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by Ryan Streeter

We Americans have a habit of carving the nation into two groups to reflect concerns about inequality or social justice. We have long talked about the “have’s and have not’s.” John Edwards’ ill-fated presidential bid was predicated on “two Americas.” More recently, we have learned that America consists of the 1 percent and the 99 percent. And so on. These bifurcations are typically based on some type of material conception of justice – such as income and wealth levels.

The most important bifurcation related to the questions of American decline, however, is none of the above. Rather, it is this: children whose parents are married and educated vs. children whose parents aren’t. To virtually all social scientists’ surprise, going to college and getting a good job has made people less likely to divorce and more likely to raise children in a married household. Put crudely, those who could most afford to be single parents are choosing not to be.

Conversely, single parenting has skyrocketed among the uneducated. In the 1960s, whether you were in the upper 20 percent of the income distribution or the lower 30 percent, the odds of your having a child as a single parent were miniscule. Today, among the upper 20 percent, the unmarried childbearing rate has stayed in the single digits, but it has exploded to nearly 50 percent among the lower 30 percent. This, we’re finding out, has serious economic and social consequences.

Over the next 30 to 50 years the married-educated group will be chiefly responsible for most of America’s productivity, earnings, and as a result, revenues to the Treasury. Over the same period, the unmarried-uneducated group will be a drag on productivity and a net consumer of public services. Already, for the first time ever, the CBO reports that America’s middle income quintile consumes more in government benefits than it pays in taxes, a radical shift from just 30 years ago. This will worsen quickly in the coming decades. There are, of course, children whose parents are educated but unmarried or married but not educated, and they fall socioeconomically on all indicators somewhere between the two primary groups. But keeping our focus on the two primary groups is most important right now, as their dynamics will define the growing divide in America.

There are at least three reasons why these trends matter a great deal.

The first has to do with entrepreneurship, which we now know from a number of detailed studies creates virtually all net new jobs each year.  Since the 1980s, we’ve seen a long-run, secular decline in the number of startups as a share of the economy. This in turn means that net new jobs are in large part falling each year because of a decline in entrepreneurialism (larger existing companies usually don’t create any net new jobs, since any job gains are always cancelled out by mergers, acquisitions, layoffs, and business closures). If we hope to restore healthy job growth in America, to put it simply, we need more entrepreneurs.

And this brings us back to our married-educated vs. unmarried-uneducated problem. As our economy today grows more prejudiced toward higher-level skills and talent, entrepreneurship will increasingly be unavailable to those on the lower rungs of the American ladder. Entrepreneurs have traditionally relied on personal resources, credit-worthiness, and family connections, which are all related, to get started. We know from Kauffman Foundation survey data that most entrepreneurs come from middle class or lower middle class backgrounds where education was nevertheless a priority. The social capital that a young person acquires because her parents are educated and leading professional lives converts more easily to financial capital in today’s talent-driven marketplace. Those growing up in single-parent households with less-educated parents are unlikely to join the upwardly mobile entrepreneurial class or the jobs they create.

This gets worse because of what Tyler Cowen has called “the great stagnation.” Not only are they unlikely to start a business, they won’t find as many good jobs in companies that others have started. Unlike the days of old, when an innovation resulted in hundreds of thousands of lower-skilled jobs, such as the invention of the light bulb and the creation of G.E. and related companies, today’s greatest innovations don’t result in the same levels or kind of job growth. Google will never match G.E.’s employee count. This hits lower-skilled, less socially adept individuals especially hard. There are fewer places for them to go in the economy, which is a big reason why their wages have stagnated.

The second reason these trends matter is related to the first. America’s growing unmarried-uneducated camp will create a larger pool of unproductive workers. In 2007 America’s employment-to-population ratio – that is, the percentage of working-age adults who are in the labor force – dropped below Europe’s. This rather stunning data point was driven largely by the fact that men toward the lower end of the socioeconomic spectrum had been dropping out of the full-time labor force for awhile.

This was well underway before the recession and wasn’t because of economic factors so much as another trend, which social scientist Charles Murray has aptly called “goofing off.” In the 1960s educated and uneducated men had virtually the same amount of leisure time. Then, between 1985 and 2005, leisure time among men without a high school degree increased by 8 hours per week, while dropping among men with a college degree by six hours. Time-use data show that the increased leisure time among uneducated men was spent mainly watching TV and sleeping, not in civic activities, job searches, or other active pursuits. This reflects a trend in lower-middle class America toward greater unproductivity, which in turn acts like a hostile type of compound interest over time: the more unproductive you are now, the harder it is to make up for the lost time vocationally later, leading to even costlier unproductivity. The uneducated-unmarried class in America will increasingly be net “takers” from the public purse. That the population of children in unmarried-uneducated homes is growing is a real problem for the future of America’s labor force.

Third, the net effect of the foregoing two trends suggests that America’s coming entitlement crisis will be more severe than we think, especially if meaningful reforms are put off for much longer. Because of the kinds of stagnation that Cowen has identified, we don’t see any significant wage boosters for lower-skilled workers on the near horizon. Since Medicare and Social Security are paid out of the payroll taxes on the earnings of current workers, the future looks especially grim when we consider how the earnings of the growing unmarried-uneducated class stack up against the needs of a swelling aging population.  We can’t simply rely on the payroll taxes of the top 20 percent to foot the bills.

