Rediscovering the West

Published in Insights, The New Zealand Initiative’s newsletter, 11 October 2019

When future historians look back at our world today, they will regard it as the end of an era. Over the space of just a few years, the fundamentals of our political and economic order have all changed.

In some cases, change reverses decades of development. In others, centuries. In one extreme case, millennia.

In combination, we are witnessing the greatest shift in the fortunes of humankind in centuries. But we may be too ignorant of history to even recognise it.

To start with the most extreme change, the world has never seen interest rates as low as today. A staggering US$17 trillion of bonds are now trading at negative yields.

This has never happened before. From ancient Mesopotamia circa 3000 BC until just a few years ago, interest rates had always been positive. They were 10 percent in ancient Greece, 20 percent in 15th century Venice and 10 percent in 18th century England.

Whatever the reasons behind the global shift towards negative interest rates, it is unprecedented. We have no map to navigate this economic world. There is no sign pointing out the exit, either.

We are simultaneously moving away from another order that lasted about half a millennium – the global dominance of Europe and America or “The West”: militarily, politically, scientifically and economically.

At its peak in the 1950s, the US and Western Europe accounted for well over half the world’s economic output. With the recent rise of Asia, that share has fallen to under 40 percent and it will continue to fall. That is a good news story for hundreds of millions of Asians, and a significant shift in the global architecture.

Another significant change is the decline of the liberal-democratic order. After the Cold War, there was hope for a new liberal world order. However, over the past two decades, entire countries have turned towards authoritarianism.

Meanwhile, support for classical liberal values is falling in the West – and being replaced with rising populism on the right and identity politics on the left.

Each development would be historically significant on its own. Together, and combined with rapid technological change, we are moving into an entirely new world. And sadly, it is not one guided by Enlightenment values.

This could be a reason for despair. It need not be.

But it must be a call to action: To re-engage with those foundations on which Western civilisation was once built and on which it thrived for centuries.

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