The Myth of America’s Decline

Overstretched and underemployed, the United States has seen better days – but history warns not to count us out.

From The American Legion, By Alan W. Dowd – April 1, 2012 America’s current condition is bad, and the long-term prognosis is worse. But don’t take my word for it.

A well-known diplomat fears that the country has “passed its high point like so many other civilizations.” An eminent scholar warns that military spending and overseas commitments are pushing the United States toward “imperial overstretch.” Another says that “the engines of economic growth have shut down.” According to a respected pundit, “Europeans and Asians are already finding confirmation of their suspicion that the United States is in decline.”

A leading presidential candidate concludes that the United States has fallen from “a position of undisputed power … to the brink of possible disaster.” Another politician says that America is “in the midst of unprecedented political troubles.”

A popular governor laments how America has become a nation of “idle industries and small dreams.” Another grimly concludes, “Our country is not strong anymore.” Yet another warns that America may “become a second-rate power.”

Even the president concedes, “The state of the union is not good.”

One caveat: each of these assessments about America’s decline was made decades ago – some as far back as the 1860s.

So if fears about U.S. decline were wrong in decades past, why should we believe them today? Maybe we shouldn’t.

Downers. Amid budget crises, stalemated wars and rising global challengers, the America-in-decline diagnosis is not only fashionable but seems reasonable. After all, the United States lost its AAA bond rating. A European official deemed it likely that “the U.S. will lose its status as the superpower of the global financial system.” Even the slow-witted boss on NBC’s “The Office” noticed. “My whole life I believed that America was No. 1,” he sighed. “That was the saying, not ‘America is No. 2.’”

No wonder that 70 percent of Americans believe the country is “in decline.” But are they right?

Of the many ways to address that question, two seem especially helpful: comparing America’s global status today with earlier junctures in history, and considering American power in relation to that of other nations.

Let’s start with the U.S.-vs.-U.S. comparison.

The United States entered the world stage with a bang, defeating the greatest empire on earth. Yet less than 30 years later, the young republic was swatted back into place. The War of 1812 saw U.S. forces routed and the capital set ablaze. When measured against its own position just a generation earlier, the United States had declined in drastic terms.

The country endured another period of decline during the Civil War. After Lincoln’s murder, Gen. William Sherman openly feared America slipping into anarchy, wondering “who was left on this continent to give order and shape to the now-disjointed elements of the government.”

But the country rebounded and emerged as a global power at the beginning of the 20th century. By the end of the Great War, American ideals were embraced around the globe. Indeed, some historians argue that the world was never as receptive to American leadership as it was when President Woodrow Wilson arrived in Paris.

Yet the postwar period saw U.S. power and prestige plummet on the world stage. In 1933, President Franklin D. Roosevelt called America “a stricken nation in the midst of a stricken world.”

“The future and the safety of our country … are overwhelmingly involved in events far beyond our borders,” he conceded in early 1941. “As long as the aggressor nations maintain the offensive, they – not we – will choose the time and the place and the method of their attack.”

In short, U.S. power had declined to where it was a century earlier, when other countries held sway over the world and America’s fortunes.

Historian Derek Leebaert captures this rapid reversal in his book “The Fifty-Year Wound.” In November 1941, the program for the Army-Navy football game included a picture of USS Arizona and a caption boasting, “No battleship has ever been sunk by air attack.” Japan made a mockery of that false bravado less than a fortnight later.

Although U.S. military, industrial and economic power was unrivaled at the end of World War II, it pays to recall that the 1950s began with debates over who lost China and ended with debates over who lost Cuba. In between, Americans wondered how they lost the space race.

Similarly, the 1960s began and ended with humbling setbacks (the Bay of Pigs and Vietnam), opening the way to a period of self-doubt in the 1970s. By the late 1980s, experts predicted that Japan and Germany would dislodge a beleaguered America from its economic perch.

Yet in the 1990s, the United States was promoted from superpower to “hyperpower.” One historian even declared that America had “too much power for anyone’s good, including its own.”

Power Play. Even amid today’s post-recession retrenchment, the U.S. economy remains a remarkable force. At $15 trillion, America’s GDP dwarfs every other country’s. Only when the European Union cobbles together its 27 economies can it claim to rival U.S. economic output. U.S. GDP is about 50 percent larger than China’s, and three times bigger than India’s. Yet the U.S. labor force is two-thirds the size of the EU’s, one-third the size of India’s and one-fifth the size of China’s.

China’s economy is booming, but it’s important to recognize the immense gap in per-capita income – $47,200 in the United States vs. $4,260 in China – and the country’s systemic problems. Although it does have an ocean of cheap labor and a swelling treasury, it doesn’t have a stable middle class, a social safety net, a government that breeds confidence in its trading partners, or a political system that embraces the rule of law and responds to the will of the people. That’s not exactly a formula for long-term success.