Improving our policies to recruit more entrepreneurial, job-creating immigrants will help offset the downward pull of the unmarried-uneducated portion of the U.S. population, but it will only be a cultural revolution of sorts among the latter that will set America aright again.

Ryan Streeter is a Distinguished Fellow at the Sagamore Institute, holds adjunct positions at Indiana University and the Hudson Institute, and is a Non-resident Fellow at the German Marshall Fund. His writings and work can be found at www.RyanStreeter.com.

by Catherine Weaver

Robert Keohane, in a recent Foreign Affairs review article, warns that pundits pondering US decline inevitably draw the wrong conclusions when they neglect the broader institutional context in which US power, for better or worse, is firmly substantiated. He is absolutely right.  One of the key lessons instilled in any student of international relations of the 20th century is that hegemonic power is often embedded in and exercised through international organizations. These multilateral organizations lock in systems of global governance that preserve the influence of their creator states even when their relative power wanes. One need only look briefly at the history of venerable postwar international institutions to observe how these organizations have served US interests in the world over the past several decades.

Yet for the US today, facing an inevitable decline in relative material power, engagement in multilateral institutions represents both an opportunity and constraint. On the one hand, the US lock on disproportionate authority in IOs such as the UN, World Bank and IMF, secured through veto powers and weighted voting rights granted when these institutions were created nearly 70 years ago, means that the US will continue to punch above its weight well into the future. Such large, long-standing organizations rarely die. And bureaucratic mandates, norms, and operating rules are also notoriously sticky, tending more towards incremental adaptation than revolution. Thus, even as the balance of power in the world shifts towards emerging economies, such as the BRICS, the dominant rules and principles that guide international security, trade, finance and development, as embedded in multilateral institutions, will continue to reflect the ideals of the powers that created them – in this case, the US. It is therefore firmly in the US interest to exploit any opportunity to maintain its institutionalized power by continuing to support and exert leadership in these multilateral organizations, even when doing so entails the inherent costs of hegemonic responsibility and strategic constraint.

Therein also lies the key constraint. As Celeste Ward Gventer argued in her recent post,  “decline will come, but its timing may depend on choices that will either enhance or weaken the U.S. position.” While her point was an incisive critique of America’s misguided foreign policy of nation-building, one might offer the same statement in the context of US engagement in global governance. The US ability to sustain its power in the world via multilateral institutions is inherently a function of its willingness and ability to help sustain the relevance, legitimacy and effectiveness of these institutions so that these institutions, in turn, can exercise authority and influence in the world.

Yet sustaining the relevance and legitimacy of multilateral institutions, in the zero-sum game of multilateral representation and governance, may in veritably require status quo powers, including the US, to cede power and influence within these institutions to rising powers. The alternative to this inclusive multilateralism, which binds rising powers into existing institutions, is the proliferation of competing venues of global governance that ultimately diffuse power and undermine the authority and leverage of those institutions in which US enjoys a preponderance of influence. We have already seen ample evidence of such governance diffusion, in the form of a shocking proliferation of new preferential trade agreements in the wake of stalled WTO talks, the increased lending power of regional development banks and the threat of a new BRICS development bank, and efforts to create new regional monetary funds (such as the Chiang Mai initiative). While such counterbalancing in global governance has thus far been relatively weak due to elusive collective action among rising powers, a pattern is emerging.

In the end, this leaves us with a rather unsettling and paradoxical conclusion with respect to US decline: to sustain power in and through global governance, the US must in fact learn to let go of power. This is especially true in instances of accommodating rising powers in existing institutions (such as the aforementioned Bretton Woods Institutions), forums (e.g., Financial Stability Forum) and clubs (e.g. G20).  Many such steps have already been taken, for example, in recent governance reforms at the IMFand World Bank, which granted more formal votes and informal influence to the BRICS (especially China). Yet even here, the modest concession of power (which in the case of the IMF and World entailed no real loss of formal voting power by the US) risks being seen as empty gestures (or worse, insults) when the end result is a balance of power within the institution that looks more like 1982 than 2012. The same lesson can be taken from recent leadership selection processes at the World Bank and IMF, which reaffirmed the seventy year old gentlemen’s agreement to let the US chose the President of the Bank and Europe dictate who runs the Fund. The clear lack of effort to allow for a more open and meritocratic process reaffirmed many critics’ beliefs that the US and its Western allies have no intent of upholding their espoused democratic ideals in these institutions. This is even a view held by many within the institutions, as evident in the recently leaked, scathing resignation letter of a senior IMF economist.

This ultimately leads me to believe that one key way the US can stem the decline of its power is to rethink its strategic engagement in global governance. And this means supporting international institutions not only in material terms, through the sustained provision of critical resources. It also means that US must support these key institutions of global governance on principled terms, truly abiding by the core values embedded in the mandates of these organizations even when it means forsaking short-term self-interest. The legitimacy the US accrues by working through multilateral institutions (as opposed to going it alone) is only good insofar as these institutions are themselves perceived as legitimate governors.

