Geopolitics and American Economic Competitiveness

When I was in high school, I read the classic book The Rise and Fall of the Great Powers by Paul Kennedy. In the early 1990s, Kennedy and others were focused on the rise of Japan and the presumed geopolitical decline of the United States. These predictions of imminent American decline were of course wrong, or at least premature.

Earlier this week, I wrote about the effects of automation on the U.S. and global economies. The key point was that contemporary technological innovations are tending to make many workers redundant. Travel agents, secretaries, legal assistants, factory workers, and many other groups of workers are being replaced by computers and robots. Rising productivity is not leading to net growth in jobs, and many economists are warning that we should get used to a “new normal” of higher unemployment (and lower economic growth rates). For the sake of argument, let’s assume that these trends do persist over the next few decades.

If these problematic economic trends persist in the United States, what will that mean for global geopolitics? Here are a few key possibilities:

1. Military spending in the U.S. will inevitably decline, as even many influential Republicans recognize. Future American leaders will be much less likely to engage in long-term military campaigns like those in Iraq (2003-2011) and Afghanistan (2001-present). The prospects for Pentagon-led “nation building” missions will decline significantly. NATO’s capabilities will dwindle even more than they already have.
2. Sluggish economic growth and political gridlock in Washington could lead to lack of action on the public debt. In last night’s debate, Mitt Romney aptly used the phrase “on the road to Greece” to refer to America’s fiscal ill health. Though the U.S. has key advantages over Greece, the performance of American political elites over the last 12 years does not bode well for the future. If holders of U.S. public debt demand higher returns and provoke a sovereign debt crisis, the world’s superpower could enter into a period of rapid global retreat, just as Britain did in the 20^th century.
3. Anemic, jobless growth could lead to trade protectionism and economic nationalism reminiscent of the pre-World War II period. True, the Great Recession (2007-) was remarkable for its lack of economic nationalism. But if economic conditions do not improve significantly in the next decade, the World Trade Organization and free trade agreements could become big targets, especially for the Democratic Party.

Just as Paul Kennedy’s prediction of American decline in the late 1980s was wrong, contemporary pessimists could be very wrong about imminent U.S. decline. Economists, after all, do not excel at long-term prediction, despite the grander claims of some. What are your thoughts about recent economic trends in the United States?

Labor Day in the U.S., part I

If you haven’t sampled the blog of Walter Russell Mead, it is well worth a look. Today – Labor Day in the United States, and the unofficial end of summer – Mead’s blog includes a thoughtful set of reflections for American students as the new school year begins.

Here is one key excerpt that caught my attention. In this excerpt, Mead is addressing America’s next generation:

Your competition isn’t sitting in the next library carrel. Your competition is in China and India – and your competition isn’t hanging out at frat parties or sitting around watching sitcoms with dorm-mates ….

Your competition is working hard … and is deadly serious about learning. There’s nothing written in the stars that guarantees Americans a higher standard of living than other people. Those of you who spend your college years goofing off in the traditional American way are going to pay a much higher price for this than you think.

For those of you reading this elsewhere, please indulge a bit of American introspection. As a former university professor, I know well the U.S. adolescent culture that Mead is describing. Too many young adults today exist in an “entitlement culture” that does not serve them or their country well. Their attitude is that “seat time” (i.e. attendance with minimal expectations for performance) at university should lead to a credential which should automatically lead to a good job. For more on this culture, see the recent book Academically Adrift by Richard Arum and Josipa Roksa.

Educational reform without cultural reform will never work. Unless American students embrace a culture of high achievement, this country will slip farther in international competitiveness, and deservedly so. Economic stagnation could lead to greater social instability in this country and additional strain on our institutions of government.

*** Did you like what you read here? You might be interested in the new book by this blog’s author, Failed States: Realities, Risks, and Responses.