King Charles' visit to the US in April was a stark reminder of how the roles had reversed between the coloniser and the colony. At its peak, in the early 20th century, the British Empire stretched over a quarter of the Earth, prompting some to boast that the sun never set on it. Not much remains today of that empire other than pomp and circumstance.
In 1988, after I read Professor Paul Kennedy’s treatise on the decline of great powers, I wondered if the same fate would befall the US one day. But then I came across Dr Henry Kissinger’s assertion that “US exceptionalism” made it immune not only to international law but also to the laws of history. Between these two positions, there was a wide gap. Who was correct?
A partial answer to that question was provided recently by the Wall Street Journal. It published a graph showing that US debt now equals the size of its economy, something not seen since the late 1940s. The article stated that this “is a potent symbol of the fiscal stresses on the US that have been building for decades. Lawmakers in both parties have expressed alarm but given priority to tax cuts and spending increases with clearer short-term political benefits. Economists warn that, in the long run, higher federal debt will drive up interest rates ... on mortgages, car loans and credit cards, and will undermine private investment by soaking up capital.”
It quoted an economist from MIT: “When you can earn more on your investments in bonds, you’re going to demand a higher return from any of those projects in the real economy.” It went on to say: “Some economists say higher debt leads to higher inflation by putting pressure on the central bank to keep interest rates low and, in the extreme, print money to repay debtors...debt will rise to 120% of GDP by 2036 and 175% by 2056.”
To answer the question of whether the US has begun to decline, I first turned to some of my friends who have worked in a variety of industries in the US
That article made me think about three major developments that have occurred in the US since Kennedy’s book was published. The economy is under stress, not only with rising debt, unemployment and inflation, but also with a decaying but neglected infrastructure. Second, society is being torn apart slowly but steadily by rising racism, poverty and homelessness. And third, the US is losing its image and credibility on the world stage, as it continues to insult allies, threatens to absorb Canada and Greenland, kidnaps the president of Venezuela and engages in a war of choice against Iran jointly with Israel. Americans in increasing numbers are wondering if this is just a ploy to divert attention from serious domestic issues, the Epstein files, and to feed the military-industrial complex.
To answer the question of whether the US has begun to decline, I first turned to some of my friends who have worked in a variety of industries in the US over the past several decades, and then read what a few historians, political scientists and economists have said on the subject.
The responses from my friends were diverse. One was upbeat and said that America’s cultural dominance of the world was total. Be it fast food, beverages, music, entertainment, American iconic brands rule the world! The US continues to be the lone superpower, militarily, economically, financially, technologically and politically! No other country comes close.
Another said that America’s decline has begun but it will take a century for the US to drop down to the level of today’s UK. Machine learning will speed up this decline. The world will not need a superpower. It seems that America’s only purpose today is to kill people and destroy the planet. Unless a major change in thinking happens and we decide to become part of the world, American capitalism will speed up the decline. Paper money would not be enough to save the country once the once-mighty dollar ceases to be the currency of choice.
A third said that the decay in America we are seeing today is not taking place in Europe, where he had spent the last two weeks. It was so refreshing to experience the normalcy of everyday life in Germany and Italy, he added, and not be inundated with the nonsensical chaos that is almost happening daily in this country.
A fourth put the blame squarely on the current US administration. He said we need to get rid of the leader and his band of sycophants. Then came a tongue-in-cheek remark: “I wish we could somehow ship the whole lot of them off to a penal colony on some faraway island in the middle of a shark infested ocean.”
A fifth said that the US is in an AI bubble which will “surely burst soon.” Every serious economist (who isn’t American) takes an historical approach and says you simply cannot sustain these radical investments of capital for technologies and companies that consistently return orders of magnitude less in profit and cyclically reinvest in each other. They will tell you that a bubble has already formed beyond government control to reign in, even if it was interested in doing so (which it is not). “Add to that the 100,000s of young and middle-career people both in tech/finance AND in the public sector who have been so rapidly cast out over the last two years due to the decisions of this administration and you’re looking at high risks of recession.” He added, “those are the same young and middle-career people who practically built the tools that Tech execs and shareholders salivate over and would be the ones to build tools for the future. We are actively crippling our future innovators and leaders.”
He mentioned that a slew of reports has come out during the last few weeks that show the US is the fastest ever declining democracy since researchers began to track it a few decades ago. That might not mean much to Tech tycoons who are only interested in amassing wealth. “When you add financial recession, depression, or even lighter versions of economic troubles that are coming our way—owing in part to the Iran war—you’ve got the recipe for a further descent into fascism, not away from it. That’s what history shows at least. American exceptionalism is blinding many, history does not care much for blind fools.”
A sixth said no one ever thought that the Roman, British and Ottoman empires would ever end. Overstretch, among other things, brought about their demise. The leaders of this administration don’t seem to comprehend that US power has been based on its ability to project power. You need allies all over the globe to do that. The US is losing friends fast. The decline has begun even though the US remains the preeminent AI power, China was catching up fast.
A seventh pointed out that there is a high (negative) correlation between income inequality (typically as measured by the GINI coefficient) and happiness or well-being — as well as social stability. The GINI coefficient was relatively stable until the early 70’s (0.35 in mid-50’s to 0.36 in 1972), but has risen steadily since then, reaching 0.49 in 2024. It’s not hard to see why high levels of income (and wealth) inequality give rise to all manners of social ills.
An eighth said that something is going to break before things get better. He said, “You can always count on America to do the right thing after trying all the wrong things.”
A ninth, commenting on the worsening debt status of the US, said the billionaires continue to sweep the debt under the rug, just like they sweep their incomes under the rug and end up paying no taxes. “That’s just as brazen as highway robbery,” he added.
A tenth said that despite Kissinger’s imagined “exceptionalism,” the US is not immune from the laws of economic gravity. Such a heavy debt service burden might be acceptable to the international money folks, but not when the US government is engaged in daily examples of deeply irrational behaviour, clueless economic decisions, and self-denial. This is not a business plan that makes any investor comfortable, so the two alternatives are either expensive debt or complete lack of access to credit. When national debt equals the gross domestic product, lenders are more apt to put their money in something less risky than US treasuries.
An eleventh concurred and said: “There is nothing to indicate that America will be an exception. Buckle up your seat belts folks. It’s going to be a rocky road.”
The twelfth and final respondent to my informal survey said I was right. The decline had begun and was very visible.
The overwhelming view among these dozen friends was that the US was in decline. The only question was how fast it will decline and by when it will cease to be a major power.