The United States in the Early 21st Century: 
Decline or Renewal? 

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Policy Paper

by Abraham F. Lowenthal - Brookings Institution
November, 2013

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 Table of Contents


Introduction   

The bitter impasse finally, if temporarily, resolved in Washington following the 16-day government shutdown made it absolutely evident to all that the United States faces serious problems. These problems did not suddenly arise, nor are they limited to the showdown regarding the shutdown of government activities and services and raising the national debt limit. The difficulties are not only political, but also economic and social; they have developed over many years, and they are by no means resolved.

 GDP growth in the United States was more than 4% in the early 1960s, fell below 3% in the late 1970s, regained some strength in the late 1980s and early 1990s, but then dropped to its current level of less than 2%, with most forecasts suggesting that it will remain in that range for some considerable time. The United States has had prolonged high unemployment, sharply reduced consumer confidence, and the specter of likely eventual inflation. With tax revenues down and high deficits but staunch political resistance to tax increases, public services had been sharply cut back even before the 2013 “sequestration” (across-the-board budget cuts throughout the federal government), caused by another Congressional impasse.

America’s once-vaunted infrastructure is beginning to crumble, undercutting competitiveness. Roads and bridges are in disrepair, and some are collapsing. The air traffic control system is dangerously antiquated, and the railroad system is creaking. The energy grid sometimes malfunctions. Cellular and broadband systems are slow compared to those in many other advanced nations; the United States ranks twentieth in broadband penetration and thirty-third in broadband speed.

The quality of education, especially at the primary and secondary levels, has been declining in comparison with other nations. The United States ranks 28th in the world in the overall quality of the educational system and 38th in the quality of primary education.

Even higher education, long the forte of the United States, is now declining, at least by some measures, in relative terms. The United States ranks 14th among 32 countries in the percentage of college graduates, for example. Public universities across the nation are being severely weakened by budget cuts, and many private colleges and universities are similarly challenged.

Poverty in the United States has worsened, especially for African Americans and Hispanic Americans. More than 46 million people today live in poverty, the highest number in more than fifty years. Income inequality has worsened significantly; the percentage of national income earned by the top one percent of Americans has risen from about 9% in 1980 to 23.5% in 2007 and more today. The percentage of wealth owned by the top 1% is even higher, more than 34%. One family, six descendants of Sam Walton of Walmart, owns more than the combined wealth of the bottom 30% of the entire US population.

This has been in many respects a Lost Decade for the US economy. Median household disposable real income is 4% lower today than it was in 2000, though it has risen in most OECD countries. Unemployment is more than double what it was ten years ago. The percentage of Americans relying on food stamps to afford basic necessities has doubled. The middle class dream of the single-family home has become problematic for millions of Americans.

Meanwhile the federal government’s debt climbed from 36% of the GNP in 1970 to 59% in 2000, 64% in 2007, and now exceeds 100%. Structural deficits at federal, state and municipal levels will likely be hard to reduce significantly for years to come. The political parties, branches of government, and diverse interest groups clash fiercely over the relative priority of deficit reduction and spending needs, with the Republican Party ever more identified with balanced budgets and reduced taxes as firm, if not necessarily compatible, commitments.

Economic downturn, worsening inequity, and unraveling social cohesion have contributed to political deterioration. Political institutions of all kinds are increasingly in disrepute: parties, Congress, the presidency, even the courts. Special interest groups and single-issue constituencies press their views unrelentingly. Campaign finance considerations have become an ever-more powerful and pervasive aspect of the US political system, especially since the Supreme Court’s 2010 decision in the Citizens United case that removed limits on what wealthy individuals, labour unions, and corporations can spend to support political causes and candidates. 

Both media consolidation and the fragmentation of media markets have contributed to intense political polarization. Millions of Americans are exposed almost entirely, to one partisan extreme or another. The bounds of public policy debate, historically limited to broadly centrist alternatives and long pushed toward consensus by the nature of US political institutions, have been widening. 

