Concluding Reflections on American Decline

by William Inboden

Lamenting American decline is as American as, to borrow a phrase, baseball and apple pie.  As the Yale historian Harry Stout has shown, even before the United States was a nation, as early as the 17th century Puritan ministers in New England regularly warned their flocks against the dangers of “declension” from their spiritual commitments and their calling to forge a new society.  Such jeremiads a century before the founding of the American nation seem to have been subsequently hardwired into our national DNA.   More recently, as Celeste Ward Gventer and Joseph Joffe have pointed out, the US has, almost like clockwork, every decade undergone hand-wringing over our looming decline – anxieties that, not coincidentally, occurred alongside America’s ascent to global superpower status.  So the 1950s brought Sputnik and worries of the lost American edge in science and technology; the 1960s had the “missile gap” and descent into the Vietnam quagmire; the 1970s witnessed the oil embargo, recession and inflation, and declining global influence; the 1980s saw the rise of Japan as the dynamic economic competitor, and so on.  Every decade, it seems, Americans fret that our nation is in decline.

But just because decline has been successfully warded off in the past does not mean that American hegemony is destined to continue into the future.  While I hope that an appreciation of our history of declinist worries brings some perspective, it should not bring complacency.

Looking back over this week’s posts, a few themes stand out (besides the, ahem, high volume of quality contributions from the fine students and scholars at the University of Texas-Austin):

First, the evolving and expanding nature of power.  As Frank Gavin discussed, in bygone eras national power was a pretty straightforward combination of military strength, economic might, population, and geography.  Yet just glancing through the range of issues that our contributors touched on this past week – including demographic trends, family structures, education policy, participation in multilateral institutions, entrepreneurship and innovation, governance, fiscal policy, even culture and cuisine– shows how much more multifaceted and expansive the very concept of national power has become in the 21st century. This brings new challenges as efforts to maintain American supremacy need to account for a growing number of variables, but new opportunities as well for the United States to show global leadership.

Second, the patterns and lessons of history.  History is inescapable when considering our present circumstance.  Jeremi Suri brought some insightful lessons and perspective from an erstwhile empire that is little appreciated today: once-great Austria-Hungary. Celeste Ward Gventer found in history a cautionary tale that American power can get precipitously sapped by nation-building adventures abroad.  Former NIC Chairman Bob Hutchings took a different gloss on history as he recounted past efforts by the NIC to evaluate America’s evolving global role, and suggested ways that this type of institutional and intellectual history could shape future predictions.

Third, the need for wise policy and political will.  The various Global Trends reports make very sophisticated efforts to project what the world will look like two decades into the future.  Yet as Mat Burrows and his very capable team who produce the reports will readily admit, one of the biggest variables in these projections is the human factor – specifically what policy decisions will leaders make, and will citizens collectively generate the political will to change course and make tough decisions?  Many of our contributors came back to this fundamental fact: for the United States, decline is a choice. And as I discussed here, much of the disposition of American decline rests not on the problems our nation faces, but on whether we will be resigned to acquiesce to these problems, or resolved to overcome them.

William Inboden is a Distinguished Scholar at the Strauss Center for International Security and Law and Assistant Professor at the LBJ School of Public Affairs at the University of Texas-Austin, and a non-Resident Fellow with the German Marshall Fund.

By winboden Posted in GT2030

Divisions of Decline: Family Structure and Social Capital

by Ryan Streeter

We Americans have a habit of carving the nation into two groups to reflect concerns about inequality or social justice. We have long talked about the “have’s and have not’s.” John Edwards’ ill-fated presidential bid was predicated on “two Americas.” More recently, we have learned that America consists of the 1 percent and the 99 percent. And so on. These bifurcations are typically based on some type of material conception of justice – such as income and wealth levels.

The most important bifurcation related to the questions of American decline, however, is none of the above. Rather, it is this: children whose parents are married and educated vs. children whose parents aren’t. To virtually all social scientists’ surprise, going to college and getting a good job has made people less likely to divorce and more likely to raise children in a married household. Put crudely, those who could most afford to be single parents are choosing not to be.

Conversely, single parenting has skyrocketed among the uneducated. In the 1960s, whether you were in the upper 20 percent of the income distribution or the lower 30 percent, the odds of your having a child as a single parent were miniscule. Today, among the upper 20 percent, the unmarried childbearing rate has stayed in the single digits, but it has exploded to nearly 50 percent among the lower 30 percent. This, we’re finding out, has serious economic and social consequences.

