Americans seem to have forgotten that we are not slaves to finance-tech profits as the sole divining rods to what happens next.
A recent essay explores the paradox of American power: global reach amidst civic decline: The Strange Triumph of a Broken America: Why Power Abroad Comes With Dysfunction at Home.
The media, mainstream and alternative alike, has long been highly attuned to evidence of US decline. This sensitivity held sway throughout the Cold War (1950 to 1990), briefly morphed into triumphalism in the early 1990s “unipolar moment” and then returned to tracking decline in the era of China’s rise (1998-present).
As a mind experiment, substitute “China” for the “US” in the following statistics drawn from the essay. Many of us find that we believe statistics showing China’s dominance more readily than we believe those showing US dominance.
By virtually any measure, the US has gained ground on its international rivals in key areas. Autocratic regimes excel in cloaking their systemic problems behind unverifiable claims, while democracies are a free-for-all of self-criticism. This openness accentuates the sensitivity to decline while the decline of autocracies is papered over.
Consider these statistics with an open mind. (The essay is behind a paywall so I am excerpting data points. Let’s stipulate that statistics can be massaged or inherently flawed, for example GDP, but they offer a general data-based context for discussion.)
The US accounts for 26% of global GDP, the same as during the ‘unipolar moment’ of the early 1990s.
In 2008, the economies of the US and the Eurozone were nearly equal in size, but today, the American economy is twice as large.
The US economy is roughly 30% larger than the combined economies of the so-called global South: Africa, Latin America, the Middle East, South Asia, and Southeast Asia. A decade ago, it was just 10% larger.
In 1995, Japanese citizens were, on average, 50% wealthier than Americans, measured in current dollars; today, Americans are 140% richer.
If Japan were a U.S. state, it would rank as the poorest in average wages, behind Mississippi–as would France, Germany, and the UK.
From 1990 to 2019, U.S. median household income rose 55% after taxes, transfers, and adjusting for inflation, with income in the bottom fifth seeing a 74% gain.
The US dollar (USD) accounts for nearly 60% of global central bank reserves–down from 68% in 2004 but equivalent to its 1995 share. It is used in roughly 70% of both cross-border banking and foreign currency debt issuance–up from 2004–and almost 90% of global foreign exchange transactions. (China’s renminbi holds a 2.3% share of global central bank reserves.)
Once the world’s largest energy importer, the US is now the leading producer of oil and natural gas, surpassing Russia and Saudi Arabia.
US energy efficiency and renewable technologies have lowered per capita carbon emissions down to levels not seen since the 1910s.
The US consumer market is equivalent to China’s and the Eurozone’s combined.
U.S. firms generate over 50% of the world’s high-tech profits, whereas China captures only 6%.
The US is the only great power whose prime working-age population is projected to grow throughout this century. In contrast, China’s population of workers between the ages of 25 and 49 is projected to drop by 74%, Germany’s by 23%, India’s by 23%, Japan’s by 44%, and Russia’s by 27%.
Americans start businesses at two to three times the rate of France, Germany, Italy, Japan, and Russia and one and a half times the rates of China and the UK.
The US is home to 7 of the top 10 universities and a quarter of the top 200.
Exports account for just 11% of GDP, compared with a global average of about 30%.
Global capital flows into the US as a safe haven.
This chart of the global stock market reveals the enormous gap between the US stock market as a magnet for global capital and everyone else: the US market comprises 67% of global equities, while China has a tiny 3% share. Global capital is not pouring into China as a safe, profitable haven, it’s leaving China to the tune of hundreds of billions of dollars a year, as China’s property bubble burst has already erased $18 trillion and is far from bottoming.
The opportunity costs of China’s subsidy-heavy economic development model are enormous. The electric vehicle sector alone has received $231 billion in subsidies since 2009, while China’s neglect of its rural population has left around 300 million people without the education or skills needed to work in a modern economy, as the economist Scott Rozelle has shown.
China’s new tech startups have dropped from over 50,000 in 2018 to just 1,200 by 2023.
Chinese are the fastest-growing migrant group crossing the U.S. southern border, with their numbers surging 50-fold.
All this speaks to two points: 1) every nation has problems balancing global ambitions and domestic stability, and 2) the durability of US global reach.
The author then turns to America’s domestic dysfunctions, and makes these points:
Social Security and Medicare help seniors, but working-age Americans receive far less support.
United States spending only one-fourth of the OECD (the developed economies) average on job training and just over one-third on childcare and early education.