Dr. Catherine (Kate) Weaver is Associate Professor at the LBJ School of Public Affairs and Distinguished Scholar at the Robert S. Strauss Center for International Security & Law at the University of Texas at Austin.

by William Inboden

Lamenting American decline is as American as, to borrow a phrase, baseball and apple pie.  As the Yale historian Harry Stout has shown, even before the United States was a nation, as early as the 17thcentury Puritan ministers in New England regularly warned their flocks against the dangers of “declension” from their spiritual commitments and their calling to forge a new society.  Such jeremiads a century before the founding of the American nation seem to have been subsequently hardwired into our national DNA.   More recently, as Celeste Ward Gventer and Joseph Joffe have pointed out, the US has, almost like clockwork, every decade undergone hand-wringing over our looming decline – anxieties that, not coincidentally, occurred alongside America’s ascent to global superpower status.  So the 1950s brought Sputnik and worries of the lost American edge in science and technology; the 1960s had the “missile gap” and descent into the Vietnam quagmire; the 1970s witnessed the oil embargo, recession and inflation, and declining global influence; the 1980s saw the rise of Japan as the dynamic economic competitor, and so on.  Every decade, it seems, Americans fret that our nation is in decline.

But just because decline has been successfully warded off in the past does not mean that American hegemony is destined to continue into the future.  While I hope that an appreciation of our history of declinist worries brings some perspective, it should not bring complacency.

Looking back over this week’s posts, a few themes stand out (besides the, ahem, high volume of quality contributions from the fine students and scholars at the University of Texas-Austin):

First, the evolving and expanding nature of power.  As Frank Gavin discussed, in bygone eras national power was a pretty straightforward combination of military strength, economic might, population, and geography.  Yet just glancing through the range of issues that our contributors touched on this past week – including demographic trends, family structures, education policy, participation in multilateral institutions, entrepreneurship and innovation, governance, fiscal policy, even culture and cuisine– shows how much more multifaceted and expansive the very concept of national power has become in the 21stcentury. This brings new challenges as efforts to maintain American supremacy need to account for a growing number of variables, but new opportunities as well for the United States to show global leadership.

Second, the patterns and lessons of history.  History is inescapable when considering our present circumstance.  Jeremi Suri brought some insightful lessons and perspective from an erstwhile empire that is little appreciated today: once-great Austria-Hungary. Celeste Ward Gventer found in history a cautionary tale that American power can get precipitously sapped by nation-building adventures abroad.  Former NIC Chairman Bob Hutchings took a different gloss on history as he recounted past efforts by the NIC to evaluate America’s evolving global role, and suggested ways that this type of institutional and intellectual history could shape future predictions.

Third, the need for wise policy and political will.  The various Global Trends reports make very sophisticated efforts to project what the world will look like two decades into the future.  Yet as Mat Burrows and his very capable team who produce the reports will readily admit, one of the biggest variables in these projections is the human factor – specifically what policy decisions will leaders make, and will citizens collectively generate the political will to change course and make tough decisions?  Many of our contributors came back to this fundamental fact: for the United States, decline is a choice. And as I discussed here, much of the disposition of American decline rests not on the problems our nation faces, but on whether we will be resigned to acquiesce to these problems, or resolved to overcome them.

William Inboden is a Distinguished Scholar at the Strauss Center for International Security and Law and Assistant Professor at the LBJ School of Public Affairs at the University of Texas-Austin, and a non-Resident Fellow with the German Marshall Fund.

The Fiscal Politics of Decline

by Terrence L. Chapman and Patrick J. McDonald

The current policy conflict over whether automatic cuts to the defense budget, negotiated as a commitment mechanism to ensure the fulfillment of the budget accord from last summer, should be implemented in January of 2012 illustrates some of the short term to medium term national security challenges associated with an era of budget deficits and increasing public pressure for fiscal restraint.    These cuts would reduce troop levels by approximately ten percent in both the Army and the Marines and entail sizable reductions in capital equipment, namely ships and planes, for both the Navy and the Air Force.  Secretary of Defense Leon Panetta has publicly described these cuts as “disastrous.”  The Chairman of the Joint Chiefs, Martin Dempsey, has warned that they risk hollowing out America’s forces, reducing the military advantage the United States possesses over other countries, while pushing the United States to be “less visible globally.”  Our research on the fiscal politics of power transitions and military conflict suggests that this internal fiscal struggle in the United States possesses much larger long term implications that bear directly on the possibility and consequences of American military decline.  In particular, we see the post-9/11 bipartisan support for tax cuts (except on upper incomes however defined) as a bipartisan choice for decline.

Our research examines how international order depends on the internal fiscal bargains within countries.  These bargains set the terms of revenue that can be extracted from society in order to fund military expansion, which in turn shapes the bargaining leverage of the state, and the structure or division of the larger international political status quo.  The spoils of international bargaining—like preferential trade ties, military basing rights in other countries, multiple alliance options, or the capacity to support/install democratic partners in other countries, benefit American citizens, but may do so unequally.  Key to the internal bargain is the degree to which those who foot the burden of increased defense spending are “vested,” or have a stake in, the international outcomes that that spending affects.  Also important is the ease with which those who fund public outlays can replace leaders who “overtax,” which influences the amounts governments can raise from society.

