Is This the Sunset of America?

To claim that the United States has lost its superpower status has become a new trend. Its budget deficit, the downgrade of its credit rating and the incapability of its government to reach an agreement over the debt ceiling clearly point to the economic and political problems that the country is facing. These are serious issues.

However, are they lethal? Have China, together with the EU, overtaken the leader position? That is hardly the truth. Interestingly, the debt-ceiling problem was created by American politicians themselves after having made their way to Congress by using their “lower taxes, less government” slogan.

After having hindered any efficient decision-making in Congress and having almost bankrupted the country, the tea party movement has suffered a severe downfall in approval ratings. Such a rapid change is something that happens to all the politicos who come to power suddenly and seemingly out of nowhere. It happens in the United States just like it manifests itself in Lithuania.

It is hard to believe that after having endured the negative effects of such a populist market economy Americans would again vote for its harsh advocates. This would mean reductions in public spending without increasing taxes for the richest. That is to say, growing unemployment and cuts in government programs.

America has lost its AAA rating. According to the Standard & Poor’s rating, the United States is now very close to Estonia, and countries like Finland are higher on the list. Nonetheless, the situation is a bit different in real life. It only takes the stock markets of the United States to stagnate for the rest of the world’s markets to follow suit, including those countries that have higher credit ratings. Why don’t the world stock markets react in the same way when, let’s say, Swedish stocks go down? The answer here is very simple. That is because America remains the world’s finance center no matter how many of its dollars countries like China have bought.

A great deal of economists and political analysts agree that the economic problems of the European Union are much more worrisome than those of the United States. The United States and the EU have chosen to introduce budget cuts to solve their problems and leave the evaluation of the social consequences of such choices for later. Nevertheless, even in this tough situation, the United States has advantages over the EU.

While the EU bodies do not possess the power to regulate monetary choices of its member states, the United States can successfully enforce its policies throughout the whole country. In the case of the EU, it is enough for any agreement to be harshly opposed by Germany or France for it to be completely abandoned. This sort of power cannot be found in any federal unit of the United States.

In addition, the euro itself is a relatively new currency. It could practically be seen as the deutsch mark that has transformed itself and imposed its rules on the whole eurozone. The recent enthusiasm by which the euro was adopted in Greece and Portugal has produced rather unpleasant results, not to mention the problems that Italy and Spain are dealing with.

What is next for the economy of the EU is hard to tell. It is difficult to grasp much from the EU leaders about the long-term economic strategy of the region and what is actually happening sub-regionally.

There is often discussion that the United States’ long-time leadership role will soon be unavoidably taken by China. China, however, depends on the West just as much, if not more than the United States depends on China. The competitiveness that the Asian superpower has built up during the years is based on cheap labor and foreign investment coming from the West. As the labor there is getting more expensive, the attractiveness of China will very likely diminish in the future. Certainly, there are no obstacles for China to create its own companies that would compete in the world market, just like Japan did after World War II.

Surely, post-war Japan and present-day China differ from one another in that the Chinese Communist Party does not appear to be willing to give away its monopoly of power to anyone. China does have deep-rooted traditions of imperial rule; yet, the period of the Communist regime makes up just a tiny bit of Chinese history. Also, another trait of the Chinese economy is the disproportionate number of peasants in comparison to the Western countries. It is challenging to guess how China will tackle this issue.

Therefore, all the potential rivals of the United States show some serious weaknesses. Washington could get rid of its problems without great difficulties if more political will was shown and more compromises were reached. History shows that such will was always there during the defining moments in American politics. Why should this crisis be an exception?