Is America declining?

Published: January 3, 2016
The writer is a former caretaker finance minister and served as vice-president at the World Bank

The writer is a former caretaker finance minister and served as vice-president at the World Bank

“In 2015, a sense of foreboding seemed to settle on all the world’s major power centers,” wrote Financial Times’ Gideon Rachman in his year-end column. “From Beijing to Washington, Berlin to Brasilia, Moscow to Tokyo — governments, media and citizens were jumpy and embattled. This kind of global anxiety is unusual. For the past 30 years and more, there has been at least one world power that was bullishly optimistic.” Japan in the 1980s, the United States in the 1990s, the European Union in the early 2000s was in turn buoyant, projecting hope for the world into the future. But as 2015 gave way to 2016, all the big players seem uncertain — even fearful. Could the United States once again lead the rest of the world? But going by the rhetoric coming from the Republican Party’s candidates for the 2016 presidential election, the mood of one segment of the population is sour. The contest has produced a pervasive narrative of national decline and decay. One reason for pessimism is income stagnation for those occupying the lower rung of the economic ladder. This, in turn, is the result of a significant decline in worker productivity.

But the US has done better than other mature economies. Productivity decline started in the 1990s in Europe and Japan and reached the United States level a decade and a half later in 2005. But those who suggest that America is losing its position compare it with such rising economic powers as China and India. However, basing conclusions about relative global positions when the structures of the economies are radically different can be misleading. When the United States took over from the United Kingdom as the dominant global power, their economies were structurally similar. China and the United States are different. In the former, manufacturing and agriculture together account for 54 per cent of the Gross Domestic Product. In the United States, the share of these sectors is much smaller — only 15 per cent. The share of the service sector has increased from 69 per cent in 1970 to 85 per cent in 2015. As the economist William Baumol pointed out decades ago, the productivity of a live Beethoven string quartet could not be higher than that of the quartet that performed 100 years earlier. The move towards advanced services sector economies such as the United States, Japan and most of Europe implies slower productivity growth and hence, slower growth in national incomes.

There is the notion that the United States was born with a mission to convert the rest of the world to its set of values. Under President Barack Obama, American exceptionalism acquired a different meaning. He used the term to mean that America had exceptional ability to accommodate all people and points of view within one system of politics and values. However, incidents such as the massacre of nine African-Americans in a historic black church in Charleston, South Carolina on June 18 poured doubt even on this assertion. Another massacre of innocents in the Californian city of San Bernardino by a Muslim couple of Pakistani origin also created tension in society. It led to the rise of Islamophobia in the country. How would the United States’ political system deal with these fissures?

Francis Fukuyama, who has studied development of political order and its decay, has argued in his two-volume magisterial work on the subject that political progress is not linear; it has ups and downs. Sometimes those “downs” can be so severe that they threaten the collapse of the system. He is afraid that the practice of democracy in several politically developed systems is possibly headed in that direction. This is the case in particular in the United States. There the system has been hijacked by the moneyed class that has been empowered by a decision of the Supreme Court to use their enormous wealth to buy support at all levels of government.

There is reason to suggest that the United Sates is not about to withdraw from the world stage or become a minor player along with several others. The run-up to the elections of November 2016 in which American voters will choose the successor to President Obama, one-third of the Senate, the entire House of Representatives, several state governors and state legislatures will profoundly affect the country’s future. This will be one of the more important electoral contests in the country’s history. In 2015-16, America stands at a new threshold; how it crosses it will influence the role it will play in the world. There are a number of issues to settle. Once the dust thrown up by the elections of November 2016 settles down and a new person moves into the White House and a new Congress takes office, America would have decided what kind of space it wishes to occupy in a world that is going through unprecedented change. Withdrawing behind its borders is not an option. It is too large a country with much strength to contemplate such a move. Aggressively confronting China, the country that has made enormous and unprecedented progress, should not be regarded as an option, either. There is also the problem of dealing with the rise of religious extremism, a subject I will deal with some length in a later article. There, President Obama has adopted the right approach: to advise those who are fighting this development without getting involved by sending American soldiers to do battle.

Published in The Express Tribune, January 4th, 2016.