Decline is a relative phenomenon.  It involves a shift in the relative distribution of military power across countries.  These shifts can have two main consequences: they can reduce bargaining leverage of the declining state; and, as Martin Dempsey has suggested, possibly increase the risk of military conflict when countries seek to renegotiate the global status quo to reflect new and changing power relationships.

Domestic fiscal strength is a key determinant of international political strength.  As Leon Panetta said in his June testimony to Congress, there is no free lunch.  Governments generally have four means to meet revenue needs:  raise taxes, borrow, draw on publicly owned assets, or simply expropriate these assets from society (often by inflating away debt burdens or simply defaulting on debt as Germany did in the interwar period).  A politically independent Federal Reserve, a politically strong financial sector, a strong national skepticism of public ownership, and the presence of institutions that protect the rule of law have effectively taken the latter two revenue-raising strategies off the table.  The former two, tax power and borrowing, carry several tradeoffs.    Taxation reduces immediate consumption, on the other hand, but may be a more sustainable source of long-term strength, provided that citizens paying taxes are sufficiently “vested” in international outcomes, which may be reflected in the degree to which increases in U.S. power are redistributed through economic channels to fund economic growth at home.  Borrowing to finance tax cuts, wars, and greater government spending (as the U.S. has been able to do in roughly the last decade), avoids short-term sacrifice but invites a long-term problem of snowballing debt that delays tough fiscal decisions and makes fiscal power dependent on the borrowing costs for the state.  Most importantly, as the Greek crisis has clearly demonstrated, the capacity to borrow is intimately tied to a government’s political capacity and willingness to tax.

What is unique about the current American situation?  First, in the aftermath of the Soviet collapse and 9/11, the reach of American political and military influence has dramatically increased.  American troops now deployed around the world.  As a consequence, American forces are now part of the military and political status quo wherever they are deployed.  The withdrawal or diminution of these forces, in such places as Afghanistan, Pakistan, or the Horn of Africa, will generate political change as local groups whose influence had been limited by American forces press their concomitant growth in military power to their political advantage.  Second, the United States has built this position of influence without fiscal buy-in on the part of its electorate, instead drawing on foreign capital.  This raises serious concerns about the sustainability of America’s current global military position if the global community of lenders rapidly reassesses, as it been apt to do, the safety of U.S. debt.

The situation today bears some similarity to the 1920’s, when the United States self-imposed a temporary decline from a theretofore zenith of global power achieved at the end of World War I.  Among other things, the U.S. aggravated the reparations struggle and helped to undermine the nascent political order in Europe by opting for tax cuts rather than war debt relief for Britain and France.  Quite simply, the military power and global influence of the United States rest critically on its fiscal power at home.  If there is no such thing as free lunch, the American taxpayer will, at some point, need to increase its stake in the current international political status quo in order to preserve it.  Given current federal tax levels, we worry that bipartisan support for delay in fiscal stabilization through taxation makes decline, and its attendant negative political consequences for international stability and American influence, more
likely.

Terrence Chapman and Patrick McDonald are both Associate Professors of Government and Distinguished Scholars at the Strauss Center for International Security and Law at the University of Texas-Austin

Catching the Winds of Power

by Adam Parker

In international relations, measures of power are usually relative. Depending on the measure or definition of power, however, this relativity can be quite different. This has important implications for any discussion of American decline. One way to think about this is to attempt to measure aggregate capabilities: what can a given state do? This is a relative measure because the answer to the question depends on the powers of other states (Liechtenstein can’t successfully invade Germany, for instance). The second way to think about power would be to compare these aggregate capabilities: what can a state do that another state can’t? These two measures are distinct, but discussions about American decline often fail to adequately separate them.

Thinking about the aggregate capabilities of the United States, it can be easily argued that American power is declining. Rising powers such as China, India, and Brazil are expanding their spheres of influence, thereby shrinking the area where the United States can exert its influence with impunity. Additionally, the rising influence of non-state actors—be they corporations, NGOs, or transnational terrorist or criminal networks—is further restricting the ability of the United States to unilaterally pursue its interests. Simply put, the United States does not (and will not) have the same clout it had in the unipolar moment after the Cold War.

Now, before the declinists declare victory and quit the field, let’s examine the relative aggregate capabilities in the international community. Here, it is far less clear that the United States is in decline. The decline of the importance of the state (which many gifted individuals have already said a great deal about) is not restricted to the United States. It is a universal problem that all states are confronting. More importantly, all states are confronting a full suite of problems—both domestic and transnational—relating to demography, resource management, and economics that will tax even the most capable among them. These challenges, particularly in their domestic manifestations, will sap the ability of states to act beyond their own borders.

In facing these challenges, the United States possesses many unique advantages. Regarding demography, the United States occupies an important middle ground. U.S. population growth has reached the replacement rate.[1] Many other developed countries in Europe have dropped below this rate, while many developing countries such as India are struggling to meet the needs of their growing populations. Also, the United States is not aging as rapidly as Japan, Europe, or even China (despite all our concern about the retiring baby boomers). Demographically, the United States is well off compared to its near-peer competitors.

