Is America’s Decline Really Inevitable?

One of the two “unlikely but possible” scenarios suggested by Peter Feaver in his post below is that of a resurgent United States combined with an implosion of Europe and/or the BRICs. Such an option is not discussed in GT2030, but I would argue that a scenario that challenges the quasi-conventional wisdom in some circles that “the United States’ (and the West’s) relative decline vis-à-vis the rising states is inevitable” (p.82) is well worth discussing in more detail. In this post, I will address some of the factors that might make such a scenario more more probable than the many would expect, and I’ll particularly focus on the US decline side of the equation rather than the possible implosion of the EU or the BRICs.

Several contributors to this blog already highlighted some of the key advantages that the US will continue to have in 2030 relative to China and other emerging powers, and called into serious question the narrative of “decline.”    

Among the strategic trends favoring the US, the most often-quoted ones are:

 

1. Demographic trends, where a combination of higher fertility relative to other potential world powers and immigration continues to give the US an advantage over its potential global competitors

 

2. Technological trends, where US advantages in nanotechnology and what The Economist recently called a “Third Industrial Revolution” brought about by digital manufacturing is likely to bring the high-tech manufacturing jobs of the future back to developed countries from developing ones

 

3. Innovation trends, where the uniquely safe and opportunity-rich entrepreneurial environment of the United States continues to remain the breeding ground for the next Apple, Google, or Facebook. Even though China for example invests large amounts of money in R&D, their return on this investment in terms of innovation is questionable. As the consulting firm Booz&Co documented in a series of reports examining the world’s top 1000 biggest R&D spenders,

 “Money doesn’t buy results: There is no relationship between R&D spending and the primary measures of economic or corporate success, such as growth, enterprise profitability, and shareholder return.

The comparison of R&D investment with economic performance provides a lens through which we can judge the innovation effectiveness of the Global Innovation 1000. Despite significant variation in innovation investment levels, the sheer magnitude of these companies’ spending leaves little doubt that they are committed to innovation. But the disconnect between R&D investment and performance levels demonstrates that commitment is no guarantee of success”

On the other side of the ledger, how about the worrisome trends referenced by the experts who predict a relative decline? First and foremost, there is the economic argument that China’s overall GDP will surpass the US GDP at some point in the next few decades, perhaps even before 2030, at least at PPP values.  There is a large literature dedicated to speculation about whether the Chinese government will be able to maintain healthy levels of growth while addressing the many political, social and environmental problems it faces, and serious skepticism is in order. Moreover, the PPP (purchasing power parity) measure is only one way to look at GDP, and from a geopolitical vantage point it’s very unclear it is the best one. When measured at market values, the Chinese economy even in the best of circumstances will not catch up for a longer period of time. The same is true for the GDP/capita measure, which could be a proxy for how much Beijing could divert money to foreign affairs as opposed to the domestic concerns of providing for their very large population. After all, as Robert Kagan argues, the relationship between economic growth and geopolitical influence is not nearly as straightforward as we sometimes assume: for example, “It is not clear that a richer India today wields greater influence on the global stage than a poorer India did in the 1950s under Nehru, when it was the leader of the Non-Aligned Movement, or that Turkey, for all the independence and flash of Prime Minister Recep Tayyip Erdoğan, really wields more influence than it did a decade ago.”

Another worrisome trend mentioned by GT 2030 is the state of the US education system: the report echoes a common theme of the national dialogue on this topic: “without large-scale improvements in primary and secondary education, future US workers – which have benefited from the world’s highest wages – will increasingly bring only mediocre skills to the workplace.” From business leaders to the Gates Foundation to countless task force reports, there is overwhelming concern about the poor performance of US K-12 students on standardized scores compared to their foreign peers, particularly in math and sciences. While I share some of this concern, I do so to a much lesser extent than the GT2030 authors. First of all, this is not a new concern: as even some advocates of the importance of improving K-12 education admit, the US has always been an outlier of sorts in this area: “The United States has never done well on international assessments of student achievement. Instead, its level of cognitive skills is only about average among the developed countries. Yet the country’s GDP growth rate has been higher than average over the past century.” One possible explanation for this is the superior quality of America’s higher education system: as the same study notices, “By most evaluations, U.S. colleges and universities rank at the very top in the world.” Another reason has more to do with other strengths of US economic system not related to education performance, such as less government regulation, openness to free trade, and perhaps most relevant for this debate, high levels of skilled immigration.

