Are BRICS countries already challenging the US-led world order? | The Bottom Line

hi I'm Steve Clemens and I have a question the West likes to dismiss the bricks Alliance as a political Sideshow but is it starting to crack the us-led global order let's get to the bottom line next week the group of countries known as the bricks meet in Russia for its annual Summit after the alliance of emerging economies expanded last year these nine countries now represent a bigger slice of global wealth than the GC the main economic group of the United States and its Junior Partners population wise bricks represents about five times more people around the

world than these G7 Nations and it literally has 40 countries knocking on its door to join but what power does it really have and can the bricks pose a challenge to America's grip on global dominance and the global economy even if it wanted to today we're talking with Richard wolf professor ameritus of Economics at the University of Massachusetts and author of more than a dozen books on the global economy including democracy at work a cure for capitalism Richard it's a real honor to have you on the show today and I want to just ask you

like Point Blank bricks is it a real new thing that's going to challenge the American Global Order or is it still an illusion well the short answer to your question is it's a real thing not an illusion it's already challenged the order that was dominated by the United States and it promises to continue to do so it certainly is as we are speaking um it is only wishful thinking on the part of the major countries of what we used to call the collective West or maybe should still call it it's a it's a self delusion

on the part of the West to minimize it to brush it off really is a new world order that we are living through and I believe many of the problems many of the tensions many of the hostilities we are in the midst of as you and I are speaking are derivative from are shaped by The Challenge posed by the bricks so when I look at this group of Nations it's hard for me to understand what do they represent what are they for in terms of I know that they may be against American dominance but it

what are they collectively for they should not be thought of as some sort of monolith they aren't but they share that the highest priority they have is to emerge from the state of underdevelopment less development whatever language you find comfortable these are countries that don't yet have the standard of living of the United States and who do not accept the notion that they can't or mustn't or shouldn't aspire to at least the same standard of living if not in fact a higher standard and they want the freedom and they want the opportunity to do so

and now the tension they feel that the United States with its major allies the G7 that is Canada Japan Britain France Italy and Germany those seven have held them back first as colonies and secondly as Paras as Nations that are hemmed in by all kinds of restrictions that is what's unacceptable that is what they agree on and that's where the rub with the G7 emerges now I want to ask you a complex um question about the dollar why why can't there be a challenge on that status tomorrow why can't rubles or the Juan or you

know the currencies in Brazil Etc be bundled together which I understand is part of the objective of the bricks but why is there such Primacy of the dollar well it's been the case as you correctly point it's been the case basically since the end of World War II and if I may let me suggest the importance of of historically understanding what we're doing here what situation that we are in at the end of World War II all of the countries that might have been competitors of the United States in terms of their economic power their

influence on the world their importance in the flows of trade and money all of the potential competitors and we can list them Britain France Germany Japan Russia all were destroyed by the war by contrast the United States emerges after having a war but the war helped the American economy people have to remember we were in a deep depression the greatest depression capitalism has ever suffered from 1929 to 19441 when World War II gets underway this economy the US was depressed in 1933 we had a 25% unemployment rate one out of four workers had no work

and this affected every family in the country so we came out of the Great Depression by means of World War II we took half of the millions who were unemployed and put them in a uniform and the other half of the unemployed went to work making the uniforms and the guns and the ships and the planes and all the rest and so we came out of the war yes we suffered loss of troops who fought that was certainly significant but not comparable to what happened in those other countries but we had an intact economic system

other than Pearl Harbor no bomb fell on the United States for the rest of the war and so there was no contest We Were King of the Hill we the US was dominant if you're going to conduct trade you better use the dollar because that was the only thing you could be sure was valuable alongside of gold and so the dollar became the international symbol as well as the real transactional material to get your economy going again so that by the end of the 20th century it had become the norm as you rightly say for

central banks around the country to hold dollars as well as gold as the reserve banking their currency and the easiest way for Americans to grasp what the dollar as International currency means is to think very simply here's how it goes a foreign country sends the United States the fruits of its labor wine from France electrical equipment from Japan uh Copper from Africa whatever and we send them little green pieces of paper the dollar the $10 bill the $100 bill which costs absolutely nothing to produce it's it's a cheap piece of paper they accept the paper

and we get the produce wow they agree normally with other countries they're not going to send you their produce the products of their industry unless you send an equivalent to them it's an exchange and in many cases we still do that here in the United States with other countries but if you have the dollar and the world wants it you basically get something for nothing the world holds the dollar satisfied with that because they need it for their currency support and we get the fruit of other people's labor without having to give anything of Our

