June 13, 2015

UNRIVALLED:

American Hegemony Is Here to Stay : U.S. hegemony is now as firm as or firmer than it has ever been, and will remain so for a long time to come. (Salvatore Babones, June 11, 2015, National Interest)

Cycles of hegemony run in centuries, not decades (or seasons). When the United Kingdom finally defeated Napoleon at Waterloo in 1815, its national resources were completely exhausted. Britain's public-debt-to-GDP ratio was over 250 percent, and early nineteenth-century governments lacked access to the full range of fiscal and financial tools that are available today. Yet the British Century was only just beginning. The Pax Britannica and the elevation of Queen Victoria to become empress of India were just around the corner.

By comparison, America's current public-debt-to- GDP ratio of less than 80 percent is relatively benign. Those with even a limited historical memory may remember the day in January 2001 when the then chairman of the Federal Reserve, Alan Greenspan, testified to the Senate Budget Committee that "if current policies remain in place, the total unified surplus will reach $800 billion in fiscal year 2011. . . . The emerging key fiscal policy need is to address the implications of maintaining surpluses." [...]

The U.S. Census Bureau has projected that China's working-age population would reach its peak in 2014 and then go into long-term decline. In the twenty years from 2014 to 2034, China's working-age population will fall by eighty-seven million, while its elderly population will rise by 149 million. In the language of economic punditry, China will "grow old before it grows rich."

The U.S. population, by contrast, is young and growing. In 2034, the U.S. population is projected to be growing at a rate of 0.6 percent per year (compared to -0.2 percent in China), with substantial immigration of talented, productive people (compared to net emigration from China). The U.S. median age of 39.2 will be significantly younger than the Chinese median age of 44.8. Over the long term these trends may change, but the twenty-year scenario is almost certain, because for the most part it has already happened. Economic trends can turn on a dime, but demographic trends are mostly immutable: tomorrow's child-bearers have already been born. [...]

[T]he effective borders of the American polity extend well beyond the Atlantic and Pacific coasts. If the Edward Snowden leaks have revealed nothing else, they have shown the depth of intelligence cooperation between the United States and its English-speaking allies Australia, Canada, New Zealand and the United Kingdom. These are the so-called Five Eyes countries. These English-speaking allies work so closely with the United States on security issues that they resemble ancient Rome's Italian allies. Despite their formal political independence, they do not make major strategic decisions without considering America's interests as well as their own.

Curiously, America's English-speaking allies resemble the United States in their demographic structures as well. While East Asia's birthrates have fallen well below replacement levels and parts of continental Europe face outright depopulation, the English-speaking countries have stable birthrates and substantial immigration. The most talented people in the world don't always move to the United States, but more often than not they move to English-speaking countries. It doesn't hurt that English is the global lingua franca as well as the language of the Internet.

One surprising result of these trends is that the once-unfathomable demographic gap between China and the English-speaking world is narrowing. According to U.S. Census Bureau projections, in 2050 the U.S. population will be 399 million and rising by 0.5 percent per year while the Chinese population will be 1.304 billion and falling by 0.5 percent per year. Throw in America's four English-speaking allies, and the combined five-country population will be 546 million--nearly 42 percent of China's population--with a growth rate of 0.4 percent per year. No longer will China have the overwhelming demographic advantage that has historically let it punch above its economic weight.

Posted by at June 13, 2015 8:22 AM
  

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