Time To Manage America’s Decline?
Is it time to just admit that the good old days are over?
Gideon Rachman had an eyebrow-raising piece in The Financial Times yesterday that is bound to cause outrage among some segments of American politics, and general discomfort for Americans as a whole. Essentially, he argues, it’s time for Americans to start talking about the consequences of our nation’s decline:
Recently I met a retired British diplomat who claimed with some pride that he was the man who had invented the phrase, “the management of decline”, to describe the central task of British foreign policy after 1945. “I got criticised,” he said, “but I think it was an accurate description of our task and I think we did it pretty well.”
No modern American diplomat – let alone politician – could ever risk making a similar statement. That is a shame. If America were able openly to acknowledge that its global power is in decline, it would be much easier to have a rational debate about what to do about it. Denial is not a strategy.
President Barack Obama has said that his goal is to ensure that America remains number one. Even so, he has been excoriated by his opponents for “declinism”. Charles Krauthammer, a conservative columnist, has accused the president of embracing American weakness: “Decline is not a condition,” he declared. “Decline is a choice.” The stern rejection of “declinism” is not confined to the rabid right. Joseph Nye, a Harvard professor and doyen of US foreign policy analysts, regards talk of American decline as an intellectual fad – comparable to earlier paranoia about the US being overtaken by Japan. Thomas Friedman, a New York Times columnist, has just published a book that is subtitled, “What went wrong with America – and how it can come back”.
What is not permissible, in mainstream debate, is to suggest that there may be no “coming back” – and that the decline of American power is neither a fad nor a choice but a fact.
As a first matter, Rachman is correct that talk of decline is simply not politically acceptable in the United States. Regardless of political ideology, American politicians are united on one thing; that we are “Number One” (whatever that means) and that they will do whatever is needed to keep us there. A politician who talks openly about decline, or acknowledges that other nations are rising, or even dares to suggest that America has made mistakes (except when those mistakes are invoked in a effort to score partisan points, see e.g., then Senator Obama’s comments about Bush foreign policy) usually isn’t going to go very far. It’s partly an American thing, I think. We like to be optimistic and we like to think that our nation is exceptional and better than the rest of the world. A politician who tells us the opposite, or warns about a future that could be bleak regardless of what the government does, is likely to be booed off the stage.
Rachman contends, though, that refusal to acknowledge reality will come with a price:
Those who refuse to entertain any discussion of decline actually risk accelerating the process. A realistic acknowledgement that America’s position in the world is under threat should be a spur to determined action on everything from educational reform to the budget deficit. The endless politicking in Washington reflects a certain complacency – a belief that America’s position as number one is so impregnable that it can afford self-indulgent episodes such as the summer’s near-debt default.
The failure to have a proper discussion of relative decline also risks leaving American public opinion unprepared for a new era. As a result, the public reaction to setbacks at home and abroad is less likely to be calm and determined and more likely to be angry and irrational – feeding what the historian Richard Hofstadter famously called “the paranoid style in American politics”.
There’s a good point lurking here. American history is replete with examples of radical social movements that have arisen amidst a time of radical change and, all too often, they have expressed themselves by victimizing one group or another, whether its immigrants or African Americans or whomever it might be? How might America react if they wake up at some point at realize that their nation has declined and the world has changed and they haven’t been prepared for it? The prospects for some kind of radical backlash are real, it seems to me.
This is why, regardless of whether or not you agree with the hypothesis that America is in decline (and more on that below), it’s better that politicians be honest with Americans about the problems that we face than that they continue with the jingoistic “USA! USA!” nonsense that seems to predominate most political discussion these days. A prime example of this, of course, is the entire fiscal situation in Washington. We’ve known for years that entitlements were facing a demographic crisis that would require adjustments of some kind or another, and that cutting takings while increasing spending is perhaps the most insane idea ever. Simple logic would have told us that the Housing Bubble of the 2000s was unsustainable, and that cutting taxes while fighting two wars would lead to fiscal disaster. And yet, with very few exceptions, nobody spoke up because politicians know they do best when they tells us what we want to hear. We’re dealing now with decades of Pollyanna-ism, and we’ll be doing the same again in the future if Rachman is right.
Is he right, though? Is America in decline in a manner that we really have no control over?
