The movement of people and capital demonstrates the existence of a single superpower.
When it became obvious that Russia could not compete with the United States or its allies, Yevgeny Primakov — a spy who became a philosopher before becoming prime minister — came up with the idea of a multipolar world. This was a world with multiple power axes, with several great powers pursuing their own diffuse interests and spheres of influence. Russia was supposed to be one of those powers. In the beginning this theory was not persuasive and Primakov’s own life was difficult.
Primakov had the misfortune of being a Russian prime minister with an incredibly brief tenure. Yet he wanted a place in history for his ideas as well. He was experienced in fabrications. As director of Russia’s Foreign Intelligence Service, Primakov acknowledged, during a rare moment of remorse, that the KGB was behind Soviet newspapers’ claims, or lies, regarding the AIDS virus being a creation of the U.S. government.
But his idea of a multipolar world order was not just another hoax told to spies — it had weight and substance. That is perhaps because it was stolen by his ideological adversary, Henry Kissinger. The idea was destined to expand, and it did.
The multipolarity theory became fashionable within elite Russian universities. It propagated through the core of Russian cultural institutions: Their reach and presence was broader than that of U.S. military bases. (Primakov’s shadowy foundation spread this idea even in Bulgaria.) This multipolar business seemed sound. It possessed an infectious, almost scientific popularity and it soon arrived in Western, left-leaning academic circles, birthing an entire clique of brain trusts. Multipolarity’s apotheosis was undoubtedly the creation of the BRIC countries (Brazil, Russia, India and China) — the unification of the leading emerging market economies and the nucleus of a future multipolar world.
The BRICS Illusion
BRIC is a strange animal. The acronym was created by my former colleague and acquaintance Jim O’Neill, an influential economist and asset manager at Goldman Sachs. O’Neill was fantastic at many things; he was especially good at the invention of catchphrases. He knew that to be noticed in the cutthroat world of brokerage agents one had to be bold and remarkable.
BRICS (the S stands for the addition of South Africa) was a marketing triumph. O’Neill’s interpretation of history sounded enticing. It read like this: Brazil and Russia would mine raw materials that would then be duly absorbed by the fast-industrializing India and China. The relationship between raw material producers and raw material-consuming nations would lead to a happy symbiosis of prosperity and might: a match made in Goldman heaven!
The world’s power center is shifting, according to the “vampire squid” (Goldman’s pet nickname within the industry) and everyone better get on board with it! Oil prices are rising, so BRICS leaders quipped “Who needs the West?” BRICS would beat the developed world at its own game, including when it comes to technology. Without much fanfare former Russian Prime Minister and President Dmitry Medvedev created the Skolkovo Innovation Center — a technology business hub near Moscow — as a Russian Silicon Valley! The ever-innovative Bangalore would fuel Russia’s technological explosion.
A terrific tale. Sadly, it did not happen. The collapse of global oil prices and other commodities in 2008 crippled both BRICS and its cheerleaders for more than a decade. But wait, the year 2022 — a year with high prices for oil and raw materials — is the year in which BRICS will be back, with a vengeance. Or that is what the multipolar crystal ball predicted.
Old and Bitter
The world has changed. After a decade of low growth and a demographic decline, BRICS is old and bitter. Vladimir Putin and Xi Jinping planned to rule forever. Narendra Modi and Jair Bolsonaro were to follow in their footsteps. Flustered by their domestic demons, these countries are unappealing. China, with its failed banking system and totalitarian control over the lives of its own people, is not seductive. What could be said about Russia with its decades-long recession now fused with its new role as the world’s villain? Even Medvedev is not the same. Instead of inaugurating technology hubs he now threatens the world with nuclear apocalypse every time he wakes up on the wrong side of the bed.
My point is this: Do not look at Medvedev. Look at his son, the one who never saw a multipolar world or the allure of BRICS. Medvedev Junior chose California for his home (until his U.S. visa was revoked) — a place superior to Mother Russia in both economy and entertainment. The young Medvedev made his own choice — follow the flow of migration and you will see the world’s true zenith.
The Flow of Migrants and Money
BRICS’s lost decade coincided with a massive and catastrophic brain drain of human capital away from BRICS and into the decadent developed world. BRICS’s elite also moved to the corrupt, liberal West. Sniffing the scent of the Chinese Communist Party’s coming revenge, Chinese billionaires drained untold riches into Singapore and Manhattan. Indians outside India (non-resident Indians) became the dream clients of London’s asset managers. More than a trillion dollars left Putin’s Russia — they made Mayfair and Kensington even more dazzling. Putin’s children are in Switzerland. Xi’s only daughter, Xi Mingze, graduated from Harvard. Like most young and free people, the sons and daughters of dictators know that it is fine to visit their homeland, but not so fine to live there.
This is neither surprising nor new. Most residents of the cosmopolitan world want to live the lifestyle of the West with its endless opportunities, unrestrained consumerism, socioeconomic mobility and an overabundance of entertainment. It is no accident that every flourishing metropolis in India, South Africa, China, and yes, even Moscow!, looks and feels like New York, London, Berlin or Hong Kong. It’s just better!