In addition, China faces serious demographic problems. “By 2050,” as Jonathan Last reports, “China will be losing, on net, 20 million people every five years.”

Similarly, Russia’s population will shrink by 15 million in the next 20 years. Japan and Europe are rapidly aging, lacking the immigration levels and birth rates to reverse the trend. But America’s population growth rate outpaces Europe’s, Japan’s and China’s, boding well for our long-term health.

As for America’s current economic health, the recession exposed serious problems. Entitlement spending is unsustainable. And the country’s debt, bulging from 38 percent of GDP in 2008 to 63 percent in 2010 to 85 percent today, has entered a danger zone. But these are solvable problems that policymakers have the tools, if not the will, to tackle.

The systemic and demographic problems facing much of Asia and Europe may not be solvable. Many countries would be thrilled to have our debt-to-GDP ratio: Japan’s public debt is 199 percent of GDP; Britain’s external debt is 413 percent of GDP, France’s 250 percent, Germany’s 185 percent, Australia’s 138 percent.

Despite its economic challenges, the United States remains the engine of the global economy. It boasts 18 of the 50 largest companies on earth – three times as many as the closest challenger. The United States is home to the world’s largest aerospace (Boeing), biotech (Amgen), pharmaceutical (Pfizer), retail (Walmart), petroleum (ExxonMobil), software (Microsoft), technology hardware (HP), computer services (IBM), communications equipment (Cisco) and heavy equipment (Caterpillar) firms.

Rather than simply mass-producing, reverse-engineering or pirating what others create – like China’s state-controlled industries – these corporations are shaping the future and propelling globalization.

Some argue that globalization is just another word for Americanization, and they may be right. Indeed, it is in the wake of globalization that we begin to glimpse the full breadth of U.S. power:

•The Libyan people are clamoring for iPhones, Nikes, Ford Mustangs and Eminem CDs.

•Cubans and Iranians are erecting illegal satellite dishes to catch a glimpse of U.S. television.

•Thanks to Yao Ming, some of the NBA’s biggest fans are in China. Beijing honored the now-retired basketball star as its 2005 “vanguard worker,” an award once reserved for Maoist revolutionaries.

•Seventy percent of Coke drinkers live outside North America. Half of all McDonald’s restaurants are somewhere other than the United States. Walmart has 2,700 stores outside the United States.

•Ninety percent of all PCs run Microsoft software.

•The United States claims six of the world’s top 10 universities.

•The United States accounts for more than one-third of all international patent filings.

The converse simply does not hold. Americans are not buying Afri-Cola, watching Chinese basketball, tuning in to Castro’s state-run TV, surfing the Web with Chinese software or European PCs, or opening research labs in foreign lands.

Speaking of foreign lands, the U.S. military provides a security umbrella to about half the world’s landmass, polices the world’s toughest neighborhoods, and serves as the world’s first responder and last line of defense. No other military could attempt such a feat of global multitasking.

Because of the U.S. military’s restraint, foreign governments invite it onto their territory: Kosovo, Korea and Kuwait want U.S. troops to maintain regional stability. From Germany to Georgia, those who remember a Europe of concrete walls and iron curtains want U.S. forces on their soil as a hedge against Russia. And those who fear China’s rise are strengthening their U.S. ties.

As to the charge that America is “overstretched,” consider that in the 1950s, the United States had 3.4 million troops on active duty, a sizable 2.1 percent of the country’s 160 million population at the time. In the 1960s, the country had a million troops stationed overseas. During the Cold War, America spent 6 to 10 percent of its GDP on defense. Today, the United States has 1.4 million troops on active duty (out of a population of 313 million); 70 percent of U.S. forces are based in the United States and its territories; and America spends 4 percent of its GDP on defense.

Without question, the United States faces challenges that could erode its global position: its fiscal situation is a mess, China is ascending, and the world abounds with asymmetric threats that could undermine the liberal order Americans have built for generations.

But America overcame worse economic times in the 1930s and 1970s. America has coped with rising powers before. And today’s asymmetric threats pale in comparison to the existential threats posed by the madmen of the 20th century. Moreover, no country enfolds the full spectrum of geopolitical power (economic, military, cultural) and embraces universally appealing attributes (political pluralism, economic opportunity, cultural openness) like the United States. This confluence of strengths gives the United States a decisive edge.

So perhaps it’s premature to replace Old Glory with a white flag just yet.

Alan W. Dowd is a contributing editor for The American Legion Magazine.

