America on the Rise

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For much of the past decade, “declinism” – the notion that America is heading toward a deadly denouement – has largely been a philosophy of the left. But more recently, particularly in the wake of Barack Obama’s election, conservatives have begun joining the chorus, albeit singing a somewhat different variation on the same tune.

In a recent column in The Washington Post George Will illustrates this conservative change of heart. Looking over the next few decades Will sees an aging, obsolescent America in retreat to a young and aggressive China. “America’s destiny is demographic, and therefore is inexorable and predictable,” he suggests, pointing to predictions by Nobel Prize economist Robert Fogel that China’s economy will be three times larger than that of the U.S. by 2040.

Will may be one of America’s great columnists, but he – like his equally distinguished liberal counterpart Thomas Friedman – may be falling prey to a current fashion for sinophilia. It is a sign of the times that conservatives as well as liberals often underestimate the Middle Kingdom’s problems – in addition to America’s relative strengths.

Rarely mentioned in such analyses is China’s own aging problem. The population of the People’s Republic will be considerably older than the U.S.’ by 2050. It also has far more boys than girls – a rather insidious problem. Among the younger generation there are already an estimated 24 million more men of marrying age than women. This is not going to end well – except perhaps for investors in prostitution and pornography.

In the longer term demographic trends actually place the U.S. in a relatively strong position. By the end of the first half of the 21st century, the American population aged 15 to 64 – essentially your economically active cohort – are projected to grow by 42%; China’s will shrink by 10%. Comparisons with other competitors are even larger, with the E.U. shrinking by 25%, Korea by 30% and Japan by a remarkable 44%.

The Japanese experience best illustrates how wrong punditry can be. Back in the 1970s and 1980s it was commonplace for pundits – particularly on the left – to predict Japan’s ascendance into world leadership. At the time distinguished commentators like George Lodge, Lester Thurow and Robert Reich all pointed to Europe and Japan as the nations slated to beat the U.S. on the economic battlefield. “Japan is replacing America as the world’s strongest economic power,” one prominent scholar told a Joint Economic Committee of Congress in 1986. “It is in everyone’s interest that the transition goes smoothly.”

This was not unusual or even shocking at the time. It followed a grand tradition of declinism that over the past 70 years has declared America ill-suited to compete with everyone from fascist Germany and Italy to the Soviet Union. By the mid-1950s a majority were convinced that we were losing the Cold War. In the 1980s Harvard’s John Kenneth Galbraith thought the Soviet model successful enough that the two systems would eventually “converge.”

We all know how that convergence worked out. Even the Chinese abandoned the Stalinist economic model so admired by many American intellectuals once Mao was safely a-moldering in his grave. Outside of the European and American academe, the only strong advocates of state socialism can be found in such economic basket cases as Cuba, North Korea and Venezuela.

So given this history, why the current rise in declinism? Certainly it’s a view many in the wider public share. Most Americans fear their children will not be able to live as well as they have. A plurality think China will be the world’s most powerful country in 20 years.

To be sure there are some good reasons for pessimism. The huge deficits, high unemployment, our leakage of industry not only to China but other developing countries are all worrisome trends. Yet if the negative case is easier to make, it does not stand historical scrutiny.

Let’s just go back to what we learned during the “Japan is taking over the world” phase during the 1970s and 1980s. At the time Dai Nippon’s rapid economic expansion was considered inexorable. Yet history is not a straight-line project. Most countries go through phases of expansion and decline. The factors driving success often include a well-conceived economic strategy, an expanding workforce and a sense of national élan.

In the 1950s, 1960s and 1970s Japan – like China today – possessed all those things. Its bureaucratic state had targeted key industries like automobiles and electronics, and its large, well-educated baby boom population was hitting the workforce. There was an unmistakable sense of pride in the country’s rapid achievements after the devastation of the Second World War.

Yet even then, as the Economist’s Bill Emmot noted in his 1989 book The Sun Also Sets, things were not so pretty once you looked a little closer. In the mid-1980s I traveled extensively in Japan and, with the help of a young Japanese-American scholar, Yoriko Kishimoto, interviewed demographers and economists who predicted Japan’s eventual decline.

By then, the rapid drop in Japan’s birthrate and its rapid aging was already clearly predictable. But even more persuasive were hours spent with the new generation of Japanese – the equivalent of America’s Xers – who seemed alienated from the self-abnegating, work-obsessed culture of their parents. By the late 1980s it was clear that the shinjinrui (“the new race”) seemed more interested in design, culture and just having fun than their forebears. They seemed destined not to become another generation of economic samurai.

At the time though, the very strategies so critical to Japan’s growth – particularly a focus on high-end manufacturing – proved highly susceptible to competitors from lower-cost countries: first Taiwan, Korea and Singapore, and later China, Vietnam and more recently India. Like America and Britain before it, Japan exported its unique genius abroad. Now many companies, including American ones, have narrowed the technological gap with Japan.

Today Japan, like the E.U., lacks the youthful population needed to recover its mojo. It likely will emerge as a kind of mega-Switzerland, Sweden or Denmark – renowned for its safety and precision. Its workforce will have to be ultra-productive to finance the robots it will need to care for its vast elderly population.

Will China follow a similar trajectory in the next few decades? Countries infrequently follow precisely the same script as another. Japan was always hemmed in by its position as a small island country with very minimal resources. Its demographic crisis will make things worse. In contrast, China, for the next few decades, certainly won’t suffer a shortage of economically productive workers

But it could face greater problems. The kind of low-wage manufacturing strategy that has generated China’s success – as occurred with Japan – is already leading to a backlash across much of the world. China’s very girth projects a more terrifying prospect than little Japan. At some point China will either have to locate much of its industrial base closer to its customers, as Japan has done, or lose its markets.

More important still are massive internal problems. Japan, for all its many imperfections, was and remains a stable, functioning democracy, open to the free flow of information. China is a fundamentally unstable autocracy, led from above, and one that seeks to control information – as evidenced in its conflict with Google – in an age where the free flow of information constitutes an essential part of economic progress.

China’s social problems will be further exacerbated by a huge, largely ill-educated restive peasant class still living in poverty. Of course America too has many problems – with stunted upward mobility, the skill levels of its workforce, its fiscal situation. But the U.S., as the Japanese scholar Fuji Kamiya once noted, possesses sokojikara, a self-renewing capacity unmatched by any country.

As we enter the next few decades of the new millennium, I would bet on a more youthful, still resource-rich and democratic America to maintain its preeminence even in a world where economic power continues to shift from its historic home in Europe to Asia.