Tuesday, February 01, 2005
america in decline
while an eventual end to the stupid current american hubris is inevitable -- and hopefully comes without the debilitating war that ended militaristic nationalism in germany and japan -- some of what this report says should be tempered. for example, kaplan cites:
the NIC's forecast involves not merely a recalibration in the balance of world power, but also—as these things do—a loss of wealth, income, and, in every sense of the word, security.one has to recall that britain underwent something of this process as well in the divestiture of its empire between 1914 and 1960. no one would say that britain has fallen into chaos and poverty. however, it is fair to say that britain now is forced to rely on its alliances and compromises with partners in a way it did not before; this is assuredly something of what the united states has coming on its fade to multipolarity.
there is also a separate but related problem in the dollar. as the preeminent global imperial currency, the dollar has enjoyed a position since 1945 of being the reserve currency, the ultimate denominator of value. but the profligacy of american fiscal and monetary policy -- beginning in 1971 through the current day -- has clearly eroded much of the confidence of the international community in the dollar.
britain too lost the global currency, watching the pound fade to the dollar. but britain never was faced, even in the aftermath of world war 2, with the scale of debt disaster now overhanging the united states after a decade of conspicuous overconsumption, both public and private. and the pain of paying that piper will be the intensifier that will take an unsettling process and make it painful. the advantage of being able to borrow in one's own currency cannot be underestimated. when that ends, a major american economic advantage will have been lost.