The debates in the US presidential election reveal a country that is declining in economic power, beset with divisions and unable to address global problems
Compare and contrast the attention recently paid to the power shift in Beijing – which tends to happen only once a decade – with the quadrennial circus in Washington DC. China’s rise to superpower status and its economic might (among other things, it owns the world’s largest reserves of foreign exchange, shale gas and rare earth metals) doesn’t yet make it interesting enough for us to spend much time fretting over the man expected to be China’s next leader Mr Xi Jinping.
Barack Obama and Mitt Romney are a different story. We’re fixated. Maybe the reason is cultural affinity, The West Wing and, lately with the hapless Romney, the sheer entertainment value of seeing a candidate doing his best to alienate as many voters as he can. Or is it our continuing thralldom to US ideas about government, channelled by McKinsey and the consultancies? Maybe it’s just force of habit, padded by showbiz crossovers such as Clint Eastwood and his empty chair at the Republican convention.
It surely isn’t the geopolitical or financial weight of next month’s US presidential election. Or its decisiveness. If recent polling results hold, Obama’s fate will be to win the White House and see the Republicans, deeply partisan, keep control of the House of Representatives and even win the Senate. He becomes the proverbial lame duck who at best can only veto attempts to enact a rightwing agenda.
If Obama wins despite US median household income falling lower than it was in 1995, and despite chronic unemployment, you might be tempted to join Moody’s, the credit ratings agency, that has just threatened a US downgrade, and sing ‘things can only get worse’.
Looming over Washington is a ‘fiscal cliff’. Existing law says that come January 2013, the executive has to make $600bn worth of tax increases and spending cuts. Amending that law requires the White House, the Democrat-controlled Senate and House Republicans to negotiate. They haven’t so far, and under most likely post-election scenarios they are going to have even less incentive to compromise.
In anticipation of this huge sum getting sucked out of the purchasing power of US households and business, the Federal Reserve has resorted yet again to extraordinary efforts to pump liquidity into the financial system. It’s all most peculiar. Previous efforts to bolster the real economy by boosting banks have not worked. Chair of the Fed’s board of governors, Ben Bernanke, seems to be following a discredited monetarist textbook; yet if his massive quantitative easing did work and pushed unemployment down, his intellectual fate will be to have disproved a central tenet of the neo-classical economics of which he is an avid exponent. (It says money doesn’t matter in explaining growth and job levels.)
What about the election’s impact on the UK? Polls clearly express Europe’s preference for Barack Obama and cultural queasiness at Tea Party beliefs. But if the White House did change hands, not much is likely to change either on the streets of Athens or at Westminster. After presidential tetchiness over the inability of eurozone leaders to put together a formula for growth, Europe has fallen beneath the American radar, leaving Chancellor Merkel, President Hollande and the rest to get on with it, or not.
Despite Hillary Clinton’s indefatigable diplomatic travelling, US policy has been paralytic, in Syria, over Iran’s nuclear capacity and over the friction between China and Japan. For all the Republicans’ bellicosity, Mitt Romney shows no aptitude for fresh action.
Already under Obama, on this side of the Atlantic as on the other side of the Pacific, the US’s friends and enemies are realising the post-1945 era has definitively come to an end. This election captures, more directly even than the antics of George W Bush, the US problem. The Americans no longer have a picture of what they would like the world to look like, let alone a map of how to get there.
The end of the US’s role as guarantor of international order is about more than diplomacy and security. It’s also about this great country’s inner life. Since at least the turn of the century, a gap has opened between domestic financial capacity and global aspirations and US responses to 9/11 widened it. Security analyst Philip Bobbitt feared the ‘hollowing out’ of the US. How can an ageing society that depends for its demographic rejuvenation on resented Latino immigrants, that is unable or unwilling to pay for basic healthcare or welfare for 50 million of its people, project force overseas? And how can it seek to police persistent, endemic and growing conflicts, after failing in Afghanistan and with the fate of its intervention in Iraq still so uncertain?
If anything the election exposes the irreconcilable views of American people and parties. This is a society that needs both to think anew – about its capitalist civilisation, its common purposes and its collective capacity. The financial crisis shook the faith of all those who believed that as a society Americans knew what they were about, and had both the theory and political practice to bring it about. But recent years have seen US economics, governance, and intellect put to the test and found wanting. The election can only confirm that.
David Walker is a writer and broadcaster. He was a Harkness Fellow and worked in the US Congress
This article first appeared in the October edition of Public Finance