Monday, January 24, 2011

Is America in Decline or the World Catching Up

There is much talk around now days that America is in decline. Hell, even the current White House resident, Obama, thinks so and has said as much for the last few years.

Setting national ego and jingoism aside, I don't think U.S. America is in decline because the U.S. was never truly in ascendancy. Events of the 20th Century conspired to place the U.S. in an accidental position of power not rightfully hers nor eagerly sought putting most countries at a lower living standard. The Great Depression slowed the consumption of foods and raw materials freeing them for the massive war effort that followed. The results World War II left the U.S. as the only industrial/agricultural/financial country with the power and ability to rebuild and feed the world, and militarily strong enough to ward off the danger of the Soviet threat while keeping Red China at bay. The United States of America that most of us grew-up in and remember fondly was, frankly, an historical accident.

Exploiting that accidental power position, countries around the world sent their businessmen here to learn the "American way" of production and sent their children to American universities for the best educations. Back in their home countries, the practices and educations gained here were put into effect. Unlike nearly every other world power - empire, if you will - America taught the world's nations to compete and succeed on the American level of success. Now, after long last, the world is catching up with us.

I've held an OCRegister article by Tibor R. Machan since Nov 26, 2008. In it, Machan, via Fareed Zakaria, confirmed for me what I had believed for a few decades.
How the U.S. lost its lead over the world

In his recent book "Post American World" (W. W. Norton, 2008), Fareed Zakaria, made some excellent points about the United States. The central point of his thesis was that America hasn't so much deteriorated, economically and otherwise, but that other countries are beginning to catch up with it.

I had compared this phenomenon several years ago with the U.S. Olympic basketball "Dream Team," which for a while was supreme. In time, however, the national teams of other countries caught up, and now the Americans are no longer certain winners.

Similarly, the United States, which had been an exceptional country for a long time - despite some serious flaws (slavery, military conscription) - is no longer alone in the world with its substantially free institutions. It is no longer the only major country with a substantially free-market economy.

Its civil-libertarian legal system is also beginning to be replicated elsewhere. And some countries that had been out-and-out tyrannies and in which human advancement had been nearly completely retarded, are no longer so different. In China, for example, where although much of the old communist ideology is given lip service, the actual economic policies have freed up much of the society's economic energies. This is evident in many other countries, where elements of free-market capitalism are gradually becoming prominent.

Because the U.S. was virtually alone for the better portion of its existence with many free institutions, especially those bearing on economics and the free development of ideas, enormous development occurred here. The immense wealth of the country, as economists like Adam Smith had predicted, arose from removing the government as the primary director of economic affairs.

This also produced some undesirable but subtle side effects. The American welfare state also grew tremendously; the political power of big labor unions and industries became nearly unchecked so that members could cut some truly awesome (though less than fully voluntary) deals to gain high wages, subsidies and protectionist measures.

Indeed, it is arguable that compared with the rest of the world, American industries became spoiled. Like the Dream Team, they could pretty much sit on their laurels, deserved or not.

The country became the economic model to emulate throughout the world. And this position engendered a great many features of American society that became entrenched. High salaries and wages, good credit ratings, comfortable living for millions made it the envy of the world.

But as other countries started to learn from the Americans, they made progress, too, including in their competitiveness. Given that economic agents around the world had far lower expectations than did the Americans, their ability to pose serious competition to Americans grew by leaps and bounds. In time the Americans had to realize that they were no longer able to coast and maybe had to tighten their belts, lest they be dispossessed of their economic superiority. The auto industry is a case in point.

But once people get used to living exceptionally well, it's not an easy thing to give it up. Great expectations, dreams and all, do get checked by new realities but the mind tends to resist. And that is where we are now, helped along by some stupid mistakes made by the ever-meddling politicians and bureaucrats who populate our welfare state.

Still, this isn't the end of the world. Once it is acknowledged that the substantially free ride that came from comparatively superior institutions is over, effort and innovation will have to double up, and America could well remain on top, though not by default. That is the hope that president-elect Barack Obama ought to be telling us about, not vague stuff most folks associate with getting a free ride, by way of the largess of a welfare state that is no longer affordable.
To paraphrase John Paul Jones, 'We have not yet begun to ascend.'





The life of Indigo Red is full of adventure. Tune in next time for the Further Adventures of Indigo Red.

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