The underlying theory is fairly simple, really. America has always been able to kick production into high gear on very little notice because of the vast pools of private wealth. Producing the machinery of war, for example, happens very quickly here when it’s needed. War production is very profitable, and further increases the general prosperity. General prosperity is the glue that holds the American cultural dynamic together, and helps to blend the great diversity into a common goal — the American dream. If American wealth is socialized, then capital incentive is minimized. Production is centrally planned, and the culture loses its cohesion. The sort of entrepreneural atmosphere described by the theory has always permeated almost everything American, including the military. Once soldiers have been taught to obey orders, they are taught to think for themselves. An American troop contingent is trained to think on its feet and make military progress, rather than wait for orders from on high. This is a generalization, of course, and certain things require high-level clearance. But generally, the idea is that a hundred soldiers skilled in the art of warfare are worth more than a thousand soldiers waiting around to be told what to do by one warfare genius. It is a matter of critical response time and logistical correction on the fly. It applies as well in business. The greater the level of entrepreneurship at the bottom of the hierarchy, the more successful a business will be. That’s the gist of it. But frivolous regulation, wealth leakage, punishment of success, and subsidy of failure eats away the very fabric that holds everything together.
My guess is that the US will lose its domination because we’re heading towards a multipolar world, with several major powers (amongst them the USA due to size, population, techonological level, natural ressources), and a large number of not any more unsignificant powers major powers won’t be able anymore to control, mess up with. For instance, currently, south-Korea isn’t that large a country, and is less wealthy than most western countries. However, it became rich enough (and as consequence powerful enough) to prevent other countries, even poweful ones, to bully it, contrarily to say, a dirt poor African country of the same size. As a result, the relative power and influence of the USA will dwindle.
It’salso true for cultural influence. For instance, currently, in a number of countries, people are watching inept Brazilian TV series rather than inept american ones. A country losing its economic dominance lose too in quick order not only its diplomatic and military influence (or it refuses to for a time, overspend and collapses as a result) but also its cultural influence (it produces less scientific advances, less “cultural products”, it becomes less important to know its language, and so on).
Of course, this rest on another assumption : that a lot of countries will become more develloped, more wealthy in the near future. Hiwever, there’s currently a number of hints that it might be the case. Like for instance the fact that a lot of the industrial production and even he poduction of services are redirect towards asian or eastern european countries (and now, even towards Africa in some cases), or the fact that western countries’ population is growing old, while develloping countries have a large youth an more and more educated population. I’m sure however that many people will state that this is wishful thinking.
Nevertheless, I predict that, barring some major event making any guess pointless (say, a major war, or even a major oil-related crisis some other posters have mentionned), the relative influence of the USA will be significantly less important within 30 years. Beyond that, too many things could happen (we’ve recently witnessed the collapse of Soviet Union, which had been a world-changing event, for instance, but besides politics, there could be major technological or cultural changes) for any prediction to be meaningful.
However, I wouldn’t make any guess at which other maor powers could rise. China seems an obvious candidate, of course, but it could for instance break apart or be engulfed in some civil war. Some people mentionned the EU, but it could become more integrated politically hence more powerful or become more empoverished due to an older population, or an unability to stand against economical competition. India could very well know a sudden rapid economical growth, Brazil could eventually see its famous “bright future” comes true, Russia could recover, the Mercosur could become the equivalent of the current EU and so on…
India is a prime area for software development and cheap, non-technical labor but I wouldn’t go so far as to say that they are on top of the world’s technological trends.
Russia is a basketcase and will probably take a generation or two to really get any better. Their population replacement rate is worse than nearly every country in Europe (except for maybe Moldova), alcoholism is growing increasingly worse, and their still mostly conscript military has an astronomical rate of suicide, desertion, and physical abuse.
Actually, this has been true for all major powers. The UK was a major power due to the wealth it accumulated from trade and early industrialization, France before that due to the sheer size of its agricultural production Spain before that due to the wealth brought by its american colonies,… Even small countries (the Netherlands, Portugal, Venice) became very important powers due to their wealth. And I can’t see how it could be otherwise. You can’t fund the most powerful army for long if you aren’t anymore the wealthiest country, for instance.
