You are invited to read this commentary from the Free Enterprise Foundation. It will make you think!

America in the Balance

“The U.S. is an empire in decline. People have predicted the end of America in the past and been wrong. But let’s face it: if you are trying to borrow $9 trillion to save your financial system…and already half your public debt [is] held by foreigners, it is not really the conduct of rising empires is it?” Prof. Niall Ferguson.

Is America in decline? Are we on the edge of being toppled from our perch among the world’s leading nations? For this, our last column of the first decade of the twenty-first century, we will explore that question and expect to further explore it in the new decade that approaches.

Prof Ferguson, the Tisch Professor of History at Harvard and author of the The Ascent of Money, goes on to suggest that America stands where Britain did in the latter half of the 20th and Spain in the 17th century. He sees all three at the end of long periods of world leadership brought asunder by poor statecraft. He sums up by saying “Excessive debt is usually a predictor of subsequent trouble.”

He equates the U.S. to Great Britain in 1900 in underestimating the strength of a growing rival. For him China is our Germany and will become our diplomatic challenger for world leadership within the next decade and a half. In my view, with their accelerated naval building program, they already are in Southeast Asia and with another 15 years to become mature in their understanding of force projection, they are right in line with Prof. Ferguson’s timetable.

Professor Ferguson has plenty of company. Former Federal Reserve Chairman Volker, under the banner “Volker says China’s Rise Highlights Relative U.S. decline,” the former Chairman decries our dependence on Chinese credit and its inhibitory effect on our policy alternatives. “You cannot be dependent on these countries (BRIC Nations) for three to four trillion dollars of your debt and think they are going to be passive observers of whatever you do.” And while hoping for the best, he concludes that it is like herding cats to keep them together and going our way.

The London based International Institute for Strategic Studies adds its two cents to the consensus by seeing a need for the U.S. to rely on allied nations for leadership managing the world’s problems. Increasingly it is a case of “No we can’t!” in contrast to the Obama domestic theme of, “Yes, we can! ” That is the stark reality for what are Hobson’s choices facing us around the globe.

There is more than subjective consensus underlying the conclusions of our tottering crown. The number of U.S. companies worldwide that are in the world’s top 2000 largest has fallen by 36 percent just since 2004 from more than a third of the total to just over one quarter. American corporate earning power has declined along with that drop at an even more precipitous rate. Today our share of global profits has fallen to 10 percent from just over 60 percent in 2004.

When economic trends are projected over the past 40 years, it strengthens Professor Ferguson’s analysis that we are looking like Great Britain just before the fall. There are myriad reasons for these events, but in large part it is due to the convergence of highly unwise national credit practices at the same time we are exhibiting distaste for those policies necessary to favor capital formation.

Like The Sage of Omaha, I am loath to bet against America. And like Churchill, I am used to our nation “finally getting it right” and riding to the damsel’s rescue just as the train approaches at breakneck speed headed towards her prostrate form tied to the tracks. Can we do it again? Will we do it again? Prof Ferguson can be forgiven his lack of faith. After all he’s a Brit and hasn’t been born into that aura of invincibility that accompanies us Colonials into the world. And why shouldn’t we feel that way? As President Reagan reminded us, we have every right to dream heroic dreams. “We’re Americans!”

Many times in the past I have been able to drink from that unique elixir that is the American can do attitude. If it can be dreamed into existence, it can be accomplished and along with such cohorts as I have inspired to drink of the same brew, together we have accomplished amazing feats, maybe even one or two that still appear to me to be miraculous. Now that I sit on the sidelines here in academia and “observe,” my confidence in the future has become tempered by the times.

For too long we have neglected to bolster the free market structures required for our continued prosperity. We have a generation coming to maturity that appears ignorant of the paths we have trod and ignorant of the Biblical values of self discipline and faith that must exist to drive progress in the future. We have national leadership that has turned its back on our history. It has not fully partaken of the American elixir and chooses instead to mimic a foreign collectivist model for our future.

State determined management of our economy will never work in America. The American people are a rare breed of self selecting individualists whose ancestors or themselves sacrificed everything to get to our shores where the vastness of the land was equal to the freedom of our people’s imagination and was all that was needed to manufacture the reality of the dream we live.

If we are to continue to survive, it is that dream to which we must adhere. Lip service is not good enough. Every parent, every school, every church, even every playgroup must reinforce the meaning of our history and our special role in this world.

Freedom and its responsible pursuit are at its center. Meanwhile the life energy and the national assets being wasted on pursuit of the siren song of Washington’s one answer fits all is sapping our strength just when we face increasing challenges from abroad. I pray for our future and watch us totter on the edge. Which path will the nation pursue? I do not know. That is for the American people to decide, but for me I must continue to keep the faith alive that drives us in supplication that the answer will be the right one. _._

Copyright © 2009 by Robert E. Freer, Jr. All rights reserved

About the author: Robert E. Freer, Jr., is president of the Free Enterprise Foundation. He is also a professor at The Citadel and was selected in 2005 to be their first John S. Grinalds Leader in Residence and in 2009 to be their first BB&T Visiting Professor in Ethics and Free Enterprise Leadership. A regular contributor to the Mercury, Prof. Freer may be reached at Robert.freer@citadel.edu. If you would like him to appear before your group or organization to speak on any of the subjects about which he writes, please contact him at The Citadel. Copies of his earlier columns may be found at The Free Enterprise Foundation