A chill wind from the West

ANYONE doubting the theme of an editorial in The Economist’s Christmas issue that “hope is on the move” from the West might have thought again after this week’s “regional outlook” forum held in Singapore by the Institute of South-East Asian Studies.

Asia’s economic prospects for the year were deemed healthy by private economists and the IMF alike. A forecast slowdown to 7% annual growth for Asia (excluding Japan) hardly sounds the stuff of nightmares. Inflation is becoming a worry but governments still have policy weapons in reserve to keep it under control.

Politically and in terms of regional security, there is less cause for universal optimism. Thailand faces a troubling year, not to mention the more obvious hotspots of the Korean peninsula, Afghanistan and Pakistan. But even these seem almost minor disruptions compared with the big story: the rapid rise of China, India and the two-fifths of the world population who live there.

For a real dose of sobering gloom, the invited keynote speaker was an imported European, Jacques Attali, a Frenchman with a distinguished career as academic, development-bank boss, presidential adviser, author, consultant and all-round “public intellectual”.

Mr Attali began by quibbling with the theme he had been given; “Repositioning Asia after the crisis”. It was the word “after” he balked at. For him a private-debt crisis in the West had been “solved” by turning it into a public-debt crisis and then by resorting to the printing press. In the past, he said, this strategy has usually ends in “inflation, war or both”. This would be what the optimistic regional economists glossed over as “external shocks”.

His most chilling observation, however, was a comparison between Asian optimism now and European and American buoyancy in the early 1900s. Then, as now, technological advance was transforming the world, and globalisation bringing unheard-of prosperity. Communism was almost unknown and fascism and Nazism still to emerge.

Yet, within a few years, the world was to enter a “dark age” that did not end until 1989 (as Mr Attali sees it—a view probably not shared by most of the West’s baby-boomer generation, who had things pretty good).

Of course, Mr Attali was far from predicting any such disaster for Asia; just sounding a cautionary note against irrational exuberance and hubris. As we noted at Christmas: “As for the Westerners’ gloom, it has its uses.”