For several years I worked with a group of Indians on a complex engineering project. We spoke on the phone almost every day, often for many hours. In many ways this was one of those classic globalization projects that Thomas Friedman wrote about - a complex distributed endeavor involving participants from all over the world.
I grew to know many of them quite well, not because I could see them in the flesh, but rather because I could hear their voices, and I could understand their very individual approach to solving engineering problems. We worked as peers, but our situations were very, very different. I remember one occasion when we were arranging a teleconference, when the project manager spoke about the constraints they worked under. Her staff had to come into the office, they could not phone or work from home, and many of them had one-way commutes of 2 ½ hours!
So here I am, an American born into the middle class, working together with people who, by virtue of study and exhausting commutes like that, had pulled themselves up into the Indian middle class. They were still making far less in purchasing terms than I did. While their prices for daily food and shelter were far less then mine, there was absolutely no comparison between lifestyles. And so I wondered – if we are all doing the same work, on the same project, as part of the same team – why is it that I live better than they do?
This - in a nutshell - is the nature of the American Empire. Living at the center of an empire conveys enormous, disproportionate advantages that rely on the ability to draw dollars at the center vs. rupees on the margins. And I drew those dollars not because of base engineering ability, or natural talent, but rather because of one thing only: long-term relationships with other people at the center.
Things are changing very rapidly, and I believe the current economic crisis is the tipping point that will accelerate our economic decline, and ultimately unravel our empire.
On one of my trips in India I was driving along a highway out in the country, and I saw something extraordinary. Every twenty miles or so I saw a small, relatively new, school building, and these didn’t promote themselves as general schools, but rather schools of engineering. Quite often I could see the Indian students outside in their bright school uniforms. India and China now educate far more engineers than we do.
It is easy to be dismissive of new schools like this and the quality of their graduates but there is no getting around one, simple point. The best and most talented 1% out of a population of a billion will be more talented than the best 1% out of a population 1/3 that size.
We like to tell ourselves that we somehow deserve the wealth we’ve acquired, and the extraordinary ease of our lives compared with the rest of the world. Some say we have these things because of our freedom, or the ability of our economy to adapt to new circumstances, or our ability to assimilate immigrants, or a stable political structure. Or sometimes just some unique “can-do” American spirit. I’m sure these have been factors in creating our empire, but we are, in my view, an empire built on war and industry. First it was the slow drive West as we took the continent from its original inhabitants. Then it was the growth of Malthusian industry. Then it was two world wars where we used our industry to destroy the powers of the Old World.
The industry is leaving now. While American workers are still the most productive in the world, the risks of hiring the next worker here is considerable. Hire here and you have to hire HR people to position you against lawsuits, and every employee you hire is a roll of the dice. Just one employee and their lawyer can take the productivity of a thousand other workers. That is why we now graduate far more lawyers than engineers. Why make things when you can make more money by taking things? No American business can survive without the overhead of a team of lawyers and lobbyists on retainer. We’ve returned to feudalism, where the knights are lawyers, and the Dark Ages was no innovative time.
But the wealth to be plundered is drying up. We don’t make things anymore; we buy things from the rest of the world. We don’t tax ourselves for all the costs off our social programs, we borrow it. And with the recession, the stimulus bill, the new spending bill, and what we’ll spend to “reform” health care, we’ll be borrowing a lot more.
We can’t sustain this. I know lots of pundits claim that America is the indispensable nation, that the rest of the world has no choice but to ship us phones, TVs, cars, refrigerators air conditioners – all for . . . well just bookkeeping entries. Just promises to pay more at some later time. Maybe the rest of the world will loan us money to educate more and more lawyers, school administrators, accountants, and social workers – but I doubt it. I know of no historian that doubts that the British Empire lost its hegemony over the world because they became a debtor nation, and needed us to pay their bills. I see no reason why the Chinese and the Indians – productive, still-growing economies, won’t do to us what we did to the British.
I suppose it is in the nature of empires to seem immortal, because they suffuse themselves into every aspect of the world. At their height, it just doesn’t seem as if the world could be ordered any other way. While empires can last for centuries, they do, eventually, die. Perhaps our decline won’t be driven by war, but the historical record doesn’t offer much reason for hope.
The financial crisis seems pretty bad now, but the time may come when we'll look back fondly at a time when we only needed to worry about money.