Change in US Power Over the Last Decade (Part Two)

Comparison and Analysis

The first part of this report summarized the condition of the U.S. economy and social well-being as well as its change in power over the last decade. Below is a comparison of the state of the economies and social well-being of the U.S., the European Union, Russia, China, Japan and India. Every effort is made to provide references in investigating the relative change in U.S. power. As the only superpower, there is no doubt that the general strength of the U.S. currently makes it the world’s most powerful nation. However, in regards to various aspects of economic and social development, the EU, Russia, China, Japan and India have advantages over the U.S.

Biocapacity and Dependence on Resources

Investment in resources is a crucial element in maintaining social well-being and production of goods. Self-reliance on resources constitutes the mark of an independent nation in regards to the development of economy and social well-being. Natural resources not only include non-renewable resources such as oil, ore and coal, but also renewable resources such as forests, lakes and farmland. The present day issue is not limited to the depletion of non-renewable resources, but includes the inability of mankind to keep up with the use of renewable resources. As increasingly “green” methods start to affect economic policies and decisions, the strengths and weaknesses of the environment are determining what constitutes a competitive edge in the 21st century. In view of this, this report takes into account biocapacity as a factor of composite national strength by measuring natural resources provided through controlled use of common technology, as well as total area of land and waters used for dumping waste.

According to the Global Footprint Network’s 2010 report, the ten countries with the largest biocapacity are Brazil, China, the U.S., Russia, India, Canada, Australia, Indonesia, Argentina and France. With regards to both total ecological supply and ecological need, the U.S. is second only to China, far above France, Germany, the U.K., Japan, Italy or any one country, and even surpasses the total of all of these.

In examining a nation’s biocapacity, one must consider the effects of population. Looking at the per capita supply, Russia is the leader. The U.S. and France possess a higher per capita biocapacity than the EU’s average of 2.89, but lower than North America’s average of 4.93. Germany’s per capita biocapacity is higher than the world’s average of 1.78, but lower than the EU’s average level. U.K., Italy and China’s levels are higher than Asia’s average of .82, but lower than the world’s average. Japan and India’s levels are lower than Asia’s average. It is important to note that aside from fulfilling a nation’s resource needs through domestic supply, they can also be fulfilled through imports. The U.S. (0.01) and China (0.03) are roughly equal in amount of per capita imports, and their dependence is relatively low. Germany (0.36) and France (0.74) have a relatively higher dependence on imported resources, while Japan (1.18), the U.K. (1.51) and Italy (1.91) have the highest dependence.

No nation wishing to develop economically and socially can do without strategic resources. In this report special attention is paid to each nation’s dependency on imported resources. The higher a nation’s dependency on imports, the more the stability and safety of its supply may be restricted. The U.S., Japan and the EU are behind Russia, China, India and other developing countries, but the U.S.’s situation is better than the EU and Japan’s. Among these, only Russia is able to fulfill domestic needs while exporting large amounts of resources–up to 60%-80% of its domestic use. Between 2000 and 2009 Japan’s dependency on imported resources in no way weakened and actually rose gradually. During the same period, the EU’s dependency dropped to some extent, from 53.2% in 2000 to 45.2% in 2009. In the last ten years the U.S., China and India’s dependency rose slightly.

Gross Domestic Product and GDP Per Capita

The U.S. led the world in GDP in 2000, exceeding the EU, Japan and China; but by 2003, the EU had surpassed the U.S., and has since held the top rank. The U.S. has since held second place, followed by Japan and China. Examining the economic situation between 2000 and 2009 it may be seen that the GDPs of the U.S., the EU, Japan and China underwent relatively large changes relative to the world’s total; therefore a change in economic position was seen. The U.S. and the EU form the first echelon in international economy, both possessing a larger economy than Japan and China’s put together. Japan and China make up the second echelon, both possessing a larger economy than Russia and India’s put together.

Additionally, between 2000 and 2009, the U.S. slowly widened the gap between its GDP values and the EU’s. It also widened the gap between its GDP and Japan and China’s. In 2000, the difference between the U.S. and China’s GDP was 8.753024 trillion. By 2007 the difference was 10.780239 trillion, and by 2009, after undergoing the global economic crisis, the difference shrank to 9.13427 trillion. At the time, according to International Monetary Fund projected data, the difference would drop to 8.8790 trillion in 2010 and to 8.7350 trillion in 2011.

