Re­think­ing Amer­ica’s de­cline

Smart lead­er­ship can keep the na­tion ahead of China

The Washington Times Weekly - - Commentary - By Ben S. Car­son

We re­cently learned that China is poised to re­place the United States as the No. 1 eco­nomic power in the world some­time later this year. Our ane­mic quar­terly growth rate of 0.1 per­cent cer­tainly lends cre­dence to this spec­u­la­tion.

We must se­ri­ously ques­tion those who say our na­tion is not in de­cline. They are adopt­ing the os­trich strat­egy and stick­ing their heads in the sand.

There is no ques­tion that Amer­ica is the pin­na­cle na­tion of the world cur­rently and is likely to re­main in that po­si­tion for sev­eral years, given our mil­i­tary strength and the depth and sta­bil­ity of our fi­nan­cial in­fra­struc­ture. How­ever, over­con­fi­dence is the fre­quent com­pan­ion of cat­a­strophic de­cline, as con­firmed by nu­mer­ous his­tor­i­cal writ­ings.

If we con­tinue our fis­cally ir­re­spon­si­ble ways, cou­pled with our ar­ro­gance, there ex­ists no other pos­si­bil­ity than self-ru­ina­tion.

Our abil­ity to print money is al­ready in jeop­ardy as some other na­tions have be­gun mak­ing noises about al­ter­ing the in­ter­na­tional re­serve-cur­rency sys­tem to em­pha­size mul­ti­ple cur­ren­cies, el­e­vat­ing their sta­tus and de­creas­ing the strength of the U.S. dol­lar.

Our ever-in­creas­ing na­tional debt would then place us on shaky ground. The Trea­sury se­cu­ri­ties we have been of­fer­ing to China and oth­ers would no longer hold the same ap­peal, and all the bor­row­ing we have done against the fi­nan­cial well-be­ing of our prog­eny will come back to plague us and them.

Many who are re­spon­si­ble for putting us in this pre­car­i­ous po­si­tion would ar­gue that we re­ally don’t need to worry about coun­tries such as China re­plac­ing us as the pin­na­cle na­tion in the world, be­cause they have too many struc­tural prob­lems.

For in­stance, China is far be­hind us in per-capita in­come, creat­ing many so­cial is­sues and neg­a­tively im­pact­ing growth of the mid­dle class, which is the most ef­fec­tive growth en­gine.

Their paucity of ap­pro­pri­ate en­vi­ron­men­tal con­trols has led to lethal in­dus­trial pol­lu­tion, en­cour­ag­ing some of the in­tel­lec­tu­ally gifted and mo­bile cit­i­zens to leave the coun­try.

China also has a very weak bank­ing sys­tem, with too much govern­ment in­ter­fer­ence, which means their cur­rency is un­likely to be ac­cepted by the rest of the world as the re­serve cur­rency for many years. They could, how­ever, rec­og­nize and cor­rect these de­fi­cien­cies more rapidly than ex­pected, thereby en­hanc­ing their po­si­tion as a for­mi­da­ble chal­lenger to the United States.

Even if the these prob­lems are rec­ti­fied, China can­not ex­pect con­tin­u­a­tion of the kind of eco­nomic ex­pan­sion we have re­cently wit­nessed but is now rapidly dis­si­pat­ing.

If the United States has the good sense to sig­nif­i­cantly lower its cor­po­rate-tax rate, this dis­si­pa­tion will ac­cel­er­ate. Ad­di­tion­ally, the lack of in­tel­lec­tu­al­pri­vate-prop­erty pro­tec­tion in China will pre­vent it from gen­er­at­ing the kind of in­no­va­tion that usu­ally ac­com­pa­nies pin­na­cle-na­tion sta­tus.

When it comes to en­ergy, China has large po­ten­tial re­serves of shale gas, but nat­u­ral wa­ter is largely lack­ing in those ar­eas, mak­ing ex­trac­tion dif­fi­cult with­out new tech­nol­ogy. We may be un­able to ex­ploit this weak­ness be­cause of self-im­posed, short­sighted over­reg­u­la­tion of the en­ergy sec­tor in our coun­try.

From these few ex­am­ples, it can be seen that a com­bi­na­tion of wise moves by China and un­wise moves by the United States in the next few years could have very trou­bling im­pli­ca­tions for the fu­ture of our coun­try.

If there is a sud­den, cat­a­clysmic debt-en­gen­dered fi­nan­cial cri­sis in the United States, China is only one of a num­ber of pos­si­ble suc­ces­sors to our pin­na­cle po­si­tion. Per­haps our en­ergy should be ex­pended on fig­ur­ing out how to not only avoid fi­nan­cial col­lapse, but also how to in­vig­o­rate the most pow­er­ful eco­nomic en­gine the world has ever known.

We should take ad­van­tage of the great laboratory of ideas; namely, suc­cess­ful states that have gone from se­vere bud­getary deficits to sig­nif­i­cant sur­pluses through ac­tions of wise gov­er­nors and leg­isla­tive bod­ies. Let’s look at their tax­a­tion poli­cies and the busi­ness con­di­tions they cre­ated that stim­u­lated eco­nomic ac­tiv­ity.

There is noth­ing par­ti­san about this ap­proach; rather, it would be a man­i­fes­ta­tion of com­mon sense, which should know no po­lit­i­cal af­fil­i­a­tion.

The eco­nomic prob­lems we are ex­pe­ri­enc­ing in this coun­try, for­tu­nately, are in­duced by our own in­ep­ti­tude. I say for­tu­nately, be­cause it is within our own power to al­ter our course. We do not have to de­pend on the good will of some­one else. When we are able to work to­gether, as was the case with the Simp­sonBowles com­mis­sion on fis­cal re­spon­si­bil­ity, which was not per­fect, but bet­ter than noth­ing, ex­cel­lent ideas can be gen­er­ated that can move us along the path of eco­nomic re­cov­ery.

There is gen­eral agree­ment that our sys­tem of fed­eral tax­a­tion makes lit­tle sense and is overly com­pli­cated, yet we have failed to do any­thing about it. We also con­tinue to thrust the heavy foot of the govern­ment on to the necks of both small and large busi­nesses, sti­fling growth and in­no­va­tion.

En­ergy poli­cies ac­tu­ally aimed at en­ergy pro­duc­tion could be a tremen­dous boost to our fi­nan­cial bot­tom line.

Restora­tion of trust in a shrink­ing, rather than an ever-grow­ing, govern­ment that ac­tu­ally tries to fa­cil­i­tate the free­dom and well-be­ing of all of its cit­i­zens and not con­trol their lives, would most prob­a­bly lead to a rapid ex­pan­sion of eco­nomic growth in Amer­ica, which is the best way to tackle our debt.

As was the case with the Ro­man Em­pire, our fate is in our own hands. Ben S. Car­son is pro­fes­sor emer­i­tus of neu­ro­surgery at Johns Hop­kins Univer­sity and au­thor of the forth­com­ing “One Na­tion” (Sen­tinel, May 20).

ILLUSTRATION BY DONNA GRETHEN/TRI­BUNE CON­TENT AGENCY

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