Is This The End of the American Century?

This site features updates, analysis, discussion and comments related to the theme of my book published by Rowman & Littlefield in 2008 (hardbound) and 2009 (paperbound).

The Book

The End of the American Century documents the interrelated dimensions of American social, economic, political and international decline, marking the end of a period of economic affluence and world dominance that began with World War II. The war on terror and the Iraq War exacerbated American domestic weakness and malaise, and its image and stature in the world community. Dynamic economic and political powers like China and the European Union are steadily challenging and eroding US global influence. This global shift will require substantial adjustments for U.S. citizens and leaders alike.

Sunday, December 20, 2009

U.S. #1 in Cumulative Carbon Emissions

This is why the developing countries are unhappy about U.S. insistence that they cut THEIR carbon emissions!.

See scientist James Hansen's Newsweek article on "Power Failure: Politicians Are Fiddling While the Planet Burns" where he writes that "Planet earth is in imminent peril." We now have evidence, he continues "that continued exploitation of all fossil fuels on Earth threatens not only the other millions of species on the planet but also the survival of humanity itself--and the timetable is shorter than we thought."

While Hansen supported the election of Barack Obama, he now believes that in terms of climate change, "President Obama does not get it" and that he and his advisers have caved to pressure from monied interests.

"Civil resistance may be our best hope," he concludes.

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Sunday, December 13, 2009

The 21st Century, Multipolarity, and Education

The following email from Gaston Younger provides an interesting perspective on America's global reputation, the rise of other powers (especially in Asia) and the poor state of U.S. public education. As you will see from his emails, Younger lived in both Vietnam and France before coming to the U.S., where he served 20 years with the U.S. Army.

I just read you book "The end of the American century" and find it very fascinating but yet a gloomy, unpleasant realistic outcome for our country if our elected public officials do not take into consideration the serious situations (financial, economic & educational) facing the US.

I was born in French Indochina & I can attest to the facts on my vacation trip to Vietnam and the surrounding countries of the former French colonial empire that China has replaced both France & the US as the preeminent global power in that part of the world. We should all welcome the new era of multipolar world; however American citizens should definitely demand from their government on both local & federal levels to invest more financial resources in public education if we are to compete successfully with the new rising powers; S Korea, India, China, Brazil.

After the disastrous eight years of the Bush regime & a total lock on power by a fanatical, right wing Taliban GOP controlled US Congress from 1994 until 2006, our country image abroad has dramatically deteriorated. It is incumbent upon informed citizens to urge their elected public officials to take implement immediate actions in the areas of k12 public education & environmental friendly green energy if we are to pull our country out of this economic fiasco.

After receiving this email, I responded to Gaston, asking him about his own background, and this is his reply:

I was born in Vietnam from a mixed French-Vietnamese ancestry, left Vietnam in '67 for France where I continued my studies & came to the States in '73. I graduated from high school in New Orleans & joined the US Army for the next 20 years as a linguist (French & Arabic). I was stationed mostly throughout the Middle East, did couple tours on the DMZ in Korea & one tour in Germany. I was selected by the Army to attend DLI(Defense Language Institute) where I graduated top 5% in my Arabic class.

I was fortunate to have a throughout French education in my childhood in Indochina. The French educational system is second to none in Western Europe. It emphasizes primarily on the rich tradition of French literature. All kids memorize at an early age "les fables de La Fontaine"by Jean de La Fontaine, the classical works by Victor Hugo, Moliere, Guy De Maupassant, Honore de Balzac, Emile Zola, Albert Camus, Anatole France, Gustave Flaubert.

Thinking about Vietnam in the 20th century, I am saddened by the critical mistakes made by the French government in 1945, when it refused to recognize Ho Chi Minh declaration of independence; however France recognized Laos independence four years after the end of WW2. Did you know Ho Chi Minh actually admired the US? It is unfortunate the cold war allowed many demagogues particularly US Senator Joe McCarthy and many more in the Truman & Eisenhower administrations to demonize Ho Chi Minh & portrayed him a a Soviet stooge or harboring pro-Chinese sentiment while Vietnam has deep mistrust of its northern neighbors for thousand years & lets not forget it was the same Ho Chi Minh who organized the guerrilla warfare against the imperial Japanese Army occupying French Indochina while working closely with the OSS.
Like many Vietnamese, I have a deep admiration for French culture, literature, cuisine, music.

I share many of your political ideas. I worked in 2004 for John Kerry but I was disheartened by the election results, I still could not understand the reasons 58 million Americans voted for a demagogue from the red state of Texas considering his shady personal character & many policies implemented by his administration will definitely affect our country for years to come. I wore the Army uniform for 20 years with pride, but the prisoner sexual abuse at Abu Graibh made me sick to my stomach & soiled our country image throughout the world, I will never forgive this rogue Bush regime for destroying our military, ruined our country image abroad.

The midterm election in 2006 & President Obama successful election in 2008 finally gave us some hope to turn this country around, although it may be a little bit too late. The damage (fiscal policy mismanagement, unilateral foreign policy) has been done.

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Thursday, December 10, 2009

Obama's Peace Prize, and U.S. Power, as Seen From India

The Nobel Committee's selection of President Obama for the Peace Prize is a recognition of the reality that U.S. power rests "not in its weapons or in its armies, but in the syncretic values of the American people." This is the view of India's M.D. Nalapat, a Professor of Geopolitics at Manipal University. Professor Nalapat's essay, "Peace, Not War, the Best Strategy" appears on the webpage of the China-U.S. Friendship Exchange as part of a dialogue on the themes of my book on The End of the American Century.

This response to Nalapat's essay appears on that same site this month.

It is both enlightening and refreshing to hear about the U.S. role in the world from a thoughtful critic outside the U.S., like India's Professor M.D. Nalapat. He points to the past tendency of the U.S. to rely on ''military and economic muscle to seek 'compromises' that are in fact surrenders by the other side.'' I believe those views are widespread in the world, though quite different from the way most Americans perceive their role in the world. It is difficult for Americans to hear the voices and opinions of others, because we are so used to thinking of ourselves as the world's best, and the most admirable. Kishore Mahbubani, the author of The New Asian Hemisphere, thinks Americans are blind to their own shortcomings, and basically unable ''to listen to other voices on the planet.'' In an increasingly globalized and interconnected world, this is one big factor in America's declining global power, influence, and effectiveness.

Mr. Nalapat views the great strength of the U.S. resting in its ''syncretic values'' and its openness to innovation and immigration. Indeed, I would agree that immigration, and the power of assimilation and adaptation, have been an important element of this country's history and development. Immigrants have provided both an energetic workforce and a vital source of creativity, innovation, and invention. The election of Barack Obama, an African-American with a multi-ethnic heritage, seems a confirmation of this admirable national trait.

However, this American advantage may also be eroding, and even becoming problematic. In the U.S. now, there is growing anti-immigrant sentiment, and one would expect this to increase as the economic downturn continues to bite. While the United States has (almost) always welcomed others to our shores, we have not usually treated them very well once they get here. Hispanics and other minorities, for example, experience much higher levels of poverty and unemployment than Whites, and are much more likely to be stuck with poor schools and inadequate health care.

The U.S. is still a global leader in science, technology and innovation, but even in these areas, the country is losing some of its edge. Over the last two decades, the U.S. has steadily lost its overwhelming global dominance in the production of both patents and scientific journal articles. The decline of American schools has taken a toll on science education, too, with American students often coming in dead last on international tests and competitions in science and math. China produces four times as many engineers as the United States. As other countries like China and India gear up technologically, it seems likely that talented and creative people are more likely to stay at home, or return home after taking some education in the United States.

Of course the U.S. remains a major global player in science, technology and innovation. But its ''American Century'' dominance in this area, as in so many others, is on the wane in the face of both domestic decline and the ''rise of the rest.'' Similar to Joseph Nye's emphasis on culture, Madhav Nalapat stresses the ''arts and sciences'' as a powerful tool for the U.S., especially in its interaction with China. And this is where I most differ with Dr. Nalapat. While culture and scientific exchanges are important, they can not substitute for the much more overwhelming influence of trade and economics. This is where China (and the EU, and India) are really gaining, and where the U.S. is particularly vulnerable. It is the growing economic might and confidence of these powers, and others that will most challenge the dominance of the United States.