Over the next 30 to 50 years the married-educated group will be chiefly responsible for most of America’s productivity, earnings, and as a result, revenues to the Treasury. Over the same period, the unmarried-uneducated group will be a drag on productivity and a net consumer of public services. Already, for the first time ever, the CBO reports that America’s middle income quintile consumes more in government benefits than it pays in taxes, a radical shift from just 30 years ago. This will worsen quickly in the coming decades. There are, of course, children whose parents are educated but unmarried or married but not educated, and they fall socioeconomically on all indicators somewhere between the two primary groups. But keeping our focus on the two primary groups is most important right now, as their dynamics will define the growing divide in America.

There are at least three reasons why these trends matter a great deal.

The first has to do with entrepreneurship, which we now know from a number of detailed studies creates virtually all net new jobs each year.  Since the 1980s, we’ve seen a long-run, secular decline in the number of startups as a share of the economy. This in turn means that net new jobs are in large part falling each year because of a decline in entrepreneurialism (larger existing companies usually don’t create any net new jobs, since any job gains are always cancelled out by mergers, acquisitions, layoffs, and business closures). If we hope to restore healthy job growth in America, to put it simply, we need more entrepreneurs.

And this brings us back to our married-educated vs. unmarried-uneducated problem. As our economy today grows more prejudiced toward higher-level skills and talent, entrepreneurship will increasingly be unavailable to those on the lower rungs of the American ladder. Entrepreneurs have traditionally relied on personal resources, credit-worthiness, and family connections, which are all related, to get started. We know from Kauffman Foundation survey data that most entrepreneurs come from middle class or lower middle class backgrounds where education was nevertheless a priority. The social capital that a young person acquires because her parents are educated and leading professional lives converts more easily to financial capital in today’s talent-driven marketplace. Those growing up in single-parent households with less-educated parents are unlikely to join the upwardly mobile entrepreneurial class or the jobs they create.

This gets worse because of what Tyler Cowen has called “the great stagnation.” Not only are they unlikely to start a business, they won’t find as many good jobs in companies that others have started. Unlike the days of old, when an innovation resulted in hundreds of thousands of lower-skilled jobs, such as the invention of the light bulb and the creation of G.E. and related companies, today’s greatest innovations don’t result in the same levels or kind of job growth. Google will never match G.E.’s employee count. This hits lower-skilled, less socially adept individuals especially hard. There are fewer places for them to go in the economy, which is a big reason why their wages have stagnated.

The second reason these trends matter is related to the first. America’s growing unmarried-uneducated camp will create a larger pool of unproductive workers. In 2007 America’s employment-to-population ratio – that is, the percentage of working-age adults who are in the labor force – dropped below Europe’s. This rather stunning data point was driven largely by the fact that men toward the lower end of the socioeconomic spectrum had been dropping out of the full-time labor force for awhile.

This was well underway before the recession and wasn’t because of economic factors so much as another trend, which social scientist Charles Murray has aptly called “goofing off.” In the 1960s educated and uneducated men had virtually the same amount of leisure time. Then, between 1985 and 2005, leisure time among men without a high school degree increased by 8 hours per week, while dropping among men with a college degree by six hours. Time-use data show that the increased leisure time among uneducated men was spent mainly watching TV and sleeping, not in civic activities, job searches, or other active pursuits. This reflects a trend in lower-middle class America toward greater unproductivity, which in turn acts like a hostile type of compound interest over time: the more unproductive you are now, the harder it is to make up for the lost time vocationally later, leading to even costlier unproductivity. The uneducated-unmarried class in America will increasingly be net “takers” from the public purse. That the population of children in unmarried-uneducated homes is growing is a real problem for the future of America’s labor force.

Third, the net effect of the foregoing two trends suggests that America’s coming entitlement crisis will be more severe than we think, especially if meaningful reforms are put off for much longer. Because of the kinds of stagnation that Cowen has identified, we don’t see any significant wage boosters for lower-skilled workers on the near horizon. Since Medicare and Social Security are paid out of the payroll taxes on the earnings of current workers, the future looks especially grim when we consider how the earnings of the growing unmarried-uneducated class stack up against the needs of a swelling aging population.  We can’t simply rely on the payroll taxes of the top 20 percent to foot the bills.

Improving our policies to recruit more entrepreneurial, job-creating immigrants will help offset the downward pull of the unmarried-uneducated portion of the U.S. population, but it will only be a cultural revolution of sorts among the latter that will set America aright again.

Ryan Streeter is a Distinguished Fellow at the Sagamore Institute, holds adjunct positions at Indiana University and the Hudson Institute, and is a Non-resident Fellow at the German Marshall Fund. His writings and work can be found at www.RyanStreeter.com.

