. It is a provocative guide to global trends. Instead of focusing on moment–by-moment market predictions, author Daniel Altman, looks at deeper, underlying economic factors that we frequently overlook in the short-term view. Fundamentally, he states that “over long periods of time, countries with similar deep factors tend to reach similar limits of growth and prosperity.”

And it is the deep factors matter the most says Altman. “They will determine whether entire generations—hundreds of millions of people—live better or worse than their predecessors. The deep factors’ origins lie in geography, climate, culture, politics, and historical accident.

As a result, he speculates that China’s moment in economic history "will be impressive, but brief.” With corruption, lack of a first-rate technology infrastructure, resistance to start-up businesses, and an aging population, average incomes in China will grow at lower rates than in the U.S.

He asserts that American’s will find new sources of work in their “selling power.” He isn’t ignoring the fact that we are losing jobs to the Internet or that people do sell all over the world, but his point is that American culture has made Americans uniquely suited to sell products and services over a more diverse (global) population. The primary attribute of the American way of selling, says Altman, is the ability to “transcend cultural differences by isolating the lowest common denominator.”

As this is the long view, Altman says that means that there is room to maneuver. Over a period of 20 to 30 years, it is possible to make the necessary changes needed to alter our economic futures. But it will take will and political continuity. “The people and leaders need to perceive the risks, grasp the opportunities, and commit to maintaining the same posture even as the parties in power change.” This is not easy for it requires one generation sacrificing for the next and long-term political thinking that is so rare these days. To solve our global issues, “countries will have to work together.” “Yet,” he fears, “the political institutions that provide the framework for global problem-solving may not be up to the task.”

He gives a couple of reasons why the gaps developing from the forces of economic integration and rapid globalization will threaten the cooperation necessary to solve our problems. “First, when people live very different lives, it becomes harder for them to understand or even be aware of one another’s problems….Second, it’s hard for two very different countries to negotiate on equal terms, even with a supposed level playing field.” The negotiations can take on a “coercive quality.”

Whether his predictions come true or not, there is plenty here to think about as we look ahead. And as I’ve written before, the challenge isn’t leading a tribe, it’s leading across tribes. That requires a very different mindset and approach to people and ideas.

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Posted by Michael McKinney at 09:51 AM
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