The Empire Is NOT In Decline? — Part II

On January 31, 2012 I wrote a post called The Empire Is NOT In Decline? The post's title was meant to be sarcastic, of course. I deconstructed some articles which defended the claim of America's continued pre-eminence. Then I put together a short, incomplete list of the obvious reasons American is indeed in decline. Making that argument is a lot like shooting fish in barrel.

Today I was going to write a quick critique of Robert J. Lieber's Is American decline real? (Salon, May 14). But then a Google search revealed that the recent "pushback" against us "declinists" is far greater than I thought it was. Here's Lieber on the subject—

These depictions are pervasive on the Internet and in the press. A quick Google search for the term “American decline” yields 117 million “hits” in 0.13 seconds. A columnist for The New York Times writes that, “Wherever you choose to look . . . you’ll see a country in sad shape.” A leading German news magazine headlines, “A Superpower in Decline.” And from the realm of pop culture, the comic book action hero Superman renounces his U.S. citizenship. But are such assessments accurate?

As we would expect, Lieber goes on to argue that pessimistic assessments are not accurate. But there's lots more.

• America Is So Not In Decline: Ritholtz (Daily Ticker, interview with Barry Ritholtz, March 6)
• 8 Reasons American is not in decline (Christian Science Monitor, April 28)
• American Decline A Mirage In A World That's Rising (Ezra Klein, Bloomberg, May 16)
• America Is Not in Decline (policymic, February 12)

There are others, but that's enough.

The argument that America is not in decline usually rests upon misleading premises. Those arguing for our continued dominance say that in so far as the United States is still the most powerful global military power, and still has the world's largest economy in dollar terms, we are still #1 and will remain so for some time to come.

The DOTE argument, and that of every commentator who does not have a kool-aid dispenser mounted on their water tap, is that our decline is almost entirely due to the steady deterioration over 30 years of American society at large and its economy in particular. Those who argue we are not in decline invariably dodge all the compelling evidence documenting that deterioration.

Another argument—my favorite—says that yes, American is going down the toilet, but everybody else has already been flushed, so we're still #1. Here's Erza Klein.

If hundreds of millions of Chinese and Indians continue to be stuck on unproductive farms or in unskilled jobs rather than being freed to develop their human capital, the rest of the world will be denied access to the endless innovations they otherwise might have developed. Put another way, the sun may now set on the British Empire, but the average British citizen lives much better because of the medical and computer technologies developed in Britain’s former colonies. If those colonies hadn’t grown rich and strong enough to throw off the mother country’s yoke, the result would be a worse world for everyone—including the British.

[My note: Did young Ezra learn to construct specious arguments like this in college? If so, I think we need to take another look at the alleged "benefits" of a college education.]

So, yes, the U.S. has its problems. But I wouldn’t trade our problems for anyone else’s. Europe, China and Japan face immense demographic challenges. All three are aging rapidly and, for cultural and political reasons, immigration is unlikely to swell their workforces. Japan, with a median age of 44.6, is one of the oldest countries in the world. In China, the birth rate has fallen from 2.6 births per woman 30 years ago to 1.56 today.

Then Klein goes on to argue how all the other big economic powers—Europe, China, Japan the other BRICS—are well and truly fucked. Way more fucked than we are. This reminds me of the old lawyer joke in which the defense attorney says "sure, my client killed that man. But look at the all the other stuff he didn't do!"

The pushback against America's obvious decline is as predictable as the morning sunrise. Those whose bread is buttered will argue that America is still great. Those with no butter on their bread, and perhaps no bread at all, don't need to be convinced.

Bonus Video — Barry Ritholtz embarrasses himself once again

 

Comments

[Jack Leonard]

Hi Dave, I loved that lawyer joke, glad I tuned in just for that. Read your posts everyday.
Jack

[The Practician]

For the record, Ezra Klein wasn't so much constructing a specious argument as plagiarizing the "Growth Theory" Section of an Economics textbook. I guess that's probably even more of a reason to take a second look at the benefits of a college education.

[John D]

I think the latest news on California's sudden increase in debt from $8B to $16B really opened my eyes to the fact that our collapse could be coming sooner than most folks realize. Think about what happens if one state has to go to the federal government for a bailout- the union could actually separate. Do you think for one moment that Louisiana- which allows offshore drilling to get the tax money- is going to want to bail out a state that bans offshore drilling for quality of life reasons? No way! This could get very nasty, and don't believe any state can figure a way out other than to get bailed out by Uncle Sam.

I find it hard to believe anyone could say we are not in decline. The ponzi scheme is all coming apart.

[Wanooski]

Dave, haven't you heard? America is exceptional. Nothing bad can ever happen to it, what's happening to it isn't so bad, what's causing the problem is the fault of things "un-american".

See that's the kind of cognitive dissonance we're dealing with, all of those arguments persist in peoples' minds at the same time, even though they are contradictory.

[Ben]

@John D

The term for the process of fragmentation or division of a region or state into smaller regions which are hostile or non-cooperative with each other is Balkanization.

Balkanization: http://en.wikipedia.org/wiki/Balkanization

[sharonsj]

This should be interesting. Greece is going up in flames, to be followed by Spain and Portugal. And if England is in such great shape, why does it have continuing strikes and violence?

The U.S. is still being propped up by the Fed, but each new round of quantitative easing results in price inflation. If Republicans get control, you'll see more austerity, more job loss, less social programs--and as Gerald Celente predicted--violence in our streets.

[Ben]

The more I think about it the more I realize that things are out of our hands. The crisis has years of momentum propelling it forward.

[raintonite]

Someone mentioned the UK. The UK is fubared. Full stop.

Leaving aside that the wealthy cut their taxes while imposing austerity on the misrable majority, they have painted themselves into a demand destructive corner.

Any uptick in the economy, if this is at all possible as North Sea oil reserves slide exhoribily down the back side of Hubbert's parabola, will mean that these austerity psychos will pocket more change (cut their taxes, increase their rental incomes) leading to further immiseration of the majority.

It's just a matter of time before they destroy all demand in various localities. (It's already apparent in mid and north England and elsewhere.) We no longer work under oil-rich economic assumptions - whether they be marxist, keynesian or friedmanite.

The equation is simple. Less for you means more for me. As the economic pie shrinks, we'll want more and more so that we can pretend/lie that the economy is still growing. When we have it all, we'll skeedattle.

The only useful info these parasites could impart is if they let us know how much they're hoarding in off-shore accounts each year. Don't hold your breath waiting for that info. The rats will have left before we know it.

Only one question remains: go down fighting or just go down.

[LCarey]

@John D
To elaborate a bit on your point - complex systems can be especially prone to sudden and catestrophic failure, rather that gradual deterioration. Witness the 2007-08 financial debacle - everything worked great right up until the point it stopped working.

Dave, I hope you mother is doing okay after her dental work.

[Bill]

"We are the best looking horse in the glue factory." Richard Fisher, Dallas FED, October 2010