Zachary Karabell

Zachary Karabell
Company
River Twice Research
Bio
Zachary Karabell is an author, historian, money manager and economist. Karabell is President of River Twice Research, where he analyzes economic and political trends. He is also a Senior Advisor for Business for Social Responsibility. Previously, he was Executive Vice President, Head of Marketing and Chief Economist at Fred Alger Management, a New York-based investment firm, and President of Fred Alger and Company, as well as Portfolio Manager of the China-US Growth Fund, which won both a Lipper Award for top performance and a 5-star designation from Morningstar. He was also Executive Vice President of Alger's Spectra Funds, a no-load family of mutual funds that launched the $30 million Spectra Green Fund, which was based on the idea that profit and sustainability are linked. At Alger, he oversaw the creation, launch and marketing of several funds, led corporate strategy for acquisitions, and represented the firm at public forums and in the media. Educated at Columbia, Oxford, and Harvard, where he received his Ph.D., he is the author of several books, including the forthcoming Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It, which will be published by Simon & Schuster in 2009, and previous books such as A Visionary Nation: Four Centuries of American Dreams and What Lies Ahead, The Last Campaign: How Harry Truman Won the 1948 Election (which won the Chicago Tribune Heartland Award for best non-fiction book of the year), and Peace Be Upon You: The Story of Muslim, Christian and Jewish Coexistence (Knopf, 2007), which examined the forgotten legacy of peace among the three faiths. In 2003, the World Economic Forum designated Zachary a "Global Leader for Tomorrow." He sits on the board of the World Policy Institute and the New America Foundation, and is a member of the Council on Foreign Relations. He is a regular commentator on national news programs, such as CNBC, CNN, and a contributor to such publications as The Wall Street Journal, The Los Angeles Times, The New York Times, Newsweek and Foreign Affairs.

Zachary Karabell's Links

Salon.com
NOVEMBER 14, 2009 12:22PM

The U.S. and China - The Defining Issue of Our Day

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Cross-posted at River Twice Research.

In his current Asian trip, President Obama visits Japan, then addresses a forum of leaders in Singapore, and eventually ends up in Seoul to discuss nukes and North Korea. But make no mistake, the axis of this week is the time Obama will spend in China, which has catapulted to the forefront of international affairs and is on its way to joining the United States as the alpha and omega of the global economic system.

That China has emerged is secret to no one, but the consequences haven’t been fully integrated - either by the United States or by China. The level of intertwinement between the two economies has reached the point where they have effectively merged, forming what I’ve called an economic “superfusion.” But that fusion hasn’t yet altered political and cultural mindsets.

The ministers of the world still beseech the United States to “do something” about a weakening dollar, and U.S representatives on the eve of this trip announced that after the financial morass of the past 15 months, the United States “is back.” Yes, the United States remains the world’s largest economy - though technically the combined income of the European Union is greater. But size isn’t everything - just look at Japan, which is still the world’s second largest economy but whose influence and impact are substantially less. China may be poor on a per capita basis (perhaps $5000 per person relative to nearly $50,000 in the United States), but it is changing more rapidly and consuming more hungrily that any other society in the world. It is the change factor in the global system.

Chinese leaders, however, have a tendency to downplay their outsized presence and retreat to a combination of false modesty (”Who us? We’re just a poor, developing nation”) and baton-passing (”The Americans are the ones who messed up the system and they are the ones who have to fix it, and oh by the way, make sure that our $800 billion in Treasury bonds and $500 billion in other investments don’t lose value!”). Their doctrine of non-interference in the internal affairs of other countries is a welcome relief for some who have grown tired of the American tendency to do the opposite, but it also is an increasingly ineffective dodge of the responsibilities that come with hundreds of billions of dollars of investment in Africa, Latin American and Central Asia, as well as hundreds of billions of dollars in trade with the United States, Japan, Korea, the EU and the rest of the world.

Americans, however, still don’t quite get it. China represents the first time in any American’s lifetime that the United States is faced with a country that it cannot coerce. Even the Soviet Union was vulnerable in its way to American military might. China doesn’t even pretend to compete with the United States militarily (though it is aggressively spending on “asymmetric” warfare such as disruptive communications technologies and other methods that would impede the ability of the U.S. military to operate smoothly in the Pacific Rim). And there is no real stick for Americans to wield when it doesn’t like how China behaves, whether that is in the realm of human rights or intellectual property. For America, China is a ‘welcome to the real world’ phenomenon, a case where the United States has to do what most other societies have learned to do for centuries: deal with things they don’t like in other countries without being able to force them to behave differently.

The issue for American going forward has little to do with China and everything to do with America. Can Americans rediscover the energy and innovation that brought such power and prosperity in the first place? Can the United States respond constructively to a changed global status that sees the rise of wealth and prosperity everywhere from Brazil to India to China? And can the U.S. government remove its collective head from the sand and act with the urgency that everything from climate change to economic competitiveness demand?

The problem of China for America is that it is a large but amorphous issue, unlike Afghanistan (do we send troops NOW?) or health-care, with its endless and acrimonious battles in the beltway. There is no vote, or quick resolution or unitary policy that will “solve” China. That allows it to linger as a concern, but not to shape action.

So while Obama’s visit is important in form and a start, it cannot be a one-off, full of pomp and devoid of substance. Somehow, the United States must shake of the collective grogginess of Cold War, terrorism, financial crisis and inequalities and grapple with a world that is evolving and changing around us whether we like it or not. There is still time, but that clock is ticking and midnight is approaching.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

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Enjoyed reading this. I live and work in China. I like the changing times, the signs that show America, and the American way of life, isn't the only game in town.

A couple edits, for your consideration:

The issue for American going forward... (America)

Somehow, the United States must shake of the collective...(off)

My answers to your questions:

Can Americans rediscover the energy and innovation that brought such power and prosperity in the first place?

Power and prosperity are no longer matters of energy and innovation, due to and over population. Nations like American will NEVER be the same again. Like the world's oil reserves, America is in decline and there's no turning back. China is booming, developing, just like America once was, but the those in power here are also barking up the wrong trees, leading us, the average, working-class citizens of the planet, down the primrose path of extinction.

Can the United States respond constructively to a changed global status that sees the rise of wealth and prosperity everywhere from Brazil to India to China?

Sadly, no. Human nature is going to destroy its own species and by the time the leaders, those in power, the governments of the world's superpowers wake up and smell the depleted ozone. The game is already over, we just don't know it yet.

And can the U.S. government remove its collective head from the sand and act with the urgency that everything from climate change to economic competitiveness demand?

Are you kidding? The American government is its own worst enemy, a reflection of man's savage and greedy incompitility with nature, with the natural order of things. America is finished, and the power players, the wealthiest 1%, have no intentions of changing the status quo of moneymaking - business and economic development - above all else, and the corporate exploitation and take over of the civilized world as we know it.

It's like a movie now: who will be the wealthiest of the wealthy to buy the golden tickets aboard those life-saving arcs of 2012? The rest of us will perish, including our own children's children, and a new theory of evolution, survival of the wealthiest, will be the deciding factor in the next phase of human history.
Power and prosperity are no longer matters of energy and innovation, due to CATASTROPHIC ENVIRONMENTAL ISSUES and over-population.
we handed China our consumer market on a silver platter
of course they are doing well!

we will do better only when we look out for ourselves on trade and restore the middle class in this country