An American Question.

How long will the US remain the sole superpower? Can the current American political establishment learn anything from empires resigned to history’s scrapheap?

History has told us that all empires eventually come to an end, even the Roman Empire collapsed. The Romans became unstuck in a heady mix military overreach and misguided political leadership. Their political system had also become increasingly corrupt, toothless, and diluted.

The British Empire eventually dissolved following the Second World War, the British realised that colonial rule can only last so long; people yearn for self-rule and the ability to choose their own path through the world. The post-WW2 empire was quickly broken up in favour of an economic and ideological entity: The Commonwealth.

The Empire’s end was brought about both through legitimate political protest and dissent, and as in the cases of Kenya and Malaysia - to name but two - militant insurgencies. More importantly the British government was in financial dire straits following a long and expensive war. The British could no longer finance its huge military machine.

In this context probably the most interesting empire was the one inherited by King Philip II of Spain, a rule dominated by military conflict. Interestingly Philip only knew 6 months of peace during his 42-year reign, Philip was obsessed with furthering his influence and ensuring Spanish dominance of the globe. It was said that the Spanish Empire was the “first empire on which the sun never set” such was the extent of this pan-global entity.

When Philip died in 1598 he left a crumbling treasury, an unstable empire, and a much-weakened military. Philip had failed to run a financially astute enterprise, constantly fighting wars he could not pay for. His autocratic rule meant he had to keep his upper classes placated with minimal taxation; therefore his tax base was inefficient to support his extensive military infrastructure.

Philip also suffered significant military losses (including the prized Spanish Armada – in a navel battle with the British weather) and suffered further economic woes with unsustainable levels of foreign capital influx (from the newly explored Americas), which caused inflation and decimated the internal Spanish economy.

The one certainty of History is that it repeats itself ad nauseam, the American elite should be aware of the follies and circumstances of previous imperial declines to minimise the impact of the fall. Should they choose controlled decline a la the British, and try to salvage as much dignity and influence as possible? Should they continue regardless as the Romans did until strong challengers usurp their dominance? Or finally will the US become bankrupt like the Spanish in 1557?

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There can be many comparisons with the above case studies and the current US situation. Like the late Roman Empire, the US – in George W Bush – has a leader obsessed with the belief that a great war defines every great leader. Bush saw his father throw away his political capital in the first Gulf War when Bush 41 decided against following Saddam Hussein’s armies to Baghdad. In a conversation with journalist Mickey Herskowitz before his first election victory Bush commented:

‘If I have a chance to invade, if I had that much capital, I’m not going to waste it. I’m going to get everything passed that I want to get passed and I’m going to have a successful presidency.”

Bush fell into the trap that has snared so many before him by fighting a war he did not have to fight. America may well emerge victorious and Bush may yet be vindicated, but there is no doubt the American military will re-emerge from the battle scared and weakened. Falling volunteer numbers are already causing great concern within the Pentagon, and the military’s reputation has been damaged.

Like the Spanish in the Netherlands, the American military is being grinded down both mentally and physically by insurgencies, the search for an exit strategy from Iraq is already being reported. Like the Goths proved against the Romans, the insurgents are showing that a light and agile fighting force, which better knows the terrain, can outmanoeuvre, cause damage, and undermine the morale of a larger better-equipped adversary.

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It is true that the US ‘Empire’ is different from those above, as it does not claim sovereignty over other countries. However it would be wrong to suggest that America is not imperial as it expresses its will on the world using its unmatched economic resources and military power. In this era of the UN and marching global democracy the international community frowns on direct control of one country over another, as it does in the case of China and its occupation of Tibet. America is much more astute in its imperial overtures, it uses economic dependency to exert influence over foreign governments.

Let’s remember that the Roman, British, and Spanish Empires were primarily trade enterprises. The Roman Empire was a network of markets relying on the logistical infrastructure provided by the Roman Army, which spent as much time building as fighting. The British were driven both by ideology and profits, Simon Schama called his program on the Empire, Britannia Incorporated, to emphasise the economic foundations that financed and justified the expansionism.

The Spanish Empire was a wedding of Catholicism and Capitalism, as the Spanish spread the word of God they collecting vast wealth from around the world. The Spanish used their immense army and navy to secure exclusive access to the factors of production (minerals, labour, and land) needed to sustain its economic ambitions. The Catholic Church and the extended Holy Roman Empire provided Spain with an important cultural identity and allies to rally in times of conflict.

America employs a collective of compliant states that can be mobilised in time of conflict as we have seen in the military intervention in Iraq. A cocktail of economic co-operation and direct aid is used to further the strategic designs of the US leadership. The US uses these allies to increase its already significant voice within international institutions, and can therefore impose its will on the world.