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Saturday, December 5, 2009

Joseph Nye on American Power in the 21st Century

Harvard Professor Joseph Nye's work, especially his book Soft Power has much influenced my own thinking, and figures prominently in The End of the American Century. His ideas have directly or indirectly influenced the Obama administration, as reflected in Secretary Clinton's use of the term ''smart power.'' Both the rhetoric and actions of the Obama administration add substance to the concept.

Professor Nye's essay, "American Power in the 21st Century," is featured on the website of the China-U.S. Friendship Exchange, as a "comment" on my own "dialogue" there about The End of the American Century. This response to Nye's essay appears on that same site this month.

Professor Nye has long argued that power is multidimensional, that military power is increasingly irrelevant or dysfunctional, and that achieving foreign policy goals now rests on persuasion and cooperation as much as anything. I agree with him on all of this, and his marvelous formulation in this essay that ''on many transnational issues, empowering others can help to accomplish one's own goals.''

But I disagree with him that ''American power in the twenty-first century is not one of decline'' and the difference lies mostly in how we view America's domestic record. In Soft Power, Nye identifies many elements of American soft power, including its economy, culture, values, and global image. But as I show in my book, the U.S. has lost ground in virtually every domain of such soft power, while also losing strength and credibility with its military power and its global reputation. Meanwhile, other regions or powers, like China, the EU, India and others have gained global soft power influence, often at the expense of the U.S.

The U.S. economy and standard of living, since World War II a source of envy and admiration worldwide, is no longer much of a model or aspiration for others. Its astounding growth over the last two decades, it turns out, was a hollow shell, built on ballooning levels of household and government debt. The current economic downturn-still not finished by a long shot-is bringing the United States back to a more ''natural'' economic position, much lower than before. Even before the current crash, by many measures more meaningful than GDP/capita-like quality of life indices-the U.S. was nowhere near the top of the global list.

While growing the economy, based mostly on increased consumption, the U.S. neglected health care, education, investments, R&D, and infrastructure, and allowed increased levels of poverty and inequality. On all of those measures, the U.S. fares poorly in comparison to other developed countries.

Global opinion surveys conducted by Pew, BBC and others show little enthusiasm in other countries for ''American-style democracy,'' for American ways of doing business, or for the spread of U.S. ideas and customs. Though global opinion about the U.S. has improved somewhat with the election of President Obama, far more people worldwide continue to see U.S. influence on the world as ''mostly negative'' rather than ''mostly positive.'' On this scale, among 15 countries, the U.S. ranks 10th, below Germany, Britain, Japan and China, according to a recent BBC poll.

While American culture remains popular in many places (though not, by all means, all), it is difficult to see how global infatuation with ''Desperate Housewives'' can help solve problems like terrorism or global warming. As Professor Nye notes in his first paragraph, even some of our closest allies now believe the era of U.S. global leadership is over. Even more emphatic assertions of that belief have come from leaders in China, Brazil, Peru, Iran and elsewhere.

American decline is not necessarily a bad thing, though, given the increasing interconnectedness of countries and global issues. It will be easier for the United States to interact cooperatively with other countries-and for them to deal with Washington-if the U.S. is not so dominant and domineering. President Obama has adopted a much more conciliatory and modest approach to other countries-viz. his speeches in Ankara and Cairo-and this befits a country that has less reason to crow about its superiority and exceptionalism. As Professor Nye points out, most of the big issues facing the U.S., and the rest of the world, are not susceptible to the application of power by a single country. More things are ''outside the control of even the most powerful state.''

The United States is certainly in decline, both in absolute terms, and relative to other countries. But it will remain an important and influential power, especially if it continues to adopt a less arrogant, more cooperative approach to the rest of the world.

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Thursday, December 3, 2009

Dick Armey: Fostering Hate with Deliberate Lies

I was absolutely stunned to read this quotation from Dick Armey, the former House Republican leader, in a speech he gave recently in North Carolina:

"Nearly every important office in Washington, D.C., today is occupied by someone with an aggressive dislike for our heritage, our freedom, our history and our Constitution."

It is inconceivable that Armey, who worked so long in Washington, actually believes this. Could he actually come up with some names of people that fit in that category? Probably not. So one can only conclude that Armey deliberately lied when he said this to a crowd of supporters in Hickory, N.C.

Since retiring from the House in 2003 has worked as a lobbyist for a big law firm, while also serving as chairman of a conservative nonprofit called FreedomWorks, which is opposed to "big government." A story on him, and how he "has taken his politics and ideas to the right-wing protest movement," appeared in the November 8 issue of the New York Times Magazine.

Later, in discussing the health care reform with a reporter, he admitted that he did not believe some of the extreme charges--for example, about "death panels"--but said that "if people want to believe that, it's O.K. with me."

This is demagoguery, fear- and hate-mongering that has no place in the U.S. political arena, though it is increasingly dominating and poisoning the political process, and American democracy. Armey should be ashamed of himself; instead, he seems to revel in the way his provocative lies stirs up the political pot.

President Obama called attention to this phenomenon in his Afghanistan speech on Wednesday night, where he called for a return to the spirit and values that unite us as Americans:

"we, as a country, cannot sustain our leadership, nor navigate the momentous challenges of our time, if we allow ourselves to be split asunder by the same rancor and cynicism and partisanship that has in recent times poisoned our national discourse."

"I refuse to accept," the President continued, "the notion that we cannot summon that unity again. I believe with every fiber of my being that we -- as Americans -- can still come together behind a common purpose. For our values are not simply words written into parchment -- they are a creed that calls us together, and that has carried us through the darkest of storms as one nation, as one people."

We can disagree about policies, and the role of government, and the rights of the individual vs. the needs of the community. That is all part of the political process. But we need to speak out against, and call to account, people like Dick Armey and Glenn Beck who deliberately lie and deliberately foster hate and division.

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Monday, November 16, 2009

Global Debt Comparison

Britain's Economist magazine online has a very interesting and useful interactive map on global debt, showing the public debt levels of most countries in the world. One can slide the tabs to look at past years, or projections for future years. Pop up graphics also show public debt per capita and as a percentage of GDP.

A striking feature of the global map is that it is mostly the wealthy countries (North America, Europe and Japan) that have the highest debt levels worldwide. Some of the online commentary on this phenomenon point out that many of these countries are actually in worse shape than the U.S., in terms of government debt levels.

My friend and colleague Jeff Payne (who this semester is teaching a course using The End of the American Century as one of the texts), called my attention to this Economist site, and made the following observation:

It seems the US is indeed taking out extreme debt over the recession, but not in the same level of GDP as many other developed countries. So, among the most developed nations, we are not the worst - do not know if that is anything to celebrate. Yet, in relation to your research program I wonder what this the American experiment exhausted, or is the entire Western world in that same situation?

My response would be that yes, most of the Western world has government debt problems. I see the U.S. situation as far more dire, though, for the following reason. Most of those other countries accumulated their debts while financing government programs that supported health care, social welfare, education, infrastructure and the environment. Most other wealthy countries are far ahead of the U.S. in all those dimensions, as I point out in my book. The U.S., in contrast, accumulated our huge debts largely by financing consumption and military spending. All the while, U.S. health care and education languished, poverty and inequality increased, the environment and infrastructure deteriorated. So at the starting gate of the new global order, the U.S. is way behind the rest of the developed world, and too broke to catch up.

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Thursday, November 12, 2009

Reality and Hope in the Obama Era

What follows is the first page from the new epilogue of the paperback edition of The End of the American Century, entitled "Reality and Hope in the Obama Era."

“What is required of us now is a new era of responsibility -- a recognition, on the part of every American, that we have duties to ourselves, our nation and the world." --President Barack Obama, January 20, 2009

Much has changed, for better and for worse, since the hardbound edition of this book first went to press in early 2008. Indeed, the publication of the book in October of that year coincided with both the exhilarating finale of the 2008 presidential elections, and the meltdown of the U.S. economy. The election of Barack Obama fulfilled the first criterion of the “best-case scenario” that I posed in Chapter 10: new political leadership. Both for who he is and what he says, Obama provides the best possible hope of restoring some of America’s domestic health and international reputation, after the catastrophic lost decade of the George W. Bush administration. President Obama wants to fix the many American problems enumerated in this book—health care, education, infrastructure, the environment among them—and in the first months of his administration had already initiated policies and legislation to do so. He also pledged from the outset to withdraw U.S. forces from Iraq, to abide by international law, and to be more cooperative and multilateral in dealing with other countries.

