For The Good Of America, Finding A Balance Between Triumph And Decline

Last April, prominent writer and economist Clyde Prestowitz argued in Foreign Policy that the United States is “in decline.  That’s obvious to everyone outside the United States and to most inside except for firm believers in American exceptionalism.”

In a recent cover story for the American Review, however, he cites “growing evidence … that this century may well wind up being another American century.”

Overestimating one’s power can sow hubris ... Underestimating one’s power, however, can sow defensiveness...

Noting Prestowitz’s conclusion, among others, Ambrose Evans-Pritchard in The Telegraph discerns an emergent view “in elite circles that the banking crash in 2008 was a nasty shock for the U.S., but not a crippling blow to America's creative enterprise.”

New Optimism

Here are some factors behind renewed, if cautious, confidence in U.S. prospects:

Private-Sector Creativity: While partisan toxicity in the nation’s capital is troubling, the Economist recently explored how states and cities are addressing “the very problems Congress runs away from” in regulation, innovation, infrastructure, and education.

Frugality: Household debt decreased from 130 percent of income in 2007 to 105 percent in 2012, and the Congressional Budget Office projects that federal debt held by the public will decrease by a net of 1.5 percent over the next decade, giving policymakers some breathing room to think of long-term debt-reduction policies.

Energy: The Associated Press reports that “the daily flow of imported crude oil [has] dropped to the lowest level in 17 years.” Energy expert Michael Levi notes that in 2012, U.S. crude oil production “posted its largest one-year increase since the dawn of the oil industry.” Furthermore, natural-gas production increased by 33 percent between 2005 and 2012 — overtaking coal, Levi states, “as the United States’ biggest source of domestically produced energy” in 2011. Considering these parallel energy developments, the National Intelligence Council recently concluded that “energy independence is not unrealistic for the U.S. in as short a period as 10 to 20 years.”

Trade: The U.S. is reinvigorating its efforts to boost trade with the European Union and Asia-Pacific.  According to one estimate, eliminating tariff barriers and substantially reducing non-tariff barriers between the U.S. and the EU could boost U.S. GDP by about 1.6 percent annually in the long run. Meanwhile, the U.S. is moving aggressively to expand the membership of the Trans-Pacific Partnership. Its annual trade with the 11 current participating countries is $1.4 trillion; if Japan joins, that figure would rise to $1.7 trillion.

Trends in the Global Balance 

With the U.S. showing signs of economic regeneration, developments abroad are also dimming the mystique of  “the rest.” Talk of “Chindia” has grown quieter, for example, as the appearance of strategic alignment between them has unraveled. The relationship between China and Russia, furthermore, has proven to be one of convenience more than one of depth. Meanwhile, the BRIC countries — Brazil, Russia, India, and China — have yet to develop into a coherent strategic counterweight to the West.

So, what about China, the dragon in the room? As remarkable as the country’s growth has been, recent revelations about its environment have prompted more intense speculation about the sustainability of that expansion. More than 22,000 rivers have disappeared since the 1990s; the country “is running out of water,” according to a recent Financial Times report; and air pollution is driving away Chinese expatriates and their families. Gideon Rachman concludes that “[p]ollution in China is now so bad that it threatens to obscure the vision [of a ‘China Dream’].”

A More Grounded Posture

The prospect of an economic revival in the U.S. is no license for getting carried away. The nation faces a number of daunting challenges, several of which steadfast anti-declinist Walter Russell Mead identified in the American Interest last month.

Going forward, the U.S. should be confident but proactive, neither taking its superpower status for granted nor claiming impotence in the face of change.

To advance its national interests in an increasingly crowded and competitive environment, one in which power continues to flow eastward and non-state actors exert a growing sway, the U.S. will need to find a middle ground between the triumphalism that infused U.S. discourse after the Cold War and the declinism that has come to permeate it since in the aftermath of the financial crisis.

Overestimating one’s power can sow hubris: it contributed to America’s invasion of Iraq in 2003 as well as the “irrational exuberance” that presaged the housing bubble’s collapse in late 2007.

Underestimating one’s power, however, can sow defensiveness: nowhere would such a reaction be more dangerous than in managing the rise of China, the one country with the potential to approximate a peer competitor this century.

Going forward, the U.S. should be confident but proactive, neither taking its superpower status for granted nor claiming impotence in the face of change.

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