Americans have been moving geographically to live with other like-minded people, forming homogeneous communities of lifestyles, values, beliefs, and ultimately politics. In 1976 fewer than 25% of Americans lived in “landslide” counties, those where the margin of victory in presidential election results is 20 percent or higher; now almost half do. 

Economic and political divisions have been exacerbated by cleavages between the coasts and the heartland; rural and urban residents; immigrants and anti-immigrants; homosexual and homophobic Americans; religious and secular; and among the well to do, the middle class and the poor. Civic discourse has descended to the level of confrontational rhetoric and competing bumper stickers.

The once admired political system of the United States, with its powerful concepts and institutions designed to provide checks and balances, is increasingly dysfunctional. The core problem today is not, as it was for the country’s founders, limiting the concentration of too much power in the hands of one individual, faction, party, or branch of government. Rather it is the inability of the governance system to consistently fashion and implement coherent and effective public policies to confront the country’s major challenges. The spectacle of government shutdown was the most dramatic instance of this gridlock, but the problem has been evident on many other issues, large and small. It has been impossible for President Barack Obama to fill important executive and judicial appointments, for instance, due to historically unprecedented obstructionist maneuvers in Congress.

All these trends feed a sense of stalemate, breeding public disillusion that is expressed by some as apathy and by others as anger. Nearly 80% of the American public in recent polls have said they are not satisfied with the country’s direction. An even greater share has said that they disapprove of the performance of Congress. The courts, exempt from serious political attack in most previous generations, are now rebuked by vociferous politicians who threaten wholesale impeachment of judges. Increasingly, issues that are eminently political and legislative—such as the provisions of the national health care insurance reforms, voter registration requirements, and immigration laws—are challenged in the courts, which are in turn often subject to street demonstrations and counter-demonstrations. 

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US Decline in Perspective

Even if this summary of American decline is accurate in its specific details, is this perhaps just a snapshot in time, a temporary situation accounted for by the financial crash of 2008 and its immediate consequences? Or is the United States experiencing longer term deterioration, likely to endure and perhaps even to accelerate?

Concerns about the supposed decline of the United States are by no means new. Samuel P. Huntington published an essay in Foreign Affairs in 1988, pointing out that then-current popular and policy-oriented writings, analyzing the loss of American economic hegemony and its consequences, marked the fifth wave of “declinism” since the 1950s, and there have been others since. Each of these waves has been based on some observable data, but each has failed to take into account or to foresee contrary tendencies or potential that have reversed many of the identified negative trends.

The view that the United States is in rapid decline and that its international influence is quickly waning, fashionable in some international intellectual circles, is tinged by some understandable local triumphalism in China, Brazil and elsewhere, and maybe by a bit of schadenfreude.In part, the perception of American deterioration may derive from some time lag in fully recognizing that US dominance in the mid-twentieth century had already, decades ago, begun to give way to a more normal position of important regional and global power, without omnipotence or anything close to that.

The stature of the United States in the mid-twentieth century was exceptional; it could not possibly last. This overwhelming primacy owed largely to the fact that all the other significant international powers of the 1920s and 1930s, both the eventual victors and the vanquished in World War II, were severely weakened by that war; only the United States emerged stronger than it had been. The international power of the United States has inevitably receded from that zenith.

Those who suggest that the international influence of the United States is rapidly declining highlight its failure to stabilize Iraq and Afghanistan; its inability to secure other high priority objectives in Iran, North Korea, Syria and in the Israel-Palestine conflict; and the serious tainting of its international reputation arising from a variety of incidents, domestic and international, including human rights abuses and the massive surveillance of private communications. They also emphasize the near-collapse of its financial institutions in 2008 and the consequent weakening of the American (and the world) economy and the absence of effective US leadership on global issues ranging from climate change to trade regimes, the law of the seas to international criminal justice.

