The myth of America’s decline
This is an excerpt from “The Reckoning: Debt, Democracy and the Future of American Power,” published this week by Palgrave Macmillan.
For all the doom and gloom about â€śAmerican decline,â€ť the United States looks nothing like the twilight empires to which itâ€™s often compared. For one thing, in this age of globalization, a far greater swath of the planet â€“ including some surprising nations like China and Saudi Arabia â€“ wish America well, albeit for their own, selfish reasons. Why would either country, in spite of what it may think of American culture or foreign policy, want to upset a status quo upheld, at great expense, by American power that enriches them more each and every year? From the US perspective, this should be an advantage. It creates stakeholders all over the planet that genuinely hope Washington can solve its current fiscal problems. With the exception of the British Empire, which had a relatively benign replacement lined up when it ran out of steam, history offers no other example of a waning empire whose most obvious potential rivals â€“ China, India, the EU, to name but a few â€“ all have good reasons to want to help arrange a long, slow approach to a soft landing.
â€śI have no objection to the principle of an American Empire,â€ť writes Niall Ferguson, the Oxford historian. â€śIndeed, a part of my argument is that many parts of the world would benefit from a period of American rule.â€ť Ferguson and others like him recognize the importance of the role the United States has played, a role that â€śnot only underwrites the free exchange of commodities, labor and capital but also creates and upholds the conditions without which markets cannot function â€“ peace and order, the rule of law, non-corrupt administration, stable fiscal and monetary policies â€“ as well as public goods.â€ť Ironically, many would-be topplers of American hegemony no doubt feel the same way.
Another key difference from the decline of Europeâ€™s imperial powers is that while Americaâ€™s relative decline is underway, the United States hardly looks likely to sink quickly to second-class status. In other words, the current trajectory would see the United States settle into a kind of parity with emerging powers. In instances where the changing of the guard occurred with amazing speed â€“ Spain after Philip II, the Dutch after the Napoleonic wars, France after World War I, and Britain after World War II â€“ the declining powers were exhausted, attempting to cling to far-flung colonies because their imperial economic models depended on extracting every last ounce of labor and resources to prop up the home country. The United States has something none of them ever enjoyed â€“ the worldâ€™s largest domestic consumer market, as well as a commanding lead in many of the disruptive technologies that still drive product innovation. So absolute decline appears only a distant prospect â€“ unless Americans badly fail at the polls, inviting another decade just like the one just finished.
Relative decline for the United States is hardly the worst possible outcome, if Washington and its allies can fashion a post-hegemonic system as resilient as the US-dominated one launched by Roosevelt and Truman in the mid-1940s. And Americans may find that, after decades of superpower headaches, they kind of enjoy being mortal again.
But this will require some serious repair work, and not just to the national balance sheet. Americans are right to take pride in their countryâ€™s achievements, but at times this pride looks, from the outside, a lot like arrogance or even racism. â€śBrazil, China, India, and other fast-emerging states have a different set of cultural, political, and economic experiences, and they see the world through their anti-imperial and anticolonial pasts,â€ť says G. John Ikenberry, a Princeton professor of international relations and former State Department official. â€śStill grappling with basic problems of development, they do not share the concerns of the advanced capitalist societies. The recent global economic slowdown has also bolstered this narrative of liberal international decline. Beginning in the United States, the crisis has tarnished the American model of liberal capitalism and raised new doubts about the ability of the United States to act as the global economic leader.â€ť
Removing the stain of financial fundamentalism should be a priority of US foreign policy, too, and I believe it to be achievable. In spite of the financial charlatanism that prevailed in the first decade of the century, the American economy is sputtering but not crumbling. American innovations still drive progress in many fields of science and technology, even if some of its most innovative software â€“ Facebook, Twitter, the Internet generally â€“ occasionally undermine its own interests abroad. American manufacturing, recently written off as a legacy of a bygone age, is mounting a comeback as the costs of labor in the emerging world rise, along with the costs of transporting products back to the home market. At some point, the political risks of a factory in China or Bangladesh might just outweigh the incremental labor cost savings. For these and other reasons, then, the United States is hardly a â€śspentâ€ť power. A more apt word might be winded, like an aging runner who ate, smoked, and drank too much over the Christmas holiday. The United States struggles today to call up the old reserves of strength that seemed to power growth and job creation effortlessly through the preceding two decades. This is partly because the â€śsteroidâ€ť of the housing bubble that fueled its irrational exuberance during many of those years has turned into a weight around its neck in the form of slow, excruciating deleveraging of household debts. But the runner lives and still has a few marathons left in him.
This is the time for America and its friends to face reality. These may not be the best of times, but with some planning and hard work, they do not have to become the worst of times, either.