The United States is similarly blessed in the area of resources. Unlike China or India, the United States does not struggle to provide its citizens with energy. In terms of shale gas, the United States possesses near-limitless reserves and could conceivably become a net exporter of energy again. The American West and Southwest face impending water problems, but these too pale in comparison to China, whose leaders have conceived of the gargantuan South-North Water Transfer Project to address this issue.

Related to these points, the American economy is relatively strong in the long term. The Eurozone union, technically the largest economy in the world, may not be long for this world. At the very least, the feasibility of a monetary union without a fiscal union is in serious doubt. As evidence of the continued relative strength of the dollar, it has remained the world’s safe haven despite the inability of Congress to responsibly tackle the debt problem. China, while currently more fiscally secure, confronts a population of impoverished people numbering some 250 million. This places significant pressure on the Chinese budget as the government struggles to maintain stability. Finally, the United States continues to lead the world in creativity, research, and technological innovation.

For these reasons, it seems probable that the United States will see its aggregate capabilities decrease over the next 18 years while those of its peers and competitors decrease even faster. As the states of the world scramble to catch the fading winds of international power, the United States has the biggest sail. This raises an important question for discussion: should the United States content itself with being the fastest in a slowing fleet of ships, or should we try to maintain our present speed? The answer to this question will be of great consequence to the future of U.S. foreign policy.

Adam Parker is a second-year Master’s candidate at the LBJ School of Public Affairs at the University of Texas-Austin.


[1] Roughly 2.2 children/woman on average, a rate which stabilizes the population

by Megan Reiss

The implications of US power decline are great. In the Global Trends 2030 report, three scenarios about the way the world could look in 2030 are introduced. The first is a reverse engines scenario, whereby the US becomes fairly isolationist, current conflicts erupt, the world economy slows, and even technology flatlines. In a fragmentation scenario, the lack of will to fix the current political, social, economic, and governance problems leads to a world with greater risk of conflict, but without the dire predictions of the reversed engines.  Finally, the utopian-like projections of the fusion scenario portrays an environment where political will to solve problems leads to a prosperous, cooperative world. Of these three scenarios, the report argues that the fragmentation scenario is the most likely to come to fruition, based on the current trends.

These futuristic predictions beg us to ask, will the US have the ability to manage or even shape scenarios, or will American power decline so managing outcomes is no longer feasible?  I can imagine an interplay of will and power may determine which scenario will result. The US may have power but no political will.  Though it may be tragic from an American perspective to waste the ability to lead the world community, latent power would allow the US to muster up the will in the future.  Power means that even if political will is initially absent, when a sufficient shock occurs or a window opens, the US could then muster the will to work to fix the economy, ease conflicts, solve governance problems. But if the US loses power, even with strong political will, there may be little means of affecting change.

Is the power of the US declining in the world?  This question seems like it should be fairly simple to answer by projecting trends into the future, as was done in various graphs in the Global Trends 2030 study, especially those on the Aggregate Power of Developing States. One graph measures power based on GDP, population size, military spending, and technology.  China and the US have equal power by the year 2030. By 2050, China overtakes the US in power by roughly 6 percentage points. But when the team adds health, education, and governance to the mix, suddenly China’s power is behind the US by four or five percentage points in 2030 and is only a couple percentage points ahead in power by 2050. By adding only a few additional elements, the estimated future of US power begins to look a bit rosier.

We could break the elements of these projections down even more to try get to the roots of actual power.  Data on the average age of the population, the social programs the population are guaranteed, the congruence of domestic opinion, the harmony of regional and distant State relationships, the epicenters of industrial booms, the salience of international organizations, and even the influence of nuclear weapons would mean the neat and tidy graphs would only get more complicated. Yet intuitively, each of these should factor in to power projections. Try to then picture accurately predicting the likelihood of innovation in fields we have yet to stumble upon and the power projections on a graph seem incomplete.

Predictions of power decline repeat across history. In the 50’s, the US prepared for nuclear war and predicted that the Soviets would threaten US power to such a great extent that the dominos would fall and many of our allies could succumb to communism.  The 60’s saw the US at the brink of a nuclear conflict and saw a massive escalation of manpower in conflicts over communism in developing countries. Domestic turmoil and a renewed arms race defined the 70’s.  The 80’s brought a series of conflicts in developing countries and another terrifying arms race to assure American power. The USSR (and its power) collapsed unexpectedly. Each decade sees projections of American decline, and this decade is no different.  With hindsight, we can point to the various reasons decline didn’t happen to explain why the predictions were inaccurate. However, we have to keep in mind that some of those making predictions about the power of the USSR and the likelihood of American decline were those people studying these environments. Traditionally, we simply have not been very good at predicting American decline.

We need to know what confers power. While power is traditionally viewed through the size and skill of the military, in an era that is void of two or more States meeting face-to-face on a battlefield, the number of tanks a State possesses no longer seems like an accurate measure of power.  The US still has the strongest military, and yet we discuss possible decline.  There’s more to power than military, or even economics or population size.  If these were the only elements, we would be much better at predicting the future of American decline.