On the other hand, as I cautioned even for the best case scenario, new leadership will not reverse or solve the problems of American decline. The problems facing this country are so systemic and deep seated—most of them long-preceding the Bush administration—that even radical changes will have only minimal impact on the trajectory of America’s decline. Furthermore, the debt-induced economic crisis that I presaged at the end of Chapter 1 is already well underway. Much of the country’s economic growth of the last twenty years was fueled by government and consumer debt, creating a giant country-sized Ponzi scheme that was bound to implode. President Obama’s well-intentioned and necessary—but enormous-- spending plans to fix things will only hugely inflate the country’s already unprecedented levels of debt. It is difficult to see how the country will extricate itself from this mess. Certainly the time frame is many years, perhaps a decade or more, and not the cheerful predictions of most economists and politicians that we will be out of the woods in a few months or years.

On the international scene, the events of the last year have been a good-news, bad-news story. The election of an African-American as President of the United States gave a huge boost to this country’s international reputation. Obama’s message of hope, reconciliation, humility and multilateralism was welcomed all across the globe, and promised to allay—at least somewhat—the ill will fostered by the Bush administration’s arrogance and belligerence. However, during America’s lost decade, much of the rest of the world had moved on, and beyond, the United States. Almost nowhere is the country still viewed as the “city on the hill” to be followed and emulated. Increasingly, foreign leaders and their populations have dismissed, criticized or mocked the U.S. and its policies. This tendency has accelerated as the rest of the world has had to bear the brunt of America’s economic and financial mismanagement. When the Chinese Prime Minister, for example, complained about “the unsustainable model of development characterized by prolonged low savings and high consumption,” there was no question which country he was referring to.

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The End of the American Century Published in Paperbound

The End of the American Century is now available in paperback, with a newly added epilogue on the Obama Presidency, entitled "Reality and Hope in the Obama Era." (See the next post for the first page of the epilogue). The book is available from the publisher at the link at the top of this page, and also from Amazon, Barnes & Noble, etc.

(For readers who purchased the hardbound edition, and would like to see the epilogue, send me an email and I will provide you with that chapter.)

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Tuesday, November 3, 2009

Dialogue and Forum on "The End of the American Century"

An extended "dialogue" on the themes of The End of the American Century has been posted on the website of the China-U.S. Friendship Exchange at this link. The interview with me was conducted by the organization's founder and president, Dr. Sheng-Wei Wang, who is based in Hong Kong. The interview focuses especially on America's changing global role and its relationship with China.

This November issue of the China-U.S. Friendship blog also includes two other essays on themes related to my book: "American Power in the 21st Century" by Harvard's Joseph Nye (author of Soft Power); and "Peace, Not War, the Best Strategy," by Professor of Geopolitics Madhav Das Nalapat at the Manipal Academy of Higher Education in India. Those two essays are accessible at this link.

My responses to those two essays will appear in the next (December) issue of China-U.S.

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Wednesday, September 30, 2009

Kolko's "The World in Crisis"

The American revisionist historian Gabriel Kolko has published a new book, The World in Crisis, with a subtitle that is the same as my book, The End of the American Century. The book is a collection of essays, written since 2004, most of which have appeared in print or online though often, according to the author, revised and updated for this publication. The common theme is "the decline of American power, the limits of its military technology, and the end of a century in which the United States had the pretension to lead the world." (p. 3).

These themes are similar to those of my own book, and Kolko concludes, as I do, that America's "century of domination is now ending." But there are substantial differences as well. First of all, while Kolko's first two chapters address America's financial crisis, the clear focus of the book is on America's foreign policy and global role. In The End of the American Century, I see the roots of America's decline as much in the domestic arena as in the global one, though they are closely linked. Secondly, Kolko sees the decline of American power beginning very early--as early as the Korean War in the 1950s, whereas I see the decline beginning in the 1970s, and mostly as a result of domestic factors: especially growing consumerism, individualism, poverty, inequality and debt.

Kolko's book is World in Crisis: The End of the American Century, published by Pluto Press in 2009.

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Wednesday, September 23, 2009

U.S. Health Care Compares Badly to Others

In his address to Congress last week, President Obama decried the failures of the American health care system, and pointed out how poorly it fares in comparison to other wealthy countries. Millions of people in this country do not have health insurance and can’t afford necessary medical care. Tens of thousands die each year from lack of such access. We are “the only wealthy nation that allows such hardship for millions of its people,” observed the President.

The sorry and disgraceful state of the American system of health care is documented in The End of the American Century (pp. 48-53), and was also the subject of a post I made on this blog a year ago (US Ranks Low on Health Care). Since then, there is a mounting pile of evidence documenting how badly America fares in health care, on multiple dimensions. This is true both in terms of general overall statistics, like infant mortality, maternal mortality, and average lifespan (reported by organizations like the World Health Organization and the United Nations), but also in more specialized areas, like survival rates for disease, patient access to physicians, and public satisfaction with health care in different countries.

The highly regarded Commonwealth Fund, for example, conducts periodic studies of such issues, comparing the United States to other wealthy countries. One such study on patient access to primary-care physicians found that Americans wait longer to see their doctors than patients in Britain, Germany, Australia, or New Zealand, Holland or France—all countries with strong public-health systems. Almost a quarter of Americans reported waiting six days or more for an appointment, compared to just 14% in the UK and 18% in France, for example.

Another study on “preventable deaths” found the U.S. ranking dead last of the 19 countries in the study. These are deaths that could have been prevented with timely and effective health care--which of course is often unavailable to millions of American citizens. The U.S. ranking on this scale actually declined from 1997 to 2003, from 15th place to 19th place. Number one in the ranking? France.

Yet another study compared five-year survival rates for various diseases in the U.S. Canada, Australia, New Zealand, and England—all of whom spend far less on health care than the U.S. Of the five diseases, on only one of them (breast cancer) did the U.S. have the best five-year survival rates.

The veteran journalist T.R. Reid has just published a new book, The Healing of America, in which he compares health care systems around the world. In a summary of the book in Newsweek ("No Country for Sick Men"), Reid observes that in health care:

“The United States is the odd man out among the world’s advanced, free-market democracies. All the other industrialized democracies guarantee health care for everybody—young or old, sick or well, rich or poor, native or immigrant. The U.S.A., the world’s richest and most powerful nation, is the only advanced country that has never made a commitment to provide medical care to everyone who needs it.”
Consequently, according to Reid,
“about 22,000 of our fellow Americans die each year of treatable diseases because they lack insurance and can’t afford a doctor.”

Many Americans express concern about the “rationing” of health care in a government-supported system. But has Reid observes, the U.S. already rations health care. It is “rationing care by wealth.” While this may seem natural to Americans, he says, “to the rest of the developed world, it looks immoral.”

The immorality of this is particularly callous in its effects on children. A study from the National Center for Health Statistics reports that poor children are 3.6 times more likely to have poor health than children from affluent families. As I point out in my book, “The United States is the only developed country in the world where children suffer poor health and die simply because their parents are poor or unemployed.” (p. 52).

One also hears concern in the current debates about the potential costs of a system of universal health care—legitimate concerns in the face of unprecedented government deficits and debt. But the U.S. already has the most expensive health care system in the world, no matter how you measure it. As a share of GDP (2006), health care constituted over 15% in the U.S., compared to 11% in France, 10% in Canada and 8% in England—all of them with universal coverage for their citizens (OECD). On a per-capita basis, the U.S. also outspends every other country in the world, by a long shot.

Many Americans assume that the largely private medical care in the U.S. is more efficient, less bureaucratic and less costly than the government-run programs in other countries. In fact, administrative costs in the U.S. are higher in for-profit hospitals than in public ones, and overall administrative costs are higher in the U.S. than in countries with government-run programs. Compared to other countries, the U.S. also comes up high on administrative costs in health care. A 2003 study in the New England Journal of Medicine estimates that administrative costs absorbed 31 cents of every health care dollar in the U.S. compared to only 17 cents in Canada, which has a universal health insurance plan paid for by the government.

By all of these statistical measures, the U.S. health care system looks bad. But what it really comes down to is not statistical comparisons but fairness, compassion and justice. And the outcome of health care reform will depend as much on these American values more than anything else. President Obama himself recognized this in his address to Congress, where he appealed to the “large-heartedness” in the American character—“that concern and regard for the plight of others.”

