Is the US in Decline?

Georgetown’s foreign policy discussions lately have been in love with the question of whether the US is in decline. For the most part, I think most of the experts I’ve listened to have fallen on the side of “not really”.

I tend to agree. My attempt to understand what’s been going on is this: my thoughts aided by Naomi Klein’s “Shock Doctrine”, I believe that the Friedmanites ran out of places to apply their shock and awe, what with South America resisting first, and then Russia, Iraq, and then Afghanistan. The only place left to try was the US, and privatization and starvation of government funding ran amok during Bush rule.

Loosening regulation on the financial markets led to a string of bubbles, resulting in massive redistribution of wealth to the rich and making the system unsustainable. Right now such a large failure of theory is forcing us to reevaluate what the best policies are: on preemptive war, the role of government, the subtlety of good governance (within international development in particular) and regulation.

The US left a lot of countries in its wake. People complain that the US is losing its dominance, but in fact it merely overstretched its bounds under neoconservative attempts to take advantage of unipolarity. The US spurned organizations it helped to create during its darkest hours, like the United Nations, Bretton Woods, and the World Bank. It sought to throw Iraq against the wall as an example to the rest. It pushed radical free market ideology to other countries.

The US is being hurt by its own financial greed, preying upon its own poor, but look at what’s happened elsewhere: Iceland’s stock market fell 76% in one day, heavily reliant on financial services. London has had to nationalize some of its institutions and it would not surprise me if London collapsed to some degree, being a close competitor to NYC in financial service offerings.

The countries our most slack-jawed patriots fear the most are not immune. Russia’s stock market was forced to halt on three occasions, I believe, because of volatility. Putin has gained popularity by bringing the Soviet Bear back to Russia (having thrown Georgia against the wall himself), but his oligopolistic, intimidation government is somewhat hollow and driven by commodity appreciation.

China, which has been fairly modest in its rise, despite our antagonism towards it publically, is also a victim. It depends on foreign demand for its goods, most of which are cheap and have little real value. It has not matured enough yet to wean itself off exports through adding value to its goods. According to an NPR article, it has lost 20 million jobs so far and is in danger of much more. The Shanghai stock market index has plummeted. (By the way, a hilarious paragraph from that article: “Harley Seyedin, the president of the American Chamber of Commerce in South China, says this slowdown was the result of deliberate action by the government.” Think that guy’s a Friedmanite?)

Many other countries lost half their stock market values during this mess as well. Jeffrey Sachs says the real victims won’t be third world countries, but the second world countries dependent upon globalization.

So why do Americans see the world from inside a bubble? Why do they think China (or the EU!) can develop a military to compete with ours? Why do they think China will leave our economy in shambles? China indeed will produce more than us by 2050 (yes, 2050 according to the estimates, which are all we have to go on), but per capita the US will still grow faster.

Now let’s look at the US. Clearly it has its own problems. Financial bankruptcy is a major concern, yes. How will we pay for our retirees or for medical care? How will we generate the political will to modernize our institutions for the internet age? Racism and intolerance has been exacerbated by economic uncertainty and by McCain and Palin standing idly by instead of speaking out against it. (“No, Obama’s not an Arab, he’s a good man.” Hmm.)

But unlike the EU and other large countries, we will continue to have more immigrants coming in, ensuring our replacement rate is sustainable. We have a diversified, innovative economy with no peer in terms of high-valued goods. Ironically the horrible subsidies we give to farmers have wrecked world crop markets enough that in crises we will fare better in terms of having access to raw materials. We still have protected strategic oil reserves that of course Republicans seem to want to tap out so we can be even more vulnerable in terms of national security.

We have the chance to roll out highly productive solar collectors and electric cars before other nations, and INCREDIBLY SOON, if we invest right. How’s that going to affect the Middle East, Russia, and Venezuela? And Canada for that matter?

Our military, although involved in two occupations, could redeploy and then deploy somewhere else and not fail. It is incredibly resilient as long as we can finance it. It can even be argued to provide a common good to international stability, according to Michael Mandelbaum. (highly contentious, but worth thinking about)

Sure, there’s no doubt that Fareed Zakaria is right: this is about the rise of the rest, not the decline of imperial America. But the rise of the rest what we SHOULD want as peaceful, freedom-loving, ultra-competitive Americans: no nations in poverty, more nations contributing to a globalized, efficient, tolerant world. (notice I didn’t assume democratic) And we will lose some of our influence as long as we remain backwards in our foreign policy, but that tide can turn quickly if we provide leadership by example.

So I think the naysaying is overblown. I expect a lot of what I just wrote to turn out to be incomplete or even blatantly wrong, but it is at least framed in a more holistic picture of what the levers are that affect international affairs than just the fact that the US has done some incredibly dumb things.

Besides, Barack Obama is about to win. Do you have any idea how big the fucking party in DC is going to be when he claims victory? Do you have any idea how much this will affect the rest of the world?

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Filed under Business, Economics, Foreign, Globalization, Government, Policy

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