An idea associated with Milton Friedman is that it is not really important whether all the elements in a model accurately reflect the world, as long as the model ‘works’ by reflecting reality. We are traditionally quite bad at predicting American decline, as predictions about an American decline which never happened are repeated with frequency across decades. Various models attempting to assess power are changing for the very reason that the models are not working, they are not properly assessing power.

I can not say for certain whether America is in decline or not. Intuitively I do not believe it is because I do not see America losing the ability to influence or affect change.  While it’s nearly impossible to predict success and innovation in new arenas, the US is repeatedly at the forefront of innovation and there’s no obvious reason to believe this trend will stop.  Although we have growing competitors and a disagreeable domestic situation, we have the luxury of the dollar as the world’s main currency, the top universities, a strong military, nuclear weapons, and a huge GDP.  I can say with certainty that Americans need to muster up the political will to use our power to shape the world into the best possible scenario, but we won’t be able to start until we follow the repeated examples of American history in times of domestic discord and create some semblance of political unity at home. Finally, while we’re trying to ease tension at home, we can keep trying to pinpoint those historically elusive elements that do predict power decline.

Megan Reiss is a doctoral student at the LBJ School of Public Affairs at the University of Texas-Austin.

A Demographic Morning in America

by Gustavo O. Fernandez

When considering the question of American decline, one could point to yawning budget deficits, unaffordable entitlement programs, a creaking infrastructure, or the coming ‘fiscal cliff,’ comprised of tax hikes and budget cuts, as domestic factors contributing to an American power in retreat. Internationally, one could cite China’s rise as a potential threat, and another indicator of possible American decline. Yet, when one looks at the country’s demographic projections through 2050 the United States has a strong, positive outlook that will make solving these challenges manageable.

The United States has always been a country welcoming to immigrants, who have been enticed by the power of democracy, opportunity, and the promise of a brighter future for their children. This promise continues to manifest itself with strong population growth. For example, over 90 percent of U.S. population growth since 2000 has come from immigrants or the children of immigrants. Because of this trend the population of the United States is predicted to increase by an additional 30 percent between now and 2050.

A growing population means that the base of citizens that can be taxed will increase, making it relatively easier to fix our deficit, and with less pain, since it will be spread across more people. It also means that we will have the resources to continue to staff our military, and that we will have a robust working population that will support our retiring baby boomers. Most importantly, as the United States grows and becomes more racially and ethnically diverse, it will lead to more innovation, and more entrepreneurship. For example, between 1995 and 2005, 52 percent of American start-up companies were founded either by immigrants or their children. This is the kind of innovation that we need in order to meet the challenges that we face today.

Strong population growth will also help the U.S. internationally. China is often cited as one of the central potential threats to American power. Yet when we compare fertility rates we get a different picture. China’s fertility rate, at 1.56, is below replacement. This means that China’s population is, in fact, shrinking. In contrast, the U.S.’s fertility rate, at 2.08, shows a population that is growing. This will be a challenge for China, and one that will limit its ability to project power internationally over the medium and long-term.

Some readers may greet with skepticism the news that China’s shrinking population is a problem. After all, China is a huge country of over one billion people. It is true that a shrinking population is not necessarily bad. The challenge that China faces is that its population is both shrinking and aging very quickly. China’s population will begin to shrink after 2026, and by 2050 the size of the working population will be 50 percent smaller than today. This means that the country will have fewer working-age people taking care of their abundant older relatives, and with no comprehensive, functional pension system in place, China will struggle to meet the needs of its quickly greying population. This will be a significant strain for China, and will demand the attention of the country’s leadership. And while China turns inward to deal with its “senior tsunami,” the United States will continue to enjoy the benefits of strong population growth.

Population growth will continue to shift the ethnic makeup of the United States. The ethnic makeup may be evolving, but the idea of America, what makes our country exceptional, is alive and well. And that’s good news. The positive demographic numbers mean that we will have the people, ideas, time and energy to find innovative solutions to the problems that worry our country today.

Simply having a positive demographic outlook won’t solve all of our problems, but it is a very good start. Demography may not be destiny, but it does put us in a strong and advantageous position moving forward. It is now up to our political leaders and policymakers to craft and implement the correct forward looking policies to effectively harness the demographic advantage that the United States is set to enjoy for the next 40 years or more. Hopefully our leadership is up to the task.

Gustavo O. Fernandez is a graduate student in the Master of Global Policy Studies program at theLyndon B. Johnson School of Public Affairs at The University of Texas-Austin.

Looking Backward, Planning Forward

by Robert Hutchings

In 1994, during a brief stint in the National Intelligence Council as director of its Analytic Group, I was involved in the first of the “Global Trends” exercises, organized by the then-chairman of the NIC, Joe Nye.  (The “Global Trends 2010” report was published in early 1997 under the chairmanship of Dick Cooper.)  In an essay that I wrote for the project (and later published in a book of mine called At the End of the American Century), I described a world that would remain militarily unipolar, with no power or group of powers capable of matching the global reach of the United States, but with a tripolar distribution of economic power among North America, Europe, and East Asia.  Beneath the level of these familiar yardsticks of national power, moreover, I saw not the concentration of power but its diffusion among supranational, subnational, and transnational actors beyond the control of any government.

