April 21, 2012

America's decline: Myth or reality?

Take note of a new phrase in the seemingly endless debate over whether the days of the United States as the world's pre-eminent power are numbered: those who doubt the country's economic decline are said to be holding an "intellectual ostrich position."

The expression was coined by Edward Luce, author of a deeply-researched new book entitled "Time to Start Thinking: America in the Age of Descent". It notes that the United States accounted for 31 percent of the global economy in 2000 and 23.5 percent in 2010. By 2020, he estimates, it will shrink to around 16 percent.

Luce's diagnosis of America's decline descent, published in April, was the latest addition to a steadily growing library of books, academic papers and opinion pieces for or against the idea that the United States can maintain its status as the world's only superpower. If we adopt Luce's phrase, it's a discussion between declinists and ostriches. The latter include President Barack Obama and his presumptive Republican rival in next November's presidential elections.

"It means that we're going to have a 2012 election where... both candidates will start on a false premise: that relative economic decline is simply to be ignored or dismissed," Luce said in an interview with Foreign Policy magazine. "And I'd describe that as a kind of intellectual ostrich position." The false premise, in this view, was set out by Robert Kagan, a scholar at the Brookings Institution, a Washington-based think tank, in a lengthy analysis entitled "Not Fade Away: Against the Myth of American Decline". One of the points Kagan made to support his argument was that the US share of world gross domestic product (GDP) has held steady over the past four decades. Plain wrong, says Luce.

The Kagan article, now expanded into a book ("The World America Made"), is reported to have so impressed Obama that it influenced his State of the Union Speech in January, when he said "Anyone who tells you that America is in decline or that our influence has waned doesn't know what they are talking about."

They don't? Here's the view of Clyde Prestowitz, a labour economist and veteran declinist, weighing into the debate in April: "You'd have to be blind not to see the deterioration of our infrastructure. We used to have trade surpluses. Now we have chronic deficits. We used to tell ourselves that didn't matter because we had surpluses in high tech items. But now we have deficits there, too. We used to be the world's biggest creditor. Now we are its biggest debtor. How can anybody claim we are not suffering decline?"

Washington's loss of influence has been evident in many regions of the world, most recently at a summit that brought together leaders of North and Latin America in the Colombian city of Cartagena. There, in Uncle Sam's traditional backyard, Obama's assertion that US influence had not waned highlighted a particularly wide gap between rhetoric and reality.

Backyard no more?

The backyard showed itself so united in opposition to decades-old US policies - the trade embargo on Cuba, the war on drugs - that the summit ended without the usual final communique. "There was no consensus," said the summit's host, Colombian president Juan Manuel Santos, an important U.S. ally in the region.

Apart from disagreements over two of Washington's oldest and most obviously failed policies - 50 years of Cuba embargo, 40 years of drug war - the meeting showed that the United States is no longer seen as the single most dominant force in the region.

As an analysis by the Washington-based Inter-American Dialogue put it on the eve of the Cartagena meeting: "US-Latin American relations have grown more distant. The quality and intensity of ties have diminished. Most countries of the region view the United States as less and less relevant for their needs - and with declining capacity to propose and carry out strategies to deal with the issues that most concern them."

Why less and less relevant? For one, US economic dominance in Latin America is no longer what it used to be. A decade ago, 55 percent of the region's imports came from the United States. That has shrunk to less than a third. China's share of trade with Brazil, Latin America's economic and political powerhouse, has overtaken that of the United States. The same goes for Chile and Peru.

To what extent US influence in the backyard will continue to slide depends largely on how clear-eyed US leaders see their country's global position. The ostrich view would hasten the decline.

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