It is time to give a surprise quiz about the state of the national economies of the world. There may still be a general understanding that, despite all negative developments of the last decade, the US still packs a powerful economic punch. But President Obama has displayed a surprising and very disappointing isolationist, fortress-America position on economics. The front page of last week’s edition of the Canadian national news magazine MacLean’s dealt with a topic that is being considered in many countries: “Obama, Why He’s bad for Canada – His ambitions could cripple our economy”. US Buy America policies have been put through by his regime, with the predictable Canadian retaliation, despite long-standing Free Trade agreements. The very big question of the future markets of Canada’s immense energy reserves is now being discussed with regard to European and especially Asian markets, with far less dependence on US markets. The result could be a blow to the economies of both the increasingly antagonistic neighbours. Last week the US Homeland Security lads forced an Air Canada plane flying from Fredericton, New Brunswick to Montréal, Quebec to turn around in mid-flight, somewhere over Maine, because a Canadian citizen was on board whom they didn’t like crossing US air space. You can’t get much less neighbourly than that.
Perhaps these are problems that can be addressed, however, and the US still produces over 30% of the world’s economy. But what about China, which garners much of the journalistic interest in trade and economy these days? How dominant has it become in that sphere? Do you think that China will soon replace the US as leading economic power? Well, think again. The fact is that China’s economy is still only one tenth the size of Japan’s, and produces less than 10% of the world’s economy. Many economists feel that India, not China, is the real rising economic power in Asia, as it reacts more flexibly to the current economic crisis and deals with it through a banking system that is much more reliable.