I looked back on that essay a decade later in a speech I gave in April 2003, shortly after I became NIC Chairman and three weeks after the invasion of Iraq.  In the speech, I acknowledged that some of my earlier judgments had been overtaken by events; others were just plain wrong.  But the core argument, I contended, was still valid: “At a time when the spectacular performance of our armed forces in Iraq may tempt us to see power in predominantly military terms, it is worth recalling that our preponderance is not so great in other areas and that we continue to live in an interdependent world.  We can’t wage the war on terrorism by ourselves, and we can’t bomb the global economy into submission.  Our smart bombs aren’t that smart.”

The subtext of both the essay and the speech was that the “unipolar moment” was a dangerous illusion that would tempt us to vastly overestimate our real power and our ability to bend world events to our liking.  In a couple of other speeches I gave that year as NIC Chairman, I spoke – a bit more recklessly – about “the problem of American power,” which “may tempt us to take on more than we can handle, simply because there is nothing to stop us from doing so.”

Now, with the passage of another decade and chastened by our experiences in Iraq and Afghanistan, we seem to have lurched in the other direction and are now underestimating our power in a kind of declinist funk.  There are worrying indicators, to be sure, of declining education levels, a deteriorating American workforce, rising inequality, degraded infrastructure, and many others that augur poorly for our longer-term competitiveness and vitality.  Other contributors to the GT 2030 blog can comment more ably than I on those.  My focus here is how those with policy responsibility think about America’s power position and how they act upon their assumptions.

It is worth pointing out that the Global Trends projects – GT 2030 is the fifth of them – were not intended to be mere intellectual exercises in thinking about the future but rather were meant as guides to action.  By thinking systematically about future trends and their implications, we wanted to help policy makers at the most senior levels decide what to do right now.

Looking out to 2030 and the kinds of challenges the United States is likely to face, amassing ever more potent military power seems among the least relevant activities we might undertake.  Our larger problem is that we quite literally have more power than we know what to do with.

Instead, we need to accentuate and develop the advanced skills needed to deal with constantly shifting coalitions of partners, diffuse threats to American interests coming from almost anywhere, and complex problems that are not often susceptible to “kinetic” solutions.  There are encouraging signs: the Obama administration has shown itself adept at applying force strategically and selectively, and it has been wise enough to see that not every challenge merits an unconditional and unlimited American commitment.

But we as a society need to do much better at understanding other cultures, mastering the techniques of statecraft, better combining the military and non-military dimensions of our power, and better coordinating the public, private, and non-profit sectors in our complex interactions around the world.

We need better diplomats, too.  For all the complex relationships we have around the world, it is striking that few American diplomats have ever taken or ever will take a course on diplomacy, strategy, or statecraft.  This is why (shameless self-promotion coming here) the LBJ School of Public Affairs has embarked on a major global initiative toward “Reinventing Diplomacy,” working with scholars and practitioners around the world to make the study of diplomacy better grounded in history, more comprehensive in scope, and more global in outlook.

Robert Hutchings is the Dean of the LBJ School of Public Affairs at the University of Texas-Austin.  He has previously served as Chairman of the National Intelligence Council.

by Larry O’Bryon

No patriotic American would like to admit that our country is in decline, but how does the evidence stack up? Time for a quick look in the mirror America, to assess what we see.

Economically, we are a society conditioned on too much debt and financial leverage. This conditioning, or addiction even, exists in Americans’ exposure to real estate and credit card debt, Wall Street’s excesses, and now an increasingly untenable fiscal situation with our federal government.

Socially, we are concerned with the American middle class struggling with stagnant real wage growth during the past decade. Poverty levels of the population are approaching levels last seen in the 1960s. Images of the suffering in New Orleans in the aftermath of Hurricane Katrina still reside in our collective memory, proof that our safety net isn’t what it should be. In education, the U.S. struggles to break the top 20 nations in high school math and science scores.

Our military is the world’s finest fighting force, and our defense budget dwarfs those of other nations. However, we have been working through an intractable conflict in Afghanistan with our NATO allies, with ambiguous prospects for the longer-term results of our nation-building efforts. We look tentative in our steps to support resolution of conflict in Syria and contain Iran’s nuclear ambitions.

In the political realm, we are demonstrating the limitations of democracy, as our two-party system grinds to a halt under divided and partisan leadership focused on campaigning, rather than governing and results-oriented action. Through contentious and inconsistent foreign and domestic policies, recent administrations have impaired our respectability abroad, and weakened our unity and strength at home.

Indeed, at first glance, American exceptionalism and global influence seem to be on the wane.

However, further reflection is necessary. The U.S. has significant geographic advantages, including a bounty of natural resources. Our country continues to have the highest per capita GDP on a PPP basis of the world’s major economies. In addition, many of our challenges are within our own ability to control. For example, the year-end 2012 fiscal cliff, driving concerns of renewed recession, is avoidable through politicians’ taking responsible actions to reform our tax code and address our twin deficit and debt challenges. The U.S. remains the destination that millions of productive immigrants aspire to emigrate to enjoy our meritocratic, freedom-loving society, a continuing source of strength for our nation. Our universities and higher education opportunities remain the model for the rest of the world.  From a global perspective, the EU, China and the other BRICs have economic, political and societal challenges that exceed our own.

