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Clobbering of an Era
Speaking of American Decline

The Atlantic, 1987

The literature of decline must be a subplot of any self-respecting dynamic society: it’s never a good idea to slouch toward self-indulgence. That’s not to say that those who warn of decline are cassandras. The warnings are usually accurate, pointing out symptoms of decline not in celebration but as correctives, or to re-igniting old fires: To warn of decline, when the signs are there, is implicitly to urge remedies, explicitly to inspire away from decline. That the declines predicted in previous eras didn’t pan out as predicted doesn’t necessarily mean the forecasts were wrong. It means the warnings were heard and the course adjusted. Isn’t that what healthy societies not scared of their own dialectic are supposed to do?

We got a good dose of decline chat in the mid-1970s, when the United States was licking the napalm off its wounds following Vietnam. We got another dose in the late 1980s and early 1990s, when the American economy seemed to do nothing right and the Japanese prime minister called Americans lazy. The Atlantic had a cover story in August 1987 showing Uncle Sam struggling to keep his grasp around the globe. The headline: “The Decline of America,” by Paul Kennedy. You had to turn to the inside page to see the more accurate title, complete with the parenthesis in the original: “The (Relative) Decline of America,” along with the little synopsis: “In 1945 the United States commanded a 40 percent share of the world economy; today its share is half that, and yet our military commitments have grown dramatically. This imbalance, which conforms to a classic historical pattern, threatens our security, both military and economic.” You could see one fallacy right off: in 1945 the United States commanded a 40 percent share of the world economy because the world economy was comatose. By 1987, the share may have been half what it was, but it was half of a share grown immensely wealthier overall. Europe was rebuilt, rich and prosperous. The Pacific Rim was on its way up, led by China. The Soviet empire was crumbling. Nevertheless Paul Kennedy wasn’t pointing out false signals, either. The United Stateswas overextended even then. (Six weeks after Kennedy’s piece was published, the stock market crashed, losing 22 percent of its value in one day.) It could keep it up only by diverting more resources to its military machinery — which the United States has done, more or less, uninterruptedly. The extent of that diversion is hidden by the country’s willingness to take on gargantuan debt, and by other countries’ willingness to enable that debt: Borrow all you will, you’re still inflating your GDP, but on false pretenses.

Three years after Kennedy’s essay (a precursor to a book on decline) the New York Review of Books assigned him to review several books on the subject, including Henry Nau’s “The Myth of America’s Decline: Leading the World Economy into the 1990s,” a title that proved prophetic, but not because Nau was a triumphalist. The book was a sober analysis of what had made America work up until then, and a warning about what might not work if it didn’t apply ideas, purpose and policies to its direction—rather than focus on what Kennedy termed “institutional structures and material power.” And that’s just what the United States did in the 1990s. It was powered by ideas, and helped by two big factors: the disappearance of the Soviet Union, which enabled those ideas to roam unhampered by the Cold War’s sometimes stultifying strictures, and the decade-long stodginess of the Japanese economy, which removed a major competitor from the scene. China and India weren’t yet ready to take on the United States economically. The planet was all Uncle Sam’s again, oddly as it had been after 1945. It all started, psychologically, in 1991, when Gulf War I changed all the decline talk to a new triumphalism. Nothing like a war, a mostly phony one at that, to demolish self-doubt, at least for a while.

Nothing suggests that the country needed change direction in 2001. It was awash in surpluses, with more to come. It needed only a few adjustments, the correct steerage, the wise and continued focus on ideas. Instead, we got Bush II, his fanatically ideological tax cuts for the sake of tax cuts (actually, for the sake of the rich, but that’s another story) and his overblown, overbearing response to the 2001 attacks. Which has now led us back to decline chatter. Remember Niall Ferguson’s piece in the Times about America’s debt (“Reason to Worry,” he termed it.) Most recently there was James Kitfield’s piece in the National Journal (“The Decline Begins”) which triggered a discussion of its own on this site, and inspired this piece. Kitfield sums up what various scholars and policy analysis from all ideological hothouses are saying: It isn’t just about overextension. That alone may have been sustainable, given the numbers. But it’s about the underpinnings of that overextension. When the United States was all over the globe in the 1980s and 1990s, it didn’t face rabid anti-Americanism. It faced some, but it was manageable. Nothing out of the ordinary. American power wasn’t always loved. It was respected. It was called on when other countries were in need. That has changed. American power today is a liability. It’s all over the globe, but so is the hatred it’s inspiring, with much more to come. That’s where the auguries of decline are most convincing. That’s what Kitfield sums up when he notes “a fundamental and potentially lasting realignment of power on the strategic chessboard. Even if an American era that decisively shaped world affairs for the past half-century has not been eclipsed, [analysts] warn that it certainly shows signs of waning.” He points out:

Even a seemingly small war such as the Soviet invasion of Afghanistan in 1979 had a cataclysmic impact. The troubled occupation exposed the myth of the invincible Red Army and overstressed a corrupt communist system, hastening the end of the Soviet Empire a decade later. Could Osama bin Laden possibly have set off a similar chain of events when he directed suicide attackers to fly airplanes into the World Trade Center and the Pentagon on September 11, 2001? Certainly the goal of toppling America from its superpower position, and repeating the victory of the Islamic mujahedeen over the Soviets in Afghanistan, was foremost in his calculations. Today, a surprising number of historians and strategists, regardless of their views of the Iraq war, see bin Laden as closer to his aims than any of them would have dared predict six years ago.

