America has muscle, but not money. China has money, but not muscle. India, like all other countries, has neither | Photo Credit: metamorworks

Tomorrow Donald Trump will complete a year in office of his second term as president of the US. The main problem the world has to grapple with now is if his second year will be as disruptive as his first.

Trump has had to choose between the two old faithfuls of power, money and muscle. He has chosen muscle. China has been using money for a long time.

Muscle is like an antibiotic and works quickly. Money is like ayurveda. If it works, it takes a long time to achieve its results. The cultural orientation of these two societies is revealed by their preference in this regard: impatience vs patience.

But here’s the problem: America has muscle, but not money. China has money, but not muscle. India, like all other countries, has neither. This is the essence of G2.

Thus it has become a 3-player game, the worst possible thing imaginable. There’s an inherent instability in this that has been studied by economists and others.

The most comprehensible description, however, can be found in George Orwell’s dystopian and dismayingly prescient book, ‘1984’. It was published long ago in 1949.

In the novel the world has been divided into groups: Oceania, Eurasia and Eastasia. Oceania is the white world. Eurasia is Russia plus some parts of Asia. And Eastasia is the world east of India. Two of these three are always in alliances and war against the third over resources.

They are all run by totalitarian regimes where the state is continually watching and attempting to get citizens to ‘behave’. Technology is central to it all. Seems familiar?

Ice creams and horses

There are other depictions, too, of the three player phenomenon and its implications. The number 3, by the way, has always fascinated mathematicians, philosophers and physicists.

One of the best insights was by an American mathematician-cum- statistician- economist called Harold Hotelling. He taught in the first half of the 20th century, including Milton Friedman.

A famous one is the ‘ice cream vendors on a beach’ problem. As long as there were two, he said, there would be stability as they divided the beach into equal halves as their market. But if a third vendor arrived, there would be no stability as each tried to continually maximise his catchment area of customers.

The principle was called ‘minimum differentiation’ whereby players strive to be as like as the other but yet different. This works as long as there are only two vendors. It breaks down when there are three.

Another economist, also a mathematician, arrived at a similar conclusion. His name was Reinhard Selten, who shared the Nobel for 1994 with John Nash. His formulation is called Selten’s Horse because the graphic depiction looks like a horse’s head.

It’s a very complex analysis whose bottom line is that people, and I daresay countries, too, usually make sequential decisions of what is rational at that moment.

But this leaves them vulnerable because the opponents are also doing the same thing. The problem is especially tough to resolve when there are three players.

A family with three children, for example, is more fraught than one with two, four or more. The problem is balance.

The bottom line

So where does all this leave us vis-a-vis the future? I think there are more certainties than uncertainties.

One absolute certainty is that there will be a scramble for resources in order to keep both capital and labour happy. The three players will be the US, China and the rest.

The second certainty is that the rest will try to have their own economic and security arrangements. This is possible but the third certainty below will limit its effectiveness.

That third certainty is the dollar that will continue to be the reserve and trading currency for the world for the foreseeable future. China is trying to displace it but it can succeed only up to a limited extent.

The fourth certainty, despite Chinese propaganda to the contrary, is the technological dominance of the US, which has effectively stopped Chinese technology in its tracks by stopping technology theft. By itself China doesn’t have the intellectual wherewithal.

The fifth certainty is political: a squeezing of liberal values in all countries. That era is over because it was, on a long view, an aberration. This will mean, overall, a contraction of global trade and economies.

And the uncertainties? By definition these cannot be predicted. But for what it’s worth I would say these might lie in the hidden clauses in bilateral FTAs.

Published on January 19, 2026