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Jun 10, 2011

Coalition Government of the World 2.0: The Future of 21st Century

  Coalition Government of the world   is a phrase I coined to describe current state of the world unfairly dominated and set the rules of the game by a small group of rich nations.  Victories of the World War II and their allies met in Bretton Woods to set up IMF and the World Bank, two institutions which are running in favor of the interests of the West.
Other many inter-governmental organizations/institutions are also the products of the West. There are instances that the West-dominated institutions such as IMF and WB are just new version of Western colonization.  When financial crisis came to East Asia in 1997, IMF asked the affected countries, in return for loans, to devalue their currencies, to open banking system to foreign competition, to ease restrictions on doing business
It has been a view getting widespread support that IMF dealt unsuccessfully with Asian Financial Crisis. IMF actually did a good job for the West.  The problematic countries must devaluate their currencies in order to get financial support. Some Asian countries were very much indebted to the West. When they devalued their currencies, the debts became larger than it should be
. Opening banking sector to foreign competition allowed other strong competitors to enter and dominate the host countries. IMF failed to contain effect of Russian financial crisis in 1998, Mexico tequila effect etc. IMF fails to effectively manage crises in virtually everywhere except in the West. IMF is doing a modest job in term of European sovereign debts.
World Bank focuses on only economic growth as a parameter of measuring poverty reduction of a country. Growth in some countries is occurring without covering the poor and sometimes even at the expense of the poor.[1] Some suspects World Bank of generating world poverty. Other the West-dominated institutions/organizations are doing the same job.
Western governments, by all accounts, are democratic both in soul and body. However, they have joined together to formed a Coalition Government.  And they have become a Government of dictators since then. Developing countries have been suffering endless suffers from sources of Western conduct.  One of my friends explained to me that the West is kind now. I say “Nope, they are not kind. They really are being kind only. They need more consumers from Sothern world to buy their goods and services.
The World is not as peaceful as it has been. At the dawn of 21st century, the world is in a big chaos. America is no longer a dominant power. Brazil, Russia, India, China and South African collectively known as BRICS, will account for over 50% of world output by 2050, according to IMF’s prediction.  This group of countries is qualified enough demand for changes to the rules set by the West since the end of World War II.   
American is in transition, so does the world. Things are evolving faster than we expect. Exorbitant privilege of dollar is now in doubt. Dollar is no longer an unquestionable currency. Many world-class economists believe the pillars of global economic growth are based on three currencies, US dollar, Euro, and Yuan. India will be soon added to the group, I think. IMF used to hint that India will be both the third largest economy by 2050 and world fastest growing economy after slowdown of China’s economy in coming decades.
Michael Spence, a Nobel laureate in economics, provocatively puts: “By mid-century, India and China will account for 2.5 billion of the 3.5 billion additional people with advanced-country incomes. By themselves, they will cause global GDP to at least double in the next three decades, even in the absence of growth anywhere else.”[2] Developing countries will play a significant role in setting anew rules for Government of World. I would love that one to be called “Coalition Government of the World Version 2.0. And Government 2.0 will write the history of 21st century.
The current selection of IMF managing director best describes changes done to a global institution. Developing countries rally behind a voice, although not behind a candidate, that the next IMF director should not be someone who comes from Europe. It is an unwritten rule that WB is headed by an Americans and IMF is headed by European.
China is now functioning as World’s Factory. India is now world IT’s center. Russia has long been world’s gas station and Brazil is now World’s market. Developing countries were included in a new-formed government and it is no doubt that a greater say, willing or unwillingly, will be given. I believe it is the end of the beginning not the beginning of the end. ^_^

[1] Creating a World without Poverty: Social Business and the Future of Capitalism by Dr. Muhammad Yunus.