Something that is missing from this debate is an acknowledgement that, even though American students in K-12 may not do very well at math and sciences, the US economy as a whole traditionally addressed that problem in a two-pronged approach: allowing American students to “catch up” and develop in college the skills needed to go ahead and become successful when they enter the workforce, and also allowing large numbers of international students to study, and then stay over, in the US to work as scientists and engineers. Therefore, one of the easiest and least costly ways to maintain US dominance in science and technology is to make it easier for international students in these fields to remain in the United States and work for US companies without having to go through the onerous visa process currently in place. 

One last note on this supposed lack of educational achievement in math and sciences. American students, while perhaps not as capable of solving abstract problems as well as some of their peers abroad, still have some intangible advantages in terms of transferring their skills to solving real-world problems and inventing new products and services to a degree unmatched around the world. After all, had  conducted such tests been conducted during the Cold War, it is likely that the Soviet block states, with their education systems heavily focused on test-taking and abstract problem solving, would have outscored the US and the Western world in general. Yet of course the US remained the hub of technological innovation and led the way in the information revolution in the 1990s and 2000s, as it continues to do today in the era of social networks, cloud computing, and, well, iPhone apps.  

Lastly, there is the thorny issue of rising healthcare costs and, by virtue of how Medicare and Medicaid programs are currently set up, of so-called “entitlements.” (The third leg of this problem, Social Security, is much more readily “fixable” in economic terms and it represents less of a long-term concern than medical costs.) It is true that high levels of government spending, if continued at the present trend, will hurt the overall prospects for economic growth by contributing to large fiscal deficits, and, incidentally, also make it more difficult to fund national defense.  However, the recent political trends in Washington point to a serious bipartisan concern about this matter, and while one’s enthusiasm for “bipartisan efforts to achieve a grand bargain” should always be firmly under control, it is not entirely unrealistic to assume that the US will find its way out of the current fiscal morass sooner than we may think.

 I welcome your comments on any one of these trends, and suggestions for other areas of inquiry on the issue of the “inevitability” of US relative decline.

10 comments on “Is America’s Decline Really Inevitable?

  1. I don’t think it is inevitable. It’s about time the United States takes back it leadership role by promoting a new world order before some other emerging country takes the lead simply over an economical bases. Yes there are other ways than using money or military power to guide this world. The sequence of economic downfalls and rise of terrorism has lead the majority of people not believing anymore in money and arms to guide this world.
    The high level of symbiosis between the countries makes impossible to even think of global wars economic or armed based. We are at the edge of a real possibility of keeping our leadership while giving a good kick forward to this unstable world.
    If a blog would open on the subject of “New World Order” I would be pleased to submit a starting point to a real solution that takes a bit more study to complete the implementation steps and some guts to implement.

    • first of all WOW! you are really lucky yo be able to do this. If i was able to go on a trip like that i would not want to go just a tosuirt and look at the world from the perspective of a foreigner. However i would want to immerse myself into other cultures and learn something about myself. for this purpose I recommend Chile, Peru, New Zealand, Philippines, Japan, Indonesia, Cambodia, India, Madagascar, Kenya, Ethiopia, Namibia, Mali, Morocco, Portugal, Italy, Ukraine, Russia, Germany, and Ireland. However these are just some of the many places out there. Have fun and ENJOY! Was this answer helpful?

  2. Pingback: “Global Trends”- CIA: Asia will as before be the center of economich development – Europa and US will losse their postions. Middleclass will be soon most important globally, but consume more and more, which will be a big problem for envi

  3. Pingback: “Global Trends”-Prognose der US-Geheimdienste: Asien überflügelt USA und Europa. Zum ersten Mal überhaupt wird eine Mehrheit der Erdenbewohner 2030 nicht mehr in Armut leben, “erstmals wird die Mittelschicht in den meisten Ländern da

  4. Just a thought: why do we assume that the net. Immigration into US will always be greater than china. History has shown that people looking to move up in life chose places that gave them the best opportunity. I would not count china out of that just because it is not democratic. I don’t have the figures for comparing, but would love to see it.

    • “The single thing that would elitanime more poverty than anything else in this country would be if fathers in this country would marry the mothers of their children,” How about if mothers marry the fathers? Of course, as Zorro points out, it’s a no win situation for men to marry. Hell, paying child support, if you have to, is probably cheaper in the long run than losing half of everything and then some (because it will be more than half) when divorcing.The services provided to single parents, mothers primarily, enable no marriage. The service providers help temporarily and hurt ultimately. Plus, in the one area where it should be for the kids, liberals demand it not be.