“It, too, is part of the American character -- our ability to stand in other people's shoes; a recognition that we are all in this together, and when fortune turns against one of us, others are there to lend a helping hand; a belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play; and an acknowledgment that sometimes government has to step in to help deliver on that promise.”

Much of the opposition to health care reform has come from people who are worried about how the changes will affect themselves and their families. Perhaps this self-interest is normal, and part of human nature. But our fate and health as a country is as much dependent on the health and safety of others as it is on our own. Re-establishing a sense of community and common purpose—and of the American tradition of large-heartedness—is an essential ingredient in the prescription for the ailing American health care system--and in restoring the United States as a great power.

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Wednesday, September 16, 2009

Can We Cut Defense Spending to Pay for Health Care and Education?

I received the following email, from a retired medical school professor, raising the question of budget priorities, and whether we might be able to help pay for health care reform and/or education by reductions in the military budget. My response follows the letter:

Professor Mason:

I've been reading your book, "The End of the American Century," these past
several days and am finding it very readable and informative, albeit a bit
depressing. I'm a biomedical scientist by training and trade (and a fellow
academic and resident of Indianapolis; see below), and am much in need of an
uncomplicated, understandable discussion of economic principles. Your book
meets those criteria very well and I appreciate having it available.

Now to my question. Since retiring from the university, I've enjoyed engaging
in online "discussions" of issues political from time to time. Most
recently, during a discussion of how we might pay for health care reform, I
innocently -- and sincerely -- suggested that we might consider closing a
few of our military bases around the world. I've read Chalmers Johnson's
trilogy on the American empire and am quite sympathetic to the view that
we've way overspent on the military. In any case, my opponent dismissed my
suggestion as naïve and irrelevant by citing government figures
( that military spending--as a percentage of GDP--is a mere 3.7% of GDP and has
actually declined in recent years. His point, of course, which was not
supported by any data, was that domestic social spending far outstrips
military spending. I find this notion preposterous but I'm puzzled by the
data he cited. Should I surmise that the percentage spent on, say,
education, is several times less than 3.7%? Or is this rendering of the data
simply misleading? Can you help me to sort this matter out?

Thanks. I'm sorry to trouble you with this question, but you DID manage to
get me to pick up and read your book...


Lynn R. Willis

Dear Lynn,

Nice to "meet" you and thanks for reading my book, and for the compliment.

On the question of defense spending, it is true that it is a relatively small share of GDP. But in terms of spending priorities--the question you are addressing--I think the more appropriate comparison is defense spending as a proportion of the budget, not the GDP. In the TruthandPolitics page you mentioned, if you scroll down to Graph 2 (Defense Spending as a Percentage of Discretionary Spending), you will see that defense spending is about half of the entire "discretionary" budget of the U.S. government. So defense constitutes more than all other categories COMBINED, and is far more than that spent for education, welfare, etc. "Discretionary" spending refers to those categories that Congress has some authority over, as opposed to "Mandatory" programs (funds already committed) for Social Security, Medicare, Medicaid, Debt Interest, etc.

You can get a better sense of this if you look at a discretionary spending pie chart, or for a more authoritative and detailed source, look at the actual federal budget summary at:

There, you will see (Table S-3) that for 2009, the Defense Department budget is $666 billion, and ALL other programs get only $613 billion. Education (Table S-7), gets a mere $41 billion.

Incidentally, US defense spending also makes up about half of all defense spending in the world, so the U.S. outspends virtually all other countries combined.

So I agree with your point that a small cut in the defense budget could make a huge difference in some of these other programs, including education and health care.


Other comments welcome!

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Thursday, September 10, 2009

The Bankruptcy of American Economics

It is not just the American economy that is bankrupt, but the profession of economics as well. It is partly the interaction of these two that has led to the collapse of the American economy and the huge economic hole we find ourselves in.

Paul Krugman provides a devastating critique of his own profession in the Sept. 6 New York Times Magazine , in an essay entitled “How Did Economists Get it So Wrong?” Krugman, a Princeton economist, New York Times columnist and Nobel prize winner, believes that

American economics, as a field “got in trouble because economists were seduced by the vision of a perfect, frictionless market system.”
The profession was blind to the possibility of catastrophic failures in a market economy, he asserts.

In a June lecture at the London School of Economics, Krugman argued that most
macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst.”

Others besides Krugman are dissecting the economics field, and finding serious problems with it. Britain’s influential Economist magazine had a cover story (7/18) on “Modern Economic Theory: Where it Went wrong—and how the crisis is changing it.” They quote the LSE’s Willem Buiter saying that a training in modern macroeconomics was “a severe handicap” at the onset of the financial crisis. The main problem was that in many macroeconomic models, insolvencies simply cannot occur.
So much for those models.

The problem of economics is even worse, I think, because the discipline has been so intolerant of dissenting views. Modern economic theory is as much an ideology as anything else, with a faith in the market that ignores both reality and those who challenge the dominant paradigm. As the New York Times put it in a story last March:

“For years, economists who have challenged free market theory have been the Rodney Dangerfields of the profession. Often ignored or belittled because they questioned the orthodoxy, they say, they have been shut out of many economics departments and the most prestigious economics journals. They got no respect.”
I saw this firsthand at my university a decade ago, when we were attempting to create a department of economics within the college of liberal arts and sciences. I was on the search committee to hire an economics professor to begin building that program. But it soon became clear that there was a basic inconsistency between the goals of the liberal arts curriculum—free inquiry, critical thinking, competing ideas—and that of the economics profession. The candidates we considered most interesting , with provocative ideas and wide-ranging interests, were largely outcasts in their own discipline, which favored narrow specialties, and strict adherence to the free market ideology. “They got no respect” from the economics discipline, so didn’t have the necessary credentials, and couldn’t be hired. Eventually, the university gave up on trying to create an economics department in the liberal arts college.

Not only is the narrow ideology of modern American economics inconsistent with the traditions of critical thinking, it has proved totally incompetent at predicting the crisis, or figuring out how to get out of it. There are a few exceptions, like Paul Krugman, Yale’s Robert Schiller, and Columbia’s Joseph Stiglitz—all Nobel laureates—and some economics writers like the New York Times’ David Leonhardt. But until now, most of them have been voices in the wilderness, trying unsuccessfully to point out the problems of mounting debt, growing inequality, and neglect of economic and social infrastructure.

President Obama , I believe, recognizes the problems and is trying to remedy them, but he is caught in a vise between huge accumulated needs of the U.S.—for example in health care and education—and the unprecedented level of government and consumer debt.

From an outsider’s perspective—that of a non-economist—it seems to me that the problem is pretty obvious and simple, and the solution is equally obvious and simple, but horribly painful. The problem is that for a generation, American government and citizens have both been living well beyond their means, borrowing to pay for the plethora of consumer goods most of us enjoy. But in the meantime, we have neglected the poor, the schools, the health care system, infrastructure, the environment, and most of the rest of the world. We have lots of goodies, but the society is ailing, and we have passed the buck to the next generation.

The painful solution is that Americans will have to spend and consume less, pay more in taxes, and be prepared for a long-term contraction in the economy. There is evidence of this already, with people finally beginning to save, and to practice “consumer thrift.” But more saving and less spending simply contributes to a contraction of the economy. Banks, retailers, the service and entertainment industry have all depended on people borrowing to spend. As this changes, all these industries will decline, and the economy will decline.

Most American economists, including those with the President, are predicting an imminent end to the recession, and a relatively quick economic recovery. So far, virtually all such predictions have proved overly optimistic and wrong. I think those predictions are based on flawed economic models, and do not account for the depths of the hole we have dug ourselves into. We are in for a very long slog.

While I agree with President Obama and Professor Krugman on most things, I disagree with them that the solution is more spending, by government and consumers, to prime the economy. What we need now is belt-tightening, and a return to a more modest standard of living—perhaps comparable to what we had in the 1970s. This will entail a continuing and severe contraction of the U.S. economy, to return to equilibrium. In the long run, though, it will be best for both the U.S. and the rest of the world.

But you won’t hear this from many economists

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Wednesday, August 26, 2009

Entering A Systemic Revolution

The collapse of the United States as the global hegemon constitutes a “systemic revolution” that will transform both the U.S. and the rest of the globe. Such a revolution is different from “normal” political revolutions, which entail an overthrow of the government. A systemic revolution ushers in even broader and more enduring changes in economy, society and culture, and it also transcends national boundaries, affecting other countries and the global system itself. It is a global paradigm shift, and we are right smack in the middle of it.