It is also not by chance that there are no global corporations from BRICS countries. The trends the entire world wants to follow were first followed in the BRICS themselves. English, now more than ever, remains the lingua franca of the world, not Mandarin or Hindi. The U.S. FANGs* dominate the virtual world while the physical world is dominated by Hollywood, Taylor Swift and Louis Vuitton. BRICS’s entertainment has yet to make a worldwide appearance.
We should mention several practical issues related to the above. The U.S. remains an undisputed economic and military leader. Its economy had a golden decade after the financial crisis while the rest of the world limped by. While some new “gravity centers” such as China grew their GDP, it is far from having parity in power and influence. The recent visit by Nancy Pelosi to Taiwan — largely unchallenged — reminded everyone: Do not confuse economic growth with military prowess. The latter comes with strong institutions and cumulative benefits from lengthy development — something that sclerotic authoritarian regimes cannot imitate. A poor, corrupt economy can only sustain a caricature of an army: See Vladimir Putin’s unpleasant Ukrainian surprise.
Last, the U.S. dollar is the unequivocal axis and anchor of world finance. Russian and Chinese troll farms periodically spew propaganda regarding the dollar’s diminishing might as a world currency and the rise of alternative mediums of exchange such as the Chinese yuan. Nonsense!
The U.S. dollar’s value appreciated to roughly its highest-ever against most currencies — the dollar has never been more dominant within the world financial system. Its role, sometimes depressingly, is understood well by the competent actors in the market. And this is why.
The U.S. government, as a whole, is a good protector of its currency’s value, especially during the last two decades of low inflation and strong growth. If your assets are in dollars, you are generally richer than everyone else. Private traders prefer this lower risk, and the nonexistent currency risk especially, that comes with the pricing of key goods and services in dollars. The dollar also opens huge trading opportunities which lead to the creation of global companies with reach in every corner of the globe.
The greenbacks opened the especially deep and liquid U.S. markets to the world. The U.S. has never truly considered capital controls or intentionally limited the flow of capital. This capital flow remains gigantic and has been used for over 40 years to finance the double-digit U.S. deficits — both in terms of the U.S. gross domestic product and its trade deficit. This is an “exorbitant privilege” that no other national currency can hope to possess, a privilege that was coined, and complained about, by French Finance Minister Valéry Giscard d’Estaing** in the 1960s. Sixty years later, while the Kremlin and the Chinese Politburo spread fantasies regarding the multipolarity of modern finance, the flow of capital in U.S. dollars is a tsunami. In uncertain times like ours the world is attracted to the huge U.S. government debt markets, the world’s most secure assets. This is the case even when the U.S. may be the cause of the problem.
Compare the marvelous growth of the dollar with the feeble performance of BRICS currencies, currencies that remain on the sidelines as a means of exchange, and horrendous as a way to store value. Some of them are prone to collapse, others fluctuate according to their local dictators. Who would want to safeguard their wealth in Chinese yuan when the renminbi is subject to the “managed floating exchange rate” by the Politburo, and when the yuan is sometimes used as a weapon in international relations akin to Putin’s use of Gazprom? The laughable recent strength of the Russian ruble in international markets (far from its true value on the black market) is the nail in the coffin in the fairy tale of the ruble as a serious global currency. Who wants to deal with a currency prone to sanctions, confiscation, capital controls and the unbridled whims of party hacks? Is there anything that BRICS can point to that would make its currencies preferred to the U.S. dollar, a currency that has not only survived the test of time, but has flourished and prospered?
The Power of Soft Power
“I could have my Gucci on
I could wear my Louis Vuitton
But even with my hoodie on, I bet I made you look”
“Made You Look” by Meghan Trainor
The author of this text would find the idea of a world with multicurrency reserves and political multipolarity stupid. The military withdrawal from the international stage that began with Barack Obama and accelerated with Donald Trump gave much-needed credibility to Primakov’s best idea. But the world will never be multipolar.
The temporary absence of the U.S. as a global leader was a strategic choice of the previous administration, surely a stupid one, but one that is now being reversed. Joe Biden’s speedy engagement with the Ukraine war, and the remarkable leadership of the Anglo-Saxon world, reminded everyone that the U.S. is back. The world is returning to familiar axes — a trend that is likely to accelerate if interventionalist Democrats such as Gretchen Whitmer or Hakeem Jeffries get closer to Capitol Hill.
While the Kremlin’s propaganda grows weaker due to Russia’s decline, the structural power of the U.S. becomes more and more obvious, a strength that currently cannot be challenged. This advantage is obvious and stems from the U.S. economy, army, institutions, technologies and vast soft power. This soft power is the main reason for the world’s single polarity, its True North. Most enterprising people will continue to migrate in this direction, as they always have done.
The best and brightest — those who write history — know that they can have a happy life in the West, not in its dark-mirrored opposition, BRICS. The “West” is a mixture of free individuals producing superior products, services and intrapersonal relations compared to the “East” and its alternatives. These best and brightest are not only bored, they are angered by oppressive dictators who attempt to impose their will not only on their own citizens but on the entire 8 billion people in the world.
Free citizens know that their world is already multipolar in a different sense — a buzzing hive of different cultures, races, faiths, dreams and actions. This wonderful diversity and constant development are the only multipolarity the world needs.
*Editor’s Note: This is an acronym for Facebook, Amazon, Netflix and Google.
**Editor’s Note: Valéry Giscard d’Estaing became France’s prime minister in 1974.