THE U.S. REALITY: POLITICAL MADNESS AMIDST ASTONISHING STRENGTH
The United States’ debt ceiling crisis provoked the usual commentary about the country’s presumed dysfunction. But the truth is that this unprovoked madness, causing selfinflicted wounds, has taken place against a backdrop of astonishing strength.
The facts cannot be disputed. The United States has recovered from the coronavirus pandemic faster than any major economy in the world. As Bloomberg’s Matthew A. Winkler recently pointed out, unemployment is stunningly low. Gross domestic product growth has grown at three times the average pace as under President Donald Trump, real incomes are rising, manufacturing is booming and inflation has eased for 10 straight months. Even the budget deficit, which was at 15.6% of GDP at the end of the Trump presidency, has dropped to 5.5% of GDP at the end of last year.
The picture is even better when viewed more broadly. The United States remains the world’s leader in business, especially in cutting-edge technology. Scholars Sean Starrs and Stephen G. Brooks found that, looking at the globe’s top 2,000 companies, Chinese firms come first in shares of global profits in only 11% of sectors, but U.S. firms are ranked first in 74% of sectors.
Or look at artificial intelligence, which most agree is the bold new frontier of technology, likely to shape every industry. U.S. companies such as OpenAI, Microsoft and Google produce the best applications on the market, and a host of other new start-ups are surging forward. As Paul Scharre points out in a Foreign Affairs essay, “Of the top 15 institutions publishing deep learning research, 13 are American universities or corporate labs. Only one, Tsinghua University, is Chinese.” He notes that while China publishes much more AI research than the United States, American papers are cited 70 percent more often. These U.S. advantages are likely to grow dramatically now that China has been blocked from the advanced chips that are absolutely essential to developing and using AI.
Or consider finance. Despite the recent banking crisis, the biggest U.S. banks are now more dominant than they have ever been worldwide. They have passed rigorous stress tests and built up their capital reserves, and as a result they are now better positioned than their European and Japanese counterparts. China’s state-owned banks are saddled with huge government debt and cannot operate in the open global financial system because that would almost certainly trigger massive outflows of funds, as the Chinese people seek to move their money to safer locales. And despite many challenges and efforts to unseat it, the dollar remains the global reserve currency, which gives the United States a financial superpower.
A somewhat under-noticed development in recent years has been the United States’ rise as an energy powerhouse. Because of fracking and natural gas, the United States is now the world’s largest producer of liquid hydrocarbons. And as Columbia University’s Jason Bordoff has noted, America’s ability to ship liquefied natural gas has made it an energy superpower, able to provide or cut off energy to countries around the world. Add to these traditional energy sources the dramatic ramp-up of green energy, thanks to the vast tax credits and incentives in the Inflation Reduction Act, and you have a picture of truly astonishing, comprehensive energy capacity.
The U.S. military remains in a league of its own, far superior to those of its rivals in Russia or China. China is catching up to the United States, but the lead remains vast across many dimensions of warfare. And in Ukraine, as the Republican foreign policy adviser Kori Schake has noted, the United States, at minimal cost and with no American troops, is inflicting ruinous damage on Russia’s army. Washington is also transforming the Ukrainian army into the most powerful fighting force in Europe — giving it another potent ally. The great force multiplier of U.S. power remains its alliances. The United States has more than 50 treaty allies; China has one (North Korea). And it has about 750 military bases of some kind around the world; China has one (in Djibouti).
I could go on. Unlike most rich countries, the United States has a strong working-age cohort that will not shrink, thanks to immigration. We still take in more than 1 million legal immigrants per year on average. China and Russia are both facing demographic declines that are almost impossible to reverse, and which will put a long-term damper on their growth.
Could it be that it is precisely this backdrop of strength that allows Washington’s politicians to indulge in crazy political theater? For most countries, the price of playing games with one’s creditworthiness would be sharp and severe, and that would act as a disciplining mechanism. But in Washington, the country’s enduring strength has become a license for irresponsibility.