Well, as James Joyner said this morning, if it turns out that our current economic situation is some kind of “new normal” and that there’s very little that fiscal or monetary policy can do to change that, then we’re most certainly in decline and we’re just going to have to accept it. If the worst of those predictions comes true, though, then it’s not just us here in the U.S. who are in for a rough ride, but the world as a whole. In that situation, being the top nation among a world of decliners may not be much, but I guess it’s something.
When people think of decline, though, they think of the idea that some other nation is going to overtake us. For a time, when people actually believed the wildly off base economic reports coming out of Moscow, some people believed that would be the Soviet Union. In the 80s, it was Japan. Now, it’s China.
There are more than a billion people in China, and nearly another billion in India. At some point, unless they intend to keep themselves in squalor for in perpetuity, these countries are going to grow economically and become more prosperous. For some reason, the decline crowd sees this as a bad thing for America, but that misses the point. Just as with the national economy, the fact that some people become more prosperous doesn’t mean that others have to become less prosperous. In fact, the opposite is true. A more prosperous China is clearly in the interest of the United States economically because it creates more avenues for trade. More open trade is beneficial to national security because nations that trade with each other are unlikely to go to war. Will China be a rival? Yes, but the more our economies become dependent on each other, the more they will be a partner.
If you measure decline by the ideal of the United States being the sole economic power in the world, then perhaps it’s true that we’re declining, but that doesn’t mean that the world we move into is one where we will be any less powerful, or at any kind of disadvantage. It will be a change, though, and it will require getting used to. That’s where the honesty from politicians that I referred to above comes in. It’s time for our leaders to stop pandering, get honest, and prepare us for the new world we’re entering.
No, I don’t think it is time to assume that the good times are all behind us.
The United States has survived the Civil War and the Great Depression. We can survive this.
If we’re talking in relative (to the rest of the planet) terms then yes, the U.S. is in decline and this cannot be reversed. If we’re talking about standards of living then I reject the premise utterly. Our economy can easily be put back on track and deliver rising prosperity to everyone.
Will this be the first pander-free honest election year?
I also don’t expect too many politicians who want us to accept the “new normal” will find themselves in office. Who wants to hear that? Not me.
An Englishman writing about America’s decline.
That lapdog collar must be chafing.
The first thing we need to recognize is that we can no longer afford an empire. Start closing our bases overseas and bring the troops home. Recognize we can no longer afford to be the worlds policeman protecting the interests of multinational corporations. Recognize the nation building we should be doing is right here at home.
That’s not optimism, it’s delusion, i.e. the denial of reality. All countries, all empires, eventually fall. There are plenty of indicators of america’s decline, and have been for decades now.
Joseph Tainter – The Collapse of Complex Societies
“The Golden Age never was the present age.” — Benjamin Franklin
I’ve always been impressed by your economic thoughts… what would “back on track” look like in your view? And wouldn’t it require a real shift in expectations about year-over-year growth? And perhaps even employment rates?
the idea that the economy can deliver prosperity for everyone or that it has ever provide prosperity is the first mistake. There will always be winners and losers no matter the time. The question is who are the winners and the losers.
The way to tell that American is finding a way to adapt to world conditions is if the poorest people in the U.S. have the lowest birthrate of any demographic group in the U.S. Until poor people stop having children as much as the middle class, the U.S. will continue to decline.
Yes, we get it superdestroyer: negroes and Mexicans, negroes and Mexicans, negroes and Mexicans, blah, blah, blah, negroes and Mexicans.
You’re a racist moron.
Almost as bad you’re a huge, crashing, resounding, tedious bore.
So, “new normal” and “American decline” were coined this morning?
Welcome to the New Normal (2003)
I dislike the tin ear to what as been an undercurrent for (another catch-phrase) the “lost decade.”
Decline compared to who? Decline compared to what?
We had this strange, unique historical moment following WW2. All our potential competitors were flat on their backs. WW2 led straight into the Cold War and our communist foes remained flat on their backs.
We stood very tall because everyone else was either recovering from having their countries burned down, or suppressed by the ideology of communism.
Now our competitors — Germany, the UK, Japan — have long-since recovered. The Chinese are freeing themselves from their ideological shackles. We have competitors. It’s no longer the 1950’s.
I think a lot of this declinism is based on nostalgia for an anomalous time.
