Monday, March 23, 2015

Something to Know 23 March

Clay Bennett

This article does an excellent job of detailing what is wrong and what is holding us back from being all that the USA could be.   It is a powerful commentary on the the effects of globalization and America's intractable malaise in resting on a belief that we are and will always be the greatest and most exceptional.   Only thing wrong is that we are not the greatest any more.  The others are passing us by, and we fail to take the necessary action to protect our strengths.   We seem to be our own worst enemy by failing to realize this demise, and our right-of-center politicos are the ones responsible.  Is this just another "flaky" whine from the left?   I don't think so, and may be another call to action: 
MARCH 17, 2015
The Biggest Threat to America's Future Is … America


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Britain, France, Germany, and Italy have decided, over the objections of the United States, to join the Asia Infrastructure Investment Bank, a new international-development institution, set up by China, that is poised to become a potential rival to the World Bank.Britain, France, Germany, and Italy have decided, over the objections of the United States, to join the Asia Infrastructure Investment Bank, a new international-development institution, set up by China, that is poised to become a potential rival to the World Bank.CREDITPHOTOGRAPH BY TAKAKI YAJIMA-POOL / GETTY

On a day when much of the world's attention is turned to Israel and its elections, I've been thinking about another foreign story that has been receiving less coverage but could, in the long run, turn out to be equally significant: the news that Britain, France, Germany, and Italy have decided, over the objections of the United States, to join the Asia Infrastructure Investment Bank, a new international-development institution, set up by China, that is poised to become a potential rival to the World Bank.

Who cares about a new development bank, you may ask? By way of an answer, let me engage in a bit of historical analysis. It may seem like a pointless detour at first, but I promise to circle back to the news.

Many years ago, after the stock-market crash of 1987, an acquaintance of mine who works on Wall Street told me, "Don't bet against the U.S. of A." It turned out to be good advice. Despite forty years of income stagnation for many middle-class Americans, a glaring rise in inequality, the Great Recession and its aftermath—despite it all, the American economy is still the world's most advanced. It represents the "production frontier" that other countries are working toward.

Productivity is higher in the United States than in Europe or Asia, which reflects the country's deep reservoirs of natural endowments, skilled labor, and technology. American scientific research leads the world, and, according to one U.K.-based survey, fifteen of the world's top twenty universities are American. U.S. financial markets are deeper and more liquid than financial markets elsewhere, and, despite advances in places like the United Kingdom and Hong Kong, there is not yet a real competitor to Silicon Valley and Wall Street when it comes to incubating innovation.

To those who argue that the American Century is over, I say: look around. If you do, chances are you'll be using an American-built search engine and an American-designed Web browser, and arriving at American-produced content. Over the past half century, many countries around the world have closed some of the economic gap with the United States, but with the exception of Norway—a special case because of its tiny size (population: five million) and vast oil reserves—none of them have moved ahead in terms of G.D.P. per capita.

This picture may change over the next thirty or forty years, but I wouldn't bet on it. History, economic theory, and common sense all suggest that it is possible to copy the economic leader's methods, but far harder to overtake it. During the seventies and eighties, Western Europe learned this lesson. In the nineties and aughts, it was Japan's turn. If China keeps expanding at the rates of the past couple of decades, it will eventually face the same dilemma.

Of course, as other countries, especially Asian ones, continue to develop, the U.S. share of global trade, G.D.P., and wealth will diminish. But that won't necessarily reflect any failing on America's part. It is the inevitable consequence of globalization and the development of a single worldwide market economy. Until around 1990, many big countries had cut themselves off from global capitalism and the opportunities it provides for the transmission of capital and knowledge. Today, Eastern Europe, China, India, and, increasingly, parts of Africa are all active players. As a result, the U.S. economy looms less large, in relative terms, than it once did, even as, by almost any measure, America is still number one.

One of the reasons these developments matter is that, in the long run, military power and strategic power reflect economic power. The Roman Empire, like other ancient hegemons, was built on an extensive slave economy. Portugal, Spain, and Holland, in their imperial heydays, were great trading nations. The British Empire, which at one point covered almost a quarter of the world's land, was built on cotton, coal, iron, and steel—the industries of the industrial revolution. As other countries, notably Germany and the United States, caught up, the British were eventually forced to retreat, with the Second World War serving as the decisive blow.

Absent an unforeseen catastrophe, Pax Americana won't suffer the same sudden end that Pax Britannica did. But over time it will be challenged, which raises a key question: Can the American psyche, and the American political system, adapt to a new reality in which the United States retains its position of leadership but no longer enjoys unquestioned dominance? So far, some of the signs are encouraging, while others are worrying.

The good news is that the American people, although patriotic and, on occasion, nationalistic, are not by their nature jingoistic imperialists. To the contrary, many of them are instinctively isolationist. Even though the United States maintains scores of military bases around the world, spends more on defense than all the other major powers combined, and is engaged almost constantly in wars somewhere on the planet (officially declared or otherwise), most Americans would object to the idea that they have an empire, whether formal or informal.

This self-deception sometimes borders on the pathological, but from a strategic point of view it is an advantage. It suggests that if the transition to shared world leadership could be managed peacefully, and in a manner that didn't insult U.S. pride, most Americans would probably accept it. Already, we hear calls from U.S. officials for the country's allies in NATO to beef up their defense spending and take on more of the burden. In Iraq, the United States is now relying on an enemy, Iran, to take the fight on the ground to the Islamic State in Iraq and al-Sham, which in the grand scheme of things is a nuisance to the United States, rather than an existential threat. If Americans object to this arrangement, they are keeping strangely quiet about it.

