“My family came from Ireland during the famine and all went to Bridgeport, and … the largest canvas of real estate that I’ve ever had to think about developing,” …

Which country, if any, is poised to become the next superpower?

There is no other superpower in the vicinity.

While US influence over the rest of the world is likely to decrease, there is no one else to take up its seat for the foreseeable future. US became a superpower not just because of its economic power. The economy was a part of the puzzle. But, beyond the size of the economy US has 5 key things:

  1. Finance. US markets are much more open and transparent than most markets in the world.
  2. Entertainment & Information. US brands (from Hollywood studios to Apple, CNN, Google, Microsoft, Youtube,Nike) shape your entertainment/information needs.
  3. Defense. Spends more than the rest of the world put together.
  4. Education. 70 of world’s top 100 universities are in the US. Googles and Apples don’t come out of a vacuum. Whether it is a moon landing or Internet or advanced defense warfare, you need education superiority. US is best positioned for an Information-era warfare (hosting most of the major information companies).
  5. Energy. The shale has given it an energy security that no other major economy has. China has to rely on oil passing through two most dangerous pirate zones – Horn of Africa and Straits of Malacca.


At its height, Japan matched the US when it came to economic prowess, but it was never a superpower. US has plenty of softpower that no other major economy has now.


 

  1. Cultural reach. Nations exert power over others through culture. From Hollywood to sitcoms, McDonalds to Coca Cola, Apple to Gap, P&G to Google, US exerts an enormous amount of softpower over the world through its brands & broadcasting. These cultural artifacts would make a kid in Kuala Lampur or Kingshasa relate more with US cities than say Chengdu. Tell me how many Chinese brands you crave or how many Chinese TV shows you watch.
  2. Cultural infusion. US is far more open to immigration and is a thriving melting pot of multiple cultures. Japan never had that. USSR never had that. China will never have that. The cultural infusion is necessary to keep the wheels of innovation churning. In the 30s and 40s, Jewish immigrants kept the lights in its laboratories. Now, the Russian, Chinese and Indian kids play a big role in the valley. A monocultural Japan & Germany faltered at the start of the information era, while US breezed through – part of it helped by immigrants such as Sergey Brin and Vinod Khosla. China is unlikely to have that advantage.
  3. Financial center. US has the democracy and transparency that is essential for the markets. On a given day, you are more likely to trust the NYSE than say SSE (Shanghai). Its bond and stock markets evolved through a century of experiments (in regulation, research and customer education).
  4. Speaking the lingua franca. US speaks the language of the world’s educated. Through a combination of reasons (from the extent of the British Empire to Hollywood) English has firmly become the center of the educated world. Mandarin is unlikely to be adopted (given how dissimilar it is to most other languages) in huge numbers by people outside China.
  5. Defense spending. It would take a really long time for China to ramp up its defense spending or ally relationships anywhere close to what US has now.
  6. Historical baggage. Through its long history, China carries a huge historical baggage. Its aggressive posturing is feared more than we fear the US. A kid in Korea, Vietnam, Japan or India is more likely to accept an American military presence in their area than a Chinese one.


I will not cover the bigger issue (ageing China) that has been covered already. US will have a much younger population than China in the next 3 decades.

In short, China doesn’t have most of the advantages that US had in becoming a superpower. China will be a great power, but will never be able to match the US at its heights. More likely, there will not be a superpower in the foreseeable future.


US Risks:

  1. The fiscal health of local governments (such as Detroit and California) is in a bad state.
  2. There is no visible solution being done for the exploding healthcare costs.
  3. Education costs are pricing out a sizable chunk of students and putting a big debt burden on the rest.


These 3 are huge problems and I don’t see easy solutions. That said, in its 230+ year history, US has gone through many crisis situations and have solved its problems through innovation and entrepreneurship.


Let us consider other potential targets:

  1. Russia. Except for energy & engineering, it doesn’t have a lot of strengths (in economy, finance, education, technology, entertainment or political structure) to take it to great heights.
  2. India. Too poor. It will take India decades to get firmly into middle income, leave alone high income. Historically, India had little interest in becoming a superpower. Even at its heights, its empires usually kept away from invasions of the kind we know now.
  3. Japan, Europe. Rapidly ageing.
  4. Southeast Asia. In population, defense, economy, they are all too small.
  5. Australia. Small, isolated, limited defense spending.

People try to write off US prematurely. The next war will be fought over information/communication superiority. US has the base for it as it controls a big chunk of world’s information. NSA’s PRISM is just a frightening reminder of the advantage US has. Companies that control world’s information such as Google, Twitter, Facebook, Apple, Yahoo and Microsoft are still domiciled in the US and plenty more are coming every day (backed by the world’s most advanced Universities). So, don’t go about predicting the end of the American superpower status anytime soon.