Urban centers have largely reaped the benefits of globalization, immigration, and the shift to knowledge- and service-based industries. In contrast, most rural areas have been left behind.
The US economic system has impoverished rural areas, threatening the stability of American democracy.
From 2000 to 2007, the United States lost 3.6 million manufacturing jobs, followed by another 2.3 million during the 2008 financial crisis. Rural towns were hit hardest.
Immigration reduced the earnings of the least-skilled native-born workers by 0.5 to 1.2 percent for each one percent rise in immigrant labor supply, according to an exhaustive review.
From 2000 to 2019, 94 percent of new U.S. jobs were created in urban areas.
Working-class men have been hardest hit by reductions in decent-paying blue-collar jobs and wages over the past two decades. As the economist Nicholas Eberstadt has shown, prime-age men currently suffer unemployment levels comparable to those of the Great Depression.
A military recruitment crisis has arisen, as 77% of young Americans ineligible for service because of obesity, drug use, or health issues.
In the author’s view, globalization has splintered the US along urban-rural lines: “The urban-rural divide itself remains a powerful obstacle to reform, because it fuels political polarization and gridlock. This fault line is likely to define American society for years to come, threatening national cohesion in a dangerous world.”
He sees this divide as threatening American democracy: “The cultural fissure between the parties increasingly threatens the United States’ democratic stability.” he also believes that “an exaggerated sense of decay is already starting to destabilize democracy.”
In my analysis, the author has missed the key dynamics driving this paradox: the dominance of finance and technology in the economy, and the dominance of the economy over every other source of national coherence.
He also misses the dire consequences of the internal contradiction at the heart of the Attention / Addiction Economy we now inhabit: it’s highly profitable to addict consumers to junk food, technologies and deranging content, and highly profitable to treat the resulting chronic disorders with medications, just as it’s highly profitable to replace durability with planned obsolescence.
In other words, it’s no mystery that 77% of America’s youth can’t qualify for military service: it’s extraordinarily profitable to degrade their physical and mental health and then treat the degradation with medications.
By making financial metrics the sole measure of success and Progress, we’ve elevated the most profitable sectors–finance and technology–to the point that our entire economy is a winner-take-most game in which those enterprises and individuals who are most adept at leveraging globalization and financialization for their private gain are worshiped as winners, while those who are less adept are abandoned as having little to no value in the game, so why invest in them?
Being a magnet for the immense global wealth that has been created by the policy responses to the 2008 Global Financial Meltdown also has perverse consequences, as global capital has been a key factor in pushing housing and other asset valuations to nosebleed levels, rendering housing unaffordable to young Americans just entering the market.
The author also failed to note that this rural-urban divide is global: small farmers and rural towns aren’t just struggling in the US, they’re struggling in Europe, Japan and China, too. Globalization has re-ordered the global economy in ways that are destructive to civic stability, as decentralized, localized producers cannot compete with globalized, commoditized crops, capital, labor and goods.
As I have taken pains to explain, this manic focus on maximizing profits as the sole metric has consolidated supply chains and capital into inherently unstable systems stripped of resilience. This fragility is masked by the apparent robustness of these systems, so that only insiders know how vulnerable the system is to disruption in any dependency chain.
In elevating maximizing profits as the sole metric for making decisions, we’ve created an economy of monopolies and cartels, for as J.D. Rockefeller understood, competition and transparency are obstacles to profits and must be eliminated.
Once capital is concentrated, it has the means to buy political influence and control the narrative, glorifying immensely profitable finance as “doing God’s work” and technology monopolies as saviors of humanity.
These asymmetries are the source of both global dominance and the destabilization of domestic coherence. Understood in this way, the paradox of American power and dysfunction are not strange; the paradox is the inevitable result of favoring profitable finance and technology above all else, as these generate global dominance and destabilizing asymmetries in the domestic economy.
Americans seem to have forgotten that we are not slaves to finance-tech profits as the sole divining rods to what happens next; we can rebalance profit with civic coherence by reducing the asymmetries created by the worship of financial-tech profits.
What’s good for trillion-dollar corporations may not be good for the nation. This reality is taboo, as is the recognition that much of what is unraveling America’s quality of life is Anti-Progress masquerading as Progress to reap greater profits, even as the machinery generating those profits grinds up the citizenry like grist in the mill.
We can do better, and must do better. Perhaps one starting point is to identify the taboos protecting the machinery unraveling national coherence from scrutiny.
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