The risk of America’s decline is real, but with these strengths and our comparative advantages, it is by no means inevitable. Left unchecked, however, the above noted issues will contribute to a diminishing of the United States’ power and influence in the evolving world order. Mitigating this risk requires the nation to come together under united leadership to achieve goals and objectives consistent with our national interests, domestic needs, and international responsibilities. Our leaders need to look beyond elections to confront these challenges, and embrace opportunities available to us to renew America’s strength and character. We have some work to do, and we better get to it.

Larry O’Bryon is a Graduate Fellow at the LBJ School of Public Affairs at the University of Texas-Austin, and previously worked for two decades in international engineering & construction and investment banking in Asia, Europe and the Middle East.

The Decline of American Education

by Miha Vindis

The world has changed in many ways since the Cold War ended. The internet and mobile communication have opened up new possibilities across the world. As high-tech, high-value generating industries are no longer bound by national borders or access to restricted resources, a new world order has began to emerge. In this new world education has become even more important. The United States – and the West as a whole – has seen its advantage in economic, technological and defense arenas erode, because we are beginning to fall behind the rest of the world. While the political establishment debates, increasingly on ideological grounds, the future of America is at risk.

The problem begins very early in the national academic system.Beginning in elementary school many students are already behind the nationally accepted standards.  For example, one study found that only 31 percent of fourth graders are proficient in reading on the NAEP (National Assessment of Educational Progress) and by eighth grade this number is virtually the same (33 percent). If the average student is not an efficient reader, how can we expect them to excel? One can find similarly alarming statistics for math and the problems compound by the time students are in high-school. In fact, according the Heritage Foundation about one in three American students fail to graduate from highschool. What is most worrying is that the numbers are getting worse in relative and absolute terms. In 2008, the United States was the only developed country with a higher percent of 55- to 64-year-olds with high school degrees than 25- to 34-year-olds.

The data for college level education is also not positive. Just over 40 percent of American’s earn a college a degree – a number which has not changed in decades – while other nations have been catching up. Consider this fact: when the baby boomer generation was completing college in the 70s, more than 30 percent of all college graduates in the world were Americans, but today, that number is only 20 Percent. While part of this can be explained by rapid population growth rates in some countries (for example, China’s proportion of college graduates tripled in the last two decades) data clearly shows that the United States is beginning to lag in higher education. According to the OECD (Organization for Economic Co-operation and Development) significant progress has been made in China, Korea, Mexico and Brazil… countries often seen as up and coming geopolitical competitors.

The problem is not necessarily one of quality in higher education. Many foreigners (this author included) still choose to come to the United States because the value offered by American universities is very high, despite very high costs (international students have limited options in terms of funding or student employment). As a Slovenian living in the United States, I constantly contrast America with Europe. And while I am willing to pay the extra cost for an American higher education, I see no such incentive for primary or secondary education. Simply put, American college education may be the most expensive in the world, but it also offers some of the best employment and earnings opportunities. The problem, therefore, is not quality or potential, but rather the small number of Americans earning degrees in critical areas and the even smaller number who are prepared for rigorous study in those fields.

The most serious problem is in the area of STEM (Science, Technology, Engineering, and Math), where there are almost 3 million unfilled jobs, but only about 300,000 graduates annually. This shortage of U.S.-born STEM workers gives companies two choices: import costly foreign labor, or move operations abroad. In fact, according to the OECD the United States has less PhD STEM graduates (per million population) than many other developed countries. The picture is even bleaker when one considers that many of those advanced degrees are awarded to foreigners. For example, about half of all engineering doctoral degrees are awarded to non-U.S. nationals. The implications of this shortfall are not only economic, but also a national security concern as it will become increasingly difficult to fill sensitive security-related jobs.

Most policy-makers would not dispute these facts: education in the United States is falling behind. Identifying the problem and recommending a solution, however, is becoming increasingly ideological. Politicians on both sides of the aisle are all too eager to turn critical issues into an ideological battle rathen seek a realistic compromise.  The United States desperately needs an overhaul of the education system, but given today’s political reality it is not clear when that will happen.

It would be foolish to pinpoint any one issue as the sole problem with education. The education system doesn’t need tweaks and fixes, it needs a serious overhaul. The system needs to be adjusted to attract qualified, motivated teachers through fair compensation; national and state curriculums need to be updated to reflect the realities of the post-Cold War era; school testing norms need to be redesigned; and effective means of motivating students have to be implemented. What is at stake if far more than just increasing reading or math test scores; without a well educated population the American advantage in just about every field will continue to erode. The world may be in the hands of the current power elite, but the future is in the hands of the next generation. No country serious about its future can afford to forget that and no patriotic policy maker should ignore that.

Miha Vindis is a Slovenian doctoral student at the LBJ School of Public Affairs at the University of Texas at Austin, and previously spent a decade in the international oil industry.