I don’t think he means it in a racist way. Typically, the poorest demographic is composed predominantly of minorities. Minorities also currently have the highest birth rates. Why do you think Democrats are so excited about the coming demographic explosion of hispanics?
If the highest birthrate is among the lowest socioeconomic group, a group that cannot afford to raise their children without government assistance, whether it be food stamps, Medicaid, or Section 8 housing, what does that portend for the country’s economic security?
You don’t have to be a racist to see the handwriting on the wall. Just pragmatic.
And I absolutely agree with Ron Beasley – we continue to house troops overseas where they really are not needed anymore. Why do we still have tens of thousands of troops in Germany? Or Japan? About the only major overseas permanent bases that make sense now are the ones in South Korea, because of the threat that North Korea presents.
I wouldn’t go that far.
Communism has evolved in China just as democracy has evolved in America, but it is still very much communism.
I think that´s more complicated. First, you don´t have one or two superpower. It´s not that America is declining – it´s that other countries are managing to compete face to face with America. India manufactures cars, Brazil manufactures planes. Most people in the US talk like if there is no other country in the world. That´s dangerous. Any American company will have to compete with companies from all over the world.
For instance, immigration. Most Americans naively believe that you simply can keep the “illegals” out then force farmers to pay wages that Americans are willing to have. You have a whole world where you have to compete with farmers paying far less than 12 dollars a hour for people to pick vegetables.
No, he means it in a racist way. He’s our local racist vermin. He’s been here for a while, always the same bulls–t.
During the depression the birth rate dropped by a large amount. One of the reason that the babby boom generation has more economic success was the depression generation cohort was so small compared to the baby boomers. The relative demographic sizes also made social security sustainable for much longer that the original plan would have allowed.
Yet, in the U.S. now, the birthrate of the upper middle class is very low because they are the ones who face the most issues. They have to pruchase good schooling by either purchasing an expensive house in a good school district or by paying private school tuition.
You should also look what happens to a state where the birthrate of the middle class and higher is very low but the birthrate of the poor is high. California is a good example where the state has to spend so much money on ESL and other classes aimed at the massive number of poor Hispanics that the school system does not really try to educate the children of the middle class. Of course, I know to progressive it is somehow racist to notice how poorly white student perform in Califonria perform versus white students do in other states.
Once again, how can American ever deal with any issue when progressive believe that noticing statistical differences in groups is racist.
To you, anyone who looks at demogrpahic data is by definition a racist. Since progressives believe that to notice any difference means that one has to act on the data, progtressives are left with the idea that they cannot notice the difference no matter what.
You have used the term “same party” many times to disparage conservatives. Yet, progressives believe that the U. S. can have the social welfare system of Sweden while maintaining open borders and unlimited immigration and while the U.S has a third world population. Even Italy, Greece, or Spain cannot maintain the social welfare system of Sweden. Why do progressives believe that the U.S. can do it.
@superdestroyer: “Once again, how can American ever deal with any issue when progressive believe that noticing statistical differences in groups is racist. ”
Notice statistical differences all you want. You still have to go a long way to pin America’s problems on poor Hispanics. Which is what you’re trying to do.
Placing such an emphasis on race, you shouldn’t be too surprised when people call you racist. Just saying.
@mattb: You have to keep in mind that our current situation is the result of deliberate policy choices: we (or our elected representatives) chose to come where we are today. We need to redirect national income away from profits and back to wages where they belong. Normally wages and productive capacity grow together: the worker spends his rising income creating more profits for businesses and resulting in investment which increases productive capacity and wages, what Keynsian and post-Keynsian economists call the virtuous cycle.
But for the last thirty years wages and productivity have diverged, the former either static or declining while the latter increased rapidly. Those gains were squeezed into corporate profits, and the gap between what workers are earning and what the economy can produce is literally the measure by which our economy is underperforming. Had we continued ploughing economic gains into wages our overall economic growth would have been significantly greater than what we’ve seen since Carter/Reagan started the corporate push.