Own in exchange it's an extraordinary power and guess what other countries would like to participate let me ask you about the bricks versus the G7 isn't this in a way a bit of a charade where the dominant bmth power in the G7 is the United States and the dominant bmth power in the bricks is China and you can hear about Brazil you hear about Russia you hear about India but I mean I'm just wondering whether these two Gargantuans are sort of hiding the fact that we're in a you know essentially a G2 world of China

and the United States at odds negotiating and masking what they're doing how how do you look at China versus the United States versus the G7 versus bricks no you're absolutely right I don't know if I would use the word hiding although I understand why you do that uh it is a diplomatic politeness you don't point out that you're the bigger of the partners in the deal uh it's a polite everybody knows but you kind of don't say it but so let me first say you're right uh the United States is the overwhelming dominant player among

the G7 and China is the unquestioned equal dominant under the bricks all right let's start with Russia because it's a big important player the the uh GDP of Russia last year in the neighborhood of say $2 trillion these are rough measures so it's the order of magnitude that's all you have to keep in your mind what is the comparison with the United States the United States said GDP this last year about 24 25 trillion so you understand Russia is two trillion the United States 24 25 trillion no contest no one should ever ever imagine that

either the Soviet Union in the past or Russia now is some kind of economic competitor of the United States never was isn't now only the hype of the Cold War would make one think like that and that's something you should correct if you've never had it explain to you now let's move to China what's the GDP last year of China again there are lots of debates about how you count it but order of magnitude 1718 trillion way more important than Russia but still not the size of the United States although it's catching up and most

people believe at current rates of economic growth China will surpass the United States by the end of this decade and it has been catching up let's remember 50 years ago which in historical time is a moment 50 years ago China was among the poorest countries on Earth and now it is the only country in the world even close to the United States and as I say catching up so China dominates Russia Brazil India India by the way is doing remarkably well the problem is they have a a poverty stricken mass that is holding them back

and until they can do something about that which they still have a long way to go they will not be equivalent to China either right China is you correctly see the new thing for the United States and what do I mean it's the first real economic competitor that the United States has had in a century why it's so hard for Americans including our leaders to adjust as the whole world must now to this reality that the dominance of the United States is over and there is no prospect that I can see for it to come

back so let me ask you Richard about your view of the US elections right now we have a ragingly high stock market we have very low unemployment but if you go out and talk to Americans there's a lot of anxiety out there when a lot of the you know surface data are pretty good and I think uh comma Harris is running on that and she's running against someone who's running on populist economics so I'm interested in how you see these choices we're going to have an election here in a couple of weeks and do you

think I framed it correctly well I would go further let me give you some other numbers we have a greater degree of inequality in our economy than we have had for 50 years years the equality that came out of the Great Depression the New Deal that was remarkable about the United States at the end of World War II the United States was less unequal than all of our allies in Europe today it's reversed we're more unequal than all of our allies in Europe what happened we cut taxes on corporations we exported huge quantities of the

best paying jobs in manufacturing which we don't have anymore on I could give you a long list of symptoms of data of realities that suggest this economy has got huge problems and so here's the difficulty there are people in our country who are enjoying the good things and then there are people in our country who are excluded from the good things let's remember for example that the 10% richest Americans own about 90% of the stocks so when you're saying the stock market is doing well it is good news for those 10% no question but for

the other 90% they're watching the 10% but they're not included in that happy experience so they feel deprived neglected and they begin you can see where Trump's support can begin to develop the idea we want to go back magga we want to go back well because the presid is looking very good and the prospects for their children in large parts of the United States are pretty Grim if you're going to be honest about it so we shouldn't be surprised if you don't distribute the good news equally across the society you're going to get the results

that we are now watching in terms of the closeness of this election well that discontent that you just describe also seems to Echo in what we're hearing from the bricks that there's sort of you know all around the world you sort of see this boiling discontent I think it's hard to know sometimes when that uh infrastructure Falls and is replaced you know by by those that that that have that discontent but it's very interesting I would be remiss Richard if I didn't ask you to share your thoughts on the Middle East as well I mean

