A headline from the Daily Telegraph of London: “IMF Drawing Up £500bn Package to Save Italy, Spain and the Euro.” Insofar as most of us give any thought to the International Monetary Fund, we vaguely assume it’s there to help developing nations. But it’s now bailing out First World advanced economies. Indeed, Italy is a member of the G7, which is supposed to be the super elite of the developed world. But it’s angling for a 600 billion–euro rescue package.
So it’s a good thing we’ve got this IMF thingy to hand when we need someone flush enough to prop up soi-disant European economic powerhouses. But where exactly does the IMF get its money from? Ah, well. America provides 17.7 percent of the IMF’s funding, which is more than the next three biggest contributors (Japan, Germany, and the United Kingdom) combined. So, in a 600 billion–euro bailout for Italy, 106.2 billion euros — or about $143 billion — will come from the United States. Which is to say, you.
But don’t panic. You’re pretty much tapped out. The United States recently bust through the $15 trillion debt ceiling to set a new all-time world record as the Brokest Nation in History. So another $142 billion barely rates a line item.
Oh, by the way, the IMF itself has spent most of the last few years operating with a $400 million budget deficit. So a broke G7 economy is being bailed out by a broke transnational organization funded by a broke hyperpower. That seems likely to work.
The jig is pretty much up for the post–World War II global order. It’s becoming increasingly hard to avoid the thought that, when it comes to the Western world, there’s no there there. There may be a there out there somewhere else, but chances are you’re paying for that, too. The put-upon taxpayer of an industrial nation accepts that the bulk of his contribution to the “international aid” budget is entirely wasted: The traditional quip, made by many people, from the great Peter Bauer to Ron Paul more recently, is that it’s poor people in rich countries funding rich people in poor countries. But that bon mot doesn’t seem quite to cover the revelation that the U.S. Agency for International Development gives foreign aid to China.
That’s to say, we borrow money from China to give to China. Oh, don’t worry. It’s only a few million, and most of it goes to “promote clean energy.” It sounds so reasonable when you put it like that. Who among us hasn’t borrowed money from his loan shark in order to buy his loan shark a hybrid?
The IMF, meanwhile, predicts that China will become the planet’s leading economy by 2016. In other words, the guy elected next November will be the last president of the United States to preside over the world’s dominant economy, and he’ll end his term back where Grover Cleveland was: a global runner-up. My colleague Jonah Goldberg thinks all this talk of Beijing’s economic might is nutso: He points out that China has 40 million people who live in caves, etc. That’s all true. Back in the heyday of Fu Manchu and Charlie Chan and Oriental stereotyping, Erle Stanley Gardner wrote en passant in the course of a non–Perry Mason yarn: “The Chinese of wealth always builds his house with a cunning simulation of external poverty. In the Orient one may look in vain for mansions, unless one has the entrée to private homes. The street entrances always give the impression of congestion and poverty, and the lines of architecture are carefully carried out so that no glimpse of the mansion itself is visible over the forbidding false front of what appears to be a squalid hovel.” In a sense, the Communists have simply inverted the “false front”: Behind the glittering skylines of the coastal megalopolises lies a vast peasant hinterland in which not even the non–cave dwellers are in danger of being mistaken for a consumer society.
But that’s the point: China’s newfound status is unsettling because it’s so weird. In the late 19th century, Britain may not have liked the rise of Germany and the United States, but it could look at its economic rivals and see newer, nimbler versions of itself. By contrast, China is on course to become the world’s leading economy without ever having been a developed economy. The fact that it’s full of cave dwellers and has no genuine market shouldn’t be cause for scoffing, but for a bit of quiet introspection on the crazy world we’ve ushered in. From Reuters: “China Blasts U.S. for Ignoring ‘Ticking Debt Bomb.’”
Consider how utterly incomprehensible that headline would seem to an American from a mere 30 years ago. Back then, the smart guys assured us that economic liberalization would force political liberalization upon China. Instead, we helped them come up with the only economically viable form of Communism. So economically viable, indeed, that Agence France-Presse reports that the People’s Republic has agreed to “purchase infrastructure assets from debt-plagued nations” in the European Union. Pace the CFR, not only is China still Communist, but Europe would rather mortgage itself to the Politburo than attempt to wean itself off its unsustainable welfare regimes.
But hey, relax. According to the Washington Post, “Black Friday and Other Holiday Weekend Shoppers Set Spending Record.” Hard to know what’s sadder: debt-laden “consumers” snapping up the latest trinkets from China, or expert “analysts” interpreting their stampede as a portent of recovery.
– Mr. Steyn blogs at SteynOnline (www.steynonline.com).