Fortunately there are lots of things we can do to correct this, and in my opinion the most important is the Jobs Guarantee championed by MMT (which is where my perspective comes from). The truth is that conservatives are right in a very limited sense when they say that taxation creates a basic level of unemployment, though they both fail to take the thought to it’s logical conclusion and wildy exaggerate its effects. The roughly 4-5% of people without jobs in healthy economic times can primarily be traced to this, and the best solution is for our federal government to take responsibility for the consequences of its actions and become the employer of last resort, guaranteeing work to anyone who wants it. This would have many benefits:
1). It ends the perennial conservative complaint about people taking handouts and not working.
2). It guarantees healthy consumer spending without the need for stimulus bills to pass Congress: as an automatic stabilizer the Jobs Guarantee ensures a stimulus is built directly into the system when we go bust.
3). It creates competition for employees with the private sector. If firms want to lure people away from government they’ll have to offer wages and benefits at least equal to what they’re already getting without resorting to Congressional battles over the minimum wage. If the Jobs Guarantee sets its wage at $10 an hour we now have a de facto minimum wage of $10.
4). It is not inflationary. Inflation related to the money supply only occurs when there’s enough cash flowing through the system to push demand beyond the economy’s capacity to produce; the Jobs Guarantee only pushes demand toward capacity limitations, it doesn’t cross it. That push means that businesses make more money and will then invest to increase that capacity, and that newly expanded capacity means wages can then rise again without a rise in prices.
There are many other things we can do but this post is way too long already. When it comes to resource limitations things might not play out like this. There is at some point a limit to what we can produce, but productivity can still increase. Instead of a pay raise maybe workers get a shorter workweek or longer paid vacations. The point is that our country isn’t in nearly as bad a position as certain people would have us believe. There’s room for optimism.
Ron Paul seems to be the only candidate out there to admit that our addiction to empire is killing us. Yes, we are in decline relative to our unique position at the end of WWII, when we were the one major power left standing and played a major role in rebuilding the rest. But heaven help the politician who tells the truth and offers up a realistic plan for managing the change, as opposed to mouthing the meaningless “we’re number one” meme. It’s this unwillingness to face reality and limitations that is going to harm us in the long run.
@michael reynolds: “We stood very tall because everyone else was either recovering from having their countries burned down, or suppressed by the ideology of communism.”
But…wait. We prospered in the past because everybody else was smashed flat, leaving us in a dominant economic position. Now, we’re told that we’ll prosper in the future because everybody is doing better, making them better economic partners. But if we need economic partners in order to prosper, how did we do that when everybody else was smashed flat? I think we need to have a lot more recognition that economic policy needs to change as conditions change, instead of blinding insisting that some particular ideology will lead to nirvana.
And, of course…Peak Oil, bitches!
Fascinating. Reynolds, the guy who sees everything through the prism of race, and spends half his time caling people racists rather than making coherent arguments……………lectures on racism.
You can’t make this stuff up.
Are you signing onto this argument?
Or just saying that disparaging “poor people” isn’t exactly racism?
(Some of my ancestors were quite poor in the Great Depression. Many of ours were. We don’t generally think their breeding was a problem.)
There’s no doubt in the mind of anyone who regularly reads superdestroyer’s rants that he’s a racist.
Drew, I only see racists through the prism of race. Most people do. Well, unless they’re sympathetic to the racists.
Some of course would rather pretend they all just magically disappeared. Why? That’s the question.
Perhaps America has always had to face the prospect of decline, but past generations trembled, girded their loins and reacted. Does that sound like us now?
I am afraid I am not buying it. It may be good in Germany, but not here. And I wonder how long that gimmick in Germany will last.
I had worked for a huge company and management came from GE-Jack Welch. It is all about the money and survival in a globalized world. To them, it is robots, lean principles or Six Sigma, mergers and consolidation. And if that does not work, they close the plant down and move to another country. Productivity is getting rid of employees.
Germany is another story: they have programs of apprenticeship and a pretty qualified workforce(Not people with dozens of degrees in law or in liberal arts). So, they have qualified workers in high tech factories to compete with the lower wages in the Emerging World. That´s not the case of the United States, where business complains that there are no qualified workers.
@Gerry W.: What I’m saying is we have all the tools we need. The policies of MMT such as the Job Guarantee aren’t used by Germany, or any other European countey for that matter. In fact the only country which comes close is China, and they’ve so far done an excellent job of steering their economy through the Great Recession. There leaders are smarter than ours and ironically have a better understanding of proper economic policy. We could be doing the same.
