Opinion

The Edgy Optimist

The benefits of a ‘de-Americanized world’

Zachary Karabell
Oct 16, 2013 12:02 UTC

This current bout of Washington inanity is approaching its denouement, but however it ends, it has accelerated a trend that has been gathering steam for at least the last five years: the move away from a Washington-centric world and towards a new, undefined, but decidedly less American global system.

The latest broadside was the widely disseminated editorial in China’s state-run news agency Xinhua, which called for a “de-Americanized world” that no longer depends on the dollar and is thus no longer at the whim of “intensifying domestic political turmoil in the United States.” That follows on the heels of a Vladimir Putin’s op-ed in the New York Times in which he called out the American tendency to see itself as an exceptional, indispensable nation. “It is extremely dangerous,” Putin concluded, “to encourage people to see themselves as exceptional, whatever the motivation.”

The fact that these two powerful critiques of America’s place in the world were written by the United States’ historical adversaries should not be an excuse to dismiss their substance. Yes, these broadsides were politically motivated, and they play to domestic and international audiences that celebrate anyone who stands up to the big, bad Americans. But even a hypocritical adversary can have keen observations, and in both cases, the message was the same: the United States may be a powerful country that controls the world’s reserve currency and has the world’s predominant military, but that does not mean it is the global leader, the world’s policeman or anything other than a first among equals at best.

For all the fervor of the Tea Party and the anxiety of the middle class, Americans still adhere to a comforting story of the U.S. as the world’s sole superpower. If anything good comes out of this current morass, it will be that we’re one step closer to unraveling that outdated myth.

The financial crisis of 2008 disabused the rest of the world of the notion that the United States — whatever its limitations — was far and away superior at maneuvering the wheels of finance and capitalism. For a while, the denizens of the European Union enjoyed tut-tutting the Americans about their love affairs with derivatives and mortgages, until the EU itself plunged into chaos in 2010. The U.S. was exposed as the man behind the curtain, dispensing advice born of financial alchemy, but in the end just as susceptible to speculators and systemic failings.

Obama and Xi’s weekend getaway

Zachary Karabell
Jun 7, 2013 17:44 UTC

This weekend, President Obama and China’s new leader Xi Jinping will meet at a retreat outside of Los Angeles. The two men are scheduled to spend six to seven hours covering a range of issues that confront the two countries, from the increasingly fraught issue of hacking and cybersecurity to what to do about an evermore unpredictable and rogue North Korea. The summit was arranged only recently, almost impromptu and more casual and low-key than the pomp and circumstances state visits of the past decade. That should in no way, however, obscure just how important the meeting is.

Rarely in history has an emerging power met an existing power without mayhem and conflict ensuing. China today is clearly emerging, with an economy that will soon be larger than the U.S.’s, though the income of Chinese citizens will remain far behind their U.S. counterparts for many years to come. In spite of recent stumbles, the U.S. remains the only country with global reach both economically and militarily.

Yet tensions notwithstanding, by any historical standard, the U.S.-China relationship has been managed remarkably well, and this casual but symbolically significant summit between the two leaders is yet another indication of that. We focus habitually on all that is going wrong in the world, yet for now at least, the China-U.S. relationship is going right. That’s not because either country and its people like the other or trust the other, but it is because we need each other.

The U.S. can’t afford a Chinese economic collapse

Zachary Karabell
Mar 7, 2013 13:29 UTC

Is China about to collapse? That question has been front and center in the past weeks as the country completes its leadership transition and after the exposure of its various real estate bubbles during a widely watched 60 Minutes exposé this past weekend.

Concerns about soaring property prices throughout China are hardly new, but they have been given added weight by the government itself. Recognizing that a rapid implosion of the property market would disrupt economic growth, the central government recently announced far-reaching measures designed to dent the rampant speculation. Higher down payments, limiting the purchases of investment properties, and a capital gains tax on real estate transactions designed to make flipping properties less lucrative were included.

These measures, in conjunction with the new government’s announcing more modest growth targets of 7.5 percent a year, sent Chinese equities plunging and led to a slew of commentary in the United States saying China would be the next shoe to drop in the global system.

The bright side of the fiscal cliff

Zachary Karabell
Dec 28, 2012 21:40 UTC

As 2012 sputters to a close, it wraps up with a yawning gap between widespread economic pessimism and the actual state of economic affairs.

Though consumer sentiment rebounded in the fall, it fell in December, amid relentless coverage of the impending fiscal cliff. Holiday spending was muted. Businesses, meanwhile, cite the unresolved negotiations in Washington as evidence of continued uncertainty and many have put new spending, hiring or investment on hold. The media counts the days (and on some cable news channels, the minutes and the seconds) till we descend the fiscal cliff – adding to the general agitation.

Yet, every indicator of American economic activity has been strengthening. Stocks are up between 8 percent and 14 percent in 2012, depending on the index. Gross domestic product is increasing more than 2 percent a year; unemployment has fallen below 8 percent; wages are steady even as inflation is close to non-existent. Energy prices have declined, and home prices have increased. Debt burdens for American households are now at the lowest level in 29 years, giving the vast majority of consumers more flexibility in their spending

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