This is the opening paragraph of my article "Entering a Systemic Revolution" which appears in the online journal Logos: A Journal of Modern Society and Culture (volume 8, issue 2). The article can be accessed here through my Selected Works page.

The article is a revised version of a lecture I gave in March at a conference on "The Past and Future of Revolutions" at Northeastern Illinois University.

In the article, I compare the current global situation to previous "systemic revolutions", among them the French Revolution of 1789, the Industrial Revolution, the Darwinian Revolution, and the anti-communist revolutions of 1989. Like those epochal changes, the domestic and international decline of the U.S. will affect both the United States and the rest of the world, and will bring fundamental and global changes in politics, economics, culture, and ideology.

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Monday, August 17, 2009

Ovation, Inc.: Speakers on Issues That Matter

I am now involved in a speaker's agency, Ovation, Inc., that is "a small but highly selective agency representing an array of affordable speakers addressing pressing issues of our time." Many of the issues raised in The End of the American Century, and on this blog, are topics available for lectures, classes, workshops, etc. by me and other experts on the Ovation roster. Take a look at the site at

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Can America Fail?

In its spring 2009 issue, The Wilson Quarterly featured a series of articles entitled "Decline or Renewal?" addressing the "scenarios for postcrisis America." The lead article, "Can America Fail?" was written by Kishore Mahbubani of the National University of Singapore, and the author of The New Asian Hemisphere: The Irresistible Shift of Global Power to the East (2009). The subtitle of that article is "A sympathetic critic issues a wake-up call for an America mired in groupthink and blind to its own shortcomings" which, in my mind, is also a pretty accurate description of yours truly!

Mahbubani believes that the U.S. has been "engulfed by a culture of individual irresponsibility" and sees many of the country's policies as deeply injurious to the rest of the world. Our policies on the Middle East, the invasion of Iraq, our double standard on nuclear proliferation, and our policies (or lack of them) on global warming "have injured the 6.5 billion other people who inhabit the world." Mahbubani thinks Americans need to be able to see our country the way others see us, to recognize and address our own shortcomings, and to be prepared to work harder, consumer less, and--especially--to sacrifice.

The two other essays in the Wilson Quarterly are a counterpoint to Mahbubani's article, but also illustrate exactly the problem Mahbubani addresses: Americans "mired in groupthink" and blind to their own shortcomings. The article by Tyler Cowen, Professor of Economics at George Mason University, asserts (without any evidence provided) that "today, the rest of the world is looking to the United States to pull it out of a recession." He also asserts, astoundingly, that the current financial crisis "has underscored the continuing strength of American global influence." Equally questionable, and more fodder for Mahbubani's observations, is Arthur Herman's assertion that "America is still the most innovative and creative economy in the world."

The editors of The Wilson Quarterly invited me to submit a response to these three articles, and a version of the following appeared in their "Letters" section in the Summer 2009 issue (page 6).

On the question of U.S. decline, Kishore Mahbubani hits the nail on the head by pointing to the inability of American thinkers and policy-makers “to listen to other voices on the planet.” Indeed, his point is illustrated by the contributions by others in the same issue who seem to assume that other countries want the U.S. to lead and who believe that the American economy is still the most dynamic in the world.

If one simply asks other people in the world what they think, these casual assumptions wither away. Global opinion surveys conducted by Pew, BBC and others show little enthusiasm in other countries for “American-style democracy,” for American ways of doing business, or for the spread of U.S. ideas and customs. Though global opinion about the U.S. has improved somewhat with the election of President Obama, far more people worldwide continue to see U.S. influence on the world as “mostly negative” rather than “mostly positive.” On this scale, among 15 countries, the U.S. ranks 10th, below Germany, Britain, Japan and China, according to a recent BBC poll.

It is difficult to see how the U.S. economy could be seen as so vital, innovative and creative at a time when the core parts of it are collapsing under the weight of innovative stagnation and stupefying levels of incompetence, greed, corruption. Manufacturing has steadily declined as a component of GDP, replaced increasingly by financial services. The U.S. does not actually produce much any more. Now the financial sector has proven a hollow shell, after fostering and encouraging record levels of both consumer spending and debt. This can no longer be sustained, so the U.S. economy is bound to decline, and probably by a lot. As Professor Mahbubani astutely points out, “the time has come for Americans to spend less and work harder.”

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Monday, July 27, 2009

New Global Powers Emerge From Crisis: Shanghai Daily Interview

I was interviewed in Shanghai by Joyce Pan for The Shanghai Daily, an English-language newspaper in China's largest city. Entitled "New Global Powers Emerge From Crisis," the interview focussed on the impact of America's economic crisis on China and other "rising powers." On the same page is an interview with French actress Isabelle Huppert, which should add to the number of hits that this blog gets!

Shanghai Daily Interview

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Sunday, July 26, 2009

American Values Contextualize Decline

Caleb Hamman

Amidst national debate on healthcare, foreign policy, and economics, with news outlets devoting coverage to pundits, officials, and political processes, it is easy to overlook the role of the American citizen in shaping public policy—the popular culpability in US decline.

To the extent American democracy functions democratically (see my earlier post and EAC chapter five), public opinion is an important variable in the furthering or the mitigating of growing challenges. Troubling trends in the American psyche are among the results of the newest study released by the World Values Survey.

The research, spanning more than fifty countries during the past four years, shows considerable divergence between American and world opinion on issues of importance.

Reaffirming The End of the American Century correlation between religious fundamentalism and rejection of science, the survey found that Americans were nearly twice as likely as non-Americans to be active in churches or religious organizations; simultaneously, Americans were 11 percent less likely to consider global warming “very serious” and three times more likely to consider it “not serious at all.”

Gaps also existed in attitude toward security and conflict resolution, reflecting a continued embrace of “hard power” in American political thought, with Americans placing more confidence in the military than non-Americans and placing less confidence in international organizations like the United Nations.

By far, the biggest gulfs between US and global attitude were in the area of economic policy. Here, Americans were much more likely than others to be tolerant of inequality, to disfavor government intervention in the economy, and to believe in the wealth-accumulating potential of hard work and individualism.

The contrast of attitude was particularly striking between the United States and the fifteen European countries surveyed. Europeans were almost twice as likely as Americans to strongly agree that incomes should be made more equal. They were also more likely to view circumstantial factors like luck and wealth as important to getting ahead, and they were much more likely to consider economic redistribution an “essential characteristic of democracy.”

Perhaps the most poignant aspect of the survey results is that they highlight an American disregard for problems the United States is uniquely victim to. Among advanced, industrialized countries, US levels of economic inequality and economic immobility are among those of the worst (see post referenced above, this post, and EAC chapter two). Despite the myriad social and political consequences of US economic problems, Americans appear remarkably misinformed and unconcerned. Meanwhile, the egalitarian measures used elsewhere to alleviate economic ills are revealed by the survey to be anathema in American thought, underscoring the difficulties faced by the current administration in its efforts to restructure the economics of health, taxation, and market regulation.

In discussion of issues like these, and in wider discussions about the rise and fall of international powers, the role of the public consciousness should not be overlooked, for particularly in democracies, popular attitude not only shapes the spectrum of debate, but is itself shaped by the institutions of policy and reform.

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Monday, June 22, 2009

Russia Hosts and Promotes Emerging Power Groups

This month, Russia hosted back-to-back meetings of two organizations representing “emerging powers” on the global scene. The first of the two, both held in Yekaterinburg, was a meeting of the heads of state of the Shanghai Cooperation Organization, which is made up of Russia, China and the four central Asian states (and former Soviet republics) of Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan. In 2006, Iran, India, Pakistan and Mongolia were inducted as observer states and expected to become full members soon. The presidents of the four observer countries, including Mahmoud Ahmadinejad of Iran, were all in attendance at the Yekaterinburg meeting. (When the U.S. originally applied for observer status at the SCO, it was turned down).

As I mention in Chapter 9 (“America’s New Rivals”), the SCO is nominally an alliance of “good neighborliness and friendly cooperation” but many observers see it as a counterbalance to NATO and perhaps to the EU. In 2003, Chinese Premier Wen Jiabao proposed a long-term goal of turning the organization into a free trade area, reminiscent of the early phases of the EU.