Call me dense, but I am not getting it. You have said nothing in what we can produce. China and other countries (2 billion cheap laborers, along with automation, lean principles, and mergers and consolidation) is controlling our wages. I don’t know how government would hire (for what?) and have the private industry offer wages (for what?). At the end of the day, it is 2 billion cheap laborers who are setting our wages and taking our jobs. And this is the mistake that the politicians are making. They talk of this or that tax policy, but they are not talking about jobs. In a globalized world, I want to know how we are going to create jobs for 2 billion people (or be aware of 2 billion people). Borders no longer exist anymore. Even for the politicians on tax policy, they cannot guarantee what widget will be made here or some other country.
China has their problems for sure, but to relate it to the great recession makes no sense. It is China that has taken our jobs, intellectual property, and has cheap labor. The great recession has to do with the Western world and not cheap labor countries. They are part of the problem and not the solution. And even then, Foxconn has said that its workers in China will be replaced by 1 million robots.
China uses State Capitalism and at the moment and it is working. They are targeting to build whole cities, but they are using our jobs and money to do it. I do believe we need more State Capitalism in a way to rebuild our country, but the jobs we had relied on will probably not come back, and they won’t come at the wages we had once before. And praising China, yes, as I have said many times before; you invest in your country, in your people, and in the future.
Let me reiterate, it is the free market that is dictating our jobs and wages. We have no control over that. You can only invest in your country, in your people, and in the future. We ran our country on failed ideology for some 30 years and ignored globalization and they still keep ignoring it. Corporations don’t care about having employees, they found a way to replace them. I see no reasoning in what you are trying to imply.
Are you implying that we tell corporations what to do? They will tell you that China and other countries are dictating our economic policies as 2 billion cheap laborers trumps all.
@Gerry W.: Wages are not the only factor in production. In fact direct labor costs are only about 11-13% of the cost of a finished product. You ignore that China, Singapore, etc. also offer large subsidies to manufacturers. If low wages were enough all on their own then China wouldn’t need to add a thick coating of icing to the cake, would it?
Government can pay us to make all kinds of things. We can’t import broadband infrastructure or high-speed railways from China, nor can we import clean rivers and decontaminated super-fund sites, nor can we import installed clean energy facilities. You have a bit of a fixation with wage differentials: the country with lower wages wins according to your argument, but this grossly oversimplifies costs of doing business. Nor is it relevant to our own economy, where flows of money are the primary factor in wage decline. The “free market” didn’t create rising standards of living in this country. Policies did by directing national income to wages. When those policies were abandoned wages stagnated. Your suggestion we have “no control” over wages is flatly untrue; New Zealand for example sets its wage floor at $13 per hour because they’ve decided this is the minimum their citizens should make.
China’s economic performance through the Great Recession is of importance because it is the result of policies. They enacted massive, sustained stimulus and got strong economic and wage growth in return. In fact the last three years have resulted in a surging Chinese middle class that wants to consume more. This on its own will inevitably reduce trade imbalances with other nations including the United States.
I’m sorry but your fatalism is misguided.
Okay, to agree with you on this point. I have always said that we need to invest in our country, in our people, and in the future.
Invest in the country: high speed internet, infrastructure, energy independence, and a new air traffic control system to save 12% on fuel.
Invest in the people: mandatory vocational training for displaced people and a globalized world.
Invest in the future: federal research grants to universities for new technologies.
I would say that wages (including healthcare and pensions) are a major factor. Case in point. Foxconn said wages were too high in their plant in China, and they will replace the workers with 1 million robots. China also fears jobs going to Vietnam and other places for lower wages.
China has money, and they are building whole cities in which I envy. If we had the Bush tax cuts collectively, we could have rebuilt most of the country.
I agree that policies and unions as well helped to create a middle class. However, you needed a free market to do that. And for today, that free market has changed. In the past, we did not have to deal with 2 billion cheap laborers, automation, lean principles, and mergers and consolidation converging all at the same time. We simply ignored our problems and ran our country on ideology.
Again, I don’t think a country in todays world can set a wage policy. It would be more important to address policies to find jobs that will stay in our country. Today that is the medical industry and local government jobs. And energy will be a big factor.
