shrinking

Issue #44

Last Update March 2, 2006

International The Shrinking America by Sten Grynir Our population is growing. Our Gross Domestic Product is growing. In everything else but military might: currency value, percentage of the oil consumption market, population health and welfare, international prestige, scientific and technological achievement, internal security, we are shrinking in comparison with the rest of the world. This is not necessarily a bad thing, as the Swedes, the Poles, the Brits, the Japanese and other previous empires have found out. Once free of their colonial ambitions, and the costs that went with them, these countries were able to do a much better job of providing their citizens with an adequate standard of living, at lower costs in life and treasure. The USA has not yet recognized that our brief hegemony is crumbling, and we have yet to make the mental adjustments necessary.

Military might aside, we simply do not swing the weight we used to, and our influence will continue to wane. Our GDP, twenty years ago far larger than that of any other nation, is today about equal to that of the EU. Much of our GDP is coming from intangibles, rather than from the production of physical goods and raw materials, although our manufacturing plight is less desperate than many believe, and our agriculture and mining remain strong. Services, including design, engineering, software creation, entertainment and tourism, picked up the slack from manufacturing, but although we are still the major force in these areas, increasingly the gap is narrowing between ourselves and the rest of the world,. Some of it is due to our own activities in outsourcing intellectual tasks, some of it is due to the decline of domestic enrollment in scientific and technological disciplines in our colleges and graduate schools, and some of it due to the increasing reluctance of foreign students, scientists and engineers who previously made up for this shortfall to endure the harassment they now find under the rubric of national security. Previously we were a magnet; in the past few years we have become a place to avoid.

In energy, we are likewise having to share more with the rest of the world. Discarding the lessons of the late 1970s, we have turned from the effective strategy of increasing energy efficiency to the embracing of energy profligacy. We produce less oil than we used to, and even the looting of our seacoasts and national parks would not reverse this trend. At the same time, demand from the rest of the world, especially emerging economic powers like China, has skyrocketed, boosting energy prices. Our energy usage has grown, but we are a smaller part of the energy use equation than before, and are thus less able to control the market.

As for our currency, we have seen a declining dollar and the rise of the Euro as a currency that might vie with the dollar as the standard of world commerce and economics. Already Asian banks are replacing dollar investments with Euro and Yen investments, a troubling sign since in recent years the Asian banks have been the biggest purchasers of our debt. Coupled with our growing international unpopularity and perceived willingness to kick over the board if we don't get our way, the overseas lenders that have kept our economy afloat, this is a real danger signal.

In reality, what is happening is a return to the normal condition of a multipolar world. The anomaly of a single state controlling everything is always a short-lived phenomenon. While enjoying the anomaly while it lasted, we should have been preparing for its end. We haven't, and the awakening will be rude, but a multipolar world is not a bad thing, especially if it is a prosperous one. We will have a smaller slice of the pie, but the pie will be bigger. Like the Romans' Mare Nostrum, the world will become no longer be our sea, but it will be more peaceful and a better place to live because of that.