America Stages a Comeback - to Pre-WWII America

An insightful article in Foreign Policy predicts that America is en route to a time before the era of liberal democracy.

Trump’s “America first” approach to foreign policy has deep roots in U.S. history. Before 1945, the United States defined its interests narrowly, mostly in terms of money and physical security, and pursued them aggressively, with little regard for the effects on the rest of the world. It espoused liberal values such as freedom and liberty but applied them selectively, both at home and abroad. It formed no alliances besides the one it signed with France during the Revolutionary War. Its tariffs ranked among the highest in the world. It shunned international institutions. The United States was not isolationist; in fact, its rampant territorial expansion inspired the envy of Adolf Hitler. But it was often aloof.

The United States could afford to pursue its goals alone because it, unlike other powerful countries, was self-sufficient. By the 1880s, the United States was the world’s richest country, largest consumer market, and leading manufacturer and energy producer, with vast natural resources and no major threats. With so much going for it at home, the United States had little interest in forging alliances abroad.

That changed during the Cold War, when the Soviet military occupied large swaths of Eurasia and communism attracted hundreds of millions of followers worldwide. By the early 1950s, Moscow had twice the military might of continental Western Europe, and communists ruled over 35 percent of the world’s industrial resources. The United States needed strong partners to contain these threats, so it bankrolled an alliance, providing dozens of countries with security guarantees and easy access to American markets.

...It would be comforting to blame the country’s current nationalist posture on Trump alone, but Americans’ support for the postwar liberal order has been shaky for decades. Surveys now show that more than 60 percent of Americans want the United States simply to look after itself. When pollsters ask Americans what ought to be the priorities of U.S. foreign policy, few cite promoting democracy, trade, and human rights—the core activities of liberal international leadership. Instead, they point to preventing terrorist attacks, protecting U.S. jobs, and reducing illegal immigration. Roughly half of those surveyed say they oppose sending U.S. troops to defend allies under attack, and nearly 80 percent favor the use of tariffs to prevent job losses from trade. Trump’s approach is no aberration; it taps into a current that has always run through American political culture.

In the years ahead, Americans’ support for the liberal order may decline further still thanks to demographic and technological changes that will increase the United States’ economic and military lead and make the country less dependent on others. First, most countries’ populations are growing older, many at extremely fast rates. By 2070, the median age of the world’s population will have doubled compared with 100 years earlier, from 20 years old to 40 years old, and the share of people aged 65 and older in the global population will have nearly quadrupled, from five percent to 19 percent. For millennia, young people have vastly outnumbered the elderly. But in 2018, for the first time ever, there were more people over the age of 64 than under six. 

The United States will soon be the only country with a large, growing market. Among the world’s 20 largest economies, only Australia, Canada, and the United States will have growing populations of adults aged 20 to 49 throughout the next 50 years. The other large economies will suffer, on average, a 16 percent decline in that critical age group, with most of the demographic decline concentrated among the world’s most powerful economic players. China, for example, will lose 225 million young workers and consumers aged 20 to 49, a whopping 36 percent of its current total. Japan’s population of 20- to 49-year-olds will shrink by 42 percent, Russia’s by 23 percent, and Germany’s by 17 percent. India’s will grow until 2040 and then decline rapidly. Meanwhile, the United States’ will expand by ten percent. The American market is already as large as that of the next five countries combined, and the United States depends less on foreign trade and investment than almost any other country. As other major economies shrivel, the United States will become even more central to global growth and even less reliant on international commerce.

...By 2050, Russia’s spending on pensions and medical care for the elderly will increase by nearly 50 percent as a share of its GDP, and China’s will nearly triple, whereas in the United States, such spending will increase by only 35 percent. Russia and China will soon face severe choices between buying guns for their militaries and buying canes for their ballooning elderly populations, and history suggests they will prioritize the latter to prevent domestic unrest. Even if Russia and China do not cut their military spending, they will struggle to modernize their militaries because of the rapid aging of their troops. Personnel costs already consume 46 percent of Russia’s military budget (compared with 25 percent of the U.S. military budget) and likely will exceed 50 percent this decade as a wave of older troops retire and draw pensions. China’s personnel costs are officially listed at 31 percent of its military budget, but independent estimates suggest they consume nearly half of China’s defense spending and will rise in the years ahead.

Democratic liberalism's days are numbered.

In liberal democracies across the world, public support for that order has long rested on rising incomes for the working class, which in turn were largely the result of growing populations and job-creating technologies. The postwar baby boom produced scores of young workers and consumers, and the assembly line provided them with stable jobs. But today, populations across the democratic world are aging and shrinking, and machines are eliminating jobs. The basic bargain—work hard, support the liberal system, and trust that a rising economic tide will lift all boats—has broken down. Nationalism and xenophobia are filling the void.

A New World Order - Region versus Region

Washington might retain only two sets of regular partners. The first would include Australia, Canada, Japan, and the United Kingdom. These countries are strategically arrayed across the globe, and their militaries and intelligence agencies are already integrated with Washington’s. All but Japan boast growing working-age populations, unlike most other U.S. allies, and thus have the potential tax bases to contribute to U.S. missions. The second group would consist of places such as the Baltic states, the Gulf Arab monarchies, and Taiwan, which share borders with or sit in close proximity to U.S. adversaries. The United States would continue to arm these partners but would no longer plan to defend them. Instead, Washington would essentially use them as buffers to check Chinese, Iranian, and Russian expansion without direct U.S. intervention. 

The analysis reflects its authorship. Written by a political scientist it exists in a world defined by political science which introduces constraints and omits a great deal of modern reality. For example, he assumes that sophisticated, industrial nations will be relatively unscathed by climate breakdown than poorer and more backward nations. I suspect that affluent countries will be in some ways less resilient to climate impacts and disruptions than some second or third-tier economies. The author, a poly-sci prof from Tufts, also has apparently not heard of a world ordered on unsustainable consumption and rapidly dwindling resources.

On a more upbeat note, a South China Morning Post columnist, Alex Lo, writes that the world envisioned in the Foreign Policy article might not be that bad. For China, second place might be more comfortable - and peaceful.

Like many other countries, China faces a dire demographic outlook. When the Chinese Academy of Social Sciences first published the “Green Book of Population and Labour” in January last year, it made a news splash because of the dire warning it contained about population decline and a shrinking labour force.

While many major economies experience declining birth rates and increasing life expectancies, China’s former “one child” policy had worsened those trends. Its birth rate fell in each of the last three years, despite allowing families to have two children from 2016. A population contraction may start by 2027. By the middle of the century, there will not be enough workers to support a vast and ageing population.

...Actually, there are worse scenarios for China than falling into the “middle-income trap”. For one thing, it may escape the so-called Thucydides’ trap – or a third world war – as Beijing realises it’s unrealistic and counterproductive to compete with the US for world dominance. Since the late 1970s, China has been able to pay for both guns and butter because of its phenomenal economic expansion. At some point in the coming decades, it may have to choose butter over guns and scale back its global ambitions. God forbid if it chooses guns over butter – just to challenge the US!

But as US baseball legend Yogi Berra used to say, “Prediction is very hard, particularly when it’s about the future.”