Date created: 15/11/08 3:02 PM Last modified:15/11/08 3:02 PM Maintained by: John Quiggin John Quiggin
31 January 2008
George Bush’s final State of the Union address was predictably short on new initiatives or soaring rhetoric, reflecting Bush’s diminished status and constrained power in the final year of his term. The US media barely paused to notice his speech before turning its attention back to the tangled contest to succeed him.
Americans in general have written off both Bush and his Administration. His approval ratings, once in the 80s, now hover below 30 per cent. The fact that the the civil war in Iraq seems to be finally winding down, leaving the US with a balkanized and ethnically cleansed long-term client, has done nothing to convince the public that the invasion was a worthwhile idea.
More striking is the finding that the 75 per cent of Americans, the highest number ever recorded, think that the country is on the wrong track. This view is clearly shared by many outside the US. It remains to be seen whether the end of the Bush era will change it.
Like Bush himself, the United States has seen both its power and its prestige ebb away over the last eight years. The US entered the 21st century as an unchallenged, and seemingly unchallengeable, military hyperpower.
The terror attacks of September 11, 2001 showed that even a hyperpower could be attacked by stealth, but they also served to strengthen even further the American position of world leadership. The declaration by Le Monde that “Nous sommes tous Americains” illustrated what seemed at the time to be a moment that would define the coming American century. In the wake of the overthrow of the Taliban regime in Afghanistan, it seemed the the US had both the power and the will to reshape the world.
The disastrous invasion of Iraq brought an end to such illusions. The Bush Administration gratuitously dissipated the international goodwill of 2001. It went on to show that, far from being omnipotent, the US military could not control and pacify a country the size of California. Threats to follow up with an invasion of Iran have come to nothing for the simple reason that the US lacks the necessary military capacity.
In economics, as well, the Bush era has exposed the limitations of American triumphalism. When Bush took office, the US had a huge budget surplus and a debt-free future in view. The dotcom boom offered the prospect of endless growth. The collapse of the dotcom boom and the fiscal profligacy of the Republicans destroyed these visions in short order.
The Greenspan policy of cheap money rescued the economy from the 2001 recession. But it laid the foundations for an explosion of dubious lending. The collapse of the subprime mortgage market has exposed the abandonment of lending standards and discredited, yet again, the ratings agencies that are supposed to keep the system hoenst.
The subprime crisis alone is sufficient to generate a slowdown or recesssion. The real problems go deeper. The involvement of the major US banks in facilitating fraudulent speculation undermines the credibility of the whole financial system. Combined with chronic trade deficits, it implies a shift away from the dollar-dominated financial order that has prevailed since 1945.
The obvious question is whether a new president can reverse these trends. Writing in the New York Times Magazine recently, Parag Khanna of the New America Foundation has argued that the unipolar moment of the 1990s is over. The 21st century will be dominated by three powers, the US, EU and China, alternatively co-operating and competing.
Khanna pointed his readers to the strengths of US competitors. The EU, growing by accretion, is already larger than the US in population and aggregate income, and has already drawn Turkey and Russia into its sphere of influence. China’s pragmatic willingness to do deals with anyone has been reflected in increased influence in areas ranging from the former Soviet Union to Latin America.
Khanna makes some important points, but tends to underplay the continuing strengths of the US. While the amorphous distribution of power in the EU has its advantages, the US, as a state, has much more unitary power of action.
The Bush Administration has done much to discredit the US in the eyes of the world. But a clear electoral repudiation of Bush, in the form of a Democratic victory in November, would undo much of the damage. The US still has deep reserves of moral legitimacy.
The US may never again bestride the world as a hyperpower. But it can realistically aspire to be ‘first among equals’ for decades to come.
John Quiggin is an Australian Research Council Federation Fellow in Economics and Political Science at the University of Queensland.
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