TIME: Almanac 1995

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<text id=92TT2303> <title> Oct. 15, 1992: How the World Will Look in 50 Years </title> <history> TIME--The Weekly Newsmagazine--1992 Oct. 15, 1992 Special Issue: Beyond the Year 2000 </history> <article> <source>Time Magazine</source> <hdr> SPECIAL ISSUE: MILLENNIUM -- BEYOND THE YEAR 2000 THE CENTURY AHEAD, Page 36 How the World Will Look in 50 Years </hdr><body> In the coming economic struggles, Japan will weaken, Europe will triumph, and the U.S. will swallow some bitter cures BY BRUCE W. NELAN - With reporting by Ratu Kamlani and Katherine L. Mihok/New York Just as wars -- two World Wars and, equally important, the cold war -- dominated the geopolitical map of the 20th century, economics will rule over the 21st. All the big questions confronting the world in the century ahead are basically economic. Is the U.S. in an irreversible decline as the world's premier power? Will Japan continue its competitive conquest of international markets? Can Europe manage to hold together the world's largest trade bloc in the face of strong centrifugal forces? And does the future hold any hope at all for the poverty-stricken Third World? This concentration on economics will be made possible by the prospect of general peace in the 21st century, heralded by the lifting of the nuclear arms threat in the 1990s. In the century ahead, the world will contain more democracies than ever before, and they will dominate in Europe, the Americas and the countries of the Pacific Rim. Since it is a truism that democratic states do not make war on one another, warfare should become essentially irrelevant for these nations, most of which will reduce their armed forces to the minimum necessary for individual or collective defense. "We're not going to see nation-states bullying one another as they have in the past," predicts senior analyst Carl Builder of the Rand Corp. New realities will also curb the old acquisitive impetus toward imperialism. Raw materials of all sorts, for example, will lose much of their importance because the manufacture of 21st century products will use fewer and fewer of them. Even the need for oil, now the most vital of interests in the West, will fall from the strategic agenda as it is replaced by solar power and controlled nuclear fusion. The end of the petroleum age will make the Arab states of the Middle East poorer and less stable but of declining interest to the West. The Islamic world, powerfully resistant to modernization, will tend to isolate itself. Unfortunately, the lifting of the nuclear threat in the 1990s will continue to create opportunities for mischief among some nationalist ideologues and local despots. In the decades ahead, the major powers will ignore most petty tyrants and the brutal but small-bore wars that they foment -- unless they seriously endanger their neighbors or threaten their own people with genocide. When that occurs, the United Nations will, in most cases, authorize joint armed intervention. When it does not, the U.S. and other states that share its views will act on their own. But cooperation with the U.N. will be the norm, in both warlike and peaceful pursuits. The world will have to utilize the powers of the U.N. to solve other overreaching problems, such as environmental pollution, global warming and damage to the ozone layer, that cannot be approached piecemeal. John Steinbruner, director of foreign policy studies at the Brookings Institution in Washington, foresees "a much more advanced form of international politics, involving more sophisticated coordination and more consequential decisions made at the international level." The U.S. will remain the one reigning military superpower in this less heavily armed world. Its forces will shrink considerably to enable it to concentrate more of its energies on economic and social advances, but it will continue to provide global outreach with state-of-the-art weapons and an invulnerable nuclear arsenal. The U.S. will have to preserve this role because the technical know-how to build nuclear weapons cannot be abolished no matter how carefully arms-control treaties are drafted. Truly determined governments, among them many smaller nations that covet prestige and power, cannot be prevented from buying or building nuclear arms. The U.S. will have to be prepared to deter nuclear-armed dictators, and to intervene against them if necessary, in order to protect its friends and head off nuclear blackmail. The competition that is normal and inevitable among nations will increasingly be played out in the 21st century not in aggression or war but in the economic sphere. The weapons used will be those of commerce: growth rates, investments, trade blocs, imports and exports. "The move to multinational trade blocs around the world has suppressed nationalism," says Gregory Schmidt of the Institute for the Future in Menlo Park, California. "Economics will eventually win out in the 21st century." In his new best seller Head to Head, M.I.T. economist Lester Thurow writes, "World trade in the next half-century is apt to grow even faster that it did in the last half-century. Any decline in trade between the blocks will be more than offset by more trade within the blocks." The big winner will be Europe. At the opening of the 21st century, the European Community will comprise an integrated market of 20 countries, newly including such advanced economies as Switzerland, Sweden, Norway, Finland and Austria. By the middle of the century, it will have added the Czech republic, Hungary and Poland, and its members' population will total more than 400 million. By then, Ukraine, Russia and most of the rest of Eastern Europe will have achieved associate membership in the Community. That last stage of Europe's growth will demand a lot of work. Eastern Europe's conversion from communist central planning to democratic market economies is one of the most difficult undertakings imaginable. As the Carnegie Endowment's National Commission referred to it in a report last July, "You can make fish soup out of an aquarium, but you can't make an aquarium out of fish soup." What exists in Eastern Europe -- mostly antiquated factories, worthless currency and a socialist hangover -- will have to be replaced. What does not exist -- a commercial banking system, marketing networks, cost accounting -- will have to be created from scratch. The biggest hope for the future of the old socialist world is its very