you've been essentially in in my view a cold hard realist on economics you know beyond morality Beyond politics look at the economics of things and be a realist in telling that story when you look at today the crisis in the Middle East we see unfolding you know Israel and this broadening crisis in the Middle East and America kind of acessing uh uh to a lot of this I'd love to get your thoughts and insights on where you see this going yeah I try to be realistic I try to look at the data I try to

give a balanced view um in in all of these things so let me try a little bit there if you ask for the big picture the way you opened our conversation by looking at the the large geopolitical framework within which to think about these things then I would have to say that much of what the United States has been doing in including its support for what Israel is doing that these strike me as unfortunate I'm choosing my words carefully attempts by the G7 the West whatever you want to call it unfortunate efforts to hold on

to a position that simply is no longer historically available to them I understand it look the American Empire is shrinking if you have a historical sense you would have known that the special position I described a few moments ago that comes out of World War II with the United States sitting on top that that can't be sustained it never has been in human history no Empire lasts forever every Empire Rises out of particular circumstances evolves over time time and then passes away the United States emerged as the dominant player in the world I mean look

we have 7 to 800 military bases around the world right now no other country has anything remotely like that that's a reflection of our Empire you can put whatever fancy words you want around it but that's what this is and it had no chance of surviving forever it would eventually fade away like every other Empire and that's a very difficult experience for Americans just as we can watch over the previous Century the poor British had to go through the loss of their empire which is now absolutely gone uh from them we are now our Empire

peaked and we are on the way down and that is and we try to hold on we don't want the Russians to tell us they can a piece of Ukraine back into Russia and we don't want our Ally our friend in the Middle East Israel uh to be in any way held back from what it wants to do the these are our allies that is our enemy we want to hold it but we can't we can't and This Bitter lesson look the honesty and I know this is difficult for Americans we lost the war in

Vietnam it's now the Communist party that runs that country we lost the war in Afghanistan it's a Taliban that runs that country we lost the war in Iraq I me I could go on but the lesson should become plain to people we can't do it Israel is a country of a few million people is not going to control and run the Middle East it can't do that with or without the United States it can drive people crazy it can produce unspeakable outcomes and to take off my realist Economist hat for a minute what these are

War CRI war crimes are defined when you kill civilians a war is supposed to be a military against the military and we went through a lot of trouble in the 20th century in world Wars 1 and two to come up with a war crimes definition and an international court that can identify and try to stop war crimes that's when you kill large numbers of civilians it doesn't matter what the excuse is you can't right so yeah the the Hamas people on the October last year killed civilians that's a war crime that doesn't mean you I

don't understand why Palestinians would be resisting the dominance and the growth of Israel I understand why they would I think Israelis understand why they would right and then the want killing of civilians over the last year by Israel in defect for me indefensible as a war crime as the international court has said it is a war crime and castigated Mr Netanyahu but for me the bigger picture is that these are efforts to hold on Israel is a kind of settler colonialism it's when Europeans come and push out the local people pretend they aren't there that's

that notion you know a people without land the Jews are going to a land without people yeah there a lovely story it's a lovely parallel but it isn't true there were people there we know the story we're Americans Europeans came here here got rid of the local population and the few of them that are left are stuck in reserves where Israel is going is in that direction but the promise the problem is that was centuries ago when you could do that you can't do that now you cannot and the world is isolating Israel and what

I see is a very very unhappy and po Israel in making this sad effort to hold on when the only possibility is working out a Live and Let Live uh arrangement with your neighbors so much to think about I really want to thank you renowned Economist and author Richard wolf thank you so much for being with us today thank you very much for having me and my appreciation for having these conversations United States in which I were born and lived all my life needs it now more than ever so what's the bottom line people just

don't like upheaval and change after World War II America and its allies built a system that still exists today folks not only go along with the system but they try to reinforce it they try to rationalize it to an almost absurd degree even when they're hurt by it until one day all of a sudden the whole structure collapses and from it a new paradigm emerges it is true that China is challenging America's Primacy it is true that Africa is rising it is true that South Asia and Latin America represent the biggest growth of the middle-

class worldwide but the American lead order is going to continue to lead and its supporters are going to twist themselves into pretzels trying to justify it until one day when it doesn't the bricks just aren't there yet but they're clearly clawing at the door and that's the bottom line [Music]