Unfortunately, the widespread recognition that America can't do everything coexists with a set of outdated presumptions and practices, which still dominate many policy discussions in Washington and are already doing considerable harm to the U.S.'s standing. If these nostrums and patterns of behavior aren't updated, they will end up doing far more damage. Indeed, it's barely an exaggeration to say that the real threat to American power and influence comes from within America itself, specifically from its increasingly dysfunctional political system.

Take the transatlantic diplomatic row over the Asia Infrastructure Investment Bank. In itself, it isn't a huge story, but it is a straw in the wind.

In June of last year, China announced that it was expanding its plans for a new international-development bank, which would be based in Beijing and would lend money for infrastructure investments across Asia. This happened after the Chinese were repeatedly rebuffed in their efforts to play a larger role in the World Bank and the International Monetary Fund, the two big Washington-based lending institutions that were set up after the Second World War, and in the Manila-based Asian Development Bank, which was founded in 1966.

Since their establishment seventy years ago, the World Bank and the I.M.F. have played an important role in stabilizing and legitimizing the U.S.-dominated global economy, directly furthering U.S. interests in the process. In many other countries, indeed, they have long been viewed as conduits for the Treasury Department and the White House. At least a decade ago, as Asia's importance to the world economy increased, smart officials in Washington came to realize that this situation couldn't continue indefinitely, and that if the Bank and the I.M.F. were to maintain their influence they would have to be reformed, with China, India, and other Asian countries playing bigger roles. In November, 2010, after years of tortuous negotiations, a package to reform the I.M.F. was agreed upon: the Fund's resources would be doubled, and China, in particular, would get more of a say in its internal deliberations.

That seemed like a step in the right direction, but Congress refused to go along with it. Following the 2010 midterm elections, the Republicans repeatedly sidelined legislation approving the I.M.F. reforms, and early last year they blocked them again, seemingly for good. This provided the Chinese the perfect backdrop against which to pursue their own initiative, the Asian Infrastructure Investment Bank, and market it to other Western countries, who are themselves keen to attract Chinese business deals and inward investment. Now, despite objections from the Obama Administration, four of the U.S.'s closest allies have agreed to join the new institution as founding members. Speaking on Capitol Hill on Tuesday, the Treasury Secretary, Jacob Lew, seemed resigned to the new reality. "It's not an accident that emerging economies are looking at other places because they are frustrated that, frankly, the United States has stalled a very mild and reasonable set of reforms in the I.M.F.," he said.

International finance is far from the only area in which Congressional intransigence and wrongheadedness are undermining U.S. interests. The open letter to Tehran that forty-seven G.O.P. senators signed last week comes to mind. What was jarring about the letter wasn't just the sight of one branch of the U.S. government telling the leaders of a rival nation that the President, with whose representatives the leaders were negotiating a nuclear deal, would be gone in a couple of years. It was the suspicion that this unprecedented communication was, at root, a poorly thought through political gesture. In this area, as in many others, domestic politics had trumped the national interest. Immigration reform, infrastructure investments, environmental initiatives, health-care reform, servicing the national debt, and, now, appointing a new attorney general to oversee the U.S. legal system—in all of these areas, the same story can be told over and over.

At any one time, it is easy to dismiss dysfunction in Washington as meaningless; believe me, I do it all the time. When political paralysis and political role-playing become institutionalized and extended over time, however, they can end up sapping a nation's vigor. Constant palace intrigue (sometimes accompanied by civil war) helped to undermine imperial Rome. In the fifteenth century, China's Ming dynasty, after another bout of infighting, took the fateful decision to turn inward and ignore the outside world. France, a superpower of the seventeenth and eighteenth centuries, could never reconcile the financial demands of the Bourbon monarchy and near-constant war with the power of the local appellate courts, which resisted imposing higher taxes.

In a country of plentiful resources and vast acreage, America's decentralized political system was, for a long time, a major advantage. It allowed policies to be tailored to local needs and prevented the emergence of an overweening state, while still enabling the mobilization of sufficient resources to develop extensive transportation and public-education systems, as well as the hydrogen bomb, the space program, the Internet, and much else besides.

Today, however, it is hard to make the argument that the U.S. political system is serving the country well. With heightened competition and new global challenges, such as the rise of China, the United States badly needs to acknowledge the new realities and improve its game. Despite the country's enduring economic strength, its conception of its role in the world is outmoded, its infrastructure is crumbling, and its test scores are lagging in math and other areas, despite its impressive performance in cutting-edge research. At the very least, it needs to preserve some of its old techniques of maintaining power, including fostering institutions through which it can exercise "soft power" and serving as a magnet for talented and hard-working immigrants, who provide it with invaluable skills and entrepreneurship.

Rather than accomplishing any of these things, Washington seems to be trapped in a never-ending back and forth, in which sloganeering substitutes for analysis and political point-scoring is elevated above policymaking. It's a dismal spectacle, and if it goes on indefinitely it will exact an increasingly high price. Not the sudden collapse of Pax Americana, perhaps, but the gradual undermining of it.


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