Professor Paul Kennedy in today’s Wall Street Journal:
"So while today’s Russia, China, Latin America, Japan and the Middle East may be suffering setbacks, the biggest loser is understood to be Uncle Sam. For the rest of the world, that is the grand consolation! By what logic, though, should America lose more ground in the years to come than other nations, except on the vague proposition that the taller you stand, the further you fall?
The first reason, surely, is the U.S.'s truly exceptional budgetary and trade deficits. There is nothing else in the world like them in absolute measures and, even when calculated in proportion to national income, the percentages look closer to those you might expect from Iceland or some poorly run Third World economy. To my mind, the projected U.S. fiscal deficits for 2009 and beyond are scary, and I am amazed that so few congressmen recognize the fact as they collectively stampede towards the door entitled “fiscal stimulus.”
The planned imbalances are worrying for three reasons. The first is because the total projections have been changing so fast, always in a gloomier direction. I have never, in 40 years of reading into the economics of the Great Powers, seen the figures moved so often, and in such vast proportions. Clearly, some people do believe that Washington is simply a printing machine.
…
Never mind, I am told, the foreigners will pay gladly for that paper. This notion makes me queasy. In the first place, it is (without its advocates ever acknowledging it) a dreadful sign of America’s relative decline. If you have seen Clint Eastwood’s poignant war movie “Flags of Our Fathers,” you also will have been stirred by the scenes where the three bewildered Iwo Jima veterans are dragged all over the country to beg the cheering audiences: “Buy American Bonds!” It’s uncomfortable all right, but there was one massive consolation. The U.S. government, fully converted to Keynesianism, was asking its citizens to dig into their own hoarded savings to help sustain the war effort. Who else, after all, could buy? A near-bankrupt British Empire? A war-torn China? The Axis? The Soviet Union? How fortunate it was that World War II doubled U.S. GDP, and the savings were there.
…
As I suggested at that time, a strong person, balanced and muscular, can carry an impressively heavy backpack uphill for a long while. But if that person is losing strength (economic problems), and the weight of the burden remains heavy or even increases (the Bush doctrine), and the terrain becomes more difficult (rise of new Great Powers, international terrorism, failed states), then the once-strong hiker begins to slow and stumble. That is precisely when nimbler, less heavily burdened walkers get closer, draw abreast, and perhaps move ahead.
…
In this focus upon chronic fiscal deficits and military overstretch, certain positive measures of American strength tend to get pushed into the shadows (and perhaps should be given more light at another time). This country possesses tremendous advantages compared to other great powers in its demographics, its land-to-people ratio, its raw materials, its research universities and laboratories, its flexible work force, etc. These strengths have been overshadowed during a near-decade of political irresponsibility in Washington, rampant greed on Wall Street and its outliers, and excessive military ventures abroad.
Things could have gone better, although that is not to argue that America can return to the preeminence it held in, say, President Dwight Eisenhower’s day. The global tectonic power shifts, towards Asia and away from the West, seem hard to reverse. But sensible policies agreed to by the U.S. Congress and the White House could certainly help to make those historical transformations less bumpy, less violent, and much less unpleasant. That’s not a bad thought, even for a “declinist” like me."