By winboden Posted in GT2030

Global Governance and the Paradox of US Decline

by Catherine Weaver

Robert Keohane, in a recent Foreign Affairs review article, warns that pundits pondering US decline inevitably draw the wrong conclusions when they neglect the broader institutional context in which US power, for better or worse, is firmly substantiated. He is absolutely right.  One of the key lessons instilled in any student of international relations of the 20th century is that hegemonic power is often embedded in and exercised through international organizations. These multilateral organizations lock in systems of global governance that preserve the influence of their creator states even when their relative power wanes. One need only look briefly at the history of venerable postwar international institutions to observe how these organizations have served US interests in the world over the past several decades.

Yet for the US today, facing an inevitable decline in relative material power, engagement in multilateral institutions represents both an opportunity and constraint. On the one hand, the US lock on disproportionate authority in IOs such as the UN, World Bank and IMF, secured through veto powers and weighted voting rights granted when these institutions were created nearly 70 years ago, means that the US will continue to punch above its weight well into the future. Such large, long-standing organizations rarely die. And bureaucratic mandates, norms, and operating rules are also notoriously sticky, tending more towards incremental adaptation than revolution. Thus, even as the balance of power in the world shifts towards emerging economies, such as the BRICS, the dominant rules and principles that guide international security, trade, finance and development, as embedded in multilateral institutions, will continue to reflect the ideals of the powers that created them – in this case, the US. It is therefore firmly in the US interest to exploit any opportunity to maintain its institutionalized power by continuing to support and exert leadership in these multilateral organizations, even when doing so entails the inherent costs of hegemonic responsibility and strategic constraint.

Therein also lies the key constraint. As Celeste Ward Gventer argued in her recent post,  “decline will come, but its timing may depend on choices that will either enhance or weaken the U.S. position.” While her point was an incisive critique of America’s misguided foreign policy of nation-building, one might offer the same statement in the context of US engagement in global governance. The US ability to sustain its power in the world via multilateral institutions is inherently a function of its willingness and ability to help sustain the relevance, legitimacy and effectiveness of these institutions so that these institutions, in turn, can exercise authority and influence in the world.

Yet sustaining the relevance and legitimacy of multilateral institutions, in the zero-sum game of multilateral representation and governance, may in veritably require status quo powers, including the US, to cede power and influence within these institutions to rising powers. The alternative to this inclusive multilateralism, which binds rising powers into existing institutions, is the proliferation of competing venues of global governance that ultimately diffuse power and undermine the authority and leverage of those institutions in which US enjoys a preponderance of influence. We have already seen ample evidence of such governance diffusion, in the form of a shocking proliferation of new preferential trade agreements in the wake of stalled WTO talks, the increased lending power of regional development banks and the threat of a new BRICS development bank, and efforts to create new regional monetary funds (such as the Chiang Mai initiative). While such counterbalancing in global governance has thus far been relatively weak due to elusive collective action among rising powers, a pattern is emerging.

In the end, this leaves us with a rather unsettling and paradoxical conclusion with respect to US decline: to sustain power in and through global governance, the US must in fact learn to let go of power. This is especially true in instances of accommodating rising powers in existing institutions (such as the aforementioned Bretton Woods Institutions), forums (e.g., Financial Stability Forum) and clubs (e.g. G20).  Many such steps have already been taken, for example, in recent governance reforms at the IMF and World Bank, which granted more formal votes and informal influence to the BRICS (especially China). Yet even here, the modest concession of power (which in the case of the IMF and World entailed no real loss of formal voting power by the US) risks being seen as empty gestures (or worse, insults) when the end result is a balance of power within the institution that looks more like 1982 than 2012. The same lesson can be taken from recent leadership selection processes at the World Bank and IMF, which reaffirmed the seventy year old gentlemen’s agreement to let the US chose the President of the Bank and Europe dictate who runs the Fund. The clear lack of effort to allow for a more open and meritocratic process reaffirmed many critics’ beliefs that the US and its Western allies have no intent of upholding their espoused democratic ideals in these institutions. This is even a view held by many within the institutions, as evident in the recently leaked, scathing resignation letter of a senior IMF economist.

This ultimately leads me to believe that one key way the US can stem the decline of its power is to rethink its strategic engagement in global governance. And this means supporting international institutions not only in material terms, through the sustained provision of critical resources. It also means that US must support these key institutions of global governance on principled terms, truly abiding by the core values embedded in the mandates of these organizations even when it means forsaking short-term self-interest. The legitimacy the US accrues by working through multilateral institutions (as opposed to going it alone) is only good insofar as these institutions are themselves perceived as legitimate governors.

Dr. Catherine (Kate) Weaver is Associate Professor at the LBJ School of Public Affairs and Distinguished Scholar at the Robert S. Strauss Center for International Security & Law at the University of Texas at Austin.

By winboden Posted in GT2030