A lost decade

The years since 9/11 have been a setback for the US

Amidst the avalanche of words that marked the 10th anniversary of the attack on the World Trade Centre in New York, only a few commentators have looked at the power shift that has occurred in the world since that epochal event. At the time of the Al Qaeda attack, the United States reigned unchallenged and supreme. Once the wars began in Afghanistan and Iraq, there were articles in Foreign Affairs asking why there should not be a new American imperium. Now, the uni-polar moment that provoked such hubris has not only passed, but Samuel Huntington’s thesis on the clash of civilisations also seems to have been somewhat closer to the mark than the even more simplistic thesis on the “end of history” argued by Francis Fukuyama. Looking back, 2001-2011 looks like a lost decade for the United States.

While no one should underestimate the capacity for resurgence in as energetic and innovative a country as the US, the fact is that it stands challenged internationally and diminished domestically. The median American family has seen no increase in incomes, when compared to a decade ago. Unemployment is higher, manufacturing accounts for a smaller role in GDP (under 12 per cent) than in almost any other advanced economy, and a large trade deficit underlines the limitations when it comes to international competitiveness. A budget surplus has turned into a large deficit, the national debt has ballooned, political divisions have deepened and the resulting political gridlock prevents suitable corrective action. The hope that has marked the country’s history, that each succeeding generation would enjoy a better quality of life, can no longer be clung to by the majority of Americans. The depredations wrought by the financial system, including the housing crisis that is still awaiting final resolution, and the accumulated weight of debt blight the future — a general condition captured in the previously unthinkable loss of AAA status in the country’s credit rating.

While the US mismanaged its affairs, China has used the opportunity to grow rapidly, to a point where in terms of actual purchasing power its GDP might exceed America’s in a few more years, while Chinese manufacturing is already close to the US in terms of the total value added. Internationally, while the US was preoccupied with west and central Asia, the Chinese presence and engagement have grown in east Asia. In the Islamic arc, notwithstanding the phenomenon of Arab Spring, the wars that the US has fought leave it facing deep hostility, including in a supposed ally state like Pakistan. In both Egypt and Tunisia, Islamist parties are poised to take pole position in the elections that are planned.

It is of course possible for the US to dig itself out of this hole. In many fundamental ways China is still not comparable to the US and has a long way to go before it can consider itself an equal. If the US pays attention to its domestic deficits (not just the financial ones but also in fields like education and infrastructure), the country will regain and project greater confidence globally — which is something that many countries around the world, including India, will welcome. But for this to happen, the country needs a more cohesive political leadership than it has just now, and greater wisdom in the big choices that it has to make.