It was not a given that Osama would get his way. Bush’s choice of policies played into Osama’s hands. His continued choice of policies is playing into those hands further, entrapping the United States in quagmires beyond Iraq when one considers the cost to the military and the economy. Those aren’t yet overriding costs. But they’re the slow-drip, compound interest kind: they’re not going away. They’re the kind that sinks empires even as those numbers look fine for now.

In the last few weeks the Wall Street Journal and the Washington Post both ran long analyses on the same theme: “How Six Years of War Didn’t Strain Economy” (in the February 5, 2007 Journal) and “The Cost of War, Unnoticed,” in the May 8 Washington Post. Their conclusion: Despite the fact that the global war on terror is about to become the second-most expensive in the nation’s history (after World War II), there’s still room for the military to grow, and for the economy to keep moving along without seriously feeling the effects of war. Why? Because this time, the Post’s Lori Montgomery writes, “the war bill is going directly on the nation's credit card. Unlike his predecessors, Bush is financing a major conflict without raising taxes or making significant cuts in domestic programs. Instead, he has cut taxes and run up the national debt. The result, economists said, is a war that has barely dented the average American’s pocketbook and caused few reverberations in the broader economy.” Good news? Not quite.

Spending as a percentage of GDP reached a peak during Vietnam, in 1969, at around 9.5 percent, but had plummeted to 5.7 percent or so by the time of the US pull-out. It rose above 6 percent during the Reagan build-up, peaking in the mid-1980s, fell to 3 percent in 2001 and is now back up to 4 percent. However, that’s taking the straight-spending figures as submitted by the Pentagon at budget time. That’s not including “supplementals.” The difference is enormous. The official military budget Bush submitted in February is $481.4 billion, or slightly less than 4 percent of GDP. As Fred Kaplan pointed out in a Slate analysis, the real figure is actually $739 billion, or closer to 5.6 percent of GDP—compared with 3.5 percent of GDP devoted to discretionary domestic spending (a proportion that was higher during the Vietnam years and close to 5 percent in the late 70s, until the Reagan slashers arrived). Also, as a percentage of GDP, the national debt even at the height of the Vietnam war in 1969 was 29.3 percent, falling to 25 percent by 1975, where it hovered—again—until the Reaganites’ wild spenders arrived. By the time Bush I left office it was up to 49.2 percent of GDP. Clinton brought it down to 33. We’re now back up to 37 and rising.

That, by the way, is only the public debt—not the total national debt, which would then have to include what one part of government owes another (like, say, what’s owed Social Security). If we include those numbers, then the national debt, at $8.8 trillion, is around 65 percent of GDP. At the height of Vietnam that proportion had fallen below 40 percent (when we were still paying for Korea and World War II) and would continue to fall to near 30 percent by the end of the supposedly profligate Carter years. Then came the... well, you know. And as Niall Ferguson noted, “let’s not forget those other debts that families did not formerly run up. Consumer credit in the 1960’s and 1970’s averaged less than 13 percent of G.D.P. In the past 10 years it has climbed to around 18 percent.”

By any measure, the national debt and the national appetite for debt, are catastrophes in the making. I don’t know how a nation can be rated stable when it has a national debt heading for $10 trillion by the time its latest bush exits, and when the next superpower, namely China, can burp and cause a financial meltdown from all the US debt servicing we owe it. By some measure, “decline” is an understatement. The credit card mentality may be a wonderful thing, only as long as you realize that bankruptcy isn’t a technicality. Bills have to be repaid. So: Is the United States doomed to decline? Not at all. But put simply, when the historical analyses of Paul Kennedy and Henry Nau are combined with the economic histories of Niall Ferguson and the more recent sum-ups of the likes of Edward Luttwak and Brent Scowcroft and others, it’s not a stretch to suggest that Bush put the United States on an unsustainable course, the kind of course that does invite decline—that has triggered decline—and that will keep sinking the country if the course isn’t adjusted, and rather fast: the boomer generation begins retiring in a few hours, and the rest of us aren’t getting younger. This is the time to ring the alarm. Actually, Paul Krugman was ringing it in 2000 when he noted in a Sept. 6 column that year that “Mr. Bush’s advisers apparently believe -- with history on their side -- that he can get away with just about anything if he does it with a twinkle in his eye and a grin on his face. Or maybe a smirk.” It worked for almost six years. The jig is up.

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