I’m indeed of the opinion that the playing field will be more equalized in relatively quick order.
Actually, this has been true for all major powers. The UK was a major power due to the wealth it accumulated from trade and early industrialization, France before that due to the sheer size of its agricultural production Spain before that due to the wealth brought by its american colonies and from the Low countries,… Even small countries (the Netherlands, Portugal, Venice) became very important powers due to their wealth. And I can’t see how it could be otherwise. You can’t fund the most powerful army for long if you aren’t anymore the wealthiest country, for instance.
I’m indeed of the opinion that the playing field will be more equalized in relatively quick order.
Lib - I’m fully aware of your liberal (libertarian) stance, but do you really see it as a black and white situation? The U.K. has a (nominally) socialist goverment, and while no way near as influential as the U.S. I think one could make a case that in terms of natural resources, size and size of population, it’s certainly a worthy ally, and weilds tremendous impact, in spite of (not due to) it’s puny size. Maybe even proportionally stronger than the U.S.
Many European countries embraze the welfare state, and while not as powerful as the US, the EU is not a socialized hellhole without entreprenuers or successful companies (though it looked that way in the 70’s).
I don’t think it’s a matter of black or white. And if Europe has made progress since the 70s, I’m delighted by that. The more capitalism, the better. But keep in mind that I applied this theory specifically to America. Given its youth on the world stage and its diversity, it is remarkable that it has held together. The theory that general prosperity is the glue makes sense to me. One of the great underlying causes of the War of Northern Aggression was the lack of prosperity in the South (due, in no small part, to Southern policies). For the South, slavery was an expense; for the North, it was a revenue. (Most slaves were sold from New England.) Anyway, my point is that this theory might not apply to less diverse countries like China, or more culturally established countries like the UK. But I think it explains America fairly well.
Remember that we need to distinguish relative vs absolute power. The US is absolutely much wealthier than it was in 1948, but relative to the entire world it is much weaker. Of course that was because most of the world except the US had been devastated by WWII, the US homeland was untouched. If the US economy doubles in the next 50 years, while the rest of the world triples, the US has lost relative power, but it is still much more powerful than today.
I don’t see the US losing relative ground to other first world countries any time soon, if anything the trend is the reverse. Europe and Japan face problems that the US doesn’t, I don’t see their economies or populations growing at the same rate as the US. Even if we consider the EU as a single country it won’t have the same unified government the US does, it is simply much too diverse to have a unified foreign policy, a unified cultural output, etc.
Where the US will lose relative ground is against developing countries. Of course for the forseeable future we will be much wealthier per capita than developing countries. But given the very low floor that, say, African countries start with, very small improvements in government could lead to dramatic economic improvements. But this isn’t a bad thing for the US, in fact it will increase the US economy in absolute terms. If you have $100,000 and your neighbor has $1000, that’s worse than if you have $150,000 and your neighbor has $10,000, even if your advantage over your neighbor was greater before. It’s a non-zero sum game, trade benefits both parties. Even when you have $200,000 and your neighbor has $100,000, you’re still better off. And yes, even when you have $300,000 and your neighbor has $400,000. However, the rapid growth of third world countries isn’t sustainable once they reach first world status, since then they face the same limits that first world countries face.
China’s manufacturing growth is dependent on China being a cheaper place to manufacture goods than othe places. If China was as wealthy per capita as, say, South Korea, it would be just as cheap to manufacture in South Korea. Of course poverty doesn’t in itself make a country a good place to open a factory, low wages are only attractive if a country has stable governance, a money economy, transporation infrastructure, educated literate workers, absence of armed bandits, absence of terrorist bombing campaigns, absence of war, etc.
Third world countries have the advantage of looking around the world, seeing countries that have had economic success, and copying those countries. Their disadvantage is that if it were easy they would have done it already. But third world countries pulling themselves out of poverty doesn’t hurt the US.
I don’t think it’s a matter of wealth.
As soon as the Bush clones sufficiently mature(You didn’t really think the real Bush was there reading “My Little Pony”?)!
