We know for certain that every nation in history that has achieved economic
and military preeminence in world affairs has eventually lost that preeminence to others, so it is pretty safe to say that
this will happen, sooner or later, to the United States as well. We also know that great civilizations have frequently
come to ruin through foreign adventures and domestic extravagance, and that these ancient failings could easily recur.
But these simple homilies are about all one can usefully extract from the
recent assertions that America is, or is about to become, a nation in decline due to the size of its military commitments
or the shortsightedness of its domestic economic policies. Indeed, it is remarkable how swiftly these painstakingly
constructed arguments have run aground on the hard rocks of economic and political fact.
The domestic economic product of the United States is much the highest of
any nation and is likely to remain so for the indefinite future. The U.S. economy has been growing faster for more than
a decade now than any other large developed nation except Japan, and the difference in U.S. and Japanese growth rates has
been narrowing. American culture is more robust and self-confident than at any time since the mid-1960s. U.S.
movies and music, for example, are dominating the free world more than ever and are making large advances in communist nations.
The idea (associated with the recent book of Professor Paul Kennedy)
that the United States is militarily overcommitted — squandering its economic strength
and paradoxically weakening its international position — is unpersuasive in the extreme.
Even at its peak, President Reagan's 1981-86 defense buildup did not take U.S. military expenditures anywhere near where they
were (as a percentage of GNP) during the period of relative peace between the Korean and Vietnam wars — a
period when the United States dominated world political affairs more thoroughly than today, and when its economic growth was
higher than today. If the United States boosted defense spending back to its mid-1950s level this would certainly reduce
its economic growth somewhat, but probably not drastically and not enough to precipitate a wholesale national decline.
Even if it did, U.S. domestic spending is today vastly higher than in the 1950s (mostly for middle-class entitlements), so
attributing the decline to military rather than domestic overstretch would be arbitrary.
Where the United States has made strong and costly commitments to resist the
expansion of communist and other fanatical states — in Afghanistan, in Angola, in the Iran-Iraq war — the result
has not been an endless drain on U.S. resources and morale, but rather the retreat of the forces the United States opposed
and a pretty clear increase in America's security and international reputation (for example, from an increase in the security
of Western oil supplies).
U.S. economic policies could certainly stand improvement, and it would almost certainly
be better if Americans were to devote more resources to savings and investment and less to current consumption. But the notion that the United States is spending itself into bankruptcy,
and the related notion that it is mortgaging its future to foreign investors, are as far-fetched as the military overstretch
gambit. The U.S. federal government's deficit is currently higher as a percent of GNP than it was in 1980 — but substantially
lower than in 1975, and lower than in Japan and in serveral European nations. Moreover, it is falling.
Here again recent developments have been especially damaging to the America-in-decline
arguments. The U.S. economy is now approaching its sixth year of sustained expansion, a performance that is unprecedented
in modern peacetime, and that has persisted through severe economic shocks such as last year's stock market collapse and this
year's drought. The spread of market-oriented economic policies and the related spread of democratic politics in the
Third World and developing nations must be counted important successes for traditional American ideals — additional
strong evidence against the notion that American civilization is in decline.
For all that has been said so far, there are two important respects in which
America can be said to be in decline. The first is that the U.S. economy has become a relatively less important component
of the world economy due to the growth of the nations of Europe and the Pacific Rim. There is, I suppose, a paradoxical
sense in which expansive U.S. foreign policies contributed to this relative decline. It was precisely the purpose of
the Marshall Plan and the occupation of Japan to help revive the nations that had been ravaged by the Second World War; but
these policies were hardly imperial and more nearly the opposite. Whatever the causes of the increasingly widely shared
prosperity of the free world, and whatever new demands the increasingly competitive international environment may place on
those who superintend American foreign policy, they seem to me altogether happy developments.
The second sense in which the united States is in decline is more complex and
profound: The policy discretion of the U.S. government (to be distinguished here from the welfare of its citizens) is in decline
due to the growth of world commerce and finance. One of the crucial aspects of the information revolution is that the
economic product of the advanced economies increasingly consists of knowledge and ideas rather than physical goods.
But knowledge is capable of moving across national barriers to commerce such as transportation costs, and less vulnerable
to the artificial barriers imposed by governments at the behest of domestic economic interests.
The result is that the U.S. government — and all national governments —
are losing some of the latitude they formerly enjoyed to manipulate their economies through taxation, regulation, and
trade restrictions. National policies are increasingly subject to an international market test, and the costs of
harmful policies to the nation that imposes them are increasingly large. One sees this tendency in the great caution
with which the U.S. government has treated proposals to impose new restrictions on U.S. equity and futures exchanges in the
wake of the last year's stock market crash: even our most zealous regulators seem to appreciate that market-impairing rules
will quickly drive business overseas. The tendency is apparent also in the debates in America and elsewhere over "mandated
benefits" — government requirements that business firms provide their employees with more extensive insurance,
pension, leave, and job security benefits. While politicians initially conceived of mandated benefits as an artful
way to elude budgetary constraints — to expand government social programs without voting new taxes to pay
for them — they are coming to realize that businesses, faced with increased global competition in both capital
and consumer markets, are incapable of providing these benefits without harming the very employees who are supposed to
be the beneficiaries.
The bracing growth of world trade and finance is probably more responsible
than anything else for the spread of liberal domestic economic policies in the free world and the communist nations.
It is also responsible for the various efforts to erect new barriers to international trade in the United States, Europe,
and Japan — and one should never underestimate the resourcefulness of governments and legislatures. But for
the time being, markets rather than governments seem to be in the driver's seat, and if this is decline it is a sort that
freedom-loving people should welcome.
