Caution: rambling post ahead.

I was goaded by Dan into reading an article by Robert Kagan, a neocon I usually avoid (by ‘goaded’ I mean that he mentioned it — I am easily influenced):

As good a foreign policy article as you will find in a US newspaper is a piece is by Washington Post "World Columnist," Robert Kagan, entitled, "Still No. 1." I learned of this article from foreign policy expert Thomas P.M. Barnett, who stated he agreed "with it 100%." I do too. What do you think?

Fair enough. I took the challenge. Here is what Kagan was getting at:

One hopes that whoever wins next week will quickly dismiss all this faddish declinism. It seems to come along every 10 years or so. In the late 1970s, the foreign policy establishment was seized with what Cyrus Vance called "the limits of our power." In the late 1980s, the scholar Paul Kennedy predicted the imminent collapse of American power due to "imperial overstretch." In the late 1990s, Samuel P. Huntington warned of American isolation as the "lonely superpower." Now we have the "post-American world."

Kagan thinks this whole theory that the U.S. is not the superpower it once was, and is heading downward in terms of international influence, is completely erroneous and will be proven wrong just as soon as the economy improves.

That certainly could happen, and I agree with Kagan that the U.S. is certainly still #1 in some respects. I also agree with him that this theory of "declinism" has been touted before, and was apparently proven wrong. The article is well written and the argument appears quite sound.

But on closer inspection, I don’t buy it. It’s interesting that Kagan’s mention of past uses of the declinism argument started in the 1970s and continued off and on until today. Good way to make everyone sound like they are just crying wolf.

But what have we seen since the late 1970s? Stagnating wages for the middle class, explosive public and private debt, and ever-increasing current account deficits. The problems with health care, arguably one of the top two or three budget issues in the U.S. right now, really began a few decades ago. The U.S. has been declining ever since but has been in a state of denial.

The U.S. has been ignoring all this for many years, recently by borrowing a shitload of money and hoping that low interest rates would produce a successive number of bubbles that would allow it to grow its way out of the mess it’s in.

At the moment, the U.S. government is out of money and its budget obligations are growing every day as the population ages.

What are the two major reasons why the U.S. has been a world leader during the past 75 years? Big economy and big military.

The big military is very expensive. The U.S. is broke. You can do the math to see why this may not be sustainable. If the U.S. decides to deny the obvious and keep spending hundreds of billions of dollars each year on its military, this will crowd out a lot of other important kinds of discretionary spending that will (in my opinion) do long-lasting damage to its economy — think education, infrastructure, fixing health care, new energy policy, etc.

The big U.S. economy will be big for a long time to come, but as the international economy becomes more interdependent, it will be more difficult for the U.S. to simply dictate terms to other countries based on things like access to its market (it’s essentially already open to everyone). Has Kagan noticed that the once-vaunted Washington Consensus is at best hibernating, and at worst completely dead? What just happened to the Doha Round? The principles championed by the U.S. are not holding up too well at the moment.

To further prove his argument, Kagan notes that the U.S. economy as a share of the global economy was roughly the same percentage for the past 40+ years. All that tells us is something about the U.S. as compared to the rest of the world as a whole; it says nothing about U.S. dominance as compared with other regions/nations. Has China become more or less important during that period? How about the EU as an economic force? And if your economy is huge, in part, because you have been propping up consumption with massive debt, shouldn’t that be somehow discounted?

Here’s another way to look at this. Take the U.S. and the EU. Now assume that the U.S. will eventually have to scale back its military spending due to financial constraints. Now compare the two based on economies alone. Not a huge difference anymore in terms of stature, is there?

From a China trade and investment perspective, if you take the military away from the U.S., then I’m not sure between the U.S. and EU which one has more influence here. This is a difficult mental exercise, of course, but when you look at purely economic and trade issues, the superpower argument seems pretty weak.

Maybe Kagan thinks that the U.S. national debt is not a big deal and that the current staggering government deficits have no structural element. Doing so is like sticking your head in the sand. Believing that the problems facing the U.S. can be solved in the short run and that there will be no lasting effect on its stature in the world seems like wishful thinking to me.

Notice that I haven’t mentioned Iraq. That war has certainly damaged the U.S. globally, but this kind of thing has happened before, and the U.S. was able to turn public opinion around. I don’t see the U.S. turning around the systemic problems in its economy so easily or quickly.

Cockeyed optimist that he is, Kagan apparently does not think that these structural U.S. economic problems are that big of a deal:

If the past is any guide, the adaptable American economy will be the first to come out of recession and may actually find its position in the global economy enhanced.

I’m not entirely sure what that means exactly, but it sounds a bit too much like wishful thinking to me. I’m not sure if Kagan is a Republican, but he reminds me of John McCain trumpeting that "The fundamentals of the U.S. economy are sound" just as the financial crisis hit.