The U.S.’s GDP per capita is not only greater than that of Japan and China, but is also greater than that of the larger economy of the EU. Keeping long-term trends in mind, in 2000, Japan’s GDP per capita changed from slightly greater than the U.S. to slightly less. As for developing countries, China closed the gap in the last decade from 37 times less than the U.S. to 10 times; Russia closed the gap on the U.S.’s GDP per capita from 20 times less to 5 times; and, India closed the gap from nearly 80 times less to under 40 times.

Median Income

In regards to purchasing power parity (PPP), the top three countries in 1990 were the U.S., Japan and Germany. In 2000, the U.S., France and Japan held the top three positions; and, in 2008, the U.S., the U.K. and Germany were at the top. A great contrast was made apparent when Japan, Germany, France, Italy, the U.K. and other countries rose up and fell one after another, while the U.S. consistently kept its position at the top. Russia’s median income was 40% of that of the U.S. in 2009, dropped to 21% in 2000, and rose to 33% in 2008, though the levels in 2008 were still lower than its median income in 1990. In total, from 1990 to 2008, the U.S. and the U.K. doubled their median incomes, with a rate of increase greater than Japan, Germany, France, Italy, and the rising and falling Russia. India, and especially, China saw even faster growth rates.

International Balance of Payments and Foreign Investments Income

Between 2000 and 2009, the total exports of the U.S., the EU and Japan, for the most part, stayed around 10% of each respective GDP. Looking at international balance of payments surplus, the U.S. trade deficit dropped from 3.84% to 2.74% in relation to its GDP. From 2000 to 2009, the U.S., the EU and Japan’s dependence on foreign trade was less than that of China, Russia and India, and markedly less than export-oriented economies. Looking at how international trade contributed to boosting the economy, the performances of the U.S., the U.K. and India were slightly less those that of Russia, Japan and China.

The U.S. is still the top recipient of foreign direct investments, and received more than Japan, China, Russia and India from 2000 to 2009. Simply speaking, the use of foreign investments reflects a nation’s ability to benefit from another nation’s wealth; in this area the U.S. still holds the top position. On the other hand, it is obvious that aside from reflecting a nation’s investment environment, the amount of foreign capital also reflects the extent to which a nation is able to invest domestically. Since the 1980s, U.S. private savings started to become less than private investments, while domestic savings were insufficient to provide adequate funds to meet total investment demand. In order to maintain a growing economy, the U.S. needed to attract more international investment.

Price Level and Unemployment Rate

The consumer price indexes of the U.S. and EU show a certain degree of synchronization. From 2000 to 2010 both kept CPI within reasonable range of 4%, and more or less maintained the stability of price levels. In a nutshell, U.S. and EU price levels stayed generally stable, and did not undergo inflationary pressures like Russia and India, or deflationary pressures like Japan.

Looking at unemployment, even though U.S. rates from 2000 to 2008 did not exceed 6%, for three consecutive years starting in 2009 rates came close to or surpassed 9%. By that time unemployment had already become one of the U.S.’s most pressing social issues. Through a comparison of unemployment rates for the U.S., EU, Russia, Japan and China, it is easy to see that U.S. unemployment rates from 2000 to 2008 were lower than that of the EU and Russia, but that they surpassed that of the EU and Russia in 2009. Furthermore, the IMF predicted the EU’s unemployment rate would again surpass that of the U.S. in 2010 and 2011. In comparison with Japan, aside from the U.S.’s unemployment rate decreasing in the first two years of the 21st century, it was higher than Japan’s thereafter. The U.S.’s unemployment rate had been higher than China’s throughout the entire decade.

National Debt and Fiscal Deficit

National debt constitutes a nation’s debenture issued at home or abroad, or debts incurred from loans by foreign governments and banks. The debt to income ratio of a nation is an important measure of its health. From 2000 to 2007, the U.S. kept its debt to income ratio at around 35%. It broke past 40% in 2008, then 50% in 2009, and 90% in 2010. As for fiscal deficit, the U.S. surpassed the so-called alert level of 3% of deficit in proportion to GDP in 2008, and then reached and surpassed 10% in 2009. According to IMF’s predictions, the U.S.’s fiscal deficit would fall in 2010, but only to 7%, and would drop to only 5% in 2011. In comparison, although the EU had a fiscal deficit of more than 4% from 2009 to 2010, it fell to slightly above 3% in 2011. Japan maintained a deficit of 4%. China’s situation was even better, keeping its deficit below the alert level.

Military Strength

From 2000 to 2009, U.S. military spending not only exceeded that of Germany, the U.K., France, China and Japan, but steadily increased from less than 3% of the GDP in 2000 to almost 5% in 2009. Of all major economies, only Russia came close to the U.S. in military spending. For the past several years India has spent about 3% of its GDP on the military, and most years it spent more than the U.K. and France, both permanent members of the UN Security Council. In comparison, China spends the least of the five permanent member countries, and has spent about the same as Italy for many years. Under constitutional restrictions, Japan and Germany’s military spending are relatively low.