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Reader Comments (13)

  • Clockboy Ahmed
    Jan 4, 2016 - 3:32AM

    I don’t see it. When I was passing by the Embassy, I saw lot of folks eager to get visa to US.Recommend

  • Jan 4, 2016 - 6:32AM

    Burki, it’s not America that is declining, Pakistan ne’er came out of StoneAge.Recommend

  • Travis
    Jan 4, 2016 - 7:15AM

    Yet another “America is dead” story based more on the deepest desire of the author rather than facts on the ground. America’s power hasn’t even peaked yet. In just 5 years, they single-handedly killed OPEC by Shale oil technology. The US is not any other nation. It has the cream of the world’s intelligentsia. If and when America goes down, we can be reasonably sure that the end of the world is in sight. But that will not stop dreamers from prematurely writing America’s epitaph.Recommend

  • Malik Mubeen
    Jan 4, 2016 - 7:40AM

    USA has done homework in this context. They know that many in this globe wish them doom away. But the fact is that they are prepared to face any worst situation. The epic of this story is contrary to the ground realities, I think.Recommend

  • Xman
    Jan 4, 2016 - 9:04AM

    America’s real asset is a healthy proportion of vastly superior, and diverse mix of very smart, free spirited and independent minded population which can deliver. China, India, and the rest of the world is mostly inbred, with complex social classes where pedigree matters more than merit. So dream on Mr. Burki, America is here to stay.Recommend

  • IndianDude
    Jan 4, 2016 - 10:46AM

    Is America declining?
    Is the best friend China the super power and America declining?
    One can answer this esoteric questions by observing length of visa queues outside the US and Chinese embassy in Islamabad.Recommend

  • Tyggar
    Jan 4, 2016 - 2:01PM

    Another article based on wishful thinkingRecommend

  • Haji Atiya
    Jan 4, 2016 - 2:31PM

    Seems like his conclusion or implications have been reached on the basis of shoddy econometrics; should try more advanced modeling and/or simulation methodologies.Recommend

  • choptocut
    Jan 4, 2016 - 2:38PM

    Mr. Burki has run out of issues and novel analytical insights. He should seriously think about retirement.Recommend

  • harkol
    Jan 4, 2016 - 3:25PM

    USA will truly decline only when,

    World has a new consumption powerhouse that can power global economy.
    An alternative food basket. USA still is the largest exporter of food items
    An alternative country with stable governance model. USA system has been stable for over a century, thus any investment in USA is considered safe
    An alternative military power. USA outspends next half a dozen countries put together.
    An alternative technology magnet. USA still has highest share of inventions & tech-superiority.

    USA is bad, but other countries are worser. This is a fact.Recommend

  • Milind
    Jan 5, 2016 - 1:00PM

    @Travis – ” The US is not any other nation. It has the cream of the world’s intelligentsia. If and when America goes down, we can be reasonably sure that the end of the world is in sight.”

    Now…now… you’re giving too much importance to intelligentsia and material aspects… Ignoring.. the intangibles… Germany before WWII was well ahead in innovation, technology and leading everybody else… But arrogance, pride, vanity led to its downfall. We see similar behaviour in the US, when it meddles in countries across the world….You never know when any mistake can be fatal.. Finally, according to Eastern thought (Indian/Hindu), the world moves in cycles (time is a cyclical concept). So everybody has ups and downs.. Many civilizations (Hindu, Muslim, Roman, Greek etc) were once at their peak and their strengths (in most cases) became cause for their downfall.Recommend

  • cautious
    Jan 6, 2016 - 4:27AM

    However, incidents such as the massacre of nine African-Americans in a historic black church in Charleston, South Carolina on June 18 poured doubt even on this assertion.
    You have to be kidding. I wonder how many people in the World even know about this obscure event — let alone present it as part of an argument about the downfall of the USA. Recommend

  • John B
    Jan 6, 2016 - 12:02PM

    The simple answer is No. Like all societies,, America has its own social problems but they are typical non issue compared to the rest of the world’s problem.

    Fairly honest cops, reliable and swift judiciary, active citizens, cheap food and clothing and affordable housing, reliable and affordable public services and decent work environments and plenty of time for recreation to enjoy life. do we call these as indicators of declining trajectory?

    The strength of America is its private sector, the individual people with independent thinking and not the politicians.

    Lowest tax rate, high productivity, creative industries, bullish business network that can make money out of thin air. The entire US government is Tuned for the welfare of the people and businesses so much so that the government can go to any llength to protect its strategic ( that is welfare of people and business) interests , however selfish it may sound for others.

    To put it bluntly, everyone around the world works for American strategic interests, europe included. Recommend

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