I don’t… the US is very big in size… while a much stronger EU is still a conglomerate of several nations. China for all its size is still very underdeveloped in certain areas. I think the current chinese model will collapse along the way like the japanese one did.
The US still have a very strong ability to inovate and compete economically… plus is one big entity… allowing it to have economies of scale. Equalization will take more time.
No one addressed my points about production. 
Would it not be potentially devastating to the US if the vast majority of products consumed in the US were produced elsewhere and those nations decided an embargo was in order? Or decided to raise tariffs substantially?
That’s the sort of situation I see being the cause of economic issues, the fact that we’re on a road to where we produce basically nothing in this country. We just provide services and research, and then ship the physical production elsewhere where it can be done cheaply.
That may be too strong a statement, I don’t know. But India does seem to be making a point of getting its young people educated on the technology front.
But if those manufacturing countries can’t sell their goods to the US, their economy will be wrecked as well. If China decided to embargo the US, or put steep tariffs on goods exported to the US then US companies could set up factories elsewhere. Sure it would cause a tremendous economic dislocation, but the factories set up over the past decade in China could just as easily be set up in India, or back to the US.
And think of the economic and social dislocation to China as all those newly employed factory workers are sent back to the farms and China’s factories are shut down. I don’t think China’s government could survive, China’s citizens have come to expect economic growth and factory jobs, if those factories fail you’ll have tens of millions of unemployed urban proletarians milling around with nothing to do except remember how they used to have jobs and a future. Unemployed factory workers are a huge threat to the stability of a country, unlike starving subsistence farmers…farmers will usually try to work even harder to wring a little more food out of the ground and hide a little more food from the bandits/taxcollectors. Factory workers without jobs have no hope and are likely to start rioting.
You know, back when I was in middle school I envisioned a scenario where the rest of the world just got fed up with the United States and decided to wage war and destroy it. Of course, even allowing for current international opinion of the U.S.A., this is somewhat unlikely. However, military wars are certainly not the only type of war, and MAGunter’s points about production lead me to think that if people in the countries that U.S. corporations currently rely on for production realize that they can run the corporations and buy all the goods just fine on their own - well. Let’s just say that all us 'mericans would be out of the economic loop but fast.
**Lemur866 **
But these goods can be sold elsewhere.
As an example, let’s say American refrigerator companies operate their factories in Colombia and Mexico. Let’s also say that American car companies operate their factories in Mexico, Colombia, and Venezuela, and at the same time Venezuela is a huge source of American oil.
Assume then that Mexico, Colombia, and Venezuela decide to get together and issue an embargo against the US until the US decides to funnel X number of dollars into these countries. Or, these countries decide to impart tariffs against the US that make the products un-economical to buy in the US.
Cars, refrigerators, and oil can be old elsewhere-there are plenty of local (South/Central American) people that could buy them, as well as the European market where they could be sold. In this scenario the US companies that own these factories could still subsist based on selling their products in other markets, albeit most likely taking a profit cut. Consumers would face a price jump, but the economy would average out.
Now, what if the State decides to Nationalize these companies in these nations? Clearly War isn’t an option, due to both the distaste of Americans for war and the cost of fighting 3 nations at once in a war. These American companies would be devastated by the loss of their manufacturing capacity, as well as supplies, and the US would become starved of these products. It has all the makings of an economic crisis as these comapies attempt to remain solvent and re-open factories elsewhere.
And if you want to further this, you could say a Nation (like China, as example) is almost the sole source of hundreds of American products from Balloons to Condoms to TVs and everything in between. Mind you that US companies are world renowned for producing shoddy products that are meant to be replaced. One day China could decide to Nationalize these factories on their land in a bid to blackmail the US out of cash.
The US economy would be in shambles shortly without these items or with them at a ridiculous price and China would have all the bargaining power. They could demand anything they want and most likely get it since no one wants a military war with China and no one wants an economic disaster.
If my logic is wrong, please let me know-but this is the sort of scenario I believe would lead to a US economic problem and the US ceding it’s status as the world power.
And here’s the rub with this argument. For manufactured goods there is an approximate market price that balances supply and demand in a world which includes the US and a couple of hundred mullion relatively wealthy consumers. If the entire world decides not to sell refrigerators to the US, then you now have an unsold stock amounting to the entire consumption of the US over a given period.