Space exploration capability is the complete embodiment of the level of a nation’s technology and launch capabilities. Statistics from the Union of Concerned Scientists show that the world’s total number of satellites launched from 2000 to 2010 was 651. During each year of this period, the U.S. launched more satellites than Russia, China, France, Japan, India, Italy, the U.K. and Germany. Every year for eight years between 2000 and 2007 the U.S. launched about half of the total of the nine countries combined, but fell to about one-third during the three years from 2008 to 2010. Throughout the decade the U.S. launched roughly as many satellites as the other eight nations, including Russia and China.

Of all new satellites, the U.S. applies one-third towards military use and one-fifth towards government provided services such as climate and seas surveillance. Over half are used commercially, and nearly one-tenth are applied towards civilian use. From 2000 to 2010, the number of new U.S. military satellites was five times that of China, and the number of new Russian military satellites was four times that of China. Additionally, looking at the use of the satellites, China only has one capable of two different types of services, while Russia has 29. The U.S. has over 40. In regards to the number of satellites providing public service, the U.S. and China surpass Russia. But in regards to commercial and civilian use, the U.S. leads Russia and, even more so, China. In fact, during the last decade the U.S. launched more new satellites than the BRIC countries – Brazil, Russia, India and China – put together; and notably launched more than double their new commercial and civilian satellites.

Technology and Education

The U.S. and Japan maintain a lead over China in the field of technology. In the Global Competitiveness Report 2010-2011, the U.S. scored ninth in higher education and training, 17th in technological readiness and first in innovation. Respectively, Japan scored 20th, 28th and fourth, while China scored 60th, 78th and 26th. Even though it will take time to make a qualitative leap forward, China is already closing the gap on the U.S. and Japan in cumulative quantity.

A correlation between technology education spending and military spending can be observed by analyzing World Bank data. From 2000 to 2009, U.S. technology education spending correlated to its military spending, and dropped from 1.92 in 2000 to 1.51 in 2009. From 2000 to 2005, China kept its technology education spending four times greater than its military spending. But beginning in 2006, it started to maintain about a 2.5 to one ratio. The main reason was because, in 2006, China’s education spending dropped 40.7%. After an increase of 44.6% in 2007 and 38.4% in 2008, China’s education spending finally met and surpassed its 2006 value by 18.7%. Not accounting for any other factors, in choosing between technology education development projects and military capability advancement, China weighs more importance on technology education development projects than the U.S. does.

Every year, from 2000 to 2007, the U.S. had more registered patents than China. But China’s numbers surpassed the U.S. in 2008. It took just eight short years from the time when the U.S. had several times as many registered patents compared to China to the time when China surpassed the U.S. Japan has consistently led the U.S. in the number of registered patents, and its lead only grew larger from 2000 to 2009. Japan’s numbers were nine times that of China in 2000, but only 30% more by 2009. The U.S. has not only fallen behind Japan in the number of registered patents, but has fallen further and further behind and been surpassed by China. However, the U.S.’s numbers have remained three to four times that of Russia’s and far above India’s numbers. For every 100,000 people who have patents, China is far behind the U.S. and Japan.

In terms of numbers of matriculated doctorate students, the U.S. maintains a lead over Japan, but is slowly losing its lead over China. Before 2002, India’s numbers were lower than Japan’s, but starting in 2003 they surpassed Japan. The ratio of American matriculated doctorate students compared to Japanese students dropped from 3.342 to one in 2000 to 2.995 to one in 2009. The U.S. population is one-forth of China’s and two and a half times that of Japan. For every 100,000 matriculated doctorate students, the U.S.’s numbers amount to 1.2 times that of Japan and four times that of China.

Trends in Population and Human Development

With socialization’s large-scale creation of various sectors, population factors play different roles, and are key elements in measuring composite national power. Generally speaking there are two ways population affects society: one, by determining the size of the workforce and overall size of the market; and two, by affecting the amount of per capita social resources and efficiency of social distribution. In 2000, the Chinese population was more than the populations of the EU, U.S and Japan put together, and by far exceeded the population of any one. India’s population is second to China and is the only other country with a population of over one billion. The population of the EU is 480 million, almost 200 million more than the U.S., three times more than that of Russia and four times more than that of Japan. From 1999 to 2009, the population of China grew by nearly 70 million, India by over 130 million, the EU by over 10 million, the U.S. by over 20 million, Japan by nearly one million, and Russia’s population decreased by nearly 4.5 million.

