Transcription
So where we are geopolitically is that the world is rebalancing, but especially what has happened is Asia's rise. And Asia has many different parts to it, and it's very interesting to attend to the different parts of Asia. Um, and I won't do a long excursus about this except to say that it's such a fascinating story because of course Asia is about 60% of the world population. So it's, it's a lot of human history.
But when European imperialism dominated Africa and Asia in the 19th century, one country in Asia, uh, escaped colonial rule, uh, in either a direct or indirect way. It nearly fell under colonial rule but escaped it, and that was Japan. Uh, and it's a fascinating story, but Japan reacted to the arrival of American imperialism, uh, actually with the, the US Navy showing up in Tokyo Bay in the 1850s, by having a decisive, I call it a capitalist revolution, uh, in 1868 called the Meiji Restoration. And they said, "We've got to get our act together, otherwise we're going to fall under the sway of these western barbarians." And they did get their act together in the most remarkable way.
And one of the things they did, which is one of my favorite stories of economic history, is they sent, they didn't have the internet then, uh, connectivity was weak. So they established a commission in 1868 to tour the world to find out what were the best practices of the most powerful countries, called the Iwakura Mission. And it went off to the world and came back with 18 volumes of observations about Europe and the United States and what to do. And they made radical reforms in the early 1870s, and that propelled the first industrialization of Asia. And they got so good at it that by 1895, they became an imperial power. Uh, so it was something in the, in the mindset. It's actually also an incredible story.
In 1894, Japan invaded China. And a Chinese diplomat said to his Japanese counterpart, "Why are you invading us? We're being attacked by the barbarians from the West, and you're attacking us." And the Japanese diplomat responded, "Oh, sorry. We have joined their club." That's a literal quotation from a wonderful book by Ezra Vogel about China and Japan facing history. And the Japanese became Western imperialists, wannabes, uh, and invaded China repeatedly up until 1945 and colonized Taiwan and Korea and so forth.
Anyway, back to our current events. This Asian dynamism started with Japan. Japan then became the imperial power of East Asia. It launched World War II in Asia, of course. Quite, and it was, they were absolutely brutal, by the way, stunningly brutal, with 10 to 20 million Chinese dying, uh, during, uh, World War II. A story very few people know. And I certainly did not know in detail until reading a wonderful book this year by a Harvard professor named Rana Mitter, called "The Forgotten Ally," about what happened to China during World War II and how, how completely devastating that war was.
But in any event, after World War II, Japan almost immediately recovered within a 15-year period because the United States rebuilt Japan with a lot of Japanese effort, of course, but rebuilt Japan to be a bulwark against communism, uh, in East Asia. So, the US gave an extra hand. So, that started the Asian recovery after World War II.
Then came all the countries that followed Japan's example, how to grow rapidly, because Japan invented a rapid growth strategy first in the 1870s, and then they did it again after World War II. And it's a mix of state and market. It is state-guided market growth. And if it sounds familiar in China, it's because China learned it from Japan. Actually, China learned it truly from Singapore, which had learned it from Japan. So, first came Japanese growth. Then came the so-called Asian Tigers: Taiwan, Korea, Singapore, and Hong Kong.
Then, Deng Xiaoping came to power in China in 1978. Had a long conversation with Lee Kuan Yew when he visited Singapore and implemented the Singapore model, I would say, which was the Japanese model, and implemented it so well that 1.4 billion people became a high-income, technologically dynamic rival of the United States within a 40-year period. And the next step of this is India, which is about 20 years behind China chronologically in the development. India looked over at China, said, "What the hell's going on? We have to reform." And India began its reforms in the 1990s, opening up to the world, ending a what they called the "License Raj," which was a completely bureaucratic, mixed-up system, uh, opened up to large entrepreneurship, and starting in the early 2000s, began rapid economic growth as well.
And then two other regions that I would mention in Asia, one is Central Asia, uh, which reached its pinnacle of economic influence in the year 1400 when the Silk Road was the dominant transit between Europe and Asia. But after Vasco da Gama, the great cities of Central Asia, Samarkand, Bukhara, and others, fell into museum status, in a way, because their role in East-West trade was ended by the Suez Canal and the Cape of, by the Cape of Good Hope first, and then the Suez Canal in the late 19th century. But now Central Asia is saying, "We're back again." Uh, because overland transport is actually quite efficient and much faster than the sea routes, and China's really good at fast rail. And so Central Asia is also experiencing a proto-boom, I would say, as the East-West connector. Uh, so this is still to be formed and to be solidified, but the so-called five stands of Central Asia, Turkmenistan, Tajikistan, Uzbekistan, Kazakhstan, and, and, and Kyrgyzstan, are in the middle between Europe and Asia and are regaining their historic, ancient role as a land bridge, uh, between East and West, and that's propelling a lot of growth.
And then the last major region of Asia to mention, of course, is the Middle East, and, uh, especially the oil-rich Gulf. And this is a very rich region, uh, facing the quite, uh, complex challenge of, uh, global energy transformation, when the livelihood has been hydrocarbons. But it's, it's a rich part of the world, obviously, the entire Gulf region.
So, Asia is in a very dynamic state. It will remain so, no matter what the United States does. Uh, and in this sense, it's not true to say that globalization has ended or the world is fragmented. Uh, there was, uh, uh, the old saying of the British Empire that "there's fog in the channel. The continent is isolated." Uh, that, that the center of the world was London. Uh, and if, uh, there was any division, it meant that the rest was isolated. I'd say that's basically the right description today, that the United States is becoming more and more protectionist and isolated and having a tantrum with, uh, China, especially. But basically, a tantrum that, uh, the age of US dominance, which lasted about a half a century from 1950 to 2000, is diminishing and disappearing, in fact. And the idea that this means the end of globalization is completely wrong, because Asia by itself is 60% of the world population. Africa right now is 18% of the world population, and Africa and Asia are not fragmenting and isolating. Africa is in the process of creating the African Continental Free Trade Area and strengthening its relations with Asia in trade. And so what is fragmenting is the US, uh, European role, which was dominant for two centuries between 1800 and 2000, and is no longer dominant in the world.
So, I, we're going to have a discussion, and I'm going to close by saying the change of geopolitics is real. It comes from a fundamentally good point, which is that Adam Smith's prediction that there would be a rebalancing of the world is coming to be. The fragmentation is mainly the US and Europe really having an existential crisis. You could call it a, a neurotic breakdown, uh, from the fact that several hundred years of dominance is coming to an end. And this is very hard to grapple with, because the mindsets are very deep, of, and it's, they're deep in Europe and the US. And anyway, everything the US knows about bad behavior, learned from the British, who were, are tutors all along, and taught everything about imperial behavior to the United States. We're just kids on the block compared to Britain, uh, in this regard. But this part of this age is coming to an end.