These failures do demonstrate serious trouble and perhaps decline, but the idea that they amount to an unprecedented and irreversible deterioration in the global position of the United States requires some amnesia. Compare US problems today with those in the 1960s and 1970s, not to mention those of the 1930s or the 1860s. The US president, a presidential candidate, and two prominent civil rights leaders were assassinated in the 1960s, as were several others championing social change. Two consecutive US presidents left office in disgrace, Lyndon Johnson hounded out by popular opposition to the Vietnam War and Richard Nixon in the face of impeachment for the Watergate scandal and cover-up. The United States was forced to retreat ignominiously from Vietnam and suffered the humiliation of the Iran hostage episode. OPEC enforced a successful petroleum embargo that temporarily disrupted the US economy. The United States suffered recurrent economic recessions, sometimes combined with high inflation, which reached 13.5% in 1980.

Throughout these challenging years, the United States faced domestic and international problems that were arguably as difficult as today’s, and was also locked in a potentially deadly world-wide rivalry with the Soviet Union, then a major thermonuclear power. Even so, the United States still accounted into the 1970s and 1980s and beyond for more than a quarter of the world’s economic production and had overwhelming military superiority over the USSR and any other nation. And during this time of troubles, the United States actually began to once again improve its economic productivity and competitiveness, leading to a new period of prosperity in the late 1980s and 1990s.

The United States has been more dominant and less so at various points. Emerging countries such as China, India, Brazil and others have begun to increase their shares of world production and power in recent years. It is true that the United States is not as overwhelming as it was in 1950, or as it seemed to be in the brief unipolar moment after the collapse of the Soviet Union in the early 1990s, but it is still the world’s most influential nation.

The United States does face serious problems, to be sure, but so do other countries. The nations of the European Union are trying to staunch the financial losses and relieve high unemployment in Greece, Italy and Spain; to maintain economic integration in the face of increasing national disparities; and to preserve social welfare programs that are no longer affordable. Many face rising frictions about the growing presence of non-European immigrants and the return of populist, exclusionary and racist movements. The European nations account for 7% of the world’s population, 25% of global economic production and 50% of social spending, an evidently unsustainable mix.

Russia is regressing toward authoritarian politics, beset by gross corruption and pockets of grotesque affluence, while being weakened by low birth rates and population decline. Japan has a long-stagnant economy and a rapidly aging population. China and India are each trying to incorporate hundreds of millions of people mired in rural poverty, and to respond to growing unrest about crime and corruption without losing their system’s political legitimacy.

Brazil, Mexico and other Latin American countries must improve the quality of their primary and secondary education sufficiently to train the many thousands of scientists and engineers as well as skilled workers who will be needed to compete effectively in the global knowledge economy. Latin American countries must also increase significantly their historically low savings and investment rates and develop adequate infrastructures for the 21st century.

Some global redistribution of economic and political power has certainly been occurring over the past fifty years, and especially in the last twenty. During these years, the economies and influence of several “emerging economies” have grown remarkably. Global economic dynamism has shifted to a significant extent from the Atlantic to the Pacific. Most of the measurable evidence of this shift, however, shows that it has occurred largely at the expense of Europe, Russia and Japan, not of the United States. The US share of global GDP fell slightly from 27.2% in 1970 to 26.3% in 2010, but Europe’s, Russia’s and Japan’s fell more. Compared with these powers, the US share of world production has actually improved.

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The US Capacity for Renewal

Looking toward the future, the United States will maintain major demographic advantages over the European Union countries, Russia and Japan. All these countries will likely experience population declines, some of them dramatic, aging of their populations and worsening dependency ratios that call into question the viability of social safety nets. The United States, meanwhile, continues to experience population growth primarily due to international immigration, high birth rates among recent immigrants and a national fertility rate greater than that of all other major countries except India. US senior citizens do face a looming crisis of inadequate savings, but modest changes in the Social Security system, including raising the cap on contributions and slightly modifying the age of eligibility, could largely resolve this potentially major problem.