The alliance already includes countries occupying three-fifths of the Eurasian landmass, and an expansion that would bring together China, Russia, India and Iran would be an imposing global force. Furthermore, it would bring together some of the world’s major oil reserves in Iran, Russia and the Caspian Sea. Some analysts see a strategic and economic effort among these countries to reduce the U.S. hold on the region’s energy resources. China and India, as the world’s fastest-growing energy consumers, may want to secure central Asia’s energy resources for their own economies. Iran and Russia, two of the world’s largest energy suppliers, want to reduce their dependence on sales to the West.

The idea of challenging Western (and especially U.S.) global dominance was evident in the communiqué from the meeting—The Yekaterinburg Declaration—which proclaimed that

“the tendency towards true multipolarity is irreversible. There is a growing significance of the regional aspect in settling global problems.”

Russia’s long-expressed opposition to “unilateralism” and “unipolarity” is a not-so-subtle swipe at the United States. Moscow’s preference for alternate configurations was evident in a second meeting in Yekaterinburg, right after the SCO assembly. This was the inaugural summit of the so-called “BRIC” countries—the emerging economic powers of Brazil, Russia, India and China. Russian president Dmitry Medvedev was perhaps guilty of hyperbole in calling the summit “the epicenter of world politics” but there is no doubt this is a formidable foursome. According to The Economist, the BRIC’s share of world output leapt from 16% in 2000 to 22% last year. For the last decade, GDP growth in the BRICs has outpaced that of the world, and of emerging and developing economies (see The Economist charts above). These four countries alone control about 40 percent of global currency reserves.

During the summit, the leaders talked about assuming more say in global policy-making; reforming the International Monetary Fund; and a plan to switch some of their foreign currency reserves out of dollars and into IMF bonds (an idea which is also the subject of much discussion in China). As the New York Times observed, the BRIC summit was
“intended to underscore the rising economic clout of these four major developing countries and their demand for a greater voice in the world. And Russia, the group’s host and ideological provocateur, is especially interested in using the summit to fire a shot across Washington’s bow.”

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Friday, June 19, 2009

Why is "The End of the American Century" Important to China?

Professor Ni Lexiong, who was the lead translator for The End of the American Century, has written this note, in Chinese, on how he came to know about the book and why he thought it should be translated and published in Chinese. The financial crisis, he writes, makes it even more urgent that people in China read the book.



2009-4-20 12:55:34 倪乐雄   来源:易文网

此书的出版也得到渥太华中国事务研究院(The China Research Institute of Ottawa)和姜留义女士的支持,在此表示感谢。


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Thursday, June 11, 2009

Federal Debt Approaches 100% of GDP

Even when The End of the American Century went to press in early 2008, the U.S. federal debt was reaching alarming levels, and was a central element of my forecasts of U.S. economic decline. At that point, the White House's Office of Management and Budget projected the gross federal debt to expand to $10.6 trillion by 2009, constituting 72% of GDP.

Since then, the federal red ink has become a tidal wave. The OMB now expects the debt at the end of this year to be $12.7 trillion, and to expand to over $15 trillion by 2011, which would then be (at 97% of GDP) almost as large as the entire economy (see chart).

David Leonhardt of the New York Times, one of the few economists to have been tracking and raising concerns about the deficits, writes that erasing the deficits "will be one of the great political issues of the coming decade." In his article "Sea of Red Ink" in the June 10 issue, he reports on a New York Times analysis of the composition of the debt accumulation over the last decade, "with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II."

The analysis finds that the growth in the federal debt since 2001 comes from four main sources. The first, the business cycle (especially the 2001 recession and the current downturn) is the largest component, accounting for 37%. Another 33% of the recent debt comes from legislation signed by President Bush, including his tax cuts. Another 20% derives from President Obama's continuation of several Bush policies, including spending on the Iraq War and the Wall Street bailouts. Only about 10% comes from new Obama policies, including the stimulus bill, and news spending on health care, education, energy and other areas.

Leonhardt sees little hope that the Obama administration can reduce or eliminate the deficits with "pay-as-you-go" government spending plans. The solution, he writes, "is no mystery" and involves inevitable tax increases and government spending cuts. These are political tinderboxes, of course, and pose a huge challenge to President Obama's leadership skills.

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Tuesday, June 9, 2009

The End of the American Century, Global Change and China

The following is a slightly edited version of my lecture in Shanghai on May 9 on "The End of the American Century, Global Change and China." The lecture was accompanied by a powerpoint presentation with much of the data and evidence I referred to, and the lecture was translated simultaneously into Chinese (see previous post on details of the forum).

Perhaps it is no accident that the first translation of The End of the American Century is into Chinese, since China is the most prominent “rising power” mentioned in a book that is primarily directed at the decline of the one power that has been dominant for the last half-century. The role of China is also important because of the huge and growing size of the Chinese economy, and the multifaceted interdependence of China and the United States. In my book, I see raw military power as increasingly irrelevant both for the United States and for other countries, as the biggest problems the world is facing—climate change, environmental deterioration, pandemic disease, poverty, terrorism, etc.—are simply not susceptible to military solutions. Addressing those problems requires international cooperation. Such cooperation also facilitates trade and economic growth, which are keys to reducing the poverty and inequality that provide the breeding ground for discontent and violence.

I understand that most of you are involved in business, trade or finance in various capacities, so I will focus my remarks today on economic issues, at least those in the United States. Given the scope and speed of the global financial collapse, economic issues are, indeed, on the minds of just about everyone. The U.S. economy is a core aspect of my treatment of the decline of the U.S. as a global power—but it is by no means the only one. And while I do, necessarily, devote a lot of attention to economics, I am myself a political scientist rather than economist. What I do in my book, and want to do here, is to look at the varied and interrelated dimensions of U.S. decline. Because it is the symbiosis of all these aspects of U.S. and global change that makes the current situation so distinctive, even unique. Many analysts in the U.S. see the current economic predicament of the country to be similar to those of other economic downturns in recent decades. I believe the combination of U.S. economic, social and political decay, and the simultaneous rise of other countries in the world—like China—means a much different outcome and future for the United States.

For those of you who have not yet read my book, let me provide a summary of the overall approach. Keep in mind that the English version of my book went to press in early 2008, well before the ongoing economic collapse of the United States, and appeared in English in the fall, just as the scale of the catastrophe was unfolding. The essential argument of my book is that the U.S. has come to the end of its long period of economic affluence and global dominance. Most Americans—even, at last, the experts!—are starting to see the handwriting on the wall now, as we see collapsing around us the stock market, housing markets, job markets, banks, manufacturing, retail stores and news media. These are all interrelated, and driven by longer term problems that pressed against us before President Obama, and even before the disastrous administration of George W. Bush. The 20th Century, often called “The American Century” had already come to a close before the awful terrorist attacks of September 11.

America’s decline is a result of three convergent and interrelated phenomena: the deterioration of the U.S. itself—especially in the economic realm but in many other respects as well; the increasing influence of other global powers; and the changed nature of global interactions. The decade-long convergence of all three of these phenomena marks a global shift of historic proportions, and one that defines a much different place in the world for the United States and its citizens.

The central aspects of U.S. decline is economic. The federal government, the state governments, and most households have been living beyond their means for a generation, and the result is unprecedented levels of government, household, mortgage and consumer debt. Americans citizens spend and consume more than they earn, and the United States as a whole consumes more than it produces. This has posed a burden on the rest of the world that is unsustainable in the long run. I will come back to these economic issues in a few minutes.

The U.S. has also fallen behind other countries in many other areas where we flourished during The American Century. The educational system, once considered the world’s best, now ranks near the bottom among developed countries. Health care shows the worst results, on average, of any of the countries of the Organization for Economic Cooperation and Development (OECD). The U.S. has higher poverty rates, more violence, and greater inequality than almost any other OECD country. Our roads, highways, bridges and dams—most built near the beginning of the American Century—are decrepit and in need of major investments. Even the country’s vaunted political system, tarnished by private interests, money and low levels of political participation, is no longer a model for emulation much of anywhere in the world.
While the U.S. has been on a long slide, both with our domestic health and our international reputation, other countries and regions have been moving ahead, and gaining confidence and clout. China is now the world’s workshop, and has the fastest sustained economic growth of any country in history. The European Union has brought together 27 countries into a peaceful and healthy community—an economic bloc bigger than the U.S. and with many countries more successful than the U.S. in providing health care, education and welfare to their citizens. Many other countries are increasingly prosperous, confident and assertive, to the point of challenging U.S. dominance in their own parts of the globe.

