America’s Relative Decline: Should We Panic?

Over at the Washington Post, Charles Kenny has a provocative op-ed arguing that China’s GDP will almost certainly soon surpass America’s in absolute terms, and this is to the United States’ benefit (the op-ed is based on Kenny’s new book, which can be purchased here).

Kenny’s first argument in support of this claim is that Americans’ quality of life will still be better than their Chinese counterparts, and that in fact “losing the title of largest economy doesn’t really matter much to Americans’ quality of life.” Fine.

Kenny next concedes that there may be some negative effects, but nonetheless argues that these are limited. For example, he notes that the dollar may no longer be the world’s reserve currency, but “businesses in the rest of the world still manage to export, even though they must go through the trouble of exchanging currencies.” Similarly, while having the largest GDP has allowed America to maintain the largest and most powerful military, “how much [has] the three-quarters increase in defense spending between 2000 and 2011 enhanced America’s well-being?” Thus, lower defense spending could be a net positive.

Kenny goes on to list a number of benefits America will receive from its relative economic decline. For example, this relative decline “is mainly a result of the developing economies becoming larger, healthier, more educated, more free and less violent. And there is little doubt the United States benefits from that,” such as through increased exports and being able to import the amazing new innovations these newly empowered countries will no doubt invent. Moreover, economic growth in the developing world “also means that there are more places for Americans to travel in security and comfort.”

There’s no doubt some truth to at least some of this. Most notably, China having a larger GDP will not equate to a better quality of life for Chinese people, and, I suppose, having more vacation spots to choose from also could bring some amount of joy to the top 1% of Americans who get bored of laying out on the same hundreds of beaches they currently feel safe to vacation in.

Still, China’s relative rise and the United States’ relative decline carries significant risks, for the rest of the world probably more so than for Americans. Odds are, the world will be worse off if China and especially others reach parity with the U.S. in the coming years.

This isn’t to say America is necessarily as benign a hegemon as some in the U.S. claim it to be. In the post-Cold War era, the U.S. has undoubtedly at times disregarded international laws or international opinions it disagreed with. It has also used military force with a frequency that would have been unthinkable during the Cold War or a multipolar era. Often this has been for humanitarian reasons, but even in some of these instances military action didn’t help. Most egregiously, the U.S. overrode the rest of the world’s veto in invading Iraq, only for its prewar claims to be proven false. Compounding the matter, it showed complete and utter negligence in planning for Iraq’s future, which allowed chaos to engulf the nation.

Still, on balance, the U.S. has been a positive force in the world, especially for a unipolar power. Certainly, it’s hard to imagine many other countries acting as benignly if they possessed the amount of relative power America had at the end of the Cold War. Indeed, the British were not nearly as powerful as the U.S. in the 19^th Century and they incorporated most of the globe in their colonial empire. Even when it had to contend with another superpower, Russia occupied half a continent by brutally suppressing its populace. Had the U.S. collapsed and the Soviet Union emerged as the Cold War victor, Western Europe would likely be speaking Russian by now. It’s difficult to imagine China defending a rule-based, open international order if it were a unipolar power, much less making an effort to uphold a minimum level of human rights in the world.

Regardless of your opinion on U.S. global leadership over the last two decades, however, there is good reason to fear its relative decline compared with China and other emerging nations. To begin with, hegemonic transition periods have historically been the most destabilizing eras in history. This is not only because of the malign intentions of the rising and established power(s). Even if all the parties have benign, peaceful intentions, the rise of new global powers necessitates revisions to the “rules of the road.” This is nearly impossible to do in any organized fashion given the anarchic nature of the international system, where there is no central authority that can govern interactions between states.

We are already starting to see the potential dangers of hegemonic transition periods in the Asia-Pacific (and arguably the Middle East). As China grows more economically and militarily powerful, it has unsurprisingly sought to expand its influence in East Asia. This necessarily has to come at the expense of other powers, which so far has primarily meant the U.S., Japan, Vietnam and the Philippines. Naturally, these powers have sought to resist Chinese encroachments on their territory and influence, and the situation grows more tense with each passing day. Should China eventually emerge as a global power, or should nations in other regions enjoy a similar rise as Kenny suggests, this situation will play itself out elsewhere in the years and decades ahead.

All of this highlights some of the advantages of a unipolar system. Namely, although the U.S. has asserted military force quite frequently in the post-Cold War era, it has only fought weak powers and thus its wars have been fairly limited in terms of the number of casualties involved. At the same time, America’s preponderance of power has prevented a great power war, and even restrained major regional powers from coming to blows. For instance, the past 25 years haven’t seen any conflicts on par with the Israeli-Arab or Iran-Iraq wars of the Cold War. As the unipolar era comes to a close, the possibility of great power conflict and especially major regional wars rises dramatically. The world will also have to contend with conventionally inferior powers like Japan acquiring nuclear weapons to protect their interests against their newly empowered rivals.

But even if the transitions caused by China’s and potentially other nations’ rises are managed successfully, there are still likely to be significant negative effects on international relations. In today’s “globalized” world, it is commonly asserted that many of the defining challenges of our era can only be solved through multilateral cooperation. Examples of this include climate change, health pandemics, organized crime and terrorism, global financial crises, and the proliferation of weapons of mass destruction, among many others.

A unipolar system, for all its limitations, is uniquely suited for organizing effective global action on these transnational issues. This is because there is a clear global leader who can take the initiative and, to some degree, compel others to fall in line. In addition, the unipole’s preponderance of power lessens the intensity of competition among the global players involved. Thus, while there are no shortages of complaints about the limitations of global governance today, there is no question that global governance has been many times more effective in the last 25 years than it was during the Cold War.

The rise of China and potentially other powers will create a new bipolar or multipolar order. This, in turn, will make solving these transnational issues much more difficult. Despite the optimistic rhetoric that emanates from official U.S.-China meetings, the reality is that Sino-American competition is likely to overshadow an increasing number of global issues in the years ahead. If other countries like India, Turkey, and Brazil also become significant global powers, this will only further dampen the prospects for effective global governance.

Therefore, many of the benefits that Kenny predicts will accompany the rise of developing countries may not occur, at least in as dramatic a fashion as one might think. For instance, there’s no doubt that a richer developing world should result in more American exports. However, American exports might at the same time be constrained by a far less open global trade environment in a multipolar world. Things we take for granted today, such as freedom of navigation and airflight, could very well be much less assured in a bipolar or multipolar future. There’s also the possibility that the world will divide into spheres of influence, in which regional hegemonic powers demand highly preferential access to markets in their home regions. Similarly, the decline of the U.S. dollar and greater international competition could also result in far more unstable international financial markets that also inhibit trade.

In short, Kenny’s no doubt correct that China becoming the largest economy won’t be the doomsday that some in America predict. Indeed, there will almost certainly be some benefits that come with it. Still, the rise of China and the rest, should it continue, will also create new dangers and risks that the world would be wise not to neglect.