If the U.S. were a stock, it would be trading at historic lows. The budget deficit is out of control, the economy is anemic and the political system is controlled by academic ideologues and Chicago hacks. Opposing them is a force largely comprised of know-nothings–to call them Neanderthals would be too complimentary.
Not surprisingly, many Americans have become pessimistic. Two in three adults now fear their children will be worse off than they are. Nearly 40% think China will become the world’s dominant power in the next 20 years, as indicated by a recent survey.
Yet, in spite of everything, I would still place my long-term bets on the U.S. Here’s why:
1. The U.S. is the only advanced country in the world with viable demographics. By 2030, all our major rivals, save India, will be declining, with ever-larger numbers of retirees and a shrinking labor force. By 2050 Germany, Japan and South Korea could approach having twice as many people over 65 per capita as the U.S. By then, the U.S. will have 400 million people, which may be more than the entire EU and three times the population of our former arch-rival Russia.
2. In terms of energy resources, the U.S., combined with Canada, is the second richest region in the world after the Middle East. The country possesses vast resources of natural gas, about 90 years’ worth, as well as strong areas for wind power. Given America’s past profligacy, the country could derive considerable savings with even modest conservation efforts.
3. America remains the world’s agricultural superpower, with the most arable land on the planet. With another 3 billion people expected on the planet by 2050, the U.S. should enjoy a continuing boom in food exports.
4. Military power matters now and in the future. We are not living in a Star Trek future of earthly harmony. The U.S. leads in military technology and, yes, our martial spirit remains a positive factor, despite the portrayals from Hollywood. For all its missteps, the U.S. military has achieved its strictly war-fighting missions–in Iraq and Afghanistan, as well as a host of smaller conflicts–over the past 20 years. Meanwhile, Europe and Japan have taken themselves out of the military game, and it will be decades before China will be ready for a head-to-head challenge.
5. There is no large country that comes close to the U.S. as an entrepreneurial hotbed (Taiwan, Israel and Hong Kong come close but are far smaller). The recent Legatum Prosperity Index showed the U.S. remains by far the largest generator of new ideas and companies on the planet.
Of course, all these critical advantages could be squandered by fecklessness. The empowered American left–in sharp contrast to the tradition that runs from Franklin Roosevelt and Harry Truman all the way to Bill Clinton–often envisions the U.S. as a country headed into the dustbin of history, and deservedly so.
Leftist historian Immanuel Wallerstein, for example, asserts that the U.S. has been “a fading global power” since the 1970s. The only question now, he suggests, is “whether the United States can devise a way to descend gradually, with minimum damage to the world, and to itself.” Another leading liberal analyst, Parag Khanna, envisions a “shrunken” America that is lucky to eke out a meager existence between a “triumphant China” and a “retooled Europe.”
The traditionally pro-American right increasingly shares this pessimism, albeit for different reasons. With Obama and the Democrats in power, many conservatives, including such keen observers as Charles Krauthammer and Victor Davis Hanson, believe the country has hit the historical skids.
Yet declinism is often overstated. Today, only someone delusional would suggest that once widely feared Japan, soon to fall to third place (behind China) as an economic power, constitutes a serious threat to American preeminence. However, the fantasy of a European resurgence remains deeply embedded among American policy wonks and academics. It is a firmly held belief despite the continent’s decades of slow growth, demilitarization, disastrous demographics and mounting budget woes, particularly on its southern and eastern fringes.
On the other hand, China and India represent true ascendant economies of the next decade and beyond. China’s rise has led one writer, the Guardian’s Martin Jacques, author of When China Rules the World, to suggest that America must “learn to bow” before the great power of the 21st century.
Yet for all their impressive growth, neither China nor India possesses either the institutional strengths or natural resources of the U.S. China’s current boom has much to do with an orgy of money-printing that would make Barack Obama blush. Real estate in some places is turning bubblish. There are reports of vacancy rates as high as 50% in Shanghai’s commercial market.
India, as anyone who has spent time there knows, remains a highly fragmented and largely impoverished country. It will be a great power of the future, but a very poor one, which will take many decades, even a century, to approach even a decent fraction America’s current per capita income.
Often overlooked as well is America’s unique advantage as an inclusive multiracial society. Over the past decade America has produced two African-American Secretaries of State and one President. America remains unique in its ability to absorb different races, religions and cultures, an increasingly critical factor in maintaining global preeminence.
What Americans need most now is to develop policies that build on our essential strengths. Some tech enthusiasts and members of the Obama Administration claim that “the age of infrastructure is over.” However, in reality there is no way to assure a decent future for the next 100 million Americans without a major investment in everything from roads and broadband to transmission lines, water systems and basic skills training
Some conservatives may oppose such a domestic surge, but the investment reflects a strong American tradition. The critical issue will be to make sure a commitment to infrastructure does not morph into a Washington-led industrial policy that would inevitably reward the well connected and stunt our innovative edge.
In the end, Americans must remain true to our individualist traditions. Compared with Europeans, who instinctively look to government for guidance, the vast majority of Americans still believe that hard work is the key to self-improvement. Our primary economic asset continues to lie with entrepreneurial spirit and adaptability.
In the coming decade, American success will require precisely this blend of public support and private initiative. If the U.S. stays true to its unique traditions, it will remain the world’s best investment for decades to come.