We’re #1! The world’s number one debtor nation, that is. And in “The End of Influence,” authors Stephen Cohen and Brad DeLong illustrate the far-reaching and potentially long-lasting consequences of other nations — mostly oil producing states and Asian manufacturing countries — having the lion’s share of the world’s money.
Americans will no doubt find this book deeply unsettling, as it predicts the U.S. will become something of a normal country and less and less a unique hyperpower. Specifically, the authors expect the U.S. to lose the ability to undertake unilateral foreign policy actions, and to be forced into making difficult adjustments — both pragmatic and psychological — as a result of our weakened economic position. Less convincingly, they also assert that America will experience a decline in its cultural power (ostensibly because we will be less worth emulating).
One might expect this to be good news for China, except China is trapped in a strange, unwanted, and uncomfortable embrace with the indebted United States, say the authors, compelled to lend to the U.S. so its citizens can keep buying. We’re bound together, and we must manage this mutual dependence carefully and, over time, wind down [the] economic imbalances, they conclude, before noting that our other trading partners will face challenges of their own when no longer able to develop their economies at America’s expense.
It’s clear, however, that going forward the United States can expect to be constrained in ways it hasn’t been hindered in a very long time. On the plus side, Cohen and DeLong stop short of forecasting dramatic decline. The United States will continue to be a world leader — perhaps even the leader, they conclude. But it will no longer be the boss.