As compared with Russia, China, India, Brazil, Mexico and other emerging countries, the United States is likely to rank, for the next several decades, far ahead on numerous indicators of economic competitiveness and entrepreneurship, as well as on most indices of human development, mass education, participation in social media, and on many comparative indicators of good governance.

It is certainly high time for Americans to abandon illusions of omnipotence and arrogant projections of “American exceptionalism.” But it is equally important to reject the incipient tendency in some quarters to write off the United States as trapped in an accelerating decline. The United States still has very considerable assets, as well as a frequently demonstrated capacity for adaptation that should not be underestimated.

The financial and economic crisis detonated in 2008 was a major inflection point, the effects of which may still be felt for years, perhaps decades. It was mainly caused by years of reckless practices in the financial services sector, based on a combination of ideology, hubris and technological shortcuts, fueled by greed, unchecked by adequate regulation and exacerbated by short-term political considerations. But the financial meltdown was not a sign of underlying economic weakness, or a fundamental lack of competitiveness of the US economy in the world.

The United States remains a nation of continental scope, with vast natural resources and remarkable agricultural productivity. It has a very large domestic market and a huge consuming public. The United States has ethnic diversity, and still has considerable intergenerational social mobility in fact and especially in prevailing popular belief. It has successfully integrated the talents of some fifty million immigrants since 1965, with much less tension and conflict than has been sparked by immigration in Europe. Although its financial institutions were severely compromised by the practices of the 1990s and the early years of this century, their integrity and strength have been largely restored, and the US dollar remains by far the world’s most relied upon reserve currency.

The United States has the world’s most impressive institutions of higher learning, boasting eight of the top ten and 53 of the top 100 best universities worldwide, according to widely-cited international rankings. At these universities and in rich and abundant industry-university collaborations, the United States produces much of the world’s most advanced scientific and technological research that, in turn, stimulates constant innovation. The public-private partnerships of governmental, university, and private sector research institutions facilitate the rapid commercial exploitation of new knowledge. The United States will remain creative, productive, and competitive as long as it keeps investing strongly in education and basic research.

The data on international students in the United States highlight this competitive advantage. There were nearly 765,000 international students in the United States in academic year 2011-2012: almost 200,000 from China, more than 100,000 from India, 72,295 from Korea, and nearly 50,000 from Latin America and the Caribbean (with the likelihood of many more to come from Brazil in future years under the new Science Without Borders program). The United States retains enormous capacity in computer sciences, communications technologies, biogenetic enterprises, nanotechnologies, clean energy and other areas of innovation.

China, India, Brazil, and Mexico are today highly dynamic countries, but the United States is far from static. It has moved from an economy dominated by manufacturing to one most prominent and competitive in services, and is now experiencing some resurgence in manufacturing, especially in advanced electronics. Much of its population has moved from the northeast and the Midwest to the south and far west, changing the country’s political constellations and dynamics in the process.

The United States has become in many ways a more diverse, creative, and efficient nation. Its recent economic restructuring has been impressive. The housing sector is reviving, and various sectors of manufacturing have regained a competitive edge. Vested economic interests have not blocked the emergence of new technologies, new forms of production and marketing, and new social media. The recovery of the US automotive industry has been remarkable. Innovative technologies for the exploitation of shale to produce natural gas amount to an energy revolution, with positive implications for the economy and security of the United States, although this carries potentially adverse environmental consequences. The United States is expected to reduce its petroleum imports by more than half by 2035, and sooner than that to become a net exporter of natural gas. It is also expected to export more petroleum by 2017 than Saudi Arabia.

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The Central Challenge: Fixing the US Political System

The core challenge for the United States in the first quarter of the 21st century is not the prowess or potential of its economy nor its relative external power and influence. The central question is, rather, the capacity of the US political system to fashion and implement public policies to respond effectively to today’s and tomorrow’s concerns.