We tried to control wages in the factory I worked at and in the end they put in robots, lean principles, and finally moved the factory out. It is still the free markets (because of 2 billion cheap laborers) that is going to win. What New Zealand has done, I cannot comment about as I don’t know what their situation is. But most countries are affected one way or another. Even Croatia is seeing their shipbuilding going to China.
Cooper tire closed a plant in Georgia and kept the place near where I live, but this is after our state and local taxes gave them millions in grants. These are still temporary fixes. There will always be the question, “will they move out?”
China’s policies have been to take everyones jobs with cheap labor. Yes, they need to grow their economy, but that was to our loss of jobs. There is simply not enough jobs to go around.
You are supporting the globalist argument that that growing middle class will consume more. That may be, but by that time, they will make nearly everything. We lost 1/3 of our manufacturing and our wages are lower. That consumer will be buying TV’s and microwaves in which we do not build anymore.
In the end, the free markets is 2 billion cheap laborers and they are dictating our jobs and wages. Been seeing this since 2004 and I don’t see anything any different for the future. The globalists have moved the goal posts. 10 years ago, they said we were going to be an information and/or service society, while some of that happened, Verizon and others have found ways of reducing their workforce. And some information went to India. Now, the globalists and the politicians say that we do not need to make the average products, that we will focus on high end products. While this maybe true for now, it does not compensate what we lost and China and other countries are seeking high end products as well.
I would rather focus on “what widget can be made here and not some other country?” And with that question, I think you can move on to make our country better. My fatalism is just realism. Just seeing the world as it is. Other countries are seeing riots, maybe they spent too much, but they also see China and other countries taking their jobs. Everyone will do some sort of gimmick. Maybe they work or maybe they won’t work, but it is a new world and seeing factories closed, it is too little too late. And the politicians are no wheres close to seeing the global world. Gingrich comes the closest to understanding, but he will favor reduced wages and benefits.
Let me reiterate. We used to have an upward movement and that was able to put policies in place to create a middle class. We lost that upward movement and we lost the different classifications of jobs, and there is just too much competition (in a non upward environment) to create jobs or set wages. Having said that, I am basing that on where I live (and I am seeing the worst). I see nothing that will replace what was lost in my community. I think there will be pockets of prosperity, but conditions have changed in the way we look at the world and how we deal with it.
We have been actually declining for several years in spite of the bubbles because we have been borrowing from the future generation and other countries by abusing the faith in the strength of the dollar. But when that faith in the dollar is destroyed because of the escalating borrowing there will be a rather rude awakening and readjustment of our lifestyle of over consumption and waste. Because the world has so much faith in the dollar we are able to import cheap goods and not even pay for them because a paper dollar given to someone has no value unless that someone can buy something from us of value. If he puts that dollar under the mattress or equivalently buys our treasury CD, we are getting the goods for free. So we are getting a free ride from the world for now and it is the cause of our apparent prosperity. Of course we are destroying our jobs and industrial capability in the process. If we can somehow redistribute our incomes we can eliminate the job issue because there is more than enough income in the upper strata. We can continue to get a free ride from the rest of the world for a while and continue our pursuit of pleasure in gambling, sports, TV shows, pornography, social media and so on. We do not have to produce any material things like shoes, clothing, appliances, cars, oil, computers, TV’s, cameras etc. Luckily we are endowed with an abundance of fertile land which we can till with illegal labor so at least food should never be a problem for us. When the world comes to its senses and sees the dollar as a worthless piece of paper, this utopia may come to an abrupt end. We will then have to produce what we consume. We will not be able to consume much because our already astronomical wages will have increased beyond astronomical limits. The reason we went to the third world in the first place is because we could not afford our own wages. I saw some American made shoes on the internet and they ranged in price from about $500 to $700. We can imagine what our consumption would be if we have to buy American made shoes and clothing.
A second reason why we will decline is that by our trade, we have increased the purchasing power of third world countries and they are consuming oil and essential mineral resources and causing run up in those things. This is why copper, steel, cement etc now costs about 3 times they use to just a few years ago. This means our houses will be too expensive to construct and all the savings we made from global trade will be more than wiped out. I know there are a few people who believe, the world’s resources are endless. Because of cyclic nature of world economy, some times the prices go down but in the long run they will continue to ratchet up. There is no real cure for the world running out of resources but we can delay that time by limiting our consumption and stop the wasteful practice of making everything disposable and unrepairable.