In times past, I have discussed the subject of “decoupling” in reference to economies and financial markets. I want to discuss decoupling again, but in a very different context. I want to encourage you to consider “decoupling” your life, at least in part.
For four and a half decades, I have lived and/or worked outside the US in a few dozen nations that were among those called the “Third World” in the past. I am old enough to remember when that term first came into use some 50 years ago. Meant to describe a host of new nations being created as European colonial empires crumbled, and whose support for either side of the Cold War (the First and Second Worlds of their day) was undetermined, it has become a slur. No one compliments a nation by calling it Third World. It is an insult and seen as one by those who live in those nations. It is also inaccurate.
I have spent a great deal of time over recent years trying to help people get away from using that outdated term. But I will take a different approach today. I will suggest a new definition for “Third World.” For the sake of this essay, let’s call it the New Third World. But if there are three, what about the other two? How are they to be defined?
The New First World is made up of those nations that used to be the primary global power centers in nearly all respects, basically the US and Europe. Let’s look at each.
The Europe of the late 20th century strove to return to its position in the 19th century and failed. It had to play second fiddle to the US. The Europe of the second decade of the 21st century longs to return to the Europe of the late 20th century. It is failing and will fail. Perhaps the single most important factor in determining Europe’s future is to never forget that it is made up of democracies. Its future will not be determined by people with names like Merkel, Rajoy, Napolitano, and so forth. It will be determined by people whose names are unknown to us, but who are very much aware of what is happening in their nations. Toss in an EU that requires unanimity to take any serious action and a eurozone designed for failure and you have a genuine disaster unfolding. Yes, the new Europe will eventually appear, but the process of getting “there” from “here” is not going to be pretty. It’s going to be very painful and it will take years, perhaps a generation.
The US is in serious trouble too. One big thing it has in its favor is that it’s not Europe. However, its political leadership for some years has been a lesson in mediocrity, neither as good as it should be nor as bad as it could be. Mediocrity is not good enough to deal with the continually-growing financial crisis in a nation almost evenly divided between two “sides” that spend almost all their time shouting insults at their opponents, but little time creating solutions. The level of political discourse in the US is worse than sad. Yes, the new US will eventually appear, but the process of getting “there” from “here” is not going to be pretty. It’s going to be very painful and it will take years, perhaps a generation.
I am a citizen of the United States of America and still very proud to be one. Likewise, I am of European heritage of many generations past, but very fond of Europe and my friends there. I spent nearly all my adult professional life as an advisor to nations of the old Third World, more than 40 of them. Two fundamentals of my work were to stress the importance of financial responsibility and managerial competency, the positive benefits of both clearly demonstrated by the North Atlantic “First World” system I represented.
Today, the tables have turned and these so-called “advanced economies” are now excellent examples of financial irresponsibility and managerial incompetency with regard to their own affairs. The New First World is “first” in all the wrong ways. If I wanted to waste my time (and I have done that more than once in recent years), I would agonize over this situation and allow it to block my own personal and professional growth, but enough is enough. That is over.
The New Second World has nothing to do with the old Soviet Union. It is made up of the BRICs and perhaps the CIVETs and other acronyms that are in use to group nations with relative large domestic markets, whose financial markets are large enough to attract money from the New First World, who have above-average growth rates, but who also have one potentially fatal problem. They may be too intimately associated with the New First World. They have a real challenge. They need to decouple from the North Atlantic’s crisis without causing their own crisis, but it’s tough when you are so tightly bound to the New First World’s investment community, as well as its commercial markets. Their problem is that they are the center of too much attention from the very nations that are in the greatest trouble. Theirs is a “co-dependency” problem and dealing with it successfully is not going to be easy. They need to decouple partially without decoupling too much. If they can pull it off, they will teach us all a lesson in managerial competency.
The New Third World is where I live and work. These nations are also tied to the rest of the global community, but not to the extent of the New Second World, in great part because they are often ignored or dismissed by the very people with problems with money and management. They are too small for blessings like program trading or hedge funds or derivatives. Many are experiencing dramatic growth of their own and visiting one after an absence of even five years can be a real surprise. Ten years later and it can easily be a shock to see how much has changed.