During the 1992 presidential election, Governor Bill Clinton had a famous sign in his campaign headquarters: “It’s the economy, stupid”; i.e. the issue that really mattered to voters was the unsatisfactory state of the economy, and he needed, therefore, to keep a laser focus on that question.

Now it is the political system, not the economy, that requires prime attention. US political institutions—presidentialism, separation of powers, and a two-party system with majority rule electoral procedures—have long worked well together to produce consensual policies by facilitating the compromises necessary to fashion effective measures over time. For the past 35 years, however, a number of changes have undermined effective governance.

One change is the polarization of US politics and its legislative expression. Voter migration within the United States has produced regional polarization of attitudes. Beliefs in the south contrast sharply with those prevalent in the northeast, the west coast, the Midwest and to a significant degree the mountain states on a variety of social, cultural and political issues ranging from family values to science and the role of government. Gerrymandering—altering boundaries of electoral districts for political advantage—exacerbates the impact of this phenomenon, producing legislators who play to their bases and highlighting primary elections that enhance the national power of local extremists. These trends have been reinforced by changes in communications media, including internet news sources and blogs, that expose voters systematically to those with similar ideological bents, and that greatly reduce fact-checking and the moderating editorial influences that used to be performed by major newspapers and national television networks. All these factors have contributed to the rightward radicalization of the center of gravity within the Republican Party, with its political base in the deep south. The most conservative Democratic member of Congress is to the left of the most liberal Republican, an unprecedented situation that makes coalition-building and compromise very difficult, as has been vividly illustrated through the October shutdown.

A second change, gradual over the last decades, but accelerating during the past twenty years, stems from major changes in campaign finance and the much expanded use of political action committees (PACs) on a national basis. Campaign contributions for presidential and congressional elections tripled from 1976 through 2000 ($2.8 billion to $6 billion dollars) and then by another 214% in the first twelve years of the twenty-first century. Contributions from PACs jumped six-fold from 1980 to 2006 ($55 million in 1980 to $363 million in 2006), and under 15% by 2012. Special interests consequently have many more resources to support candidates, and they have correspondingly increased influence.

Third, powerful lobbying firms with high budgets and cadres of high-profile former government officials have become central actors in the policy-making process. Companies recruit and pay immense sums to former governmental officials to lobby on behalf of special interests. Their cases advanced by these well-connected allies, special interests drown out the deliberation and compromise needed to make progress in Congress on such issues as health care, tax reforms, education, and immigration policy.

A fourth problem with the US governance system today is precisely that few members of Congress today undertake the kind of interactive deliberation that marked the US legislative system for many decades; they spend their time in perpetual campaign mode rather than in building the basis for cooperative legislation.

None of these problems will be easily resolved. They have not emerged suddenly or very recently, but rather gradually over many years; some were hidden from view for many years by the discipline imposed by the Cold War. They cannot be attributed to just one party or faction, but result from decisions, actions, or failures to act by both political parties and by many different interest groups, all operating within the rules of American constitutional practice that were designed for a different era, with far fewer actors, far less money and far less media coverage intruding on policymaking processes.

An underlying problem may derive from deeper aspects of contemporary US culture, particularly the relentless reinforcement of consumerism and immediate gratification. As Nathan Gardels and Nicolas Berggruen have recently observed: 

All the feedback signals in a consumer democracy—politics, the media and the market—steer behavior toward immediate gratification. In this Diet Coke culture, all too many…have come to expect consumption without savings or education, infrastructure and social security without taxes, just as they expect sweetness without calories in a soft drink.

This pithy summary captures a mix of entrenched attitudes that will not quickly be reversed. 

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Can the United States Rise to the Challenge?

