In 1969, the US accounted for 36 per cent of global income at market prices, according to the International Monetary Fund’s World Economic Outlook. America’s share had fallen to 31 per cent by 2000. Then it started to plummet. By 2010, the US accounted for just 23.1 per cent of world income. In one decade America lost 7 per cent of world share. More than half that loss occurred before the Great Recession.
China’s economy, meanwhile, was barely an eighth the size of the US’s in 2000. Today it is 41 per cent – and that is based on current exchange rates. Were Beijing to float the renminbi, China’s economy could be valued considerably higher. Far from being “remarkably steady”, the shift over the past decade has been uniquely rapid by any historic measure. Another decade like that and America’s pre-eminence will look very shaky. Indeed, as Arvind Subramanian writes, China would surpass the US within 12 years even if its growth slowed to 7 per cent a year and the US hit an unlikely annual pace of 3 per cent.
I agree with Kagan's thesis that American decline is not inevitable. Where I disagree is that more than willpower is required to avert decline.
As Luce well puts it:
Mr Kagan denies America is in relative decline—and mistakenly insists there is no economic evidence for it. Yet he argues that America’s decline is being actively willed by unnamed “politicians and policymakers”. They are “in danger of committing pre-emptive superpower suicide out of a misplaced fear of declining power”.
It is a tension that runs through the book. If America isn’t declining, who cares? If, on the other hand, America is willing its decline, who are these lemmings exactly?
The debate over the future of American power is a debate over the maintenance of the material basis for American power. It is not enough to will the ends if you do not first will the means, including a tax system that raises adequate revenue, an immigration policy that screens against low-skilled workers, and an economic policy that favors innovation and investment more—and consumption less.