How America Stays on Top

President Obama recently shocked the world with his declaration that “America will never settle for second place,” because since the end of World War II, American dominance has never been called into question. The sole exception to this might have been the Cold War, but even during this period, the U.S.-Soviet rivalry was limited to military competition; no one ever doubted whose economy was stronger. And following the fall of the Soviet Union, the U.S. became the world’s sole superpower, dominating both militarily and economically. Although this spot is secure for the time being, President Obama’s declaration shows both that he’s worried about the future and that Americans realize their days as the world’s superpower may be limited. But who can knock America from the top?

As far as military power is concerned, nobody is going to be amassing a greater arsenal or topping U.S. expenditure levels, at least not in the foreseeable future. In terms of economic power, Japan is currently trailing the U.S. in the No. 2 spot. But its GDP is far lower than the leader, making it very unlikely that Japan’s economy will surpass the U.S.

On the other hand, China’s emergent market economy is driving their GDP to levels that may soon overtake Japan, although not the U.S. anytime soon. And aside from these two, there are no countries that can compete with the U.S. in terms of population or GDP, so it’s apparent that Obama’s remarks were directed at Japan and China. In other words, the U.S. is beginning to recognize the threat Japan and China pose to its supremacy, which is why the president is giving speeches to try to encourage the people.

From this, one might assume that the U.S. is a very cautious nation. However, a closer analysis of the situation reveals that it competes with a cutthroat strategy that ensures supremacy by using every means available to force rivals to abandon their development strategies.

In the interests of preserving this dominance, the U.S. has recently launched a series of shocking new policies. The first of these, directed at Japan in early 2010, was a sudden demand for the nation’s largest auto manufacturer to recall hybrid vehicles over quality issues. Congress then went further, convening public hearings and demanding an explanation and apology from Toyota’s CEO. The reason? A calculated attack on Japanese auto manufacturers by the U.S. government, designed to save the domestic auto industry (whose vehicles could not survive the intensely competitive Japanese industry) and indirectly maintain American dominance.

Some claim that Japan’s financial and monetary system was ruined by the Plaza Accord in the 1980s and, if that’s true, this wave of recalls is threatening to send the auto and perhaps other industries down a similar path. Japan has worked for decades to build the reputation of its products, and once this is tarnished, it will be increasingly difficult for its companies to survive in the international market. For the Japanese, the essence of a company lies in its ability to maintain quality, and when that is called into doubt, they have nothing left. Ostensibly, the U.S. created this incident to attack Japanese auto industry, but the true motive lies in maintaining national supremacy.

The U.S. also has more than enough ways to deal with China, its other potential rival. The core issue between the two is the problem of Taiwan, a trump card used by the U.S. whenever it wants to control China by creating an issue. Sino-U.S. relations had just started to normalize, then sure enough, America suddenly announced new arms sales to Taiwan. More efforts to control China have taken the form of President Obama’s criticism on the issues of democracy and human rights, in addition to his decision to meet with the Dalai Lama and other leaders of separatist groups.

The U.S. is equally unscrupulous in the economic arena. In addition to pressuring the Chinese government to raise the value of its currency, it seems determined to go out of its way to make an issue of the environment. The Copenhagen Climate Council is not so much a concerted UN attempt to deal with global warming as it is a scheme carefully planned by the U.S, to establish so-called “international CO2 emission standards.” They figure that since CO2 levels will be decreasing in post-industrial America while increasing in newly-industrializing China, emission standards/taxes will be a great way to throttle China’s economic development. On one hand, they fear that one day the international community will demand that they, along with other developed nations, pay for the true cost of their carbon emissions. On the other hand, they’re doing everything in their power to hinder China’s economic development by corralling the support of other nations in pressuring it to accept strict emission standards.

Neither Japan nor China has an effective way to counter these moves. Japan, for its part, has been establishing closer ties with China, because it’s under pressure from America and knows that caving into demands will only support the status quo while shrinking its own influence on the world stage. Its government is hoping that developing relations with China will free it from American constraints and improve the economy.

Interestingly, China and Japan are the U.S.’s two largest creditors. Without the help of these two nations in buying bonds and supporting deficit financing, the U.S. would not be where it is today. Should they one day decide to abandon the dollar, the U.S. would be bankrupted by massive debt. So it would seem that by making imaginary enemies of Japan and China, and competing underhandedly, the U.S. is killing the chicken to get the egg.

In conclusion, we caution America’s leaders to take into consideration the welfare of other nations as they seek to maintain dominance, because in today’s world of increasing global economic integration, using unfair competition and monopoly to support one’s economy will only end up hurting everyone.

(The author of this column is a law professor and director of the Center for the Study of Developing Societies at the Zhongnan University of Economics and Law)