well-educated work force and a high level of science and technology. Another major plus for the emergent democracies will be the eagerness of governments in the West to do everything necessary to build prosperity in the East in order to keep waves of economic migrants from rolling over Germany, Italy, France and their neighbors. As Western investments and technical assistance take hold, the East will forge ahead. East Europeans will drop their most extreme nationalist and ethnic preoccupations in order to qualify for the economic payoffs they expect from association with the E.C. Of course, some countries, including Romania, Bulgaria and Albania, will simply not be able to transform themselves. On the other side of the world, the astonishing Asians will continue their success story, but with more diversity and less coordination than Europeans. Japan will not have things so much its own way in the next century. Its ultramodern and finely calibrated economy will not falter, but several factors will impose limits on its once seemingly boundless growth. To begin with, Japan's special sort of samurai work ethic will be under assault. Coming generations of young "salary men" will be less willing to work such grueling hours. They will want more leisure time, larger apartments, shorter commutes. Japanese men and women alike, no longer content to be poor people in a rich country, as they describe themselves, will demand a larger share of the national wealth they create. The resulting higher consumption at home will inevitably mean more imports and a reduction in Japan's trade surpluses. Problems for Japan are already building up in the Pacific Rim and are bound to intensify. Tokyo's long-range plan for growth is to bring in the raw materials it needs from Russia and steadily increase its sales of manufactured products to what it envisions as a vast market in China. But things will not work out quite that way. Communism will collapse in China, clearing the way for the powerhouse of Taiwan to join Hong Kong as a special economic zone of the Chinese motherland. Even with their help, however, China cannot grow into an industrial giant in the 21st century. Its population is too large and its gross domestic product too small (it is expected to reach only $900 per capita by the year 2000). China's economy seems to be growing at 7% in 1992, but, as the former Soviet Union and East Germany once did, Beijing cranks out phony statistics. Moreover, China's growth projections are based essentially on light industry. China will have a potential alternative supplier in Korea, where communism will be abolished in the North. The merged Koreas will prove to be a strong competitor to Japan. Right now, all Asia's "little tigers" -- South Korea, Taiwan, Hong Kong, Singapore -- run considerable deficits in their trade with Japan. In the 21st century, they will be as much Japan's rivals as its trading partners. Like the rest of the world, they will be less willing to buy from a Japan that does not buy much from them. The hard laws of economic life also decree that in the 21st century, the rich will generally get richer and the poor poorer. In order to rise to a level of prosperity, a developing country must achieve decades of high growth rates while simultaneously holding its population stable. Few will be able to manage that trick successfully. India in 2025, for example, will have 1.4 billion people. By 2050 the world's population is likely to have surged from the present 5.5 billion to 11 billion, and its production of goods and services will have quadrupled. But almost all the population increase is projected for the less-developed countries, while most of the increased output will occur in the industrial democracies. Moreover, developed countries are already buying less from the Third World and more from one another. Even now, trading by the three main economic regions -- Europe, North America and the Pacific Rim -- accounts for 75% of the world's total. Over the past decade, 20 of the world's 24 largest industrial powers have signed bilateral agreements that regulate their trade and set up new barriers to imports. If the dynamics of the 21st century produce a gloomy outlook for the poorest countries, the most bothersome question facing much of the world is about the fate of the U.S. There is no doubt, of course, that America will be a major player on the world scene. Its military power, its 20% share of the world's gross national product and its mastery of such cutting-edge fields as biotechnology, microprocessors and information technologies guarantee that. It will bestride the North American Free Trade Agreement like a colossus. But serious worries shadow the U.S. future. The country has run a $1 trillion trade deficit over the past 10 years, and its national debt is more than $4 trillion. One day the U.S. will have to pay those bills. And the only way it can do so is to stop devouring the products of other nations, put more of its wealth into investment at home and greatly expand its exports. Aside from the skewed balance sheets, there are serious doubts about the country's intrinsic health. Its educational system is in crisis, its industries faltering, its investment in itself too meager. "In a world whose workers require ever more basic education, technological savvy and specialized skill," Marvin Cetron and Owen Davies write in their book Crystal Globe, "America's schools are the least successful in the Western world." Says Brookings' Steinbruner: "There's no way of overcoming disparity in economic fortune without overcoming the disparity in education." U.S. spending on civilian research and development is 10th in the world, a level that M.I.T.'s Thurow estimates will "eventually lead to a secondary position for American science and engineering and lower rates of growth in productivity." Will the U.S. be able to diagnose its ills and swallow cures that are certain to be bitter? Probably. The country is good at rising to occasions, once it recognizes them. The end of the cold war has released immense resources and millions of talented people who can now turn to the repair of America's damage. Because the U.S. is, among other things, an evenhanded superpower and a vast market, most of the world has a stake in its continued success. But if the U.S. is to be counted among the winners in the next century, it will have to make gravely important decisions -- and act on them -- before the end of this one. </body></article> </text>