America in decline

America in decline

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Noah Smith’s recent article examines the parallels between Ming China and 20th century America. He reminds us both were for quite some time the most powerful and advanced nation on the planet. This made them self-centred and caused them to ignore advances made elsewhere.  Stagnation ensued. Ming China decline was calamitous and by the end of the 19th century China was chopped into pieces by nations its emperors had long considered barbarian. Smith hopes the same does not occur to his country.

His is a brave article.  Americans do not like pondering the possibility of their own decline but in truth, America has been declining my entire lifetime.  In 1958, a single American Marine brigade bent Lebanon government (and much of the Middle East) to its will.  This past decade, despite spending more on its military than the rest of the world put together, the United States wasted lives and treasure only to be humiliated in Iraq and Afghanistan.

When I was born, the United States was the high quality low cost manufacturer of just about everything.   Today its main function in the world economy is consumer of last resort. Once upon a time the world craved what America made.  Today it imports much more than it exports, with trade surpluses only in entertainment, agricultural products, and aircraft parts.  From World War I to the 1970s it was the world’s largest creditor.  Today, Chinese money funds its spendthrift ways. The tragedy is its borrowing funds consumption, not investment.

Land at Kennedy Airport and you can see this decline with your own eyes. I’m American but I grew up in the third world and I remember flying into New York in the 1970s and feeling so proud to be a citizen of the world’s most advanced country.   America was state of the art, modern.  Things worked.  Perhaps most striking to a boy raised in Rio de Janeiro and Mexico City, it seemed like everyone was middle class. The bus driver taking us into the city from the airport knew he was just as good as any of his passengers. Today New York is more stratified than Buenos Aires.

Kennedy airport is no longer a byword for modernity.  Not only are Dubai and Cairo’s airports better appointed, so is Nairobi’s.  The airport shuttle into Manhattan involves taking the A train through dingy Brooklyn.  And although most Americans still claim to be middle class, forty years of stagnant wages have made that distinction less and less meaningful.

Part of America’s decline is merely relative. Everybody else caught up. Relative decline isn’t really a problem.  The rise of Germany and Japan benefited the US economy, both by providing better goods for its consumers and by providing markets for its exports. The world economy is not a zero sum game.  The problem, rather, is actual decline.  Today America’s infrastructure is in a shambles, its educational system mediocre, its median wage lower than it was in 1973, its middle class shrinking and insecure.  I suspect the collapse of its middle class is both cause and effect of America’s deterioration.

America grew to world domination because of its vast natural resources, its entrepreneurial spirit, its inheritance of British rule of law. But most important was its lack of an established aristocracy.  Its heritage as a land of free yeoman farmers meant that its incipient middle class was a ready market for mass produced goods.  Aristocrats desire hand crafted luxury items.  Substance farmers can’t afford to buy hardly anything at all.  A growing middle class was the perfect market for “the American system of manufactures” of interchangeable parts and mass production. The assembly line was the great invention of the early 20th century and the US mass market was perfectly designed to absorb its products. 

A growing and confident middle class was the essential element during America’s glory years.  Its size meant that firms could prosper selling to it. Henry Ford paid his workers more than he had to, so they could afford to buy his cars.   Its confidence meant that both private and public sector happily invested in the future.

America’s decline is due, in large part to its incompetent and self-serving elite. CEOs focus on short-term movements of share prices rather than invest in the future of their firm.  Politicians care more about winning the 24-hour news cycle than serving their country.  Ratings are all that matter to network news producers.

Chris Hayes, in his 2012 book Twilight of the Elites blames meritocracy. He says, “As American society grows more elitist, it produces a worse calibre of elites.”  He suggests that meritocracy engenders a dangerous combination of lavish self-regard and brutal insecurity. Since they fear they could lose their spot in the top 1% (or the top .01%) and join the rest of us in the great unwashed, civic mindedness disappears, even in public servants. In the 1960s factory owners would strive not to fire workers during an economic slowdown.  Laying off loyal employees would get them dirty looks at the country club.  Today, of course, firing workers is the easiest way to raise the value of your stock.

In 1948, George Marshall was offered $1 million for his memoirs. That’s more than $20 million in today’s money. He refused, saying he thought it improper to make private gain from public service.  Imagine that today.  Bill Clinton made over $100 million in the eight years after his presidency making speeches to business groups. Would Eisenhower or Churchill or DeGaulle thought so little of their own dignity to sell themselves to the highest bidder?

When I graduated from university, in 1979, I and most of my classmates shared the conviction that whatever we did, we would probably end up somewhere in the great American middle class. Today, university graduates fear they don’t become oligarchs (or at least trusted servants of oligarchs) they are losers, doomed to grow old in shabby rented accommodations.

As the middle class shrinks, our rulers lose touch more and more with the lives of ordinary citizens. As the middle class shrinks, each one of us strives harder and harder to join the elite. Public service becomes just a means for private aggrandizement.

America’s decline is not inevitable.  It has huge advantages the rest of the world rightly envies.  However it is not so strong it can keep shooting itself in the foot. A government mired in petty quarrels, unable to focus on the real needs of the American people does not give us confidence that America is about to bounce back.  Lack of investment, both private and public, is deeply short sighted.  Foregoing maintenance allows infrastructure to crumble. Defunding education is insane in a world where brains not brawn are essential.

The problem with America, it seems to me, is despite all the blather about patriotism, few Americans put the interest of their country first.  Each of us is looking for private advantage.  We ask what the country can do for us.  That, I would posit, is because of the shrinking middle class.  It is hard to focus on doing the right thing when you fear falling into the abyss. If in ten years, Malia Obama has a job at a hedge fund, we are doomed.

A joke I heard in Rio, during George W Bush’s first term. “One country’s President was born in a shack and pulled himself up by his bootstraps to the highest office in the land. The other country’s President was the son of a previous president and took office through dubious legal machinations after a disputed election.  Which country is Brazil and which the United States?”


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