The recent ugly spectacle of wrangling between US Congress and the Obama administration revealed fundamental weaknesses in American politics and economics which brought back memories of a quarter century ago, when Professor Paul Kennedy’s The Rise and Fall of the Great Powers created a huge stir in scholarly circles. In his masterly review of politics and economics of great powers from 1500 to 1980, Kennedy introduced the concept of military “overstretch”, along with the powerful thesis that decline was inevitable in great powers when their ambitions and security requirements become greater than the resources available to sustain such a policy.
The sharply differing world views propounded by the two sides and their failure to compromise even when the country faces dire consequences could not have been a moment to savour for the Americans, who watched helplessly as the lobbies and interest groups jockeyed for turf, with little thought for the good of the country. The world, too, could not have been pleased at the numbing paralysis gripping the sole superpower, which prompted Russian Prime Minister Vladimir Putin to describe the US as a “parasite”. And, as the single biggest lender of over a trillion dollars to the US, China too was not amused by what it called a “madcap farce of brinkmanship” by the two parties, calling upon the US to “cure its addiction to debts” and to “learn to live within its means”. The final ignominy was the unprecedented decision by Standard & Poor to downgrade the US government’s Treasury debt, which could further alarm international lenders.
The US reaction to all this may be to echo Mark Twain’s words: “The reports of my death are greatly exagerrated”.
Undoubtedly, the US remains the world’s sole superpower. Its technology, particularly in weapons systems, is generations ahead of its rivals, while its defence expenditure is greater than the combined total of the next ten largest spenders on defence. It has bases all over the world and is actively involved in conflicts and wars in distant lands. And yet, the truth, however unpalatable, is that the country remains in an unprecedented economic mess, with the system favouring the rich and punishing the poor. Any other country with half its debt would have been seeking help from the International Monetary Fund, but thanks to its success in ensuring the dollar’s role as the global reserve currency of choice, Washington is convinced that it can keep spending, with no thought of tomorrow.
Last week’s budgetary details, finalised after weeks of agonising bargaining between Obama and the Republican-controlled House, decided to reduce spending by at least $2.4 trillion over the next 10 years, but the Congressional Budget Office estimates that by 2020 the US will have to pay over a trillion dollars annually on the debt it already owes. But neither Congress nor the Obama administration appear cognisant of this, with many continuing to assume that the rules of economics do not apply to the US. But nothing can compare with the scale of reckless policies pursued by President George W Bush, who launched two expensive wars (which, according to Professor Nordhaus of Yale University, may have already cost at least $4 trillion and at the same time provided tax reduction for the wealthy). Not surprisingly, the strong fiscal position inherited from the Clinton administration was wiped out, leaving Obama with a huge mess, and the latter’s efforts to introduce monetary discipline and to rein in the corrupt and greedy corporate barons have made little headway.
The country’s political system may also be contributing to the impasse. The constitution may have been a miracle of the 18th century, but its adherence to the concept of checks and balances contributes to political paralysis, permitting big business and powerful lobbies to wield virtual veto powers. With increasing signs of imperial ‘overstretch’, Fareed Zakaria may not be off the mark when he warns: “America’s success has made it sclerotic”.
Published in The Express Tribune, August 10th, 2011.
COMMENTS (13)
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@Feroz: Perfectly expressed! Most Pakistanis don't seem to understand this. Americans thinking is quite different, their concept of failure and success is different from Pakistanis
The greatness of America is what I call a "relentless spirit for rational inquiry". The people have a capacity to work hard and are ever ready to adapt and innovate. Their Universities are still world class with research facilities that attract the brightest from around the World. America may be a declining power but they will take the punishment and eventual resurrect themselves like a Phoenix. Not a country anyone would like to have as an enemy.
Now you are solving problems in the US. How nice?
Bush tax cuts cost $2.8 trillion during 2002-2009. Letting those cuts expire in 2012 would save $3.8 trillion over the next decade!
The US does not want to go on spending. That is an incorrect statement. They know they have to cut spending and have agreed to some with others to follow. The issue is the balance between spending and revenue increases with the Republicans and their extreme right wing friends in the Tea Part (dubbed by some as 'America's Taliban') refusing to concede an inch.
In am surprised that S&P's downgrade has had an effect on markets since all those so-called rating agencies have NO credibility. As we now know, they were dishing out AAA ratings to toxic mortgage-backed securities which caused the financial crisis of 2008.
As stated above, despite all this, yields on US Treasuries have fallen.
Overall, the drama played out in Congress over the deficit and debt limit made America the laughing stock of the world. It was really disgraceful.
Another Pakistani intellectual who wants attention from Washington and free aid money.
@Sonam...would you enlighten us on how exactly pakistan is surviving on "American" aid? numbers pls
The mess that US is in has less to do with the wars it waged but the fact that its citizens lived beyond its means and US got lousy at playing its own game- Globalization. India and China just got very very good at it, but the US is unlearning the rules of the game.
If US is feeling the load of 'imperial overstretch' Pakistan is also feeling the debilitating effects of "Religious Overstretch"!. Being the 'Citadel of Islam' and the 'Land of the Pure' must be a tough stretch - trying to ensure religion pervades anything and everything and ensuring everyone in the country is free from 'impurities'; not to speak of the need for involvement in various un related 'jihads' around the world!!
Absolutely first class analysis and how true...
First time I hear some good remaks for Fareed Zakaria, as pakistani always target him for his Indian origin. US admistration is in total mess, I started loving my stupid Indian finance ministry. don't know why? Funny.
Valid, and well-written but treasuries were mostly higher after the downgrade, you know why? Because people from all over the world, including the US, still consider treasuries the safest investment there is. The present mess is less because of the over-stretch and more because of reckless credit policies. In the end I guess its irrelevant how you go down. Every declining power has a story to tell.