At the end of the Reagan era, it is important to develop an accurate understanding of America’s world position.
Some observers have begun to speculate about an America in decline. Clearly, there have been major changes in American power since the 1950s. Depending on the base year chosen, the United States then represented one-third to two-fifths of world product and world military expenditure, whereas today it is a little over one-fifth on both measures.
But the notion of American decline confuses different times and causes. Although there has been a relative decline since the 1950s, there is little decline from American’s share of world product if one takes the 1930s or the late 1960s as the base line.
From a longer perspective, the century that began when the United States became the world’s largest economy in the 1870s may be the first of several cycles of growth. It is worth recalling the British who thought that their era was over when they lost the American colonies; they could not foresee the resurgence of the Victorian period and Britain’s “second century.”
Americans should be concerned about the changing position of the United States in world politics but portraying the problem as one of national decline is misleading. It directs attention away from the real causes that lie in long-term changes in the nature of world politics, and it suggests remedies of protectionism and withdrawal from commitments that would weaken rather than strengthen America’s position.
By and large, the Reagan Administration was successful in dealing with the short-run causes of the relative decline of U.S. power that began in reaction to the mistakes of the Vietnam War. But Reagan was less successful with the longer-term causes. His emphasis on military spending was useful (though wasteful in application) in laying a new basis for the U.S.-Soviet relationship, but it was not sufficient for coping with the long-term changes of growing multipolarity and the increased complexity of interdependence in world politics. Reagan also neglected the development of multilateral diplomacy and international institutions necessary to deal with that complexity.
Unfortunately, the Reagan Administration pursued its international goals in combination with a domestic social strategy that borrowed against the future. By allowing Americans to consume more than they produced and saved, the Administration weakened America’s international economic position and created problems that will have to be paid for in the coming decade.
While Americans will be required to cope with the debts incurred by Reagan’s tenure, there are no reasons why the world’s wealthiest country cannot pay for both its international commitments and domestic investments. The ultimate irony of Reagan’s legacy would be if America and its allies mistook the short-run problems as indicators of long-term decline and responded by cutting the United States off from the sources of its international influence.
The danger at the end of the Reagan era is that misunderstood causes and nationalistic responses may lead to inappropriate remedies. Recent polls show economic nationalism rising in the United States. But inward-turning and protectionist responses are the wrong answer. They would cut the United States off from the open flow of goods, talents and information that are vital to the nation’s strength and its ability to draw on global resources in its periodic surges of self-renewal. For example, while it is a proper criticism of American education that the United States depends on foreigners to fill one-fifth of its engineering jobs, the other side of the coin is that there are few societies so open that when they face a deficit in talent they are able to import and absorb it. This openness, as manifested in the success of recently arrived immigrants, is a great source of American strength not shared, for example, by the Soviet Union or Japan.
The appropriate American strategy is not withdrawal from international commitments in hope of obtaining domestic protection. On the contrary, that would contribute to, rather than arrest, a decline of America’s relative power, because the sources of America’s changing position are mostly outside the United States. The proper response is to face the fact that the United States has to transfer resources from consumption to investment. At home, Americans need to invest in new technologies, infrastructure and human resources. Abroad we need to invest in defense, aid and multilateral institutions that give us leverage on the broad range of issues in which we are now heavily interdependent.
Considered in these terms, the proper agenda in the 1990s is clear: America must rebuild the economic base of its power by reestablishing a balanced fiscal policy, by providing incentives for savings, by investing in education and research and development, and by using government judiciously to smooth the process of adjustment.
Enhancing America’s competitive position will require hard bargaining to develop international cooperation and stronger support for international economic institutions. Similarly, it is critical to strengthen the structure of the postwar democratic alliances in which two of the five major centers of global power (Europe and Japan) are allied with the United States rather than the Soviet Union. This requires fair sharing of alliance burdens while avoiding pullbacks and friction over burden-sharing that would diminish the West if it ruptured the alliances.
Such a strategy also requires a strong conventional and naval presence as well as a backdrop of credible nuclear deterrence. At the same time, the West can explore opportunities created by the internal problems of the Soviet Union for reducing the level of armament at which the balance of power is maintained. While arms control has not saved money in the past, there may be opportunities to do so in the future if the political climate of U.S.-Soviet relations continues to improve.
Finally, in a world in which transnational communications are the basis for economic and social strength, the United States needs to be forthright in asserting American values of openness and human rights, for in the long run American strength rests on its democratic values as well as its military and economic might.