James Fallows had a good piece at the Atlantic on US decline. This sort of writing is all the rage now of course, given the huge US debt and deficit and the indefatigable rise of China. Zakaria made a fortune and got a gig at CNN on the back of punchy neologism ‘the post-American world.’ Fallows is a nice antidote to the simple ‘power is moving to the East’ schtick of so many, especially out here. Asians love this discourse – for obvious reasons – but don’t really see the limits on the flow. There is too much enthusiasm out here, not enough analysis. For my short take on this, see here.
Fallows makes some solid arguments about Asia’s limits: gross levels of corruption, weak education systems that encourage volume over quality, limited, messy semi-democracy, socially circumscribed personal freedoms (due to strong social pressure to conform) and consequently lower creativity. All this is true. To it I would add the huge informalism and personalism of the economy. Massive amounts of money sloshes about illegally, informally, or simply ‘off-budget’ (what a wonderful euphemism for your slush fund!). As I have remarked before, the grey economy here is pretty big. I am always prompted by small vendors out here to buy in cash, not on a credit card. Credit card purchases are used for tax purposes, so this is basically a form of quiet tax fraud. I wish Fallows had actually written more on these bureaucratic-institutional limits on Asia’s rise. They don’t get nearly enough attention, as the GDP expansion stats dominate the debate.
But for Americans, probably the most interesting claims he makes concern US institutional reform. He notes that the US Constitution is over 200 years old. While this is a source of pride, it is also that case the the original document grows distant with each passing day from the realities of American life. Further, the simple age of the US government has insured the now long accretion of interest groups around the Washington policy process.
Fallows particularly targets the Senate, in which the divergence of voting weights runs from 1 senator per 18.5 million Californians, to 1 senator per 270,000 Wyomingans. Furthermore, the rise of the filibuster threat by the minority in the Senate means that a functioning majority in the Senate is now 60%, not 50%+1. Targeting the Senate for reform is popular at the moment. Obama hinted obliquely at it in the SotU.
The problem with reforming institutions, particularly the Senate, is that we have been here before. Robert Dahl noted many years ago about how the Senate wildly overrepresented agricultural interests in the US. The Progressive moment also thought that Congress got in the way as much as it worked constructively. It upheld the president as the sole carrier of the national interest, because he was the only one to get elected from a fully national constituency.
But ultimately, I am not really sure if the problem is institutional, but rather popular. The US public is simply unwilling to pay for the expense of the services it wants from government. The country is now so large, so heterogeneous, that it is easy to adopt a NIMBY approach to tax hikes and spending cuts. The pool of US resources is still enormous. So its easy to lose sight of the costs your selfishness. Someone somewhere else is paying for you Medicare. Or perhaps even worse, we are losing the sense that behind government spending are the taxes that we pay. So of course we can raise unemployment benefits; it would be cruel not to, right? Of course we know in the abstract, but the bite of reality – of higher taxes when we demand more unemployment or Medicare – is lost. The chain of steps between completing our 1040s in the spring and the receipt of grandma’s social security check is now so long, that we not longer see the causal relationship. This creates the illusion that someone else can pay, but you can keep your redistribution or tax credit. So let other see their services cut and/or their taxes go up.
Hence, my sense is the problem is attitudinal. As US dominance ages, we have become more and more accustomed to more and more. We have lost the gritty bootstrap spirit that rising actors always have, whether they be emerging nation-states like China, or upstart interns at work.
As our sense of entitlement has expanded- due to the sheer scope of US influence and wealth for 3 generations now – we have accrued wildly unrealistic expectations of what government owes us. Bush 2’s fiscal policy is the perfect embodiment of that explosion of unrealistic expectations. He said we could have it all: tax cuts, wars, more Medicare. Serious people knew this was unsustainable, but the great damage done has been to the US citizen’s perception. We have been borrowing from the future for so long, that these expectations are now set; they are locked into the psychology. This psychology of being owed a lot, not institutional blocks in the Senate or K Street, is the real problem. And it may very well take a national fiscal calamity to change popular attitudes downward. By way of example, this happened in Korea in 1997/98. The Asian financial crisis brutalized the country, but helped insure a national seriousness about growth and taxes that you just don’t see in the US.