4 responses

  1. A great article Lenny! Thanks for keeping things in perspective in the midst of this insane world! Each of us need to be reminded of where we have been and what we are capable of as Americans : )

  2. Senator-Blutarksy

    Hogwash………….the writer has, evidently, no idea what the multi-trillion dollar derivatives “death star” will do when it finally crashes in on us. Until the global bankster criminals repealed consumer protection laws which had been in place since the Depression, by passing the Gramm-Bliley Act, derivatives were outlawed. Thanks to Phil Gramm and other bankster puppets, they are now unregulated

    It is no wonder why so many Americans are so pessimistic about our future.

    If hundreds of cities, towns and counties are barely able to keep their heads above water financially right now, what is going to happen when the next recession hits?

    That is frightening to think about.

    The following are 10 signs that America is on the verge of a horrible municipal debt crisis….

    #1 Moody’s has downgraded Detroit’s debt again. The following is from the Detroit News….

    The city received a downgrade to B2 from Ba3 for its $553.1 million in outstanding general obligation unlimited tax debt and also a downgrade to B3 from B1 for the $486.4 million in outstanding general obligation limited tax debt. Both ratings fell two points.
    #2 The city of Indianapolis is facing an unprecedented 75 million dollar budget deficit in 2012. City officials are warning that there may soon not be enough money to keep the streetlights on.

    #3 Suffolk County in New York has declared a “fiscal emergency” after discovering that it is projected to take on a total of more than 500 million dollars of additional debt by the end of 2013.

    #4 The city of Trenton, New Jersey is so broke that it has put off buying more toilet paper for city buildings. At last report, there were a total of 15 rolls remaining and after that those that use city restrooms will be on their own.

    #5 Some cities are slashing expenses dramatically in an attempt to stay afloat. The following is one example from California….

    Costa Mesa, a city of 110,000 south of Los Angeles, has slashed its payroll from 611 to 450. It is selling its police helicopters and has hired a neighboring city for air patrols. It’s also pursuing a controversial effort to convert to a charter city from a general law city, which would give City Hall more power to outsource more work, said councilman Jim Righeimer.
    #6 In New York, state officials are deeply concerned that city and local governments are paying their pension obligations by borrowing from the state pension fund. This is essentially like making your minimum monthly payment on a credit card by borrowing more money on that same credit card….

    And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

    Across New York, state and local governments are borrowing $750 million this year to finance their contributions to the state pension system, and are likely to borrow at least $1 billion more over the next year. The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year.
    #7 Pension problems are catching up with a lot of cities all over the nation. For example, CBS News reported recently that the city of Central Falls, Rh0de Island has been forced to declare bankruptcy because of pension woes….

    For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy.

    “My daughters grew up here, went to school here. It’s all gone,” said Mike Geoffroy, a retired firefighter.

    He said he could not make the payments on his house after his pension was cut by $1,100 a month.
    #8 Last November, Jefferson County, Alabama filed for the largest municipal bankruptcy in U.S. history. At the time, they had accumulated a total of approximately 4.2 billion dollars of debt.

    #9 Several other U.S. large cities have defaulted on their debts in early 2012 as a Bloomberg article recently reported….

    The California cities of Stockton and Hercules, as well as Pennsylvania’s capital, Harrisburg, have opted to default on some of their insured debt in recent months.
    #10 In all, there have been 21 municipal defaults so far in 2012. The grand total of those defaults comes to 978 million dollars.

    Of course a lot of state governments are experiencing massive budget problems right now as well.

    For example, in California state government revenues for February 2012 were down by about 22 percent compared to February 2011. The state government is quickly running out of money once again, and nobody is quite sure how to fix California’s rapidly deteriorating financial situation.

    And we all know that the biggest debt problem of all is the U.S. national debt.

  3. Senator-Blutarksy

    left off the link to above

    Things are ducky…………..$4 a gallon gas, and climbing, grocery prices are sticker shock, and public assistance services are overwhelmed and crushed in debt. Go to an auto parts store – a year ago a quart of Castrol plain-jane 30weight oil was @$2 – now it is over $5 a quart. That $49 front end alignment is now $79 -89 a pop.

    or- how about this little goody-

    Unfortunately, some soldiers stuck in the winter hell known as Afghanistan may have gone unpaid for months due to the inept bureaucracy inside the beltway. This is not an “Obama problem” but instead a continuation of the Bush administration’s inconsiderate ineptness and unwillingness to clean the rat’s nest known as the Pentagon out of its antiquated ideology of allowing the next rubber stamp to find a solution to payroll problems for active duty and deployed military personnel.

    The story from the e-magazine Government Executive suggests this issue is so severe that in some cases, soldiers have experienced delays in not just regular pay but combat pay and bonuses for MONTHS after their assignments began (from the article):

    A joint House and Senate Oversight committee heard testimony from Defense Department officials and an Ohio Army National Guardsman on Thursday. The guardsman, Lt. Col. Kirk Zecchini, said pay problems have become “a normal part of Army life.”

    Zecchini described the pay problems he experienced during 28 years in various military capacities — as a traditional guardsman; a full-time, active-duty soldier; and a federal technician.