Looking at population growth rates, India and the U.S. have maintained long-term growth of at least double-digit numbers. For the most part they had a higher growth rate than China and the EU. Overall, the EU’s population growth rate has increased, in large part because it continues to expand, while India, the U.S. and China’s growth rates have fallen. As for Japan and Russia, successive years of no growth or even negative growth have created a serious social issue where they are facing the pressures of a shrinking population. China and India not only have large population bases, but continue to have higher population growth rates than the EU, and even higher rates than Japan, with its sustained negative growth.

Examining each nation’s population of those 65 years and older in proportion to its total population, one can see that Japan and the EU face the greatest pressure of an aging population. Russia and the U.S. come in second, while China and India face the least pressure. Of course, the population of 65 and older in proportion to the total population reflects the level of a nation’s health care. From 2000 to 2009, Japan’s level of health care was the highest, followed closely by the EU and the U.S., while China’s level of health care was relatively low.

The United Nations Development Program uses a Human Development Index to measure three fundamental indicators of progress: a long and healthy life, knowledge, and a decent standard of living. By examining their annual report, one can see that the ranking of every developed country fluctuated to varying degrees from 2000 to 2010. From 2000 to 2005, except for Italy rising in rank, the U.S., Japan, the U.K., France and Germany all saw a drop in rank to some degree. From 2005 to 2010, the U.S., France and Germany stopped their downward trend, while the U.K. continued the trend of the previous five years, dropping from the EU’s top four to the bottom. Aside from Germany rising in rank from 2000 to 2010, other developed countries saw drops to varying degrees. In comparison, the U.S. dropped one place, but its overall ranking was still higher than other countries.

Populace Satisfaction with Current State and Future Direction of the Country

A nation’s cohesiveness constitutes a key element of its composite power. A populace’s level of satisfaction with the nation’s current state and future direction may reflect its cohesiveness to a certain degree. Pew Research Center’s 2005 survey shows that Chinese satisfaction with the current state was very high, with 72% of participants answering “satisfied.” U.K. residents, Americans and Indians were relatively unsatisfied, with over half of participants for each country answering “not satisfied.” French, Germans and Russians were highly unsatisfied, with over 70% of participants for each country answering ” not satisfied.”

As for the level of satisfaction with the future direction of the nation, results from the same survey reveal a downward trend for the U.S. from 2002 to 2008. Although levels were up some in 2009, they began to fall again in 2010. After France’s levels of satisfaction peaked in 2003 and hit its lowest in 2006. Although levels rose slightly thereafter, France never surpassed the 30% mark. In comparison, from 2002 to 2010, China and India’s level of satisfaction continued to rise, while Russia’s levels rose during 2008, though dropping substantially after 2009. From the results of this survey from 2002 to 2010, one can see that China and India’s levels of satisfaction were substantially increasing, Japan, German and Russia’s were slightly rising, and U.S., U.K. and France’s saw varying degrees of decline.

Conclusion

The step-by-step description above leads to the following brief conclusions:

First, although some unforeseen and sudden changes, such as the collapse of the Soviet Union, 9-11, and the financial and economic crises have played an important role in changing the extent of the U.S.’s composite power, the formation of power is a process and must be observed over a relatively long time.

Second, there is disparity between absolute and relative changes in the U.S.’s composite power. Even though it is fairly obvious that the U.S. economy is declining relative to the global economy, in absolute terms (volume,) the U.S. is advancing in many areas such as the economic volume, while in relative terms (speed, proportions, etc,) some areas are improving just as some are decreasing or weakening.

Third, in judging the U.S.’s change in composite power, a comparison with other nations and regions is necessary. Comparing the U.S. with Europe, Japan, China, Russia and India, it may be seen that in some areas there has actually been a shift in power, though it is not obvious in the short term. Despite the Pew Research Center survey showing the American populace to be increasingly dissatisfied with the direction of the country, since the disintegration of the USSR, the U.S. has consistently maintained its overall lead, especially in the fields of technology and military to the extent that no other nation has yet to pose a serious challenge.

Fourth, from a comparison perspective, looking at the general description of change in composite power of nations or regions, no serious competitors have appeared on the world stage yet. Although the EU and Asia are the strongest just behind the U.S., the EU will not be able to match the U.S. without projecting the unified strength it is lacking in its state of change; and, Asian countries (namely those mentioned in this report) are even further behind in terms of unified regional strength.

Fifth, since the situation regarding many of the topics mentioned, such as the financial crisis are constantly changing, this report only illustrated some factual differences, and therefore did not go into in-depth analysis or causality.