  5. Ionut points to several trends (demographic, innovative, technological) that, in his analysis, suggest that even relative American decline is avoidable. He also gives us reason to be skeptical of trends that ostensibly favor rising powers (Chinese growth, the state of US K-12 education, the rising cost of US entitlements). In short, he justifies his position that the question of whether relative American decline is really inevitable should be part of the GT2030 conversation.

    After reading his post, though, I have one big question about the author’s position: is America’s relative decline likely? My sense is that everything Ionut wrote is relevant, and I agree with him on many fronts. Demographic trends do favor the United States. This country is both home to, and the origin of, many of the world’s greatest companies. We do have the best universities, and they are attended by the world’s brightest students. Americans are rightly proud of all of this.

    Still, the fact of the matter is that we live in a world of rising powers, and America’s unipolar moment (as Krauthammer once articulated it) is passing. This should not come as a surprise, and it is not a reason to fret. The US is not losing power; other countries are gaining power. We are witnessing the consequences of the success of the international system that the United States has headed since the end of the Cold War.

    China has averaged growth of more than 9% for more than 30 years. In that time, nearly half a billion Chinese have risen out of poverty. Jeffrey Sachs has called it the greatest development success story in the history of the world. As the US cuts defense spending, China is steeply augmenting its own (an 11% increase for 2013, announced earlier this year). Is China going to pass the US in defense spending any time soon? No. Will China’s GDP per capita pass that of the US in the foreseeable future? No. Is China gaining power relative to the United States in the international system, and is it likely to continue to do so in the next 15-20 years? Yes, and China is not the only country that fits that description.

    As a final thought, the observation that American power is likely to decline relative to the power of other countries should not be considered a “declinist” position. Again, this relative decline is more observation than argument; the power of other states is rising faster than that of the US and, as a consequence, relative decline in power is happening. This much is clear from the data in the global trends report (e.g., discussion of game-changer 5, beginning on p. 79). The most important takeaway here, though, is that even in the context of relative power decline, America can and I expect will continue to be the most important country in the world going forward. The United States has made mistakes, and its standing in the world is not particularly high right now, but its leadership at the head of the international system has been, on balance, overwhelmingly positive.

  6. I guess I don’t understand the aspect of “decline.” Are we talking about relative terms? If so, the question becomes: what metric should we use? Will China’s absolute GDP overtake the US’s? All signs point to most likely. But as the Mr Miller pointed out: this isn’t a surprise due to the sheer size of China’s economy. Perhaps we should use GDP per capita, since this is a better measurement of relative economic performance. Will China’s GDP per capita overtake the US? Never say never, but if so, that should be a long time off.

    We shouldn’t be surprised by the fact that China, and other countries like it, are growing at rapid rates. This is an empirical finding (convergence theory) predicted by most standard growth models. Other countries can adapt technological improvements made by other countries without the costs of producing them, allowing for expedited growth.

    However, none of this growth has anything to do with the US. China is just growing faster from being in a relatively disadvantaged starting position. As for the US, there is little ailing the US economy in terms of long run economic performance (as shown by its steady positive growth). US growth rates aren’t as spectacular as China’s, but that was never going to be the case. The US has a different type of economy.

    I think too much is being made about this recession. If we look at the GDP during and after the Great Depression, we can see that GDP barely missed a beat after the Depression ended. There is no reason to believe that this recession will be any different. As for how the relative importance of each economy translates into “power,” that’s well outside my expertise. However, my impression is: the less starving people in the world the better. And people in rich countries often prefer to trade rather than fight.

  7. I broadly agree with your analysis Ionut. Certainly I don’t think that Europe, Russia or India are likely to catch up with the United States. There are also good reasons to be skeptical about China’s continued stability and economic performance. However, there is one salient fact about China that should always be borne in mind – almost one in five people on this planet are Chinese, giving the country four times the population of the United States. Given this, the country only needs to manage its affairs with moderate competence in order to be very, very powerful indeed. For the past couple of hundred years, China has been very incompetently governed, so that it has punched well below its weight in global terms – can we really count on that continuing ad infinitum? To match the United States economically or militarily, China doesn’t need to be as ‘efficient’ as the United States – it just needs to be less than four times less efficient.

  8. I agree that the United States possesses a demographic advantage, not only in terms of fertility rates, but also in terms of immigration. If anything, immigration numbers understate the U.S. advantage. That is, the United States not only attracts immigrants from across the globe, but also is one of only a handful of states that can rapidly assimilate new immigrants into society.

    This is an advantage that could, with sound public policy, yield even greater advantages for the United States in the future. If the U.S. policy actively promoted immigration from highly skilled demographic groups (rather than discouraging them from staying in the United States, as generally occurs), it could do even better.

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