Fareed begins this chapter by asking us to reflect upon a simpler time...right around the year 2000. I was your typical 12 year old kid, more concerned with video games, bike riding and summer nights than world events and politics, however Fareed was a bit more mature than myself at that time. Looking from the year 2000 forward, it is difficult to predict how the next few years would play out...The most devastating attack on American soil occurs, launching two wars that have not gone as desired. At the time, the average (Inflation adjusted to 2009 dollars) price of oil was sitting pretty at 34.29/bbl and within a few years, would inflate by over 400% [1]. Nuclear proliferation continues to be a problem and world relations deteriorate as nations become hostile and imperious.
Fareed asks us the all important question that, from the perspective of the year 2000 and knowing the above events (and others that have occurred in the last decade) "How would we expect global economics to fare?" Being in this position and mindset, we would never expect that among all of the political strife and instability in the world that the global economy would fare so well, growing at its fastest rate in four decades! Personal income also increased at a rate faster than any other in history (3.2%) [2]. So how, then, does this happen? How is it that economic activity seems to have no connection with what else is going on in the world?
To this question, we have two answers, one of which Fareed touches on very intricately and I'll be rambling on about the other answer.
Most importantly, the world we're living in is, relatively speaking, rather (and unusually) calm. Fareed references a study by Ted Robert Gurr and a team of scholars at the University of Maryland's Centre for International Development and Conflict Management. It states that "the general magnitude of global warfare has decreased by over sixty percent [since the mid-1980's], falling by the end of 2004 to its lowest level since the late 1950's" [3].
"Hang on, back the truck up here. Every time I turn on my TV, I hear about Hezbollah rockets and IED's and Islamic Extremists out to get ME, so how can this be true?" That's just it. We're living through a revolution that has never occurred before in history. It is an information technology revolution that has turned the globe into a very, very small place. With very little effort, I can hop onto my computer and read up on political news in Western Europe, compare prices of sunglasses in the United States, talk with friends that are studying in Japan and working in Kazakhstan. As an offshoot of globalization, the world has become a
very small, flat place and information is accessible as never before. Through out history, I was never able to get instant updates on the slaughters in the killing fields of Cambodia nor was I able to hear live moment by moment broadcasts on the latest Tutsi bodycounts in Rwanda. Every IED that detonates in Afghanistan or every bus that is blown up in Tel Aviv is BREAKING NEWS and plastered across every network and medium available to me and as a result of the impact of this information revolution on our perception, the world only seems like a much more violent place than it really is. This, in part, explains the ability for the robust economic growth that has defined this decade.The second answer to the economic growth question is a bit more tricky. Here we go.
Throughout history, conventional thought has stated that general mayhem, chaos, war, instability and so on acted as a giant drain on economic activity, whether it be local, regional or global. In that sense, relative peace and stability were required to sustain and develop economic growth. In her book, "The Shock Doctrine", Naomi Klein states that this idea was the accepted reasoning as to why the 90's were so prosperous. "With the Cold War over, economies were liberated to concentrate on trade and investment, and as countries became more enmeshed and interdependent, they were less likely to bomb eachother" [4]. In 2007, the World Economic Forum held a conference in Davos, Switzerland. Davos was like, the hot party of the year to attend on the world economics circuit and all the big names were there...however, from the conference arose a paradox known as "the Davos Dilemma." The basis of the dilemma is that our worldly state of affairs flouts the conventional wisdom that has outlined our economic theory, or to put it bluntly "The world is going to hell, there was no stability in sight and the global economy was roaring its approval (...) You talk to International Relations experts and it's the worst of all times and then you talk to potential investors and it's the best of all times" [5]. So...what gives? Part of this can definitely be explained by Fareed's reasoning that it's actually not as bad as it seems, thanks to the ol' digital revolution but the rabbit hole goes much deeper than that.
In his farewell address given on January 17th, 1961, US President Dwight D. Eisenhower warned of the growing influence (both political and economic) of the growing Military-Industrial complex [6]. (For further information, see the attached link or even the 2005 Documentary "Why We Fight." It's pretty rad.) Today this Military-Industrial complex has permeated almost all elements of American society and has grown to wield incredible influence within American political circles. Companies such as Lockheed-Martin have themselves become emerging economic markets, with yearly government contracts (especially in the post-Iraqi invasion era) greater than the GDP of one hundred and three countries!! (In 2005 alone, Lockheed-Martin received 25 billion in tax payer dollars) [5]. With the help of 'Chicago School' economic theory, this Military-Industrial complex has evolved into a Disaster-Capitalism complex, an economic system that thrives off of economic and political chaos and instability (basically, what the Davos Dilemma was all about.) A very good example of this is the state of Israel.
Surrounded by states (Jordan, Iran, Syria, Egypt and so on...basically everyone) and NGO's of growing influence (Hamas, Hezbollah) that wish to push the state into the Mediterranean Sea, yet guarded by the world's only super power. Driven by a Zionist quest to acquire all lands promised to them (often by force, regardless of previous occupants) and dealing with the constant threat of ongoing retaliations and terrorist efforts...One can come to the conclusion that Israel is a pretty crazy place and yet, Israel is home to a robust economy and a strong currency. The thing is, Israel has transformed itself into a standing disaster capitalist apartheid state, an isolated fenced in green zone surrounded by a sea of fenced in red zones. In terms of economics, disaster capitalism has creeped into every element of Israel's economy, transforming it into a world leader in products (weapons systems/military
industry, surveillance equipment, facial recognition software, data management systems, and so on) and services (counter-terrorism training, urban combat operations and disaster zone reconstruction) that are related to the complex. In short, the Israeli economy NEEDS the strife and continued devastation to actually work. If tomorrow, there was complete peace in the middle east, the next day, the Israeli economy would fall apart and the Tel Aviv stock exchange would tank. Israel serves as an extreme example for the Western world, but can be used to highlight the development of Disaster-Capitalism as a driving economic force and helps, along with Fareeds explanation of the digital revolution, to explain why economics thrives during times of political instability and uncertainty.One of the threats to global growth at the end of Chapter 1 was a dramatic rise in the tactic of terrorism and specifically, Islamic Terrorism (At this point, we should note that Fareed is an Indian-American Muslim.)