In addition, globalization has changed the rules of the game. Labor and capital move more easily around the world, making it more difficult for the U.S.—or any government—to control economic development. Organizations that span national borders—international and non-governmental organizations, multinational corporations, terrorist groups--are for good or ill challenging the power and influence of countries. All of this make global politics more complex, and less subject to the influence of single nation-states, especially go-it-alone ones as the U.S. has been for the last eight years.

President Obama is making noble efforts to bolster America’s global reputation and reverse its decline, but in my view, it is too little and too late. The rest of the world has already caught up or caught on, and is not much interested in the U.S. resuming its global leadership. Furthermore, what the world needs now, in confronting problems--of global warming, pollution, nuclear proliferation, terrorism, poverty and epidemic disease—is cooperation and compromise rather than “leadership.”

In my book, I buttress all of these assertions by using data, showing both trend data over time in the U.S., and data comparing the U.S. to other wealthy countries. In both kinds of comparisons the US does not fare very well. Let’s look at some of these figures, focusing on the economic ones.

The End of the American Century can be seen as a descendant of the 1985 book by the Yale historian Paul Kennedy, The Rise and Fall of the Great Powers. Kennedy studied the big empires of the past—Rome, Britain, Spain, among others—and concluded that each of them foundered on what he called “imperial overstretch.” This is the tendency for big powers to become so “stretched” by foreign ventures, expansion or wars that they end up bankrupting themselves at home, leading to social and economic decay. Kennedy predicted in the mid-1980s that the same thing would happen to the Soviet Union, and even hinted that the U.S. was also vulnerable to the problem of imperial overstretch and debt. When he published that book in 1985, the U.S. federal debt was about 45% of the economy (GDP), which Kennedy said was historically unprecedented for any large power in peacetime. The only exception was France on the eve of the French Revolution.

But look what happened in the two decades after the publication of Kennedy’s book. The US federal debt mushroomed from less than half of GDP to over two-thirds of GDP. The problem escalated with the administration of G.W. Bush, who sharply increased defense spending for the wars in Iraq and Afghanistan, while simultaneously cutting income taxes. When I wrote my book in 2007-2008, I thought the size of the debt was alarming, as it approached $10 trillion. But then the financial crisis hit the United States, the stock market collapsed (by half), unemployment skyrocketed, and Congress and the President approved huge financial bailout plans that sent the federal debt even higher. The federal budget of the new Obama administration, calling for huge new spending on education, health care, infrastructure and the environment (all vitally needed but terribly expensive), is sending the federal debt burdens to levels unseen since World War II. Within a few years, even according to the President’s optimistic assumptions, the gross federal debt will reach 100% of the size of the economy. I should point out that these huge debt levels do not even include the “unfunded liabilities” for Social Security and Medicare, which would add another $45 trillion. The government has put aside no money to pay for retirement and health care benefits for senior citizens, who will increase greatly in numbers as the “baby boomers” begins retiring in the next few years.

The federal government debt, though, is only one aspect of the multiple levels of indebtedness in the United States. Another aspect of this is the trade deficit. For most of the years since World War II, the U.S. maintained a rough balance of exports and imports. But during the 1990s, as imports soared and exports declined, the trade balance got seriously out of whack, reaching records levels in both absolute terms and as a percent of GDP. The huge increase in imports, many of them from China, helped the U.S. standard of living, but was not matched by similar productivity, output or exports from the US.

A third aspect of US debt—what some called the “triple deficit”—is household and consumer debt. Over the last two decades, Americans have built up record levels of consumer debt. The household savings rate (savings as a percent of household income) have always been relatively low in the US compared to other countries, but in the last twenty years have declined sharply. By 2005, this number had dipped below zero for the first time since the Great Depression. Most Americans have saved almost nothing for their retirement years, at a time when most employers are no longer providing retirement pensions for their employees. This presages a sharp decline in the standard of living, and dramatic increases in poverty, as the population ages. On this dimension too, the US compares unfavorably with most other wealthy countries.

The American propensity to spend rather than save is partly a culture phenomenon—the strong strain of materialism in U.S. culture—but also partly due to the increasing influence of the financial services sector in the U.S. in recent years. Manufacturing has declined steadily as a share of GDP in the U.S. The U.S. doesn’t actually produce much any more. Increasingly, manufacturing has been replaced by financial services. Banks and mortgage companies make money by getting people to borrow, and therefore go into debt. One small but telling example of this is the dozens of credit card offers that most Americans get in the mail. I get several such offers a week, for example. But so do many of my students, most of whom have no income at all! As a consequence, credit card debt is at a record high, and the average household has about $10,000 in credit card debt. Consumer and household debt overall totals about $13 trillion—the size of the entire U.S. economy.

The bottom line is that the U.S. has become a consumer society, consuming far more than we produce or earn, and this can not be sustained. Consumption accounts for almost three-quarters of GDP in the US—a record for any large economy in modern history. As we have seen, much of that consumption is fueled by debt. Americans will have to save more and spend less. This will entail a substantial contraction in the U.S. economy, as workers are laid off and consumer spending declines. Unfortunately, this will also mean a decline in tax revenues, just at the time when government spending is increasing. The U.S. stock market has already declined by 50% since its highs of 2008. The economy as a whole is shrinking, at the fastest rate since the Great Depression. Most economists think that this economic decline will bottom out fairly soon, and that the worst is over. But given the problems I have mentioned, I think it is possible that the US GDP could contract by as much as one-third—roughly the same decline that the U.S. experienced during the height of the Great Depression in 1929-1933. It took the U.S. economy about 4 years to recover from that decline.

U.S. economic decline is just one element—albeit an important one—of the diminishing U.S. power, influence and reputation in the world. Global surveys show little enthusiasm around the world now for “American-style” democracy, for the American way of doing business, or for the spread of US customs and ideas. People in most countries think it would be better if another country rivaled the U.S. in military power. And a recent BBC poll of people in 21 countries found many more believing that the U.S. role in the world was “mostly negative” rather than “mostly positive.” China ranked slightly ahead of the U.S. on this question.

At the same time that U.S. power and influence is diminishing, some other countries are growing stronger, more confident and more assertive. Possible rivals for influence with the U.S. include the “BRIC” countries—Brazil, Russia, India and China—and also the European Union, which now includes 27 countries with a population and GNP larger than that of the United States. The “rising” BRIC countries have had very fast rates of economic growth in recent years and, at least until the economic crisis this year, were expected to perform even better in the near future. By another measure, the growth in stock market value, these rising powers are also outpacing the U.S. The U.S. stock market grew exceptionally fast from 2002-2007, rising at an average rate of about 15% per year. But each of the BRIC countries experienced stock market growth at least twice that of the U.S. in those years. As a percent of the world’s total stock market, the U.S. share has shrunk by almost half over the last thirty years.

Perhaps even more astonishing is the declining relative influence of U.S. banks, a phenomenon accelerated, of course, by the collapse of so many financial institutions in the U.S. Measured by market capitalization, a year ago four of the largest banks in the world were American. Now only two are. And four of the top ten are now Chinese!

These changes in the U.S. and the rest of the world signal a fundamental transformation of global politics and economics, and will require adjustments by people and governments alike around the world. For the United States and its citizens, these changes will be particularly wrenching. The U.S. economy will decline—probably by a lot, as will the standard of living in the U.S. For Americans used to a rising tide of affluence and spending, this will be a difficult adjustment. And it will also be difficult for Americans, psychologically, to deal with our diminished stature in the globe. Many changes are necessary to help restore America’s economic, social and political health. It seems to me that President Obama is cognizant of these needs, and is moving amazingly rapidly to address them. But the task is a difficult one, and a long-term one.

I am not really in a position to suggest what will happen, or should happen, in China. That is for you to decide, not me! But I was told me you would be interested in how I see all of this affecting China, so let me just mention a few things. First, of all, as should be obvious from my presentation, it seems to me that China is going to have to rely less on the U.S. market for helping fuel China’s economic growth. Americans will simply have to spend less, which means buying less of China’s many exports. It would seem that this would require, and offer the opportunity, for Chinese manufacturers to focus more on the domestic Chinese market, which will inevitably improve the standard of living of people in China. (This is an argument also made by Paul Krugman during his recent visit to China).

