America in decline

America in decline

Add to Reading List
Add to Reading List

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?”


Keep up to date with the latest thinking on some of the day's biggest issues and get instant access to our members-only features, such as the News DashboardReading ListBookshelf & Newsletter. It's completely free.


Please read our Community Guidelines before posting

Short term thinking is also reflected in the political class and now majority in Congress are wealthy. Why should they care for the poor. Yet now half of children in public schools are low income- while poor ( I would say low income is another word for poor) children get 3d world quality education according to a recent report. So decline is due to get worse. Meanwhile retiring Americans haven't saved and are expecting to rely on govt help!

The decline was evident by the 1960s, the cause is best discussed by Seymour Melman.

"In fact deterioration in the production competence of U.S. industries had been well under way since 1960 and was reported in some detail by 1965."
http://ejournals.library. ameriquests/article/view/127/ 136
Chaper 3 - Deindustrializing the US: The War Against American Workers

"By 1960s it had already weakened dominant US manufacturing industry:
"We have trained a large part of our workforce —
more than three million in military industry -- to work under a regime where escalating cost is
acceptable because there will always be a subsidy to offset the cost increase.
Cost-maximizing has yielded consequences that you might suspect after contemplating the size
of the resource used on behalf of the military, There has been a disappearance and a depletion of many American industries* " sites/economicreconstruction. com/static/SeymourMelman/ archive/ec/America_new_ economic.pdf
America's New Economic Problem
Seymour Melman at Cape Cod, JulyBackground:MIC caused industrial decline...
"In fact deterioration in the production competence of U.S. industries had been well under way since 1960 and was reported in some detail by 1965."
http://ejournals.library. ameriquests/article/view/127/ 136
Chaper 3 - Deindustrializing the US: The War Against American Workers

"By 1960s it had already weakened dominant US manufacturing industry:
"We have trained a large part of our workforce —
more than three million in military industry -- to work under a regime where escalating cost is
acceptable because there will always be a subsidy to offset the cost increase.
Cost-maximizing has yielded consequences that you might suspect after contemplating the size
of the resource used on behalf of the military, There has been a disappearance and a depletion of many American industries* " sites/economicreconstruction. com/static/SeymourMelman/ archive/ec/America_new_ economic.pdf
America's New Economic Problem
Seymour Melman at Cape Cod, July

Tom :

You're of course perfectly right--you can indeed find any number of examples of various 20th C. elites behaving selflessly. My point is, I think you land closer to the mark, analytically, towards the end of your original post, when noting "the problem with (that) few Americans put the interests of the country first." Which is to say, our predicament can't really be laid off--much as it might please us to do--at the foot of a singular group, mucky-muck or not, but must also be credited to attitudes widely shared at large. Alas, "the fault, dear Brutus, is not in our stars...."

America is in decline. So is the rest of the world.

Humans have done nothing but take for hundreds of years, the last two centuries at the industrial scale. What is there to show for this grandest of all thefts? a bunch of used cars and smog.

Americans are a silly, trivial people -- in love with clowns, bright colors, flickering images on screens ... as well as violence, porn, dope, gambling and sweet-n-salty food-like substances. The rest of the world is desperate to become just like Americans ... with nicer airports. Bourgeois foolishness on the installment plan is what America sells, the best- and highest version of industrialization.

Make no mistake about it, industrialization not just America, is failing; it has been too successful for too long. Industry devours the last of the seed corn, leaving nothing behind. What remains to it is sweeping up the debris after its inevitable, and ongoing, collapse.

This can be ameliorated but not fixed. Our resources are capital, once capital is squandered, it is gone forever. A new economics of husbandry and conservation is necessary and right now ... we are not likely to make the shift and abandon industrialization before the opportunity to do so is foreclosed by our wicked silliness.

Tom Streithorst

When Lyndon Johnson became President, he muscled the 1964 Civil Rights Act through congress. He knew this would devastate his party, that Democrats would lose the South for a generation but still, he had the political courage, actually the selflessness (and anyone who has read Caro's masterful biography knows LBJ was a profoundly selfish man) to do what was right for the country even if it would cost him and his party. Why be President if not to do good, he asked.

Eisenhower, when he left the Presidency, railed against the "military industrial complex". They might have buttered his bread, but he knew they were bad for America. Gerald Ford, on the other hand, just made a fortune when he left the Presidency by taking directorships on corporate boards of the military industrial comples.

Of course elites generally look out for themselves. They are human. There was no golden age. But looking at Congress, willing to shut down the government for minor political advantage, looking at bankers, happy to create structured vehicles designed to crash it seems that today our elites have no shame.

Adam Smith tells us in the book he considered his masterpiece (The Theory of Moral Sentiments) that our motivation in life is to gain the good regard of others. We act in ways that will get people we admire to admire us. Once upon a time that meant adhering to a certain moral code. Today mere lucre does the trick.

In the early 1960s, Nelson Rockefeller was ostracized by polite society and deemed to be ineligible to be president because he divorced his wife. In the 1980s, Claus von Bulow allegedly tried to murder his wife and was invited to all the best parties. Clearly we have seen a change in what is considered acceptable behavior. I think it has cost all of us.

The rise of inequality exemplifies the selfishness of our elites. In the 1950 CEOs believed they had a responsibility to their workers. They don't anymore.

You have to wonder about the evidence for any general, ongoing decay of societal morality, or constructive citizenship, be it ascribed to "elites" or culture as a whole. Agreed, Marshall was certainly exemplary, but was he truly representative? For most of the twentieth century, I would think you could make the case "elites" were actually every bit as "small-minded" as our contemporary crop.