It is my personal opinion that the tactic of terrorism, in respect to its core principles, has next to nothing to do with religion and was the subject of a term paper I authored for a socio-cultural anthropology option. It is a political tactic and to improve its "marketability," is sold to the public under the guise of religion. In just about every case where we've seen terrorism, there are political motivations driving the actions (protest of military
occupation, economic and political strangulation, genocide and repression, etc.) The fact of the matter is that fundamentalism will persist no matter what the situation or where you're located. That is pat of life and we as a people will become accustomed to it and able to move on. However, it is important to note that threats of terrorism have been greatly reduced through targeted efforts by counter-intelligence agencies through out the world and by world banks. Fareed notes that in our globalized society, the flow of capital from one place to another is crucial to any business venture and the same goes for terrorist organizations. The tracking and restriction of funds linked to terrorism has greatly reduced the ability to stage large scale international attacks and as a result, organizations are becoming decentralized and force to carry out local attacks which, unfortunately, take the lives of locals. As such, the support base for terrorist actions has in many cases, dropped dramatically (an exception would be Hezbollah and Hamas, who have partially legitimized themselves and risen to provide much help and support to a population that is in dire need.) 
Additionally, Fareed has observed that terrorism is an unusual military tactic as it relies on the reactions of the observer to be successful. With each shock, we become less and less affected by it and able to continue with our lives. "After [9/11], Global financial markets did not return to September 10th levels for two months. After the Madrid bombings in 2004, the Spanish market took a month to recover. After the London bombings in July 2005, British stocks were back to prebombing levels in twenty-four hours" [7]. So the point of all of this is that yes, terrorism, fundamentalism, rogue states and so fourth are obstacles to global growth but with each incident the power to impact the population, markets and growth of the world is lessened. As a global people we are learning from our experiences together and recovering, and the trend continues upwards. ...However, some people back home would have you believe something different. Enjoy the link.
http://www.youtube.com/watch?v=y2iFhGtKO-Q&feature=channel
So, things are good and we've got a good base to build on...but what brought us here? Fareed argues that more or less, three forces alone can account for the rise of the Rest. Economics, Politics and Technology.
"Alan Greenspan has described the fall of the Soviet Union as the seminal economic event of our time" [8]. With the fall of the USSR, the ideology of the right wing collapsing and centralized planning completely discredited, the entire debate on how to organize an economy shifted. All of a sudden, the only viable option to running a country seemed to be a full on capitalist (or at the very least, a quasi-capitalist, for those who were still nervous about liberalization and privatization) approach, as The Iron Lady once put it during her own country's free market reforms..."There is no alternative." The fall of the USSR is also tied in with the political forces that drove globalization and the rise of the Rest. Suddenly, the United States became the dominant player and there really wasn't anyone around who could offer any real, solid, straight up opposition like the Soviet Union could. As such, Washington was free to exert its influence directly (influence on the movement of capital) and indirectly (IMF, WorldBank, etc) across the entire globe, unopposed. As a result of the spreading of this influence, many countries removed capital controls and tied their own currencies to the dollar. The free flow of currency then allowed for the creation of many state controlled central banks and along with a very conservative monetary policy, the globe was able to tame inflation and keep interest rates very low, which in turn fuelled the surge of currency trading and capital growth. At the time of publishing, Fareed notes only twelve countries with inflation rates over 15% (mostly failed states, he says) however, linking back to the point I made in the last chapter, this statistic has changed and (unfortunately) increased as the global recession has reared its head.
The wave of Technological Innovation (the beginnings of the aforementioned digital revolution) caused further change. The resulting communication expansion allowed for a revolution in labour that has never before in history occurred. The advent of broadband has thus driven the cost of transferring goods and (especially) services for many corporations down to nearly zero, and has in part contributed to the transition of the US economy into what is largely a 'service based' economy. The communication revolution and in part, the transfer of labour, goods, and services fuelled globalization by allowing corporations to develop supply chains that spanned multiple (mainly, non-western) countries and as a result, helped fuel the economies of those countries and in turn, fuel the rise of the Rest. A startling prediction by Goldman Sachs states that if current trends continue, by 2040, the economic output of China, Mexico, India, Brazil and Russia will have a larger combined economic output than the G7 countries [9].
Since there is so much to cover in this chapter, i'm going to be breaking it up into two sections. Stay tuned!
References:
F. Zakaria The Post-American World, New York: W.W. Norton & Company Inc. 2008.
[1] http://www.inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
[2] Pp 7
[3] Ted Robert Gurr & Monty G. Marshall, Peace and Conflict 2005: A global Survey of Armed Conflicts, Self-Determination Movements and Democracy, Centre for International Development and Conflict Management, University of Maryland, College Park (June 2005).
[4] N. Klein The Shock Doctrine, London: Penguin Books, 2007. Pp 423
[5] N. Klein The Shock Doctrine, London: Penguin Books, 2007. Pp 424
[6] http://en.wikisource.org/wiki/Eisenhower%27s_farewell_address
[7] Pp 15-16
[8] Pp 22
[9] Pp 26
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