Why To Not Misjudge the United States

According to commentator Christopher Hitchens, “The ongoing financial meltdown is just the latest example of a disturbing trend that ... threatens to put the Land of the Free and Home of the Brave on a par with Zimbabwe, Venezuela and Equatorial Guinea.” Nicholas Kristof, the influential New York Times columnist, counterattacks that no, it’s due to a bad tax code that “the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.” Vladimir Putin asserts that what’s really happening is that “they [the U.S.] are living like parasites off the global economy.” For Mitt Romney, Republican presidential primary candidate, the problem is that the U.S. is “only inches away from ceasing to be a free market economy,” and Barack Obama laments that the U.S. “did not have a AAA political system to match our AAA credit rating.”

Will the United States continue being the most powerful country in the world for the forseeable future? Yes.

These days, it’s too easy to conclude that the U.S. is a disaster and that it cannot continue being the most powerful country in the world. For those who still had doubts about U.S. supremacy, the disgraceful process of negotiation over the debt limit was the final confirmation: The superpower is in free fall. And, of course, the collapse of the stock market and the possibility that the economy could once again be entering recession are nothing more than additional manifestations of the unstoppable American fiasco.

This conclusion, as obvious as it appears, is erroneous.

1. Wall Street, the Pentagon, Hollywood, Silicon Valley, universities and other sources from which U.S. power emanates continue to be solid. The stock market has fallen, and there will be budget cuts affecting sectors such as the military, for example. But despite that, the current advantage of the U.S. over its rivals is so enormous that the cuts will not displace it from the number one spot. For example, its Coast Guard alone has more ships than the 12 largest navies in the world combined. It’s not in vain that the U.S. spends more on defense than the rest of the world. U.S. superiority will continue to be undisputed in the rest of the strategic areas.

2. Absolute power is not important. What is important is relative power with respect to rivals. Although the U.S. could be declining in absolute power, its competitors also have problems and are confronting difficult threats internally and externally, as well as politically and economically.

3. Demographics. In almost all the rich nations, population is growing very slowly or is decreasing. In the U.S., it is increasing. Furthermore, it continues being the world’s most powerful magnet for talent. It also is the country that most quickly integrates and takes the most advantage of immigrants, especially the best educated.

4. When the world goes into financial panic and investors search for a safe refuge for their savings, whom do they turn to? The United States. When all of the financial markets fell off the cliff, the appetite for buying U.S. Treasury bonds broke records. Demand for these bonds was so great that their yield fell to the lowest level in history. It was not important to investors that their capital would be minimally remunerated, considering that their priority was to assure that they were placing their money in the vaults of a government that would not default on payment. Surprising, no? We are talking about the same government and same bonds whose solvency is being fiercely disputed. Neither has the news that the ratings agency Standard & Poor’s downgraded U.S. government bonds produced a flight of capital.

The world financial market gave a forceful response to those who maintain that the regrettable debate in Washington over the debt limit irreversibly damaged U.S. credit. That idea could go over well in editorials and talk radio. But those who know about money heaped Olympic levels of scorn on it. Investors speak with actions, not words. Their actions signal that they believe the U.S. will continue being the most secure country in the world.

5. The influence of radical and destructive ideas will be transitory. The ascent of groups with extremist ideas that suddenly acquire significant influence and dominate the political scene, only to then disappear with equal speed, is a recurrent phenomenon in the U.S. McCarthyism and the diverse populist movements are some examples of this. Ross Perot is another, and the tea party will be one more.

Is the U.S. facing enormous problems? Yes. Is it weakened? Yes. More so than other countries? No. Will it continue being the most powerful country in the world for the forseeable future? Yes.