It seems to me that in examining our (in my view, obvious) swan dive as a polity, one must admit the singular importance of particular junctures, or focal points, such as the advent and aftermath of WWII. As Johnson observed, nothing concentrates the mind--either singularly, or, as in this case, collectively--as the immanent prospect of extinction, and so we have it that, from the mid '40s through the immediate couple decades past that existential crisis, the U.S. coalesced as a people, and cohered as a nation, as perhaps never before and certainly as never since. The subsequent fragmentation--economically, politically, and socially, as we tilt our way downwards--may be nothing more than a return to the historic mean.

So when we will rise again to best such a challenge, returning to an inclusive emphasis on we rather than me, pulling together, our focus on the common good? It'll probably take some similar bone-shaking situation. Maybe if we someday faced some insanely stark sort of ecological threat, something looking to pose a mortal peril to our very habitat: then, possibly, you'd see a broad resurgence of concern for "the lives of ordinary citizens." Oh, wait....

I agree that this sounds like to usually reactionary Tea Party lament. Does this author have any inkling of the extent to which America dominates science and technology? Also the rate of innovation is increasing. The main problem in the US, which is the same across the developed world, is that the rise in inequality, which damages economic growth. However it seems likely that this trend, now that it is being recognized as a problem, can be reversed by judicious fiscal policy changes.

I see article after article saying that US infrastructure is in decline and I assume to the detriment of some critical and economic enabling function such as transportation, etc. I never get any specifics in reply. Can you give me any specific infrastructure projects in decline and then tell me the function that is affected?

I can tell you that US universities have never been as well (over funded in fact, classic malinvestment) funded as they are now, not that that means they produce a quality education. Unfortunately this over funding has been on the backs of students.

Tom Streithorst

I do like Norman Rockwell, so maybe you are onto something.

Tom, thanks for taking the trouble to reply.

My serious point (beneath the cheerful sarcasm) is that you are subscribing to a "declinist" view of history. The idea that nations smoothly and inexorably rise and fall is bunk, but it remains a popular idea, particularly in times of self-doubt (ironically, the earliest date your piece quotes is 1958, the year after Sputnik initiated the first round of modern American declinism).

The psychological basis of this is evident in the tendency to ascribe a change in fortunes to moral decline, either among the feckless paups, the vulgar middle class, or the delinquent elite (a tradition dating back to Edward Gibbon, who wrote his famous history as a cautionary tale for a fledgling empire). The truth is that elites are always small minded and self-serving. That's why they're elites.

Nations (as economic and cultural groupings) are complex, emergent processes, not sports teams or corporations (despite the ideological equivalence). They don't "win" or "lose", they merely adapt to and take advantage of changing material conditions (as Engerman and Sokoloff noted) through millions of uncoordinated decisions. I agree that the inequitable distribution of the fruits of recent change is a massive problem, but the "collapse of the middle class" is not. We shouldn't weep over the superstructure when the issue is a change in the base.

The USA is a vastly richer society today than it was in 1960. A lot has changed: some good (a black president), some bad (a neoliberal president). Your assumption of an ethical decline ("self-centeredness and lack of public spirit") is a nostalgic perspective. And yes, I do think this would be shared by the Norman Rockwell wing of the Tea Party.

Tom Streithorst

Dave, thanks for your comments. Allow me to respond.

1. The best explanation for the US’ rise to world dominance was a paper entitled Factor Endowments, Inequality, and Paths of Development Among New World Economics by Ebgerman and Sokoloff. They note that in 1700, no one would have predicted that the minor English colonies on the eastern coast of North America would amount to much. The silver mines of Potosi in what is now Bolivia, the sugar plantations of Jamaica and Salvador were much more valuable.

The land in Massachusetts did not lend itself to mineral extraction or plantation agriculture. They were best farmed by single families. What this meant was that the North American colonies were much more egalitarian. In Upper Peru or the Caribbean, a handful of men became very very rich but most workers were impoverished if not enslaved.

What this meant was that North America became a perfect market for mass produced goods. Guano millionaires in 19th century Peru imported fine chandeliers from Paris. No one made his fortune selling goods to slaves in Salvador but Sears and Roebuck could make money selling standardized goods to average Americans. That is what I mean by saying that American prosperity was based on a strong middle class.

2. Of course, New York is a richer city than Nairobi, a more functional city than Cairo, a better city than Dubai even if its airport is crappier. The airport is a metaphor, nothing more but it does exemplify the lack of investment in public facilities in America. Ed Luce of the FT notes that federal budget cuts in America don’t fall on entitlements, they fall on what he calls investments in the future.

3. I don’t think a “Tea Party nutjob” would complain that self-centeredness and lack of public spirit is what is bringing America down. America has declined in power, wealth and influence. Our elites are small minded and self-serving. I suggest there is a connection.

"Substance farmers can’t afford to buy hardly anything at all". I hear those Colorado guys are making a packet.

More seriously, you are guilty of of American exceptionalism, not to mention misguided nostalgia: "Aristocrats desire hand crafted luxury items", and presumably messr Carnegie, Mellon and Rockefeller didn't?

I recall being surprised when I first landed at San Francisco in the 80s at how antique the airport looked (I'd left from Gatwick's shopping-mall-with-a-runway-attached), but then I remembered this was simply evidence of early adoption. There is truth in your point about under-investment, but the novelty of Dubai or Nairobi is no guarantee of future modernity. Also, "dingy Brooklyn" appears to be undergoing a property boom of late.

Imagine your piece was written by a Tea Party nutjob. Other than adding in some obligatory nonsense about the right to bear arms and the inherent evil of government, would you have to change many of the words?

Twitter Feed

The retrospective nature of volatility can induce a false sense of security -