    During his first deployment to Afghanistan in 2003, Zecchini volunteered to serve an additional six months. Although this extension was published, his military pay stopped at the end of his original order. He served for more than a month in Afghanistan without pay until the issue was resolved.

    After a series of posts throughout Southeast Asia, Zecchini waited one and a half years for special allowances such as hostile fire pay and hardship duty location pay that he was entitled to because of the nature of the missions. The pay finally came after he wrote a memo to Ohio’s inspector general. Later, while deployed in Iraq in 2005-2006, Zecchini’s unit was told that tax was being withheld from their paychecks and additional paperwork would be involved to have the money refunded.

    Zecchini told the panel that pay problems have continued since he received an honorable discharge from the Ohio Army National Guard.

    Excuse me? Some fat assed brie eating bureaucrat inside the massive Pentagon offices goes home, gets paid leave and vacation, while we have men and women eating MRE’s, facing IED’s on their drive back to base instead of other tub of lard bureaucrats on the interstate, and even after a honorable discharge they still have their pay screwed up?

    The military should be ashamed of this beyond belief. Generals should become Corporals. Colonels should be demoted to private and I do not mean private first class. The civilians involved should be fired and replaced by anyone who can fog a mirror and pass a pee test. This is an obscenity that in this modern age of computers and automation the incompetent boobs in the District of Columbia can not correct this mistake.

    I just wonder how a one star General would feel if he had to personally deliver the news to a widow with two children of her husband’s combat death in Afghanistan and she replied to him through her tears, “Does this mean I’ll finally get the six months of back pay he is owed?”

  4. Senator-Blutarksy

    Silly me – I read this from Market Oracle –

    The 2008 cataclysm was created by the voracious greed and avarice of Wall Street, sustained by corrupt politicians in Washington, non-existent regulation by banking regulators, Federal Reserve easy money policies, unspoken guarantees of Fed bailouts if Wall Street excess risk taking blew up, and millions of delusional Americans with an unlimited credit line. Excessive debt created the problem. Adding debt is the present solution to the problem. And the accumulation of debt will lead to a tipping point that destroys the U.S. dollar and topples the Great American Empire.

    This spiral of government sponsored debt financed debacles has shockingly accelerated as we have supposedly been experiencing an economic recovery for the last two years. The 2008 financial meltdown was the result of too much debt peddled to too many people who never had the means or intentions to repay the debt. The Wall Street peddlers of debt didn’t care if it got repaid because they had already packaged it, bribed Moodys and S&P to rate the toxic garbage as AAA, and sold it to their “clients”. Then they made derivatives bets that it wouldn’t be repaid and raked in billions more as their Ponzi scheme unwound. There was just one problem with their master plan. The Wall Street titans made their derivate weapons of mass destruction so complicated and confusing that their own evil organizations of Harvard MBAs didn’t understand them. Enough hubristic CEOs existed at enough financial firms (AIG, Lehman, Bear Stearns, Citicorp) to bring the entire system crashing down as the toxic derivatives intertwined every major institution in the worldwide banking cabal.

    What has happened since those dark days of 2008 is mind blowing in its epic proportions and epic stupidity. To quote Doug Casey, “Not only haven’t we done the right thing, we’ve done the exact opposite of the right thing.” It is absurd and ultimately suicidal to cure a debt disease by administering massive doses of more debt. But that is exactly what those in power have done. The National Debt has risen from a $9.7 trillion to $15.6 trillion, a 61% increase in three and a half years, while our real GDP has grown by $244 billion, a 1.9% increase. Not exactly a fabulous return on investment. But at least there are 7 million less people employed today than there were at the peak in 2008. Plus, senior citizens and middle class savers have seen $450 billion of annual interest income they were earning in 2008 pilfered from their savings accounts and handed to the Wall Street banking elite through Ben Bernanke’s ZIRP.

    and this from Global Research-
    An SEC civil suit charged Goldman with defrauding customers. It made billions, and settled for $550 million. It was pocket change, the equivalent of four 2009 revenue days. It hardly mattered.

    No executive was fined or imprisoned. Grand theft continues unabated. It includes pump-and-dump schemes. The corporate media does not explain. Only scammed customers and insiders who are involved understand.

    On March 4, Black used James Q. Wilson’s “broken windows” metaphor pertaining to blue collar crime. He applied it to far more serious elite white-collar offenses. None rise to the level of financial ones. The amounts involved are staggering. Broken lives, communities, and economies result. The landscape’s littered with them.

    No firm’s more adept at amassing fraudulent fortunes than Goldman. Its CEO Lloyd Blankfein calls it “doing God’s work.”

    It’s also appalling that the Wall Street Journal “serve(s) as cheerleader and apologist for those” who amass wealth by stealing it, said Black.

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