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So where will the threat to US dominance originate? The majority of strategists point to Indo-China as the greatest threat to American hegemony. China and the US are financially co-dependent by a complicated exchange of capital, the US corporations invest heavily in the Chinese economy and it return the Chinese subsidises America’s trade deficit by buying up billions of dollars in treasury bonds. Until recently the Chinese also tied the Yuan to the Dollar to further facilitate continued investment and to protect the value of its Dollar assets. A rising Yuan – following the revaluation – may inhibit trade imbalances, but an intelligent response in respect to China’s money supply could temper any slowdown.

If the Chinese were to call in these bonds (which are in effect promises) the US treasury would find itself in severe difficulties. The reticence of China to call in these bonds is fuelled by its need to ensure low taxation – and therefore a high level of oversees investment – within the US economy. This co-dependence is the Cold War of today’s international economy, and tensions on both sides of this standoff are high.

The real threat to Sino-US relations may actually be more ideological than economic, as China is currently ramping up its military capabilities and continues to rattle its sabre implicitly towards Taiwan, and more subtly at Japan. A senior Chinese general recently threatened the US with nuclear Armageddon if it interfered in China’s claims on Taiwan:

“…Americans will have to be prepared that hundreds … of cities will be destroyed by the Chinese,”

So will Beijing’s ideological One-China Policy threaten its delicate balance of capital flow with America? Or will the threat of nuclear war and economic collapse dissuade both leaderships from a mutually destructive war? If both sides of this confrontation are to avoid a meltdown in relations the current nationalistic rhetoric will need to be toned down. What is for sure however is that the Chinese purchase of US Treasury bonds cannot continue forever.

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It is unlikely that global terrorism threatens the US as much as an uncompetitive economy. Manufacturing in the US has been hit heavily by the phenomenon of outsourcing labour, scarce primary resources, poor educational standards, and rising healthcare insurance costs. Toyota recently decided to situate its new plant in Toronto as opposed to the US, because the skill base was below standard in the Southern States that competed for the assembly plant. This could equally have been because the Canada state provides healthcare insurance for its citizens rather than relying on employers to foot the ever-spiralling bill. Could the expensive ‘closed’ medical industry in the US with its rocketing profits actually cripple the greater US economy?

Rivals to the US’s economic supremacy are someway behind in terms if GDP but their growth has been phenomenal. Brazil threatens the US’s agriculture with its hyper-efficient farming techniques and its minimal cost base. China remains the globes rising manufacturing superstar. And India is the emerging knowledge and service economy. And with the EU looking to re-gear its economic mechanisms and labour laws to increase its competitiveness and reduce costs, the US has potential usurpers in every major continent bar Africa.

The key to all developed economies in the globalised world is value added production and a sound knowledge base. These sophisticated nations will never compete on low-cost mass-production, so must ensure they can compete in financial and corporate services, pharmaceuticals, science and technology, and other skill based production industries.

The problem the US faces within the knowledge economy is the deteriorating educational standards and college dropout rates that threaten to further reduce its attractiveness to high-skill investment. Major US and Euro-Asian corporations will continue to invest elsewhere if America cannot provide this resource.

As India continues to express its impressive knowledge base with furious growth in medical and information technology, the pressure on America to reform is mounting.

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Empires have always had to face up the evolving world, but as with large corporations they are cumbersome and resistant to change. America needs ideological leaders who can convince the US people of the necessity to make difficult changes to their way of life. If the US is to attract industry something must be done to increase its educated workforce. The US must realise that expensive subsidies and trade barriers are breeding inefficiency in production. The government needs to take drastic steps to reduce per-capita healthcare costs by opening up its market to globally sourced pharmaceuticals, not just through the proposed tort-reform.

The US must also scale back the scope and cost of its ‘military complex’. The massive financial cost to the US is not resulting in substantial economic growth, the cost benefit of expenditure on such scale must be questioned. The reduction of the armed forces would result in reduced power on the world stage, but this would be partnered by a cooling of diplomatic tensions that could facilitate global economic growth. As with the Spanish Empire – which faced a rising British imperial aspiration - the US must deal with emerging powers and realise that if it wishes to avoid a bloody conflict over dwindling resources it must concede some ground.

The question facing the American leadership is similar to the one asked of the struggling British Empire. Is it better to relinquish some supremacy voluntarily and preserve as much influence and wealth as possible, or face having their primacy stripped away by war or economic collapse?

Over the coming decades the American people will have to address these difficult questions.