A number of proposals are being discussed in the United States today for dealing with the country’s governance problems, though the path from discussion to adoption and implementation is far from assured. Various electoral reforms, for example, could contribute to diminishing ideological polarization by expanding the electorate. Modest procedural reforms in Congress could help restore deliberation to Congress. Innovative use of interactive communications technologies could help restore a sense of participation and responsiveness to US politics. Blatant efforts to the contrary to constrict participation and hamstring effective policymaking could produce a backlash that finally opens the way for such reforms. It is possible that the Tea Party overreach in October, 2013 could ultimately have that effect. Constructive and potentially consensual approaches are now beginning to be discussed to confront many of the country’s major public policy challenges, though more often and prominently in think tanks and independent policy forums than in Congress, and more effectively in some states, especially California, than at the federal level. Pragmatic centrist approaches are being developed on health care delivery and insurance; equitable and phased reductions in entitlement programs; comprehensive immigration reform; strategic investment in education, research, development, and infrastructure; reshaped military and national security
budgets to reallocate some of the vast resources long devoted to these sectors; energy policies that mitigate climate change while providing greater efficiencies and ultimately lower costs; and income and corporate tax reforms to make them more efficient and progressive, better able to generate needed revenues, and well-aligned with key policy goals.

Public opinion polls show that considerable public support already exists for practical and centrist approaches on all these issues, ready to be mobilized if and when national political and legislative leaders turn back decisively from hyper-partisan competition toward constructive national policy-making. Whether and when this turn will occur is impossible to know, but opinion shapers in different segments of American society are more frequently and forcefully appealing for such a shift, and broad public opinion is increasingly critical of the destructive extremes and perpetual finger-pointing, and are looking for centrist solutions. That tendency has been highlighted by the most recent Congressional showdown.

Whether the US political system can regain its former capacity, evident in past times of war and other crises, to mobilize the country’s resources and energies is the central question for the United States in coming years. How it is answered will matter around the world, for this will help determine whether the United States can be a reliable partner on important issues ranging from war and peace to trade, finance and investment; from climate change, public health, resource management to international crime, narcotics traffic, terrorism and citizen security.

How the United States relates with and affects the rest of the world in future years will depend in large measure on whether it can restore strength and effectiveness to its domestic political institutions. This will not be easy, but it should not be impossible.

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About the Author

Abraham F. Lowenthal is Professor emeritus of International Relations at the University of Southern California, President Emeritus of the Pacific Council on International Policy, nonresident senior fellow of the Brookings Institution and research professor at Brown University’s Watson Institute. A recognized authority on Latin America and U.S.-Latin American relations, he was the founding director of the Woodrow Wilson Center's Latin American Program, the Inter-American Dialogue, and the Pacific Council.
His wife, Jane S. Jaquette, is Professor Emerita at Occidental College and former president of both the Latin American Studies Association and the Association for Women in Development. His two children, Linda and Michael, are writers and editors in Boston.

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Canadian Defence & Foreign Affairs Institute

CDFAI is the only think tank focused on Canada’s international engagement in all its forms-diplomacy, the military, aid and trade security. Established in 2001, CDFAI’s vision is for Canada to have a respected, influential voice in the international arena based on a comprehensive foreign policy, which expresses our national interests, political and social values, military capabilities, economic strength and willingness to be engaged with action that is timely
and credible.
CDFAI was created to address the ongoing discrepancy between what Canadians need to know about Canadian international activities and what they do know. Historically, Canadians tend to think of foreign policy – if they think of it at all – as a matter of trade and markets. They are unaware of the importance of Canada engaging diplomatically, militarily, and with international aid in the ongoing struggle to maintain a world that is friendly to the free flow of goods, services, people and ideas across borders and the spread of human rights. They are largely unaware of the connection between a prosperous and free Canada and a world of globalization and liberal
internationalism.
In all its activities CDFAI is a charitable, nonpartisan organization, supported financially by the contributions of foundations, corporations and individuals. Conclusions or opinions expressed in CDFAI publications and programs are those of the authors and speakers and do not necessarily reflect the views of the Institute staff, fellows, directors, advisors, or any individuals or organizations that provide financial support to CDFAI.

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