So you either reduce consumption by shutting factories, or drop the price and watch your profits disappear - in either case the pain would be felt on Wall Street, but it would be felt even more in Latin America, as unemployment rockets and corporate tax payments vanish. Or alternatively you can break the embargo and sell them to the US for substantially more than the pre-embargo price as you have no competition. The US probably buys more refrigerators than the whole of Latin America, so it’s a bad example, but you get the idea. I just can’t see any large group of countries maintaining the discipline to really damage the US (or EU or Chinese) economies just by shunning them.
For any product which is not in a supply shortfall, embargoes have huge economic costs, which is why they are notoriously hard to maintain. Trade exists because it is mutually profitable - deliberately distorting it to damage the counterparty is cutting off your nose to spite your face.
Slaphead is right. Those goods CAN’T be sold elsewhere, at least for the same price. If they could, they’d already be sold elsewhere. If I have a factory producing widgets, and I decide to stop selling widgets to my biggest customer, who’s going to be hurt more? Who will have more bargaining power?
My customer can find other suppliers. Where am I going to find other customers? The only reason I produce widgets is to sell them to my customers. Presumably, I’m making as many widgets as I can sell. If I had more customers I could sell more widgets. Suppliers have the upper hand when they produce products that can’t be produced by other parties and can’t be substituted for. Factories producing consumer goods are not in that situation. They produce consumer goods only because consumers are willing to buy them.
If China could sell the comsumer goods they currently sell to the US in other places, why aren’t they currently doing so? Because no one else has the money to buy the goods. Without US demand the consumer goods are worthless. Yes, you could give them away to your own population, for free…but that leads to bankruptcy.
The limiting factor in consumer goods isn’t the number of factories capable of producing consumer goods. As we have seen, factories can be set up anywhere in the world. The limiting factor is the market for consumer goods. People are only willing and able to buy so much junk. Customers in the US are willing and able to buy a lot more junk than people in most countries, because many countries are desperately poor. Factory workers in China can’t afford to buy the crap they make for the US market. Without a market for their goods the factories will close. When the factories close, the workers riot. When the workers riot, communist party officials will be hanged from lampposts. Communist party officials are the ones making the decision to embargo the US market. Communist party officials are not likely to sign their own death warrants without good reason.
China needs the US market more than the US needs Chinese production. Factories exist in China because they can be run cheaply and efficiently there. If China shuts down the factories, new factories spring up in other parts of the world to sell goods to the US. If the US stops buying Chinese products, China goes bust. Yes, trade creates dependency, we are dependent on China. But the dependency goes both ways, China is dependent on the US. They don’t have an insuperable advantage over us. Chinese factories weren’t conjured up out of thin air, they were built, and factories can be built elsewhere.
When China no longer reinvests into US debt, timed to their absolute advantage. At a point when their military is in a better position, so 30 years or so. There’s still some time to fix the debt to reduce the impact.
This is a major problem. It concerns me. It could easily happen.
As to the OP tho, the real danger to Superpower status is that the Markets lose confidence in the U.S.’s ability to pay the debt – or the U.S. not paying (or being able to pay), not that China will kick the legs out from under its lifeline and Economy. If the former happens it will be the World economy, not the U.S. alone in free-fall and when it was a proportioned out – the U.S. could even conceivably come out ahead (ala Trump and his creditors or as J Paul Getty said: “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.)
As the Canadian Magazine MACLEANS correctly points out this would trigger a world-wide economic catastrophe.
So, I do not believe China can economically take out the U.S. without utterly destroying its’ own Economy. One way to look at it is like China is a Credit Card Company. If MasterCard cuts off a guy who owes $150,000 is that really painless? Especially when a huge portion of this money is used to fund U.S. purchases of Chinese goods. If the U.S. defaults – no one else would be buying from, or in, China either. I can’t see how the Chinese do this then step up to dominate the world amidst the greatest economic Depression they have ever faced … in 50 years when there are other markets maybe – but I still think China will have so many American assets that a catastrophe here is a catastrophe for them as well.