The American Empire

I've sort of been harboring the belief that America The Empire is on the downward slide a la the Roman Empire (or at least the British Empire!). It's hard to escape the visual image of fat Roman senators, in their wealth, sitting blind to the crumbling power they had come to take for granted. Every empire will fall. It's only a matter of time. K disagrees with me, of course. And so does this guy (and the optimist in me hopes he's right):

Forget the naysayers - America remains an inspiration to us all

Browsing through an American bookshop does not lift the spirits. Books that chart the end of American supremacy, predict wars over finite natural resources, study the squeezed middle class or the catastrophic Bush presidency proliferate. The United States is going through a period of introspection and the Boston bookshelves, at which I spent part of last week, heave with the results.

In one respect, it is hardly surprising. Iraq, Afghanistan and the rise of China. The credit crunch. The $124 a barrel oil price. The unbelievable unfairness of Bush's tax cuts. The racism and violence that still pockmark American life. Yet the pessimism is overdone. The more I visit the US the more I think the pundits predicting the US's imminent economic and political decline hugely overstate their case. Rather, the next 50 years will be as dominated by the US as the last 50. The US will widen its technological and scientific dominance, sustain its military hegemony, launch a period of reindustrialisation and continue to define modernity both in culture and industry.

The fashionable view is that the American economy is a busted flush, a hollowed-out, deindustrialised shell housed in decaying infrastructure that delivers McJobs and has survived courtesy only of a ramped-up housing market and the willingness of foreigners to hold trillions of dollars of American debts.

China and India are set to overtake it in the foreseeable future. At best, the US will have to get used to living in a multipolar world it cannot dominate. At worst, it will have to accept, along with the West, that the new economic and political heart of the world is Asia.

The US economy is certainly in transition, made vastly more difficult by the spreading impact of the credit crunch. But the underlying story is much stronger. The country is developing the prototypical knowledge economy of the 21st century, an economy in which the division between manufacturing and services becomes less clear cut, in a world where the deployment of knowledge, brain power and problem-solving are the sources of wealth generation.

What counts is the strength of a country's universities, research base, commitment to information and communications technology and new technologies along with a network of institutions that supports new enterprise. Here, the US is so far ahead of the rest of the world it is painful.

The figures make your head spin. Of the world's top 100 universities, 37 are American. The country spends more proportionately on research and design, universities and software than any other, including Sweden and Japan. Of the world's top 50 companies ranked by R&D, 20 are American. Fifty-two of the world's top 100 brands are American. Half the world's new patents are registered by American companies.

This year, American exports have grown by 13 per cent, helped by the falling dollar, so that the US has reclaimed its position as the world's number one exporter. Moreover, and little remarked on, two-thirds of America's imports come from affiliates of American companies that determinedly keep most of the value added in the US. The US certainly has a trade deficit, but importantly it is largely with itself.

The US will recover from the credit crunch. Already there is an aggression and activism about how to respond that makes the British look limp in comparison. Four-fifths of new mortgages are underwritten by public mortgage banks, interest rates have been slashed and a bank bail-out was launched instantly. More activism is planned. There is a dynamic readiness to fix things in a tight economic corner, irrespective of ideology, that can only be admired.

It is a dynamism that infects the political process. I was in the US on the day Indiana and North Carolina went to the polls in the Democratic primaries. The conventional wisdom is that Obama and Clinton's fight is self-defeating and it would be better if Clinton had stood down earlier. I disagree. It has brought politics alive. Democrats are enrolling to vote in their hundreds of thousands because their vote and opinion now count. They will stay enrolled and vote in November.

There is also a great maturity about the process. It is a political argument that necessarily demands respect for your opponent because if you win you will need their support in November. Americans do public argument well. The tradition might have corrupted since de Tocqueville made the same observation in 1835, but it lives on. And it is a vital underpinning of American success.

It is this strange cocktail of argument, of plural institutions that check and balance, of investing in knowledge and of a belief that no problem can't be fixed that underpins American strength. China is the only country in the world with a similar continental-scale economy and bigger population that conceivably could mount a challenge, but it has none of these institutions and processes. Despite its size, it has only three universities in the top 100, not one brand in the top 100, not one company in the world top 50 ranked by R&D and it registers virtually no patents.

China has no tradition of public argument, nor independent judiciary. Unless and until its institutions change, it will always trail the US in the 21st century knowledge economy and experience upheaval and possible revolution along the way. India, a democracy with the right institutions, is much better placed - but with income per head 2 or 3 per cent of that in the US, a challenge will take centuries rather than decades.

It is the maligned EU that has the institutions and economic prowess to emerge as a genuine knowledge economy counterweight to America.

Sure, the US has problems. It runs its financial system like a casino. It is a grossly unfair society. Its road and rail systems have been neglected for decades. University entrance has become too expensive. It has fetishised deregulation. Money corrupts its political process. To compromise the rule of law in order to 'win' the war on terror was stupid. But none of those problems can't be fixed and the US is about to elect a President who will promise to try, in a world in which it remains the indispensable power.

Anybody who would prefer China's communists needs to see their doctor. The greatest danger is that we start believing the pessimism. The United States is - and remains - formidable. Which is just as well for all of us.

-- Will Hutton, The Observer, Sunday May 11 2008

http://www.guardian.co.uk/commentisfree/2008/may/11/usa