They have risks, but so do the other two Worlds, to put it mildly. But they have great opportunities too. As I look through the list of nations and their real GDP growth rates in 2011, I find those whose claim to such fame is associated with growth from a tiny base and very likely due to a short-term situation, but there are many others too. Three that I focus on are Mongolia (ranked second), Ghana (fourth), and Panama (sixth), where I live. There are plenty of others too, sometimes referred to as “frontier markets” (thank you, Mark Mobius) to differentiate them from “emerging markets”, our friends in the New Second World.
These nations can be very, very different and they each have to be looked at separately. It is foolish to generalize in most respects. But they do have one thing in common that makes them much more fun to live in than the other two Worlds. People in these nations do not look to the future with outright fear (the New First World) or anxiety (the New Second World), but with enthusiasm. These are not “one-year growth wonders.” You can tear any nation down (look what we’re doing to our own home nations), but if you look at them carefully, you see a pattern of growth over several years and good reasons for it.
But that isn’t the most important point in my experience. I can’t express in words the value in working with people who are positive about their future and their nation’s future. The difference is huge. Yes, we have expatriates from other nations, typically from the New First World, who still have got one foot in the “old country,” carry their anger and angst with them as extra baggage when they come, live on the surface of their new home, and sit and whine. They can be noisy, but they are definitely in the minority. Life can be challenging in a new nation, wherever it is, but if you are up to the challenge, flexible, and adaptable, the door opens on endless possibilities.
But you cannot share in these opportunities sitting in front of a computer monitor in a New First World nation. You have to move there, learn, grow, and work your butt off. There are no guarantees and your nationality isn’t going to grant you any special attention, except maybe a little sympathy if you look for it. Nonetheless, the pay-off on your investment of your life, not just your money, can be much greater than anything you can hope for in the other two Worlds.
Yes, there are the other ones, the dysfunctional nations (Somalia and North Korea come to mind) and those who have great potential, but spend most of their time shooting themselves in the foot or worse (Venezuela and Zimbabwe come to mind). But these nations are fewer in number than ever before and, let’s be frank, the dysfunctional aren’t terribly important to the rest of us, other than occasionally threatening violence, and the foot-shooters can always turn the corner and join those growing and benefiting from that growth..
I am a citizen of the United States of America and intend to remain one for the rest of my life, regardless of where I reside. I can still express my opinions in my home nation, as I am doing right now and as I do frequently. I can still vote and do, if I have someone I think is worth voting for. I can certainly keep as up-to-date as anyone on global markets, politics, etc. And I can remain in regular touch with those I love and those I work with outside my current nation of residence easily and cheaply.
But I don’t have to live there to do it. I have great confidence that my fellow Americans and our European cousins will eventually climb out of the pit they have dug for themselves. And I am happy for the New Second World and wish it the best as it struggles to maintain growth in the midst of all the confusion of its “partners” in the New First World. But decades of experience have taught me to ignore size and focus on quality, to seek a home where people look forward to a better future, not backward to the “good old days” that will never, can never, return.
What you do with your life is entirely your business, of course. It is of no significance to me. The majority of you will probably have no interest in living anywhere other than where you do now. Fine, but I’m not really writing to you. I am writing to those who have given or will give relocation to another nation some thought. Keep this New Third World, these Frontier Markets, very much in mind. If you have the resources, get out there and visit them.
Ultimately, if your life is being turned upside-down and inside-out by the constant tension and mindless shouting surrounding you now, consider decoupling your life from what it is that causes you pain and unhappiness. If you want to invest and you are willing to really work at it yourself, rather than try to make some money off what others are doing, you may be surprised to find that you are happier and more successful in the New Third World than you can hope to be now in the US or Europe. At the very least, you can enjoy life and actually have fun while investing.
But if so, don’t just keep putting it off. The New Third World is like any world. It isn’t going to wait for you. It’s too busy growing.