Even so, the U.S. and China both need each other for the economic health and development of both countries. And the rest of the world needs these two big powers to cooperate in solving global issues of trade, the environment, poverty, terrorism, nuclear proliferation, etc. So the interdependence of the two countries should continue and increase. China’s growing economy and international influence comes with increasing global responsibilities along these lines as well. China, for example, has now surpassed the United States as the leading emitter of carbon gasses that contribute to global warming. In my mind, global warming is the single greatest threat to the globe, and it requires serious work and attention. The problem can not be solved without the participation and cooperation of the U.S. and China.

Due to what has happened in the U.S., in China, and in the global community, China should by now certainly be considered an equal partner with the U.S. and other big powers in helping to shape this new global environment. I believe, from what your leaders say, that China is ready to play a bigger role in the world. And with a new, enlightened leadership in Washington, I am hoping the feelings will be mutual.

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Thursday, May 28, 2009

"The End of the American Century" Sparks Interest in China

A Chinese translation of The End of the American Century was published in China in April, just five months after the book appeared in the United States (see earlier post on publication details). The editors at Shanghai Lexicographical Publishing House told me that they translated and produced the book in record time, because they considered it a "hot topic." At the National Book Fair in Jinan, according to the publisher, the book attracted a good deal of interest, and reached #3 on the publisher's sales ranking.

A conference related to the book's title was held at the Shanghai Exhibition Center on May 9, and I was invited to give the opening address, along with a number of prominent Chinese academics. The event was held in the Center's "Friendship Hall" (see photo) which seated over 1000 people. But the turnout was unexpectedly large, and a separate room, with sound piped in, was set up for the spillover. The organizers estimated the total audience at over 1300. While some of the audience were students and professors, most were businesspeople, investors and clients of a financial securities company that was one of the sponsors of the event. So they were especially interested in the U.S. and global financial crisis, and how that will affect the U.S., China, and Sino-U.S. relations.

From questions posed by the audience, and in conversations I had with academics, journalists and financiers, the reactions to my thesis of U.S. decline was decidedly mixed, and surprisingly similar to the range of responses here in the U.S. Some agreed that the U.S. was in serious straits. Others felt that the U.S. would remain (or even should remain) the world's dominant power. Some felt that it was China's turn to take a more prominent role in global politics and economics.

Shanghai itself provides a stunning example of how far and fast China has grown. I last visited the city 20 years ago, when most of the street traffic was bicycles, and before any of the magnificent skyscrapers had risen on the other side of the river from the Bund. Now the city center is as gleaming and modern as any I have seen anywhere in the world. The many downtown shopping malls, modern and airy, are filled with outlets of the most popular (and most expensive!) Western chains. The city's two airports are modern, efficient architectural beauties. The subways and trains are clean, comfortable and efficient. The world's first commercially operating "Maglev" train (magnetic levitation) connects Pudong airport to the city center, reaching a mind-blowing speed of 250 mph. The only real problem in the city, to my mind, is the street traffic, with the chaotic and dangerous competition of taxis, cars, motorbikes, bicycles and pedestrians (more on this in a later post).

In later posts, I will post more information on the Shanghai conference, with the text of my own lecture there, and information about the other presenters at the meeting.

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Wednesday, May 20, 2009

A Welcome Spotlight on Women's Welfare

Caleb Hamman

When President Barack Obama spoke at the University of Notre Dame’s commencement ceremony Sunday, much of his focus was devoted to women. In the weeks before his arrival, there had been considerable upheaval at the Catholic university due to Obama’s support for abortion rights, a position opposed by the Church.

The abortion debate aside, in a time when gender inequality continues to plague the United States, it is reassuring to see attention being given to women’s issues. Currently, the United Nations ranks U.S. gender development 16th in the world—a ranking exacerbated by George W. Bush’s eight years in office. His administration’s first attacks on women began early and abroad.

Immediately after coming to Washington, the Bush administration instituted a “global gag rule” on foreign organizations receiving U.S. aid. Under threat of defunding, the order explicitly forbade clinics from providing women with abortion counseling or operations, even if they wished to use their own money for the services.

The next summer, the Bush administration halted potential U.S. ratification of the Convention of all Forms of Discrimination Against Women. Although 185 countries have ratified the treaty, the United States—like Iran, Sudan and Somalia—is not one of them.

Soon after, the Bush administration cut off $34 million from a U.N. fund providing women around the world with birth control, sex education and maternal health care. It also began a fierce attack against the newly formed International criminal court—an organization promising historical gains in holding war criminals accountable for sex crimes against women.

The previous eight years also saw a decline in the welfare of women within the United States. In Dec. 2008, a national crime report was released revealing that the latter years of the Bush administration oversaw a 25 percent increase in sexual violence and a 42 percent increase in domestic violence. Soon after the report’s release, the White House imposed a new rule on Health and Human services making it more difficult for women to obtain basic healthcare or birth control.

Because women in the United States are disproportionately poor, the Bush administration’s unceasing attacks on social programs and progressive taxes effectively constituted an assualt on women's economic welfare. Accompanying Bush’s policy programs were overt threats to veto any sort of equal pay for equal work legislation.

Throughout its eight years in office, the Bush administration showed clear disdain for its campaign promise that “W stands for women.” As a result, the welfare of women in the U.S. has stagnated relative to that of other advanced, industrialized societies.

The Obama administration has taken some valuable steps to put the U.S. back on track toward gender equality. In January, Obama rescinded Bush’s “global gag” policy. A few days later, he signed the Lilly Ledbetter Fair Pay Act which advanced the campaign for ending gender discrimination in income.

Although efforts such as those of the Obama administration are valuable, they will need to be sustained and furthered if gender inequality is to be removed from the vortex of U.S. decline.

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Friday, May 8, 2009

Immobility Furthering Decline

Caleb Hamman

In a time of financial turmoil and drastic inequality, one would hope the American Dream to be functioning well. This notion, that hard work will bring success to anyone in the United States, has always been central to America’s ideological fabric. Despite such tradition, recent research suggests a need to reevaluate the accuracy of the American Dream.
Ongoing work at the Economic Mobility Project (EMP) has been attempting to do just that. A nonpartisan effort funded by the Pew Charitable Trusts, EMP has been conducting the most detailed research of U.S. economic mobility to date. Its findings, thoroughly concerning, strongly reinforce the arguments of The End of the American Century.
Using longitudinal income data, EMP researchers find the United States to be a more class stratified society than commonly believed. Despite the popularity of “rags to riches” notions, the EMP finds that, on average, children born into the poorest fifth of households have only a 6 percent chance of making it to the top income quintile. Conversely, 42 percent will remain in the poorest group. More than six in ten of these impoverished children never become even middleclass.
Similar mobility barriers exist at the top. While 39 percent of children born into the richest income quintile will remain there, only 9 percent will fall to the bottom. EMP finds remnants of mobility remains in the middleclass, although even these children are more likely to fall into poverty than they are to rise to wealth.
The project’s findings are particularly disturbing in the areas of gender and race. Women, already suffering multifaceted disparity with men, are also less mobile than their male counterparts. Compared to these, it is considerably harder for women born into poor families to become wealthy. Similarly, it is also easier for wealthy women to become poor.
The racial contrast is even starker. Black children are half as likely as their white counterparts to move from extreme poverty to extreme wealth. Simultaneously, black children born into the bottom income bracket are almost twice as likely as white children to remain there. Incredibly, EMP finds that nearly three in four middleclass black children will fall into poverty—a condition tremendously difficult for them to escape.
As such findings suggest, the American Dream is not as dynamic as many believe it to be. In fact, U.S. mobility levels are actually lower than those of many developed countries. As the EMP reports, the two major international comparisons to date have placed U.S. mobility levels either last or second-to-last among nations analyzed (which have included mostly Western Europe and Scandinavia). As EMP’s authors put, “the view that America is ‘the land of opportunity’ doesn’t entirely square with the facts.”
In light of the numerous economic, political, and social issues contributing to U.S. decline, the discovery of immobility is particularly troubling. As Americans become more economically and politically unequal, the stakes of socioeconomic outcomes continue to rise. That these outcomes are out of the hands of many is more than a contributor to The End of the American Century—it is an issue of fundamental fairness and a contradiction of one of America’s most cherished ideals.

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