Nail Ferguson attempted to establish his prognosis of American decline as one that will fall abruptly and will be trigger by unsustainable public debt burden. While he tried to distinguish his view from that he describe as cyclical understanding of empiric decline espouse by academics such as Paul Kennedy, Jared Diamond and a few others.
His thesis, didn’t sound very persuasive to me.
1. I really didn’t think his version is that different to Kennedy’s. Kennedy argued that empires inevitably overstretch their military and become economically unsustainable how is that significantly different to Ferguson’s version where American fall will be cause by public debt that was accumulated quickly partly due to the wars in Afghanistan and Iraq?
2. I wonder if there is in fact no consequential differences between the US and previous Empires? I have always thought the american hegemony is unique as it is benign, compare to the Romans or Britons of the past. China, the potential rival to the US Ferguson single out in his talk, as well as great many other countries has a stake in the stability of current international system lead by the relatively benign American empire. Ferguson him self have argue with his “Chimerica” China-America economic symbiosis thesis, that debt accumulating US is an accomplice to the stability of China’s growth. Wouldn’t it be the interest of the raising powers and the creditors of America’s debt work with the ailing empire to ensure a financial soft landing; to create and fortify multilateral institutions for the purpose of replacing American power presence in strategic theaters (Middle east, North East Asia, central Asia and Eastern Europe etc)? Ferguson cited in his talk that China is reducing the proportion US dollar in its basket of reserve currency, which instead of being alarmist about it. I actually previously argued it is exactly what’s needed to be done to help US economy land softly.
3. If public debt is the issue, as Ferguson argued, the US government could very well raise tax to pay for it, consider that its tax as a percentage of GDP is only 28.3%, its very low compare to many European countries (Germany is 40.8%). They could also cut their military spending by half and still be more than 3 times bigger than China’s spending.
I would agree that the decline of the US empire is inevitable, but i seriously doubt it will be as sudden and dramatic as Ferguson make it out to be.
Update: Alex Goodall written a well thought out response (rebuttal?) to Ferguson’s thesis. worth reading.