The Decline and Fall of Declinism
Tuesday, August 28, 2007
Some people don’t want to admit it, but America is in great shape.
Under the heading “The end of a U.S.-centric world?” the PostGlobal section of The Washington Post website recently declared that “U.S. influence is in steep decline.” It was just the latest verse in a growing chorus of declinist doom-saying at home and abroad.
In 2004, Pat Buchanan lamented “the decline and fall of the greatest industrial republic the world had ever seen.” In 2005, The Guardian’s Polly Toynbee concluded that Hurricane Katrina exposed “a hollow superpower.” In 2007, Pierre Hassner of the Paris-based National Foundation for Political Science declared, “It will not be the New American Century.”
And the dirge goes on.
It’s a familiar tune, of course. We heard it in the early 1990s, when economists, political scientists and pundits were quipping that while the U.S. and Soviet military superpowers waged the Cold War, it was economic superpowers Japan and Germany that won it; in the 1980s, when Paul Kennedy led the chorus by concluding that America was tumbling toward “imperial overstretch;” in the 1970s, when the U.S. slipped into a malaise; and in the 1960s, which began with the U.S. unable to dislodge a communist dictator 90 miles off its coast and ended with the U.S. unable to hold back the spread of communism half-a-world away.
But the declinists were wrong yesterday. And if their record—and America’s—are any indication, they are just as wrong today.
Any discussion of U.S. power has to begin with its enormous economy. At $13.13 trillion, the U.S. economy represents 20 percent of global output. It’s growing faster than Britain’s, Australia’s, Germany’s, Japan’s, Canada’s, even faster than the vaunted European Union.
In fact, even when Europe cobbles together its 25 economies under the EU banner, it still falls short of U.S. GDP—and will fall further behind as the century wears on. Gerard Baker of the Times of London notes that the U.S. economy will be twice the size of Europe’s by 2021.
Declinists were wrong yesterday. If their record—and America’s—are any indication, they are just as wrong today.
On the other side of the world, some see China’s booming economy as a threat to U.S. economic primacy. However, as Baker observes, the U.S. is adding “twice as much in absolute terms to global output” as China. The immense gap in per capita income—$44,244 in the U.S. versus $2,069 in China—adds further perspective to the picture.
America’s muscular economic output comes courtesy of the American worker, who is growing ever more productive. Matthew Slaughter of the National Bureau of Economic Research details in The Wall Street Journal how, beginning in 1995, U.S. worker productivity began to accelerate. “From 1996 through 2006 it doubled, to an average annual rate of 2.7 percent.”
Another recent analysis—surprisingly filed by The New York Times—notes that this technology-driven “productivity miracle” has not manifested itself in other developed economies. Citing research (PDF) by John Van Reenen and others at the London School of Economics, the Times concludes that when U.S. firms take over foreign firms, the latter enjoy “a tremendous productivity advantage over a non-American alternative…It is as if the invisible hand of the American marketplace were somehow passing along a secret handshake to these firms.” As Reenen and his colleagues conclude, it appears that the way “U.S. firms are organized or managed…enables better exploitation of IT.”
This should come as no surprise. As Derek Leebaert explains in The Fifty-Year Wound, the information technologies that began emerging in the late 1980s “forced decentralization and demanded the sort of adaptivity made for America.”
So what do these numbers and comparisons tell us? For starters, as historian Niall Ferguson points out in Colossus, they tell us that the U.S. share of global productivity “exceeds the highest share of global output ever achieved by Britain by a factor of more than two.”
They also serve to explain how the United States can withstand not just the human losses and psychological blows of a 9/11 or Katrina, but the sort of economic and financial blows that would have overwhelmed any other country on earth.
Just consider what the U.S. economy has lost since 9/11. One estimate posited that by the end of 2003 the U.S. could have lost as much as $500 billion dollars in GDP as a result of 9/11. That’s roughly the size of the entire Iranian economy or half the Canadian economy.
As to Katrina, Congress poured $122 billion into the vast disaster area—and that was just in the 12 months immediately following the storm.
None of this was budgeted or foreseen, yet the U.S. economy dusted itself off and soldiered on.
While the declinists routinely remind us that the U.S. spends more on defense than the next 15 countries combined, they seldom note that the current defense budget accounts for barely four percent of GDP—a smaller percentage than the U.S. spent on defense at any time during the Cold War. In fact, defense outlays consumed as much as 10 percent of GDP in the 1950s, and 6 percent in the 1980s.
The diplomats who roam the corridors of the UN and the corporate chiefs who run the EU’s sprawling public-private conglomerates dare not say it aloud, but the American military does the dirty work to keep the global economy going—and growing. “The hidden hand of the market will never work without a hidden fist,” as Thomas Friedman observed in 1999.
“Globalization,” adds Robert Kaplan, “could not occur without American ships and sailors.”
Some argue that globalization is just another word for Americanization, and they may be right.
Dell and HP dominate the global PC market. More than 330 million PCs are running Microsoft software worldwide. Apple iTunes has displaced Sony’s music-downloading system—inside Japan. Google was created by a pair of Stanford grad students without any government help at all, yet it so dominates the Web that the EU is pouring some $290 million into birthing an answer.
Ferguson observes that half of the 30,000 McDonald’s restaurants are located somewhere other than the U.S., and that 70 percent of Coke’s thirsty drinkers reside outside North America. Starbucks has stores in 39 countries—from Austria to the United Arab Emirates to Australia.
WalMart has 2,700 stores outside the U.S., planting the low-price banner in 14 countries. “In the past year,” boasts the WalMart corporation, “the company became majority owner of Seiyu in Japan, completed its acquisition of Sonae in Brazil, and expanded into six new markets including Northern Ireland, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.” WalMart projects global sales of $344 billion in 2007, positioning the retail juggernaut just outside the top 30 in global rankings—for national GDPs.
The converse, even in this global economy, simply does not hold. Although Americans are notorious for appropriating from other cultures, they are not flocking to British retailers, or buying Afri Cola, or logging on to some Euro-Google, or purchasing French PCs.
But don’t take my word for it. As French president Nicolas Sarkozy matter-of-factly puts it, “The United States is the world’s leading economic, military and monetary power…Your economy is flourishing, your intellectual life is rich.”